RTRS- China soy importers await softer U.S. prices as shortage looms

BEIJING, July 11 (Reuters) - China's soy buyers are holding off on placing new orders while U.S. prices hover near record highs, hoping prices will ease before they are forced to return to the market to meet potential supply shortages later this year, traders said.

China, the world's biggest soy buyer, is expecting imports to fall short of demand in September and October after a drought in South America late last year reduced supplies of the oilseed. China's imports account for more than 60 percent of globally traded oilseed volumes.

A drop in supplies from Brazil and Argentina, the world's second- and third-biggest exporters, means crushers have only been able to source about 6 million tonnes of soy for September and October. Crushers need at least 10 million tonnes during the peak consumption season.

China's supply deficit could also deepen late this year or early next year if the recent drought in the United States cuts output again, traders said.

While Chicago Board of Trade 0#C: soy prices retreated from an all-time high on Tuesday, they remain unattractive to Chinese buyers, with the market still concerned about a possible reduction in the autumn harvest following weeks of hot, dry weather across most of the U.S. Midwest.GRA/

"At current (Chicago) prices, crushers have no intention to buy as the beans would give negative crushing margins," said a soy trading manager.

Purchases of old U.S. crop over recent weeks had helped redress the shortfall for August and September, traders said.

But buyers are still waiting for prices to drop.

"They think prices will retreat on a possible expansion of soy acreage in South America, but this time the U.S. drought seems serious," said another soy trader. "There could be a supply problem for six months from September to February before the new South American crop reaches the market."

"If the U.S. crop is cut, there could be a global soy deficit of more than 14 million tonnes, and it is not easy to cut demand by that much, particularly in China," said the trader, adding that China may need to boost imports of canola from Canada later in the year to make up for meal shortages.

STATE RESERVES, PORT STOCKS

In the face of high Chicago prices, some crushers have been sourcing supplies from stockpiles of imported soybeans at Chinese ports, which were as high as 6.5 million tonnes at the end of June.

"In the short term, there will be no supply problem. Port inventories are still at a record high level following months of large import volumes," said Wang Ping, an analyst with Dong Wu Futures.

Analysts also expect crushers in the north to buy more from weekly state soy reserve auctions, which Beijing is offering at more competitive prices than imports.

"Crushers in the north are showing more interest in buying from state reserves. They can ship the cheap soymeal to the south, and they have started doing this," said one industry analyst.

At its weekly state reserve auction last week, Beijing sold 154,334 tonnes of soy at an average of 3,956 yuan ($620)per tonne, up from 40,634 tonnes the week earlier.

Prices at the weekly auctions were lower than the 4,500 yuan per tonne offered for imported soy at the ports. Current Chicago prices would put imports of soy at more than 5,000 yuan per tonne.

RTRS- Forecast turns wetter for US Midwest; temps seen rising

CHICAGO, July 11 (Reuters) - The forecast turned wetter for parts of the U.S. Midwest, with rain expected in Illinois and other areas east of the Mississippi River this weekend, Commodity Weather Group stated in a note to clients on Wednesday.

Some showers were predicted for North and South Dakota and western Minnesota by Friday.

"This could trim down dry spots a bit, but about half of the Midwest would maintain significant moisture deficits," the note said.

An upper air disturbance boosted the chance for rain late this week and into the weekend, the forecaster stated.

The midday run of a major U.S. weather forecasting model, the Global Forecast System (GFS), indicated additional rain for the Corn Belt next week, a factor that helped pressure corn and soybean futures on the Chicago Board of Trade.

"The latest idea from GFS is for amounts of 0.5 to 1 inch (1 to 2.5 cm) w idespread, with some inch-plus amounts scattered in as well," said John Dee of Global Weather Monitoring.

T he model suggested the showers would cover 85 percent of the Midwest in the six- to 10-day period, said Dee, adding, "I t's the six- to-10 day, so it's not something you would etch in stone."

Corn and soybean crops throughout the Midwest suffered a drought during the past month that has severely cut harvest expectations.

Futures prices have soared as crop conditions have worsened, with corn up 37 percent and soybeans up 23 percent since the start of June.

The U.S. Department of Agriculture on Wednesday slashed its forecast of the U.S. 2012 corn yield to 146 bushels per acre, from 166 in June, and cut its 2012 soybean yield estimate to 40.5 bushels per acre, from 43.9 bu shels per acres pr eviously.

CBOT corn and soybeans initially rose on the news but later fell on profit-taking and ideas traders had already factored steep yield cuts into the market.

Temperatures were expected to rise during the next few days, topping out in the upper 90s to low 100s degrees Fahrenheit in western growing areas during the weekend. Cooler conditions were expected in the 11- to 15-day forecast, with temperatures in the mid-80s to mid-90s.

Commodity Weather Group also said some showers were expected in Ohio and Indiana during the 6- to 15-day period.

The region remained mostly dry on Tuesday, but some isolated showers were reported in central Illinois overnight.

RTRS- India's June refined palm oil imports seen down

NEW DELHI, July 11 (Reuters) - India's refined palm oil imports fell in June as the world's biggest vegetable oil importer looked likely to raise taxes to cut cheap supplies from Indonesia, traders surveyed by Reuters said.

India's refined vegetable oil imports have been rising since October 2011 when Indonesia, the world's No. 1 palm oil producer, tweaked its export duties to make refined oils more attractive than crude palm oil to promote its own refineries.

Traders' forecasts for refined palm oil imports in June ranged between 110,000 and 150,000 tonnes, with the average at 128,333 tonnes, down 22.4 percent from May.

Stung by Indonesia's move, many Indian refiners have been requesting the government to take steps to protect local refineries, with some units facing closure.

On Thursday, ministers are likely to review the demand of domestic processors to make refined palm oil imports costlier by raising taxes. (nD8E8I3005)

Expectations of a possible increase in import taxes in June led to lower purchases of refined palm oils. In May, imports rose in the run up to the Muslim holy month of Ramadan when fasting in the day is followed by an elaborate feast at night. (nL4E8GS276)

In the first seven months of the current year from November, India's refined palm oil imports almost doubled to 1.1 million tonnes from the year-ago period, stoking fears of falling margins for domestic refineries.

Traders said refined palm oil imports were likely to stay over last year's average of 90,000-100,000 tonnes per month if the government did not introduce protective measures.

Imported palm oils were about $40-50 per tonne more expensive in June than in the previous month due to worries over supplies of soyoil when dry weather conditions hit the soybean crop in the United States.

Imported refined palm oil was quoted at around $1,050 per tonne on a cost and freight basis on India's west coast, while imported crude palm oil was quoted at $990 per tonne.

Higher prices cut total palm oil imports by 15.5 percent last month to 583,125 tonnes, according to the average of a survey of eight traders.

On Wednesday, benchmark September palm oil futures FCPOc3 on the Bursa Malaysia slipped 1.5 percent to close at 3,082 ringgit ($970) per tonne. (nL3E8IB1AO)

The Solvent Extractors' Association of India, a leading trade body, is scheduled to release June import figures later this week.

India, the world's leading vegetable oil importer, mainly buys palm oils from Indonesia and Malaysia, and small quantities of soyoil from Argentina and Brazil. About half of India's 15-16 million tonnes of annual demand is met through imports.

Traders said imports of soyoil rose in June due to the arrival of some delayed vessels from South America, while sunflower fell, reflecting lower demand for fried food stuffs during the summer.

Soyoil imports in June are seen more than doubling from May to 151,875 tonnes, while the monthly sunflower oil imports were down by about a quarter to 94,375 tonnes in June, the survey showed.

Lower domestic demand and higher imports in April and May pushed up June stocks at Indian ports by 21.5 percent to 708,750 tonnes, it showed.

Total June vegetable oil imports, including small amounts of non-edible oils, are likely to have fallen by 4.7 percent to 854,375 tonnes from May.

"Imports will be around 800,000-850,000 tonnes in July," said Sadeep Bajoria, chief executive of Mumbai-based Sunvin Group.

About 80 percent of India's total cooking oil imports are palm oils, while the rest are soft oils.

Trader's Highlight

DJI- NEW YORK, July 11 (Reuters) - The Dow and Nasdaq fell on Wednesday, while the dollar hit a two-year high against the euro after minutes from the Federal Reserve's June meeting showed any additional bond buying by the Fed was likely to happen only if the U.S. economy gets weaker.

The benchmark Standard & Poor's 500 Index closed flat, but the Dow slipped 0.4 percent and Nasdaq lost 0.5 percent for the day. The minutes from the Fed's June 19-20 meeting suggested that most policymakers were not yet ready to take bolder action on the sluggish economy. (nW1E8G902C)

The dollar extended gains against the euro, which hit a two-year low of $1.2211 after the minutes. Gold ended nearly flat, trimming its gains following the release of the Fed minutes.

Crude oil futures finished sharply higher, despite mixed signals from the Fed. A tight supply outlook in the North Sea and a drop in U.S. crude stockpiles in the latest week helped lift oil prices.

Investors were hoping the minutes would suggest the U.S. central bank was getting closer to another round of stimulus.

"The minutes do not on the surface suggest a sizable body of support for further immediate action, although it should be borne in mind that the comments were made prior to recent data disappointments," said Peter Buchanan, economist at CIBC World Markets in Toronto.

The Dow Jones industrial average .DJI slipped 48.59 points, or 0.38 percent, to close at 12,604.53. The Standard & Poor's 500 Index .SPX inched down just 0.02 of a point, or 0.00 percent, to 1,341.45. The Nasdaq Composite Index .IXIC declined 14.35 points, or 0.49 percent, to finish at 2,887.98.

OIL GAINS, GOLD FLAT

Crude oil trimmed earlier gains after the minutes also showed that the Fed's staff had lowered its forecast for gross domestic product and projected growth rate to "not materially" exceed potential output until 2014.

"The Fed's lower GDP forecast and lack of clarity on further easing measures has undermined the rally in crude oil," said John Kilduff, partner at Again Capital LLC in New York.

But oil's pullback was short-lived.

Brent crude oil LCOc1, which fell more than 2 percent on Tuesday, rose back above $100 a barrel after the Organization of the Petroleum Exporting Countries left its 2012 world oil demand growth forecast unchanged at 0.9 million barrels per day.

OPEC produces one-third of global oil.

Brent prices also got a lift from news that the combined daily loading volume fo the four benchmark North Sea crude oil streams was expected to fall to a record low in August, based on Retuers calculations, traders said. (nL6E8IB61N)

U.S. government petroleum inventories showed a drawdown last week of 4.7 million barrels, almost four times the forecast in a Reuters poll, but it was overshadowed by larger-than-expected gains in gasoline and distillate stockpiles. EIA/S

Brent crude for August delivery LCOc1 rose $2.26 to settle at $100.23 a barrel. U.S. crude CLc1 advanced $1.90 to settle at $85.81 a barrel.

Gold ended nearly flat as spot gold prices XAU= rose $11.89 to $1,576.30 an ounce.

U.S. COMEX August gold futures GCQ2 settled down $4.10 at $1,575.70 an ounce.

Earlier in Europe, equities steadied, with a weak start to the second-quarter reporting season from the autos and luxury sectors denting sentiment, though technical support levels put a lid on losses in thin and jittery summer trading.

The region's sluggish response to the euro zone's debt crisis sent 10-year German bond yields to new lows.

The FTSEurofirst 300 index .FTEU3 of top European companies closed flat at 1,039.12.

The dollar rebounded and was up against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY up 0.10 percent at 83.483, slightly off a 52-week high at 83.61.

The euro fell against most major currencies on anxiety over how policymakers plan to tackle the debt crisis after it appeared there would be no quick judgment from a German court on the euro zone's bailout fund.

The euro EUR= was down 0.05 percent at $1.2243.

Germany sold just over 4 billion euros of 10-year government bonds at record low yields, with demand solid due to concerns that the recently agreed anti-crisis measures may not be powerful enough to overcome the euro zone debt crisis.

Yields on 10-year German debt in the secondary market DE10YT=TWEB were lower at 1.271 percent, off the average auction result of 1.31 percent.

NYMEX- NEW YORK, July 11 (Reuters) - U.S. crude futures rose more than 2 percent on Wednesday, supported by data showing crude oil stockpiles fell last week and hopes that economic stimulus may yet be forthcoming from the U.S. Federal Reserve to bolster a sputtering economy.

Prices rebounded from Tuesday's selloff in reaction to the end of a strike by Norway's oil workers.

U.S. crude oil inventories fell 4.7 million barrels last week, the Energy Information Administration said in its weekly report, much more than expected in a Reuters poll of analysts.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell on profit-taking and wetter forecasts for the U.S. Midwest, traders said, reversing early strength tied to a cut in the U.S. Department of Agriculture's soy yield forecast.

* Soymeal and soyoil followed soybeans lower.

* USDA lowered its U.S. 2012 soybean yield forecast to 40.5bushels per acre, from 43.9 in June, citing hot and dry weatherin the Midwest that scorched the crop. USDA lowered U.S. soyproduction to 3.050 billion bushels from 3.205 billion in June.

* USDA lowered its forecast of U.S. 2012/13 soybean ending stocks to 130 million bushels, from 140 million in June and below the average trade estimate of 141 million.

• USDA cut its forecast of 2011/12 soybean ending stocks to 170 million bushels, in line with the average trade estimate and down from 175 million in June.

• Forecasts called for rain in Illinois and other areas east of the Mississippi River this weekend, a meteorologist said, and the midday run of a major U.S. weather forecasting model indicated additional widespread rains next week. (nL2E8IB9HN)

• Profit-taking noted after spot soybeans Sc1 matched but failed to surpass the all-time high of $16.79-1/2 set on Monday. Funds hold a near-record net long in CBOT soybeans, leaving the market vulnerable to profit-taking and long liquidation.

• Contract highs set in several new-crop soybean contracts and most soymeal contracts.

• China's soy buyers are delaying placing new orders while U.S. prices hover near record highs, hoping prices will ease before they are forced to return to the market to meet potential supply shortages later this year - trade. (nL3E8IA03P)

FCPO- SINGAPORE, July 11 (Reuters) - Malaysian crude palm oil futures slipped on Wednesday on weaker export data, although losses were curbed by tight global oilseed supply and expectations that demand will rise in the next few weeks due to Asian festivals.

The declines in palm oil bucked grain futures, which have risen as a drought in the U.S. grain belt hurts crops, and were mainly driven by a decline in Malaysian palm oil exports for the first 10 days of July, pointing to a decline in demand.

"Despite the lower end-stocks yesterday, demand is slipping away," said a trader with a local commodities brokerage in Malaysia. "Empirical evidence suggests end-stocks could recover back up to 2 million tonnes by end September."

Benchmark September palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange slipped 1.5 percent to close at 3,082 ringgit ($970) per tonne.

Traded volumes stood at 27,591 lots of 25 tonnes each, slightly higher than the usual 25,000 lots.

Malaysian July 1-10 palm oil exports fell by 13.5 and 22.2 percent respectively, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance, taking most traders by surprise. PALM/ITS PALM/SGS

The market is also on the lookout for the U.S. Department of Agriculture (USDA) report on grain supplies, due to be released at 1230 GMT, with soybean stocks expected to remain tight following the persistent drought.

But some traders expect demand to pick up by the end of the month, when the Muslim fasting month of Ramadan begins, and then again once top buyers China and India observe major holidays in September through to November.

Palm oil is currently priced lower than other vegetable oils, which also means it is likely to attract buyers.

"Price signals in India are favouring palm oil imports over soybean and sunflower oil. The premium of both sunflower and soybean oil to crude palm oil are at or above recent averages," Victor Thianpiriya, agricultural analyst with ANZ, said in a research note.

Concerns about El Nino may also boost prices. Japan's weather bureau said on Tuesday there is a strong possibility the weather pattern -- which is often linked to droughts in Southeast Asia and could hurt palm oil output -- will emerge this summer. (nL3E8IA1US)

"We expect crude palm oil prices to surge if El Nino is confirmed as fresh fruit bunch production may be reduced by a staggering 30 percent depending on the severity of El Nino," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment bank, said in a note.

REGIONAL EQUITY- BANGKOK, July 11 (Reuters) - Most Southeast Asian stock indexes on Wednesday gained for the second straight day, powered by telecoms stocks, but market turnover was relatively sluggish as doubts remained over the euro zone's ability to tackle its debt crisis.

Malaysia's main index .KLSE advanced 0.32 percent to end at 1,629.45, its record closing high. Singapore's Straits Times Index .FTSTI rose 0.8 percent to 2,989.31, the highest close since May 4 and Thai SET index .SETI gained 0.4 percent to finish at a two-month closing high of 1208.67.

Telecoms stocks were strong, with Malaysia's Axiata Group Bhd AXIA.KL up 3.4 percent and Singapore Telecommunications Ltd STEL.SI 1.8 percent higher. Thai telecoms group Shin Corporation Pcl INTUCH.BK jumped 4.3 percent amid hopes for its high dividend payouts.