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.

RTRS - Argentine soy harvest may exceed 50 million tonnes -analyst

BUENOS AIRES, March 1 (Reuters) - Argentina's 2012/13 soy harvest should reach at least 50 million tonnes, more than recent estimates by local grain exchanges, as yields in early seeded crops beat expectations, an Argentine analyst said on Friday.

The South American country is the world as No. 3 soybean supplier and its top exporter of soyoil and soymeal. A lack of rain since the start of the year has driven global prices higher, although recent showers have brought relief.

According to analyst Pablo Adreani, head of the Agripac consultancy, soy crops planted early in the season have not been as badly affected by weeks of hot, dry weather as later-planted crops due to plentiful rains last year.

"The situation is much better than last year. The early-planted beans and corn look excellent with yields that could probably reach the record," Adreani told the Reuters Ags Forum, an online chatroom for grain traders.

Drought hit Argentina's crops in the previous 2011/12 season and soy production was a weak 40.1 million tonnes. Corn output was 21 million tonnes.

Adreani said yields in Santa Fe province, one of the country's biggest grain producers, are coming in above 3.0 tonnes per hectare in early planted beans, about 15-20 percent more than during last year's harvest.

He said farmers were about to start gathering crops in the main agriculture belt, estimating that they would sell about 15 million tonnes of grain in the next 45 days.

"After that, farmers will sit on the beans and they will only sell in a drip-drop way to meet some commercial commitments," he said.

Earlier this week, Buenos Aires Grains Exchange cut its estimate for the soy harvest to 48.5 million tonnes. Rosario grains exchange expects production of 48 million tonnes.

With regard to the upcoming wheat campaign, which will begin in May, Adreani said government export curbs could cause another disappointing season by deterring farmers from planting.

Last season, growers produced 9.8 million tonnes of wheat, according to the Buenos Aires exchange.

"I don't believe Argentina could have been a reliable supplier of wheat to Brazil. There was a serious attack of fusarium (fungi), about 40 percent of the wheat was bad quality (and) could only be sold as feed wheat."

"This year (2013/14), we could see another reduction in wheat area if the government doesn't change its anti-export policy," he said.

Trader's highlight

DJI - NEW YORK, March 1 (Reuters) - U.S. stocks advanced modestly on Friday, leaving the S&P 500 with slight gains in a volatile week as strong economic data overshadowed growth concerns in China and Europe and let investors discount the impact of expected U.S. government spending cuts.

Stocks opened sharply lower for the session as Asian factories slowed and European output fell, but most of the losses evaporated after a report showed U.S. manufacturing activity expanded last month at its fastest clip in 20 months.

U.S. consumer sentiment also rose in February as Americans turned more optimistic about the job market.

With $85 billion in government budget cuts set to begin, President Barack Obama blamed Republicans for failure to reach a compromise to avert the cuts, known as sequester. But the stock market appeared to have already priced in the failure by legislators to reach an agreement.

"We were able to dig out of that hole, but not make any great strides on it either," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We will probably be in a holding pattern pending some big development on a broader budget deal."

The Dow Jones industrial average  gained 35.17 points, or 0.25 percent, to 14,089.66 at the close. The Standard & Poor's 500 Index  added 3.52 points, or 0.23 percent, to 1,518.20. The Nasdaq Composite Index dvanced 9.55 points, or 0.30 percent, to 3,169.74.

For the week, the Dow rose 0.6 percent, the S&P 500 edged up 0.2 percent and the Nasdaq gained 0.3 percent.

The slight gains for equities came during a volatile week that saw markets decline on Monday after uncertain Italian elections, only to rebound in the next two sessions as U.S. Federal Reserve Chairman Ben Bernanke defended the central bank's stimulus measures.

The low interest rates due to the Federal Reserve's accommodative monetary policy have helped equities continue to attract investors. The Dow is less than 1 percent away from its all-time intraday high of 14,198.10. Declines have been shallow and short-lived, with investors jumping in to buy on dips.

Brent Crude Oil - NEW YORK, March 1 (Reuters) - Brent crude prices fell to a six-week low below $110 per barrel on Friday, erasing all gains so far in 2013 as political gridlock in Washington was set to trigger automatic U.S. budget cuts.

Since hitting a nine-month high of $119.20 in early February, Brent has dropped by around $9 a barrel over the last three weeks as concerns about oil demand during a sluggish economic recovery have reemerged.

In Washington on Friday, $85 billion in automatic spending cuts known as "sequestration" were about to kick in as the White House and Republicans remained at loggerheads over the federal budget, weighing on the economy of the world's largest oil consumer.

The International Monetary Fund (IMF) has warned the cuts could knock at least 0.5 percentage points off U.S. economic growth this year and weigh on the rest of the global economy.

"Despite some green shoots in the United States, the growth forecast remains mediocre, unemployment stubbornly high and economic data inconsistent," said oil brokerage PVM in a note to clients.

Crude oil exports from the Organization of the Petroleum Exporting Countries also rose in February, a Reuters survey found, marking the first monthly increase since October and further weighing on prices.

Weak growth data out of Europe and China added to fears the global economic recovery is still sputtering.

European surveys showed British manufacturing shrank unexpectedly in February while France's factories suffered their 12th straight monthly fall in output. Also falling was industrial activity in Spain and Italy.

In China, domestic and foreign demand slackened as the official Purchasing Managers' Index (PMI) missed expectations, coming in at 50.1, the government said on Friday. This was its lowest reading since September.

Chinese data showing factory growth cooled in February also dampened the mood on commodity markets.

"China is the main economic and oil demand growth engine of the world," said Dominick Chirichella of the Energy Management Institute in New York.

"If China's manufacturing is slowing it strongly suggests that oil consumption in China is going to also slow."

CBOT Soybean - Soybean futures on the Chicago Board of Trade fell on Friday, ending a two-day rise as traders cited disappointing economic data from China, the world's top soybean buyer.

* Growth in Chinese factories cooled in February to a five-month low after domestic and foreign demand slackened, an official government survey showed, missing market forecasts. 

 

·         Spillover pressure from crude oil and other markets as  traders exited some commodities and bought the dollar as a  safe-haven amid concerns about imminent U.S. spending cuts and  the post-election political stalemate in Rome. 

 

·         Informa Economics raised its estimate of Brazil's 2012/13   soybean crop to 84.5 million tonnes, from 84.0 million   previously, and left its estimate of Argentine corn production  at 51.0 million tonnes, unchanged from late February but down   from its month-ago forecast of 54.5 million.

 

·         Analyst Pablo Adreani, head of the Agripac consultancy,  said Argentina's 2012/13 soy harvest should reach at least 50    million tonnes, topping recent estimates by local grain exchanges, as yields in early seeded crops beat expectations.

·         Traders shrugged off sales of 10,000 tonnes of U.S.  soybeans to China for delivery in 2013/14, reported by USDA. It  was the fourth sale of the week of soybeans to China, boosting  the total to 483,000 tonnes for the week. 

 

·         Brazil's exports of soybeans jumped in February from the  previous month as an expected record harvest started to reach ports, trade ministry data showed on Friday.

 

·         CBOT reported 1,437 March soyoil deliveries but the ADM  Investor Services house account stopped 1,317 lots, a likely sign of rising demand from the biodiesel sector.

BMD CPO - SINGAPORE, March 1 (Reuters) - Malaysian palm oil futures fell to their lowest in more than six weeks on Friday, extending losses to an eighth straight session, as weak exports continued to weigh and investors turned cautious ahead of a key industry conference next week.

Traders were concerned Malaysia's palm exports, which one cargo surveyor said fell 9.1 percent in February, would decline further as a zero-percent export tax for the crude grade rises to 4.5 percent this month.

Focus is also shifting to Bursa Malaysia's annual palm oil conference next week, where leading industry analysts including Dorab Mistry and James Fry will present their price outlooks.

"The market is waiting for Dorab Mistry's forecast next week, which is likely to be bearish," said Alan Lim Seong Chun, a research analyst at Malaysia's Kenanga Investment Bank.

"February exports were weaker than the expected 3 percent decline. Besides that, soybean oil overnight also declined about 1 percent so that also pressured the palm oil market."

The benchmark May contract on the Bursa Malaysia Derivatives Exchange slid 1.3 percent to close at 2,368 ringgit ($766) per tonne, a level last seen on Jan. 14.

For the week, the edible oil posted a 6.6 percent loss, the worst since mid-November, tracking losses in the soybean oil market as improving South American weather boosts the supply outlook for soybeans.

Industry players are also keeping an eye on slowing palm oil output in Malaysia, the world's No.2 producer.

Less production could help ease inventory levels, which stood at 2.58 million tonnes in January, although slowing exports could mean the reduction in stocks will be slight.

In other markets, Brent crude slipped to a six-week low below $111 a barrel on Friday, weighed down by growth worries as political gridlock raised the prospect of massive U.S. government spending cuts.

In competing vegetable oil markets, U.S. soyoil for May delivery fell 0.3 in late Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange closed 0.7 percent lower.

Regional Equities - BANGKOK, March 1 (Reuters) - Most Southeast Asian stock markets retreated on Friday, joining those in broader Asia and global markets, with Philippine shares falling from an all-time high hit a day earlier and selling in big-caps such as PTTEP  wiping out early gains in Thai stocks.

Concerns over the economic fallout from possible U.S. spending cuts and Italy's political stalemate weighed on global sentiment. The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.19 percent.

The Philippine Composite Index  fell 1.2 percent to 6,642.27, after having hit a record close of 6,721.45 on Thursday.

Among leading decliners, shares in Energy Development Corp  plunged 11.4 percent after the company announced the shutdown of one of its power-generating facilities due to technical problems.

The Thai benchmark SET index  slid 0.13 percent to 1539.60, trimming Thursday's 1.6 percent gain. Market players sold recent large-cap gainers such as PTT Exploration and Production Pcl , which fell 1.9 percent.

Stocks in Singapore  and Malaysia  ended nearly flat. Indonesia , bucking the trend, rose 0.3 percent to a new record close of 4,811.61, led by a 1.9 percent gain in PT Astra International  thanks to strong 2012 results.

RTRS - INTERVIEW-Brazil soy quality rises but logistical headaches worsen

BRASILIA, Feb 26 (Reuters) - The quality of Brazilian soybeans is improving as rains that disrupted early harvest let up, the head of the national soy producer association said on Tuesday, but concerns are growing over long delays in getting beans through crowded ports.

The U.S. Department of Agriculture expects Brazil's production of soybeans to surpass that of the United States for the first time this season with 83.5 million tonnes versus 82 million, straining transport infrastructure to the limit.

Rains from early in the harvest in January slowed the flow of product from top soy-growing state Mato Grosso and many early-harvested beans are being sold at a discount due to moisture damage, Aprosoja's Glauber Silveira said.

"Mato Grosso is already starting to harvest better-quality grains now. Rains are easing," Silveira said during a guest appearance on Reuters Global Ags Forum, an online chat room for grain traders.

Brazilian weather forecaster Somar expects rains to continue this week in the key center-west region where Mato Grosso is situated, but then to shift to the south by early March.

Soy futures in Chicago for March delivery SH3 settled down 3-1/2 cents at $14.47-3/4 a bushel on Tuesday, pressured by prospects for a good South American harvest between Brazil and world No. 3 producer Argentina.

Though the weather has improved for harvesting, getting the crop to port would be a major hurdle, Silveira said. A truck shortage and clogged ports have led to queues of more than one month for ships to load even before peak harvest.

"The queues will get worse ... Costs for transport will without doubt keep rising," Silveira said, adding this burden would largely fall on trading houses. He estimated producers had forward-sold 70 percent of the crop, locking in their price.

"Producers who haven't sold yet may take a hit, though," he said, since traders facing higher costs would likely make lower offers to reduce the impact on their margins, which are being squeezed by spiking transport costs.

The soy sector says it is unable to speed this year's export flow, which is likely to be the most chaotic ever as record production is funneled through ports that have failed to expand in tandem with grains output.

New regulations this season have also restricted the hours truckers can spend behind the wheel each day, slashing road haulage capacity.

The opening of a river port in the north of the country, likely by next year, will provide some relief for next season. Critical rail and road projects costing tens of billions of dollars, however, will take several years to build.

Exacerbating the risks this year, unions representing the country's dock workers could resume strikes after mid-March unless the government modifies plans to reform port regulations, which they say could cost jobs and cut wages.

Silveira said logistics woes were eroding Brazil's edge over the United States in terms of production costs. He expected the two countries' output to be "neck and neck" and it was not yet certain Brazil would claim the rank of top producer this year.

"But I hope so!," he said.

Trader's highlight

DJI - NEW YORK, Feb 27 (Reuters) - U.S. stocks rose on Wednesday, with major indexes posting their best daily gains since early January, as Federal Reserve Chairman Ben Bernanke remained steadfast in supporting the Fed's stimulus policy and data pointed to economic improvement.

In a second day before a congressional committee, Bernanke defended the Fed's buying of bonds to keep interest rates low to boost growth. The market's jump of more than 1 percent also came on better-than-expected data on business spending plans and the housing market.

Bernanke's remarks helped the market rebound from its worst decline since November and put the S&P 500 index back above 1,500, a closely watched level that has been technical support until recently. The Dow Jones industrial average closed at a level not seen since 2007 as it again pulled within striking distance of an all-time high.

Speaking before the House Financial Services Committee, Bernanke downplayed signs of internal divisions at the Fed, saying the policy of quantitative easing, or QE, has the support of a “significant majority” of top central bank officials.

Bernanke removed a headwind from markets arising from concerns the Fed's quantitative easing might end earlier than anticipated. Doubts about the Fed's intentions had broken a seven-week streak of gains by stocks.

"The Fed continues to encourage risk-taking in markets, which is a powerful tool that makes the danger not being long stocks, not in being too long," said Tom Mangan, a money manager at James Investment Research Inc in Xenia, Ohio.

The Dow Jones industrial average was up 176.32 points, or 1.27 percent, at 14,076.45. The Standard & Poor's 500 Index was up 19.07 points, or 1.27 percent, at 1,516.01. The Nasdaq Composite Index was up 32.61 points, or 1.04 percent, at 3,162.26.

The S&P turned very slightly higher on the week, recovering from the index's biggest daily drop since November on Monday. That drop came on concerns over Italy's election, as well as over sequestration - U.S. government budget cuts that will take effect starting on Friday if lawmakers fail to reach an agreement on spending and taxes.

The index had climbed 6.3 percent for the year before pulling back on concerns about Fed policy and inconclusive elections in Italy, which rekindled fears of a new euro zone debt crisis.

"While the rally remains intact and there are reasons to be long-term bullish here, there are also reasons to not be surprised if we get a correction," said Mangan, who helps oversee $3.7 billion.

Brent Crude Oil - Feb 27 (Reuters) - Brent crude oil futures for April delivery fell 84 cents to settle at $111.87 a barrel, as investors weighed expectations that the Federal Reserve's stimulus program will be maintained against the sixth straight weekly rise in U.S. crude oil stockpiles.

NYMEX - SINGAPORE, Feb 27 (Reuters) - U.S. crude futures edged towards $93 a barrel on Wednesday after Federal Reserve Chairman Ben Bernanke eased fears of an early retreat by the Fed from its economic stimulus, although worries about Italy's inconclusive election should cap gains.

CBOT Soybean - Soybean futures on the Chicago Board of Trade rose, halting a three-day slide, lifted by export demand for dwindling supplies of U.S. soybeans and worries about Brazilian harvest delays, traders said.

* USDA said private exporters reported sales of 120,000 tonnes of U.S. soybeans to unknown destinations for delivery in the current marketing year and another 120,000 tonnes to China for delivery in 2013/14. 

·         Concerns are growing over long delays in getting newly   harvested Brazilian soybeans through crowded ports, the head of the national soy producer association said on Tuesday.

·         Further support from strong cash markets and expectations   of no deliveries of soybeans, soymeal or corn on first noticeday for CBOT March futures on Thursday. Soyoil deliveries were   estimated at 1,000 to 4,000 contracts. 

 

·         Basis bids for soybeans shipped by barge to the U.S. Gulf Coast were steady to slightly lower early on Wednesday, but persistent export demand gave the market underlying support.

·         United Grain Corp locked out union workers at its Port of Vancouver grain export terminal in the U.S. Pacific Northwest after an investigation unearthed evidence that a union leader  sabotaged equipment there, a spokesman for the grain company said.

·         Soyoil ends higher despite spillover weakness from  Malaysian palm oil futures, which fell to a near six-week low.

 

·         Wall Street rallied for a second day as Federal Reserve Chairman Ben Bernanke reaffirmed his strong support for the Fed's stimulus efforts.

BMD CPO - KUALA LUMPUR, Feb 27 (Reuters) - Malaysian palm oil futures inched down on Wednesday to a near six-week low, stretching losses into a sixth straight session with investors remaining cautious that uncertain overseas markets could weigh on demand for the tropical oil.

Prices had crept up 0.7 percent by the midday break as traders retraced from liquidations earlier in the week, but dropped later to as low as 2,395 ringgit per tonne.

Market players are now watching Italy's 6.5 billion euro auction of new 5- and 10-year bonds which kicked off at 1000 GMT for further trading cues.

"There was some retracement in the market earlier but it could not sustain itself because there was no fresh news at those levels, so prices have come under more selling pressure," said a trader with a local commodities brokerage in Malaysia.

The benchmark May contract  on the Bursa Malaysia Derivatives Exchange fell 0.4 percent to 2,410 ringgit ($777) per tonne by the day's close. Prices traded in a tight range between 2,395 and 2,443 ringgit.

Total traded volume stood at 34,090 lots of 25 tonnes each, higher than the usual 25,000 lots.

Palm oil production in Malaysia, the world's No.2 producer, has slowed from its seasonal peak in September. At the same time stronger-then-expected exports of Malaysian palm oil products -- the cheapest in the world -- are widely expected to help ease inventory levels that are still high.

"With a rising export trend and falling production rate, we see a good chance the stockpile levels in February could come down," said Phillip Futures analyst Ker Chung Yang in Singapore. He expects end-stocks in February to fall to 2.2 million tonnes from 2.58 million now.

But the uncertainty in Europe has hampered any sustained rally in palm, as investors fret over political gridlock in Italy which they fear could reignite the euro zone financial crisis and weaken global markets.

"The inconclusive Italy scenario is worrying for the market, not only for palm oil but the commodities and equities markets as well. It's a timely reminder for global investors that the European crisis is not over yet," added Ker.

In other markets, oil traded near $113 a barrel, edging up from a one-month low, as world powers ended two days of talks with Iran over its nuclear work with no sign of a breakthrough.

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

Regional Equties - BANGKOK, Feb 27 (Reuters) - Indonesia's benchmark stock index rallied to a record closing high on Wednesday thanks to solid gains in large market caps such as PT Telekomunikasi Indonesia  and as upbeat Standard & Poor's report lifted appetite for banking shares.

Jakarta's Composite Index  rose 1.14 percent, the biggest gain in more than five weeks, to 4,716.42, above Monday's record close of 4,696.11. Shares in Telkom Indonesia, the most actively traded by turnover, jumped 3.1 percent.

Banking shares were in favour, led by a 2.9 percent gain in Bank Rakyat Indonesia, with Standard & Poor's expecting Indonesian banks to maintain strong profitability, high loan growth, and sound capitalisation this year.

Others in the region came off day's highs, with late selling sending Thai stocks to two-week lows. The Philippines  edged down 0.22 percent to 6,616.27, extending its loss for a second session after Monday's record close of 6,721.33.

The region saw mixed foreign flows on the day. According to traders, Indonesia saw inflows of 813 billion rupiah ($83.75 million) on the day while the Malaysian bourse reported foreign buying of 125 million ringgit ($40.30 million).

The Thai stock market saw foreign selling of 204 million baht ($6.84 million), stock exchange data showed.

Chang Chiou Yi, a regional strategist at CIMB-GK Research, has an 'overweight' rating on Indonesia and Thailand.

"Both markets have embarked on an investment upcycle. Stable politics have helped business decision and there remain structural positives such as the rising income base, property demand and upcountry spending demand," Chang said.

RTRS - Palm oil demand to rise on competitive price- Oil World

HAMBURG, Feb 26 (Reuters) - Palm oil’s competitive price against other vegetable oils means palm is likely to win more sales in coming months in markets including India, Europe, China and even the United States, Oil World said on Tuesday.

“The preconditions for the demand of palm oil and its sister product palmkernel oil are unusually favourable for the remainder of this season, given waning competition from other vegetable oils,” Hamburg-based oilseeds analysts Oil World said.

Malaysian fob export prices for refined, bleached and deodorised palm oil were around $270 a tonne cheaper than Argentine soyoil export prices in the past week, Oil World said.

This is down from $330 in December but still makes palm oil attractive compared with seed-based edible oils such as soyoil, rapeseed oil and sunflower oil, it said.

Global October 2012/September 2013 palm oil imports are likely to rise to 42.7 million tonnes from 40.2 million tonnes in the same period a year previously, Oil World estimates.

Among major buyers is likely to be India, which may raise palm and palmkernel oil demand this season by 0.7 million tonnes, Oil World said.

The European Union is likely to cut seed oil consumption by 0.3-0.4 million tonnes this season and raise consumption of palm oil and palmkernel oil by roughly 0.5 million tonnes, it said.

“In China, the consumption of palm oil and palmkernel oil may show a relatively moderate increase of 0.3-0.4 million tonnes this season given the country’s strong focus on oilseed imports and crushings to satisfy its (animal feed) protein requirements,” it said.

The United States may also raise palm oil imports by 0.1 million tonnes, especially for biodiesel, but this may depend on U.S. rules about sustainable palm oil production, it said.

RTRS - EU to raise soymeal imports in coming months- Oil World

HAMBURG, Feb 26 (Reuters) - The European Union is likely to raise soymeal imports in coming months as animal feed makers hope the new South American soybean crops in early 2013 will depress prices, Hamburg-based oilseeds analysts Oil World said on Tuesday.

The EU will import 17.50 million tonnes of soymeal between January and September, up from 16.21 million in the same period a year ago, Oil World estimates.

EU animal feed producers cut soymeal imports last year in the face of high prices following drought damage to soybean harvests in several regions and the depressed state of Europe’s livestock farming, Oil World said.

EU feed makers have low soymeal supply cover for the 2013 summer months and are expected to start raising imports from April as supplies from large harvests in Argentina and Brazil come on to the global market, it said.

Yet the large number of consumers waiting to buy low price soymeal as South American supplies enter the market may push prices up, Oil World warned.

Trader's highlight

DJI - NEW YORK, Feb 26 (Reuters) - U.S. stocks rebounded from their worst decline since November on Tuesday after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus and sales of new homes hit a 4 1/2-year high.

The S&P 500 had climbed 6 percent for the year and came within reach of all-time highs before the minutes from the Fed's January meeting were released last Wednesday. Since then, the benchmark S&P 500 has fallen 1 percent.

Bernanke, in testimony on Tuesday before the Senate Banking Committee, strongly defended the Fed's bond-buying stimulus program and quieted rumblings that the central bank may pull back from its stimulative policy measures, which were sparked by the release of the Fed minutes last week.

Bernanke's comments helped ease investors' concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority, posing the threat of prolonged instability and financial crisis in Europe, and sending the S&P 500 to its worst decline since Nov. 7 in Monday's session.

Bernanke "certainly said everything the market needed to feel in order to get comfortable again," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"The fear is we were going to see a rollover, and the first shot over the bow was what we saw out of Italy yesterday with the elections," Kenny said. "When it came to U.S. markets, we saw some of that bleeding stop because our focus shifted from the Italian political circus to Ben Bernanke."

Economic reports that showed strength in housing and consumer confidence also supported stocks. U.S. home prices rose more than expected in December, according to the S&P/Case-Shiller index. Consumer confidence rebounded in February, jumping more than expected, and new-home sales rose to their highest in 4-1/2 years in January.

However, the central bank chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.

The Dow Jones industrial average gained 115.96 points, or 0.84 percent, to 13,900.13 at the close. The Standard & Poor's 500 Index rose 9.09 points, or 0.61 percent, to 1,496.94. The Nasdaq Composite Index  advanced 13.40 points, or 0.43 percent, to close at 3,129.65.

Despite the bounce, the S&P 500 was unable to move back above 1,500, a closely watched level that was technical support until recently, but could now serve as a resistance point.

The CBOE Volatility Index  or the VIX, a barometer of investor anxiety, dropped 11.2 percent, a day after surging 34 percent, its biggest percentage jump since Aug. 18, 2011.

The uncertainty caused by the Italian elections continued to weigh on stocks in Europe. The FTSEurofirst-300 index of top European shares closed down 1.4 percent. The benchmark Italian index tumbled 4.9 percent.

Brent Crude Oil - NEW YORK, Feb 26 (Reuters) - Brent crude oil futures fell $1.73, or 1.51 percent, to settle at $112.71 a barrel on Tuesday as inconclusive Italian election results revived investor concerns about instability in the euro zone and threatened the outlook for fuel demand.

CBOT Soybean - Soybean futures on the Chicago Board of Trade fell for a third day on pressure from the expanding Brazilian soybean harvest and market participants exiting long soybean/short corn spreads, traders said.

* Unconfirmed talk that China may sell 1 million to 2.5 million tonnes soybeans out of reserves to ease supplies until Brazilian shipments arrive.

 

·         Soymeal futures closed higher while soyoil sank for a  fifth day, with March soyoil briefly dropping below 49  cents per lb, its lowest level since Dec. 31.

 

·         The European Union is likely to raise soymeal imports in  coming months as supplies from large harvests in Argentina and  Brazil come on to the global market - analysts Oil World.

 

·         Palm oil’s competitive price against other vegetable oils   means palm is likely to win more sales in coming months in  markets including India, Europe, China and even the United  States - Oil World. 

 

·         Germany’s 2013 rapeseed crop is likely to rise to 5.3   million tonnes from 5.0 million tonnes in 2012, the German Farm Cooperatives Association said.

BMD CPO - KUALA LUMPUR, Feb 26 (Reuters) - Malaysian palm oil futures slipped on Tuesday to their lowest in more than five weeks, as weak overseas vegetable oil markets kept investors on edge, although upbeat export data and slowing production helped limit losses.

China and U.S. soy markets, which are tracked by palm, remained weak after suffering steep falls on Monday and as better weather in the U.S. Midwest and South America improved the prospects for supply.

But stronger-than-expected exports in the first 25 days of February, buoyed by increased shipments of Malaysian palm oil products to Europe and India, kept prices from tumbling further.

"The market is a little oversold at the current juncture after a slew of negative news from pundits and analysts," said a trader with a local commodities brokerage in Malaysia.

"The external market 'grains' are a major contributor to the current low prices. We anticipate demand to pick up very soon, and prices to recover once the selling pressure subside."

The USDA outlook numbers, with projections of a record soybean crop at 3.4 billion bushels, are bearish, he added. "This certainly spells trouble for palm oil in the second quarter of 2013."

The benchmark May contract on the Bursa Malaysia Derivatives Exchange had dipped to 2,411 ringgit per tonne, the lowest since Jan. 21, before closing at 2,417 ringgit ($779), a fall of 2.2 percent.

Total traded volume stood at 35,620 lots of 25 tonnes each, higher than the average 25,000 lots.

Investors are pinning hopes on healthy exports alongside seasonally slowing production to ease the current stockpile of 2.58 million tonnes in Malaysia, the world's No.2 producer.

"At the end of the month we might see an 18 percent drop in production. And with this kind of exports, we will definitely see a drawdown in the stocks," said a trader who deals with a foreign commodities brokerage.

Oil fell below $114 a barrel on Tuesday, hit by doubts over demand growth as a potential political vacuum in Italy revived concern over instability in the debt-plagued euro zone. 

In competing vegetable oil markets, the U.S. soyoil for May delivery fell 1.3 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange slipped 1.5 percent.

Regional Equities - BANGKOK, Feb 26 (Reuters) - Southeast Asian stock markets fell on Tuesday on profit-booking in recent gainers such as PT Bank Mandiri Persero Tbk  and Ayala Land Inc after Italy's inconclusive election fuelled concerns of a resurgent euro zone debt crisis.

Jakarta's Composite Index  lost 0.7 percent to 4,663.03 with Bank Mandiri fell 0.5 percent after Monday's 2.1 percent gain on strong results.

The Philippines  slid 1.4 percent to 6,630.67 as large cap Ayala Land declined 3.5 percent.

Indonesia and the Philippines both hit record closes on Monday, making them among overbought markets, with the 14-day relative strength index ending at 72.4 and 70.2, respectively, on Tuesday. The level of 70 or above indicates a market is overbought.

Singapore's Straits Times Index fell 1.1 percent to a one-month low of 3,254.26 on heavy volume of 3.3 times a monthly average, led by a 6.6 percent drop in shares of Global Logistic Properties Ltd .

The Ho Chi Minh Stock Exchange's VN Index dropped 3.9 percent, its biggest one day loss since August.

Malaysia's main index eased 0.2 percent to 1,624.18, with retail and domestic institution selling shares worth $14.8 million and $26.7 million, respectively, countering foreign buying on the day, stock exchange data showed.

Thai SET index  finished down 0.6 percent at 1,530.32. Top energy firm PTT Pcl  fell 1.4 percent after it reported a weaker-than-expected net profit for the fourth quarter.

More than 70 stocks were trading at high valuations, about 40 times price to earnings multiple, Thai stock exchange president Charamporn Jotikasthira said.