26/7/06 LONDON (Dow Jones)--Biofuels Corp.'s biodiesel  production reached 65% in July of its future target annual capacity of 250,000 tons, up from 58% in June, it said Tuesday.

The company began producing biodiesel from imported rapeseed oil, soybean and palm oil at its first plant in Teesside in late February.

In its preliminary results for the year ended March 31, the company said it has sold all biodiesel produced to date at prices in line with expectations.

The first shipments of some 7,000 tons have been made, and so far 75,000 tons of 2006 forwards production have been sold.

Biofuels Corp., one of the largest producers of biodiesel in the U.K., said its plant will provide enough biodiesel to meet a quarter of the U.K.'s Road Transport Fuel Obligation target for 5% biofuel blend by 2010-11.

The European market for biodiesel is rapidly expanding. In 2005, it reached 3.2 million tons, according to the European Biodiesel Board. Independent market research expects it to reach 9 million tons by 2010.

"With our first plant operational and with a strongly developing market across Europe for biodiesel, we believe that this is the opportune time to look at the next stage of the company's development including the addition of further capacity," said Chairman Mike Buzzacott said in a statement.

Teesside also has the potential to produce up to 25,000 tons a year of pharmaceutical glycerin. Commissioning the glycerin plant is underway, CEO Sean Sutcliffe said.