10/09/ 2005 (Business Times) -JAKARTA, Indonesia, the world'ssecond-biggest exporter of palm oil, may have record exports of thecommodity next year, helped by "ideal" growing conditions in key regionsand a slump in the local currency, a US Government report said.

Exports of palm oil, which is processed into cooking oil and margarine,and chemicals used in soap, may reach 9.6 million metric tonnes in theyear ending September 2006, the Foreign Agricultural Service in Jakartasaid in a report.

That is 6.7 per cent more than the US Department of Agriculture’s officialforecast, and compares with 9.2 million tonnes in 2004- 2005.

The rupiah fell 5 per cent against the US dollar in the past month asrecord oil prices forced Indonesia to buy more dollars to pay for importedfuel. A weaker rupiah lowers the cost of the country’s dollar-pricedexports.

"The recent weakening of the rupiah could provide an additionalcompetitive edge to Indonesian palm oil on the world market should thecurrency remain at current levels for an extended period of time," ChrisRittgers said in the report, which was dated September 6 and releasedyesterday.

The agricultural service is part of the department.

Indonesia and bigger rival Malaysia are producing more palm oil aftersurging prices between 2001 and 2003 encouraged them to expand palmplantations. Benchmark prices in Kuala Lumpur climbed 43 per cent in 2001and 43 per cent in 2002.

They have declined 7.5 per cent in the past year after a record USsoyabean harvest caused global supplies of cooking oil to swell.

Palm oil for November delivery fell RM4, or 0.3 per cent, to RM1,377 atonne on the Malaysian Derivatives Exchange at 12.28pm local time. -Bloomberg