Leading vegetable oils analyst Dorab Mistry. He is also the director of Godrej International Ltd
Palm oil will trade at 2,600 to 2,800 ringgit per tonne from now until July, said industry analyst Dorab Mistry on Thursday, lower than forecast earlier as output recovers faster than expected and demand is softer.
From July onwards, prices could then slip to 2,500 ringgit ($613.50), but are not expected to weaken further, he said.
Mistry had previously said palm prices would reach 3,000 ringgit a tonne this year on crop damage from an El Nino weather pattern. But output is now forecast to be better than expected, making it harder for prices to hit that mark.
Benchmark futures on the Bursa Malaysia Derivatives Exchange have lost about 8 percent since touching values near 2,800 ringgit a tonne in March and April, the highest levels seen in two years. On Thursday, palm futures fell 1.6 percent to reach 2,519 ringgit by the close of trade.
"From July, as we witness a strong recovery in production and as stocks build up, we may see crude palm oil (CPO) prices slip to 2,500 ringgit, but I do not expect further weakness," said Mistry at the Palm Oil Trade Fair and Seminar in India, according to a copy of his speech as seen by Reuters.
El Nino weather events typically bring dry weather to Southeast Asia, lowering palm output in top producers Indonesia and Malaysia.
Mistry sees global output declining from the previous year by 2.5 million tonnes - 1.5 million tonnes in Malaysia and 1 million in Indonesia - in the oil year through September, down from a previous estimate of a 3 million-tonne drop.
Another analyst said on Monday in Turkey at a similar palm oil seminar and trade fair that high inventories in the fourth quarter would pull palm prices down to 2,200-2,300 ringgit.
"By the final quarter of the year, the combined CPO output of Malaysia and Indonesia will be back in positive growth," said James Fry, chairman of commodities consultancy LMC International, in remarks that were posted online.
Fry had forecast in March for palm oil prices to reach 2,750-2,900 ringgit by June.
Thomas Mielke, editor of Hamburg-based newsletter Oil World, however, said at the event in Turkey - also in remarks posted online - that palm oil prices would continue to rise, but the recovery would depend on output, end-stocks, demand and biodiesel developments.
"Palm oil futures are likely to recover to 2,800 ringgit and above," he said without stating when, pegging global palm output to fall 1.4 million tonnes in the oil year through September.
($1 = 4.0750 ringgit) - Reuters
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