23/09/2007 (Reuters), India  - Global palm oil prices may reach 2,600-3,000 ringgit per tonne shortly as demand is likely to surpass supplies and rival soyoil is also expected to rise sharply, a top industry analyst said on Sunday.

Soyoil prices would soon scale up to $900 per tonne and might touch $1,000 per tonne, Dorab Mistry, whose forecasts are closely watched by the industry, told a conference in Goa.

Palm oil, mostly produced in Malaysia and Indonesia, was at a record high of 2,764 ringgit per tonne in June and rival soyoil touched a 23-year high on the Chicago Board of Trade this year.

Mistry said demand for edible oils was expected to increase by 5 million tonnes in the year to October 2008, while supplies were likely to rise by only 3.9 million tonnes.

He said supplies of edible oils were not expected to rise as a recent rally in wheat prices have lured farmers to grow more grain instead of oilseeds.

Mistry said countries such as India should opt for genetically modified technology to boost oilseed output, which has been stagnating for the last couple of years.

"The rally in wheat prices to $9 per bushel has made wheat the crop of first choice for all lands where wheat competes with corn, rapeseed or beans," London-based Mistry said.

He said an expected fall in rapeseed and soybean output in China would also drag down supplies of edible oils in global markets, pushing prices up.

The use of palm and soy oils for producing biofuels has been fuelling a sharp rally in prices globally. Prices of palm and soy oils generally move in tandem as both compete for the same market.

"Bio diesel production in Argentina is likely to be significantly higher than most people have imagined," Mistry said.

He said bio diesel production would go up by 2 million tonnes in the year to October 2008 from 2006/07 to capitalise on the growing needs for alternative fuels.

"Higher crude oil prices will propel demand for alternative fuels and lead to a greater diversion of traditional cooking oils for the production of biofuels," he said.