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Palm Oil Prices to Rise on Biofuel Demand, Drought

Bloomberg. The price of palm oil will surge this year as demand increases, supplies are curtailed by drought in Southeast Asia and more governments mandate the use of alternative fuels.

The commodity will average $564 a metric ton in 2007, 27% higher than last year’s figure, according to the median forecast of eight analysts polled by Bloomberg News. The average price gained 11% in 2006 compared with the year before.

The El Niño weather pattern can instigate droughts in parts of Asia, crimping the supply of agricultural commodities. Some analysts predict palm oil futures will rise to an average of $640 a ton this year and to $680 a ton in 2008.

“For 2007, the demand for crude palm oil will be high because of biodiesel demand,” said Stefanus Darmagiri, an analyst at UOB Kay Hian Securities in Jakarta.



By my estimate $600/metric ton equates to about $2/gal. Destroying rainforests to get [unrefined] fuel that costs two bucks per gallon doesn't sound like a very good idea.


^ Yeah, it would be nice if we could figure out how to get the rising prices to stimulate growth of biofuels instead of cocaine in Columbia but leave the rain forests alone elsewhere in South America. Ugh.


There ain't no such thing as a free lunch.


Try sweet potatoes; ferment and distill ethanol, or gasify and create liquid/gas fuels. Done properly, the yields are as high as sugar cane.

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