The prices of oils and fats were generally bullish from 2001 to 2004. However, except for cottonseed oil, they turned bearish in 2005. Price recovery in some of them is expected in 2006, as indicated by their higher prices in the first three-quarters of the year. Prices of olein, stearin and soyabean oil are expected to increase while those of cottonseed oil, tallow, coconut oil and palm kernel oil are expected to decline. The prospects for these oils and fats, especially palm oil, will continue to strengthen in 2007 due to the El Nino effect, developments in the Indian market and the diversion of some production to biodiesel production, a new demand for palm oil.