Palm oil may rise to 1,600 ringgit ($423) by April on bio-fuel demand

Palm oil prices in Malaysia may rise as high as 1,600 ringgit ($423) a metric tonne by April 2006 as countries encourage the use of the vegetable oil as a fuel for motor vehicles, a London-based analyst said.

…“Demand will grow faster than production because of this trend of looking to vegetable oils as bio-diesel,” Fry said. “You can’t just meet that demand immediately because oil palms take time to grow.”

The Netherlands and other European countries ordered 17% more Malaysian palm oil in the first 10 months of the year from a year ago, for use in cooking and as an additive to auto-fuels, according to the Malaysian Palm Oil Association. The European Union requires biofuels to make up 5.75% of gasoline and diesel consumption in its member states by 2010. A lower output in Malaysia, the world’s biggest producer of the edible oil, may help prices stay high, Fry said.

Financial Express