Palm oil may average 7.1 percent higher in 2010 than previously forecast, driven by supply shortages and dry weather caused by El Nino, BNP Paribas SA said.
The commodity may average 2,625 ringgit ($549) a metric ton this year, compared with an earlier forecast of 2,450 ringgit a ton, the bank’s Michael Greenall and Helmy Kristanto said today in a report. Prices may reach 2,800 ringgit a ton in the first half, BNP said.
An El Nino weather pattern, which can cause drought in parts of the Asia-Pacific region and Australia, started in May and will be a “significant occurrence,” BNP said. Royal Bank of Scotland Asia Securities (Singapore) Pte. also raised its palm oil forecast this week.
“We believe the current tightness in crude palm oil supply will keep prices firm and, if El Nino develops into a stronger event, crude palm oil and other oilseed price strength would extend into second half 2010,” the BNP report said. The bank expects the strongest prices in the first half of this year.
Still, BNP lowered its forecast for 2011 by 2 percent to 2,500 ringgit a ton, and predicted an average 2,450 ringgit a ton in 2012.
Palm oil for April delivery climbed as much as 0.9 percent today on the Malaysia Derivatives Exchange and traded 0.6 higher at 2,444 ringgit a ton at the 12:30 p.m. local time trading break. Palm oil has gained 37 percent in the past year and averaged 2,230.96 ringgit in 2009.
To contact the reporter on this story: Madelene Pearson in Mumbai on mpearson1@bloomberg.net
More Recent Palm Oil News 
- Crude Palm Oil Futures End Lower On Profit-Taking
- Indonesia to export only 50% of CPO output by 2015
- Reject efforts to limit growth of oil palm estates in Malaysia
- Crude Palm Oil Ends Up On Record Low End-Month Stocks
- Crude Palm Oil Prices Likely Under Pressure If Crude Drops -Fry
- Malaysia Feb CPO Output 1.16 Mln Tons; Down 12.5% On Month -MPOB
- Palm Oil Demand to Rise Faster Than Production, TransGraph Says
- CME US Dollar Crude Palm Oil Futures Specifications
- Crude Palm Oil Ends Down On Weak Crude Oil Futures
- CME Group Announces Launch of Dollar-Denominated Crude Palm Oil Futures
- Palm Oil Players Prefer Malaysia For Trading
- Palm Oil Industry Needs To Increase Yield Through Research And Innovation
- Crude Palm Oil Ends Up; Market Expects Bullish Forecasts
- Crude Palm Oil Ends Down; Choppy Trade; Outlook Awaited
- Crude Palm Oil Ends Up; Bullish Outlook, Short Covering
PRO Palm Oil Live Market News
- India Commodity Prices Including Palm Oil – Agriculture
- MARKET TALK: India Soyoil Futures Steady; Weak Palm Oil Weighs
- Malaysian Cash Market Prices For Palm Oil – March 11
- Crude Palm Oil Futures End Lower On Profit-Taking
- Indonesia Astra Agro Sells 5,000 Tons Crude Palm Oil (CPO) Thursday
- Indonesia's PT KPB Sells 2,000 Tons Crude Palm Oil (CPO) At Auction Thursday
- CPO Likely To Gain In 2H Amid Rising Demand, Dwindling Supply
- China Soybean Futures Up On CBOT Rise, But Restrained By CPI Data
- MARKET TALK: BMD Crude Palm Oil (CPO) Futures Down On Profit Taking
- China Dalian Commodity Exchange Grain Stocks, Mar 11
- India Commodity Prices Including Palm Oil – Agriculture
- China Dalian Grain Futures Closing Prices, Volume
- MARKET TALK: BMD Crude Palm Oil (CPO) Futures Down On DCE,China Rate Hike Fears
- Malaysian Cash Market Prices For Palm Oil – March 11
- MARKET TALK: CIMB Keeps M'sia Plantation Sector As Trading Buy