14/8/07 (Dow Jones) --  Global edible oil prices look set to fall in the October 2007 to November 2008 marketing year, as a supply tightness that sent the market surging to multiyear highs is easing, an influential analyst said Wednesday.

Dorab E. Mistry, director of U.K.-based Godrej International Ltd., said world edible oil production growth is expected to outstrip demand growth by 1.0 million metric tons in the coming marketing year.

"We must expect prices in 2007-08 to decline from their current high levels," Mistry, one of the industry's most widely-followed analysts, said in a paper presented at the Singapore International Oils and Oilseeds Conference.

The price of crude palm oil, the world's main edible oil, soared to a record high in mid-2007, with the bellwether third-month futures contract in Malaysia exceeding MYR2,700/ton.

The benchmark October contract on Bursa Malaysia Derivatives ended at MYR2,497/ton Tuesday, off 2007 highs, but still about 50% higher than a year earlier.

Global demand for edible oils is expected to increase by 4 million tons in 2007-08, with the biodiesel and energy sectors accounting for a quarter of the growth, Mistry said.

Meanwhile, world edible oil production is projected to rise by 4.9 million tons, he said.

Palm oil is no exception, with output of the commodity likely to bounce back strongly in the coming year after marginal growth in 2007 because of unfavorable weather conditions.

Mistry said the lean spell in CPO production should end by September.

"Palm oil has nothing but good news on the production front for 2008 and for 2009, given high prices, rapid expansion of acreage and liberal use of fertilizer," Mistry said.

World CPO output is expected to expand by 3.8 million tons in the 2007-08 marketing year compared with a 1.3-million-ton growth the previous year.

Still, Mistry said the long-term forecast for palm oil prices would only be clearer by mid-September as the industry waits for signs on how strong the expected recovery in production will be.

"A sustained rise in CPO production could tell us with confidence that prices need to fall by 10%. At present, it is still premature to jump to such a conclusion," he said.

In the meantime, the benchmark CPO futures contract is expected to trade within a MYR2,300-MYR2,500 range for the next two months.

In the coming months, palm oil's direct substitute, soyoil, is expected to remain around $800/ton, free on board Argentina, for October/November/December delivery, Mistry said.