Cavani has been a big success since joining United in October, scoring 16 goals across 38 appearances, and earlier this month he signed a one-year contract extension to stay at Old Trafford.
But United boss Ole Gunnar Solskjaer has not ruled out signing another striker this summer as the Norwegian attempts to build on reaching Wednesday's Europa League final by closing the gap on Premier League champions Manchester City.
Former United striker Forlan played alongside Cavani for Uruguay and says he thrives on the competition that signing Tottenham's England captain Kane or Borussia Dortmund youngster Haaland would bring.
"Bringing in competition is good when you play so many games - and that is Manchester United every year," Forlan told the PA news agency ahead of the Red Devils' Europa League final date with Villarreal in Gdansk.
"I would not see that as bad. Of course they can play alongside together, like they play (Luis) Suarez and Cavani together in the national team.
"I don't think if one of them (Kane or Haaland) is going to come, if they have the opportunity to do it, then Cavani or the player who arrives to Old Trafford is going to be on the bench.
"No way. I think it's going to bring more competition and do good things as well for the young players.
"He (Cavani) has been playing in Europe for so many years with competition - PSG, Napoli and also the national team. He likes competition."
Cavani turned 34 in February but Forlan, who won the World Cup Golden Ball for being named the best player at the 2010 tournament in South Africa, has not been surprised by his fellow Uruguayan's success in England.
"It's not only about the movement, which is really important in a football player, because you don't play with the ball the whole 90 minutes," Forlan said.
"You have to time every chance because you touch the ball for a very few minutes.
"The way he plays without the ball is very important and also the way he scores goals.
"He also has the maturity and understands the game much better instead of before when he was maybe running more than he is now. Now he understands that sometimes he doesn't need to run as much as he was doing before.
"He's in good shape, he's a professional person and has played a very important role for the team. Not only on the pitch, but outside the pitch.
"He has played the way I expected him to. He is a great player, physically strong. He is getting older, but he is still in very good physical condition and I am not surprised at all that he is scoring goals.
"He is confident, you can see the way he is playing and participating in every play. He is arriving at a great time and a great moment in the final in his best shape."
The Europa League final pits two of Forlan's former clubs together, with the Uruguayan having had a productive three-year spell at Villarreal after leaving United in 2004.
Forlan, a Premier League winner at Old Trafford, also won the Europa League at Atletico Madrid in 2010 and he believes victory on Wednesday will verify former teammate Solskjaer's position as United boss.
"It's going to be very special for him, the opportunity to win (a trophy) as coach and manager at a great club like Manchester United," Forlan said
"He used to win so many trophies for the club, scoring great goals in the finals.
"It's different but it will be a confirmation for him as the coach. For him to continue in charge with the team will be really special for him."
:: Diego Forlan was speaking ahead of the UEFA Europa League final between Manchester United and Villarreal in Gdansk on Wednesday. The UEFA Europa League Final is full of the most exciting action and unpredictable moments - choose yours now for a chance to win an epic prize bundle at uefa.com/UELMoment