KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives
exchange may rise toward MYR2,100 a metric ton in the next few weeks but are
likely to fall subsequently amid a slowdown in demand and higher global supply,
London-based vegetable oils analyst Dorab Mistry said Thursday.

  "In the macro-economy, world trade is shrinking, credit availability is
scarce. Output is falling, prices are falling, and there is a very real threat
of deflation. These are troubled times," Mistry said, addressing an
international conference on vegetable oils.

  It is likely that there will be a tightening of palm oil stocks in Malaysia
during the first half of 2009, but production will start to recover from August
onwards due to recent better use of fertilizers, Mistry said.

  He said beyond April and May, palm oil will become uncompetitive against
South American soyoil and will lose market share.

  "For the second half of the year, CPO prices may come under pressure from
soyoil and also higher production and weaker demand," noted Mistry.

  He said this will weigh on palm olein prices and lauric oils will follow palm
olein downward.

  Soyoil prices are also expected to fall, but due to weakening of local
currencies, the impact on exporters in Brazil and Argentina will be cushioned.

  He said global supply of vegetable oils is likely to rise by 4.7 million tons
during the current marketing year to September 2009.

  Global demand may increase during the same period by only 2.5 million tons,
including 2 million tons for food and about 500,000 tons to make biofuels, he
said.

  As a result, incremental supply will exceed demand by around 2.2 million
tons. This is the second successive year that supply will exceed demand.

  Mistry, whose forecasts on demand, supply and prices are tracked worldwide,
said food demand for vegetable oils generally increases by anywhere between 4
million and 5 million tons annually.

  But the global economic recession can badly affect demand, he noted.

  He said more importance may have to be given this year to issues relating to
the macro-economy rather than the market fundamentals of vegetable oils alone.

  There are also several bearish factors for soybeans and rapeseed, Mistry
said.