Palm oil prices seen capped by Malaysian stocks despite El Niño outlook, top analyst says

MUMBAI, Oct 1 (Reuters) - Malaysian palm oil prices are likely to remain between 4,500 and 5,000 ringgit a metric ton through December, as higher stocks weigh on prices despite expectations of lower production next year due to El Niño, a top analyst said on Thursday.

Malaysia's palm oil stocks are likely to exceed 3 million metric tons by the end of this month, which will weigh on prices, said Dorab Mistry, the director of Indian consumer goods company Godrej International.

Mistry is one of the most closely watched analysts of edible oils whose forecasts for supply and prices often move markets.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange fell 1.58% to 4,537 ringgit ($1,110.92) at the midday break on Thursday, after hitting a nearly two-year high of 5,049 ringgit in mid-September.

El Niño, which typically brings drier conditions to top palm oil producers Indonesia and Malaysia, could curb production in 2027, although new seed varieties are more resilient to dry weather, he said.

Rising energy prices due to geopolitical conflicts have boosted biodiesel demand, while Indonesia's new 50% biodiesel blending mandate is expected to tighten palm oil supplies and support prices, Mistry said.