RTRS - Malaysia March palm stocks likely to ease to 7-mth low

SINGAPORE, April 5 (Reuters) - Malaysia's palm oil stocks likely edged lower in March as production eased for the sixth straight month, a Reuters survey of five plantation companies showed on Friday.

Inventory levels may have dropped 3.8 percent in March to 2.35 million tonnes, marking the third monthly decline, to the lowest level seen since last September. Stocks hit a record 2.63 million tonnes in December.

Production most likely fell 1.2 percent from a month ago to 1.28 million tonnes, as crude palm oil yields remained in a seasonal low cycle, although the decline is significantly smaller than a near one-fifth drop seen in February.

The drops in both output and inventories are expected to support palm oil futures prices , which have been stuck below 2,600 ringgit ($840) a tonne since October 2012 after staying well above that mark for almost two years.

Exports of the tropical oil probably eased 4 percent from a month ago to 1.34 million tonnes in March. Crude palm oil shipments fell after the implementation of an export tax of 4.5 percent in March, up from no tax applied in February.

Despite inching lower, exports were still more than enough to offset production and imports for the month.

Imports of crude palm oil from top producer Indonesia are likely to have grown to 80,000 tonnes from 55,410 tonnes the month before, according to the poll.

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The benchmark third-month contract on the Bursa Malaysia Derivatives Exchange, which lost 0.8 percent in March and 0.5 percent so far in April, may gain support from the sinking stock levels. 

The edible oil could rise to 2,400 to 2,700 ringgit ($770 to $865) per tonne by the end of May, as weaker production speeds a fall in the stockpiles, said leading analyst Dorab Mistry.

Export demand may also pick up in coming months because of attractive prices and plentiful supplies compared to rival edible oils such as soyoil, Hamburg-based oilseeds analysts Oil World said early this week.

India's imports of palm oil could rise more than 17 percent in the year to October 2013 to stand at 9 million tonnes, as the edible oil is the cheapest available, despite an import duty, the country's top importer of edible oils said. 

Malaysia and Indonesia, the world's top palm oil producers, will keep their crude palm oil export tax rates for April at 4.5 and 10.5 percent, respectively, unchanged from March. 

Trader's highlight

DJI - NEW YORK, April 5 (Reuters) - U.S. stocks ended their worst week this year with losses on Friday after a weaker-than-expected jobs report undermined confidence in the economy and first-quarter earnings growth.

The jobs data, which showed employers hired at the slowest pace in nine months, was the latest in a series of disappointing economic reports.

Companies begin to report quarterly earnings next week, which is likely to be another concern for investors in light of recent economic data. Analysts' estimates for earnings growth in the first quarter have fallen since late last year, according to Thomson Reuters data.

"I think earnings season could be less than stellar again. Given market performance to date, we could see some softness in the market because we've generated some healthy returns already," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management, which has about $13 billion in assets.

Stocks had been rallying on the Fed's promise to keep providing stimulus and on mostly improving U.S. economic data. The S&P 500 is up 8.9 percent since the start of the year.

The S&P 500 was down 1 percent for the week. All but three of the S&P 500's 10 industry sectors posted declines.

The government's job report showed 88,000 jobs were added in March, less than half economists' average forecast of 200,000. The unemployment rate dipped to 7.6 percent from 7.7 percent, largely due to people dropping out of the work force.

Among recent weak data, a report Monday showed U.S. factory activity grew at the slowest rate in three months in March.

The Dow Jones industrial average was down 40.86 points, or 0.28 percent, at 14,565.25. The Standard & Poor's 500 Index was down 6.70 points, or 0.43 percent, at 1,553.28. The Nasdaq Composite Index was down 21.12 points, or 0.66 percent, at 3,203.86.

Oils - NEW YORK, April 5 (Reuters) - Brent crude fell to an eight-month low in heavy trading on Friday, going below $104 a barrel and capping off the biggest weekly drop since June as a weak U.S. jobs report fed worries about the economy of the world's largest oil consumer.

The U.S. Labor Department reported that employers added just 88,000 jobs in March, the slowest pace of hiring in nine months. The jobless rate ticked 0.1 point lower to 7.6 percent, largely due to people dropping out of the workforce.

Brent crude oil prices had the biggest weekly loss in 10 months, down more than 5 percent. They have fallen by around $15 a barrel since early February.

"But we had gone up so far, so fast without real improving data. We saw today with the jobs report translating into lower energy prices that it was not a real rally, but more of an easy-money rally."

Brent crude oil trading volumes were 49 percent higher than the 30-day moving average, with more than 950,000 lots traded.

Brent crude futures for May delivery settled at $104.12 a barrel, down $2.22 from Thursday after touching $103.62, the lowest price since August.

U.S. crude settled at $92.70 off an earlier low of $91.91 a barrel. U.S. crude has fallen by almost 5 percent this week, its biggest weekly loss since September. Its discount to Brent, however, narrowed to $11.42, the first time it has traded at less than $12 a barrel in more than nine months.

Hedge funds and other large speculators increased their bets on rising U.S. crude prices by 8,233 futures and options contracts to 246,080 as of April 2, according to a weekly report from the U.S. Commodity Futures Trading Commission.

CBOT Soybean - Soybean futures on the Chicago Board of Trade fell to a 10-month low on technical selling, fears of a potential drop in feed demand due to bird flu in China and seasonal pressure from the South American soy harvest, traders said.

 

·         Chinese authorities slaughtered more than 20,000 birds at  a poultry market in Shanghai as the human death toll from a new    strain of bird flu mounted to six, spreading concern overseas.

 

·         Nearby soybean contracts continued to lose ground to   new-crop months on spreads, a theme that continued after USDA last week reported higher-than-expected U.S. March 1 soybean  stocks.

 

·         Spot soybeans dipped to $13.54-1/2 a bushel, the lowest price on a continuous chart since June 6, before paring losses. Spot soymeal also fell to a 10-month low.

 

·         Soymeal declined along with soybeans, but soyoil closed   higher, gaining against meal on oil/meal spreads and bucking  weakness in crude oil.

·         Early planting will be delayed in the U.S. Midwest due to  cool temperatures and significant rainfall next week that will   also add valuable soil moisture, agricultural meteorologists   said.

·         Trade expects USDA to raise its U.S. 2012/13 soy ending  stocks forecast in its April 10 supply/demand report. The  average analyst estimate of U.S. soybean ending stocks was 136   million bushels, up from USDA's March forecast of 125 million.

·         For the week, soybeans fell 3 percent or 43 cents a    bushel, its second straight weekly decline. Soymeal fell   3.2 percent and soyoil fell 2.5 percent.

BMD CPO - SINGAPORE, April 5 (Reuters) - Malaysian palm oil futures inched lower on Friday, tracking weak soy markets, and posted a second straight weekly loss, with investors cautious ahead of key industry data due next week.

Soybean prices have eased this week after the U.S. Department of Agriculture reported larger-than-expected stockpiles and on worries that bird flu might spread in top importer China and reduce feed demand.

Palm oil tends to track soybean and soybean oil prices closely as the edible oils are close substitutes.

Market participants are awaiting official data on Malaysia's March palm inventory levels -- due on Wednesday -- to gauge the tropical oil's supply and demand fundamentals. Analysts said lower stocks may provide support for prices.

"We believe the overall data should be short-term positive to crude palm oil prices," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note to clients on Friday.

The bank is revising its March inventory forecast slightly down to 2.26 million tonnes from 2.31 million tonnes earlier after revising its production and exports estimates, Lim said.

A Reuters survey of five plantation companies showed Malaysia's palm oil stocks likely edged to a 7-month low in March at 2.35 million tonnes.

By the market close, the benchmark June contract n the Bursa Malaysia Derivatives Exchange had eased 1.5 percent to 2,356 ringgit ($771) per tonne. For the week, prices suffered a 0.9 percent loss.

Traders are also looking out for Malaysia's export data on Wednesday for the first 10 days of April, after cargo surveyors showed better exports in March than February boosted by higher shipments of refined products.

In other markets, Brent crude oil steadied close to five-month lows around $106 per barrel on Friday as bleak U.S. data and bulging inventories dimmed the outlook for fuel demand.

In vegetable oil markets, U.S. soyoil for May delivery  lost 0.1 percent in late Asian trade. The Dalian Commodities Exchange will be closed until Monday for a public holiday in China.

Regional Equities - April 5 (Reuters) - Thai stocks fell 2.6 percent on Friday as political concerns triggered a broad-based selling ahead of a three-day weekend while other Southeast Asian shares bounced off their day's lows as an ultra-loose monetary conditon in Japan bolstered outlook.

The Bank of Japan's recent announcement of an intense monetary easing was seen as bullish for risk assets. HSBC said Thailand, Malaysia, and Indonesia had been markets in emerging Asia that traditionally had the closest financial links with Japan.

"This is not just a Japan story: liquidity will pour into regional financial markets already drowning in the stuff," HSBC said in a report dated April 4.

"Thailand, Malaysia, and Indonesia are usually big recipients, but Vietnam, the Philippines, and even India, could see a lot more inflows, too," it said.

Leading gains in the region, the Ho Chi Minh Stock Exchange's VN Index climbed 1.1 percent as gains in heavyweight stocks helped to prop up the market after two days of falls. It was up 2.4 percent on the week, the best performer.

Hopes for disbursements from new funds, particularly those from Japan following intense monetary easing by Bank of Japan, also helped the market, said Lai Duc Long, a broker at Phu Hung Securities.

In Bangkok, the main SET index breached a key 1,500 level to close at 1,489.53. Trading volume fell to 67 percent of a full day average over the past 30 sessions as Thai market will be shut on Monday for Chakri day, reopening on Tuesday.

"Investors cut their risk exposures in response to more political noises these days. There are going to be many holidays in April and sentiment is generally weak," said CIMB senior analyst Teerawut Kanniphakul.

The SET fell 4.6 percent on the week, the worst performing market in Southeast Asia. It regained an early loss to rise on Thursday after an anti-graft body said it had found no irregularities in the disclosure of assets by Prime Minister Yingluck Shinawatra.