RTRS-Malaysia palm stocks to fall further, support prices -MPOC

MUMBAI, June 7 (Reuters) - Palm oil stocks in Malaysia, the world's second biggest producer, are likely to fall further in the coming months as festival demand cuts into supply, a trade body executive said on Thursday, potentially supporting prices for the edible oil. 

Malaysian Palm Oil Council Chairman Lee Yeow Chor said there had been a slew of orders ahead of the Muslim holy month of Ramadan, when fasting in the day is followed by elaborate feasts at night. 

Strong orders ahead of Ramadan, which begins in the third week of July and heralds the start of the festival season in Asia, could help negate the impact of the euro zone debt crisis on demand for the oil. 

"Demand will improve in the next two months due to Ramadan. Pakistan and India will buy more," Lee, who is also the head of Malaysian palm oil firm IOI Corp , told reporters at a conference in Mumbai. 

Largely reinforcing Lee's views, a Reuters survey on Wednesday showed Malaysia's palm oil stocks probably dropped 2.9 percent to 1.79 million tonnes in May, the lowest since April 2011. 

Lee also said the Southeast Asian country's palm oil output in 2012 is likely to hover at 19 million tonnes, almost flat from 18.9 million tonnes a year ago. Exports will probably edge higher, he said, without giving an estimate. 

Thanks to tighter palm oil supply, Lee sees spot prices from 3,000 to 3,200 ringgit in the next three months. 

Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange had fallen 1.4 percent to 2,962 ringgit per tonne by 0830 GMT on Thursday.  

Prices touched a trough of 2,925 ringgit on Monday, their lowest since Nov 2, 2011.

RTRS-Palm futures to drop on cloudy economic outlook-Mistry

KUALA LUMPUR, June 7 (Reuters) - Malaysian palm oil futures could fall to 2,700 ringgit-2,800 ringgit ($854-$886) per tonne with the euro debt crisis and lack of monetary stimulus clouding the global economic outlook and crimping commodity demand, a leading analyst said on Thursday. 

The forecast by Dorab Mistry, head of vegetable oil trading with Indian conglomerate Godrej Industries , represents up to a 10 percent drop from the current 3,000 ringgit per tonne as food demand from China and India has not been immune to slowing growth. 

"I no longer expect prices to reach 4,000 ringgit in view of the changed macro economic scenario," Mistry said in a speech to be delivered at an industry seminar in the Indian port city of Mumbai. 

"My forecast of the fundamentals of crude palm oil production was correct, but the macro situation has been very poor," he said, in reference to tight supply in Malaysia, the world's No.2 producer. 

If there is a repeat of the 2008 financial crisis, Mistry said prices could "collapse" to 2,200 ringgit although "the likelihood of that happening is no more than 20 percent." 

Palm oil prices may eventually recover to a level of 3,300 ringgit, he said without giving a time-frame, as the decline in the futures and falling production in Malaysia attracts more buyers. 

Any stimulus from the United States, Europe or China, could encourage a speedier recovery, Mistry said, with palm oil rising to a peak of 3,500 ringgit over the next few months. 

 PALM OIL SUPPLY SQUEEZE 

Mistry said "something odd" was happening in Malaysian plantations with combined output in the first five months of 2012 at less than 500,000 tonnes compared to a deficit of 53,969 tonnes in the same period in 2011. 

"I expect the same struggling performance from the oil palm in Malaysia in June and July also. It is conceivable that the year-on-year deficit January to July will be a record 900,000 tonnes, he said. 

The El Nino weather condition, which is set to emerge in August and brings a dry spell to Southeast Asia, could help prices recover, although Mistry said he would not be computing its effect into his forecasts this time. 

Hot weather usually accelerates the ripening of oil palm fruits. However, prolonged exposure to heat will trigger yield stress in the trees, eventually crimping production. 

When the last El Nino episode occurred in early 2010, yields weakened in Indonesia and Malaysia and lifted prices above 2,500 ringgit in the first quarter of that year. 

"There are now definite signals of an emerging El Nino. If those signals give us an El Nino, prices will recover faster than most people expect," he said. 

Trader's Highlight

DJI- NEW YORK, June 7 (Reuters) - The S&P 500 ended barely changed on Thursday as optimism about China's interest-rate cut was offset by Federal Reserve Chairman Ben Bernanke's comments that dimmed hopes for more U.S. stimulus. 

Both the Dow industrials and the Nasdaq ended off session highs, with the Dow rising modestly for the day and the Nasdaq slipping. 

Stocks lost ground following Bernanke's comments a day after experiencing the best one-day rally so far this year. Over the previous three days, the S&P 500 gained 2.9 percent, recovering some of May's losses.  

The surprising move by China's central bank to cut its benchmark interest rate by 25 basis points helped ease worries about faltering global demand.  

Speculation has been rising that central banks will take more action to combat escalating debt problems in Europe and slower global growth. Bernanke, in testimony Thursday, said the Fed was ready to take action but gave no hint of imminent steps.

His remarks were seen as offsetting more supportive comments from other Fed members in the last 24 hours, but still leaving the door open for more action at the Fed's next meeting on June 20. 

The Dow Jones industrial average <.DJI> advanced 46.17 points, or 0.37 percent, to 12,460.96 at the close. The Standard & Poor's 500 Index <.SPX> edged down 0.14 of a point, or 0.01 percent, to 1,314.99. The Nasdaq Composite Index <.IXIC> slipped 13.70 points, or 0.48 percent, to close at 2,831.02.  

NYMEX- NEW YORK, June 7 (Reuters) - U.S. crude futures fell on Thursday as comments from U.S. Federal Reserve Chairman Ben Bernanke diminished expectations for additional economic stimulus and countered the supportive interest rate cut unexpectedly announced by China. 

Ben Bernanke said the U.S. central bank was ready to help the economy if financial troubles mount but offered few hints that further monetary stimulus was imminent.

For investors wanting indications about the prospect for a third round of large-scale Fed bond buying, Bernanke's testimony disappointed. 

As the euro zone debt crisis drags on, Spain's credit rating was slashed by three notches by Fitch, which signaled it could make further cuts as the cost of restructuring the country's troubled banking system spiraled and Greece remains in political turmoil. 

China delivered two surprises on interest rates on Thursday, cutting borrowing costs to combat faltering growth while giving banks additional flexibility to set competitive lending and deposit rates.         

On the New York Mercantile Exchange, July crude  fell 20 cents, or 0.24 percent, to settle at $84.82 a barrel, but extended losses and fell below $84 in post-settlement trading. 

CBOT SOYBEAN- Chicago Board of Trade soybean futures rose to their highest level in nearly three weeks on Thursday, surging through key technical resistance by the close of pit trading at 1:15 p.m. CDT (1815 GMT) on a weaker dollar and hopes that top importer China will step up its soy imports, traders said.  

China, the world's biggest importer of soybeans, cut interest rates for the first time in four years in a bid to bolster economic growth. 

China will import more corn and soybeans next season to keep pace with growing domestic demand, the state-owned China Grain Reserves Corp (Sinograin) said. 

The benchmark CBOT July contract burst through technical resistance at its 50-day moving average during Thursday's session, the first time it has breached that level since May 21. 

CBOT July soybeans peaked at $14.30 a bushel, their highest level since May 18. 

CBOT showed another drop in soybean registrations late Wednesday, a possible sign of firming cash markets. Soybean registrations fell by 54 contracts, leaving a total of 43 lots. The number of contracts registered for delivery has dropped from 667 contracts as of May 30. 

FCPO- SINGAPORE, June 7 (Reuters) - Malaysian palm oil futures fell on Thursday, tracking lower crude oil as investors turned cautious on prospects of the United States introducing fresh monetary stimulus and European policymakers rescuing Spanish banks.   

Fed Chairman Ben Bernanke is due to testify on the U.S. economy before a congressional committee later in the day, and investors will be watching closely for any clues to policy that could boost global growth and commodity demand.  

Palm oil has been recovering on bargain hunting after  plunging to its 2012 low on Monday. But the market returned to the red on Thursday as most investors were still waiting for further cues before jumping in. 

"The market is playing a waiting game," said a dealer with a foreign commodities brokerage in Malaysia.  

"Traders are awaiting Bernanke's talk tonight and also Dorab's talk later in the day," he added, referring to top oils analyst Dorab Mistry, who is set to speak at a palm oil trade fair in India.     

Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange lost 1 percent to close at 2,974 ringgit ($941) per tonne. Prices touched a low of 2,925 ringgit on Monday, their lowest since Nov 2, 2011. 

Traded volumes stood at 34,801 lots of 25 tonnes each, higher than the usual 25,000 lots. 

REGIONAL EQUITY- BANGKOK, June 7 (Reuters) - Southeast Asian stock markets traded mainly flat to higher on Thursday amid hopes about debt situation in Europe and gains in commodities-related stocks, with Vietnam leading the way after the credit upgrade by ratings agency Standard & Poor's. 

Vietnam's index of Ho Chi Minh Stock Exchange <.VNI> jumped as much as 2.4 percent and ended the day up 1.88 percent at a one-week high of 434.41. The Southeast Asia's best performer has racked up gains of nearly 24 percent so far this year. 

The upgrade stoked expectations of increased fund flows and lower borrowing costs. Foreign investment to Vietnam has been  negative so far this month, in line with others in the region.  Vietnam had $7.8 million in foreign outflows in June to Wednesday. For the same period, the Philippines <.PSI> reported $19 million in outflows, Thailand <.SETI> had $143 million in outflows and Indonesia <.JKSE> posted $158 million in outflows. 

Stocks in the Philippines, Malaysia <.KLSE> and Thailand <.SETI> gained 1.1 percent, 0.4 percent and 0.05 percent, respectively. Singapore <.FTSTI> and Indonesia <.JKSE> retreated from day highs to end a tad lower.