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    Spanish engineering and energy company Abengoa says it had suspended bioethanol production at the biggest of its three Spanish plants because it was unprofitable. It cited high grain prices and uncertainty about the national market for ethanol. Earlier this year, the plant, located in Salamanca, ceased production for similar reasons. To Biopact this is yet another indication that biofuel production in the EU/US does not make sense and must be relocated to the Global South, where the biofuel can be produced competitively and sustainably, without relying on food crops. Reuters - September 24, 2007.

    The Midlands Consortium, comprised of the universities of Birmingham, Loughborough and Nottingham, is chosen to host Britain's new Energy Technologies Institute, a £1 billion national organisation which will aim to develop cleaner energies. University of Nottingham - September 21, 2007.

    The EGGER group, one of the leading European manufacturers of chipboard, MDF and OSB boards has begun work on installing a 50MW biomass boiler for its production site in Rion. The new furnace will recycle 60,000 tonnes of offcuts to be used in the new combined heat and power (CHP) station as an ecological fuel. The facility will reduce consumption of natural gas by 75%. IHB Network - September 21, 2007.

    Analysts fear that record oil prices will fuel general inflation in Kenya, particularly hitting the poorest hard. They call for the development of new policies and strategies to cope with sustained high oil prices. Such policies include alternative fuels like biofuels, conservation measures, and more investments in oil and gas exploration. The poor in Kenya are hit hardest by the sharp increase, because they spend most of their budget on fuel and transport. Furthermore, in oil intensive economies like Kenya, high oil prices push up prices for food and most other basic goods. All Africa - September 20, 2007.

    Finland's Metso Power has won an order to supply Kalmar Energi Värme AB with a biomass-fired power boiler for the company’s new combined heat and power plant in Kalmar on the east coast of Sweden. Start-up for the plant is scheduled for the end of 2009. The value of the order is approximately EUR 55 million. The power boiler (90 MWth) will utilize bubbling fluidized bed technology and will burn biomass replacing old district heating boilers and reducing the consumption of oil. The delivery will also include a flue gas condensing system to increase plant's district heat production. Metso Corporation - September 19, 2007.

    Jo-Carroll Energy announced today its plan to build an 80 megawatt, biomass-fueled, renewable energy center in Illinois. The US$ 140 million plant will be fueled by various types of renewable biomass, such as clean waste wood, corn stover and switchgrass. Jo-Carroll Energy - September 18, 2007.

    Beihai Gofar Marine Biological Industry Co Ltd, in China's southern region of Guangxi, plans to build a 100,000 tonne-per-year fuel ethanol plant using cassava as feedstock. The Shanghai-listed company plans to raise about 560 million yuan ($74.5 million) in a share placement to finance the project and boost its cash flow. Reuters - September 18, 2007.

    The oil-dependent island state of Fiji has requested US company Avalor Capital, LLC, to invest in biodiesel and ethanol. The Fiji government has urged the company to move its $250million 'Fiji Biofuels Project' forward at the earliest possible date. Fiji Live - September 18, 2007.

    The Bowen Group, one of Ireland's biggest construction groups has announced a strategic move into the biomass energy sector. It is planning a €25 million investment over the next five years to fund up to 100 projects that will create electricity from biomass. Its ambition is to install up to 135 megawatts of biomass-fuelled heat from local forestry sources, which is equal to 50 million litres or about €25m worth of imported oil. Irish Examiner - September 16, 2007.

    According to Dr Niphon Poapongsakorn, dean of Economics at Thammasat University in Thailand, cassava-based ethanol is competitive when oil is above $40 per barrel. Thailand is the world's largest producer and exporter of cassava for industrial use. Bangkok Post - September 14, 2007.

    German biogas and biodiesel developer BKN BioKraftstoff Nord AG has generated gross proceeds totaling €5.5 million as part of its capital increase from authorized capital. Ad Hoc News - September 13, 2007.

    NewGen Technologies, Inc. announced that it and Titan Global Holdings, Inc. completed a definitive Biofuels Supply Agreement which will become effective upon Titan’s acquisition of Appalachian Oil Company. Given APPCO’s current distribution of over 225 million gallons of fuel products per year, the initial expected ethanol supply to APPCO should exceed 1 million gallons a month. Charlotte dBusinessNews - September 13, 2007.

    Oil prices reach record highs as the U.S. Energy Information Agency releases a report that showed crude oil inventories fell by more than seven million barrels last week. The rise comes despite a decision by the international oil cartel, OPEC, to raise its output quota by 500,000 barrels. Reuters - September 12, 2007.

    OPEC decided today to increase the volume of crude supplied to the market by Member Countries (excluding Angola and Iraq) by 500,000 b/d, effective 1 November 2007. The decision comes after oil reached near record-highs and after Saudi Aramco announced that last year's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent. OPEC - September 11, 2007.

    GreenField Ethanol and Monsanto Canada launch the 'Gro-ethanol' program which invites Ontario's farmers to grow corn seed containing Monsanto traits, specifically for the ethanol market. The corn hybrids eligible for the program include Monsanto traits that produce higher yielding corn for ethanol production. MarketWire - September 11, 2007.

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Tuesday, September 25, 2007

Analysts uncertain about palm oil price outlook

Three leading palm oil market analysts each offer a substantially different medium term outlook for the commodity. These differences are the result of uncertainties about biofuel subsidies in the US, demand in Asia, the development of other vegetable oil markets and the outlook for crude oil.

Vegetable oils are increasingly used in biofuels as crude oil prices have tripled to a record in five years. US farmers have planted more corn to meet demand for ethanol, pushing sowings of soybeans to a 12-year low. Malaysia and Indonesia account for about 90 percent of palm oil output, the most competitive vegetable oil. Palm oil on the Malaysian Derivatives Exchange, which trades the global benchmark, touched a record 2,764 ringgit on June 6 and has averaged 59 percent more since January than a year ago. The most active contract gained 1.4 percent to 2,606 ringgit on Friday. Soybean oil, palm oil's main competitor, reached a 23-year high of 40.49 cents on Tuesday.

Up on soaring demand
Dorab Mistry, a director at Godrej International, thinks palm oil futures in Malaysia may advance as much as 15 percent during the next year because of rising demand for biofuels and a shortfall in supplies of other vegetable oils. Prices might climb to up to 3,000 ringgit, or $870, a ton in the year ending Sept. 30, 2008, Mistry said during a conference in Goa. Earlier this year, he had predicted that prices would surpass 2,500 ringgit this year. Mistry has traded vegetable oils since 1976.

Demand for vegetable oils in the year to September 2008 may rise by 5 million tons, while supply may increase by 3.9 million tons, Mistry thinks. This incremental demand includes two million tons for biofuels and three million for food purposes.

Down, on US subsidy cut
For his part, James Fry, managing director of London-based LMC International and a leading gobal palm oil market analyst, told reporters at a conference in India that palm oil prices could ease from January if the United States cuts incentives it gives to biofuel producers.

Fry thinks palm oil prices are likely to reach 2,000 to 2,100 ringgit per tonne by March, down from the current levels of around 2,600 ringgit per tonne. The U.S. may cut subsidies to its biofuel units and if it does that by January global palmoil prices will start softening

The subsidy the US government gives is meant to encourage local soybean oil being converted into biofuel. But many people are importing palm diesel instead of using local soyoil to make biofuels. They import palm diesel, mix it with 1 percent local diesel, make the blend, that is biofuel, and collect the subsidy. Analysts have been expecting the US to stop this misuse of the subsidy for the last six months:
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Steady growth, stable prices
Finally, according to Thomas Mielke, chief editor of Oil World, a trade publication, global palm oil production may rise to a record 41 million tons in the year to September 2008, from a probable 37.38 million tons this year, as crops recover from the dry season in Malaysia and Indonesia. He said he expected prices to trade between 2,300 and 2,600 ringgit in the next 12 months.

Mielke thinks palm oil can partly fill the gap created by insufficient production growth in soybeans, canola and sunflower.

International Herald Tribune: Price of palm oil predicted to leap - September 24, 2007.

Reuters: Palm prices seen falling if U.S. cuts biofuel subsidy - September 23, 2007.


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