* Thailand to buy 120,000 tonnes of crude palm oil-govt
* Refiners say Malaysian planters palm oil for processing
* Malaysian refiners eyeing Indonesian palm oil stored on barges
* Palm oil and sugar next on govts' stockpiling list-analyst
* Malaysian markets shut for holiday, Indonesia open (Adds details from Thai deputy prime minister, trader quote)
Niki Koswanage Reuters 1 Feb 11;
KUALA LUMPUR, Feb 1 (Reuters) - Malaysian refiners snapped up more Indonesian crude palm oil to meet orders globally after floods in a key growing area submerged estates and cut off roads, adding to Asia's escalating food costs.
Malaysia's worst flood in four years may force big Asian buyers to shift some of their rice and soybean stockpiling efforts to include palm oil, a key ingredient in cooking oil, as they struggle to keep in lid on inflation.
Top food buyers India and China, which account for more than half of total palm oil export annually, are scrambling to use monetary policy tools and food cost measures to rein in rising inflation.
Thai Deputy Prime Minister Suthep Thaugsuban said on Tuesday that the country will buy an additional 120,000 tonnes on palm oil in stages till end-March, more than an expected 50,000-100,000 tonnes.
"Refiners will have a lot in their hands now. They need to take up from Indonesia, try and meet Thailand's import requirements and stock up a little for themselves after the floods," said a Malaysian trader.
Thailand usually only imports palm oil from Malaysia when necessary, but flooding there has disrupted shipments so it may also have to turn to Indonesia this time.
"The oil could come from Malaysia and Indonesia, but it should be bought at market prices," Thaugsuban told a media conference in Bangkok.
CRUDE PALM IMPORTS FROM INDONESIA
Although La Nina-driven rains in Malaysia since the weekend have slowed, the floods have killed three people, forced 50,000 from their homes and turned small towns surrounded by oil palm estates into islands.
With 70,000 tonnes of crude palm oil now delayed for processing, refiners in Malaysia's key export port of Pasir Gudang in Johor are eyeing Indonesian palm oil stored in floating barges in the Malacca Strait.
"The roads leading to Pasir Gudang port still have some floods and trucks can't get through but on the other side, Indonesian tankers are lining up to offload since many of them escaped this month's higher tax," said a Malaysian refiner.
To ensure domestic cooking oil supplies, Indonesia raised its export tax on crude palm oil to 25 percent in February from 20 percent as international prices rose on tight global vegetable oil stocks and resilient demand.
Another Malaysian refiner said that at least 20,000 tonnes of Indonesian palm oil was waiting to be unloaded at Pasir Gudang in Johor.
Although Malaysia is the second largest palm oil producer in world after Indonesia, its refining industry is the biggest and most extensive.
Factories in Malaysia usually slow down ahead of Lunar New Year this week but refiners need to secure more supplies after the holiday as Malaysian stocks have hit a five month low in December and demand is likely to pick up.
Benchmark Malaysian palm oil futures jumped nearly 3 percent to a one-week high at 3,809 ringgit($1,244) a tonne on Monday as investors covered positions on concerns that floods may spread during a string of holidays this week.
Malaysian markets are closed on Tuesday for a public holiday and will re-open on Wednesday for the morning trading session before being shut for the rest of the week.
WHAT'S NEXT?
Malaysia's floods come as a massive cyclone is due to slam into northeast Australia this week, potentially hurting a third of the sugarcane crop and fuelling agriculture commodity prices.
These are the latest in a string of weather-related disasters, starting from the drought in Russia last summer to recent floods in Australia, which boosted wheat prices and initially started a scramble for food supplies this year.
"Palm oil and sugar could also be the next hot food items for governments to scramble for. We could be seeing a lot of government policy reactions in the coming week," said an analyst with an investment bank in Singapore.
Rice, Asia's key staple, is already trading higher as governments from Indonesia to Bangladesh stock up to prevent food shortages, which in the past have provoked protests.
Elsewhere, countries like Algeria are rushing to buy grains, a move seen heading off civil over food prices and unemployment that are sweeping across north Africa.
($1 = 3.061 ringgit) (Additional reporting by Apornrath Phoonphongphiphat in BANGKOK and Fitri Wulandari in JAKARTA; Editing by Ed Lane)
