14/06/2011 (Bernama) - OSK Research is maintaining its short-term bullishness on palm oil price as supply disruption in Indonesia and Malaysia's mandatory bio-diesel blend will set the stage for palm oil price to stage a counter trend rally.

The research house has forecast a short-term supply disruption in Indonesia, while the recent rollout of Malaysia's mandatory biodiesel blend is also timely to help absorb the higher production and should avert a collapse in the commodity's price.

"We think the impact of this has yet to be reflected in the May statistics," it said in its research note today.

The Malaysian Palm Oil Board announced on Friday that the inventory had approached two million tonnes. The 13.7 per cent jump in Malaysia's palm oil production overwhelmed the paltry 4.3 per cent rise in exports, resulting in the inventory rising to 1.918 million tonnes, the highest inventory level since January 2010.

OSK said although palm oil price will soften in the second half of this year due to the bumper harvest in Malaysia and Indonesia, bullish factors will dominate in the near term.

Meanwhile, Kenanga Research said that it looked forward to increase the average crude palm oil assumption price for 2011/2012 of RM2,800 and RM3,000 by RM200-RM300 a tonne.