27/7/06 (NSTP)  - MALAYSIA'S palm oil exports can reach RM29 billion this year, about 2 per cent higher than last year's figure, helped by high demand for crude palm oil (CPO).

When contacted by Business Times recently, Malaysian Palm Oil Board (MPOB) director-general Dr Basri Wahid said that this year's palm oil exports should exceed the RM28.57 billion earned in 2005.

"In the first half of this year, we've already shipped out RM14.12 billion worth of palm oil products. Although this is 2 per cent lower than the RM14.39 billion achieved in last year's corresponding period, we're optimistic that exports will accelerate in the second half," he said.

"Carotech and Golden Hope have already started exporting their methyl esters, brandnamed 'CaroDiesel' and 'Bio-N', to Japan, and their earnings will be reflected in the second-half figures," Basri added.

Although many economists agree with the MPOB that CPO prices are likely to rise in the second half of the year, they also forecast that ringgit may strengthen against the US dollar. A stronger the ringgit means lower earnings for exporters. However, the MPOB is unperturbed by that prospect.

"Even if the expected high CPO prices may be offset by the risk of a stronger ringgit, we're optimistic that exports can hit the RM29 billion mark," the director general said.

"We estimate that CPO prices will trend between RM1,450 and RM1,550 per tonne as demand is likely to pick up during the Muslim fasting month of Ramadan in October. There will be an anticipated increase in demand from China and India," he added.

As at June 30 2006, Malaysia's palm oil stocks hit a record high of 1.65 million tonnes.

The director-general also said that the Government had set aside 40 per cent, or six million tonnes, of the annual production of 15 million tonnes of palm oil for the biodiesel and biofuel industry.

This commitment by the Government will ease worries of high stockpiles as well as assure biodiesel investors that there will be adequate crude palm oil as feedstock for their factories.

By 2010, through the aggressive replanting of high-yielding clones by plantation owners, Malaysia has set a target of 25 per cent oil extraction rate. This means that the industry has to achieve an average production of six tonnes of crude palm oil per hectare per year.