By James Poole Dec. 15 (Bloomberg) -- Palm oil futures may advance 19 percent by the end of the first quarter, said Dorab Mistry, director of Godrej International Ltd., one of India’s biggest importers of vegetable oils. Palm oil may gain to 2,800 ringgit to 3,000 ringgit per metric ton ($820 to $879) by the end of March, said Mistry in remarks prepared for delivery at a conference in New Delhi. He was reiterating a Dec. 4 prediction that the commodity would increase to 3,000 ringgit by the end of March. Prices have soared 49 percent this year on the Malaysia Derivatives Exchange on increasing demand from India and China, the world’s biggest users of the oil, used for cooking and as an alternative fuel. The contract for February delivery ended at 2,525 ringgit per ton in Kuala Lumpur today. “The outlook for 2010 is bullish,” said Mistry. “I expect palm oil prices to rise at the fastest pace in relation to all other vegetable oils,” he said. Soybean oil gains will be curbed by higher South American supplies after April, he said. Still, “higher supply will be met by higher domestic biodiesel demand” and soybean oil will have to rise to about $950 per ton free on board in Argentina, he said. The gap between soybean oil and palm oil will “undoubtedly narrow,” he said. “I expect sunflower oil prices to command a considerable premium” and to climb as high as $1,200 per ton in Europe, while rapeseed oil will be higher than soybean oil “but perhaps not as high as sunflower oil,” he said. Stock Market Risk His forecast would put RBD palm olein at about $900 per ton fob by the end of January, he said. He expected palm kernel oil and coconut oil to trade “in rough parity” with palm oil in the first half of 2010. The predictions were at risk should global stock markets drop, he said. “It is more than likely that we shall see a big correction in markets at some stage between February and April,” he said. “One-sided long positions can be dangerous.” The forecasts assumed the dollar at about $1.50 to the euro and crude oil from $70 to $90 a barrel in the next few months. Malaysia, the second-biggest grower, may produce less palm oil in 2010 than in 2009 because of the start of a new low cycle for palm trees, the onset of El Nino and a replanting program, he said. He expected a 1 million to 1.5 million ton increase in output next year in Indonesia, the largest producer, down from a 2 million-ton gain expected by analysts, because of El Nino. South American Crops Plantings and production in South America appear to be on course and, with El Nino leading to “sumptuous” rainfall there and “if rust problems are minimized”, we are looking for record crops in Argentina and Brazil, he said. “Prospects for sunflower seed production have somewhat deteriorated in recent weeks,” he said. “Rapeseed production seems to be coming up to expectation and is a little better than expected,” he said. India may import more than 8.65 million tons of vegetable oils in the 2009-2010 year, said Mistry. The country shipped in 8.65 million in 2008-2009, according to his table. Imports may be more than expected this year because Indian farmers are “very reluctant sellers of oilseed”, the high prices of pulses make oilseeds like groundnuts and soybeans “very attractive for direct human consumption,” and per capita consumption is expected to increase 4 percent to 5 percent, Mistry said in his prepared remarks.

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