* Palm oil prices to rise by first quarter of 2018
* 2017 output for Indonesia, Malaysia revised downward
* Malaysia output in 2018 could rise to 19.97 mln T
* Indonesia output in 2018 to 36.5 mln T to 37 mil T
KUALA LUMPUR, Oct 19 (Reuters) - Crude palm oil prices are forecast to rise to $800 per tonne CIF Rotterdam by January, with potential to hit $850 by March 2018, said leading edible oils analyst Dorab Mistry on Wednesday.
Mistry said palm oil prices would rise due to tight inventory levels as production recovery in Malaysia and Indonesia was weaker than expected. Indonesia and Malaysia produce nearly 90 percent of global palm oil.
"Peak stocks in Malaysia will not exceed 2.3 million tonnes by January 2018. After that stocks will decline ... all the way to July 2018 and we shall have a period of the tightest ever stocks in history," said Mistry, in the text of a speech delivered in Bogota, Colombia.
Prices for Malaysian crude palm oil delivered into Rotterdam were at $732.50 per tonne CIF on Tuesday. <PALM-MYCRD-P1>
Mistry said these benchmark prices would rise to $850 CIF Rotterdam by March next year if palm oil's rival oilseeds - South American soybean, European rapeseed, and Ukrainian and Russian sun seed - don't yield bumper crops.
His forecasts assume Brent crude oil prices in a range of $45-$50 a barrel and for periodic rate hikes by the U.S. Federal Reserve.
Mistry had earlier forecast Malaysian palm oil futures rising to 3,000 ringgit ($711) a tonnes if end-stocks do not reach 2.6 million tonnes by January 2018.
Benchmark palm oil contract prices for January delivery on the Bursa Malaysia Derivatives Exchange was last down 0.8 percent at 2,741 ringgit a tonne at Tuesday's close of trade. The market was closed on Wednesday for a national holiday.
Mistry, director of Indian consumer goods company Godrej International, also forecast rising palm production levels in Indonesia and Malaysia next year, while reducing his full-year estimates for 2017 on weaker-than-expected output recovery.
Malaysian output in 2018 could rise as much as 4.5 percent from this year to 19.97 million tonnes, he said, while production in Indonesia could grow 8.8 percent to 36.5 million to 37 million tonnes next year.
"In 2017-18 we expect further rebuilding of (global vegetable oil) stocks but only in the second half of the year, towards the end of the year, when palm oil production rises and peaks around October 2018," Mistry said.
Mistry lowered his estimates for Malaysian production this year to 19.1 million to 19.3 million tonnes, down from an earlier forecast of as much as 20 million tonnes.
He pegged Indonesia's 2017 palm oil output at 34 million to 34.5 million tonnes, down from a previous estimate of as much as 35 million tonnes.
($1 4.2220 ringgit)
(Reporting by Emily Chow; Editing by Tom Hogue)