PUTRAJAYA, April 7 (Bernama) -- Palm oil prices may move beyond RM1,650per tonnes in the second half of this year should supply be adverselyaffected by the recent dry season or if mineral oil prices continue tostay above US$50 per barrel, said a Germany-based consultant ThomasMielke.

Mielke is the director of Ista Mielke GmbH, an independent researchorganisation that publishes Oil World. Oil World is an online globalmarket report for oilseed and oils that is accessible on subscriptionbasis at www.oilworld.biz.

Palm oil production could be affected by the recent dry condition in palmoil producing countries of Malaysia, Indonesia, Thailand and parts of thePhilippines and thus might result in positive effect on prices, he said.

Speaking to Bernama on the sidelines of Malaysian Palm Oil Board's (MPOB)seminar in Kajang, near here, Mielke said he was preparing a new estimatefor Malaysia's palm oil production this year from his February's forecastof 14.7 million tonnes.

On the demand side, he said continued rally in mineral oil prices mightforce a rising number of industrial consumers to switch to palm oil assubstitute to mineral-base fuel.

He said in Europe imports of Malaysian palm oil as biofuel had juststarted about a month ago.

"From June onwards, I see a strong world demand for Malaysian palm oilagainst the outlook of slower growth in Malaysia's production due todeclining yield per hectare.

"My tentative forecast is that European import of Malaysian crude palm oiland palm oil products as biofuel could be 600,000 to 800,000 tonnes inJanuary to December 2005 or even more compared with almost zero in 2004,"he said.

Despite the upbeat outlook for palm oil prices, he said bumper crops ofsoybeans, rapeseed and cottonseed could cause moderation in the price risein the near term.

Turning to lauric oil markets, consisting of palm kernel oil and coconutoil, where prices were tightening, Mielke said it was not expected tochange due to the declining coconut oil production.

"Output will be down for the fourth consecutive year this season due tonegative development in the Philippines and the small production inIndonesia.

"Palm kernel oil output will continue to rise but the overall worldproduction of coconut oil and palm kernel oil can hardly cover demand foroleochemical industries," he added.

On the growing oil and fat's usage as biofuel and their growingtraditional demand by industrial and household consumers, he said growthin supply is not keeping up with demand.

"World demand of oil and fats is expected to show an unprecedented growthof 6.0 million tonnes this season (Oct'04 to Sept'05), the biggest growthin history as compared with 4.1 million tonnes last season."

"The world will have difficulty in expanding production sufficientlywithin the next one or two years," said Mielke.

-- BERNAMA