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By Mayank Bhardwaj
NEW DELHI, Feb 3 (Reuters) - Malaysian palm oil prices could fall by nearly a fifth from the current level to 2,500 ringgit a tonne by June or July as production is expected to recover in second-biggest producer Malaysia, analyst Dorab Mistry told an industry event on Friday.
Mistry, director of Indian consumer goods company Godrej International, also said, however, that palm prices would rise to 3,300 Malaysian ringgit ($745.59) in the short-term due to limited supplies.
Benchmark palm oil prices are currently trading not far off their highest in more than four years as lingering dry weather effects from an El Nino weather event in 2015 are still cutting into production.
But palm oil prices will react negatively at the first sign of rising output, sometime around mid-March, the analyst told an event in New Delhi via video conference.
His medium-term forecasts assume Brent crude oil prices in a range of $50-70 a barrel and two rate hikes by the U.S. Federal Reserve this year.
Indonesia's palm oil production recovered strongly from September 2016 onwards, but Malaysian output has not due to a drought in the first quarter, Mistry said.
Indonesia and Malaysia are the world's top two producers of palm oil.
He said Malaysia's palm oil stocks have fallen below 1.5 million tonnes by end-January from 1.67 million tonnes at the end of December.
$1 = 4.4260 ringgit Reporting by Mayank Bhardwaj; Writing by Rajendra Jadhav; Editing by Tom Hogue