KUALA LUMPUR, Oct 4: Palm oil prices, currently trading at near seven-month highs, are likely to be firmer in 2004 due to tight supply and lower stocks of the world’s major oils and fats, the editor of the Hamburg-based newsletter Oil World was quoted as saying.

Thomas Mielke said with world palm oil production expected to slow down further at the start of the new crop season — October 2003 to September 2004 — palm oil prices are seen performing better than rival soyoil next year, the Star newspaper reported on Saturday.

The recent price rallies were breathtaking and this could be a foretaste of what lies ahead for the next six months, Mielke told an industry conference in Kuala Lumpur.

He said the wide price discount of palm oil to soyoil, which has helped boost demand for palm oil, would likely narrow to $60 a tonne from $100 currently.

Palm oil prices in Malaysia, the world’s largest producer, have jumped 200 ringgit ($53) a ton, or 17 per cent, over the last month, tracking a similar rally in soyaoil futures on the Chicago Board of Trade.

The benchmark third-month palm oil contract on the Malaysian Derivatives Exchange fetched 1,529 ringgit ($402) a ton on Friday, its highest since March 10.

But Mielke cautioned that both palm oil and soy markets were currently vulnerable and due for some technical correction.

We may see some downward pressure on prices over the next one to three weeks owing to expanding soya bean harvests and some technical selling due to profit-taking after the recent bullish performance, he said, expecting palm oil and soyoil prices to trade below their recent highs for most of this month.

Mielke said world stocks of the major 17 oils and fats as of October 1 were only 12.6 million tons, down nine per cent from a year earlier and 15 per cent from two years ago.

Opening stocks of palm oil next year are seen at 3.71 million tons, compared with 3.92 million tons this year. —Reuters