NUSA DUA, Indonesia, Nov 8: Malaysian crude palm oil prices may trade at around 3,000 ringgit a ton in the next few months as expected higher palm oil output may help keep a lid on prices amid growing demand, analysts said on Thursday.

Dorab Mistry, director of Godrej International, said global palm oil output is expected to increase by 3.8 million tons in 2008 while there will be little demand for palm oil from new power generators.

Prices at 3,000 ringgit are a fair level, Mistry told a conference in Bali.

We will achieve growth in palm oil production of 3.8 million tons. And no new electricity generators will start to use palm oil for burning to produce electricity, he said.

Strong crude oil prices will also keep palm oil prices high, analysts said.

Palm oil prices may rise as high as 3,200 ringgit ($961) per ton if average oil prices surge to more than $100 a barrel, leading industry analyst James Fry said on Thursday.

Palm oil, the world’s second most popular edible oil After soyaoil, closely tracks movements in crude oil and soyaoil because of the increasing use of soyoil and palm oil as alternative energy sources.

Malaysia’s palm oil futures have soared around 50 per cent since early this year, boosted by strong demand from the food and energy sectors as the world seeks substitutes for oil.

I think the highest would be 3,100-3,200 ringgit, said Fry, managing director of London-based LMC International, when asked how much the price of palm oil could go up.

Palm oil is still the most efficient means to produce biodiesel in per-hectare terms, he told an industry conference in Bali.

Malaysian palm oil futures hit a record 3,000 ringgit ($899.3) a ton on Wednesday, tracking gains in crude oil and soyaoil.

Prices of other edible oils would remain high as erratic weather and competition for acreage with food crops, particularly wheat, may squeeze supply.

Wheat is more attractive to farmers than oilseeds. Also wheat is a staple food. The global fight for acreage will continue, said Mistry.

Rapeseed oil will hold at $1,200 a ton ex-mill in Europe.—Reuters