(AFP) The sudden sharp rise in palmoil prices is limited and producers should cash in now, Primary Industries Minister Lim Keng Yaik warned today.

"Sell now. Sell forward .... This is good enough price. Sell whatever you have," Lim told reporters.

Malaysia, the world's largest palmoil producer, watched with dismay as the price plunged from a high of RM2,377 ringgit a tonne in 1998 to around RM800 in mid-July.

But prices have risen sharply in the last two weeks and yesterday hit RM1,180 a tonne, he said.

Lim predicted the upward price could last for about six months.

But he said that exporters and traders were too often waiting for prices to climb further before selling. "I appeal to them to sell forward," he said.

"The more they sell forward it will boost exports, reduce stocks and will spur price upwards."

Forecasts of bad weather

Lim said the surge in price was due to the government's ability to cut crude palmoil stocks from 1.5 million tonnes to 1.05 million tonnes since January and forecasts of bad weather in other major edible oil producing countries like India and China.

The price had also been boosted in Malaysia by the replanting of old palmoil trees, he said.

"If 200,000 hectares are cut down by the end of the year, then some 600,000 of crude palmoil production can be withheld," he said.

Lim said 4,300 applications for replanting involving some 150,000 hectares (representing 75 percent of the target) have been received.

"I am afraid those who have applied might opt out now that the price has gone up," he said.

Under a programme to encourage the replanting of trees which are more than 25 years old, the government is providing a loan of RM6,000 per hectare and a one-off RM1,000 per hectare to smallholders and plantations.