Friday, October 7, 2011

20111007 1808 FCPO EOD Daily Chart Study.

FCPO closed : 2772, changed : -36 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histrogram : recovering, seller taking profit.
Support : 2770, 2750, 2720, 2700 level.
Resistance : 2800, 2850, 2900, 2920 level.
Comment :
FCPO closed recorded loss with quiet volume participation while overnight soy oil ended little lower and currently trading higher while crude oil eased lower after recent rallies.
Market traded in light volume as trader avoid exposure ahead of next Monday official MPOB September CPO figure, cargo surveyor 1~10 October 2011 export data and news on Malaysia will hold discussions with Indonesia next week over its move to reduce the export tax on palm oil products.
Daily chart formed a down bar candle with upper shadow close above middle Bollinger band after market opened lower and traded downward in 34 points range bound market and closed at the low of the day.
Technical study still suggesting a pullback correction downside biased market development testing support and resistance level.
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.

20111007 1728 FKLI EOD Daily Chart Study.

FKLI closed : 1386, changed : -11.5 points, volume : higher.
Bollinger band reading : side way range bound downside biased.
MACD Histrogram : rising, seller reducing exposure.
Support : 1385, 1375, 1360, 1350 level.
Resistance : 1395, 1400, 1420, 1430 level.
Comment :
FKLI closed recorded loss with little improved volume transacted on 2012 budget announcement day doing 14 points huge discount compare to cash market that ended higher. Overnight U.S. market continue to rebound higher and today's Asia markets traded higher while European markets currently having mixed development.
News on European Central Bank said yesterday it will reintroduce yearlong loans, giving banks access to unlimited cash through January 2013 restore to a certain extend of confident to the market sentiment while investors awaited the monthly U.S. jobs report.
Daily chart formed a down bar candle closed below middle Bollinger band level after market opened higher and swinging downward to closed near the low of the day.
Technical reading suggesting a side way range bound downside biased market development testing support and resistance level possibly resume downward movement.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with moderate cut loss and profit target.

20111007 1708 Regional Markets EOD Daily Chart Study.

DJIA chart reading : pullback correction little downside biased.
Hang Seng chart reading :  pullback correction downside biased.
KLCI chart reading : pullback correction downside biased.

20111007 1609 Global Market & Commodities Related News.

Asian stocks rise, euro steady on Europe bank moves
SINGAPORE, Oct 7 (Reuters) - Asian stocks rose on Friday and the euro clung to gains from a 2-cent rally after euro zone policymakers moved to shore up struggling banks and fend off a financial crisis.
"There are still plenty of problems that face the European financial system," said Greg Gibbs, strategist at RBS in Sydney. "The risk rally will probably run out to steam in the next week."

Asian Stocks Head for Biggest Two-Day Gain Since 2009 on European Outlook (Bloomberg)
Asian stocks rose, sending a regional benchmark index toward its biggest two-day gain in two years, as optimism European officials will protect banks from the region’s debt crisis boosted the earnings outlook for lenders and exporters. National Australia Bank Ltd. (NAB), the nation’s largest lender to businesses, gained 3.9 percent in Sydney. Hutchison Whampoa Ltd., which owns ports in Germany and Spain, surged 10 percent in Hong Kong after saying its operations in Europe are “very resilient.” Toyota Motor Corp., Asia’s No. 1 automaker, advanced 0.4 percent in Tokyo, while in Seoul, Samsung Electronics Co. rose 0.6 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, jumped 2.5 percent in Sydney after commodity prices increased.
The MSCI Asia Pacific Index rose 2 percent to 112.87 as of 3:17 p.m. in Tokyo, set for a 5.2 percent two-day gain, the steepest since April 2009. About three stocks advanced for each that declined on the measure, which was headed for a 0.2 percent decline this week. The gauge tumbled 16 percent in the third quarter, the biggest drop since 2008, amid concern that Europe’s debt crisis and a U.S. economic slowdown will drag the world back into recession.

Emerging markets money braced for China shock (Bloomberg)
LONDON, Oct 6 (Reuters) - For all the confidence in China's resilience to global economic shocks over the past decade, some investors are now starting to worry about a hard landing for the high-flying economic giant.
Fears of a Chinese growth shock are compounding a broader sell-off bedevilling emerging markets, prompting many to raise cash levels and reposition portfolios to cope with an end to the China-driven commodities boom and a resurgent dollar.

Soy falls on yield outlook, harvest pressure; wheat firms
SINGAPORE, Oct 7 (Reuters) - Chicago soy slid half a percent on Friday, trading close to a one-year low as the market was weighed down by a forecast of higher U.S. crop yields and ideal weather aiding the harvest in the Midwest.
"There is pressure on corn and soybean prices as the harvest is progressing well with dry weather in the Midwest," said Lynette Tan, a grains analyst at Phillip Futures in Singapore.

Argentina's key wheat area helped by rain -exchange
BUENOS AIRES, Oct 6 (Reuters) - Rains over the last week in key Argentine wheat areas improved conditions of 2011/12 crop after a dry September had raised concerns about it, the Buenos Aires Grains Exchange said on Thursday.
Lack of precipitation last month delayed corn planting and battered wheat crops in Argentina. The South American grains powerhouse is a leading wheat exporter and the world's No. 2 corn supplier.

Yields to bring down Brazil's new soy crop-gov't
BRASILIA, Oct 6 (Reuters) - Brazil may suffer its biggest drop in soy output in decades next year if dry conditions from a possible return of La Nina weather descend on the southern grain belt, the government said on Thursday.
In its first forecast of 2011/12, the government's crop supply agency Conab said soy output will fall to 72.18-73.29 million tonnes from a record 75.3 million last year.

Coceral ups EU 2011 wheat, maize crop forecasts
PARIS, Oct 6 (Reuters) - European Union grain trade lobby Coceral raised its forecast for the bloc's soft wheat harvest in 2011 to 128.39 million tonnes from the 126.53 million tonnes estimated in July.
The forecast was in line with recent estimates by French analysts Strategie Grains, which last month put the bloc's total soft wheat output at 129.0 million tonnes.

UK rapeseed exports to rise following record crop
LONDON, Oct 6 (Reuters) - UK exports of rapeseed could rise to more than 500,000 tonnes in 2011/12, boosted by a record crop and diminished competition from Germany, David Eudall, senior analyst at Britain's Home-Grown Cereals Authority said on Thursday.
"There is a very large export market for the UK," he told the HGCA's annual outlook conference, adding UK exports could be "500,000 tonnes or above".

UK 2011 wheat harvest up 3 pct on year -farm ministry
LONDON, Oct 6 (Reuters) - The U.K.'s 2011 wheat harvest is estimated at 15.4 million tonnes, up 3 percent on the year, the farm ministry reported on Thursday.
"This increase is a combination of a slightly increased yield of 7.8 tonnes a hectare, along with a 1 percent increase in the wheat area," the ministry said.

Thai rice plan: well-intentioned but hazardous
SUPHANBURI, Thailand, Oct 6 (Reuters) - On paper, it's populism at its best: the world's biggest rice exporter paying farmers a hefty premium to better their lives.
But Thailand's rice policy will cost it customers and fiscal peace of mind, as well as make Asia's staple food costlier as the region tries to cope with rising inflation.

Brent crude stays firm above $105 on EU's move
SINGAPORE, Oct 7 (Reuters) - Brent crude stayed firm above $105.50, boosted by Europe's move to shore up ailing banks and expectations that the U.S. economy may not be sliding into recession.
"Support was given mainly by the focus on Europe and comments... in favor of recapitalizing banks," said MF Global in its daily report.

Thailand aims to be regional energy hub, to up oil reserves
BANGKOK, Oct 6 (Reuters) - Thailand aims to revive a long-stalled plan to become an oil trading and biofuel hub in Southeast Asia, challenging Singapore's dominance, its new energy minister said on Thursday.
The net oil importer plans to boost its crude reserves, excluding refined oil products, to 29 days from 18 days now to improve energy security, said Pichai Naripthaphan, as consumers face volatile crude prices which continue to hold above $100 a barrel.
Copper rises 1.5 pct, eyeing best week since April
SINGAPORE, Oct 7 (Reuters) - Copper rose more than 1 percent on Friday and is on course for its best week since April as efforts in Europe to contain the sovereign debt crisis there drew buyers back to one of the hardest hit commodities in the past quarter.
"There's a bit of a relief rally going on, but copper's still got to do a lot of work on the topside in order to get back in a bull trend," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

Manila's Nickel Asia 9-mth sales volume up 43 pct y/y
MANILA, Oct 7 (Reuters) - The Philippines' top nickel producer Nickel Asia Corp  said on Friday its nickel ore sales volume in January to September rose 43 percent from a year earlier on higher prices and strong demand from China.
Nickel Asia, partly owned by Japan's Sumitomo Metal Mining Corp , said it sold 8.3 million wet metric tonnes (WMT) of nickel ore worth 9.8 billion pesos ($224 million) during the nine-month period, from 5.8 million WMT worth 5.7 billion pesos a year ago.

COLUMN-Aluminium-The dangers of comparative analysis
LONDON, Oct 6 (Reuters)- Aluminium  has been traded on the London Metal Exchange (LME) for more than 30 years, and analysts have been charting, monitoring and trying to predict the course of the metal since then.    
Over those years, a rich history has developed, both within the rises and falls of the metal's price, and within the offices and corridors of those who seek to understand and comment on aluminium.

Copper price plunge in Q3 deflates U.S. scrap market
NEW YORK, Oct 6 (Reuters) - A plunge in the price of copper at the tail end of the third quarter resulted in a virtual standstill in U.S. secondary scrap business, already restrained by a less-aggressive Chinese presence this year.
But trade could receive a jolt in the coming week and months ahead, as Chinese buyers return from holiday to find international prices below where they were the week before -- even with a 6 percent surge in copper futures on Thursday.

Tight copper concentrate a feature for some years
LONDON, Oct 6 (Reuters) - Tight copper concentrate supplies and excess smelting capacity for the industrial metal will remain a feature of the market for some years to come, Javier Targhetta, president of Spanish smelter company Atlantic Copper  said.
But Targhetta refused to be drawn on whether that would translate into lower treatment and refining charges (TC/RCs) for the metal used widely in power and construction.

Chinese copper smelters seek higher TC/RCs for 2012
LONDON, Oct 6 (Reuters) - Chinese copper smelters are seeking higher yearly treatment and refining charges for term copper concentrate imports for the full year of 2012 as they expect supply to rise, while trading sources say some global miners may switch to quarterly charges.
For 2012, smelters now want treatment and refining charges (TC/RCs) they receive for converting term concentrate imports into metal of $60-$80 per tonne and 6-8 U.S. cents per pound for the full year delivery, smelter sources told Reuters at a gathering late on Wednesday in London.

Zambia lifts metal exports ban after two days
LUSAKA/LONDON, Oct 6 (Reuters) - Zambia has lifted a ban on metal exports, just two days after imposing it to sort out irregularities and increase transparency in Africa's top cooper producer, a minerals ministry official said on Thursday.
Newly elected President Michael Sata has been concerned -- analysts say with good reason -- that copper exporters are misreporting the amount of ore leaving Zambia. Earlier this week Zambia suspended export permits to put new guidelines in place.

Indonesia's tin ban exports to last for 1 month
JAKARTA, Oct 6 (Reuters) - Indonesia's Tin Industry Association expects the full export ban from Oct.1 will last for one month before prices go above $25,000 per tonne, Johan Murod, general secretary of the association, said on Thursday.
Smelters in Indonesia's main tin producing region of Bangka island agreed to impose a full export ban from Oct. 1 due to falling global prices to help it recover.

Manila's Nickel Asia 9-mth sales volume up 43 pct y/y
MANILA, Oct 7 (Reuters) - The Philippines' top nickel producer Nickel Asia Corp  said on Friday its nickel ore sales volume in January to September rose 43 percent from a year earlier on higher prices and strong demand from China.
Nickel Asia, partly owned by Japan's Sumitomo Metal Mining Corp , said it sold 8.3 million wet metric tonnes (WMT) of nickel ore worth 9.8 billion pesos ($224 million) during the nine-month period, from 5.8 million WMT worth 5.7 billion pesos a year ago.

METALS - Copper rises 1.5 pct, eyeing best week since April
SINGAPORE, Oct 7 (Reuters) - Copper rose more than 1 percent on Friday and is on course for its best week since April as efforts in Europe to contain the sovereign debt crisis there drew buyers back to one of the hardest hit commodities in the past quarter.
The European Central Bank threw a lifeline to commercial banks, announcing on Thursday that it will provide longer-term cheap money for the growing number of European lenders which have seen wholesale funding dry up as market confidence ebbs.

PRECIOUS - Gold heads for biggest weekly gain since Sept
SINGAPORE, Oct 7 (Reuters) - Gold headed for its biggest weekly gain in a month as equities regained strength after fresh efforts by Europe to resolve its debt crisis eased nagging worries about a global recession, while purchases from jewellers offered additional support.
But trading was slow ahead of the release of U.S. non-farm payrolls data for September, which could show 60,000 new jobs created and the unemployment rate unchanged at 9.1 percent, offering hopes the world's largest economy was only growing slowly, and not falling into recession.

Gold heads for biggest weekly gain since Sept
SINGAPORE, Oct 7 (Reuters) - Gold headed for its biggest weekly gain in a month as equities regained strength after fresh efforts by Europe to resolve its debt crisis eased nagging worries about a global recession, while purchases from jewellers offered additional support.
"The payroll number will be a driver of trade today, but will jostle metals prices only if it's significantly far from  expectations," said Tom Pawlicki, precious metals and energy analyst at MF Global.

20111007 1115 Global Market & Commodities Related News.

Asia Stocks, Won, Metals Gain on Europe Outlook
Asia stocks rallied for a second day, while the South Korean won and metals climbed amid efforts by European policy makers to contain the region’s debt crisis. The yen strengthened and Treasuries snapped a three-day drop before data on U.S. unemployment. The MSCI Asia Pacific Index added 2.2 percent at 11:27 a.m. in Tokyo. Standard & Poor’s 500 Index futures fell less than 0.1 percent after a three-day rally in the U.S. stocks gauge. The won appreciated 0.9 percent. The yen rose 0.2 percent versus the euro. Treasury 10-year yields declined one basis point to 1.97 percent. Oil dipped 0.4 percent in New York after the biggest two-day jump in seven months. Copper and zinc advanced.
European Central Bank President Jean-Claude Trichet said yesterday the ECB will resume covered-bond purchases and reintroduce yearlong loans for banks. He defied calls for an interest-rate cut and acknowledged “downside risks” to the economy have intensified. U.S. data today may show gains in non- farm payrolls last month failed to dent the 9.1 percent unemployment rate, economists surveyed by Bloomberg News said.

GLOBAL MARKETS-Global stocks, oil rise on European bank moves
NEW YORK, Oct 6 (Reuters) - Global stocks rallied for a third straight day and oil prices surged on Thursday on renewed European efforts to aid ailing regional banks and as a ho-hum U.S. jobs report still managed to ease fears of a new recession.
"We're popping back up again, based on the idea they will reach an agreement and rescue us,"

COMMODITIES-Copper up most since early 2010; oil rallies  
NEW YORK, Oct 6 (Reuters) - Copper saw its biggest gain in 20 months and oil rose a second straight day on Thursday, as signs that Europe was wrestling its debt crisis under control helped commodities rebound further from last week's loss.
"We have raised cash levels and we are putting some money back to work down at these levels,"

Oil gains 3 pct on ECB bank move, U.S. data
NEW YORK, Oct 6 (Reuters) - Oil prices jumped nearly 3 percent on Thursday, gaining for a second straight day as Europe moved closer to pumping aid to the region's troubled banks and U.S. jobless benefit claims rose less than expected last week.
"Oil traders are looking at the macro-market situation. reacting to the ECB moves and also the better-than-expected jobless claims data,"
NYMEX-Natural gas ends up despite bearish EIA report  
NEW YORK, Oct 6 (Reuters) - U.S. natural gas futures ended higher on Thursday for the second time in three sessions as short covering support offset pressure from bearish weekly inventory data, mild weather forecasts and growing supplies.
"It (the storage build) was a shade under expectations, but it was still healthy. The trend is definitely lower, but the market is oversold here1

EURO COAL-Prices stable on scant trade by few buyers
LONDON, Oct 6 (Reuters) - Prompt physical coal prices were little changed on Thursday, after a steep fall of $2 a tonne early in the week, while buyers were thin on the ground.
"Coal swaps rose in very early trading, reflecting moves in the markets in general, but there are few buyers and the bids and offers are far apart,"

20111007 1013 Global Economic Related News.

Vietnam: Central bank increases refinancing rate to 15% from 14%
Vietnam’s central bank increased its refinancing rate for the first time since May to 15% from 14%, as the country tries to fight Asia’s fastest inflation and stabilize its currency. The move will be effective 10 Oct, the central bank in Hanoi said yesterday. It also raised overnight interest rates on electronic transactions to 16% from 14% and cut the rate on dollar deposits that exceed the compulsory reserve of credit institutions at the central bank to 0.05% from 0.1%. Vietnam is struggling to regain investor confidence hurt by inflation that has exceeded 20%. (Bloomberg)

Japan: LDP Calls for Increasing BOJ Assets, More Yen Intervention
The opposition Liberal Democratic Party proposed increasing the Bank of Japan’s asset fund and diversifying the methods of yen intervention to help an economy recovering from the 11 March earthquake and nuclear disaster. Japan’s biggest opposition called for increasing the central bank’s asset-buying fund by JPY10trn (USD130bn) to JPY25trn, according to a document obtained from LDP lawmaker Naokazu Takemoto. It also advocates doubling the government’s USD100bn fund to help companies buy overseas assets by taking advantage of the strong yen. (Bloomberg)

EU: ECB holds benchmark rate at 1.5% at Trichet’s final meeting
The European Central Bank resisted calls to cut interest rates at President Jean-Claude Trichet’s final policy meeting and may opt to use other tools to stem the sovereign debt crisis. ECB officials meeting in Berlin left the benchmark rate at 1.5%. With Greece on the brink of default, the ECB is under pressure to step up efforts to stop contagion by shoring up the euro region’s bond markets and helping banks weather the storm. (Bloomberg)

German: Factory orders unexpectedly fell a second month in August
German factory orders unexpectedly fell for a second month in August as domestic demand waned. Orders, adjusted for seasonal swings and inflation, declined 1.4% from July, when they dropped 2.6%, the Economy Ministry in Berlin said in a statement yesterday. Concerns that Europe’s debt crisis and slowing global growth could drag the economy back into recession may prompt companies to put off investment. European confidence in the economic outlook dropped to the lowest in almost two years last month. (Bloomberg)

UK: Launches fresh GBP75bn stimulus
The Bank of England (BoE) will spend GBP75bn more of newly-created money to shield Britain's economy from the eurozone debt crisis and keep a faltering recovery going, opting for an early, dramatic move to maximise the impact. Yesterday's decision by the BoE to expand its asset purchase programme to a total GBP275bn highlights the precarious state of Britain's economy as global growth slows, government spending cuts and tax hikes bite, and consumers face high inflation and slow wage rises. BoE governor Mervyn King said in a letter to Finance Minister George Osborne that the global economic recovery had slowed, and that the euro debt crisis had created severe strains on financial markets. (StarBiz)

US: Jobless claims climbed less than forecast last week
Claims for US unemployment benefits rose less than forecast last week to a level that shows companies may be starting to slow the pace of dismissals. Applications for jobless benefits increased by 6,000 in the week ended 1 Oct to 401,000. The monthly average dropped to the lowest level since the end of August. Reductions in firings may set the stage for bigger gains in payrolls needed to bring down the unemployment rate, signaling more confidence among companies that demand will hold up. (Bloomberg)

US stocks, Euro advance as Treasuries drop on European debt optimism
US stocks rallied for a third day, commodities gained and Treasuries slid as European officials detailed plans to tame the sovereign debt crisis and reports on retail sales and jobless claims bolstered optimism in the economy. The S&P 500 Index gained 1.8% to 1,164.97 while the Dow Jones Industrial Average rose 1.7% to 11,123.33. The Stoxx Europe 600 Index surged 2.7%. European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce yearlong loans for banks, while defying calls for an interest-rate cut and acknowledging “downside risks” to the economy have intensified. The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default. (Bloomberg)

20111007 1012 Malaysia Corporate Related News.

Potential listing of Felda commercial arm
The market is abuzz with a rumour that Felda Group's commercial entity will seek listing on Bursa Malaysia, a move that could potentially create the world's largest listed plantation company. Felda Global Ventures Holdings SB and Felda Holdings, which are collectively known as Felda Global Group, are cash-generating units of Felda and have a staggering plantation size of 850,000 ha. An industry source said the potential listing could be any one of the major commercial bodies, namely Felda Global Ventures or Felda Holdings, or both. (StarBiz)

CIMB in talks for stake in San Miguel’s Bank of Commerce
CIMB is in early talks with San Miguel Corp on the possibility of acquiring stake in the Philippine conglomerate’s banking arm Bank of Commerce. Bank of Commerce is the Philippines’ 16th largest lender with assets of PHP90.7bn (RM6.6bn). If this latest proposal goes through, it will be the second acquisition abroad for CIMB in recent months after having bought 70% of Thailand’s Sicco Securities last month. (Financial Daily)

MISC-Dialog ties up with China firm
MISC and Dialog’s co-owned Centralised Terminals SB has entered into an agreement with China Aviation Oil (S) Corp to jointly undertake the development of a tank terminal facility in Tanjung Langsat Port in Johor. Construction on the project, which total development cost is estimated at RM371m, is expected to commence by early 2012 for completion by end-2013. Centralised Terminals, 55% owned by Dialog and 45% by MISC, will hold a 74% stake in the JV company. The JV company will undertake the design, development, operation, management and maintenance of the oil storage tank facility. (Financial Daily)

Petronas to build fertilizer plant for Sabah
Petronas will build a fertiliser plant in Sabah that will almost double its fertiliser output in the country. Construction will start before the middle of next year, with natural gas from Sabah's offshore wells powering the production complex. The project, dubbed the Sabah Ammonia-Urea or Samur, will take three years to complete with an estimated cost of RM4.5bn. It will be built on a 60 ha site within the Sipitang oil and gas industrial park about 150km south of Kota Kinabalu. The work includes site preparation, landscaping, security services, civil works, manpower supply, temporary facilities, inland transportation and process buildings as well as development of a jetty and bagging plant. (BT)

MAS aims RM382m annual earnings from Indian facility
MAS’ aircraft maintenance facility in Hyderabad, India, is expected to earn USD120m (RM382m) annually, said a senior official. The maintenance, repair and overhaul (MRO) centre, to be launched this month, is expected to cater to carriers from India, Bangladesh, Nepal and Sri Lanka. The centre has signed agreements with India-based low-cost carriers SpiceJet and Kingfisher. Both carriers had been sending their aircraft to Malaysia for MRO services. The facility is capable of 60 to 80 aircraft. (Malaysian Reserve)

Pos Malaysia Bhd : Rais: Pos M’sia not inclined to support myemail
Information, Communications and Culture Minister Datuk Seri Utama Rais Yatim has said that Pos Malaysia Bhd is not inclined to support the 1Malaysia email project as it would have an impact on its activities and services. Yesterday, Rais said that myemail is not a Pos Malaysia project but that of another company with its own financing. In response to queries on the fate of postal land assets- some of which are located in prime areas – in light of the sale of Khazanah Nasional Bhd’s stake in Pos Malaysia to DRB-Hicom Bhd, Rais said the matter is still being discussed with the relevant authorities. On whether the government still holds a golden share in Pos Malaysia, Rais said the government still dies, through Ministry of Finance Inc but with the sale of Khazanah’s shares to DRB-Hicom, the golden share has been changed to the appointment of two directors to Pos Malaysia’s board. He also refuted claims that Pos Malaysia had suffered operational losses since it was corporatized in 1992. – The Edge

Petronas Chemicals Group Bhd : Petronas unit awards job
Petronas Chemicals Group Bhd has awarded and engineering contract for the RM4.5bil urea fertiliser complex known as Sabah Ammonia-Urea project in Sipitang, Sabah, to a consortium of contractors comprising Mitsubishi Heavy Industries Ltd, Apex Energy Sdn Bhd and PT Rekayasa Industri. – StarBiz

Plantation Sector : M’sia-Indonesia talk on CPO tax soon
Malaysia plans to hold a discussion with its Indonesian counterpart next week following Indonesia’s move to slash export tax on crude palm oil (CPO). Plantation Industries and Commodities Minister  Tan Sri Bernard Dompok said the ministry will hold discussions with Indonesia to discuss the matter and is awaiting a date. Indonesia slashed more than half its export duty on CPO refined products in August while cutting export duty on palm oil products to 13% from 25%, starting Oct 1. However, Dompok said he was confident Malaysia would still achieve this year’s palm oil export target of RM70.0bil. - StarBiz

Water Sector : Government has no plans to privatise IWK for now
Deputy Finance Minister Datuk Donald Lim said there is no intention to privatise Indah Water Consortium Sdn Bhd (IWK) in the near future. He added that although the government had no such intention, it would still support the initiatives by the Energy, Green Technology and Water ministry which oversees IWK. The initiatives include restructuring of the sewerage industry, a review of the sewerage tariff and repayment of guaranteed capital expenditure. The government took over IWK in 2000 at a cost of RM192.0mil. IWK’s liability until June 2011 amounted to RM2.0bil, the bulk of which includes government support loan, while its assets are worth about RM1.2bil. – The Edge

RHB, OSK: Still await Bank Negara nod. It has been seven working days since RHB Capital Bhd (RHB Cap) and OSK Holdings Bhd requested Bank Negara's approval to commence merger talks but no one is any wiser on how the central bank will decide on this. (Source: The Star)

Islamic Banking: Alkhair seeks boutique bank. Alkhair International Islamic Bank (M) Bhd is in discussion with Bank Negara to get approval to start talking with potential acquisition targets, which will allow Alkhair to tap into the ringgit business in the country. The group has identified a couple of potential acquisition targets that are small boutique banks and not big banks like Bank Islam. (Source: The Star)

20111007 1008 Global Market Related News.

Asian Stocks Advance on Europe Optimism (Bloomberg)
Asian stocks advanced for a second day as optimism European officials will protect banks from the region’s debt crisis boosted the earnings outlook for lenders and exporters. National Australia Bank Ltd. (NAB), the nation’s largest lender to businesses, gained 3 percent in Sydney. Mitsubishi UFJ Financial Group Inc., Japan’s biggest listed lender by market value, climbed 1.8 percent in Tokyo. Toyota Motor Corp., Asia’s No. 1 automaker, advanced 1.9 percent, while in Seoul, Samsung Electronics Co. rose 1.3 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, gained 2.4 percent in Sydney after oil and metal prices advanced. The MSCI Asia Pacific Index rose 1.2 percent to 111.96 as of 9:53 a.m. in Tokyo. Almost four stocks advanced for each that declined on the measure, which is set for a weekly loss. The gauge tumbled 16 percent in the third quarter, the biggest drop since 2008, amid concern that Europe’s debt crisis and a U.S. economic slowdown will drag the world back into recession.

Japanese Stocks Advance Second Day Amid European Optimism; Sony Drops (Bloomberg)
Japanese stocks rose for a second day, trimming their weekly losses, after optimism European officials will take steps to protect banks from the region’s debt crisis boosted the earnings outlook for Asia’s exporters. Honda Motor Co., a carmaker, rose 2.2 percent. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, advanced 2 percent after financial shares gained in the U.S. and Europe. Sony Corp. (6758) fell 1.2 percent after Nomura Holdings Inc. cut the consumer-electronics maker’s rating to “neutral” from “buy.” The Nikkei 225 (NKY) Stock Average rose 1.2 percent to 8,627.96 as of 9:04 a.m. in Tokyo. The broader Topix index added 1.2 percent to 745.75. For the week, the Nikkei has fallen 0.9 percent, while the Topix is down 2 percent.
“It certainly sounds like policymakers in Europe are understanding the situation with the banking system,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “It looks like they are getting more willing to recapitalize the banks. That has been a positive step, but we haven’t seen that yet. I think it is a real risk till we see an announcement.”

European Stocks Climb for Second Day; BNP Paribas, Natixis Rally (Bloomberg)
European stocks rose for a second day amid speculation policy makers will reach agreement to contain the sovereign-debt crisis and as the Bank of England expanded its bond-purchase program. BNP Paribas (BNP) SA, Credit Agricole SA (ACA) and Natixis surged after Le Figaro said the French government is working on a contingency plan to take stakes in the country’s lenders. BHP Billiton Ltd. (BHP), the world’s biggest mining company, rallied 5.9 percent as metal prices increased. SABMiller Plc (SAB) surged 7 percent after a report the brewer is in talks to be bought by Anheuser-Busch InBev NV. (ABI) The Stoxx Europe 600 Index climbed 2.7 percent to 230.27 at the 4:30 p.m. close in London. The benchmark gauge has gained 5.9 percent over the past two days as investors speculated that euro-area policy makers are working on plans to boost bank capital.

U.S. Stocks Rise on Speculation About Progress on Europe Crisis (Bloomberg)
U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest three-day gain since August, amid speculation that European officials were making progress in containing the region’s debt crisis. Financial stocks in the S&P 500 added 3.2 percent as a group, rising 8.8 percent in three days, the biggest advance since July 2009, as European lenders gained and Treasury Secretary Timothy F. Geithner said U.S. banks have strengthened. Alcoa Inc. (AA), the largest U.S. aluminum producer, climbed 5.4 percent as commodities jumped. Target Corp. (TGT) added 4.3 percent as September sales beat analysts’ estimates. The S&P 500 rallied 1.8 percent to 1,164.97 at 4 p.m. New York time, climbing 6 percent in three days, the most since Aug. 15. The Dow Jones Industrial Average gained 183.38 points, or 1.7 percent, to 11,123.33 today. The Russell 2000 Index of small companies jumped 2.4 percent, extending its three-day advance to 11 percent, the biggest rally since March 2009.

U.S. Jobless Claims Climbed Less Than Forecast (Bloomberg)
Claims for U.S. unemployment benefits rose less than forecast last week to a level that shows companies may be starting to slow the pace of dismissals. Applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000, Labor Department figures showed today. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August. Reductions in firings may set the stage for bigger gains in payrolls needed to bring down the unemployment rate, signaling more confidence among companies that demand will hold up. Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 percent, according to the median forecast of economists before tomorrow’s jobs report.

Consumer Comfort Index in U.S. Caps Worst Quarter Since ’09 on Job Outlook (Bloomberg)
Consumer confidence last week capped the worst quarterly performance in more than two years, when the U.S. economy was still in a recession. The Bloomberg Consumer Comfort Index rose to minus 50.2 in the week ended Oct. 2, from the prior period’s minus 53 that was the second-lowest level on record. The gauge averaged minus 48.4 from July through September, the third-worst quarterly reading of all time and the weakest since minus 49.9 in the first three months of 2009. Ninety-two percent of those surveyed had a negative opinion of the economy, underscoring the concerns of Federal Reserve Chairman Ben S. Bernanke, who this week said the central bank can take further steps to sustain a recovery that’s “close to faltering.” An ailing housing market, stagnant payrolls and stock-price declines have reduced Americans’ ability to spend.

Soaring Farmland Prices in U.S. Midwest Bring Fed Scrutiny of Rural Banks (Bloomberg)
When regulators come knocking at the Bank of Newman Grove, Nebraska, inquiring about loan risks, Chairman Jeffrey Gerhart has a “stress test” ready to show how his portfolio would fare if rural land prices dropped 25 percent. Or 50 percent. Or 75 percent. “I hope it’s not going to go to heck in a handbag out here, but this allows us to look at those worst-case scenarios,” said Gerhart, a fourth-generation banker in the 800-person town two hours west of Omaha, deep in the heart of Nebraska’s corn and soybean belt. He began stress testing his bank’s assets, about 90 percent of which are agricultural, in the last two years after prodding from staffers at the Federal Reserve Bank of Kansas City.
Farmland prices in Nebraska rose 30 percent in the second quarter from a year earlier, according to a survey by the Kansas City Fed, driven by soaring farm income from elevated agriculture commodity prices and record-low interest rates. That’s the high end of increases in cropland valuations of 8 percent or more throughout the region stretching from Oklahoma to North Dakota and from Nebraska to Michigan, according to surveys by three Federal Reserve banks. The Fed banks -- Kansas City, Chicago and Minneapolis -- oversee about three-quarters of the nation’s farm banks.

Treasuries Snap Decline as Economists Predict 55,000 New Jobs (Bloomberg)
Treasuries snapped a three-day decline before a government report that economists said will show U.S. jobs gains in September fell short of what’s needed to cut the unemployment rate. The Federal Reserve is scheduled to buy $1.5 billion to $2 billion of Treasuries due from 2021 to 2031 today, according to its website. The purchases are part of the central bank’s plan to support the economy by keeping long-term borrowing costs down. Employment climbed by 55,000, after no change in August, according to the median forecast of 91 economists surveyed by Bloomberg News. The jobless rate probably held at 9.1 percent, the survey shows. “If Treasury yields rise, it’s a good chance to accumulate,” said Hiromasa Nakamura, a senior investor at Mizuho Asset Management Co. in Tokyo, which oversees the equivalent of $39.1 billion and is a unit of Japan’s second- largest bank. “Today’s number will be negative for consumer spending.”

Thai Flood Death Toll Rises as Waters Threaten Honda, Sony (Bloomberg)
The death toll in Thailand’s worst floods in five decades rose to 244 and threatened to disrupt operations of automobile and electronics makers that use the Southeast Asian country as a production base. Heavy rain since July 25 has caused flooding in 59 of the country’s 77 provinces, and 28 of them remain submerged, the Department of Disaster Prevention and Mitigation said on its website today. Industrial parks in Ayutthaya province home to factories from Honda Motor Co. and Sony Corp. are at risk after floods caused nearby plants to shut down. “The situation in Ayutthaya is quite worrisome,” Prime Minister Yingluck Shinawatra, who surveyed the damage by helicopter today, told reporters after landing in Bangkok. “In some areas water has reached levels we have never seen before.”

European Central Banks Extend Global Efforts (Bloomberg)
Europe’s leading central banks returned to crisis-fighting mode, expanding a push by global monetary-policy makers to support economies and financial markets while fiscal authorities struggle to act. The European Central Bank, after a meeting yesterday in Berlin, said it would reintroduce purchases of covered bonds and yearlong loans for banks to support markets rattled by the region’s sovereign-debt crisis. In London, the Bank of England boosted its asset-purchase program by more than a third to 275 billion pounds ($424 billion) in a bid to avert a new recession in the U.K. International central bankers are softening their anti- inflation stances or reviving programs to keep financial systems liquid as they race to keep slumping growth from turning into a full-fledged contraction. The Federal Reserve has eased policy two months in a row, while central banks in Malaysia and South Korea have refrained from raising rates as they focus on maintaining growth over damping price increases.

Merkel-Sarkozy Divided on Greek Default Threat to Their Banks: Euro Credit (Bloomberg)
Angela Merkel and Nicolas Sarkozy are running out of road. Whether to allow Greece to default and how to manage the fallout, questions they have tried to avoid for more than a year, may finally require answers as European officials turn to fortifying banks and consider ways to ease Greece’s debt load. It costs $6 million plus $100,000 a year to insure $10 million of Greek securities for five years, with credit-insurance prices pointing to a 91 percent chance of default. As the German chancellor and French president prepare to meet in two days for their eighth one-on-one summit in 20 months, Merkel has cited the need to prepare for the default that investors see as a sure thing. Sarkozy, whose banks have the most to lose, is unwilling to gamble on letting Greece go.

King Loses Faith in Europe as BOE Acts on ‘Virus’ (Bloomberg)
Bank of England Governor Mervyn King has lost faith in European governments’ ability to resolve the region’s debt crisis. The central bank yesterday announced its biggest stimulus since the depths of the recession, citing “vulnerabilities” related to the euro-area turmoil. King said the move, the first loosening of U.K. monetary policy since 2009, was a response to what may be the worst financial crisis ever. “It’s pretty much a vote of no confidence in European officials,” said Richard Barwell, an economist at Royal Bank of Scotland Group Plc, and a former Bank of England official. “Either the virus is already in the U.K. so they had to respond, or they don’t believe the problem will be sorted out. I lean toward the second because of how much they’ve done.”

Bank of England Expands Bond-Purchase Program for First Time in Two Years (Bloomberg)
The Bank of England pledged to buy the most bonds since the depths of the last financial crisis as officials raced to stop the euro-region debt turmoil from pushing the economy back into recession. The nine-member Monetary Policy Committee led by Governor Mervyn King raised the ceiling for so-called quantitative easing to 275 billion pounds ($421 billion) from 200 billion pounds. That’s the biggest expansion since the first round of stimulus in March 2009. Only 11 of 32 economists in a Bloomberg News survey predicted an increase in asset purchases. The pound dropped after the decision, which came a day after a report showed Europe’s second-biggest economy grew less than previously estimated in the quarter through June and as Greece’s crisis strained money markets. The central bank said in a statement that slowing global growth and the turmoil in Europe “threaten the U.K. recovery.”

ECB Keeps Banks Afloat as Governments Act on Greek Default Risk (Bloomberg)
The European Central Bank’s move to keep euro-area banks afloat is buying governments more time to recapitalize them as Greece edges closer to default. The ECB said yesterday it will reintroduce year-long loans, giving banks access to unlimited cash through January 2013, and resume purchases of covered bonds to encourage lending. At the same time, the European Commission is pushing for a coordinated capital injection into banks and German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized. “Politicians, including Angela Merkel, have finally realized the urgency in protecting banks as a Greek default can no longer be ruled out and no-one wants a Lehman in Europe,” said Christoph Kind, head of asset allocation at Frankfurt Trust, which manages $24 billion. “From its side, the ECB is making sure that banks won’t face funding issues throughout that period.”

ECB to Buy Covered Bonds, Offer Longer Loans (Bloomberg)
European Central Bank President Jean- Claude Trichet, fronting a policy decision for the final time, said the ECB will resume covered-bond purchases and reintroduce year-long loans for banks as the sovereign debt crisis threatens to lock money markets. The ECB will spend 40 billion euros ($53 billion) on covered bonds starting next month and will offer banks two additional unlimited loans of 12 and 13-month durations, Trichet said at a press conference in Berlin today after policy makers left the benchmark interest rate at 1.5 percent. He also said the ECB will continue to lend banks as much money as they need in its regular refinancing operations at least until July 2012.
The ECB is resisting calls to reverse its two rate increases this year even as the debt crisis threatens to tip Europe back into recession, turning instead to tools it has previously used in an effort to calm financial markets. The Bank of England today unexpectedly expanded its bond-purchase program to 275 billion pounds ($421 billion) from 200 billion pounds after keeping its key rate at a record low of 0.5 percent.

EU Leaders Under Investor Pressure to Devise Bank Rescue Plan Before G-20 (Bloomberg)
European Union leaders are under pressure from investors to devise a comprehensive plan to rescue the region’s banks before a Group of 20 summit in November. “A blanket recapitalization of banks, in some cases, over- capitalizing those banks, would be the only thing that’s going to restore confidence at this juncture,” Simon Maughan, head of sales and distribution at MF Global Ltd. in London, said in a Bloomberg Television interview yesterday. Plans to inject capital into Europe’s banks are “well under way,” European Commission President Jose Barroso said yesterday. The European Central Bank also reintroduced yearlong loans, giving banks unlimited access to cash through January 2013. Lenders in the region may need as much as 200 billion euros ($269 billion) of additional capital, according to the International Monetary Fund’s European head Antonio Borges.

20111007 1007 Global Commodities Related News.

World Food Prices Drop for Third Month on Slumping Grains, UN Agency Says (Bloomberg)
World food prices fell for a third month in September, the longest stretch of declines in more than two years, after grain prices slumped amid concern demand will be hurt by an economic slowdown. An index of 55 food commodities fell to 225 points last month from 229.5 points in August, the United Nation’s Rome- based Food and Agriculture Organization said. The gauge reached a record 237.7 points in February. Corn futures in Chicago had the biggest monthly slide in at least 50 years last month, dragging down other grains and taking pressure off rising living costs across the world. China’s fourth-quarter consumer price index probably rose 4.5 percent, down from 5 percent in the third quarter, according to the median of nine estimates compiled by Bloomberg News.

Corn (CME)
US corn futures end steady, pulling back from early session gains on late profit-taking and technical selling. Prices were higher most of the day, fueled by solid weekly export sales, a recovery from oversold conditions and signs of stability in external financial markets. However, traders remain cautious of extending risk in the face of an expanding harvest, particularly without a dominant fundamental feature ahead of next week's government crop forecast, says Shawn McCambridge of Jefferies Bache. Traders unwilling to push prices until a clearer sense of supply/demand is established. CBOT Dec corn end unchanged at $6.05 1/2/bushel, well off $6.17 session high.

Wheat (CME)
US wheat futures end lower, retreating from solid early gains amid harvest pressure. Grains in general unable to sustain early rally, which traders say was fueled by short-covering. "A disappointing performance given strength in crude and euro," RJ O'Brien's Rich Feltes says. Expected rains in southern Plains, expected to breathe life into a struggling early crop, limiting upside, analysts say. Export demand lackluster, they add. CBOT Dec wheat ends down 9 1/4c, or 1.5%, at $6.16 a bushel; Dec. KCBT wheat down 2c to $6.97 3/4; MGEX Dec wheat climbs 18 1/2c to $8.95 on supply worries and slow farmer selling, which is driving up cash prices, but deferred months end lower.

Rice (CME)
US rice futures end lower, retreating from early gains along with other grains. Lackluster demand limited the market's upside, although analysts note weather problems in Asia are threatening global supplies. Grains also pressured by the ongoing harvest, which is pushing more supplies into the pipeline. CBOT November rice ends down 8 1/2c at $15.93/hundredweight.

US corn steady after 3 pct rally, harvest caps gains
SINGAPORE, Oct 6 (Reuters) - U.S. corn futures steadied, after their biggest rally in two months a day earlier, as investors scooped up the grain, optimistic that European leaders will succeed in averting a financial crisis that could trigger a global recession.
"Yesterday we saw a sharp rally in corn and wheat but there is still uncertainty in the market as one day of recovery doesn't change the situation much," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.

Manila considers raising 2012 rice import goal post typhoons
MANILA, Oct 6 (Reuters) - The Philippines may consider buying more than its targeted 500,000 tonnes of rice next year and weigh corn imports after  typhoons damaged crops, but it is unlikely to purchase more rice for 2011, government and industry officials said on Thursday.
Proceso Alcala said strong double-digit growth in rice production for most of the January-to-September period should help ensure sufficient supply this year.

Ukraine plans new grain export rules - lobby
KIEV, Oct 6 (Reuters) - Ukraine's government has promised grain traders it will come up with measures to boost exports that have been hit by customs duties, Ukraine's grain lobby UAC said on Thursday.
"The decision should be made next week and the new export regime should come into force as soon as possible", Serhiy Stoyanov, the director of Ukrainian Agrarian Confederation (UAC), told Reuters.

Indonesia must do more to boost rice yields -IRRI
JAKARTA, Oct 6 (Reuters) - Indonesia must take more aggressive action to boost yields on its rice paddy fields rather than expand planting areas, if it is serious about being self-sufficient in the staple diet, the International Rice Research Institute (IRRI) said.
The world's most populous Muslim nation was self-sufficient in rice in the early 1980s but then farmland was turned into housing for a booming population, while rampant smuggling put pressure on local growers.

Philippine group reviewing need to buy feedwheat,corn
MANILA, Oct 6 (Reuters) - A Philippine feed millers group said on Thursday it was assessing the quality of corn harvests and the need to import both feedwheat and corn after two strong typhoons last week.
The Southeast Asian country did not import corn this year but bought around 1 million tonnes of feed wheat mainly from Australia.

Philippines to review 2012 rice imports post typhoons
MANILA, Oct 6 (Reuters) - The Philippines will review its plan to cut rice imports to 500,000 tonnes next year after strong typhoons damaged crops in major rice-producing provinces, but it is unlikely to buy more  for this year, the Agriculture Secretary said on Thursday.
Proceso Alcala said strong double-digit growth in rice production for most of the January to September period should help ensure sufficient supply this year.

Vietnam 2012 rice for export may reach 7.2 mln T-report
HANOI, Oct 6 (Reuters) - Vietnam, the world's second-largest rice exporter after Thailand, could have 7.2 million tonnes of the grain available for export next year after deducting domestic consumption, up from 7 million in 2011, a state-run newspaper said on Thursday.
Output in 2012 could drop to 41.52 million tonnes of unmilled rice from 41.57 million this year, but consumption could fall to 27.33 million tonnes from 27.52 million in 2011, the Nhan Dan daily cited Agriculture Ministry projections as showing.

Informa lowers US 2011 corn yield forecast
CHICAGO, Oct 5 (Reuters) - Analytical firm Informa Economics on Wednesday cut its estimate of the U.S. 2011 corn yield to 149.5 bushels per acre (bpa), from 151.0 previously, and projected U.S. corn production at 12.519 billion bushels, trade sources said.
Informa raised its U.S. 2011 soybean yield forecast. The firm also cut its corn and soybean production forecasts for Argentina, citing adverse crop weather associated with the La Nina phenomenon.

Russia to harvest 95 mln t grain this year-Putin
MOSCOW, Oct 5 (Reuters) - Russia will harvest 95 million tonnes of grain this year, Prime Minister Vladimir Putin said on Wednesday, giving a figure above the official forecast of 90 million tonnes.
"As of today, or Oct. 5, 90 million tonnes of grain have been harvested," Putin told a government meeting.

Duties to quash Ukrainian hopes of record exports
KIEV, Oct 5 (Reuters) - Ukrainian grain exports in the 2011/12 season may reach just half the previously expected record volume of 24-25 million tonnes if export duties on grains remain in place, Agriculture Minister Mykola Prysyazhnyuk told Reuters on Wednesday.
"We need to export 25 million tonnes but if export duties remain in place, we will export about 13 million tonnes, maybe a little bit more," he said.

Coceral Raises EU Soft Wheat 2011-12 Output View To 128.39 Mln Tons (CME)
European Union farmers are expected to harvest 128.39 million metric tons of soft wheat in 2011-12, Coceral said, raising its July estimate by 1.86 million tons. The EU grain lobby body also raised its estimate for the 2011 corn harvest across the EU27 to 62.95 million tons, from the 54.77 million tons harvested last year and its previous forecast of 57.24 million tons. Total grain output is now seen at 279.03 million tons in 2011 from a planted area of 55.5 million hectares, compared with a revised estimate for 2010 of 273.99 million tons from 55.98 million hectares, Coceral said. Coceral's upward revision follows on the heels of a raft of analysts who have raised their EU grain output forecasts in recent weeks as more favorable weather has improved prospects for the region's drought-hit harvest. The lobby group now pegs soft wheat yields in 2011-12 at 55.3 tons a hectare, up from its earlier prediction of 54.6 tons/hectare and just above the 55.2 tons/hectare it estimated was harvested last year.
Still, the outlook for the region's barley crop is looking less optimistic. Coceral cut its production forecast for the grain to 50.94 million tons, down from 51.76 million tons expected in July and 52.67 million tons last year. The total oilseed crop in 2011 was pegged at 27.90 million tons, up from 26.52 million tons in July.

FAO Warns Of Tight World Grain Markets As Food Prices Fall (CME)
World grain markets are expected to remain tight this crop year, the United Nations' food body said, even as growing economic gloom and improving harvest prospects pushed food prices lower in September. The Food and Agriculture Organization's food price index, which measures the monthly change in international prices of a basket of food commodities, averaged 225 points last month, down 2% from August. Although that's still only 13 points below the record peak reached in February and higher than at the same time last year, that marks the third consecutive month of declines from this year's heady heights. The fall, particularly in grain, sugar and oils prices, was triggered by both fears of a global economic slowdown and the strength of the greenback, as well as improving supply prospects for many agricultural markets, the FAO said.
"Large [grain and oilseed] supplies from the Black Sea put downward pressure on prices from other origins," the FAO said. "A stronger U.S. dollar further contributed to the price decline." The body raised its forecast for 2011-12 world cereal production by 3 million metric tons to 2.31 billion tons, up 3% compared to the last crop year, thanks to a 4.6% increase in wheat output and a higher rice harvest. And it forecast a 2% decrease in cereal use, largely due to a sharp fall in the growth of ethanol production from wheat and corn, which is now only expected to grow 2% in 2011-12, compared to 5% the previous crop year. But it warned that even with improving prospects for the global harvest, the outlook remains "uncertain" for the world's most food insecure countries given the worsening economic climate and low world food stocks.
"Despite this positive production outlook, the impact on global food security remains uncertain given the current international economic slowdown," it said in a report. International grain prices as measured by the FAO's cereal index fell 3% to 245 points in September, continuing the downward trend seen since April, the FAO said. Still, it noted that with prices still at historically high levels, "the crop should remain an attractive option for producers." The FAO's oil index also fell 2.3% last month, while the sugar index fell 3.8% as improving production prospects in Europe, India, and Thailand helped prices to ease from their July peaks.

Mexican Agriculture Producers, Companies Urged To Hedge More (CME)
A Mexican government program that partially subsidizes price hedging for agricultural producers and companies is stretching its budget by shifting more of the risk to the participants. The Agriculture Ministry's trade service Aserca helps purchase hundreds of thousands of options for corn, coffee, wheat, orange juice, cotton and other commodities on the New York Board of Trade or the Chicago Mercantile Exchange. For corn, which represented more than half of the program last year, the government has subsidized 95% of the price of the options for producers and 70% for companies that use corn, meaning producers have been responsible for just 5% of the options' risk while the companies assume 30% of the risk. Aserca is lowering the government's share to 90% for producers and 50% for companies, effective Wednesday for corn.
Aserca Director Juan Fernandez del Valle said the changes were the result of dwindling resources. He said the program stopped operating for seven weeks this summer as funds ran low. On Wednesday, it relaunched operations for corn's spring-summer harvest, with the lower government subsidies. The program hasn't yet re-started for other products. "[Participation] can't be tied to whether we have a budget or not," he said. The government has allocated 10.4 million pesos ($767,000) for the program this year, up from MXN7.66 million in 2010. But increased market volatility has put pressure on government resources by increasing the cost of options, reducing the volume of produce that can be hedged. The annual volume covered under the program averaged about 15 million metric tons a year in the past three years; for January-August 2011, it was 12 million tons.
Fernandez del Valle said the aim is to change the culture of the Mexican agriculture sector, encouraging producers and companies to rely less on government resources and to participate more directly in the futures market. As Mexico increases its production of basic grains, producers and companies will need to assume more of the risk of hedging, because government budgets won't be able to match the demand, Fernandez del Valle said. And as more hedging is done, producers will benefit from lower interest rates on loans because of the security provided by the options, Fernandez del Valle said. This financial impact could be even greater than the government subsidy itself, leading to more income and potential for increased productivity, he said. Freeze and drought wreaked havoc on Mexico's corn harvests this year, and officials expect climate problems to persist. Corporate interest in the hedging program has increased as a result, so that they can secure supplies in the face of natural disasters.
Producers have become more interested because of the volatility of prices. Aserca's price-hedging program was created in 1994 after the North American Free Trade Agreement went into effect in order to help Mexicans prepare for agricultural trade openings written into the treaty.

Corn in Chicago Climbs 0.3% to $6.0725 a Bushel; Wheat, Soybeans Advance (Bloomberg)
Corn for December delivery rose 0.3 percent to $6.0725 a bushel on the Chicago Board of Trade at 10:24 a.m. in Melbourne. Soybeans for November delivery gained 0.3 percent to $11.6675 a bushel. December-delivery wheat advanced 0.2 percent to $6.2625 a bushel.

Thai rice plan: well-intentioned but hazardous
SUPHANBURI, Thailand, Oct 6 (Reuters) - On paper, it's populism at its best: the world's biggest rice exporter paying farmers a hefty premium to better their lives.
But Thailand's rice policy will cost it customers and fiscal peace of mind, as well as make Asia's staple food costlier as the region tries to cope with rising inflation.

Argentina may sign deal soon to sell corn to China
BUENOS AIRES, Oct 5 (Reuters) - Argentina hopes to sign a deal with China in November that would clear the way for corn exports to the Asian country -- the world's No. 2 corn consumer, Agriculture Secretary Lorenzo Basso said on Wednesday.
China does not currently buy Argentine corn due to curbs on the genetically modified varieties that account for about 80 percent of the South American country's corn production.

Ghana's Cocobod recommends small cocoa price hike
ACCRA, Oct 5 (Reuters) - Ghanaian cocoa sector regulator Cocobod has recommended a "very marginal" increase in the prices paid to farmers, partly because international market prices are down, its chief executive told Reuters on Wednesday.
The recommendation is for a price of 3,216 cedis ($1,991) per tonne in 2011/2012, up from 3,200 cedis for the season just ending, Tony Fofie said in an interview.

Armajaro expands into Colombian, Costa Rican coffee
LONDON, Oct 5 (Reuters) - Armajaro Trading Limited is expanding its global coffee operations into Colombia and Costa Rica, where it has opened a Latin American regional head office, its chief executive, Richard Ryan, said. Armajaro Trading started out as a cocoa trading company in 1998 and expanded into coffee around seven years ago, originally focussed on the world's top robusta coffee producer Vietnam.

Crop Death Seen Boosting Sugar as Stockpiles at 37-Year Low: Commodities (Bloomberg)
U.S. sugar stockpiles are shrinking to the lowest in 37 years after rain and freezing weather damaged the beet crop, potentially reversing a price slump and forcing the government to ease import limits. Farmers in Minnesota, the biggest beet grower, will reap 19 percent less than last year and output will drop in four more of the 10 biggest producing states, the U.S. Department of Agriculture estimates. Domestic prices may rise 10 percent to 41 cents a pound by year end, said Frank Jenkins, the president of Jenkins Sugar Group Inc., the largest U.S. raw-sugar broker. Sugar is the only major agricultural commodity produced in the U.S. that is subject to import quotas, and the USDA increased the limit by 45 percent this year as futures surged 21 percent in the three months through August. Retail prices have gained 9 percent since the start of January, twice the rate of food inflation. Rising costs are squeezing margins for Kraft Foods Inc. and Hormel Foods Corp.

Sugar, coffee, cocoa bounce with shares
LONDON, Oct 6 (Reuters) - ICE sugar, coffee and cocoa futures bounced early, in line with global stocks which rose for a second day as expectations grew policymakers would take steps to support European banks.
Raw sugar futures rose, tracking gains in other markets, underpinned by tight supplies of Brazilian raw sugar.

Indonesia coffee roasters buy Vietnam beans, supply tightens
SINGAPORE, Oct 6 (Reuters) - Coffee roasters in Indonesia, the world's No.2 robusta producer, have started to buy beans from rival Vietnam earlier than usual this year at $40-50 premiums to London futures, including freight, due to falling output and rising consumption, dealers said on Thursday.
Indonesia's annual domestic coffee consumption was growing at about 10 percent in the last five years, said Singapore-listed Olam International , the world's largest shipper of robusta. Olam estimated Indonesia's consumption at up to 180,000 tonnes this year.

I.Coast intensifies fight against cocoa smuggling
ABIDJAN, Oct 5 (Reuters) - Top world cocoa grower Ivory Coast has ramped up border security and warned cocoa dealers they could be prosecuted if they are caught smuggling beans to neighbouring countries, farmers and a government source said on Wednesday.
The move comes after a 2010-11 cocoa season in which as much as 200,000 tonnes of the West African nation's crop was transported to Ghana, Liberia and elsewhere as dealers sought higher prices and other export outlets than Ivorian ports, which were shut off for months by a post-election civil war and cocoa export ban.

Brazil mid-crop ends above forecast but down on year
BRASILIA, Oct 5 (Reuters) - Brazil's May-September cocoa mid-crop has ended well above initial forecasts but lagged last year's output by nearly 2 percent, data from Bahia Commercial Association showed.
The mid-crop ended having produced 1,680,592 60-kg bags (100,836 tonnes) in both Bahia and outlying cocoa producing states. By comparison, the 2010 mid crop produced 1,711,358 (102,681 tonnes).

Brent above $102; Libyan oilfield may be in ruins
SINGAPORE, Oct 6 (Reuters) - Brent crude neared $103 a barrel, extending its surge in the previous session as pessimism about weaker demand was outweighed by a surprise drawdown of U.S. inventories and concerns that Libya's largest oilfield could be damaged.
"We went from about $76.00 to around $79.70 for WTI (this week) and prices holding on to those highs shows the market is pretty much doing alright," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

Crude Oil Falls in New York on Renewed Growth Concern After Two-Day Rally (Bloomberg)
Oil fell in New York, trimming the first weekly gain in three, on speculation that U.S. unemployment above 9 percent will slow fuel demand even as Europe takes steps to stimulate its economy. Futures slipped as much as 0.5 percent before a Labor Department report today that may show gains in U.S. September payrolls were too small to reduce joblessness. Oil yesterday capped the biggest two-day rally since February after European Central Bank President Jean-Claude Trichet announced a bond- purchase program to tame the region’s sovereign debt crisis. Crude for November delivery dropped as much as 44 cents to $82.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $82.17 at 10:02 a.m. Sydney time. The contract yesterday climbed $2.91 to $82.59, for a two-day gain of 9.1 percent, the biggest since Feb. 22-23. Prices are up 3.8 percent this week and down 10 percent this year.

Copper Traders Most Bullish in Six Weeks as China May Replenish Stockpiles (Bloomberg)
Copper traders and analysts are the most bullish since August on speculation prices at a one-year low will spur China, the world’s largest buyer, to build stockpiles. Gold, sugar, corn and soybeans may also climb. Ten of 15 respondents surveyed by Bloomberg expect copper to rise next week and 5 predicted a drop, the most bullish reading in six weeks. It’s the first time in four weeks that the separate surveys forecast gains for all five commodities. Copper slumped to a 14-month low on Oct. 3 as commodities slid on concern that demand may wane as economies slow. Diego Hernandez, chief executive officer of Codelco, the world’s largest copper producer, said the next day that China should take advantage of the slump to restock. In 2008, during the worst global recession since World War II, China’s copper demand still jumped 4.9 percent, according to Morgan Stanley.

Gold, Silver Futures Advance in New York as Commodities, Equities Rally (Bloomberg)
Gold futures rose for the second straight day and silver surged as commodities and equities rallied amid optimism that European officials were making progress in taming the region’s sovereign-debt crisis. The Standard & Poor’s GSCI Index of 24 raw materials gained as much as 2.6 percent, led by gains in copper and silver. The European Central Bank will resume covered-bond purchases and reintroduce yearlong loans for banks, President Jean-Claude Trichet said. “Gold is back to behaving like a classic commodity,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Physical demand is providing support to gold.” Gold futures for December delivery gained $11.60, or 0.7 percent, to settle at $1,653.20 an ounce at 1:40 p.m. on the Comex in New York. The precious metal is heading for the first weekly gain in five.

20111007 1006 Soy Oil & Palm Oil Related News.

Soybeans (CME)
US soybean futures end flat, backpedaling from early session highs, as traders took profits on recent gains. Soybean futures found it tough to sustain price strength in the face of an advancing harvest, with traders also factoring in the potential for higher production estimates from government forecasters next week, analysts say. Industry analysts say soybeans remain vulnerable to the general sentiment in global financial markets, and need some conviction of stability in world markets before traders take on added risk. CBOT Nov soy end unchanged at $11.63 3/4/bushel, well off the session high of $11.82 3/4.

Soybean Meal/Oil (CME)
Soy-product futures stumble, retreating on late-day profit-taking. The inability of soybeans to sustain early advances quickly filtered into soymeal and soyoil, with traders taking a cautious approach ahead of next week's USDA reports and with global economic uncertainty still lingering. CBOT December soymeal end down $1.10 at $304.10/short ton as December soyoil dropped 0.06c to 49.14c/pound.

Malaysia Sets Sights On Nationwide Biodiesel Sales -Minister (CME)
Top palm oil producer Malaysia plans to sell palm-based biodiesel throughout the country by early 2013, Commodities Minister Bernard Dompok said. Malaysia continues to roll out its biodiesel B5 mandate, which was launched in the federal administrative capital of Putrajaya on June 1, after a five-year delay. B5 is a blend of 95% regular petroleum-based diesel and 5% palm oil-based biodiesel. The B5 mandate could use up around 500,000 tons of palm-based biodiesel annually and potentially prevent a large stock build-up, supporting palm oil prices, Dompok said. Malaysia produces around 17 million tons of palm oil a year and most of it is sold as edible oil, Dompok said. Malaysia has been struggling to implement a mandate to promote the palm-based biodiesel industry that was first introduced in 2007 as the blended fuel required subsidies to match diesel prices at the pumps, at a time when the country seeks to cut back on subsidies to reduce its huge fiscal deficit, he said.

Brazil 2011-12 Soy Crop Seen Down As Productivity Falls -Conab (CME)
Brazil's soy production is expected to decline in 2011-12, as the excellent weather that contributed to the previous year's bumper crop won't likely repeat itself, while good prices attract farmers into cotton and corn. Government crop-supply agency Conab said it estimates Brazil's 2011-12 soy production at between 72.19 million and 73.3 million metric tons, down from last year's output of 75.32 million tons. The expected drop in soy output reflects lower productivity, as planted area is set to increase 2% to 3.5% from the 24.18 million hectares sown in 2010-11. Conab said some farmers will want to plant corn rather than soy due to demand for feed from the local poultry and pork industries, as well as crop-rotation needs. "We must recall that in the last harvest, the weather conditions were extremely favorable [to soy], resulting in record productivities," Conab said. Brazil is the world's No. 2 exporter of soy, after the U.S.
Corn production, which occurs in two stages--a summer crop and a winter crop--is expected to reach between 57.33 million tons and 58.99 million tons during 2011-12, compared with the previous year's crop of 57.51 million tons. "The outlook for the first corn crop is good," Conab said, noting that planting of summer corn has already begun in some regions. "Good prices in the market should stimulate the planted area to increase." Planting of the grain is seen expanding between 2.5% and 4.6% from the past year's 13.84 million hectares. Cotton, of which Brazil is a growing supplier to world markets, could also increase its share of the grains-farming pie. Conab expects Brazil to produce between 1.93 million and 2.11 million tons of cotton fiber, compared with last year's crop of 1.96 million tons.
Conab noted that below-normal sea-surface temperatures in the equatorial Pacific Ocean indicate a possible return of the La Nina phenomenon, which tends to cause dry weather in Brazil's main agricultural regions. But the Southern Hemisphere spring in coming months should continue to see normal or slightly above-normal rainfall in most of the country, with drier conditions not expected until November and December, Conab said.

Palm oil at new one-year low as short sellers tap economic fears
KUALA LUMPUR, Oct 6 (Reuters) - Short-sellers again drove Malaysian palm oil to its lowest level in a year while other agricultural commodities have fallen slightly or clawed back some losses this week as fears about a global recession ease slightly.
"Losing 150 ringgit over a week is really not such a special thing with the financial turmoil going around. Now everyone is trying to see how far they can push palm oil down," said a trader with a foreign commodities brokerage.