Keng Yaik: Iraq war will hit CPO, timber

THE war in Iraq will greatly affect the crude palm oil and timber markets as freight and insurance charges will go up, said Primary Industries Minister Datuk Seri Dr Lim Keng Yaik. 

“We hope that there is no war. The US should not unilaterally declare war. We hope US and its alliance will rethink it (war),” Lim said at the press conference in Kuala Lumpur yesterday. 

He said ships would stay clear of the war zone area for at least 500 miles radius and should it be near, the insurance cost would be much higher. 

In the eventuality of a war, Malaysia would look at other markets to cushion its impact. 

However, at present, Lim is optimistic that crude palm oil prices would stay at RM1,600 per tonne level or even more, for the whole of 2003. 

As at Feb 7, spot month February closed at RM1,594 per tonne. 

Touching on rubber and the recent news that Thailand might not cut rubber supply by 4% as previously agreed with Indonesia and Malaysia, Lim said, “I hope he has been misquoted.” 

However, should it be true, there was an urgency to have a discussion with Indonesia and Thailand, Lim said. 

“After all, being the biggest producer, Thailand is benefiting more with the present high level of prices,” he said. 

International RSS March stood at 354 sen per kg while Tyre Grade SMR 20 was at 354.5 sen per kg, as at Feb 7. 

The three countries, which account for about 60% of world rubber production, agreed in Bali (December 2001) to cut exports and output by 10% and 4%, respectively, aiming to support rubber prices. 

On another note, Lim said rubber glove manufacturers involved in undercutting prices, were likely to face bankruptcy as the price of raw rubber had increased substantially. 

Over the past 10 days, latex price had risen by more than 10% to 360 sen per kg from 330 sen per kg. 

Lim said, as the biggest rubber glove producer in the world, Malaysia should look after smallholders in the rubber industry by getting better price for rubber, at all times. 

He also urged the rubber glove manufacturers to find a new market or niche market and maintain a steady price and not lower the selling price of rubber gloves below US$17 per 1,000 pairs. 

Due to price-cutting activity, rubber gloves prices slipped to US$14 per 1,000 pairs from US$26 per 1,000 pairs. – Bernama 

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