Saturday March 5, 2005 - Palm oil exports from Malaysia may rise as muchas 6.7% this year because a drop in prices has made the edible oil moreattractive to buyers, Oil World said.

Malaysia’s palm oil exports may rise to as much as 13.5 million metrictons this year, from 12.6 million tons in 2004, Thomas Mielke, director ofthe research company, said at the Annual Palm and Lauric Oils Conferencein Kuala Lumpur yesterday.

"We’re going to see big exports because of world demand and low prices,"Mielke said. Hamburg-based Oil World’s estimates are closely watched bytraders of edible oils.

Plantations companies in Malaysia and Indonesia, the world’s top palm-oilproducers, expanded cultivation between 2001 and 2003 to take advantage ofhigher prices.

Prices have dropped about 30% in the past year because the scale ofexpansion raised concern about excess supply.

Thomas Mielke

A record US harvest of soybeans, used to make a rival oil, also helpedpush down palm oil prices.

Palm oil futures prices in Malaysia will probably trade between RM1,400and RM1,550 this year as concern about the additional output eases, Mielkesaid.

Malaysian palm oil production may rise about 5% to 14.7 million tons in2005, Mielke said. Production increased by 4.7% in 2004, according topreliminary figures from the Malaysian Palm Oil Board.

Lower rainfall in Sabah and parts of the peninsula may limit yields,Mielke said. In 2004, Sabah had about 80% of the rainfall it normallyreceives, raising the possibility of an El Nino developing, he tolddelegates in his presentation.

A drought in Brazil, the world’s second-largest supplier of soybeans, mayreduce excess supply following a record harvest in the US, supportingglobal prices of edible oils, Mielke said.

Oil World has cut its estimate for Brazil’s soybean crop to 58 millionmetric tons this year, compared with a January estimate of 63.4 millionmetric tons, he said.

Vegetable oils such as soybean, rape and palm, will also benefit fromhigher crude oil prices, which are fueling demand for alternative fuels.- Bloomberg