KUALA LUMPUR (March 18 2003) - Edible oil imports by India, the world'sbiggest consumer of the commodity, are likely to fall 10 percent to450,000 tonnes in April after purchasing enough palm oil and soyaoil inMarch, traders said on Monday.

The slowdown in India's imports and the threat of an imminent war in Iraqwould pressure palm oil futures.

"Market outlook seems bearish. I am sure it will break the 1,450 ringgitkey support. Also, I think exports will slow down in the second half ofthis month," said a trader.

At the close on Monday, the benchmark June contract was 19 ringgit lowerat 1,480 ringgit ($389.47).

India had bought more than its usual requirements in March after tradersrestricted imports in anticipation of a cut in edible oil imports duringthe 2003-04 budget unveiled in late February.

But India left the duties unchanged, spurring traders to buy more forMarch shipment, 350,000 tonnes of palm oil from main producers Malaysiaand Indonesia, and 150,000 tonnes of South American soyaoil.

India levies a basic import duty of 85 percent on refined, bleached anddeodorised (RBD) palm olein, 65 percent on crude palm oil and 45 percenton soya oil.

India's edible oil stocks normally reach 450,000 tonnes a month and up to250,000 tonnes of palm oil are bought every month.

"India is a bit overbought. Imports will slow down in April and palm oilwill be very much affected," said one dealer.

Edible oil stocks in India currently stand at 190,000 tonnes, down from290,000 at end-January.

Palm oil futures touched a high of 1,695 ringgit ($446.05) a tonne onDecember 30 but had since retreated because of declines in exports duringJanuary and February.

Soyaoil, palm oil's direct competitor, will likely see its premium to palmoil stabilise at $40- $50 a tonne from the current $101, a trader said.

"We will see more soyaoil shipments from South America in April," he said.

Soyaoil's premium has narrowed from $135 last November due to steady flowof supplies from Brazil and Argentina.

In the freight market, brokers were also cautious because of a fear of warin Iraq, but they said the current increase in freight rates was mainlydue to a rise in demand for shipping chemical products.

"Demand for palm oil is clouded by this stupid war thing.

The US will go ahead with the war, with or without UN backing," said onebroker.

"I don't know how the war will affect the market, but consumers areconsumers. I mean, they will have to eat whether there is war or not," headded.

Traders said Malaysia's palm oil exports were unlikely to meet marketexpectations of around one million tonnes in March because India wasalready overbought.

On Monday, cargo surveyor Societe Generale de Surveillance Malaysian palmoil exports for March 1-15 stood at 514,637 tonnes, up from 339,136 tonnesfor February 1-15.- Reuters