09/03/2012 (Hindu Business Line) - A generally bullish outlook for palm oil prices in the coming months was presented by various speakers at the Palm and Lauric Oils Price Outlook conference here.

Mr Thomas Mielke, Editor of Oil World, said that 2011-12 will see a global production deficit of 13-15 million tonnes (mt) of oilseeds and the ending stocks of oils will be just about 6.3 per cent of usage. For the first time, global soyabean output will decline by 20 mt to 245 mt.

Tightening supplies and robust demand will keep vegoil prices firm, he asserted adding palm oil will benefit. China has become a bullish demand factor in 2012, he remarked.

Mr Mielke's price forecast for 2012 included palmolein fob Malaysia $1,180 a tonne; crude palm oil cif Rotterdam $1,150/tonne; soya oil fob Argentina $1,250/tonne and palm kernel oil Rotterdam at $1,400/tonne.

Dr James Fry, Chairman of London-based LMC International, showed the positive relationship between crude oil and vegetable oil prices via the bio diesel route.

He built four different scenarios based on various crude price levels, palm oil stocks and global economic slowdown following possible geopolitical instabilities (See Table).

Grim supply
According to Mr Dorab Mistry of Godrej International, the demand-supply situation is pretty grim in the first half of the year until June.

Crude palm oil production will rise seasonally but will remain in the ‘low cycle', he said adding that stock levels will be at their tightest and therefore vegoil prices will peak around June. Crude palm oil prices will climb steadily and peak at $1,250 fob or at about RM 4,000 a tonne by end of June 2012, he asserted. After June, there may be a pullback with prices remaining in the $1,150-1,200 price band until there is evidence of end to the low cycle by November.