HAMBURG (August 20 2003) : The global 2003/04 rapeseed crop will be muchsmaller than expected at 36.28 million tonnes, up 3.8 million tonnes fromlast season, Hamburg-based newsletter Oil World said.

Only a month ago the newsletter had forecast a 4.4 million tonne rise.

"What was believed to become a bumper crop has been decimated in manycountries due to unfavourable weather," it said.

The main falls would take place in the European Union and east Europe.

It estimated German production at 3.75 million tonnes against 3.92 milliontonnes last year. French output was seen falling to 3.18 million tonnesfrom 3.42 million tonnes.

It estimated global season opening stocks at 2.26 million tonnes against3.59 million tonnes at the start of last season.

MEAL DEMAND: Increased soyabean crushings largely to meet high meal demandcould hit soyaoil prices by raising oil output, Hamburg-based newsletterOil World said.

"World oil stocks are relatively low and still declining during thecurrent July/September quarter," it said.

Palm oil also remains a critical factor in international pricedetermination, it said.

Palm oil remains very competitive although fob price discounts of palmolein against Argentinean soyaoil has fallen from $60 and more duringOctober 2002/July 2003 to $38 in mid August.

"In the medium to long term, palm oil prices in particular and vegetableoil prices in general could move higher once the period of monthly recordproduction in Malaysia tapers off," it added.-Reuters