Sep 20 2010 8:21AM
HO CHI MINH CITY (Dow Jones)--Global vegetable oil prices are likely to rise by $30 to $50 a metric ton in the October-December period due to lower-than-expected inventories of palm oil, dry weather in Brazil and rising production of biofuels, a leading industry analyst said Friday.
"Prices of all vegetable oils will be higher than their current values in the next quarter," Oil World editor-in-chief Thomas Mielke said in a broadcast address at the U.S. Agricultural Cooperators Conference in Vietnam.
Due to ample inventories, wheat and soybean prices may not sustain at their current levels around $7.50 and $10.50 a bushel, respectively, Mielke said.
Corn prices will need to strengthen to ensure farmers don't switch acreage to wheat planting next year, he said.
An additional 3 million tons of palm oil are needed on an average every year for the next 10 years to meet rising global demand, which is a very big challenge, noted Mielke.
He said rainfall has been insufficient in soybean-producing regions of Brazil, which is a cause of concern and supportive for vegetable oils prices for the time being.
He said South America's soybean production may fall by 7.0 million tons in the marketing year that begins on Oct. 1 from a record 136 million tons reached this year.
He also said rising biofuel production was positive for vegetable oil prices.
A sharp rise of 3.2 million-3.3 million tons is likely in global biofuels production to 19.2 million tons in 2010.
According to Mielke, E.U. usage of rapeseed oil for making biofuels will rise by 1.0 million tons to 6.7 tons in 2009-10 but may decline next year.
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