* Rebound in Southeast Asia palm oil output to pressure
* Decline seen coming in 2nd half as inventories still tight
* India, China palm oil demand seen slowing this year
By Naveen Thukral and Emily Chow
KUALA LUMPUR, March 8 A rebound in Southeast
Asia's palm oil production this year is forecast to drag down
prices of the tropical product in the second half, with
additional pressure coming from an expected slowdown in demand
from top importers India and China.
Tight supplies following a drought in 2015-16 are expected
to support the market over the next two months, but downward
pressure should build from May as output picks up in Indonesia
and Malaysia, analysts and industry officials said at a
conference in Kuala Lumpur.
Benchmark Bursa Malaysia crude palm oil futures
fell to their lowest since early November last week on slowing
demand and the outlook for higher production. On Wednesday, the
main contract slid a second day to hit a low of 2,821 Malaysian
ringgit ($634.40) a tonne.
More than 1,600 delegates are in Malaysia for one of the
world's biggest edible oil conferences, ending on Wednesday.
Three leading analysts of the palm oil industry, Thomas
Mielke, James Fry and Dorab Mistry have a rare consensus on
prices declining by year-end or early in 2018.
While Fry expects crude palm oil prices to fall about 20
percent by the final quarter of 2017, Mielke expects oil prices
to fall by more than 15 percent by 2018. Mistry is looking at
prices to falling by nearly 12 percent by as early as June-July
to 2,500 ringgit a tonne.
"The recovery in (crop) yields will be slow, the further
increase in yields should occur in 2018," Mielke told the packed
This will add another 4.5 million-5 million tonnes to palm
oil production next year, and this is "going to have a bearish
impact of prices," he said.
While production picks up, demand for palm oil from India
and China is likely to slowdown.
Vegetable oil imports by India, the world's biggest buyer,
are expected to decline to 14.3 million tonnes in the year to
October 2017, down from 14.738 shipped a year ago, Mistry said.
India's soybean production climbed to 11.5 million tonnes
late last year and the nation is expecting to harvest a bumper
rapeseed crop next month.
Traders at the conference said a rise in China's soybean
imports means the country will need less palm oil as it will
have higher supplies of domestically produced soybean oil.
Soybean imports by China, which takes more than 60 percent
of beans traded worldwide, climbed 23 percent year-on-year in
February to mark the highest level for that month since at least
2010 at 5.54 million tonnes.
Still, higher production of biodiesel, mainly in Indonesia,
could help to limit any decline in palm oil prices.
($1 = 4.4470 ringgit)
(Reporting by Naveen Thukral; Additional reporting by Gavin
Maguire; Editing by Tom Hogue)