SINGAPORE, June 19 (Reuters) - Asia's palm oil trade may see a drop involumes in coming weeks, with Indian buying gradually running out of steamand rising Argentine soy supplies making soyoil increasingly attractive,traders said on Wednesday.While improved U.S. weather has boosted U.S. soy crop prospects,pushing down Chicago Board of Trade soyoil prices, Argentine farmers areslowly but surely pushing more sales after the peso weakened against thedollar in the past few sessions."If we weigh the factors for palm oil, I think the situation is not allthat bullish. The Indians are in an overbought situation. China's demandis uncovered but they could look either way -- to Malaysia for palm or toSouth America for soyoil," a regional edible oils trader said.Another trader added: "Indian buying may not continue at the same paceand Pakistani traders feel the prices are too high."This echoed views of some India-based traders who said India's palm oilimports in July were expected to dip to 250,000-300,000 tonnes from320,000 tonnes in the same month last year.On June 6, Malaysian palm oil prices hit three-year highs, hoveringjust below the 1,500 ringgit a tonne mark, on hopes of tight globalsupplies and surging demand from China and India. But they have sincegiven up some of their gains.At 0733 GMT, the benchmark third-month September contract was up nineringgit at 1,433 ringgit ($377.11) a tonne after trading as low as 1,407ringgit.CBOT soyoil on Tuesday closed down 0.18 to 0.27 cent per lb, with Julydown 0.27 cent at 17.86 cents.Traders said palm oil may see fierce competition from soyoil as sellersin South America seek to unload stocks before new U.S. soy arrivals."We may not see that kind of rally again in palm oil prices which wesaw recently," said an edible oils trader. "We know that Argentina cannotafford to go on holding onto their stocks forever. They have to sell itbefore the U.S. hits the market."

CUT-THROAT COMPETITIONFollowing a recent surge in Indian imports, New Delhi last week raisedthe base import prices for palm oils sharply. The government fixes baseprices in order to prevent the loss of revenue from under-invoicing byimporters.And on Tuesday, customs data showed China's palm oil imports inJanuary-May fell 13.8 percent year-on-year to 450,000 tonnes, while soyoilimports of 70,000 tonnes in the same period, although relatively small inabsolute terms, rose 63.7 percent."There could be a temporary lull in Indian buying as base prices havebeen hiked," said one trader.Some traders added the strongest bullish factor for palm oil was lowMalaysian stocks which stood at 929,472 tonnes at the end of May, downfrom 1.06 million a month earlier and 1.21 million at end-2001. The onlyother factor was weather."I think the palm oil market is in for a healthy correction," saidChetan Parikh, managing director of Telya Resources Pte Ltd. "But we couldfeel some tightness in September and October. India may be overbought butnot China.""Apart from that, we should not forget the growing fears of El Nino,"Parikh said. "Supply side is okay but not very comfortable. It could gettighter by the third quarter."Some regional traders are of the view that Malaysian palm oil exportfigures for the second half of June may not show the same kind of increaseas for the first two weeks."I may be wrong, but I think we might see a drop in Indian andPakistani purchases although Chinese figures might continue to reflectbuoyant buying," said one trader.

(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)