13/7/06 (PlanetArk)  -  KUALA LUMPUR - Malaysian palm oil prices are likely to rise to between 1,600 and 1,700 ringgit a tonne in 2007 from 1,450 ringgit (US$397) now, driven by growing demand for biofuels, a top industry official said on Wednesday.
 

Biodiesel output in Malaysia is expected to be around 200,000 to 250,000 tonnes in 2006, with several plants expected to start production to meet an October target to roll it out at pumps.
"Moving into 2007, there will be a big surge in the new capacity for biodiesel," said Sabri Ahmad, chairman of the Malaysian Palm Oil Association.

"We are looking at 1.5 million tonnes of biodiesel in 2007." He said 10 biodiesel plants were under construction and 10 more had ordered machinery to set up the facilities, and the facilities should be up and running in about one year.

Palm oil output in Malaysia, the world's largest producer, was likely to rise to around 15.5 million tonnes this year from 14.9 million tonnes a year ago, Sabri said.

As countries from Europe to Asia seek ways to cut dependence on imported oil, curb greenhouse gas emissions and boost local agriculture, biofuel plants are sprouting at a dizzying pace.

Biofuels are plant-based fuels, such as ethanol made from sugar or grains, which can be added to gasoline and biodiesel derived from oilseeds or palm oil and added to diesel.

Such is the demand for palm oil-based biofuel that Malaysia has stopped licensing new producers while industry works out how to divide the raw material between the food and energy sectors.

Malaysia's edible oil industry says the government has approved 32 manufacturing licences, with annual output capacity of around 3 million tonnes of biodiesel, from 87 applications.


GOLDEN HOPE STARTS BIODIESEL PLANT

Sabri also heads palm oil giant Golden Hope Plantations Bhd. He said higher palm oil prices should help the company post strong earnings in the year to June 2007.

"If we look at 2006/07, the future is bright," Sabri said, adding that every increase of 100 ringgit in the price of crude palm oil would add 70 million ringgit to the company's profit.

Golden Hope started Malaysia's first commercial biodiesel plant, which has an annual capacity of around 35,000 tonnes, this month and Sabri said shipments from it would start in August.

The company is building two more biodiesel plants in Malaysia and one in Holland, which are all expected to open in 2008, giving the company a biodiesel capacity of 390,000 tonnes.

The firm's shares were trading up 0.95 percent to 4.24 ringgit by 0702 GMT on Wednesday. The plantation index on the Kuala Lumpur Stock Exchange has gained 18 percent so far this year and was at 3,301.91 on Wednesday. (US$1=3.65 ringgit)