RTRS-UPDATE 2-Bernanke comforted by easing European stresses

WASHINGTON, March 20 (Reuters) - Federal Reserve Chairman Ben Bernanke on Tuesday welcomed an easing in Europe's financial troubles and said the U.S. central bank would be ready to act if conditions worsened again.

"In the past few months, financial stresses in Europe have lessened, which has contributed to an improved tone of financial markets around the world, including in the United States," he said in testimony prepared for delivery on Wednesday.

Bernanke said U.S. financial institutions have some potential exposure to losses from the credit default swaps they sold to protect against a possible European sovereign debt default. But he said major U.S. banks are not vulnerable.

"These (CDS) sales have been more than offset by purchases of protection, which would imply that in the event of a sovereign default, U.S. financial institutions would be net recipients of CDS payouts," Bernanke said.

European financial markets have stepped back from the brink since Greece, at the epicenter of the region's debt crisis, struck a deal with creditors to cut its large debt burden. But Greece and several other euro zone countries are still grappling with deep budget cuts and tough economic reforms aimed at making their economies more competitive.

Bernanke, in his testimony to the U.S. House of Representatives Oversight Committee, said European policymakers must follow through on fiscal reforms for the recent period of relative calm to persist.

"Full resolution of the crisis will require a further strengthening of the European banking system; a significant expansion of financial backstops, or 'firewalls,' ... and, critically, continued efforts to increase economic growth and competitiveness and to reduce external imbalances," he said.

The Fed chief reiterated the central bank's commitment to keeping the U.S. financial system stable, even if Europe's woes flare up again.

"The Federal Reserve will continue to monitor the situation closely, work with our financial institutions and foreign counterparts to enhance the resilience of our financial system, and be ready to use our tools to help stabilize U.S. markets should the situation require such action," said Bernanke.

Bernanke is set to testify alongside U.S. Treasury Secretary Timothy Geithner. In an appearance before the House Financial Services Committee on Tuesday, Geithner warned Europe against an approach that focuses too heavily on short-term budget cuts.

RTRS-FOB Gulf Grain-Soy offers ease, China eyes new-crop

March 20 (Reuters) - U.S. soybean export premiums at the Gulf Coast were flat to lower for old-crop supplies on Tuesday amid sinking CIF basis bids and lackluster demand after Brazilian prices fell sharply in recent days, traders said.

Some price inquiries from Chinese buyers reported for U.S. new-crop shipments, but no fresh sales could be confirmed. China has recently been booking summer shipments of Brazilian soybeans, including an April-May cargo on Tuesday.

CIF soybean barge basis bids at the Gulf for nearby shipments fell by 3 to 4 cents per bushel on Tuesday as a lack of fresh export sales had holders of soybeans liquidating supplies amid more competitive prices in South America. Gulf FOB offers were flat to a penny lower.

Basis also pressured by concerns about slowing growth in China, the world's top soybean importer.

Traders monitoring labor strife in Argentina after grain truckers called an indefinite strike to demand higher pay.

No market impact has been noted yet, as the main thrust of Argentina's harvest is still two or three weeks away.

Corn export premiums at the U.S. Gulf Coast were mostly steady on Tuesday, capped by sinking CIF basis values butunderpinned by expectation for additional demand to develop following recent price decline.

Traders eyeing potential increase in corn import demand from China as prior large purchases have occurred with benchmark U.S. futures in the low-$6-per-bushel area. May corn closed at $6.47-1/2 a bushel on Tuesday.

Some traders question whether China may wait to book further corn purchases until after USDA prospective plantings report on March 30, which was expected to show the largest U.S. corn acreage since 1944 this year.

Buyers in Taiwan bought corn from Ukraine in small consignments to test quality, larger purchases possible.

Wheat export premiums at the U.S. Gulf were mostly steady on Tuesday in quiet trade.

Wheat imports by Indonesia, Asia's top importer, may rise 5 percent per year over the next decade amid growing wealth, an industry group said.

RTRS-OIL WORLD CUTS BRAZILIAN 2012 SOYBEAN CROP FORECAST BY 1.5 MLN T TO 66.5 MLN T

HAMBURG, March 20 (Reuters) - Hamburg-based oilseeds analyst Oil World said on Tuesday it had cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes to 66.5 million tonnes compared with 75.3 million tonnes in 2011 because of drought and crop fungus.

Oil World also reduced its forecast of Argentina's 2012 crop by 0.5 million tonnes to 46.5 million tonnes, down from 49.2 million in 2011.

It cut its forecast of Paraguay's crop by 0.6 million tonnes to 4.0 million tonnes, down from 8.4 million tonnes in 2011.

"New damage (came) in the first half of March from very dry and hot conditions in southern Brazil and northern Argentina," Oil World said. "On top of that, the Brazilian states of Mato Grosso and Goias have reported damage from Asian Rust fungus, the worst in more than five years."

The United States is the world's largest soybean producer followed by Brazil with Argentina in third place. U.S. soybean prices touched new six-month highs on Friday and Monday on expectations drought damage to South American soybean harvests would transfer global import demand to the United States. [ID:nL4E8EG6BR] [ID:nL3E8EJ1EO]

"Demand for U.S. soybeans has clearly benefited from the downward revisions of South American crop estimates in recent weeks," Oil World said.

Oil World had also cut its forecast of Brazil's 2012 soybean crop by 0.5 million tonnes on Mar. 6. In December 2011 the analyst had put Brazil's upcoming crop at 72.8 million tonnes.

Oil World's forecasts compare to the U.S. Department of Agriculture's Mar. 9 estimates of 68.5 million tonnes for Brazil and 46.5 million tonnes for Argentina.

Oil World now estimates global 2011/2012 soybean production will fall to 243.2 million tonnes from 265.8 million tonnes in 2010/11 largely because of the South American harvest problems.

"It remains to be seen to what extent the recent price uptrend is going to slow down the demand growth," Oil World said. "No doubt, a decline in world production of soybeans in the vicinity of 22-23 million tonnes is necessitating a certain amount of demand rationing."

Trader's Highlight

DJI- NEW YORK, March 20 (Reuters) - Renewed concerns about China's economic growth weighed on global stocks o n T uesday, while oil prices dropped more than 2 percent on expectations Saudi Arabia would act to stem any price rise that could hurt
the global economy.

Safe-haven Treasuries gave up most initial gains, however, as Wall Street trimmed some of its losses in the afternoon. Meanwhile, the dollar rose broadly as growth-related currencies were pressured by Chinese worries.

The Dow Jones industrial average <.DJI> ended down 68.94 points, or 0.52 percent, at 13,170.19, while the Standard & Poor's 500 Index <.SPX> lost 4.23 points, or 0.30 percent, to 1,405.52. The Nasdaq Composite Index <.IXIC> fell 4.17 points, or 0.14 percent, to 3,074.15.

NYMEX- NEW YORK, March 20 (Reuters) - U.S. crude futures fell more than 2 percent on Tuesday after Saudi Arabia provided details about high production levels, saying there was no supply shortage and that the kingdom could boost output more to meet
any supply shortage.

A stronger dollar and intraday share price weakness added pressure as the U.S. April crude contract headed to expiration at the end of the session.

The dollar gained across the board, bolstered by safe-haven demand spurred by worries about a potential slowdown in China, which dragged down both European and U.S. equities.

Saudi Oil Minister Ali al-Naimi said the kingdom had met all its customers' requests for oil, was now pumping 9.9 million barrels per day and stood ready to raise output to full capacity of 12.5 million bpd, if needed.

On the New York Mercantile Exchange, expiring April crude fell $2.48, or 2.29 percent, to settle at $105.61 a barrel, having traded from $105.35 to $107.91.

CBOT SOYBEANS- Soybean futures on the Chicago Board of Trade fell 1.5 percent to post their biggest decline in seven weeks, hit by technical selling, fund long liquidation and profit-taking from a six-month high, traders said.

Funds hold a big net long position in CBOT soybean futures and open interest has risen 40 percent since the start of 2012, leaving the market vulnerable to bouts of long liquidation.

Funds sold soy, corn and wheat after all three markets posted downside reversals on Monday, with the front contract closing lower after setting higher highs and lower lows than the previous session.

Worries about slowing growth in China, the world's top soy buyer, added pressure; global miner BHP Billiton said it saw signs that growth in Chinese iron ore demand was flattening.

Traders positioning ahead of USDA's U.S. planting intentions and quarterly stocks reports next week. Chicago brokerage The Linn Group projected U.S. 2012 soybean seedings at 76.7 million acres, above USDA's outlook forum figure of 75.0
million.

Market shrugs off news that analysts Oil World cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes, to 66.5 million, due to drought and crop fungus.

FCPO- SINGAPORE, March 20 (Reuters) - Malaysian palm oil futures extended losses on Tuesday as some traders took profits on concerns that the market was overbought, although losses were limited by still-robust demand as indicated by export trends.

Palm oil rallied to a 9-month high of 3,418 ringgit last Friday on an upbeat price outlook, and traders said the market was poised for a correction.

"Prices ended lower in unison with CBOT and technical-based selling. It looks like the much anticipated correction is taking place currently and once that is completed, prices will resume their uptrend," said a trader with a local brokerage in Malaysia.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.2 percent to close at 3,366 ringgit ($1,093) per tonne, paring gains this year to 6 percent from a year-high 7.2 percent.

Traded volumes on Tuesday stood at 28,255 lots of 25 tonnes each, higher than the usual 25,000 lots.

REGIONAL EQUITY- BANGKOK, March 20 (Reuters) - Most Southeast Asian stock markets rose on Tuesday as investors sought counters with attractive dividend yields, but profit taking capped gains, pulling Thailand's benchmark index back from the 1,200-point level for a second day.