Thursday, December 15, 2011

20111215 1812 FCPO EOD Daily Chart Study.

FCPO closed : 2971, changed : -81 points, volume : higher.
Bollinger band reading : downside biased.
MACD Histrogram : resume falling, seller testing market.
Support : 2970, 2950, 2920, 2900 level.
Resistance : 3020, 3050, 3070, 3100 level.
Comment :
FCPO closed recorded substantial loss with increasing volume transacted. Overnight soy oil closed recorded loss and currently rebounding little higher while crude oil price also rebounding higher after yesterday closed lower.
Dissapointing and slowing down export data released by both cargo surveyor resulted FCPO price to trade in negative territory through out the day.
Daily chart formed a down bar candle closed near lower Bollinger band level after market opened and trade lower, moved side way little higher followed by further selling activities sent price to closed at the low of the day.
Chart reading turned to suggesting a downside 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.

20111215 1745 FKLI EOD Daily Chart Study.

FKLI closed : 1463, changed : -0.5 point, volume : higher.
Bollinger band reading : side way range bound.
MACD Histrogram : falling, seller testing market.
Support : 1458, 1445, 1440, 1435 level.
Resistance : 1470, 1477, 1485, 1491 level.
Comment :
FKLI closed 1 tick lower with increased volume exchanged doing 1 point discount compare to cash market that closed slightly higher. Overnight U.S. market closed recorded loss again and today Asia markets closed recorded loss while European markets trading higher.
Possible slower China manufacturing data and weaker Korea retail sales resulted Asia region markets to trade weaker.
Daily chart formed an up doji bar candle with lower shadow closed near middle Bollinger band level after market opened lower, dive deeper and consolidated until 2nd half session recovery back into positive zone before eased little downward to closed near the high of the day.
FKLI still likely to trade side way range bound testing support and resistance level for the near term.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20111215 1722 Regional Markets EOD Daily Chart Study.

 DJIA chart reading :  side way range bound.
 Hang Seng chart reading : little downside biased.
KLCI chart reading : side way range bound.

20111215 1616 Global Market & Commodities Related News.

Asian Stocks Decline Third Day as Economies Slow, Europe Concern Flares (Bloomberg)
Asian stocks fell for a third day amid signs of slowing economic growth in China and Japan, and as rising financing costs stoked concern Europe is losing its fight to contain the debt crisis. HSBC Holdings Plc (5), Europe’s biggest lender, fell 2.1 percent in Hong Kong. Industrial & Commercial Bank of China Ltd. dropped 2.6 percent on a report mainland manufacturing may contract for a second month. Toshiba Corp., a maker of laptop computers, home appliances and power plants, sank 3.8 percent after sentiment among Japanese manufacturers worsened. Olympus Corp. (7733) plunged after restated earnings showed the camera-maker inflated assets by $1.3 billion. “Europe’s situation doesn’t seem to be moving in a positive direction,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29 billion. “Japan is highly vulnerable to overseas factors. The euro has fallen a lot against the yen, which is another headache for exporters.”

FOREX-Euro steady, stuck near 11-month low
SINGAPORE, Dec 15 (Reuters) - The euro held steady on Thursday, but still hovered near an 11-month low hit the previous day as signs the European debt crisis was far from over prompted investors to sell risky assets and bolstered demand for the dollar.        
"We need something to get us through the next six to 12 months," Ryan said.

Europe debt woes prompt year-end flight from risk
SINGAPORE, Dec 15 (Reuters) - Asian shares fell into bear market territory for the year and commodities and the euro nursed stinging losses, after fears that Europe's debt crisis is still worsening prompted investors to dump riskier assets and huddle in the safety of the dollar and Treasuries.
"We're quite bearish about the world at the moment," said Damien Boey, equity strategist at Credit Suisse in Sydney. "You're looking at basically the three major economies in the world causing problems."

Corn, soy struggle on European debt woes; soy firms
SINGAPORE, Dec 15 (Reuters) - U.S. corn was little changed after sliding to a nine-month low in the last session, while the benchmark wheat languished at contract lows as concerns over Europe's worsening debt crisis continued to plague the global markets.
"Grains and oilseeds are not in a Christmas mood, it's all because of the macro economic situation," said Ker Chung Yang at Phillip Futures in Singapore. "Buyers are seeing some bargain hunting in soybeans near the psychological support level of $11 a bushel."

Vietnam may cut 2012 rice exports to 6.5 mln T-report
HANOI, Dec 15 (Reuters) - Vietnam may cut its 2012 rice exports to 6.5 million tonnes after shipping a record volume of 7.2 million tonnes this year, and prices could fall on ample supply, a state-run newspaper quoted an Agriculture Ministry official on Thursday as saying.    
Thanks to high value of the rice sales in 2011, farmers have been expanding the area of low-quality varieties, Nguyen Tri Ngoc, head of the ministry's Crops Department was quoted by the Vietnam Economic Times newspaper as saying.
Italy 9-mth soft wheat, maize imports up-Anacer
MILAN, Dec 14 (Reuters) - Imports of soft wheat into Italy, a major grain buyer in Europe, jumped 13.4 percent year on year and maize imports surged 38.3 percent in the first nine months of 2011, Italian cereals body Anacer said on Wednesday.
Soft wheat imports rose to 4,027,945 tonnes in the January-September period from 3,552,051 tonnes in the same period of 2010. Maize imports rose to 1,918,962 tonnes from 1,387,358, Anacer said in a statement.
Colombia coffee output falls 13.7 pct in Nov -Growers
BOGOTA, Dec 14 (Reuters) - Colombia's coffee output fell for the eighth straight month in November, dropping 13.7 percent from a year ago due to heavy rains that limited flowering, the coffee growers federation said on Wednesday.
The world's third biggest exporter after Brazil and Vietnam has seen output drop since 2009 and struggled to regain historical production levels because of bad weather and a renovation program to replace aging trees.

Mexico to open tender for 8.1 mln tonnes of coal
Dec 14 (Reuters) - Mexico's Federal Electricity Commission (CFE) will open a tender on Thursday to acquire 8.1 million tonnes of coal to cover energy needs at one of its main thermoelectric plants.
The tender will cover 80 percent of coal needed at the CFE's Petacalco plant in the southwestern Mexican state of Guerrero for 2013 as well as 50 percent needed for 2014, the CFE said in a statement said on Wednesday.

S.Korea Nov LNG imports drop 34.5 pct y/y after stock build
SEOUL, Dec 15 (Reuters) - South Korea's imports of liquefied natural gas (LNG) dropped 34.5 percent in November from a year ago, as the world's second-largest buyer reduced volumes after building winter inventories in September and October, customs data showed on Thursday.
South Korea imported 2.32 million tonnes in November, down from 3.54 million tonnes a year earlier, Korea Customs Service data showed.

India fuel demand growth headed lower: Clyde Russell
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--    
SINGAPORE, Dec 14 (Reuters) - India's oil-product demand appears poised for a sharp decline as the economy is battered by slowing industrial growth, a weakening currency and fiscal constraints on the government.
Fuel demand rose 4.1 percent in the first 10 months of 2011 from the same period a year earlier, running ahead of the International Energy Agency's forecast for an increase of 3.6 percent for the whole year.

Brent little changed at $105 after biggest drop since Sept
SINGAPORE, Dec 15 (Reuters) - Brent crude futures were little changed at $105, after plunging the most in nearly three months in the previous session after Italy's borrowing costs skyrocketed and renewed fears about the euro zone's debt crisis.
"There is still a lot of uncertainty surrounding Europe and that is worrying investors," said Ken Hasegawa, commodity derivatives manager at Newedge Brokerage in Tokyo. "Although there was an agreement, a lot of countries are involved and they need to get the deal cleared," he said, referring to last week's European summit.

Diesel runs dry in southern China gas stations - report
Dec 15 (Reuters) - Widespread diesel shortages are hitting southern China, with many filling stations posting "no diesel" signs ahead of high seasonal demand, the China Review News reported on its website.
The newspaper reported long queues at filling stations along the expressway linking Beijing and Hong Kong, while in the southeastern province of Zhejiang, a line of trucks awaiting fuel at a gas station stretched for 2 km.

Nickel premiums eye Chinese demand next year
LONDON, Dec 14 (Reuters) - Nickel premiums in Europe could see a recovery early next year say some traders and producers who expect recently eased bank reserve requirements in China to help spur demand for raw materials.  
"The Chinese government has just eased the lending regulations for its banks so we could see a bit of a pick-up in January if we stay at these levels," a source at a nickel producer said.

China 2012 steel output, iron ore imports growth to slow
SINGAPORE, Dec 15 (Reuters) - Growth in China's steel output and iron ore imports will slow next year as the world's top steel market keeps a tight grip on its property sector, putting pressure on iron ore prices, a Reuters poll showed.
Despite slower growth, steel output and iron ore imports would still hit record levels in 2012, reflecting Beijing's efforts to invest in public housing and infrastructure.

Top Brazil iron ore state to tax mining from Jan
Dec 14 (Reuters) - Brazil's Para state, home to the country's largest iron ore mine, will impose a 6.45 reais-per-tonne ($3.45) tax on iron ore, likely pushing up the cost of ore produced there by Brazilian mining giant Vale .
Vale is the world's largest iron ore exporter and the Carajas mine it operates in Para is the source of nearly 10 percent of all world exports. At today's exchange rate and spot iron ore price, the tax could add about 2 percent to the price of a tonne of the mineral.

China's aluminium imports to rise as arbitrage opens -trade
HONG KONG, Dec 14 (Reuters) - China's primary aluminium imports are likely to rise until March with investors and merchants ramping up purchases after an arbitrage window between the London Metal Exchange and Shanghai opened for the first time since 2009, traders said on Wednesday.
Benchmark three-month LME aluminium dropped more than 18 percent from end-2010 to $2,017.5 per tonne around noon on Wednesday. Shanghai third-month aluminium contract fell by less than 6 percent during the same time, supported by lower domestic production.

Shanghai copper, zinc fall on Europe debt fears
KUALA LUMPUR, Dec 15 (Reuters) - Copper prices in Shanghai fell for a sixth day, tracking losses in most commodities overnight, after Italy's borrowing costs spiked and deepened fears about the euro zone debt crisis.
"Markets are frustrated and disappointed, waiting for a road map on the resolution of the two-year-old debt crisis," said Ong Yi Ling, an investment analyst at Phillip Futures in Singapore.

Copper mkt seen in 343,400 T surplus Jan-Oct 2011
LONDON, Dec 14 (Reuters) - The global copper market was in a surplus of 343,400 tonnes from January to October 2011 which was larger than a surplus of 18,200 tonnes in the whole of 2010, consultancy World Bureau of Metal Statistics (WBMS) said on Wednesday.
World refined copper production rose to 16.29 million tonnes, up 2.0 per cent compared to the same months last year.

Gold steady after carnage, Europe trouble eyed
SINGAPORE, Dec 15 (Reuters) - Spot gold wallowed near a 2-1/2-month low after dropping 3.5 percent in the previous session, as investors remained nervous about the euro zone debt crisis amid the year-end rush to liquidate positions.
"It's not only because of the stronger dollar, the year-end fund redemption and margin call demand from other markets also contributed to the sell-off," said a Shanghai-based trader.

India's Rajesh Exports to import more gold for retail thrust
MUMBAI, Dec 14 (Reuters) - India's Rajesh Exports , the world's biggest jewellery maker, expects to raise gold imports 17 percent next year to power its renewed thrust in the competitive and fragmented local jewellery market as a cushion against a volatile export market, its chairman said on Wednesday.
"The profitability in exports is always lower due to bulk business, and the profitability on retail is higher. The idea is to increase our profitability on our revenues," said Rajesh Mehta, chairman of Rajesh Exports.

METALS-Shanghai copper, zinc fall on Europe debt fears
KUALA LUMPUR, Dec 15 (Reuters) - Copper prices in Shanghai fell for a sixth day on Thursday, tracking losses in most commodities overnight, after Italy's borrowing costs spiked and deepened fears about the euro zone debt crisis.
"Markets are frustrated and disappointed, waiting for a road map on the resolution of the two-year-old debt crisis," said Ong Yi Ling, an investment analyst at Phillip Futures in Singapore.

PRECIOUS-Gold extends losses after carnage on Europe woes
SINGAPORE, Dec 15 (Reuters) - Spot gold weakened further on Thursday after dropping 3.5 percent in the previous session, as investors remained nervous about the euro zone debt crisis amid the year-end rush to liquidate positions.
"It's not only because of the stronger dollar, the year-end fund redemption and margin call demand from other markets also contributed to the sell-off," said a Shanghai-based trader.

20111215 1159 Global Market & Commodities Related News.

GLOBAL MARKETS-European debt woes prompt year-end flight from risk
SINGAPORE, Dec 15 (Reuters) - Asian shares retreated and the euro and commodities nursed stinging losses on Thursday after fears that Europe's debt crisis is still worsening prompted investors to dump riskier assets and huddle in the safety of the dollar and Treasuries.
The market view that a European Union summit last week had failed to produce a solution to the crisis was reinforced when Italy was forced to pay an eye-watering 6.47 percent on 5-year bonds on Wednesday, a record borrowing cost for the euro era.

COMMODITIES-Markets crash amid technical selling, Europe worry
NEW YORK, Dec 14 (Reuters) - Commodities plunged across the  board on Wednesday, with gold all but losing its safe-haven  appeal, as technical selling pressure added to investors'  wearing patience over the European debt crisis.
"It's almost like panic atmosphere that we were dealing  with," said Bill O'Neill, partner at commodities investment  firm LOGIC Advisors and a regular commentator on gold.

Oil drops more than 4 pct as commodities plunge
NEW YORK, Dec 14 (Reuters) - Oil tumbled more than 4 percent on Wednesday, the biggest drop in over two months as a commodities selloff led to breaches of key technical support.
"That has to do with some real fear about not only slowing global growth, but also default," said Addison Armstrong, director of market research for Tradition Energy in Stamford, Connecticut.

Japan burns 200,000 bpd more crude for power in Oct
TOKYO, Nov 14 (Reuters) - Japan's utilities burned 200,000 barrels per day (bpd) more crude and 136,000 bpd more low-sulphur fuel oil in October than a year earlier to compensate for the loss of nuclear power capacity after the March quake, industry data showed on Monday.
Only 11 of the country's 54 nuclear reactors are operating, forcing the world's third-largest importer of oil and top importer of liquefied natural gas (LNG) to use even more of those fuels to generate power to plug the nuclear shortfall.

NYMEX-Natural gas hits 27-mth low, ends down 4 pct
NEW YORK, Dec 14 (Reuters) - Record high supplies and a slow start to the heating season drove front-month U.S. natural gas futures to their lowest close in more than two years on Wednesday.
"Storage is still at record highs for this time, and I  don't see any (cold) weather ahead. It's going to be tough to  get rid of all the storage gas," a Houston trader said.

Euro Coal-Prices dip again with oil, euro
LONDON, Dec 14 (Reuters) - Physical prompt coal prices slipped again by around 50-75 cents on Wednesday in line with weaker oil, the euro and equities and in the absence of fresh spot trade.
"The euro's down, oil and equities are down and there doesn't seem to be any real need to do business," one European trader said.

20111215 1049 Global Economic Related News.

Competition for bank deposits among local banks is set to intensify amid a  slowing economy and a consumer base that already has a high  household  debt to GDP ratio. Recent banking data has pointed to a slowing inc radit and  money supply growth, consistent with the slowing pace of economic growth.  However loan growth has outpaced deposits, a trend attributed to the growing  indebtedness of Malaysian households. (Financial Daily) 

China: Yuan bulls at 33-month low as Dim Sum yields jump
Traders’ expectations for gains in China’s renminbi in the coming year are evaporating as economic-growth prospects worsen, a decade after the nation joined the World Trade Organization. The 12-month non-deliverable forward contracts on the yuan touched 6.4455 per dollar yesterday, the lowest level since 29 March. That’s 1.1% weaker than the onshore spot rate, the biggest discount since March 2009. The contracts, settled in dollars, allow investors to bet on the exchange rate in a year. (Bloomberg)

In  China, banks gave out Rmb562.2bn (US$88.24bn) in  new loans last  month, compared with Rmb586.8bn in Oct. Economists were expecting bank  lending to total Rmb550bn in Nov. (AFP, Bloomberg)

China’s money supply, M2, was up 12.7% yoy, slightly lower than the 12.9%  in Oct. This was in line with consensus expectations of a 12.8% yoy increase.  Other measures M0 and M1 rose 12.0% yoy (11.9% in Oct), and 7.8% (8.4% in  Oct) respectively. (AFP, Bloomberg)

China's top economic  policy-setting conference closed its annual meeting  on Wednesday with a commitment to maintain "prudent" monetary and  "proactive" fiscal policies in 2012. No aggressive policies were forecast to be  used to stimulate the economy unless there was a sharp slowdown in GDP  growth below 8%. "The country will ensure that macro-economic regulation  policies and overall consumer prices remain 'basically stable', and will guarantee  the steady growth of the economy and maintain social stability" (Reuters)

China's banking watchdog  has decided to indefinitely  postpone new bank  capital adequacy rules amid increasing concerns about a slowing economy.  It was previously due to introduce strict banking capital and liquidity rules,  stricter than Basel III recommendations, on a gradual scale beginning on 1 Jan  12. (Reuters)

Indonesia: Poised to pass land law for boosting growth plans
Indonesia’s parliament may approve this week a land-acquisition law that will allow the government to accelerate infrastructure projects, bolstering President Susilo Bambang Yudhoyono’s efforts to boost growth. Lawmakers will probably approve the bill on 16 Dec, Taufik Hidayat, vice chairman of the Land Procurement Parliamentary Special Committee, said in a telephone interview. After Yudhoyono signs it into law, the government will be empowered to take over land for development, while owners will be guaranteed adequate compensation, he said. (Bloomberg)

India’s inflation rate declined to 9.11% yoy from 9.73% in Oct. This is slightly  higher than the 9.02% that was forecast. (Financial Times)

Japan's industrial output rose 2.2% mom in Oct (-3.3% in Sep) in a sign the  impact of flooding in Thailand was less than feared, revised data showed, but  Europe's debt crisis and global growth worries may dampen production ahead.  (Bloomberg)

Japan’s  capacity utilisation index rose 4.1% mom in Oct (-3.6% in Sep) to  89.3. (Bloomberg)

Japan: Bond risk rises most on debt burden twice Italy’s

The cost of insuring Japan’s bonds against losses is poised to rise this year by the most on record amid concern a shrinking current-account surplus may push the world’s most indebted nation toward a crisis like Europe’s. Five-year credit-default swaps tied to Japanese government bonds have jumped 62bpts to 134bpts this year through 13 Dec, heading for the biggest annual increase since at least 2005. Germany’s contracts have climbed 45 to 104 as European leaders struggle to contain borrowing costs and bolster investor confidence in the region’s biggest economies. (Bloomberg)

Australia: Kangaroo bond sales drop 88% as spread widens
Bond sales by foreign issuers in Australia are headed for the slowest quarter since 2009 as the debt crisis that started in Greece drives relative yields for Europe-based borrowers to record highs. Offerings of so-called kangaroo bonds have plunged to AUD675 million (USD675 million) since 30 Sept, down 88% from AUD5.7 billion last quarter, data compiled by Bloomberg show. The notes are Australia’s worst-performers this quarter, losing 0.4%, compared with a 2.9% gain for government securities, indexes compiled by Standard & Poor’s show. (Bloomberg)

UK: Unemployment rises as Europe darkens world outlook
U.K. unemployment rose to a 17-year high in the three months through October, deepening concerns Britain is heading for another recession as turmoil in the euro area damps the global economic outlook. Unemployment as measured by International Labor Organization standards rose by 128,000 to 2.64m, the most since 1994, the Office for National Statistics said in London. The jobless rate climbed to 8.3% from 7.9% between May and July, the highest since 1996. (Bloomberg)

Eurozone: ECB buying may grow in tandem with funding needs
The European Central Bank’s bond- buying efforts will need to accelerate to match a torrent of Spanish and Italian debt sales early next year. The central bank’s purchases have been worth about the same as Spain and Italy’s borrowing needs during the past 12 weeks, data compiled by Bloomberg show. Italy’s 10-year funding cost has increased by two percentage points in the past year, and rose to 6.79% at 4.08 pm London time, after the nation sold EUR3bn (USD3.9bn) of five-year notes at the highest rate since 1997. (Bloomberg)

Eurozone industrial production fell 0.1% mom in Oct (-2.0% in Sep),  Eurostat said. Economists expected a 0.3% decline. On a yoy basis, industrial  production increased by 1.3% (+2.2% in Sep). (Reuters, Eurostat)

US: Import prices climb less than forecast as metals drop
Prices of goods imported into the US rose less than forecast in November, reflecting lower costs for metals and food, indicating inflation will remain contained. The import-price index climbed 0.7%, the first increase in four months and followed a 0.5% drop in October, Labor Department figures showed in Washington. Economists projected the gauge would increase 1%, according to the median forecast in a Bloomberg News survey. Prices, excluding fuel, decreased 0.2% for a second month, the first back-to-back drop in more than a year. (Bloomberg)

US mortgage applications increased 4.1% from one week earlier, driven by a  surge in refinance applications, according to data from the Mortgage Bankers  Association’s (MBA) survey for the week ended 9 Dec. The Refinance Index  increased 9.3% from the previous week to its highest level since 4 Nov. The  seasonally adjusted Purchase Index decreased 8.2% from one week earlier.  (MBA) 

US stocks fall on concern Europe struggling to contain crisis
US stocks retreated, sending the S&P 500 Index lower for a third straight day, as growing funding stress in Europe fuelled concerns that the region is struggling to contain its sovereign debt crisis. The S&P 500 declined 1.1% to 1,211.82 at 4 p.m. New York time. The benchmark measure for American equities fell 3.5% in three days. The Dow Jones Industrial Average dropped 131.46 points, or 1.1%, to 11,823.48. (Bloomberg)

20111215 1048 Malaysia Corporate Related News.

Johor Corp, CVC Capital launch takeover of QSR, KFCH
Johor Corporation and CVC Capital Partners Asia III Ltd have teamed up to take over QSR Brands and KFC Holdings Malaysia (KFCH). Johor Corp and CVC Capital made the offer via a special purpose vehicle Massive Equity SB (MESB) in which Johor Corp holds a 51% stake and CVC Capital 49%. MESB offered RM6.80 for the shares in QSR Brands and RM3.79 for the warrants. At RM6.80, this is 80 sen above the closing price of RM6 on Tuesday, while the offer price for the warrants was a premium of 77 sen from the closing price of RM3.02. MESB also made an offer to KFCH of RM4 per share and RM1 per warrant. (Financial Daily)

Sime Darby buys part of Caterpillar distribution biz for RM1.1bn cash
Sime Darby’s industrial division buys Caterpillar Inc’s former Bucyrus distribution business, involving mining machinery, in Australia, Papua New Guinea and New Caledonia for USD360m (RM1.1bn) cash. Sime Darby said on Wednesday the acquisition would enable its industrial division to strengthen its position in the mining industry by offering a wider range of mining equipment and services to its customers. (Financial Daily)

Naza joins in race for Proton
The Naza Group, the country’s biggest privately-held automotive group, made a closed-door presentation to Khazanah Nasional yesterday to buy its stake in Proton Holdings. The presentation came just a day after UMW Holdings made a similar presentation to the government’s investment fund. The other bidder for the national carmaker is DRB-HICOM, the country’s biggest publicly-traded automotive company. (BT)

RM1.4bn capex plan for SapuraCrest Kencana
Sapuracrest Petroleum plans to spend RM1.4bn in capital expenditure (capex) in the next two years. It will be used for buying new vessels and as part of SapuraCrest's new investments and expansion plans. SapuraCrest is merging with Kencana Petroleum to create Malaysia's oil and gas (O&G) largest player by assets. (BT)

SapuraCrest's shareholders have given the go-ahead for its merger with  Kencana with 99.5% in favour of the deal. Shareholders also approved  SapuraCrest's acquisition of Australia-based Clough's marine construction and  offshore engineering operations in Australia, UK and US for RM409m cash.  executive vice chairman Datuk Seri Shahril Shamsuddin said that moving  forward, SapuraCrest will focus on streamlining its operations with Kencana  and expanding its workforce, adding that the oil & gas business is coming off  its base and poised for an upswing. Kencana's shareholders are scheduled to  vote on the merger today. (Star)

Khazanah Nasional should not sell its entire stake in  Proton as this would  trigger a mandatory general offer and affect the potential buyer’s ability to turn  the national carmaker around, Tun Dr Mahathir Mohamad said. ―I’m not okay  with it... (because) the cost will be very high for whoever buys,‖ he said. ―And  when the cost is very high, turning it around becomes very difficult because  whoever buys it will have to inject more money into Proton, maybe inject  another RM2bn.‖  This high initial capital expenditure may affect Proton’s revival plans in  the long term unless the buyer was  ―very strong‖ financially and could  manage spending well, Dr Mahathir pointed out. (Malaysia Today)

Malaysia Competition Commission (MyCC) will officially look into the  deal between Malaysia Airlines (MAS) and AirAsia when the Competition  Act comes into effect on Jan 1 next year. However, CEO Shila Dorai Raj said  neither MAS nor AirAsia had submitted any report to MyCC. MyCC received  several complaints from consumers, especially during its road show in Sabah  and Sarawak recently. "Our priority is the consumers. We will investigate the  deal next year onwards. From our initial analysis, we think there could be  something," she told reporters.  Yesterday, International Chambers of Commerce (ICC) organised the  "ICC Malaysia CEO Business Luncheon Talk on Competition Act 2010:  An Insight into What to Expect". The Competition Act is to prevent  business monopolies or cartels. It will apply to all commercial activities  undertaken within and outside Malaysia that affect competition in the  country. The Act will provide a regulatory framework including powers  to investigate, adjudicate and impose penalties. (BT)

Malaysian Airline (MAS) will axe eight loss-making routes under its route  rationalisation exercise which will take effect early 2012. The withdrawal was  based on internal profitability and yield analysis. This account for almost 12% of  passenger capacity and the ongoing route rationalisation will improve loads,  improve yields and have a profit impact of RM220m to RM302m for 2012.  (Financial Daily)

Qantas should base its Asian operations in Malaysia rather than Singapore if it  is serious about expanding in the region, said  Tan Sri Tony Fernandes.  ―Singapore is the better business hub for sure, but the majority of Singapore  traffic is transit traffic  – just like Dubai. Whether you connect in KL or  Singapore, the key is connectivity,‖ adding that Qantas would have lower costs if  it chose Kuala Lumpur. (BT)

The additional costs and delays to  KLIA2 can be blamed on  Malaysia  Airports’ (MAHB) decision to move the new low-cost terminal from its original  northern site to the current spot in the west,  Tony Pua said. This was due to  poor soil conditions at the new site as noted in the 1992 KLIA Masterplan,  estimating that earthworks alone accounted for about RM1.2bn of the additional  RM1.9bn in additional cost. The report clearly says don’t build anything here.   Pua pointed out the move to KL IA West meant a third runway had to  be built for RM270m and also the construction of a second control  tower for RM500m, the only modern airport in the world with two  control towers. (Malaysian Insider)

Tenaga Nasional Bhd (TNB) expects 2012 to be a challenging year in the  midst of increasing demand for electricity and the shortage of gas supply, said  its VP of planning, Datin Roslina Zainal. However, she was confident the gas  problems would be resolved by next July when Petronas' regasification terminal  in Melaka was ready. "We are hopeful the government will allow the present cost-sharing  mechanism to continue until the problem is resolved". Moving forward,  she said, TNB will focus on the local front where the competitive  bidding for 4,500MW of new generation by 2016-2017 would  commence early next year. She said although the LNG bought by Petronas for its regasification  terminal in Melaka was at market prices, the price of gas paid by the  power sector would not reach market prices by 2012. "This is not  expected to be a major problem since LNG makes up a smaller portion  of gas for the country and indigenous gas will still be available," she said.  (Bernama)

The proposed cost-sharing mechanism agreed to by the government addresses  the cost incurred by using alternative fuels up to Oct 2011, said  Tenaga  Nasional Bhd VP of  planning, Datin Roslina Zainal. However, the power  sector experienced gas shortage in Nov and was continuing this month, thus  Tenaga is still using alternative fuels to power its gas plants.  She said, "Tenaga has brought up this matter to the government,  requesting the cost sharing mechanism be put in  place until the gas  shortage problem is overcome". At the current level of gas volume  supplied to the power sector, Tenaga would need to incur additional  cost of between RM300-400m a month, which was unsustainable. She said that officers from Petronas, Energy Commission and Tenaga  would be involved in the review process to ascertain the cost incurred  by using alternative fuels. The process was envisaged to start by  mid-Dec 2011 after the Economic Planning Unit gave the mandate to  the Energy Commission to act as witness for this matter.  "The documents, which are being reviewed, will date from Jan 2010  until Oct 2011 and therefore, the review process will take some time  before it is completed," she said. Roslina said the mechanism for review  and audit would  be similar to the way it was done in 2002 under a  cost-sharing mechanism.  "Tenaga is confident this process will proceed smoothly since the  documents are ready for review by Petronas and the Energy  Commission." The exact figures will be finalised once the review process  is completed," she said. (Bernama)

RHB Capital and  OSK group will soon submit to Bank Negara Malaysia a  detailed proposal on the merger of the investment banking units of both groups.  ―The parties have been in negotiations and seem to have come to more definite  terms on the proposed merger. They are nearing completion of discussions and  aim to submit the details of the merger as early as this month,‖ said a source  familiar with the matter.  The proposed merger is targeted to be finalised by Mar 2012. RHB  Capital is believed to be looking at bringing in an ―outsider‖ who is not  from either entity to lead the investment banking business of the  merged entity. (Financial Daily)

PLUS Bhd, the company taking over Malaysian highway operations of  PLUS  Expressways Bhd, set indicative pricing to sell RM23.4bn of Islamic bonds in  the country's record corporate debt offering. The company, part-owned by  Malaysia's largest pension fund, started inviting bids for RM11.3bn of  syariah-compliant notes with maturities ranging from five to 19 years, and to  yield between 3.8-5.07%, according to a sales note sent to investors yesterday.  PLUS will also privately place some of the bonds, which will have maturities of  20-25 years, it said.(BT)

UDA Holdings Bhd will be reviewing the proposal by Ministry of Finance  (MoF) to divide the former Pudu Jail site, better known as Bukit Bintang City  Centre (BBCC) into three plots, to ensure the value of the land can be  maximised. UDA chairman Datuk Nur Jaz-lan Mohamed said the study is being  conducted by a special committee chaired by a board member before it is  presented to MoF for consideration.  It was reported that the MoF had asked UDA to divide the former Pudu  Jail land into three plots with two being given to Bumiputera companies  and the remainder to a non-Bumi entity. The directive was issued after  the MoF did not consider UDA's proposal to appoint a China  government-linked company, Everbright International Construction  Engineering Corporation, as its joint venture partner for the land. (BT)

Goldis has accepted an offer from Trigoh Sdn Bhd to dispose of its 70% srake  in Macro Kiosk (MKB) for RM15m cash. The proposed disposal will be a  management buyout (MBO) by Goh Chee Ken, Goh Chee Heng and Goh Chee  Seng who are the CEO, COO and head of corporate affairs of MKB respectively.  The 70% stake in MKB was originally acquired for RM105,000 on Feb 1, 2002.  The expected gain on disposal of MKB will be about RM9.5m. (Financial Daily)

20111215 1031 Global Market Related News.

Asian Stocks Drop as Japan Sentiment Sinks Amid Europe Pessimism (Source: Bloomberg)
Asian stocks (MXAP) fell for a third day after a survey showed sentiment among Japan’s largest manufacturers deteriorated and as growing funding stress in Italy stoked concern Europe is losing its fight to contain the debt crisis. Sony Corp., the maker of Bravia televisions that gets 21 percent of sales from Europe, slipped 1.7 percent in Tokyo after the euro touched a two-month low against the yen, reducing the value of sales from the region. Komatsu Ltd. (6301), a maker of construction equipment, sank 3 percent after the Bank of Japan released results of its Tankan survey. BHP Billiton Ltd. (BHP), the world’s largest mining company and Australia’s No. 1 oil producer, declined 1.7 percent in Sydney after oil and copper prices tumbled yesterday.
“There’s no visible progress on Europe’s debt crisis,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “There are no events that may buoy the mood, and there’s no guarantee that the euro will stop weakening. The euro may drop below 100 yen, compounding the situation for export-related stocks.”

U.S. Stocks Fall on Concern Europe Struggling to Contain Crisis (Source: Bloomberg)
U.S. stocks retreated, sending the Standard & Poor’s 500 Index lower for a third straight day, as growing funding stress in Europe fueled concern the region is struggling to contain its sovereign debt crisis. Chevron Corp. (CVX) and Halliburton Co. (HAL) fell at least 2.8 percent as oil and metals declined. Joy Global Inc. slumped 11 percent after the maker of mining equipment said demand for commodities will remain slow. First Solar Inc. (FSLR), the largest maker of thin- film solar panels, plunged 21 percent after it cut estimates. Financial shares (S5FINL) in the S&P 500 rose 0.1 percent, rebounding from an earlier loss, as the Wall Street Journal reported that S&P has not informed France about an imminent downgrade. The S&P 500 declined 1.1 percent to 1,212.76 at 2:12 p.m. New York time. The benchmark measure for American equities has fallen 3.4 percent in three days. The Dow Jones Industrial Average lost 137.22 points, or 1.2 percent, to 11,817.72 today.

Japan Stocks Fall Third Day as Tankan Drops, Europe Debt Concerns Increase (Source: Bloomberg)
Dec. 15 (Bloomberg) -- Japanese stocks fell for a third day after manufacturing sentiment worsened and rising financing costs fueled concern Europe is losing its fight against the debt crisis. Mitsui O.S.K. Lines Ltd. led declines among Japan’s largest shipping companies, dropping 4.8 percent. Sony Corp. (6758), which depends on Europe for about a fifth of its sales, fell 1.5 percent after a slide in the euro hurt the earnings outlook. Olympus Corp. plunged as much as 20 percent after restated earnings reports showed the camera-maker had inflated assets by $1.3 billion. The Nikkei 225 Stock Average (NKY) fell 1.2 percent to 8,410.58 as of 10:06 a.m. in Tokyo. The broader Topix index dropped 1.1 percent to 728.97 after the central bank’s Tankan survey showed Europe’s debt crisis and yen appreciation are impeding the Japan’s recovery from the March earthquake disaster.

European Stocks Drop as Fed Refrains From Further Stimulus; Logica Plunges (Source: Bloomberg)
European stocks declined, with the benchmark Stoxx Europe 600 Index falling to its lowest level in two weeks, as the Federal Reserve refrained from taking new action to bolster the world’s largest economy. Rio Tinto Group and Eurasian Natural Resources Corp. paced a selloff in mining companies, both falling more than 4.5 percent as copper slid. Logica Plc tumbled 16 percent after the Anglo-Dutch computer services provider cut its forecast for sales growth this year. Bayerische Motoren Werke AG (BMW), the biggest maker of luxury cars, and Volkswagen AG (VOW), the maker of Audi vehicles, fell at least 4.5 percent. The Stoxx 600 plunged 2.1 percent to 232.44 at the close after the Fed failed to signal a third round of asset purchases known as quantitative easing, or QE3, following its meeting yesterday. The Stoxx 600 has retreated 16 percent this year as the euro area’s sovereign-debt crisis spread to the region’s larger economies.

Chow Tai Fook Drops in H.K. Debut After $2B IPO (Source: Bloomberg)
Chow Tai Fook Jewellery Group Ltd., a Hong Kong-based chain with revenue greater than Tiffany & Co. (TIF), fell on its first trading day in the city after raising HK$15.8 billion ($2 billion) in a share sale. Chow Tai Fook slid as much as 8.9 percent to HK$13.66 before trading at HK$13.86 as of 9:35 a.m., compared with its initial public offering price of HK$15, the bottom of a marketed range. The company got net proceeds of HK$15.3 billion through the city’s second-biggest IPO this year. The jeweler with more than 1,300 outlets in mainland China is among companies that priced their stock offerings at or near the low end of marketed ranges as stocks have tumbled in Hong Kong (HSCI) amid concerns about Europe’s debt crisis. New China Life Insurance Co. priced its $1.9 billion Hong Kong and Shanghai IPO near the bottom of price ranges, and Haitong Securities Co. scrapped a planned offering in the city.

Skills ‘Mismatch’ Hurts Unemployed in U.S. as Job Openings Grow: Economy (Source: Bloomberg)
Federal Reserve policy makers yesterday said that while the American job market shows signs of improving, they are still concerned with the “elevated” level of unemployment. One reason may be because employers can’t find qualified help, according to economists like Dean Maki. The number of positions waiting to be filled this year has climbed to levels last seen in 2008, when the jobless rate was around 6 percent. The housing bust and ensuing financial crisis put people out of work whose skills may not correspond with those needed by the health-care providers and engineering firms where jobs go wanting. “What’s going on here is a mismatch of the skills of the unemployed and at least some of the positions that are becoming available,” Maki, chief U.S. economist at Barclays Capital in New York, said in an interview. “This seems to be slowing the pace of filling those job openings.”

Treasuries Snap Three-day Advance Before Regional Manufacturing Reports (Source: Bloomberg)
Treasuries snapped a three-day gain before U.S. central bank reports on manufacturing that economists said will provide evidence that the economy is strong enough to avoid a recession. The U.S. is scheduled to sell $12 billion of five-year Treasury Inflation Protected Securities today in the last of four auctions of coupon-bearing debt this week. Industrial production increased 0.1 percent in November after rising 0.7 percent in October, according to the median forecast of economists surveyed by Bloomberg News. Manufacturing in the New York and Philadelphia regions picked up in December, regional reports may also show, based on separate surveys. “There’s no recession,” said Hideo Shimomura, who helps oversee the equivalent of $76.8 billion as chief fund investor at Mitsubishi UFJ Asset Management Co. in Tokyo, a unit of Japan’s biggest publicly traded bank. “Yields are going to rise in the next quarter.”

China Property Executives Buy Most Stock Since 2008 as Curbs Damp Values (Source: Bloomberg)
Executives of Chinese developers including Shimao Property Holdings Ltd. (813) and Glorious Property Holdings Ltd. (845) are buying the most stock in their companies since at least 2008, betting the government will ease curbs on the property market that had depressed the shares. Shimao’s billionaire Chairman Hui Wingmau bought 11 million shares in November, bringing the total this year to 82 million, the most since 2008, according to data compiled by Bloomberg. Glorious Chairman Zhang Zhirong, with a $5.4 billion net worth according to Forbes, purchased a record 119 million shares through 11 transactions, mostly in September, the data show.
Glorious, Shimao and KWG Property Holdings Ltd. (1813), whose executives also have been buying stock, lost half their values in 2011 as the government tightened mortgage requirements and introduced limits on properties owned to prevent an asset bubble. China this month cut the amount of cash banks must set aside as reserves for the first time in three years to prevent a bubble.

China to Impose Anti-Dumping Duties on GM, U.S. Cars (Source: Bloomberg)
China announced plans to impose anti-dumping duties on some vehicles imported from the U.S. after failing to block a U.S. tariff on Chinese tires. Punitive duties will be as high as 12.9 percent for autos from General Motors Co. (GM) and 8.8 percent for Chrysler Group LLC, China’s commerce ministry said today on its website. The U.S. units of Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI) will face duties of 2 percent and 2.7 percent respectively, it said. “The move shows that China is always capable of intervening politically in its markets,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “The automobile industry is very dependent on China for growth, and there’s doubts about the pace of future expansion.”

Japan Manufacturing Slides as Europe Crisis Hurts Demand (Source: Bloomberg)
Sentiment among Japan’s largest manufacturers deteriorated more than economists expected, underscoring the fragility of a post-quake recovery. The Tankan large manufacturer index fell to minus 4 from 2, the Bank of Japan (8301) said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a reading of minus 2. A negative number indicates that pessimists outnumber optimists. Executives said their sentiment will worsen further into 2012 as an appreciating currency and Europe’s debt crisis threaten profits at companies from Toyota Motor Corp. (7203) to TDK Corp. (6762) Half of the analysts in a Bloomberg News survey forecast that the economy will contract this quarter, bolstering the case for more stimulus from the central bank.
“This clearly shows that the economy is getting worse and it was surprising to see that the outlook is bleaker,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former BOJ official. “If sentiment keeps worsening and raises the chance of Japan falling into a recession, the BOJ will have to take more decisive action rather than simply buying more assets.”

No Surrender on India Retail Initiative: Singh (Source: Bloomberg)
India’s Prime Minister Manmohan Singh pledged to overcome opposition to opening the country’s retail industry to companies like Wal-Mart Stores Inc. (WMT), saying his two-decade reform agenda is the best way of reviving the slowest economic growth in two years. In an interview in his office at Parliament House in New Delhi, Singh said he’ll succeed in letting foreign companies buy majority stakes in Indian retailers after contesting regional elections early next year and as slower inflation bolsters support for his administration. He said he underestimated the opposition that derailed the plan a week ago and sent the benchmark stock index to its biggest three-day drop since July 2009.
“There was inadequate preparation and some partners in the coalition developed cold feet,” Singh said in the interview yesterday covering subjects from his legacy to the losses suffered by Kingfisher Airlines Ltd. “But I can assure you, India remains committed to a system of regulation that is supportive of enterprise and we will do everything to encourage foreign investment.”

Euro Trades Near 11-Month Low Before Spain Bond Sale, German Manufacturing (Source: Bloomberg)
The euro traded 0.3 percent from the weakest level in 11 months as Spain prepares to sell bonds amid concern Europe’s policy makers are struggling to stem the region’s debt crisis. The 17-nation euro was near the lowest level in 10 weeks against the yen before a report forecast to show Germany’s manufacturing industry contracted for a third-straight month, spurring concern that Europe’s fiscal problems will hamper growth in the region’s biggest economy. The dollar maintained gains against most major peers as Asian stocks dropped for a third day, extending a global decline in shares and bolstering demand for the world’s reserve currency as a refuge. “We’ve got a very negative view on growth for Europe next year,” said Robert Rennie, Sydney-based chief currency strategist at Westpac Banking Corp., Australia’s second-largest lender. Fiscal austerity and tightening financial conditions “will develop into a fully blown recession,” he said.

20111215 1030 Global Commodities Related News.

E.U. debt fight a threat to world crop exports: Maguire
-- Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, Dec 14 (Reuters) - The spiraling debt worries plaguing European politicians in recent months is starting to have an impact on U.S. agricultural trade and could well restrict U.S. and global crop shipments throughout much of 2012.
Europe is the World's second largest importer of soybeans  and wheat, and a major importer of corn, beef and many other  agricultural products, and so represents a significant trading  partner for U.S. crop and food producers. However, the recent  strangling of credit in the region has served to stifle trade  finance there to the degree that U.S. agricultural shipments to  the E.U. have already dropped off sharply in recent weeks and  pose a notable risk to the outlook for U.S. agricultural trade  in 2012.

Commodities Fall Most in 11 Weeks in ‘Panic Selling’ on Europe’s Debt Woes (Source: Bloomberg)
Commodities posted the biggest drop in almost 11 weeks, led by gold and crude oil, as concerns mounted that European leaders are failing to stem the region’s debt crisis, eroding demand for energy, metal and crops. The Standard & Poor’s GSCI index of 24 raw materials declined 4.1 percent to settle at 621.93 at 3:43 p.m. New York time, swinging to a loss in 2011. Gold closed at the lowest price in five months, with silver at the cheapest since February. Oil slid more than 5 percent. German Chancellor Angela Merkel said there is no easy solution to the European crisis after rejecting an increase in the upper limit of funding for the region’s permanent bailout mechanism. The euro fell below $1.30 for the first time since January. The Federal Reserve yesterday refrained from taking new measures to spur growth.

As China Goes, So Go Commodities (Source: CME)
You want to know where the global commodities markets are heading in the coming years? Then it's probably best that you remember a single word: China. As the biggest and one of the fastest-growing of the world's developing economies, China has become a voracious consumer of industrial and agricultural commodities. Its shifting needs are now the most important driver in the prices of many of those goods. Producers often base massive capital investments largely on their expectations for Chinese demand for their products. Investors often make similar calculations before buying or selling commodities contracts or related securities. That's why no single factor is likely to have a more far-reaching impact on commodities markets over the next few years than how Chinese demand changes as the country's economy evolves.
"That's the big question," says Richard Adkerson, chief executive of Freeport-McMoRan Copper & Gold Inc. So what's the answer? Here are three possible economic scenarios, and what each would mean for global commodities markets.
Full Speed Ahead
If China's consumption of commodities continues to grow at the rate it has over the past 10 years, this is what the world would have to do to meet that demand in 2020, assuming that the rest of the world's collective appetite doesn't change at all: Pump almost as much additional crude oil as Saudi Arabia now provides per year. Grow more than three times as many soybeans as currently come out of Iowa, which alone provides 5% of global output. Extract nearly three times as much new copper as the current annual production from Chile, which mines about four times as much as any other nation. And that's just for starters. Vast increases in supply would be needed for all sorts of other commodities as well.
Prices that rocketed to record heights in recent years on Chinese buying could fly even higher. That would be good news for companies that produce those commodities and investors who have placed bets on them -- unless high prices abruptly choke off demand or spur the Chinese and other buyers of commodities to seek alternative goods. Materials in tight supply or at risk of significant constraint, like crude oil, copper and palladium, could be vulnerable to sharp price increases. Their prices shot up 50%, 106% and 207%, respectively, in the five years through 2010. By contrast, aluminum is plentiful, cotton production is rising sharply and nickel output is climbing -- at least for the moment -- which can make them less vulnerable. It's also easier to produce some commodities in greater quantity when needed, which can limit price shocks. It takes less time, for example, to grow more corn than it does to find new oil beneath the ocean floor.
Many analysts consider the fast-growth scenario improbable. The consensus is that China is headed for slower economic growth than it experienced from 2001 to 2010, when its annual rate of expansion ranged from 8.3% to 14.2% and reached double digits six times, according to the World Bank. If the consensus is right, the question becomes how much China's growth will slow. A growth rate of 4% to 6% would be a big leap forward for the U.S. economy and plenty of others. But not for China. That's the range of growth expected for the Chinese economy by around 2013 or 2014 by Roubini Global Economics LLC, a New York-based research and consulting firm. Shelley Goldberg, the firm's director of global resources and commodity strategy, calls that a "hard landing" after the far more rapid expansion of the past decade. "Obviously, it doesn't bode well for commodities," Ms. Goldberg says.
Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction -- which would be at risk from weakness in the Chinese real-estate market -- and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble, she says, because the fuel is heavily used in China to generate power. Some commodities could take a hit not because China uses more of them than anyone else but because it has been providing much of the growth in their markets. For instance, while China accounts for just 11% of global oil demand, according to Barclays Capital, it provides 60% of the growth in that demand. Similarly, a hard landing might hurt the soybean market more than the corn market, because China is a huge importer of soybeans but produces almost all the corn it needs at home, says Kevin Norrish, managing director for commodities research at Barclays Capital.
For many China watchers, including Barclays, the most probable scenario is an economy that keeps expanding strongly but at a less blistering pace, with annual GDP growth rates in the high single digits. That would mean continued upward pressure on most commodities prices, with some possibly rising substantially, but in most cases not the soaring prices that a red-hot economy would produce. "We still see loads of reasons why growth is going to continue, but the rate of growth is going to slow over time," says Jim Lennon, who specializes in Chinese commodity markets as an analyst at Macquarie Group Ltd., one of the leading financiers for commodities producers. The first half of the current decade will see more rapid growth than the second half, in Mr. Lennon's view, as the main engine of the Chinese economy over time switches from massive infrastructure projects to consumer demand for durable goods. The result will be a tamer increase in consumption of base metals and other commodities, he says.
Between 2000 and 2010, Chinese consumption of copper, aluminum, zinc, nickel and lead grew at compound annual rates ranging from 13.9% to 24.4%, according to a presentation Mr. Lennon delivered in October. For 2010 to 2020, the projected growth range is 5.3% to 9.3%, the presentation said. Even in a slower-but-steady world, demand -- and prices -- could shoot up for some commodities. For instance, China uses less natural gas per capita than many other countries, notes Neil Beveridge, a Hong Kong-based senior oil analyst for investment bank Sanford C. Bernstein. That will change, he says, as more people use the fuel to heat or cool their homes and greater volumes are consumed by industry. In 2010, China imported about 1.6 billion cubic feet of natural gas per day, according to the U.S. Energy Information Administration. Mr. Beveridge expects China's imports to grow to 10 billion cubic feet per day by 2015 and 20 billion by 2020, more than any other nation's at that point.
Meanwhile, demand is likely to continue growing for some food commodities but shrink for others, says Scott Rozelle, a professor at Stanford University who studies Chinese agriculture. As China's growing middle class consumes more meat, animal feed such as soybeans and corn will continue to be in increasing demand, he says. But "the demand for wheat and rice will fall" as diets continue to evolve, Mr. Rozelle says, and China may occasionally even export some of those less-coveted staples, as it has over the past 10 years. One thing to keep in mind is that China is such a big market now that any increase in consumption -- even in a slower but steady economic expansion -- can create a big chunk of fresh demand, and push prices up accordingly. As Ms. Goldberg notes, "They still are 1.3 billion people."

Corn (Source: CME)
US corn futures end sharply lower on pressure from a stronger US dollar, but hold above a closely watched support level. Given sharp losses in markets ranging from crude oil to gold, agricultural commodity prices "are holding up stronger than I thought," said Frank Cholly Jr, senior commodities broker with RJO Futures. He sees upside potential for corn once the euro bottoms. Worries about Europe's debt crisis and a broader economic downturn weighing on prices. March contract holds above support at $5.80, a nine-month low set last week. Drop below that could prompt more liquidation, traders say. CBOT March corn ends down 2.3%, or 13 3/4c, at $5.80 3/4.

Wheat (Source: CME)
US wheat futures tumble as worries about Europe and poor demand weigh. March CBOT wheat ends at a contract low amid a broad commodity slump caused by Europe and a surging dollar. "The best thing you can say about today's grain markets were they performed massively better than the gold or crude markets," says Dave Marshall, an independent broker and adviser in southern Illinois. Traders add that weak export demand gives the market little reason to bounce back. March CBOT wheat ends down 3.3%, or 19 3/4c, to $5.80 3/4. March KCBT wheat ends down 20 1/2c to $6.35 1/2 and March MGEX wheat closes down 14 1/4c to $8.15 3/4.

Rice (Source: CME)
US rice futures extend their free-fall, ending lower amid widespread commodity losses prompted by a stronger dollar and worries about Europe's debt. Grains fell across the board. Rice has slumped throughout the fall on poor demand and ample world supplies, and set a fresh 5 1/2-month low. CBOT Jan. rice ends down 1.4%, or 20c, to $13.65 per hundredweight.

French Soft Wheat Harvest Seen At 33.8M Tons (Source: CME)
French soft wheat production is likely to fall to 33.8 million metric tons in the 2011-2012 season, from an estimated 35.7 million tons in the same period a year earlier, France Agrimer, said. The government agency only slightly raised its estimate for 2011-2012 from a previous forecast of 33.7 tons last month. France Agrimer forecasts soft wheat exports to non-European countries will fall to 8.6 million tons, down from 12.9 tons in 2010-2011, and exports to European countries will fall to 6.5 million tons from 6.7 million tons last season. Regarding non-EU exports, "five million tons have already been dispatched as of the first week of December. This means that non-EU exports are certainly going to slow as we cannot export what we don't have", said the agency president, Remi Haquin.

Global Rice Prices Head Higher (Source: CME)
Aggressive buying by Asian governments is pushing up rice prices, even as the world heads for a second straight year of record harvests. Thailand, India and Indonesia are stockpiling rice to ensure they have a secure, reasonably priced supply for their people and also to guarantee artificially high prices to their farmers. Earlier this year, rising food prices contributed to inflation in parts of Asia, causing some jitters. The increased buying follows flooding from July to October that destroyed about 20% of the main rice crop in Thailand, the world's biggest rice exporter. While nations like India and China have increased their output, boosting the global rice harvest, much of it isn't available for export. All of this is good news for bullish investors, who saw rice futures on the Chicago Board of Trade climb to 18.255 cents a pound in September, their highest level in almost three years.
Futures have since eased, by almost four cents, but analysts say they could revisit the September high if the Thai export squeeze continues. The International Grains Council, or IGC, predicts Thailand will export about eight million metric tons of rice in 2012, a 24% drop from a year earlier. Rice-industry officials say exports may slump to five million tons because in addition to the flooding, the Thai government has promised to buy unmilled rice, or paddy -- which is rice with its husk intact -- from farmers at a price that's now about 50% above the prevailing market rate. The price of milled benchmark-grade white rice is at a three-year high on the cash market in Thailand and Vietnam, which together control about half of the world's trade. Analysts say prices could move even higher.
Other countries may not have the desire, or ability, to export more rice. India's government buys more than a third of its own crop, and IGC says Indian exports won't exceed 4.5 million tons in the marketing year that started Oct. 1. And the U.S. says dry weather may reduce its rice output 21% to a six-year low in the year ending July 31.

U.S. corn, soy dip on Europe crisis, higher supplies
SINGAPORE, Dec 14 (Reuters) - U.S. corn and soy fell , giving up last session's modest gains as Europe's unresolved debt crisis weighed on riskier assets, while hopes of plentiful global grain and oilseed supplies also dented sentiment.
"It is perhaps the strength in the U.S. dollar which is on the back of euro zone concerns," said Brett Cooper, senior manager of markets at FCStone Australia.

Bangladesh not to import rice on record crops -official
DHAKA, Dec 14 (Reuters) - Bangladesh will not import rice over the next six months to June 2012 because it has bulging domestic stocks and domestic procurement is rising, thanks to successive record crops, a senior procurement official said on Wednesday.
"We have imported 350,000 tonnes of rice so far in the current fiscal year and we don't need to buy further from the global markets in the rest of the year," said the official. The fiscal year started in July.

Australia 2011/12 wheat output estimates
SYDNEY, Dec 14 (Reuters) - Australia, one of the world's top four wheat exporters, is set to reap a record 28.3 million tonne crop in 2011/12, the U.S. Department of Agriculture said in its latest forecast, although recent rain is threatening to reduce the quality of the crop in some areas.
USDA revised up its forecast by 2.3 million tonnes in line with the latest Australian government forecast estimate.

Ukraine AgMin raises grain exports forecast -report
KIEV, Dec 13 (Reuters) - Ukraine's Agriculture Ministry has raised its forecast of grain exports in the current season to 25 to 27 million tonnes from 23 to 25 million tonnes, Interfax news agency quoted minister Mykola Prysyazhnyuk as saying on Tuesday.
The ministry's previous forecast was driven by concerns about winter grains. A severe drought had hit most of Ukraine's grain-producing areas and could have killed a third of winter grain crops sown for the 2012 harvest.

UK wheat exports edge up, still below last year
LONDON, Dec 13 (Reuters) - UK wheat exports edged up in October, although continuing to run significantly below last season's levels, customs data showed on Tuesday.
Shipments during October totalled 291,511 tonnes, up from the prior month's 277,315 tonnes.

Canada grain sector wary of Wheat Board battle
WINNIPEG, Manitoba, Dec 13 (Reuters) - A wary Canadian grain industry will ease cautiously into signing forward price contracts for the prized 2012 wheat and barley crops, as legal entanglements over Ottawa's plan to end the Wheat Board's marketing monopoly hamper any swift moves into an open market.
A Conservative government bill is set to end the Canadian Wheat Board's monopoly on western wheat and barley sales next August. The change would shake up the industry, creating an open market and leaving the CWB a smaller, optional grain buyer.

Global Coffee Market Prepares for Record Espresso-Bean Jolt: Commodities (Source: Bloomberg)
Record robusta harvests in Vietnam and Brazil and potentially the biggest jump in Indonesian output in 16 years are boosting supplies of the coffee used to make espressos just as slowing economic growth threatens demand. Production may climb for a fourth year, gaining 2.3 percent to 55.98 million bags (3.36 million metric tons) in 2011-2012, Rabobank International predicts. More supply will create the biggest glut in at least four years, according to Macquarie Group Ltd. Prices that already fell 9 percent this year will drop a further 8.5 percent to $1,750 a ton by June 30, the lowest level since October 2010, the median estimate in a Bloomberg survey of 13 traders showed.
Robusta surged 62 percent in London trading in 2010 as record demand created the first shortages in at least three years, according to Macquarie. Supply is now expanding amid mounting concern that Europe’s debt crisis will derail the global economy. Coffee sales fell for the first time in seven years in 2009 as nations contended with recessions, according to Euromonitor International Ltd., a London-based research group.

Indonesia frets about sugar stocks as farmers protest imports
JAKARTA, Dec 14 (Reuters) - Indonesia is concerned about domestic white sugar supplies between March and May next year when current stocks of 740,000 tonnes run out and the new crushing season has yet to start, a senior trade ministry official said on Wednesday.
Bayu Krisnamurthi, deputy trade minister said this at a meeting with the Indonesia Sugarcane Farmers Association (APTRI), who was demanding the cancellation of a plan to import 500,000 tonnes of sugar next year and other policies they say have made them lose several hundred million dollars.

Australia sees sugar exports up despite trimming output fcast
SYDNEY, Dec 14 (Reuters) - Australian sugar exports are forecast to increase by 7 percent in 2011-12 to 2.8 million tonnes in line with a rise in production from canefields recovering from cyclone damage earlier this year, the government's commodities forecaster said.
The forecast is mostly unchanged from one made by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) in September, despite a downward revision of  expections for the harvest.

Vietnam 11/12 coffee output seen up-attache
Dec 13 - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Vietnam:
"Post forecasts for MY 2011/2012 a production increase to 20.6 million 60 kg-bags (equivalent to 1.24 million tonnes). The rainy season continued until the end of November, which delayed the coffee harvest. Post expects that new-crop coffee will be ready in the local market from the second week of December.
According to official data from Vietnam's General Statistics Office, in MY 2010/2011, Vietnam exported 1.232 million tonnes of all types of coffee products, valued at a record $2.6 billion. This is an increase of 6 percent in volume and 56 percent in value over MY 2009/2010 due, in part, to high global prices.

Prospects for next Brazil cane crop better -Unica
SAO PAULO, Dec 13 (Reuters) - After several months of downward revisions in Brazil's 2011/12 main center-south cane crop, the season is ending with a whimper, but next year already looks better, sugar and ethanol industry association Unica said on Tuesday.
Nearly all of the 350-odd sugar and ethanol mills in the center-south, which accounts for 90 percent of Brazil's cane output, have closed for maintenance over the interharvest period, Unica said.

Mauritius 2011 sugar estimate lifted to 430,000 T
PORT LOUIS, Dec 13 (Reuters) - Mauritius' Chamber of Agriculture revised its 2011 sugar production forecast upward by 4.9 percent to 430,000 tonnes on Tuesday on the back of improved sugar cane productivity.
Sugar, long a pillar of the Indian Ocean island's nearly $10 billion economy, accounts for roughly 1.2 percent of gross domestic product.

Oil Trades Near Five-Week Low on OPEC Production Ceiling, European Debt (Source: Bloomberg)
Oil traded near the lowest price in more than five weeks in New York after OPEC raised its output ceiling and Europe’s debt crisis worsened, threatening a recession that may curb demand for commodities. Futures were little changed after dropping yesterday the most since September after members of the Organization of Petroleum Exporting Countries meeting in Vienna agreed to raise their output target to 30 million barrels a day. Prices were also depressed by events in Europe, with Italy’s five-year bond yield climbing to a 14-year high at an auction. Ernst & Young LLP said the euro region is likely to slip back into recession. “Europe and OPEC are the drivers,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. “European leaders haven’t addressed the issue of potential contagion of the sovereign debt problems. That creates the possibility that confidence will be a problem for international economies, and a lack of confidence has the impact of dampening demand for most things, including commodities.”

Brent slips towards $109 ahead of OPEC; EU woes weigh
SINGAPORE, Dec 14 (Reuters) - Brent crude slipped towards $109 ahead of a meeting of oil cartel OPEC as investors turned their attention to the global growth outlook after the U.S. Federal Reserve warned that turmoil in Europe threatened the U.S. economy.
"There is some profit-taking we are seeing today after oil surged so high yesterday," said Tetsu Emori, a fund manager with Astramax Co. in Tokyo.  

OPEC readies 30 mln bpd oil deal
VIENNA, Dec 14 (Reuters) - OPEC oil producers gathered on Wednesday for a meeting that is expected to reset a production limit for the first time in three years and settle an argument over output levels in Saudi Arabia's favour.
The Organization of the Petroleum Exporting Countries ministers will consider a new supply target of 30 million barrels daily, roughly in line with current production.

Sri Lanka's diesel imports seen up in Jan -sources
SINGAPORE, Dec 14 (Reuters) - Sri Lanka's diesel imports for January are expected to double from previous months as domestic demand for power generation rises, industry sources said on Wednesday.
State-owned company Ceylon Petroleum Co (Ceypetco) is seeking about 600,000 barrels in total of 0.25 percent sulphur gasoil for delivery in January, through three different spot tenders, they said.

OPEC, IEA agree on balanced oil market ahead
LONDON, Dec 13 (Reuters) - Healthy production levels by OPEC will help balance oil markets next year as demand growth slows, the West's energy watchdog and OPEC said on Tuesday, a day ahead of a policy-setting meeting by the producer group.
The International Energy Agency said the Organization of the Petroleum Exporting Countries had raised output to its highest level in more than three years, and the oil producer group said it was now pumping more than might be required next year.

Euro Coal-Prices stable despite oil gain
LONDON, Dec 13 (Reuters) - Physical prompt coal prices were little changed on Tuesday on shrinking liquidity in the holiday season in Europe, despite a rally in oil futures after the International Energy Agency forecast demand growth next year.
The IEA's five-year outlook for coal was more bullish than for oil, with a forecast of a steady rise in European and Asian imported prices to 2016 due to growing absolute demand from China and relatively strong demand from India.
Coal outlook uncertain, China remains driver - IEA
LONDON, Dec 13 (Reuters) - The forecast for coal to 2016 is marked by extreme uncertainty over the global economic outlook and the impact of shifts in China's domestic market, the International Energy Agency said on Tuesday.
Coal demand worldwide will keep growing in the medium term, despite calls in many countries for reducing reliance on high-carbon fuels, the IEA said in its Coal Medium-Term Market Report 2011 released on Tuesday.

Gold May Extend Rout to Enter Bear Market as Rallying Dollar Hurts Demand (Source: Bloomberg)
Gold may extend a rout into a fourth straight day as a rally in the dollar erodes demand for the metal as an alternative investment, raising the prospect that the commodity may tumble into a bear market. Spot gold traded little changed at $1,576.65 an ounce at 9:22 a.m. in Singapore after swinging gains and losses. Immediate-delivery metal lost 8 percent in the preceding three days, and is set for a second weekly loss. The February-delivery contract slumped as much as 1 percent to $1,571.50 on the Comex. The dollar rose to an 11-month high against the euro yesterday on signs of increased funding stress as Europe battles its debt crisis, driving spot gold to $1,563.38, the lowest level since Sept. 26. Gold dropped below its 200-day moving average yesterday for the first time in almost three years, indicating to some analysts that more declines may be in store.

Iron Ore-Spot at 2-week lows on subdued China steel demand
SINGAPORE, Dec 14 (Reuters) - Iron ore dropped to two-week lows with offer prices in top buyer China retreating on Wednesday, reflecting restrained buying interest from steel producers coping with sluggish demand.
Prices of steel in China, the world's biggest consumer and producer of the construction raw material, have been mostly flat to lower in recent weeks, trimming crude steel output to 49.88 million tonnes in November, the lowest in 14 months.

Australia lifts iron ore export forecast on China
SYDNEY, Dec 13 (Reuters) - Australia has lifted its forecast for iron ore exports by 2.4 percent to a record 460 million tonnes in 2011/12 as producers dig more mines to feed a growing hunger in China for imported ore to make steel.
Iron ore prices have weakened this quarter as questions persist over China's future growth prospects, but that has done little to deter mega-producers such as Rio Tinto   and BHP Billiton   from earmarking billions of dollars to expand in Australia's western iron range.

Baltic index turns negative, capes seen supported
LONDON, Dec 13 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned negative on Tuesday on concerns about a glut of vessels, although strong Chinese demand for iron ore limited losses on the capesize market.
The shipping sector in coming months is expected to face a supply glut and economic gloom that will pressure earnings, including concerns over the outlook for Chinese demand for raw materials.

Ship orders languish in the dry dock of funding
LONDON/SEOUL, Dec 13 (Reuters) - The cancellation of an order from South Korea's second-biggest ship builder, the country's first this year, signals a worsening storm for the seaborne sector as bank funding dries up and overcapacity pulls earnings further under water.
Daewoo Shipbuilding & Marine Engineering  said late on Friday that a Greek shipper had cancelled a 589.3 billion Korean won ($514 million) order for two very large crude carrier (VLCCs) oil tankers and two bulk carriers, made at the height of a shipping boom in 2008.

20111215 1028 Soy Oil & Palm Oil Related News.

ITS CPO export down 16.6% to 668,538 tonnes for the period of 1~15 Dec 2011.
SGS CPO export down 19.2% to 649,138 tonnes for the period of 1~15 Dec 2011.

Soybeans (Source: CME)
US soybean futures succumb to pressure Wednesday from a stronger dollar and broad weakness in commodities and equities, tumbling to a 14-month low. Worries about Europe's debt crisis and the global economy set the negative tone, traders say. The outside pressure nullified any support from worries about the South America crop, which is facing dry weather that, if it persists, could harm yields. Soybean prices, pressured throughout the fall by weak exports, fall to lowest level since Oct. 2010. CBOT Jan. soybeans end down 18 1/2c, to 1.7%, to $11 per bushel.

Soybean Meal/Oil (Source: CME)
March soyoil down 0.83c to 48.80 cents/lb, and March soymeal down $1.60 to $286.30.

Palm near 6-week lows on Europe, demand concerns
JAKARTA, Dec 14 (Reuters) - Palm futures dropped to trade near six-week lows, weighed down by the euro zone debt crisis and doubts about demand after bleak inventory data earlier this week.
"Palm oil looks a bit slow," said a Jakarta-based trader.

India's Nov vegoil imports up 28 pct on year - trade
MUMBAI, Dec 14 (Reuters) - India imported 855,363 tonnes of vegetable oils in November, up 28 percent from 668,917 tonnes a year ago, data released by a leading trade body showed on Wednesday, slightly above average expectations in a Reuters poll.
India's vegetable import in November is seen at 828, 875 tonnes, according to a Reuters poll.

Slow soymeal use restrains soy crushings- Oil World
HAMBURG, Dec 13 (Reuters) - Sluggish global soymeal demand is restraining soybean crushings and so production of soyoil, Hamburg-based oilseeds analysts Oil World said on Tuesday.
"World consumption of soymeal will be smaller than expected in the Oct./Dec. quarter, probably rising by only 0.8 percent from last year to an estimated 46.0 million tonnes, thus continuing the sluggishness already experienced in July/Sept. 2011," Oil World said.