16/09/2008 (Reuters), Bangkok - Crude palm oil stocks in Thailand have more than doubled since January as falling world prices have slowed exports, and palm fruit farmers have appealed to the government to support prices, traders said on Tuesday.

Stocks had surged 112 percent to 170,000 tonnes as of Tuesday from 80,000 tonnes in January, a Commerce Ministry official said.

"Stocks jumped because we are exporting less crude palm oil as we don't want to have losses due to low prices, and domestic refiners have slowed their buying," said a trader at one of Thailand's top three palm-crushing plants.

Malaysian crude palm oil futures <0#KPO:>, which set the global trend, hit a 17-month low on Tuesday as U.S. crude oil slid below $92 a barrel, dragging vegetable oil markets from China to the United States down with it.

"Crude palm oil prices should fall further in line with Malaysian palm futures," another trader said. "Sluggish demand is also adding pressure to prices."

Buyers from China and India, the world's biggest vegetable oil importers, cancelled or renegotiated around 800,000 tonnes of palm oil deals in August, anticipating further price falls.

Thai crude palm oil exports are likely to fall more than 50 percent from levels of around 20,000 tonnes per month seen in the middle of this year, traders said, adding that refiners were buying irregularly, expecting prices to drop.

Domestic crude palm oil was at 22 baht ($0.64) per kg on Tuesday, down from 34 baht per kg in January, traders said.

Thailand, the world's number three palm oil producer after Malaysia and Indonesia, expects to produce 1.3 million tonnes of crude oil this year. Around 900,000 tonnes will go to refineries to produce cooking oil and the rest to biofuel factories, according to Commerce Ministry estimates.

INTERVENTION
Thai palm fruit prices have fallen in line with crude palm oil and farmers have appealed to the government to intervene.

Domestic palm fruit was quoted at 3.80 baht per kg, down from 5.80 baht in January, traders said.

"Farmers are asking the government to intervene in the market by setting floor prices to prevent prices from falling much further, but that would distort the market," one trader said.

Commerce Ministry officials are due to meet industry representatives this week to discuss measures to support farmers, an official said.

Palm oil exports from Malaysia, the world's biggest exporter, fell 8.5 percent to 616,138 tonnes in Sept. 1 to 15 from 673,264 tonnes in Aug. 1 to 15, cargo surveyor Intertek Testing Services said on Monday.

U.S. crude oil tumbled more than 4 percent to a seven-month low on Tuesday, in free fall for a second day as the collapse of Lehman Brothers added to concern about demand and made investors ditch oil for safe-haven assets.