11/1/07 (NSTP)   -  THE value of Malaysia's palm oil exports reached a record RM31.81 billion last year, helped by factors including the high prices enjoyed by crude palm oil (CPO) in the second half.

CPO fetched prices ranging from RM1,800 to RM1,900 a tonne in the last six months of 2006.

"It's heartening to see palm oil exports set a new record and jump by 5 per cent from the previous record achieved in 2004," Malaysian Palm Oil Board (MPOB) director-general Datuk Dr Mohd Basri Wahid told Business Times.

He attributed the buoyant CPO prices to robust global demand from the food, oleochemical and biodiesel industries.

"New contribution from biodiesel exports are reflected in the second half of 2006. From August to December, monthly exports were ranging from RM2.9 billion to RM3.1 billion," he said.

China remained the top buyer of Malaysia's palm oil products last year, purchasing 3.58 million tonnes. The Netherlands was second, with 1.67 million tonnes.

"China has been buying more and more of our palm oil every year, but in 2006 it was a very good 20 per cent growth compared to 2005's 6 per cent and 2004's 11 per cent," Basri said.

Pakistan was the third biggest buyer, consuming 957,352 tonnes, while the US bought 683,650 tonnes.

"Buyers from the US have also developed an appetite for Malaysia's palm oil. In 2005, demand from the US rose 65 per cent because of the US Government's mandatory labelling of transfat content on packaged food by January 1 2006. Food manufacturers in the US are using palm oil to replace harmful hydrogenated oils," Basri said.

He added that he would not be surprised if the US should replace Pakistan as the third biggest buyer of Malaysia's oil palm products one day.

He said the Americans are using more soyabean oil for fuel and that creates a vacuum for palm oil to be used in food manufacturing.

However, there was some earnings erosion last year as the stronger ringgit versus the US dollar reduced export revenue from palm oil, which is traded in the US currency.

On the floods that have hit the southern region of Peninsular Malaysia since December, Basri said the harvesting of oil palm fruit had been affected.

As at December 31 last year, total palm oil stocks dropped 10 per cent to 1.51 million tonnes from 1.68 million tonnes recorded at the end of November.

Yesterday, the benchmark third-month March contract on the Bursa Malaysia Derivatives exchange dipped by RM11 to RM1,879 a tonne after trading between RM1,856 and RM1,890.