Oil World sees palm oil prices down 10 percent

The combination of record supplies of sunflower seeds from the Black Sea area and lower demand due to the economic downturn will push palm oil prices down 10 percent in the next two months, German-based analyst Oil World said on Tuesday.
Nearby palm oil futures were quoted at $1,020 a tonne cif Rotterdam on Monday, down 21 percent from $1,292 a tonne in January. "We expect that the price lows of vegetable oils will be reached in October-December 2011," Oil World said in its weekly report.
"Crude palm oil in Rotterdam may fall to a low of $920 a tonne." Oil World said that record production of sunflower seed in the Black Sea region will remain a "major bearish" factor in the vegetable oils market. But it added that if China, India and Egypt increase imports because sun oil prices are attractive, that could stop the decline in vegetable oils prices. "We see prices of most oils seeds, vegetable oils and oilmeals recovering in 2012 owing to a slowing-down of the growth in supplies," Oil World said.
The recovery of vegetable oil prices will depend on the weather outlook, which could impact production, as well as on biodiesel mandates rising further in 2012 in several countries which will continue to squeeze the global balance of oils and fats, Oil World said. "The growth of palm oil production is likely to slow down in 2012. Some palmoil-producing regions have received below normal rainfall (primarily in May/July 2011) and young palms have already shown signs of stress."