HAMBURG (August 06 2003) : Soyaoil and palm oil prices are likely to rallysoon after their recent fall created the most oversold market for morethan 10 months, Hamburg-based newsletter Oil World said on Tuesday.

"In our judgement soyaoil and palm oil are currently undervalued," itsaid. "Supply and demand fundamentals as well as the low stocks world-widewould justify a price recovery in the near term.

"Current stocks of soyaoil and palm oil in key countries are tightrelative to consumption and down from a year ago."

The general market assessment for Malaysian palm oil was bearish, OilWorld said.

"But it seems that the outlook for seasonally rising palm oil productionin August and September is now largely discounted in current prices."

It added: "Total palm oil stocks in Malaysia are still tight at the momentrelative to monthly usage.

"This is constructive but it has lately been generally ignored by themarket."

rapeseed estimate up.

Weather damage to the European Union rapeseed crop is not as severe aspreviously feared, Hamburg-based newsletter Oil World said.

It now forecasts this year's EU crop at 9.4-9.5 million tonnes against itsprevious estimate of 9.3 million and last year's crop of 9.34 milliontonnes.

Harvesting is now complete or is coming to a close in most regions, itsaid.

"The crop has been substantially damaged by unfavourable weatherconditions but latest information suggests that the overall crop will notbe as poor as recently assumed," the newsletter said.

EU supplies could also be tightened by poor crops in the Czech Republic,Slovakia, Poland, Hungary and some other east European countries.-Reuters