JAKARTA/KUALA LUMPUR (March 8): Malaysian palm oil futures rose on Wednesday, reversing earlier losses, after a leading analyst forecast higher prices in the near term.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange closed 0.6% higher at RM2,875 (US$645.78) per tonne.

Trade was tracking forecasts coming out of a palm industry conference in Kuala Lumpur this week.

Malaysian palm oil futures are expected to rise to RM3,000 a tonne because of tight inventories after last year's drought, though a decline by June is still likely as production recovers, widely followed analyst Dorab Mistry said on Wednesday.

"Mistry made sense. End stocks are low and looks like nearby tightness will still be there," said a palm trader.

Despite the near term bullish forecast, Mistry and others see a dip in prices in the second half of the year.  

Tight supplies following a drought in 2015-16 are expected to support the market over the next two months, but downward pressure should build from May as output picks up in Indonesia and Malaysia, analysts and industry officials said at the conference.

Palm oil may test a support of RM2,820 per tonne, a break below which could cause a further loss to the next support at RM2,783, said Reuters market analyst for commodities and energy technicals Wang Tao.

In related vegetable oils, soybean oil on the Chicago Board of Trade climbed 0.6%, while the May soybean oil contract on the Dalian Commodity Exchange dropped up to 1.9%.

Palm, soy and crude oil prices at 1124 GMT

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.4520)