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         Week of 14 - 20 July 2010

Section I: Weekly Highlight of Fundamentals

    Section II: Other Weekly Highlights

          Section III: Weekly Data

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                                              Bil 26/2010
                                                                     Weekly Highlights - MPOC

Section I : Weekly Highlight on Fundamentals

On Schedule Soybeans Blooming in the US

   The USDA reported on Monday, July 19 that 60% of the soybeans planted in major US
    planting areas are blooming ahead of the last four year average of about 56% by the same
    period (July 18). About 18% of the planted soybeans are now in pod setting stage, also
    ahead of the four year average of 15%.

   Until now, about 67% of the soybeans are rated from good to excellent by the farmers.
    Farmers have been experiencing hot and dry weather for the last weeks. Although there
    has been some concern on possible yield losses if the current weather persists, the weather
    forecast looks promising as rain is expected in some parts of the US in the coming days.

Europe - Weather Updates

   Major concern currently surrounds the production of high-yielding oilseeds as the
    rapeseed crops have already been destroyed severely in several countries and are now
    threatened by the current heat and dryness in Europe. Production of sunflower seed in the
    EU and Russia may also be curbed as a result of this.

   In Russia, the risk of sunflower seed losses has increased in several parts of the Volga and
    Central districts. It is expected that huge losses would occur if weather were to remain too
    dry and hot for the next 2-3 weeks in these areas which account for 25% of the Russian
    sunflower seed area. Rain is forecast only for the beginning of next week. Production
    prospects in the Black Soil region however have continued to improve and favourable
    conditions are forecast for the next few days.

                                                                      Weekly Highlights - MPOC

Section II : Other Weekly Highlights

1. China

RMB appreciation may increase China’s soybean imports

   According to the latest report from USDA, the strong expectation on the appreciation of
    RMB is anticipated to increase the soybean imports by China with 480 million MT in
    2009/10 and 500 million MT in 2010/11.

   Some insiders pointed out that many soybean crushing projects put into effect in recent
    years which held by large grains & oils enterprises such as COFCO and China Grain
    Reserves Corporation, pushing up China’s soybean crushing capacity to over 100 million

   Data from NDRC shows that soybean crushing capacity was 770 million MT in 2007 and
    the figure increased by about 30% within three years. The rapid growing capacity
    increases the demand for imported soybeans whose import volume hit 425 million MT in
    2009 from 374.4 million MT in 2008.

   The report released by USDA indicates the relationship between China’s soybean
    crushing capacity and its import volume. It is reported that the crushing capacity is
    estimated to increase 15% and soybean arrivals will grow 17%.

2. Pakistan

Pakistan buys 20pc of Malaysian palm oil exports

   Pakistan has bought nearly 20 percent of the palm oil exports ahead of Ramazan, traders
    said on Thursday. Exports of Malaysian palm oil products for July 1-15 rose 16.4 percent
    to 708,384 tonnes from 608,324 tonnes shipped between June 1 and 15, cargo surveyor
    Societe Generale de Surveillance said on Thursday.

   Pakistan is likely to import over 200,000 tons of palm oil in the month of July which will
    be highest in the current year and will also push the overall imports of the country to over
    1.0 million MT.
                                                                        Weekly Highlights - MPOC

Rs 2.27 billion Ramazan relief package approved by Cabinet

   The Cabinet which met with Prime Minister Syed Yusuf Raza Gilani in the chair on
    Wednesday approved relief package of Rs 2.27 billion to reduce the prices of essential
    commodities during Ramazan. The Cabinet also constituted a committee of Ministers for
    Commerce, Food and Agriculture, Industries and Production and Finance to review the
    situation with a view to ensuring the availability of essential food items to the common
    man at affordable prices during Ramazan.

   The Prime Minister said the Utility Stores Corporation with its 5700 outlets should play
    proactive role in providing essential food items to the poor in Ramazan at affordable
    prices particularly essential items such as Atta, ghee, sugar, and other pulses.

   It is a common practice that the prices of oil and ghee and other pulses start increasing as
    the fasting month approaches, with this relief package the government is trying to control
    the price hike and subsidize the prices of essential commodities.

3. India

KS Oils to raise oil palm cultivation.

   K.S. Oils, the Madhya Pradesh-based edible oil manufacturer, plans to undertake palm
    plantation in 35,000 hectares in Indonesia with an investment of Rs 850 crore (US$ 170
    Million) over the next three years. The company intends to invest Rs 150 crore (US$30
    million) to cover 7,000 hectares this fiscal and had invested Rs 200 crore (US$ 40
    million) till last fiscal.

   K.S, Natural Resources, the wholly-owned Singapore subsidiary, owns 55,000 hectares
    and has already covered palm plantation over 1,000 hectares in Indonesia. The subsidiary
    also produces 500 tonnes of crude palm oil (CPO) from the 1,000 acres of palm plantation
    in Malaysia. The Managing Director, K.S. Oils, reported that they have embarked on
    international projects of oil palm plantations, in Indonesia AND Malaysia, to source their
    total requirement of CPO, which is currently 200,000 MT per annum. The objective of

                                                                     Weekly Highlights - MPOC

    embarking on such projects is not only to source their raw material requirement but also
    to add to their bottom line.

   In the previous fiscal year, KS oils imported 200,000 MT of PO and 100,000 MT of SBO,
    at an aggregate cost of US$ 240 Million. “International palm plantation not only secures
    our raw material requirement but also adds to our profitability as farming commands an
    EBITDA (earnings before interest, taxes, depreciation and amortisation) of 50-55 per
    cent,” he said.

Optimism on good monsoon progress

   The Indian economy could gain greater buoyancy, with the government predicting that the
    year will see a bumper crop. Agriculture minister Sharad Pawar on Friday said, "The way
    sowing operation is going and reports of good monsoon from the states, we are likely to
    have a bumper crop (production) this year."

   As of July, an additional three million hectares had been sown with inputs from states,
    pointing to better coverage of oilseeds, sugarcane and paddy, a happy augury for those
    reeling under high inflation.

   Hit last year with the double whammy of a global economy struggling to come out of
    shock and a drought-hit yield, the Indian economy is bound to gain from the combination
    of factors that seem to be working to push it along 9%- plus growth that the International
    Monetary Fund also predicted.

   The strong revival of monsoon and its rapid movement to the food-bowl states of Haryana
    and Punjab has built confidence in the government that the kharif harvest could help boost
    agricultural production and reduce inflation.

    Rainfall deficit continued to fall by the day and on Thursday, stood at 10% of the long-
    term average as compared to the 16% at the beginning of the month. Excessive rains in
    the two north western states did raise some concerns, but experts feel that the damage so
    far was minimal.

                                                                      Weekly Highlights - MPOC

   While the government granaries are already filled with record grains -- 50 million tonnes
    roughly -- a healthy kharif production across different crops, experts suggested, would
    also reduce the government's woes on the inflation front.

   This optimism is in tune with agricultural experts who warned that while sowing was
    going well, the final kharif production would depend on the spatial distribution of rains
    over the monsoon period. Concerns remained about Uttar Pradesh, which was yet to
    receive its share of monsoon showers, though the Met department predicted that rainfall
    would improve over the next few days.

   The falling share of agriculture in national income and an increasing disconnect between
    primary sector results and the decisions of the manufacturing sector also implies that
    agricultural production alone may not be enough to push the economy to the 9.4% level
    that IMF has predicted. But it would certainly reduce the strain on the economy of a back-
    to-back failed primary sector.

   The Centre’s move to raise the support price of pulses has drawn flak from the oilseed
    industry that has been asking for a higher minimum support price (MSP) as an incentive
    to encourage farmers. The government has increased MSP for pulses by 30 per cent.
    While ignoring, the oilseed sector. Oilseeds production and acreage has been stagnant for
    the last five years and vegetable oil imports have increased over 100 per cent during the

4. Europe

Belarus Biodiesel Production Rises

   Belarus produced 370,700 tonnes of biodiesel in the first half of the year, an increase of
    60.4% compared to the same period in 2009, according to figures from the National
    Statistics Committee.

   Regional market analysts UkrAgroConsult said that production of biodiesel has increased
    5.4 times since 2008. The analysts say that by the end of the year the Belneftekhim
    companies will have manufactured more than 780,000 tonnes.

                                                                      Weekly Highlights - MPOC

5. Africa

Congo says talking to China on land for palm oil

   Democratic Republic of Congo is studying a proposal to provide land to China to grow
    large amounts of palm for oil production in the vast central African country, a
    government minister told Reuters on Thursday.

   Details of the plan were scarce but it comes as arable land around the world is in short
    supply due to climate change and other factors, and Africa's land supply attracts growing
    attention from wealthier resource-hungry nations.

   "There's a study for oil palm farms on an industrial scale but it has not been presented to
    government and nothing has been signed yet," Minister of Information Lambert Mende
    told Reuters by telephone, giving no further details.

   Mende said Congo's Finance Minister Matata Ponyo was visiting China to discuss a
    range of energy and infrastructure deals, following the cancellation of debt worth $8
    billion by multilateral institutions including the World Bank this month.

Nigeria -NIFOR CEO Calls for Private Sector Participation in Oil-palm Production

   Executive Director, Nigerian Institute for Oil Palm Research (NIFOR), Dr Dere Okiy has
    warned that until the private sector of the economy engage in the mass production of palm
    oil, Nigeria will continue to remain a net importer of the product.

   Reacting to a question from a journalist on why Nigeria has remained a net importer of
    palm oil in spite of the existence of NIFOR founded in 1939 by the colonial masters to
    carry out research on palm oil, Dr. Okiy attributed the shortage of edible oil in the country
    to the non mass production of the product by NIFOR insisting that the Institute was only
    engaged in research, the result of which is passed on to commercial private producers.

   According to him “Private individuals are supposed to be the driving force for mass
    production of palm oil” and called on private investors to avail themselves with research
    findings of the Institute and engage in mass production of palm oil.

                                                                Weekly Highlights - MPOC

   While observing that land tenure system in the country was a limiting factor against
    private mass production of palm oil by individuals, he called on local and state
    governments to provide contiguous land areas to oil palm farmers to encourage mass
    production of palm oil.

                                                                     Weekly Highlights - MPOC

Section III : Weekly Data

1. Palm Oil Prices

   Palm oil prices surged on the news that the stock of Malaysian palm oil dipped for the 6
    consecutive months to its 10-month low of 1.45 million MT as of end June. The lower
    than expected CPO production in June was the main factor contributing to the low stock
    when export growth was able to increase by more than 5% in the same month.

   Strong China’s trade performance in June also eased the worries of traders on the
    slowdown of global economic recovery. The record high of crude mineral oil import in
    China at 22 million MT signified during the same also another reason signifying the
    economy recovery is in progress. This also supported the crude mineral oil prices closer to
    US$80 per barrel during the week.

   As the fasting month is around the corner, the demand of palm oil is anticipated to surge
    for the preparing of festive food products after the Ramadan month. This is being testified
    by the increase in palm oil products export for the first 15 days of July, where both ITS
    and SGS reported an increase of palm products by 11.3% and 16.4% respectively. The
    decision of Pakistan to cut the crude palm oil duties in June also boosted the demand for
    this product from Malaysia.

   Possible of the arrival of hot weather at the crucial development stage of soybean and
    corn planting also worried the prospected soybean production in this season after the
    Russia and Germany has had to cut their oilseeds crop forecasted resulted also from hot
    weather. As a result of the above developments, the average price of CPO increased from
    RM2,399.90 to RM2,445.80

                          Local Price (RM/MT)             Export Prices (US$/MT)
             Date           CPO         CPKO           RBD PO RBD PL RBD PS

        Previous week      2,399.90    3,346.80         764.00      775.88       752.75
            12-Jul         2,418.00    3,386.00          NT          785          770
            13-Jul         2,422.50    3,338.50          NT          NT           NT
            14-Jul         2,445.50    3,360.50          NT         783.00        NT
            15-Jul         2,453.50    3,366.00          NT         808.50        NT
            16-Jul         2,489.50    3,410.50         805.00      807.50       773.00
           Average         2,445.80    3,372.30         805.00      796.00       771.50
      Source: MPOB

                                                                     Weekly Highlights - MPOC

2. International Prices

   Deteriorating crop prospects sparked steep price gains throughout the oilseeds and oils &
    fats market last week. The concern about yield prospects of soybean in US was triggered
    by forecast of heat wave moving into the US Midwest in coming week. It is feared that
    unfavourably hot and dry conditions may persist into August, the key yield-determining

   Lower US soybean stock level also indicated the strong market demand despite bumper
    harvest of soybean in South America. Finally, the strong recovery in global equity market
    also lends support to SBO (fob, Bra) price during the week. At the last look, the SBO (fob,
    Bra) average price for the week of 12-16 Jul was at US$849, an increase of close to 4% as
    compared to the price recorded week before.

   On CPO, the price was buoyed by the impressive pace of Malaysian exports and a
    probably smaller than expected seasonal increase of palm oil output in June. Furthermore,
    the strong export for the first 15 days of July also further strengthen the belief among
    traders that strong demand is arriving in coming months due to festive celebration such as
    the Hari Raya in all Muslim countries. As a result of the market development, average
    price of CPO (cif, Rott) hiked US$28 in a week to US$803.

                          Previous                     Prices US$ / MT
                           Week       12-Jul       13-Jul 14-Jul 15-Jul       16-Jul
 CPO      (cif, Rott)       775          790          790       798     813    825       803
 SBO      (fob, Dutch)      870          893          899       915     924    938       914
 SBO      (Brazil, fob)     819          836          846       845     852    864       849
 SFO      (fob, Argen)      847          850          850       850     860    850       852
 RSO      (fob, Dutch)      911          924          930       959     981    997       958
 PKO      (cif, Rott)      1,030       1,045        1,045     1,055   1,055   1,070     1,054
 CNO      (cif, Rott)      1,005       1,005        1,005     1,015   1,025   1,045     1,019
 CPO      (fob, Indon)      744          755          752       755     775    767       761

Source: Oil World

                         Weekly Highlights - MPOC

Source: Oil World

                                                                    Weekly Highlights - MPOC


1. Malaysia’s Exports & Imports

                                    Exports                     Imports
                              2009          2010            2009       2010
             Jan           1,353,686     1,461,727         29,863    155,803
             Feb           1,257,482     1,294,915         27,423     64,091
             Mar           1,260,797     1,396,949         15,693     50,138
             Apr           1,193,524     1,285,467         42,579    110,456
             May           1,230,449     1,365,637        114,681    114,397
             Jun           1,279,701     1,440,884         87,078     61,028
             Jul           1,454,541                       93,288
             Aug           1,317,093                       97,796
             Sep           1,322,900                      118,328
             Oct           1,478,462                       75,486
             Nov           1,501,504                       56,384
             Dec           1,224,353                      153,797
             Jan-June      7,575,639     8,245,579        317,317     555,913
             Jan-Dec       15,874,492                     912,396

2. Exports to Major Countries

                        Jan-June     Jan-June      Change      Change        Jan-Dec
        Country           2009         2010        (Vol.)       (%)            2009
     China              1,690,785    2,079,716      388,931      23.0        4,027,172
     Egypt                322,553      339,257       16,704       5.2          609,210
     EU                   875,629    1,008,046      132,417      15.1        1,892,099
     Pakistan             934,468      933,841         -627      -0.1        1,769,321
     India                692,343      566,774     -125,569     -18.1        1,354,429
     Japan                278,228      288,438       10,210       3.7          538,878
     Ukraine              341,828      127,633     -214,195     -62.7          544,143
     USA                  448,781      517,470       68,689      15.3          859,401
     Total              5,584,615    5,861,175       276,560        5.0     11,594,653

                                                                         Weekly Highlights - MPOC

3.   Production & Stocks

                                 Production                        End-Stocks
                              2009         2010                 2009         2010
            Jan            1,329,333    1,321,304            1,829,357    2,003,175
            Feb            1,187,381    1,156,814            1,565,532    1,789,194
            Mar            1,275,822    1,387,234            1,365,582    1,655,748
            Apr            1,286,059    1,306,228            1,292,692    1,622,580
            May            1,395,275    1,385,424            1,371,238    1,562,323
            Jun            1,445,937    1,420,062            1,408,317    1,451,434
            Jul            1,492,211                         1,332,182
            Aug            1,495,241                         1,415,853
            Sep            1,557,764                         1,579,252
            Oct            1,984,036                         1,974,526
            Nov            1,595,592                         1,934,613
            Dec            1,520,063                         2,239,257
            Jan-June       7,919,807      7,977,066          1,408,317     1,451,434
            Jan-Dec        17,564,714                        2,239,257

4. Monthly Average Prices

                                              CPO Local Prices
                                              2009       2010
                              Jan             1,842     2,518
                              Feb             1,898     2,550
                              Mar             2,027     2,632
                              Apr             2,402     2,544
                              May             2,744     2,533
                              Jun             2,445     2,516
                              Jul             2,115
                              Aug             2,412
                              Sep             2,232
                              Oct             2,154
                              Nov             2,199
                              Dec             2,461
                              Jan-June        2,226          2,549
                              Jan-Dec         2,244
                            Note: Average for Peninsular Malaysia
                                                                                  Source: MPOB

                                               Weekly Highlights - MPOC

                     BMD CPO FUTURES

                        BMD                    BMD
                  Settlement Price        Volume Traded
                    (RM/(USD))                 (lots)
                   September 10            September 10
     14 July         2,381 (722)               6,340
     15 July         2,439 (739)              15,889

                    October 10               October 10
     16 July        2,449 (742)                14,269
     19 July        2,454 (744)                 7,998
     20 July        2,424 (735)                11,235

Source: Reuters                        Exchange rate: US$1 = RM3.30

* 1 lot = 25 MT


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