Macquarie raises crude palm oil forecast

The price of crude palm oil, the world's most-traded vegetable oil, may average 17 per cent higher in 2007 than an earlier estimate as its demand as a fuel additive competes with its use in food, PT Macquarie Securities Indonesia said.

Palm oil may average $550 a metric tonne this year, excluding freight and insurance costs, analyst Liny Halim said in an interview in Jakarta on the sidelines of an investor conference.

Her earlier estimate was $470 a tonne. The price of palm oil, the world's most traded vegetable oil, has jumped 12 per cent in the past three months amid rising demand for the commodity as a fuel additive, as well as its traditional use in soaps and as a cooking oil. Biofuels have been gaining popularity ever since 2001 when crude prices tripled.

"We are very bullish on soft commodities "" they are the next wave in the commodities rally, and have been lagging the base metals," Halim said. "As soybean prices rise, so will palm oil." Soybean oil is a competing vegetable oil.

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