Palm Oil to Advance on Demand, Biofuel, Analysts Say

The price of palm oil, the world’s most traded vegetable oil, will surge this year as demand increases, the impact of drought curbs supply in Southeast Asia and more governments mandate the use of alternative fuels.

The commodity will average $564 a metric ton in 2007, 27 percent higher than last year’s figure, according to the median forecast of eight analysts polled by Bloomberg News. The average price gained 11 percent in 2006 compared with the year before.
Sales of palm oil, 85 percent of which is grown in estates in Malaysia and Indonesia, have been surging in China and India, the world’s two most populous countries. The oil is used in foods such as chocolate and, increasingly, as an additive that is blended with conventional fuels, including diesel.

Bloomberg