Wednesday, March 21, 2012

20120321 1833 FCPO EOD Daily Chart Study.

FCPO closed : 3368, changed : +2 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histrogram : weakenning weakening buyer taking profit.
Support : 3350, 3300, 3270, 3250 level.
Resistance : 3420, 3450, 3470, 3500 level.
Comment :
FCPO closed 2 ticks higher with declined volume transacted. Soy oil price currently rebounding little higher after overnight fall nearly 2% while crude oil price currently trading higher.
FCPO price traded range bound through out the day without clear direction as overnight soy oil price plunge, slowing China and India growth concern with higher export prospect.
Daily chart study still calling a pullback correction upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120321 1804 FKLI EOD Daily Chart Study.

FKLI closed : 1586.5 changed : +11 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histrogram : recovering, buyer seller battling.
Support : 1580, 1570, 1565, 1550 level.
Resistance : 1590, 1600, 1610, 1620 level.
Comment :
FKLI rallied higher with little improved volume changed hand doing 4 points premium compare to cash market that also closed higher. Overnight U.S. markets closed recorded loss and today Asia markets still traded mixed while European markets currently trading little higher.
Mixed development over slowing China nad India growth with improved U.S. home sales data and latest Greece parliment approved 130 billion bailout resulted global market to trade indecisively.
Back home, FKLI rallied higher with daily chart study revised to suggesting an upside biased market development possibly testing resistance near upper Bollinger band. (Wild guess : perhaps GE is near and now is the  pre rally ?? )
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.

20120321 1645 Global Market & Commodities Related News.

Shares weighed by China slowdown worries
TOKYO, March 21 (Reuters) - Asian shares eased, as concerns about China's slowing economy dampened the optimism generated by a brightening outlook for the U.S. economy that has been pushing equity markets higher since late last year.
"The market is caught in a tug-of-war between concerns about China's slowdown and expectations for monetary easing to support growth," said Hirokazu Yuihama, senior strategist at Daiwa Capital Markets in Tokyo.

FOREX-Dollar firmer as commodity currencies come under fire
SYDNEY, March 21 (Reuters) - The U.S. dollar started with a spring in its step on Wednesday as renewed worries about Chinese growth saw investors dump commodity currencies including the Australian dollar.
The dollar index bounced off a 1-1/2 week trough of 79.354 to last trade at 79.610. Against the yen, the greenback climbed to 83.68 , nearing an 11-month high of 84.17 seen just a few days ago.

U.S. grains rebound slightly from recent falls
SYDNEY, Mar 21 (Reuters) - U.S. grains rebounded slightly after losses in the previous session, when traders unwound gains due to bearish chart signals and favorable weather for crops in the United States.
Rain showers expected across parts of the U.S. Plains and Midwest should benefit the developing winter wheat crop.

No deal yet to end Argentine grain truckers strike
BUENOS AIRES, March 20 (Reuters) - A strike by Argentine truckers disrupted the flow of corn and soybeans to the country's main ports for a second day on Tuesday after union leaders failed to reach a deal with the government.
The protest to demand higher pay began early on Monday, just as exporters needed to haul freshly harvested soybeans to port.

India to review sugar exports on March 26
NEW DELHI, March 20 (Reuters) - A ministers' panel will review sugar exports on March 26, a government source said on Tuesday, raising hopes of more overseas sale of the sweetener from the world's second-biggest producer that could put pressure on global prices.
India, the world's largest consumer of sugar, has already allowed 2 million tonnes of sugar exports in the year from Oct. 1 and expects output to far outstrip demand.

Thai sugar output forecast at record of 10 mln T
BANGKOK/SINGAPORE, March 20 (Reuters) - Thailand, the world's second largest exporter of sugar, will produce a record 10 million tonnes of the sweetener in the 2011/12 crushing season because of good weather, but premiums will crumble as inventory builds, industry officials said on Tuesday.
Premiums for Thai raw sugar, a key indicator of demand, slipped to their lowest in three weeks as more sugar comes on stream, while buyers stay on the sidelines, hoping to buy the sweetener at much cheaper prices.

Brent heads towards $125 on U.S. stocks draw, weaker dlr
SINGAPORE, March 21 (Reuters) - Brent crude edged towards $125 a barrel, rebounding from sharp losses a day earlier, as lower-than-expected U.S. crude stocks and a weaker dollar offset the prospect of top exporter Saudi Arabia ramping up supply.
"The lower stocks is giving support to the market, but the Saudi comments will put a short-term cap on the oil price, and ease fears of supply issues emanating out of Iran," said Ben Le Brun, market analyst with OptionsXpress in Sydney.

Japan says told U.S. it would cut Iran oil imports further
TOKYO, March 21 (Reuters) - Japan's top government spokesman said on Wednesday that Japan had told the United States that it would accelerate its cuts in Iranian crude imports.
Japan is estimated to have reduced oil purchases from Iran   by 15-22 percent in the second half of last year, a move lauded by the United States, which on Tuesday decided to give a six-month reprieve to banks in Japan and 10 EU nations from the threat of being cut off from the U.S. financial system.

China may import 1 billion tonnes of coal, or not
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, March 19 (Reuters) - The good news for anybody planning to spend billions of dollars developing a coal mine in Australia, Indonesia or Mozambique is that China's import demand may jump to 1 billion tonnes a year within two decades.
But the bad news for mining executives is the Asian giant's imports may not rise much at all as domestic output growth can meet future needs.

Venezuela: US plan to tap oil reserves unsustainable
CABRUTICA, Venezuela, March 20 (Reuters) - Venezuela said on Tuesday that a plan by the United States and Britain to tap strategic oil reserves was unsustainable in the long term and would only have a limited impact on prices.
Oil Minister Rafael Ramirez said OPEC had no plans to hold an extraordinary meeting to discuss the issue, which he said was primarily a political move ahead of November's presidential election in the United States.

Euro Coal-Prices stable, China growth worries weigh
LONDON, March 20 (Reuters) - Prices of prompt physical coal were largely unchanged again on Tuesday with coal lacking clear direction from fundamentals but macro factors such as China growth worries could start to erode prices, utilities and traders said.
Bids and offers were again too far apart to trade and both buyers and sellers were uncertain of the market's strength.

China Feb coal imports up 167 pct y/y - report
BEIJING, March 20 (Reuters) - Coal imports by China, the world's top user, amounted to 20.55 million tonnes in February, up 167.1 percent from a year earlier, a report on energy industry website China Energy Net ( showed on Tuesday.
Imports in the first two months increased 51 percent from a year earlier to 40.2 million tonnes, the report said.

Feb daily aluminium output 68,900 T - IAI
LONDON, March 20 (Reuters) - Daily average primary aluminium output in February dropped to 68,900 tonnes compared with a revised 69,000 in January and 69,600 in February 2011, provisional figures from the International Aluminium Institute (IAI) showed.  
Total production in February (29 days) was 1.998 million tonnes, compared with 2.139 million tonnes in January (31 days) and 1.950 million in February 2011.  

Copper market in 358,000 T deficit in 2011-ICSG
SINGAPORE, March 21 (Reuters) - The global market for refined copper was in a 358,000 deficit in 2011, in line with the same period of 2010, the International Copper Study Group (ICSG) said on Wednesday.
World refined useage grew by 3 percent to 20 million tonnes, while world refined production grew by the same percentage to 19.63 million tonnes, ICSG said in its latest monthly bulletin.

Global steel output shows recovery still fragile
LONDON, March 20 (Reuters) - The daily rate of global crude steel production rose slightly in February from a month earlier, helped by a seasonal demand pick-up in top producer China, according to a Reuters calculation based on data released by an industry body on Tuesday.
When the figures take into account the extra day in February 2012 compared with 2011, however, both Chinese and global daily steel production were down slightly last month compared with February 2011, showing the sector continued to suffer from the uncertain economic situation.

Iron Ore-Indian low-grade ore prices rise in cautious market
SINGAPORE, March 21 (Reuters) - Prices of lower-grade Indian iron ore in China rose on Wednesday after a miner sold cargoes at steep prices at a tender, although overall market appetite remained thin with players unsure about the outlook for China's steel demand.
Indian ore with iron content of less than 60 percent were being offered at a dollar more per tonne in China compared to Tuesday, according to industry consultancy Umetal.

Italy's Q1 steel output seen up 5 pct -Federacciai
MILAN, March 20 (Reuters) - Steel output in Italy, the European Union's second-biggest producer after Germany, will grow at a slower pace in the first three months of 2012 than a year ago due to falling demand on the key European market, a senior industry official said.
"According to our preliminary forecasts, production growth should be about 5 percent in the first quarter," Giuseppe Pasini, chairman of Italy's steel industry body Federacciai, told Reuters after an industry fair presentation.

Australia's miners sees China iron ore demand flattening
PERTH, March 20 (Reuters) - Australian iron ore miners, key beneficiaries of China's modern-day industrial revolution, on Tuesday signaled demand growth was finally slowing in response to Beijing's moves to cool its economy.
It was the strongest indication yet from an industry closest to China's phenomenal industrial growth over the last decade that the boom times, if not over, are tempering.

Australia lifts iron ore exports forecast
SYDNEY, March 21 (Reuters) - Australia raised its forecast for 2011/12 iron ore exports to a record 473 million tonnes, from a previous projection of 460 million tonnes, reflecting expectations demand from top buyer China will remain strong.
While China slashed its growth target for this year to an eight-year low of 7.5 percent, big miners are betting on a soft landing for the world's second biggest economy and forging ahead with their longer-term iron ore output expansion plans.

&#8226 Glencore to resume Philippine copper operations by mid-yr
MANILA, March 20 (Reuters) - Glencore International  will resume operations at the only copper refinery in the Philippines by June or July, six months after a fire halted its operations, a company official told Reuters on Tuesday.
Philippine Associated Smelting and Refining Corp (PASAR), majority owned by Glencore, shut in January after a fire at its site in the central Leyte province, destroying anti-pollution devices.

Markets fail to see China iron ore slowdown is good
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, March 21 (Reuters) - The market sell-off after BHP Billiton said China's iron ore demand is "flattening" was as predictable as it was wrong, with investors failing to see the news is exactly what's needed to prolong the commodity boom.
It was predictable that equities and growth-exposed currencies such as the Australian dollar dropped, as this is what happens when markets become concerned that China, the engine of global economic growth and commodity demand, is slowing too much and risks a hard landing.

&#8226 Gold edges up on dollar; physical demand sluggish
SINGAPORE, March 21 (Reuters) - Gold prices edged higher after dropping nearly 1 percent in the previous session, as a slightly weaker dollar came to the aid of buyers, while sluggish physical demand and an improving U.S. economic outlook capped gains.
"Gold has seen some liquidation by funds after the hopes for QE3 (third round of quantitative easing) were dashed," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

METALS-LME copper gains; China demand worries weigh
SINGAPORE, March 21 (Reuters) - London copper rebounded on Wednesday, after falling to a more than one-week low in the previous session, while worries over a slower growth in Chinese demand for commodities kept a lid on gains.
Three-month copper on the London Metal Exchange  rose 0.6 percent to $8,481.25 a tonne by 0323 GMT, reversing losses from the previous session when it dropped to its lowest since March 9 at $8,383 a tonne.

PRECIOUS-Gold edges up on dollar; physical demand sluggish
SINGAPORE, March 21 (Reuters) - Gold prices edged higher on Wednesday after dropping nearly 1 percent in the previous session, as a slightly weaker dollar came to the aid of buyers, while sluggish physical demand and an improving U.S. economic outlook capped gains.
The latest U.S. housing market data added to a string of numbers indicating steady recovery in the world's largest economy, diminishing hopes of further quantitative easing which had helped buoy gold earlier this year.

Baltic sea index rises despite capesize weakness
March 20 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose on Tuesday as higher rates for smaller vessels countered weakness in capesizes.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, climbed 5 points or 0.57 percent to 884 points.

20120321 1112 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares ease on China slowdown worry
TOKYO, March 21 (Reuters) - Asian shares slipped on Wednesday as fresh concerns about China's economic slowdown dampened investors' risk appetite, which have been generally rising on a brightening outlook for the U.S. economy.
"Concerns about global growth, specifically China, have weighed on market risk appetite," Barclays Capital analysts said.

COMMODITIES-Down broadly; oil tumbles on Saudi supply pledge
NEW YORK, March 20 (Reuters) - Oil tumbled on Tuesday, with U.S. crude posting the biggest daily decline in three months, after Saudi Arabia reassured markets it will pump enough to compensate for the potential loss of Iranian crude. Gold and other commodities also fell as the dollar rebounded.
"I want to assure you that there is no shortage of supply in the market," Naimi said. "We are ready and willing to put more oil on the market, but you need a buyer."

OIL-Oil falls as Saudi Arabia seeks to calm markets
NEW YORK, March 20 (Reuters) - Oil dropped nearly 2 percent o n T uesday as Saudi Arabia sought to knock back crude's price rise that has threatened the global economy, with the oil minister offering the most detailed argument to date that the OPEC
nation was prepared to meet any supply shortfall.
"My only mission is to convey to you that there is no supply shortage in the market," Naimi told a media briefing in Doha, Qatar, adding supplies were now outpacing global demand by more than 1 million bpd and that current prices were "unjustifiable".

Japan trade min: crude oil supply problem unlikely
TOKYO, March 21 (Reuters) - Japan is unlikely to face major crude oil supply problems now that Washington has exempt the country from financial sanctions as it has cut purchases of Iranian crude oil, Trade Minister Yukio Edano said on Wednesday.
"We welcome the decision," Edano told a news conference. "I believe (crude oil) supply will not become a major issue."

Venezuela: US plan to tap oil reserves unsustainable
CABRUTICA, Venezuela, March 20 (Reuters) - Venezuela said on Tuesday that a plan by the United States and Britain to tap strategic oil reserves was unsustainable in the long term and would only have a limited impact on prices.
Oil Minister Rafael Ramirez said OPEC had no plans to hold an extraordinary meeting to discuss the issue, which he said was primarily a political move ahead of November's presidential election in the United States.

Iraq's southern oil exports jump in March
LONDON, March 20 (Reuters) - Iraq's oil exports from its southern ports have jumped by 150,000 barrels per day (bpd) in March, according to shipping data tracked by Reuters, a sign Baghdad is on the way towards boosting shipments to a post-war record rate.
Exports from the Basra oil terminal, Khor al-Amaya, and a new Gulf outlet have averaged 1.81 million bpd in the first 19 days of March, the data showed, up from about 1.66 million bpd in February.

NATURAL GAS-US natural gas futures end lower ahead of storage build
NEW YORK, March 20 (Reuters) - U.S. natural gas futures ended lower on Tuesday, after two days of modest technical gains, as record-high supplies, mild early spring weather and expectations for a weekly inventory build on Thursday weighed on prices.
Pax Saunders, analyst at Gelber & Associates in Houston, said recent price action could look like a technical bottom, but he added, "It's difficult to imagine that we've seen a seasonal low with ... an end-of-March storage level likely near 2.4 tcf and no substantive production constraints on the table."

EURO COAL-Coal seeks direction, China looks bearish
LONDON, March 19 (Reuters) - Prices of prompt physical coal were largely unchanged on Monday as it struggled to find direction from its own fundamentals or from other markets, traders and utilities said.
"It's been illiquid, no demand for the front months but no real appetite to sell it either, and no direction from oil, currency or power today," one utility source said.

20120321 0959 Malaysia Corporate Related News.

MRT Corp awards RM8.2bn contract to MMC-Gamuda JV
Mass Rapid Transit Corp SB (MRT Corp) has awarded the underground package of the MY Rapid Transit (MRT) Sungai Buloh-Kajang line worth RM8.2bn to a JV entity comprising MMC Corp and Gamuda. The scope of work for the contract is to design and build a 9.5km MRT underground tunnel and seven underground stations. Works for the underground package will be directly supervised by MRT Corp. According to MRT Corp, the tunneling works alone will comprise about 30%-40% of the total project cost. (Malaysian Reserve)

KLK sells Crabtree & Evelyn for RM465m, expands oil palm landbank
Kuala Lumpur Kepong (KLK) is disposing of its non-core asset in CE Holdings (CEH) for USD155m (RM465m), and expanding its oil palm landbank in Kalimantan by acquiring an Indonesian firm for IDR10.8bn (RM3.6m). KLK said its wholly-owned subsidiary KLK Overseas Investments has entered into an unconditional SPA with HK’s Khuan Choo International to dispose of 100% equity, or 63.7m shares, in CEH while another subsidiary KL-Kepong Plantation Holdings sealed a deal to acquire 90% equity, or 225 shares, of PT Global Primatama Mandiri. (Malaysian Reserve)

Sime Darby to expand healthcare business in Indonesia, Asean
Sime Darby plans to expand its healthcare business in Indonesia in sync with its five-year strategic plan to grow the business in Malaysia and the Asean region. Its CEO Datuk Mohd Bakke Salleh said the group was currently focusing on Jakarta and had been discussing with a few players in the Indonesian market with regard to its plan. On a separate note, he said that the newly launched Sime Darby Medical Centre Ara Damansara, which was opened in January, currently has 73 beds and the number would be scaled up to 220 beds by 2016. (Malaysian Reserve)

Fajarbaru clinches RM73m contract
Fajarbaru Builder Group’s (FBG) wholly owned subsidiary, Fajarbaru Builder SB, has received a letter of award from Akitek Tenggara SB to demolish and rebuild part of the existing six-storey Shaw Parade Complex in phases for RM72.9m. It said the contract is expected to contribute positively to earnings and net assets of FBG for its financial years ending 30 June 2012 to 2015. (Malaysian Reserve)

EPF raises stake in IJM Plantations
The Employee Provident Fund (EPF) has been gradually increasing its stake in IJM Plantations and currently holds 12.54% or 100.5m shares in the plantation company. It showed that the EPF acquired 465.5k shares in IJM Plantations on 15 March. It had 98.2m shares in the company at the start of this year. (BT)

Maybank: Inks pact with Myanmar partners
Maybank has emerged  as  the first local bank to offer services for Myanmar workers in Malaysia to remit funds back home after signing a pact with four partners. President and CEO Datuk Seri Abdul Wahid Omar said this service could see some RM38m in transfers this year and help fuel the growth target of 20% in total remittance value from RM2bn in 2011. Maybank's four partners in Myanmar are Asia Green Development Bank, Co-operative Bank, Ayeryarwady Bank and Kanbawza Bank. Meanwhile, Abdul Wahid said Maybank was among 16 foreign banks that had set up representative offices in Myanmar and was waiting for approval from the Myanmar authorities to open its branch there. (Business Times)

Maybank: Sees 20% growth in fund transfer
Maybank is aiming for a 20% growth in the value of foreign workers' fund transfer this year from RM2bn registered last year. President and CEO Datuk Seri Abdul Wahid Omar said the target would be boosted by the introduction of Maybank Money Express (MME) remittance service to Myanmar that would see some RM38m being transferred this year. The new service to Myanmar will help fuel the 20% growth that we are targeting. It will bring us another step forward in strengthening our regional MME remittance platform,” he said at an agreement signing between Maybank and four Myanmar banks to use the MME service. The banks are Asia Green Development Bank, Co-operative Bank Ltd, Ayeryarwady Bank Ltd and Kanbawza Bank Ltd. The service would allow remittance transactions from Malaysia through Maybank branches and forex booths to the respective banks in Myanmar via an electronic platform. (StarBiz)

MAS: Hayati tipped to become MASkargo chief
According to sources, MAS executive vice-president of airport operations, Hayati Ali has been tipped to become the next head of its cargo arm. However, the national carrier has neither denied nor confirmed this. The company said the position of head of Malaysia Airlines Cargo Sdn Bhd (MASkargo) is currently vacant. MAS will make the necessary announcement once the suitable person for the position is appointed. While the MAS management was keen to appoint Hayati to the position, the decision had not been finalised, sources said. One of its considerations is Hayati’s possible reluctance to accept the position. A source said that she is quite happy with her post and may want to stay on, given the option. (Business Times)

BIMB Holdings: Bank Islam expects less robust performance
Bank Islam Malaysia expects its profit growth to slow this year given the more challenging economic environment. MD Datuk Seri Zukri Samat cited this to the economic situation in Europe and the US that was still fragile and that growth in big emerging economies like Brazil, Russia, India and China was also expected to slow down. (Business Times)

Key West Global: Terms with PT Formasi not finalised
Key West Global Telecommunications is in talks with PT Formasi Sumatera Energi to to venture into the oil and gas businesses in Indonesia, it said in a statement to the local stock exchange Tuesday. Business Times had on Tuesday reported that KeyWest was in talks with PT Formasi, and if the deal went through, it will lead to a reverse takeover of Keywest. KeyWest added in the statement to the bourse that to date, the terms have yet to be finalised. (Business Times)

Jotech: Gets shareholders’ nod for merger with AIC, AutoV
Jotech Holdings has received shareholders’ approval for the proposed merger with AIC Corporation and AutoV Corporation. Jotech said on Tuesday the approval was given at the EGM and court convened meetings on Tuesday. All three companies would be collectively be acquired by a special purpose vehicle -- Temasek Formation Bhd (TFB) – which is owned by executive chairman of Jotech and AIC, Datuk Goh Tian Chuan. (Financial Daily)

Cypark: Targets annual turnover of RM45m from solar plants
Cypark Resources has targeted to generate turnover of about RM45m from 2013 when the 33 MW solar capacity from its solar plants are completed. Cypark executive chairman and founder Tan Sri Razali Ismail said the company targeted to complete the installation of an additional 25MW of solar plants in Johor, Perlis, Melaka and Negeri Sembilan by end-2012. He said with the targeted completion of 33 MW total solar capacity, Cypark expects to generate annual turnover of about RM45m from year 2013 onwards, adding that by Jan 2013, Cypark hoped to fully transform itself into a green utility company specialising in the area of solar Photovoltaic and waste to energy. (Financial Daily)

Automotive: Feb vehicle sales jump 9%
According to Malaysian Automotive Association (MAA), motor vehicle sales in Feb 2012 increased by 3,626 units or close to 9% to 44,013 units, from 40,387 units in the same month last year. MAA said the passenger car segment recorded sales of 38,867 units compared with 36,457 units in Feb last year, while commercial vehicle sales rose to 5,146 units from 3,930 units. Longer working month and strong performance by the commercial vehicle segment were cited as main factors for 9% jump in sales volume in Feb. (Financial Daily)

Royal Bank of Scotland Plc (RBS) is closing its equity capital market (ECM) and corporate finance units in South Korea and cash equities businesses in Indonesia, South Korea and Singapore. RBS said in a statement, “For commercial reasons, we have agreed with CIMB Group Holdings Bhd (CIMB) that the cash equities, ECM and corporate finance businesses in Korea and cash equities in Indonesia and Singapore will not ultimately transfer as part of the sale. We have therefore made the decision to initiate steps to wind down these businesses commencing today.” The decision sheds light on the British lender‟s recent agreement with CIMB for the sale of Asian assets, signaling that CIMB is eyeing RBS‟ Hong Kong, India and Australian businesses to boost its investment banking presence in Asia. (Reuters)

The idea for the share swap between Malaysian Airlines (MAS) and AirAsia came from Datuk Seri Najib Razak but the PM did not want the deal to cause friction with employees, a MAS union leader has revealed. The plan was to have two national champions when the ASEAN open skies policy takes effect in 2015. “Najib said it was his idea to have the share swap and collaboration but he didn‟t ask them (the new management) to do all this (actions that caused unhappiness),” said Abdul Malek, MAS Employees Union (MASEU) secretary-general. The union leader said that some staff had been asked to resign from MAS before being transferred to the new yet unnamed subsidiary airline that would takeover the regional routes, a propose he found unacceptable. It is learnt that Putrajaya is considering a special entity to take MAS off the hands of its main shareholders, Khazanah and Tune Air. The plan could potentially be for Khazanah to divest its stake in MAS first before a general offer is made for the remaining shares from other shareholders, including Tune Air. (Malaysian Insider)

Naza Automotive Manufacturing, the manufacturing arm of the Naza Group, has invested RM30m in a new robotic assembly line at its plant in Gurun, Kedah. The new assembly line is the first line at the 56ha facility with robots to ensure the quality consistency for the C-segment Peugeot, which is set to be exported to other markets in the region. The RM30m assembly line is part of its RM714m expansion and upgrading exercise which began in 2010 and is scheduled to be completed end-2015. The exercise includes investments in facility upgrades, plants expansion, new model introductions as well as R&D. (BT)

Focus Dynamics Technologies Bhd said that Datuk Raymond Chan Boon Siew is not a placee in the private placement exercise undertaken by Focus and neither have they received any proposal from him to inject oil and gas projects into the company. Focus was responding to a query from Bursa Malaysia on an article in a Chinese daily, which stated that Chan plans to buy 25% equity interests in the company via a private placement exercise and from the open market. (BT)

20120321 0959 Global Economy Related News.

IMF chief Christine Lagarde warned that crude oil prices may spike by up to 30% if Iranian supplies were disrupted, causing "serious consequences" for the global economy. (AFP)

US: US housing heals as starts near 3-year high
Housing starts in the US hovered in Feb near a 3-year high and building permits rose, adding to signs that the industry at the heart of the last financial crisis is stabilizing. Commerce Department figures showed that builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1% from a Jan pace that was stronger than previously reported. Building permits, a proxy for future construction, climbed to the highest level since October 2008. The median estimate in a Bloomberg survey of 80 economists called for a rise to 700,000. Estimates ranged from 650,000 to 775,000. The prior month was revised up to 706,000, the highest since October 2008, from a 699,000 pace. (Bloomberg)

US housing starts fell 1.1% mom in Feb (3.7% in Jan) to stand at 698,000 (a revised 706,000 in Jan), falling short of consensus expectations of a 700,000 rate. Permits rose 5.1% to 717,000 (a revised 682,000 in Jan), exceeding the median forecast of 700,000. (Bloomberg)

Federal Reserve Chairman Ben Bernanke said Europe's financial troubles have eased, but added the central bank would be ready to act if conditions worsened again. (Reuters)

US Treasury Secretary Timothy Geithner does not think the Volcker rule ban on proprietary trading will present a “meaningful risk” to liquidity or credit availability in European countries. (Bloomberg)

EU: Monti risks strikes to revamp Italy’s labor market
Italy's Prime Minister Mario Monti will impose a plan to ease firing rules, risking strikes and protests, as he seeks an overhaul of Italy’s labor markets to fuel the economic growth needed to trim Europe’s second-biggest debt. Monti told unions and employers Tuesday night in Rome there would be no more discussion of his plan to allow companies more leeway to fire workers when economic times turn bad. The government may pass the measure by decree, meaning  the plan would be enacted immediately before securing parliamentary passage. With unemployment at a decade-high 9.2%, convincing unions that easing firing rules will help create jobs has been a tough sell. (Bloomberg)

Greece: Parliament approves new bailout deal
Greece's Parliament has approved a new international bailout deal, which will see the crisis-hit country receive an additional EUR172bn in rescue loans. Lawmakers backing the coalition government of socialists and conservatives voted early Wednesday in favour of the new agreement, after the Communist Party staged nationwide protests against the deal. (Bloomberg)

Spain: Banks’ bad loan ratio increased to 7.91% in January
Spanish banks’ bad loans as a proportion of total lending jumped in January to the highest level since 1994 as the country’s recession and rising unemployment forced more borrowers to miss loan payments. The bad-loans ratio climbed to 7.91% from 7.62% in December and 6.06% in the same month a year earlier, the Bank of Spain said. Lending fell 3.1% in January from a year ago and deposits dropped 4.2%. (Bloomberg)

UK: Inflation slows less than forecast on alcohol, food
UK inflation slowed less than economists forecast in Feb as prices for alcohol and some foods offset declines in electricity and gas costs. The Office for National Statistics said consumer prices rose 3.4% from a year earlier, the least since Nov 2010, compared with 3.6% in Jan. The median estimate of 36 economist forecasts was for a reading of 3.3% last month, according to a Bloomberg News survey. (Bloomberg)

China: Record profits at Chinese banks marred by climbing loan defaults
China’s biggest banks, set to post record profits for a fifth year, may report 2011 results marred by an increase in bad loans as an economic slowdown and faltering property market trigger defaults by borrowers. Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four biggest local rivals may post a 15% increase in combined fourth-quarter net income when they report this month, according to analyst estimates compiled by Bloomberg. Their non-performing loans rose for the first time since the 3Q 2008, the banking regulator said last month. (Bloomberg)

China: Hikes fuel prices by biggest margin in three years
China on Tuesday hiked fuel prices by the biggest margin in nearly three years after a surge in the cost of global crude. The rise is the second this year and comes as the government has more leeway to adjust price levels while inflation eases from three-year highs seen in mid-2011. The benchmark retail price for petrol will rise by CNY0.44 per litre while the price for diesel rises by CNY0.51. (Bloomberg)

Profits for Chinese state-owned enterprises (SOEs) fell 10.9% yoy to reach Rmb363.5bn (US$57.7bn) during the first two months. Revenues grew 9.9% yoy to Rmb7.5tr during the same period. The SOEs turned in taxes of Rmb736.55bn, up 16% yoy. (Xinhua)

Taiwan: Sees record export orders for February
The value of Taiwan's export orders in February surpassed USD30bn this year for the first time, boosted by strong demand for laptops, smartphones, and tablets, according to government figures released Tuesday. Export orders, an indication of shipments in the next one to three months, totaled USD33.95bn in February, up 17.6% y-o-y. Compared with the previous month, the value also showed an increase, rising 7.84% or USD2.47bn. (Bloomberg)

The Bank of Thailand is issuing bonds with longer maturities ranging from about six months to three years to reduce local market volatility caused by foreign capital inflows. (Bangkok Post)
Thai vehicle sales in Feb hit a new record high of 90,461 units, representing a 17.2% yoy increase. For the first two months of 2012, combined vehicle sales reached 166,707 units, up 14.5% yoy. (The Nation)
IMF Asia-Pacific Department director Anoop Singh opines that growth of Asia as a whole continues to be resilient, with emerging Asia growing “about 7%” and China and India “7-8%.” He also concurred with the Bank of Thailand’s assessment of the nation’s recovery, saying “it is going to be a strong period” of “good recovery.” (The Nation)

Global: Naimi says Saudi Arabia can raise output 25% if needed
Saudi Arabia’s oil minister said the country can increase crude production by as much as 25% immediately if needed, seeking to allay the concern over supplies that has driven prices to the highest in 3 years. Brent crude has gained 15% in London this year  to about $124 a barrel. Iran has threatened to shut the Strait of Hormuz at the entrance to the Persian Gulf, a transit point for a fifth of the world’s traded oil, in response to sanctions on its crude exports imposed over its nuclear program. The minister said Saudi Arabia has excess capacity of 2.5m barrels a day, which makes up the bulk of spare capacity in the Organization for Petroleum Exporting Countries. International Energy Agency said as much as 1m barrels a day of exports from Iran, the second-biggest OPEC member, may be lost as embargoes enforced by the US and Europe hinder consumers from buying its oil. (Bloomberg)

20120321 0946 Global Market Related News.

Asian Stocks Drop on China Slowdown Concern (Source: Bloomberg)
Asian stocks declined for a second day as miners and makers of building equipment retreated on concern China’s economy is slowing and as housing starts in the U.S. fell from a three-year high. BHP Billiton Ltd. (BHP), the world’s biggest mining company, slipped 2 percent in Sydney as copper futures slid the most in two weeks. Komatsu Ltd. (6301), a manufacturer of construction equipment that depends on the mainland for 23 percent of its sales, slid 2.7 percent in Tokyo. David Jones Ltd. (DJS) slumped 9.5 percent after Australia’s No. 2 department store chain said profit may fall to the lowest in six years. “A view that the Chinese economy is slowing down is emerging,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “It looks like shares may be sold, led by energy-related companies after a pause in gains in commodities markets.”
The MSCI Asia Pacific Index (MXAP) fell 0.4 percent to 126.61 as of 9:33 a.m. in Tokyo. The gauge climbed 12 percent this year through yesterday as positive economic reports from the U.S. boosted confidence in the outlook for the region’s exporters.

Japan Stocks Snap Five-Day Gain on China Slowdown Concern (Source: Bloomberg)
Japanese shares fell, with the Nikkei 225 (NKY) Stock Average heading for its first drop in six days, as commodities slipped on concern China’s economy is slowing. Komatsu Ltd. (6301), a construction machinery maker that counts China as its biggest market, lost 2.6 percent. Mitsubishi Corp., Japan’s top commodities trader by market value, slid 1.6 percent and Inpex Corp., the nation’s largest oil explorer, sank 1.7 percent after metals and crude prices dropped. Advantest Corp., a manufacturer of memory-chip testers, jumped 3.8 percent after BNP Paribas SA raised its rating on the semiconductor industry. “A view that the Chinese economy is slowing down is emerging,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “It looks like shares may be sold, led by energy-related companies after a pause in gains in commodities markets.”
The Nikkei 225 fell 0.4 percent to 10,103.84 as of 9:28 a.m. in Tokyo. The broader Topix Index lost 0.4 percent to 864.49. The gauge has advanced 19 percent this year, rebounding from last year’s 19 percent drop, amid signs the U.S. economy is recovering.

U.S. Stocks Fall as Commodities Decline on China Concern (Source: Bloomberg)
U.S. stocks declined, snapping a three-day advance for the Standard & Poor’s 500 Index, as commodities fell on concern about a Chinese economic slowdown. Industrial and commodity shares slumped as China raised fuel prices by the most in two years and BHP Billiton Ltd. said the nation’s steel production is slowing. Caterpillar Inc. and Alcoa Inc. (AA) dropped more than 1.5 percent. Adobe Systems Inc. (ADBE) sank 3.9 percent as its profit forecast missed some estimates. Bank of America Corp. jumped 2.9 percent. Tiffany & Co. (TIF) surged 6.7 percent after forecasting profit that beat projections.
The S&P 500 retreated 0.3 percent to 1,405.52 at 4 p.m. New York time, after the benchmark measure yesterday advanced to the highest level since May 2008. (SPX) The Dow Jones Industrial Average declined 68.94 points, or 0.5 percent, to 13,170.19 today. The Russell 2000 Index of small companies slumped 1 percent to 829.24. About 6.2 billion shares changed hands on U.S. exchanges, or 6.5 percent below the three-month average. “A Chinese slowdown is inevitable,” said Peter Jankovskis, who helps manage about $2.9 billion at Oakbrook Investments in Lisle, Illinois. “It’s possible that will take some of the heat out of commodities. Yet China is not the only growth story out there. China will continue to be an important player, but the U.S. economy seems to have found its legs.”

Stocks Tumble as Slowdown Cuts Company Earnings: China Overnight (Source: Bloomberg)
Chinese equities traded in the U.S. dropped to a two-week low, led by E-House (EJ) China Holdings Ltd., on concern slower growth in the world’s second-largest economy is hurting corporate earnings. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. dropped 1.1 percent to 103.47 yesterday in New York, the weakest level since March 8. China Telecom Corp. (CHA) plunged to a five-week low as profit missed the average analyst estimate. Suntech Power Holdings Co. (STP) led solar companies higher after U.S. imposed lower-than-expected duties on solar-equipment imports from China. Property developer China Real Estate Information Corp. (CRIC), video sharing website Youku Inc. and insurance agency CNinsure (CISG) Inc. all reported net losses for the last quarter of 2011 as the economy recorded the slowest growth since mid-2009.
Europe’s debt crisis, a sluggish U.S. recovery and climbing oil prices are crimping the outlook for China, the world’s biggest exporter and second-largest consumer of crude. “Everybody starts to talk about a soft landing when a really strong economy starts to slow down, and it may end up being somewhat worse than that,” Michael Shaoul, chairman of New York-based Marketfield Asset Management, which manages $1.5 billion of assets and holds short positions in Chinese shares betting on their decline, said by phone yesterday. “Europe’s problem allowed people to ignore the deterioration in the emerging markets story.”

European Stocks Decline as BMW, Daimler Retreat on China (Source: Bloomberg)
European (SXXP) stocks dropped the most in two weeks as an official at China’s association of carmakers said auto sales will miss its forecast in 2012. Bayerische Motoren Werke AG (BMW) and Daimler AG fell more than 4 percent. BHP Billiton Ltd. (BHP) slumped 4.1 percent, leading a gauge of mining companies lower. Metro AG (MEO) advanced after Germany’s largest retailer posted fourth-quarter earnings that matched analysts’ estimates. The Stoxx Europe 600 Index retreated 1.1 percent to 268.96 at the close for the benchmark measure’s biggest drop since March 6. The gauge has still gained 10 percent this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders.
“Last week was a major move and there’s no surprise that we’ve seen a bit of a rest this week,” David Miller, a partner at Cheviot Asset Management in London said in a Bloomberg Television interview with Caroline Hyde. “There’s been a growing realization that in fact the economic numbers particularly out of the States have been better than expected and consistently good and in Europe we’ve had the absence of bad news.” The benchmark Stoxx 600 slipped 0.1 percent yesterday, paring the previous week’s 2.6 percent rally, its biggest weekly gain since early February.

GLOBAL MARKETS-Chinese shares lead a slip in Asia; euro steady
SINGAPORE, March 20 (Reuters) - Shares slipped on Tuesday, led by losses in Hong Kong and Shanghai on underwhelming corporate earnings, while the euro held near its highest level in a week on easing fears about wider damage to the financial system from Greece's debt crisis.
"Momentum is clearly stalling right now and in need of distinct signals, whether it be U.S. housing data pointing to a stable recovery or stronger indications of policy easing in China," said Kim Se-joong, an analyst at Shinyoung Securities in Seoul.  

FOREX-Dollar stuck near one-week low; Aussie falters
SINGAPORE, March 20 (Reuters) - The dollar hovered near a one-week low against a basket of currencies but recent signs of improvement in the U.S. economy and rising Treasury yields were likely to lend it some support.              
"I don't expect to see the dollar pull back significantly," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.

Euro Gains After Greece Bailout Vote, Before German PMI (Source: Bloomberg)
The euro advanced against the dollar and reached a four-month high versus the yen after Greece won parliamentary approval for a new international bailout, boosting demand for the region’s assets. The 17-nation currency rose against 14 of 16 major counterparts before reports tomorrow forecast to show an expansion of services and factory output in Germany, Europe’s largest economy. The dollar weakened before Federal Reserve Chairman Ben S. Bernanke tells Congress that financial strains in Europe have eased, according to testimony prepared for delivery today. The yen fell before a report tomorrow projected to show Japanese exports declined for a fifth month. “Some of the reports coming out of Europe and the Greek vote going through is supportive of the euro in the near term,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency-risk management company.
The euro rose 0.3 percent to $1.3267 as of 10:15 a.m. in Tokyo. The 17-nation currency climbed 0.2 percent to 110.97 yen and earlier touched 110.99, the most since Oct. 31. The yen rose 0.1 percent to 83.64 per dollar.

U.S. Housing Heals as Starts Near Three-Year High: Economy (Source: Bloomberg)
Housing starts in the U.S. hovered in February near a three-year high and building permits rose, adding to signs that the industry at the heart of the last financial crisis is stabilizing. Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, climbed to the highest level since October 2008. Gains in homebuilding are benefitting construction-material suppliers like Owens Corning Inc. (OC) as the industry heals following the worst slump on record. The jump in applications is a reflection of growing confidence that indicates housing will no longer hold back the economic expansion.
“The housing market continues to recover at a very gradual rate,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who forecast a 697,000 pace for housing starts. “The increase in permits likely flags further strength in the months ahead.”

Fed Board Nominees Back Exit Strategy Ensuring Price Stability (Source: Bloomberg)
President Barack Obama’s nominees to the Federal Reserve Board told a Senate panel they would help the Fed withdraw stimulus when necessary in a way that keeps prices stable and doesn’t jar financial markets. Jerome Powell, a former private equity manager and Treasury undersecretary under President George H.W. Bush, told the Senate Banking Committee today he sees “tremendous risk in the exit,” including inflation and asset price bubbles. Jeremy Stein, a Harvard University economist and former adviser to Treasury Secretary Timothy F. Geithner, told the panel the central bank must avoid a “disruptive impact on markets.”
Powell and Stein, both with financial market expertise, said they would pursue in a balanced way the Fed’s dual mandate to ensure full employment and price stability. They were nominated by Obama in January to fill vacant Fed board seats. If confirmed, they would fill a void left by Kevin Warsh, a former Morgan Stanley banker and confidante of Chairman Ben S. Bernanke during the financial crisis, said Antulio Bomfim, a former Fed economist. Warsh resigned from the board in April. “I don’t think there’s been anybody with either strong experience or academic credentials in financial markets” since Warsh left, said Bomfim, now a senior managing director with Macroeconomic Advisers LLC in Washington. “Together they bring both.”

Free Lunches Pushing U.S. to Insolvency, Columbia’s Mundell Says (Source: Bloomberg)
Political competition for votes and lack of fiscal discipline are pushing the world’s largest economy toward solvency issues, according to the Nobel Prize- winning economist Robert Mundell. “The public is looking for free lunches, and the political competition for votes makes the politicians offer them free lunches,” Mundell, a professor of economics at Columbia University, said on Bloomberg Radio interview with Tom Keene and Ken Prewitt. “That’s what gets us in to the difficulties of insolvency.” The U.S. plans to finance a budget deficit forecast to exceed $1 trillion for a fourth year, and outstanding U.S. marketable debt expanded to $10 trillion in February. Even as the jobless rate has fallen from a high of 10 percent in October 2009 to 8.3 percent in February, it remains almost 2 percent above the average of the past decade and the central bank has called unemployment “persistent.”
“You could have fiscal stimulus back in the day of Keynes, when the government was a small proportion of gross domestic product and there was no insolvency problem,” he said, referring to British economist John Maynard Keynes. “You can’t just issue more bonds to pay for deficits and expect it to solve the employment problem.”

Fed Bond Portfolio Generates $75.4 Billion for U.S. Treasury (Source: Bloomberg)
The Federal Reserve paid $75.4 billion to the U.S. Treasury as an expanded bond portfolio generated $83.6 billion in interest income from its open-market operations last year. The Fed’s total assets stood at $2.92 trillion at the end of 2011, up from $2.43 trillion at the end of the previous year and about $894 billion in 2007, according to financial statements released by the central bank today. The central bank’s balance sheet expanded as it purchased $2.3 billion of securities in a bid to bring down long-term borrowing costs and spur the economy after cutting short-term rates almost to zero in December 2008. Remittances to the Treasury generated by income from securities holdings are likely to decline as the economy revives.
“Certainly, the numbers are going to go down,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “From a fiscal standpoint, I think it is OK because if interest rates are going up, that means the economy is improving and tax revenue is going up.” Treasury 10-year notes fell for a 10th consecutive trading day, the longest stretch of declines since at least 1985, as investors bet a strengthening economy will diminish the refuge appeal of U.S. government securities.

Bernanke Returns to Academic Roots to Defend Fed’s Existence (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke returned to his roots as a university professor today, seeking to explain and justify the existence of the central bank ahead of the 100th anniversary of its founding next year. Bernanke told 30 students at George Washington University that central banks play a key role in the modern monetary system as guardians of economic and financial stability. His hour-long lecture, followed by questions from the students, is the first of four planned talks on the history of the Fed and is part of what public relations specialist Richard Dukas called a “P.R. offensive” to buff the central bank’s tarnished image. The Fed is being attacked from both the left and the right, with liberals criticizing it for not doing enough to bring down unemployment, and conservatives blaming it for doing too much and risking faster inflation.
Bernanke’s return to the milieu where he spent more than two decades will give the Fed’s top policy maker an opportunity to “set the narrative” on the central bank’s role during and after the financial meltdown, said Princeton University professor and former Fed Vice Chairman Alan Blinder. “The question of who gets to write the history is an important one.”

Departing PBOC Adviser Xia Bin Urges More Central Bank Autonomy (Source: Bloomberg)
Xia Bin, a former Chinese central bank adviser, urged more autonomy for the monetary authority, a week after ending two years on a policy board controlled by the State Council. The People’s Bank of China “should be given more power in the areas of some short-term and specific monetary policy adjustment and operations,” Xia, 60, said in an interview in Hong Kong yesterday. There is “large room for improvement in how decisions are made,” he told Bloomberg Television. The state researcher joins organizations including the World Bank and economists at Deutsche Bank AG and UBS AG who have urged China to increase central bank independence and transparency. While U.S. and European counterparts operate separately from other parts of the government, major moves in China such as interest-rate adjustments are decided by the State Council, or Cabinet.
A World Bank report last month said that “further moves to improve the independence of the central bank and to increase the transparency of monetary policy decision making would be essential to support greater international acceptance” of the yuan as a reserve currency.

Hong Kong Beats Netherlands and U.S. as Best Place for Business (Source: Bloomberg)
Hong Kong (HSI), a bastion of free-market policies and low corporate taxes as well as the gateway to the world’s most populous nation, is the best place to do business, according to data compiled by Bloomberg. The city of about 7 million people secured top position in a new index based on six criteria including the degree of economic integration and labor costs. The Netherlands, the U.S., the U.K. and Australia occupied the next four leading slots. The ranking marks a victory for Hong Kong 15 years after the city’s return to Chinese sovereignty stoked concern that its role as an international financial hub would slide. General Electric Co. has established operations there, Gap Inc. is among the retailers drawn by the 28 million Chinese tourists who pass through it and HSBC Holdings Plc is one of the financial titans listed on its stock exchange.
“Hong Kong is a gateway to China, it has competitive tax rates and that makes it one of the natural choices for companies to set up their Asian headquarters,” said Tomo Kinoshita, deputy head of Asia economics research at Nomura Holdings Inc. who has worked in the city for five years. “It makes sense for companies that want to be close to China as well as the rest of Asia to use Hong Kong as their base.”

Pimco’s Kashkari Says Greece, Portugal to Need More Bailouts (Source: Bloomberg)
Pacific Investment Management Co.’s Neel Kashkari, who heads global equities at the Newport Beach, California-based investment firm, said Greece and Portugal will need additional bailouts. “We don’t think that Greece will actually be able to deliver on the austerity measures they’re promising,” Kashkari said today in an interview on Bloomberg Television’s “InBusiness with Margaret Brennan.” “Risks in Europe remain, so we’re being very selective.” Europe’s approval of a 130 billion-euro ($172 billion) rescue package for Greece, the second such bailout since 2010, doesn’t solve the region’s sovereign-debt crisis, Kashkari said. While U.S. economic indicators have been improving, risks of further “shocks” coming out of Europe and slowing growth in the emerging markets are leading Pimco to buy stocks only selectively, he said.
Kashkari said he likes Ensco Plc (ESV), a London-based offshore drilling company, and farm-equipment maker Deere & Co. (DE), based in Moline, Illinois, because it sells to emerging-market consumers.

ECB’s Nowotny Says Portugal in Much Better Shape Than Greece (Source: Bloomberg)
European Central Bank council member Ewald Nowotny said Portugal is “in much better shape” than Greece and predictions by Pacific Investment Management Co. it may need more money are “extremely problematic.” “I consider this announcement by an asset manager, who is also following his own interests, to be extremely problematic,” Nowotny wrote in a live online chat with Austria’s Der Standard newspaper today. “Portugal’s debt ratio and the development of its foreign trade are in much better shape than in Greece, even though risks do remain, of course.”
Portugal last year became the third euro-area country to request external aid, following Greece and Ireland, and Prime Minister Pedro Passos Coelho is cutting spending and raising taxes to meet the terms of the 78 billion-euro ($103 billion) plan. Still, Mohamed El-Erian, chief executive officer at Pimco, told Germany’s Der Spiegel magazine in an interview published on March 18 that the first aid package will prove insufficient, forcing the nation to ask for more money. Portugal’s government has managed to cut the country’s 2011 deficit to 4 percent of gross domestic product from 9.8 percent a year earlier and the International Monetary Fund said last month that Portugal’s financial aid program was on track.

U.K. Inflation Stays Above BOE Limit on Alcohol, Food: Economy (Source: Bloomberg)
U.K. inflation slowed less than economists forecast in February as higher alcohol and food costs helped keep consumer-price gains above the Bank of England’s upper limit. Consumer prices rose 3.4 percent from a year earlier, the least since November 2010, compared with 3.6 percent in January, the Office for National Statistics said today in London. The median estimate of 36 economists was for a reading of 3.3 percent last month, according to a Bloomberg News survey. The pace of the slowdown in inflation may be curbed by rising oil costs, which have surged in the past six months. While the Bank of England has forecast that price growth will ease to its 2 percent goal this year, policy maker Martin Weale said last month there is a “risk that there may be more persistence to inflation.”
One can “expect further declines in inflation to be more modest going forward,” George Buckley, chief U.K. economist at Deutsche Bank AG (DBK), said in an e-mailed note. “The key question remains where consumer price inflation settles. We think it will be higher than Bank of England forecasts at year-end.”

Greece’s Third Bailout Seen in Debt With Junk Grade: Euro Credit (Source: Bloomberg)
Greece’s bonds and credit ratings are factoring in a third bailout for the nation that analysts and investors say will require greater concessions from its international creditors. Within a week of euro-area member states giving their formal approval to a second bailout package for Greece, the International Monetary Fund said the country may require additional funding or a further debt restructuring. Pacific Investment Management Co., which runs the world’s biggest bond fund, said it remains “cautious” on euro-area government debt even after the largest-ever sovereign refinancing because the risk remains that Greece will leave the single-currency area. “It’s still a very steep mountain to climb,” said Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group Plc in London. The restructuring deal “doesn’t do anything to put Greece on a sustainable path,” he said. “A third bailout will become necessary.”
The price of Greek government bonds maturing in February 2042 that were provided as part of its debt exchange was at 21.48 cents on the euro at 8:04 a.m. London time, with yields at 15.02 percent. Standard & Poor’s said on March 15 it rated the securities CCC, its fourth rank above default, citing questionable growth prospects, a weakening political consensus to implement budget cuts, and a “still large” debt burden.

20120321 0945 Soy Oil & Palm Oil Related News.

Soybeans (Source: CME)
US soy futures stumbled, with soybeans sliding to one-week lows in a broad-based risk-off trading day. Widespread fund selling across commodities dogged soy prices, as traders looking to reduce some risk exposure took profits on prior gains, analysts say. The absence of fresh export news left buyers without an incentive to extend gains, with overbought market signals accelerating technical selling, analysts add. CBOT May soybeans ended down 21 1/2c at $13.45/bushel.

Soybean Meal/Oil (Source: CME)
May soymeal dropped $5.30 to $365.60/short ton, and May soyoil fell 1.07c to 54.33cents/lb.

Palm oil edges down, demand prospects cap losses
SINGAPORE, March 20 (Reuters) - Malaysian palm oil futures extended losses as some traders took profits on concerns that the market was overbought, although losses were limited by still-robust demand, indicated by export trends.
"Prices ended lower in unison with CBOT and technical-based selling. It looks like the much anticipated correction is taking place currently and once that is completed, prices will resume their uptrend," said a trader with a local brokerage in Malaysia.

Argentine truckers strike as soy harvest starts
BUENOS AIRES, March 19 (Reuters) - Argentina's truckers have called an indefinite strike to demand higher pay rates, parking their rigs in protest just as exporters were counting on them to haul freshly harvested soybeans to port.
Grains powerhouse Argentina is the world's No. 1 supplier of soyoil, a feedstock for the booming international biofuels sector. It is also a top soybean and corn exporter.

Malaysia is taking its oil palm biomass resource to the next level via the formation of dedicated Oil Palm Biomass Centre (OPBC). A source said the centre would be monitored by a consortium comprising of major oil palm plantation companies, international biochemical groups as well as local and foreign scientists from various institutions of higher learning. A private investment of between RM20bn and RM25bn is expected within the next 5-10 years to achieve the Government's goal for new high-value downstream operations. (StarBiz)

20120321 0945 Global Commodities Related News.

Corn (Source: CME)
US corn futures drop over 2% on a combination of broad based fund liquidation across asset classes and fear of declining export demand. Traders had a tough time making a bullish case for corn, with the absence of fresh export demand news and overbought conditions promoting a risk off environment, analysts say. Investors also reduced some length in the market, as traders factor in the potential for large US corn plantings in 2012. CBOT May corn ends down 16c at $6.47 1/2/bushel.

Wheat (Source: CME)
US wheat futures drop to a 1-week low, influenced by widespread selling in commodities. Reduced risk exposure across asset classes encouraged traders to take profits, analysts say, while wheat also saw pressure from fundamental weakness as ample world supplies and improved weather conditions for developing US winter-wheat crops kept buyers sidelined for most of the day. CBOT May wheat falls 9 3/4c to $6.42 1/2 a bushel as May MGEX drops 7 3/4c to $7.99 1/4 and May KCBT declines 11c to $6.80 1/2.

Rice (Source: CME)
US rice futures slide as broad selling in many markets derailed the commodity's 3-day rally. Analysts also note concerns about poor export demand encouraged traders to take profits. CBOT May rice ends down 24c at $14.36 1/2 per hundredweight.

Wheat falls for 2nd day on US weather; corn, soy ease
SINGAPORE, March 20 (Reuters) - Chicago wheat extended losses sliding more than 1 percent as forecasts of crop-friendly weather in the U.S. Plains boosted supply prospects.
"Warm temperatures and scattered rain in the U.S. are promoting rapid development of the winter wheat crop," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. "Forecast relief to dryness in southwest Europe and western Canada is also weighing on values."

Morocco halts barley import duties until end 2012-traders
PARIS, March 19 (Reuters) - The Moroccan government has suspended import duties on barley until Dec. 31 to ensure adequate supplies to its domestic market in the face of a growing drought, European traders said on Monday.
Morocco, which halted barley import duties on March 15, is bracing for a drop in this year's cereals harvest, as well as other crops, after a shortage in rainfalls and a prolonged cold spell hurt farming.

Zambia commercial farmers cut maize production
LUSAKA, March 19 (Reuters) - Commercial maize production in Zambia will fall by about 80 percent in the 2011/2012 season compared with the previous crop season after farmers turn to more lucrative cash crops, the farmers' union said on Monday.
Zambia's commercial maize farmers produce a fraction of the national output compared to small-scale farmers.

Ukraine exports 865,000 T grain by sea March 1-16
KIEV, March 19 (Reuters) - Ukraine exported about 865,000 tonnes of grain, mostly corn, by sea in the first 16 days of March, Kiev-based consultancy ProAgro said on Monday.  It said Ukraine had exported about 636,000 tonnes of corn, 132,000 tonnes of wheat and 96,000 tonnes of barley. No figures for the same period of 2011 were immediately available.

China's rice imports from Vietnam seen tripling
HANOI, March 19 (Reuters) - China could see a three-fold jump in rice imports from Vietnam this year, industry officials said on Monday, as the world's biggest consumer steps up purchases to contain domestic prices.
The demand from China, coupled with an industry-led stockpiling campaign, is keeping a floor under Vietnamese paddy prices even as the harvest of the major crop is peaking in the Mekong Delta food basket.

Russia rules out grain export limits for 2011/12
MOSCOW, March 19 (Reuters) - Russia's government sees no need for grain export restrictions during the current crop year, which saw Russia emerge from a near-total ban to export record volumes, Russia's first deputy prime minister, Viktor Zubkov, said on the government website.
The government has already ruled out export restrictions before the end of April.  

USDA Says Morocco Wheat Imports Will Exceed 5M Tons In 2012-13 (Source: CME)
Morocco's wheat imports could by far exceed 5 million metric tons in the 2012-13 marketing year, according to the U.S. Department of Agriculture's Rabat attache, as unusual cold spells have hampered the current crop's development after a lack of rainfall initially delayed grain sowing. Morocco's 2011-12 cereal crop has entered a precarious period as farmers and government officials brace for a difficult time ahead, with the USDA estimating total production will not exceed 3.2 million tons. Meanwhile, Moroccan agricultural experts expect cereal output to be higher, at around 4 million tons, but still just half of last year's harvest. The USDA expects Morocco's wheat imports to hit 3.2 million tons in 2011-12, as the government deals with the crisis by suspending duties on cereal imports and providing support to affected cereal farmers and livestock producers.
Morocco's consumption of wheat is among the highest in the world per capita, with imports from the European Union exceeding 2 million tons in 2011, coming mainly from France. U.S. wheat exports totaled 287,600 tons in the calendar year and accounted for about 8% of the Moroccan market, the USDA said.

India May Remove Caps On Wheat Product Exports -Officials (Source: CME)
The Indian government is considering the removal of controls on wheat product exports, as frequent policy changes in the past have scared away buyers, two senior government officials said. A ministerial panel scheduled to convene March 26 will likely consider a trade ministry proposal to scrap time limits and caps on quantities of wheat products that may be exported, the officials said. The meeting occurs ahead of a government-mandated deadline for the export of a limited volume of wheat products on March 31. India, the world's second-largest wheat producer, opened up exports of wheat products in 2009 and has extended the deadline several times, as buyers have been reluctant to enter deals with Indian exporters given the potential for the flow of flour to be suspended by government fiat on short notice. Exports between July 3, 2009 and Jan. 23, 2012 totaled just 127,982 tons against the original 650,000-ton limit, according to government data.
Denmark, Dubai, the Middle East, Indonesia, Sri Lanka, Nepal and the Maldives are usually the main buyers of Indian wheat products, such as semolina and wheat flour, which are used to make bread and bakery items. The food ministry has proposed extending the current deadline for exports to March 31, 2013, while the trade ministry has argued against any limits. Local flour mills have asked the government to put an export policy into place for at least three years to ensure that overseas buyers are assured continuous supplies as part of long-term contracts.

Deutsche Bank Rules Out New Food Investment Products This Year (Source: CME)
Deutsche Bank AG said it won't launch any new investment products in staple agricultural commodities this year, as it continues to examine whether such products have a negative affect on rising, volatile food prices. Food price inflation climbed toward the top of the international agenda after hitting successive record highs in the early part of 2011, amid global supply concerns for cereals, sugar and cocoa. French President Nicholas Sarkozy made the issue a priority of his leadership of the Group of 20 industrial and developing nation, with plans to limit the influence of speculative investors--whom he blames for pushing up prices--expected to be put forward by finance ministers in July. "We recognize that the proper functioning of agricultural markets have wide social ramifications. Therefore we intend to proceed with caution and we will refrain from launching new staples-based public exchange-traded products this year," Deutsche Bank said in its annual Corporate Social Responsibility Report.
The bank said it agrees with international policymakers that transparency in agricultural commodity derivatives markets should be enhanced and measures to avoid misconduct strengthened, with significant regulatory changes already decided upon or under consideration in both Europe and the U.S. The bank said it supports efforts to implement appropriate regulation across all relevant futures exchanges, and believes this is essential to allow those markets to function well as instruments of hedging and price discovery. Such reforms aim to tighten conduct requirements and avoid manipulation, by increasing transparency through the introduction of additional reporting stipulations, position limits and new trading and clearing rules for over-the-counter derivative contracts. However, Deutsche Bank said more research is needed to assess the true effect of speculation on food prices.
"Some academic research suggests an impact on prices from speculative activity; but most of the peer-reviewed, academic literature suggests that the fundamentals of demand and supply are the dominant drivers of commodities prices," it said. Deutsche Bank said that its review shows agricultural prices are reliant upon fundamental factors, with increasing demand driven by population and income growth, dietary shifts in developing countries and biofuel production. Yet this hasn't been met by output growth, the bank said, leaving prices on an upward trend with agricultural production and food availability constrained by water scarcity, climate change, inequitable land access and harvest waste. Meanwhile, Deutsche Bank said restrictions on international trade and national subsidization policies exacerbate the effects of these trends, so these issues need to be addressed on a coordinated basis, with "the Action Plan on Agriculture adopted by the G20 at the Cannes Summit an important step."
Among Deutsche Bank's existing agricultural investment products are four exchange-traded products known as the PowerShares DB Agriculture ETNs, which "provide investors with a cost-effective and convenient way to take a short or leveraged view on the performance of the agriculture sector."

Thai 2011/12 sugar crushing season to end late May
BANGKOK, March 20 (Reuters) - The current 2011/12 Thai sugar crushing season is expected to end in late May, slightly later than normal, due to record output, a senior official said on Tuesday.
"At first, we expected crushing to end in June, but things have proceeded quite smoothly despite a rise in output so we think we can finish crushing by May which is slightly later than a normal year," said Prasert Tapaneeyangkul, secretary of the Office of Cane and Sugar Board (OCSB).

Ivorian cocoa arrivals seen lower, acid level up
ABIDJAN, March 19 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast were 1.3 percent lower at around 1,025,000 tonnes for the season to March 18, compared with 1,039,121 tonnes in the same period of the previous season, exporters estimated on Monday.
The figures showed around 10,000 tonnes of beans were delivered to the West African state's two ports between March 12 and March 18, up from 1,941 tonnes in the same week a year ago.

E.African countries sit on sugar glut-Ecobank
LONDON, March 19 (Reuters) - Several East African countries including Uganda and Kenya are sitting on surpluses of sugar and are seeking homes for supplies imported after last year's drought, a senior analyst said on Monday.
"Late last year Kenya, Tanzania and Uganda banned exports of sugar and allowed duty-free imports, but unfortunately some traders got a bit carried away and imported far too much," said Edward George, head of the soft commodities research desk at pan-African banking group Ecobank.

India seals deals to export 60,000 T sugar to Iran
NEW DELHI, March 19 (Reuters) - Indian traders have struck deals to export 60,000 tonnes of raw sugar to Iran for March-April delivery, three trade sources said on Monday, marking their first sales of the sweetener to Tehran since western sanctions were tightened at the start of 2012.
The exports are within the ceiling of two million tonnes of sales already allowed by New Delhi under the open general licence (OGL) scheme.

Record Cotton Harvest Seen Cutting Prices for Gap: Commodities (Source: Bloomberg)
Record cotton crops from India to Brazil are exceeding demand by the most in more than two decades, driving prices lower for Gap Inc. and Abercrombie & Fitch Co. Farmers will reap 123.6 million 480-pound bales in the 12 months ending in July, exceeding demand by 15 million bales and expanding stockpiles by 32 percent to the second-biggest on record, the U.S. government estimates. Futures will extend this year’s 4.2 percent retreat in New York by a further 15 percent to 75 cents a pound by Dec. 31, according to the median of 15 analyst estimates compiled by Bloomberg. Prices rose to $2.197 a year ago after cold weather and floods from China to Pakistan ruined crops, the highest since America was recovering from the Civil War more than a century earlier. Farmers worldwide planted more acres, creating a glut that the International Cotton Advisory Committee in Washington says may increase by a further 12 percent next season.
“Cotton is a cub right now and can grow into a fully- fledged bear,” said Sterling Smith from St. Paul, Minnesota- based Country Hedging Inc., a unit of CHS Inc., the largest U.S. farmer-owned co-operative. “We’re going to have exceptional production next season, and that will weigh on prices significantly.”

Push By Ethanol Producers Into Corn Oil Raises Concerns Over DDGs (Source: CME)
A push by U.S. ethanol companies into corn oil is starting to give the livestock industry indigestion. Corn oil, which is used both for cooking oil and to make biodiesel fuel, has emerged over the last year as a lucrative niche product for ethanol producers looking to add new revenue at a time of weak returns. Corn-oil production, though, comes with a downside: extracting the oil cuts into the fat content of the ethanol industry's major byproduct--distillers dried grain. The yellow, powdery substance known as DDGs is ubiquitous in the feed rations for cattle, hogs and poultry. Yet extracting corn oil makes DDGs less effective at helping animals grow ahead of slaughter. Researchers said concerns over the decreasing DDG fat content are just starting to emerge. Livestock producers could start to reduce their use of DDGs in favor of soybean meal, analysts and livestock nutritionists say.
As corn-oil extraction "becomes more widespread, livestock producers, particularly of hogs, will begin to shift feeding back to meal," said Don Roose, president of U.S. Commodities, a Des Moines, Iowa-based brokerage that advises both livestock producers and ethanol plants. Prices for soy meal hit six-month highs last week, rising on concerns over global supplies in the face of a disappointing South American soybean crop. The soy product pulled back 1.5% at the Chicago Board of Trade on Thursday. University researchers and animal nutritionists across the Midwest said they are hearing concerns from cattle and hog producers about DDGs and are trying to determine the effects of corn oil production on the nutritional value of DDGs. Researchers at large state universities from Nebraska to Illinois to Minnesota all plan to release findings in the weeks and months ahead.
So far, demand for DDGs has held up, said Steve Markham, head DDG merchandiser for farmer co-op CHS Inc., the nation's biggest marketer of the feed. He said exports to Asia have climbed, with several major shipments recently. Still, Markham acknowledged that a large international customer complained about the falling fat content in DDGs during a recent meeting with CHS executives. Many hog producers in the U.S. and abroad have just gotten used to DDGs, with supplies exploding in recent years as ethanol production surged. The changes in DDGs for livestock producers are "kind of throwing them a curve ball," said Jay O'Neil, agricultural economist with Kansas State University. Most of the industry's largest ethanol companies--including Valero Energy Corp., Archer Daniels Midland Co., Green Plains Renewable Energy Inc. and privately held POET LLC--have retrofitted plants in the past year to produce corn oil.
Valero spokesman Bill Day said the company, which extracts corn oil at two of its Iowa plants, actually has seen a recent jump in demand for DDGs. He explained that buyers have become dissatisfied with rival suppliers who are more aggressive about corn oil output, producing DDGs with less fat than what Valero sells. Corn oil provides a hefty margin for ethanol producers because costs, after the initial investment in equipment, are low. A backlash from livestock producers is unlikely to cause plants to rethink their corn-oil strategy. Ethanol margins have weakened due to slow demand growth and high corn prices. Since the start of 2011, corn futures at the Chicago Board of Trade are up 5.5% and well above historical averages, while ethanol futures are down 1.8%. Still, few expect ethanol producers to sacrifice corn oil for DDG. "It makes dollars and cents to yank out as much fat as you possibly can," Markham said.

Brent falls below $125 on Libyan supply, China fuel hike
SINGAPORE, March 20 (Reuters) - Brent crude fell below $125 a barrel as global supply concerns eased and a hike in Chinese fuel prices sparked fears of lower energy demand in the world's second-largest oil consumer.
"The move might sap demand growth. Higher prices tend to discourage wasteful consumption," said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.

Global: Coal slump worst in three years seen on gas drop
Coal for Asia’s power stations is headed for the worst slump since the global financial crisis cut prices 3 years ago as slowing economic growth tempers demand and U.S imports threaten to flood the market. Thermal coal at the Australian port of Newcastle is set for the steepest drop over two quarters since the period ended March 2009. The fuel at Richards Bay in South Africa, a terminal for supplies to Asia and Europe, is poised for the longest run of quarterly declines in a decade. Prices are unlikely to recover in the next six months amid a glut of the fuel and slowing consumption, according to eight analysts, traders and producers surveyed by Bloomberg News. Coal with an energy value of 6,700 kilocalories per kg cost $104.90/ mt on Mar 16 at Newcastle, down 14% from Sept 30, according to data from IHS McCloskey. The decline is poised to be the biggest over two quarters since the 57% drop from Sept 2008 to Mar 2009, when global financial markets plunged following the collapse of Lehman Brothers Holdings Inc. (Bloomberg)

Oil Rebounds From Biggest Decline in Three Months in New York (Source: Bloomberg)
Oil for May delivery rose as much as 38 cents, or 0.4 percent, to $106.45 a barrel in electronic trading on the New York Mercantile Exchange at 11:19 a.m. Sydney time. Futures dropped $2.49 percent yesterday to $106.07, the lowest close since March 15. The April contract, which expired at the end of floor trading yesterday, fell 2.3 percent to $105.61, the biggest decline in three months.

Saudi Arabia Can Raise Output 25% If Needed, Naimi Says (Source: Bloomberg)
Saudi Arabia (OPCRSAUD) can increase crude production by as much as 25 percent immediately if needed, the country’s oil minister said, seeking to allay the concern over supplies that has driven prices to the highest in three years. Brent crude has gained 15 percent in London this year to about $124 a barrel. Iran has threatened to shut the Strait of Hormuz at the entrance to the Persian Gulf, a transit point for a fifth of the world’s traded oil, in response to sanctions on its crude exports imposed over its nuclear program. “If you believe Hormuz will be closed, I will sell you the Empire State or the Egyptian pyramids,” Ali al-Naimi said in a briefing with reporters in Doha, Qatar today. “I want to assure you that there is no shortage of supply in the market. OPEC is supplying what it needs, we have capacity, additional reserves of 2.5 million barrels” a day.
Saudi Arabia increased production to 10.047 million barrels a day in November, the highest in at least three decades. The kingdom, the world’s biggest crude exporter, has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April, al-Naimi told reporters at the Ritz Carlton hotel in the Qatari capital.

Vietnam's Mar-Apr diesel imports up nearly three-fold from Feb
SINGAPORE, March 20 (Reuters) - Vietnam is set to import nearly three to four times more diesel in March and April than in February, as importers seek additional volumes to fill a demand build-up after an import tax was scrapped this month, industry sources said on Tuesday.    
The country's top oil importer and distributor, Petrolimex, and state-owned oil marketer, PV Oil, are seeking a total of 78,000 tonnes of gasoil for delivery over March and April in two separate tenders, they said.

Full return of Libyan oil to ease global pressure
LONDON, March 19 (Reuters) - Libya's oil exports are set to return to full pre-war levels by April this year, beating even the most optimistic estimates and potentially easing a global shortfall of oil caused by outages and conflicts.
Libya plans to export almost 1.4 million barrels of oil per day (bpd) in April, a senior National Oil Corp (NOC) official said. At that level, its exports will exceed deliveries in February 2011 before the uprising that ousted Muammar Gaddafi began.

China Steel Growth Has Flattened as Economy Shifts, BHP Says (Source: Bloomberg)
BHP Billiton Ltd. (RIO), the world’s biggest mining company, said China’s steel production is slowing as the world’s fastest-growing major economy starts to shift to focus more on consumers than large building projects. “The big infrastructure build clearly will come to some end,” Ian Ashby, the Melbourne-based company’s president of iron ore, told reporters today in Perth. “Steel growth rates will flatten, and they have flattened, and we still see positive growth out to the middle of the next decade.” The Australian dollar dropped for the first time in four days after the comments as Rio Tinto Group, the world’s second- largest iron ore exporter, said at a conference in Perth that it’s seeing a slowdown in China, its biggest customer. Premier Wen Jiabao this month cut the nation’s economic annual growth target to 7.5 percent and an official at the China Association of Automobile Manufacturers said vehicle sales this year may miss the industry group’s forecast.
“The rate of GDP growth in China is more immediately slowing,” Rio’s David Joyce, managing director of expansion projects, said at the conference. “We remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year.”