MANILA (Dow Jones)--World coconut oil prices were offered sharply higher this
week, buoyed by short-covering by consumers and spillover support from the
trendsetting palm and soyoil markets, trade participants said Friday.

  Traders said lower exports of coconut oil from the Philippines in the past
few months have significantly reduced inventories in most export destinations.

  Consumers are now trying to improve on their stocks by making new deals, but
fresh demand in the market has mostly involved limited quantities, they said.

  "Consumers are buying on a hand to mouth basis, as prices are still at high
levels," said one trader.

  Traders said the export market is also trying to catch up, as the local
market is still at a premium over the export market. The local market currently
enjoys a premium of at least $20 a metric ton over the export market, they
said.

  Traders said the bullish tone in the trendsetting palm and soyoil markets
also helped buoy coconut oil prices.

  Chicago Board of Trade soybean futures finished higher for most of the week
on broad-based commodity buying, underlying demand and talk of the Argentina
farmers strike heating up again.

  Analysts said a combination of weakness in the U.S. dollar and record-high
crude oil futures in conjunction with talk of Argentina farm groups looking to
possibly go back on strike provided a bullish tone for the soybean market.

  On the other hand, crude palm oil futures on Malaysia's derivatives exchange
ended up for most of the week after end-month inventories in March were
estimated to have eased from record highs.

  The government-run Malaysian Palm Oil Board estimated 16.8% on-month export
growth in March to 1.24 million tons compared with only a modest increase of
5.5% in production to 1.29 million tons. This, along with a rise in domestic
consumption, led to a small fall in inventories to 1.82 million tons as of
March 31 compared with record-high closing stocks of 1.93 million tons in
February.

  Traders said coconut oil prices are likely to continue on their upward trend
next week on prevailing tightness of copra in the local market.

  Farmers were expected to start unloading their copra to generate income in
line with religious activity called "fiestas" usually observed in the month of
May.

  But an improvement in copra supply remains to be seen in the market, which
could keep coconut oil prices at higher levels, said a second trader.

  Philippine exports of coconut oil this month could reach around 80,000 tons,
traders added.

  Traders quoted coconut oil for April/May shipment at $1,440-$1,450/ton, CIF
Rotterdam, and offers for May/June at $1,440/ton, CIF, while June/July was also
offered at $1,440, CIF. These prices are $60-$65 higher than prices quoted a
week ago.

  The Philippines is the world's largest exporter of coconut oil and other
coconut-based products.