Palm oil producer New Britain Palm Oil Ltd. (NBPO.LN) Friday reported a 13% fall in first-half profit, skewed by changes in the accounting value of its trees, and said it expects prices for crude palm oil to remain buoyant due to short-term jitters about food supplies and rising consumption in the long term.

The company, which operates in Papua New Guinea, said its average selling price during the first six months of the year was $792 a metric ton, compared with $730 a year earlier.

However, prices recently spiked to $900 a ton due to concerns about food shortages caused by poor wheat harvests in Russia and Ukraine. There have also been concerns about supply shortages caused by production problems in Indonesia, a major producer of palm oil.

"Palm oil is in a very strong position," said New Britain Palm Oil Executive Director Alan Chaytor.

He told Dow Jones Newswires demand for palm oil in the short term is buoyant and the medium-term outlook appears firm.

He added longer-term demand for the commodity, which is used in many food products, is expected to keep rising as food consumption increases.

New Britain Palm Oil reported a pretax profit of $82.3 million for the six months to June 30, compared with a profit of $94.8 million a year earlier. Revenue increased 27% to $205.4 million following an increase in crude palm oil prices.

New Britain Palm Oil's earnings are affected by fluctuations in the value of its biological assets--its trees. Excluding this, pretax profit was $46.2 million, compared with $41.9 million a year earlier.

Royal Bank of Scotland analysts said earnings were ahead of its expectations. It rates the stock "buy."

New Britain Palm Oil added it expects to benefit from increasing demand from food producers and consumers that palm oil be produced from a sustainable source.

The company's oils are fully traceable now it has begun refining operations at Liverpool in the U.K., it said. Customers include McVitie's owner United Biscuits and cereal maker The Jordans and Ryvita Co.

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com

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