Thursday, December 22, 2011

20111222 1058 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares, euro ease as bank funding doubts persist
TOKYO, Dec 22 (Reuters) - Asian shares and the euro eased on Thursday as doubts remained over how much of the funds banks raised from an inaugural long-term European Central Bank tender will actually flow into struggling euro zone economies and help restore confidence.
"With bank balance sheets under stress and the system still required to raise capital ratios under Basel III, the temptation will surely be for banks to sit on this additional liquidity, rather than recycle it back through the economy," wrote BNP Paribas in a daily note.    

COMMODITIES-Oil extends gains in thinly traded markets
NEW YORK, Dec 21 (Reuters) - Oil prices closed at a one-week high on Wednesday, leading gains in thinly traded commodity markets, as tumbling U.S. crude stockpiles indicated more demand for energy and an offer of cheap loans for struggling European banks aided sentiment.
"Volumes are predictably low because of the pre-holiday rounds that we're in. High trading deposits in some markets like gold and silver are also putting a squeeze on trades," said George Gero, vice president at RBC Capital Markets Global Futures in New York.

China shows no qualms over price of Iran oil showdown
BEIJING/SINGAPORE, Dec 20 (Reuters) - China has made an audacious move to force Iran to sell it cheaper crude, disrupting the flow of over 10 percent of the Islamic Republic's exports by cutting January imports in half.
In contrast to other top Asian buyers worried about what sanctions mean for crude flows from the world's fifth-largest exporter, China has shown no public qualms about the risk that a disruption will drive up the cost of oil.

Oil rises as US stockpiles slump to near 3-year low
NEW YORK, Dec 21 (Reuters) - Oil prices rose for a third straight day on Wednesday as U.S. crude inventories dropped to their lowest in nearly three years, overshadowing worries about the euro zone debt crisis.
"Overall, the (oil stocks) data is mildly bullish and I expect we will continue the trend for the next week," said Mark Waggoner, president at Excel Futures.

NYMEX-Natural gas ends up for 2nd day, shorts cover
NEW YORK, Dec 21 (Reuters) - U.S. natural gas futures reversed course and ended higher on Wednesday for a second day, backed by technical buying after an early sell-off stalled, but record high supplies and fairly mild weather forecasts continued to limit the upside.
"The market has been trending lower for days. We were bound to get some retracement, maybe in sympathy with crude," said Tom Saal, senior vice president at INTL Hencorp in Miami,    

20111222 1025 Global Economic Related News.

Malaysia: CPI for November up 3.3%
Malaysia’s Consumer Price Index (CPI) for November 2011 rose 3.3% to 104.1 from 100.8 in the same month last year. When compared to the previous month, the CPI increased by 0.1%, the Statistics Department said in its latest release yesterday. It said that for the first 11 months of the year, CPI rose 3.2% to 103.1 compared to 99.9 in the same period last year. (Malaysian Reserve)

China: Dim sum sales to double in 2012, underwriters say
CNY bond sales in Hong Kong may double in 2012 as Chinese companies take advantage of lower borrowing costs and European issuers seek alternatives to EUR fundraising, the market’s biggest underwriters predict. So-called Dim Sum offerings may rise to CNY300bn (USD47.3bn) in 2012 from CNY150bn this year. While yields on Dim Sum debt have climbed to 5.91% on the Bank of China Offshore RMB Index, they’re lower than the 6.56% one-year benchmark lending rate and the 10% yield for BBB+ rated issuers in China. Average Dim Sum bond yields jumped almost 4 ppts this year as traders pared expectations for CNY appreciation and debt ratings companies raised “red flags” on corporate governance. (Bloomberg)

India: Bearish Rupee bets at ‘08 high as confidence ebbs
International investors are boosting bets that India’s INR will extend the worst slide since 2008 as an economic slump deepens, suggesting a lack of confidence in the central bank’s steps to curb exchange-rate volatility. Twelve-month non-deliverable forward contracts on the rupee dropped 2% this month to INR55.85/USD even as the Reserve Bank of India introduced measures to boost USD supply and curb INR sales. Forwards fell as much as 6.5% below onshore spot INR prices yesterday, the deepest discount since 2008, data compiled by Bloomberg show. (Bloomberg)

UK: Consumer confidence down
UK consumer confidence fell this month to its lowest level since the depths of the financial crisis in 2009 as pessimism about the economy increased amid continuing turmoil in the euro area, GfK NOP Ltd said. An index of sentiment dropped two points from November to -33, the weakest reading since February 2009, the London-based research group said in an e-mailed report. A measure of expectations for the economy over the next year fell eight points to -41, the lowest since January 2009. (StarBiz)

US: Shale boom heralds fifth year of gas declines
Booming US natural gas production from shale formations and slowing demand from households, factories and power plants are poised to send prices down for an unprecedented fifth year in 2012. Gas may tumble 8.2% from its 2011 average next year, as output rises 2.8% to a record 67.72bn cubic feet a day, according to the Energy Department. Demand will probably climb 1.7%, after a 1.8% increase this year, the department said in its 6 Dec Short-Term Energy Outlook. (Bloomberg)

US: Sales of existing US homes rise from deep slump
Sales of existing homes in the US rose in November to a 10-month high, showing demand may be starting to stabilize following a plunge over the past four years that was steeper than previously calculated. Purchases climbed 4% to a 4.42m annual pace, the most since January, the National Association of Realtors said yesterday in Washington. The group revised down figures going back to 2007 by an average 14%, putting them more in line with other measures of demand. (Bloomberg)

US: Mortgage bonds miss rally as Europe sales loom
US mortgage bonds that lack government backing are trading at about the lowest prices in more than a year, even as riskier assets from high-yield company bonds to stocks rally, with investors bracing for sales of home-loan debt by European banks. A set of subprime bonds tumbled to a two-year low of 28.1 cents. Banks across Europe have pledged to cut more than EUR950bn (USD1.2trn) of assets during the next two years, after regulators made them increase core capital to 9% by June instead of in 2019. (Bloomberg)

Malaysia : Maintains 5% GDP growth forecast for 2011, 2012  The government is maintaining its GDP) forecast for this year and next year at 5%, based on the strong domestic demand. The PM said that the country was still committed towards the 5% growth this year and that it was on course to achieving that. He also said that in order to ensure strong domestic demand, the government departments and ministries must achieve a very high rate of spending in terms of their development expenditure. (Bernama)

US: Faces 2013 Fitch AAA downgrade unless deficit cuts made  The US’s AAA rating will probably be cut by Fitch by the end of 2013 unless lawmakers are able to formulate a plan to reduce the budget deficit after next year’s congressional and presidential elections. In order to do so, agreement will also have to be reached on raising the federal debt ceiling, which is expected to become binding in the 1H of 2013. Fitch assigned a negative outlook on the US in November after a congressional committee failed to agree on budget cuts. The rating firm forecast federal public-debt will exceed 90% of GDP by the end of the decade unless the government addresses rising health and social security spending through tax increases or reductions in expenditures. (Bloomberg)

US: Fed proposes new, tougher rules for big banks  The Fed said the largest US banks and financial companies should hold extra cash on their balance sheets to cushion themselves against financial crises. The proposal by the chief US banking regulator, will affect banks with assets over $50bn in assets. There are even stricter rules for companies with over $500bn in assets such as JPMorgan Chase, Goldman Sachs and Citigroup.US banks opposed the rules citing they would be forced to hold too much extra cash, hampering their ability to make loans. (Associated Press)

EU: Banks gorge on ECB loans  Banks gobbled up nearly 490bn euros in 3-year cut-price loans from the ECB, easing immediate fears of a credit crunch but leaving unresolved how much will flow to needy euro zone economies. The near half a trn euro take-up of ECB funds exceeded almost all forecasts. A total of 523 banks borrowed with demand way above the 310bn euros expected by traders polled by Reuters, making it the most the bank has ever pumped into the financial system. (Reuters)

EU: Mark Mobius sees end to Euro crisis by June  Mark Mobius expects Europe's debt crisis to be resolved in the middle of next year, sparking a rise in global bourses. Mobius, who as chairman of Franklin Templeton's Emerging Markets Group oversees $50bn in investments, said investors were overstating the potential impact of the crisis. He warned, however, that the size of derivatives contracts tied to European sovereign debt offered real risks to investors. (Reuters)

UK: Moody's says Euro crisis endangers UK's top-notch rating  According to Moody, Britain's top-notch debt rating is under threat from the crisis in the euro zone, and further shocks to the country's economy could derail government efforts to balance the budget. Britain's scope to absorb further fiscal shocks while retaining its stable outlook and triple-A rating have deteriorated over the past year due to weak growth. (Reuters)

Italy: GDP contracts, signaling new recession  The Italian economy contracted in the third quarter, signaling the country may have entered its fifth recession since 2001 as the government adopts new austerity measures that will further weigh on growth. GDP declined 0.2% from the second quarter, when it expanded 0.3%. It was the first contraction since the final three months of 2009 and matched the median forecast in a survey of 23 economists by Bloomberg News. Consumer spending declined 0.2% from the second quarter, with investment contracting 0.6%. Exports grew 1.6% in the quarter, while imports fell 1.1%. (Bloomberg)

Hungary: May raise EU’s highest rate again as IMF pressure mounts  Hungary may need to raise the EU’s highest benchmark interest rate next year as talks over a bailout stalled and the government and the central bank spar over monetary-policy independence. The Magyar Nemzeti Bank increased the two-week deposit rate by a half- point for a second month to 7% yesterday and said it would raise borrowing costs further if country risk worsens. Policy makers also considered a quarter-point increase. The European Commission and the IMF suspended talks on a financial aid package to Hungary last week, citing objections to a draft law on the central bank that they say may undermine policy autonomy. (Bloomberg)

South Korea: Overseas investors jump back into stocks after Kim’s death  Foreign investors bought the most Kospi index stocks in three weeks as some fund managers overlooked possible political upheaval in North Korea to buy equities in South Korea, Asia’s cheapest major market. Overseas investors purchased a net 329.9bn won ($287m) of shares in Kospi companies yesterday, the most since Dec. 1, according to data from Korea Exchange Inc. A net 564.9bn won was sold during the previous two days, the data showed, after the death of North Korean leader Kim Jong Il sparked concerns over succession in the totalitarian nation. (Bloomberg)

China: Facing slowing growth, high prices  Chinese Premier, Wen Jiabao said slowing growth and elevated prices are adding to the difficulties the government faces in helping manage the world’s second-biggest economy. He also said China will keep its export policies such as tax rebates “basically stable” next year and use fiscal spending to support “structural tax cuts” and to improve people’s lives. (Bloomberg)

Japan: November exports fall as Asia demand weakens  Japan's exports fell at their fastest annual pace in 6 months in Nov as a persistently strong yen, Europe's sovereign debt crisis and a slowdown in emerging economies weighed on overseas demand.The decline in exports and a jump in imports tipped Japan's trade balance nd into a deficit of 684.7bn yen ($8.8bn), bigger than forecast and the 2 straight month in the red, finance ministry data showed on Wednesday. This casts doubt over whether Japan can achieve a solid economic recovery early next year, although the central bank is set to stand pat on policy at a rate review. (Reuters)

20111222 1023 Malaysia Corporate Related News.

AEON Credit: Gains on firm 3Q earnings
AEON Credit shares advanced on Wednesday after its net profit for the 3Q2011 rose 57.4% to RM25.2m from RM16.0m y-o-y driven by increase in revenue. The revenue for the quarter was up 31.7% to RM89.81m from RM68.18m. EPS for the quarter was 21.05 sen compared to 13.37 sen in 2010, while NAV per share was RM2.53. The increase in revenue was due mainly to growth in business on increased financing transaction volume as a result of marketing and promotion activities during the festive periods. (Financial Daily)

Aeon Co (M): Buys 7.37ha lands in Kulai for RM22.2m for shopping centre
Aeon Co (M) is acquiring two pieces of freehold land in Kulai for RM22.2m as part of its strategy to expand its retail business. It had entered into a sale and purchase agreement with Genting Property Sdn Bhd to acquire the freehold lands measuring a total 7.37ha for the purpose of operating a business of shopping centre with car parks and departmental stores cum supermarket. (Financial Daily)

Fajarbaru: To build RM62.0m sewage treatment plant
Fajarbaru has secured a RM62.0m contract to build a sewage treatment plant at Klang, Selangor. Fajarbaru said the construction period was 30 months commencing from the date of possession on Jan 11, 2012. The contract is expected to contribute positively to its earnings for the financial years 2012 to 2015. (Financial Daily)

Jaya Tiasa: 2Q net profit rises 36.8% to RM41.16m
Jaya Tiasa net profit for the 2Q rose 36.8% to RM41.16m y-o-y due to increase in revenue. Its revenue for the quarter increased to RM239.53m from RM192.21m in 2010. EPS for the quarter increased to 15.42 sen from 11.27 sen in 2010 with net assets per share at RM5.01. For the 6 months ended Oct 31, Jaya Tiasa net profit jumped to RM97.08m from RM52.53m, while revenue rose to RM499.52m from RM377.74m in 2010. The improvement in revenue was due mainly to increase in logs sales volume and plywood average selling price; higher fresh fruit bunches (FFB) sales volume; and improvement in crude palm oil (CPO) sales volume and selling price. (Financial Daily)

Subur Tiasa: 1Q net profit up 8% to RM10.8m
Subur Tiasa’s net profit for 1Q2012 rose 8% y-o-y to RM10.8m due to the rising selling prices of logs and timber products, coupled with effective cost management. Its revenue for the quarter fell 4.44% y-o-y to RM151.22m. EPS for the quarter rose to 5.74 sen from 5.32 sen in 2010 with net assets per share at RM3.40. Its revenue for the quarter dipped due to lower logs, plywood and sawn timber export sales volume. (Financial Daily)

Cypark: Sees RM17m revenue from RE
Cypark Resources expects to generate annual revenue of up to RM17m from the sales of renewable energy upon full commencement of the renewable energy (RE) park. Cypark said it had obtained Feed-In Tariffs (FiT) approval from Sustainable Energy Development Authority to supply 8 MW and 2 MW of renewable energy from solar PV and landfill biogas sources, respectively. It said the FiT approval was secured by Cypark Suria (Pajam) Sdn Bhd and Cypark Suria (Ngeri Sembilan) Sdn Bhd. With the approval, Cypark would be able to sign a renewable energy power purchase agreement with Tenaga Nasional Bhd for FiT concession periods of 21 and 16 years respectively for electricity generated from solar PV and landfill biogas. (StarBiz)

LBS Bina: Eyes RM800m sales target
LBS Bina is confident of achieving their RM800m sales target despite tough market conditions. The MD said that My First Home Scheme and other government initiatives would contribute 20% to the group's total revenue. He noted that the company currently has a land bank of some 920 hectares with an estimated gross development value of RM9.1bn that will keep it busy for the next few years. (Bernama)

Banking: Financial system to grow 8-11% annually from 2011-2020  BNM said Malaysia's financial system is expected to grow at an annual rate of 8-11%, increasing its depth to 6 times of GDP between 2011 and 2020. Correspondingly, the financial sector contribution to nominal GDP in 2020 is expected to increase to 10.12% from 8.8% in 2010 while the assets of the banking sector rising almost three times of GDP by 2020. This decade would also see a shift towards more market-based financing, whereby by 2020, more than half of this total financing is expected to be raised through financial markets from 46% in 2010. Financing based on Islamic principles would also grow to account for 40% of total financing in 2020 from 29% in 2010. (Bernama)

QSR, KFCH not seeking other bids
The boards of QSR Brands Bhd and KFC Holdings Bhd (KFCH), which have a joint takeover offer by Johor Corp (JCorp) and CVC Capital Partners Asia III Ltd, are not seeking any alternative bids for the sale of their assets and liabilities. The statement by both companies to not invite alternative bids will put to rest speculation on possible counter bids for the fast food chain assets. The latest announcement also clears doubts that the joint offers to take control of the country’s largest fried chicken chain would be able to meet the tight deadline of just 7 days after the offer was made. (Financial Daily)

Petra Energy terminates CEO
Petra Energy has terminated the services of its CEO, Kamarul Bahamin Albakri, effective 20 Dec 2011, according to a filling to Bursa Malaysia. No reason was given for his removal. Kamarul, however, retains his seat on the company’s board.(Malaysian Reserve)

Boustead Holdings not planning to take unit private
Boustead Holdings said it is not considering any proposal to privatise its unit, Boustead Heavy Industries Corp (BHIC). It said this in response to a report by StarBiz that Boustead was considering privatising BHIC. Boustead's denial means that it will not be able to make an offer to buy out BHIC in the next six months, according to Securities Commission ruling. (StarBiz)

Posco/Daewoo tipped to win Ampang LRT systems works
A consortium led by Posco/Daewoo Engineering of Korea has emerged as the odds-on favourite to win a contract worth about RM1.1bn to undertake system works for the Ampang light rail transit (LRT) line extension project. Business Times understands that Syarikat Prasarana Negara Bhd favours Posco/Daewoo as it offered to use the Communication-Based Train Control (CBTC) Signalling System supplied by France-based Thales Group. For the Kelana Jaya LRT line extension and monorail system, Prasarana had awarded the system works contract to Thales on a direct negotiated basis because of the CBTC system. Thales’ CBTC technology has been in use since 1985 and the system has been proven on 53 projects around the world. (BT)

DRB-HICOM swaps land status in RM76m
DRB-HICOM announced yesterday it had entered into an agreement to swap the Malay Reserve (MR) status of a plot of land in Langkawi with the non-MR status of a piece of land in Kedah for RM76m. DRB-HICOM’s wholly owned subsidiary, Rebak Island Marina (RIMB), entered into the land status swap (LSS) agreement with Northern Gateway Free Zone SB. This could be the first time listed companies have swapped the status of two pieces of land and only approval required is the nod from the land authority. (Financial Daily)

20111222 1011 Global Market Related News.

Asia Stocks Snap Rally Amid Europe Concern (Source: Bloomberg)
Asian stocks (MXAP) dropped, snapping a two-day rally, as lenders sought more cash from the European Central Bank than economists had expected, reducing optimism that the region’s debt crisis will be contained. Mizuho Financial Group Inc. (8411), Japan’s third-biggest lender, fell 1 percent on speculation Europe’s worsening debt problems will hurt bank earnings. Tokio Marine Holdings Inc. slipped 2 percent on concern Japan’s No. 2 casualty insurer may be paying too much to buy Delphi Financial Group Inc. OneSteel Ltd., Australia’s second-largest producer of the metal, gained 5.9 percent after saying it’s not considering a debt or share sale. “The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative, but at least they are acting as a lender of last resort for banks,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “As we are heading closer to a holiday period, volumes decline.”

Japanese Stocks Snap 2-Day Rally as Europe’s Banks Devour Cash From ECB (Source: Bloomberg)
Dec. 22 (Bloomberg) -- Japanese stocks fell for the first time in three days, as lenders borrowed more cash from the European Central Bank than economists had expected, sparking concern the region’s debt crisis won’t be contained. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank by market value, fell 0.3 percent. Okuma Corp. (6103) and other makers of precision machinery dropped after Bank of America Merrill Lynch cut its rating on the sector to “bearish.” Tokio Marine Holdings Inc. (8766), Japan’s second-biggest casualty insurer, fell 2 percent after agreeing to buy U.S.-based Delphi Financial Group Inc. in its biggest acquisition in three years.
“The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative, but at least they are acting as a lender of last resort for banks,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “As we are heading closer to a holiday period, volumes decline.”

Stocks in U.S. Advance as Utilities, Banks Outweigh Technology-Led Decline (Source: Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as gains in energy and consumer shares helped the market recover from an early drop led by disappointing results at Oracle Corp. (ORCL) Exxon Mobil Corp. (XOM) gained 1.4 percent after oil rose for a third day as U.S. inventories declined the most in a decade. Gauges of utility, consumer staples and health-care companies in the S&P 500 added at least 0.7 percent. Bank of America Corp. advanced 1.2 percent after agreeing to a record $335 million fair-lending settlement. (BAC) Oracle plunged 12 percent, the most since 2002, as sales and profit missed analysts’ projections.
The S&P 500 increased 0.2 percent to 1,243.72 at 4 p.m. New York time, after dropping as much as 1 percent earlier. The Dow Jones Industrial Average gained 4.16 points, or less than 0.1 percent, to 12,107.74 today. The Nasdaq Composite Index slumped 1 percent to 2,577.97. About 6.6 billion shares changed hands on U.S. exchanges, or 17 percent below the three-month average.

European Stocks Decline as ECB Funding Fails to Ease Debt-Crisis Concern (Source: Bloomberg)
European stocks fell for the first time in three days as lenders sought more funds from the European Central Bank than economists had predicted, reducing optimism that the debt crisis will be contained. SAP AG (SAP), the world’s largest maker of business-management software, tumbled the most in two years as U.S. rival Oracle Corp. reported sales and profit that missed analysts’ estimates. Italy’s UniCredit SpA (UCG) led a gauge of banks (SX7P) lower. Konecranes Oyj (KCR1V) slipped 3.6 percent in Helsinki after announcing a restructuring of its operations. The Stoxx Europe 600 Index declined 0.5 percent to 237.29 at the close of trading. The benchmark measure rallied as much as 1.4 percent after the ECB agreed to provide three-year loans to euro-area banks to keep credit flowing to the economy, before erasing its advance two hours later.

Sales of Existing U.S. Homes Rise From Slump (Source: Bloomberg)
Sales of existing homes in the U.S. rose in November to a 10-month high, showing demand may be starting to stabilize following a plunge over the past four years that was steeper than previously calculated. Purchases climbed 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said today in Washington. The group revised down figures going back to 2007 by an average 14 percent, putting them more in line with other measures of demand. “Perhaps signs of life are increasing for the housing market,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York, who forecast a sales rate of 4.4 million for last month. “Housing is finally not going to be a drag on economic growth in 2012. That’s not to say that risks don’t abound. We know that there’s a substantial shadow inventory of distressed properties that we’re still waiting to come onto the market.”

Bernanke Prods Savers to Become Consumers (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke finally may be catching a break: His easy-money policies are showing signs of speeding up the economic rebound three years after he cut interest rates to zero. Housing may be nearing a bottom as record-low mortgage rates tempt more buyers into the market and confidence among homebuilders climbs to the highest since May 2010. Autos, another part of the economy sensitive to interest rates, are reviving, with carmakers reporting in November their highest sales pace in more than two years. Banks also are starting to put more of their money to work, expanding commercial and industrial loans last quarter by the most since Lehman Brothers Holdings Inc. went bankrupt in September 2008. “When the Fed sprinkles happy dust on the economy, we always respond,” said Allen Sinai, co-founder and chief global economist and strategist at Decision Economics in New York. “The happy dust has been out there a long, long time, and I think it finally may be settling in some places.”

Treasuries Hold Two-Day Loss Before Consumer Confidence, Spending Reports (Source: Bloomberg)
Treasuries held onto two days of losses before data this week forecast to show confidence and spending among U.S. consumers rose, a sign of a recovery in the world’s largest economy. Thirty-year bond yields were two basis points from a one- week high as the Federal Reserve prepares to make its final 2011 purchase of long-term Treasuries today in its effort to lower borrowing costs. The extra yield investors demand to hold 30- year Treasuries instead of 10-year notes widened to 104 basis points, or 1.04 percentage points, the most in more than a week. Demand for U.S. debt was supported as investors continue to seek a refuge from the prolonged debt crisis in Europe. “We’ve been seeing good data coming out of the U.S. and that indicates the economy is better than we had thought,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest publicly traded bank. “The recovery is supportive of the yields and Treasuries are likely to be sold.”

Dollar Is Near 11-Month High Against Euro Before Confidence, Spending Data (Source: Bloomberg)
The dollar traded 0.7 percent from its highest level in 11 months versus the euro before reports this week forecast to show confidence and spending among U.S. consumers strengthened, spurring demand for the nation’s assets. Europe’s common currency held yesterday’s decline as Greece’s creditors resisted pressure from the International Monetary Fund to accept bigger losses on their holdings of government bonds, according to people with direct knowledge of the talks. Australia’s dollar dropped, halting a two-day advance, as Asian stocks declined, sapping demand for higher- yielding currencies. “The U.S. economy is on a recovery path,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “The U.S. recovery diminishes the chance of another round of quantitative easing, which is a buying catalyst for the dollar.”

European Banks Devour ECB Emergency Funds Amid Frozen Markets (Source: Bloomberg)
European banks borrowed enough cash from the European Central Bank at its first three-year offering to refinance almost two-thirds of the debt they have maturing next year amid concern that markets will remain frozen. The 523 euro-area lenders took a record 489 billion euros ($638 billion) from the Frankfurt-based central bank in 1,134- day loans today, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. That equals about 63 percent of the European bank debt maturing in 2012, according to Goldman Sachs Group Inc. analysts. “The perceived stigma attached to central bank borrowing has not prevented euro-zone banks from making extensive use of the ECB’s offer,” said Martin van Vliet, an economist at ING Group in Amsterdam. “The take-up of loans is massive.”

ECB to Lend Greater-Than-Forecast $645 Billion as Banks Line Up for Funds (Source: Bloomberg)
The European Central Bank will lend euro-area banks a record amount for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis. The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans today, the most ever in a single operation and more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate -- currently 1 percent -- over the period of the loans. They start tomorrow. “It was obviously an offer the banks could not refuse,” said Laurent Fransolet, head of fixed-income strategy at Barclays Capital in London. “It shows the ECB is not out of ammunition and it gives banks security on liquidity for a few years. On the other hand it means banks will rely on the ECB for longer.”

Budget Deficit Narrowed More Than Forecast in November on Higher Revenue (Source: Bloomberg)
Britain’s budget deficit narrowed more than economists forecast in November as tax revenue rose and the government’s fiscal squeeze restrained spending. Net borrowing excluding support for banks fell to 18.1 billion pounds ($28.5 billion) from 20.4 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 15 forecasts in a Bloomberg News survey was a reading of 19.7 billion pounds. Tax revenue expanded 7.1 percent, while spending increased 0.8 percent. The U.K.’s Office for Budget Responsibility cut its growth forecasts last month, prompting Chancellor of the Exchequer George Osborne to borrow more and extend spending cuts to trim the budget deficit. The economic recovery has lost traction as officials in Europe, Britain’s biggest trading partner, struggle to contain the sovereign debt crisis, and Moody’s Investors Service said yesterday the U.K. is not immune to the turmoil.

Putin Must Beat His Own Economic Record (Source: Bloomberg)
Vladimir Putin may be his own toughest competition in next year’s presidential race. Putin, now prime minister, is trying to persuade voters he can repeat the performance of his first two terms in the Kremlin, when the economy grew at an annual average of 7.1 percent from 2000 to 2008. Gross domestic product in Russia, the world’s biggest supplier of energy, may rise 4.5 percent this year, according to government forecasts, even after a boost from record oil prices. Russia’s main export blend of the fuel has averaged $109 a barrel in 2011, more than the $46 a barrel in 2000-2008.

N.Z. Growth Accelerated on Rugby Spending (Source: Bloomberg)
New Zealand’s economy grew faster than economists forecast in the third quarter, as Rugby World Cup spending gave a temporary lift to an economy struggling to recover from earthquakes. Gross domestic product rose 0.8 percent in the three months ended Sept. 30 from the previous quarter, when it increased 0.1 percent, Statistics New Zealand said in a report released today in Wellington. Growth was faster than the 0.6 percent median projection in a Bloomberg News survey of 14 economists. Investors are betting Reserve Bank Governor Alan Bollard will see the spending by rugby fans as a one-time boost and hold the official cash rate at a record-low 2.5 percent until late next year. The central bank forecasts a stronger recovery in 2012, assuming rebuilding of earthquake-devastated Christchurch accelerates in the second half of the year.

Australian, New Zealand Dollars Decline Amid European Debt Crisis Concern (Source: Bloomberg)
The Australian and New Zealand currencies dropped, snapping a two-day advance, amid concern the European Central Bank’s measures to boost liquidity may not stem the region’s debt crisis. Australia’s currency fell 0.3 percent to $1.0070 and slipped 0.3 percent to 78.63 yen as of 11:07 a.m. in Sydney. New Zealand’s dollar dropped 0.3 percent to 76.82 U.S. cents and 59.98 yen.

20111222 1010 Global Commodities Related News.

Bird Flu in H.K. Sparks Culling of 19,451 Birds (Source: Bloomberg)
Hong Kong culled 19,451 birds and banned the sale and import of live poultry until Jan. 12 after the deadly H5N1 bird flu virus was found in a chicken carcass at a wholesale market. The 30 chicken farms in Hong Kong were tested, with all samples free of avian influenza, the city government said in a press release yesterday evening. The Agricultural, Fisheries and Conservation Department will conduct further testing. Hong Kong takes a tough line on the highly pathogenic strain of flu virus, first recorded in humans in the city in 1997 and which has since spread through Asia, Europe and Africa, resulting in the deaths of tens of millions of birds and killing more than half of the people that caught it. The city of 7 million people was also hit by an outbreak of Severe Acute Respiratory Syndrome in 2003 in which 299 people died.

Hong Kong Culls Chickens As Avian Flu Resurfaces (Source: CME)
Hong Kong health authorities said they culled all 17,000 live poultry in a wholesale market after a dead chicken there tested positive for the H5N1 avian flu virus, the first new case since 2008. York Chow, Hong Kong's secretary for food and health, said the recent detection of H5N1 virus in local wild birds indicated that the disease remained a threat to the community, noting it's not certain at this stage whether the chicken came from a local farm or was imported. The city's government has raised the response level against the avian flu to "serious" from "alert" and suspended live poultry imports for 21 days. "It is unfortunate that an avian influenza case is detected before the Winter Solstice (Dec 22), necessitating a halt to the supply of live chickens. I understand that it will cause inconvenience to the public, and the poultry trade will also encounter losses," Chow said at a news conference.
"However, to safeguard public health, we need to adopt decisive and effective measures to prevent and control the spread of the virus," Chow added. The news could hit public sentiment as the financial center struggles with the impact of the global economic slowdown. Hong Kong, a special administrative region of China, narrowly skirted the technical recession in third quarter. Top officials have warned the economic outlook is not optimistic and recession in the city is possible in coming quarters. Hong Kong has detected bird flu in poultry occasionally, but has had no major outbreaks since 1997, when the virus killed six people and led to a slaughter of the territory's 1.5 million birds.

Colombia Farms Hit By La Nina - USDA (Source: CME)
Heavy rainfall, induced by weather phenomenon La Nina, continues to impact on the quality and quantity of Colombia's agricultural products, the U.S. Department of Agriculture's Bogota attache. But lower food supply in Colombia due to La Nina has not resulted in higher food prices in the third-quarter of 2011, as farmers pushed their crops to harvest before the rainy season, the USDA said, adding that the quality was impacted. The transport of agricultural products has been affected, with the road connecting the port of Buenaventura to Bogota now not operating at full capacity due to recurring landslides. "This road transports 120,000 tons of cargo daily. Our source indicated the alternative route will add an extra five hours to the travel time which would result in daily commercial losses of $5 million," the USDA said.

English Farmland Values To Rise In 2012 (Source: CME)
English farmland values are expected to rebound in the first half of 2012, property consultancy Knight Frank said, after values continued to edge downwards in the third quarter of 2011. "I think that values will rise by 7%-10% in the first half of 2012, and then remain steady for the rest of the year as an increase in supply pegs back growth," Clive Hopkins, head of Knight Frank's Farm and Estate Sales team said. "The early part of the year tends to be when we see most activity in the market as subsidy checks arrive and farmers put into action the plans they have been making over the winter," Hopkins said. English farmland prices gained on average 4% during the year, following consecutive drops of almost 1% in each of the final two quarters. The on-going reform of the Common Agricultural Policy continues to overhang the market, especially the proposed new rules on how subsidy payments will be allocated. However, Hopkins said the impact of this would be minor.
"This is not like 2005 when there was a fundamental shift in the way subsidies were paid and the market ground to a halt due to all the uncertainty. It could complicate some sales and provide some interesting conundrums for the lawyers to sort out, but I think the market will cope this time around," Hopkins said.

Temasek Acquires 6.5% Stake In Mosaic Co (Source: CME)
Singapore state investment firm Temasek Holdings has acquired a 6.5% stake in New York-listed fertilizer maker Mosaic Co. (MOS), according to a filing to the Securities Exchange Commission. The filing, dated Dec. 13, said Temasek now holds 17.9 million shares, which, based on Tuesday's closing price of US$49.93, values the stake at US$893.1 million. A regulatory filing to the SEC dated Sep. 30 showed Temasek held 108,026 Mosaic shares.

China Looks To Remove Vegetable Tax (Source: CME)
China's government is proposing to eliminate its value-added tax on the distribution of vegetables in its latest effort to shield consumers from higher food prices. The proposal comes a year after Beijing launched a wide-ranging government drive to increase food supplies, the key culprits behind inflationary pressures. Improving the nation's agricultural production distribution is part of that effort, officials say. A VAT of 17% applies to enterprises engaged in import-export, production, distribution or retailing activities. The State Council, China's cabinet, on Tuesday published a draft policy inviting comments on the systemic reform, in which it said it wanted to refine the fiscal system for the distribution of agricultural goods. Lifting the VAT on vegetables would lower the cost of production for wholesale retailers, who typically pass the cost on to consumers.
"Distribution companies, especially wholesale companies, would benefit from the lower cost, but it's also generally a good policy for the business environment," said Gao Wang, analyst for Beijing Orient Agribusiness Consultant Ltd. The move underscores the fact that inflation remains a key concern, even though the government in recent weeks has signaled a shift away from taming prices and toward fostering growth. Vegetable prices rose 26% from the start of the year to 1.76 yuan (about 28 U.S. cents) a kilogram in July, its highest point this year, according to Ministry of Commerce data. Vegetable prices fell back to about 1.25 yuan per kilogram but have since been climbing again. The average wholesale price of 18 types of vegetables monitored by the Ministry of Commerce has been rising for six straight weeks, up 7.9% last week and up 28% since early November, the ministry said Tuesday.
Beijing's draft also encourages regional distribution companies to accelerate mergers and acquisitions, introduce more auctions, develop online retail business and build more refrigeration and storage facilities nationwide. It also said it wants to "establish and improve an agricultural reserve system," meaning stockpiles. It hasn't detailed any spending plan for the proposals yet. Last year, the government told farmers to raise vegetable acreage and vegetable production to roll back surging prices. The State Council also imposed selective price controls on flour and vegetable oil, which it had lifted by August as prices eased. Still, it was pork, rather than vegetables, that turned out to be the chief culprit for China's yearlong tussle with sharp inflation. China's pork prices reached a record 23.61 yuan a kilogram in mid-June, a 57% jump compared with a year earlier. Overall agricultural price pressures have eased in China as the country posted a record grain harvest this year.

Corn (Source: CME)
US corn futures rallied to their highest price in a month on support from crude oil and technical strength. The market shook off early losses on rains in South America, thanks in part to stronger crude. The market's surge improved the technical outlook, which prompted more buying, traders add. Today's gains, though, were limited by lackluster export demand and a lack of fresh news. CBOT March corn ends up 1.6% at $6.16 1/2 a bushel; it's up 6.4% since Thursday.

Wheat (Source: CME)
US wheat futures rally on short-covering and support from corn. With speculative funds net short the market, traders says it's primed for a short-covering rally, which was a factor today. Gains in corn and crude oil added to the supportive tone. "There really is no fundamental reason for the rally," says RCM Asset Management's Doug Bergman. Weak export demand limits gains. CBOT March wheat ends up 1.5%, or 9 1/4c, to $6.17 a bushel; KCBT wheat closes up 3c to $6.71; MGEX March wheat closes up 2 1/2c to $8.41 3/4.

Corn dips on S. America rain f'cast, soy steady
SINGAPORE, Dec 21 (Reuters) - U.S. corn fell, snapping three sessions of gains, while soybeans were little changed near a 4-week top on forecasts of rain in parts of Brazil and Argentina that had been hit by dry weather.
"If the rains come in significant total, then we may see this weather premium, which had started to creep its way into the market, erode," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.

Ukraine sees 11/12 grain export capped at 23 mln T
KIEV, Dec 21 (Reuters) - Ukraine's grain exports will be unlikely to exceed 22-23 million tonnes in the 2011/12 season despite a record harvest because of aggressive exports from neighbouring Russia, Ukraine's Farm Minister Mykola Prysyazhnyuk said on Wednesday.
"We have lost time in the first months of this season, allowing Russia to earn a lot (from exports) without  competition from our side," Prysayzhnyuk told Reuters in an interview.

Argentina plowing ahead with grains export reform
BUENOS AIRES, Dec 20 (Reuters) - Argentina's Agriculture Ministry is about to present a proposal to overhaul a system of corn and wheat export quotas that is unpopular with farmers, the farm minister said on Tuesday.
The center-left government of President Cristina Fernandez only grants export permits once it has registered sufficient wheat and corn stocks to guarantee affordable domestic supplies.

Rain to bring short-term relief to S.American crops
CHICAGO, Dec 20 (Reuters) - Much-needed rains are expected through Thursday for soybean and corn fields in Argentina and southern Brazil, offering short-term relief from dry conditions as stressful weather returns next week, a U.S. meteorologist said Tuesday.
Storms through Thursday are likely to produce 0.5 to 1.25 inches (12 to 32 millimeters) of rain for southern Santa Fe and northwest Buenos Aires provinces, key Argentine corn areas, said agricultural meteorologist Drew Lerner of World Weather Inc.

Heavy snow boosts soil moisture for US Plains wheat
CHICAGO , Dec 20 (Reuters) - Heavy snowstorms hit the U.S. Plains Monday night and Tuesday morning, bringing as much as 15 inches of snow and boosting soil moisture reserves in big wheat growing areas that suffered from drought for much of 2011.
The snow provided relief to the dormant 2012 U.S. hard red winter wheat crop, ensuring that it will emerge in good condition this spring.

Drought and E.coli hit French farmers' 2011 revenue
PARIS, Dec 20 (Reuters) - French farmers' average revenue dipped in 2011 after a surge the previous year, hit by a severe drought in the spring and an E. coli outbreak that led consumers to shun fresh vegetables, the farm ministry said on Tuesday.
In 2011, the overall revenue per farm is expected to fall 3.6 percent, against a surge of 66 percent in 2010.

Corn Crop Heads for Sixth Record Year to Feed 1 Billion Cows: Commodities (Source: Bloomberg)
Farmers will reap a record corn crop for a sixth consecutive season in 2012, slowing a slump in stockpiles of livestock feed as global meat demand approaches a quarter of a billion metric tons. Production will rise 4.8 percent to 867.5 million metric tons in 2011-12, curbing the drop in inventories to 0.8 percent, the smallest decline in three years, the U.S. Department of Agriculture estimates. With harvests expanding from Argentina to China, prices will fall as much as 29 percent to $4.305 a bushel in Chicago trading next year, according to the median of 24 analyst estimates compiled by Bloomberg News. Corn prices doubled in the past two years as farmers failed to keep up with meat consumption that expanded 62 percent in a generation. Stockpiles fell in eight of the past 12 years and are down 34 percent since 2000, contributing to a surge in world food costs. Growers are now planting the most corn ever and more feed will come from a projected record wheat harvest.

Soybeans Head for Longest Rally in Two Months; Corn, Wheat Prices Rebound (Source: Bloomberg)
Soybean futures for March delivery rose 0.8 percent to $11.64 a bushel at 11:38 a.m. on the Chicago Board of Trade. The price was up for the fifth straight session, the longest rally since mid-October. Earlier, the oilseed dropped as much as 1.1 percent. Corn gained 1.3 percent in Chicago after declining as much as 1 percent. Wheat rose 0.9 percent after dropping as much as 1.3 percent.

Rice (Source: CME)
US rice futures further extend their recent rebound amid short-covering. After tumbling throughout the fall, the market has rattled off 5 straight days of gains. Analysts say the market was oversold, but there's little fresh news to change the outlook, which includes ample world supplies and weak US-export demand. Rice joined wheat and corn in rallying. CBOT January rice ended up 1.1% at $14.15/hundredweight

Arabicas dip, above one-year low, sugar steady
LONDON, Dec 21 (Reuters) - ICE arabica coffee futures eased but traded above Monday's one-year lows in early business, while raw sugar was little changed and cocoa edged up underpinned by a softer dollar.
Arabica coffee futures on ICE dipped and traded above Monday's one-year low, supported by rallying European stocks and a rising euro after upbeat U.S. and German data this week.

Australia's sugar cane harvest ends at near-record low
SYDNEY, Dec 21 (Reuters) - Australia's sugar cane harvest has ended with a crop of 27.9 million tonnes of cane, one of the worst on record, the Canegrowers trade group said on Wednesday.
Next year's crop could show a slight improvement of between 31 million and 32 million tonnes of cane unless severe wet conditions curtailing production persist, it said.

German 13th factory test sugar content 17.99 pct
HAMBURG, Dec 20 (Reuters) - The 13th factory test on the sugar beets delivered to refineries in Germany this season showed sugar content of 17.99 percent, compared with 17.95 percent in the previous test, the association of German sugar producers WVZ said on Tuesday.
The association did not publish a 13th test in 2010. The 12th 2011 test sugar content was up from 17.27 percent in the 12th test in 2010.

Ukraine produces 2.3 mln T sugar so far in 2011
KIEV, Dec 20 (Reuters) - Ukrainian sugar refineries produced about 2.3 million tonnes of white sugar from sugar beet as of Dec.19 or 50 percent more than at the same date in 2010, Ukraine's sugar union Ukrtsukor was quoted as saying on Tuesday.
Interfax Ukraine news agency quoted Ukrtsukor data as showing that refineries had received about 17.7 million tonnes of sugar beet and processed 17.2 million tonnes.  

Ghana cocoa purchases hit 448,528 T by Dec. 8
ACCRA, Dec 20 (Reuters) - Cocoa purchases declared to Ghana's Cocobod reached 448,528 tonnes by Dec. 8 since the start of the season on Oct. 14, data from the industry regulator showed on Tuesday.
The figures compare with 421,711 tonnes of official purchases recorded during the corresponding eight weeks of the previous season, which ran from Oct. 1 to Nov. 25, according to the data seen by Reuters.

Uganda sees Dec coffee exports at 215,000 bags
KAMPALA, Dec 20 (Reuters) - Uganda expects coffee exports in December to slip from the same month a year earlier because rains have delayed harvesting and drying of beans, the Uganda Coffee Development Authority (UCDA) said on Tuesday.
UCDA said it expects 215,000 60 kg bags of coffee to be exported this month, down from 237,747 bags a year earlier. Uganda primarily cultivates the robusta variety and the crop is a major source of foreign exchange for the east African country.

Sugar Falls on Supply; Coffee Declines; Cocoa, Cotton Advance (Source: Bloomberg)
Sugar fell for the first time in four sessions on speculation that supplies will climb as harvesting accelerates in the Northern Hemisphere. Coffee declined, while cocoa and cotton climbed. Orange juice slid. Global sugar supplies will exceed demand by 11.1 million metric tons in the season that started Oct. 1, up 13 percent from a September estimate, Sucden, the trading arm of Sucres et Denrees SA, said today. Thailand, Russia and the European Union will have record crops, the Paris-based company said. “Importing countries are also relying on increased domestic production, resulting in a lack of demand on world export markets,” Emmanuel Jayet, a Sucden analyst, said in the report. “The nearly completed record crop in Russia, once the biggest importer of raw sugar, is heralding these changing fundamentals.”

Gold Futures Decline From One-Week High as Dollar Advances Against Euro (Source: Bloomberg)
Gold dropped from a one-week high as a rebound by the dollar curbed demand for the precious metal as alternative asset. The euro fell as much as 0.4 percent against the greenback on concern that European Central Bank measures to support its banking sector won’t be enough to stem the region’s debt crisis. Gold headed for the first quarterly decline in more than three years as Europe’s fiscal woes eroded prospects for the global economy and commodity demand. “As people take a closer look, they see that maybe things aren’t as good as they thought” in the European rescue effort, Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.

Brent rises above $107 on econ recovery hopes
SINGAPORE, Dec 21 (Reuters) - Brent crude futures rose above $107, gaining for a third straight day, after upbeat U.S. data pointed to a recovery in demand growth in the world's biggest oil consumer amid fears of a disruption in supplies.  
"There are two main things that are solid indicators of a revival in the United States. One is employment and the other housing," said Tony Nunan, a risk manager at Mitsubishi Corp.  

Japan crude stocks rise 1.5 pct to 2-mth high
TOKYO, Dec 21 (Reuters) - Japan's commercial crude inventories last week rose 1.5 percent to a two-month peak, reflecting increased imports as crude throughput rose to a four-month high.
Kerosene stocks fell for the second time in the past three weeks as the peak winter season began, after hitting a three-year high in the week to Nov. 26.

China end-Nov fuel stocks up, first rise in six months
BEIJING, Dec 21 (Reuters) - China's refined oil product inventories at the end of November rose 3.6 percent from a month earlier, the first rise in six months, the official Xinhua news agency said in a newsletter on Wednesday.
The country's commercial crude oil stocks at the end of November fell 1.34 percent from end-October, marking their second drop in a row after four consecutive gains, the China Oil, Gas and Petrochemicals reported.

Crude Futures Rise for Third Day as Inventories Decline Most in a Decade (Source: Bloomberg)
Oil rose for a third day as U.S. inventories declined the most in a decade. Crude gained 1.5 percent after the Energy Department reported supplies fell 10.6 million barrels to 323.6 million. It was the largest decline since Feb. 16, 2001, and almost five times the 2.13 million-barrel drop that was the median of 12 analyst estimates in a Bloomberg News survey. Oil also advanced as imports slipped to a three-year low. “This is a shocker and is going to be bullish for oil,” said Rich Ilczyszyn, chief market strategist and founder of in Chicago. “This is definitely going to get some of the bears scared out of the market in the short term.”

20111222 1006 Soy Oil & Palm Oil Related News.

Soybeans (Source: CME)
US soybean futures ended higher, settling at 5-week highs. The momentum of setting new highs after plunging to 14-month lows recently continues to evolve, analysts say. Investors covering short positions ahead of Christmas and the end of the year fueled the buying, with lingering concerns about crop weather in South America helping buoy prices as well. CBOT March soy ended up 8 3/4c at $11.63 1/4/bushel.

Soybean Meal/Oil (Source: CME)
Soy product futures bounce with soybeans, driven by traders exiting short positions to reduce risk exposure ahead of the end of the year, analysts say. The absence of fresh news to direct prices kept futures following the lead of soybeans. CBOT March soymeal ended up $3.60 at $302.80/short ton; March soyoil finished up 0.05c at 49.80 cents/pound.

Palm oil at 1-wk high ahead of year-end
JAKARTA, Dec 21 (Reuters) - Malaysian crude palm oil futures rose to a one-week high , supported by expectations of rising demand, firmer comparative oils and an improving Euro zone debt outlook.
"The market is moving to the year-end slightly firmer," said a Kuala Lumpur-based trader. "Monday is a holiday next week, so a lot of people are closing positions."

China Nov soy imports from U.S. down 34.8 pct on yr -Customs
BEIJING, Dec 21 (Reuters) - China, the world's top soy buyer, imported 34.8 percent less of the oilseed from the United States in November than a year ago, as South American supplies cut into the U.S. share of China's huge market, data from the General Administration of Customs of China showed on Wednesday.
That compared with robust annual import growth of 39.4 percent from the United States in November 2010.