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Malaysia palm oil prices to fall 17 pct by Nov-Dec -analyst Fry

By Rajendra Jadhav

MUMBAI, Sept 14 (Reuters) - Benchmark Malaysian prices for
crude palm oil are likely to fall nearly 17 percent from current
levels by November or December as overseas appetite for the
commodity falters over the winter, leading industry
analyst James Fry said on Thursday.

Malaysian crude palm oil (CPO) futures will drop
below 2,400 ringgit ($572) per tonne in the last two months of
the year, with their discount to other edible oils like
sunflower and soyoil widening, Fry told the Globoil India
conference.

Prices for the commodity, used to churn out products ranging
from soap to biofuel, stood around 2,880 ringgit on Thursday.
They have jumped nearly a fifth in the past three months.

Indonesia and Malaysia account for nearly 90 percent of
global palm oil production.

Places such as China and Europe normally reduce their intake
of palm oil in winter months as the tropical product solidifies
in cold temperatures.

European Union CPO prices will likely drop by almost $100
from their August average of $674 per tonne by
November-December, added Fry, the chairman of commodities
consultancy LMC International.

A recent rally in palm futures based on reports of sharp
fall in CPO output in Malaysia is "irrational" as the reduction
in production due to national holidays will be made up later,
said Fry.

"CPO output is recovering from the devastating impact of the
El Nino drought," he said. An El Nino weather pattern hit
Southeast Asian palm production hard in 2015, bringing drought
conditions to parts of the region.

Sunflower oil will remain the most price-competitive
alternative to palm oil in the European Union market over the
next six months, Fry said.
($1 = 4.1990 ringgit)
(Reporting by Rajendra Jadhav; Editing by Joseph Radford)

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