24/03/2009 (ForexProps.com), Hamburg - European Union imports of palm oil are currently increasing and could rise sharply this year largely because of demand for biofuel production, Hamburg-based oilseeds analysts Oil World forecast on Tuesday.

"We consider it possible that 1.0 to 1.1 million tonnes of palm oil will be used for biofuels in the European Union in calendar year 2009, compared with 0.8 million tonnes in Jan/Dec 2008," Oil World said.

Palm oil use for biofuels has been controversial in Europe because of allegations tropical rain forests are being destroyed for palm production. The first shipment of palm oil certified as coming from sustainable production under a new programme arrived in Europe in November 2008. [ID:nLB513118]

The EU is likely to use 550,000 tonnes of palm oil for biodiesel in 2009, up from 450,000 tonnes in 2008 when consumption mainly took place for biodiesel output in Italy, Spain, France and Germany, Oil World said.

About 370,000 tonnes of palm oil was used for EU electricity and heat generation in 2008, mostly in small power plants in Germany, it said.

"Very attractive palm oil prices in Oct/Dec 2008 and early 2009 resulted in considerable forward purchases," it said.

"We assume that in Germany alone about 400,000 to 450,000 tonnes of palm oil will be used for producing electricity and heat this year." -Reuters-