Palm oil futures may climb to 1,600 ringgit by Feb

Nov 18 | Updated: Nov 19 2005, 07:03am hrs
Palm oil prices in Malaysia may rise as high as 1,600 ringgit ($423) a metric tonne by February 2006 as countries encourage the use of the vegetable oil as a fuel for motor vehicles, a trader said.

Asian governments want to promote the use of gasoline and diesel mixed with ethanol, palm oil and other vegetable oil to help lower oil import bills and cut pollution. Bio-fuels help stretch fossil fuel supplies when crude oil prices rise. Oil prices reached a record $70.85 a barrel on August 30.

The green energy story is here and now, Dorab E Mistry, director of Godrej International Ltd, one of Indias top five edible oils traders, said. In the next 12 months, bio-fuels will be a strong reality. Skeptics will be proven wrong as chunks of bio-fuel capacity come on-stream.

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.