Malaysia, Indonesia biodiesel production forecast to rise in 2017

KUALA LUMPUR (Reuters) -- Malaysia will produce about 900,000 t of biodiesel in 2017, up about 80% from half a million tons last year, while Indonesian output will rise to 3.5 MMt this year from 3 MMt in 2016, an industry expert said on Tuesday.

"These are the forecasts based on the current pricing of crude palm oil and oil prices," said U.R. Unnithan, president of the Malaysian Biodiesel Association on the sidelines of a palm oil industry conference in Kuala Lumpur.

Benchmark palm oil prices are up nearly 3% so far this month after sliding 8.5% on expectations of rising output and weakening demand in February.

Palm oil is down 1.5% at $640.94 per ton on Tuesday evening.

Palm oil can be used to produce the bio components of biodiesel grades sold at retail fuel pumps. Low crude oil prices, though - benchmark crudes are still around half of what they were in mid-2014 -- are expected to make it tougher for biodiesel to compete against petroleum diesel.

Reporting by Emily Chow; Editing by Tom Hogue

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