outheast Asian palm oil prices may come under pressure as a looming global economic recession weighs on Brent crude oil , making the edible oil less attractive for use in competing biodiesel, a top industry analyst said on Friday. Slowing output as key producers enter the rainy season will also boost the tropical oil’s premium over Brent crude to more than $100 a tonne, setting the stage for an eventual drop in palm oil prices, said James Fry, head of LMC International. The London-based analyst stuck to an earlier forecast made in November that benchmark palm oil futures could fall to $850 per tonne by June if Brent crude pulls back to $79 a barrel on a possible global recession triggered by the euro zone and U.S. debt crisis. Palm oil futures on the Bursa Malaysia Derivatives Exchange are trading above $900 a tonne. Brent crude, which has gained about 15 percent so far this year, is trading around $108 a barrel, or about $810 per tonne. “Watching the world economy today is very much like waiting for a train crash to happen,” Fry said at the Indonesian Palm Oil Conference in Bali island. “With many signs of slowing world trade, this weakness will hit the growth in demand for oils, not only for food, but also for biofuels, as transportation is affected,” he added. Any correction in the crude oil markets will come as recent high prices trigger demand rationing and stimulate new discoveries and output, Fry said.
And every $10 per barrel drop in crude oil will cut all edible oil prices by $70 a tonne, he added.