[Breaking news] RTRS - Palm oil edges down on U.S., Europe worries

SINGAPORE, Nov 8 (Reuters) - Malaysian palm oil futures edged down on Thursday, tracking losses in global markets on renewed worries that economic woes in the United States and Europe could hurt commodity demand.

Crude oil and equities slumped as euphoria faded after President Barack Obama's re-election on Wednesday, with the world's biggest economy now facing a so-called fiscal cliff of $600 billion in automatic tax increases and spending cuts.

Sentiment was also dented by a gloomy outlook for Europe after the European Commission said the euro zone economy would barely grow next year. 

By the midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had lost 0.4 percent to 2,387 ringgit ($780) per tonne.Total traded volumes stood at 10,994 lots of 25 tonnes each, lower than the usual 12,500 lots.

Palm oil prices must stay at around 2,200 ringgit a tonne for two months in order to stimulate demand for the edible oil and reduce high stock levels, leading industry analyst Dorab Mistry said at a conference in China on Thursday.

RTRS - Palm oil stockpiles to melt if price stays low for 2 mths -Mistry

JAKARTA, Nov 8 (Reuters) - Benchmark Malaysian palm oil prices must stay at around 2,200 ringgit ($720) a tonne for two months in order to stimulate demand for the edible oil and reduce high stock levels, a leading industry analyst said on Thursday.

Malaysian palm oil prices Jan 2013 contract have already lost about a quarter this year to trade at around 2,400 ringgit ($780) a tonne, as stocks rise in top producers Indonesia and Malaysia and demand slumps, hit by a global economic downturn.

But palm prices must fall further within the next 4 to 6 weeks to lure buyers and cut back inventories, said Dorab Mistry, head of edible oil trading at Indian conglomerate Godrej Industries.

"One thing is crystal clear. Futures are very overpriced at present," Mistry said in a speech to be delivered at an industry meeting in the Chinese city of Guangzhou.

Last month, second-largest producer Malaysia said it would cut export taxes next year, which has helped support crude palm oil prices. The government also said it would scrap duty-free export quotas. 

Mistry said that by January, the government would have to announce loopholes and exemptions to this new export tax regime to allow substantial duty-free exports of crude palm oil, otherwise monthly exports will fall.

"In their euphoria, plantation groups and their cheerleaders have overlooked one simple but significant fact," Mistry said. "In the last fortnight, palm oil has completely priced itself out of any meaningful energy demand," he added.

STOCKS TO MARCH HIGHER

Seasonally strong production may have driven Malaysian palm oil stocks to another record high in October, a Reuters survey of five plantation firms showed this week.

Inventory levels may have grown 7.5 percent in October to 2.67 million tonnes from a previous peak of 2.48 million in September, the poll showed.

Malaysian palm oil stocks are likely to increase further in November and December, Mistry said, adding that they will total 3 million tonnes by Jan. 1 next year. 

Crude palm oil production will be 18.4 million tonnes by Malaysia this year and 27.5 million by Indonesia, he estimated.

Output prospects next year had brightened as a result of the fadeout of the El Nino weather event and better rain, he added.

Turning to rival edible oil soyoil, Mistry said prices of soybeans SX2, now trading at about $15.18-1/4 a bushel, would depend on the weather, acreage and pace of planting in South America, and crucially, releases from Chinese state reserves.

"If the state reserve releases another 2 million tonnes of soybeans between now and March, Chinese imports will be reduced to that extent, and prices need not rise to $18," he said.

"Prices around $16 will be sufficient to see us through until new crop Brazilian supplies come to market."

Trader's highlight

DJI - NEW YORK, Nov 7 (Reuters) - The Dow industrials lost more than 300 points in a sell-off on Wednesday that drove all major U.S. stock indexes down over 2 percent in the wake of the presidential election as investors' focus shifted to the looming "fiscal cliff" debate and Europe's economic troubles.

The Standard & Poor's 500 Index posted its biggest daily percentage drop since June, with all 10 S&P sectors solidly lower and about 80 percent of stocks on both the New York Stock Exchange and the Nasdaq ending in negative territory. Both the Dow and the S&P 500 closed at their lowest levels since early August.

The election was considered a major source of uncertainty for the market, but now the focus turns to the fiscal cliff, with investors worrying that if no deal is reached over some $600 billion in spending cuts and tax increases due to kick in early next year, it could derail the economic recovery.

Still, some viewed the day's slide as a buying opportunity, saying it was unlikely that no deal would be reached on the fiscal cliff and arguing that Europe's troubles were already priced into markets.

"The notion that you may have gotten a respite on the financial services side (with regulation) if Romney had been elected is obviously being unwound," said Mike Ryan, chief investment strategist at UBS Wealth Management Americas in New York.

In 2008, stocks also rallied on election day, but then fell by the largest margin on record for a day following the vote, with each of the three major U.S. stock indexes posting losses ranging from 5 percent to 5.5 percent.

NYMEX -  NEW YORK, Nov 7 (Reuters) - U.S. crude futures fell 4.8 percent on Wednesday as United States and Europe economic concerns dragged down markets a day after the re-election of U.S. President Barack Obama.

CBOT Soybean -  Soybean futures on the Chicago Board of Trade fell 0.5 percent  on long liquidation two days ahead of a monthly report in which the U.S. Department of Agriculture is expected to raise its estimate of the U.S. soybean harvest, traders said.

• Spillover pressure from a 4.6 percent drop in U.S. crude oil futures tied to worries about U.S. and European debt. 
• Soybeans also weighed down by beneficial crop weather in Brazil, which is projected as the top global soybean producer in 2012/13. However, in Argentina, the No. 3 world soy producer, excessive rain threatens to delay seedings of soybeans and corn.
• Market underpinned by historically high U.S. cash basis bids for soybeans and especially soymeal, reflecting strong soymeal demand from the livestock feeding sector.
• CBOT soyoil ended nearly flat, underpinned by fund short-covering and traders exiting long soymeal/short soyoil spreads.
• Soyoil also buoyed by a technical bounce in Malaysian palm oil futures, which had fallen to a one-month low. 
  

FCPO -  SINGAPORE, Nov 7 (Reuters) - Malaysian palm oil futures gained on Wednesday, snapping three days of losses, with investors buying after prices dropped to a one-month low earlier in the session and on concerns year-end floods in the country could hurt production.

"I heard there are worries about floods in the Johor area, and we have also seen some technical buying," said a Singapore-based trader with a global commodities house, referring to the state that accounts for almost 15 percent of Malaysia's total palm production.

The benchmark January contract on the Bursa Malaysia Derivatives Exchange gained 1.1 percent to close at 2,397 ringgit ($786) per tonne. Prices earlier fell to their weakest since Oct. 8 at 2,364 ringgit. Total traded volumes stood at 43,064 lots of 25 tonnes each, much higher than the usual 25,000 lots.

Malaysia's palm oil exports rose 10 percent to a 2012-high at 1.6 million tonnes in October, and the steep discount between palm oil and soybean oil could uncover more demand and help ease swelling stocks. Stock levels in Malaysia, the world's No.2 palm oil producer, were projected to reach a record 2.67 million tonnes in October, a Reuters survey showed on Tuesday. 

Traders are now waiting for Malaysian exports data for Nov. 1-10 from cargo surveyor Intertek Testing Services scheduled to be released on Saturday and October stocks data from industry regulator the Malaysian Palm Oil Board on Monday.

Regional Equity - BANGKOK, Nov 7 (Reuters) - Singapore stocks climbed to two-week highs on Wednesday, with Indonesia hitting a one-week high and most other Southeast Asian stock markets paring earlier losses amid gains in global stocks after U.S. President Barack Obama was re-elected.

Singapore's Straits Times Index ended up 0.79 percent at 3,043.27, the highest close since Oct. 25. Jakarta's Composite Index was up 0.8 percent at 4,350.42, the highest close since Oct. 30.

Bangkok's SET index edged down 0.08 percent, recouping most earlier losses. Malaysia's main index rebounded from an earlier drop to end nearly unchanged.