RTRS - China palm oil stocks hit record 1.4 mln tonnes - Reuters survey

KUALA LUMPUR, March 4 (Reuters) - China's palm oil stocks most probably rose to a record 1.4 million tonnes in February as imports surged late last year ahead of stricter quality regulations from Jan. 1, a Reuters survey of five Chinese traders and analysts showed.

Record palm oil stocks in China may further depress domestic prices , which are already down more than 8 percent this year, and help keep inflation there under control.

"Stocks in China have been hovering near the one-million-tonne mark for a prolonged period and increased buying before the stricter regulation pushed inventory level to a record high," said Xu Jian Fei, chief economist with Chinatex Grains & Oils Import & Export Ltd, one of China's largest edible oil trading companies.

The world's No.2 consumer of palm oil imported 954,087 tonnes of the vegetable oil in December, customs data showed, almost double the average 490,000 tonnes, as traders sought to avoid the new quality standard.

But it turned out to be business as usual after China's quarantine authorities allowed discharge of the first two palm oil cargoes from top exporter Malaysia in late January, easing previous worries that the new standards may hamper shipments.

February's imports most likely declined 15 percent to 400,000 tonnes from January's 472,733 tonnes because of the week-long Lunar New Year holiday and a shorter month, according to the survey conducted ahead and during the Bursa Malaysia Palm Oil Conference, which runs from March 4 to 6.

Official data for February imports will be out in late March. The country does not release official data on stocks level.

Despite record stocks that are likely to be 56 percent higher than the 900,000 tonnes seen in February last year, respondents said imports may gain further traction with the winter ending in the coming months.

"Palm oil demand will certainly benefit if the weather turns warmer in coming months," said Chinatex's Xu. Palm oil consumption is typically lower in winter as the tropical oil tends to solidify in cold weather.

Import demand may also be supported by trading companies that use palm oil orders as a short-term financing channel to obtain cash from banks.

"Imports will keep on growing because palm oil consumption is expected to increase as the weather turns warmer and trade-financing companies need to import palm oil to keep their cash flow going," said a poll respondent.

FACTORS TO WATCH:

Stronger palm oil purchases from China may lead to better Malaysian export numbers in March. In February, exports from Malaysia declined about 9 percent, cargo surveyors' data showed.

MARKET REACTION:

The palm oil market may gain some support in March if China snaps up more cargoes, benefit ting from prices that fell below 2,500 ringgit ($806). Prices fell more than 6 percent in February, impacted by high palm oil stocks and improvements in South American weather that could increase soybean crop supply.

RTRS - India, China to snap up more palm oil cargoes due to low prices, tariffs

KUALA LUMPUR, March 4 (Reuters) - India and China, the world's top two edible oil importers, will buy more of the commodity this year despite record stocks as cheap palm oil cargoes and low import tariffs help meet rising food consumption and temper food-driven inflation.

Resilient demand from the two Asian giants whose populations are growing in size and wealth is likely to bring down near-record palm oil stocks in Indonesia and Malaysia, the world's top producers.

While this will support benchmark Malaysian palm futures , which fell 23 percent last year, higher stocks at ports in China and India are bound to pressure domestic prices, offering some relief to their governments fretting over inflation.

Indian edible oil stocks are expected to have hit a record 1.875 million tonnes in February, an Indian industry official told Reuters on the sidelines of an industry conference. China's palm oil stocks at ports were also anticipated at a record 1.4 million tonnes last month, a Reuters survey showed.

India's overall imports of palm oil and soyoil is expected to be 10.5 million to 11 million tonnes in the marketing year ending October 2013 against a record 10.2 million tonnes in the previous year, according to B.V. Mehta, executive director of the Solvent Extractors' Association.

"Imports for India are still going up. Palm oil prices are still low and people don't want to lose an opportunity," Mehta said, adding that demand for the commodity will keep rising as long as the government does not raise import tariffs for crude and refined edible oils.

China's palm oil imports for the marketing year to September 2013 are likely to rise by 18 percent to 6.65 million tonnes, Hamburg-based oilseeds analyst Oil World said in a recent note.

STOCK BUILD

Stocks in India and China likely rose to a record in February as traders stocked up mostly on palm oil ahead of changes in policy by the respective governments.

China, the world's No.2 consumer of palm oil, imported 954,087 tonnes of the vegetable oil in December, customs data showed, almost double the average 490,000 tonnes, as traders sought to avoid new quality standards that came into force on Jan 1.

"Stocks in China have been hovering near the one-million-tonne mark for a prolonged period and increased buying before the stricter regulation pushed inventory level to a record high," Xu Jian Fei, chief economist at Chinatex Grains & Oils Import & Export Ltd, one of China's largest edible oil trading companies, told Reuters.

It turned out to be business as usual after China's quarantine authorities allowed discharge of the first two palm oil cargoes from top exporter Malaysia in late January, easing previous worries that the new standards may hamper shipments.

In India, buyers snapped up cargoes on expectations the government would use its budget in late February to announce a hike in import tariffs.

"It didn't happen as they were worried about food inflation and now we are stuck with huge stocks," Solvent Extractors' Mehta said. "It does not bode well for the industry."

The Indian oilseed crushing industry was expecting import taxes for crude edible oils to rise to 10 percent from 2.5 percent to stem the flow of cheap imports and boost domestic prices so farmers would continue to plant oilseeds.

Refined oils had been expected to rise to 20 percent from 7.5 percent now.

For the Indian government, keeping the taxes unchanged means keeping prices of soyoil , which are down 2 percent so far this year, under control. Headline inflation in January slowed to a more than three-year low thanks to a slower rise in fuel although there are upside risks to food inflation, analysts say.

China's inflation is expected to touch 3 percent this year, compared to 2.6 percent last year, a central bank official said on Sunday, signalling a growing focus on rising food prices.

Trader's highlight

DJI - NEW YORK, March 4 (Reuters) - U.S. stocks closed higher on Monday as investors staged a late-day rebound, extending a recent trend of buying on dips and pushing major indexes near all-time highs despite concerns about growth and China's housing market.

The Dow closed within 40 points of its all-time closing high, recovering from early losses on plans to tighten curbs on China's housing market, as well as a slowdown in the growth of that country's services sector.

Any slowdown in the world's second-largest economy could affect U.S. growth, especially commodities and materials, which have a lot of exposure to China. Industrial and material shares were among the weakest of the day, with Caterpillar Inc off 1.8 percent at $89.75 and Alcoa Inc down 1.1 percent at $8.35.

The S&P 500 has jumped about 7 percent so far in 2013 as investors continue to view equities as more attractively valued than other asset classes, allowing stocks to resist calls for a pullback even with few obvious catalysts to drive shares definitively higher.

"There are a lot of worries out there, but also a lot of positive momentum. Stocks remain the only game in town if you want yield," said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio, who helps oversee $14.5 billion.

"So many people think we're overextended that a pullback could happen at any time, but there are also so many people reentering the market on dips that I wouldn't be surprised to see a new high on the Dow sometime this month."

Concerns about "automatic" budget cuts in the United States and the euro-zone debt crisis also have served as reasons for investors to take a breather in the face of technical resistance. Any sign that the $85 billion in cuts are beginning to take a toll on the economy could jostle markets.

The Dow Jones industrial average  rose 38.16 points, or 0.27 percent, to 14,127.82 at the close. The Standard & Poor's 500 Index  gained 7.00 points, or 0.46 percent, to 1,525.20. The Nasdaq Composite Index added 12.29 points, or 0.39 percent, to end at 3,182.03.

Brent Crude Oil - NEW YORK, March 4 (Reuters) - Brent crude oil futures edged down 31 cents, or 0.3 percent, to settle at $110.09 a barrel on Monday due to demand concerns over a factory growth slowdown in China and worsening business sentiment in Europe.

The contract traded between $110.89 and $109.58 during the session.

CBOT Soybean - March 4 (Reuters) - Soybean futures on the Chicago Board of Trade rose on Monday, led by nearby contracts on technical buying and worries about tightening supplies of old-crop U.S. soybeans, traders said.

• Soybeans, meal and oil traded lower at times on technical selling and spillover weakness from corn and wheat, but the complex rallied by the close.

• The most-active May soybeans contract  broke through its 20-day moving average and posted its highest settlement since Feb. 21.

• USDA reported export inspections of U.S. soybeans in the latest week at 40.427 million bushels, above a range of trade estimates for 30 million to 35 million bushels.

• Firm cash soy market underscored by minimal number of March soybean and soymeal deliveries. CBOT reported one soybean delivery and no deliveries of soymeal.

• CBOT reported 504 March soyoil deliveries, but signs of commercial demand persisted with the ADM house account stopping 252 contracts and the Bunge house account stopping 50.

• Forecaster Agroconsult raised its forecast for Brazil's soybean harvest to 84.2 million tonnes, from 84 million previously, and put Brazil's corn crop at 75 million tonnes, from 74.7 million previously. 

• Weekend rains across Argentina significantly reduced drought conditions and improved conditions for late soybean growth, MDA Weather Services said. The rains reduced the dryness to about 15 percent of Argentina's soybean belt.

• China's palm oil stocks most probably rose to a record 1.4 million tonnes in February as imports surged late last year ahead of stricter quality regulations, a Reuters survey of five Chinese traders and analysts showed. 

• South Korea is seeking 10,000 tonnes of non-genetically modified soybeans for arrival by July 30 via a tender, the Korea Agro-Fisheries & Food Trade Corp said on its website. 

BMD CPO - KUALA LUMPUR, March 4 (Reuters) - Malaysian palm oil futures inched up on Monday, pulling out of an oversold situation to snap eight straight sessions of losses while investors keep an eye on an industry conference for more clues on the vegetable oil's outlook.

Palm prices fell more than six percent last week, notching the biggest weekly loss since mid-November as soy markets in China and the United States suffered from predictions of potential bumper South American soybean crops.

Traders are also watching Bursa Malaysia's annual palm oil conference which kicks off on Monday, and will focus on price outlooks and industry clues from leading analysts including Dorab Mistry and James Fry.

"The market edged higher today on a technical bounce as it was oversold," said a dealer with a foreign commodities brokerage in Malaysia.

"A lot of people will be watching the market during the palm oil conference. They are more cautious," said another trader with a foreign commodities brokerage.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange had gained 1.8 percent to 2,411 ringgit ($776) per tonne by Monday's close. Prices traded in a tight range of 2,375 - 2,415 ringgit.

Total traded volume stood at 36,692 lots of 25 tonnes each, slightly higher than the usual 25,000 lots.

China's palm oil stocks most probably rose to a record 1.4 million tonnes in February as imports surged late last year ahead of stricter quality regulations from Jan. 1, a Reuters survey of five Chinese traders and analysts showed.

Dismal palm oil export data also triggered investor worries that a 4.5 percent export tax hike on crude palm oil beginning March could stifle demand for Malaysian palm oil products and keep stockpiles high.

Investors are pinning hopes that seasonally slowing output and a wide $300 discount to competing soyoil would shift demand to Malaysian palm, the cheapest vegetable oil in the market, but say exports need to pick up faster to run down the current 2.58 million tonne stockpile.

Brent crude futures slipped towards $110 per barrel on Monday, extending their more than 7 percent drop of the past three weeks, hurt by concerns a fiscal crisis in the United States and worrying data from China would sap demand in the top two consumers.

In competing vegetable oil markets, U.S. soyoil for May delivery edged down 0.1 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange rose 0.9 percent.

Regional Equities - BANGKOK, March 4 (Reuters) - Most Southeast Asian stock markets fell on Monday, with stocks in Indonesia and Singapore each sliding around 1 percent led down by banking and commodities shares and large caps as the broader Asian markets weakened amid a patchy global growth outlook. 

Jakarta's Composite Index .JKSE was down 1.04 percent at 4,761.46. Shares in Pt Bank Rakyat Indonesia Persero Tbk  and Pt Bank Mandiri Persero Tbk  dropped 4.9 percent and 2 percent, respectively.

Singapore's Straits Time Index .FTSTI ended down 0.9 percent at 3,239.95, with commodities names such as Golden Agri-Resources Ltd  and Olam International Ltd OLAM.SI leading among laggards.

The MSCI's index of Southeast Asia . was down 1 percent versus a 1.7 percent fall of the MSCI's broadest index of Asia-Pacific shares outside Japan .

A sell-off in Chinese equities dragged Asian shares down sharply on Monday, as worries about Beijing tightening its grip on the property sector compounded weak sentiment already dampened by a patchy global growth outlook.