Thursday, March 15, 2012

20120315 1805 FCPO EOD Daily Chart Study.

FCPO closed : 3403, changed : +18 points, volume : lower.
Bollinger band reading : upside biased with possible pullback correction.
MACD Histrogram : rising, buyer in charge.
Support : 3350, 3300, 3270, 3250 level.
Resistance : 3420, 3450, 3470, 3500 level.
Comment :
FCPO closed firmer with declined volume changed hand. Soy oil price currently trading higher after overnight closed recorded small loss while crude oil price trading between gain and losses.
Price continue to surge higher after both cargo surveyor reported better export data, higher India imports and drop in cooking oil supplies. Huge increased in export reported today may probably due to Chinese New Year holidays and fewer days in February month.
Daily chart reading remained suggesting an upside biased market development with possible pullback correction.
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.

20120315 1739 FKLI EOD Daily Chart Study.

FKLI closed : 1582 changed : +5.5 points, volume : lower.
Bollinger band reading : upside biased.
MACD Histrogram : falling lower, seller taking exposure.
Support : 1570, 1565, 1550, 1540 level.
Resistance : 1580, 1590, 1600, 1610 level.
Comment :
FKLI closed recorded gain with reduced volume participation doing 2.5 points premium compare to cash market that closed little lower. Overnight U.S. markets closed marginally higher and today Asia markets having mixed development while European markets drifting between gain and losses.
Global markets traded mixed after China reported slower foreign direct investment for the fourth straight month and India Central Bank left interest rate unchanged amid economy slowdown.
Daily chart form an up doji bar candle with reading adjusted to suggesting an upside biased market development possibly testing resistance near upper Bollinger band level.
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.

20120315 1658 Regional Markets EOD Daily Chart Study.

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

20120315 1600 Global Market & Commodities Related News.

Hong Kong Stocks Slip on Speculation China Keeps Property Curbs
2012-03-15 02:53:40.305 GMT
By Jason Clenfield
March 15 (Bloomberg) -- Hong Kong stocks dropped, with the benchmark index headed for a second straight daily loss, as developers fell amid speculation China will keep property controls in place. Tencent Holdings Ltd. advanced after the mainland’s biggest Internet company said profit rose.     Country Garden Holdings Co. led shares of builders and real-estate companies lower after Chinese Premier Wen Jiabao said yesterday home prices are still too high. Cnooc Ltd., China’s largest offshore energy explorer, fell 2.2 percent as crude oil traded near a one-week low. Tencent rose 2.7 percent after saying revenue from online games and social-networking services boosted profit in the fourth quarter.
The Hang Seng Index dropped 0.2 percent to 21,267.42 as of 10:46 a.m. in Hong Kong on volume that was about 7 percent below the 30-day average. The gauge has advanced 15 percent this year amid signs the U.S. economy is strengthening and on speculation China will continue to ease limits on lending. The Hang Seng China Enterprises Index of mainland companies, also known as the H-share index, slipped 0.7 percent to 11,218.16.
“China will continue to tighten policy because property prices are still way beyond the reach of average people, and that breeds resentment,” said Francis Lun, managing director at Lyncean Holdings Ltd. in Hong Kong. “We’re looking forward to a big correction. The rally is based on the unfounded expectation that Wen will somehow relax monetary policy.”
Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The gauge lost 0.1 percent in New York yesterday, snapping a five-day advance that drove it to the highest level since June 2008.
Mainland Chinese real-estate companies dropped for second after Wen said home prices are still far from reasonable after two years of property controls. The government wants to ensure long-term, stable growth in the property market, he said yesterday at the end of the annual National People’s Congress.
Futures on the Hang Seng expiring this month rose 0.1 percent to 21,313. The HSI Volatility Index eased 1.1 percent to 20.98 indicating options traders expect a swing of 6 percent in the benchmark index over the next 30 days.

Shares ease on China growth worry, dollar stays firm
TOKYO, March 15 (Reuters) - Asian shares eased on renewed concerns about Chinese growth, but a brighter global economic outlook underpinned the dollar and kept investor risk appetite intact, reducing the appeal of safe-haven government debts.
"The market is reviewing its view on the U.S. economy and scaling back expectations for further U.S. monetary easing or the risk that the U.S. economy will be doing poorly this year," Makoto Noji, senior strategist at SMBC Nikko Securities.

U.S. soy extends gains as drought hurts S.American crop
SYDNEY, March 15 (Reuters) - U.S. soy futures rose early , extending gains from the previous session when it hit a 5-1/2 month top, on hopes demand would be boosted due to a drought in South America and a port congestion in Argentina.
Better-than-expected demand from U.S. soy processors last month also added support as NOPA pegged the February crush at 136.350 million bushels, below 142.813 million in January but above an average of analysts' estimates for 134.5 million bushels.

Agroconsult cuts 3 mln T from Brazil soy crop view
SAO PAULO, March 14 (Reuters) - Drought over Brazil's southern soy growing states prompted analysts Agroconsult on Wednesday to strike 2.8 million tonnes from its forecast of the 2011/12 crop to 67.1 million tonnes from 69.9 million previously.
Agroconsult is the latest in a series of government and independent analysts who have pared back their estimates of this year's crop.
IGC sees global maize deficit in 2012/13
LONDON, March 14 (Reuters) - World maize production should climb in 2012/13 but is likely to remain below consumption as demand for meat boosts feed use, International Grains Council senior economist Amy Reynolds said on Wednesday.
Reynolds, in a presentation at the Agra Europe outlook conference, put the 2012/13 global maize crop at 880 million tonnes, up from 864 million in the prior season.
Ukraine starts 2012 spring sowing
KIEV, March 14 (Reuters) - Farms in Ukraine's southern Crimea region have started the 2012 spring field works, sowing the first 400 hectares of early grains, the UkrAgroConsult agriculture consultancy said on Wednesday.
Last year, Crimean farms started spring sowing on March 10. Ukraine's Farm Minister Mykola Prysyazhnyuk said this week that frosts across most of the country had delayed the sowing.

Burundi sees 2012/13 coffee output jumping 107 pct
BUJUMBURA, March 14 (Reuters) - Burundi predicts coffee output for the 2012/13 season will jump by 107 percent compared with the previous season, following the cyclical nature of the crop and good rains, the country's industry regulator said on Wednesday.
Production for the coffee year (April 1-March 31) would reach 29,000 tonnes against 14,000 tonnes produced in the 2011/12 crop.

U.S. crude prices strengthen on economic optimism
PERTH, March 15 (Reuters) - U.S. oil futures inched up in Asian trading as strong U.S. economic data, signalling a recovery in the world's largest economy and supply worries spurred by tensions over Iran's nuclear programme supported oil prices.
"I am still bullish about the oil price in the short-to-medium term with demand likely to be strong due to recent reports of strong U.S. employment and retail sales data. Supply issues from Iran are also still lingering," Miguel Audencial, a trader with CMC Markets in Sydney, said.

Obama, UK's Cameron discussed tapping oil reserves-sources
WASHINGTON, March 14 (Reuters) - President Barack Obama and British Prime Minister David Cameron discussed the possibility of releasing emergency oil reserves during a meeting on Wednesday, two sources familiar with the talks said, the first sign that Obama is starting to test global support for an effort to knock back near-record fuel prices.
Obama raised the issue during a broad bilateral meeting at the White House, according to a UK official with knowledge of the discussion.
Iron ore meet to focus on rising output as China cools
SYDNEY, March 14 (Reuters) - An unrelenting rise in iron ore output by the world's biggest producers as top consumer China looks to curb economic growth and its impact on global supply and prices, will be in focus at an industry conference next week.
Rio Tinto , BHP Billiton , AngloAmerican  and other companies gathering at the Global Iron & Steel Forecast Conference in Perth will outline plans to ramp up iron ore capacity for much of this decade in hopes China will continue to buy just about all they can mine.

Copper drops as firm dollar, China demand worries weigh
SINGAPORE, March 15 (Reuters) - Copper edged down, extending losses from the previous session due to a firmer dollar and lingering concerns of a slow demand recovery in China, the world's top consumer of the metal.
"Any positive headline on the macroeconomy bodes well for copper but eventually the market needs to heed the fundamentals. For copper, that is Chinese demand," said Zhu Bin, an analyst at Nanhua Futures in the eastern Chinese city of Hangzhou.

Gold bounces after 2 pct drop,U.S. dollar eyed
SINGAPORE, March 15 (Reuters) - Gold regained some strength after a drop in the previous session attracted bargain hunters, but a strong dollar and fading expectations of more monetary easing in the United States made the metal vulnerable to more selling.
"Sentiment is of course very bad, I can say. After slipping below $1,650, it may go down further to $1,600," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that a rebound will be capped at $1,675 to $1,680.

Zimbabwe gold production off to slow start in 2012
HARARE, March 14 (Reuters) - Zimbabwe's monthly gold production has fallen short of the targeted 1,100 kilogrammes since the start of 2012, according to figures published by the finance ministry on Wednesday, throwing into doubt a projected annual output of 13 tonnes for the year.
The southern African country's gold mining sector is recovering from an economic crisis which peaked in 2008 as hyperinflation reached 500 billion percent and forced most mines to close.

METALS-Copper drops as firm dollar, China demand worries weigh
SINGAPORE, March 15 (Reuters) - Copper edged down on Thursday, extending losses from the previous session due to a firmer dollar and lingering concerns of a slow demand recovery in China, the world's top consumer of the metal.
The dollar rose to its highest in nearly two months against a basket of currencies, weighing on commodities priced in the greenback by decreasing the purchasing power of investors holding other currencies.  

PRECIOUS-Gold bounces after 2 pct drop,U.S. dollar eyed
SINGAPORE, March 15 (Reuters) - Gold regained some strength on Thursday after a drop in the previous session attracted bargain hunters, but a strong dollar and fading expectations of more monetary easing in the United States made the metal vulnerable to more selling.  
The physical market lacked activity as jewellers looked for a bargain, while bullion holders shifted their money into equities after strong U.S. economic data and accommodative monetary policies by global central banks sent investors back into risk assets.

FOREX-Dollar powers ahead on U.S. economic optimism, higher yields
TOKYO, March 15 (Reuters) - The dollar hit a fresh 11-month high against the yen and a one-month peak against the euro in Asia on Thursday, supported by growing optimism on the U.S. economic recovery and subsequent rises in U.S. bond yields.
The dollar's strength came as other currencies suffer their own problems, with the euro shackled by worries over debt, the yen hampered by speculation of more easing by the Bank of Japan and the Aussie dollar hurt by worries about growth in China.

20120315 1100 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares ease on China growth worry, dollar stays firm
TOKYO, March 15 (Reuters) - Asian shares eased on Thursday on renewed concerns about Chinese growth, but a brighter global economic outlook underpinned the dollar and kept investor risk appetite intact, reducing the appeal of safe-haven government debts.
"The support for the USD responds to perceived positive news from the US, rather than negative news from Europe. This positive twist has extended the rally into equities," Barclays Capital analysts said. "We believe that the drivers behind a higher USD/JPY remain intact," they said.

COMMODITIES-Down broadly on dollar, oil stockpile weighs
NEW YORK, March 14 (Reuters) - Oil prices closed lower as did most other commodities on Wednesday after the the dollar strengthened, tempering investor appetite for riskier assets.

OIL-Oil falls on U.S. stock build, Iran eyed
NEW YORK, March 14 (Reuters) - Oil futures dropped on Wednesday after data showed U.S. crude stockpiles rose last week for the fourth time in a row and the dollar strengthened, tempering investor appetite for riskier assets.
"WTI (West Texas Intermediate) futures are increasingly showing the strains of a 10-million-barrel build at Cushing since mid-January," said Jim
Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.  

NATURAL GAS-Front-month US natgas ends lower, weather weighs
NEW YORK, March 14 (Reuters) - Front-month U.S. natural gas futures slid slightly on Wednesday but managed to remain above Tuesday's 10-year spot chart low as weaker crude, mild late-winter weather and swelling inventories all pressured prices.
"Though the near-term outlook appears negative for prices, longer-term, low prices in the U.S. should encourage increased industrial demand as industries like those involved in chemical production take advantage of the low price," optionsXpress analysts Mike Zarembski and Rob Kurzatkowski said in a market update.

EURO COAL-ARA prices slide again on oversupply
LONDON, March 14 (Reuters) - Oversupply pushed European coal prices down by over $1.00 on Wednesday, with further price falls likely, traders and analysts said.
"That April trade wasn't for U.S. coal which trades at a discount, it was delivery into Rotterdam so totally standard and I can't remember I saw a trade at such a big discount, that is extremely bearish," one trader said.

Iran oil bosses calm over sanctions, trust in Asia
KUWAIT, March 14 (Reuters) - Iranian oil officials show no signs of alarm as oil markets fret about a loss of supply from their country due to international sanctions, saying their Asian customers remain loyal and there is no easy and quick substitute for their crude.
They say the West is unrealistic to hope that Saudi Arabia - the only country in the world that can quickly boost supplies - will help replace the lion's share of Iranian barrels. They also judge that Western politicians, heading for re-election this year, lack the courage to face a further rally in oil prices.

Obama, UK's Cameron discussed tapping oil reserves-sources
WASHINGTON, March 14 (Reuters) - President Barack Obama and British Prime Minister David Cameron discussed the possibility of releasing emergency oil reserves during a meeting on Wednesday, two sources familiar with the talks said, the first sign that Obama is starting to test global support for an effort to knock back near-record fuel prices.
Obama raised the issue during a broad bilateral meeting at the White House, according to a UK official with knowledge of the discussion.

U.S. import prices rise in February on higher oil
WASHINGTON, March 14 (Reuters) - U.S. import prices rose in February on sharply higher oil costs, but there were few other signs of imported inflation pressure and food prices posted their largest decline in three years.  
Import prices rose 0.4 percent after a downwardly revised flat reading in January, the Labor Department said. Prices in January were previously reported as having risen 0.3 percent.

20120315 1000 Malaysia Corporate Related News.

Sunway REIT to spend RM200m n the Putra Place
Sunway REIT Management SB will spend RM200m on the refurbishment of Sunway Putra Place (formerly known as The Mall). CEO Datuk Jeffrey Ng said the refurbishment will take 15 to 18 months with a projected return on investment of 12.5% to 15%. “The estimated incremental income is expected to be RM25m to RM30m annually,” he told a media briefing on the transformation plan for Sunway Putra Mall yesterday. (Financial Daily)

WCT buys land in OUG for RM450m
WCT will pay a cash consideration of RM450m to acquire the entire equity interest in Timor Barat Properties SB, which has three parcels of land totaling 23ha in the matured Overseas Union Garden (OUG) area of Kuala Lumpur. The construction and property development firm said Iris Green SB, a wholly-owned subsidiary, had entered into a conditional share sale agreement to acquire Timor Barat from Eng Lian Enterprise SB, Shen & Sons SB and AMC SB. (Financial Daily)

TRC Synergy gets RM36m Dayabumi facelift project
Construction and property developer TRC Synergy’s wholly–owned subsidiary, Trans Resources Corp SB, has received a construction and alteration contract from Kompleks Dayabumi SB for a sum of RM36m. The contract will involve construction, alteration and additional works to the existing Kompleks Dayabumi and is expected to contribute positively to TRC’s earnings in the future, the company said in an announcement to Bursa Malaysia yesterday. (Malaysian Reserve) Please see yesterday’s report

DRB-Hicom gets nod for Proton stake and may retain Lotus following takeover of Proton
DRB-HICOM yesterday received its shareholders’ nod to acquire the 42.7% stake in Proton Holdings held by Khazanah Nasional which, consequently, will trigger a mandatory general offer (MGO) for all the remaining Proton stakes not owned by the group. The group expects the acquisition to be completed within seven days, after which, Proton would become a 50.01%-held, subsidiary. Also, the company may retain shareholding in British sports and car manufacturer Group Lotus Plc. Malaysia’s leading automotive player intends to continue capitalising on Lotus’ renowned automotive powertrain and handling engineering development, said an industry source. (Malaysian Reserve)

DRB-Hicom will announce a new management team for Proton Holdings in two weeks' time, Group Managing Director Datuk Seri Mohd Khamil Jamil said. "There will be improvements to the management. There can be new faces, I will not discount the fact, and there can be old faces. There is always a blend of old and new (faces) for continuity as well as for providing new ideas and talents,” he said. (Bernama, BT)

REDtone and Telekom Malaysia have joined forces to roll out the national High Speed Broadband (HSBB) particularly for the small- and medium-sized enterprise (SME) segment. TM will provide the HSBB (Access) and HSBB (Transmission) services to REDtone which will see gain access to 1.3m premises covered by the HSBB services nationwide. REDtone will then have the opportunity to widen its service offerings to the SMEs. REDtone's managing director Datuk Wei Chuan Beng, who expects to start offering the HSBB services in July, said that the HSBB access will enable it to enhance its focus and strengthen its data and broadband business.(BT)

AirAsia Thai IPO expected to raise RM500m
The listing of AirAsia Thai is expected to raise THB5bn (RM500m) and will likely take place in Bangkok by early July this year, while the prospectus will be out in May, said sources close to the deal. Tentatively, the shares will be prices at THB5 (RM0.50) apiece. It is learnt that investment bankers handling the deal are flying to Bangkok today to finalise details of the initial Public Offering (IPO) exercise. The listing was supposed to take place last year, but was delayed due to the flooding in Thailand in October. (StarBiz)

TM’s HSBB service in economically viable areas soon
Telekom Malaysia (TM), which has been progressively rolling out high speed broadband (HSBB), will introduce the service to commercially-driven areas beyond 2012. TM group CEO Datuk Seri Zamzamzairani Mohd Isa said its main priority now was to fulfill its obligation to provide 1.3m premises passed by year-end under its agreement with the Government. (StarBiz)

Putrajaya will move ahead with the proposed listing of FELDA Global Ventures Holdings (FGVH), with or without the 51% stake in commercial arm FELDA Holdings held by settlers of the federal land development scheme. A group of eight settlers had last month won a temporary court order blocking the transfer of shares from their FELDA Investment Co-operative (KPF) to FGVH, a crucial step in the plan to list the plantation firm. But Deputy Minister in the Prime Minister’s Department Datuk Ahmad Maslan told a press conference today the government will not delay the listing beyond June as it wanted to capitalise on high crude palm oil (CPO) prices. He said that the listing will go ahead whether or not the settlers are successful in winning an injunction against the share transfer when the matter is heard in court on March 22. “If we cannot set the injunction aside or if they appeal, we still have to go ahead. We have to capitalise while CPO prices are high. “That is the main factor for why we want to list in May, but now it will probably be in June. But we will go ahead without KPF,” the Pontian MP added. (Malaysian Insider)

All Felda settlers are eligible to receive the windfall from Felda Global Ventures Holdings' (FGV) proposed listing, including those opposing it, said Deputy Minister in the Prime Minister's Department Datuk Ahmad Maslan. "The Federal Government will not discriminate in distributing the benefits although some of the settlers disagree with the listing," he said in response to a written question by Datuk Ismail Mohamed Said (BN-Kuala Krau) in Parliament. Ismail had asked the Government whether those opposing the listing would receive any of the benefits and whether the temporary injunction filed at the High Court would delay or stop the proposed listing. Ahmad said the Government had initiated necessary steps to ensure the listing would continue and the interests of the Felda settlers protected. "Although eight settlers, backed by the Opposition, have caused a bit of delay by filing an injunction, the Government will ensure that the listing takes place," he said. (Starbiz)

A FELDA settlers’ group has vowed a fresh suit to stop the proposed listing of FELDA Global Ventures Holdings Berhad (FGVH) that Putrajaya says will benefit those involved in the land scheme. The government promised yesterday to move ahead with the proposed listing of FGVH, with or without the 51% stake in commercial arm FELDA Holdings held by settlers of the Federal Land Development Authority (FELDA). A group of eight settlers had last month won a temporary court order blocking the transfer of shares from their FELDA Investment Co-operative (KPF) to FGVH, a crucial step in the plan to list the plantation firm. FELDA Settlers’ Children’s Association (ANAK) chairman Mazlan Aliman said the association was looking at different ways in which to halt the listing, one of which is to file an injunction to stop the leasing of FELDA plantation land in different states throughout the country. “One of the things we are looking at is to file a court injunction to stop the leasing of 360,000 hectares of FELDA plantation land. “The success of (FGVH’s) the listing depends on the acquisition of the most important assets like KPF shares and (FELDA) land. This is what we want to stop... at all costs,” he told The Malaysian Insider via text message.(Malaysianinsider)

High Court judge Abang Iskandar Abang Hashim should have disclosed he previously worked at the Securities Commission (SC) before hearing a suit against it by an E&O Bhd shareholder, the regulator’s lawyers argued. The lawyers contend he would know of “secret dealings” when hearing asuit filed by Michael Chow Keat Thye against the SC for failing to compel conglomerate Sime Darby to buy remaining shares after it bought a 30% stake in the property developer for RM776m. Abang Iskandar heard the SC’s submissions to recuse him, among which was his previous job as the regulator’s enforcement director from May 2004 to October 2009 meant he had a relationship with the senior management and commissioners. “The Securities Commission’s main point is that the judge should disclosed... that he was a former employee during exparte and interparte,” said Datuk Shafee Abdullah who is representing Chow. (Malaysian Insider)

AirAsia X will increase its daily flights to Taipei to 11 a week from June 22 and nine a week to Perth from June 24. Its CEO Azran-Osman Rani said this is due to the strong and growing travel demand to and from Taiwan and Australia. “The demand for travel to Perth and Taipei has recorded strong average passenger loads in excess of 85% in 2011,” he said. (Star Biz)

Sarawak is inviting India's largest edible oil producing company, the Ruchi Group of Industries, to invest in the state. Sarawak Second Minister for Resource Planning and Environment Datuk Amar Awang Tengah Ali Hasan said the state government would assist Ruchi get partners for joint ventures. Sarawak, he said, currently has 1.5m hectares which were suitable for oil palm plantation but so far, only about 300,000ha had been developed into estates. (Bernama)

TA Global has entered into an "umbrella deed" with Birkbeck Trust to jointly build a hotel and residences in Vancouver, Canada. The estimated GDV of the project is C$496.4m (RM1.5bn). The project, which includes a 64-storey mixed-use commercial and residential building containing a 161-room hotel, will require an initial contribution of C$110m from each company. The estimated profit from the development is C$136.6m. The expected profit has not taken into account interest cost on the C$85m contribution to the JV by the parties. Aside from the C$110m initial contribution, TA Global expects to incur an additional financial commitment of C$75m in external borrowings to put the joint development onstream and hotel into operation within the next five years. The company expects construction to begin in 3Q12 with completion expected by mid-2016. (Financial Daily)

Tonton, the online video portal by Media Prima Bhd, is aiming to secure 2.5m registered viewers by the end of this year. After 18 months of operations, Tonton has garnered 2m registered viewers. Alt Media, Media Prima's digital communications and broadcasting subsidiary that manages the Tonton project, is now in pursuit of developing a more compact version of the portal - Tonton Lite - that utilises mobile application technology. (BT)

Axiata: Indonesian unit sees subscriber base growing 10%
Axiata’s Indonesian unit PT XL Axiata Tbk is expected to register a 10% growth in its subscriber base to 51m this year from 46.4m in 2011, according to wire reports quoting XL Axiata’s president director Hasnul Suhaimi in Jakarta. Hasnul was also quoted as saying on Wednesday that XL Axiata plans to spend as much as eighttrn rupiah (1 rupiah = RM0.033) as capex this year. He also said the company expects to secure a loan from Bank Mandiri to refinance 1.5trn worth of debt which is due next month, according to the report. (Financial Daily)

AirAsia, MAS: PM to review share-swap deal
A MAS employees union official said on Wednesday that Prime Minister Datuk Seri Najib Razak has promised to review a share-swap deal between MAS and AirAsia. The 20,000 strong union MASEU is opposed to the US$364m (RM1.11bn) deal that has brought AirAsia founder, Tony Fernandes and his brand of aggressive cost-cutting into the MAS boardroom, which they said resembles a takeover by the budget carrier. (Financial Daily)

AirAsia: Long-haul unit ups flight frequency to Australia
AirAsia X, the long-haul and low-fare unit of AirAsia will increase its flight frequency from Kuala Lumpur to Taipei and Perth as part of its network realignment strategy announced earlier this year. It said the additional frequencies would see current daily flights to Taipei increasing to 11 a week from June 22 and to Perth to 9 flights a week effective Jun 24. AirAsia X said it remain focused in strengthening its core market network in Australia, Japan, South Korea, China, Taiwan and Iran where it can build a leadership position in the long-haul and low-cost aviation sector this year. AirAsia X CEO Azran Osman-Rani said they are responding to the strong and growing travel demand to and from Australia and Taiwan citing that the demand for travel to Perth and Taipei recorded strong average passenger loads in excess of 85% last year. Azran said the additional flights would open up new horizons for commercial activities and boost tourism in the Asean region, Australia and Taiwan. (Financial Daily)

Aviation: BAE may produce fighter jet components here. GLOBAL defense and security firm BAE Systems said that some components of its Eurofighter Typhoon fighter jets will be made in Malaysia if it manages to clinch a deal with the government. "Because of the capability of the Malaysian defense industry, we believe there is quite a lot that can and should be produced here," he said at a media briefing here yesterday. The UK-based firm hopes to persuade the Ministry of Defense to buy 18 Eurofighter Typhoon fighter jets for the Royal Malaysian Air Force. (Source: Business Times)

MMC Corp: Tanjung Bin said to have sell RM3.3bn sukuk
Tanjung Bin Energy Sdn Bhd, a Malaysian electricity producer, sold RM3.3bn (US$1.1bn) of Islamic bonds to yield 4.45% to 6.05%, two people with knowledge of the deal said. The Shariah-compliant bonds were privately placed in 31 portions, with maturities ranging from five years to 20 years, said the people who couldn’t be named because the information is private. The securities were rated AA3, the fourth-highest investment grade by RAM Rating Services Bhd. (Business Times)

Meda Inc: Plans integrated township in Sg Siput
Meda Inc plans to undertake an integrated township in Sungai Siput, Perak with the proposed purchase of 256.04 acres of land from RM13m. The company said its unit Nandex Land Sdn Bhd has signed a sale and purchase agreement with Majuperak Energy Resources Sdn Bhd to purchase the leasehold land. Meda said the proposed acquisition, which was was part of its plan to acquire prime land for development was expected to be completed by March 31, 2013. Meda Inc said the proposed acquisition would allow it to lock in large tract of development land at attractive  prices for township development. The company said it planned to build two-storey link houses which were within the reach of first-time house buyers. The township would also have two and three storey shops, semi-detaches houses, bungalows and facilities. (Financial Daily)

SIG Gasses: Works on details of gas supply projects in Bintulu
SIG Gases is working out the details of its proposed industrial gas production plant and refilling plant projects to supply liquid products and compressed gases to industries in Samalaju Industrial Park, Bintulu. Executive director Stanley Lau said the details, including the plants' development costs and production capacity, were expected to be finalised soon. This follows the signing of a JV agreement between wholly-owned subsidiary Southern Industrial Gas Sdn Bhd (SIGSB) and Iwatani Industrial Gas Pte Ltd, a unit of Iwatani Corp of Japan as strategic business partners last Saturday. Under the agreement, a JV company called Iwatani-SIG Industrial Gases Sdn Bhd would be set up. Iwatani and SIGSB will hold 60% and 40% equity interest respectively in the JV company. (StarBiz)

EP Manufacturing: In acquisition deal
EP Manufacturing said in its statement to Bursa Malaysia that it plans to enter into an acquisition agreement which will result in a significant change in business direction. As such, trading in its shares will be suspended from 9am Thursday till 5pm Friday. (StarBiz)

Oil & Gas: Kamarudin to join fray for Shell LPG?
Sources said Tune Air Sdn Bhd and co-founder and major shareholder, Datuk Kamarudin Meranun is in the race to acquire Shell Malaysia Trading Sdn Bhd’s (SMTSB) liquefied petroleum gas (LPG) assets. Kamarudin and a senior oil and gas (O&G) are believed to be the two locals bidding for the assets, apart from KUB Malaysia Bhd. Sources added that Kamarudin is likely to use Tuner Air as his vehicle. However, it is also said that he and Wan Zulkiflie are woking closely with Oman’s National Gas Company (NGC) to bid for SMTSB’s prized assets. (Financial Daily)

20120315 1000 Local & Global Market Related News.

The My First House Scheme attracted a total of 1,624 applications as at end-Jan 2012, said Bank Negara Malaysia (BNM).Of 1,624 applications, 564 were withdrawn due to multiple applications to various banking institutions. From a total 1,062 actual applications, 389 or 36.6% applications have been approved by banking institutions, of which 280 obtained guarantee from Cagamas. Meanwhile, 168 or 15.8% applications are currently being processed by banking institutions and some 505 or 47.5% applications are unable to meet the eligible criteria. The Scheme was launched in Mar 2011 and aims to allow young working adults to obtain 100% financing from banking institutions to purchase their first home valued at a maximum of RM220,000 (for single applicants) or a maximum of RM400,000 (for joint applicants of husband and wife with household income below RM6,000 per month cumulatively). Applications are made to participating banking institutions and upon approval, Cagamas will provide a guarantee for the first 10% of the loan. (Financial Daily, BNM)

The Bank of Thailand said that inflation is under control despite oil price spikes. Even if oil prices hit US$140/bbl, both core and headline inflation would be within target ranges, as every 10% increase in oil prices would raise the CPI by 0.3-0.4% pt. (The Nation)

Chinese Premier Wen Jiabao iterated that the renminbi exchange rate “is close to reaching an equilibrium level,” and as such, the government “will press ahead with reforms of the renminbi exchange-rate mechanism.” (AFP)

China is easing restrictions on lending capacity at three of the nation’s four biggest banks after new loans dropped to a four-year low, officials at the banks with knowledge of the matter said, with lenders to be permitted to use more of their deposits to make loans. (Bloomberg)

China's power consumption rose 6.7% yoy to 749.7bn kwh in the first two months, lower than 11.7% growth for the entire of last year. (Xinhua)

Standard & Poor’s projects China's real GDP growth at 8.3% in 2012, and expects to see a bigger role of small and medium-sized enterprises (SMEs) in boosting the economy. The official projection stands at 7.5%. (The Nation)

South Korea’s unemployment rate rose to 4.2% in Feb, an 11-month high, from 3.5% in Jan on account of declining job creation and the graduation of university students who are categorised as jobless. (AFP)

Japan’s industrial output for Jan was revised down slightly to 1.9% mom from the previous estimate of 2.0% (a revised 3.8% in Dec). (AFP)

The Japanese business survey index of sentiment at large manufacturers stood at -7.3 in Jan-Mar, compared with -6.1 in Oct-Dec, according to the joint survey by the Ministry of Finance and the Economic and Social Research Institute. (Reuters)

India’s wholesale price index rose 6.95% yoy in Feb (6.55% in Jan), government data showed. The reading overshot economists’ median estimate of 6.75%. (WSJ)

Euro: Italy keeps sales at short end even as returns soar
Italy is shunning sales of longer- maturity bonds even as they offer investors the best returns in the world. The longest-dated securities Italy has issued since 1 Jan are due in 2022, sooner than the 2026 and 2040 bonds sold in the first quarter of last year. It has increased offerings of debt maturing in less than two years to take advantage of demand bolstered by three-year loans from the European Central Bank to help quell the European sovereign-debt crisis. The yield difference between two-year notes and 30-year bonds widened last week to a more than 2.5-year high of 392 basis points. (Bloomberg)

Euro: Dutch austerity demands risk backfiring on Premier
Dutch Prime Minister Mark Rutte’s demand for budget cuts in debt-laden southern Europe may backfire as the leader of one of the four remaining AAA euro countries struggles to narrow a bigger-than-planned deficit. His coalition must find EUR9bn (USD11.8bn) in budget cuts this year, equal to 1.5% of the nation’s gross domestic product, to meet European rules and protect the top credit grade that France and Austria lost in January. Rutte, who led demands that Greece deepen spending cuts and overhaul its economy in exchange for a rescue, is squeezed by mounting domestic dissent and a campaign by nationalist leader Geert Wilders to exit the euro. (Bloomberg)

German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are bringing the eurozone “a good way along the mountain path,” albeit “not completely over the mountain” as “imbalances” in euro-area economies show that the task is far from complete. (Bloomberg)

UK: Fitch puts UK debt on negative outlook days away from budget
Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50% chance that the AAA rating will be reduced within two years, the company said in a statement in London yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis. Osborne will meet coalition partners later this week to agree on a budget he will present on 21 March. (Bloomberg)

UK: Unemployment rose more than forecast in February
UK jobless claims rose more than economists forecast in February and a broader measure of unemployment remained at the highest rate in 16 years, underscoring the weakness of the labor market even as the economy shows some signs of recovery. Unemployment-benefit claims climbed by 7,200 from January to 1.612m, a 12th straight monthly increase, the Office for National Statistics said today in London. The median forecast of 28 economists in a Bloomberg News Survey was for a gain of 5,000. Unemployment measured by International Labour Organization methods held at 8.4% in the three months through January, the highest since 1995. (Bloomberg)

US: Bernanke says ‘frustratingly slow’ US growth impedes lending
Federal Reserve Chairman Ben S. Bernanke said the weak US economy impedes efforts by banks to make profitable loans. “Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending,” Bernanke said. The Federal Open Market Committee added yesterday that economic conditions would still warrant holding the benchmark interest rate near zero at least through late 2014. Community banks are “facing difficult challenges,” Bernanke said. “Their close ties to local economies are, on balance, a source of strength, but a drawback of those ties is that the fortunes of communities and their banks tend to rise and fall together.” (Bloomberg)

US: Growth in US to strengthen as jobs lift consumers
The world’s largest economy will strengthen through 2012 as employment gains give Americans the means to withstand rising fuel costs, according to economists surveyed by Bloomberg News. Gross domestic product will climb at a 2.5% annual rate in the final three months of the year, up from 2% this quarter, according to the median forecast of 71 economists surveyed from 9 to 13 March. For all of 2012, the US may expand 2.2%, accelerating from 1.7% last year. More jobs, increasing share prices, improving confidence and stability in housing will bolster the expansion. At the same time, unemployment will be slow to retreat, averaging 7.3% in 2014, showing why Federal Reserve policy makers yesterday said interest rates will remain low for at least the next two years. (Bloomberg)

The US current account deficit totalled US$124.1bn in 4Q11 (a revised US$107.6bn in 3Q11), with the goods & services deficit deepening in the quarter while the surplus on investment income fell back. The measure was thus 3.24% of GDP in the quarter (2.84% in 3Q11). For 2011 as a whole, the deficit increased but only slightly to US$473.3bn from US$470.9bn in 2010. (Bloomberg)

US export prices rose 0.4% mom in Feb (a revised 0.2% in Jan), exceeding consensus of 0.3%, whilst import prices rose 0.4% mom (a revised 0.0% in Jan), falling short of consensus of 0.6%. (Bloomberg)

20120315 0947 Soy Oil & Palm Oil Related News.

SGS CPO export up 41.9% to 701,536 tonnes for the period of 1~15 Mar 2012.
ITS CPO export up 37.1% to 697,804 tonnes for the period of 1~15 Mar 2012.

Soybeans (Source: CME)
US soybean futures end higher, boosted by concerns about tight supplies and by higher-than-expected crush data. The National Oilseed Processors Association estimated 136.4 million bushels of soybeans were crushed last month, above the average analyst estimate of 132.6 million. Traders also say a disappointing South American crop could cut into supplies and drive more purchase demand to the U.S., a factor that has driven prices up for two months. Support also comes from worries some U.S. farmers may plant corn instead of soybeans this year, leading to tight soy supplies later this year. CBOT May soybeans end up 1 1/2c at $13.50 1/4/bushel, while CBOT March contract expires, closing up 7 1/4c at $13.56 on low volume.

Soybean Meal/Oil (Source: CME)
May soymeal rises $1.10 to $367.20/short ton, and May soyoil ends down 0.07c to 54.80 cents/lb.

Palm oil at 9-mth high on exports, U.S. data
SINGAPORE, March 14 (Reuters) - Malaysian crude palm oil futures rose to a nine-month high as recovering exports raised demand prospects for the edible oil and upbeat U.S. economic data lifted investor confidence.
"Exports seemed good for the month as we see from the first ten days, we should expect higher exports this month," said a trader with a foreign brokerage in Kuala Lumpur. "Besides that, soybean oil is up and crude oil is still above $125, so these are supportive factors for palm oil."

India Feb refined palmoil imports jump, trend to continue
MUMBAI, March 14 (Reuters) - India's imports of refined palm oil more than tripled in February from a year ago as a tax change by top exporter Indonesia made refined products more attractive and the trend could continue unless New Delhi steps in with counter measures.
The share of refined palm oil in total palm oil imports in February rose to 46 percent from just 22 percent a month ago as the impact of the tax took hold, data released by the Solvent Extractors' Association of India (SEA) showed on Wednesday.

Palm Oil to Climb to Year High as Cooking-Oil Supply Drops (Bloomberg)
Palm oil, used in everything from candy bars to instant noodles, will advance 3.4 percent to the highest in more than a year by June as cooking-oil supplies drop to the lowest in more than three decades, a survey showed. The tropical oil will gain to 3,500 ringgit ($1,147) a metric ton from 3,385 ringgit at the close on the Malaysia Derivatives Exchange today, according to the median estimate in a Bloomberg survey of 10 analysts and traders who attended a conference in Kuala Lumpur last week. Inventories of palm, soybean, rapeseed and six other oils will drop below 30 days of consumption this year, the fewest since 1977, U.S. Department of Agriculture data show. Global food prices rose for a second consecutive month in February on higher costs for cereals, cooking oils and sugar, as shown by the index of 55 food items tracked by the United Nations’ Food and Agriculture Organization.
“The stocks-to-usage ratio is going to be much lower this year, so that will boost prices,” said Sandeep Bajoria, chief executive officer of Sunvin Group, a Mumbai-based commodities trader, who predicts a high of 3,700 ringgit. Futures climbed as high as 3,395 ringgit today, the most expensive since June 6. Prices have gained 6.6 percent this year compared with a 0.9 percent advance in the Standard & Poor’s GSCI Agriculture Index of eight commodities. The commodity last reached 3,500 ringgit in March last year. Mistry, Coleman
The UN food index increased 1.2 percent in February from a month earlier and the gauge of edible oils and fats rose 2.1 percent. The cost of food may remain near current levels in coming months as demand drains increased supply, Abdolreza Abbassian, a senior FAO economist, said March 8. The edible oil may climb to a four-year high of 4,000 ringgit ($1,310) by June and then drop to $1,150 to $1,200 on a free-on-board basis, according to Dorab Mistry, director at Godrej International Ltd., who has traded the commodity for three decades. Michael Coleman, managing director at Aisling Analytics Pte, said last month the price may climb to $1,300. While global palm-oil output is set to increase 2.3 million tons this year, that won’t be enough to counter lower production of other oils including soybean and rapeseed, Thomas Mielke, executive director Oil World, said March 7. Global soybean production may drop by 20 million tons to 245.53 million tons after drought hurt crops in South America, he said.

Malaysia, Indonesia
Palm oil output in Malaysia, the second-biggest grower, is expected to climb to 19.4 million tons this year from a record 18.9 million tons in 2011, according to the Malaysian Palm Oil Board. From March, output each month will be less on a year-on- year comparison due to a low output cycle, leading to “flat” growth of as much as 19 million tons in 2012, Mistry estimates. Production in Indonesia, the largest grower, will increase by about 1.4 million tons to 26.5 million tons in 2012, he said. With crude oil trading above $100 a barrel and signs that the U.S and European Union economies are stabilizing, palm oil may climb as more investors buy commodities, said Bajoria. “There is so much liquid money throughout the world, through the hedge funds and the new money injected via the European central bank,” he said. “The money travels to the destinations where the best returns can come.”

Palm oil will advance 3.2% to the higher in more than a year by June as cooking-oil supplies drop the lowest in more than three decades, a survey showed. The tropical oil will gain to RM3,500 a tonne on the Malaysia Derivative Exchange, according to the median estimate in Bloomberg survey of 10 analyst and traders. (Bloomberg)

20120315 0948 Global Commodities Related News.

ITS CPO export up 37.1% to 697,804 tonnes for the period of 1~15 Mar 2012.

Corn (Source: CME)
US corn futures ended lower, stabilizing after a three-day rally. Higher prices have been buoyed by expectations of Chinese buying, but when fresh sales announced Tuesday were lower than expected, buyers had little incentive to extend advances, analysts say. However, traders said the mild correction didn't change the overall makeup of the market, as many analysts still feel the USDA is underestimating US corn demand and overestimating US corn supplies. CBOT May corn ended down 3 1/4c at $6.58 3/4/bushel.

Wheat (Source: CME)
US wheat futures end mostly lower, pressured by lower corn prices. "The corn market wasn't higher, so wheat didn't have support today," says Brian Grete at Pro Farmer. Wheat and corn are linked as both can be used as animal feed. Concerns about large world wheat supplies also weighed today, as did expectations for warm and wet US weather that is favorable for the winter-wheat crop. CBOT May wheat falls 5 1/4c to $6.43 3/4 a bushel while the March contract expires, closing up 1/4c at $6.51 3/4 on low volume. KCBT May wheat declines 6 1/2c to $6.81 and MGEX May drops 4 1/2c to $8.06 1/2.

Rice (Source: CME)
US rice futures fall sharply, getting toward the bottom of recent trading ranges as the commodity continues to draw pressure from a lack of US export demand. Technical selling emerged today, accelerating declines once futures pierced the week's lows. "Demand remains a problem with export sales only showing a moderate pace and as domestic demand is said to be very slow," says Jack Scoville at Price Futures . CBOT May rice slides 2.9% to $13.91 1/2 per hundredweight.

U.S. soybean extends gains; wheat, corn rise
NEW DELHI, March 14 (Reuters) - U.S. soybean futures for May extended gains after rallying more than 1 percent a day earlier due to mounting concerns over tight supplies from drought-hit South America.
"Production estimates have been lowered again by a number of forecasters, including the USDA and that is the reason behind the rise in soybeans," said Malcolm Bartholomaeus, editor of ProFarmer, a Perth-based farm advisory.

Philippines' NFA to import rice this year as buffer
MANILA, March 14 (Reuters) - The Philippines is cutting rice imports for the private sector this year to 380,000 tonnes because of expected good crops but  may consider more government imports to cover its planned 500,000-tonne purchases, farm officials said on Wednesday.
The agriculture agency had previously said the entire  500,000 tonnes approved for import for 2012 year would be brought in by the private sector.

China corn imports seen at 4 mln T in 2011/12 -state-run company official
SINGAPORE, March 14 (Reuters) - China's corn imports are expected to more than double in the 2011/12 year to 4 million tonnes from 1.5 million a year earlier, an official of a state-run company said on Wednesday.
Recent rains in the country's northeastern corn belt have improved soil moisture ahead of plantings, promising an improved outlook for the crop, the official told Reuters.

Argentina unlikely to sell large corn volumes to China -trader
SINGAPORE, March 14 (Reuters) - Argentina is unlikely to sell large volumes of corn to China this year, despite a recent deal between the two countries on trading the grain, due to a lower-than-expected output, an Argentine trader said on Wednesday.
A long dry spell this year has raised questions about how much corn would be available for export from Argentina, the No. 2 global supplier after the United States. Supply concerns have pushed Chicago Board of Trade benchmark corn prices  to their highest since January this week.

UK wheat exports running behind last season
LONDON, March 13 (Reuters) - UK wheat exports slowed during January despite the shipment of a cargo to the United States, customs data showed on Tuesday.
Shipments during January totalled 218,919 tonnes, down from 324,496 tonnes in December and a season high of 445,172 tonnes in November, the figures showed.
Cumulative shipments for the 2011/12 season, which started on July 1, 2011, were 1.80 million tonnes, down about 15 percent from 2.12 million in the same period a year earlier.

Ukraine AgMin cuts wheat harvest outlook to 14 mln T
KIEV, March 13 (Reuters) - Ukraine's Agriculture Ministry has cut its 2012 wheat harvest forecast to 14 million tonnes from 16 million tonnes, Minister Mykola Prysyazhnyuk said on Tuesday, after winter plantings suffered from drought and frost.
"We expect to reach a harvest of 14 million tonnes of wheat," Prysyazhnyuk said.

China Local Corn Prices High Enough To Make Imports Viable (Source: CME)
China's corn import potential is intact despite a bumper crop, as local prices may consolidate at high levels, an official from a state-run Chinese concern said. China's corn imports in the marketing year that started Oct. 1 will likely be around 4 million tons, more than double the 2010-11 total, said the official. Imports in 2012-13 will likely be steady on year, even with a planned acreage expansion, he said on the sidelines of a grain conference here. The premium of domestic corn prices over delivered U.S. corn is favorable for imports, he said. China's corn area expanded by around 3% to 33.4 million hectares last year due to a shift away from soybeans and rice, and there is room for another 2% increase this year, he said. The corn belt in northeastern China received less snowfall this winter, but recent showers have improved soil moisture, setting the stage for another bumper crop, he said.
China's corn output this year is estimated around 191 million tons against consumption around 188 million tons, he said. Although supply and demand are balanced, prices have increased in line with input costs and domestic inflation, he said, adding that local corn prices are unlikely to fall soon and may consolidate around current levels. The market is abuzz with speculation that Chinese buyers may have purchased U.S. corn this month to build stocks and cut costs amid high local prices. The official didn't confirm any recent purchases. Chicago-based analyst Dan Basse said that as of early March, corn prices in Guangzhou city in southern China and Shandong province and Dalian city in the north, were equivalent to around $9.92, $9.86 and $9.68 a bushel, respectively, while U.S. Gulf Coast prices were around $7.20 a bushel. At these levels, at least some areas can import U.S. corn and have positive margins, even after accounting for taxes and freight, said Basse, president of consultancy AgResource Co.
He projected China's corn imports in 2011-12 and 2012-13 at 5 million and 6 million-8 million tons, respectively. Last month, China signed an agreement with Argentina to set up a protocol for imports of Argentinean corn, if needed. It is unlikely that much corn will be traded this year, said Freddy Pranteda, a director with Cosur SA, a Buenos Aires-based commodity brokerage.

Indonesia Flour Imports Fall On Cheap Australia Wheat (Source: CME)
Indonesia's flour imports have slowed by over 50% in the last five months due to availability of cheaper Australian wheat, trading and milling executives said. Until early October, an average of 50,000 metric tons of wheat flour were imported every month, but volumes have declined by more than half since then, they said. Flour imports from Turkey on a delivered basis of around $350 a ton translate into a local sale price of around IDR100,000 per 25-kilogram bag. Cheaper grades of local flour, processed by Indonesian mills using imported wheat, are available at IDR98,000-IDR99,000 per 25 kg, down from IDR110,000-IDR120,000 in October-November. The onset of a bumper wheat harvest in Australia in October dragged down prices and cargoes were imported well below $300/ton, a Jakarta-based importer said on the sidelines of a grain conference.
Turkish flour import prices have risen by up to $30/ton, cost and freight, Indonesian ports, during the period due to higher Black Sea wheat prices as the region entered its lean season, he added. Turkey exports flour made from wheat imported mostly from the Black Sea region. Indonesia's local milling capacity has also expanded, leading to higher direct imports of wheat instead of flour. Since 2009, various companies have been expanding daily milling capacity. Most of it is operational and the rest will be completed gradually by 2014. This will increase Indonesia's annual milling capacity by 3 million tons to around 10 million tons, although actual utilization is much lower. Wheat milling by Bhogasari Flour Mills, one of Asia's largest, is growing at 6%-7% annually, a company executive said. Inconsistency in the quality of imported flour has also kept purchases under control, he added.
Indonesia is one of the top importers of wheat and wheat flour. Flour imports in 2011 were between 500,000 and 600,000 tons, traders said.

France AgriMer: 2011-2012 Soft Wheat Harvest Seen At 33.9M Tons (Source: CME)
French soft wheat production is likely to fall to 33.9 million metric tons in the 2011-2012 season, from 35.7 million tons in the same period a year earlier, France Agrimer, said. The government agency marginally lowered its estimate for 2011-2012 from a forecast of 34 million metric tons made last month. France Agrimer forecasts soft wheat exports to non-European Union countries are expected to fall to 8.8 million tons, from 12.9 million tons in 2010-2011, and exports to European Union countries are seen almost stable at 6.7 million tons. The agency said it expects corn production in 2011-2012 will be 15.5 million tons. It forecast hard wheat output will be 2.0 million tons and barley output will be 8.8 million tons.

UK's Agriculture Sector To See Supply Chain 'Paradigm Shift' -NFU (Source: CME)
The U.K.'s agriculture sector is set to undergo a "paradigm shift" in industry relationships which moves towards a more collaborative approach, the National Farmers' Union said, with longer-term contracts, less tendering, and better planning. "There will be a move away from a very short-termist approach to supply chain practice to a more collaborative, longer-term model which will help farmers, retailers and manufacturers to overcome some of the key challenges they are facing," said Tom Hind, the NFU's director of corporate affairs. "More dedicated, structured relationships allow for greater innovation to be fostered," he told the Outlook for Agriculture 2012 conference. There will likely be more consolidation at all levels of the supply chain, he said, and in manufacturing that will manifest itself in companies looking to offer a 'one stop shop' in key categories.
Retailers are also increasingly likely to move down the supply chain to invest in manufacturing, particularly with own-label products, Hind said, citing Safeway Inc. and Kroger Co. as examples in the U.S., and Wm Morrison Supermarkets PLC in the U.K. Such companies are also likely to target expansion into more global markets, Hind said, with 12 major international retailers already responsible for about 40% of global grocery sales. "It strikes me that the level will probably increase as some of our major retailers recognize their market here is not growing an awful lot and will look to expand overseas," he said.

Syria Forced To Up 2011-12 Cereal Imports By 1 Million Tons -FAO (Source: CME)
Civil unrest for the past 12 months means that Syria will be forced to import a total of 4 million metric tons of cereals in the 2011-12 crop year, 1 million tons more than a year earlier, as fears of food security for the country rise, warned the United Nations food body. The outlook for the country's 2012 winter cereal crops, now at the vegetative stage, also remains uncertain given the disruptions to agricultural activities and limited access to inputs such as fertilizer and seeds, said the U.N.'s Food and Agriculture Organization. Syria's cereal production last year, estimated at around 4.2 million tons, fell 10% below the previous five years' average, because of late and erratic rainfall that impacted the cultivation of the crops, especially in the main crop-producing areas of Al Hasakah and Al Raqqah in the North and North-east, said the FAO. In some areas of Syria, it is reported that civil insecurity has also prevented farmers from accessing their farms during the harvest.
Meanwhile, sanctions and a strong depreciation of Syria's currency have both had a negative impact on the country's capacity to import goods, including food commodities, said the FAO, a situation not helped by recent tax rises. "The imposition of an additional 30% tax by Syria on goods imported from Turkey is expected to put further pressure on domestic prices and hence reduce access to food for poorer households," warned the FAO. According to the U.N.'s World Food Program, 1.4 million people have become food insecure especially in the areas of Homs, Hama, Damascus, Daraa and Idleb. "An estimated 300,000 small farmers and herders in north-eastern provinces, who have already suffered four consecutive seasons of drought, are also affected by the loss of opportunities from seasonal labor migration to the south and east," said the FAO. Additionally, the economic downturn is expected to curb the Syrian government's ability to support subsidy schemes on producer and consumer levels.

Mexican Bank Credit For Underproduced Crops Seen Rising (Source: CME)
Mexican agriculture officials expect banks to increase their loans this year to producers of crops that don't yet meet domestic demand, such as cocoa, rubber and robusta coffee. The increased credit is a result of an Agriculture Ministry program called "Tropico Humedo," which provides subsidies and credit for the production of certain crops in southern and southwestern Mexico with high unrealized potential. Cocoa-bean production, for example, has a potential to reach 1.4 million tons in Mexico, but output is currently about 28,000 tons, according to ministry officials. Mexico could also produce up to 1.7 million tons of rubber, but produces only 29,000 tons. Support from the Tropico Humedo program has inspired private sector banks such as Banco Bilbao Vizcaya Argentaria SA (BBVA) and Banco Santander SA (STD) to lend to producers, officials said.
This year, credit for all of the largely imported crops in the program, which also includes vanilla and pepper corns, is expected to rise 46% compared with 2011, to 1.5 billion pesos ($118.6 million). That includes loans from rural development banks and private banks. The increase in bank credit will compensate for a MXN450 million decrease in government subsidies and loans, with the Agriculture Ministry expecting to inject MXN500 million into the Tropico Humedo program this year. Pedro Ernesto Del Castillo, program coordinator for Tropico Humedo, called the upward trend in bank credit to these sectors "irreversible" and said it has already increased 32% since the beginning of the program in 2009. Private banks almost never gave loans to producers of rubber trees before the program was launched, said Ignacio Miguel Oliver Morales, regional subdirector of the rural development fund FIRA. But last year, about half of the MXN32 million invested in the rubber-producing sector was channeled through banks.
"It gives you an idea how much banks have started to gain confidence in these industries," he said. The area planted with rubber trees is expected to rise to 37,278 hectares this year, compared with 29,840 hectares last year.

Soybeans Climb to Six-Month High on Chinese Demand; Corn Slides (Source: Bloomberg)
Soybean futures rose to a six-month high on signs of increasing demand from China and limited supplies from the U.S., where farmers may shift more land to growing corn and wheat. Corn prices fell. The U.S. inspected 15.07 million bushels of soybeans for export to China in the week ended March 8, almost seven times more than the same week last year, the government said March 12. The U.S. Department of Agriculture, which will update acreage estimates on March 30, said last month that soybean planting may be unchanged this year, while farmers boost corn seeding by 2.3 percent and wheat by 6.6 percent. “Demand has been relatively good coming out of China, and it looks like beans will get cheated on the acres this year,” Frank J. Cholly, a senior commodities broker at RJO Futures in Chicago, said in a telephone interview. “Corn right now is still a more profitable crop.”
Soybean futures for May delivery climbed 0.1 percent to settle at $13.5025 a bushel at 1:15 p.m. on the Chicago Board of Trade, after touching $13.6075, the highest for a most-active contract since Sept. 16. Futures have jumped 12 percent this year as dry weather threatened crops in South America.

Cocoa Rally Fading as African Rains Erase Shortage: Commodities (Source: Bloomberg)
Rain across parched cocoa plantations in West Africa, which supplies 69 percent of the world’s beans, is leading analysts to pare forecasts for shortages, threatening the biggest rally in a year. Global output should about match demand in the crop year ending in September, compared with the 94,000-metric-ton deficit seen last month, according to estimates by Marex Spectron Group, which trades the beans in New York and London. Prices may drop 14 percent to $2,000 a ton by July, according to Rabobank International and Lome, Togo-based Ecobank Transnational Inc., which financed $227 million of cocoa and coffee trading in 2011.
Prices rose as much as 21 percent in the past two months as dry winds blowing from the Sahara toward the Atlantic battered West African plantations before a mid-crop harvest that starts next month. Farmers have struggled to keep up with a 38 percent expansion in the chocolate market since 2006, which London-based Euromonitor International Ltd. values at $105 billion. Cocoa output rose 15 percent to 3.96 million tons since 2006-07, according to the International Cocoa Organization. “Recent rains in West Africa have been plentiful, particularly in Ghana, and this is positive for the development of the mid-crop and the new crop,” said Eric Sivry, the London- based head of Marex Spectron’s agriculture options brokerage. “Many analysts have been caught by surprise.”

China Feb cotton imports rise 234 pct on yr-industry website
BEIJING, March 13 (Reuters) - China's cotton imports in February were at 616,000 tonnes, surging 234 percent from the same period last year, an industry website showed on Tuesday.
Imports last month rose 89 percent month on month, said the report on a website operated by the China National Cotton Reserves Corp

Ivory Coast cocoa mid crop seen below 5-year average
LONDON, March 12 (Reuters) - Ivory Coast's 2011/12 mid crop output will fall slightly below the average production over the past five years due to dry weather, which is also likely to harm quality, international exporters said on Monday.
The average forecast, based on four exporters' estimates, pegged the April-September mid crop at around 323,000 tonnes, down sharply from last year's bumper 471,735 tonnes, when ideal weather boosted output.

Vietnam revises up Feb coffee exports at 202,000 T
HANOI, March 12 (Reuters) - Vietnam exported 202,000 tonnes, or 3.37 million bags, of coffee last month, up 40.3 percent from a year earlier, Vietnam Customs said, revising up an earlier government estimate of 180,000 tonnes.
But the actual loading volume in January-February fell 12.6 percent from the same period last year to nearly 313,700 tonnes, the customs department run by the Finance Ministry said in a report seen by Reuters on Monday.

India bans fresh cotton exports - for now
NEW DELHI, March 12 (Reuters) - India will now ban fresh cotton exports and allow only quantities already registered  but not shipped, its trade secretary said on Monday, as the world's No.2 producer continued to flip-flop with its trade policy, fuelling market uncertainty.
The trade minister said on Sunday the government would lift a surprise ban on cotton exports imposed on March 5, after influential Farm Minister Sharad Pawar, a coalition ally, opposed the move and asked Prime Minister Manmohan Singh to revoke the ban.

Oil Trades Near 1-Week Low on U.S. Supplies, Saudi Pledge (Source: Bloomberg)
Oil traded near the lowest price in more than a week in New York as investors bet that supply is ample after U.S. crude stockpiles rose and Saudi Arabia pledged to make up for any shortage in shipments from Iran. Futures were little changed after falling 1.2 percent yesterday. Crude inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, climbed to the highest level in nine months, according to the Energy Department. Saudi Arabia will make up any “perceived or real” shortfall, Oil Minister Ali al-Naimi said in Kuwait. Prices have advanced this year as the U.S. and Europe tighten sanctions against Iran over its nuclear program. “The market has been trapped between $105 and $108 a barrel for a while now,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “We’re looking for the trigger to push us out of that range and that inventory figure does speak to the potential for a drop.”
Crude for April delivery was at $105.61 a barrel, up 18 cents, in electronic trading on the New York Mercantile Exchange at 11:43 a.m. Sydney time. The contract yesterday dropped $1.28 to $105.43 a barrel, the lowest close since March 6. Prices are 6.9 percent higher this year.

POLL-U.S. crude stocks seen higher on imports
March 13 (Reuters) - U.S. commercial crude oil stockpiles were forecast to have risen for the fourth straight time last week on higher imports, an extended Reuters poll of analysts showed on Tuesday.
On average, crude stocks were projected up 1.7 million barrels in the week to March 9, with 10 analysts polled predicting an increase and one, Jason Schenker of Prestige Economics LLC, calling for a draw.

S.Africa plans to cut Iran oil imports
Kuwait, March 13 (Reuters) - South Africa hopes to have a plan by the end of May for replacing Iranian crude that currently makes up a quarter of its crude imports, the country's energy minister told Reuters.
The United States has pressured many of Iran's biggest oil buyers in Asia to reduce their purchases in a Western push to starve Tehran of funds for its disputed nuclear programme.

Brent crude dips below $126 ahead of US oil data
SINGAPORE, March 14 (Reuters) - Brent crude dipped below $126 as expectations for a build in U.S. crude inventories and a stronger dollar offset support from improving economic sentiment in the world's top oil consumer.
"The U.S. economy seems more buoyant, so that is keeping the market up," said Tony Nunan, a risk manager at Mitsubishi Corp. "What will bring oil prices off is if we get strong builds in inventories. Supply seems to be sufficient, with OPEC producing at high levels to make up for any shortfall."

Gold Seen Heading for 12th Annual Gain on Investor Hoarding (Source: Bloomberg)
Gold is poised for a 21 percent gain in 2012, extending its bull market to 12 consecutive years, as investors hoard record amounts and central banks expand reserves for the first time in a generation. Bullion may rise to $1,897 an ounce in New York by Dec. 31 from $1,566.80 at the end of 2011, based on the average of 14 respondents in a survey at the Bloomberg Link Precious Metals Conference yesterday in New York. The rally that began in 2001 is the longest since at least 1920 in London, including a 10 percent gain last year. Demand has strengthened as Europe seeks to contain its debt crisis, China’s economic expansion slows, and governments from the U.S. to the U.K. keep interest rates at all-time lows to shore up growth. Central banks have been net buyers for three straight years, the longest stretch since 1973, World Gold Council data show. Holdings (.GLDTONS) in exchange-traded funds backed by the metal reached a record 2,410.2 metric tons yesterday, data compiled by Bloomberg show.
“There are significant shifts going on in the world,” said Martin Murenbeeld, the 67-year-old chief economist at Toronto-based DundeeWealth Inc., which manages about $100 billion in the Dynamic Mutual Funds. “Gold has become an investment, an asset class, and over time, we are only going to be building it up. The central banks are holding gold because they are not sure if the euro will remain five years later.”

20120315 0948 Global Market Related News.

Asian Stocks Rise for Third Day on Japanese Exporters (Source: Bloomberg)
Asian stocks rose, with the benchmark index set for its longest winning streak since February, after Japan’s exporters gained as the yen’s drop against the dollar buoyed their earnings outlook. Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 3 percent in Tokyo. The top three contributors to the MSCI Asia Pacific Index’s advance were Japanese exporters. Ricoh Co. (7752), an office-equipment maker, gained 5.1 percent after Citigroup Inc. raised its rating to “buy” from “neutral.” Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, slid 3.1 percent in Sydney after price of the precious metal dropped yesterday. The MSCI Asia Pacific Index gained 0.3 percent to 127.57 as of 9:30 a.m. in Tokyo, with more than three stocks rising for each that fell. All but two of the gauge’s 10 industry groups advanced as the measure headed for its longest winning streak since Feb. 9.
Japan’s Nikkei 225 Stock Average (NKY) advanced 1 percent. South Korea’s Kospi Index climbed 0.2 percent and Australia’s S&P/ASX 200 Index dropped 0.2 percent.

Nikkei 225 Headed for Highest Close in a Year on Weak Yen (Source: Bloomberg)
March 15 (Bloomberg) -- Japanese stocks rose for a third day, with the Nikkei 225 (NKY) Stock Average headed for its highest close in a year, as the yen’s drop to an 11-month low against the dollar buoyed earnings prospects for exporters. Honda Motor Co. (7267), Japan’s second-largest carmaker by market value, rose 0.3 percent. Kyoei Steel Ltd. (5440) paced gains among steel and iron companies. Sharp Corp. (6753) slid 4 percent after the electronic maker forecasting a record loss named a new president. The Nikkei 225 rose 1 percent to 10,150.50 as of 9:34 a.m. in Tokyo, set for its highest close since March 11. The broader Topix Index gained 1 percent to 865.44. The MSCI Asia Pacific Index excluding Japan slid 0.2 percent.
“Perhaps we are seeing a sustained devaluation of the yen, which would improve the outlook for Japanese exporters in particular,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Perhaps what we are seeing is a redirection of asset allocation toward Japan because a lot of fund managers are underweight, and that’s pushed up the market very quickly ahead of fundamentals.”

S&P 500 Falls After Rising to the Highest Since June 2008 (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) fell, snapping a five-day advance, after the benchmark gauge for U.S. equities rallied to the highest level since June 2008. A gauge of financial shares in the S&P 500 swung between gains and losses following the Federal Reserve’s stress test results. Citigroup Inc. (C) and MetLife Inc. (MET) lost more than 3.3 percent. Bank of America Corp. (BAC) and Zions Bancorporation rose at least 4.1 percent. The Dow Jones Transportation Average (TRAN) fell 1.4 percent as the Fed’s better economic assessment caused investors to reduce bets on more monetary easing. Apple Inc. (AAPL) added 3.8 percent as Morgan Stanley raised its share-price estimate.
The S&P 500 fell 0.1 percent to 1,394.28 at 4 p.m. New York time, after closing yesterday at 14.4 times reported earnings, the highest valuation level since July. The Dow Jones Industrial Average advanced 16.42 points, or 0.1 percent, to 13,194.10. The Russell 2000 Index (RTY) of small companies dropped 0.9 percent to 823.40. About 7.5 billion shares changed hands on U.S. exchanges, or 13 percent above the three-month average. “It’s an issue of confidence,” Robert Zagunis, co- portfolio manager at Jensen Investment Management Inc., said in a telephone interview from Portland, Oregon. His firm oversees $5.7 billion. “Little by little, things are improving. You have symbolic announcements like the Fed stress tests. Longer-term, the market will be higher, but there may be a scale back. The question is -- are you in for the short term or the long term?”

European Stocks Rise to Eight-Month High; EON Shares Gain (Source: Bloomberg)
European (SXXP) stocks advanced to the highest level since July as the Federal Reserve raised its economic assessment of the world’s largest economy. EON AG, Germany’s biggest utility, gained 7 percent after it reported 2011 earnings that topped analysts’ estimates. Credit Suisse Group AG and Legal & General Group Plc (LGEN) advanced as a gauge of banks and insurers rallied. Arkema SA, the French maker of plastics additives, fell 5 percent as a shareholder is selling as much as 450 million euros ($589 million) of the company’s stock. The Stoxx Europe 600 Index (SXXP) climbed 0.3 percent to 270.27 at the close. The gauge has gained 11 percent so far this year amid optimism that the euro area will contain its sovereign-debt crisis and better-than-expected U.S. economic data.
“The U.S. continues to deliver rather good economic data and the situation in Greece has calmed down for the time being,” said Peter Braendle, who helps manage $60 billion at Swisscanto Asset Management AG in Zurich. “For Southern Europe I hope for further structural reforms, not just saving programs, but it’s certainly a positive impulse for stock markets.”

Dollar stronger across the board, hits 11-mth high vs yen
TOKYO, March 14 (Reuters) - The dollar hit an 11-month high against the yen and 1-month high on the euro, extending its gains after a modest brightening of the Federal Reserve's economic forecasts nudged traders to downplay expectations of further monetary easing.  
"The move in the yields was essential for the dollar rally to continue," said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.  

Brighter outlook send shares, U.S. dlr higher
LONDON, March 14 (Reuters) - A brightening economic outlook and news most U.S. banks passed their annual stress tests sent world share markets higher and lent weight to the view that further Fed easing was less likely, pushing up the U.S. dollar across the board.
"The markets do run very much on confidence and at the moment, that's improved greatly," said Grant Williamson, a partner at New Zealand brokerage Hamilton Hindin Greene.

Dollar Touches 11-Month High Against Yen on U.S. Recovery (Source: Bloomberg)
The dollar rose to an 11-month high against the yen before U.S. data today forecast to show regional manufacturing expanded and initial jobless claims decreased, adding to signs the American economy is gathering momentum. The greenback was near the highest level in four weeks against the euro amid reduced bets the Federal Reserve will begin a third round of bond purchases, or quantitative easing, which could debase the world’s reserve currency. The yen declined against most its major counterparts as Asian stocks advanced for a third day, curbing demand for the lower-yielding Japanese currency. “We’re seeing a shift in trend to dollar buying across the board,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “Should U.S. economic data continue to come in firm, it will support the market’s view that the Fed doesn’t need QE3.”
The dollar touched 84.02 yen, the highest level since April 13 before trading at 83.98 yen at 10:04 a.m. in Tokyo, 0.3 percent above yesterday’s close in New York. The U.S. currency rose 0.1 percent to $1.3019 per euro. It yesterday climbed as high as $1.3011, the strongest since Feb. 16. The yen dropped 0.2 percent to 109.32 per euro, after earlier touching 109.40, the weakest since Feb. 27.

Rising oil prices draw first hedge fund shorts: Kemp
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, March 13 (Reuters) - Soaring oil prices have started to draw interest from contrarian hedge funds willing to bet the increase is a spike and not sustainable.
Hedge funds and other money managers raised their short positions in futures and options linked to U.S. crude prices (also known as WTI) by the equivalent of more than 17 million barrels in the week ending March 6, according to the Commodity Futures Trading Commission (CFTC).

Growth in U.S. to Strengthen as Jobs Lift Consumers: Economy (Source: Bloomberg)
The world’s largest economy will strengthen through 2012 as employment gains give Americans the means to withstand rising fuel costs, according to economists surveyed by Bloomberg News. Gross domestic product will climb at a 2.5 percent annual rate in the final three months of the year, up from 2 percent this quarter, according to the median forecast of 71 economists surveyed from March 9 to March 13. For all of 2012, the U.S. may expand 2.2 percent, accelerating from 1.7 percent last year. More jobs, increasing share prices, improving confidence and stability in housing will bolster the expansion. At the same time, unemployment will be slow to retreat, averaging 7.3 percent in 2014, showing why Federal Reserve policy makers yesterday said interest rates will remain low for at least the next two years.
“Some of the conditions for faster growth are falling into place,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. By the end of the year, “we’ll still be a long way from what would make the Fed more comfortable. They will still be missing their full employment objective.” IHS Global Insight was the second most-accurate forecaster of consumer spending over the two years through February, according to Bloomberg calculations.

Bernanke: ‘Frustratingly Slow’ Growth Impedes Lending (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said the weak U.S. economy impedes efforts by banks to make profitable loans. “Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending,” Bernanke said today in remarks recorded for delivery at the Independent Community Bankers of America National Convention and Techworld in Nashville, Tennessee. The Federal Open Market Committee said yesterday that economic conditions would still warrant holding the benchmark interest rate near zero at least through late 2014. Community banks are “facing difficult challenges,” Bernanke said. “Their close ties to local economies are, on balance, a source of strength, but a drawback of those ties is that the fortunes of communities and their banks tend to rise and fall together.”
The best six-month streak of job growth since 2006 prompted Bernanke yesterday to acknowledge an improved path for the economy, even as policy makers repeated that unemployment is “elevated” and that strains in global markets “continue to pose significant downside risks to the economic outlook.”

Current-Account Deficit in U.S. Widens to $124.1 Billion (Source: Bloomberg)
The current-account deficit in the U.S. widened more than forecast in the fourth quarter to $124.1 billion, the biggest in three years. The gap, the broadest measure of international trade because it includes income payments and government transfers, grew 15 percent from a revised $107.6 billion shortfall in the prior quarter that was smaller than initially estimated, a Commerce Department report showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a $115 billion fourth-quarter deficit. Imports (USTBIMP) of goods may keep rising as an improving job market underpins consumer spending, and businesses replace outdated equipment. The overall balance of payments deficit is also a reminder of U.S. dependence on foreign investors for funding.
“A widening of the balance just tells you about the relative growth rate of the U.S. compared with other economies,” said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. “There’s a fairly good chance that the deficit will widen again because imports are on track to outpace exports.”

Stress Tests Show How Fed Pushed on Balance Sheets (Source: Bloomberg)
The resilience of the largest U.S. financial firms when tested against a recession more severe than the last one shows regulators have succeeded in pushing banks to build fortress-like balance sheets. The Fed yesterday said 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario, even while continuing to pay dividends and repurchasing stock. Those results were due to scrutiny by the Fed on capital payouts over the past three years, the central bank said. Regulators, empowered by the Dodd-Frank Act and goaded by criticism for failing to spot the subprime mortgage debacle, have redesigned their approach to bank supervision. They now place greater emphasis on systemic risk as they seek to avoid a repeat of the crisis that resulted in a $245 billion taxpayer bailout of banks through the Troubled Asset Relief Program.
“Any bank that remains adequately capitalized under these acute stress scenarios is not just strong but also darn-near impregnable,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics, a Washington research firm, whose clients have included Wells Fargo & Co. (WFC) “What’s a bank for is at the heart of this question: Is it to be Fort Knox?”

Bernanke Keeps Easing Option While Signaling Economy Improving (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke is keeping additional easing on the policy-making table even after upgrading his view on the U.S. expansion. Stocks rose and Treasuries fell after the Federal Open Market Committee yesterday improved its outlook for growth, reducing expectations the central bank will begin a third round of bond buying. At the same time, the FOMC reiterated in a post- meeting statement that the joblessness rate is “elevated” and “significant downside risks” remain. Even after the most robust six-month period of job growth since 2006, unemployment persists at 8.3 percent and Bernanke is holding to his plan to keep the benchmark interest rate close to zero through at least late 2014.
“The way the statement was crafted was to keep their options open,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “What they’re trying to tell us is ‘Hey, don’t change your policy outlook because we’re not ready to say things have changed enough’” that no more stimulus is needed.

Import Prices in U.S. Rise Less Than Forecast, Food Costs Drop (Source: Bloomberg)
Prices of goods imported into the U.S. rose less than forecast in February, reflecting the biggest drop in food costs in three years. The 0.4 percent gain in the import-price index follows little change in January, Labor Department figures showed today in Washington. Economists projected the gauge would increase 0.6 percent, according to the median forecast in a Bloomberg News survey. Prices excluding fuel fell 0.1 percent. A slowing global economy may restrain demand for commodities, limiting inflation pressures in the U.S. even as energy costs rise. Federal Reserve policy makers yesterday projected they’ll keep interest rates low at least until late 2014, predicting the jump in fuel prices will be temporary. “Once you look past the rise in oil, import prices are pretty tame on the back of the dollar strength we’ve been seeing recently,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said before the report. “This points toward pretty well controlled non-energy costs.”

Treasury 5-Year Notes Fall Before Job Data Amid Recovery (Source: Bloomberg)
Treasury (YCGT0025) five-year notes fell for a seventh day, the longest losing streak in almost a year, before U.S. data today that economists said will show fewer Americans filed claims for jobless benefits. A gauge of investor expectations for inflation was near the highest in seven months before a U.S. government report forecast to show wholesale prices increased the most in five months. Japan’s government bonds dropped, with 10-year futures sliding to an eight-month low. “The U.S. economy is undoubtedly getting better,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $71 billion in Tokyo. “The bond market is likely to remain weak.” Five-year Treasury yields added six basis points to 1.16 percent as of 10:12 a.m. in Tokyo, the highest since Oct. 28. The benchmark 10-year yield rose four basis points to 2.31 percent, the most since Oct. 31. The 2 percent security due February 2022 dipped 3/8, or $3.75 cents per $1,000 face amount, to 97 1/4.

Wen Tells Future Leaders to Embrace Political Change (Source: Bloomberg)
Chinese Premier Wen Jiabao, set to leave office next year after a decade in power, said his nation must adopt political change to support an economic transformation that has produced rapid development at the cost of a widening wealth gap. “Without successful political reform, it’s impossible to carry out economic reform,” Wen, 69, told reporters in Beijing yesterday in a three-hour press conference closing the legislature’s annual gathering. “There’s even the possibility of losing what we’ve achieved.” Wen’s remarks reflect widening protests over illegal land grabs and discontent with declining purchasing power as China (GDPNTTL)’s wealthy drive up housing costs. At stake for China’s next generation of leaders, scheduled to be selected in a process that begins later this year, is maintaining social order in the world’s fastest-growing major economy.
Wen’s remarks echoed comments he’s made in the past, including a speech in 2010 where he said reversing policies of reform and openness would be a “dead end” for development. The comments two years ago were directly refuted by an editorial in the Communist Party’s official newspaper, suggesting that other leaders did not share his views.

Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says (Source: Bloomberg)
China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist. “If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.”  The Shanghai Composite Index fell 2.6 percent yesterday, the most since Nov. 30, after Premier Wen Jiabao said home prices are still ``far from a reasonable level.'' His comments fueled concern the government will maintain restrictions on the property market for an extended period even as the curbs threaten to slow economic growth.
Wen announced at the beginning of a national lawmakers’ congress on March 5 an economic growth target of 7.5 percent for this year, down from 8 percent over the past seven years. Data last week showed China’s factory output in the first two months of the year rose the least since 2009, while retail sales increased less than economists predicted and inflation eased to the slowest pace in 20 months.

Fitch Puts U.K. Debt on Negative Outlook Days Away From Budget (Source: Bloomberg)
Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50 percent chance that the AAA rating will be reduced within two years, the company said in a statement in London late yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis. Osborne will meet coalition partners later this week to agree on a budget he will present on March 21. The decision “reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery,” Fitch said.
While the warning is a blow to Osborne’s strategy of implementing the biggest squeeze on government spending since World War II, it may strengthen his hand in negotiations with Liberal Democrat coalition partners, who want him to cut taxes to help the poorest workers.

U.K. Unemployment Jumped More Than Forecast in February (Source: Bloomberg)
U.K. jobless claims rose more than economists forecast in February and a broader measure of unemployment remained at the highest rate in 16 years, underscoring the weakness of the labor market even as the economy shows some signs of recovery. Unemployment-benefit claims climbed by 7,200 from January to 1.612 million, a 12th straight monthly increase, the Office for National Statistics said today in London. The median forecast of 28 economists in a Bloomberg News Survey was for a gain of 5,000. Unemployment (UKUEILOR) measured by International Labour Organization methods held at 8.4 percent in the three months through January, the highest since 1995. The data may fuel arguments from opposition politicians that Prime Minister David Cameron is cutting government spending too fast to tackle the deficit and comes after the economy contracted in the fourth quarter. While some indicators signal the economy returned to growth this quarter, consumer confidence remains weak on concern that job cuts may continue.
The “labor-market figures paint a generally weak picture,” said Samuel Tombs, an economist at Capital Economics in London. “The recent pickup in economic growth seems to be insufficient to bring down unemployment.”