MALAYSIA, INDONESIA PALM OIL DEVELOPMENTS

KUALA LUMPUR, June 12 (Reuters) - Malaysia and Indonesia, theworld's main palm oil producers, are counting on China increasingpurchases this year because of a severe drought, but pricesremain around 12-year lows because of a supply glut.Malaysia and Indonesia, both expected to increase productionthis year, are facing stiff competition with other edible oilssuch as soybean oil.In addition to possible Chinese purchases, traders also hopeIndia, the world's largest edible oil buyer, will agree toMalaysian and Indonesian calls to cut its palm oil import dutiesto 45 percent.In February, India slapped its heaviest ever import duty of75 percent on crude palm oil and 85 percent on refined palm oil.The duties compare with 45 percent for crude soybean oil and50.8 percent on refined soybean oil.Malaysia and Indonesia together account for more than 80percent of world palm oil output which is projected in 2001 at22.66 million tonnes, up 1.2 million tonnes from last year.Other producers include Nigeria, Brazil, Peru, Colombia andthe Philippines.Malaysia, the biggest producer, is struggling to reducedomestic stocks, which reached a record high of 1.52 milliontonnes last November, because of poor exports.Domestic consumption is flat at around two million tonnes,forcing the country of 22 million people to be more aggressive infinding new markets to ease the glut.The government aims to get rid of one million tonnes of palmoil this year through replanting ageing trees and burning crudepalm oil (CPO) mixed with diesel oil as industrial fuel.But sagging prices are likely to discourage farmers to chopdown their trees as it will mean a further drop in income.Plans to burn 400,000 tonnes of CPO mixed with diesel oilhave also hit a snag because most power plants owned by thestate-run power utility Tenaga Nasional Bhd have switched to gasfiring. Industry's response to the idea has been lukewarm.Following are details of Malaysian and Indonesian palm oilproduction and exports, in million tonnes, calendar year:PRODUCTION EXPORTS2001 2000 2001 2000MALAYSIA 11.93 10.84 10.00 9.06INDONESIA 7.2 6.5 4.2* 4.5* The Indonesian Palm Oil Producers Association (Gapki) saidexports from the world's second largest producer, could fall thisyear because of the high import duties in India. Gapki hasrevised its forecasts.Following are forecasts of palm oil imports for 2000/2001from the main consuming nations, in million tonnes, Oct/Sept:2000/2001 1999/2000India 4.03 3.48European Union 2.62 2.46China 1.86 1.47Pakistan 1.17 1.08For prices and details of freight costs on Malaysian andIndonesian palm oil to key destinations, please double-click on