Wednesday, October 24, 2012

20121024 0956 Soy Oil & Palm Oil Related News.

Sime Sees Palm Rally as Mistry Says Worst Not Over: Commodities (Bloomberg)
The six-month bear market in palm may be ending as declining output in Malaysia curbs a record glut, with Sime Darby (SIME) Bhd., the largest producer, forecasting a rally in the world’s most-used cooking oil. Reserves will diminish as exports accelerate, said Franki Anthony Dass, an executive vice president at Sime Darby Plantation Sdn. Futures will rally 9 percent to 2,775 ringgit ($909) a metric ton in Kuala Lumpur by the end of the quarter, based on the median of 13 analyst and trader estimates compiled by Bloomberg. Prices may go as high as 3,100 ringgit by the end of the first half, Dass said in an interview.
Palm, used in everything from biofuels to candy to noodles, slumped to a three-year low this month as Malaysian inventories reached a record, spurring the government to cut export taxes to clear the glut. Dorab Mistry, who has traded the oil for 35 years and correctly forecast previous slumps, said that won’t be enough and prices have yet to bottom. Analysts expect Felda Global Ventures Holdings Bhd. (FGV), the third-largest palm-plantation operator, to report a 21 percent increase in profit next year. “The drop was a lot more excessive than was warranted,” said Abah Ofon, an agricultural analyst at Standard Chartered Plc in Singapore, predicting prices as high as 3,250 ringgit this quarter. “We’re going to see a drop in output and seasonally we’re going to see an uptake in demand,” said Ofon, who correctly forecast in November that prices would rally.

Crops Wilting
Palm retreated 20 percent to 2,544 ringgit on the Malaysia Derivatives Exchange this year, slumping as low as 2,230 ringgit on Oct. 3. That contrasts with record corn and soybean prices as the worst U.S. drought since 1956 wilted crops. The Standard & Poor’s GSCI Agricultural Index of eight commodities gained 13 percent since the start of January as the MSCI All-Country World Index of equities rose 11 percent. Treasuries returned 1.5 percent, a Bank of America Corp. index shows. Global consumption will rise 5.3 percent to 51.7 million tons in the 2013 marketing year, driving stockpiles relative to demand to a four-year low, the U.S. Department of Agriculture estimates. Reserves will be equal to 11 percent of demand at the end of the period, a drop of about 1 percentage point, according to the USDA, whose estimates include several national years.
The commodity is extracted from the fruit of the oil palm grown in tropical regions. Indonesia and Malaysia account for 87 percent of global supply. Malaysian output reached a record 2 million tons in September, taking inventories to 2.48 million tons, industry data show. Output peaked in October last year, then fell 38 percent in the following four months. Prices have risen every fourth quarter in all but one of the past six years.

Duty Free
The government said Oct. 12 that export taxes will drop to 4.5 percent to 8.5 percent from Jan. 1, down from 23 percent, and a quota on duty-free shipments would end. India, the biggest importer, may buy as much as 50 percent of its supply from Malaysia after the change, from 20 percent now, according to B.V. Mehta, the executive director of the Mumbai-based Solvent Extractors’ Association, an industry group. The tax change will reduce reserves, Sime Darby’s Dass said Oct. 19 in Subang Jaya, outside Kuala Lumpur. Higher demand from India and steady consumption in Europe and China will boost shipments, said Dass, who’s been in the industry for 30 years and oversaw 2.45 million tons of production last year.

Global Economy
Slowing global economic growth may curb demand and limit the rally. The 17-nation euro area will contract 0.5 percent this quarter and not expand again until the third quarter, the median of as many as 25 economist estimates compiled by Bloomberg shows. The 27-nation European Union accounted for 14 percent of imports last year, according to USDA data. China, the second-biggest buyer, has slowed for seven straight quarters. Prices plunged 44 percent in 2008 as the global economy endured its deepest recession since World War II. The world is “awfully close” to another slump, Bank of Israel GovernorStanley Fischer said in a Bloomberg Television interview broadcast Oct. 15. The International Monetary Fund cut its 2012 global growth forecast to 3.3 percent on Oct. 9, compared with a July prediction of 3.5 percent.
The economy doesn’t “look bullish” for palm, Mistry, a director at Godrej International Ltd., told a conference in Kuala Lumpur on Oct. 16. Malaysian stockpiles may exceed 3 million tons by Jan. 1 and futures may drop to 2,200 ringgit within six weeks, he said. Mistry became known as Mr. Titanic after he compared the market in 1998 to the ill-fated liner.

Southeast Asia
Indicators of an El Nino, caused by a warming of the Pacific Ocean that can parch Southeast Asia, remain neutral after being close to thresholds for the weather pattern in recent months, Australia’s Bureau of Meteorology said yesterday. Output dropped 8.3 percent in 1998 because of an El Nino event, data from the Malaysian Palm Oil Board show. Demand for palm may be boosted by curbs in supplies of soybeans and sunflowers, according to Thomas Mielke, the executive director of Oil World, a Hamburg-based research company. Global stockpiles of soybean oil, the most-consumed after palm, have started falling toward the smallest since 1994 because of the U.S. drought, USDA data show. Total inventories of palm, soybean, rapeseed and sunflower oils will decline to about 8.2 percent of consumption this year, the lowest since 1977, according to data compiled by Bloomberg using USDA estimates.

Soybeans Rally
Soybeans advanced 27 percent on the Chicago Board of Trade this year, reaching a record $17.89 a bushel in September, and soymeal surged 49 percent. While soybean oil retreated 1.9 percent, its premium to palm widened to as much as $379 a ton this month, the most since 2008. China’s imports of palm may rise 5.3 percent to 6 million tons in 2013, according to Desmond Ng, the Malaysian Palm Oil Council’s regional manager for China. The Asian nation is consuming about nine times more than a generation ago, leading a fourfold gain in global demand, the USDA estimates. Felda’s profit will increase to 1.14 billion ringgit next year from 943.2 million ringgit, according to the mean of 18 analysts’ estimates compiled by Bloomberg. The Kuala Lumpur- based company raised $3.3 billion in June in what was the year’s biggest initial public offering since Facebook Inc. Its shares have fallen 12 percent since the end of June. All producers are profitable with prices at 2,200 ringgit or more, Mistry said.
“The supply situation for oilseeds is very tight historically,” said Erin Fitzpatrick, an analyst at Rabobank International in London. “That is going to be supportive for palm oil.”

Pro Farmer: After The Bell Soybean Recap  (CME)
Soybean futures faced heavy pressure in early trade, but the market improved around midday and extended gains into the close to settle steady to 6 3/4 cents higher through the September contract. Far deferred months closed 2 cents lower. Early in the session, soybean futures faced heavy profit-taking pressure due to strong gains in the U.S. dollar index and sharp losses in the stock market and crude oil futures.

Soybean Complex Market Recap (CME)
November Soybeans finished up 6 3/4 at 1553 1/4, 1 3/4 off the high and 24 1/4 up from the low. January Soybeans closed up 6 1/2 at 1555 3/4. This was 24 1/2 up from the low and 1 1/4 off the high. December Soymeal closed up 5.2 at 476.2. This was 10.3 up from the low and 0.7 off the high. December Soybean Oil finished down 0.34 at 51.32, 0.7 off the high and 0.36 up from the low. November soybeans traded sharply lower in early trade today but managed to climb into positive territory and close on the highs of the day in impressive fashion. Soybean oil finished the day lower while meal finished the day higher. Futures were able to hold above yesterday's lows despite broad-based commodity liquidation throughout the day. Worse than expected corporate earnings also added to the negative tone as stocks traded down sharply and the US Dollar rose. Soybean basis in the Gulf of Mexico ticked higher midday on demand interest from China and slow country movement. Calendar spreads held steady to firm despite the sharp selloff in futures early on which suggests a bullish fundamental bias. South American weather remains mostly favorable but temperatures are expected to rise in the central west to south central regions of Brazil this week. South Brazil and Argentina will continue to see heavy rainfall through the next 7-10 days but drier than normal conditions in central and northern Brazil remains a concern. The longer term forecast for South America should favor row crop planting and maturity.

EDIBLE OIL: Malaysian palm oil futures fell as investors booked profits after the previous session's three-week high on worries that October's stronger-than-expected exports were not enough to trim record high stocks in the world's No.2 producer. (Reuters)

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