RTRS - EU Commission backs controversial sustainable palm oil scheme

BRUSSELS, Nov 27 (Reuters) - The European Commission has approved a scheme that would certify as sustainable transport fuel made from palm oil, condemned by environmental groups as one of the most damaging sources of biodiesel.

The Commission made public on Tuesday a decision taken last week to endorse the Roundtable on Sustainable Palm Oil scheme, which means the palm oil producers it licenses can qualify for subsidies.

"Palm oil is driving deforestation, wildlife loss, community conflicts, and accelerating climate change. Instead of greenwashing palm oil, the EU should outright ban its use as a biofuel," said Robbie Blake, biofuels campaigner at Friends of the Earth Europe.

Concern that some biofuels create more problems than they solve led to a major policy shift in September when the EU executive announced a proposal to limit how much biodiesel and bioethanol could be made from food crops.

Last month, it announced new rules to encourage a shift away from first-generation biofuels, blamed for stoking food price inflation, forcing forest clearance and draining of peat land. The aim is to move towards a second generation of fuels made from waste or algae, for instance.

The Commission's own research has shown palm oil has the highest emissions of any biofuel when so-called ILUC factors - the indirect land use change caused by using it for fuel - are considered.

"Emissions from peat conversion have a larger impact on the overall emissions attributed to oil crops, particularly for palm oil, than for bioethanol crops," a Commission document released in October said.

The roundtable is an association of hundreds of palm oil growers, processors, traders and distributors, as well as some non-governmental organisations working in palm-oil producing nations, such as Indonesia and Malaysia.

Commission spokeswoman Marlene Holzner said the Roundtable on Sustainable Palm Oil scheme had been judged "suitable."

She added that the EU's Renewable Energy Directive already prohibits the destruction of forests to grow palm oil or other biofuel crops.

RTRS - Soybeans undervalued, not reflecting high crop risk- Oil World

HAMBURG, Nov 27 (Reuters) - Soybean prices are too low and do not reflect the possible risk to tight global supplies if the critical South American soybean harvest in early 2013 suffers weather damage, Hamburg-based oilseeds analysts Oil World said on Tuesday.

“In our opinion the prices of soybeans and other oilseeds are currently undervalued considering the production risks in South America and the unusually small world stocks available at the beginning of 2013,” Oil World said.

“Soybean stocks will be depleted to a multi-year low of 49 million tonnes at the beginning of 2013 when the South American crop starts moving. They are down 21 million tonnes from a year ago and leave hardly any cushion for crop damage.”

Soybean prices hit record highs in September as drought ravaged the U.S. crop, but fell back to pre-drought levels in mid-November as the U.S. harvest turned out larger than expected and looming big South American crops may relieve world supplies in early 2013. 

Unfavourable sowing weather in key exporters Argentina and Brazil led Oil World to cut its forecasts of 2013 soybean harvests in both countries but a large increase is still expected on the year. (Full Story)

Low stocks and short U.S, supplies will mean the world will urgently need big South American soybean exports in early 2013, it said.

“At the moment the market is optimistic in its estimates of soybean yields and production in South America,” Oil World said. “But the biggest problems are to be seen in the possibly too low pace of soybean disposals caused by the bottlenecks in the domestic transport and export facilities in Brazil and Argentina.”

As the United States is forecast to export over 80 percent of its available soybean export supplies by February 2013 and with soybean stocks sharply reduced, the monthly volumes to be shipped out of South America will have to be record volumes from March 2013, it said.

Brazil’s soybean stocks on Jan. 1, 2013, as its new harvest starts will have fallen to 1.0 million tonnes from 5.4 million tonnes in January 2012, Oil World estimates.

Argentina’s soybean stocks on Mar. 1, 2013, as its later harvest approaches will fall 2.3 million tonnes from 3.6 million tonnes a year previously, it forecast.

RTRS - Argentine soy prices get boost from CBOT gains

BUENOS AIRES, Nov 27 (Reuters) - Argentina's closing soy prices and trends on Tuesday:

• Soy prices in the main grains port of Rosario rose to between 1,910 pesos and 1,950 pesos ($396/$404) per tonne, mirroring gains in the benchmark Chicago futures market, traders said. Trade was scant because supplies are low.

• Prices closed at 1,900 pesos per tonne in the previous session.

• Chicago Board of Trade soybean futures rose 1.7 percent on Tuesday, their biggest daily gain in a month, on technical buying and fears that South American production might fall short of initial expectations, traders said.

• Rains that swept through Argentina last week replenished moisture levels for young corn and soy plants in the main crop belt, but other areas remain under water despite some drier weather, a meteorologist said on Tuesday.

• In Rosario, soy for delivery in May 2013, which is quoted in U.S. dollars, closed up $5 to end at $315 per tonne.

• In the port of Quequen, soy traded at 1,700 pesos per tonne.

Trader's highlight

DJI - NEW YORK, Nov 27 (Reuters) - U.S. stocks slid on Tuesday in a choppy session, losing ground in the last hour before the close after Senate Majority Leader Harry Reid expressed disappointment that there has been "little progress" in dealing with the "fiscal cliff."

The market was flat for most of the session but fell sharply after Reid's comments, a signal that investors remain skittish about the wrangling in Washington. The CBOE Volatility Index, or VIX, rose on Reid's words. 

Higher dividend and capital gains taxes are part of the negotiations in Washington and may rise even if a deal is crafted.

The S&P 500's modest losses on Tuesday marked its worst day in eight sessions - indicating traders are unwilling to sell aggressively as a deal probably would trigger a rally. The benchmark S&P 500 once again closed below 1,400, a key psychological level that it had reclaimed last week as it rose nearly 4 percent.

The Dow Jones industrial average fell 89.24 points, or 0.69 percent, to 12,878.13 at the close. The S&P 500 dropped 7.35 points, or 0.52 percent, to finish at 1,398.94. The Nasdaq Composite lost 8.99 points, or 0.30 percent, to end at 2,967.79.

NYMEX - NEW YORK, Nov 27 (Reuters) - U.S. crude oil futures fell 56 cents to $87.18 a barrel on Tuesday on concerns about the progress of key U.S. budget talks.

CBOT Soybean - Chicago Board of Trade soybean futures rose 1.7 percent, their biggest daily gain in a month, on technical buying and fears that South American production might fall short of initial expectations, traders said.

·     Strength in soyoil lends support. Most-active CBOT January soyoil hit a three-week high on recent export demand for  U.S. soyoil and short-covering by funds, who hold a massive netshort position in the commodity.

·    Some traders cited support from talk that China might step  up soybean purchases in the coming weeks.  

·     Basis bids for soybeans shipped by barge to the U.S. Gulf Coast were steady to higher, supported by good demand from  exporters and concerns that low water on the Mississippi River  would restrict shipping in the coming weeks, traders said.

·    Market lifted by concerns about threats to South American soy prospects. Excessive rain in Argentina is delaying planting of corn and soybeans, and although crop weather in Brazil is mostly satisfactory, traders are monitoring pockets of dryness in the south.    

·      Soybean prices are too low and do not reflect the possible  risk to tight global supplies if the critical South American soybean harvest in early 2013 suffers weather damage - oilseeds analysts Oil World.

·      South Korea's Major Feedmill Group bought 110,000 tonnes  of soymeal likely to be sourced from South America in a tender for up to 165,000 tonnes, European traders said.

FCPO - SINGAPORE, Nov 27 (Reuters) - Malaysian palm oil futures edged down on Tuesday, as traders booked profits from a near one-week high after Greece's international lenders agreed on a financial aid deal that boosted market optimism.

On the domestic front, investors are watching Malaysian palm oil output to gauge whether stocks will reach another record high, especially after the latest cargo surveyor data pointed to weaker export demand.

"Demand is tepid, with rumours that India may import on domestic shortfall. Speculators are also seen pushing up futures amid optimism that output in the fourth quarter will avert the looming 'supply cliff'," said a trader with a local commodities brokerage in Malaysia.

The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to close at 2,410 ringgit ($792) per tonne, but off the day's high of 2,458 ringgit, a level last seen on Nov. 21.

Total traded volumes stood at 35,938 lots of 25 tonnes each, higher than the usual 25,000 lots.

The market, however, expects weaker palm oil prices to stimulate demand for price-sensitive markets such as India and Pakistan in the next few weeks. 

Palm oil stocks in China could hit one million tonnes by year-end, up from 790,000 tonnes last week, fed by surging imports and stagnant domestic demand, the China National Grain and Oils Information Centre said on its website 

Regional Equities - BANGKOK, Nov 27 (Reuters) - Philippine shares posted small gains to hit a record close for the third session on Tuesday, while Singapore and Thailand edged slightly higher amid good buying interest in large cap telecoms and banks seen as market laggards.

The Philippine index finished at 5,586.45, topping Monday's all-time closing high of 5,579.42. Singapore's Straits Times Index and Thai SET index both rose to a near three-week high, up 0.3 percent and 0.5 percent, respectively.

Among weak spots, Malaysia fell for a fifth session, ending down 0.6 percent at a five-month low, while Indonesia lost 0.9 percent after Monday's 0.6 percent gain that sent the index to a record finish of 4,375.17.