Monday September 27, 3:23 AM - BOMBAY (Reuters) - Malaysian crude palm oilfutures are expected to fall to 1,300 ringgit a tonne in coming monthsfrom about 1,450 ringgit recently, on rising world supply and slow demand,a leading analyst said on Sunday.
"From now onwards, for the next several months, it will be very difficultfor oilseed and oil prices to rise," London-based Dorab E. Mistry,director of Godrej International Ltd. said at an edible oils conference.
Malaysian December palm oil futures closed down 19 ringgit at 1,420ringgit on Friday. The intra-day high was 1,443 ringgit.
Mistry said world vegetable oil supply was expected to rise by 7.0-8.5million tonnes in the year to October 2005, but consumption was seenrising by 4 million tonnes during the year.
Traders estimated global oil supply at 104 million tonnes and consumptionat 94 million tonnes in 2003/04.
Most seasonal demand for the coming months had already been met with heavyshipments in the past months, said Mistry, whose price forecasts arekeenly watched by traders.
He said soybean production in the United States was expected to rise byabout 11 million tonnes this year from the previous year, while SouthAmerica was expected to produce about 17 million tonnes more than lastyear.
Total world soybean output was likely to jump by 30 million tonnes in2004/05 from a year earlier, Mistry said, adding extra beans productionwas seen lifting soybean oil output by 5 million tonnes.
But the production growth depended on good weather in South America. An ElNino weather pattern or crop failure in the region could lower oil supply,he said.
"If the news from South America is good, prices will decline and bottomout sometime in January or February 2005. Once all the news on big cropsand big stocks has been priced in, the market may get a chance to rally inthe spring," he said.
Mistry said the outlook for palm oil production was less certain.
"If an El Nino develops, the outlook for palm oil expansion will be cloudyand we can only hope for unchanged, to slightly lower production," Mistrysaid.
But if El Nino does not develop, world palm oil production could rise by1.2-1.5 million tonnes, he added.
Edible oil production in India, the world's largest importer, was expectedto fall to 6.4 million tonnes in the new year starting November, from 6.89million the previous year, Mistry said.
The country received poor monsoon rains in June and July, crucial monthsfor winter crop sowings, but the rainfall improved in August.
Mistry said India was expected to import 5.4 million tonnes of vegetableoils, including non-edible oils, in 2004/05, compared with an estimated4.8 million tonnes in the current year.
Palm oil imports were seen rising to 4 million tonnes next year from 3.65million this year, while soyoil imports were expected to jump to 1.35million tonnes from 950,000 tonnes, he said.