July 3 2004 - RUSSIA has started to enter the palm oil market in aslightly bigger way than usual following the activation of an exportcredit facility for the commodity.

Traders said Russia has been in the market for four weeks, making smallpurchases of between 5,000 and 10,000 tonnes of crude palm oil (CPO).

Although small, the amount is slightly bigger than before. Hopefully, thevolume will grow in the next few weeks. However, the market has discountedthe Russian factor due to the small volume, a trader told Business Timesyesterday.

In comparison, China and India, which are Malaysia’s top two buyersrespectively, make purchases averaging 100,000 tonnes a month and willusually trigger bullish sentiments when the amount is higher than usual.

Russia has been buying about 100,000 tonnes of CPO for the past few years.

Malaysian Palm Oil Promotion Council regional market committee (Europe)chairman Sabri Ahmad said last month that Russia and Malaysia are ready tostart the overdue Palm Oil Credit Payment Arrangement (Pocpa).

Sabri, who is also Golden Hope Plantations group chief executive, saidshipments are expected to begin at an aggressive pace before Russian portsbecome inaccessible in winter and supplied by a Malaysian consortium madeup of four companies.

Traders said about 200,000 tonnes of palm oil may be delivered to Russiaover the next two years on a credit basis.

The Government introduced Popca in 1992 whereby credit was offered tolong-term Russian buyers of Malaysia’s palm oil.

The countries, especially those facing foreign exchange shortage, arenormally granted a two-year credit line.

The bilateral payment arrangement scheme promotes counter-trade involvingthe exchange of palm oil for a host of products while expanding the globalmarket for the Malaysian commodity.

Meanwhile, CPO futures at Bursa Malaysia Derivatives Bhd closed loweryesterday on profit-taking ahead of the weekend, a dealer said.

He said that there was not much excitement in the market due to the lackof fundamentals to generate interest.

At the market close, spot month for July 2004 fell RM10 to settle atRM1,529 a tonne. The benchmark third month delivery (September 2004) lostRM15 to settle at RM1,514 while October delivery eased RM9 to RM1,508.

Yesterday’s turnover fell to 4,216 lots from 4,660 lots on Thursday whileopen interest rose to 23,407 contracts from 23,284 contracts previously.