Dry weather, biofuel mandate to boost palm prices in 2014
But the country is likely to use only 2 million tonnes of palm oil for blending into biodiesel in 2014, 41 percent short of its target of 3.4 million, Hassan said.
The weak demand for palm oil comes at a time when global oilseed supplies are expected to rise.
Output of rival soyoil should see a spike, with Brazil headed for a record soybean crop of 90 million tonnes, according to the U.S. Department of Agriculture, up from 82 million a year ago. Argentina's soybean output is seen climbing to 54 million tonnes this year, compared with 49.3 million tonnes in 2013.
Next Three Weeks Eyed
Several traders at the conference said the global supply and demand fundamentals could cap the rally in palm prices.
If rains come as normal and the high production cycle kicks in from July, palm can trade between 2,600 and 2,900 ringgit over July to October, Mistry said.
Benchmark prices of the tropical oil have risen almost 7 percent this year and are currently at above 2,830 ringgit.
"If it stays dry for another 2-3 weeks, oil palm will react and yields will decline in October-December this year and in the following two years," said Thomas Mielke, editor of Hamburg-based newsletter Oil World.
"Such a scenario would trigger higher-than-forecast prices." ($1 = 3.2750 Malaysian ringgit)
- Farm Market iD releases 2013 Land and Grower Database
- Even in isolated, pristine Tasmania, pressure for GMO farming
- Grains dipped Tuesday while the other markets climbed
- Cattle, soybeans climb Tuesday morning
- Maire Tecnimont to build $1.6 billion U.S. fertilizer plant
- Corn price premiums continue to fade