The Hindu Business Line : Malaysia bullish on biodiesel demand

Palm oil is likely to benefit from a combination of factors, including changes in Malaysia's supply fundamentals, weather concerns in South America, the effects of China abolishing tariff rate quota, and higher global demand for palm oil for use in biodiesel, said Dr Peter Chin, Malaysia's Minister for Plantation Industries and Commodities.

Dr Chin was addressing over 1,200 delegates from nearly 40 countries at the annual palm oil price outlook conference here on Thursday, organised by Bursa Malaysia, which trades crude palm oil (CPO) futures.

Viable option

The Minister said the National Biofuel Policy unveiled last August would spur the development of the bio-fuel industry in Malaysia. Three companies have already established joint-ventures with the Malaysian Palm Oil Board (MPOB) to set up palm bio-diesel plants in the country using MPOB-patented technology, each with an annual production capacity of 60,000 tonnes.

The competitively priced palm oil has become a viable option in the bio-fuel sector, particularly in the European Union, the leader in biodiesel production, and having an outlet of 2.5 million tonnes in 2005, he pointed out.

Observing that CPO prices had softened in 2005 after sustaining an upward trend for three years, the minister said prices were still remunerative for the industry. Bursa Malaysia has received enquiries from Multi Commodity Exchange of India, Dalian Commodity Exchange and Joint Asia Derivatives Exchange for a settlement price of Bursa Malaysia's CPO futures contract. Bursa Malaysia may get into a licensing arrangement for CPO settlement prices.

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