26/11/2010 (Business Times) - Malaysian palm oil should fall to RM2,600 by June 2011 on higher output in Southeast Asia and a decent soy crop but the pace of decline will be slower than the market expects, thanks to unusually low stocks, a key analyst said today.

The forecast by LMC Chairman James Fry represents a fall of 20.6 per cent from current palm oil futures, which closed at RM3,276 per tonne on yesterday, and takes into account palm oil’s higher than usual premium over diesel.

“It is hard to see why this gap should widen since biofuel demand can adjust downwards. A normal crude palm oil to diesel gap of $150 by June means 2,600 ringgit,” London-based Fry told an industry meeting in the Malaysian capital.