KUALA LUMPUR (Dow Jones)--Crude palm oil prices may climb to MYR4,000 a metric ton in the next few weeks on tight palm oil inventory levels amid high energy prices, leading vegetable oils analyst Dorab Mistry said Wednesday.
"Prices may test new highs in the next eight to 10 weeks," Mistry said at an international palm oil conference. "We are facing extremely tight palm oil stocks in Malaysia at least until June."
May palm oil on the Bursa Malaysia Derivatives settled at MYR3,584/ton Tuesday, down nearly 10% from MYR3,967 the benchmark contract reached Feb. 10
Palm oil stocks may improve from July onward, due in part to increased fertilizer application on oil palm trees and "the extraordinarily wet and cloudy weather we have experienced in recent months...the high production cycle will
commence in July," Mistry said.
He said Malaysia's output will likely see strong growth during the September-November period and he expects CPO production to reach 17.3 million
tons in 2011.
If realized, the output figure would represent a small rebound in production after two years of declines. Malaysia's palm oil output in 2010 reached 17 million tons, compared with 17.6 million tons in 2009 and 17.8 million tons in 2008.
London-based Mistry, who is also a director at Godrej International Ltd., said Indonesia's CPO output will increase by 1.5 million tons to reach 24 million tons in 2011.
Palm oil's discount to soyoil may widen significantly in the second half of the year, he said, as palm oil production improves at a time when soyoil prices are likely to rally to 70 cents a pound.
"Soyoil's premium over refined palm olein will reach historic highs of $200/ton as winter sets in." Refined palm olein was last offered at a $40 discount to Argentina soyoil.
March soyoil futures on the Chicago Board of Trade ended 60 points lower Tuesday at 57.97 cents/lb, off a recent high of 59.75 cents/lb and a March 2008
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;
shie-lynn.lim@dowjones.com