Friday February 13, 2004 - THE spot price of crude palm oil (CPO), whichtraded above RM1,900 per tonne yesterday, is expected to hit the magicfigure'' of RM2,000 very soon, going by the commodity's continued bullishperformance.

The strong CPO price run-up is mainly supported by the rally in soyacomplex prices on the Chicago Board of Trade, which have hit a 5-1/2-yearhigh, and the US$160 per tonne discount at which CPO is currently tradingagainst soya bean on the exchange.

Other factors fuelling market sentiment include the seasonal 20% declinein Malaysia's palm oil production to 800,000 tonnes last month versusDecember 2003.

Furthermore, demand has been strong, with India one of the biggest buyersof Malaysia's palm oil registering a 91% month-on-month increase inimports in January (up 33% year-on-year) and there is talk that thecountry is considering cutting further its tariff on refined, bleached anddeodorised palm oil.

An analyst with MIDF Sisma Securities One said that it would be safe tosay the CPO price would hit the magic figure'' of RM2,000 per tonne withinthe first quarter this year, but that it would be difficult for the priceto be sustained above that level in the second and third quarters.

I believe the RM2,000 level will somewhat mark the tail-end of thebullishness of the CPO price in the past three years, another analystsaid.

The determining factor will be the weather in the major soya-beanproducing countries of Brazil and Argentina, which are expected to produce96,500 tonnes of the commodity or 48% of the world's output this year.