Bloomberg - India Seen Raising Cooking Oil Import Taxes to Protect Growers

India, the largest cooking oil consumer after China, will probably increase taxes on imports to shield oilseed farmers from cheap palm supplies from Indonesia and Malaysia, according to a trade group.

The government may raise the tariff on unprocessed oils to 10 percent from 2.5 percent in thefederal budget next week, while the tax on refined varieties could increase to 20 percent from 7.5 percent, B.V. Mehta, executive director of the Solvent Extractors’ Association of India, said in a phone interview.

India will present its annual budget on Feb. 28 and Finance Minister Palaniappan Chidambaram is seeking to raise revenue, partly by increasing taxes on commodities. Tariffs on gold imports may rise for a second time this year to curb a record current-account deficit, according to the All India Gem & Jewellery Trade Federation. Imports of palm and soybean oils surged to a record last month as refiners boosted purchases before the government imposed a tax on Jan. 17.

“If the government increases duties there may be a temporary setback to imports and palm product prices may drop in Indonesia and Malaysia,” said Prasoon Mathur, an analyst with Religare Commodities Ltd. “Even if local supplies are comfortable, India will still keep importing palm products as there is a price advantage.”

D.S. Malik, spokesman at the finance ministry in New Delhi, declined to comment on possible tax changes yesterday.

Record Stockpiles

Domestic inventories of vegetable oils surged to a record 1.75 million metric tons after imports climbed 27 percent to 2.77 million tons in the three months ended Jan. 31, the extractors’ association said Feb. 14.

The government may refrain from raising taxes because of concern about inflation, said Religare’s Mathur. While wholesale inflation eased to a 38-month low of 6.62 percent in January, the increase in consumer prices accelerated to 10.79 percent, one of the highest levels in major economies.

The contract for May delivery fell 1.1 percent to 2,536 ringgit ($815) a ton on the MalaysiaDerivatives Exchange yesterday, widening soybean oil’s premium over palm to $332.82.

Malaysia cut taxes on crude exports to zero in January and February to clear record stockpiles that reached 2.63 million tons in December. The duty will be 4.5 percent in March after an increase in global prices, according to the customs. Indonesia may keep the rate unchanged at 9 percent next month, the Indonesian Palm Oil Association said Feb. 19.

Oilseed Prices

Indonesia and Malaysia are the top producers of palm, which accounted for about 79 percent of Indian cooking oil imports in January. Palm and soy are the most consumed edible oils.

“Local oilseed prices have fallen and they will go down further if imports increase,” said extractors association’s Mehta. “Farmers will lose interest in growing oilseeds. The government should immediately increase the taxes.”

Oilseeds output in India will drop to 29.5 million tons in the year ending June 30 from 29.8 million tons a year earlier, the farm ministry said Feb. 8. Mustard futures fell 21 percent on the National Commodity & Derivatives Exchange Ltd. in Mumbai in the past six months as soybeans lost 17 percent.

* Source : http://www.bloomberg.com/news/2013-02-22/india-seen-raising-cooking-oil-import-  taxes-to-protect-growers.html

Palm Oil Heads for Weekly Gain as Soybeans Rally on Crop Concern

Feb. 22 (Bloomberg) -- Palm oil advanced, poised for aweekly gain, on speculation that demand for the world’s mostused cooking oil may increase after soybeans, crushed to make acompeting product, rallied to a two-week high.

The contract for delivery in May advanced as much as 0.8percent to 2,555 ringgit ($824) a metric ton on the MalaysiaDerivatives Exchange, and ended the morning session at 2,551ringgit. Futures are set to gain 2.7 percent this week.

Argentina’s 2012-2013 soybean crop output forecast will betrimmed to about 49 million tons, or 48 million, from a Decemberforecast of 53 million by the Rosario Grains Exchange as thisweek’s rain didn’t offset damage from the previous month’sdrought, according to a person with direct knowledge of thesituation yesterday.

Soybeans in Chicago today rallied for afifth day to the highest level since Feb. 8.“The market is focusing on Argentina although it is awarethat it’s going to be a big crop.” said Gnanasekar Thiagarajan,a director at Mumbai-based Commtrendz Risk Management ServicesPvt. “This will be a short-lived rally.”

Soybeans for May delivery climbed as much as 1.2 percent to$14.88 a bushel on the Chicago Board of Trade. Soybean oil for May delivery advanced 0.6 percent to 51.98 cents a pound.

The cooking oil’s premium to palm oil was at $322.52 a ton today. The two are the most consumed edible oils in the world. Refined palm oil for delivery in September rose 0.5 percentto 7,078 yuan ($1,134) a ton on the Dalian Commodity Exchange.Soybean oil for delivery in the same month increased 1.3percentto 8,738 yuan a ton.

RTRS - Brazil grain ship lineup swells, dock strike set for Friday

BRASILIA, Feb 21 (Reuters) - Strong global demand for Brazil's big corn and soybean crops has two to three times more ships lined up to load at its two main ports than a year earlier and to complicate loadings a six-hour dock workers strike is set for Friday.

Fifty-nine ships were waiting to load grain at Santos port on Thursday versus 29 a year ago, data from SA Commodities/Unimar showed. At the other main grain port, Paranagua, 82 ships were waiting compared with 31 ships this time last year.

The long queues, which are costly for shippers, reflect strong demand after drought reduced output in the top soy producer the United States and No. 2 grower Brazil last year.

They are set to get longer still when the harvest peaks next month. Port worker strikes set for Friday and Tuesday are exacerbating what is already expected to be one of the most challenging seasons ever for grain logistics in Brazil.

Brazil is expected to export a record soybean crop and large sugar and corn crops, but has a shortage of road haulage and port capacity.

The management at Paranagua, the most important grain port in Brazil, said in a Thursday statement it was "apprehensive" about the two work stoppages because of the intense shipping traffic, even though the strikes are to last just six hours each.

"At a time when the flow of bulk is large because of the harvest, stoppages like this can create all kinds of 

problems and losses," said Luiz Henrique Dividino, superintendent at the port authority of Paranagua.

Dock workers are striking to protest forthcoming changes to regulations governing port operations, which they say will lead to wage cuts and job losses by ending the obligation for terminals to hire workers through a centralized agency.

The government says the rule changes are needed to boost competitiveness as it seeks to attract billions of dollars in investment to expand port capacity to cope with burgeoning commodity exports.

The dock workers, represented by the umbrella union Forca Sindical, have not ruled out longer stoppages later on to prevent the changes being passed in Congress. Friday's strike will begin at 7 a.m. local time and end at 1 p.m.

Isis Markarian, a representative at shipping agency SA Commodities/Unimar at Santos port, said the strike was unlikely to have much effect on operations there since few laborers were involved in the bulk loading of ships via conveyor belt.

Several commodity trading houses with their own port operations were also switching over to bulk loading of grain instead of sugar which might help clear some of the growing backlog, she said.

RTRS - India soyoil drops on weak palm oil; soybean up

MUMBAI, Feb 21 (Reuters) - Indian soyoil futures fell nearly 1 percent on Thursday following losses in Malaysian palm oil, though a weak rupee limited the downside.

• Soybeans edged higher on thin supplies, while rapeseed was steady as an estimated rise in output weighed.

• A weak rupee makes edible oil imports expensive but raises returns of oilmeal exporters

• As of 0851 GMT, Malaysian palm oil futures  were down 1.17 percent at 2,535 ringgit per tonne, while U.S. soybeans  eased 0.24 percent to $14.79-1/4 per bushel. US soybeans had gained 0.9 percent in the previous session.

• "Overseas markets are influencing price movements in local markets. The record high imports of edible oils in January has raised supplies," said Chowda Reddy, a senior analyst with JRG Wealth Management.

• India's vegetable oil imports soared 27.4 percent from a month earlier to hit an all-time high in January on record purchases of cheap palm oil from southeast Asia.

• India meets more than half of its edible oil requirement through imports, with palm oil constituting a major part.

• The actively traded soyoil contract for March delivery on the National Commodity and Derivatives Exchange was 0.64 percent lower at 704.1 rupees per 10 kg.

• The soybean contract for March delivery was up 0.57 percent at 3,335 rupees per 100 kg, while the rapeseed contract for April edged up 0.06 percent to 3,472 rupees per 100 kg.

• India's rapeseed output is expected to surge by a fifth this year due to favourable weather conditions, helping the world's biggest vegetable oil importer boost local supplies by 400,000 tonnes.

• At the Indore spot market in Madhya Pradesh, soyoil dropped by 4.15 rupees to 729.35 rupees per 10 kg, while soybeans eased by 10 rupees to 3,414 rupees per 100 kg. At Jaipur in Rajasthan, rapeseed fell by 16 rupees to 3,900 rupees.

Trader's highlight

Dow Jones - NEW YORK, Feb 21 (Reuters) - U.S. stocks fell for a second straight day on Thursday and the S&P 500 posted its worst two-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies.

But a late-day rally helped stocks erase some of their losses with most of the pullback concentrated in the technology- heavy Nasdaq. The move suggested investors were still willing to buy on dips even after the sharp losses in the last session.

In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.

"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire. "The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."

U.S. initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to the lowest in eight months. 

The Dow Jones industrial average fell 46.92 points, or 0.34 percent, to 13,880.62 at the close. The Standard & Poor's 500 Index lost 9.53 points, or 0.63 percent, to 1,502.42. The Nasdaq Composite Index  dropped 32.92 points, or 1.04 percent, to close at 3,131.49.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 1.8 percent over the period and just managed to hold the 1,500 level on Thursday. Still, the index is up 5.3 percent so far this year.

The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted the Dow and the S&P 500 close to all-time highs.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, could depress the economy.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

About two stocks fell for everyone that rose on the New York Stock Exchange and Nasdaq. About 7.64 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well above the 20-day moving average of around 6.6 billion shares.

Brent Crude Oil - NEW YORK, Feb 21 (Reuters) - Brent crude futures fell more than 1 percent on Thursday, pressured by weak economic data and the possibility that the U.S. Federal Reserve might curb its economic stimulus program.

Brent April crude fell $2.07, or 1.79 percent, to settle at $113.53 a barrel, having traded from $113.32 to $115.31.

CBOT Soybean - Soybean futures on the Chicago Board of Trade rose for a fourth straight session, with front months gaining against back months on fresh export demand for dwindling supplies of old-crop U.S. soybeans, traders said.    

* USDA said private exporters reported the sale of 130,450 tonnes of U.S. soybeans to unknown destinations, including 75,450 tonnes for 2012/13 delivery and 55,000 tonnes for 2013/14.

 

·         Trade talk swirled that China has bought up to nine   cargoes of old-crop U.S. soybeans, including some of which were switched to the United States from Brazilian origin.

 

·         Further support stems from concern about grain shipping  delays in Brazil, where two to three times more ships are lined   up to load at the country's two main ports than a year earlier, and a six-hour dock workers strike is set for Friday.

·         Soymeal follows soybeans, gaining against soyoil on  meal/oil spreads on ideas that port congestion and logistics  issues in South America will boost export demand for U.S. soybeans and meal.

·         Trade expects USDA's weekly export sales report on Friday  to show U.S. soybean sales in the latest week at 300,000 to  600,000 tonnes (old and new crop years combined), and soymeal  sales at 100,000 to 200,000 tonnes. 

 

·         CBOT March options expire on Friday and traders are eyeing  open interest in calls at the $15.00 strike, which could act as   a magnet drawing futures prices to that level.

 

·         CBOT March soybeans trading above all key moving averages; traders eyeing psychological resistance at $15.00.

BMD CPO - KUALA LUMPUR, Feb 21 (Reuters) - Malaysian palm oil futures slipped on Thursday, tracking weak U.S. and China vegetable oil markets and as investors booked profits from prices which have gained almost two percent so far this week.

U.S. soy prices slid on Thursday from a selloff in commodities amid speculation that a hedge fund had been forced to liquidate assets, rattling sentiment across major commodity markets and weighing on palm prices.

But major losses in palm oil were prevented by hopes that seasonally slowing output in Malaysia, the world's No.2 producer, will help ease stocks despite sluggish exports.

"At the end of the month exports may be slightly down compared to January, but it will not have much impact because production is slowing by more than ten percent," said a trader with a foreign commodities brokerage in Malaysia.

"I think there will be a slight drawdown in end-stocks again," the trader added. Inventory levels in January had inched down 1.9 percent from record highs of 2.63 million tonnes.

"For today, the immediate support is 2,500 ringgit and resistance is 2,550 ringgit. There is a bit of profit taking and market correction."

The benchmark May contract  on the Bursa Malaysia Derivatives Exchange slipped 1.1 percent to close at 2,536 ringgit ($814) per tonne. Prices traded in a tight range between 2,513 and 2,543 ringgit.

Total traded volumes stood at 16,996 lots of 25 tonnes each, lower than the typical 25,000 tonnes.

Technicals showed a bullish target at 2,620 ringgit per tonne will only be valid when Malaysian palm oil climbs above a resistance at 2,593 ringgit, said Reuters market analyst Wang Tao.

Palm oil products shipped in the first twenty days of the month showed signs of slowing down from robust exports in earlier weeks, cargo surveyors data showed on Wednesday.

Oil extended the previous session's decline on Thursday to a three-week low on concern the U.S. Federal Reserve might stop its stimulus program sooner than thought and on the prospect of a rise in Saudi Arabian oil output.

In other vegetable oil markets, the U.S. soyoil for May delivery fell 0.4 percent in early Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange closed 1.4 percent lower.

Regional Equities - Feb 21 (Reuters) - Southeast Asian stock markets mostly fell on Wednesday with Indonesia coming off record high close and Thailand retreating from a 19-year high, on worries that the U.S. Federal Reserve could prematurely wind down its bond-buying programme.

The minutes from the Fed's January meeting showed many officials voiced concern over potential costs of more asset purchases, suggesting that the programme, known as QE, may slow before the pick-up in hiring it was intended to deliver.

Indonesia , after hitting a record high of 4,656.13 points in intraday trading, ended tad weaker, falling 0.04 percent to 4,632.04 from the previous day's all-time closing high, led by mining and finance shares.

Jakarta also enjoyed a net foreign inflow of $78.5 million on Thursday.

Thailand  fell 1.2 percent to 1528.74 from a 19-year high, led by 2.3 percent fall in top energy firm PTT PCL .

Singapore  fell 0.64 percent, weighed by a 2.7 percent fall in property developer CapitaLand Ltd after it posted a 45 percent drop in fourth-quarter net profit.

Vietnam , the region's best performer, plummeted as much as 3.7 percent to close at a near four-week low led by banks.

Bucking the trend, the Philippine index  hit a record closing high of 6,667.41 points with a 0.28 percent gain, while Malaysia's edged up marginally with a 0.04 percent gain helped by $17.96 million net foreign buying.

FOREX - NEW YORK, Feb 21 (Reuters) - The euro fell to a six-week low against the dollar and a three-week trough against the yen on Thursday, pressured by disappointing euro zone economic data and by uncertainty ahead of Italy's election at the weekend.

The dollar rose to a 5-1/2-month high against a basket of currencies, a day after minutes from the Federal Reserve's last meeting bolstered expectations the central bank may pull back from its bond-buying program sooner rather than later.

The downturn in the euro zone worsened unexpectedly this month, especially in France. The weak data kept alive chances of an interest rate cut by the European Central Bank in coming months.

"Today's data stands in sharp contrast to the consensus market expectations that the region will see turnaround in growth as soon as Q1 of this year," said Boris Schlossberg Managing Director of FX Strategy at BK Asset Management in New York.

Concerns that a fragmented parliament after Italy's national election could trigger a sell-off in the peripheral euro zone bond market also weighed on the euro.

Nichi Vendola, leader of the Left Ecology Freedom party (SEL) and frontrunner in polls for Italy's election, said the country should seek revisions of European Union budget rules.

That raised fears that Vendola will push a centre-left government too far to the left and prevent a coalition agreement with outgoing Prime Minister Mario Monti, which is seen as the most market-friendly election outcome.