November 25, 2006	Saturday	Ziqa'ad 3, 1427

KUALA LUMPUR, Nov 24: Palm oil prices are expected to rise further by early next year as stockpiles decline due to robust global demand ignited by the rapidly expanding bio fuel industry, a analyst said on Friday.

Crude palm oil prices are expected to rise around 11pc to 2,000 ringgit ($550) a ton from around 1,800 ringgit a ton, said James Fry, vegetable oils analyst and managing director of London-based LMC International Ltd.

The benchmark February contract on the Bursa Malaysia Derivative exchange finished up 40 ringgit at 1,876 ringgit a ton. Crude palm oil prices have risen by around a quarter this year.

Fry said Malaysian palm oil reserves, a key demand indicator, are likely to fall to 1.25 to 1.3 million tons in the first half of 2007, compared with the record of 1.799 million tons in September.

Asian companies are eager to supply bio diesel or palm oil to Europe to gain a slice of the continent's growing green fuel market but analysts say their hopes are likely to be dashed by protectionist barriers.

But Europe's dependence on palm oil will continue to grow in coming years because of the increasing use of locally produced rapeseed oil to make bio diesel, Fry said.

It is not possible for them to stay without palm oil, as it is economically attractive for them to use palm oil and it is not genetically modified.—Reuters