General Morgan and his forces have retreated after a third day of fighting in southern Somalia.
General Morgan had promised to return to peace talks
At least 30 fighters have been killed in clashes between the Jubba Valley Alliance, which controls Kismayo port, and the warlord.
A BBC correspondent says after fighting at dawn in Dhoobley, 200km north of Kismayo, the warlord's fighters fled.
Gen Morgan is the only major warlord outside a peace process soon to choose Somalia's first leader in 13 years.
Welcome to return
The exact whereabouts of the warlord is unknown, but residents in Dhoobley say Gen Morgan passed through the town on Wednesday with two vehicles, travelling towards the Kenyan border.
The area around Kismayo has been tense in recent weeks, as Gen Morgan's forces have advanced on the port.
He had promised to return to take part in the peace process in neighbouring Kenya, after mediators agreed to pay off the bill he had run up there in a luxury hotel before returning to Somalia.
Peace process facilitator Bethwell Kiplagat said the warlord would still be welcome to return to the talks, where the election of a parliamentary speaker on Wednesday cleared the way for the formation of a central government.
"If we can bring him here it would be the best thing for Somalia and for the peace talks," he told the BBC's Focus on Africa programme.
According to the BBC's Mohamed Olad Hassan in Mogadishu, both sides accuse each other of starting the fighting on Wednesday.
The areas where the fighting has taken place are now reported to be under the full control of the Jubba Valley Alliance, our correspondent says.
Some 800 fighters, using 100 vehicles, have reportedly been involved in three days of battles.
Kismayo is Somalia's third city and an important business centre.