* Rising use of vegoils in biofuels has boosted palm oil * Crude may pressure palm on rate hikes, govt spending cuts By Aloysius Bhui KUALA LUMPUR, March 10 (Reuters) - Malysian palm oil futures KPOc3 may steadily decline below 2,500 ringgit ($748.7) a tonne this year if Brent crude oil LOCc1 drops to $70 a barrel, top industry analyst James Fry said on Wednesday. That represents a decline of roughly 5-6 percent from current prices, especially if governments worldwide hike interest rates and cut back on spending, dragging Brent crude down by 25 percent within six months, said Fry, the head of LMC International. Fry also presented data showing that if Brent crude held in a range of $76 to $79 a barrel, chances are that palm oil could range between 2,600 and 2,700 ringgit per tonne over the period from March to September. The London-based analyst often links Brent crude with palm oil, thanks to the growing use of soyoil and rapeseed in the biofuel sector. Palm oil often substitutes for these edible oils in the global food industry, especially in Europe. "The arrival of biofuels has reduced the role of (palm oil) stocks (on prices). Since early 2008, they have determined only the premium of crude palm oil prices over petroleum prices," Fry told the Bursa Malaysia palm oil conference.

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