KUALA LUMPUR (July 02 2003) : Malaysia's third-quarter palm oil shipmentscould show growth of as much as 21 percent on a year earlier due to hugelydiscounted prices against soyoil, industry sources said on Tuesday.

The world's largest palm oil producer typically sees high production anddemand between July and September due to a squeeze in supply of most otheroils.

But with prompt shipment of a tonne of the nearest competing soyoilproduct costing at least $80 more, exports of palm oil could expand fromcurrent monthly levels of 1.1 million tonnes to 1.15 million until otheroilseed harvests in October, traders said.

Some 2.85 million tonnes of palm oil were shipped between July andSeptember 2002 when the discount to soyoil was only around $50 a tonne.

But current price differentials could result in as much as 3.45 milliontonnes being exported in the third quarter of this year, up 21 percentfrom a year earlier, exporters said. In the second quarter, 3.14 milliontonnes were exported.

"One would imagine that demand in the next three months would be robust,absolutely robust, maybe something we have not seen before," said anexports manager at a foreign-owned commodities house in Kuala Lumpur.

"This may be optimistic but feasible due to the discounted palm oil priceswe are seeing," he said. A tonne of palm olein, Malaysia's main palm oilproduct, was trading at a discount of $80 on Monday to a tonne ofArgentine crude degummed soybean oil for July.

The discount was wider for August shipment at $88 and $100 forSeptember.-Reuters