RTRS - USDA South American soy crop forecasts too optimistic -Oil World

HAMBURG, April 16 (Reuters) - South American soybean crop forecasts by the U.S. Department of Agriculture (USDA) are too optimistic and do not sufficiently take into account recent poor crop weather, German oilseeds analyst Oil World said on Tuesday.

Total soybean crops in the main South American exporters - Brazil, Argentina, Paraguay, Bolivia and Uruguay - in early 2013 will total 143.60 million tonnes, Oil World estimates, below the USDA April 10 forecast of 148.75 million tonnes but still up from last year’s 114.95 million.

“In our opinion the USDA estimates of April 10 are overly optimistic for Brazil, Argentina and Uruguay, not yet reflecting the crop damage resulting from detrimental weather conditions,” Oil World said.

Big Argentine and Brazilian harvests are needed in early 2013 to relieve the tight global soybean market after a small U.S. crop last year.

Late-season rain followed by dryness cut yields in Brazil. Drought in parts of north Brazil is the worst in 50 years, Oil World said.

Dryness followed by very heavy rain has also threatened yields in Argentina. Argentine second-crop soybeans have not developed well, the firm said.

Oil World retained its forecast of Brazil's 2013 soybean crop of 81.3 million tonnes, up from 66.3 million in 2012. The USDA on April 10 also retained its forecast of Brazil’s crop at 83.5 million tonnes.

Oil World also kept its forecast for the Argentine crop at 48.5 million tonnes of soybeans in early 2013, which is up from the 39.7 million harvested in 2012 but below the 51.50 million forecast by the USDA.

Oil World expects Uruguay to harvest 2.6 million tonnes in 2013, slightly higher than its 2.45 million tonnes last year, but it warned the crop could fall as low as 2.5 million.

RTRS - U.S. inflation, factory data favor continued Fed easing

WASHINGTON, April 16 (Reuters) - U.S. consumer prices fell in March for the first time in four months and factory output slipped, strengthening the argument for the Federal Reserve to maintain its monetary stimulus to speed up economic growth.

Other data on Tuesday suggested the housing market recovery was losing momentum, even though housing starts breached the 1-million unit rate mark for the first time since June 2008.

"For the Fed, it's business as usual," said Millan Mulraine, senior economist at TD Securities in New York. "There is not likely to be an acceleration in growth momentum that would cause them to shift their policy stance anytime soon."

The Labor Department said its Consumer Price Index edged down 0.2 percent last month as gasoline prices tumbled, unwinding some of February's 0.7 percent increase. Economists had expected a flat reading.

Underscoring the benign inflation environment, consumer prices rose just 1.5 percent in the 12-months through March -- the smallest increase since July. Prices had increased 2.0 percent year-on-year in February.

Stripping out volatile energy and food costs, the so-called core CPI was up only 0.1 percent after gaining 0.2 percent in February. That lowered the 12-month increase to 1.9 percent in March from 2.0 percent in February.

A separate report from the Fed showed output at the nation's factories decreased 0.1 percent after advancing 0.9 percent in February. The decline was fairly broad-based, with output dropping for primary metals and electronics. Automobile assembly, however, increased.

Despite the factory weakness, overall industrial production rose 0.4 percent last month due to a jump in utilities' output.

Stocks on Wall Street were trading higher as strong earnings from Coca-Cola and Johnson & Johnson buoyed investor sentiment. U.S. Treasury debt prices fell, while the dollar weakened against a basket of currencies.

Economic data for January and February have suggested growth accelerated in the first quarter after activity almost stalled in the final three months of 2012.

But in a replay of the prior two years, the economy appears to have hit a speed bump at the end of the quarter, with data ranging from employment to retail sales and manufacturing weakening significantly in March.

Much of the weakness is blamed on higher taxes and deep government spending cuts put in place in Washington.

"We definitely see the second quarter slowing from the first in terms of overall growth across many of the sectors. Obviously, the drag from fiscal policy is playing into this a little bit," said Erik Johnson, a senior U.S. economist at IHS Global Insight in Lexington, Massachusetts.

MUTED INFLATION

The lack of inflation and slowing economic growth bolster the case for the Fed to remain on its very easy monetary policy path, despite divisions among policymakers over the wisdom continued asset purchases.

Minutes of the Fed's March 19-20 meeting published last week suggested the U.S. central bank was moving closer to ending its monthly $85 billion purchases of mortgage and Treasury bonds meant to keep interest rates low and spur faster job growth.

On Tuesday, New York Federal Reserve Bank President William Dudley cautioned against pulling back too soon, pointing to the sharp moderation in the pace of job growth in March.

"I'd note that we saw similar slowdowns in job creation in 2011 and 2012 after pickups in the job creation rate and this, along with the large amount of fiscal restraint hitting the economy now, makes me more cautious," he told the Staten Island Chamber of Commerce.

A third report from the Commerce Department showed housing starts rose 7.0 percent last month to a 1.04 million-unit annual rate, the highest in nearly five years.

However, the increase was driven by the volatile multi-family sector, while groundbreaking for single-family units fell. In addition, permits for future construction tumbled 3.9 percent -- reversing February's gain.

That suggested a slowdown in housing activity, coming on the heels of a report on Monday that showed a third straight monthly decline in homebuilders' confidence in April.

"The decline in single starts and permits is consistent with recent hints the housing recovery has lost some momentum," said David Sloan, senior economist at 4Cast Ltd in New York.

Trader's highlight

DJI - NEW YORK, April 16 (Reuters) - U.S. stocks jumped more than 1 percent on Tuesday, a day after their worst decline since November, as gold prices rebounded and earnings from Coca-Cola and Johnson & Johnson improved the outlook for first-quarter results.

Inflation data, which reinforced expectations that the Federal Reserve will keep its stimulus plan in place, added to bullish sentiment.

The price of gold jumped 1 percent after its record daily drop in dollar terms on Monday. The SPDR Gold Shares ETF , which fell 8.8 percent on record volume Monday, rose 1.1 percent to $132.80. The S&P 500 materials index climbed 1.9 percent, leading the benchmark S&P 500 higher.

The market's advance followed the S&P 500's drop of more than 2 percent drop on Monday, giving the index its worst one-day percentage loss since Nov. 7. The S&P 500 is up 10.4 percent since the start of the year after enjoying a strong first-quarter run, partly as a result of the Fed's continued stimulus efforts.

"Yesterday I think was a bit out of line ... But I think the trend is that the market is consolidating, that we're going to see a little bit of a pullback here over the next month and a half or so, and then we'll get on to greener pastures," said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.

S&P 500 earnings are now expected to have risen 1.8 percent in the first quarter, based on actual results from 42 companies and estimates for the rest, up from a recent estimate of 1.1 percent growth.

The Dow Jones industrial average jumped 157.58 points, or 1.08 percent, to close at 14,756.78. The Standard & Poor's 500 Index gained 22.21 points, or 1.43 percent, to finish at 1,574.57. The Nasdaq Composite Index  rose 48.14 points, or 1.50 percent, to end at 3,264.63.

On Monday, a drop in the price of gold and other commodities triggered a sharp selloff in stocks. But stocks fell further late in the session after news of two fatal explosions near the finish line of the Boston Marathon.

Oils - NEW YORK, April 16 (Reuters) - Brent crude fell below $100 a barrel for the first time in nine months in heavy trading on Tuesday, extending losses triggered by data from China and the United States that suggested little growth in global oil demand.

Both Brent and U.S. crude pared losses in afternoon trading after each fell more than $2 earlier, suggesting the low prices could be luring back traders, analysts said.

"We are still seeing some weakness in price, in contrast to a number of markets that are snapping back to the upside with more vigor. That’s because we still have a lot of oil," said Tim Evans, an energy futures specialist at Citi Futures Perspectives in New York.

The spread between Brent crude and U.S. crude narrowed by nearly $1 to $10.88 after widening to as much as $11.93 during the trading session, and down from a $23 spread in February.

LIMITED DEMAND PROSPECTS

A powerful earthquake that struck southeast Iran sending strong tremors across the region, raised concerns it might damage oil production, which put a floor under oil prices, traders said.

Brent crude on Monday dropped about 3 percent in a wider commodities rout after data showed economic growth in China, the world's second-largest oil consumer, had slowed unexpectedly in the first three months of 2013.

Underscoring recent worries, the International Monetary Fund on Tuesday shaved projections for global economic growth for this year and next on the back of spending cuts in the United States and Europe.

CBOT Soybean - Soybean futures on the Chicago Board of Trade closed higher on Tuesday on bargain buying after selling off a day earlier, with firm U.S. cash markets lending additional support as old-crop soybean supplies dwindle.

·         New-crop November soybeans  rallied after setting a     10-month low early in the session.

·         Bull-spreading was an early feature, with the May/November  soybean spread reaching $2.02, May's biggest premium    in a month. However, the inverted May/July spread had   weakened by the close.

·         U.S. equity markets rose one day after the worst decline  since November. Gold made a modest recovery and government data   on inflation and housing signaled an improving economy.

 

·         Worries about bird flu reducing feed demand in China  continue to hang over the market. China's poultry sector has   lost more than $1.6 billion since reports emerged two weeks ago   of a new strain of bird flu, an official at the country's   National Poultry Industry Association said.

 

·         The slow start of exports from South America's new soybean  crop in March and April may compel China to buy more U.S.  soybeans in coming weeks, oilseeds analysts Oil World said.

·         South American soybean crop forecasts by the U.S.   Department of Agriculture are too optimistic and do not  sufficiently take into account recent poor crop weather - Oil World. 

BMD CPO - SINGAPORE, April 16 (Reuters) - Malaysian palm oil futures ended flat on Tuesday, as a recent commodities rout that dented investors' appetite for riskier assets offset earlier gains on bargain hunting.

Gold fell to its lowest in more than two years and Brent crude dropped below $100 per barrel for the first time since July as a shaky global economic outlook drove investors to liquidate assets, extending a sell-off in commodities into a third day.

The weak sentiment spread to the vegetable oil markets, with palm oil falling to a low of 2,281 ringgit per tonne on Monday its weakest since December, and the most active Dalian soybean oil contract tumbling to the lowest since its initiation.

"The market is quiet today due to uncertain factors in the external markets. Prices look to be supported at the 2,250 ringgit level and face resistance at 2,320 ringgit," said a trader with foreign commodities brokerage in Malaysia.

The new benchmark July contract on the Bursa Malaysia Derivatives Exchange ended flat at 2,301 ringgit ($757) per tonne.

Total traded volumes stood at 40,241 lots of 25 tonnes each, higher than the average 35,000 lots.

Malaysian palm oil shipments for the first half of the month fell by 4 percent from a month ago, said one cargo surveyor Intertek Testing Services, while another surveyor Societe Generale de Surveillance reported a steeper 7.2 percent drop.

Market participants will be keeping a close watch on the next export data for the April 1 to 20 period to gauge stocks level. A 10 percent increase in shipments in March helped ease inventory level to 2.17 million tonnes, the lowest in seven months.

In other markets, Brent crude sank below $100 a barrel for the first time in nine months on Tuesday in a broad commodities rout after recent weak data from China and the United States spurred worries about oil demand.

In other vegetable oil markets, U.S. soyoil for May delivery gained 0.8 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange recouped some losses after falling as much as 2.4 percent earlier.

Regional Equities - April 16 (Reuters) - Most of Southeast Asian markets ended firmer on Tuesday, led by Indonesia and Thailand as hopes over the region's economic growth in the face of a slowdown in Chinese economy helped investors to acquire risky assets.

Overall stock indexes in Malaysia, Indonesia, Singapore, and the Philippines are hovering at their near peak, but investor appetite for the region's stocks still remained robust.

HSBC Global Research in a note said weaker-than-expected Chinese economic data will have lesser impact of the ASEAN economies including Indonesia, Malaysia, Thailand, the Philippines and Vietnam.

"Here, the main growth driver at the moment is local demand, supported by a strong leverage cycle and, in the cases of Malaysia and Thailand, generous fiscal policy," it said.

"To be sure, exports of raw materials to China play a role for Malaysia and Indonesia, but a marginal slowing of these is likely to be offset by the monetary stimulus recently provided by the Bank of Japan."

Jakarta's Composite index  jumped more than 1 percent to close at its highest since April 3, when the index hit a record closing high, while Malaysia ended up 0.2 percent to a near one-week peak, helped by $81.84 million net foreign inflow.

Thailand gained 0.7 percent to its highest since April 2, while Singapore edged up 0.2 percent.

Economists have argued that markets were ripe for some correction after recent rallies, but have been taken aback by the sudden plunge in commodities, triggered by weak data from China and the United States that have sparked fresh concerns about the strength of economic recovery.

On Monday, the price of gold bullion tumbled another $125 per ounce in its biggest-ever daily loss, and its 9 percent loss was the biggest since 1983. 

Bucking the trend, the Philippines, the region's best performer with 16.8 percent gain for this year, lost 0.8 percent and Vietnam eased 0.4 percent on concerns over macroeconomy, margin calls and losses in global markets.