Thai biodiesel producers will be celebrating this year, with domestic palm oil production expected to increase by approximately 30%, and prices to drop accordingly. 

 

A report by the US agricultural attaché predicts production will rise by 30 per cent to 900,000 tons in 2006. “This means that the food and fuel industries are likely to be paying lower prices for palm oil this year,” he said.

Consumption of palm oil in the food sector is growing, thanks to its cost advantages over other vegetable oils.

Retail prices for refined palm oil are currently 27-30 baht per litre (USD $0.70), compared to 36-37 baht (USD $0.94) for refined soybean oil.

Currently refined  palm oil accounts for about 60-70 per cent of total cooking oil consumption in Thailand.

 

However while prices may go down this year, industry expects the government to prevent them from falling too low.

 

Farmers in the south of the country have been encouraged to switch from rubber trees to oil palms by the promise of strong demand for the oil in biodiesel production.

 

Thailand has a high dependence on crude oil for fuel and the government has announced plans to grow the biodiesel sector, which could consume some 200,000 tons of crude palm oil produced in the country.

 

See related article: Thailand and Brazil discuss biofuels: http://www.biofuelreview.com/content/view/185/2/

 

David Smith, Singapore