RTRS - DORAB MISTRY Price forecast

DORAB MISTRY, DIRECTOR, GODREJ INTERNATIONAL PRICE OUTLOOK

• "The world economy faces challenging times in 2013. The biggest new factor is the emergence of the U.S. as a major crude oil producer. This is a game changer for energy prices."
• "One cannot be bullish on energy prices. This has a direct effect on the biggest bullish factor for palm oil -– biodiesel."
• Expects the third-month palm futures contract to trade at 2,300-2,500 ringgit per tonne from now until end-April, and warns that trading may become more volatile in the event elections are called in Malaysia during this period.
• Expects prices to decline to 2,200 ringgit or lower from mid-April.
• Sees July to August as a critica for the market, and the August USDA report on U.S. crop estimates could be a watershed. Prices may fall at this stage as the low production cycle is ending and the market looks to rapidly expand production.
• Does not expect futures to decline below 1,800 ringgit unless Brent crude declines to $80 per barrel.
• "As prices decline below 2,000 ringgit, plantations will begin to reduce fertiliser usage and harvest rounds will get longer. These should keep prices from falling further."
• Says price forecast is based on assumption that Brent crude will trade in a band between $90-110 per barrel, a relatively strong U.S. dollar and normal weather conditions.
• Threats to price forecast include backtracking on biodiesel mandates by the U.S. or withdrawal of the $1 per gallon blending credit.

INDIA

• Says India is going to harvest record rapeseed crop and a big wheat crop.
• Says both Malaysian and Indonesian exporters have been chanelling crude palm oil and palm olein into India, which has meant that prices of locally produced oils have fallen steadily. India is carrying record stocks of imported oils as well as record stocks of domestic oilseeds.
• Estimates current Indian stocks of all oils –- imported as well as domestic -- at almost 2 million tonnes, up 80 percent from March last year.
• "India's imports of edible and non-edible oils during the oil year November 2012 to October 2013 will also break all records."
• Says India to import 8.55 million tonnes of palm oil in the oil year of November 2012 to October 2013.
• "The recent statement in the Economic Survey of India released on Feb. 26 clearly states the intention of the Indian government to support prices of domestic oilseeds and oils, using the instrument of import duties."
• Expects the Indian government to revise the import duty on unrefined oil to 10 percent and on refined oil to 17.5 percent in April or latest May.
• Expects that by August to September, the import duty on unrefined oil will be further hiked to 20 percent and on refined oil to 27.5 percent.

INCREMENTAL SUPPLY/DEMAND

• Says palm oil's high production cycle extended further than initially thought and only ended in January. Expects low production cycle that begins in February to be shorter than previous cases due to better weather and should end around September.
• Estimates Malaysia's crude palm oil production at between 19.5 and 19.7 million tonnes in 2013. This is partly due to higher than expected acreage reaching maturity.
• Estimates Indonesian production of crude palm oil will top 30.5 million tonnes in 2013, a 9 percent increase from last year's 28 million tonnes.
• Says strong expansion of mature acreage in Thailand, Central America, Colombia and parts of Africa will lead to an extra 700,000 tonnes of crude palm oil in 2013, bringing global incremental supply to 3.9 million tonnes.
• Believes export taxes will soon become irrelevant because prices will be below threshold levels.
• "What interests me more is the anti-dumping duty that the EU is likely to impose on Indonesian palm methyl ester at some stage in 2013 but with retrospective effect from 2012."
• Says India will produce an extra 500,000 tonnes of rapeseed oil in the next 12 months.
• "The biggest supply response is being seen in soybeans. South America is now on course to produce about 140 million tonnes of soybeans in 2013. This is almost 30 million tonnes more than 2012."
• Expects global food demand to grow by 3.5 million tonnes due to lower prices and biodiesel demand worldwide to expand by about one million tonnes, leading to an incremental demand of about 4.5 million tonnes.
• Says incremental supply seen at 4.35 million tonnes.
• "We can see that incremental supply and demand are broadly in balance this year."
• Says post-September there will be large supplies of soybeans, sunflower seeds and even palm oil which will be entering a new biological high cycle. The oil year 2012/13 should also see the heaviest carry-over stocks in history.
• "Therefore the outlook further forward, given normal weather, is bearish." 

RTRS - Top analysts call the palm oil markets for 2013 (DORAB MISTRY)

KUALA LUMPUR, March 6 (Reuters) - Following are estimates on palm oil prices and other edible oil markets from leading analysts at the Bursa Malaysia conference that ends on Wednesday.

DORAB MISTRY, DIRECTOR, GODREJ INTERNATIONAL

INDIA

• Says India is going to harvest record rapeseed crop and a big wheat crop.

• Says both Malaysian and Indonesian exporters have been chanelling crude palm oil and palm olein into India, which has meant that prices of locally produced oils have fallen steadily. India is carrying record stocks of imported oils as well as record stocks of domestic oilseeds.

• Estimates current Indian stocks of all oils –- imported as well as domestic -- at almost 2 million tonnes, up 80 percent from March last year.

• "India's imports of edible and non-edible oils during the oil year November 2012 to October 2013 will also break all records."

• Says India to import 8.55 million tonnes of palm oil in the oil year of November 2012 to October 2013.

• "The recent statement in the Economic Survey of India released on Feb. 26 clearly states the intention of the Indian government to support prices of domestic oilseeds and oils, using the instrument of import duties."

• Expects the Indian government to revise the import duty on unrefined oil to 10 percent and on refined oil to 17.5 percent in April or latest May.

• Expects that by August to September, the import duty on unrefined oil will be further hiked to 20 percent and on refined oil to 27.5 percent.

RTRS -Top analysts call the palm oil markets for 2013

KUALA LUMPUR, March 6 (Reuters) - Following are estimates on palm oil prices and other edible oil markets from leading analysts at the Bursa Malaysia conference that ends on Wednesday.

JAMES FRY, CHAIRMAN, LMC INTERNATIONAL PRICE FORECAST

• Expects Malaysian stocks to fall to 1.8-1.9 million tonnes at their mid-year low point.

• Says Bursa Malaysia crude palm oil (CPO) prices and local delivery prices will come together at 2,625 ringgit ($845) by mid-year, if Brent crude falls to $105 per barrel.

• Says CPO prices on an FOB basis would be near 2,775 ringgit ($890) in June or July taking palm oil prices in Europe near $950.

• Says European palm kernel oil prices will rise a little faster to stand just above $1,000 at mid-year, or $950 on an FOB basis.

PALM BIODIESEL

• Says when CPO in Europe is at parity with Brent crude prices, Southeast Asian CPO will trade at a discount to crude due to freight costs. Palm oil in Indonesia enjoys a wider discount to Brent crude than Malaysia as its export taxes hold down local prices.

• Says the discount has made palm methyl ester (PME), or palm-based biodiesel, a price-competitive transport fuel in the local markets in Malaysia and Indonesia.

• "If I were Petronas or Pertamina today, I would be rushing to buy local CPO to upgrade into biodiesel for blending with diesel, so as to hold down the costs of supplying motorists with their diesel fuel."

• Says PME is also attractive in exports market, thanks to a combination of high stocks, a steep discount of Asian CPO to crude oil and a $300 per tonne blending credit for biodiesel in the U.S.

• "We are seeing striking proof that markets work. Cheap palm oil in relation to crude oil does wonders for the use of PME as a fuel. Many factors have reinforced the attractions of CPO as a competitive source of fuel in recent months."

• Says higher PME exports will likely hasten a drop in CPO stocks and raise prices.

RTRS - Palm oil labelling will slash EU consumption - Dutch agency

AMSTERDAM, March 5 (Reuters) - Palm oil consumption in Europe would be curbed when new rules start next year compelling food makers to label their products with the ingredient if used, the Dutch product board warned.

Because it is solid at room temperature, palm oil has become an irreplaceable ingredient in a variety of products from chocolate bars and spreads to biscuits, ice cream and even soap.

But a wave of negative campaigning has targeted its cultivation, especially in Indonesia and Malaysia - a natural habitat for the orangutan - where activists say rain forests have been destroyed to make room for palm oil plantations.

Frans Claassen, head of the Dutch Board for Margarine, Fats and Oils, which represents the industry, said the negative campaigns could force food producers to seek to replace palm oil, which would cut its imports and make products more expensive.

"If palm oil keeps its bad reputation some food producers could stop using palm oil," Claassen told Reuters.

Since 1995 global palm oil production has tripled as food producers have used it to replace less healthy trans fats created by hydrogenation of liquid oils such as rape oil, soy oil and sunflower oil.

Palm oil imports to the European Union account for 10 percent of global production, and nearly half is imported through the Netherlands.

As of December 2014, food producers will be obliged to put on labels if they use rape oil, palm oil, soyoil or any other oil that are currently all labelled as vegetable oil, and experts say it will be difficult to find a replacement for it.

Mike Gordon, professor of food chemistry at the Department of Food and Nutritional Science at the University of Reading in Britain said milk butter fat could be the only alternative.

"It (milk butter fat) would probably be a bit more expensive," he said.

SUSTAINABILITY

Campaigners and food producers agree sustainability certificates could be a way to reassure consumers a rainforest has not been destroyed to make room for the palm oil used in a specific product.

Unilever, one of the world's biggest palm oil buyers, said 100 percent of its palm oil was sustainable as of 2012.

"By 2020, we are aiming for all of our sustainability sourced palm oil to be traceable back to the plantation on which it was grown," it said in a written statement to Reuters.

It said the industry needs to step up demand for sustainable palm oil which now accounts for 15 percent of the global output, to reassure both consumers and campaigners.

In Malaysia, a government official who declined to be named said his country will draft a new labelling strategy to reassure consumers in the EU, a major importing region.

“The strategy is to differentiate ourselves from Indonesian palm oil where most of the forest clearing is happening. In Malaysia, on the other hand, we are running out of land," the official said.

Hans van Trijp, professor of marketing and consumer behaviour at Wageningen University in the Netherlands, said labelling would not on its own bring any changes in consumer behaviour, but aggressive campaigns could make them more observant of labels and prone to boycotting certain ingredients.

"The information itself will not motivate consumers to change. The issue needs to be put on the agenda," he said.

RTRS - EU palm oil imports head for record high-Oil World

AMSTERDAM, March 5 (Reuters) - Palm oil imports to the European Union are heading for a record high this season, taking the slack from lower supplies of soyoil and sunflower oil, German-based analyst Oil World said.

Oil World said palm oil imports to the European Union could reach 6.4 million tonnes in the period from October 2012 until September 2013, compared to 5.83 million tonnes in the same period a year before.

"More palm oil is needed to offset lower consumption of soya oil and sun oil," Oil World said.

"Also recent low prices have generated considerably higher palm oil demand in the EU energy sector (for electricity generation as well as for biodiesel)"

It said most of the increase in palm oil imports was noticed in the Netherlands, Germany and Italy, while palm oil imports to Spain declined due to further falls in biodiesel production in the last quarter of 2012.

Palm oil prices have been pressured by high stock in Malaysia and Indonesia that account for nearly 90 percent of global production.

Crude palm oil prices for shipments cif Rotterdam fell to $875 a tonne in February from $1,125 a tonne in the same period a year ago.

"Palm oil stocks in Malaysia and Indonesia started to decline in January and obviously continued to decline in February, but are still sharply above a year ago," Oil World said.

Trader's highlight

DJI - NEW YORK, March 5 (Reuters) - The Dow Jones industrial average soared to a record closing high on Tuesday, breaking through levels last seen in 2007 and as investors rushed in to join the party in anticipation of more gains.

Signs of a strengthening U.S. economy, continued support from the Federal Reserve, and fairly attractive valuations compared to other assets have boosted the Dow by almost 9 percent so far this year. A strong reading in the U.S. services sector, which accounts for the bulk of economic activity, was the latest indicator of improving demand.

"I'm surprised at the speed of the gains, which have come at a pace that we can’t annualize. But stocks are still not expensive, and we can expect to continue getting a reasonable advance from here," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, who helps oversee $760 billion in assets.

Gains came across the board, with 10 of the Dow's 30 component stocks reaching new 52-week highs on a day when 456 securities hit new yearly highs on the New York Stock Exchange. The Dow Jones Transportation Average also closed at a new high after rising 1.5 percent.

About 71 percent of the NYSE stocks closed higher while 67 percent of Nasdaq-listed shares ended in positive territory. About 6.41 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, slightly below the daily average so far this year of about 6.48 billion shares.

About 16.9 million contracts changed hands in the U.S. options market on Tuesday, according to options analytics firm Trade Alert. The turnover consisted of 8.90 million calls and 8.01 million puts. The overall option turnover was in line with last month's daily average of 16.89 million contracts.

The blue-chip Dow's forward 12-month price-to-earnings ratio was at 15.87, compared with 16.99 during the 2007 highs, according to Thomson Reuters Datastream. The S&P 500's price-to-earnings ratio was at 13.5. 

The Institute for Supply Management's services index showed growth accelerated in February to its fastest pace in a year. Still, some areas of the economy haven't recovered as well as equity prices have since the financial crisis. The unemployment rate is at an elevated 7.9 percent, far above the 4.7 percent rate at the time of the Dow's previous high.

Markets have shrugged off the stalemate between the congressional Republicans and the White House over automatic U.S. government spending cuts, known as the "sequester." Other recent headwinds, including political turmoil in Europe, have also been navigated without much pain, with investors using any decline as an opportunity to buy.

"The economy is still expanding and improving despite the risk of higher taxes and lower spending," McDonald said. "While you can never rule out a correction, we don't see the economy or the Fed getting in the way of the market."

The Dow Jones industrial average  shot up 125.95 points, or 0.89 percent, to close at 14,253.77. The Standard & Poor's 500 Index  gained 14.59 points, or 0.96 percent, to 1,539.79. The Nasdaq Composite Index climbed 42.10 points, or 1.32 percent, to 3,224.13.

Brent Crude Oil - NEW YORK, March 5 (Reuters) - Brent crude broke a five-day losing streak on Tuesday, rising by more than 1 percent toward $112 a barrel on optimism over Chinese oil demand, record-high U.S. equities and North Sea supply disruptions.

Oil prices extended their rise slightly in post-settlement trading after the announcement of Venezuelan President Hugo Chavez's death, ending the socialist leader's 14-year rule of the oil-rich South American country.

Brent crude futures rose $1.52 per barrel to settle at $111.61. The front-month contract for April delivery rose as high as $111.93 a barrel in post-settlement activity, following the announcement of Chavez's death.

CBOT Soybean - March 5 (Reuters) - Soybean futures on the Chicago Board of Trade rose on Tuesday, briefly topping $15 a bushel, on export demand for dwindling supplies of old-crop U.S. soybeans, traders said.

• Front-month soybeans futures broke through psychological resistance at $15 a bushel for the first time since Feb. 22 but closed below that level.

• Soymeal followed soybeans higher while soyoil closed lower.

• USDA said private exporters reported sales of 330,000 tonnes of U.S. soybeans to unknown destinations for the current marketing year and 345,000 tonnes to China for delivery in 2013/14.

• Trade expects USDA on Friday to lower its forecasts for end-year 2012/13 U.S. and world soybean stocks to reflect poor crop weather in Argentina and robust demand for scarce U.S. supplies.

• The average analyst estimate for U.S. 2012/13 soybean ending stocks was 120 million bushels, down from USDA's February forecast of 125 million.

• Brazil's government will release its next official soybean crop forecast on Thursday, March 7.

• Brazil's vegetable oils association Abiove held its soy crop forecast unchanged at a record 82.3 million tonnes.

• Strength in outside markets lends support. The Dow Jones industrial average hit a record high as major world stock markets rallied after China pledged more government spending to boost economic growth and data showed the U.S. service sector expanding at its fastest pace in a year.

BMD CPO - KUALA LUMPUR, March 5 (Reuters) - Malaysian palm oil futures edged down in thin volume on Tuesday after gains in the previous session lifted prices from near two-month lows, with traders focusing on a key industry conference to determine strategies.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,399 ringgit ($772) per tonne by the day's close. Prices traded in a tight range of 2,389 to 2,428 ringgit.

A technical bounce on Monday had helped prices snap eight straight sessions of declines and move higher from levels last seen in mid-January.

"There was an attempt to push the market higher yesterday and some anticipation about a follow through in buying, but nothing materialized," said a trader with a local commodities brokerage in Malaysia.

"Traders are mostly waiting on the analysts and speakers for more clues. There will probably be slow trading until tomorrow," he added. The palm oil conference being held in the Malaysian capital runs March 4-6.

Several palm oil refineries have slowed operations and some plan to halt output if a Malaysian military attack on an armed Filipino group on Borneo island drags on, potentially disrupting supply of the tropical oil to China, refinery officials told Reuters on Tuesday.

Sabah, part of Borneo island, is Malaysia's top oil palm growing region, accounting for a quarter of national production. Much of the palm oil from Sabah is shipped to China -- the world's second-largest consumer of edible oils.

The development was not impacting prices significantly so far, traders, analysts and government officials said. But prolonged supply disruptions could buoy prices, although climbs would probably be limited as high stock levels in the country continue to weigh.

"If the turmoil drags on for weeks and months, it could have a more severe impact on production," CIMB Investment Bank said in a note. "The security fears may also affect the operations of ports located near where the clashes are taking place."

In other markets, Brent crude futures rose towards $111 per barrel on Tuesday, bucking a five-day losing streak on bargain buying after China pledged to keep its economy growing at 7.5 percent.

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 inched up 0.1 percent.

Regional Equities - BANGKOK, March 5 (Reuters) - Most Southeast Asian stocks rose on Tuesday along with gains in Asian peers, with the Philippine index nearing its record high close as large-cap Philippine Long Distance Telephone (PLDT) rose on robust quarterly profits, but an overbought Indonesia retreated.

Asian shares climbed on Tuesday as a globally accommodative monetary stance helped revive risk appetite. 

The MSCI's broadest index of Asia-Pacific shares outside Japan  was up 1 percent while the MSCI's index of Southeast Asia  was 0.4 percent higher.

The Philippine index  snapped its two-day losing streak, ending up 1.12 percent at 6,711.72, just shy of its record close of 6721.45 hit on Feb. 28. PLDT shares jumped to five-year highs after it posted a six-fold rise in quarterly profit.

Telecom firms also led among gainers in the region such as Singapore Telecommunications Ltd and Malaysia's DiGi.Com Bhd . In Bangkok, investors bought Shin Corporation Pcl partly due to a high dividend payout.

Bucking the trend, Indonesia  edged down 0.2 percent as investors sold recent gainers such as banks. PT Bank Rakyat Indonesia, which hit a record high on Feb. 28, extended losses for a third session, falling 2.3 percent.

Vietnam's Ho Chi Minh Stock Exchange's VN Index  dropped 1.4 percent, adding on Monday's 1.8 percent loss, due to pressure from margin calls and weak buying demand.