RTRS- Indonesia's SMART sees 2013 palm oil output rising by up to 10 pct

NUSA DUA, Indonesia, Nov 30 (Reuters) - Indonesia's biggest palm oil producer SMART SMAR.JK expects its 2013 output to rise by as much as 10 percent on the year to around 2.4 million tonnes as more plantations mature, a company executive said on Friday.

SMART, or PT Sinar Mas Agro Resources & Technology, is likely to produce about 2.2 million tonnes of palm oil this year, Susanto, chief executive of the company's West Kalimantan operations, told Reuters.

"For next year, hopefully there will be an increase of 5-10 percent," Susanto said on the sidelines of the 8th Annual Indonesian Palm Oil Conference.

"We have new areas and more mature areas, especially in Central Kalimantan," he added.

SMART runs the Indonesia palm oil operations of its Singapore-listed parent Golden Agri-Resources GAGR.SI.

The company had earlier estimated output to rise by about 8 percent a year over the next five years.

Susanto manages 30,000 hectares of palm plantations in West Kalimantan, producing 40,000-45,000 tonnes this year. He said that volume is likely to rise 10-15 percent in 2013.

Malaysia and Indonesia account for about 90 percent of the world's annual palm oil production of about 45 million tonnes.

This year, Europe's financial woes coupled with an economic slowdown in top buyers India and China, have cut demand for the edible oil and pushed inventories in second-largest producer Malaysia to record highs.

The rising stocks have shaved a quarter off the value of palm oil futures FCPOc3 this year, and many analysts at the conference see little let-up in early 2013.

INFRASTRUCTURE UPGRADE

Palm oil stocks in Indonesia, the world's top producer, are more than 4 million tonnes at present and capacity is between 5-6 million tonnes, said Joelianto, trading director at SMART.

To offset falling demand, government officials in Indonesia have called on the palm industry to build bigger storage capacity, and increase domestic use of biofuels.

Joelianto, however, said the biggest challenge to the industry in Indonesia was the lack of bigger waterways and new ports to quickly ship out palm oil and ease high stock levels.

"The government has not done anything concrete yet," said Joelianto, adding that many palm firms were now building their own jetties. "We need more infrastructure, especially deeper ports that can handle bigger volumes."

Earlier this month, the Indonesian Vegetable Oil Association said modernising Indonesia's state-owned ports was crucial to handle the rapidly expanding refined palm oil output.

Crude palm oil shipments were also affected by dry weather conditions and falling water levels on a river in West Kalimantan in June.

"If Indonesia's palm oil (output) is growing by 2-2.5 million tonnes per year, we must have ports that can handle that kind of volume," Joelianto said.

RTRS- Palm oil prices set for a volatile 2013 in oversupplied market

NUSA DUA, Indonesia Nov 30 (Reuters) - Palm oil prices are set to start 2013 on a sour note as record high stocks and rising output in Southeast Asia overwhelm already weak demand, while regulatory uncertainty in top buyers India and China adds to the gloomy outlook.

Analysts and traders at an industry meeting in Bali expect the world's biggest palm oil producers, Indonesia and Malaysia, to boost supplies next year, barring any weather disruptions.

An increase in the amount of edible oil on the global market is likely to further weigh on benchmark Malaysian futures 0#FCPO:, which are set to post their worst annual performance this year since the 2008 financial crisis. The profits of big palm oil firms, such as Singapore's Wilmar WLIL.SI and Malaysia's Sime Darby SIME.KL, are also likely to be eroded.

While lower prices will attract food demand, appetite could be curbed by possible regulations by China and India. India, the world's biggest buyer, may set higher taxes on edible oil imports to protect oilseed farmers, and China launches strict quality curbs for imports on Jan. 1.

"I am steadily coming to the conclusion that the days of supernormal profits in palm oil cultivation are coming to a close," influential palm oil market analyst Dorab Mistry said.

"Overall I expect vegetable oil prices to remain rangebound in the first half of the year and to begin a major bear market in the second half," he told the conference.

Mistry, who handles the edible oil trading portfolio for India's Godrej Industries, forecast palm oil to "break down" if India hiked import taxes.

Otherwise, palm oil futures will trade between 2,300 and 2,600 ringgit between now and February 2013, as high stocks more than make up for strong Asian demand growth, he said.

Other analysts and traders surveyed by Reuters at the meet also saw palm oil prices averaging 2,500 ringgit next year, or 17 percent off this year's average of 3,016 ringgit.

SOAKING UP MORE SUPPLY

Palm oil is now trading at above 2,350 ringgit, sharply lower than year-ago levels of above 3,000 ringgit.

Prices next year will be affected by the performance of benchmark Brent crude oil and the Chinese quality requirements, said James Fry, chairman of consultancy LMC International.

"There are three possible outcomes," he said, referring to the Chinese curbs. "More crude palm oil or crude olein imports for refining, more polishing of RBD olein imports and maybe more fractionation of RBD palm oil imports."

Higher crude prices could boost the appeal of Asian palm oil, and shrink Malaysian inventories to 1.8 million tonnes by June 2013 from a record 2.5 million in October, Fry said.

Palm futures are unlikely to change too much from current levels if Brent futures fall to around $90 a barrel, he added. If Brent stays at around $110, palm oil could hit 2,950 ringgit.

Palm oil demand has fallen this year, crimped by financial woes in Europe and economic slowdown in China.

Next year, producers will also have to contend with even higher supplies from both Malaysia and Indonesia, which makes for a challenging market unless the global economy picks up.

Mistry, in his first estimate of Indonesian output, forecast production to rise to 29.5 million to 30 million tonnes in 2013 from a projected 27.5 million this year, exceeding estimates by the official industry association GAPKI.

He also forecast Malaysian output growing at a slower pace, to 19 million tonnes next year, from an estimated 18.4 million this year.

Not all analysts, however, rue the increase in supply.

Thomas Mielke, editor of Hamburg-based research house Oil World, believes the increase in palm oil supply will help fill the gap left by a decline in soybean production in the Americas.

He forecast crude palm oil prices, now trading at a record $350 discount to soybean oil, would start rising as more customers make the switch.

"Global soybean supplies are tight," he said. "I expect that palm oil futures will appreciate to 3,100 to 3,200 Malaysian ringgit sometime in March, April, May 2013."

Indonesia's rapidly expanding edible oil processing industry is also likely to help soak up the extra output.

Indonesia's Palm Oil Board forecast total palm oil consumption to rise to about 7.5 million tonnes next year, from an expected 7 million this year.

Jakarta is also considering increasing tax incentives to encourage palm oil companies to set up refineries, a government adviser said, as it develops its downstream sector to compete with Malaysia and draw in more export earnings.

RTRS-Palm oil slips on investor caution, set for third monthly loss

SINGAPORE, Nov 30 (Reuters) - Malaysian palm oil futures edged lower on Friday and were heading for their third straight monthly loss, with investors staying cautious after top analysts warned that record high stocks will weigh on prices in the new year.

But losses were limited by a surprise increase in Malaysian exports in November to 1.66 million tonnes from 1.6 million tonnes seen in October, easing concerns that record high stocks would climb further for the month.

 

"The export surprise is likely to limit the downside because end-stocks are going to be flat to slightly lower for November. The market is also taking some time to digest the analysts' comments," said a dealer with a foreign commodities brokerage in Malaysia.

By the midday break, the benchmark February contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,372 ringgit ($780) per tonne. For the month, prices were on track for a 5 percent loss.

Total traded volumes were thin at 8,342 lots of 25 tonnes each compared to the usual 12,500 lots, highlighting investor caution.

Technicals showed palm oil's target at 2,353 ringgit per tonne remained unchanged, and a break below will lead to a further drop to 2,288 ringgit, said Reuters market analyst Wang Tao.

Palm oil prices need to trade at the 2,200 ringgit level for the next 4-6 weeks to attract demand that could reduce and clear stocks, said top industry analyst Dorab Mistry at the Indonesian Palm Oil Association conference on Friday.

Leading analyst James Fry of LMC International raised issues such as uncertainty ahead of Chinese and possibly Indian import rules, although Thomas Mielke of Oil World provided a more upbeat forecast for palm oil prices.

Analysts and traders surveyed by Reuters at the conference saw 2013 average palm oil prices at 2,500 ringgit, down 17.1 percent from 3,016 ringgit calculated so far for this year.

 

In related markets, Brent crude slipped towards $110 a barrel on Friday as critical U.S. budget talks to avert a looming fiscal disaster appeared to have stalled, denting the outlook for oil demand from the world's biggest consumer.

In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 lost 0.1 percent in early Asian trade. The most-active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange edged up 0.2 percent.

RTRS- Analysts call the palm oil market for 2013

NUSA DUA, Indonesia Nov 30 (Reuters) - Following are comments by key analysts at a palm oil industry conference in the Indonesian island of Bali:

THOMAS MIELKE, EDITOR, OIL WORLD

PALM OIL'S DISCOUNT TO SOYOIL

"Palm oil prices are undervalued, I consider the huge discount of $350 to soyoil as not sustainable. It is a matter of time with current surplus in palm oil getting disposed."

SOUTH AMERICAN CROPS

"South American crops are going to be key for prices. September to February 2012/13, global crushing of ten oilseed varieties forecast to suffer an unprecedented drop of 5 million tonnes."

"In contrast, crushing jumped8.4 million tonnes a year ago and 5.8 million tonnes per annum on the average of the past 14 years. The world needs more palm oil to offset these reductions."

"Soybean crushing could be compensated by higher palm oil supplies."

"September/February 2012/13 world soybean supplies down 24 million tonnes. Little rationing in world soybean consumption so far."

RTRS- CIMB upgrades S'pore-listed palm oil firms

CIMB Research upgraded Singapore-listed palm oil plantation firms to 'overweight' from 'trading buy' but downgraded Indonesia-listed peers to 'neutral' from 'overweight'.

Singapore-listed companies will be "less impacted by the minimum wage increase (in Indonesia) due to their geographically-diversified estates, as well as have better prospects in light of their exposure to the domestic cooking oil sector", CIMB said.

It lowered its average crude palm oil price forecasts by 7-9 percent for 2012-2014 to reflect waning risks from El Nino.

The brokerage upgraded Singapore's Wilmar International Ltd WLIL.SI to 'outperform' from 'neutral', and raised its target price to S$3.90 from S$3.52, citing a recovery in earnings due to better crushing margins and higher sales volumes in 2013.

By 0147 GMT, Wilmar shares were up 0.6 percent at S$3.21, but are the biggest underperformer in the sector, falling 36 percent so far this year against the Straits Times Index's .FTSTI 16 percent gain.

Golden Agri-Resources Ltd GAGR.SI was also upgraded to 'outperform' from 'trading buy', as CIMB expects its shares to ride on the recovery in crude palm oil prices in the first half of the year.

CIMB downgraded Indonesia's Astra Agro Lestari AALI.JK to 'neutral' from outperform and cut target price to 23,300 rupiah from 27,400 rupiah, due to rising cost pressures.

Trader's Highlight

DJI- NEW YORK, Nov 28 (Reuters) - U.S. stocks rallied on Wednesday after comments from House Speaker John Boehner, the top Republican in Congress, on a possible compromise to avoid the "fiscal cliff" turned the market around.

The S&P 500 rebounded from a 1 percent decline, gaining more than 20 points from its low after Boehner, an Ohio Republican, said he was optimistic that a budget deal to avoid big spending cuts and tax hikes can be worked out. President Barack Obama added to the good feelings, saying he hoped to get a deal done in the next four weeks.

 

"The fiscal cliff is dominating the discussion, and short term, we’re a little bit too optimistic on it being fixed right away," said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York.

In expectation of higher dividend tax rates in 2013, companies have been shifting dividends or announcing special payouts to shareholders.

 

The market's move marked the second straight day where a leading legislator dictated trading action. On Tuesday, stocks fell on pessimistic remarks from Senate Majority Leader Harry Reid, a Democrat from Nevada.

The market has been swinging for weeks now on headlines from Washington, with Wednesday's gyrations once again highlighting the importance that Wall Street is giving to finding a solution to avoid the series of tax increases and spending cuts that could push the U.S. economy into recession.

The Dow Jones industrial average .DJI rose 106.98 points, or 0.83 percent, to 12,985.11 at the close. The S&P 500 .SPX gained 10.99 points, or 0.79 percent, to 1,409.93. The Nasdaq Composite .IXIC added 23.99 points, or 0.81 percent, to close at 2,991.78.

The S&P 500 bounced off a strong support area near 1,385 that includes both its 200- and 14-day moving averages. It closed above 1,400 for the third session in four - an optimistic sign for stock bulls.

The S&P retail index .SPXRT gained 1.4 percent.

 

Nearly 6.1 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

On the NYSE, roughly seven stocks rose for every three that fell, and on Nasdaq, five issues rose for every three that fell.

NYMEX- NEW YORK, Nov 28 (Reuters) - U.S. crude futures fell a third straight session on Wednesday as concerns about fuel demand outweighed optimism about a potential deal to resolve the U.S. budget crisis.

U.S. January crude CLc1 fell 69 cents, or 0.79 percent, to settle at $86.49 a barrel, having traded from $85.36 to $87.34.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell 0.2 percent, stalling a three-day rally as traders booked profits after the spot January contract reached a 2-1/2 week high.

* USDA confirmed sales of 290,000 tonnes of U.S. soybeans to China for delivery in 2012/13.

 

• Concerns about excessive rains delaying soybean planting in Argentina underpinned the market. John Dee, meteorologist for Global Weather Monitoring, said rain was likely Thursday and Friday and again through much of next week.

• Crop weather in Brazil was mostly satisfactory, but some southern areas could use more rain, Dee said.

• Logistical jams and transportation delays anticipated in Brazil early next year will likely slow the flow of a record soybean crop to buyers around the world who are counting on South America to fill the gap left by drought in the United States.

• Rabobank said in an annual outlook that it expected CBOT soybean prices to average $14.75 a bushel in the first quarter of calendar year 2013 before sliding almost 12 percent to $13 in the fourth quarter.

 

• Cash basis offers for soymeal softened at a few locations in the interior U.S. Midwest as recent gains in CBOT futures chilled demand from livestock and poultry producers.

 

• Trade expects USDA's weekly export sales report on Thursday to show sales of U.S. soybeans at 500,000 to 750,000 tonnes, soymeal sales at 150,000 to 250,000 and soyoil sales at 100,000 to 200,000 tonnes.

• January soybeans SF3 face technical resistance at their 200-day moving average of $14.59. The contract's nine-day relative strength index stood at 51 after the close, in neutral technical territory.

FCPO- SINGAPORE, Nov 28 (Reuters) - Malaysian palm oil futures eased on Wednesday, dropping for a second straight session on concerns that U.S. fiscal woes could hamper global economic growth and commodity demand.

Prices touched their highest in almost a week on Tuesday as a Greek debt deal provided brief comfort for investors, but lack of progress in U.S. budget talks and speculation that Malaysian palm oil inventories could hit a record high this month kept prices in a tight range.

"The market looks like it's expected to just stay rangebound this week," said a Singapore-based trader with a global commodities trading house. "But for the longer term, sentiment has improved, compared to a month ago."

The benchmark February contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 0.7 percent to close at 2,394 ringgit ($784) per tonne. Prices traded in a range of 2,383 to 2,417 ringgit.

Total traded volumes stood at 31,818 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technicals showed mixed signals for palm oil, but it is biased to drop to 2,353 ringgit per tonne, said Reuters market analyst Wang Tao.

Malaysian palm oil stocks hit a record high in October at 2.51 million tonnes on seasonally high production. While some traders said slower output this month may ease pressure on the stockbuild, concerns remained that export demand might not be enough to reduce stocks.

Cargo surveyors showed a slight drop in shipments in the first 25 days of November from a month ago.

The European Commission has made public a decision taken last week to allow palm oil producers under the Roundtable on Sustainable Palm Oil scheme to qualify for biofuel subsidies, a move that could spur more European demand for the tropical oil.

In other markets, Brent oil slipped on Wednesday as investors nervously eyed talks to head off a looming fiscal disaster in the United States, the world's top oil consumer.

The U.S. budget woes also weighed on other vegetable oil markets. U.S. soyoil for December delivery BOZ2 fell 0.7 percent in early trade. The most-active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 0.4 percent lower.

The market also took note of Olam International's OLAM.SI detailed defence on Wednesday against short-seller Muddy Waters' attacks on its accounting practices and acquisitions, emphasising it was not at risk of insolvency.

Shares of the Singapore commodities firm tumbled as much as 6 percent to a three-and-a-half year low, but later recouped some losses.

REGIONAL EQUITY- BANGKOK, Nov 28 (Reuters) - The Philippine index closed at a record high on Wednesday amid good buying interest in large caps, following stronger-than-expected third-quarter GDP growth, while Indonesia fell for a second session as market players cashed in on recent gainers.

In Manila, the index .PSI rose 0.9 percent to 5,633.72, scaling a record for the fourth session. The Philippine economy grew a faster-than-expected 7.1 percent in the September quarter, reflecting strong domestic demand and government spending.

"The Philippines is having a fantastic year despite strong global headwinds. Most nations in Asia saw a tough third quarter while the Philippines had the fastest GDP expansion since 2010," HSBC said in a report.

"This is largely due to the fact that policy makers took timely measures to counterbalance an anticipated slowdown of demand from China and the Eurozone as well as the resilient nature of the services-oriented economy," it said

In a choppy session, Jakarta's Composite Index .JKSE ended down 0.8 percent at its lowest close in more than three weeks, led by a 5 percent fall in PT Astra International Tbk ASII.JK.

Astra shares, a proxy of Indonesia's consumer sector, had gained almost 2 percent last week versus a 0.05 percent loss of the broader market.