RTRS- Malaysia govt to discuss palm oil export tax on Friday

JAKARTA, Oct 8 (Reuters) - Malaysia will consider possible changes to its crude palm oil export tax regime on Friday, including limiting plantation expansion to support falling prices, a minister said on Monday.

Late last week, Malaysia, the world's second biggest producer of the edible oil after Indonesia, delayed taking a decision on a proposal to cut crude palm oil export taxes to 8-10 percent from 23 percent as the cabinet needed more time to study the plan.

"The Malaysian cabinet will discuss the changes on palm oil export tax structure next Friday," said Bernard Dompok, Malaysia's plantation industries and commodities minister, following talks with Indonesia's agriculture minister in Jakarta.

Palm oil markets have been waiting for Malaysia to come up with a strategy to counter top producer Indonesia's move last year to cut export taxes of refined palm oil and boost margins for its downstream processing industry.

Malaysia and Indonesia account for about 90 percent of global palm oil supplies, of around 40 million tonnes.

Analysts say any move to cut Malaysia's export tax could help support crude palm oil prices.

Benchmark Malaysian palm oil futures closed down 2 percent on Monday as traders braced for rising inventory levels, offsetting bargain-hunting seen earlier in the market after steep declines last week to a near three-year low. POI/

A debt crisis in the euro zone and economic slowdown in China - both top palm buyers - has muddied the demand outlook to weigh on prices.

In order to help prevent further declines in palm oil prices, both countries have agreed to work together to manage supplies and work closely on environmental issues.

"There are two possibilities in our cooperation with Indonesia," Dompok said. "First, reducing palm oil plantation expansion. The other possibility is to increase palm oil use (and) consumption in Malaysia by promoting biodiesel usage."

Replanting of palm trees that are more than 25 years old in Malaysia, was one way of doing this, Dompok added.

Indonesia's Agriculture Minister Suswono added however, that there were no plans for both countries to work together on joint palm oil export tax proposals.

RTRS- Malaysian palm oil firm eyes Philippines after peace deal

KUALA LUMPUR, Oct 9 (Reuters) - Malaysia's Felda Global Ventures, the world's largest crude palm oil producer, is the first foreign investor to evince interest in the southern Philippines after Manila agreed on a historic peace deal with Muslim rebels, potentially opening up tracts of farm land.

The Philippine government and Moro Islamic Liberation Front rebels agreed on Sunday on a pact to end 40 years of conflict in the impoverished southern region of Mindanao. Officials have cautioned that the deal is only a first step as the two sides need to thrash out details on the scope and powers of a new autonomous region.

Conflict-wracked Mindanao has the most suitable land in the Philippines for oil palms, Sabri Ahmad, chief executive of cash-rich Felda Global FGVH.KL told Reuters in an interview.

"We will go there for oil palms," he said in the Malaysian capital late on Monday. "There is ample area for oil palms to meet strong local demand," he added.

Felda Global had a $3.1 billion listing earlier this year, at the time the largest in the world after Facebook's IPO, and had said it planned to use the funds to expand in Southeast Asia and Africa.

The fighting in Mindanao has deterred any widespread foreign investment investment in the agriculture and mineral-rich region.

Despite the natural resources, the Philippines imports more than 500,000 tonnes of crude palm oil a year to meet strong local demand for the product, used mostly for cooking.

While Sabri did not give an estimate for how many hectares Felda Global was looking to develop, he said plantation companies would need to invest in at least 10,000 hectares to gain economies of scale.

"We would have to look at building up the infrastructure. It will have to be a holistic approach," he said.

Mindanao has about one million hectares of grasslands, equivalent to the size of Puerto Rico, that can be turned into oil palm estates, the Philippines Palm Oil Development Council (PPDCI) has estimated.

The southern Philippines could become the next destination for land-hungry companies like Malaysia's Sime Darby SIME.KL and Singapore listed Wilmar WLIL.SI which have struggled with environmental restrictions in top palm oil producer Indonesia and harsh weather conditions in Africa.

The rush for land comes as benchmark palm oil futures 0#FCPO: on the Bursa Malaysia Derivatives Exchange have nearly doubled over a decade, driven by demand for its products ranging from cooking oil and biofuel to cosmetics.

Felda Global could bring to the Philippines the farmer's co-operative model developed by its parent -- the Malaysian government's Federal Land Development Authority, said Sabri.

The government gave the rural poor cheap loans to acquire and develop small tracts of land. Felda Global in turn, buys palm fruits from the farmers to ensures a steady income flow.

"When commodity prices are high, these farmers have the leeway to improve their lives. Everyone wins," said Sabri.

With Felda Global buying up palm fruits from the farmers and other independent farmers to process, it has become the world's largest crude palm oil producer with an annual output of around 3.3 million tonnes.

MYANMAR

Felda Global is also in discussions with Myanmar to bring this farming model to the former pariah state that has undergone a year of reforms. But it faces pressure from farmers who say interest from private firms has fuelled land grabs.

"Once the embargoes get fully lifted, we want to reach out to the World Bank and other agencies to start up these co-operatives in a sustainable manner," said Sabri.

"Ideally, we would like to take up 5,000 hectares of oil palm estates and then help the farmers develop the surrounding land for themselves. Then they can also provide palm oil to us for processing," he said.

Felda wants to develop the supply chain for other business segments like sugar and rubber in Myanmar.

The company is conducting a study to develop 30,000 hectares of sugarcane near Mandalay in the central region and another 30,000 hectares of rubber estates in the south of Myanmar.

Myanmar's 60 million population -- nearly two times the size of Malaysia's -- could be a big market for palm based-cooking oil and margarine that Felda Global exports.

"Demand is picking up. Currently, it is about 150,000 tonnes and I can safely say it will go up to more than half a million tonnes," Sabri said. "Myanmar is going to be big for us."

RTRS- Paraguay cenbank sees 9.5 pct economic growth in 2013

ASUNCION, Oct 8 (Reuters) - Paraguay's central bank on Monday raised its outlook for 2013 economic growth to 9.5 percent from between 8.0 percent and 8.5 percent previously, citing an expected jump in soy and grains output.

The South American country is seen suffering an economic contraction of 1.5 percent this year, partly from a drought that slashed farm production. Paraguay is the world's No. 4 soy exporter, although it lags far behind the top three suppliers.

The central bank forecasts the commodities sector will grow 24.9 percent in 2013 after shrinking an estimated 20.6 percent in 2012.

"Basically this is due to a likely 'super harvest' of soy and grains, according to sector estimates, although this is subject to weather conditions, of course," central bank official Miguel Mora told reporters.

Beef exports are also expected to rebound next year, when the landlocked country will hold a presidential election, after the appearance of foot-and-mouth disease in late 2011 hurt meat shipments.

Paraguay's economy shrank 2.3 percent in the second quarter from a year ago.

The government's budget forecasts 8.5 percent growth in 2013, an estimate shared by the International Monetary Fund.

RTRS- Weekly rainfall forecast for Brazil soy belt-Somar

SAO PAULO, Oct 8 (Reuters) - Rains should spread and intensify in Brazil's soy belt later this week as farmers sow what is expected to be a record crop, local forecaster Somar said on Monday.

Light, irregular rainfall in mid September jump-started planting of what the U.S. Agriculture Department expects to be a record 81-million-tonne soybean crop that would put Brazil ahead of the United States in production of the oilseed.

Local forecaster Somar Meteorologia, which specializes in forecasting weather for Brazil's major crop regions, said a cold front that brought rain to the Brazil-Argentine border would move north into No. 2 producing state Parana starting Thursday.

"After a period of little or irregular rainfall, we are going to see a change in weather patterns and the return of rainfall to central Brazil," the report said.

RTRS- World Bank cuts East Asia GDP outlook, flags China risks

SINGAPORE, Oct 8 (Reuters) - The World Bank cut its economic growth forecasts for the East Asia and Pacific region on Monday and said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast.

"Unlike the rest of the region, China is experiencing a double whammy -- the growth slowdown is driven by weaker exports as well as domestic demand, in particular investment growth," World Bank Chief Economist for East Asia and the Pacific Bert Hofman said at a briefing in Singapore.

He stressed, however, that the World Bank, like many economists, still expects China to have a soft landing as seen from the bank's revised 7.7 percent growth forecast for this year and 8.1 percent for next year.

The World Bank earlier on Monday released its latest East Asia and Pacific Data Monitor, warning China's that slowdown could accelerate.

In the report, the international lender said that ambitious investment plans announced by several local governments in China could face funding constraints, "not least because governments are feeling the pinch of a cooling real estate market, which lowers land sales revenues".

The World Bank said the central government was unlikely to come up with a major fiscal stimulus package as policymakers were concerned about a rebound in home prices and a possible reversal of hot money flows.

Nevertheless, the bank expects growth in China to pick up in 2013, helped by monetary policy measures introduced earlier this year and an acceleration of central government investment spending.

The World Bank had earlier this year forecast 8.2 percent GDP growth for China in 2012 and 8.6 percent in 2013.

For the region as a whole, the World Bank now expects developing East Asia to grow by 7.2 percent this year and 7.6 percent in 2013, down from earlier estimates of 7.6 percent and 8.0 percent, respectively.

"This is the slowest growth rate in the Asia Pacific region since 2001. It's even slower than the peak of the financial crisis in 2009," Hofman said.

The World Bank last week cut its 2012 growth forecast for sub-Saharan Africa to 4.8 percent from 5.2 percent, and lowered its outlook for Latin America to 3 percent from the previous 3.5 to 4 percent, citing the global economic slowdown.

"Economic projections for EAP (East Asia and Pacific) are surrounded by considerable uncertainties, and a variety of risks continue to loom over the global and regional economy," the bank said.

"Although recent policy moves have reduced the risk stemming from the Eurozone, financial market disruptions still constitute the main risk to this outlook, followed by the 'fiscal cliff' risk in the United States," it added, referring to the sharp cuts in U.S. government spending that could be triggered next year if lawmakers fail to reach a new agreement.

SOUTHEAST ASIA, QE3

The World Bank was bullish about Southeast Asia due to strong domestic demand and noted investment spending in Thailand, Malaysia and Indonesia was booming. For Indonesia, the ratio of investment to gross domestic product has now returned to pre-Asian financial crisis levels.

The multilateral lender kept its 2012 GDP forecasts for Indonesia and Thailand at 6.1 percent and 4.5 percent, respectively, and raised its 2012 growth outlook for Malaysia to 4.8 percent from 4.6 percent.

The 2012 forecast for the Philippines was increased to 5.0 percent from 4.2 percent.

"In the Philippines, the acceleration of government infrastructure spending has contributed to the strong growth performance in the first half, while revenue growth is supported by tax administration reforms as well as strong GDP growth," the World Bank said.

Most developing East Asian economies were well positioned to weather troubles in the global economy as they enjoyed current account surpluses or only modest deficits and held high levels of foreign exchange reserves relative to their international payment obligations, the World Bank added.

Hofman said the latest round of "quantitative easing" by Western central banks will not be as disruptive to East Asia as previously, as weakening exports coupled with still strong imports mean overall inflows to the region were not as large as they had been in the past.

"It was a problem almost two years ago and even one year ago but it seems less of a problem now," he said.

The U.S. Federal Reserve last month unveiled a third round of quantitative easing, whereby it will inject new money into the system by buying mortgage securities. The European Central Bank has also announced plans to buy the bonds of trouble eurozone countries such as Spain to bring borrowing costs down.

The World Bank, however, warned that countries such as Mongolia, Laos, Timor Leste, Fiji and Papua New Guinea could experience a sharp terms-of-trade shock in a major slowdown, as commodities accounted for at least 80 percent of total exports.

It added the recent spikes in global food prices were less of a risk to the East Asia and Pacific region as rice markets had not been affected.

"Rice prices have been relatively stable, with most of the price risks on the downside as stocks in Thailand continue to build as a result of the new floor price policy, and good crops in Cambodia, Vietnam and the Philippines," it said.

Trader's Highlight

DJI- NEW YORK, Oct 8 (Reuters) - U.S. stocks slipped in light trading on Monday, pulling back from recent five-year highs ahead of an earnings season expected to be weak.

Trading volume was the lowest so far this year in a full session as the U.S. government and the bond market were closed for the Columbus Day holiday. About 4.1 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, compared with the year-to-date daily average of 6.54 billion to last Friday.

Stocks were pressured throughout the day as the World Bank cut its growth forecasts for the East Asia and Pacific region, and warned that the slowdown in China could worsen and last longer than many analysts expect.

Analysts expect third-quarter earnings to fall for the first time in three years even though the S&P 500 gained 5.8 percent during that period. Such a grim forecast might call into question whether the rally can be sustained.

"Certainly there have been a lot of downward revisions in earnings in general," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC in Lisle, Illinois. "Some people are predicting that we may see an overall decline in earnings, so there may be some defensive posturing and profit-taking."

The reporting season begins in earnest on Tuesday with Dow component Alcoa Inc AA.N, which is expected to post a break-even quarter compared with a profit of 15 cents per share a year earlier. Alcoa shares rose 0.3 percent to $9.12.

The Dow Jones industrial average .DJI fell 26.50 points, or 0.19 percent, to 13,583.65 at the close. The S&P 500 .SPX lost 5.05 points, or 0.35 percent, to 1,455.88. The Nasdaq Composite .IXIC dropped 23.83 points, or 0.76 percent, to end at 3,112.35.

Analysts forecast third-quarter earnings of S&P 500 companies will fall 2.3 percent from the year-ago quarter, according to the latest Reuters data. Earnings for the fourth quarter, which will be reported early next year, are seen up 9.6 percent.

However, some questioned whether the earnings bar was being set too low.

John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York, said companies will find it hard to disappoint, and "surprises will have a more positive than negative look."

Further weighing on sentiment, euro-zone finance ministers said Spain did not need a bailout because it was taking steps to put its finances in order. Expectations that Madrid would ask for financial aid have helped support equities and other risky assets over the past several weeks.

Recent earnings warnings from large multinationals such as FedEx FDX.N, Caterpillar CAT.N and Hewlett-Packard HPQ.N have cited weakness in Europe and China.

According to Thomson Reuters data through Monday, 91 companies in the S&P 500 have issued negative outlooks versus 21 positive pre-announcements, for a ratio of 4.3, the weakest showing since the third quarter of 2001.

Netflix NFLX.O gained 10.5 percent to $73.52 after Morgan Stanley raised its rating to "overweight" on the stock of the video streaming company, saying that Netflix could become a global video platform.

Apple Inc AAPL.O shares fell 2.2 percent to $638.17, ranking as the biggest drag on both the S&P 500 and the Nasdaq 100 .NDX despite denials of a strike at one of its manufacturing plants. China Labor Watch said a Foxconn plant in China that makes Apple's iPhone was crippled by a strike, but Foxconn, a Taiwanese company, denied the report.

NYMEX- NEW YORK, Oct 8 (Reuters) - U.S. crude futures fell on Monday on concerns that slower economic growth in China and the debt crisis in Europe will curb demand for petroleum, while the potential for Middle East turmoil to disrupt supplies limited losses.

CBOT SOYBEAN- CBOT soybean futures on the Chicago Board of Trade ended lower on Monday on worries about the economy in the world's top soy buyer China, on a firmer dollar and on positioning ahead of monthly U.S. government crop estimates, traders said.

• The World Bank cut its economic growth forecasts for the East Asia and Pacific region and said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast.

 

• Seasonal pressure noted from the expanding U.S. soybean harvest. USDA's weekly crop progress report will be released Tuesday, a day later than normal, due to the federal Columbus Day holiday. Traders estimated that the U.S. soy harvest was roughly two-thirds complete.

• Deferred CBOT soybean contracts pressured by ideas of a record-large South American soy harvest. Rains should spread and intensify in Brazil's soy belt later this week, improving soil moisture, local forecaster Somar said.

 

• Market underpinned by short-covering. Chart support in November soybeans SX2 held at the 100-day moving average near $15.36-1/4 per bushel.

• Ahead of USDA's October supply/demand reports on Thursday, the average estimate for U.S. 2012 soybean production among 26 analysts surveyed by Reuters ahead was 2.759 billion bushels, up from USDA's September forecast of 2.634 billion.

 

• The average analyst estimate for U.S. 2012/13 soybean ending stocks was 134 million bushels, up from USDA's September forecast of 115 million.

 

• Paraguay's central bank raised its outlook for 2013 economic growth to 9.5 percent from between 8.0 percent and 8.5 percent previously, citing an expected jump in soy and grains output.

 

FCPO- SINGAPORE, Oct 8 (Reuters) - Malaysian palm oil futures closed down 2 percent on Monday as traders braced for rising inventory levels, offseting bargain-hunting seen earlier in the market after steep declines last week to a near three-year low.

A monthly report by the Malaysian Palm Oil Board (MPOB) on Wednesday could show September stock levels hitting a record high, setting a bearish tone for fundamentals.

 

"The market has no specific direction to go yet after falling so much," said a Singapore-based trader with a global commodities house, referring to prices that fell to near 3-year low and posted their third straight weekly loss last week.

"We have the MPOB report for September's end-stock. The market has been expecting the worst so if it is a bit better than market expectations, that will help for a good rebound," the trader added.

The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 2 percent to close at 2,368 ringgit ($785) per tonne, after trading in a range from 2,361 to 2,446 ringgit.

Total traded volumes stood at 36,000 lots of 25 tonnes each, much higher than the usual 25,000 lots.

Technical analysis showed palm oil is expected to end its rebound at or below 2,503 ringgit per tonne, and fall towards 2,230 thereafter, Reuters market analyst Wang Tao said.

 

Palm oil investors are looking out for Malaysia export data for Oct. 1-10, also due on Wednesday, after weaker-than-expected numbers in September failed to alleviate concerns over high stock levels. PALM/ITS PALM/SGS

The market received a temporary boost last week from a possible Malaysian move to slash crude palm oil export taxes to 8-10 percent from 23 percent, but an official said on Friday the decision had been delayed.

China's soybean oil futures fell to a 4-month low on Monday, after trade resumed following a week-long holiday and in line with steep losses on the Malaysian palm oil market last week.

 

The most active January 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 2 percent lower at 9,088 yuan per tonne, after going as low as 9,050 yuan, a level last seen on June 5.

In a bearish sign for palm oil, Brent crude oil fell below $111 per barrel on Monday on concerns that slower economic growth would curb oil demand, but supply worries stemming from tension in the Middle East helped check losses. O/R

In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 edged down 0.4 percent in late Asian trade.

REGIONAL EQUITY- BANGKOK, Oct 8 (Reuters) - Southeast Asian stocks mostly retreated on Monday amid concerns over the global economic outlook, with Indonesia coming off an intraday record on selling in recent gainers such as Astra International ASII.JK while property shares led Singapore lower.

Jakarta's Composite Index .JKSE fell 1 percent, erasing early gains that pushed the main index to an intraday record high of 4,324.79.

Indonesia's biggest listed company by market capitalisation Astra International lost 2.4 percent after a 5.8 percent surge on Friday when the main index closed at a high of 4,311.31.

In Singapore, CapitaLand Ltd CATL.SI dropped 3.3 percent while other property shares also fell after new government measures were introduced to cool the city-state's property market.

The benchmark Straits Times Index .FTSTI finished down 1 percent. It was up 1.55 percent last week and was Southeast Asia's second-best performing market after the Philippines .PSI.

Malaysia's index .KLSE ended unchanged, with foreign investors buying shares worth a net 117 million ringgit ($38.30 million) while retail and local institutions were net sellers, stock exchange data showed.