Wednesday, August 8, 2012

RTRS- Bangladesh to tender for 20,000 T of palm oil to stabilise market

DHAKA, Aug 7 (Reuters) - State buyer Trading Corporation of Bangladesh will import 20,000 tonnes of refined palm olein annually through an international tender, in an attempt to keep domestic prices more stable, its chairman said on Tuesday.

"We will seek the entire quantity in a single tender and receive 5,000 tonnes of refined oil every three months from the winning bidder,” Sarwar Jahan Talukder said.

“It will ensure a normal flow of edible oil throughout the year,” he said.

Successive governments have been struggling to control prices of edible oil amid widespread accusations that big players often create artificial shortages to make windfall profits.

Analysts said the volume of the latest tender would not be enough to control the market.

“It’s good that the government is finally taking an initiative, though the initial impact will be nominal,” said Fakhrul Alam, Malaysian Palm Oil Council’s regional manager for Bangladesh, Nepal and Myanmar.

“The purpose will be achieved only if the government gradually increases the import volume and holds a substantial quantity in reserve.” he told Reuters.

Bangladesh is almost entirely dependent on imports of crude and refined palm and soybean oil to meet domestic demand of nearly 1.5 million tonnes.

It imports 1 million tonnes of palm oil, 400,000 tonnes of soybean oil, 150,000 tonnes of rapeseed and 100,000 tonnes of soybean seed annually.

RTRS- Wetter outlook for drought-struck US Midwest

CHICAGO, Aug 7 (Reuters) - Midday forecasts were for wetter weather in the U.S. Midwest this week which will help the late planted soybean crop but arrive too late to be of benefit to the drought-stressed corn crop, an agricultural meteorologist said.

Outlooks for Wednesday and Thursday were for 0.50 to 1.00 inch (1.3 to 2.5 cm) with locally heavier amounts in Missouri, west central Illinois, western and southern Iowa and southern South Dakota.

"Previously we were expecting 0.20 inch to 0.75 inch," said Andy Karst, meteorologist for World Weather Inc.

Karst also said there were now outlooks for up to 1.00 or 2.00 inches of rain Thursday and Friday for northern Indiana, southern Michigan, Ohio and Kentucky compared with the previous outlook for only 0.50 inch.

MDA EarthSat Weather meteorologist Don Keeney agreed the central and eastern Midwest should receive rain on Thursday and Friday, and high temperatures will be in the 80s degrees Fahrenheit (26-32 degrees Celsius), rather than the 90s F.

"Temperatures will be cooler late this week, a high of only 77 F in Chicago by Friday but there's a return to heat next week," Keeney said.

Keeney said some of the late-planted U.S. soybean crop would benefit from the late summer turn to damper weather but the lion's share of the U.S. corn crop has already been affected by the worst drought in 56 years.

Corn and soybean prices were driven to record highs in late July as the drought worsened, trimming crop production. Prices for each eased on Monday but by Tuesday the market was turning higher again on concerns about more crop losses.

Relentless heat and drought has slashed prospects for the U.S. corn crop to a five-year low and the supply of corn next year was expected to fall to its lowest in nearly 20 years. (nL2E8J701W)

The U.S. Department of Agriculture (USDA) on Friday will release its August crop report and traders were bracing for the worst.

U.S. soybean inventories could fall to their lowest level in 32 years as the drought continues to trim U.S. soybean production prospects. (nL2E8J64R1)

Soybean conditions began to stabilize last week on improved crop weather in a broad swath of the Midwest while corn conditions declined another one percentage point. However, the ratings for each remained the worst since 1988 as the heat and dryness took a huge bite out of crop prospects.

RTRS- Soy futures' downside potential limited- Oil World

HAMBURG, Aug 7 (Reuters) - Tight global supplies mean soybean futures contracts have limited potential to fall up to January 2013 although they could face temporary selling pressure after touching record levels, Hamburg-based oilseeds analysts Oil World said on Tuesday.

“Soybean futures are vulnerable to another setback on further fund selling,” it said. “However the downward potential is limited for the contracts up to Dec. 2012/Jan. 2013 in view of the prospective severe tightness of global supplies of soybeans and soymeal in Sep. 2012/Febr. 2013.”

Soybean prices hit record highs in late July as severe drought and a heatwave scorched U.S. crops following drought-damage to Brazilian and Argentine crops earlier this year. GRA/ (nL2E8J3CKY)

Soybeans have fallen from their peaks after rain in the U.S. Midwest brought mild relief to the crop, but this Friday's supply-demand report from the U.S. Department of Agriculture is widely expected to slash the U.S. government's estimates of this year's U.S. corn and soybean crops. (nL2E8J3CKY) (nL2E8J3CKY)

There is great uncertainty about the level of damage to the U.S. soybean crop but several estimates indicate that there will not be enough soybeans to meet global demand, Oil World said.

“Severe demand rationing will be required, considering the sharply-reduced South American soybean stocks currently available and the prospective unusually-small U.S. soybean stocks of or below 4.3 million tonnes as of end-August 2012,” it said.

Oil World forecasts the smaller crops mean global soybean crushings will be reduced by at least 3-4 million tonnes from a year ago in Sept. 2012/Feb. 2013, even if soybean stocks are reduced steeply in the U.S. and other countries ahead of the arrival of next year’s South American soybean crops.

This will in turn cut output of the key animal feed soymeal and support soymeal prices.

“The global tightness will be much more severe in soymeal than in soyoil during Sept. 2012/Feb. 2013,” it said.

RTRS- Latam soybean stocks in staggering fall- Oil World

HAMBURG, Aug 7 (Reuters) - Soybean stocks in the leading South American producers have dropped by about a third against this time in 2011 after poor harvests and brisk exports, shifting global soybean demand to the United States at a time of concern the U.S. crop will also fall, Hamburg-based oilseeds analysts Oil World said on Tuesday.

“At the beginning of August, combined soybean stocks in Argentina, Brazil, Paraguay and Uruguay had plummeted to only an estimated 45.4 million tonnes, a staggering 22.5 million tonnes or one-third below a year earlier,” Oil World said.

“Soybean crushers are reportedly facing increasing difficulties in acquiring soybeans considering that a large portion of the physically available stocks is already committed.”

The United States is the world’s largest soybean exporter, followed in second place by Brazil, then by Argentina and Paraguay. Drought cut soybean harvests in South America this year while another drought and heatwave is also threatening the U.S. crop. (nL2E8J1F9L)

Oil World estimates Brazil’s Aug. 1 soybean stocks fell to 20.80 million tonnes from 33.15 million tonnes on Aug. 1, 2011. It believes Argentina’s stocks fell to 22.66 million tonnes from 30.62 million tonnes and Paraguay’s to 1.75 million tonnes from 3.88 million tonnes.

Instead of meeting global soybean demand, Brazil may have been importing soybeans itself recently, it said.

“There was talk recently that Brazilian crushers are considering purchasing soybeans from neighbouring countries,” Oil World said. “An estimated 0.2 million tonnes was apparently purchased from Bolivia, but we consider it unlikely that any noticeable quantity will be imported from Argentina and/or Paraguay where soybean supplies are currently unusually tight too.”

Brazilian and Argentine soybean exports were above expectations in June and July, it said. But they will have to drop in the remaining months of the year as supplies dwindle.

The “prospective sharp decline in South American exports is boosting foreign demand for U.S. origin to levels the United States is unlikely to satisfy, owing to the recent significant soybean crop deterioration,” Oil World added.

This is a major reason why soybean prices reached all-time highs in July, it said. GRA/

RTRS- US soy stocks seen matching 32-year low on drought

CHICAGO, Aug 7 (Reuters) - The worst drought to hit the U.S. Midwest in half a century could push domestic soybean inventories to match their lowest level in at least 32 years, analysts said ahead of a hotly anticipated monthly report from the U.S. Department of Agriculture.

There is still time for late summer rains to bolster supplies, however, or for record-high prices to curtail demand and help maintain soy reserves.

The USDA is scheduled to release its August supply/demand report on Friday, the first monthly report of the year to include yield data from field samples.

Ahead of the report, the average estimate for U.S. soybean ending stocks for the 2012/13 "new crop" marketing year among analysts surveyed by Reuters was 112 million bushels. That would match the stocks total from 2003/04, the lowest in USDA records dating back to 1980/81.

The USDA in July projected 2012/13 soybean ending stocks at 130 million bushels. Eleven of 17 analysts surveyed predicted the USDA would lower its forecast, while four expected no change. Two reckoned there would be an increase, saying the supply squeeze would drive Chicago Board of Trade soybean prices high enough to cut demand.

Front-month CBOT soybeans Sc1 touched an all-time high of $17.77-3/4 per bushel on July 20. The United States is the largest producer of soybeans, which are crushed into soybean meal, a key source of protein in livestock and poultry feed, and soyoil, which is used in foods and biofuels.

"We are going to reach a point where people are not going to be willing to pay up for the beans or meal," said Sterling Smith, commodity strategist for Citigroup in Chicago, who pegged 2012/13 soy stocks at 140 million bushels.

"We are beginning to see people taking their turkeys to market. They are taking livestock to market. They are culling the herds," Smith said.

At the CBOT on Tuesday, benchmark November soybeans SX2 were up 10-3/4 cents at $15.95 per bushel by 9:05 a.m. CDT (1405 GMT), but down 6 percent from a life-of-contract high of $16.91-1/2, set July 23.

NEW-CROP SUPPLIES STILL IN QUESTION

Analysts were unanimous in their expectations that this summer's drought would prompt the USDA to lower its forecasts for 2012 soybean yield and production. The average trade estimate for soy production was 2.817 billion bushels, which would be a five-year low. The average yield estimate was for 37.753 bushels per acre, a nine-year trough.

The USDA in July projected soy production at 3.050 billion bushels, with an average yield of 40.5 bushels per acre.

Also, nearly all the analysts expected the USDA to reduce its forecast of harvested acres. The average trade estimate was for 74.8 million acres (30.3 million hectares), down half a million from the USDA's July forecast of 75.3 million acres.

In the last 10 years, the department has cut its forecast of harvested soy acreage from July to August three times and raised it two times. In 1988, another year of major drought, it cut the outlook for the soy harvested area by 400,000 acres in its August report.

One complication in estimating the crop size in August is that soybeans in some areas are still setting pods, a key factor in determining yield. Much-needed rains fell in parts of the U.S. Midwest last weekend, a factor that pressured soybean futures on Monday on the Chicago Board of Trade as traders mulled improved crop prospects.

"With this rainfall we just received, I think it's going to go a long way in helping the beans. Maybe you can get another half a bushel out of the yield," said Jason Ward with Northstar Commodities in Minneapolis.

Forecasts on Tuesday called for showers and cooler temperatures in parts of the drought-stricken U.S. Midwest this week, but hotter and drier weather was likely by next week. (nL2E8J723S)

Others noted that the soybean crop is developing well ahead of normal, however, a factor that may limit its ability to rebound. The USDA on Monday said 71 percent of the crop had reached the pod-setting phase by Aug. 5, compared with the five-year average of 53 percent. US/SOY

"OLD-CROP" ENDING STOCKS SEEN TIGHTENING

Along with the size of the harvest, another variable in the new-crop supply is the amount of "old crop" ending stocks carried in from the 2011/12 marketing year, which ends Sept. 1, 2012. The average trade estimate for 2011/12 soy stocks was 158 million bushels, down from the USDA's July forecast of 170 million.

Some analysts cited strong export demand for 2011/12 U.S. soybeans, especially from top buyer China, after a drought slashed South America's soy harvest.

"The old-crop demand has been better than people thought. You have not seen China quit buying those old-crop beans," said Ward.

Anne Frick with Jefferies Bache in New York expected the USDA to raise its forecast of the amount of soybeans crushed by domestic soy processors. Frick said the USDA's 2011/12 crush estimate of 1.675 billion bushels looks too small given monthly soy crushing statistics.

"I think they could go up more than 20 million (bushels) on the crush, but I don't think they will," Frick said.

As for global supplies, traders expected the USDA to lower its forecasts for both 2011/12 and 2012/13 world soybean ending stocks. But analysts still anticipate 2012/13 soy inventories rising compared to 2011/12 as South American farmers are expected to sow large crops later this year.

"Everyone is going to watch Brazilian planting when that starts in three or four weeks," said Smith. "If they have any problems down there, this market will go bonkers."

Trader's Highlight

DJI- NEW YORK, Aug 7 (Reuters) - U.S. stocks rose for a third straight day on Tuesday, pushing the S&P above 1,400 for the first time since early May, on growing optimism the European Central Bank would act soon to contain the euro zone's debt crisis.

Trading was light, which could distort the level of optimism investors truly have that Europe will follow through with adequate measures. ECB President Mario Draghi boosted hopes last week when he spoke of restoring calm to the euro zone's troubled bond markets.

Since then, good news from Greece and declines in borrowing costs for Spain and Italy from peaks above 7 percent have kept sentiment positive. The relative calm allowed the S&P to break through the psychologically important 1,400 level after trying unsuccessfully the past couple of sessions.

"If the ECB expands its balance sheet, it will keep pushing these bond yields lower, which can help these countries finance their debt, giving markets a bit of reprieve," said Joseph Tanious, global market strategist at J.P. Morgan Funds in New York. "It's likely we won't get anything official for a few weeks, and until then investors are likely to be skittish."

Summer holidays have added to light trading volume, which has contributed to volatility. Equities cut their gains just before the close on Tuesday, mirroring Monday's late-day action.

About 6.39 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.

The real tests for markets may come in September. The ECB is expected to face decisions about controlling the euro zone debt crisis and the Federal Reserve could take stimulus actions to aid the flagging U.S. economic recovery.

The Dow Jones industrial average .DJI rose 51.09 points, or 0.39 percent, at 13,168.60. The Standard & Poor's 500 Index .SPX was up 7.12 points, or 0.51 percent, at 1,401.35. The Nasdaq Composite Index .IXIC was up 25.95 points, or 0.87 percent, at 3,015.86.

Despite worries over the economies of Europe and the United States, investors have pushed the S&P 500 up more than 11 percent so far this year. Yield-hungry investors have kept buying stocks as U.S. and German government bond prices soar and yields hit historic lows.

Tuesday's advance was led by stocks in cyclical sectors like energy, materials and consumer discretionary, while defensive sectors like telecoms and utilities edged lower.
"Despite what seems like a weekly scandal of some sort, the banks have posted incredibly large profits. The Fed has made it very easy for them to take on very little risk and make very large profits," said Randy Frederick, managing director of active trading and derivatives for Charles Schwab in Austin, Texas.

With 82 percent of S&P companies having reported quarterly results, 68 percent have beaten profit expectations, according to Thomson Reuters data.

Pfizer PFE.N and Johnson & Johnson JNJ.N scrapped further studies of an experimental drug for Alzheimer's disease after the drug failed in a second trial. U.S.-traded shares of their partner, Elan Corp ELN.N, dropped 0.9 percent to $11.15. Pfizer fell 2.1 percent to $23.74 and J&J edged 0.8 percent lower to $68.29. (nL2E8J6DQ5)

A group of investors rescued Knight Capital Group KCG.N in a $400 million deal that kept the market maker in business, but existing shareholders were nearly wiped out. Knight closed 0.3 percent lower at $3.06, erasing gains of more than 3 percent from earlier in the session. (nL2E8J60KK)

About 62 percent of stocks on the New York Stock Exchange closed higher while 61 percent of Nasdaq-listed stocks finished up.

NYMEX- NEW YORK, Aug 7 (Reuters) - U.S. crude oil futures rose for a third day in a row on Tuesday, posting the highest settlement in 12 weeks, on hopes for more U.S. Federal Reserve economic stimulus, record low North Sea output seen likely in September and Middle East tensions.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell for a second day on forecasts for improved crop weather in the U.S. Midwest and profit-taking ahead of a major U.S. government crop report on Friday, traders said.

* Updated midday forecasts called for wetter weather in the U.S. Midwest this week, which should help late-planted soybeans but arrive too late for most of the drought-stressed corn crop - meteorologist. (nL2E8J72GA)

• Trade was thin, with daily volume in soybean futures about 20 percent below the prior 250-day average.

• Traders awaiting USDA's monthly supply/demand reports on Friday. Analysts expect USDA to lower its forecasts of U.S. soybean production, yield and harvested acreage, as well as ending stocks for both 2011/12 and 2012/13. (nL2E8J7353)

• Soybean stocks in the leading South American producers have dropped by about a third since one year ago, shifting global demand to the United States at a time of concern the U.S. soy crop will also fall - analysts Oil World. (nL6E8J77IE)

• Tight global supplies mean soybean futures contracts have limited potential to fall up to January 2013 although they could face temporary selling pressure after touching record levels - Oil World. (nL6E8J6AY9)

• USDA late Monday said 29 percent of the U.S. soybean crop was rated in good to excellent condition, unchanged from the previous week -- halting a string of six weeks of decline. US/SOY

• CBOT reported no deliveries against August soybean or soymeal futures, while soyoil deliveries totaled 1,155 contracts.

FCPO- SINGAPORE, Aug 7 (Reuters) - Malaysian crude palm oil touched its lowest in more than a week on Tuesday, as traders priced in wetter weather in the U.S. Midwest that eased concerns about further damage to new-crop oilseed supplies.

Investors also avoided taking risky positions ahead of key reports later in the week. Industry regulator Malaysian Palm Oil Board (MPOB) will release official stocks and output data on Friday, and traders expect a recovery in stocks after a 14-month low in June.

A monthly supply and demand report due later this week from the U.S. Department of Agriculture (USDA) could also provide some clues on soybean production trends and the extent of drought damage.

"The market is exercising caution here ahead of MPOB and USDA data," said a dealer with a foreign commodities brokerage in Malaysia.

"The crop rating was rather neutral despite some rains reported over the weekend," he added, referring to the unchanged weekly soybean crop condition rated by the USDA. (nL2E8J635O)

The benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange closed 0.4 percent lower at 2,907 ringgit ($938) per tonne. Prices earlier touched a low at 2,897 ringgit, a level last seen on July 27.

Total traded volume came in at 23,574 lots of 25 tonnes each, fewer than the usual 25,000 lots.

The supply-demand report from the USDA later this week could offer more clues for traders on the extent of soy crop damage from the worst drought in 56 years.

A lower quality of soybean crop, leading to a smaller supply of soybean oil, could shift more vegetable oil demand to the cheaper palm oil.

Market participants are also looking out for the Malaysian palm oil export figures for the Aug 1-10 period.

Exports in July suffered a double-digit monthly decline and could lead to higher stocks especially on the back of higher production for the month. PALM/ITS PALM/SGS

REGIONAL EQUITY- Aug 7 (Reuters) - Most Southeast Asian stock markets eased on Tuesday with Singapore falling from a one-year high, but foreign investors bought into equities in Indonesia and Malaysia amid hopes that Europe will take further action to tackle its debt crisis helped sentiment.

Singapore's Straits Times Index .FTSTI fell 0.1 percent from a one-year high as property developer CapitaLand Ltd CATL.SI came off 2.2 percent after its chief executive sold one million shares. (nL4E8J71ID)

Jakarta Composite Index .JKSE lost 0.5 percent and Malaysia .KLSE ended 0.5 percent weaker from its near three-week high, both in strong volumes.

Despite losses, Indonesia saw foreign inflow of $12.7 million, while Kuala Lumpur enjoyed a net foreign buying of $5.93 million.

Thailand .SETI, bucking the trend ended steady.