Bloomberg - Volatility Rises Most in Malaysia as Flows Imperiled

Bloomberg - Currency swings are rising in Malaysia at the world’s fastest pace as concern mounts that the ruling coalition will lose its 55-year grip on power after attracting more foreign capital than any other emerging market except Mexico.

Full article :

http://www.bloomberg.com/news/2013-03-08/volatility-rises-most-in-malaysia-as-flows-imperiled-currencies.html

Bloomberg - Soybeans Advance as U.S. Export Sales Jump, Draining Inventories

Bloomberg - Soybeans climbed after export sales from the U.S. jumped to the highest level since January before a government report that may show global supplies will decline.

The contract for delivery in May rose as much as 0.4 percent to $14.7875 a bushel on the Chicago Board of Trade and was at $14.7725 by 11:03 a.m. in Singapore, on a trading volume that was 55 percent less than the 100-day average for that time of day. Futures are set for a 2.3 percent advance this week.

Full article :

http://www.bloomberg.com/news/2013-03-08/soybeans-advance-as-u-s-export-sales-jump-draining-inventories.html

RTRS - PREVIEW-Malaysia Feb palm stocks head for 6-mth low on seasonal output fall

KUALA LUMPUR, March 7 (Reuters) - An decline of nearly a fifth in output probably eased Malaysian palm oil stocks in February to a six-month low, a Reuters survey of five plantation companies showed on Thursday.

Inventory could have fallen 6.1 percent in February, the steepest decline since January 2011, to 2.42 million tonnes, which would mark the lowest level seen since last September.

Production in the world's second-largest producer may have fallen to 1.31 million tonnes, a decline of nearly 18.1 percent from 1.6 million the previous month, crimped by seasonal factors.

Exports of the tropical oil probably eased 14.4 percent from a month ago to 1.39 million tonnes in February, due to a shorter month and a fall in demand for refined palm products.

Imports of crude palm oil from top producer Indonesia are likely to have grown to 75,000 tonnes from 54,781 tonnes the month before, according to the poll.

FACTORS TO WATCH:

A lower inventory level may provide some support for the benchmark third-month contract on the Bursa Malaysia Derivatives Exchange which has lost more than 6 percent in February.

Forecasts from six speakers at the Bursa Malaysia palm oil conference in the Malaysian capital showed prices could range from 1,800 to 3,200 ringgit this year, with the main focus on top analysts James Fry and Dorab Mistry.

Mistry was neutral on near-term prices, saying they should range between 2,300 and 2,500 ringgit till the end of April but might fall after that, while a more bullish Fry expected prices to climb to 2,625 ringgit by mid-year on biodiesel demand.

Market participants are watching closely developments in a standoff between the Malaysian army and an armed Filipino group in Sabah, which could possibly disrupt production in the state that contributes almost one-third of the country's output.

Traders also expect Malaysia to export less crude palm oil in March after the world's No.2 palm oil producer raised its export tax for the grade to 4.5 percent from zero.

Rival Indonesia, the world's top palm oil producer, will increase its export tax for the crude grade to 10.5 percent in March from 9 percent the previous month.

Edible oil stocks in China and India were expected to hit a record in February, but the world's top two edible oil importers may still buy more this year, as cheap cargoes and low import tariffs help meet growing food consumption and rein in food-driven inflation.

Trader's highlight

DJI - NEW YORK, March 7 (Reuters) - U.S. stocks closed modestly higher on Thursday, with the Dow ending at a record for a third straight day as jobless claims data pointed to a pick-up in the labor market's recovery a day before the closely watched payrolls report.

The Dow and the S&P 500 were both up for their fifth straight days as investors looked for opportunities to buy into the recent rally. However, caution ahead of the jobs report curbed gains and kept the S&P more than 1 percent below its record close.

"Today’s move is pretty tranquil. No one is going to take big positions ahead of tomorrow’s number, but the market is definitely in an uptrend," said Paul Zemsky, the New York-based head of asset allocation at ING Investment Management.

Growth-oriented sectors led the day's gains. The S&P financial index  added 0.7 percent and hit an intraday high. Shares of Dow component Bank of America rose 2.9 percent to $12.26 while JPMorgan Chase & Co added 1.2 percent to $50.63.

A strengthening economy and loose monetary policy by central banks around the world have pushed U.S. stocks higher this year. Investors have kept buying into the market since Tuesday's rally, but gains have been more subdued.

Worries remain as Washington debates the path of fiscal policy, the euro zone is not out of its crisis, and U.S. economic growth remains anemic.

However, the latest economic data was encouraging, as the number of Americans filing claims for unemployment benefits unexpectedly fell last week to a seasonally adjusted 340,000. It was the second straight week of declines.

Investors will stay focused on the labor market ahead of Friday's non-farm payrolls report, which is expected to show the U.S. economy added 160,000 jobs in February. While it has been a soft spot in the economic recovery, the labor market is seen as healing slowly.

"If payrolls disappoint, we'll have a pullback, but that won't be enough to derail the rally," said Zemsky, who helps oversee $170 billion. "If the report is strong, markets still have room to grow."

The Dow Jones industrial average rose 33.25 points, or 0.23 percent, to 14,329.49, a record closing high. The Standard & Poor's 500 Index added 2.80 points, or 0.18 percent, to 1,544.26. The Nasdaq Composite Index gained 9.72 points, or 0.30 percent, to end at 3,232.09.

Brent Crude Oil - NEW YORK, March 7 (Reuters) - Brent crude futures edged up on Thursday in choppy trading as a restarted North Sea pipeline curbed gains, while supportive jobless claims data and a weaker dollar pushed U.S. crude up more than 1 percent.

Brent April crude rose 9 cents, or 0.08 percent, to settle at $111.15 a barrel, having traded from $110.41 to $111.40.

CBOT Soybean - Soybean futures on the Chicago Board of Trade ended higher Thursday on relentless export demand for tightening supplies of old-crop U.S. soybeans, traders said.

* The thinly traded March soybean contract, which is in delivery and expires next week, gained against most-active May, bolstered by talk of fresh export demand for U.S. soybeans out of the Pacific Northwest.

·         Basis bids for soybeans shipped by barge to the U.S. Gulf   were mixed on Thursday morning, firming on the spot market but  weakening for supplies delivered in April, traders said.

·         Brazil's crop supply agency Conab cut its forecast of the  country's 2012/13 soybean harvest to 82.1 million tonnes, still   a record but down from 83.4 million in February. 

·         Brazilian dock workers plan a 24-hour nationwide strike on   March 19, a move that will add to the backlog of trucks waiting   to unload soy supplies, because talks with the government over  its plan to privatize ports have yielded little progress.

·         Trade expects USDA on Friday to cut its forecasts of U.S.   and world soybean ending stocks. The average analyst estimate for U.S. soy ending stocks was 120 million bushels, down from 125 million in February. 

·         USDA reported export sales of U.S. soybeans in the latest week at 1.383 million tonnes (including 392,000 for 2012/13 and    990,600 for 2013/14), topping trade estimates for 900,000 to 1.25 million.

·         USDA reported weekly soymeal export sales at 119,300 tonnes, below trade estimates for 200,000 to 300,000 tonnes. USDA reported net cancellations of soyoil export sales totaling   19,700 tonnes, versus expectations for net sales of 5,000 to15,000 tonnes.

·         CBOT reported no deliveries against March soymeal, one  soybean delivery and 112 soyoil deliveries, with no strong stoppers.  

BMD CPO - KUALA LUMPUR, March 7 (Reuters) - Malaysian palm oil futures rose to a one-week high on Thursday, drawing support from expectations of a bullish industry report and a lower palm oil inventory level, although gains were curbed by investor caution.

Traders are looking ahead to Friday's U.S. Department of Agriculture (USDA) report, which is expected to trim its outlook for soybean supplies, according to a Reuters poll.

The Malaysian Palm Oil Board's report on the country's February inventory level due on Monday may also sway the market, with a Reuters survey of five plantation companies showing stocks may drop to a 6-month low on seasonal slowing output.

But investor caution remained after leading analysts presented differing price forecasts for the year at the biggest annual meeting on the edible oil, which ended on Wednesday.

"The palm market is still undecided on which direction to go yet. Now we're all looking at the soy side and the USDA data tomorrow," said a Singapore-based trader with a global commodities house.

"As you can see, the market is still under pressure as traders don't dare to put much hope into it yet," the trader added, referring to the slightly bullish USDA report.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange closed up 1.5 percent at 2,435 ringgit ($785) per tonne, slightly below its intraday high at 2,442 ringgit, a level unseen since Feb. 27.

Total traded volume stood at 28,800 lots of 25 tonnes each, slightly higher than the usual 25,000 lots.

Price forecasts from six speakers at the Bursa Malaysia palm oil conference in the Malaysian capital ranged from 1,800 to 3,200 ringgit, with the main focus on top analysts James Fry and Dorab Mistry.

Mistry was neutral on near-term prices, saying prices should range between 2,300 and 2,500 ringgit until the end of April but might fall after that, while a more bullish Fry expected prices to climb to 2,625 ringgit by mid-year on biodiesel demand.

In other markets, Brent crude futures steadied around $111 per barrel on Thursday as traders eyed central bank meetings and economic data this week to get a better picture on the prospects for oil demand in the world's top consumers.

In competing vegetable oil markets, U.S. soyoil for May delivery gained 0.1 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange was down 1 percent.

Regional Equities - BANGKOK, March 7 (Reuters) - Southeast Asian stock markets ended mostly weaker to flat on Thursday in line with weaknesses in Asia, with the Philippines retreating from an all-time high and Indonesia posting modest gains after Bank Indonesia left rate unchanged as expected.

Investors cashed in large caps such as Philippine Long Distance Telephone Co (PLDT) which fell 1.7 percent. The stock rallied early in the week on strong quarterly results.

Citi Research downgraded PLDT shares to 'sell' from 'buy' and cut their price target to 2,700 peso.

"PLDT's share price has run up owing to a combination of domestic liquidity inflows and hope that competition improves. We now find valuations to be expensive and profit momentum is likely falling short of prior targets," the broker said in a report dated March 6.

PLDT shares closed at 2,942 peso on Thursday.

The Philippines closed down 1.6 percent at 6,725.13 after hitting a record close of 6,835.21 on Wednesday. Malaysia ended nearly unchanged at 1,650.93 after a nearly 1 percent gain over the past two sessions.

Malaysia is Asia's worst performer in 2013 with a year-to-date loss of 2.3 percent. Domestic investors were net sellers of the market this year amid cautious views ahead of a national election expected in the first half of 2013.

Foreign investors bought Malaysian shares on Thursday, their fifth consecutive session for the month, with a net buying of $68.28 million, taking their net buying to around $320 million month to date.

Singapore edged up 0.2 percent at 3,298.54 and Thailand was up 0.1 percent at 1,560.98, hovering around a 19-year high.

Indonesia  gained 0.5 percent to 4,848.30, marking a record close for a second straight session, led by a 2.1 percent gain in PT Bank Mandiri Persero Tbk

Indonesia's central bank left its benchmark interest rate unchanged at a record low 5.75 percent, as expected, saying it expects price pressures to ease after inflation hit a 20-month high in February.

RTRS - Snowstorms and rains welcomed by drought-plagued U.S. farmers

CHICAGO, March 6 (Reuters) - Drought-relieving and crop-friendly snow fell on Tuesday from southern Minnesota and eastern Iowa into the Ohio River Valley, leaving a blanket of 5 to 10 inches of wet snow, an agricultural meteorologist said on Wednesday.

Additional moisture is expected later in the week that will provide more relief to bone dry soils following the worst drought in the United States in more than 50 years.

"A storm this weekend will bring rains to much of the central and southeastern Plains before moving into the Midwest and Delta," said Joel Widenor, a meteorologist for Commodity Weather Group (CWG).

The weekend storm will provide needed relief to Nebraska, northern Colorado, northern and eastern Kansas, Iowa and Missouri, he said.

"The southwestern third of the Plains will receive less moisture," Widenor said. Early fieldwork will be interrupted mainly in the Delta, where one-half to 1.5 inches of rain is likely, he said.

Winter wheat conditions improved across much of the U.S. Plains last week following heavy snow that provided a much-needed boost to soil moisture in areas that have been suffering from drought, according to the U.S. Department of Agriculture's National Agricultural Statistics Service (NASS).

Meteorologists said the significant winter snow and rain had so far eliminated the drought conditions in an area roughly from Illinois eastward.

But more moisture will be needed in April and May to nurse the winter wheat crop to maturity and aid the soon-to-be-seeded corn and soybean crops, meteorologists and crop experts have said.

Don Keeney, a meteorologist for MDA Earthsat Weather, said that as of early February, about 4 inches (10 cm) to 6 inches (15 cm) of rain was needed in Kansas, the top producer of hard red winter wheat, to bring the state out of drought status.

Up to 8 inches (20 cm) was needed in a pocket of severe dryness in northeastern Kansas, a big corn- and grain sorghum-growing area. Similar amounts were needed in Nebraska, Texas, Oklahoma, Iowa and Missouri and northern Illinois and Indiana.

RTRS - Strong oilseed supply to weigh on palm in 2013; biodiesel demand eyed

KUALA LUMPUR, March 6 (Reuters) - Palm oil prices could drop further this year due to swelling supplies of competing commodities such as oilseeds, while high stocks in the world's top consumers and producers of the tropical oil will also drag.

Prices of palm oil plummeted 23 percent last year largely on a stockbuild in major producers Indonesia and Malaysia, and traders and analysts at a conference in Kuala Lumpur said they could fall further when global oilseed supply kicks into high gear later this year.

"In 2013 post-September, we see big supplies of soybeans, sunflower seeds and even of palm oil, which will be entering a new high cycle. We have also begun the oil year with the heaviest carry-over stocks in history," leading industry analyst Dorab Mistry said on Wednesday at the meeting.

Indonesia, the world's top palm oil producer, does not publish official data on inventory levels, but they were estimated at 5 million tonnes in January, while No. 2 producer Malaysia started 2013 with record stocks of 2.63 million tonnes.

"Therefore the outlook further forward, given normal weather, is bearish," continued Mistry, who is also the director of Indian conglomerate Godrej International Ltd.

Conference attendees were also focusing on inventory in top buyers India and China, which rose to record levels in February as traders stocked up ahead of changes in policy by their respective governments. 

Mistry said prices should remain in a 2,300-2,500 ringgit ($740-806) range until end-April, warning that trading may be more volatile due to a looming election in Malaysia. Prices FCPOc3 stood at around 2,400 ringgit on Wednesday.

Palm oil's geopolitical risk was highlighted during the industry meeting, which coincided with a prolonged standoff between the Malaysian military and an armed Filipino group on Borneo island that has forced several refineries there to slow operations.

Improving soybean output from South America, estimated to grow more than 20 percent this year, may push down palm oil prices to 2,200 ringgit after mid-April, Mistry added. A higher soybean supply for crushing into vegetable oil could shift demand away from rival palm oil.

While prices may slump further on expanding palm oil output in July-August, Mistry did not foresee prices falling below 1,800 ringgit unless Brent crude oil drops under $80 per barrel from around $112 on Wednesday

But food and energy demand for vegetable oil should remain supported by low prices, especially after the U.S. Congress passed a blending tax credit for biodiesel in January.

"I am estimating world food demand to grow by 3.5 million tonnes, mainly as a result of lower prices," said Mistry, noting that biodiesel demand worldwide could expand by about 1 million tonnes this year.

Another top analyst, James Fry, posted a more bullish view on biodiesel appetite, saying record high stocks that narrowed Brent crude's premium to palm oil have encouraged much greater use of the edible oil as fuel in local and overseas markets.

"If I were Petronas or Pertamina today, I would be rushing to buy local CPO (crude palm oil) to upgrade into biodiesel for blending with diesel, so as to hold down the costs of supplying motorists with their diesel fuel," said Fry, adding that the higher demand would help stocks decline and push prices to 2,625 ringgit by mid-year.

Analysts, traders and industry officials surveyed by Reuters at the conference saw average palm oil prices this year declining almost 18 percent to 2,420 ringgit from last year's 2,958 ringgit. 

TAXING ISSUES

Tax changes in major producers and consumers that could add more uncertainty to the palm market were also a hot topic at the conference this year.

"Another big unknown is the way Malaysian export taxes will affect Europe's CPO premium over Brent," said Fry, who is the chairman of commodities consultancy LMC International.

Malaysia in October approved a plan to cut crude palm oil export taxes and is setting the tariff on a monthly basis, as it tries to claw back market share from rival Indonesia.

The export tax for March rose to 4.5 percent from zero percent in January and February.

Analysts were also touting a possible hike in the Indian import tax aimed at curbing the country's edible oil purchases that have pushed stocks to a record-high.

"I expect that by August to September 2013, the import duty on unrefined oil will be further hiked to 20 percent and to 27.5 percent on refined oil," Mistry said.

The country currently imposes a 2.5 percent import duty on crude edible oil and 7.5 percent on refined products.

Trader's highlight

DJI - NEW YORK, March 6 (Reuters) - Wall Street mostly edged higher on Wednesday, with the Dow hitting another record, helped by a private payroll survey that bodes well for the monthly jobs report due at the week's end.

Improved labor market data from the private sector sparked the positive tone and boosted confidence for the U.S. government's payroll report on Friday. The data from payrolls processor ADP followed similarly strong reads on housing and the services sector, reports that have contributed to lifting the Dow to historic levels and pushing up the S&P 500 to just 1.5 percent below its own record close.

Continued support from the Federal Reserve and equity valuations that are considered attractive compared with other asset classes have also pushed shares higher, and while some continue to call for a pullback at recent levels, those factors staying in place could keep the positive momentum intact.

"When you reach a record high, it triggers introspection about whether we're overvalued, but I don't expect a pullback because the reasons we've climbed are still in place," said David Joy, chief market strategist at Ameriprise Financial in Boston. "The market has the opportunity to move higher until there's evidence those factors will die out."

Relative to junk bonds, the earnings yield on the S&P 500 - the inverse of the P/E ratio and used for valuation comparisons with bonds - is around 7.5 percent - above the yield to maturity on junk bonds, which is around 6.5 percent, data showed, indicating that stocks have a better value than the riskiest corporate bonds.

The Dow Jones industrial average rose 42.47 points, or 0.30 percent, to 14,296.24, another record closing high. The Standard & Poor's 500 Index edged up 1.67 points, or 0.11 percent, to 1,541.46. The Nasdaq Composite Index slipped 1.77 points, or 0.05 percent, to close at 3,222.36.

The positive catalyst for Wednesday's advance came from signs of improvement on the jobs front. The slowly healing labor market has been one of the weaker spots of the recovery, but data on Wednesday showed private-sector hiring was surprisingly strong in February as companies added 198,000 employees. 

It was an early look at the labor market two days ahead of the U.S. government's closely watched non-farm payrolls report on Friday, which is expected to show the economy created 160,000 jobs last month while the unemployment rate held at 7.9 percent.

"If payrolls come in under 150,000, that could knock the market off stride, but if we got anything north of 175,000, that would give another boost to the market in the short term," said Joy, who helps oversee $675 billion.

Brent Crude Oil - NEW YORK, March 6 (Reuters) - Brent crude futures settled 55 cents lower at $111.06 per barrel on Wednesday after U.S. government data showed domestic crude inventories rose much more than forecast. 

CBOT Soybean - Chicago Board of Trade soybean futures were lower on profit-taking and unwinding of bull spreads ahead of the release on Friday of USDA's March supply/demand and crop production reports, traders said.

* Pressure also stemmed from improving crop weather in the U.S. and in Argentina and on a firm dollar, they said.

·         Position-squaring was beginning to surface ahead of the   release at 11:00 a.m. CST (1700 GMT) on Friday of the U.S.  Department of Agriculture's March supply/demand and world crop   production reports. 

·         An average of analysts' estimates pegged the 2012/13 U.S.  ending soybean stocks at 120 million bushels, below the USDA's  forecast in February for 125 million. 

·         The analyst average for global ending soybean stocks for  2012/13 was 59.448 million tonnes, below the USDA February  outlook for 60.120 million.

·         An average of analysts' estimates for Brazil's 2012/13 soybean production was 83.145 million tonnes, below the USDA  February forecast for 83.5 million. The analyst average for   Argentine soy production was 50.871 million tonnes, below the  USDA February outlook for 53.0 million. 

·         Crop forecaster Lanworth on Wednesday trimmed is forecast  for Brazilian soy production to 80.8 million tonnes from its  previous outlook for 81.0 million and lowered its outlook for Argentine soy production to 49.4 million from its previous forecast for 49.6 million.   

·         Drought-relieving and crop-friendly snow fell on Tuesday  from southern Minnesota and eastern Iowa into the Ohio River  Valley, leaving a blanket of 5 to 10 inches of wet snow, an agricultural meteorologist said on Wednesday. Additional moisture is expected in some areas by the weekend.

·         Minimal showers are seen for Argentina until the weekend,   according to Commodity Weather Group (CWG). "The European model  is then much wetter than the American model. Our forecast leans  toward the wetter outlook and has increased coverage to more  than half the soybean belt," said CWG's meteorologist Joel  Widenor. "This could help to limit stress to less than 20 percent for late soybean development," he said.

·         Soybean spot basis bids were steady to sharply higher at processors, elevators and river terminals around the U.S.    Midwest on Wednesday as farmer offerings remained seasonally   light and demand from end-users remained strong, dealers said.

BMD CPO - KUALA LUMPUR, March 6 (Reuters) - Malaysian palm oil futures ended flat in thin volume on Wednesday, with investors digesting price forecasts by top analysts at the industry's biggest annual gathering to determine their strategies.

The Bursa Malaysia palm oil conference in the Malaysian capital saw main speakers James Fry, the chairman of commodities consultancy LMC International, and Dorab Mistry, head of trading at India's leading speciality chemicals group Godrej Industries present price outlooks for palm oil.

"We should see a short-term bottom at 2,300 ringgit. Most market players are still digesting the price forecasts," said a dealer with a foreign commodities brokerage in Malaysia, referring to Mistry's forecast that prices should range between 2,300 and 2,500 ringgit until the end of April.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange closed flat at 2,400 ringgit ($774) per tonne. Prices were caught in a 2,389-2,413 ringgit range.

Total traded volume was thin, at 20,945 lots of 25 tonnes each, below the average 25,000 lots.

Mistry posted a bearish price outlook on improving global supplies of oilseeds and palm oil in the later part of the year, saying prices could fall to 2,200 ringgit or even lower after mid-April. 

Fry, who spoke earlier just before the market's midday close, said palm oil's low prices had encouraged its greater use in biofuel, and that could help ease record stocks. He also said prices may climb to 2,625 ringgit by mid-year. 

High stocks in Malaysia, the world's No.2 palm oil producer, have caused prices to tumble more than 20 percent in 2012.

A Reuters poll of traders, analysts and government officials at the palm oil forum showed that prices could fall an average of 18.2 percent to 2,420 ringgit per tonne this year as stockpiles continue to weigh.

European imports of palm oil are heading for record highs of 6.4 million tonnes between Oct. 2012 and Sept. 2013, Hamburg-based analyst Oil World said on Tuesday, taking up the slack from lower supplies of soyoil and sunflower oil.

In other markets, Brent futures rose towards $112 a barrel on Wednesday, tracking a rally in equity markets and expectations of a revival in demand growth following positive economic data from the United States and China.

In competing vegetable oil markets, U.S. soyoil for May delivery was almost flat 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 6 (Reuters) - Southeast Asian stocks rose on Wednesday as a record close on Wall Street lifted appetite for riskier assets and gains in large caps such as PT Telekomunikasi Indonesia led Indonesia to all-time highs.

Indonesia's Jakarta Composite Index snapped two days of losses to close at 4,824.68, above its record close of 4,811.61 hit on March 1.

Investors bought large-caps such as PT Telekomunikasi Indonesia, which jumped almost 6 percent. In a statement released after market hours, the company said its 2012 net income rose 17.2 percent, due to strong revenue growth.

The Philippine Composite Index climbed 1.8 percent to 6,835.21, its new all-time closing high, with conglomerate Alliance Global Group Inc up nearly 5 percent.

It is now Asia's best performing bourse with a year-to-date gain of 17.6 percent.

In Bangkok, the main SET index was up 0.65 percent at 1,559.35, the highest close since January 1994. However, turnover was relatively weak, falling to 68 percent from a monthly average.

The MSCI's broadest index of Asia-Pacific shares outside Japan gained nearly 1 percent while the MSCI's index of Southeast Asia was up 1.2 percent.

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.