Malaysia's palm oil prices may bounce beyond the 1,200 ringgit level laterthis year on bad weather in the United States and heavier demand frommajor buyers like India and China, an industry official said on Tuesday."I think it (the price) will stay around 1,200 ringgit. If the U.S.(soybean) crop has problems, then it may go up further," Ahmad Ibrahim,marketing director of the state Malaysian Palm Oil Promotion Council(MPOPC), told Reuters in an interview.Malaysia's palm oil futures hit 1,315 ringgit ($346.05) a tonne --their highest level in 22 months -- on August 8 (third-month basis),driven by concern that supplies may be hit in coming months by adverseweather.But prices have gradually eased since then with some traders sayingrecent persistent rains would instead boost output from the world'slargest palm oil producer.By midday on Tuesday, the benchmark third-month November contract wasquoted 21 ringgit higher at 1,136 ringgit ($298.95) a tonne as traderscovered their positions after Monday's sharp drop.Ahmad said Monday's 71 ringgit slide was a correction and he expectedprices to trend higher now, particularly as dry weather in the U.S. mayaffect the soybean crop from the world's largest producer, which in turncould further boost palm oil prices.Palm oil is soyoil's direct competitor."What happened is that the increase in (the palm oil) price was toofast. Now it's being corrected," Ahmad said."But we see in the last few weeks, the weather is not very conducive inthe U.S. for a good (soybean) crop."Ahmad said India, the world's largest edible oil importer, was also inthe market for palm oil ahead of the Diwali Hindu festival of lights inNovember, while China would increase its intake when it joined the WorldTrade Organisation (WTO).Malaysian government officials have said China's palm oil import quotacould stand at up to 2.88 million tonnes in 2005, compared with 1.4million tonnes in 2001.India was Malaysia's main palm oil buyer in 2000, taking 2.03 milliontonnes.Ahmad said population growth and an improvement in purchasing power wasexpected to boost global palm oil consumption to more than 16.5 milliontonnes this year from 15.1 million in 2000.Demand for vegetable fats was also rising because people were morehealth conscious and were shunning animal fats, he said."Many countries are very price sensitive, like Bangladesh. They haveincreased their buying of palm oil tremendously this year," he added.Bangladesh imports could reach up to 300,000 tonnes this year comparedwith less than 100,000 tonnes last year, he said.Malaysia and Indonesia, the world's second largest palm oil producer,account for more than 85 percent of global palm oil exports. About 60percent of palm oil exports came from Malaysia and 25 percent fromIndonesia, Ahmad said.Malaysia's palm oil production is expected to increase 3.4 percent to11.2 million tonnes in 2001. Indonesia's output is projected to reach 7.2million tonnes this year compared with 6.5 million tonnes in 2000.(US$1 = 3.8 ringgit)

KUALA LUMPUR21 Aug,2001Reuters