Monday, May 7, 2012

20120507 1810 FCPO EOD Daily Chart Study.

FCPO closed : 3360, changed : +2 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : falling lower, seller in control.
Support : 3350, 3330, 3300, 3270 level.
Resistance : 3380, 3420, 3450, 3470 level.
Comment :
FCPO closed 2 ticks higher with decline volume transacted. Soy oil price currently trading little lower after last Friday closed lower by nearly 1% while crude oil price falling lower.
Uncertain global equity market development after Greece and France polls resulted global commodities and crude palm oil to fall lower. However, FCPO managed to recovered all intraday losses(from 8 week low) and closed marginally higher in the second half session after Reuters survey conducted shows higher export and production and lower inventory level.
Daily chart study adjusted to suggesting a pullback correction downside biased market development after recent falls.
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.

20120507 1730 FKLI EOD Daily Chart Study.

FKLI closed : 1578 changed : -5 points, volume : lower.
Bollinger band reading : little downside biased.
MACD Histogram : recovering, seller reducing position.
Support : 1570, 1565, 1550, 1540 level.
Resistance : 1580, 1590, 1595, 1600 level.
Comment :
FKLI closed recorded loss with reduced volume transacted doing 6.5 points discount compare to cash market that also closed lower. Last Friday U.S. markets falls lower and today Asia markets ended in reds while European markets currently trading registering loss.
Investors seems raising concern over changes in France and Greece political situation may lead to more complex European debt resolution decided to press the sell button to reduce exposure under current uncertainty situation.
Daily technical reading revised back to suggesting a little downside biased market development unless market manage to penetrade middle Bollinger band resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20120507 1710 Regional Markets EOD Daily Chart Study.

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

20120507 1609 Palm Oil Related News.

May 7 (Bloomberg) -- Palm-oil production in Malaysia, the second-biggest supplier after Indonesia, probably gained the most in seven months in April, after recovering from seasonally low-output months, according to a Bloomberg survey. Output advanced 6.6 percent to 1.29 million metric tons, the biggest gain since September, from 1.21 million tons in March, according to the median estimate in the survey of three plantation companies and two analysts. That’s still 16 percent lower than the 1.53 million tons a year earlier. The Palm Oil Board is scheduled to release the official data on May 10.

20120507 1608 Global Market & Commodities Related News.

Risk assets from oil to shares slumped after elections in Greece and France fuelled questions about commitments from struggling euro zone economies to pursue austerity policies seen widely by markets as vital to resolving the bloc's debt crisis.  U.S. stock index futures fell after Greek voters trounced ruling parties in elections on Sunday, a result that put the country's future in the euro zone at risk, and as Socialist candidate Francois Hollande won the French presidency.

LME bid would test Hong Kong Exchanges Li's M&A mettle
HONG KONG, May 7 (Reuters) - Monday promises to be a big day for Charles Li.
The 50-year-old former journalist and investment banker is likely to report lower quarterly earnings at Hong Kong Exchanges and Clearing Ltd (HKEx) , where he is CEO, and faces a deadline to bid for the world's largest commodities exchange.

FOREX-Euro sinks to 3-month low after Greek vote upsets
TOKYO, May 7 (Reuters) - The euro tanked on Monday, breaking below its well-worn range from the past three months against the dollar after elections in Greece and France raised fresh concerns that the euro zone's hard-earned bailout and austerity steps could fall apart.
"The PASOK did unexpectedly poorly in the election ... Until we have more clarity on how the coalition government will be formed and what the new government will do with the bailout scheme, the euro will stay under pressure," said Masafumi Yamamoto, chief FX strategist at Barclays.

The euro tanked, breaking below its well-worn range from the past three months against the dollar after elections in Greece and France raised fresh concerns that the euro zone's hard-earned bailout and austerity steps could fall apart.

U.S. grain futures dropped as investors fled riskier assets, after Greek and French polls stoked concerns on whether struggling euro zone economies could continue to pursue austerity measures crucial to resolving the bloc's debt crisis.

Zambia agrees export of 300,000 T maize to Zimbabwe
Zambia signed a contract to export of 300,000 tonnes of maize to Zimbabwe from its huge surplus of carry-over stocks from last year, Zambia's Food Reserve Agency (FRA) said on Saturday.

Informa raises US soy acreage forecast, trims corn
Private analytical firm Informa Economics raised its forecast of U.S. 2012 soybean plantings to 75.822 million acres (30.68 million hectares), from 74.2 million acres previously, trade sources said on Friday.

Oil fell sharply, extending steep losses from the previous session, after elections in France and Greece raised concerns over their ability to carry out further austerity measures and renewed worries about the euro zone debt crisis.

Indonesia to impose 20 pct export duty on metal ores
JAKARTA, May 4 (Reuters) - Indonesia will impose a 20 percent export duty on all metal ores under new regulations to be applied from May 6 and will work on export policy plans for its coal industry in the next month, senior government officials said on Friday.
Jakarta aims to boost investment in domestic ore processing to lift exports of higher-value finished metals by the G20 economy through the new rules which come into force on Sunday.

Indonesia tax on metals risks China shipments
JAKARTA/HONG KONG, May 4 (Reuters) - New Indonesian taxes on metals and curbs on raw mineral shipments are likely to hit exports of nickel and bauxite to China and push ore prices higher on world markets, an industry source said on Friday.
The government of Southeast Asia's biggest economy aims to boost investment in domestic ore processing to lift exports of higher value finished metals. The new rules come into force on Sunday.

Tin, nickel premiums seen to be steady in Europe
LONDON, May 4 (Reuters) - Premiums for tin and nickel in Europe are unlikely to be affected by planned increases in deliveries of the two metals from London Metal Exchange-monitored warehouses, given that producers already supply enough to meet demand, traders said.
The exchange (LME) said last week its board had accepted in principle a proposal for warehousing companies to deliver at least 60 tonnes a day of tin or nickel or a combination of the two metals.

Shanghai copper fell, after elections in France and Greece stoked concerns on whether struggling euro zone economies could continue to pursue austerity measures crucial to resolving the bloc's debt crisis.

India's FMC hikes position limits in gold contracts
India's commodity markets regulator has asked the Multi Commodity Exchange (MCX) to increase the maximum positions that can be taken at an individual or member level for new gold contracts, without giving any reason.

Gold edged lower, pressured by a stronger dollar after elections in France and Greece cast doubts on whether the euro zone will be able to battle the debt crisis.  

METALS-Shanghai copper drops after French, Greek polls
SHANGHAI, May 7 (Reuters) - Shanghai copper fell to near two-week lows on Monday, following declines in other riskier assets, as elections in France and Greece stoked fears about the euro zone's ability to tackle its debt crisis and the potential fallout for the global economy.
"The euro zone political uncertainties are taking centrestage today, pushing down the appetite for commodities such as base metals and crude oil. A stronger dollar today is also weighing on metal prices," said CIFCO Futures analyst Zhou Jie.

PRECIOUS-Gold edges down on firm dollar after Europe elections
SINGAPORE, May 7 (Reuters) - Gold edged lower on Monday, pressured by a stronger dollar after elections in France and Greece cast doubts on whether the euro zone will be able to battle the debt crisis.
"We really need to see economy much weaker before the central bank steps in," said Dominic Schnider, head of commodity research at UBS Wealth Management in Singapore.

20120507 1143 Global Market & Commodities Related News.

GLOBAL MARKETS-Risk assets weaken after French, Greek elections
TOKYO, May 7 (Reuters) - Risk assets fell broadly on Monday after elections in Greece and France fuelled questions about commitments from struggling euro zone economies to pursue austerity measures, widely seen by markets as crucial to resolving the bloc's debt crisis.    
"The election results may topple market perception that Europe was making progress in its debt woes," said Mitsuru Sahara, chief FX manager at Bank of Tokyo Mitsubishi-UFJ in Tokyo.  

COMMODITIES-US jobs report worsens selloff; NY oil below $100
NEW YORK, May 4 (Reuters) - A sell-off in commodities got little reprieve o n F riday, with oil prices plunging 4 percent to close below $100 a barrel for the first time since February, after disappointing U.S. jobs data sparked a broad flight from risk.
"We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption," said Gene McGillian of Tradition Energy.

Day-to-day oil price stability a conundrum
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, May 4 (Reuters) - With just over a third of the year gone, 2012 has already proved tumultuous for the oil market, with front-month Brent futures trading as low as $108 per barrel and as high as $128.
There has been no lack of big news and surprises: civil war in Syria, the eruption of trouble in South Sudan, the rise and fall of tensions with Iran, endless production problems in the North Sea and speculation about the release of emergency stocks by the United States and its partners in the International Energy Agency (IEA).

Peak oil move over - now solve CO2
--Gerard Wynn is a Reuters market analyst. The views expressed are his own--
LONDON, May 3 (Reuters) - Trends in global economic growth and rising CO2 emissions rule out optimism that climate targets can be met, even while the world gets to grip with energy security.  
The continuing financial crisis and record high oil prices in 2008 haven't driven a low-carbon revolution which green lobbyists and agencies including the United Nations urged three years ago.  

Japan eyes guarantees for ships carrying Iran oil-Nikkei
TOKYO, May 7 (Reuters) - Japan is considering a new law to provide sovereign guarantees for its ships to allow them to continue importing Iranian crude oil after EU sanctions come into effect in July, the Nikkei business daily said.
The European Union has already prohibited European insurance coverage on hull and machinery for Iranian crude shipments, which has significantly limited Japan's lifting of Iranian crude from April.   The European Union in March, however, extended European insurance for oil spills on Iranian oil shipments until July 1, responding to calls for exemptions by Japan and South Korea.

Mideast fuel oil poised for tight summer
DUBAI, May 3 (Reuters) - The Middle East fuel oil market is braced for a tightening third quarter as soaring power generation demand is set to curb Saudi Arabia's exports and Western sanctions could deprive the market of Iranian supplies.
But although tighter supplies should push Gulf fuel oil premiums higher and could lift the Singapore ship fuel bunkering market, fears of regional fuel oil shortage are unfounded, traders and analysts in the Middle East and in Asia say.

OPEC output target rise not yet on agenda -Algeria
ALGIERS, May 6 (Reuters) - Raising the output target set by the Organization of the Petroleum Exporting Countries is not on OPEC's agenda for now but probably will be, Algerian Energy and Mines Minister Youcef Yousfi said on Sunday.
Asked about the prospect of increasing the target, Yousfi told state radio: "For the moment that is not the object of our discussions, but probably that will come at the OPEC level."

OIL-Oil extends slide after French, Greek polls
SEOUL, May 7 (Reuters) - Oil fell sharply on Monday, extending losses from the previous session, after elections in France and Greece raised concerns about their ability to carry out further austerity measures and renewed worries the euro zone debt crisis may resurface.
The bad news from Europe came after U.S. nonfarm hiring slowed for the second month in a row in April, which fueled a sell-off in oil markets on Friday.  

Shell, PetroChina JV Australia LNG faces big cost overrun-source
HONG KONG/PERTH, May 4 (Reuters) - The cost of Royal Dutch Shell  and PetroChina's  Australian joint venture LNG may rise as much as 50 percent from initial estimates, which could force the companies to delay development, a source close to the project said on Friday.
Arrow LNG is one of four on Australia's east coast that aim to pump gas from coal seams to export facilities. The estimated investment for all the projects is rising rapidly from the initial price tag of around $70 billion.

NATURAL GAS-US natgas futures end down on weather, profit-taking
NEW YORK, May 4 (Reuters) - U.S. natural gas futures ended lower o n Friday as moderate weather forecasts for next week and poor economic data triggered profit-taking after recent gains despite another supportive weekly inventory report.
"The market couldn't go any higher because we have some very bearish weather coming up, but I think we can hold the $2.20s, then make a run higher once we get some weather support," said Steve Mosley at SMC Advisory Services in Arkansas.

EURO COAL-ARA prices tick higher, China on sidelines
LONDON, May 4 (Reuters) - European coal prices crept higher by 25 cents a tonne on Friday as the market steadied after hitting two-year lows earlier in the week on weakening fundamentals.
"While exports of U.S. coal may make some economic sense we believe their impact will continue to be marginal," Deutsche Bank said in a research note on Friday.

20120507 1140 Malaysia Corporate Related News.

Claims for Bakun pile up
State-owned Sarawak Hidro SB, the chief promoter of the problem-plagued Bakun hydroelectric dam, is faced with claims of more than RM820m, raising the cost of what already ranks as one of the country’s most expensive infrastructure undertakings. Financial executives close to the project said the Malaysia-SinoHydro Corp Joint Venture, a JV company led by Sime Darby Bhd, has submitted claims amounting to RM670m for the civil works of the mammoth undertaking. Separately, a consortium led by Argentina’s IMPSA group, the chief supplier of turbines for the massive dam project, is seeking another RM140m from Sarawak Hidro. (Financial Daily)

Freight Management bullish on FY12
Logistics player Fright Management Bhd (FMB) is expecting another year of growth, boosted by its third party logistics (3PL) business and growth potential in the local logistics industry. Managing director Chew Chong Keat said FMB still has room to grow in the local logistics sector. He added that FMB has managed to maintain growth despite uncertainty in the logistics industry. (Financial Daily)

KFC and QSR buyout close to fruition
The buyout of KFC Holdings Bhd (KFC) and its parent, QSR Brands Bhd by the Johor Corp (JCorp)-led consortium is coming close to fruition with the JCorp board now finalizing the sale and purchase agreement (SPA), sources said. StarBiz had reported that a government-linked investment company (GLIC) would be part of a special purpose vehicle in the buyout exercise. They said the GLIC would be the second largest shareholder in KFC/QSR after JCorp, upon completion of the buyout. (StarBiz)- Please see accompanying report.

Brakes on plan to sell off Lotus
DRB-Hicom has put a stop to the plan by the former management of Proton Holdings Bhd to sell off Lotus Group International Ltd. It is understood that a closed-door meeting was held recently in Norwich, Britain, the home of the sportscar maker, headed by Proton’s executive chairman and new Lotus chairman Datuk Seri Mohd Khamil Jamil. British media reported that Khamil met with British Business Secretary Vince Cable and South Norfolk member of parliament Richard Bacon to allay fears that Proton was about to pull the plug on Lotus. (BT)

MMC Corp looking to relist Malakoff
With Gas Malaysia Bhd almost ready to start trading on Bursa Malaysia, MMC Corp Bhd, a construction, power and port group, is planning another initial public offering (IPO) for its other subsidiary, Malakoff Corp Bhd. Group managing director Datuk Hasni Harun said MMC, owned by businessman Tan Sri Syed Mokhtar Al Bukhary, hoped to relist Malakoff by next year. On the rationale of listing its existing subsidiaries, Hasni said MMC was focused on strengthening its business capabilities and further explore ways to unlock the value of its assets. (BT)

Hibiscus unit secures Norway JV deal
Hibiscus Petroleum SB is expanding its involvement in the Norwegian oil and gas industry through a jointly-controlled company with its local partner there, North Energy ASA. In a filing to Bursa Malaysia last Friday, it said that the joint company called Lime Petroleum Plc has secured 50% of North Energy’s interests in four concessions in Norway. (Malaysian Reserve)

Masterskill is likely to declare a bumper dividend from the end-11 RM74m balance of the RM147.6m funds raised during its IPO in 2010. An investment banker pointed out that the unutilised amount can be distributed to shareholders. The banker also said that since the business is declining, i.e. facing a decline in diploma student numbers, the group could sell the land that it had bought to build the university campus. According to the article, proceeds from a possible land sale plus the balance of the IPO funds bring the total distributable cash to c.RM112m or 27 sen/share. (Edge Weekly)

Shares in PT Bank CIMB Niaga Tbk may emerge as a preferred investment to CIMB Group Holdings Bhd, if the Indonesian central bank decides to implement a new ceiling on single shareholder stakes for the country's commercial banks. The stricter regulation could see CIMB's 96% stake in CIMB Niaga cut down to 50%, which will in turn significantly raise the free-float in the Indonesian arm of the financial grouping and make the company, which is listed on the Indonesian stock exchange, more palatable to investors. (Financial Daily)

All is not lost, says MAS chairman Tan Sri Md Nor Yusof after the collapse of the share swap. He says a lot has been achieved behind the scenes, including mopping up a lot of mess. “Plenty has been done and we are more focused on sales now,” adds Md Nor. The first thing on the agenda is to re-visit the business plan to see if there is any need for a re-setting. That is key as earlier plans call for MAS to remain a full service premium carrier. CEO Ahmad Jauhari Yahya adds there is no need to craft a new business, only the need to tweak. MAS has also been accused of selecting a handful of outside talent in the strategy planning and for the running of the airline during the share swap period when there are a lot of untapped talent from within. So this time the re-visit of the plan involves the employees. It would have input from the unions and head of units on what their wish list for the airline’s strategy going forward. MAS Employees Union president Alias Aziz’s stand is clear. “We support anyone who can help  MAS earn more revenue. We do not want those who cause the airline to lose money. Thus far, the feedback from staff is that they want to work with the management to move MAS forward.” Md Nor said that MAS will not compete with a low cost model. He believes MAS can tap the regional market by being a premium carrier as this is a catchment area. Our middle class is growing significantly. So there is traffic. Firefly would continue with its turboprop operations, but may be re-branded. MAS needs fresh injection of funds and cash call is not on the cards for now, those in the know claim. MAS said it had secured RM1bn short term advance, like a bridging loan till it gets the financing for the aircraft sorted. Mohd Rashdan Yusof is working on an innovative financing package, an asset backed type of facility which could be issued in two weeks time. Ahmad Jauhari says MAS will issue a RM3bn Islamic bonds. Md Nor adds that whatever the instrument, the rightful owners of the aircraft will still be MAS. Still the pessimists feel that a 25%-30% cut in staff strength is necessary to bring down the cost as MAS is seen to have too many employees and the productivity level is low. Md Nor is not talking about cuts but to get everyone motivated, having proper work scheduling systems to keep productivity levels up and reducing the need for after hours work. Tan Sri Tony Fernandes said, “I’m sad that the swap is being unwound only because I feel Datuk Kamarudin Meranun and myself could have made a much bigger difference. But the collaboration is being strengthened. And that’s a good thing.” Commenting on the collaboration without equity participation, “Equity interest was an idea from the financial guys. But it still can work without equity. We are in a far, far better place than before. Collaboration is critical in a very competitive global place,” said Fernandes. (Star Biz)

Thai Airways will begin deployed its newly-acquired A380 aircraft on the Bangkok-Frankfurt route from December this year, and this could pose a threat to Malaysia Airlines (MAS) on that sector. MAS has four weekly to Kuala Lumpur although there is demand for much more. With the deployment of the new aircraft by Thai Airways, MAS could lose market share in Germany. Many German tour operators who offer tour packages to Malaysia, have lamented the fact that they are losing out on business to the country, because of the inadequate number of flights. (Bernama)

More than 40,000 Felda settlers are expected to welcome Prime Minister Datuk Seri Najib Tun Razak who is scheduled to announce a windfall in conjunction with the listing of Felda Global Ventures Holdings this coming Tuesday. The prime minister is set to make the announcement during a massive Felda settlers gathering at Felda Jengka 8, Jerantut in Pahang. "The PM’s announcement is not just a windfall but a response to all the criticisms and accusations hurled at the government and Felda by the opposition all this while," said Jengka Felda deputy vice president Sulaiman Bakardi said. (Bernama)

Palm oil production in Malaysia probably gained the most in seven months in April, after recovering from the seasonally low-output months, according to a Bloomberg survey. Output advanced 6.6% to 1.29m metric tons, the biggest gain since September, from 1.21m tons in March, according to the median estimate in the survey of three plantation companies and two analysts. That’s still 16% lower than the 1.53m tons a year earlier. The Malaysian Palm Oil Board is scheduled to release the official data on May 10. (Bloomberg)

Toll rates on some of the country's expressways may either be reduced or abolished if the Cabinet endorses restructuring plans submitted by concessionaires. Works Minister Datuk Seri Shaziman Abu Mansor said there was also a possibility that toll rates might not be increased over a longer period against regular intervals now. Shaziman said the government might consider paying a reasonable amount of compensation to some of the concessionaires to prevent toll increases. On the move to abolish toll on some of the highways, he said this concerned companies which had more than one highway concession. He said the concessionaires had proposed to abolish collection on a particular highway but to extend collection on another. (Star)

VADS Bhd, a wholly-owned unit of Telekom Malaysia Bhd, may build up to five large data centres in Malaysia over the next three years, as it anticipates more demand for its services. "We are still in the planning stage. So far, the location of the data centres and their size have yet to be finalised. But the plan is to build three to five larger scale ones in Malaysia over the next three years," said CEO Ahmad Azhar Yahya. While the size of each of the new data centres have not been finalised, Azhar said that a larger-scale data centre could be in the range of tens of thousands to over 100,000 sq ft. "Demand for cloud computing and data centres are expected to grow significantly over the near to medium term. "It is possible that our data-centre business, which is a part of our ICT business, will one day become the company's largest revenue contributor," said Ahmad Azhar. "Small- and medium-sized companies, wanting to compete better and manage their cost better, will be moving towards cloud computing. This trend would create demand for data centres," said Ahmad Azhar. Although revenue has been steadily improving ever since it was listed in 2002 (and delisted in 2009), Ahmad Azhar said the company's full potential is yet to be unleashed. This was because a big bulk of its revenue came from servicing its parent company Telekom Malaysia. As at last year, just over 50% of its revenue came from external sources. "This is something we are seriously looking into. We aim to increase our external revenue significantly moving forward," he said without going into further details. (BT)

Some independent power producers (IPPs) have questioned the Energy Commission’s (EC) decision to lump Tenaga Nasional Bhd’s (TNB) older power plants together with the IPPs in the ongoing competitive bidding exercise to extend their power purchase agreements. The EC has announced that in addition to the first generation IPPs, five TNB plants have purchased documents to participate in the request for the proposal (RFP) for PPAs that will expire between 2015-2017. (Malaysian Reserve)

State-owned Sarawak Hidro Sdn Bhd, the chief promoter of the problem-plagued Bakun hydroelectric dam, is faced with claims of more than RM820m, raising the cost of what already ranks as one of the country's most expensive infrastructure undertakings. Financial executives close to the project said the Malaysia-SinoHydro Corp Joint Venture (MCHJV), a JV company led by Sime Darby Bhd, has submitted claims amounting to RM670m for the civil works of the mammoth undertaking. Separately, a consortium led by Argentina's IMPSA group is seeking another RM140m from Sarawak Hidro. (Financial Daily)

With Gas Malaysia Bhd almost ready to start trading on Bursa Malaysia, MMC Corp Bhd is planning another initial public offering (IPO) for its other subsidiary, Malakoff Corp Bhd. Group MD Datuk Hasni Harun said MMC, owned by businessman Tan Sri Syed Mokhtar Al Bukhary, hoped to relist Malakoff by next year. “We are putting in the process (to list). It will take time (for listing), probably about six months. “It’s a bit tough (to float this year). Next year will be a more realistic target,” he said recently. “We are starting the process now. Whether to list of not is a different matter but we are looking at the possibility of listing. Starting the process means appointing the advisers and so on,” he explained. (BT)

UMW Corp Bhd hopes its oil and gas (O&G) unit will turn around in the current year, said its president and group CEO Datuk Syed Hisham Syed Wazir. Syed Hisham is expecting higher contribution this year from the O&G unit's three operating jack-up drilling rigs, especially Naga 3 and its land rigs. The unit recently signed a two-year contract worth US$105m (RM319.2m) with Petronas Carigali Sdn Bhd for Naga 3. "We are expecting new business in India and China to manufacture pipes for the O&G sectors there. We are bullish on the outlook for the O&G unit," he said. (BT)

KPJ Healthcare Bhd hopes to reach beyond RM2bn in revenue this year based on its encouraging performance during the last quarter 2011. Besides looking at acquisition opportunities, the group is keen to grow its medical tourism which currently commands about 5% of its revenue. "Eight of our hospitals are already earning more than RM110m revenue a year with an occupancy rate of between 66-75%," said managing director Datin Paduka Siti Sa'diah Sheikh Bakir. "Our mergers and acquisition initiative depends largely on the opportunities that arise. We look at hospitals that are promising but with lack of fund to expand," she said. (BT)

The Malaysian Rubber Board (MRB) has awarded the RM1.4bn development on 2.2ha in Jalan Ampang, Kuala Lumpur to Crest Builder Holdings Bhd and its 49% joint-venture (JV) partner Detik Utuh Sdn Bhd, sources said. For the open tender of this land, request for proposals started last June. Various proposals had been submitted by property players which included those from SP Setia Bhd and Naza TTDI Bhd. “Many developers were looking to purchase of the land but MRB declined to sell it as it was looking for a longer term business model with recurring income,” said a source. The land, also known as Lot 76 is opposite the Great Eastern Mall and would be developed over seven years. The development cost would be borne by the Crest Builder and Detik Utuh JV. MRB, as the landowner would receive 22.5% of the project's gross development value (GDV) for land rights, which translates into about RM300m. The development would include four towers which consist of one office block, two SoFo' (small office, flexi office), and an apartment block atop a retail mall. This development strategy is similar to the RM1.04bn tower atop the Dang Wangi light rail transit station contract which was also recently secured by Crest Builder and Detik Utuh. While Crest Builder is better known as a contractor, it is starting to shift its focus to become a property developer. It currently has a construction orderbook of some RM950m and unbilled property sales orderbook of RM300m. With the MRB land and the Dang Wangi project, this would bring its unbilled property orderbook to over RM2.5bn. (Starbiz)

20120507 1140 Global Economy Related News.

The biomass sector in Malaysia is expected to attract two potential major foreign direct investments (FDI) worth about RM3.5bn in the near future. The Technical Advisor to The EU-Malaysia Biomass Sustainable Production Initiative (Biomass-SP), Datuk Leong Kin Mun said an investment of US$300m (RM913.4m), is expected to come from a US-based company, Genomatica, to establish a biosugar plant. He added that a Chinese company, Wuhan Kaidi, is seeking to invest RM2.5bn in a 20-MW biomass power plant. There is no specific timeframe for the projects to start as there are many issues to be addressed before the deal is sealed and this includes the sustainability of feedstock supply, he said. (Bernama, Starbiz)

Kuantan has the potential to be developed as an industrial and tourism site, said PM Datuk Seri Najib Tun Razak. "I have directed the East Coast Economic Region to develop a waterfront project in Kuantan to attract more tourists," he said. (The Star)

Kuantan has been identified as the suitable location to house a sister industrial park between China and Malaysia, said PM Datuk Seri Mohd Najib Razak. The move was to reciprocate China's efforts to keep aside a 55 sq km land in Qinzhou, Nanning as the Qinzhou Industrial Park, a joint venture project between China and Malaysia. The government was carrying out detailed studies on the implementation of the project and have had meetings with investors from China towards that, he said. (Bernama)

Tanjung Bin Petrochemical and Maritime Centre (TBPMC), which will cost about RM2.4bn, is set to play a vital role in transforming south Johor into an oil and gas (O&G) hub, supported by other major developments in the area. Seaport Worldwide (SWW), a wholly-owned subsidiary of Johor Port, which in turn is wholly-owned by MMC Corp Bhd, is the master developer of the 2,255-acre project. Tanjung Bin’s anchor tenant, ATT Tanjung Bin Sdn Bhd (ATB), is already in operations and currently provides storage capacity of up to 841,000 sq m under its phase one development. ATB plans to provide an additional 400,000 sq m of storage space under phase two. The planned bridge across Sungai Pulai that will connect Port of Tanjung Pelepas (PTP) to Tanjung Bin will open up opportunities for more social and economic activities. SWW was also now in serious discussions with some international O&G players to further develop the area and provide additional storage capacity of 2m-3m sq m. (Starbiz)

Thailand’s foreign reserves for the week ended 27 Apr eased to US$178.5bn from US$178.7bn the previous week. The central bank’s holdings of forward contracts rose 3.5% to US$30.9bn last week, from US$29.8bn a week earlier (Bloomberg)

Thailand: Prasarn signals rate cut over as GDP forecast raised
Thailand will refrain from further interest-rate reductions as an economic recovery that is exceeding the central bank’s expectations prompts it to raise the 2012 growth forecast. Governor Prasarn Trairatvorakul said that Thailand will probably expand 6% this year, from a previous estimate of 5.7%, while inflation is still at a “manageable level.” The Bank of Thailand has kept its benchmark rate unchanged at its past two meetings at 3%, a level that Prasarn said is in an “accommodative zone” and will help strengthen the nation’s growth. (Bloomberg)

Philippines: Inflation accelerates from 30-month low on fuel, food
Philippine inflation accelerated in April from a 30-month low on higher utility, fuel and food costs, reducing scope for the central bank to resume interest-rate cuts. Consumer prices rose 3% y-o-y, after a 2.6% advance in March. The median estimate was for a 2.6% gain. Inflation pressure may rise further after the government approved a fare increase for jeepneys, a popular mode of transport, and President Aquino said that wage boards would speed up discussions on higher minimum pay. (Bloomberg)

Australia: Central bank cuts growth, inflation outlook on weak hiring
The Reserve Bank of Australia (RBA) cut growth and inflation forecasts as weak job and housing markets keep price gains in check. The RBA said that labor market conditions have continued to be on the soft side to date, with large increases in employment in mining and some service industries roughly offset by declines in the manufacturing, hospitality and retail sectors. The central bank sees average growth of 3% in 2012, down from its February estimate of 3.5%. Consumer prices should rise 2.5%, from a previous prediction of 3%. (Bloomberg)

EU: Manufacturing, services shrink more than estimated
Euro-region services and manufacturing output contracted more than initially estimated in April, adding to signs of a deepening economic slump. A euro-area composite index based on a survey of purchasing managers\ dropped to 46.7 from 49.1 in March. That’s the fastest rate of decline since October and below an estimate of 47.4 published on 23 April. A reading below 50 indicates contraction. A gauge of euro-region manufacturing fell to 45.9 in April from 47.7 in March, while a measure of services dropped to 46.9 from 49.2. (Bloomberg)

UK: Home prices drop the most in 1.5 years as recession bites
UK house prices dropped the most in 1.5 years in April as a stamp-duty exemption for first-time buyers ended and the economy fell into its first double-dip recession since the 1970s. Prices dropped 2.4% from March, the largest monthly decline since Sept 2010, to an average GDP159,883. Prices had risen 2.2% in March. April values were down 0.6% y-o-y. Demand for homes was boosted earlier this year as first-time buyers took advantage of a tax exemption on purchases of homes costing less than GBP250,000 before it ended in March. (Bloomberg)

Socialist Francois Hollande swept to victory in France's presidential election on Sunday in a swing to the left at the heart of Europe and promised to start a pushback against German-led austerity policies. Hollande led conservative incumbent Nicolas Sarkozy by 51.3% to 48.7% with 83% of votes counted, the Interior Ministry said. (Reuters)

Greek voters enraged by economic hardship caused by the terms of an international bailout turned on ruling parties in an election on Sunday, putting the country's future in the euro zone at risk and threatening to revive Europe's debt crisis. The latest official results, with over 61% of the vote counted, showed the only two major parties supporting an EU/IMF program that keeps Greece from bankruptcy would be hard pressed to form a lasting coalition. Conservative New Democracy and Socialist PASOK, who have dominated Greece for decades, were holding less than 35% of the vote. That would mean they might only scrape the 151-seat threshold needed for even the most fragile majority in parliament. (Reuters)

US: Job gains trailing forecasts, adding to concerns of US slowdown
American employers in April added the fewest number of jobs in six months and wages stagnated. The 115,000 increase in payrolls was less than the forecast of a 160,000 increase and followed a revised 154,000 gain in March that was larger than initially estimated. Unemployment fell to a three-year low of 8.1% as people left the labor force. The April increase in payrolls leaves the labor market 5m jobs short of the 8.8m lost as a result of the 18-month recession. Private payrolls during Obama’s term in office turned to positive from negative in April, with a net gain of 35,000. Overall payrolls remain lower than when Obama was inaugurated because there are 607,000 fewer government workers, including federal, state and local employees. Average hourly earnings were USD23.38 in April, little changed from the month before. (Bloomberg)

Global: Consumer confidence gains
Global consumer confidence rose in the first quarter as improvements in the US economy and continued growth in Asian markets brought sentiment levels to the highest level since the global recession began. Nielsen said its index of consumer confidence rose 5 pts in the period to 94. North America rose 8 pts to 92 while Europe is the most pessimistic region at 72 pts, though confidence increased in 16 out of 27 markets there. Asia-Pacific continues to be the most optimistic area at 103 pts. (Bloomberg)

US stock market slumps
US stocks slumped, sending the Standard & Poor’s 500 Index (S&P 500) to its biggest weekly retreat this year, as data on the American and European labor markets fueled concerns the global economy is weakening. The Dow Jones Industrial Average fell 168.32 pts, or 1.3% to 13,038.27, while the S&P 500 shed 22.47 pts, or 1.61% to 1369.10. (StarBiz)

20120507 1132 Global Market Related News.

Asian Stocks Fall as French Socialist Hollande Wins Poll (Source: Bloomberg)
Asian stocks fell, with the regional benchmark index heading for its biggest decline in almost six months, after U.S. employers added fewer jobs than forecast and amid growing concern over Europe’s debt crisis after Socialist Francois Hollande was elected president of France. Samsung Electronics Co., the world’s No. 1 maker of mobile phones by sales, dropped 2.5 percent in Seoul. Canon Inc. (7751), a camera maker that depends on Europe for almost a third of its sales, slipped 1.7 percent in Tokyo. BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, lost 3 percent as crude oil and copper futures fell. “There’s concern that the European debt problem may get serious,” said Toshiyuki Kanayama, a market analyst at Tokyo- based Monex Inc. “The euro is being sold in the currency market and that’s negative for Japanese stocks. In the U.S., the job recovery is getting sluggish, fueling concern that may have a bad impact on consumer spending and housing markets.”
The MSCI Asia Pacific Index declined 2.1 percent to 121.50 as of 10:22 a.m. in Tokyo, heading for its biggest drop since Nov. 10. About 19 shares dropped for each that rose on the gauge. The measure fell 0.2 percent last week after Australia’s central bank cut its economic growth forecast and U.S. services industries expanded less than forecast, sparking concern the global recovery may be faltering.

China’s Stocks Decline on Europe Debt, Property Market Concerns (Source: Bloomberg)
China’s stocks fell for the first time in four days on speculation housing demand will weaken and the election of a new president in France may deepen Europe’s debt crisis. China Vanke Co. (000002) and Poly Real Estate Group Co. led declines for developers after the Xinhua News Agency reported Industrial & Commercial Bank of China Ltd. suspended a discount on mortgages for first-time home buyers nationwide. Jiangxi Copper Co. and Huludao Zinc Industry Co. slid more than 1 percent on concern a global slowdown will curb demand for commodities. PetroChina Co., the nation’s second-largest refiner, dropped the most in two weeks after the Shanghai Securities News said fuel prices may be cut today. “Concerns about Europe’s debt are back and that will hurt global investors’ risk appetite,” said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Expectations for an easing of property curbs have faded and the overall policy tone is still tight.”
The Shanghai Composite Index (SHCOMP) slipped 5.52 points, or 0.2 percent, to 2,446.49 as of 9:49 a.m. local time. The CSI 300 Index (SHSZ300) fell 0.2 percent to 2,710.40. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, retreated 1.5 percent in New York on May 4. The Shanghai index advanced 2.3 percent last week, the biggest weekly gain since Feb. 24, after the securities regulator cut trading costs and manufacturing expanded for a fifth month in April. The gauge has climbed 11 percent this year on expectations the government will relax monetary policies to spur economic growth.

Japan Stock Futures Drop as French Socialist Wins Poll (Source: Bloomberg)
Japanese stocks fell, with the Nikkei 225 Stock Average heading for its biggest decline in six months, after a socialist was elected France’s president, raising concern austerity measures would be rejected in Europe. Shares also fell as U.S. employers added fewer jobs than expected. Brothers Industries Ltd. (6448), an office equipment company that relies on Europe for almost 30 percent of its sales, lost 4.8 percent after the euro fell against the yen. Honda Motor Co. (7267), a carmaker that counts North America as its biggest market, sank 4.8 percent. Gree Inc. (3632) plunged 23 percent on concern the government may halt some social network games over “questionable” sales methods. “The situation in Europe is tough,” Khiem Do, Hong Kong- based head of Asian multi-asset strategy at Baring Asset Management Asia Ltd., said on Bloomberg Television. The firm oversees about $10 billion. “Very few nations can stand austerity. If the European Monetary Union stays the same, something has to give.”
The Nikkei 225 (NKY) sank 2.6 percent to 9,134.26 at the 11:30 a.m. trading break in Tokyo, set for its steepest drop since Nov. 10. Volume on the gauge was about 2.5 percent below the 30-day average. The broader Topix Index lost 2.5 percent to 772.95, with all 33 industry groups declining.

European Stocks Post Biggest Weekly Retreat Since March (Source: Bloomberg)
European stocks posted their biggest weekly drop since March as Spain entered a recession, a report showed the U.S. economy added fewer workers than expected and investors awaited elections in France and Greece this weekend. Home Retail Group Plc (HOME) had its biggest weekly drop since 2006 after it said annual profit fell 60 percent and it won’t pay a final dividend. Man Group Plc plunged after saying clients withdrew a net $1 billion in the first quarter, while costs were higher than analysts had predicted. Vestas Wind Systems A/S (VWS) fell for a second week. The Stoxx Europe 600 Index (SXXP) retreated 2.4 percent to 253 this week, its biggest slide in six weeks. The Stoxx 600 gained 0.5 percent last week. The gauge has lost 7.1 percent since its 2012 high on March 16 amid renewed concern that the euro area has yet to contain its sovereign-debt crisis.
“The closely watched non-farm payrolls report came in significantly below expectations,” said Chris Beauchamp, a market analyst at IG Index in London. “The outlook does not look particularly promising.”

S&P 500 Futures Fall as France’s Hollande Wins Election (Source: Bloomberg)
U.S. stock futures fell, following the biggest weekly slump in 2012, after Francois Hollande’s election as France’s president and Greek voters flocking to anti-bailout parties spurred concern about Europe’s debt crisis. Standard & Poor’s 500 Index futures expiring in June dropped 1.1 percent to 1,347.60 at 10:42 a.m. Tokyo time. The benchmark index for American equities retreated 2.4 percent last week. The euro declined, slipping to the weakest level since November 2008 against the British pound and reaching a three- month low versus the U.S. currency. “There are still many hurdles in Europe,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview. “There are no easy answers and the electorate is rejecting austerity. People will take a renewed focus on Europe and that focus is not positive.”
Socialist Hollande got about 52 percent against about 48 percent for Nicolas Sarkozy, according to estimates by four pollsters. Hollande’s platform calls for policies German Chancellor Angela Merkel opposes, including higher taxes, increased spending and a delayed deficit-reduction effort. He has also advocated a more aggressive European Central Bank role. Greece’s poll casts doubt on whether the two main parties can put together a government strong enough to implement spending cuts to ensure the flow of bailout funds.

Buffett Targets Asia for Reinsurance, Ice Cream Expansion (Source: Bloomberg)
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (BRK/A), said he’s pursuing more opportunities in Asia after boosting reinsurance sales and expanding the Iscar Metalworking Cos. unit on the continent. “Korea, Japan and you name it,” Buffett, 81, said May 5 at Omaha, Nebraska-based Berkshire’s annual meeting. Buffett visited South Korea, Japan and India last year, and China in 2010. Berkshire owned almost 4 million shares of South Korean steelmaker Posco and a stake in Chinese carmaker BYD Co. (1211) as of Dec. 31, according to regulatory filings. Japan, rebounding from a March 2011 earthquake and tsunami, and Thailand, which suffered record floods last year, are among countries where Berkshire has increased sales.
The reinsurance unit has done “far more business in Asia” in recent months that it did a few years ago, he said at the meeting. Berkshire’s International Dairy Queen Inc. ice-cream unit, led by CEO John Gainor, recently opened its 500th store in China, where the Green Tea Blizzard dessert is the No. 1 seller. The subsidiary has more than 270 outlets in Thailand and expanded into Singapore last year.

Asian Currencies Slide on European Election Results, U.S. Jobs (Source: Bloomberg)
Asian currencies fell, led by South Korea’s won and Malaysia’s ringgit, after the results of elections over the weekend in Europe stoked concern the region’s debt crisis may worsen. The won dropped by the most in 11 weeks as the MSCI Asia- Pacific Index (MXAP) of stocks lost 2 percent, sinking to the lowest level since January. Greek voters flocked to anti-bailout candidates, putting at risk austerity efforts needed to ensure the flow of financial aid. In France, Socialist Francois Hollande was elected president. He supports policies German Chancellor Angela Merkel opposes, including higher taxes, increased spending and a delayed deficit-reduction effort, “The French and Greek results were not encouraging,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “With the Greek result, it’s doubtful whether they can stick to the reform package. We’ve seen a fair bit of risk aversion coming in.”
The won slid 0.7 percent to 1,139.20 per dollar as of 10:44 a.m. in Seoul, according to data compiled by Bloomberg. The ringgit weakened 0.7 percent to 3.0633, the Singapore dollar dropped 0.6 percent to $1.2494 and the Philippine peso lost 0.2 percent to 42.400. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, fell for a fifth day to a two-week low. Its 60-day historical volatility dropped to 2.69 percent from 2.72 percent on May 4.

Euro Drops to 3-Month Low After Greek, French Elections (Source: Bloomberg)
The euro fell to a three-month low after Socialist Francois Hollande was elected president of France and as Greek voters flocked to anti-bailout parties, stoking concern austerity efforts in Europe may be derailed. The 17-nation currency slid for a sixth day, its longest series of losses since September 2011, after German Chancellor Angela Merkel’s party had its worst election result in more than half a century in the state of Schleswig-Holstein. The yen and the dollar rose versus most of their peers as Asian stocks extended a global rout, boosting demand for haven currencies. “There are major concerns about the euro,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company. “What’s common to both Greek and French voting is that people aren’t feeling good about austerity measures, which are the crux to a resolution of Europe’s debt problems.”
The euro declined to $1.2955, the weakest since Jan. 25, before trading at $1.2981 as of 11:42 a.m. in Tokyo, 0.8 percent below last week’s close in New York. It dropped 0.8 percent to 103.64 yen. The U.S. dollar was little changed at 79.84 yen.

Treasury 10-Year Yield Falls to 3-Month Low on Jobs Datas (Source: Bloomberg)
Treasuries rose for the seventh week, the longest stretch since 2008, as employers in the U.S. added fewer jobs than forecast amid speculation the Federal Reserve may consider additional stimulus measures to boost the economy. Treasury 10-year yields fell to a three-month low as payrolls added the least jobs in six months to fuel concern the U.S. economic recovery is faltering. Yields fell before elections in Europe that may result in leadership changes and inflame the region’s sovereign-debt crisis. The U.S. will sell $72 billion in notes and bonds next week. “Yields are reflecting a fair amount of concern for growth, in both the U.S. and abroad,” said Jay Mueller, who manages about $3 billion of bonds at Wells Capital Management in Milwaukee. “We had unrealistically strong data for months and now we are paying for it. Weak growth, Fed policy and weakness in Europe are keeping yields low.”
The benchmark 10-year note yield this week fell six basis points, or 0.06 percentage point, to 1.88 percent in New York, according to Bloomberg Bond Trader prices. Yesterday it touched 1.87 percent, the lowest since Feb. 3.

Employers in U.S. Added Fewer Jobs Than Forecast in April (Source: Bloomberg)
American employers added fewer workers than forecast in April and the jobless rate unexpectedly fell as people left the labor force, adding to concern the economic expansion is cooling. Payrolls climbed 115,000, the smallest increase in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated. Stocks and bond yields fell on bets that a slowdown in hiring will restrain the wage growth needed to fuel the consumer spending that accounts for 70 percent of the world’s largest economy. The data pose a challenge for President Barack Obama, who was attacked by Republican challenger Mitt Romney’s campaign today for his “failed economic record.”
“We’re still very much on the recovery path, but we’ve got a huge amount of ground to make up in the labor market,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who accurately forecast the unemployment rate.

Job Gains Trailing Forecasts Add to U.S. Slowdown Concern (Source: Bloomberg)
American employers in April added the fewest number of jobs in six months and wages stagnated, adding to concern the almost three-year-old economic expansion is cooling. The 115,000 increase in payrolls was less than forecast and followed a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed yesterday in Washington. The median estimate in a Bloomberg News survey called for a 160,000 advance. Unemployment fell to a three-year low of 8.1 percent as people left the labor force. “Employers are hiring, they’re just hiring at a very modest rate,” said Jonas Prising, president of the Americas at Milwaukee-based ManpowerGroup, a provider of temporary workers. “The current growth rate of employment is probably consistent” with economic growth of 2 percent, he said.
A slowdown in hiring, along with wage gains that are failing to keep pace with inflation, may make it difficult for consumers to boost their spending, which accounts for 70 percent of the world’s largest economy. The figures also represent a challenge for President Barack Obama, who was attacked by Republican opponent Mitt Romney’s campaign for his “failed economic record.”

Consumer Confidence Gains as Taiwan, U.S. Rise in Nielsen Survey (Source: Bloomberg)
Global consumer confidence rose in the first quarter as improvements in the U.S. economy and continued growth in Asian markets brought sentiment levels to the highest level since the global recession began, according to a survey by Nielsen Holdings NV. (NLSN) Nielsen, a global information and measurement company, said its index of consumer confidence rose five points in the period to 94. The company surveyed more than 28,000 online customers in 56 countries from Feb. 10 to Feb. 27, with sentiment increasing in 38 of those markets compared to the three months through December, according to an e-mailed statement. North America rose eight points to 92 in the period, its highest level since the quarter ended September 2007, as job prospects and confidence on personal finances improved. Europe is the most pessimistic region at 72 points, though confidence increased in 16 out of 27 markets there, and Asia-Pacific continues to be the most optimistic area at 103 points.

Trade Gap Probably Grew as Imports Rose: U.S. Economy Preview (Source: Bloomberg)
The U.S. trade deficit probably widened in March as imports rebounded from the biggest setback in three years, economists said before a report this week. The gap grew to $50 billion from $46 billion in February, according to the median forecast of 62 economists in a Bloomberg News survey taken ahead of a Commerce Department report set for May 10. Other data may show wholesale prices, the cost of imports and consumer sentiment were little changed. Companies probably bought more goods from abroad, reflecting higher fuel prices and a bounce back in shipments from China following the Lunar New Year holidays. At the same time, exports may fail to keep pace as a slower global expansion hurts sales at companies like Caterpillar Inc. (CAT) and United Technologies Corp. (UTX), indicating the U.S. economy won’t be able to count on an improving trade account to boost growth.
“We expect the oil-import bill to soar,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts. “We expect foreign trade to be a drag on growth for the year.”

China Market-Opening Pledge Yields JPMorgan Opportunity (Source: Bloomberg)
China raised the ceiling on foreign banks’ investments in securities ventures for the first time in more than a decade after two days of talks with the U.S. overshadowed by wrangling over activist Chen Guangcheng. China agreed to let foreign companies raise their stakes in joint ventures with domestic securities firms to as much as 49 percent, according to a joint statement released after annual Strategic and Economic Dialogue talks in Beijing yesterday. The current maximum is 33 percent. It will allow similar stakes in futures brokers. While Treasury Secretary Timothy F. Geithner hailed a strengthening in economic ties today, two decades of opening by China have failed to balance trade between the two, with the U.S. posting a $19.4 billion trade deficit in February. Global banks haven’t broken into underwriting rankings and China has stalled on agreements to lift restrictions on U.S. movies.
“This is a strong gesture from China’s policy makers to further open its financial markets,” said Hong Jinping, a Shenzhen-based analyst at China Merchants Securities Co.. At the same time, the new rules “won’t change the landscape of China’s brokerage industry, which is dominated by over 100 local firms” and where local political connections are important, Hong said.

Japan Enters Nuclear Recess After Sole Working Reactor Shut Down (Source: Bloomberg)
Japan began a recess from nuclear- generated electricity, its first in more than four decades, after its sole operating power reactor was halted for scheduled maintenance. Hokkaido Electric Power (9501) Co.’s Tomari No. 3 reactor in northern Japan stopped generating electricity at 11:03 p.m. on the night of May 5, and fission ceased at 4 a.m. yesterday, said Satoshi Takada, a spokesman for the utility. Shutting down the 912-megawatt Tomari unit leaves Japan without an operating power reactor for the first time since May 1970, as plant operators carry out mandatory maintenance or additional safety checks following the Fukushima disaster. The country’s 50 nuclear plants provided 30 percent of its electricity prior to March 11, 2011.
The utilities powering the world’s third-biggest economy have been forced to turn to coal, oil and gas-fired plants to keep factories, offices and households supplied with electricity. Buying and importing those fuels is driving up costs and may lead to higher electric bills and a further drag on an economy that’s contracted in three of the past four years.

Sarkozy Becomes First French President in 30 Years to Be Ousted (Source: Bloomberg)
Nicolas Sarkozy’s defeat in the French presidential election makes him the first incumbent in more than 30 years to fail to win re-election, and the ninth European leader to be booted out since the region’s debt crisis began. Sanctioned for his flamboyant personal style and slowing economic growth, Sarkozy lost to Socialist Francois Hollande, who got about 52 percent of the vote against 48 percent, polling estimates showed. Sarkozy is the second French president to lose a re-election bid since World War II after former President Valery Giscard d’Estaing was vanquished in 1981. “After 35 years of politics, after 10 years at the highest levels of government, after five years as head of state, I will become a Frenchman among the French,” Sarkozy said last night, conceding defeat.
With joblessness at a 12-year high and public debt at a record, the electorate proved unwilling to forgive the 57-year- old lawyer for foibles such as celebrating his 2007 victory at a chic Paris restaurant and a holiday on a billionaire’s yacht, making the election an anti-Sarkozy vote. “If the French had jobs and more money in their pockets, they’d be confident and ready to forgive,” said Laurent Dubois, a professor at the Institute of Political Studies in Paris.

End of Merkozy Leaves Franco-German Gulf as Greek Voters Rebel (Source: Bloomberg)
Voters in Greece and France challenged austerity as Europe’s sole prescription for the financial crisis, adding pressure on German Chancellor Angela Merkel to broaden her focus from debt reduction to save the 17-nation bloc. Greek elections left the two biggest parties short of the clear majority to keep bailout efforts there on track. In France, Socialist Francois Hollande defeated President Nicolas Sarkozy, Merkel’s preferred partner for enforcing fiscal rigor. “Europe is watching us,” Hollande, 57, told supporters in the central town of Tulle 90 minutes after his victory was announced. “The mission is now mine, to give European construction a growth dimension. That’s what I’ll tell our partners as soon as possible.”
Germany and France, whose leadership in fighting the crisis that began in Greece in 2009 gave rise to the partnership known as “Merkozy,” don’t have much time to patch up rifts between Merkel and Hollande. “To get anything done in Europe, Germany and France have to agree,” said Holger Schmieding, chief economist at Berenberg Bank in London.

Greek Election Gridlock Raises Risk for Bailout, Euro Future (Source: Bloomberg)
Greece’s political leaders struggled to find the support needed to form a coalition government after voters flocked to anti-bailout parties, calling into question the country’s ability to impose the measures needed to guarantee its future in the euro. New Democracy won 20 percent of the total vote with more than 50 percent of the ballots from yesterday’s elections counted at 12:30 a.m., according to the Interior Ministry website. Socialist Pasok, which partnered with New Democracy in securing a second rescue package for the country, trailed in third place with 42 seats. Official projections predicted the two would fall one short of the 151 seats needed to win a majority. Syriza, a coalition of left parties which has vowed to cancel the bailout terms, got 16.1 percent and has 49 seats as the second-biggest party, boosting its showing from the 2009 election nearly four-fold. The new Greek parliament will have three new anti-bailout parties represented.
“The chance of a pro-EU bailout coalition of New Democracy and Pasok is on a knife-edge,” Sarah Hewin, senior economist at Standard Chartered Plc, said in an e-mail. “The scale of opposition is such that even if a pro-bailout coalition can be formed it will be tough for the new government to push ahead with further austerity, risking a halt to EU bailout finance. This test could come within weeks.”

EU to Show Flexibility on Budget-Deficit Rules, Rehn Says (Source: Bloomberg)
European Union Economic and Monetary Affairs Commissioner Olli Rehn indicated the EU would show flexibility in enforcing the bloc’s deficit rules as nations across the region struggle to spur growth as they cut debt. With economies from Spain to the Netherlands sliding into recession, elections tomorrow in France and Greece may highlight concerns that German-led budget cuts aimed at taming the debt crisis could falter. Francois Hollande, the frontrunner in France’s presidential race, has called for more focus on growth in the region’s fiscal pact, while polls in Greece show many voters favor anti-bailout groups promising an end to austerity. “The pact entails considerable scope for judgment, based on economic analysis and its legal provisions, when it comes to its concrete application,” Rehn said today at an event sponsored by the Institute for European Studies in Brussels. The pact ’’implies differentiation among the member states according to their fiscal space and macroeconomic conditions.’’

Budget Surplus Best Defense for Australian Economy, Swan Says (Source: Bloomberg)
Returning Australia’s budget to surplus is the best defense against an uncertain global economic outlook and will continue to support the nation’s top credit ratings, Treasurer Wayne Swan said. Australia’s economy is forecast to return to its trend growth over the next couple of years with a strong outlook for mining investment, Swan said in his weekly economic note today. “Against the uncertain international backdrop, Australia’s fiscal discipline sends a strong message of confidence to the world, demonstrated in our AAA credit rating from all three major international ratings agencies, something never before achieved in our nation’s history,” Swan said.
Prime Minister Julia Gillard is set to unveil on May 8 a budget that seeks to end four years of deficits as support for her government has fallen to near-record lows in opinion polls. The budget comes as the Reserve Bank of Australia cut growth and inflation forecasts this week on slowing inflation after slashing its key rate by half a percentage point to a two-year low.

Philippine Growth Likely Passed 5.2%, Aquino Says (Source: Bloomberg)
The Philippine economy likely grew at least 5.2 percent in the first quarter, the fastest pace in more than a year, according to the nation’s president. “First quarter excluding agriculture, I was told already” indicates a 5.2 percent expansion, President Benigno Aquino said in an interview at Malacanang Palace in Manila May 4. “So far agricultural figures that have been sent my way, the prognosis is it has expanded also -- so it will not serve to bring down the 5.2 but it will probably enhance it.” The official gross domestic product report is scheduled for May 31. The acceleration would bring the Southeast Asian nation nearer to Aquino’s 7 percent target for sustained growth, and underscores forecasts for the central bank to be done cutting interest rates. Aquino, 52, plans to strengthen the economy by stepping up investment, which is currently the second-lowest in Asia relative to GDP, according to Credit Suisse Group AG.
“Manila has been the place to be in early 2012,” Edward Teather, a senior economist in Singapore at UBS AG, wrote in an April 26 research note. “The improved growth data supports our call that the BSP is done easing policy rates,” he wrote, referring to the Bangko Sentral ng Pilipinas. UBS analysts last month boosted their projection for the increase in the country’s GDP this year to 4.5 percent, from 3.3 percent previously.

20120507 1131 Global Commodities Related News.

Hedge Funds Bet Wrong Before Biggest Slump Since October (Source: Bloomberg)
Hedge funds raised bets on higher commodity prices for the first time in six weeks, just before the biggest three-day slump since October as U.S. jobs data fell short of expectations and European manufacturing contracted. Money managers increased net-long positions across 18 U.S. futures and options by 6.9 percent to 895,240 contracts in the week ended May 1, the biggest gain since Feb. 28, Commodity Futures Trading Commission data show. Bullish copper wagers surged sevenfold before prices fell for three days, and soybean bets reached the highest since at least June 2006 as the oilseed capped the biggest weekly loss since mid-January. The Standard & Poor’s GSCI Spot Index of 24 raw materials tumbled 4.9 percent in the three sessions ended May 4, the most since Oct. 4. Reports showed last week that services and manufacturing output shrank last month in the euro region and the U.S. added fewer jobs than forecast in April.
Open interest, or contracts outstanding, across commodities fell 2 percent in the seven se ssions through April 30, the longest slide since November, data compiled by Bloomberg show. “We had some soft data points along the edges that’s taken some of the steam out of the market,” said Kelly Wiesbrock, who helps manage $1.3 billion of assets for San Francisco-based hedge fund Harvest Capital Strategies. “It’s hard to know whether this is a just a little bit of a pause, or if this is something bigger.”

Market Recap: Wheat Futures (Source: CME)
Wheat futures finished mid-range with Chicago down 3 1/2 to 10 1/2 cents, Kansas City down 6 to 8 cents and Minneapolis split with nearbys slightly lower and deferred months slightly higher. Chicago wheat futures were sharply lower for the week. On tap next week is USDA’s Crop Progress/Condition Report Monday and its Supply & Demand Report Thursday. The first of these will reflect a well-advanced crop that is in much better shape than last year. The other report will likely reflect ample domestic and global supplies, opening the door for more pressure on wheat futures.

Wheat Market Recap Report (Source: CME)
July Wheat finished down 6 at 609 1/2, 11 1/4 off the high and 10 up from the low. December Wheat closed down 8 3/4 at 648. This was 8 1/4 up from the low and 13 1/4 off the high. July wheat closed 6 cents lower on the session and down 41 3/4 cents for the week. Weakness in outside market forces and a further sell-off in the other grains plus a sharp break in crude oil and the stock market helped to pressure the market into the mid-session with July wheat trading to a low of 599 1/2. A turn up in corn and a surge higher on old crop corn helped to spark a short-covering bounce off of the lows. Traders see a large production forecast for the US winter wheat production report for next Thursday as the weather remains favorable for high yields. Traders also view the fast start to the spring wheat season as a negative force. The early selling pushed the market down to a new contract low. KC wheat also pushed to new lows for the move and down to the lowest level for the nearby contract since July of 2010. Minneapolis wheat fell to new lows for the move with the nearby contract down to the lowest level since November of 2010. Algeria bought 120,000 tonnes of US hard red winter wheat for May shipment. India is exploring the possibility of exporting as much as 10 million tonnes of wheat from federal stocks to make room for the next crop. Stocks of wheat on April 1st were 53.3 million tonnes which is more than double the buffer stock requirement. Stocks are expected to rise to near 75 million tonnes by June 1st but total storage capacity is thought to be near 63 million. The weak tone from financial markets helped drag milling wheat futures in Europe down 1.76% for the session. July Oats closed down 4 1/2 at 340. This was 1/2 up from the low and 10 off the high.

Large specs may soon reverse their winter wheat stance
--Gavin Maguire is a Reuters market analyst. The views expressed are his own.--
CHICAGO, May 3 (Reuters) - Large speculators have lately built up their largest net short stance in the Kansas City wheat market in close to two years after crop-friendly growing weather throughout recent months looks set to result in a sizeable 2012 winter wheat harvest.
But those traders may be on the verge of reversing their stance. For the past five years they have consistently built long exposure to this market soon after harvest gets underway as softer prices increased demand. And given that cash wheat is already cheaper than cash corn in several key feed-demand centers, and that an early winter wheat harvest looks likely this year, this market's 'seasonal' bottom may come sooner than expected.

GRAINS-Wheat up for 2nd day on short-covering, soy firms
SINGAPORE, May 4 (Reuters) - Chicago wheat rose for a second day  with support from short covering, but the market is on track for its biggest weekly loss since February on expectations of near-record U.S. yields adding to ample global supply.
"I am looking for wheat to go down as a crop tour in the U.S. is finding record yields which will put pressure on the market," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Healthy Kansas wheat seen having record yield
KANSAS CITY, May 3 (Reuters) - Kansas appears to be on track this year to produce its largest hard red winter wheat crop since 2003 with a record yield possible, said crop scouts on Thursday who had just completed this year's annual crop tour that found fields helped by a mild winter and a wet spring.
The crop, which got off to a shaky start in some parts of this leading hard red winter wheat state due to a devastating drought across the southern Plains, is expected to be 46 percent larger than last year's, adding to overflowing global supplies.

Market Recap: Corn Futures (Source: CME)
Bull spreading was the theme of the week, as old-crop futures responded to stepped-up demand and firming basis, while new-crop futures focused on the swift planting pace and beneficial rains across the Corn Belt. For the week, May corn ended 9 1/4 cents above last week's close, with December corn down 14 1/2 cents. Country and Gulf basis levels spiked this week to reflect continued strong demand and tight supplies of old-crop. As a result, traders look for USDA to trim 2011-12 carryover in next Thursday's Supply & Demand Report.

Corn Market Recap for 5/4/2012 (Source: CME)
July Corn finished up 5 3/4 at 620 1/4, 5 3/4 off the high and 16 1/4 up from the low. December Corn closed down 5 1/4 at 524 1/4. This was 9 1/4 up from the low and 5 1/2 off the high. July corn closed 5 3/4 cents higher on the session and managed to close just 5 1/4 cents for the week. A bearish tilt to outside market forces with a firm US dollar and a sharp break in the stock market combined with the weather outlook was enough to keep selling pressure on the corn market early today to drive the market lower. The Midwest looks to receive more rain for the next several days and then a cooler and dry trend for the middle to late part of next week. This is seen as bearish as the crops already planted will receive good moisture and the drier trend next week will allow for a resumption of plantings. Funds were noted sellers again today and the December corn pushed down to the lowest level since March 17th. The strong cash markets and a lack of deliveries against the May corn so far sparked a strong rally in May corn to pull the other months higher late in the day and even December corn pulled up off of the early lows. May corn pushed to the highest level since March 19th. Decatur Illinois cash is bid at 42 cents premium to the July. Private exporters reported the sale of 240,000 tonnes of optional origin corn to Mexico and 116,000 tonnes to South Korea for the 2012/13 season. July Rice finished up 0.02 at 15.205, equal to the high and 0.225 up from the low.

SOFTS-ICE sugar, coffee edge up early, cocoa flat
LONDON, May 4 (Reuters) - ICE raw sugar futures edged up in early trade with prices underpinned by oversold indicators and expectation physical demand may pick-up after a fall in prices to a one-year low earlier this week, dealers said.
Raw sugar futures on ICE  were slightly higher.

India seen exporting 4 mln T sugar this year
NEW DELHI/SINGAPORE, May 3 (Reuters) - India might export only another 1 million tonnes of sugar now New Delhi has freed up overseas sales given unattractive prices, bringing total shipments to 4 million tonnes this year in an over supplied global market, trade and government sources said.
India, the world's top consumer and the No.2 producer behind Brazil, freed up sugar exports on Wednesday due to strong production and low local prices, sending New York futures to one-year lows on fears of a flood of exports.

Brazil cane crush starts slow in rainy harvest
BRASILIA, May 3 (Reuters) - Cane crushing in world top sugar producer Brazil reached 4.74 million tonnes by April 15, cane industry association Unica said on Thursday, behind the 6.99 million tonnes crushed by this time last year due to a late start to the harvest.
Sugar output of 152,000 tonnes was behind the 214,000 tonnes produced by this time last year as a result. The 2012/13 crop started officially on April 1 and analysts are hoping for a moderate recovery after last year's disappointing crop.

India proposes setting up sovereign fund to buy coal assets abroad -min
NEW DELHI, May 4 (Reuters) - India's coal ministry has proposed setting up a sovereign wealth fund to buy coal assets abroad, Coal Minister Sriprakash Jaiswal said on Friday.
Coal accounts for more than half of India's power generation and will be required for 85 percent of the 76,000 megawatts additional capacity targeted in the next five years.  

Euro Coal-Prices stabilise after 5 days of falls
LONDON, May 3 (Reuters) - European coal prices stabilised on Thursday as two-year low levels earlier in the week led to some fresh buying by utilities and traders.
Prompt South African prices recovered slightly, having traded on Wednesday at the lowest level since October 2010 at $97.00 FOB Richards Bay.

OIL-Brent steady above $116; set for steepest weekly fall since Dec
SINGAPORE, May 4 (Reuters) - Brent crude held above $116 per barrel on Friday ahead of a key U.S. payrolls report, with the benchmark poised for its steepest weekly fall since December due to concerns over the health of the global economy and easing supply disruption fears.  
"What we are seeing today is prices trading in a tight span, in a holding pattern, ahead of the jobs data," said Victor Shum, senior partner at oil consultancy Purvin & Gertz.

Oil Falls to Four-Month Low on European Votes, U.S. Jobs (Source: Bloomberg)
Oil fell to the lowest level in more than four months after European elections stoked speculation austerity efforts will be derailed and weaker-than-expected jobs data underscored concern the U.S. economy may falter. Futures slumped as much as 3.2 percent to the lowest intraday price since December 20, extending a 4 percent drop on May 4 after U.S. payrolls rose by the least in six months. Euro- region services and manufacturing output contracted in April, a purchasing managers index showed. Crude also slid after France elected Socialist Francois Hollande as president and Greek voters flocked to anti-bailout parties. “It’s a confluence of factors dragging oil markets lower,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “Weaker-than-expected jobless numbers and weak services PMI clearly rattled markets as did the Greek and French election results.”
Crude for June delivery plunged as much as $3.15 to $95.34 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.56 at 12:41 p.m. Sydney time. The contract decreased $4.05 to $98.49 on May 4, the lowest close since February 7. Prices slipped 6.1 percent last week, the biggest weekly drop since September.

Iron Ore-Shanghai rebar falls for third week in a row
SINGAPORE, May 4 (Reuters) - Shanghai steel futures ticked higher on Friday, but posted a weekly loss for a third straight week amid slow Chinese demand, which has trapped iron ore prices in tight ranges over the past two weeks.
Despite sluggish steel demand in China, the world's biggest consumer and producer, the country's steel output remains high as mills tend to continue to produce more, even at thin margins, unless they see prices dropping sharply and on a sustained basis.

Indonesia to impose tax, curbs on raw metal exports
JAKARTA, May 3 (Reuters) - Indonesia will impose a new export tax on metal ores and prohibit the shipment of raw minerals unless miners submit plans to build smelters, in a decision likely to shake up mining in one of the world's major metals exporters.
The tax is an average 20 percent duty on 14 mineral ore exports including copper, gold and nickel from Sunday, slightly lower than expected but enough to hurt miners in Southeast Asia's biggest economy.

China steel mills too big to fail - or succeed
HANCHENG, China, May 3 (Reuters) - In a ramshackle township in northwest China's Shaanxi province, red Communist Party banners call on a nearby steel mill's workers to seek "progress" and avoid making "backward steps".
The slogans demonstrate the hybrid nature of China's floundering steel sector, which as it tries to serve the twin masters of the state and the market has seen margins plummet and racked up a mountain of debt.

Baltic sea index rises on higher capesize rates
May 3 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Thursday after a three-day losing streak as rates for larger capesizes rose.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, gained eight points or 0.7 percent to 1,157 points.

Asia Dry Bulk-Rates to fall on increasing tonnage supply
SINGAPORE, May 3 (Reuters) - Rates for panamax dry bulk carriers on key Asian freight routes are expected to fall next week with an increasing amount of tonnage weighing on an already oversupplied market, ship brokers said on Thursday.
The rate for panamax vessels travelling via the transpacific route dropped 6 percent to a 12-day low of $11,581 a day on Wednesday from $12,321 last week on ample vessel supplies and limited demand.

20120507 1130 Soy Oil & Palm Oil Related News.

Reuters Survey :
Malaysia Apr 2012 Crude Palm Oil
- Exports seen up 4.3% at 1.4 million tonnes from Mar 2012
- Stocks seen down 7% at 1.82 million tonnes from Mar 2012
- Output seen up 6.1% at 1.29 million tonnes from Mar 2012

VEGOILS-Palm oil edges up; economic fears weigh
SINGAPORE, May 4 (Reuters) - Malaysian palm oil futures inched up on the back of short-covering ahead of the weekend, but the contract is on course for its worst weekly loss since November as investors remain worried about the health of the global economy.
"There was a sell down early in the morning, but then prices pushed back up. Today is Friday so we expect a bit of short-covering in the market," said a trader with a foreign commodities brokerage in Malaysia.

Argentina exchange chops soy view to 41 mln tonnes
BUENOS AIRES, May 3 (Reuters) - A leading Argentine grains exchange slashed another 2 million tonnes off its forecast for 2011/12 soy production on Thursday due to the impact of bad weather including a sharp drought that has battered yields.
The Buenos Aires Grains Exchange cut its forecast for the harvest in the world's No. 3 soybean exporter to 41 million tonnes -- 17 percent below the previous year's crop of 49.2 million tonnes.

Market Recap: Soybean Futures  (Source: CME)
Soybean futures finished a highly volatile day of trade with a mixed to mostly firmer tone. Old-crop soybean futures posted weekly losses after hitting fresh contracts highs earlier in the week, while new-crop contracts ended slightly higher for the week. Traders' focus will be split in several directions next week. Fundamentally, attention will remain on China to see if the recent buying binge continues. Also, USDA will give traders the first "official" look at the 2012-13 balance sheet next Friday.

Soybean Complex Market Recap  (Source: CME)
July Soybeans finished up 4 3/4 at 1478 1/4, 3 off the high and 20 1/4 up from the low. November Soybeans closed down 1 at 1366 3/4. This was 14 3/4 up from the low and 6 1/4 off the high. July Soymeal closed up 6.2 at 432.6. This was 8.4 up from the low and 0.4 off the high. July Soybean Oil finished down 0.51 at 53.65, 0.75 off the high and 0.24 up from the low. July soybeans closed 4 3/4 cents higher on the session and closed 15 1/4 cents lower for the week. The lower close on the week after posting a contract high is seen as a negative technical development by some traders. Traders will be monitoring the weekly COT report this afternoon as the fund net long position has been at a record high for the last few weeks. The market saw some choppy trade early but a continued long liquidation selling trend emerged into the mid-session to push the market moderately lower on the day into the mid-session. Traders view the weather outlook as a negative force with 1-3 inches of rain this week for a wide portion of the Midwest which is helping to alleviate any dry spots ahead of the key growing season. July soybeans are already down as much as 54 1/2 cents from Wednesday's peak. Weakness in palm oil in the last two sessions helped to push soybean oil sharply lower with December oil pulling back to the lowest level since March 8th. Traders see canola stocks near a 4-year low for the Stats Canada stocks report for Monday. Private exporters reported the sale of 120,000 tonnes of US soybeans to unknown destination for the 2012/13 season.

Inflation fear raised as UN agency cuts soybean output forecast
MILAN, May 3 (Reuters) - World output of key animal feed ingredient soybeans is set to tumble in 2011/12, with prices poised for fresh highs, the United Nations food agency said, showing the resilience of inflation trends fanned by three months of rising food costs.
Record high food prices in February last year helped fuel the Arab Spring uprisings in the Middle East and North Africa. Prices receded in the second half of 2011 but the uptrend resumed in January.

Soy Traders Most Bullish Since March as Drought Cut Crops (Source: Bloomberg)
Soybean traders are the most bullish in seven weeks as drought damage to crops in Argentina and Brazil boosts demand for supplies from the U.S., the biggest producer of the oilseed. Sixteen of 24 analysts surveyed by Bloomberg expect prices to gain next week and one was neutral, the highest proportion since March 16. Soybean futures reached $15.125 a bushel this week, the highest since July 2008. Hedge funds are making the biggest bet on rising prices since at least June 2006, data from the Commodity Futures Trading Commission show. The U.S. Department of Agriculture has announced daily sales of at least 100,000 metric tons of soybeans 10 times since the start of April, dominated by purchases from China. Archer Daniels Midland Co., the largest grain processor, told analysts this week that it would be “difficult to buy beans going forward” because of declining South American exports.
“As the soybean supply in Brazil is running out, that is forcing the Chinese to return to the U.S.,” said Chris Gadd, an analyst at Macquarie Group Ltd. in London. “You’d expect to see continued strength in U.S. exports.” Soybeans rose 22 percent to $14.685 on the Chicago Board of Trade this year, rebounding from last year’s 14 percent slump. The Standard & Poor’s GSCI gauge of 24 raw materials climbed 1.1 percent as the MSCI All-Country World Index (MXWD) of equities added 7.5 percent. Treasuries returned 0.2 percent, a Bank of America Corp. index shows.

Biggest Consumer
China, the world’s biggest soybean consumer, bought 921,642 tons of U.S. soybeans in the four weeks ended April 26, nearly triple the amount in the same period in 2011, the USDA said yesterday. It’s booked 7.121 million tons of soybeans for shipment in the next crop year, 21 percent more than at this time last year, USDA data show. Prices may match the record $16.3675 set in 2008 this quarter, Erin FitzPatrick, an analyst at Rabobank International in London, wrote in an e-mail April 30. UBS AG raised on April 26 its forecast for this quarter’s average price to $14.227 from $12.70. Oil World, a research company in Hamburg, cut its prediction for global production to 238.1 million tons on May 1, 10 percent less than a year earlier.
Viterra Inc., a grain handler based in Regina, Canada, said last week that oilseed supplies may be limited through the next growing season that begins Sept. 1. ADM Chief Risk Officer Craig Huss said on a conference call May 1 that South American exports would decline as countries “rationalize what they have.”

Argentina’s Crop
The jump in prices is already curbing demand, according to Oil World. Consumption will climb 1.4 percent this season, compared with a 6.3 percent expansion a year earlier, the company forecast in a report dated April 27. “We’re starting to see a bit of demand destruction at these levels,” said FitzPatrick of Rabobank. “We still don’t have a good handle on what Argentina’s crop is going to be and how many acres will be planted in the U.S. The degree of how much we’ll need to ration demand will be based on these crop sizes, and that still isn’t clear yet.” U.S. soybean planting probably will be 1.8 million acres more than the 73.9 million projected by the USDA on March 30, according to Rabobank. The U.S. planted 74.98 million acres last year. The USDA updates its estimate on June 29.
World soybean production may drop to 240 million tons this season, 9.5 percent less than a year earlier, the United Nations’ Food & Agriculture Organization said in a report yesterday. South American output will decline 14 percent after dry weather in Brazil, Argentina and Paraguay “decimated yields,” the FAO said.

ICE Futures U.S.
In other commodities, 15 of 24 people surveyed by Bloomberg anticipate higher corn prices next week. The grain slipped 5.4 percent to $6.1175 a bushel this year in Chicago. Five of 12 people surveyed said raw sugar will fall next week three were neutral. The commodity dropped 11 percent this year to 20.84 cents a pound on ICE Futures U.S. in New York. Ten of 23 traders and analysts surveyed expect copper to decline next week and six were neutral. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, rose 7.6 percent to $8,174 a ton this year. Gold futures on the Comex in New York increased 4.8 percent to $1,642.10 an ounce this year. Prices gained the previous 11 years and holdings in gold-backed exchange-traded products are about 1.2 percent below the record 2,410.2 tons set March 13, data compiled by Bloomberg show. Fifteen of 28 traders and analysts surveyed by Bloomberg said gold would climb next week and five were neutral.

Goldman Sachs
Money managers cut wagers on higher prices across 18 commodities by 29 percent in the past two months, according to data compiled by Bloomberg. Goldman Sachs Group Inc.’s analysts, led by Jeffrey Currie in New York, said in a report April 24 they expect raw materials to return 13 percent over the next 12 months. Combined open interest, or contracts outstanding, across the 24 commodities in the S&P GSCI rose 17 percent this year, data compiled by Bloomberg show. “The global recovery will gain in pace later this year and next, but we expect more temporary setbacks in the short to medium term,” said Filip Petersson, an analyst at SEB AB in Stockholm. “That may actually offer good opportunities to buy commodities.”