Palm oil prices are expected to fall further from their recent record highs as likely production and stocks are set to rise above previous expectations, Hamburg-based oilseeds analysts Oil World said.
"We expect palm oil prices to react...and weaken in June or July 2007 from their all-time highs of $840 to $860 registered in May and early June," it said. "The worst is over." It expected crude palm oil prices in Rotterdam and Hamburg to average around $760 in July 2007/June 2008. "Palm oil production has started to increase seasonally," it said.
"For July/December 2007 we expect world palm oil production to rise by 1.2 million tonnes or 6.0 percent from a year earlier, following an unusually small increase by 0.3 million tonnes or 1.9 percent in January/June 2007."
"For October-September 2007/08 we expect palm oil production to increase by 3.3 million tonnes or 8.7 percent. This is a much more comfortable increase than the 1.9 million tonnes or 5.3 percent estimated for this season."
"We expect Malaysian and world stocks to increase seasonally in July/September 2007." But downward price potential for palm oil would be limited by expected strength in soyaoil as global soyabean output falls, it said.