KUALA LUMPUR, March 27 (Reuters) - Malaysian palm oil futures are likely to rise to 4,000 ringgit ($1,303) per tonne by end-June as demand increases ahead of the Muslim fasting month of Ramadan while Southeast Asian supplies diminish, top industry analyst Dorab Mistry said on Tuesday.
Mistry's forecast, which is unchanged from earlier this month, represents a 15.3 percent jump from current palm oil prices, trading at 3,467 ringgit per tonne at 0430 GMT.
Mistry, head of edible oils trading with Godrej Industries, said many countries in Asia and the Middle East were stocking up on palm oil in June ahead of the Muslim fasting month, which is due to start around July 20.
These summer months, however, are when production usually declines in top palm oil producers Indonesia and Malaysia, where plantations are also seeing weaker yields after last year's strong output.
"Demand for palm oil will be greatest just when production will not have had time to recover. We are likely to see very tight stocks and a run up in prices so as to ration demand," Mistry said in a speech at an industry conference in Beijing.
"Reports of March production are also not encouraging. As I have earlier pointed out, CPO production in the first half of 2012 will be lower than it was in the first half of 2011," he added, referring to crude palm oil.
Following are some key points from the speech delivered at the China International Oils and Oilseeds Conference. Reuters obtained an advance copy of the speech.
PALM OIL
Mistry expects palm kernel oil to trade higher from current levels and rise to $1,700 CIF Rotterdam. Coconut oil should trade at a discount and reach $1,500 CIF Rotterdam.
Sees the prospect of Thailand becoming a palm oil importer. For a related story.
Sees an increase in demand for palm oil in Europe due to high rapeseed oil prices. Mistry said there are reports that rapeseed biodiesel has become uncompetitive, paving the way for more soy and palm biodiesel to be shipped to Europe.
Says availability of Indonesian refined products is getting tighter and therefore, Malaysian refiners may once again be able to take a larger market share.
INDIA
Says stands by earlier estimate of India's current rapeseed crop at around 5.3 million to 5.8 million tonnes.
Says prices of rapeseed and mustard oil are very high and these appear to justify his crop estimate. It also means Indian imports of soybean oil from Argentina will be higher than estimated.
SOYBEANS, SOYOIL
Says reports that U.S. farmers will plant more corn if the weather remains dry and warm will have a significant impact on soy. Corn is a very reliable crop and prices are high, which gives farmers some sort of guarantee.
Says it is quite possible that U.S. farmers will plant the estimated 95 million acres to corn and this will leave soybean acreage for 2012 unchanged or very slightly higher.
Says in 2012, U.S. farmers need to plant at least 3 to 4 million extra acres of soybeans, and for yields to be in line with current trends, in order to bring in a big crop.
Expects prices of crude degummed soya oil to rise to about $1,300 FOB, soy oil futures in Chicago to trade up to 60 cents and soybeans to hit $15 per bushel. Says increases are partly driven by South American biofuel needs.
CHINA
Says there is high edible oil stocks and negative parity for imports but notes that evidence over the last 12 months suggests that high stocks and negative parity have not affected the combined imports of oilseeds and oil in total.
Says China imports more oilseeds or more oil depending on its domestic crush economics and these factors will normalise if domestic interest rates are allowed to decline and liquidity increases.
Mistry's forecast, which is unchanged from earlier this month, represents a 15.3 percent jump from current palm oil prices, trading at 3,467 ringgit per tonne at 0430 GMT.
Mistry, head of edible oils trading with Godrej Industries, said many countries in Asia and the Middle East were stocking up on palm oil in June ahead of the Muslim fasting month, which is due to start around July 20.
These summer months, however, are when production usually declines in top palm oil producers Indonesia and Malaysia, where plantations are also seeing weaker yields after last year's strong output.
"Demand for palm oil will be greatest just when production will not have had time to recover. We are likely to see very tight stocks and a run up in prices so as to ration demand," Mistry said in a speech at an industry conference in Beijing.
"Reports of March production are also not encouraging. As I have earlier pointed out, CPO production in the first half of 2012 will be lower than it was in the first half of 2011," he added, referring to crude palm oil.
Following are some key points from the speech delivered at the China International Oils and Oilseeds Conference. Reuters obtained an advance copy of the speech.
PALM OIL
Mistry expects palm kernel oil to trade higher from current levels and rise to $1,700 CIF Rotterdam. Coconut oil should trade at a discount and reach $1,500 CIF Rotterdam.
Sees the prospect of Thailand becoming a palm oil importer. For a related story.
Sees an increase in demand for palm oil in Europe due to high rapeseed oil prices. Mistry said there are reports that rapeseed biodiesel has become uncompetitive, paving the way for more soy and palm biodiesel to be shipped to Europe.
Says availability of Indonesian refined products is getting tighter and therefore, Malaysian refiners may once again be able to take a larger market share.
INDIA
Says stands by earlier estimate of India's current rapeseed crop at around 5.3 million to 5.8 million tonnes.
Says prices of rapeseed and mustard oil are very high and these appear to justify his crop estimate. It also means Indian imports of soybean oil from Argentina will be higher than estimated.
SOYBEANS, SOYOIL
Says reports that U.S. farmers will plant more corn if the weather remains dry and warm will have a significant impact on soy. Corn is a very reliable crop and prices are high, which gives farmers some sort of guarantee.
Says it is quite possible that U.S. farmers will plant the estimated 95 million acres to corn and this will leave soybean acreage for 2012 unchanged or very slightly higher.
Says in 2012, U.S. farmers need to plant at least 3 to 4 million extra acres of soybeans, and for yields to be in line with current trends, in order to bring in a big crop.
Expects prices of crude degummed soya oil to rise to about $1,300 FOB, soy oil futures in Chicago to trade up to 60 cents and soybeans to hit $15 per bushel. Says increases are partly driven by South American biofuel needs.
CHINA
Says there is high edible oil stocks and negative parity for imports but notes that evidence over the last 12 months suggests that high stocks and negative parity have not affected the combined imports of oilseeds and oil in total.
Says China imports more oilseeds or more oil depending on its domestic crush economics and these factors will normalise if domestic interest rates are allowed to decline and liquidity increases.
