Biofuel demand to push agri commodities prices higher

Strong demand for biofuels will be the catalyst driving prices of agriculture commodities higher.

Singapore-based Frost & Sullivan director, global consulting Chris de Lavigne said the global supply tightness in oilseeds this year would take years to balance while the world market continued to look for ways to grow more crops, especially for bioethanol production.
He said 2007 was the year of the domino with crude palm oil (CPO) becoming a major beneficiary, given the tight supply of soyoil following increasing corn usage in the US for ethanol and soybean for biodiesel production in Latin America.

“I believe for CPO to hit the RM4,000-per-tonne level will be quicker than what we think,” de Lavigne said in his paper Will biofuels continue to influence high vegetable oil prices? at the Palm and Lauric Oils Conference 2008 yesterday.

He said it was a reality that CPO was now trading at US$1,000 per tonne compared with just a forecast made in May last year.

Another speaker, Carotino Sdn Bhd executive director U.R. Unnithan said palm-based biodiesel would still be the most cost-effective diesel substitute in a free world market.

The Star