20/04/2006 (Food Navigator.com)  - Malaysian palm oil prices are expected to edge up by 2-5 per cent in the near future on the back of growing demand in Europe for alternative fuels, suggests a report.

Palm oil is currently priced at RM1,470 per tonne but could increase to between RM1,500 (€332) and RM1,550 per tonne, according to Malaysian Palm Oil Association chief executive Azizi Meor Ngah.
Demand for alternative fuels – triggered by the surge in oil prices – has already had a significant impact on another key commodity in the food sector, sugar.

But palm oil, the cheapest of the edible plant-derived oils, has been somewhat protected by the plentiful supply from key producers in Malaysia and Indonesia.

However Azizi Meor Ngah told Reuters this week that prices are likely to rise, despite expectations of an increase in domestic output to 15.2 million tonnes in 2006 from last year's 14.9 million.

“We are expecting an upward adjustment in palm oil prices because crude oil prices have gone up. European demand is quite strong,” he told the news agency.

Additional pressure on stocks will come from China, which is expected to buy 3.5 million tonnes of the oil from Malaysia this year, up from 2.9 million tonnes in 2005.

And India's new rules requiring all genetically modified products to carry a declaration from the exporter may also boost palm oil demand, he said.