KUALA LUMPUR (Dow Jones)--The discount in palm oil to soyoil prices will likely narrow further, and palm oil could even trade at a slight premium soon, an industry analyst said Wednesday.

A record soybean harvest this year may have some damping effect on soyoil prices as palm oil prices strengthen on bullish supply fundamentals, Thomas Mielke, editor-in-chief of Oilworld, said at an industry conference.

Refined, bleached and deodorized palm oil''s discount to free-on-board Argentine soyoil has narrowed from around $100 a metric ton late last year to around $40/ton recently.

Crude palm oil prices may rise to around MYR2,900/ton if output in Malaysia eases further, Mielke said, without giving a time frame.

Around 0800 GMT Wednesday, benchmark crude palm oil futures were trading up MYR22 at MYR2,672/ton, following data for February from the Malaysian Palm Oil Board showing lower production and end-month inventories.

Mielke told Dow Jones Newswires earlier that CPO output in Malaysia may rise only slightly to 17.8 million tons in 2010, from 17.6 million tons last year.

A slight increase or a decline in supply from Malaysia would be bullish for prices as global demand is rising at a faster pace.

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