RTRS-Palm oil to rise to $1,303 a tonne by end June-Mistry

KUALA LUMPUR, March 27 (Reuters) - Malaysian palm oil futures are likely to rise to 4,000 ringgit ($1,303) per tonne by end-June as demand increases ahead of the Muslim fasting month of Ramadan while Southeast Asian supplies diminish, top industry analyst Dorab Mistry said on Tuesday.

Mistry's forecast, which is unchanged from earlier this month, represents a 15.3 percent jump from current palm oil prices, trading at 3,467 ringgit per tonne at 0430 GMT.

Mistry, head of edible oils trading with Godrej Industries, said many countries in Asia and the Middle East were stocking up on palm oil in June ahead of the Muslim fasting month, which is due to start around July 20.

These summer months, however, are when production usually declines in top palm oil producers Indonesia and Malaysia, where plantations are also seeing weaker yields after last year's strong output.

"Demand for palm oil will be greatest just when production will not have had time to recover. We are likely to see very tight stocks and a run up in prices so as to ration demand," Mistry said in a speech at an industry conference in Beijing.

"Reports of March production are also not encouraging. As I have earlier pointed out, CPO production in the first half of 2012 will be lower than it was in the first half of 2011," he added, referring to crude palm oil.

Following are some key points from the speech delivered at the China International Oils and Oilseeds Conference. Reuters obtained an advance copy of the speech.

PALM OIL

Mistry expects palm kernel oil to trade higher from current levels and rise to $1,700 CIF Rotterdam. Coconut oil should trade at a discount and reach $1,500 CIF Rotterdam.

Sees the prospect of Thailand becoming a palm oil importer. For a related story.

Sees an increase in demand for palm oil in Europe due to high rapeseed oil prices. Mistry said there are reports that rapeseed biodiesel has become uncompetitive, paving the way for more soy and palm biodiesel to be shipped to Europe.

Says availability of Indonesian refined products is getting tighter and therefore, Malaysian refiners may once again be able to take a larger market share.

INDIA

Says stands by earlier estimate of India's current rapeseed crop at around 5.3 million to 5.8 million tonnes.

Says prices of rapeseed and mustard oil are very high and these appear to justify his crop estimate. It also means Indian imports of soybean oil from Argentina will be higher than estimated.


SOYBEANS, SOYOIL

Says reports that U.S. farmers will plant more corn if the weather remains dry and warm will have a significant impact on soy. Corn is a very reliable crop and prices are high, which gives farmers some sort of guarantee.

Says it is quite possible that U.S. farmers will plant the estimated 95 million acres to corn and this will leave soybean acreage for 2012 unchanged or very slightly higher.

Says in 2012, U.S. farmers need to plant at least 3 to 4 million extra acres of soybeans, and for yields to be in line with current trends, in order to bring in a big crop.

Expects prices of crude degummed soya oil to rise to about $1,300 FOB, soy oil futures in Chicago to trade up to 60 cents and soybeans to hit $15 per bushel. Says increases are partly driven by South American biofuel needs.

CHINA

Says there is high edible oil stocks and negative parity for imports but notes that evidence over the last 12 months suggests that high stocks and negative parity have not affected the combined imports of oilseeds and oil in total.

Says China imports more oilseeds or more oil depending on its domestic crush economics and these factors will normalise if domestic interest rates are allowed to decline and liquidity increases.

RTRS-U.N. FAO SENIOR ECONOMIST ABBASSIAN SEES WORLD SOY, CORN PRICES "VERY FIRM" OVER NEAR TERM

BUENOS AIRES, March 26 (Reuters) - World grain prices will likely remain "very firm" over the near term as animal feed demand outpaces expectations and dry weather stunts supply, the senior economist of the UN's Food and Agriculture Organization (FAO) said on Monday.

"In the near term - this month and next - we are going to still see very firm prices. What happens after that depends on crop development and the weather," the FAO's senior economist Abdolreza Abbassian told Reuters in a telephone interview.

Trader's Highlight

DJI- NEW YORK, March 27 (Reuters) - U.S. stocks retreated from near four-year peaks on Tuesday, while a batch of large-cap shares hit new highs, with the help of portfolio managers snapping up top performers near the end of the quarter.

With the first quarter ending on Friday, portfolio managers adjusted holdings by buying some of the best performers to dress up their portfolios. A total of 175 stocks on the New York Stock Exchange hit new 52-week highs on Tuesday, including Dow components Home Depot and International Business Machines , along with high-end retailers.

The Dow Jones industrial average <.DJI> shed 43.90 points, or 0.33 percent, to close at 13,197.73. The Standard & Poor's 500 Index <.SPX> dropped 3.99 points, or 0.28 percent, to 1,412.52. The Nasdaq Composite Index <.IXIC> dipped 2.22 points, or 0.07 percent, to 3,120.35.

NYMEX- NEW YORK, March 27 (Reuters) - U.S. crude futures edged higher on Tuesday in tug-of-war trading as investors factored increasing concerns about supply disruptions against the likelihood of a release of strategic oil reserves to cap rising fuel costs.

Prices for both U.S. and Brent crude edged higher on reports of production problems in the North Sea and South Sudan. This added to persistent fears about potential disruption of supply from Iran as Tehran and the West spar over the OPEC nation's
nuclear program.

Crude prices turned negative after a Bloomberg report quoted Charles McConnell, assistant secretary for fossil energy at the U.S. Energy Department, as saying a release from reserves "is being considered."

A U.S. government official told Reuters the Obama administration had not changed its stance on tapping the reserves or other options under consideration to help cool fuel prices.

On the New York Mercantile Exchange, May crude rose 30 cents, or 0.28 percent, to settle at $107.33 a barrel, having traded from $106.52 to $107.73. Prices dipped in post-settlement trading after the API data.

CBOT SOYBEANS- Chicago Board of Trade soybean futures fell as investors locked in profits following the market's rally to a six-month peak earlier in the week, traders said.

Benchmark May contract remained above all key moving averages despite Tuesday's decline.

Prospects for good export demand for U.S. supplies due to crop shortfalls in South America limited the drop in the futures market.

FCPO-SINGAPORE, March 27 (Reuters) - Malaysian palm oil futures hit a more-than-one-year high on Tuesday as traders bet on strong export growth after droughts had damaged the South American soy harvest that is crushed into competing soyoil.

Worries about soybean crop damage in Brazil can potentially boost demand for palm oil and has upped the stakes in the unfolding U.S acreage battle between soy and corn with a key U.S. government report due to be released on Friday.

Comments by leading analyst Dorab Mistry at a conference in China that palm oil will rise to 4,000 ringgit by end-June also pushed prices higher.

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange inched up 0.6 percent to close at 3,481 ringgit ($1,139) per tonne after going as high as 3,497 ringgit, a level unseen since last March.

Traded volumes stood at over 21,026 lots of 25 tonnes each, lighter than the usual 25,000 lots.

REGIONAL EQUITY- BANGKOK, March 27 (Reuters) - Southeast Asian stock markets
gained on Tuesday after Federal Reserve Chairman Ben Bernanke signaled ultra-loose monetary policy would continue.

Foreign investors bought shares in Indonesia and Malaysia with a net inflow of $54.4 million and $105.1 million respectively on Tuesday.

Federal Reserve Chairman Ben Bernanke on Monday made clear that the central bank is in no rush to reverse its ultra-loose monetary policy after responding aggressively to a deep recession.