Thursday, March 22, 2012

20120322 1806 FCPO EOD Daily Chart Study.

FCPO closed : 3342, changed : -26 points, volume : higher.
Bollinger band reading : pullback correction upside biased.
MACD Histrogram : falling, buyer taking profit and seller testing market.
Support : 3350, 3300, 3270, 3250 level.
Resistance : 3380, 3420, 3450, 3470 level.
Comment :
FCPO closed lower with better volume distributed. Soy oil price currently trading weaker after overnight closed little lower while crude oil price currently falling lower.
Market continue to consolidate lower are recent rally with continue profit taking activities and on concern over slowing global economy growth with lead to lower demand. News wise, Indonesia official raised export tax for crude palm oil and palm olein for the month of April.
Technical reading remained calling a pullback correction upside biased market development testing support near middle Bollinger band with MACD indicator having negative crossed down.
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.

20120322 1732 FKLI EOD Daily Chart Study.

FKLI closed : 1584 changed : -2.5 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histrogram : recovering, buyer testing market.
Support : 1580, 1570, 1565, 1550 level.
Resistance : 1590, 1600, 1610, 1620 level.
Comment :
FKLI corrected little lower with soaring volume transacted doing 0.5 point premium compare to cash market that closed nearly unchanged. Overnight U.S. markets closed little lower and today Asia markets remained having mixed development while European markets currently falling lower.
Regional having mixed reaction on improved U.S. housing data, concern over lower U.S. company profit, China moves to lower reserve requirement for agriculture bank and a survey data shows that China manufacturing may contract for the month of March.
Back home, FKLI testing news week high and retreat lower after lower GDP growth forecast for this year with daily chary reading remained suggesting an upside biased market development.
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.

20120322 1706 Regional Markets EOD Daily Chart Study.

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

20120322 1646 Global Market & Commodities Related News.

Shares struggle as China data fuels growth worry
TOKYO, March 22 (Reuters) - Asian shares gave back most of their earlier gains after data showed China's factory activity shrank for a fifth successive month, renewing concerns about a growth slowdown in the world's second largest economy.
"The Chinese PMI data (unofficial) will no doubt dominate early sentiment, at least until European manufacturing PMI data takes centre stage," said Cameron Peacock, market analyst at IG Markets, in a note.  

FOREX-Aussie hits 2-mth low on weak China data; Europe PMIs eyed
TOKYO, March 22 (Reuters) - The Australian dollar dropped to a two-month low on Thursday after data showed China's manufacturing activity shrank in March for a fifth straight month, underscoring concerns about growth slowdown in the world's second largest economy.
After HSBC flash PMI showed the overall rate of contraction deepening and new orders sinking to a four-month low, the Aussie fell 0.7 percent to $1.0383 , hitting the lowest level since late January. It had fetched $1.0477 prior to the release.

GRAINS-Wheat, corn climbs on Chinese demand; soy falls
NEW DELHI, March 22 (Reuters) - U.S. wheat and corn futures rose, recovering after three straight sessions of losses due to expectations that China will import more grains after buying 350,000 tonnes of feed wheat from Australia.
"Wheat imports by China are definitely big, bullish news and traders anticipate China's demand to be very strong in the days to come as it tries to cool higher grain prices," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Argentine grains truck strike goes into 4th day
BUENOS AIRES, March 21 (Reuters) - Argentina's striking truck drivers will keep their rigs parked for a fourth straight day on Thursday, as concern grows that the protest could slow soy exports from one of the world's key suppliers.
Growers in Argentina's Pampas grains belt have begun collecting this season's crops. But millions of tonnes of soybeans and corn will be stranded without the trucks needed to haul the crop to grains terminals that dot the country's rivers and serve as the gateway to the world market.

Texas' 2011 drought costliest in state history, researchers say
SAN ANTONIO, March 21 (Reuters) - Texas agriculture producers lost $7.62 billion to the state's 2011 drought, which experts said makes it the costliest drought in the state's history and possibly the most expensive drought ever suffered by any state.
"No one alive has seen single-year drought damage to this extent," said Travis Miller, an agricultural economist at Texas A&M University.

Stubborn drought expected to tax Mexico for years
CHIHUAHUA, Mexico, March 21 (Reuters) - A severe drought in Mexico that has cost farmers more than a billion dollars in crop losses alone and set back the national cattle herd for years, is just a foretaste of the drier future facing Latin America's second largest economy.
As water tankers race across northern Mexico to reach far-flung towns, and crops wither in the fields, the government has allotted 34 billion pesos ($2.65 billion) in emergency aid to confront the worst drought ever recorded in the country.

Kenya sees wheat production almost tripling
NAIROBI, March 21 (Reuters) - Kenya expects its 2012 wheat output to almost triple compared with the previous year buoyed by increased planting and  favourable weather forecasts, the Agriculture ministry said on Wednesday.  
It expected to harvest 6.3 million 90-kg bags of wheat in 2012 up from the 2.2 million realised last year when prolonged drought slashed production in its main crop season.

Dry weather now main concern for EU grain farmers
PARIS, March 21 (Reuters) - Grain farmers in western Europe are keeping their eyes on rain forecasts as concerns mount that persistent dryness could further cut yields following damage linked to the cold snap earlier this year.
In recent weeks, analysts repeatedly cut their 2012 forecasts for north European winter grain crops including wheat, barley and durum to take account of frost damage and these reductions are now mostly priced into the markets.

Global coffee market tight despite price slump
GUAXUPE, Brazil, March 21 (Reuters) - The latest retreat in arabica coffee prices signals the tightly supplied coffee market is not running out of beans yet, but the outlook for sub-optimal harvests and faster consumption indicate that by next season it could come close.
A tour of coffee areas in the world's top arabica grower, Brazil, showed a good but sub-optimal crop on the way. But in Colombia, output has dropped sharply and poor harvests have become almost a chronic problem.
Sugar prices may be at short-term top -Kingsman
GENEVA, March 21 (Reuters) - Consultant Jonathan Kingsman warned on Wednesday of risks sugar prices could fall after rallying to a three-week high this week, saying funds that piled into the sweetener may have over-reacted to talk of lower-than-expected Brazilian output.
ICE May raw sugar futures  surged to a high of 26.20 cents a lb on Tuesday after market talk of scaled-back expectations for output in the centre-south region of top producer Brazil due to prolonged dry weather.

Brent falls below $124 on China demand fears
SINGAPORE, March 22 (Reuters) - Brent crude dropped below $124 a barrel, after weak Chinese manufacturing data sparked concerns that energy demand growth could slow at the world's second-largest oil consumer.
"It's a surprising reading, and is contrary to improving monetary conditions and a stabilising external conditions," said Natalie Robertson, a commodities strategist with ANZ Bank in Melbourne. "It reflects Chinese demand on the ground, which has a significant impact on commodity markets."

COLUMN-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.

China Feb refined copper imports hit third-highest level
HONG KONG, March 21 (Reuters) - China's inflows of refined copper rose 12 percent month-on-month in February to hit the third-highest level ever on delayed shipments from the holiday month of January and as buyers stocked up on expectations of rising demand during the peak March-May consumption season.
In February, 375,831 tonnes of refined copper arrived China, compared to 335,480 tonnes in January and up 137.6 percent from a year earlier, data from the General Administration of Customs showed on Wednesday.

China fund targets nickel in resource deals
HONG KONG, March 21 (Reuters) - China Development Bank's investment arm is targeting copper, uranium, iron ore, coking coal as well as nickel resources overseas, looking for investments with good returns and Chinese connections, a China Development Bank International executive said on Wednesday.
Chinese firms have been snapping up copper, uranium, iron ore and coking coal assets around the world, but have yet to make a big splash in nickel.

Stainless steel output hits record, growth slows
LONDON, March 21 (Reuters) - Global production of stainless steel grew 3.3 percent to hit a new record of 32.1 million tonnes in 2011 but growth slowed sharply from 2010's 25 percent, a report from the International Stainless Steel Forum showed on Wednesday.
"China has remained the driving force in stainless steel production," it said.

Australia lifts iron ore exports forecast, bets on China demand
PERTH/SYDNEY, March 21 (Reuters) - Australia expects to produce record tonnages of iron ore through much of the decade, nearly all of which will be used to manufacture steel in China, shrugging off signs demand was cooling off and that prices would drop.    
Australia raised its forecast on Wednesday for iron ore exports in the current fiscal year by nearly 3 percent to 473 million tonnes, and also sounded a bullish note on the outlook for shipments in the longer term.  

Japan Feb crude steel output falls 3.7 pct yr/yr
TOKYO, March 21 (Reuters) - Japan's crude steel output declined 3.7 percent in February from a year earlier, the smallest fall in three months, as demand from Thailand recovered from the aftermath of devastating flooding late last year, an industry body said on Wednesday.  
The yen's retreat to an 11-month low against the U.S. dollar last week will further boost Japan's steel exports in the following months, while a gradual increase in reconstruction demand in and after April will support domestic demand, the Japan Iron and Steel Federation said.

METALS - LME copper falls after China factory activity shrinks
SINGAPORE, March 22 (Reuters) - London copper futures turned negative on Thursday, after manufacturing data on China that showed factory activity in the world's top metals consumer shrank for a fifth month.
Three-month copper on the London Metal Exchange  fell by 0.67 percent to $8,398 a tonne by 0323 GMT.        
Copper was falling towards 11-day lows tipped Tuesday at $8,345 a tonne, when sentiment took a hit after top miner BHP Billiton  also sparked China growth concerns when it warned of flattening iron ore demand from the world's second-largest economy.

PRECIOUS-Gold sluggish after China factory activity falls
SINGAPORE, March 22 (Reuters) - Gold prices were little changed on Thursday, hovering around $1,650 an ounce, as investors weighed a recent improvement in the U.S. economy against the continuing shrinkage of Chinese manufacturing activities.
Bullion prices have fallen more than 2 percent so far this month, after the U.S. Federal Reserve dashed hopes for further asset purchases in its latest policy statement and recent data showed the U.S. economic recovery was well on track.

PRECIOUS-Gold ticks up; China, euro zone data eyed
SINGAPORE, March 22 (Reuters) - Gold prices inched up, stuck in a narrow range as investors await manufacturing data from China and the euro zone to assess the health of their economies, while a slightly lower dollar lent some support.

20120322 1503 Palm Oil Related News.

Palm Oil May Advance on Concern Malaysian Production to Decline
2012-03-22 04:00:26.940 GMT
By Ranjeetha Pakiam
March 22 (Bloomberg) -- Palm oil, little changed, may gain on speculation that production in Malaysia, the second-largest supplier after Indonesia, will drop before recovering in May.
June-delivery palm oil climbed as much as 0.5 percent to 3,383 ringgit ($1,098) a metric ton on the Malaysia Derivatives Exchange before trading little changed at 3,365 ringgit at 11:50 a.m. in Kuala Lumpur. Futures have advanced 6 percent this year.
Production in Malaysia is expected to be little changed this year, and from March, output each month will be less on a year-on-year comparison, Dorab Mistry, a director at Godrej International Ltd., said March 7. Output in February dropped 7.9 percent to 1.19 million tons from a month earlier for a fourth monthly decline, according to data from the nation’s palm oil board. January and February are seasonally low-production periods.
“In the next one-to-two months, Malaysia is going to see some production disappointment,” Alvin Tai, an analyst at OSK Holdings Bhd., said by phone in Kuala Lumpur. Output may bottom out in April, before it starts to recover, he said.
Shipments of palm oil into China, the biggest vegetable oil consumer, may total 503,100 tons in March, the Ministry of Commerce said on its website today. China’s imports were 383,666 tons in February, the customs agency said yesterday.
Indonesia will raise the tax rate for crude palm oil exports to 18 percent in April from 16.5 percent this month, Deddy Saleh, director general of foreign trade at the Trade Ministry, said in a mobile-phone text message today.
Soybeans for May delivery were little changed at $13.5325 a bushel on the Chicago Board of Trade. Soybean oil was also little changed at 54.41 cents a pound.
Palm oil for delivery in September was little changed at 8,540 yuan ($1,352) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month was also little changed at 9,552 yuan a ton.

20120322 1106 Global Market & Commodities Related News.

OIL-Oil rises as US inventory drop offsets Saudi pledge
NEW YORK, March 21 (Reuters) - Brent crude edged up slightly on Wednesday while U.S. crude rose $1 in light trading as an unexpected drop in U.S. stockpiles outweighed a pledge by top OPEC exporter Saudi Arabia to meet any supply shortfall.
"Crude futures are up on the EIA inventory draw downs but prices are also moving up because yesterday's sell-off appears to have been overdone," Phil Flynn, analyst at PFGBest Research in Chicago, said.
NATURAL GAS-US natgas futures end slightly higher in seesaw trade
NEW YORK, March 21 (Reuters) - U.S. natural gas futures ended slightly higher on Wednesday in seesaw trade, lifted by a late flurry of technical buying despite record-high supplies, mild early spring weather and expectations for a weekly inventory build on Thursday.
"I don't see a lot of upside here. Inventories are well above last year and the weather is certainly not helping (the bulls)," a New England-based trader said.

EURO COAL-Swaps fall, pulling physical down slightly
LONDON, March 21 (Reuters) - Prices of prompt physical coal were largely unchanged for the third day running due to a lack of clear direction and despite a rise in oil prices.
"There's been real apathy today - the same factors are there which have been around for weeks, oversupply, poor demand and nothing much from China," one trader said.

COMMODITIES-Markets defy firm dollar; oil up on supply drop
NEW YORK, March 21 (Reuters) - U.S. oil prices rose on Wednesday as lower crude stockpiles and political tensions over Iran helped the market rebound from the previous day's sell-off.
"Prices are also moving up because yesterday's sell-off appears to have been overdone," said Phil Flynn, crude oil analyst at PFGBest Research in Chicago.

GLOBAL MARKETS-Shares inch up; China, euro zone PMI eyed
TOKYO, March 22 (Reuters) - Asian shares inched up on Thursday but remained in ranges as investors waited for manufacturing data from China and the euro zone due this session for more clues about the state of their economies.
"During Asian hours, key market drivers are Japan's trade data and China's PMI," said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.

Japan's Iran crude purchases may fall 70 pct in April -media
TOKYO, March 22 (Reuters) - Japan's Iran crude purchases could plunge to below 100,000 barrels per day in April, down around 70 percent from last year's average of 313,480 bpd, the Nikkei business daily said on Thursday, citing unidentified industry sources.
Crude purchases this month are around 180,000 bpd, the report added.
Under pressure from fuel prices, Obama starts energy blitz
BOULDER CITY, Nevada, March 21 (Reuters) - President Barack Obama will direct federal agencies on Thursday to speed approvals of one portion of the controversial Keystone pipeline, in a move designed to ease political pressure on the White House as the industry frets about a glut of oil trapped in the region.
Obama, who is under pressure from voters over rising gasoline prices, used a stop at a solar panel facility in Nevada on Wednesday to accuse Republicans of ignoring renewable fuels that could help wean the United States off foreign oil.

20120322 1049 Local & Global Economy Related News.

BNM: Gross inflows of FDI still ‘significant’ at RM98.9bn for 2011
Gross inflows of foreign direct investments (FDI) remained significant at RM98.9bn in 2011, accounting for 11.9% of gross national income (GNI), in tandem with the strong overall domestic investment outlook and revival of corporate earnings, according to the central bank. Bank Negara Malaysia, in its 2011 annual report released yesterday, said this was evident in the larger inflows of equity capital and extension of inter-company loans, amid sizeable earnings retained by existing multinational corporations for reinvestment purposes. (Malaysian Reserves)

Malaysia: Sees slower growth this year on persistent global risks
Malaysia’s GDP will expand at a slower pace this year as financial and economic restructuring in developed nations curb global growth, BNM predicts. The economy may expand 4% to 5% in 2012 while inflation may slow to a range of 2.5% to 3% this year from 3.2% in 2011, it added. (Bloomberg)

Malaysia's potential output is estimated to return to its trend growth rate of about 5% over the medium term, said Bank Negara Malaysia in its Annual Report 2011. The higher growth in potential output needs to be supported by continuous improvement in productivity, higher private investment to sustain stock accumulation and job creation, especially for high-skilled workers. (Bernama)

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said financial institutions have demonstrated capacity to absorb volatile capital flows. Given the maturity of the financial markets in Asia and strength of the intermediaries, there was now the capacity to cope with volatility in the market, she said. The central bank would closely monitor hot money in the market and as well any surges that would be destabilising to the Malaysian market, she added. (Bernama)

There is no need to introduce tightening measures on consumer credit, said Bank Negara Governor, Tan Sri Dr Zeti Akhtar Aziz. Household debts were not at alarming levels with the declining trend in non-performing loans. "All those who have affordability should be eligible to borrow," she said. The quality of loan portfolios have also improved, she added. The implementation of new Guidelines on Responsible Financing, which came into effect Jan this year, was introduced largely to curb speculative buying in the property market and limit the increase in house prices, she said. (Bernama, Financial Daily)

Thai exports fell 6.1% yoy in Jan (-2.1% in Dec 2011) to US$15.5bn. Imports declined 2.5% yoy in Jan (+19.6% in Dec) to US$15.0bn, resulting in a trade surplus of US$0.5bn in Jan (-US$0.2bn in Dec). Thailand’s current account balance stood at US$0.8bn in Jan (US$1.9bn in Dec), undershooting market expectations of a US$1.5bn surplus. The overall balance of payments in Jan was a deficit of US$0.2bn (-US$1.0bn in Dec). (Bloomberg)

The Bank of Thailand’s monetary policy committee left the repurchase rate unchanged at 3%, deeming the level of the key policy rate suitable for boosting the economy and curbing inflation. (Bangkok Post)

Indonesia’s government forecasts that the country’s economic growth in 2013 may reach between 6.7 and 7.4%, mainly driven by growing investment and an expanding budget for infrastructure. (Jakarta Post)

Japan’s all-industry activity index dropped 1% mom in Jan, reversing a 1.6% gain in Dec and exceeding the expected fall of 0.7%. (RTTNews)

The Japanese Cabinet Office continued in Mar to deem the economy as ―still picking up slowly, while difficulties continue to prevail due to the Great East Japan Earthquake.‖ (Bloomberg)

Japan convenience-store sales grew 9.6% yoy in Feb (5.7% in Jan) on a total sales basis to hit ¥675.58bn. (Bloomberg)

China: Cuts reserve ratios for 379 Agribank branches
China boosted rural credit by cutting reserve requirements for an additional 379 branches of Agricultural Bank of China, the nation’s third-biggest lender by market value. Effective 25 March, the ratio will fall by 2% for the branches in the provinces of Heilongjiang, Henan, Hebei and Anhui. The move expands a trial that previously lowered requirements for 563 branches in eight provinces. The latest move means a total of CNY23bn has been freed up. (Bloomberg)

India: May cut rates in April after inflation eased
India may start cutting interest rates from April to bolster economic growth following a moderation in inflation, its Economic Affairs Secretary R. Gopalan said. “If inflation remains at this level after factoring in various things, then interest-rate reversal may start in April. It is important for this country since we are looking for higher growth,” Gopalan, one of the finance ministry’s top bureaucrats, said. (Bloomberg)

UK: Government cuts income tax, austerity drive undimmed
UK Chancellor George Osborne cut the top rate of income tax while imposing new levies on the wealthy, in a political high wire act designed to rejig the burden of austerity without wavering on plans to erase a huge budget deficit. Britain should avoid a renewed recession and while the recovery was set to remain modest this year, growth should pick up thereafter, Osborne said. Its government has made erasing a huge budget deficit - which topped 11% of GDP before it took office - within the next five years its core objective, and the latest forecasts showed it remained on track. (Reuters)

US: Home sales show strength, prices rise
Home sales fell in February, but upward revisions to the prior month's pace and the first yearly increase in prices in 15 months pointed to steady improvement in the housing market. Existing home sales fell 0.9% in February from January but still notched their second highest level since May 2010. (Reuters)

US Federal Reserve Chairman Ben Bernanke said Europe must further strengthen its banks and that its financial and economic situation ―remains difficult‖ even as a ―welcome development‖ came in the form of reduced stresses. (Bloomberg)

US Federal Reserve Chairman Ben Bernanke warned that higher energy prices ―would probably slow growth, at least in the short run‖ as they ―create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.‖ (Bloomberg)

US existing-home sales fell 0.9% mom in Feb to 4.59m units (a revised 4.63m in Jan), but still notched their second highest level since May 2010. Economists had expected a rise to 4.62m. (Reuters)

20120322 1048 Malaysia Corporate Related News.

IJM Land partners Robert Tan to develop in Johor land
IJM Land has acquired 50% equity interest in Nasa Land SB, a subsidiary of Aspirasi Ratna SB, a subsidiary of Aspirasi Ratna SB for RM51m, in order to expand its landbank. In a statement to Bursa Malaysia, the group said it had entered into a conditional share sale and purchase agreement with Aspirasi Ratna to acquire a total of one million ordinary shares of RM1 each in Nasa Land for a total cash consideration of RM51m. (Financial Daily)

Bumi Armada clinches RM115m job
Bumi Armada Navigation SB, a subsidiary of Bumi Armada, has won a four-year contract worth RM115m from Brazilian oil and gas major Petroleo Brasileiro SA (Petrobras) for a platform supply vessel (PSV). “This is our third contract with Petrobras following close on the heels of the recent contract for our Armada Tuah 102, which is now in Brazil. This complements our Armada Tuah 104, which has been operating off Brazil since June 2011,” said Hassan Basma, group executive director and chief executive officer in a statement yesterday. (Financial Daily)

Mitrajaya unit secures 2 contracts worth RM103m
Mitrajaya Holdings Bhd’s (MHB) wholly-owned subsidiary, Pembinaan Mitrajaya SB, has secured two projects with a total contract value of RM102.9m. In a filing with Bursa Malaysia yesterday, it said the first project was for the proposed construction of the Trigon Apartment in Selangor, which was awarded by Bandar Setia Alam SB, for a contract period of 24 months, with a value of RM65.6m. The second project was awarded by Cahaya Jauhar SB, for the proposed construction of a mosque in Nusajaya, Johor. The contract valued at RM37.3m, is for a period of 21 months. (Financial Daily)

Daya Materials unit lands Penang job
Daya Materials says its wholly-owned unit, Daya CMT SB has won a RM62m contract from Penang Development Corp to design and build a factory and a two-storey office building at Batu Kawan Industrial Park in Penang. It told Bursa Malaysia yesterday that the buildings are for Malaysian Automotive Lighting SB, a wholly-owned unit of Italy’s Magneti Marelli, which is part of the Fiat Group. (Malaysian Reserve)

Hibiscus gets shareholders nod for Lime acquisition
Hibiscus Petroleum has received more than 99% approval from its voting shareholders for its proposed 35% acquisition of Lime Petroleum Plc, thus fulfilling the last mandatory condition for the exercise. With this, Hibiscus will be transformed from a special-purpose acquisition company (SPAC) to a fully operating company listed on the Main Market of Bursa Malaysia. Lime owns three oil and gas concessions in two countries in the Middle East. Managing director Dr Kenneth Pereira said securing a fourth concession was a condition to completing the deal but this could be waived by Hibiscus if it wished to.(StarBiz)

The cost of earth works at the KLIA2 new low-cost terminal is RM773.38m, the Dewan Rakyat was told. Transport Minister Datuk Seri Kong Cho Ha said the cost of construction of the new control tower at KLIA2 was RM40.95m. He disclosed this information in a written reply to Tony Pua who had wanted to know why the site of KLIA2 was shifted from KLIA North to KLIA West. Kong said the decision to shift the site of KLIA2 from KLIA North to KLIA West was based on the KL International Airport Master Plan of 2008. (Bernama)

By year-end Malaysia Airlines (MAS) would have become a full member of the oneworld alliance and would be able to offer connectivity to about 800 destinations in 150 countries by riding on an expanded oneworld network. ―This membership will be among the significant catalysts that will complement our efforts to win back customers and become a profitable premium carrier as outlined in our Business Plan,‖ said MAS group CEO Ahmad Jauhari Yahya. (Star Biz)

Qantas Airways has shelved plans to set up a South-east Asian hub after failing to get approvals in Singapore, while its supposed-partner in Kuala Lumpur, Malaysia Airlines (MAS), is in dire financial straits. ―We are still in dialogue with both the Singaporeans and Malaysians but nothing is happening in the short term,‖ Qantas CEO Alan Joyce was quoted as saying by Bloomberg. ―It's more of a long-term issue. The move would be pushed back by a year or two, or three.‖ He seems to suggest that the Singapore authorities would not give Qantas as air operator’s license. (BT)

Although the Ministry of International Trade and Industry (Miti) is again reviewing the National Automotive Policy, it will maintain the established deadlines for the termination of the Approved Permit (AP) system for the import of CBU vehicles. There will be no changes to the 2009 NAP review which stipulated that the government will stop issuing Open APs from Dec 31, 2015 while the Franchise AP will be terminated by Dec 31, 2020. Open APs are used to import any brand of cars while Franchise APs can only be used to import specific brand of cars. (Financial Daily)

Malaysia Building Society (MBSB) targets to reduce its net non-performing loans (NPL) by another two to three percentage points (pps) this year. It plans to provide financing extensions and resuscitate abandoned projects which have been on its books for years. According to CEO Datuk Ahmad Zaini Othman, MBSB’s net NPL ratio stood at 8.5% as at end December. He said if the group could shave its net NPL ratio by another two to three pps this year, to 5.5% to 6.5%, it would be another great achievement. (Financial Daily)

Malaysia Building Society (MBSB) will finance the builder and buyers of Malaysia’s biggest abandoned housing project, located in Bandar Baru Salak Tinggi, Sepang as part of its efforts to resolve its corporate legacy accounts issue. MBSB will provide term and bridging finance facilities of up to RM215m to builder NCT United Development and an additional RM243m to the buyers. This project has been unresolved for more than 10 years. (Star Biz)

At least three parties are said to be finalising their bids to buy over Jaring Communications Sdn Bhd after several failed attempts by the Government to sell the broadband company in the past. One of the bidders is Puncak Semangat Sdn Bhd, a company linked to Tan Sri Syed Mokhtar Albukhary. Another company called CMC Engineering Sdn Bhd is also in the running, while a third party is said to be one that is politically-linked. Jaring was the company to provide interest access in Malaysia but has remained a niche player due to competition and lack of infrastructure. The Jaring is up for sale is in line with the Government's drive to sell down its stakes in companies, especially those in non-core area of business. (StarBiz)

Maxbiz Corp will be delisted on March 26 after Bursa Malaysia dismissed the company’s appeal against the decision to remove its securities from the stock exchange. It had earlier failed to submit its regularisation plans to the Securities Commission or Bursa Malaysia Securities for approval within the timeframe. (Star Biz)

MHC Plantations has proposed to undertake a two-for-five bonus issue to reward its shareholders and to enhance the company's capital base. MHC said the exercise involved 56,155,420 new MHC shares to be credited as fully paid-up on the basis of two bonus shares for every five existing MHC shares held on an entitlement date to be determined later. The plan also involved 56,155,420 warrants on the basis of two free warrants for every five existing MHC shares held on the entitlement date. (Bernama)

Texchem to dispose of stakes in units for USD42.2m
Texchem Resources Bhd is disposing of 70% interest each in its units, Technopia Sdn Bhd and PT Technopia Jakarta,to Fumakilla Ltd Japan (FMJ) for USD42.4m. Both units are involved in the manufacturing and sales of household insecticides such as mosquito coils, aerosol insecticides and insect repellants. (The Star)

Three said to be finalising bids on Jaring
At least three parties are said to be finalising their bids to buy over Jaring Communications Sdn Bhd after several failed attempts by the Government to sell the broadband company in the past. One of the bidders is Puncak Semangat Sdn Bhd, a company linked to Tan Sri Syed Mokhtar AlBukhary. Another company called CMC Engineering Sdn Bhd is also in the running, while a third party is said to be one that is politically-linked. (Source: The Star)

AIC gets approval for merger plan
AIC Corp Bhd has received the nod from its shareholders at an EGM for its proposed merger with Jotech Holdings Bhd and AutoV Corp Bhd. In July 2011, Temasek Formation Bhd, a special-purpose company owned by Datuk Goh Tian Chuan, who is also group executive chairman of Jotech and AIC, submitted the merger offer simultaneously to AIC, Jotech and AutoV. (Source: The Star)

Berjaya Toto: 3Q net profit dips 1.8% to RM112.74m, 9-month RM310m
Berjaya Sports Toto posted net profit of RM112.74m in 3Q FY2012, a slight decline of 1.8% from the RM114.87m a year ago. Its revenue rose 15.5% to RM983.46m from RM851.16m. Earnings per share were 8.44 sen compared with 8.59 sen. It declared a third interim single tier exempt dividend of 6.0 sen per share which will go ex on Apr 9. The higher percentage increase in revenue was mainly attributed to the higher revenue reported by Sports Toto Malaysia Sdn Bhd. Berjaya Philippines Inc. group reported lower revenue and pre-tax profit for the current quarter under review mainly attributed to higher revenue achieved in the previous year corresponding quarter as a result of the high Jackpot prize then.  (Financial Daily)

Lysaght Galvanised Steel: Secures RM23m contract
Lysaght Galvanized Steel has clinched  4 subcontracts worth RM22.75m from YTL Bhd to supply and install antenna poles. The group said a subcontract would be entered between Lysaght Marketing Sdn Bhd and Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd, a unit of YTL at a later date. Lysaght said the estimated date of completion was within 177 days to 206 days from the date of commencement. I added that works were expected to contribute positively to the group’s earnings and net assets for the FY2012. (StarBiz)

20120322 1016 Global Market Related News.

Asian Stocks Rise as China Eases Lending Curbs for Rural Banks (Source: Bloomberg)
Asian stocks rose amid further evidence that the U.S. housing sector is stabilizing and as China moved to bolster credit growth by expanding a cut in reserve-requirement ratios to more branches of Agricultural Bank of China Ltd. James Hardie Industries SE (JHX), the building materials supplier that counts the U.S. as its biggest market, advanced 1.8 percent in Sydney. Kubota Corp., a farm equipment makers that gets about 17 percent of sales from Asia excluding Japan, rose 0.7 percent in Tokyo. Fuji Electric Co. gained 2.9 percent after the supplier of factory automation equipment won a 10 billion-yen ($120 million) from Emirates Aluminum Co.
“I don’t see a hard landing happening in China this year because of the policy offsets that can be put in place,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “China’s housing sector remains a key concern. The anecdotes coming out of the housing market suggest the weakness is quite pronounced.” The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 126.42 as of 9:53 a.m. in Tokyo. The measure climbed 11 percent this year through yesterday as signs the U.S. economy is improving boosted confidence in the outlook for Asia’s exporters.

Japan Stock Futures Drop on U.S. Housing Data, Higher Yen (Source: Bloomberg)
Japanese stocks gained after the government reported higher-than-forecast exports and an unexpected trade surplus for February. Rising crude prices lifted energy stocks. Canon Inc., the world’s biggest camera maker, gained 0.9 percent. Japan Petroleum Exploration Co., the nation’s second- largest oil explorer by market value, rose 0.5 percent. Nomura Holdings Inc., Japan’s biggest brokerage, sank 2 percent after saying it was involved in an insider-trading case. The Nikkei 225 Stock Average (NKY) rose 0.2 percent to 10,105.50 as of 9:47 a.m. in Tokyo. The broader Topix Index gained 0.3 percent to 861.12.

U.S. Stocks Fall as Energy Shares Drop on Profit Concern (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index down a second day, on concern the best first-quarter since 1998 has outpaced economic prospects and as Baker Hughes Inc. drove a selloff in energy shares. Baker Hughes, the world’s third-largest oilfield-services provider, tumbled 5.8 percent after saying that a shift away from gas rigs will hurt earnings. Morgan Stanley (MS) and Fifth Third Bancorp dropped at least 1.7 percent to pace losses in financial companies. Hewlett-Packard Co. (HPQ) slumped 2.2 percent for the biggest decline in the Dow Jones Industrial Average. The S&P 500 slipped 0.2 percent to 1,402.89 at 4 p.m. New York time. The Dow retreated 45.57 points, or 0.4 percent, to 13,124.62. About 6.1 billion shares changed hands on U.S. exchanges, or 7.9 percent below the three-month average.
“People won’t play real hard at these levels,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which oversees more than $300 billion. “I don’t think you should get bearish. Yet the market’s energy seems to be used up after the strong rally.”

Most European Stocks Fall on U.S. Data; Adidas Declines (Source: Bloomberg)
Most European (SXXP) stocks declined as a report showed sales of previously owned U.S. houses unexpectedly fell in the world’s biggest economy. Adidas AG (ADS) slid 2.3 percent after Morgan Stanley cut its recommendation on the stock. TeliaSonera AB (TLSN), the biggest Swedish telephone company, dropped the most since August 2011 after the Finnish government sold shares. Banco Popolare SC (BP), Italy’s fifth-biggest bank, gained after reporting earnings and a better than expected outlook for its capital position. The Stoxx Europe 600 Index (SXXP) declined 0.1 percent to 268.67 at the close in London. The gauge still has gained 9.9 percent this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders and U.S. economic data surpassed estimates. The volume of shares changing hands on the Euro Stoxx 50 Index today was 5.7 percent more than the average over the past 30 days, according to data compiled by Bloomberg.
“It’s possible we were a bit too optimistic,” said Benoit de Broissia, an analyst at KBL Richelieu Gestion in Paris, which oversees about $3.4 billion. “There are still a number of headwinds. We can’t say that residential real estate is a motor of growth for the U.S. economy at this point.”

Most Emerging Stocks Drop as Chinese Concerns Deter Investors (Source: Bloomberg)
Most emerging-market stocks retreated as concern China’s economy is contributing to a global slowdown deters investors from riskier assets. The MSCI Emerging Markets Index (MXEF) was little changed at 1,048.29 by 12:31 p.m. in New York, as 408 stocks fell while 316 gained. Raw materials producers and industrial companies slipped, while telecommunications companies advanced. Steelmaker Cia. Siderurgica Nacional SA (CSNA3) headed for the biggest loss in three months, dragging Brazil’s Bovespa (IBOV) lower for a second day. OAO GMK Norilsk Nickel (GMKN), Russia’s biggest mining company, slid to the lowest level in more than two months on concern nickel prices may extend declines. The Hang Seng China Enterprises Index (HSCEI) slumped for a sixth day. Metals and commodity prices have fallen as declining Chinese retail sales and home prices add to signs the world’s second-largest economy is slowing. Premier Wen Jiabao cut the economic growth target for this year to the lowest since 2004 on March 5.
“People are increasingly nervous about what may happen in China,” John-Paul Smith, a London-based emerging-market strategist at Deutsche Bank AG, said by phone. “My own big fear is that even though over the medium and long-term a restructuring of the Chinese economy is what’s needed to avoid a hard landing, in the near term you’re likely to see lower growth rates.”

GLOBAL MARKETS-Shares hold below 8-mth high, eyes on US data
LONDON, March 21 (Reuters) - World stocks held below a recent 8-month high as investors anticipated that further evidence of a recovery in the U.S. economy could add fuel to this year's risk rally and ease concerns about slowing China growth.
"This week's retreat is a sign of normal breathing by the market, and more people are jumping on the bandwagon. The liquidity rally is not over," said Franz Wenzel, head of investment strategy at AXA Investment Managers, which has 512 billion euros ($679 billion) under management.

FOREX-Euro up on short-covering; yen on defensive
SINGAPORE, March 21 (Reuters) - The euro edged higher against the dollar on short-covering, while the yen was mostly weaker with traders eager to add to bearish bets against the Japanese currency.  
"The market is a little bit short euros, so that's what's driving it," said Jesper Bargmann, head of G11 spot FX in Asia for RBS in Singapore.  

Treasuries Rise a 2nd Day as Oil Gains, S&P 500 Retreats (Source: Bloomberg)
Treasury 10-year notes rose for a second day as investors took advantage of a surge in yields, while oil jumped above $107 a barrel and U.S. stocks fell. The dollar strengthened against most major peers. Ten-year Treasury yields decreased seven basis points to 2.29 percent at 4 p.m. in New York after yesterday falling for the first time in 10 days, halting the longest increase since 2006. The Standard & Poor’s 500 Index decreased 0.2 percent to 1,402.89 after yesterday retreating from the highest level in almost four years. Spanish bonds slid amid concern the nation faces an increasing risk of a debt restructuring.
Federal Reserve Chairman Ben S. Bernanke said the increase in oil may slow economic growth, at least in the short term. The Fed bought $4.03 billion in U.S. debt today as part of its program to swap $400 billion of shorter-term securities with longer-term bonds. Goldman Sachs Group Inc. said in a report that global stocks are set to follow a “steady upward trajectory,” and prospects for equities versus bonds are “as good as they have been in a generation.” “Even though the U.S. data is picking up, it’s picking up from very low levels, and the housing market still has a lot of problems to deal with, which is why Treasury yields are still at these low levels,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of 21 primary dealers that trade with the Fed. “There are still Fed purchases this week and the sharp sell-off has stopped. And we are seeing investors start to take advantage of the higher rates.”

Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds (Source: Bloomberg)
Warren Buffett made a friendly bet four years ago that funds that invest in hedge funds for their clients couldn’t beat the stock market over a decade. So far he’s winning. The wager that began on Jan. 1, 2008, pits the Omaha, Nebraska, billionaire against Protégé Partners LLC, a New York fund of hedge funds co-founded by Ted Seides and Jeffrey Tarrant. Protégé built an index of five funds that invest in hedge funds to compete against a Vanguard mutual fund that tracks the Standard & Poor’s 500 Index. The winner’s charity of choice gets $1 million when the bet ends on Dec. 31, 2017. The Vanguard fund’s low-cost Admiral shares returned 2.2 percent, with dividends reinvested, from the start of the bet through Feb. 29, as stocks rebounded from a 12-year low in March 2009.
The hedge funds fell about 4.5 percent, based on Protégé’s index returns for the first three years and results since then for the Dow Jones Credit Suisse Hedge Fund Index, which has roughly tracked the group of unidentified funds when adjustments are made for extra fees. “Hedge funds of funds have underperformed because of high fees and mediocre manager selection,” said Brad Alford, head of Alpha Capital Management LLC in Atlanta, which runs a mutual fund of funds designed to replicate the performance of hedge funds with lower fees and the flexibility for clients to pull money out daily. Since 2009, his Alpha Defensive Growth (ACDEX) strategy has posted an annual average return of 8.2 percent, almost twice the return of hedge fund of funds.

Stocks to Begin a ‘Steady Upward Trajectory’ Goldman Says (Source: Bloomberg)
Stocks will probably begin a “steady upward trajectory” over the next few years because any declines in economic growth are already reflected in share prices, Goldman Sachs Group Inc. said. “Given current valuations, we think it’s time to say a ‘long goodbye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report today. The prospects for returns in equities versus bonds “are as good as they have been in a generation,” he wrote.
The Stoxx Europe 600 Index (SXXP) is trading at 11.2 times estimated earnings, compared with an average of 11.8 over the past five years, according to data compiled by Bloomberg. The index dropped 11 percent last year as policy makers tried to stop Greece’s sovereign-debt crisis from spreading. The MSCI World Index (MXWO) is trading at 13.2 times estimated earnings after falling 7.6 percent last year, data compiled by Bloomberg show.

Korean Bonds Advance on U.S. Housing Data; Won Near One-Week Low (Source: Bloomberg)
South Korea’s government bonds advanced and the won traded near a one-week low as a report showing sales of previously owned U.S. houses unexpectedly fell sapped demand for riskier assets. Purchases of existing homes dropped 0.9 percent to a 4.59 million annual rate, compared with the median forecast for a rise to 4.61 million in a Bloomberg News survey, figures showed yesterday. Federal Reserve Chairman Ben S. Bernanke told Congress yesterday that higher energy prices may weaken the U.S. economy and that Europe’s financial and economic situation “remains difficult”. An index showing the outlook for China’s manufacturing will be released today. “It seems the momentum for Korean yields to gain further is weakening with Fed chairman’s speech also signaling the U.S. economy hasn’t improved much,” Ryan Oh, a Seoul-based fixed- income analyst at Samsung Securities Co., wrote in a note to clients. “The spike in Korean yields spurred by overseas short- term investors may be a buying opportunity.”

Dollar Remains Higher Before U.S. Jobless Claims Data (Source: Bloomberg)
The dollar remained higher after gaining yesterday against most major peers before a U.S. report forecast to show initial jobless claims dropped, damping prospects of further monetary easing by the Federal Reserve. The U.S. currency rebounded from a two-week low against the euro after data yesterday showed sales of previously owned American homes held near the highest level in almost two years. The yen briefly gained after Japan posted an unexpected trade surplus for February. New Zealand’s dollar slid to a one-week low after its economy grew less than economists estimated. “I think the market wants to buy dollars,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc. “Currently, data is pointing to lower commodity prices and you’ve got resurgent, strong numbers coming out of the United States.”
The dollar bought $1.3228 per euro at 9:59 a.m. in Tokyo from $1.3216 yesterday, when it touched $1.3285, the weakest level since March 8. The U.S. currency was unchanged from yesterday at 83.41 yen, after earlier touching 83.14. The Japanese currency fetched 110.33 per euro from 110.23, after earlier rising as much as 0.3 percent.

Yen Gains Versus Dollar, Euro After Japan Trade Balance Data (Source: Bloomberg)
The yen gained against the dollar and euro after Japan said exports fell 2.7 percent in February from a year earlier, less than economists had forecast. The Japanese currency climbed 0.2 percent to 83.25 per dollar as of 8:53 a.m. in Tokyo. It added 0.2 percent to 110.00 against the euro.

Bernanke Says Europe Must Aid Banks Even as Strains Ease (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke told Congress that higher energy prices may weaken the U.S. economy by sapping consumer spending. “Higher energy prices would probably slow growth, at least in the short run,” Bernanke said today in response to questions from the House Committee on Oversight and Government Reform. Rising fuel prices “create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.” Bernanke and his colleagues on the Federal Open Market Committee are watching oil and gasoline prices that threaten U.S. growth and are likely to push up inflation “temporarily,” according to their statement last week, when they said interest rates are likely to remain near zero through at least late 2014.
Crude oil for May delivery climbed $1.36, or 1.3 percent, to $107.43 a barrel at 11:38 a.m. today on the New York Mercantile Exchange. The national average price of a gallon of gasoline rose to $3.86 yesterday from $3.28 on Jan. 1, according to the American Automobile Association.

Existing U.S. Home Sales Hold Near Two-Year High: Economy (Source: Bloomberg)
Sales of previously owned U.S. houses held in February near an almost two-year high, adding to evidence the market that triggered the recession is firming. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010, a report from National Association of Realtors showed today in Washington. The median price increased over the past year for the first time since November 2010. “The U.S. housing market is stabilizing and very gradually carving out a recovery,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who correctly projected the February sales rate. “Housing demand should pick up in response to falling unemployment and attractive affordability.”
Buying a house is coming within reach for more Americans as hiring picks up, incomes grow, property values steady and mortgage rates hold near record lows. The report also showed the number of houses for sale climbed in February by the most in 10 months, a reminder that foreclosures continue to loom as a headwind for the market.

China Cuts Reserve Ratios for 379 Agribank Branches (Source: Bloomberg)
China boosted rural credit by cutting reserve requirements for an additional 379 branches of Agricultural Bank of China Ltd. (601288), the nation’s third-biggest lender by market value. Effective March 25, the ratio falls by 2 percentage points for the branches in the provinces of Heilongjiang, Henan, Hebei and Anhui, the People’s Bank of China said in a statement on its website yesterday. The move expands a trial that previously lowered requirements for 563 branches in eight provinces. The latest move means a total of 23 billion yuan ($3.6 billion) has been freed up, the PBOC said. The ruling Communist Party has pledged to fine-tune economic policies as needed as a cooling real-estate market and faltering export demand limit the nation’s expansion. Mining company BHP Billiton Ltd. (BHP) said March 20 that China’s steel output growth has flattened, adding to concern that a slowdown may deepen.
“This is a marginal and targeted easing aiming at encourage more lending in rural areas and to smaller businesses,” said Lu Ting, a Hong Kong-based economist at Bank of America Corp. The reserve-ratio level for the nation’s largest lenders stands at 20.5 percent after a cut in February.

North Korea’s Gaeseong Pushed for Inclusion in FTA (Source: Bloomberg)
South Korea is pushing to include the Gaeseong industrial zone in North Korea in its free-trade deals with the U.S. and Europe, a step that would deepen cross- border ties after the North’s leadership transition. “Unification is already taking place in Gaeseong, with daily encounters and shared interests,” said Yoo Dong Ok, the chairman of Daewha Fuel Pump Industries and a spokesman for South Korean companies operating in the manufacturing enclave. Shipments from the factories, mostly textiles and car parts, would quickly surge 15 percent if they win free-trade status, Yoo estimated in a March 20 interview. Yoo and the government in Seoul want the fruits of North Korean workers’ labors on the shelves of stores in Chicago and Berlin, even as they condemn the regime of new leader Kim Jong Un for a planned rocket launch. The U.S. warned the test-firing jeopardizes a food-aid deal and breaks international agreements.
“It may help any efforts by North Korea to open up if the South wins inclusion for Gaeseong,” said Cho Bong Hyun, a researcher at IBK Economic Research Institute in Seoul who has visited the communist country more than 30 times since 2000 and advises companies seeking to do business there. “North Koreans have lived in a closed society under tight state control but now through Gaeseong, they’re learning about and experiencing the outside world.”

Europe Revival Seen in Most Bond Sales Since ’10: Credit Markets (Source: Bloomberg)
Europe’s comeback from the brink is extending to the region’s corporate debt market, where borrowers are selling bonds at the fastest pace in two years. Fiat SpA (F), Italy’s biggest manufacturer, Daimler AG and Electricite de France SA led 6.6 billion euros ($8.7 billion) of offerings in the busiest day of issuance since Jan. 12, 2010, according to data compiled by Bloomberg. Daimler in Stuttgart, Germany raised 750 million euros after boosting the sale from 500 million euros, while EDF (EDF) in Paris sold 1.6 billion euros of bonds and Fiat issued its first benchmark deal since July. The European Central Bank’s injection of cash into banks through loans and Greece’s debt restructuring is raising optimism that the region’s sovereign crisis will be contained. The cost to borrow for European non-financial companies has fallen at a faster rate this year than for issuers in the U.S., Bank of America Merrill Lynch data show.
“While Europe still faces many obvious challenges, there has been a combined regulatory and political response to euro- area problems,” Edward Marrinan, macro credit strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said in a telephone interview. “The follow-on risk appetite has been reflected in robust new issuance.”

Osborne Says U.K. to Avoid Recession as He Keeps Austerity Push (Source: Bloomberg)
Chancellor of the Exchequer George Osborne said Britain will avoid sliding back into recession as he delivered a budget intended to maintain his austerity drive. Forecasts from the nonpartisan Office for Budget Responsibility show the economy expanding 0.8 percent this year, up from a November estimate of 0.7 percent, Osborne told Parliament in London today. Gross domestic product shrank 0.2 percent in the last three months of 2011. Prime Minister David Cameron’s government is seeking to retain the U.K.’s AAA credit rating by erasing the bulk of the deficit by 2017 and taking measures to support growth that don’t require additional borrowing. The shortfall unexpectedly increased last month, data released today showed. “Britain is going to earn its way in the world,” Osborne said. “There is no other road to recovery.”
With Fitch Ratings revising its U.K. outlook last week to “negative” from “stable,” Osborne is sticking to plans to ax a budget deficit now totaling more than 8 percent of gross domestic product, a shortfall greater than in France, Germany and Italy.

U.K. Budget Deficit Doubles as Taxes Fall, Spending Jumps (Source: Bloomberg)
Britain’s budget deficit almost doubled in February as taxes fell and spending surged, leaving Chancellor of the Exchequer George Osborne little room to meet his full-year goal as he prepares to announce the annual budget. Net borrowing excluding support for banks was 15.2 billion pounds ($24.1 billion), the highest for any February on record, compared with 8.9 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 17 forecasts in a Bloomberg News survey was for a shortfall of 8 billion pounds. Osborne has rejected calls to relax his program of cuts, saying warnings from Fitch Ratings and Moody’s Investors Service that Britain could lose its top credit rating reinforce the need to stick to his plan to erase the structural deficit by 2017.
“It provides a very uncomfortable background for the budget,” said Philip Shaw, an economist at Investec Securities in London. “We’ll get tough talk today but against a really nasty number for February. The fact there has been a worsening on this scale is a big surprise.”

20120322 1016 Global Commodities Related News.

Corn (Source: CME)
US corn futures end lower on favorable spring weather and technical pressure. Unusually warm weather is prompting early fieldwork for farmers and talk of planting already. Earlier planting seen as setting the stage for better yields, and could prompt farmers to plant more corn than initially expected. "You just can't spin this weather being bullish the markets," says Prime Ag Consultants analyst Chad Henderson. Traders also note corn/soybean spread trading, as soy climbed on the day. They add that declines the past three days could signal a reversal in market direction. CBOT May corn ends down 5 1/2c to $6.42 a bushel.

Wheat (Source: CME)
U.S. wheat futures end lower on favorable crop weather and ample supplies. Rains and warm weather across the Plains seen as benefitting both the winter and spring wheat crops, analysts say. Also, while corn has a bullish near-term supply story and soybeans has a supportive longer-term supply story, wheat has neither, says Western Milling analyst Joel Karlin. Traders add that wheat is in a precarious position technically with prices falling the past three days. Weaker corn prices this week adding pressure. CBOT May wheat ends down 6 1/4c to $6.36 1/4 a bushel, KCBT May wheat closes down 5 1/2c to $6.75 and MGEX May wheat ends down 1/2c to $7.98 3/4.

Rice (Source: CME)
US rice futures end lower, stumbling in unison with other grain futures. Rice continues to draw pressure from concerns about lagging demand, with weakness in corn and wheat helping offset support from concerns US rice acreage is poised to decline at the expense of more profitable crops, analysts say. CBOT May rice finished 2c lower at $14.34 1/2/hundredweight.

U.S. corn, wheat, soy edge back after fund liquidation
NEW DELHI, March 21 (Reuters) - U.S. corn and soybean futures inched back after posting their biggest daily declines since January a day earlier, triggered by fund liquidation of long positions, with wheat following them higher.
"Today's gain is just a rebound from last night's sell-off and going forward, I see some downside, but a limited one," said Jonathan Barratt, chief executive of BarrattBulletin, a commodity research firm based in Sydney.

As winter becomes spring, another summer-like day in much of U.S.
CHICAGO, March 20 (Reuters) - Much of the United States basked in another day of unseasonably warm weather on Tuesday as one of the mildest winters on record gave way to a balmy spring and possibly a hot summer that could cause difficulties for crops.
On what meteorologists consider the first day of spring, record highs were set in dozens of central and eastern cities, from International Falls, Minnesota on the Canadian border to Lexington, Kentucky in the south,

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.

Canada's Viterra puts Glencore in grain's top tier
LONDON/WINNIPEG, Manitoba, March 20 (Reuters) - Glencore , already the world's No. 1 diversified commodities trader, has agreed to buy Canada's largest grain handler in a C$6.1 billion ($6.2 billion) deal that will shake up an industry that has thrived on surging global demand for food and fuel.  
Glencore will acquire Viterra Inc and then sell off some parts to Canada's Richardson International and Agrium Inc . By divesting some grain elevators, mills and farm-supply dealers, the Swiss-based trader aims to allay concerns that Ottawa might block the deal on national sovereignty or competition grounds.

Noodles to push Indonesia wheat demand up 5 pct y/y
JAKARTA, March 20 (Reuters) - Demand in Asia's top wheat importer, Indonesia, will rise by at least 5 percent a year over the next decade, an industry group said on Tuesday, as growing wealth prompts more consumers to switch to noodles and away from the staple rice.
Last year, Southeast Asia's largest economy used more than 6 million tonnes of wheat, including 5.3 million tonnes of wheat and 679,000 tonnes of wheat flour imports, Franciscus Welirang, chairman of the Indonesian Wheat Flour Mills Association (Aptindo), told Reuters.

India's Grain Stocks Sufficient To Continue Exports To 2014 -Food Minister (Source: CME)
India's Food Minister K.V. Thomas said that the country has sufficient grain stocks to continue rice and wheat exports while also implementing a food security program at least until 2014. The minister's comments come ahead of a ministerial panel meeting scheduled for Monday to review supply and demand of foodgrains and other agricultural commodities against a backdrop of bumper crops and brimming stockpiles. At the same time, the government has unveiled an ambitious food security program aimed at giving 70% of the population access to grain subsidies. "We intend to implement the Food Security Law by the year-end," Thomas told reporters on the sidelines of a conference. A debate on the proposed law in parliament is likely to be completed over the next few months, he said. The program would guarantee 7.0 kilograms a month of highly subsidized wheat, rice and coarse grains to each member of families that are designated as needy-- and at least 3.0 kilograms per member of families that are somewhat better off.
Once the law is implemented, Thomas said the total annual food subsidy bill is expected to rise to INR1.12 trillion ($22 billion), up from the current estimate of INR880 billion for 2012-13. The country will need 62 million tons of grains a year to implement the law. The country has benefited from two consecutive bumper foodgrain harvests, but experts have said that availability of grains to keep the program going over the long term may become problematic unless the country invests significantly more to improve yields. In the face of a shortage of warehouse space, India lifted a ban on wheat and rice exports in September after banning both for around three years as part of efforts to fight food inflation.

Nestle CEO: Emerging Markets Bolster Commodity Prices (Source: CME)
Emerging market demand continues to bolster commodity prices as well as Nestle SA earnings, the company's chief executive said, as the rising incomes of developing market consumers offset much of the slowdown in demand in Europe and North America. The world's largest food manufacturer by sales expects high-growth markets like Indonesia, India and China to take make up a larger and larger slice of Nestle's revenues in the coming years, said Paul Bulcke, chief executive officer of the company, during a visit to Indonesia. Although prices for some industrial metals have fallen recently as China's economy slows, prices for many other commodities, including agricultural goods, have continued to rise due to strong demand. This is likely to continue for the foreseeable future, Bulcke said.
"The demand is going up because 80% of the world's population is developing and emerging. They are going to eat more and better and that is good," he said. "In general, agriculture raw materials have come down for 50 to 60 years. Now the underlying trend is upward." Last year Nestle's net profit fell to 9 billion Swiss francs ($9.87 billion) from CHF34 billion a year earlier. The 2010 figure included a CHF25 billion gain from the sale of Alcon eye-care business. The company's sales fell 10% to CHF84 billion. The tough year would have been worse if not for growth in emerging markets. An increasing amount of Nestle's growth is coming from emerging markets, Bulcke said. The company already makes about 40% of its revenues in emerging markets and expects that percentage to climb. Last year its revenues grew 13% in developing economies but only 4.5% in developed economies, he said.
"They are creating a new middle class and they are developing fast, while you look at the developed countries and they are slowing because of the debt crises," he said. The maker of such brands as Kit Kat candy bars, Purina pet food and Haagen-Dazs ice cream continues to expand operations in emerging countries. In Indonesia it has invested close to $1 billion over the last 10 years in its own facilities and those of its suppliers. It is currently in the middle of a $200 million upgrade of a factory near Jakarta to produce more infant food, milk powder and Milo chocolate malt mix for the growing middle class in Southeast Asia's largest economy.
Nestle is developing and customizing its products, designing them for specific emerging-market consumers. Its Nescafe instant coffee brand has more than 180 different blends around the world. It adds iodine to its soup stock in some parts of Africa where consumers don't get enough iodine. In Indonesia it sells products for as little as 1,000 rupiah, or 11 U.S. cents, to target the less affluent consumer, and it fortifies some of its milk powders with iron because many Indonesians have iron deficiencies, said Arshad Chaudhry, president of PT Nestle Indonesia. "The opportunity is everywhere," Chaudhry said. Last year Nestle's bottom line was also hurt by the weakening of the greenback. Bulcke said he hopes to see a stronger U.S. dollar soon as a weaker one bites into Nestle's earnings, which are consolidated in Swiss francs. He said any further decline in the U.S. currency could also hurt global growth.
"The dollar is really very weak historically" against most currencies, he said. "That could start to unbalance some normal [functioning] in the world economy. Some recovery would be good."

General Mills: Consumer Demand Will Stabilize In Coming Months (Source: CME)
General Mills Inc. expects that the sharp volume declines food makers have struggled with recently in the U.S. will moderate in the coming months as shoppers get used to new higher prices. "As we, in the months ahead, lap all the pricing we took and our merchandising level moderate...we believe that consumer demand will stabilize and will moderate," General Mills Chairman and Chief Executive Ken Powell said during the company's third-quarter earnings call. The combination of stabilizing volume, higher prices and continued strong results outside the U.S. are expected to keep General Mills sales' growth strong in the fourth quarter. But higher costs will once again cause margins to contract, though less so than in the third quarter. The maker of Cheerios cereal and Progresso soups reported a slight drop in third-quarter earnings, as higher costs pushed down profit margins and U.S. sales volumes fell. Shares were down 1.3% in recent trading to $38.25.
The per-share earnings fell at the midpoint of a range disclosed last month, when General Mills warned that weak volume in the U.S. would weigh on profits. Overall sales, however, were slightly higher than Wall Street analysts expected for the period, helped by stronger growth overseas. General Mills also backed its full-year view given last month. Food makers industrywide have been under pressure as budget-conscious U.S. consumers push back against price increases aimed at offsetting rising commodity costs. In General Mill's U.S. retail segment--its largest top-line contributor--sales were up 3.8% from a year earlier to $2.61 billion, a gain driven by higher prices, which added 9 percentage points. Volume, however, sliced 5 percentage points of sales growth for the segment. General Mills's top performers in the division were cereal and snacks, which both posted higher volume.
The clear laggard, however, was Yoplait yogurt, whose sales fell 3%. In the U.S., Yoplait has been slumping as it has lost share to Greek yogurt brands like the closely held Chobani, which has been growing at triple digit rates. That has hurt Yoplait's established product lines like regular and light yogurt. Yoplait is trying to capture its fair share of the market for Greek yogurt--known for its thicker texture and higher protein content--with Yoplait Greek. But some analysts questions whether the product has enough power to compete against Chobani and some other brands that are dominating the category. Powell said that the company in June plans to unveil a comprehensive new lineup of yogurt products, including in the Greek segment. "Clearly, our goal is to stabilize and return the entire Yoplait business to growth," he said. For the quarter ended Feb. 26, General Mills reported a profit of $391.5 million, or 58 cents a share, compared with a year-earlier profit of $392.1 million, or 59 cents a share.
Stripping out acquisition costs and other items, earnings fell to 55 cents a share from 56 cents a year earlier. The company's downbeat February forecast called for earnings of 54 cents to 56 cents a share. Net sales rose 13% to $4.12 billion, a jump the company said was helped by its Yoplait yogurt acquisition. Analysts expected $4.07 billion in revenue, according to a survey conducted by Thomson Reuters. Gross margin narrowed to 36.6% from 39.2%, reflecting higher input costs and other factors. The international segment's sales were up 51% from a year earlier to $1.04 billion, leading to a 40% jump in the segment's operating profit.

Soybean Futures Rebound on Speculation China to Boost Purchases (Source: Bloomberg)
Soybeans rose for the first time this week on speculation that reduced output in South America will force Chinese importers to buy more from the U.S., the world’s largest grower. China imported 3.83 million metric tons of soybeans in February, up 65 percent from a year earlier and the most for the month since before 2004, the Customs General Administration said today. Processors may increase purchases for delivery from July to October after Chicago futures tumbled yesterday, said today in a report. “Prices probably have found a level that will stimulate new Chinese purchases from the U.S.,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. “A jump in Brazilian soybean-export prices yesterday, when U.S. prices fell, makes U.S. supplies more attractive to Chinese buyers.”
Soybean futures for May delivery rose 0.7 percent to close at $13.55 a bushel at 1:15 p.m. on the Chicago Board of Trade, after dropping 1.6 percent yesterday, the most since Jan. 30. The oilseed has gained 14 percent in the past two months as hot, dry weather reduced crops in Brazil and Argentina, the two biggest producers after the U.S. The U.S. was the largest exporter in the year that ended Sept. 30, according to government estimates. The U.S. crop was valued at $35.8 billion in 2011, second behind corn, government figures show.

China May Have 20 Million Ton Corn Deficit by 2020, Center Says (Source: Bloomberg)
Corn demand in China, the second- biggest consumer, may outstrip domestic production by as much as 20 million metric tons by 2020, boosting imports, a government policy researcher said. The use of corn to produce biochemical products is growing rapidly and may make China a “large corn importer” so as to meet demand, according to Cheng Guoqiang, deputy director of the Development Research Center of the State Council. China’s increased reliance on imported corn may help drive up food prices and spur investment in agriculture. Imports in the 2012-2013 marketing year beginning Oct. 1 may rise to 8.9 million tons from estimated 6.6 million tons this year, Shanghai JC Intelligence Co. said March 19. “With food demand set to rise irrespective of prices, insufficient corn supply will become routine,” Cheng said in slides prepared for a conference in Boao today. Bumper domestic harvests won’t ease the supply deficit, he said.
Rising domestic corn prices will prompt farmers to switch to corn while cutting planting of soybeans and cotton, Cheng said. Annual corn demand for industrial use has increased to 45 million tons to 50 million tons from 38 million tons in 2008, he said in the slides.

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.

Brent heads towards $125 on US stocks draw, soft dollar
SINGAPORE, March 21 (Reuters) - Brent crude edged towards $125 a barrel, pulling back from sharp losses a day earlier, as a surprise drawdown in U.S. crude stocks and a weaker dollar offset the prospect of a ramp up in supply by top exporter Saudi Arabia.
"The lower stocks are 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 wants Iran crude imports cut 10-20 pct -Idemitsu
TOKYO, March 21 (Reuters) - The Japanese government probably wants Idemitsu Kosan  to continue cutting Iranian crude imports as before, which is by  10 to 20 percent a year, the oil refiner's chairman said on Wednesday, a day after the United States exempted the Asian nation from financial sanctions.
Each oil firm in Japan that buys Iranian oil has been in separate talks with the government on curbing oil imports from the Middle East nation, but the government has not instructed them to attain a detailed percentage figure for cuts.

China Feb oil product stocks up 1.81 mln T on mth
BEIJING, March 21 (Reuters) - China's refined fuel inventories rose 1.81 million tonnes in February against a month earlier, and were up 960,000 tonnes compared with a year earlier, the National Development and Reform Commission said on Wednesday.
The commission said most of the increase was in diesel.

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."

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.

Oil Declines as Emergency Crude Stockpile Release Studied (Source: Bloomberg)
Oil declined from the highest close in two days in New York after France said that industrialized nations are considering releasing strategic crude stockpiles to counter rising prices. Futures fell as much as 0.4 percent after the French Industry Minister Eric Besson said the country is “studying with its partners all possible options” including the release of oil reserves. Prices have advanced this year on concern sanctions aimed at halting Iran’s nuclear program will disrupt crude exports. West Texas Intermediate rose yesterday after government data showed an unexpected drop in U.S. supplies. “All the powers that be now are trying to get oil prices down,” Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney, said in a Bloomberg Television interview. “The bulls and the bears are quite evenly matched because when it gets low we see Iran coming up, when it gets high, we see the Fed, the U.K. and Saudi Arabia coming out saying they can placate any concerns.” Oil for May delivery slid as much as 46 cents to $106.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.05 at 11:37 a.m. Sydney time. It gained $1.20 yesterday to $107.27, the highest close since March 19. Front- month prices are 8.3 percent higher this year.

Gold May Gain as a Weaker Dollar Spurs Investment Demand (Source: Bloomberg)
Gold rose on speculation that demand will increase when jewelry shops end a five-day shutdown tomorrow in India, the world’s largest buyer, and as Federal Reserve Chairman said higher oil prices may stoke inflation. Jewelers are protesting tax increases the government announced last week that may raise retail-gold prices by 6.3 percent. There may be pent-up demand from the closures, Edel Tully, an analyst at UBS AG in London, wrote today in a report. Rising fuel prices “create at least short-term inflation pressures,” Federal Reserve Chairman Ben S. Bernanke said today during congressional testimony. “We will see a rise in demand in the short term because of India coming back to the market,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Bernanke’s statements were gold friendly.”
Gold futures for April delivery rose 0.2 percent to settle at $1,650.30 an ounce at 1:37 p.m. on the Comex in New York. The metal, which reached an eight-week low of $1,634.70 on March 14, has rallied 5.3 percent this year.

20120322 1015 Soy Oil & Palm Oil Related News.

Indonesia Raises April CPO Export Tax To 18% From 16.5% -Official
Indonesia Raises April palm olein Export Tax To 9% From 8% -Official

Soybeans (Source: CME)
US soybean futures end higher, rebounding from declines seen so far this week. The combination of a strong demand base, declining South American crop estimates and the uncertainty of 2012 US acreage underpinned prices as the market got back to the theme of buying beans on fear of losing acreage in 2012 to other commodities and assumptions that strong China demand will tightening US supplies amid next week's USDA reports, says Mike Zuzolo of Global Commodity. CBOT May soybeans ended up 10c at $13.55/bushel.

Soybean Meal/Oil (Source: CME)
Soymeal and soyoil followed soybean futures, climbing on supportive demand outlooks. May soymeal rose $4.20 to $369.80/shot ton and May soyoil gained 0.05c to 54.38c/pound.

Palm oil falls for 3rd day, demand caps losses
SINGAPORE, March 21 (Reuters) - Malaysian palm oil futures eased on Wednesday, tracking broader commodities markets such as crude oil which was hit by a supply pledge from Saudi Arabia, but losses were limited by an upbeat demand outlook for the edible oil.
"The market's down a bit and it's more on a correction after a rally for nearly three weeks. Because most of the commodities were under pressure yesterday, including crude oil and soybean oil, so palm oil was not spared even though exports were good," said a trader with a foreign brokerage in Malaysia.

China H1 soy imports seen up 25 pct on year-CNGOIC
BEIJING, March 21 (Reuters) - China, the world's top soy buyer, will import some 29 million tonnes of soy in the first half of the year, a quarter more than the same period last year, due to strong demand from animal feed producers, an official think-tank said in a report.
The imports are just over half the 55 million tonnes of soybeans China is forecast to import this year from global suppliers. Last month, a Chinese trade delegation signed deals to buy a record 13.4 million tonnes of soybeans from the United States.

Oil World sees larger 2012 Canadian canola crop
HAMBURG, March 20 (Reuters) - Canada could harvest 15 million to 15.4 million tonnes of canola (rapeseed) in 2012, up from 14.4 million last year as a record area is likely to be sown with the oilseed, Hamburg-based oilseeds analysts Oil World forecast on Tuesday.
Canadian farmers are expected to react to high canola prices by increasing their sowings, Oil World said. Canadian canola futures touched a new six-month high on Monday.

Oil World cuts Brazil, Argentine soy crop forecast
HAMBURG, March 20 (Reuters) - Hamburg-based oilseeds analyst Oil World said on Tuesday it had cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes to 66.5 million tonnes compared with 75.3 million tonnes in 2011 because of drought and crop fungus.
Oil World also reduced its forecast of Argentina's 2012 crop by 0.5 million tonnes to 46.5 million tonnes, down from 49.2 million in 2011.