Palm oil prices will rise strongly in coming months, with demand remaining high and stocks falling, Hamburg-based newsletter Oil World said.
It forecast crude palm oil at $610 a tonne cif north Europe during April to June. North Europe April crude palm was at $547.50 on Monday.
"Palm oil prices are undervalued relative to soyoil," it said. "At the current large discounts, world demand for palm oil is picking up. This will result in relatively high palm oil exports.
"World palm oil stocks are already low and relative to demand they are likely to continue to decline in April/June 2004."
It forecast global stocks falling to 3,110,000 tonnes on June 30, from 3,190,000 tonnes at the same time in 2003. April/June world palm oil exports will rise to 5,437,000 tonnes against 4,889,000 in January/March.
Sluggish Malaysian output was tightening supplies. "This will be offset by continued growth in Indonesia but the net effect is likely to be a stagnation of world production in April/June and only a marginal increase in July/September," it said. "This will considerably limit the scope for expanding palm oil usage".
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