By Mei Mei Chu
KUALA LUMPUR (Reuters) -Palm oil prices are likely to remain high in the first quarter but "fall dramatically" during the second half of the year as palm and oilseed plantings pick up, two leading industry analysts said in a webinar on Thursday.
Prices would be propelled by the soyoil market, with crop-stressing drought in South America squeezing global soybean supplies and China continuing its stockbuilding of commodities, they said.
Malaysia's benchmark crude palm oil price jumped 6% during the first week of the year, trading at 3,817 ringgit ($945.27) a tonne on Thursday, its highest in nearly a decade.
Global palm oil production, which was below expectations last year, is likely to recover in the second half of 2021 and bring down prices, said Dorab Mistry, director of Indian consumer goods company Godrej International.
"Price volatility will be high in 2021," he said. "The shortages and tight situation in palm, the worst is over. The market to watch now is the soybean weather and market," he added.
"We will see price pressure in the second half of the year, this price pressure not only comes from higher planting of soybeans but also considerably higher plantings from sunflower and rapeseed," said Thomas Mielke, chief executive officer of Oil World.
Global oilseed production is expected to rise from 578 million tonnes in the current 2020/21 season ending Sept. to 615 million tonnes next season due to higher planting and better weather, he said.
However, palm oil supply will continue to be in a tight balance as import demand rises but supply growth is low, especially as top producer Indonesia continues its palm biodiesel programme, he added.
Mielke estimates world palm oil production to rebound by 4.4 million tonnes in the 2020/21 season, with Indonesian output up by 3.4 million tonnes and Malaysia rising 0.3 million tonnes.
($1 = 4.0380 ringgit)
(Reporting by Mei Mei Chu; editing by Philippa Fletcher)