02 November 2001 (Business Times) - MALAYSIA’S crude palm oil (CPO) pricesare expected to stay firm between RM900 and RM1,000 a tonne next week onthe back of strong fundamentals.Analysts said expected overseas demand in the near future, especially fromChina, plus the recent cut in India’s import duty on CPO are all good newsthat should boost the commodity’s market sentiment.They said the upside potential for CPO price, however, is likely to belimited in the near term on anticipation that the palm oil closing stockfor October will increase slightly compared with that of the previousmonth.Despite some disruptions in palm oil shipments to Pakistan and West Asiadue to the war in Afghanistan, market watchers view the delays as atemporary setback as demand from these countries are expected to bounceback once the situation in the region improves.Malaysia’s physical CPO closed RM15 higher yesterday at RM960 per tonnefor November (South) from RM945 per tonne the day before.On the Malaysia Derivatives Exchange (MDEX), the benchmark third monthJanuary CPO futures ended RM16 firmer at RM1,006 a tonne from RM990 atonne previously.The price increases were mainly due to news that India has, on Wednesday,slashed its import duty on CPO by 10 per cent to 65 per cent.“The reduction in India’s import duty on CPO was not expected by many...that was why the market reacted positively to it,” a plantation analystwith a foreign research house told Business Times.However, palm oil traders said the reduction in import duty will benefitIndonesia more than Malaysia as the former exports more of its palm oil incrude form, while Malaysia mainly sells its palm oil abroad in refinedform.India has an 85 per cent levy on refined palm oil to help protect domesticrefiners.Nevertheless, the analyst said the tax cut is a reflection of the IndianGovernment’s commitment of making palm oil more affordable to the country’s consumers.“What is more important is that demand from India is still quite strong,”he said.Following the September 11 attacks, palm oil shipment costs have gone updue to war risk-related costs and the increase has to be borne by endusers.Reducing the import duty on CPO will ultimately result in buyers payingless for the commodity, he said.India was the largest buyer of Malaysia’s palm oil in the first sevenmonths of this year at 1.3 million tonnes during the period or 21 per centof the country’s total shipments.China is the second largest buyer at 695,000 tonnes, with Pakistan thirdat 672,000 tonnes.Another analyst said the tax cut on CPO will make the commodity morecompetitive against other edible oils, particularly soyabean oil.Although the situation in Afghanistan had caused palm oil stocks to go updue to delayed shipments to major buyer Pakistan and other West Asiannations, she was optimistic that the setback is only temporary.“On an overall basis, the demand for palm oil from these countries willhave to come back because palm oil is a needed good,” she said.