Standard Chartered, which forecast the late-2013 revival in palm oil prices, urged caution over expecting a continuation of a rally which on Monday drove futures to their best close in 16 months.
The bank, which in July correctly called the rebound in palm oil prices, listed some reasons to be more upbeat on the vegetable oil, including taking a more upbeat view of Indian demand, which it had seen as a market weak spot.
India's crude palm oil imports rose last year by 8.6% to 8.3m tonnes, underlining the country's place as the buyer, ahead of the European Union and China.
And "we expect India's strong [palm] consumption to continue", driven by population growth and higher incomes, and ideas of a potential drop in domestic output of soybeans, the source of soyoil, the main rival vegetable oil to palm oil, the bank said.
It quoted a forecast from India's Central Organisation for Oil Industry and Trade that India's out of kaharif, or summer sown, soybeans will drop by 500,000 tonnes, "which equates to around a 100,000-tonne loss in soyoil production".
Furthermore, inventories held by Malaysia, the second-ranked palm producer and exporter, will "tighten in 2014", undermined by a reduced availability of cheap imports from Malaysia which it uses to bolster supplies, and flat production in Sarawak and Sabah, the top producing regions.
However, StanChart analyst Abah Ofon urged palm buyers nonetheless to "lock in crude palm oil prices at current levels to protect their margins against adverse downside moves in the second quarter of 2014".
The palm oil market faces "stiffer competition" from rival oils - especially soyoil, given the prospect of a record soybean harvest in South America, he said, keeping at 2,575 ringgit a tonne his forecast for Kuala Lumpur palm oil prices this year.
Furthermore, there are concerns that "negative perceptions" of palm oil are "gaining momentum in parts of Europe based on messaging about its impact on health and the environment".
Some research links palm oil to higher rates of heart disease, while the industry has long been the focus of attacks on claims over the destruction of rainforest to make way for plantation land.
"A large European consumer we spoke to detailed that consumer perceptions of products containing palm are souring in parts of Europe, with major retailers choosing to launch CPO-free products," Mr Ofon said.
Palm oil futures on Monday settled at 2,682 ringgit a tonne in Kuala Lumpur, up 0.7% on the day and the highest close since September 2012.
The rise was attributed to strong Malaysian exports so far this month, which SGS pegged up 27% on those in the first half of February, underlining the bumper growth, which rival cargo surveyor Intertek has placed at 32%.
"The revival in exports is mainly caused by tight oilseed supplies, causing oilseed prices to hike," said Chee Tat at Singapore-based broker Phillip Futures.
"As such, it provided an incentive to overseas buyers to switch to palm oil as a cheaper food and biodiesel alternative."
Furthermore, the end of the northern hemisphere winter "will encourage more buying of palm oil" for biodiesel, hence resulting in higher demand for the commodity".
Palm oil's relatively high melting point makes it unsuitable for making biofuels for winter use.