RTRS-INTERVIEW-UPDATE 1-Malaysia's KLK eyes Indonesian palm oil refineries for growth

KUALA LUMPUR, March 2 (Reuters) - Malaysia's No.3 palm oil firm, KL Kepong , will build three refineries in Indonesia to tap higher margins after Jakarta lowered its processed edible oil export taxes, a senior company official said on Friday.

With 56 percent of KL Kepong's 248,498 hectares of total landbank in Indonesia, the firm has "little choice" but to build refineries there to enhance the value of its crude palm oil from these estates, the firm's plantations director, Roy Lim, said.

"Indonesian refined materials are available at sometimes a $15-$25 a tonne discount to what is being offered by Malaysian refineries in their endeavour to take advantage of the margins and to capture markets," Lim told Reuters in an interview ahead of the Bursa Malaysia Palm Oil Conference.

Planters, refiners and bankers gather for the palm oil conference from Monday to Wednesday as the market for the tropical oil grows this year at the expense of soyoil, with the South American soy crop damaged by drought.

Indonesian refiners have been offering discounts and taking business away from Malaysian competitors, with last year's cut in processed palm oil export taxes and high supply boosting margins.

Top producer Indonesia's moves turned margins negative for Malaysia where KL Kepong has two palm oil refineries.

RTRS-INDONESIA TARGETS 40 MLN T OF PALM OIL OUTPUT BY 2020, VS 23 MLN IN 2011 -DEPUTY AGRICULTURE MINISTER

JAKARTA, March 2 (Reuters) - Indonesia will aim to increase palm oil yields to boost output by 73 percent by 2020, a senior agriculture official said on Friday, and added it may give tax cuts to those complying with a government-backed greens cheme.

Output in the world's top palm oil producer hit 23 million tonnes last year, and better farming techniques rather than land expansion is now key to meeting a 40 million tonne 2020 target, Rusman Heriawan, the deputy agriculture minister told Reuters in an interview ahead of next week's Bursa Malaysia Palm Oil Conference.

"Hopefully by the end of 2020, it is supposed to be 40 million tonnes," Heriawan said. "We will rely heavily on how to increase our productivity, rather than expand the land for palm oil."

"We are a little bit reluctant to extend the land, since there are a lot of disputes ... over claims to land."

Indonesia is seen as a key player in the fight against climate change and is under intense international pressure to curb its rapid deforestation rate and destruction of carbon-rich peatlands.

Facing increasing pressure to improve industry practice and halt deforestation, an Indonesian moratorium on new permits to clear forests took effect in May last year for an initial two years.

In 2012, palm oil estates will sprawl across 8.2 million hectares of Indonesian land, and is expected to rise about 200,000 hectares each year for the next decade.

The Indonesian government is also reviewing the law that requires palm oil plantation firms to set aside 20 percent of land for local small-holders, Heriawan said.

RTRS-UPDATE 1-Informa cuts Brazil soy forecast on dry weather

CHICAGO, March 2 (Reuters) - Informa Economics lowered its forecast of Brazil's 2011/12 soybean crop to 68 million tonnes from its previous estimate of 70 million, trade sources said on Friday.

Informa officials had no comment on the numbers, but in a report to clients the private analytical firm attributed the cuts to warm and dry weather in southern Brazil that stressed soybean crops during pod setting, a key phase of growth.

However, Informa raised its forecast of Argentina's 2011/12 soybean harvest to 47.5 million tonnes from 46.5 million previously, citing timely rains in February that benefited late-seeded soybeans.

Last month, the U.S. Department of Agriculture projected Brazil's soybean crop at 72 million tonnes and Argentina's crop at 48 million tonnes. USDA is scheduled to release updated U.S. and world crop forecasts on March 9.

Informa left its forecast of Argentina's 2011/12 corn crop unchanged from last month at 22.5 million tonnes.

USDA's current estimate for Argentine corn production is 22 million tonnes. Informa raised its forecast of new-crop 2012/13 corn production in Ukraine to 24 million tonnes, up from 22.5 million last month.

The firm said it expected that some 3.5 million hectares initially planted to winter grains in Ukraine would be reseeded to spring crops following poor emergence and damage from bitterly cold temperatures in late January into mid February.

RTRS-UPDATE 3-Argentine dockers end strike in Rosario grain hub

BUENOS AIRES, March 2 (Reuters) - Argentine dock workers ended a strike on Friday that had delayed dozens of grain ships in the country's main grains hub Rosario,
port chamber CAPYM said.

Dock workers who moor ships in Argentine harbors walked off the job on Thursday for an indefinite strike over what they called inadequate staffing of work shifts.

This left dozens of vessels paralyzed along the Parana River near Rosario, one of the world's biggest grain export centers.

SOMU, the union representing the dock workers, "agreed to lift the strike," Guillermo Wade, director of Argentina's CAPYM port managers chamber told Reuters. SOMU representatives could not be reached immediately for comment.

Trader's Highlight

DJI- NEW YORK, March 2 (Reuters) - The S&P and Nasdaq notched their eighth week of gains out of the last nine, but momentum ran out on Friday as stocks ended the day lower in a thinly traded session.

Energy shares were the big losers in the broad decline, falling alongside crude oil prices, though other cyclical groups, including industrials and financials, also lost
altitude.

The S&P 500 has gained almost 9 percent since the beginning of the year. But mixed economic data and tensions between Iran and Israel have given investors few reasons lately to chase the market higher after three straight winning weeks for the benchmark index.

"We're in a small pullback, but that's to be expected after a very strong rally," said David Kelly, the chief market strategist for JPMorgan Funds in New York, who added that he considered stocks cheaper than other asset classes like bonds.

The Dow Jones industrial average dipped 2.73 points, or 0.02 percent, to 12,977.57 at the close. The Standard & Poor's 500 Index slipped 4.46 points, or 0.32 percent, to 1,369.63. The Nasdaq Composite Index shed 12.78 points, or 0.43 percent, to close at 2,976.19.

NYMEX- March 2 (Reuters) - U.S. crude futures dropped nearly percent on Friday after Saudi Arabia denied a report of a ipeline fire, while a stronger dollar prompted investors to rim positions in riskier assets, including commodities.

The swift market reversal from a post-settlement rally on Thursday that was spurred by the pipeline report caused U.S. rude futures to end the week lower, ending three straight eekly gains.

NYMEX RBOB gasoline and heating oil posted sharp losses for he day. For the week, however, gasoline rose while heating oil ell.

The dollar rose against the euro after Spain set a softer eficit target this year, defying a European Union fiscal pact nd stoking fresh worries about the euro zone debt crisis.

Tensions in the Middle East, which also helped fuel Brent rude's surge on Thursday to levels not seen since a record run in July 2008 and extend a U.S. crude rally to 10-month highs, will highlight Monday's meeting in Washington between U.S. President Barack Obama and Israeli Prime Minister Benjamin Netanyahu on Monday.

On the New York Mercantile Exchange, crude for April delivery settled at $106.70 a barrel, falling $2.14, or 1.97 percent.

CBOT SOYBEANS- Soybean futures on the Chicago Board of Trade rallied from early declines to set a five-month high and extend their winning streak to 10 straight sessions on a mix of technical fund buying and bullish fundamentals, traders said.

Market draws support from export demand for U.S. soybeans in the wake of expected production losses in South America, and worries that U.S. farmers might not plant enough soybeans in 2012 to meet demand.

FCPO-KUALA LUMPUR, March 2 (Reuters) - Malaysian crude palm oil futures fell on Friday as traders booked profits from a rally driven by surging crude oil prices and prospects of tighter soyoil supplies from South America.

Prices rose more than six percent in February alone and have come under pressure this week from concerns of orders shifting to Indonesia that offers more discounts due to ample feedstock and lower export taxes for refined palm oil.

"In general, demand is strong because people will buy more palm oil than soyoil due to the South American drought but Malaysia may not be capturing demand because of Indonesia," said a trader with a foreign commodities brokerage in Kuala Lumpur.

Benchmark May palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 0.8 percent to close at 3,259 ringgit ($1,085) per tonne. Traded volumes were thin at 16,601 lots of 25 tonnes each, compared to the usual 25,000
lots.

REGIONAL EQUITY- BANGKOK, March 2 (Reuters) - Most Southeast Asian stock markets posted modest gains on Friday as rising oil prices bolstered energy and resource-related shares, with foreign buying helping push Thai shares to the highest in almost 16 years.

Foreign inflows into the Thai market have gathered steam this year on hopes of a recovery in the flood-hit economy, and as improving U.S. economic data boosts investors' appetite for
riskier assets.

Singapore was up 0.49 percent and Malaysia gained 0.66 percent, climbing at one point to the highest in more than seven months.