23/11/2012 (Agrimoney.com) - Anglo-Eastern Plantations joined the throng of companies forecasting higher palm oil prices even as futures headed lower again, depressed by fears over the rebound in Malaysian exports.

The group, which has a landbank of some 130,000 hectares in Indonesia and Malaysia, forecast that crude palm oil prices would "gradually recover", after falling last week to a three-year low on the Kuala Lumpur futures exchange.

The decline in palm oil values, which at $823 a tonne in Rotterdam in mid-November had fallen more than 20% so far this year, had been depressed by a "confluence of negatives" Anglo-Eastern said, flagging global economic weakness besides the seasonal high in Indonesian and Malaysian output.

Malaysian inventories hit a record high of 2.51m tonnes last month.

Palm oil vs soyoil

However, supplies of vegetable oils overall are "relatively low", when compared with demand, the group said.

For the nine major vegetable oils - including also soyoil, sunflower oil and rapeseed oil - stocks as a proportion of use will fall to 9.8% in 2012-13, from 11.3% last season, according to US Department of Agriculture data, even though that of palm oil itself will stay stable, at 13.5%.

Furthermore, "the price differential between crude palm oil and soyoil, its nearest competitor, is at a near four-year high of over $300 a tonne, which more than double the historical average".

The upbeat forecasts follow a forecast last week from New Britain Palm Oil that a strengthening of palm oil prices in the first half of 2013 could occur" if the "overhang" of palm oil stocks in Malaysia, erodes.

"There are signs that these [inventories] may have peaked," Nick Thompson, chief executive at the group, which operates in Papua New Guinea, said.

'May prove short-lived'

Separately, Sipef, the Brussels-listed plantations group which also produces palm oil in Papua New Guinea, said last month that the vegetable oil's "fundamentals have not changed", and that once higher stocks "do get absorbed, over the next three to four months, prices will move up to higher levels again.

"Let's keep in mind that demand should be boosted by palm oil's steep discount versus its main competitor soyoil."

And REA Holdings has flagged that the "current crude palm oil price is at an unusually large discount to the soyoil price and this seems likely to support the crude palm oil price in the medium term.

"Whilst the fall in crude palm oil prices is unwelcome, this may prove quite short-lived."

Soyoil supported

Soyoil prices have found support in Chicago from a series of export deals by the US, which on Wednesday unveiled the sales of 20,000 tonnes of the vegetable oil to China, and 56,000 tonnes to an unknown destination.

This follows the sale on Monday of 20,000 tonnes to "unknown", and 72,000 tonnes announced last week through the US Department of Agriculture's daily alerts system.

"The soyoil exports the past week have given the soybean complex support," broker US Commodities said.

Chicago soyoil for December closed up 0.4% at 48.53 cents a pound on Wednesday.

'Fuelled traders' concerns'

However, palm oil fell 1.3% to 2,411 ringgit a tonne on Thursday, continuing to feel pressure from cargo surveyor data showing a drop in Malaysian shipments this month, despite the lower prices.

Intertek Testing Services said that Malaysian exports were 3.3% lower in the first 20 days of November than in the same period of October, with Societe Generale de Surveillance putting the decline at 3.8%.

The data "fuelled traders' concerns over a slowdown in demand", Ker Chung Yang at Singapore broker Phillip Futures said.

Anglo-Eastern Plantations shares closed up 4.2% at 690p in London.