20/09/05 (The Jakarta Post, Jakarta) - The average price of Crude Palm Oil(CPO) next year is expected to stay at US$360 per ton due to higher globaldemand. CPO is seen to be healthier than other edible oils and is neededfor biodiesel as an alternative to fossil fuel, local association said.

"Based on the 10-year cycle, CPO prices should have reached theirdecade-long peak last year and should fall drastically this year and nextyear. Apparently, this will not be the case for now," Indonesian Palm OilProducers Association (Gapki) chairman Derom Bangun said on Tuesday.

CPO prices reached their decade-long peak to average $430 per ton lastyear, while the average price over the first six months of this year was$360 per ton, Derom told reporters on the sidelines of a workshop titled"Preventing and tackling forest and cultivated land fires".

Derom said increasing global demand would enable Indonesia's CPO exportsto rise to 9.6 million tons this year from last year's 8.7 million tons.

He was optimistic that demand for CPO would increase as consumers wouldturn to palm oil-based food products as other hydrogenated edible oils,such as soybean, sunflower and canolla oils, contained Trans Fatty Acid(TFA), believed to be bad for the heart.

"Starting Jan. 1, 2006, the U.S. will require every food manufacturer tostate TFA level in each of their products," Derom said, adding that oncethe U.S. applied such a policy, other countries would eventually followsuit.

Moreover, global oil prices, which are hovering near $70 per barrel, haveprompted higher demand for edible oils as biofuel and biodiesel to serveas alternatives to pricey fossil fuels, he said.

"Several European countries have started to provide tax incentives forindustries importing edible oil, which is cleaner and help conserves theenvironment," he said.

He added a number of firms had shown an interest in importing more palmoil.

Commenting on India's latest move to cut the benchmark import price forCPO and palmolein, Derom said he expected Indonesia's exports to increaseby 10 percent from an average of 200,000 tons per month.

Indonesia last year exported 2.7 million tons of CPO and palmolein, ofwhich 1.9 million tons was CPO.

India, Asia's second largest vegetable oil importer, cut its benchmark CPOimport price by $26 a ton to $397 and crude palmolein import price by $18a ton to $414, the Solvent Extractors' Association of India said earlier.

The cut will effectively lower import duties on the product makingshipments cheaper from Indonesia and Malaysia, the world's biggestproducers of the cooking oil.

Output from the two countries is expected to make up about 85 percent ofthis year's global palm oil production.