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Palm oil to slip into discount against soyaoil [24-02-2011]  
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Malaysian palm oil will flip from its current premium to competing soyaoil and trade at a discount, as production recovers in the second half of this year, a leading analyst said yesterday.

Palm olein now trades at a US$70 (RM210) premium to a tonne of Argentine soyaoil, triggering concerns that demand will slow and weigh on benchmark palm oil futures that is set to post its worst monthly loss in February in more than a year.

Thomas Mielke, editor of Hamburg-based Oil World, said the fading La Nina weather condition in coming weeks will aid the recovery in Malaysian and Indonesian output that has been curbed by heavy rains and floods in early 2011.

The same can be said for the Argentine soya crop that has now experienced favourable rains after a prolonged dry spell owing to the weather condition.

"A discount will emerge soon. Palm oil will then further widen the gap as production yields will recover," Mielke said ahead of the Bursa Malaysia Palm Oil Conference on March 7-9.

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