24/9/06 MUMBAI (Reuters) - Palm and soy oil prices are expected to rise in coming months as the world's appetite for "green" fuel grows and a greater quantity of oils is diverted to meet energy demand, a top industry analyst said on Sunday.

Biofuel plants are sprouting at a dizzying pace as nations from Europe to Asia seek ways to cut dependence on crude oil, curb greenhouse gas emissions and boost agriculture.

Crude palm oil futures at the Malaysian exchange will range between 1500 and 1700 ringgits per tonne by March 2007, with a strong possibility of a spike beyond 1800 per tonne, Dorab Mistry, director of London-based Godrej International Ltd, told a global edible oils conference.

"We can see quite clearly that there is now a link between the price of crude oil and world vegetable oil prices," said Mistry, whose price forecasts are watched keenly by the industry and analysts.

"I expect a steadily rising market provided NYMEX crude oil prices remain in the range of $60-70 per barrel."

He said crude soy oil prices will rise steadily to about $600 per tonne free on board from current levels of $520, while RBD palmolein will trade between $450 and $525 per tonne free on board.

Mistry had in February forecast that crude palm oil futures would trade in the range of 1400 to 1600 ringgits between March and September 2006. Crude palm oil futures are currently ranging around 1540 ringgits in the Malaysian futures markets.

Almost 9 million tonnes of major oils and fat is being used to meet energy requirements, either by way of biodiesel production or direct burning, out of total consumption of almost 120 million tonnes, Mistry said.

Mistry said the supply and demand situation of edible oil for the year ending September 2007 was quite bullish.

He said the demand for edible oil for the period was set to grow by 6.5 million tonnes, while only about 3 million tonnes of additional supplies were expected by way of higher soy and palm oil output.

The big expansion in biodiesel production in Brazil, one of the largest exporters of soyoil along with Argentina, will hamper shipments from the South American nations after March 2007, Mistry said.

"My estimate is that Brazilian exportable surplus of soyoil will fall by at least 10 percent in 2006-07 and by a massive 40 percent in 2007-08," Mistry said.