Hamburg, Jul 31, 2001 (OIL WORLD FLASH) - Palm oil prices are rallying onaccount of declining Malaysian stocks. Exports in July were again sharplyabove a year ago. In its announcement today, SGS pegged bulk exports ofMalaysian palm oil and lauric oils in July at 932 Thd T. This is down by7% from a month earlier, but up steeply by 212 Thd T or 30% from a yearago. India was the key destination with 201 Thd T, followed by theEuropean Union 186 Thd T, China 94 Thd T and Pakistan 88 Thd T. Malaysianpalm oil production in July remained below earlier expectations. Tradesources indicate that produc-tion may probably be largely unchanged nearthe 925 Thd T achieved in June. If that is confirmed, total Malaysian palmoil stocks would probably be only as low as 910-950 Thd T as of end-Julyvis-a-vis 1031 a month and 1075 Thd T a year ago. If also Augustproduction is curbed below expectations, it will keep Malaysian palm oilstocks sharply below earlier expectations. Much will also depend on futurepalm oil import demand from India, China, Pakistan, Europe and othercountries. The combination of a pronounced slowing-down of yields andproduction coupled with high export demand has resulted in a sharp declinein Malaysian palm oil stocks below the year-ago level. The outlook forOct/Dec 2001 is very bullish as the comparatively low stocks as ofend-September coupled with a decline in Malaysian palm oil productionbelow the year-ago level would sizably reduce Malaysian exportavailabilities below the year-ago level. We expect Malaysian palm oilprices to rally above soybean oil on the world market sometime within thenext 2-4 months.