RTRS - Brazil raises record soy, strong corn crop forecasts

SAO PAULO, Jan 9 (Reuters) - Brazil will produce a record 82.7 million tonnes of soybeans this season due to a hefty expansion in planted area, the government said on Wednesday, raising its forecast by 0.12 percent from a December estimate.

Brazil has been the world's No. 2 soybean grower in recent years but could surpass the United States in production of the oilseed this season with an expected rebound from a disappointing 66.4 million tonne crop in 2011/12.

With the harvest just beginning in some areas of the country, Brazil's area planted with soy will likely increase by 9.2 percent from last year to 27.34 million hectares, slightly above the 27.24 million hectares estimated in December by Conab, the government's food supply agency.

"An increase in area cultivated is observed in all producing areas of the country, especially in Mato Grosso," Conab said, referring to Brazil's top producing state in its fourth official forecast report on the crop.

But the agency lowered its forecast for soy field productivity by 0.33 percent from December to 3.02 tonnes per hectare, as producers in the region reported irregular yields from the state where some 1 percent of the crop has been harvested.

"We have reports of producers collecting 34 bags per hectare and reports of harvests yielding 54 bags per hectare," said Nery Ribas, technical director of the Association of Soy Producers of Mato Grosso.

Mato Grosso received below-average rainfall in October and December, though rains were ample in the key month of November. The agriculture ministry said now that seeds have germinated, rains actually need to stop in Mato Grosso to allow harvesting and prevent disease and fungi taking hold.

"There's neither an excess nor a shortage of rain," in Mato Grosso and the Center West, Neri Geller, secretary for agricultural policy at the agriculture ministry, said at a news conference.

Unlike last season, No. 2 and No. 3 producing states Parana and Rio Grande do Sul, which start harvesting later than Mato Grosso, have also received sufficient rains. Frontier farms in the Northeast have received almost no rainfall in recent months.

Conab also raised its corn forecast by 0.42 percent from December to 72.2 million tonnes. That would be just slightly below last season's record 73 million tonne corn crop.

The corn forecast is above the U.S. Agriculture Department forecast of 70 million tonnes. Conab's soybean forecast is also above the USDA's expected 81 million tonnes.

Conab representatives justified their strong corn forecast by saying farmers are sacrificing area planted with wheat in order to plant corn, although the area planted with corn is not expected to increase as much as that of soy.

U.S.-based crop forecaster Lanworth on Wednesday raised its estimate for Brazil's corn crop to 76 million tonnes from 73.9 million tonnes previously due to larger-than-expected planted area.

Wheat production, which was hurt by heavy rains during the harvest period, was forecast to fall to 4.3 million tonnes. That is down from Conab's forecast for 4.46 million tonnes from December and 24.6 percent off last year's crop.

Millers have said Brazil, one of the world's largest wheat importers, will have to buy more wheat from the Northern Hemisphere this year due to a weak crop from neighboring Argentina and its own disappointing harvest.

Brazil has already exported more corn than ever before from the 2011/12 crop, an estimated 21.5 million tonnes according to Conab. That is more than Argentina, usually the world's No. 2 exporter, will sell abroad from its 2011/12 crop, according to some private estimates.

Brazilian corn exports will likely fall to 15 million tonnes from the 2012/13 crop, however, Conab said. Soybean exports will increase to 36.41 million tonnes, up from 32.47 million tonnes shipped from the last crop and helping fill low global stocks.

Brazil, an agricultural powerhouse that is poised to take on a larger share of the world's food production, will likely produce a cotton lint crop of 1.4 million tonnes, down from 1.9 million tonnes last year , Conab said.

Conab's report initially pushed Chicago soybean and corn future prices down, with traders betting bumper crops from South America would reduce demand for U.S. supplies.

March corn later rose 0.25 percent while March soybeans weakened 0.05 percent.

Trader's Highlight

DJI - NEW YORK Jan 9 (Reuters) - Global equities rose modestly on Wednesday after aluminum maker Alcoa opened the U.S. earnings season with a brighter outlook for global demand, though the results did not give a clear direction of how well corporations did during the fourth quarter.

The dollar rose against the yen on expectations of more easing from the Bank of Japan this month, but investors were wary before policy meetings of the European and British central banks on Thursday, when Spain also tests the market's appetite for debt from peripheral euro zone economies.

Alcoa, the largest aluminum producer in the United States, said late on Tuesday it is cautiously optimistic about demand for the metal in 2013, buoyed by aerospace and construction buyers.

Investors have been concerned that the recent impasse over the U.S. "fiscal cliff" and signs of slowing economic growth would weigh on earnings this season, resulting in only anemic growth. Alcoa, as the first Dow component to report, is seen as starting the season with a positive tone.

"Clearly no one is expecting a stellar earnings season. With the number of companies that lowered guidance over the last few weeks, I think there's some concern that we could see companies disappoint," said Kate Warne, investment strategist at Edward Jones in St. Louis.

"However, based on the fact that many companies have lowered guidance, that means they've put the bar so low they could crawl over it, and I would expect what we'll see is some relief as earnings come in."

The Dow Jones industrial average ended up 61.66 points, or 0.46 percent, at 13,390.51. The Standard & Poor's 500 Index was up 3.87 points, or 0.27 percent, at 1,461.02. The Nasdaq Composite Index was up 14.00 points, or 0.45 percent, at 3,105.81.

Alcoa's results also buoyed Asian stocks and pushed Europe's FTSE Eurofirst 300 index up 0.7 percent to a 22-month closing high.

Worries over Washington budget battles remain a constraint. A similar fight over the U.S. debt ceiling in 2011 caused the country to lose its sterling AAA credit rating, rattling world markets.

The benchmark 10-year U.S. Treasury note was unchanged, the yield at 1.8639 percent.

Investors were pushing to retake some of last week's sharp losses after Federal Reserve minutes hinted at growing unease within the bank about its asset-purchasing program.

German government bond prices also gained following a successful auction of new five-year debt, continuing a string of strong European sales this week with Austria, the Netherlands and Ireland all tapping the market.

But a test looms on Thursday when Spain and Italy hold their first debt sales of 2013. The Spanish auction could also offer clues on the timing of a much-anticipated request by the government for international financial aid.

Surging demand for high-grade corporate debt in the United States has put the new issue market on course for a record week. Thomson Reuters IFR said new issue volume totaled a massive $33 billion by the end of Tuesday, and only $7.6 billion more was needed to match the previous weekly record of $40.6 billion.

JAPAN EASING

The dollar rallied against the yen, moving toward a 2-1/2 year high hit last week on expectations of bolder monetary easing from the Bank of Japan at its next meeting later this month.

The U.S. currency was up 0.9 percent at 87.77 yen, gaining 0.2 percent against a basket of currencies.

"The outlook for additional easing is keeping a lid on the yen to the upside," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Sources familiar with BOJ thinking told Reuters the central bank was likely to adopt a 2 percent inflation target at the meeting, double its current goal, and issue a statement, with the government promising to pursue bold monetary easing steps.

The euro was slightly lower at $1.305, easing after German industrial output rose less than expected in November.

The data was unlikely to change the ECB's thinking, with most analysts expecting interest rates to be kept on hold on Thursday, though some believe rates will be cut later this year.

Brent crude oil fell 0.2 percent to $111.69 per barrel on increasing supply from the United States. U.S. light crude was flat at $93.17.

U.S. commercial crude oil stockpiles were expected to have risen last week as refiners on the Gulf Coast resumed imports after slowing shipments at the end of the year for tax purposes, according to a Reuters poll.

NYMEX - NEW YORK, Jan 9 (Reuters) - U.S. crude futures edged lower on Wednesday in choppy trading as rising oil inventories and increasing domestic crude oil production applied pressure.

CBOT Soybean -  Most-active March soybean futures on the Chicago Board of Trade ended lower as traders adjusted positions ahead of key reports due out later this week from the U.S. Department of Agriculture, traders said. Trade was choppy but March soybeans stayed inside of the previous session's trading range.

  

• Soymeal ended mostly lower while soyoil ended firm but both markets were rangebound ahead of USDA's Jan. 11 reports. Concerns about a likely record-large soybean harvest in Brazil added pressure. Brazilian government supply agency Conab raised its estimate of the country's crop to a record 82.7 million tonnes, from 82.6 million in December.

  

• Trade expects USDA on Friday to raise its estimate of the drought-hit U.S. 2012 soybean harvest, reflecting a slightly higher yield than previously thought. But strong demand from exporters and domestic processors should keep USDA's forecast of U.S. soy ending stocks at a nine-year low.

  

• USDA said private exporters reported sales of 120,000 tonnes of optional origin soybeans to China for delivery in 2013/14.

  

• Trade expects USDA's weekly export sales report on Thursday to show sales of U.S. soybeans in the latest week at 200,000 to 400,000 tonnes, soymeal sales at 75,000 to 175,000 tonnes and soyoil sales at 35,000 to 65,000 tonnes.

  

• Crop forecaster Lanworth raised its estimate of the U.S. 2012/13 soybean crop to 2.904 billion bushels, from 2.861 billion previously. Lanworth also forecast U.S. soybean stocks as of Dec. 1, 2012 at 1.949 billion bushels.

  

• Lanworth raised its forecast for Brazil's soybean crop to 79.8 million tonnes, from 79.1 million previously.

  

• CBOT reported 704 contracts delivered against January soyoil futures. There were no deliveries of soybeans or soymeal.

FCPO - SINGAPORE, Jan 9 (Reuters) - Malaysian palm oil futures rebounded from a more-than-two-week low on Wednesday, snapping four consecutive days of losses, although gains were limited by investor caution ahead of a slew of key industry data this week.

Traders are uncertain whether overseas buyers will increase purchases after Malaysia set a zero percent crude palm oil export tax in January, especially as China is this month introducing stricter rules on edible oil imports.

They will be watching Malaysia's export data for the first 10 days of January, due on Thursday, for more trading clues.

"From the first week of January until now, we have not seen any official data, so market participants have no idea how strict China is in enforcing the regulation," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.

"But on the other hand, we have this zero percent export tax that could support prices."

The benchmark March contract on the Bursa Malaysia Derivatives Exchange gained 1 percent to close at 2,413 ringgit ($794) per tonne. Prices dropped to a low of 2,382 ringgit on Tuesday, a level last seen on Dec. 21.

Total traded volume stood at 37,074 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technical analysis showed palm oil was expected to consolidate in a zone of 2,371 to 2,407 ringgit for one trading session before sliding further towards 2,334 ringgit, Reuters market analyst Wang Tao said.

Market participants will also focus on Malaysia's December palm oil stocks and output data on Thursday. A Reuters survey showed stocks are likely to have eased to 2.5 million tonnes from a record 2.56 million on slowing production.

Malaysia's weather office issued a heavy rain advisory on Thursday, saying intermittent rain may cause floods in low-lying areas in the key palm producing state of Sarawak, possibly disrupting harvesting.

In related markets, Brent futures steadied below $112 per barrel on Wednesday as investors awaited Chinese trade data, U.S. corporate earnings and the outcome of a European Central Bank policy meeting to glean insights into the health of the world's biggest economies.

In competing vegetable oil markets, U.S. soyoil for March delivery edged up 0.2 percent in late Asian trade. Investors in agricultural markets are taking positions ahead of a U.S. Department of Agriculture supply-demand report due to be released on Friday.

The most active May soybean oil contract on the Dalian Commodity Exchange closed down 0.9 percent.

Regional Equity - BANGKOK, Jan 9 (Reuters) - Indonesian shares fell to one-week low on Wednesday as recent gainers such as banking shares saw profit-taking while other Southeast Asian stock markets gained along with broader Asian markets as bargain hunters bought beaten down large-caps.

Foreign selling in domestic bonds dented sentiment for the Indonesian rupiah, leading to mild caution in local stock markets, a Jakarta-based trader said.

Jakarta's Composite Index finished at 4,362.93, the lowest close since Jan. 2. Among losers, top micro lender PT Bank Rakyat Indonesia fell 1.3 percent after gaining over 7 percent in the past five sessions.

The Philippine Composite Index rose 0.7 percent to 6,091.18, a new closing high. The Thai SET index .SETI edged up 0.4 percent at 1,423.46, the highest close in more than 17 years.

Vietnam edged up 0.4 percent to its highest close in more than seven months after regulators announced a widening of stock trading bands.