Tuesday, January 17, 2012

20120117 1803 FCPO EOD Daily Chart Study.

FCPO closed : 3164, changed : +38 points, volume : higher.
Bollinger band reading : correction range bound upside biased.
MACD Histrogram : falling lower, buyer leaving and seller testing market.
Support : 3150, 3100, 3070, 3050 level.
Resistance : 3200, 3250, 3270, 3300 level.
Comment :
FCPO closed recorded rebounded higher with better volume transacted. Soy oil price currently rallying higher after last Friday closed substantially lower while crude oil price also surging higher back to above 100 per barrel level.
FCPO price rebounded higher reacted to news of dryer weather forecast this week across Argentina and Brazil that resulted soybean and soy oil to trade higher.
Chart study suggesting a correction range bound upside biased market development as market currently testing resistance near middle Bollinger band level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120117 1722 FKLI EOD Daily Chart Study.

FKLI closed : 1522.5, changed : +12.5 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histrogram : falling lower, buyer leaving and seller testing market.
Support : 1515, 1505, 1500, 1494 level.
Resistance : 1530, 1540, 1550, 1565 level.
Comment :
FKLI closed rebounded higher after yesterday substantial falls with slower volume exchanged doing 3 points premium compare to cash market that also closed higher. Overnight U.S. market closed for holiday and today Asia markets ended in positive territory while European markets also currently registering gains.
Global market traded positively after France bond auction recorded lower borrowing yield and anticipation of easing monetary policy aftr China recorded slowest GDP since 2009.
Chart reading suggesting that market seems facing temporary support near middle Bollinger band level and rebounding from there possibly testing previous resistance level with MACD indicator having negative cross down.
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.

20120117 1655 Regional Markets EOD Daily Chart Study.

 DJIA chart reading :  correction range bound little upside biased.
 Hang Seng chart reading : upside biased with possible pullback.
KLCI chart reading : correction range bound upside biased.

20120117 1624 Global Market & Commodities Related News.

Shares, euro up on China data; Europe worry persists
TOKYO, Jan 17 (Reuters) - Asian shares and the euro rose as slightly better-than-expected Chinese economic growth data soothed investor worries that the euro zone debt crisis was slowing global activity.
"The slowdown is quite modest, and the overall situation of the Chinese economy is stable," said Hua Zhongwei, analyst with Huachuang Securities in Beijing. "According to our field studies, demand for heavy equipment and machinery is recovering, and that is a very good sign for the economy."

FOREX-Euro rises as China GDP spurs short-covering
SINGAPORE, Jan 17 (Reuters) - The euro rose on short-covering as risky assets drew broad support from data showing China's economic growth slowed less than expected in the fourth quarter.
The euro rose 0.5 percent to $1.2729 , its gains accelerated by stop-loss buying and pulling away from a 17-month low of $1.2624 hit last week on trading platform EBS.

US corn, soy rebound as Argentine drought worsens
SINGAPORE, Jan 17 (Reuters) - U.S. corn and soybeans bounced back, rising around 1 percent from multi-week lows with support from renewed concerns over forecasts of dry weather in Argentina and Brazil in coming days.
"On the fundamental front, we believe there is more upside  as we are likely to see some bargain-hunting after last week's selloff," said Lynette Tan, an analyst with Phillip Futures in Singapore.

China 2011 cotton output up 10.7 pct on year -stats bureau
BEIJING, Jan 17 (Reuters) - China, the world's top cotton consumer, harvested 6.6 million tonnes of cotton in 2011, up 10.7 percent on the year, according to figures released by the National Bureau of Statistics.
The bureau's figure was lower than that issued earlier by the National Development and Reform Commission, which put last year's output at 7.2 million tonnes.

Colombia 2011 coffee output lowest in over 30 yrs
BOGOTA, Jan 16 (Reuters) - Colombia's coffee output dropped to 7.8 million 60-kg bags in 2011, down 12 percent versus 2010 and the worst year in more than three decades, the growers' federation said on Monday.
The world's top producer of high-quality Arabica beans posted a third consecutive year of lower-than-expected coffee production in 2011 as bad weather, fungus and a tree renovation program keep output below historic averages of 11 million 60-kg bags.

ICO raises estimate for 2011/12 global coffee crop
LONDON, Jan 16 (Reuters) - The International Coffee Organization on Monday raised its estimate of the global coffee crop in 2011/12 to 132.4 million 60 kg bags as Ethiopia overtook Colombia as the world's number three producer.
The crop was revised up from a previous forecast of 128.6 million, largely reflecting an improved outlook in Ethiopia. It remained, however, shy of the prior season's 134.2 million bags.

Little rain this week for parched Argentine corn
BUENOS AIRES, Jan 16 (Reuters) - Argentina's drought will worsen this week, local meteorologists said Monday, dashing hopes that rain in the days ahead might be strong enough to revive parched corn and soy fields.
Weeks of unforgiving Southern Hemisphere summer sun have toasted grains fields in the world's No. 2 corn-exporting country, killing expectations that Argentina might replenish global corn supplies depleted by a lackluster U.S. harvest.  

Brent crude up, near $112 on China demand
SINGAPORE, Jan 17 (Reuters) - Brent crude futures rose to stand close to $112 on  expectations of steady demand growth after the world's second-largest oil consumer, China, posted an economic expansion that beat forecasts.  
"China's data is encouraging, the numbers have been good across the board and that is supportive of oil," said Ben Le Brun, market analyst at OptionsXpress. "It shows that the fallout from the European crisis has not been as bad as expected."

China's December refinery runs hit record
BEIJING, Jan 17 (Reuters) - China's daily refinery crude throughput hit a record of 9.24 milllion barrels in December, up 4 percent on year, data from the National Bureau of Statistics showed, as new refining facilities came on line.
China processed 39.23 million tonnes of crude oil last month, or equivalent to about 9.24 million bpd, exceeding the previous record posted in November at 9.22 million bpd.

Italy cuts Iran oil import, ups Saudi import in Oct
MILAN, Jan 16 (Reuters) - Italy cut crude oil imports from Iran in October while increasing imports from Saudi Arabia ahead of tightening of international sanctions against Tehran, data from oil industry body Unione Petrolifera (UP) showed on Monday.
October's drop in Italian imports of crude oil from Iran came before the latest U.S. sanctions on Tehran were signed into law on Dec. 31 targeting Iran's crude oil sales.

China Dec daily steel output rises 1.2 pct on month
BEIJING, Jan 17 (Reuters) - China's daily crude steel production reached 1.6826 million tonnes in December, up 1.2 percent compared with the previous month, according to data released on Tuesday by China's National Bureau of Statistics.    
Aggregate output over December reached 52.16 million tonnes, up 0.7 percent year on year and up 4.6 percent from November.

Chinese metal merchant sees profit in supply chain
SHANGHAI, Jan 16 (Reuters) - Metals traders in China had a tough time last year as shrinking bank credit choked up their cash flow, but one successful merchant trader managed to circumvent the restrictions through a paper trade it now wants to expand into copper imports.
Ocean Resources, part of a conglomerate based in the southeastern Shaanxi province, is a metals trader with few downstream customers. Instead, it boosts its cash flow by trading commercial invoices with other traders in the country.

London copper up on better than expected China GDP data
KUALA LUMPUR, Jan 17 (Reuters) - London copper rose for a second day after China's GDP expanded faster than expected, easing concern that demand for industrial metals from the world's second-largest economy will falter as the euro zone teeters on a recession.
"This is good news as it shows the economy hasn't slowed as much as feared by some," said Yiping Huang, chief economist for emerging Asia at Barclays Capital in Hong Kong.

China refined copper output up 14.2 percent in 2011
HONG KONG, Jan 17 (Reuters) - China's refined copper production rose 14.2 percent on the year in 2011, with December output up 8 percent from a year earlier as smelters rushed to meet annual output targets.
In 2011, refined copper production in the world's top copper consumer reached 5.179 million tonnes while December output increased 2 percent from November to 457,000 tonnes, data from the National Bureau of Statistics showed on Tuesday.

Gold climbs with riskier assets on China data
SINGAPORE, Jan 17(Reuters) - Spot gold rose more than half a percent, encouraged by revived risk appetite that lifted markets across the board, after China announced better than expected economic growth in the last quarter of 2011.
"The data showed that China's economic growth was not as bad as feared and there was too much panic in the market," said Bonnie Liu, an analyst at Macquarie in Shanghai.

METALS-London copper up on better than expected China GDP data
KUALA LUMPUR, Jan 17 (Reuters) - London copper rose for a second day after China's GDP expanded faster than expected, easing concern that demand for industrial metals from the world's second-largest economy will falter as the euro zone teeters on a recession.
Three-month copper on the London Metal Exchange  climbed 0.51 percent to $8,130 a tonne by 0205 GMT, extending gains from the previous session.

PRECIOUS-Spot gold rises 1 pct as China data lifts markets
SINGAPORE, Jan 17(Reuters) - Spot gold climbed about 1 percent encouraged by revived risk appetite that lifted markets across the board, after China announced better than expected economic growth in the last quarter of 2011.
The world's second-largest economy grew 8.9 percent from a year earlier in the fourth quarter, beating a forecast of 8.7 percent by economists polled by Reuters, although it was the slowest growth in 2-1/2 years.

20120117 1153 China Economy Related News.

China Economic Growth Slows, May Prompt Wen to Ease Policies
By Bloomberg News
    Jan. 17 (Bloomberg) -- China’s economy expanded at the
slowest pace in 10 quarters as export demand moderated and a
prolonged campaign against consumer and property-price gains
cooled growth.
    Gross domestic product, the value of all goods and services
produced, rose 8.9 percent in the fourth quarter from a year
earlier, the statistics bureau said in Beijing today. Growth
fell below 9 percent for the first time since mid-2009, based on
previously reported data, and compared with the 8.7 percent
median forecast in a Bloomberg News survey of 26 economists.
Industrial production in December increased 12.8 percent from a
year earlier, it said.
    Premier Wen Jiabao may tilt policies toward sustaining
growth in the world’s second-biggest economy as policy makers
predict a “grim” outlook for exports and inflation concerns
diminish. Liang Wengen, China’s richest man and chairman of
equipment maker Sany Heavy Industry Co., told Wen this month
that construction-machinery demand is weak and called for an
increase in infrastructure investment.
    “Economic data may worsen more sharply in coming months,
raising concerns among policy makers about growth,” Ken Peng, a
Beijing-based economist at BNP Paribas SA, said before today’s
release. “But officials will want to avoid relaxing policies
too aggressively so as not to reignite inflation or undermine
their campaign against property bubbles.”
    Full-year economic growth slowed to 9.2 percent from 10.4
percent in 2010, today’s report showed. The gain in industrial
production compared with the median estimate of 12.3 percent in
a Bloomberg survey and a 12.4 percent increase in November.

                         Debt Crisis

    China’s benchmark stock index fell the most in a month
yesterday, capping a four-day 3.5 percent decline, on concern
Europe’s worsening debt crisis will hurt exports to the nation’s
biggest market and as expectations waned of an imminent cut to
banks’ reserve requirement ratios.
    The yuan dropped the most in more than two months yesterday
after Standard & Poor’s stripped France of its top credit rating
and downgraded eight other euro-area nations. Twelve-month non-
deliverable yuan forwards have traded at a discount to the
onshore spot rate since Nov. 20, apart from one day, reflecting
increased bets the Chinese currency will weaken against the U.S.
dollar as the economy cools.
    Banks including BNP, Nomura Holdings Inc. and UBS AG
forecast weaker economic expansion this quarter as overseas
sales moderate further and government measures to rein in
property prices hurts demand for goods including steel, cement
and home appliances. UBS’s Hong Kong-based economist Wang Tao
estimates growth will ease to 7.7 percent, while Nomura’s chief
China economist Zhang Zhiwei forecasts 7.5 percent or lower.
Their projections were made before today’s release.

                        Lack of Credit

    Sany’s Liang, who topped Forbes Asia’s 2011 China rich list
with an estimated wealth of $9.3 billion, was among business
leaders who met Wen during his visit to Hunan province earlier
this month. Zhan Chunxin, chairman of competitor Zoomlion Heavy
Industry Science & Technology Co., who was also at the meeting,
complained a lack of access to credit was hurting customers and
    Fixed-asset investment excluding rural households expanded
23.8 percent last year, compared with the median 24.1 percent
estimate in a Bloomberg survey. Retail sales rose 18.1 percent
in December from a year earlier, today’s report showed.
    The People’s Bank of China last month allowed banks to set
aside less of their deposits as reserves and December’s new
loans were the highest since April, signs the government is
loosening monetary policy to encourage lending even as it
maintains curbs on the residential real-estate market to bring
down home prices.

                         Adding Cash

    Expectations of another reduction before the weeklong Lunar
New Year holiday that starts Jan. 23 are receding. The PBOC
halted sales of bills and repurchase contracts at the end of
December to add funds to the financial system. It will inject
more cash through 14-day reverse repurchase operations today and
Jan. 19, two traders who declined to be identified said
yesterday, after the seven-day repurchase rate, which measures
interbank funding availability, surged to the highest since July.
    The central bank may “front-load” policy easing into the
first half, with one interest-rate cut in March and three
reductions in banks’ reserve requirements, according to Nomura’s
Zhang. Peng from BNP estimates  four to five reductions in the
ratio through the year.
    “Any easing won’t be as aggressive as after the 2008
global financial crisis,” said BNP’s Peng. Officials will
remain wary of inflation, which remained above the government’s
4 percent in 2011 and may rebound later this year, he said.

                         Biggest Risks

    Consumer-price gains averaged 5.4 percent last year,
exceeding the government’s 4 percent target every month, even as
the pace slowed to 4.1 percent in December from a year earlier.
    A deeper recession in Europe, which may cause a sharper
slump in demand for China’s exports, and a “disorderly
correction” in the property market are the biggest risks to the
economy this year, said Chang Jian , a Hong Kong-based economist
at Barclays Capital Asia Ltd.
    The world’s largest exporter may see shipment growth halve
this year from a 20 percent pace in 2011, while property
investment, which accounts for about a fifth of the nation’s
fixed-asset spending, may expand at half last year’s rate,
according to Chang.

20120117 1152 Global Market & Commodities Related News.

Asian Stocks Rise as Slowing China GDP Boosts Speculation of Policy Easing (Bloomberg)
Asian stocks rose after a report that showed China’s economy is slowing boosted speculation the government may take extra measures to spur growth amid concerns about Europe’s debt crisis. Country Garden Holdings Co. (2007), a real estate developer, rose 4.5 percent in Hong Kong after China’s economy grew a faster- than-estimated 8.9 percent in the fourth quarter from a year earlier. Canon Inc. (7751), a Japanese camera maker that depends on Europe for about a third of its sales, rose 0.6 percent after France sold debt at a lower cost even after its credit rating was cut. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s No. 2 publicly traded bank, rose 1.2 percent after it won a bid to buy Royal Bank of Scotland Group Plc’s aircraft-leasing unit.
The MSCI Asia Pacific Index gained 1 percent to 116.75 as of 11:16 a.m. in Tokyo, rebounding from a 1.1 percent decline yesterday, the biggest since Dec. 19. About five stocks rose for each that fell on the gauge. European Central Bank President Mario Draghi yesterday said loans offered last month to the region’s banks helped avoid “a major credit crunch.”

GLOBAL MARKETS-Shares steady as China data eyed; Europe worries weigh
TOKYO, Jan 17 (Reuters) - Asian shares inched higher and the euro stayed above a 17-month trough on Tuesday as investors focused on economic data from China to gauge the impact of the euro zone debt crisis on global growth.    
"As EUR/USD tumbles toward a key long-term support level, it is interesting to note that the positive correlation between EUR/USD and equities is starting to erode," RBC Capital Markets said in a report, referring to a recovery in S&P 500 index futures  from mid-December as the euro eased against the dollar.

Oil prices gain after Iran warning
LONDON, Jan 16 (Reuters) - Oil futures rose on Monday on growing tension between Saudi Arabia and Iran, after the Islamic state told its Gulf Arab neighbours not to make up any shortfall caused by an embargo on its crude oil exports.
"Iran is the main topic still by some 2 million barrels per day 'almost immediately'.

NYMEX-Natgas sinks 5 pct in holiday trade to 28-mth low
Jan 16 (Reuters) - U.S. natural gas futures sank nearly 5 percent in electronic trade on Monday, adding to last week's five-day, nearly 13 percent losing streak and tumbling to their lowest level in 28 months.
"You have a market in a glut with weak demand at a period of time when you should typically see high demand. Natural gas is responding to the dynamics of its own market, which are price bearish," said Jason Schenker, president of Prestige Economics in Austin, Texas.

Euro Coal-Prices drop $2/T with power
LONDON, Jan 16 (Reuters) - Prompt physical coal prices dropped by around $2.00 a tonne on Monday with weaker European power prices to test support at $100, utilities and traders said.
"Macros are bearish, economies in Europe are looking weak and nobody is buying anything, here or in Asia," one utility source said.

20120117 0948 Palm Oil Related News.

ITS CPO export down 11.4% to 591,995 tonnes for the period of 1~15 Jan 2012.
SGS CPO export down 11.3% to 575,833 tonnes for the period of 1~15 Jan 2012.

The La Nina  weather condition may begin to weaken “more steadily” in February, after peaking in December  and January, the Malaysian Meteorological Department said. The rain would favor palm oil plantations, but may not be enough for rice cultivation, the department said. The state of Sabah is expected to receive slightly above average amount of rainfall in January, according to the report. (Bloomberg)

Malaysia's palm oil industry exports have been projected to grow 5% in 2012 depending on the world economy, Deputy Plantation Industries and Commodities Minister Datuk Hamzah Zainudin said. (Bernama)

Palm oil prices may  rise to RM3,450 per tonne over the next three months, said the Chief Market Strategies, NextView Group, Benny Lee. He said the outlook for the whole year, is however bearish, due to the global economic uncertainty and weakening of the US dollar against the ringgit. "Prices will face immediate resistance at RM3,230 per tonne," he added. As to what the likely price target for the year-end is, Lee said there is a need to look at more data by July, before a projection can be made. (Bernama)

20120117 0940 Local & Global Economic Related News.

Malaysia: Beats investment target as 2012 gets ‘challenging’
Private investment in Malaysia beat the government’s target last year with International Business Machines Corp and Toshiba Corp among companies pledging to further spend in Southeast Asia’s third-biggest economy. Investment exceeded RM90bn (USD29bn), surpassing the government’s RM83bn target, International Trade and Investment Minister Mustapa Mohamed told reporters in Putrajaya, outside of Kuala Lumpur. The final 2011 tally is still being finalized and may grow, he said. [Bloomberg]

China: Foreign-exchange reserves dropped for the first time in more than a decade as foreign investment moderated, the trade surplus narrowed and Europe's crisis spurred investors to sell emerging-market assets. The holdings, the world's biggest, fell to USD 3.18tr on Dec. 31 from USD 3.2tr Sept. 30, People's Bank of China data released in Beijing showed. (Source: Bloomberg)

China: Growth may slow to 10-quarter low, worse to come
China’s economy probably grew the least in 10 quarters in the last three months of 2011 and may cool further as export demand slumps and officials prolong a campaign against property bubbles. Gross domestic product, the value of all goods and services produced, rose 8.7% from a year earlier, the slowest pace since the second quarter of 2009, according to the median forecast surveyed by Bloomberg News. The data, and indicators for investment, retail sales and industrial production, are scheduled for release tomorrow in Beijing. [Bloomberg]

S. Korea: The Bank of Korea held off from raising borrowing costs for the seventh straight month, highlighting growing risks to its economy from Europe's debt crisis even as a weaker won threatens to fuel inflation. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate unchanged at 3.25%, the central bank said in a statement in Seoul. (Source: Bloomberg)

Singapore: Retail sales rose for a ninth month as consumers bought more telecommunication products and increased purchases at gas stations. The retail sales index rose 6.4% YoY in November after gaining a revised 8.4% YoY in October, the Statistics Department said in a statement. (Source: Bloomberg)

India: Inflation slows to two-year low as rate pressure eases
India’s inflation slowed to the lowest level in two years, giving the central bank scope to keep interest rates on hold for a second straight meeting next week. The benchmark wholesale-price index rose 7.47% in Dec from a year earlier, the commerce ministry said in a statement in New Delhi, compared with a 9.11% gain in November. Easing prices may strengthen the ruling Congress party’s bid in state elections starting this month after corruption allegations undermined Prime Minister Manmohan Singh’s coalition in the past year. [Bloomberg]

UK: Home sellers cut prices as recovery in ‘paralysis’
UK home sellers cut asking prices for a third month in January, according to Rightmove Plc, which said the property market will remain “challenging” this year. Average asking prices in England and Wales fell 0.8% from December to GBP224,060 (USD343,000), the lowest in a year, the operator of Britain’s biggest property website said in London. In the capital, values gained 0.8%. UK property prices may remain under pressure as unemployment rises and euro-region turmoil threatens economic growth. [Bloomberg]

EU: EFSF loses AAA rating after S&P downgrades of France, Austria
The European Financial Stability Facility (EFSF), the euro area’s bailout fund, lost its top credit rating at Standard & Poor’s after earlier downgrades of France and Austria. The rating was cut to AA+ from AAA, S&P said yesterday in a statement and removed the facility from CreditWatch with negative implications. S&P had said on 6 Dec that the loss of an AAA rating by any of EFSF’s guarantors may lead to a downgrade. Klaus Regling, chief executive officer of the facility, said the downgrade won’t hamper its capacity of EUR440bn (USD557bn). [Bloomberg]

EU: Euro leaders race to salvage rescue plans after ratings cuts
European leaders will this week try to rescue under-fire efforts to deliver new fiscal rules and cut Greece’s debt burden as investors ignore Standard & Poor’s euro-region downgrades. Greek officials will reconvene with creditors on 18 Jan after discussions stalled last week and governments elsewhere are preparing for a 30 Jan summit as the European Central Bank warns against “watering down” a revamp of budget laws. French borrowing costs fell today as the government in Paris sold EUR8.59bn (USD10.9bn) in debt. [Bloomberg]

U.K: Factory-gate prices unexpectedly fall on energy prices in December. The cost of goods at factory gates declined 0.2% MoM from November. Annual price growth slowed to 4.8% the least in a year. (Source: Bloomberg)

Standard & Poor's takes various rating actions on 16 Eurozone sovereign governments. S&P has lowered long-term ratings on 9 eurozone sovereigns (by 2 notches: Cyprus, Italy, Portugal, Spain; by 1 notch: Austria, France, Malta, Slovakia, Slovenia) and affirmed ratings on 7 (Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, Netherlands), citing that the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone. (Source: Standard & Poor's).

U.S: Consumer sentiment climbs more than forecast in January, reaching its highest level in eight months on signs the labor market is improving. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 74 from 69.9 at the end of December. The measure has increased 9.9 points in the last two months, the biggest such gain since April-May 2009. (Source: Bloomberg)

U.S: Trade gap widened more than forecast in November as American exports declined and companies stepped up imports of crude oil and automobiles. The gap expanded 10.4% to USD 47.8b, the widest since June, from a USD 43.3b shortfall in October. (Source: Bloomberg)

20120117 0939 Malaysia Corporate Related News.

Bounty Crop, a wholly-owned subsidiary of Boustead Plantations, which in turn is a wholly-owned subsidiary of Boustead, and Supriadi Zainal proposed to dispose 95% of PT Dendymarker Indahlestari (PTDI) to PT Agro Investama Gemilang for US$38m. In addition, Bounty Crop also has the right to sell its remaining 5% stake in PTDI at an exercise price of US$2m. (BMSB)

Gamuda Bhd has started discussion with a consortium of banks for a multi-billion ringgit facility to finance the slew of mega projects that it would possibly be undertaking soon, banking sources said. The source said that Gamuda was preparing its funding requirements so that it could start projects which it had put in a bid for including the Klang Valley mass rapid transit (KVMRT) and the RM7bn Electrified Double Track Railway Project (EDTP) from Gemas to Johor Baru. Currently, Gamuda-MMC are still in the running for the RM4bn tunnelling portion of the KVMRT project. They are the only local party bidding for the tunnelling portion and stand a good chance of securing the contract. The closing tender for the tunnelling portion is Jan 31, and the announcement of the winner is likely to be made in April. (Starbiz)

Penang is set to welcome investments totalling RM35m this year from food and beverage operators into  phase one of the Gurney Paragon development on Gurney Drive. The project's developer, Hunza Properties Bhd (HPB), has already seen the entry of nine tenants into Phase 1B of its multi-billion ringgit waterfront development with capital investments in excess of RM10m. "We are working hard to continue bringing in established names which have yet to set up a presence in Penang to open their businesses in Gurney Paragon," HPB executive chairman Datuk Khor Teng Tong said. Phase 1B of the project comprises some 100,000 sq ft of lettable space, and its developers are touting the entire Gurney Paragon project as the only one in the country for now which integrates a restored heritage building amidst modern residential, retail and commercial spaces. (BT)

Petronas Dagangan plans to open more than 67 new petrol stations nationwide this year. CEO Amir Hamzah Azizan said the company will allocate between RM350m-450m p.a. for capex, which includes the opening of new stations. "This year will be a big one for us. We will probably build the largest service station in our history", Amir added. Including the new stations, Petronas Dagangan will have more than 1,000 stations this year. (BT)

Petronas and  Royal Dutch Shell Plc will jointly invest USD12b over 30 years to recover oil off Malaysia's Sarawak and Sabah coast. The production-sharing partners aim to extract 750m barrels of oil from the two projects. (BT)

Petra Energy will hold an EGM on 9 Feb to remove director Kamarul Baharin Albakri. (BMSB)

Malaysia’s cocoa grindings in 2011 are estimated at 299,271 tonnes, a drop of one per cent from 302,366 tonnes in 2010. According to Malaysian Cocoa Board and Cocoa Manufacturers Group, the grindings continued to slow down in the 4Q11. (BT)

Hovid Bhd has been uplifted from being a Practice Note 17 company, the company said in a statement to the stock exchange. The uplift will take effect today, (BT)

Kimlun has been awarded a RM82.1m construction contract for two blocks of services apartments and ancillary buildings in Johor Bahru. (Malaysian Reserve)

Dayang has been awarded an RM85m contract for extension of the time charter for one of its workboats by Brunei Shell Petroleum Company. The contract extension will be from March 1, 2012 until Oct 31, 2016. (Malaysian Reserve)

EITA Resources Bhd has received approval from the Securities Commission for its listing exercise.The elevator manufacturer and distributor of electrical and electronics components and equipment is aiming to list on the Main Market of Bursa Malaysia in 1H12. EITA’s elevator systems are marketed under the EITA-Schneider brand. EITA-Schneider elevators have been installed in Malaysia, Singapore, Laos, Vietnam, Philippines, Hong Kong and Saudi Arabia.(Starbiz)

DRB-Hicom buys Proton at RM5.50
Khazanah is divesting its 42.72% stake in Proton Holdings to DRB-Hicom via a conditional sale at RM5.50 per share or RM1.29bn cash. Once the deal is completed, DRB-Hicom will be obliged to undertake a mandatory general offer for the remaining Proton shares at the same price, resulting in DRB-Hicom having to fork out an additional RM1.73bn for the remaining 57.28%. This is the second asset that DRB-Hicom is taking over from Khazanah in under a year after buying a 32.2% controlling stake in Pos Malaysia last April. The RM5.50 per share offer is lower than the price Khazanah paid for its Proton stake of roughly RM8 per share. (Financial Daily) Please see accompanying report.

IOI highest bidder for Singapore job
IOI Corp was the highest bidder for a plot of land to build high-rise public housing in Singapore near the Clementi MRT station. The RM988.4m (SGD408m) bid was the highest for the condominium project in Jalan Lempeng, followed by a RM874.5m (SGD361m) bid from three companies. Industry sources pointed out that IOI will eventually secure the project as the Singapore government gives priority to the highest bidder. IOI says it may take some time for it to receive an official confirmation from the Singaporean government. (StarBiz) Please see accompanying report.

Kulim rejects MCCM’s offer for QSR
Kulim has rejected the unsolicited offer from the Malay Chamber of Commerce Malaysia (MCCM) to buy its 58.68% stake in QSR Brands at RM6.90 per share. The company took note that its holding corporation Johor Corp (JCorp) would not support any proposal to dispose of the QSR shares. JCorp chairman Datuk Abdul Ghani Othman said that Massive Equity’s purchase of QSR and KFC is part of the JCorp’s overall rationalization programme for its various divisions to focus on their core businesses. (Financial Daily)

Bumi Armada clinches RM155m project
Bumi Armada has sealed a RM155m contract with Petroleo Brasileiro SA (Petrobras) for the provision of one anchor-handling towing support (AHTS) vessel. The AHTS vessel will be supporting research activities as well as hydrocarbon and mining activities developed by Petrobras in the Brazilian continental shelf. The contract is for a period of four years with an extension option of another four and is expected to be effective by 1QCY12. (Financial Daily)

Eagleexpress to spend USD400m on aircraft
Eagleexpress Air Charter SB, a new air charter airline funded by investors from Malaysia and South Korea, will invest around USD400m (RM1.26bn) over the next three years to buy 20 second-hand aircraft. It will buy the aircraft, which have been in use for an average 15 years, from Penerbangan Malaysia (PMB) and the world aircraft market. Eagleexpress CEO Captain Azlan Zainal Abidin said the company has secured funding of up to USD300m from a South Korean investor. The first batch of nine will be delivered over the next 12 months. (BT)

Axing of routes a pure business decision
The decision by AirAsia X to suspend four of its loss-making international routes is purely a business decision and must be viewed positively by Malaysians, says co-founder and CEO of AirAsia, Tan Sri Tony Fernandes. He said allegations that the move by AirAsia’s sister company to drop the KL-Mumbai, New Delhi, Paris and London routes, was a move to accommodate and establish a business strategy with MAS, was totally untrue and “irritating”. (Malaysian Reserve)

Pakistan awards Bina Puri mega highway project
The Pakistan government has awarded a multi-million ringgit highway expansion project to Bina Puri Holdings. A high-ranking official of Pakistan’s National Highway Authority confirmed on Saturday that Bina Puri had been selected for the project, worth nearly RM850m. (Malaysian Reserve)

Axiata maintains capex at RM4.2bn
Axiata Group expects to allocate almost RM4.2bn this year for capex purposes, its president and CEO Datuk Seri Jamaludin Ibrahim said. He that the group is looking at the possibility of acquiring non-mobile operating companies in the Southeast Asian region. However, he declined to disclose further info on the matter such as any specific target companies or in which countries the companies are located. (BT)

Felda settlers should disregard the Opposition for trying to stir dissent by arguing that the listing of Felda Global Ventures Holdings (FGVH) will be to their detriment, said Prime Minister Datuk Seri Najib Tun Razak. “Have no fear because it (the listing) will bring a windfall for the people of Felda,” he said. Najib assured the settlers that they would get higher earnings while enjoying the current perks and benefits such as bonus, Hari Raya cash tokens and loans for house renovation. “As I said when tabling Budget 2012, Felda settlers will enjoy a windfall. I will announce the quantum to be received by each individual following the listing at an appropriate time and it may be more than RM500,” he added. (Starbiz)

Tan Sri Tony Fernandes said the move by AirAsia X to suspend for of its loss-making international routes is a purely business decision and must be viewed positively. He said claims that the move was to accommodate and establish a business strategy with Malaysia Airlines (MAS) were untrue and “irritating”. “Azran Osman Rani (AirAsia X’s CEO) discovered that the best profitability is to have between four to eight hour (routes), with one type of engine and aircraft, which is the Airbus 330. This has nothing to do with MAS or AirAsia.” He also that it was good that MAS and AirAsia could collaborate in certain areas, but wrong to say this would destroy competition. “We cannot grow if we increase our fares. In fact it is against my philosophy.” (Malaysian Insider)

The Malay Chamber of Commerce Malaysia (MCCM) will call for a press conference on Thursday to announce an official bid, complete with financing details, of the proposed acquisition of Kulim (M) Bhd’s 54% stake in QSR Brands Bhd, president Syed Ali Alattas toldStarBizWeek. He said that the MCCM team had recently met up with some potential interested franchisors of the KFC brand and the bid was likely to involve some well-connected wealthy backers. “We have met them. These parties (are) not only bumiputras but also non-bumiputras. As I have said earlier, this counter bid will involve Malaysians; bumiputras and non-bumiputras alike. “After further thoughts on this, we (MCCM) have agreed that this should not be a bumiputra-only franchise as it will not be healthy this way,” he said. Syed Ali said he would unveil more details at the planned briefing in Kuala Lumpur.
Meanwhile, Syed Ali said he was confident that fund managers such as Lembaga Tabung Haji (LTH), Felda Holdings Bhd, Amanah Saham MARA and Permodalan Nasional Bhd would receive letters from the MCCM regarding this matter soon. “We have sent official letters to these parties and we hope it would reach them soon. “Given the festive season, it may take sometime, I believe, for  these letters to arrive at their destinations because the post offices have many letters and greeting cards to deliver,” he said. (Starbiz)

Tan Chong Motor expects its first car plant in Danang, Vietnam to be completed by March this year. The plant would produce up to 1,200 units of B-segment cars monthly. Some of the output will be exported to China. (Bernama)

Petronas has signed a transition agreement with the government of  South Sudan for the continued operations in the upstream blocks in the country. The agreement grants Petronas the rights to conduct petroleum operations. These are their existing contract areas secured via the previous exploration and production sharing agreement. The agreement also paves the way for an enhanced, mutually-beneficial relationship between Petronas and its partners with South Sudan’s government. (Bernama)

According to  Malaysian REIT Managers Association chairman Stewart Labrooy, the M-REIT sector will face slower growth and competition for tenants as an oversupply situation emerges in the office market leading to lower rental yields. In Kuala Lumpur,  property prices are expected to remain flat for 2012 with some weaknesses in the high-end residential and office markets. In the office sector, the seven million sq ft of new office space scheduled for completion this year would result in softening in rental and occupancy. “Most M-REITs have strong tenant covenants and long leases to counter cyclical financial events. They also practise very conservative valuations so we don't see any downward pressure on them in 2012 and beyond. In addition, the average  gearing of most M-REITs are in the range of 20% to 40%, precluding any event of a default on their loan covenants,” he said.
Labrooy said a silver lining from the uncertainty and volatility of the global markets was that investors and fund managers had started shifting to dividend stocks with strong asset backing and renewed their interest in M-REITs as defensive stocks in uncertain times. “I believe that we will continue to see a strong subscription in the M-REIT sector this year bearing in mind that the  sector performed fairly well to outperform the KLCI in 2011,” he added. (Starbiz)

Can-One will take control of a 32.9% stake in Kian Joo Can Factory by this week, according to sources. BT was told that Can-One has secured financing from Kuwait Finance House to proceed with the acquisition. Can-One wants to go through the deal not only because of the huge paper gain that it is sitting on but also because of its ability to equity account the Kian Joo stakes. Can-One’s own profit is poised to soar. (BT)

Johor Corp will spend up to RM40m to upgrade all its hotel assets to cater to the expected increase in tourist arrivals, which is driven by the opening of several attractions in Iskandar Malaysia. JCorp Hotels &  Resorts Sdn Bhd deputy CEO, Muhamad Mazlan Ali, said the hotels' upgrading work would start with the Puteri Pacific Johor Baru. "The hotel, which opened in 1990, needs some refurbishments. To stay afloat, we have to upgrade our properties," Muhamad Mazlan told Business Times. He said once the refurbishment exercise was completed in about a year or two, the company would review its pricing strategy upwards. Currently, the average room rate in the Johor market is about RM180 a night. JCorp Hotels, the hospitality arm of Johor Corp, owns and manages five properties in Johor. (BT)

Mitrajaya Holdings has won two bids totaling RM33.4m from  Putrajaya Holdings for the proposed construction and completion of two-storey terrace houses and two-story and three-storey shop office units in Putrajaya. The contracts are to be completed within a period of 22 months. (Malaysian Reserve)

Prestariang wants to more than triple its market worth to RM500m by 2015 as part of its efforts to reward shareholders, consolidate its position as one of the country's top information, communications and technology (ICT) companies, as well as to help make the local stock market more attractive. The Multimedia Super Corridor (MSC) status company's core business is to train and certify lifelong learners to become professionals. As at September last year, the company had an orderbook of RM280m. The firm also offers software licence distribution and management. (BT)

AEON: To open five to eight more malls by 2015. AEON Asean vice-president and chief executive officer Nagahisa Oyama said these new shopping malls are at the planning stage, therefore the company does not have specific locations for the complexes yet. A shopping mall would usually cost some RM200m, depending on location and arrangement with the developer. (Source: The Star weekly)

F&N: Feels impact of Thai floods, Coke loss. Fraser & Neave Holdings Bhd (F&N) expects contribution from its dairies division to be lower in its first quarter ended Dec 31, 2011, due to the recent floods in Thailand. CEO Datuk Ng Jui Sia said its dairies plant in Ayutthaya is currently under repair and will resume operations in April. (Source: The Sun)

HDD: Price seen rising. The price of hard disk drives (HDD) is expected to rise further this year due to tighter supply in HDDs. Eng Teknologi CEO Datuk YK Teh said the group's Thailand operations would only be able to kick off at the end of the first quarter and to resume full capacity production in Thailand by year-end. The current wholesale price of an external one terabyte 2.5-inch HDD is now hovering at RM345, compared with RM258 before the impact of the floods in Thailand. (Source: The Star)

20120117 0918 Global Market Related News.

Asia Stocks Rise on French Debt Sale (Source: Bloomberg)
Asian stocks rose after France sold debt at a lower borrowing cost and on speculation a report today will show China’s economy is slowing enough to prompt the government to take extra measures to spur growth. Canon Inc. (7751), a Japanese camera maker that gets 32 percent of its revenue out of Europe, rose 0.5 percent. Komatsu Ltd. (6301), Japan’s largest construction machinery maker that counts China as its largest market, added 0.9 percent. Rio Tinto Group (RIO), an Australian mining company, rose 0.9 percent after metal prices gained. The MSCI Asia Pacific Index gained 0.5 percent to 116.20 as of 9:24 a.m. in Tokyo. Yesterday, the measure lost 1.1 percent, the most since Dec. 19.
“It does seem like markets are taking a glass-half-full view of Europe and they seemed to be very impressed by the liquidity that’s coming out of” the European Central Bank, said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “Anecdotally, we are hearing China’s senior leadership is very very concerned about the outlook in Europe, which tells you the bias is to ease policy more than they have already.”

Japan Stocks Rise as French Borrowing Costs Ease, Investors Shrug Off S&P (Source: Bloomberg)
Japanese stocks gained, with the Nikkei 225 (NKY) Stock Average rebounding from its biggest drop in a month yesterday, as France’s borrowing costs eased and ahead of a report today expected to show China’s economy is slowing enough to prompt the government to take measures to spur growth. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- largest publicly traded bank, rose 1 percent after it won a bid to buy Royal Bank of Scotland Group Plc’s aircraft-leasing division. Inpex Corp. (1605), the nation’s largest oil explorer by market value, climbed 1.2 percent after crude prices increased. Taiyo Yuden Co. jumped 3.3 percent after UBS AG boosted the equity rating on the electronic parts maker to “neutral.” The Nikkei 225 rose 0.5 percent to 8,423.86 as of 9:24 a.m. in Tokyo. The broader Topix advanced 0.4 percent to 727.87, with about eight shares rising for every five that fell. Both gauges dropped yesterday the most since Dec. 15.

China Economic Growth May Slow to 10-Quarter Low as Worse to Come: Economy (Source: Bloomberg)
China’s economy probably grew the least in 10 quarters in the last three months of 2011 and may cool further as export demand slumps and officials prolong a campaign against property bubbles. Gross domestic product, the value of all goods and services produced, rose 8.7 percent from a year earlier, the slowest pace since the second quarter of 2009, according to the median forecast of 26 economists surveyed by Bloomberg News. The data, and indicators for investment, retail sales and industrial production, are scheduled for release tomorrow in Beijing. The fourth straight quarterly slowdown in the world’s second-largest economy adds to concerns that global expansion is faltering, with the International Monetary Fund warning of near- zero growth in Europe and a “substantial” cut to its global forecast. China’s exports rose the least in two years in December and inflation eased to a 15-month low, bolstering the case for Premier Wen Jiabao to loosen policies.

Japan’s Machinery Orders Jump 14.8% in Sign of Corporate Spending Rebound (Source: Bloomberg)
Japan’s machinery orders rebounded in November, signaling that companies are willing to invest even as the yen remains strong and the global economy slows. Bookings, an indicator of future capital spending, rose 15 percent in November from a month earlier, the Cabinet Office said in Tokyo today. The median estimate of 29 economists surveyed by Bloomberg News was for a 5.1 percent increase. Weak overseas demand and gains in the yen have cut profits at Japanese exporters from Nippon Steel Corp. (5401) to Panasonic Corp. The rebound in orders signals that the world’s third-largest economy is showing some resilience to the stronger currency and a slowing global economy.

Euro Leaders Race to Salvage Rescue Plans (Source: Bloomberg)
European leaders will this week try to rescue under-fire efforts to deliver new fiscal rules and cut Greece’s debt burden as investors ignore Standard & Poor’s euro- region downgrades. Greek officials will reconvene with creditors on Jan. 18 after discussions stalled last week and governments elsewhere are preparing for a Jan. 30 summit as the European Central Bank warns against “watering down” a revamp of budget laws. French borrowing costs fell today as the government in Paris sold 8.59 billion euros ($10.9 billion) in debt. The talks on Greece and budgets may serve as tougher tests of the tentative recovery in investor sentiment than S&P’s decision to cut the ratings of nine euro-region nations, including France. History suggests fallout from the downgrades may be limited. JPMorgan Chase & Co research shows that 10-year yields for the nine sovereigns that lost their AAA status between 1998 and last year’s U.S. downgrade rose an average of two basis points the next week.

Europe Bailout Fund Loses Top Rating at S&P (Source: Bloomberg)
The European Financial Stability Facility, the euro area’s bailout fund, lost its top credit rating at Standard & Poor’s after earlier downgrades of France and Austria. The rating was cut to AA+ from AAA, S&P said yesterday in a statement and removed the facility from CreditWatch with negative implications. S&P had said on Dec. 6 that the loss of an AAA rating by any of EFSF’s guarantors may lead to a downgrade. “The EFSF’s obligations are no longer fully supported either by guarantees from EFSF members rated AAA by S&P, or by AAA rated securities,” the rating company said. “Credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place.” The EFSF, designed to fund rescue packages for Greece, Ireland and Portugal partially with bond sales, owed its AAA rating to guarantees from its sponsoring nations. Two of those sovereigns, France and Austria, were cut on Jan. 13 to AA+ from AAA by S&P, which also downgraded seven other euro countries.

ECB’s Draghi Questions Role of Ratings Companies After S&P Downgrades (Source: Bloomberg)
European Central Bank President Mario Draghi said investors largely priced in the euro-area sovereign downgrades from Standard & Poor’s and questioned the importance of ratings companies. “I will never comment on ratings as such, but certainly one needs to ask how important are these ratings for the marketplace overall, for investors?” Draghi said late yesterday at the European Parliament in Strasbourg. “It seems to a great extent markets have anticipated these ratings changes and priced them in. We should learn to do without ratings, or at least we should learn to assess creditworthiness” with less reliance on the ratings companies, he said.
S&P stripped France and Austria of their top ratings on Jan. 13 and cut seven other euro countries in a move that left Germany with the bloc’s only stable AAA grade. Efforts to combat the region’s debt crisis are falling short, S&P said. The company last night also removed the AAA grade of the European Financial Stability Facility, which is designed to fund rescue packages for Greece, Ireland and Portugal.

Greek Debt Swap Faces ‘Critical’ Phase as Discussions to Resume This Week (Source: Bloomberg)
The Greek government and its creditors return to the negotiating table this week to revive stalled talks on a debt swap as German Chancellor Angela Merkel places pressure on both sides to forge a deal. Greek Finance Minister Evangelos Venizelos said two days ago that talks with the Institute of International Finance will resume on Jan. 18. The Washington-based IIF, which represents banks holding the bonds, said on Jan. 14 there is a “tentative plan” to return to Athens mid-week, “but this depends on developments over the next few days.”
European officials and the nation’s creditors agreed in October to implement a 50 percent cut in the face value of Greek debt by voluntarily exchanging outstanding bonds for new securities, with a goal of reducing Greece’s borrowings to 120 percent of gross domestic product by 2020. The two sides, which broke off negotiations on Jan. 13, have struggled to reach an accord on the coupon and maturity of the new bonds to determine losses for investors, raising the danger of a sovereign default.

European Retailers Rise on Glimmers of Economic Stabilization (Source: Bloomberg)
European consumer-discretionary companies such as Marks & Spencer Group Plc are outperforming consumer-staple businesses including Nestle (NESN) SA, indicating investors’ forecasts for the region’s economy were too pessimistic. Investors have pushed shares of the discretionary group higher in recent weeks as concerns about another prolonged recession have moderated, according to Robert Griffiths, a London-based pan-European equity strategist at Royal Bank of Scotland Group Plc. These stocks historically are “early movers” -- meaning they start to outperform as shareholders improve their economic assessments, he said. “When investors spot signs of stabilization, this is an area of the market that’s early to rally,” Griffiths said, adding that these shares are benefiting from company sales reports and surveys that are beating forecasts.

Inflation Slows to Two-Year Low, Reducing Pressure on India Interest Rates (Source: Bloomberg)
India (INGDPY)’s inflation slowed to the lowest level in two years, giving the central bank scope to keep interest rates on hold for a second straight meeting next week. The benchmark wholesale-price index rose 7.47 percent in December from a year earlier, the commerce ministry said in a statement in New Delhi today, compared with a 9.11 percent gain in November. The median of 25 estimates in a Bloomberg News survey was for a 7.40 percent gain. Easing prices may strengthen the ruling Congress party’s bid in state elections starting this month after corruption allegations undermined Prime Minister Manmohan Singh’s coalition in the past year. Inflation in India is still the fastest among BRIC nations including Brazil, Russia and China, crimping the Reserve Bank of India’s room to lower borrowing costs and shield the economy from Europe’s debt crisis.

20120117 0917 Global Commodities Related News.

Commodities Face ‘Twin Macro Risks’ in Europe, China, Morgan Stanley Says (Source: Bloomberg)
Commodity markets face the “twin macro risks” of a European recession and a hard landing in China this year, according to Morgan Stanley. The recovery in the value of the U.S. dollar provides additional headwind for the asset class, the bank’s analysts wrote in a report today.

Rains help, but will not reverse corn losses - Argentina
BUENOS AIRES, Jan 13 (Reuters) - Rains this week brought relief to Argentina's 2011/12 corn crop after weeks of drought but will not reverse losses in most areas, the government said in its weekly report on Friday.
The world's No. 2 corn producer has been hit by La Nina-related dryness that has toasted crops, prompted a lowering of crop estimates and dented hopes that Argentina can replenish corn supplies depleted by a lacklustre U.S. harvest.

Canadian Wheat Board sees smaller world wheat crop
WINNIPEG, Manitoba, Jan 13 (Reuters) - The world will grow slightly less wheat in the upcoming crop year, but Canada's production looks to rise modestly, the Canadian Wheat Board said on Friday in its first outlook of the year.
Global wheat production will slip nearly 2 percent to 677 million tonnes in 2012/13 from an estimated 688.8 million tonnes for the current marketing year, the CWB said at a farm conference in Saskatoon, Saskatchewan.

Rain sweeps over drought-hit Brazil grains areas
SAO PAULO, Jan 13 (Reuters) - Heavy rain returned to soak key parts of southern Brazil's drought-hit grains areas on Friday, which could halt crop losses that have been increasing through weeks of hot, dry weather, local state agricultural agencies said.
Unusually dry weather linked to the prevailing La Nina weather anomaly has caused significant losses to soy and corn crops in the world's No. 2 soy producer, boosting the price of the grains on the Chicago Board of Trade futures exchange.

Rains help Paraguay soy; farmers say more needed
ASUNCION, Jan 13 (Reuters) - Rains fell on Paraguay's drought-stricken soy fields but farmers said they were not enough to revive plants and experts forecast that dryness will still severely affect output.
Paraguay is the world's No. 4 soybean exporter, although it lags far behind No. 3 supplier Argentina. The oilseed is Paraguay's top export earner and sinking yields could complicate bank loans to growers and hurt the economy.

Argentina's Rosario slashes corn forecast 18 pct
BUENOS AIRES, Jan 13 (Reuters) - Drought has crippled Argentine corn and prompted the Rosario grains exchange on Friday to slash its 2011/12 production outlook to 21.4 million tonnes, down nearly 18 percent from last month's estimate of 26 million tonnes.
Weeks of dryness have hurt grains fields in the world's No. 3 soybean- and No. 2 corn-exporting country, prompting crop estimate cuts and denting hopes that Argentina could replenish corn supplies depleted by a lackluster U.S. harvest.

Cocoa Falls as Europe’s Slowdown May Dent Demand; Robusta Coffee Climbs (Source: Bloomberg)
Cocoa fell for a third day in London on speculation Europe’s economic slowdown is curbing demand and as exports from Nigeria, the world’s fourth-largest producer, are set to resume. Robusta coffee and white sugar advanced. Cocoa-bean processing in Europe rose 1.8 percent in the fourth quarter, the European Cocoa Association said Jan. 13. That was below the 7.5 percent estimate from analysts and traders in a Bloomberg News survey and the third quarter’s 14 percent increase. Nigeria will resume cocoa exports “immediately” after a national strike was called off, Olakunle Akingbola, a business manager at Lagos-based Cobalt International Services, said by phone today. “Expectations of robust demand for cocoa in Europe were disappointed,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, wrote in a report e-mailed today. “The cooling of demand is not sufficient to give additional buoyancy to prices, given that a moderate market surplus had already been anticipated for the 2011-12 season.”

Natural Gas Extends Drop to Two-Year Low in New York: Commodities at Close (Source: Bloomberg)
Natural gas futures were down 4.5 percent at 4:56 p.m. in London after falling to a two-year low. There was no trading in the Standard & Poor’s GSCI gauge of 24 commodities and UBS Bloomberg CMCI index of 26 raw materials because of the Martin Luther King Jr. Day holiday in the U.S. Natural gas fell in New York, taking its decline in the past six days to the biggest in more than five years, on speculation that milder-than-average weather in the U.S. will curb heating demand. Natural gas for February delivery fell 12 cents to $2.555 a million British thermal units on the Nymex and traded as low as $2.54, the lowest since Sept. 4, 2009. Futures have declined more than 16 percent in the past six days, the largest drop since November 2006. U.K. natural gas and electricity for this summer slumped as supplies were ample, even as colder weather caused heating demand to surge.

Oil Trades Near 3-Day High on Straits of Hormuz Threats, EU Embargo Push (Source: Bloomberg)
Oil traded near a three-day high in New York after Iran said a loss of supply through the Strait of Hormuz would shock markets and France pushed for faster enforcement of a proposed ban on imports from the country. Futures were little changed after climbing 1 percent yesterday. France wants the European Union embargo delayed by no more than three months to allow nations including Greece, Italy and Spain time to find alternative supplies, an official with knowledge of the matter said. Iran has threatened to shut the channel in response to international sanctions. Any disruption will harm the world’s crude markets, the Iranian governor to OPEC said, according to the state-run Mehr news agency. Crude for February delivery was at $99.44 a barrel, down 25 cents, in electronic trading on the New York Mercantile Exchange at 10:35 a.m. Sydney time. The contract yesterday rose 99 cents to $99.69, the highest settlement since Jan. 11. Prices closed at $98.70 on Jan. 13.

China launches its first physical iron ore trading platform
BEIJING, Jan 16 (Reuters) - China launched its first physical iron ore trading platform on Monday in a further move to strengthen its pricing power over the sector dominated by foreign miners.
The China Beijing International Mining Exchange (CBMX) provides the online platform together with the China Iron & Steel Association and the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters.

METALS-Copper slips as euro zone rating cut spurs growth worry
SHANGHAI, Jan 16 (Reuters) - Copper fell on concern that a credit rating cut for nine euro zone nations by agency Standard & Poor's could be the latest hurdle in the region's resolution of a two-year sovereign debt crisis, slowing demand for commodities
"We have seen the price come off a little today in Shanghai, so the downgrade has had a little bit of an impact, but I don't see significant pressure on prices," said commodities analyst Bonny Liu of Macquarie Securities in Singapore.

PRECIOUS-Gold steady after S&P downgrades; dollar pressures
SINGAPORE, Jan 16 (Reuters) - Spot gold traded steady, weighed down by a strong dollar after mass downgrades of euro zone nations by Standard & Poor's on Friday, while its safe haven appeal could benefit from renewed fears about the euro zone debt crisis.
"There are a lot of risks still ahead of us and we don't think gold has priced in these risks," said Jeremy Friesen, commodity strategist at Societe Generale. "It (the downgrades) is one of the incremental pushes for gold to appreciate."

Baltic index at near 1-yr low, confidence slumps (Source: Bloomberg)
LONDON, Jan 13 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell to its lowest in nearly a year on Friday as a slump in cargo activity and a growing surplus of vessels weighed further on the market.
The shipping sector in coming months is expected to face a supply glut and economic gloom, including concerns over the outlook for Chinese demand for raw materials, which will pressure earnings.