Wednesday, October 27, 2010

20101027 1821 FCPO EOD Daily Chart Study.

FCPO closed : 3037, changed : -16 points, volume : higher.
Bollinger band reading : correction range bound upside biased.
MACD Histrogram : turned lower, buyer realising profit.
Support : 3020, 3000, 2970 level.
Resistant : 3050, 3070, 3100 level.
Comment :
Continue profit taking activities lead FCPO to slips lower with better volume transacted following lower soy oil futures price development plus a weaker crude oil futures price as US Dollar continue to trade firmer. Daily chart formed a long lower shadow doji bar candle closing the gap between last week Friday and Monday and recover upward closed off the low of the day with the reading still suggesting a correction range bound upside biased market development.
When to buy : buy at support and weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20101027 1736 FKLI EOD Daily Chart Study.

FKLI closed : 1499.5, changed : +1 point,  volume : lower.
Bollinger band reading : correction range bound upside biased.
MACD Histrogram : recovering, buyer holding on.
Support : 1485, 1470, 1458 level.
Resistant : 1500, 1530, 1550 level.
Comment :
A wild day FKLI recorded marginal gain traded in lower but still relatively high volume transaction(mostly rollover activities) after market tested new high and retreat lower closing off the high below 1500 psychological level. Daily chart formed a long upper shadow doji bar candle tested above upper Bollinger band resistant level with the reading remained suggesting a correction range bound upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20101027 0949 Local & Global Economics News.

Malaysia: Household debt not a worry, says Zeti
Going forward, Malaysia will implement measures to ensure it will not be a destabilising factor for the economy, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. “Bank Negara Malaysia is not concerned about rising household debt as the level of bad loans is still low and there are various ways to keep it in check”, she mentioned. The Malaysian Institute of Economic Research had noted that household debt had risen to 77% of GDP last year, the highest in Asia, from 63.9% in 2008. (BT)

Singapore: Industrial output growth accelerated in September
Singapore’s industrial production rose at the fastest pace in three months, an advance that may ease as a slowdown in world economic growth hurts demand for electronics and pharmaceuticals. Manufacturing, which accounts for about a quarter of the economy, climbed 26.2% in September from a year earlier, after a revised 7.7% increase in August, the Economic Development Board said. The median estimate of 17 economists surveyed was for a 19% gain. (Bloomberg)

South Korea: Economic growth slowed to 0.7% as Won jumped
South Korea’s economic expansion slowed in the third quarter as the nation’s surging currency threatened exports and global growth cooled, signaling more room for the central bank to pause interest-rate increases. Gross domestic product advanced 0.7% from the previous three months, when it gained 1.4%, the central bank said. That was less than the 0.8% median forecast in a survey of 10 economists. From a year earlier, GDP rose 4.5%. (Bloomberg)

UK: Growth sustains surprise momentum as S&P spares AAA grade
The UK economy grew more than forecast in the third quarter and Standard & Poor’s said the nation no longer faces the risk of downgrade as pressure eases on the Bank of England to add more stimulus. S&P restored its outlook on Britain’s credit rating to “stable” from “negative” after warning in May last year that the nation’s top AAA grade was at risk. Gross domestic product rose 0.8% in the quarter through September after climbing 1.2% in the previous three months, the Office for National Statistics said. (Bloomberg)

UK: GDP probably slowed; BOE keeps ‘fingers crossed’
Britain’s economic growth probably slowed in the three months through September to a third of the pace of the previous quarter, keeping pressure on policy makers to consider adding stimulus. Gross domestic product rose 0.4% in the period, compared with a 1.2% increase in the second quarter, according to the median forecast in a survey of 35 economists. (Bloomberg)

US: Confidence increases more than forecast
Confidence among US consumers rose in October from a seven-month low as households turned less pessimistic on the outlook for the economic recovery. The Conference Board’s sentiment index climbed to 50.2, exceeding the median forecast in a survey, from a revised 48.6 in September. Another report showed homeprice gains receded in August after a tax credit lapsed. (Bloomberg)

20101027 0947 Malaysia Corporate News.

RM4.50-RM5.20 a share for Petronas Chemicals IPO: Sources
The Employees Provident Fund and Kumpulan Wang Persaraan will be "cornerstone" investors in the IPO, buying a combined 445m shares, according to the term-sheet. Petronas Chemicals Group, the petrochemicals unit of state oil company Petroliam Nasional (Petronas), aims to raise between USD3.7bn and USD4.2bn (RM11.5bn and RM13bn) in Malaysia's biggest initial public offering (IPO), two people familiar with the matter said. Banks advising on the sale set an indicative price range of RM4.50 to RM5.20 per share for institutions late Monday, they said, speaking on condition of anonymity. Two Malaysian pension funds will come in as key investors, according to a term-sheet e-mailed to fund managers. (BT)

Talks on Bakun may wrap up mid-2011
Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui expects negotiations between the Finance Ministry and the Sarawak state government on the sale of the Bakun hydropower project to conclude by mid-2011. "I don't know the details but they are still in talks. The Bakun dam is scheduled to generate power by mid-2011. I would expect it (the sale) to conclude by then," Chin told reporters after delivering a keynote address at the ABB Executive Forum in Kuala Lumpur yesterday. Currently, Malaysia's energy mix is dependent on natural gas and coal. In view of diversification of energy mix, nuclear power is seen as an energy source post- 2020. Chin reiterated that the Cabinet had approved the setting up of a nuclear power plant and the Economic Council had given the ministry the go-ahead to start identifying suitable sites. (BT)

One mega Islamic bank this year
Bank Negara will announce one mega Islamic bank by this year under its plan to issue up to two mega Islamic bank licences. “We will announce one mega Islamic bank,” governor Tan Sri Dr Zeti Akhtar Aziz said yesterday. It was previously reported that Malaysia has shortlisted two foreign banks to be licensed as mega Islamic banks with a minimum capital of USD1bn each under the Government’s financial sector liberalization measures announced last year. (StarBiz)

Malaysia-India trade pact
Malaysia will sign today a bilateral trade agreement with Asian economic giant India, paving the way for strong trade and investment ties. The two countries recently concluded the Comprehensive Economic Cooperation Agreement (Ceca), which had been negotiated for the past two years. Prime Minister Datuk Seri Najib Razak and his Indian counterpart, Dr Manmohan Singh, will witness the "lock in" of the pact today. International Trade and Industry Minister Datuk Seri Mustapa Mohamed and Indian Commerce and Industry Minister Anand Sharma will sign on behalf of their respective countries. According to the Ministry of International Trade and Industry, the agreement will also stipulate the three main timelines for the Ceca. For instance, the legal aspects have to be cleared by end-November and the formal Ceca has to be signed by 31 Jan next year. The Ceca itself must be in force on 1 July. India, which ranks as Malaysia's 12th largest trading partner, expects trade with Malaysia to jump 50% to USD15bn (RM46.5bn) by 2015 with the trade pact in place. (BT)

Equine Capital to sell Wisma KLIH for RM58m
Equine Capital is selling Wisma KLIH for RM58m, the bulk of which will go towards the repayment of its bank borrowing. In a filling with Bursa Malaysia yesterday, Equine said its wholly owned subsidiary Kuala Lumpur Industries (KLIB) had entered into a sale and purchase agreement with wonderful vantage SB, a company engaged in property acquisition and development. The RM58m price comprises RM48m for the freehold property and RM10m for renovation and refurbishment, it said. (Financial Daily)

Court declares MTD deal valid
MTD Capital told Bursa Malaysia yesterday that the Philippine Supreme Court has declared as valid and constitutional the supplemental toll operation agreement for MTD’s South Luzon Toll Expressway project. However, the court declared void and unconstitutional clauses that said that the Toll Regulatory Board had to compensate MTD’s South Luzon Tollway Corp/the Philippine National Manila Toll Expressway Systems Inc for its loss of revenue resulting from the non-implementation of the approved authorized toll price and toll rate adjustments. Any party wishing to appeal the decision has 15 days from 25 Oct. Trading of MTD shares was suspended until 5pm yesterday and will resume trading today at 9am. (StarBiz)

Malaysia plans sukuk for public to spur trade
Malaysia plans to let issuers sell to individual investors sukuk that can be traded on the local stock exchange as the Government seeks to reverse a 24% decline in sales in the world’s biggest market for Islamic bonds. Bursa Malaysia, the exchange operator, was working with regulators on rules to enable companies to issue Islamic debt that would be affordable to the public, chief executive officer Datuk Yusli Yusoff said in an e-mailed reply to questions last week. Issuance of the securities fell to RM19.8bn this year from RM26.2bn in 2009, the steepest drop since 2003, according to data compiled by Bloomberg. (StarBiz)

20101027 0835 Global Market News.

Oil falls on stronger dollar, U.S. supply jump
SINGAPORE, Oct 27 (Reuters) - Oil fell on Wednesday as the dollar strengthened and after an industry report showed a bigger-than-expected gain in U.S. crude inventories last week.
"The dollar is clearly a major driver of oil prices at present, and our prediction that this would be the case is now being confirmed by the increased correlations evident in the market," JP Morgan analysts headed by Lawrence Eagles said.

GLOBAL MARKETS: Dollar higher on Fed doubts, stocks flat
NEW YORK, Oct 26 (Reuters) - The dollar rose broadly on Tuesday as investors speculated the Federal Reserve would proceed more cautiously in announcing any asset-buying next week, scaling back bets against the greenback.
"Everything is dependent on the FOMC and people don't want to take aggressive positions ahead of this very big decision," said Stephan Maier, currency strategist at Unicredit in Milan.

Gold lower, silver steady after CFTC comment
SINGAPORE, Oct 27 (Reuters) - Gold edged lower as the market looked set to consolidate ahead of the U.S. Federal Reserve's decision on further monetary easing next week, while a stronger dollar also weighed.
"The market is entering a period of consolidation. The euro is under pressure and the dollar isn't doing a great deal, making the precious metals market quiet," said Ellison Chu, manager of precious metals at Standard Bank Asia in Hong Kong.

China should significantly boost gold in reserves -media
BEIJING, Oct 27 (Reuters) - China should significantly boost the amount of gold  held in state reserves, a newspaper run by China's Ministry of Commerce said on Wednesday, citing a local researcher.
Meng Qingfa, a researcher with China Chamber of International Commerce, was quoted by the International Business Daily as saying that China should eventually boost its gold reserves to a level equal to that held by the United States. 

PRECIOUS-Gold edges lower as dollar firms, eyes Fed meet
LONDON, Oct 26 (Reuters) - Gold edged lower in Europe on Tuesday as the dollar firmed a touch, but held near $1,340 an ounce as investors awaited clues from U.S. data due this week on the prospect of further monetary easing in the United States.
"Markets are now in the process of discounting the weekend impact of the G20 meeting and are bracing for the next big move by the Federal Reserve," said Pradeep Unni, senior analyst at Richcomm Global Services.

FOREX-Dollar steadies; sterling jumps on GDP data
LONDON, Oct 26 (Reuters) - The dollar steadied on Tuesday, with investors wary of pushing it lower due to uncertainty about what easing measures the Federal Reserve may take next week, while UK economic growth figures lifted sterling.
"Japan has pointed out quite clearly that they will intervene in dollar/yen if it falls too quickly and the market is aware there is no easy one-way bet on dollar/yen downside," said Stephan Maier, currency strategist at Unicredit in Milan.

Second thoughts on QE lift dollar, hit stocks
LONDON, Oct 26 (Reuters) - Second thoughts about the outcome of the next Federal Reserve meeting weakened stocks and steadied the dollar's decline, underlining how crucial the prospect of more Fed asset-buying has become to financial markets.
"The dollar is in a bit of a holding pattern. The market is still mulling over the U.S. QE story and dollar selling is a bit less of a one-way bet than it was," said Jeremy Stretch, currency strategist at CIBC.

20101027 0834 Soy Oil & Palm Oil Related News.

Brazil soy belt gets rain, not right kind yet-Somar
SAO PAULO, Oct 26 (Reuters) - Some areas of Brazil's No. 1 soybean producing state Mato Grosso have seen good rainfall in October but others have not, which highlights one of the problems that La Nina is likely to cause for the grain crop.
Private meteorologists Somar said farmers in Mato Grosso will have to wait until Nov. 6 but more widespread rains are on the way. Several producers in the state are about a month or so behind in planting due to the drier weather.

China soy crush output to top 95 mln T 2010/2011-CNGOIC
BEIJING, Oct 27 (Reuters) - China will add 11 million tonnes of new soy crush capacity in 2010/2011 (Oct/Sept), with total crushing capacity to top 95 million tonnes annually, said the China National Grain and Oils Information Centre (CNGOIC).
The capacity expansion has boosted China's increase of soy imports,the centre said in a report on its website (
Brazil 2011 cotton output hit record -sector
BRASILIA, Oct 26 (Reuters) - Brazil's 2011 cotton harvest could achieve record output of 1.7 million tonnes in 2011, sector sources said, a leap of nearly 50 percent from this year as prices which hit a new high on Tuesday, motivate growers.
"International prices are spectacular ... The local market price is good. Production costs are stabilized ... Cotton is more profitable than soy," said Sergio De Marco, head of a government-industry cotton group that meets regularly.

Soy slips from 14-month top on dollar, wheat steady
SINGAPORE, Oct 27 (Reuters) - Chicago soy futures fell 0.8 percent, after hitting a new 14-month top, while corn lost half a percent as a strong dollar weighed on commodity markets.
"There has been relative move in the U.S. dollar across the board, so you are seeing the dollar play in commodities," said said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

Soy product futures inched higher, recovering from initial losses in step with a bounce in soybean futures. Solid underlying demand for the products helped keep a floor beneath prices as well, analysts said. December soyoil settled 0.06 cents, or 0.1%, higher at 49.53 cents a pound. December soymeal ended $0.90, or 0.3%, higher at $335.50 a short ton. (Source : CME)

Rabobank Raises CBOT Soybean Price Forecast On China Demand (Source : CME)
Rabobank Tuesday raised its forecast for bellwether Chicago soybean futures due to strong demand in China. Rabobank increased its average forecast for Chicago Board of Trade nearby-month futures in the January-March period next year by 23% to $12.75 a bushel. It raised the forecast for the current quarter to $11.75/bushel from $10.50/bushel. "Global soybean demand remains exceptionally robust and even with prices at current levels, there is no real evidence of demand rationing," Rabobank said in a monthly report. A combination of healthy crush margins and record export bookings indicates that China's soybean imports in the year to Sept. 30, 2011 are likely to exceed the 55 million tons currently forecast by the U.S. Department of Agriculture.
China is the world's largest importer of soybeans, with imports jumping to 50 million metric tons last year from 41 million tons the previous year. The USDA is understating global demand, Rabobank said. It said China is the primary driver for this demand, with a 60% share in the global soybean trade. Rabobank also raised its average CBOT corn futures forecast for next quarter to $5.80/bushel from $5.25/bushel, and for this quarter to $5.50/bushel from $5.25/bushel.

USDA Sticks To Tame Food-Price Inflation Outlook (Source : CME)
The Agriculture Department is standing by its forecast for unusually tame food-price inflation this year but warned that the broad rally in farm commodity prices since midsummer will take a bigger bite out of consumers' wallets next year. In its monthly food-price inflation forecast released Monday, the USDA stuck with the prediction it first made in late August that the government's widely followed consumer-price index for food will rise between 0.5% and 1.5% this year, which would be the smallest increase since 1992. The USDA also left unchanged its forecast for retail food prices to climb by a more typical rate of between 2% and 3% in 2011. But Ephraim Leibtag, the USDA economist responsible for the forecast, said surging prices of commodities such as corn and wheat are increasing the odds that the 2011 food inflation rate will be at the high end of his forecast range.
"I wouldn't be shocked if we got to 3% if the current conditions continue," Mr. Leibtag said. Forecasting the food inflation rate is unusually difficult this year. Agricultural commodity prices are booming even though the U.S. economy is weak. Many executives in the food manufacturing and supermarket sectors are nervous about passing along all of their higher ingredient costs to consumers who seem willing to shop around for bargains. The prices farmers are being paid for everything from corn and wheat to hogs and milk have soared this year. U.S. farm exports are surging amid strong demand from emerging economies such as China, which are recovering from the global recession far faster than the developed world. At the same time, supplies of U.S. commodities such as beef and pork are tight in the wake of output cuts on U.S. farms during the recession. Compared with a year ago, the price of Texas steers is up 19%, soft red wheat is up 82%, butter 74% and corn 42%.
Last week, some major food brands began signaling their intent to raise prices. General Mills Inc. said it would increase prices in November on a quarter of its breakfast cereals, and fast-food giant McDonald's Corp. said it would raise menu prices. But other players in the food sector are still cutting prices to satisfy recession-weary consumers. Last week, supermarket chain Supervalu Inc. cut its earnings forecast amid continued price-cutting by rivals. Economists say high unemployment is casting a big shadow over food prices. Not only is it making shoppers more price-sensitive, it is helping to keep a lid on labor costs, which takes some pressure off food manufacturers to raise prices.

Shaken Grain Industry Pushes USDA On Recent Cuts In Crop Reports (Source : CME)
U.S. agriculture officials faced sharp questions from a grain industry shaken by dramatic swings in recent government crop estimates. More than 100 people including farmers, grain traders and executives from commercial grain companies attended the U.S. Department of Agriculture annual data users' meeting. The unprecedented turnout was driven by a surprisingly sharp cut by the agency in its corn crop estimates earlier this month. The change sent futures surging and further undermined confidence in the agency's closely-followed forecasts. "This room today is expressing concern about further cuts down the road in the U.S. corn crop," said Rich Feltes, an analyst for brokerage firm R.J. O'Brien, to USDA officials. Those at the meeting criticized the sharply reduced corn-harvest estimate, issued in a monthly report Oct. 8, saying the USDA should have detected weakened crop yields earlier in the season. The U.S. corn crop developed earlier than usual this year due to early planting and warm weather.
Attendees attempted to gauge the potential for another shock, asking a top USDA official how much of the government's sample corn fields had been harvested before the Oct. 8 report. Nearly 91% of USDA's sample corn plots had been harvested ahead of the October report, far greater than earlier reports, said Joseph Prusacki, director of statistics for USDA's National Agricultural Statistics Service. Prusacki reiterated the sharp cut in corn output reflected problems in estimating the average weight of corn kernels. The actual weight came in lower than the estimated weight used in earlier reports, helping to drive the sharp cut. "Until we get real grain weights, it's very difficult to get a handle on the size of the crop," said Prusacki, who cited the grain-weight issue in an interview last week with Dow Jones Newswires. Besides estimates, the USDA uses actual field visits and farmer surveys to determine its harvest estimates.
USDA officials said prior to the October report farmers may have mistakenly thought the crop would turn out better than it did and reported that way on their surveys. "Farmers have been a little bit slower to respond to the lower yields," said Lance Honig, chief of the crops branch for USDA's statistics service. A second issued raised at the meeting were the reasons behind a larger-than-expected estimate for corn supplies in storage. One concern had been the inclusion of corn from the current harvest in those estimates. The storage report is only supposed to include corn from previous harvests. Prusacki said the department reviewed its data to ensure it did not include corn from the current harvest. It was "possible" for fresh corn to slip into the data, but officials do "everything we can" to prevent it, he said. The larger-than-expected September supply estimate, which drove a sharp drop in prices after its release, followed a smaller-than-expected supply estimate in June that sent prices soaring.
The estimates are issued quarterly.

Corn dips on profit-taking, weather woes support wheat
SINGAPORE, Oct 26 (Reuters) - U.S. corn futures slipped  as investors booked profit after a 1.6 percent gain in the previous session, while wheat ticked higher as poor rains in U.S. winter crop areas supported the market.
"There is certainly unease at the growing strength of La Nina," said Garry Booth, a trader at MF Global Australia.

USDA defends US corn stocks data at data meeting
CHICAGO, Oct 25 (Reuters) - U.S. Department of Agriculture officials on Monday stood by their last two quarterly U.S. corn inventory reports but said the poor quality of the 2009 harvest may have played a role in large swings in the figures.
The inventory reports, along with an Oct. 8 corn yield estimate that came in well below trade expectations, whip-sawed the Chicago Board of Trade grain markets, sparking pointed questions at USDA's annual data meeting Monday in Chicago.

Palm oil retreats as dollar firms
KUALA LUMPUR, Oct 26 (Reuters) - Malaysian palm oil futures eased on profit taking due to a firmer dollar, but losses were limited by strong Chinese demand for soybeans for crushing into vegetable oils.
"Currently we're getting all support from the U.S. soy complex," said a trader in Kuala Lumpur. "The market needs factors like very strong export figures and fear of lower stocks to reach 3,100 ringgit."

New Brazil soy crop seen 1 pct below record-Safras
SAO PAULO, Oct 25 (Reuters) - Brazil's 2010/11 soybean crop that farmers began planting a few weeks ago is seen at 67.69 million tonnes, down 1 percent from the record 68.1 million tonnes harvested last season, analysts Safras e Mercado said.
In the analyst's second forecast of the new crop, Safras said it had raise its new outlook from the July view of 67.18 million tonnes due to a slightly greater planted area than previously expected.

U.S. corn, soy harvests remain on record pace
CHICAGO, Oct 25 (Reuters) - U.S. farmers kept up the record pace in this year's corn and soybean harvests, according to U.S. Agriculture Department data released on Monday.
Corn harvest was 83 percent complete as of Oct. 24, up from 20 percent a year ago and well above the five-year average of 49 percent.