KUALA LUMPUR (March 13 2003) : India has booked 350,000 tonnes of palm oilfor March, more than its normal monthly requirement, raising fear it mightslow down in coming months and shift to rival soyaoil, freight brokerssaid on Wednesday.

India, the world's largest edible oil consumer, purchases palm oil frommain producers Malaysia and Indonesia, taking between 250,000 and 270,000tonnes a month.

It also buys soyaoil, from Argentina and Brazil.

"It's a staggering number. People just don't have the guts to say thatIndia is overbought," said one freight broker.

"About 63 percent of the oil comes from Indonesia," said the broker,referring to the world's second-largest producer that has been anaggressive seller in the past few months.

Brokers said more soyaoil from South America would enter the edible oilsmarket in late March, giving main consumers such as India and China extrachoice beyond the usually cheaper palm oil.

Soyaoil's premium to palm oil currently stands at $105 a tonne comparedwith $135 last November due to a steady flow of supplies from Brazil andArgentina.

Brokers said India's palm oil intake was high in March because the countryhad refrained from buying much oil in previous months, while waiting for apossible cut in edible oil imports duties.

But in its budget announced on February 28, the government left the dutiesunchanged.

Brokers said even though Malaysian palm oil futures had retreated from ahigh of 1,695 ringgit on December 30, Indian buyers were content to waitfor prices to slid further.

Some Malaysian palm oil traders had blamed poor exports in January andFebruary for the declines in the futures market.

By midday on Wednesday, the benchmark May futures rose 14 ringgit at 1,498ringgit ($394.21) a tonne after trading as high as 1,500 ringgit due toovernight rises in Chicago soya market.

"I've talked to various people in India or China and I've got animpression that they think prices will come down further.

It may fall to 1,450 ringgit," said one freight broker.

But some palm oil traders said India desperately needed more edible oilsbecause local stocks had fallen to 150,000 tonnes from a normal400,000-450,000 tonnes a month.

Falling futures prices should also generate demand, they said.

"People should realise the futures market is oversold. Stocks in India arevery low and it's clear they need oil. But the market needs to stabilise,"said one trader.

India imports about 4.5 million tonnes of edible oils every year, almosthalf of what it consumes.

Palm oil accounts for nearly three million tonnes.

India was Malaysia's second-largest palm oil buyer after China in 2002,taking 1.68 million tonnes, down from 2.03 million tonnes in 2001.

China purchased 1.84 million tonnes of Malaysian palm oil in 2002, up from1.28 million tonnes the previous year.