The price of palm oil, down 67 percent from its March record, is nearing the end of its decline, according to Goldman Sachs. However, despite decreasing supplies and the fact that, per one analyst, “edible oil demand has remained relatively resilient even during severe recessions,” Goldman cut its price forecast for palm oil for the next two years by between 41 percent and 50 percent, joining analysts at CLSA Asia Pacific-Markets and UBS AG.

Malaysia (home to growers such as IOI Corp., Sime Darby Bhd. and Kuala Lumpur Kepong Bhd.) and Indonesia are the world’s largest producers of palm oil, which is also their biggest agricultural export. The two are felling oil palms and planting younger saplings in order to cut output. Goldman noted that historically, the price of the edible oil has been mainly driven by supply. Replanting will thus help reduce output, while the yield from plantations is under “stress”.

Back on March 4th, palm oil reached a record 4,486 ringgit ($1,236) a metric ton in Malaysia. But CLSA analysts predict that it will probably only bring 1,000 ringgit a ton in 2009, and 1,250 ringgit in 2010.