Palm oil price may fall to RM2,100/T, near current low

"(There is) only limited downside potential on the BMD from current prices," Thomas Mielke(filepic) said, according to a copy of his presentation, referring to palm's benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange

The price of Malaysian palm oil could drop to as low as 2,100 ringgit ($519.80) per tonne "in the medium term", edible oil analyst Thomas Mielke told an industry event in Seoul, not far from current levels which is the weakest in almost three years.

"(There is) only limited downside potential on the BMD from current prices," he said, according to a copy of his presentation, referring to palm's benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange.

Malaysian palm oil fell to 2,176 ringgit on Thursday, the lowest since September 2015, tracking losses in prices of related edible oils amid weak demand and a festering trade dispute between China and the United States. The price has lost 6 percent this month.

Mielke, editor of the Hamburg-based newsletter Oil World, said current Indonesian palm oil prices are also near their lows at $570-$580 a tonne, free-on-board basis. They have averaged $600 per tonne in June, according to Thomson Reuters Eikon data.

Mielke also said the growth trend in China's soybean crushing could be temporarily interrupted due to its trade row with the United States, leading to higher palm oil imports.

"China cannot satisfy all of its soybean import demand from non-U.S. origins," he said. "China is likely to raise palm oil imports, if the soybean crush is curbed."

China typically imports soybeans to crush into meal for animal feed, leaving soyoil as a byproduct which competes with palm.

Mielke slightly cut his outlook for palm oil production in Indonesia and Malaysia, which together produce about 90 percent of global supply.

He pegged 2018 output in Indonesia at 38.9 million tonnes and Malaysia's at 20.2 million tonnes. In March, he had forecast 38.8 million tonnes for Indonesia and 20.8 million tonnes for Malaysia.

Next year's production in Indonesia is estimated at 40.5 million tonnes and Malaysia at 20.7 million tonnes, he said. ($1 = 4.0400 ringgit) - Reuters