KUALA LUMPUR (March 8): Leading vegetable oils analyst Thomas Mielke said on Wednesday that he still expected crude palm oil prices to fall to 2,400 ringgit a tonne by 2018, as production recovers after a year of drought.

"Palm oil prices have peaked, but the decline in the past four weeks was overdone," said Mielke, editor of Hamburg-based newsletter Oil World, speaking at an industry conference in Kuala Lumpur.

"Some recovery is likely in the next three to six weeks because of insufficient supplies and a prospective strong world import demand," Mielke said.

Benchmark palm oil prices for May on the Bursa Malaysia Derivatives Exchange were down 0.6% at 2,840 ringgit in early trade on Wednesday.

Mielke had previously forecast palm oil prices would rally in the first quarter of the year before starting to decline from March or April, hitting US$600 per tonne by 2018.

Palm oil output is seen improving this year, after crops took a hit from the lingering effects of an El Nino weather event in 2015. The El Nino brought scorching heat across Southeast Asia, hitting palm's fresh fruit yields and lowering output.

On Wednesday the analyst said 2017 production in Malaysia would recover to 19.85 million tonnes, from 17.3 million tonnes last year, while Indonesian output was forecast at 35 million tonnes.

"In 2017, yields will recover, but remain below average levels," he said.