Wednesday, November 14, 2012

RTRS- China palm oil traders stock up ahead of tighter quality norms

SINGAPORE, Nov 14 (Reuters) - Buyers from China, the world's second largest importer of palm oil, are rushing to stock up on the refined variant in the last quarter of this year before stricter quality measures set by Beijing take effect on Jan. 1 next year, traders said.

China announced its plans for the grade, used mainly in cooking oil, in July, but official websites gave few details. Traders in China and Southeast Asia said the rules may ask for lower values of stearic acid and peroxide in palm oil cargoes.

Higher-than-usual values of stearic acid in palm oil can cause health problems while peroxide value measures rancidity to tell how long the edible oil can last in storage, traders said.

"We see more buying now because nobody really knows what is going to happen when the rules take effect next year," said a Singapore-based palm oil trader. "We just have to wait for the first cargo to enter the country and see what happens."

Refined palm oil, which has higher stearic acid levels than competitors such as soyoil and rapeseed oil, will be the most affected by the new quality standard, traders in China said.

Chinese buyers have stepped up palm oil imports since October, with imports in November and December set to grow above 700,000 tonnes each month, traders said.

That represents an increase of at least 8.5 percent over the last two months of 2011, customs data show, when China imported a total of 1,290,000 tonnes.
Edible oil imports that fail the new standards will have to be refined further before they can be sold.

“It would increase costs and you have to find refiners to do it for you,” said an industry analyst in China, who declined to be named because he is not authorised to speak to the media.

China, the world's second-largest importer of palm oil after India, consumed close to 6 million tonnes of the commodity in 2011, taken mostly from top producers Indonesia and Malaysia.

But palm oil shipments were down 1.7 percent by September from a year earlier, at 4.1 million tonnes, customs data showed.



CHINA SPOILS INDONESIA'S PLANS?

The new rules could give greater importance to crude grades a year after top palm producer Indonesia cut export taxes for refined palm oil in a bid to grow processing capacity. Industry groups expect Indonesian refining capacity to rise 21 percent to 25 million tonnes by the end of 2012.

Industry analyst Dorab Mistry, the head of edible oil trading at Indian conglomerate Godrej Industries GODI.NS, said Beijing's move signalled that China would import more crude palm oil than refined cargoes, in a manner similar to India.

"From Jan. 1, 2013, China is introducing extremely stringent specifications for refined palm olein," he told an industry conference in China last week. "This probably has something to do with food safety, which is a matter of great importance to the Chinese government."

The bottom line is that costs will start to rise if refined palm oil is imported and has to be refined again. This scenario could see buyers just bring in crude palm oil cargoes to be refined in China at a cheaper price.

"We may see an initial 5 to 10 percent decrease in China palm oil imports once the new regulation kicks in," said one Shanghai-based oils analyst.

"But it will only affect refined palm oil intended for food use. Imports of crude for industrial use should not be affected."

Palm oil stocks in China are climbing swiftly towards 800,000 tonnes, the analyst added, as traders buy ahead of the new regulation, although purchases were also driven by food demand for Lunar New Year celebrations in February.

Traders and analysts said China's port stocks stood at 700,000 to 750,000 tonnes in August, easing from almost one million tonnes in May, but higher than the 450,000 to 500,000 tonnes seen last year.

RTRS-China to stockpile domestic corn, soy for state reserves-source

BEIJING, Nov 13 (Reuters) - The Chinese government will start stockpiling soy and corn from local farmers at higher prices than a year ago, an industry source said on Tuesday, a move set to stabilise domestic prices and support soy imports.

China, the world's top soy buyer, will pay 4,600 yuan ($740) per tonne to soy farmers in four major growing areas in the northeast. The price was 15 percent higher than what was offered last year, said the source who has seen a government document.

Beijing will pay between 2,100-2,140 yuan per tonne to stockpile domestic corn in the northeast corn belt, up about 7 percent from year ago, the source said.

The latest stockpiling, expected to start over the coming weeks and stretch till the end of April, is an annual exercise to protect farmers' interest.

With the new stockpiling price for soybeans around 4 percent above the price of imported supplies at Chinese ports 0#ASSOYA-CN, analysts said the government's latest reserve build would keep crushers' enthusiasm for imports alive.

"The stockpiling plan will stabilise domestic prices at current levels. Crushers will continue to import as domestic demand stays healthy," said Zhang Ruming, an analyst with Dalian Liangyun Futures Co. Ltd.

China has stayed on the sidelines of the global corn market as high international prices made imports unattractive.

Industry speculation of stockpiling prices has already pushed up Dalian soy prices 0#DSA:, with the most-active May 2003 contract up 1.24 percent to close at 4,757 yuan per tonne on Tuesday.

China's soy imports are expected to rise to 4.8 million tonnes in November, up from 4.03 million tonnes in October, according to estimates by the China National Grain and Oils Information Center (CNGOIC).

Beijing has been selling its state reserves over past months to help keep the market well supplied and cap food inflation.

China, the world's second largest consumer, is expecting a record corn harvest or 201 million tonnes, which was 4.3 percent higher than last year.

RTRS- NOPA October U.S. soy crush seen at 147.713 million bushels

CHICAGO, Nov 13 (Reuters) - The National Oilseed Processors Association's monthly soybean crush data scheduled for release on Wednesday should show the U.S. crush for October at 147.713 million bushels, analysts projected on Tuesday.

If realized, the figure would mark the industry group's biggest October crush since 2010 and the highest monthly total reported by NOPA since November 2010.

Trade estimates ranged from 138.0 million to 153.0 million bushels. NOPA reported the September crush at 119.732 million bushels.

The soy crush typically rises from September to October as the U.S. soybean harvest progresses, replenishing supplies. Strong cash crush margins this autumn al so ha ve encouraged soy processors to step up crushing operations, analysts said.

NOPA reported the soy crush in October 2011 at 141.179 million bushels. I ts October 2010 crush figure was 1 51. 8 64 m illion bushels.

The consensus estimate for NOPA's October 2012 U.S. soyoil stocks figure was 2.090 billion lbs, up from NOPA's September figure of 2.043 billion lbs. Analysts' estimates ranged from 1.975 billion to 2.215 billion.

NOPA reported October 2011 soyoil stocks at 1.876 billion lbs.

RTRS- India to buy more palm oil as edible oil imports rise -Oil World

HAMBURG, Nov 13 (Reuters) - India will raise palm oil purchases in coming months as its edible oil imports continue to rise but its soyoil and sunflower oil purchases will fall slightly, Hamburg-based oilseeds analysts Oil World said on Tuesday.

India will import 7.88 million tonnes of palm oil between Oct. 2012 to Sept. 2013, up from 7.47 million tonnes in 2011/12, Oil World estimates.

Soyoil imports in 2012/13 will drop slightly to 1.20 million tonnes from 1.25 million tonnes in 2011/12 and sunflower oil imports will fall to 1.00 million tonnes from 1.15 million tonnes, it forecast.

“India has become increasingly dependent on vegetable oil imports in the past 15-20 years,” it said. “This was the result of the rapidly rising domestic requirements and insufficient domestic production.”

India’s total 2012/13 edible oil imports including other types will rise to 10.37 million tonnes from 10.16 million tonnes in 2011/12 and only 8.62 million tonnes in 2010/11, it said.

Oilseed yields in India remain unusually low in comparison with other countries, it said. In contrast to improvements in Indian grain crops, India's government and oilseed industry associations have been unsuccessful in efforts to promote better productivity in Indian oilseed farming, it said.

RTRS-Indonesian palm industry rejects France's proposed "Nutella tax"

JAKARTA, Nov 13 (Reuters) - A proposed tax increase on palm oil in food in France, dubbed the "Nutella tax", should not go ahead because health fears associated with the edible oil do not stand up to scrutiny, an industry group in top producer Indonesia said on Tuesday.

The tax would rise to 400 euros ($510) a tonne from 100 euros if the proposal floated by a Senate committee this month secures majority backing in the Senate and in the lower house of France's parliament, the National Assembly.

The makers of Nutella said on Saturday they would not change the lucrative recipe even if France, its biggest market, endorsed the proposal
The use of palm oil has been met with increased public opposition in France and other Western nations due to deforestation and to allegations it can cause health problems.

"It is wrong," Sahat Sinaga, executive director at the Indonesian Vegetable Oil Association (GIMNI) told Reuters. "It is not a new issue. I don't think they will pass this law."

Similar palm oil health warnings gained heavy publicity in the United States decades ago and had subsequently been disproved by academic research, he said.

"Let's again do research into the health (impacts)," said Sinaga, a former employee of Unilever. "From a technical and scientific point of view, this is not correct."

The main ingredients of Nutella food spread are sugar, palm oil, milk powder, hazelnuts, cocoa, emulsifier and flavouring. According to Nutella's website, more than 100 million jars were sold in France in 2008.

Sinaga's comments echoed those on Monday by Malaysian Palm Oil Council chief Yusof Basiron, who said the French tax proposal threatened the livelihoods of more than 240,000 small farmers.

In a statement, Basiron urged the French government to reject the proposal, which he said could significantly undermine the competitiveness of France's food industry.

Palm oil, the world's most traded and consumed edible oil, is used mainly as an ingredient in food such as biscuits and ice cream, or as a biofuel.

Indonesia and Malaysia account for about 90 percent of global palm oil production of around 50 million tonnes.

While emerging markets such as India and China dominate palm purchases globally, Europe is also a large buyer.

Sinaga, whose association has 30 members who account for 65 percent of refining capacity in Indonesia, said he was worried that other countries might follow France's lead.

Asked about other challenges facing the palm industry, Sinaga said modernising Indonesia's state-owned ports was crucial to handle the rapidly expanding refined palm oil output.

He said that if the three main state-owned ports in Belawan and Dumai in Sumatra and Jakarta did not modernise, palm stocks levels in Indonesia would rise next year.

"We want the port facilities to improve their pumping capacity," added Sinaga. "It is now an average of 600 tonnes per hour and should be 1,000 tonnes per hour."

Indonesia slashed export taxes for processed oil in October last year in an effort to boost investments in processing and create more jobs in the industry.
Previously, the archipelago had focused on increasing plantations, which currently cover about 8.2 million hectares.

Palm oil refinery capacity in Indonesia will rise 21 percent this year to 25 million tonnes, Sinaga said last week.
Malaysia, the world's no. 2 palm producer, last month said it would cut export taxes next year. (Full Story)

The Indonesian Palm Oil Association, which represents mostly plantation firms, last week called on the Indonesian government to reduce palm oil export taxes to gain greater parity with Malaysia and safeguard shipments to top buyer India.

Highlighting a spilt in the industry, Sinaga reiterated his call for the Indonesian government not to make any change the current export tax regime as consistency is better for business.

RTRS- Argentine soy prices fall further on CBOT moves

BUENOS AIRES, Nov 13 (Reuters) - Argentina's closing soy prices and trends on Tuesday:



• Soy prices closed down for a third straight session at 1,810 pesos ($378) per tonne compared with the prior session's unofficial price of 1,850 pesos, affected by losses in U.S. soy futures that lasted much of the day.

• Soybean futures on the Chicago Board of Trade closed mixed on Tuesday, with the front two contracts rebounding to close higher on firm cash markets and slowed farmer offerings, traders said.
• In Rosario, soy for delivery in May 2013, which trades in U.S. dollars, closed at $315 per tonne.

Trader's Highlight

DJI- NEW YORK, Nov 13 (Reuters) - World stocks fell on Tuesday, extending losses as U.S. stocks reversed gains on worries that the United States could fall back into recession due to looming spending cuts and tax rises if Congress does not act, and the euro weakened as Greece faced delays in winning more aid.

The euro hit a more than two-month low against the dollar and a one-month trough versus the yen on concern about the delays in aid for debt-burdened Greece and on uncertainty about whether Spain will seek a bailout.

Worries about Greece and Spain have caused the euro to lose value against the safe-haven dollar in seven of the last nine trading sessions. So far in November, the euro has fallen 1.9 percent against the dollar and 1.7 percent against the yen.

In late trading, the euro EUR= was slightly lower at $1.2704, after earlier trading as low as $1.2660, its lowest level since Sept. 7.

Greece's international lenders gave the country more time to fix its budget, though they did not disburse the aid Greece had hoped to use to refinance 5 billion euros of its debt by Friday.

A public clash between Greece's international lenders over how Athens can bring its debts down to a sustainable level has fueled fears that Europe's troubles could flare up anew.

"When those overseeing resolution to the euro zone crisis continue to disagree, it becomes very difficult to instill confidence in investors," said Sean Cotton, foreign exchange adviser at Bank of the West in San Ramon, California.

On Wall Street, equities sold off late in the session, led by a slide in Microsoft, although retailers were a notable bright spot after Home Depot, the world's largest home improvement chain, raised its outlook.

"Stocks opened with a boost of upside energy, but when there was no follow-through by late morning, players just took some chips off the table to wait for tomorrow's retail sales figures and any developments in the fiscal cliff negotiations," said John Canavan, market analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.

The market is grappling with how a divided U.S. Congress will deal with the series of mandated tax hikes and spending cuts that start to take effect next year and could take the world's largest economy back into recession. However, serious negotiations are still weeks away, analysts said.

The Dow Jones industrial average .DJI was down 58.90 points, or 0.46 percent, at 12,756.18. The Standard & Poor's 500 Index .SPX was down 5.50 points, or 0.40 percent, at 1,374.53. The Nasdaq Composite Index .IXIC was down 20.37 points, or 0.70 percent, at 2,883.89.

The release of October U.S. retail sales on Wednesday is expected to offer key insights into how consumer spending is shaping up for the fourth quarter, said Deutsche Bank Securities chief U.S. economist Joseph LaVorgna.

Dow component Home Depot Inc HD.N raised its full-year outlook and cited an improving housing market as it reported quarterly results. Its stock rose 3.6 percent to finish at $63.38.

Microsoft MSFT.O shares fell 3.2 percent to $27.09 after the surprising departure of a key executive, who analysts said was the driving force behind the company's biggest product.

The risk aversion gripping investors boosted U.S. Treasuries, with the benchmark 10-year Treasury note up 6/32, and its yield easing to 1.59 percent.

A weak German ZEW sentiment survey heightened concerns about the impact of the euro zone crisis on Europe's largest economy and knocked the euro earlier in the session.

The FTSEurofirst 300 .FTEU3 pan-European index closed up 4.81 points, or 0.44 percent, at 1,099.16. Spain's IBEX index .IBEX rallied 1.7 percent, while its bond yields eased slightly

Brent crude oil LCOc1 slipped $0.89 to $108.18 a barrel, falling for a second day on worries about demand growth in a well-supplied market as the United States and Europe grapple with fragile economies.

Platinum group metals rose sharply after a forecast that production outages earlier this year could create a supply deficit, while gold traded flat as investors awaited more clarifications on Greek aid by the euro zone.

Spot gold XAU= eased 0.1 percent to $1,725.94 an ounce.

U.S. COMEX gold futures for December delivery GCZ2 settled down $6.10 at $1,724.80 an ounce, preliminary Reuters data showed.

NYMEX- NEW YORK, Nov 13 (Reuters) - U.S. crude futures edged lower on Tuesday in choppy trading, a second consecutive decline, pressured by concerns about weak demand in a well-supplied market as the United States and Europe struggle to bolster fragile economies.
 
CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade closed mixed, with the front two contracts rebounding to close higher on firm cash markets and slowed farmer offerings, traders said.

* Spot November soybeans SX2 rallied 1.1 percent ahead of the contract's expiration on Wednesday.

• The benchmark January contract SF3 rallied after dipping below psychological support at $14.00 per bushel for the first time since June.

• Soybeans Sc1 had dropped more than 6 percent since the U.S. Department of Agriculture surprised traders on Friday by raising its estimate for U.S. soybean production above trade expectations.

• Market rebounded on strengthening cash values as the drop in futures halted farmer soybean sales. Spot basis bids for soybeans shipped by barge to the U.S. Gulf Coast firmed on strong exporter demand, mostly for near term shipments amid concerns of a slowdown or halt to barge traffic on the mid-Mississippi River.
• USDA reported export inspections of U.S. soybeans in the latest week at 64.065 million bushels, topping trade expectations for 53 million to 59 million bushels.

• Soymeal futures closed higher, regaining ground against soyoil on meal/oil spreads.

• Analysts expect the National Oilseed Processors Association on Wednesday to report the October U.S. soybean crush at 147.713 million bushels, up from NOPA's September figure of 119.732 million. Estimates ranged from 138.0 million to 153.0 million bushels.

• The Chinese government will start stockpiling soy and corn from local farmers at higher prices than a year ago, an industry source said on Tuesday, a move set to stabilize domestic prices and support soy imports.

FCPO- SINGAPORE, Nov 12 (Reuters) - Malaysian palm oil futures recovered after falling to their lowest in three years on Monday, as a rise in Malaysian palm oil stocks in October missed market expectations and signalled a slowdown in inventory buildup.

Prices fell to 2,220 ringgit ($725) per tonne before the midday break, a level last seen in November 2009, tracking steep drops in Dalian soybean oil and U.S. soybeans after a larger-than-expected production forecast from the U.S. Department of Agriculture (USDA) on Friday.

But the benchmark January contract FCPOc3 on the Bursa Malaysia Derivatives Exchange closed up 0.4 percent at 2,324 ringgit after industry regulator the Malaysian Palm Oil Board reported a 1.1 percent increase in palm oil stocks to a record 2.51 million tonnes.

The rise missed market expectations that stocks in the world's No.2 palm oil producer likely climbed 7.5 percent to 2.67 million tonnes.

"It is very bullish. Nobody expected this figure. Nobody. We were expecting a bigger glut than usual in stocks," said a trader with a foreign commodities brokerage in Malaysia.

Total traded volumes stood at 48,969 lots of 25 tonnes each, much higher than the usual 25,000 lots despite expectations for a quiet market ahead of the Diwali and Awal Muharram holidays in Malaysia this week.

Market participants will be looking out for Malaysia's Nov. 1-10 exports data from Societe Generale de Surveillance later, after another cargo surveyor Intertek Testing Services reported on Saturday a 16 percent rise from the previous month.
In a bearish sign for palm oil, crude oil eased towards $109 per barrel on Monday, as concerns about the looming U.S. fiscal cliff and weak economic data from Japan offset signs that Chinese oil demand grew last month.

In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 was down 0.7 percent in late Asian trade. The most active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 3.9 percent lower, after earlier hitting its 4-percent daily limit.

REGIONAL EQUITY- Nov 13 (Reuters) - Thai shares fell to their two-week low on Tuesday on concerns about the U.S. fiscal cliff and about the Greece's debt crisis, while the Philippines and Vietnam stocks also ended weaker.

Major Southeast Asian stock markets in Singapore .FTSTI, Indonesia .JKSE and Malaysia .KLSE were closed for a public holiday.

Thailand's broader stock index .SETI fell 0.4 percent to its lowest since Oct. 29, while the Philippines .PSI and Vietnam .VNI lost 0.3 percent and 0.9 percent, respectively, in thin volume.

"Global concerns due to U.S. fiscal cliff and Greece's debt problem are the main factors," said Pichai Lertsupongkit, head of investment advisory services at Thanachart Securities.

"The markets will be waiting to see directions from the fiscal cliff and Greece's debt issue and we might see sideway movements until then."

In Hanoi, shares in several Vietnam-listed property companies fell on concerns over bad debt, and analysts expect further fall in the real estate stocks.