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 Mahamad Rodzi Abdul Ghani
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 The Star
 Biofuel demand lifts palm oil prices

13/7/06 (The Star)  -  KUALA LUMPUR: Palm oil prices are likely to range between RM1,600 and RM1,700 a tonne in 2007 from RM1,450 now, driven by growing demand for biofuels, said a top industry official. 

The output of palm oil in Malaysia, the world’s largest producer, would likely rise to around 15.5 million tonnes this year from 14.9 million in 2005, Malaysian Palm Oil Association chairman Datuk Sabri Ahmad said.

“The production up to the second half has not been so good, but in the second half we are seeing good crop recovery.”

He said Malaysia’s biodiesel production of 200,000 to 250,000 tonnes in 2006 would be friendly for prices in the second half of the year.

“Moving into 2007, there will be a big surge in new capacity for biodiesel,” Sabri said in an interview. “We are looking at 1.5 million tonnes of biodiesel in 2007.”

He said 10 biodiesel plants were under construction and 10 more had ordered machinery to set up the facilities. “In about 12 months 20 should be in production.”

Hunger for palm oil-based biofuel is so fierce that it has prompted Malaysia to stop licensing new producers, while the industry works out how to divide the raw material between the food and energy sectors.

The output of palm oil in Malaysia, the world's largest producer, will likely rise to 15.5 million tonnes this year from 14.9 million tonnes in 2005.

Malaysia’s edible oil industry said the government had already approved 32 manufacturing licences for units estimated to produce 3 million tonnes of biodiesel a year, from a total of 87 applications received.

Sabri, who is also group chief executive of Golden Hope Plantations Bhd, said the company was expected to post strong earnings in the year to June 2007, fuelled by higher palm oil prices.

“If we look at 2006/07, the future is bright,” Sabri said, adding that every increase of RM100 in the price of crude palm oil would bring the company an additional profit of RM70mil.

Golden Hope this month started the country’s first commercial biodiesel plant having an annual capacity of 35,000 tonnes. 

“It has just started this month and shipments will start in August,” he said.

The company is setting up three more biodiesel plants, two in Malaysia and one in Holland, which are all expected to start in 2008. Sabri said the combined capacity of the company’s biodiesel plants was 390,000 tonnes. – Reuters

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