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BusinessWorld (Philippines) 10/03/2001 - The Department of Agriculture(DA) yesterday said two Malaysian firms have committed to invest P975million to develop the country's palm oil industry.In a report submitted to the Agriculture department, Agumil Philippines,Inc. and Agusan Plantation, Inc. said a total of 13,000 hectares of landwill be developed in Mindanao for palm oil plantation from 2002 to 2004.The Philippine Coconut Authority (PCA) estimates that it will cost aboutP75,000 to develop one hectare of land into palm oil plantation.In Agusan del Sur, about 2,600 hectares will be converted to palm oilplantation. At present, both companies occupy about 3,700 hectares of landas palm oil plantation. In Cotabato, about 3,600 hectares of land will bedeveloped while another 7,000 hectares of land in Bohol province will beconverted into palm oil plantation.The Mindanao region is eyed as the most suitable area to grow palm oilbecause of its moderate temperature as well as the evenly distributedrainfall.Rolando T. Dy, executive director for Food and Agribusiness of theUniversity of Asia and the Pacific, said in a statement that thegovernment should already start the full development of this industrybecause of the expected increase in the demand in the next couple ofyears."By 2010, domestic palm oil demand would require some 70,000 to 100,000hectares. Given the gestation and senile trees, plantings must start soon.Given the slow pace of doing things here, the country will start to importpalm oil in 2010," he said.He also said the development of the palm oil industry will producecompetition with the coconut industry. But he pointed out that the exportmarket will readily absorb the available supply of coconut oil if domesticusers will prefer palm oil because of economic costs.Palm oil is the world's second source of vegetable fats after soybeans.Palm oil is usually use in the manufacturing of canned fish and meatproducts. It is also used as cooking oil and margarine.Last year, the country imported about 67,000 tons of palm oil. The localproduction was only recorded at around 46,000 tons against a total demandof 113,200 tons.By 2005, the consumption is expected to increase to 180,000 tons but basedon the existing production area allocated to palm oil the country isexpected to harvest only about 53,000 tons. In 2010, the country is seento import some 189,000 tons to meet the demand of about 290,000 tons.

KOTA KINABALU, Sept 27 (Bernama) -- Sabah chief minister Datuk Chong KahKiat said the potential for downstream processing of palm oil in Sabah istremendous as the state accounts for only two percent of such activity inthe country's palm oil industry.Downstream activities in Sabah are confined to only basic refining andfrationisation, he said when launching the Malaysian Palm OilAssociation's (MPOA) Sabah branch in Sandakan todayChong also said there are no tertiary processing activities in the statecompared with the level of activities in Peninsula Malaysia in both theedible and non-edible areas."And the production of consumer products in Sabah is confined only tocooking oil," he said.Chong said there are also opportunities in producing various grades ofpalm-based margarine, shortening for butter, confectionery fats, creamers,emulsifiers, pharmaceuticals and vitamin E & B.According to estimates by IOI Edible Oil Sdn Bhd, Sabah's plantationsector is capable of producing some 10 million tonnes of biomass per yearbased on the state's current planted hectarage of one million hectares.Chong also said Sabah has overtaken Johor in terms of the largest plantedarea with oil palms at 29.64 percent of the country's total planted areaof 3.38 million hectares.Sabah's production of 3.11 million tonnes of palm oil last year accountedfor 28.69 percent of the nation's total output of 10.84 million tonnes.Chong, who is also Sabah's tourism, environment, science and technologyminister, also reminded the state's plantation industry to give toppriority to the protection and conservation of the environment in theirpursuit for development.

03 October 2001 (Business Times)

02 October 2001 (Business Times) - PRIMARY Industries Ministry isattempting to squeeze palm oil into 20 per cent of the payment in Malaysia’s proposed purchase of between 10 and 16 Russian fighter jets.Its minister Datuk Seri Dr Lim Keng Yaik said he will make recommendationsto the Cabinet, Defence Ministry and Finance Ministry that at least 20 percent of the total value of the purchase be paid in the commodity.“I hope that part of the total contract estimated at between US$350million (US$1 = RM3.80) and US$560 million to be paid partly in palm oil,”he told Business Times in Kuala Lumpur last week.It is understood that the Government is eyeing the Sukhoi Su-30MKmulti-role long-range twin-seater fighter bomber which is priced at anestimated US$35 million a piece.The Royal Malaysian Air Force is currently evaluating two multi-rolecombat aircraft, Boeing Military and Missile Systems’ F/A-18E/F strikefighters dubbed the “Super Hornets” and the Sukhoi Su-30.The Sukhoi is expected to participate at the October 6-14 LangkawiInternational Maritime and Aerospace Exhibition.The plan was first mooted in 1997 but had to be shelved due to the Asianregional currency crisis and talks of the deal being revived resurfacedlast month.This is the second arms deal which is believed to cost at least US$35million each.Malaysia had bought 18 MiG-29 Fulcrum fighter jets in 1994 for a total ofUS$600 billion (then RM1.56 billion) under an offset programme which took24 months to negotiate.It involved a cash payment of US$450 million of which, US$95 million wasin palm oil and palm oil products and supply of other Malaysian productsworth US$55 million.The palm oil was to be delivered to Russia over a period of five years,which incidentally ends this year.Malaysia, as part of its efforts to promote the commodity, has enteredinto several billion-ringgit counter trade arrangements with severalcountries notably India, China and the US which include palm oil fordouble-tracking works and locomotives.It is also understood that negotiations were to have been carried out inRussia last month during an agreement to extend Russia a US$50 millioncredit to buy about 200,000 tonnes of Malaysian palm oil.The two countries were to have formalised the pact during a visit by PrimeMinister Datuk Seri Dr Mahathir Mohamad to Russia but the trip wascancelled following the terrorist attacks in the US on September 11.“We hope to conclude the counter-trade as soon as possible and Malaysiahas already invited Russia to come which may take place some time nextyear,” Dr Lim said.Malaysia was exporting 350,000 tonnes to 400,000 tonnes of palm oil a yearto the former Soviet Union before its collapse, of which 80 per cent wasconsumed by Russia. Since 1993, Russia has been buying 40,000 tonnes to60,000 tonnes a year.

03 October 2001 (Business Times) - PALM oil bulkers may face a criticalshortage in storage capacity if exports remain slow in the coming monthswhile production stays high, industry sources say.Malaysian crude palm oil (CPO) exports for September is estimated to havedropped by between 25 per cent and 30 per cent to about 620,000 tonnesfrom 879,717 tonnes in August.The Malaysian Palm Oil Board (MPOB) is expected to announce the officialexport, production and stockpile figures for the month on October 12.CPO stock stood at 878,316 tonnes in August and analysts and traders saidit may rise a whopping 48 per cent to over 1.3 million tonnes.The fall in exports has been attributed mainly to disruptions indeliveries to Pakistan caused by shipping lines’ reluctance to ply theroute, as well as higher freight rates and a newly imposed war-risksurcharge.Freight rates from Malaysia to Pakistan were raised US$1 to between US$23(US$1 = RM3.80) and US$24 per tonne last week.Shipowners are also believed to be imposing a war-risk insurance surchargeof up to US$10 per tonne.“CPO stock has been steadily rising. If the export situation does notimprove soon, bearing in mind of the continued high production levels, wewill be faced with a critical stock level,” said a CPO bulker executivewho spoke on condition of anonymity.Another industry executive was however more optimistic, saying thatprovided there is no all-out war in West Asia trade should stabilise quitesoon.“There has been some negative impact on the palm oil sector, but mainlybecause some shipments to Pakistan have been put on hold.“Pakistan is not self-sufficient in edible oil, they will still have toimport CPO from countries like Malaysia,” he said.In fact, traders said Pakistan have made fresh inquiries to buy palm oilfrom Malaysia and Indonesia, despite the higher freight cost, on concernsover possible military attacks by US against neighbouring Afghanistan.Demand for palm oil is also expected to receive a boost from Indianconsumers ahead of Deepavali in November.India is the largest importer of Malaysian CPO, buying some 2.03 milliontonnes last year and 2.38 million tonnes in 1999.Consensus forecast by traders and analysts put production of CPO at anall-time high of over 11 million tonnes for 2001, compared to a projected10.8 million tonnes earlier.The clouded outlook for the palm oil market is also reflected in thenarrower margins faced by trading companies.Manager Zaharin Hamzah told Business Times that his company, for one, hasstopped trading in CPO futures temporarily on account of the weak pricesand fluctuating demand.“We are now only trading spot.”On the Malaysian Derivatives Exchange yesterday, palm oil spot October andDecember futures eased RM28 each to RM862 and RM872, respectively.Traders said the fall was also attributable to possible dumping byIndonesian suppliers amid weakness in the rupiah.On the Kuala Lumpur Stock Exchange (KLSE), the plantation index eased 4.31points to 1,419.78. KL-Kepong Bhd lost 10 sen to RM5.10 and Chin TeckPlantation Bhd 12 sen to RM4.06.This was despite better overall trading sentiments which saw the benchmarkKLSE Composite Index closing 2.74 points higher at 616.74.Pakistan has consistently bought about one million tonnes or 9 per cent ofMalaysia’s palm oil exports annually.Malaysia is the world’s largest producer of the commodity. The ninemillion tonnes it exported last year raked in about US$4.2 billion

01 October 2001 (Business Times) - LOCAL plantation companies are expectedto show improved third quarter earnings this year, mainly due to thedramatic improvement in crude palm oil (CPO) prices during the period.CPO prices breached RM1,000 per tonne on July 12, after languishing atbetween RM600 and RM700 a tonne for 13 months.A Business Times poll on four research houses which monitor plantationstocks revealed that the market expects plantation companies to show animprovement in their third quarter results.“Companies such as Golden Hope Plantations Bhd, Kuala Lumpur Kepong Bhdand IOI Corp Bhd would have capitalised on the good prices by selling asfar forward as they can,” one plantation analyst pointed out.Despite these cheerful prognostications, the Kuala Lumpur Stock Exchange(KLSE) Plantation Index showed a smaller improvement during the timecompared to the KLSE Composite Index (KLCI) and the KLSE Emas Index.From June 28 to September 28 this year, the Plantation Index appreciatedby only 4.21 per cent compared to KLCI’s 4.84 per cent and the Emas Index’s 3.34 per cent.The Plantation Index last Friday closed 19.61 points up at 1427.73 whilethe KLCI increased 2.70 points to 615.34 points and the Emas Index ended1.03 points higher at 145.84.“Top performers would most probably be IOI Corp Bhd, Golden HopePlantations Bhd and Kuala Lumpur Kepong Bhd which account for a combinedweightage of 46 per cent on the Plantation Index,” said one analyst.Within the last three months, IOI was the best performing counter of the39 listed on the Plantation Index, with a price increase of some 28.37 percent, followed by PPB Oils Palms Bhd at 27.59 per cent, Kulim Malaysia at18.03 per cent and Mentakab Rubber at 15.38 per cent.“Most of these companies with the exception of Kumpulan Guthrie would havesold as far forward as possible,” he said.He added that nobody knows what kind of financial position Guthrie, whichis currently acquiring land in Indonesia, is in. The third largestplantation in the country, Guthrie suffered losses of RM24.5 million forthe first half of its financial year ending December 31 2001 compared withRM15.9 million of the same period previously due to lower palm oil prices.IOI Corp, currently in battle with Sime Darby Bhd for control over palmolein manufacturer Palmco Holdings Bhd, also saw profits for the financialyear ended June 2001 fall by 3.93 per cent to RM291.13 million from 303.03million previously.Cash-rich Golden Hope made a net profit of RM57.829 million for the finalquarter ended June 30 this year, from RM325.93 million in the previousfinancial year, translating into an earnings per share (EPS) of 5.46 sen.The consensus estimates for the group on the Multex Global Estimates wasRM86 million net profit with an EPS of 7.7 sen but despite falling shortof expectations this time round, hopes are high for its 2002 earnings witha net profit forecast of RM173.79 million and an EPS of 17.10 sen.For 2003, Golden Hope is expected to perform even better with a forecastnet profit of RM212.82 million and an EPS of 20.97 sen.The fly in the ointment is of course the terrorist attacks in the US,which has created a lot of uncertainty in the market, especially withregards to palm oil prices.One analyst remarked: “By right, events in the US should have no bearingon palm oil prices because edible oil is a necessity and not a luxury itemsuch as gold or crude oil.“People still need oil to cook, and the world’s population is still therewhich translates into demand,” said the analyst.He further said commodities are traded in US dollars, and since theringgit is pegged to it, any impact will be cushioned.“However, there is still a possibility that the world would fall into arecession which will result in weaker demand.“And concerns of palm oil shipments to Pakistan being disrupted maydepress prices further,” he said.Golden Hope ended 2 sen higher at RM3.12 last Friday with KL Kepong up 20sen to RM5.20. IOI remained unchanged at RM3.42, United Plantations gained2 sen at RM3.04, Austral gained 2 sen to close at RM2.50 and PPB Oil Palmsgained 6 sen at RM4.26.

04 October 2001 (Business Times) - MALAYSIA International Shipping Corpand Felda-owned Suterajaya Shipping Sdn Bhd, the two main local linesplying to Pakistan, are said to have experienced no disruptions in sendinggoods to the republic.Representatives of the two companies were at a special meeting arranged bythe Primary Industry Ministry with palm oil industry players in KualaLumpur yesterday.A source close to the meeting said these representatives informed thegathering that the issue of export disruptions might have been blown outof proportion by self-interested and irresponsible parties.“It is business as usual. The disruption is mainly the work ofinternational insurance companies that have declared a war zone in WestAsia and imposed war-risk premiums on September 12, right after the US wasattacked by terrorists.“This declaration has brought about confusion to some shippers which haveto take into consideration of this war-risk premium,” the source said.Some 90 per cent of Malaysia’s shipowners are insured by internationalinsurance companies while the rest are by Malaysian insurance companies.It is understood a war zone is defined as 24 degrees north of the equator.“However, Malaysia’s shippers acknowledged that an additional war-riskpremium of between 0.1 per cent and 0.4 per cent, depending on existingpolicies, must take effect.“But this premium will not be borne by the shippers but by both thebuyers, sellers and eventually the consumers of the commodity,” the sourcesaid.The source said the ports which will come under the insurance cover arethe Pakistani ports of Kassim and Karachi and the north Indian port ofKandala.“The premium is applicable 48 hours before ships enter the war zone,” saidthe source.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik had called onindustry players yesterday to discuss and draw a series of measures toaddress shipment disruptions since the terrorist attacks in the US onSeptember 11.Others which participated in the meeting included the Malaysian Palm OilBoard, The Malaysian Palm Oil Promotion Council, the Malaysian Palm OilAssociation, Palm Oil Refiners Association and the Pakistan HighCommission.Dr Lim had said last week that Malaysia’s palm oil shipments to Pakistanwere disrupted due to shippers’ refusal to take unnecessary risks intransporting the commodity due to a possible US retaliation againstneighbouring Afghanistan.He had said many shippers are reluctant to go to the area until thewar-risk premium issue is sorted out prompting him to call the meeting up.An average of 100,000 tonnes of palm oil is shipped to Pakistan each monthby about 10 ships. Pakistan is Malaysia’s fourth largest buyer at aroundone million tonnes for the past several years.Malaysia is the world’s largest producer of palm oil with India as itsbiggest buyer followed by China and the European Union.The Indian Ocean and the Arabic Sea are the only accessible route by seato Pakistan, other parts of West Asia and West India.Around 90 per cent of Malaysia’s trade is via sea, and US forces havebegun to build up a presence near the oceans after the attacks on New Yorkand Washington.The US has accused Afghanistan’s ruling Taliban of harbouring the primesuspect, Saudi-born Osama bin Laden, of the terrorist attacks in the US.All shipments leaving Malaysia’s main ports for West Asia, the Red Sea andPakistan will pay a war-risk premium from Monday.The surcharge for ships leaving Port Klang to West Asia and Pakistan isUS$150 (US$1 = RM3.80) for a 20-foot container and US$300 for a 40-footcontainer.The war-risk surcharge for shipments to the Red Sea is US$100 and US$200respectively.There was no surcharge to these areas before the Septemeber 11 terroristattacks.However, imposing a war-risk premium is not new because insurancecompanies are known to have imposed such premiums before to areas such asSri Lanka, Suez Canal and Iraq.

Investment advisor Surf88.com examines the prospects for palm oilCRUDE palm oil price below RM1,000 per tonne. The price of crude palm oil(CPO) has fallen below RM1,000 per tonne since mid-September. Beforeinvestors rush to cut exposure to plantation stocks, let us take a look atthe latest global demand and supply of edible oils, and the implicationson CPO.The Indian factor: The turn in sentiment was triggered by sluggish demandfrom India on expectations of a good local harvest, and alsodisappointment that India has maintained its high palm oil import dutyafter a seemingly positive meeting between the Malaysian and Indian PrimeMinisters. The recent depreciation of the Indian rupee against the USdollar was another dampener. We understand that Indian demand has remainedsluggish in the past two weeks or so, with no firm major orders for thecoming weeks.Meanwhile, the US catastrophe ignited concern that Pakistan buyers,another major im-porter of palm oil, may not be able to raise letter ofcredits (LCs) to fund their purchases.What could change? One possible factor that could reverse the trend wouldbe a deterioration in the current soyabean and groundnut crop, which wouldnecessitate India to import more. We note recent reports citing lessfa-vourable weather conditions in India, which albeit preliminary, is atrend which should be monitored. We would also keenly watch the rupee andthe Indian government’s stance on the currency. As for Pakistan, thesituation is in a flux given the potential US retaliation and as such palmoil import is unlikely to be top on the agenda in the short term.Nonetheless, in-dications of fresh demand from Pakistan last Friday didperk up a sluggish market, with CPO futures spiking up to RM992 per tonnefor the month of October.Short term price subdued: Short-term fluctuations notwithstanding, the CPOmarket is still in a situation where medium-term supply is shrinking butshort-term demand sluggish. It is hard to see a sustained breakout underthe circumstances. Nonetheless, we see no reason to sell now as the weakdemand phase looks temporary while the medium-term demand picture shouldimprove to support a better price outlook, possibly in the 4th quarter.Soyabean crop estimate reduced: Recall two months ago when we firsthighlighted that ac-tual planting of soyabean in the US was about 2% belowexpectations. Based on the latest crop development, production will alsofall short of initial expectations. The latest production estimate hasbeen cut back by 1.2% to show only a marginal increase from a year ago.There may still be room for further downward revision in view ofdrier-than-expected weather in the Mid-West.Sunflower seed production not looking good: Other than soyabean oil,production of sunflower seed is also below expectations with likelihood ofan eight-year low. Sunflower oil is a major oil, ranking number four inthe world with a 10% global market share.Where does this leave us? Global stocks of edible oil are expected todecline for the first time in three years, while the stocks/consumptionratio is forecast to fall to a record low. Palm oil stock in Malaysia hastumbled from an all-time high of 1.5 million tonnes in November last yearto under 0.9 million tonnes in August this year. Some other local positivefactors we have discussed before include the high possibility of eventighter palm oil supply next year given the good response to thegovernment’s replanting programme which is ex-pected to reduce plantedarea by 5%.Shorter term, CPO prices may remain subdued due to the seasonal productionupturn and the uncertainties over export demand, but we believe theseshould clear up by November for CPO price to resume its strength. Ourex-pectation of CPO price to return to RM1,000 per tonne by year-end andRM1,200 next year.Plantation stocks are inherently resilient: Notwithstanding the CPO priceoutlook, plantation stocks are inherently resilient due to theirabove-average cash flows, balance sheet and generally good management.Quite a few also offer above-average dividend yields. As their resiliencehelps in the immediate trying times, there is the recovery potentialharnes-sed by improved CPO price outlook nearer year-end.Against this background, we would certainly hold on to our plantationspicks at this point in time. In fact, we would look to buy IOI Corp(RM3.38), PPB Oil Palms (RM1.85), United Plantations (RM3) and Chin Teck(RM3.90) should the KLSE fall further under the influence of Wall Street.In terms of technical price targets, we would look to accumulate IOI Corpat below RM3.20, PPB Oil Palms at below RM1.70, United Plantations atbelow RM3, and Chin Teck at below RM3.80. Meanwhile, we would hold KLK, Hi& Lo and Unico-Desa.

Friday, September 28, 2001 - PALM oil exports to Pakistan and West Asiancountries may be reduced if the US were to attack Af-ghanistan, primaryindustries minister Datuk Seri Dr Lim Keng Yaik said.The reduction would be due to disruption in shipping lanes, and not due toa drop in demand or lack of insurance cover, he told a press conference athis office in Kuala Lumpur yesterday.Lim said Pakistan and Egypt were among the biggest purchasers of Malaysianpalm oil, accounting for 20% to 25% of Malaysia's exports or 1.7 milliontonnes out of some 9 million tonnes produced in the country.However, he said, palm oil exports could still go to Pakistan via India.Lim said the US was not a major purchaser of Malaysian palm oil and theother major importers were India and China.He said Malaysian exports of palm oil to China could touch one milliontonnes annually following that country’s accession to the World TradeOrganisation. China imports 1.5 million tonnes of palm oil each year. –Bernama

KARACHI (Business Recorder ) 09/27/2001 - The Trading Corporation ofPakistan (TCP) on Wednesday sold 8,650 metric tonnes of imported soybeanoil for more than Rs 328.76 million through an auction. Chairman TCP, SyedMasood Alam Rizvi, said that a large number of bidders participated in theauction held at the corporation's office located in Lahore.In all, 42 ghee and cooking oil units and commercial importers registeredwith TCP participated in the fourth auction.The TCP sold soybean oil at the rates ranging between Rs 38.002 to Rs38,011 per tonne.He said the corporation sold seven lots of 30 tonnes, 23 lots of 100tonnes, four lots of 250 tonnes and 10 lots of 300 tonnes.It may be noted that the TCP had floated a tender for the auction of10,000 tonnes of soybean oil on Sept 21.The United States government will supply 163,000 tonnes of soybean and75,000 tonnes of soybean oil worth $80 million to Pakistan under the aid.The corporation had earlier sold 4,250 tonnes and 6,700 tonnes at Karachiand 4,000 tonnes at Lahore in three auctions.The auction was held in pursuance of TCP's auction notice dated September20, 2001, the 4th auction for a quantity of 10,000 tonnes imported soybeanoil of US origin under 416(b) programme in TCP's Regional Office on 1stFloor, LDA Plaza, Egerton Road, Lahore.The auction commenced at 1100 hours on Wednesday, September 26, 2001.About 42 ghee/cooking oil units and commercial importers registered withTCP participated in the auction.The total cost of 8,650 tonnes of soybean oil sold comes to Rs328,760,400.

MUMBAI, Sept. 23 (Business Line) - FOLLOWING imposition of tariff valuesand advent of domestic oilseed harvest season, there has been asignificant slowdown in Indian purchases of various palm oils. After ashort- lived rally in July, the overseas market is forced to seek lowerlevels over the last four weeks as Indian demand declined.If any proof of import slowdown was required, it is here. In the first 20days of the current month, a mere 25,000 tonnes were shipped out fromMalaysia to India, according to shipment data compiled by internationalsurveyors SGS (Malaysia) Sdn Bhd. This comprised about 13,400 tonnes ofrefined palm oil, 5,200 tonnes of refined palmolein and 6,500 tonnes ofcrude palm oil.During August, a record volume of 6.5 lakh tonnes arrived in the countryand in July 5.2 lakh tonnes. For the current month, arrivals are projectedat about 3.5 lakh tonnes, mainly soft oils (degummed soyabean oil) andcrude palm oil. October imports may be even lower. Aggregate importsduring oil year November 2000-October 2001 will be about 48 lakh tonnes,slightly up from 45 lakh tonnes of last year.Will tariff values be revised down? With the slide in palm oil prices inMalaysia, there is renewed expectation of a downward revision in tariffvalues for palm oils here. Large arrivals in July and August kept thedomestic market well fed until recently; but pipeline stocks have startedto dry up as further imports are dwindling.This can lead to a sudden price spurt, especially at the time of impendingfestivals. A weakening rupee too is bullish for the edible oil market.Poor import commitment for September and October because of acutedisparity between local and international prices may lead to tightening ofsupplies and price spikes here. At the current overseas market prices (butassessed at much higher tariff value), palm oil imports have become anunviable business.Also, the upcoming US military action has the potential to disruptinternational cargo movement for several days. In anticipation of priceincrease, some importers and stockists have reportedly gone slow on theirsales programme.However, the policy makers will ride on the horns of a dilemma. Reductionin tariff values will push overseas prices up, result in revenue reductionand depress domestic oilseeds and oils prices. With the kharif oilseedharvest ready to commence, any tinkering with the customs duty or tariffvalues will have to be a carefully calibrated exercise.New crop oilseed prices are likely to come under pressure, notwithstandingthe sharp increase in minimum support price announced recently. NationalAgricultural Cooperative Marketing Federation of India (NAFED) has alreadyindicated its intention to step in to support prices by procuring aboutfive lakh tonnes.

ISLAMABAD, 9/27/2001(Financial Times Information Limited) - Pakistan isinching towards sever shortage of palm oil as commodity's supply hasdiscontinued due to danger of looming US attack on Afghanistan. Theimporters of palm oil could neither get their due shipments nor place neworders as none of the shipping companies were ready to sail to Pakistanafter the air crash incidents in New York and Washington.Talking to Business Recorder, President Pakistan Ghee Manufacturers,Shaikh Ikram said: "The country is facing alarming situation as palm oilstocks are shrinking quickly. We have informed the concerned quarters thatif the blockade continued it would result in shooting up of prices."According to market analysts, cooking oil and ghee price may increase from10 percent to 15 percent after two weeks if supply of imported palm oleinand palm oil could not be restored.When contacted an official of the Commerce Ministry said the governmentwas weighing various options for the restoration of palm oil supply fromMalaysia including one, war-risk premium.Price of cooking oil and ghee are already touching an all time high in theopen market due to difference between tanker owners and palm oil importerson fares from Karachi to various cities.Pakistan has palm oil stocks for two weeks and the government wasexpecting some positive development before the situation aggravates, hopesthe official.Sensing the gravity of the situation, the Federation of Pakistan Chambersof Commerce and Industry (FPCCI) had already warned the government thatthe blockade might take a turn for the worse if the supply remainedsuspended for a long time. In particular, it mentioned commodities forwhich Pakistan is dependent on other countries.The FPCCI demanded that the government should formulate a contingency planwith the private sector's involvement to cope with the situationconfronted with the country.In the case of a number of essential items, Pakistan heavily depends onother countries. Palm oil, tea, chemicals, life saving drugs, fertiliserswere included in the list of imported items.