Malaysian crude palm oil futures are expected to end the year at their current level of around 1,400 ringgit ($368) a tonne despite fears of a slump forced by rival soyabean oil, a senior industry official said.
"Everybody is thinking the palm oil prices are going to take a dip because of the high Soya production," said M.R. Chandran, chairman of the Malaysian Palm Oil Association, which groups 108 oil palm plantations in the country.
"But I reckon we should end the year at around 1,400 ringgit a tonne," he told Reuters in an interview on Wednesday. "People are talking of about 1,350 ringgit but I don't think we'll see such a major correction."
The benchmark January crude palm oil contract on the Malaysia Derivatives Exchange was up two ringgit at 1,423 ringgit ($374.47) a tonne on Wednesday, off an intrude high of 1,430.
Cash prices were far higher. "I personally know of plantations supplying spot oil to local refineries at 1,480 ringgit and above," an industry source said. "Contracts for November have been done at 1,500 ringgit."
Loyal support from big consumer China and India's likely return to the market despite plentiful buying in recent months were among the supportive factors, Chandran said.
Society Generale de Surveillance (SGS), the main surveyor of Malaysian oil palm product cargoes, said this week it estimated October 1-25 exports at 1.02 million tonnes lower by 6.5 percent from September 1-25.
But the figure was 8.3 percent up when compared with SGS's estimates from a year ago. India, the world's biggest oils importer, took in about 25,000 tonnes of palm products in five days to October 25 despite analysts saying it was likely to lay off, with enough supplies to last till the year-end.
"The domestic market's biggest concern now is that there are about 1.3 million tonnes of stocks on its hands compared to last year's tally of below one million," said Chandran. "But the lower production in coming months should take care of that."
Chandran put November output to fall 5.0-8.0 percent from October's forecast of 1.4 million tonnes. "December should be even lower," he added.