Mistry stands by palm oil forecast

Written by Bloomberg | Updated: Apr 21 2012, 08:54am hrs
Palm oil may gain 15% by the end of June, according to Godrej Internationals Dorab Mistry, restating a yearlong call for a rally to 4,000 ringgit ($1,303) a tonne after prices dipped.

I am very happy to reiterate my forecast, Mistry said. The Godrej director, whos correctly forecast price trends over the past year, has been predicting a rally to that level since at least March 2011. Wilmar International, the worlds biggest palm-oil processing company, is Mistrys favorite palm stock, he said.

While prices in Malaysia have climbed 9.1% this year, in line with Mistrys outlook, theyve fallen 4.5% since April 10 amid concern the global recovery may be at risk as economic growth in China slows and the European debt crisis worsens. Shares in Wilmar International, which have dropped over the past 12 months, are good value, he said.

My price forecasting is based on fundamentals of supply and demand and these have not changed, he wrote.

In fact, CPO production is underperforming more than my model had suggested, referring to crude palm oil by its initials.

Palm oil for July delivery dropped as much as 1% to 3,444 ringgit a tonne on the Malaysia Derivatives Exchange, and ended the morning session at 3,465 ringgit. Thats down from a 13-month high of 3,628 ringgit on April 10.

Currently, the macro picture is undergoing a reassessment and that has led some players to de-risk, said Mistry, , whos traded palm oil for more than three decades. This sentiment changes from time to time, and as time goes by, each such change lasts for a shorter duration. Time will tell.