KL urges cut in palm oil production

KL urges cut in palm oil production

Agence France-Presse, Kuala Lumpur

Palmoil producers in Malaysia, the world's top supplier, were
urged Monday to cut production amid fears rising stocks would
lower prices.

Primary Industries Minister Lim Keng Yaik said the Sept. 11
terror attacks on the United States had worsened the situation.

"It (crude palmoil stock) has gone up to 1.2 million tons
again. If you don't watch it the stock will go up to two million
tons by end of this year," he was quoted as saying by Bernama
news agency.

The U.S. military strikes in Afghanistan had affected
Malaysia's exports to West Asia and Pakistan as many shippers
were reluctant to go to the area unless insurance companies
provided war cover.

Pakistan is Malaysia's fourth largest buyer of palmoil, after
India, China and the European Union. An average of 100,000 tons
of processed palmoil is shipped to Pakistan monthly.

Lim said that to cut stocks, some 2,500 tons would be sent to
the power giant Tenaga Nasional's plant in Prai to be burnt as
fuel.

The government had previously initiated various measures to
reduce crude palmoil stocks in July-August to about 750,000-
800,000 tons.

Lim urged producers to cut production to reduce rising
stockpiles and lower operation cost. Another way to address the
problem was to embark on replanting, he said.

The government has a target of replanting about 200,000
hectares by year-end and has offered incentives for the industry
players. So far, only 136,000 hectares have been replanted.

The efforts helped push prices in July above the 1,000 ringgit
(US$263) level for the first time in 10 months but prices have
fallen below that since the terrorist attacks.