Thursday, May 10, 2012

20120510 1825 FCPO EOD Daily Chart Study.

FCPO closed : 3349, changed : +14 points, volume : higher.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller lock in profit.
Support :  3330, 3300, 3270, 3250 level.
Resistance : 3350, 3380, 3420, 3450 level.
Comment :
FCPO closed little higher with better volume changed hand. Soy oil price currently rebounding higher after overnight closed recorded loss while crude oil price registering loss.
Price swing wildly today after MPOB data shows lower inventory level followed by downward dive after SGS cargo surveyor reported substantial drop in export and lastly price closed at opening price formed a doji bar candle as traders awaits USDA report.
Daily chart study suggesting a pullback correction downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120510 1745 FKLI EOD Daily Chart Study.

FKLI closed : 1583 changed : +5 points, volume : higher.
Bollinger band reading : side way range bound little downside biased.
MACD Histogram : turned upward again, seller closing position.
Support : 1580, 1570, 1565, 1550 level.
Resistance : 1590, 1595, 1600, 1605 level.
Comment :
FKLI closed recovered higher with little improved volume changed hand doing 5 points discount compare to cash market that closed little higher. Overnight U.S. markets closed recorded loss for the 6th strait day and today Asia markets ended mixed while European markets currently trading little lower.
Global markets traded in mixed development on current Europe political turmoil, missed economists estimate China exports data that soars 4.9% and some Asia major companies raise earnings forecast.
Technical chart reading remained suggesting a side way range bound little downside 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.

20120510 1718 Regional Markets EOD Daily Chart Study.

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

20120510 1653 China Trade Data by Reuters

China risks fresh demand downturn, trade data shows
(Reuters) - China risks a fresh downturn in demand for goods from its massive factory sector, with weaker than expected exports and stalling headline import growth signaling that government spending is the crucial factor keeping the economy moving. Annual growth in imports in April was just 0.3 percent, far below forecasts of an 11 percent increase, while exports managed growth of just 4.9 percent versus expectations of 8.5 percent, customs data on Thursday showed. Shipments to emerging economies experienced a drop alongside well-flagged European weakness. "We know the external climate is not particularly conducive to strong export growth and digging into the data you can see primarily it is a euro zone story, which is to be expected," Alistair Thornton, China economist at IHS Global Insight in Beijing, told Reuters.
"But the headline number on import growth is less expected and more worrying. It does point to a real weakness in the domestic economy and shows that we have not yet turned the corner into a sustained recovery." The risks to China's factory-focused economy of weakness in private sector final demand were underscored by a drop-off in shipments from Asian economies that feed China's export-oriented assembly lines, while robust imports from Australia and solid annual volume growth in raw material imports indicate that state-led infrastructure spending underpins economic activity. Asian shares lost ground after the numbers and the Australian dollar, sensitive to expected demand from the biggest market for the country's commodities, pared gains made following strong local jobs data.

The question now being asked by investors is whether the Chinese government, which has ramped up spending on social housing and basic infrastructure as part of its pro-growth policy bias since the autumn of 2011, should take further steps. "At the moment the evidence is not yet decisive enough to say that the government needs to do more," Wang Tao, China economist at UBS in Hong Kong, said. Calendar-adjusted month-on-month export growth was 9.4 percent while imports rose 7.3 percent on the same basis. Year over year, the growth rates were 7.2 percent and 4.8 percent, respectively - a sign that demand at home and abroad might not be as bad as the headline data implies. "We think government easing has already been coming through in social housing construction and infrastructure spending," Wang said, adding that the gathering consensus view that China's economy had bottomed out remained valid.
Other economists agreed that Thursday's data alone was insufficient to trigger fresh easing steps, such as a quick cut to the reserve ratio requirements (RRR) for banks that would give them more money to lend. "It doesn't change much for monetary policy," Yao Wei, China economist at Societe Generale in Hong Kong, said. "The PBOC is experimenting with a new approach to manage liquidity. Instead of using required reserve ratio cuts, they are conducting reverse repos, which gives them more flexibility. I don't think this report changes the outlook that much." China has cut RRR by 100 basis points from a record high of 21.5 percent in two steps, the last a 50 bps cut in February. The market consensus is for 150 bps of more RRR cuts this year, according to the benchmark Reuters poll.
Arguing against an emergency RRR cut is that the slide in import growth was in part caused by a sharp year-on-year drop in commodity prices - the widely-tracked Thomson Reuters-Jefferies CRB index is down about 17.4 percent year on year - left a hefty trade surplus of $18.4 billion, which is a key component in money supply growth which is targeted at 14 percent in 2012. China's policymakers, while keen to support growth, are equally determined to ensure that stimulative policies do not rekindle inflation that is back under control and below the official 4 percent target after a two-year tightening campaign. Still, some analysts argued that more action may be needed. "There is weakness in domestic demand and that should be a wake-up to policymakers to do more to stimulate domestic demand," Darius Kowalczyk, an economist at Credit Agricole-CIB in Hong Kong, said. "Domestic demand is weak and that means we could see GDP growth start to slow."
China is likely to see its slowest year of economic growth in a decade in 2012, according to the consensus forecast of 8.4 percent in a Reuters poll.

Trade was the first of a flurry of economic indicators to be released this week - inflation, producer prices, industrial output, fixed asset investment and retail sales are all due on Friday - which had been expected to show a month-on-month improvement in both foreign and domestic demand. Trade figures from the second quarter tend to give a clearer picture of the emerging trend for the year, given the volatility in first-quarter numbers distorted annually by shifts in the Lunar New Year holidays. But there are signs that the final numbers released on Thursday have caught policymakers wrong-footed. "As recently as April 27, Premier Wen Jiabao said that China's export and import growth had picked up to 12.7 percent and 8.3 percent year-on-year for the period April 11-20. The full-month data released today is much weaker than that, putting further pressure on authorities to loosen policy," economists at Nomura said in a note to clients.
Hurt by a recession in Europe and a patchy economic recovery in the United States - China's two biggest trading partners -export growth has slumped to single-digit levels this year, a long way from growth of more than 20 percent seen in 2010. The just-concluded Canton Fair, a bi-annual export trade fair widely considered a barometer of China's export growth, saw the value of signed export deals shrink 2.3 percent from a year ago, the first annual drop since the global financial crisis, which has fanned worries over the strength of world demand. China's export sector dragged on the economy in the first quarter of 2012, with net exports subtracting 0.8 percentage points from GDP, which grew at its slowest annual rate in nearly three years at 8.1 percent. China's manufacturers had shown signs of improvement in April, with export orders ticking up and output gathering pace among bigger plants in the country's vast factory sector, according to surveys of purchasing managers last week.
"What the PMI is definitely telling us is that things are getting better, but what the PMI never tells us is where things are getting better from," Thornton at IHS said. "There's a lot of fluidity here. Whether you could draw a sharp line under Q1 and say it was the weakest is up for debate. I think Q1 and Q2 will be weaker than Q3 and Q4. We're just waiting to see how that plays out. We are at the bottom I think and things are looking like they will start to turn, but they clearly haven't turned that quickly."

20120510 1651 Global Market & Commodities Related News.

Asian shares struggled, as a weak Chinese trade data stoked fears of a growth slowdown and further undermined risk appetite already reduced by worries about the health of Spanish banks and deepening political chaos in Greece. U.S. stocks fell for the fifth day in six on Wednesday as investors kept their focus on the turmoil in Europe, but news that Greece will receive its latest debt bailout payment helped cut losses late in the session.

The euro wallowed near a 3 1/2-month low against the dollar as political deadlock in Greece threatens its rescue deal and raises the spectre of the country risking insovency and leaving the euro zone.

FOREX-Euro wallows at 3 1/2-month low on Greek deadlock
TOKYO, May 10 (Reuters) - The euro wallowed near a 3 1/2-month low against the dollar on Thursday as political deadlock in Greece threatens its rescue deal and raises the spectre of the country risking insovency and leaving the euro zone.
"Uncertainty over Greece is going to weigh on markets," said Sumino Kamei, senior currency analyst at the Bank of Tokyo Mitsubishi UFJ.

USDA to see global grain stocks on rise at last-analysts
Global stockpiles of corn and soybeans are set to rise next autumn after years of thinning inventories, the U.S. Agriculture Department was expected to say on Thursday, offering hope for a break in the cycle of surging food prices.

Labor strike to hit Argentina's key grain port
Workers at most of the installations at Argentina's key grains port, Rosario, will start an indefinite pay strike beginning on Thursday, an official with the country's CGT labor federation said.

Philippines says Q1 farm output up 1.08 pct on yr
The Philippines' agricultural output in the first quarter grew 1.08 percent from a year earlier as favourable weather boosted crop harvests and with higher livestock and poultry production, the farm minister said on Thursday.

Chicago soybean futures edged higher, after three days of losses, ahead of a key U.S. government report expected to show a further reduction in South American supply estimates due to a severe drought.

Brent crude slipped below $113, after weaker-than-expected Chinese trade data that raised concerns over energy demand at the world's second-largest oil consumer.

COLUMN-Rising zinc stocks a double-edged sword
--Andy Home is a Reuters columnist. The opinions expressed are his own--
LONDON, May 9 (Reuters) - Surplus zinc is once again flooding into London Metal Exchange (LME) warehouses, 30,450 tonnes of
it arriving in the last couple of weeks.
Exchange-registered inventory of 936,650 tonnes is now the highest it's been since 1995, an era of chronic oversupply and what turned out to be disastrous attempts to control the price.

Australia's Northern Iron surges on Indian bid report
May 10 (Reuters) - India's Aditya Birla group has submitted a non-binding bid for  A ustralian-  listed i ron ore miner Northern Iron Ltd , a newspaper report said, sending shares of the target firm up 19 percent to a six month high.
Northern Iron, which has operational mines in Norway with an annual production capacity of 2.2 million tonnes of iron ore, is expecting a valuation of about $500 million, the Economic Times reported on Thursday, citing people with direct knowledge of the situation.

China April iron ore imports falls 8 pct to six-mth low
China's iron ore imports slid to a six-month low of 57.69 million tonnes in April, down 8 percent from a month earlier, as the world's top buyer of the commodity cut purchases due to falling steel prices and margins.

Baosteel keeps steel product prices unchanged for June
SHANGHAI, May 9 (Reuters) - China's Baoshan Iron & Steel Co  will keep the prices of its main steel products unchanged for June, the company said on Wednesday, reflecting its caution on steel demand growth in the world's second-largest economy.
The country's biggest listed steelmaker has kept prices unchanged for the third consecutive month. Baosteel's pricing moves are regarded as a bellwether for the industry.

Copper futures rose, bouncing off the previous session's three-week lows as some Chinese investors took advantage of the dip in prices to cover short positions and restock.

China April copper imports drop 19 pct to 8-month low
HONG KONG, May 10 (Reuters) - China's copper imports fell 18.8 percent to an 8-month low in April, preliminary official data showed on Thursday, as a plentiful supply of the metal in the world's top copper consumer curbed its purchases on the international market.
The monthly drop had been broadly expected and copper prices showed little strong reaction, while April imports were still 42.9 percent higher than a year ago.

Rio Tinto backs iron ore in dicey global environment
BRISBANE, May 10 (Reuters) - Rio Tinto  has turned cautious, shoring up capital and focusing on a narrow range of expansion projects in the face of global uncertainty, though the world's No.3 miner said it was slightly more upbeat about the outlook than six months ago.
At its annual meeting in Australia on Thursday, its chairman fended off pleas from shareholders for share buybacks and higher dividends saying Rio Tinto did not want to repeat what happened during the global financial crisis, when it had to row back on expansions while trying to slash $40 billion in debt it took on with the top-of-the-market takeover of Alcan.

China April iron ore imports falls 8 pct to six-mth low
SHANGHAI, May 10 (Reuters) - China's iron ore imports slid to a six-month low of 57.69 million tonnes in April, down 8 percent from a month earlier, as the world's top buyer of the commodity cut purchases due to falling steel prices and margins.
Total imports for the first four months stood at 244.6 million tonnes, up 6.5 percent from a year ago, preliminary data from China's customs showed on Thursday.

Gold struggled to make headway after three straight sessions of losses, with investors still worried about political deadlock in Greece and problems in Spain's banking sector.

METALS-Copper up on technicals; China buys on dip
SHANGHAI, May 10 (Reuters) - Copper futures rose on Thursday, bouncing off the previous session's three-week lows as some Chinese investors took advantage of the dip in prices to cover short positions and restock.
"Prices are still consolidating within small ranges today. London copper fell close to its technical support at $7,800 yesterday, which gave it a rebound momentum in this session," said China Futures Co. analyst Yang Jun.

PRECIOUS-Gold struggles as Europe concerns grip investors
SINGAPORE, May 10 (Reuters) - Gold struggled to make headway on Thursday after three straight sessions of losses, with investors still worried about political deadlock in Greece and problems in Spain's banking sector.
"There are not many good reasons to sell gold or other precious metals," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank. "It is risk-off selling in everything but dollar and yen."

20120510 1127 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares ease on worries over Spanish banks, Greek chaos
TOKYO, May 10 (Reuters) - Asian shares fell for a sixth straight session on Thursday, with sentiment taking a further hit from mounting worries about the health of Spanish banks while deepening political chaos in Greece seemed to put it at risk of insolvency and a euro exit.
"Greek and European issues remain at the forefront," said analysts at Barclays Capital in a note. "However, it appears that political uncertainty is here to stay, and that, combined with weak economic prospects, should keep market concerns elevated. We remain EUR bears," they said, adding that barring a rise in financial sector risks the euro's fall would be gradual.

COMMODITIES-Brent oil up, most others down; focus on Europe
NEW YORK, May 9 (Reuters) - Copper hit a three-week bottom o n W ednesday and gold and a number of agricultural markets closed lower on nagging fears about an economic slowdown in Europe, but the commodities selloff eased somewhat as bargain hunters lifted battered Brent oil prices.
"You're seeing significant economic forces within the European Union slip into recession ... that causes problems for a Chinese economy that is all about growth, and really can't handle any set-backs," said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.  

Australia gets reality check on commodities
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, May 9 (Reuters) - There is a creeping realisation inside Australia that the nation's commodities boom is becoming harder work, with project costs blowing out and questions over whether there will be enough demand from Asia.
Australia's economic success of the past decade and its hopes for future wealth are built on the appetite of Asia, and China in particular, for iron ore, liquefied natural gas, coal and other commodities.

Cautious European refiners cut April stocks
LONDON, May 9 (Reuters) - Cautious European refiners cut crude oil and product stocks in April to near four-year lows in the face of weak demand and high feedstock costs which have continued to pressure margins, forcing some to idle units, particularly in the Mediterranean.
European crude and oil products stocks fell 0.4 percent month-on-month to 1,071.06 million barrels at the end of April, with declines in crude oil, middle distillates and fuel oil, data from industry monitor Euroilstock showed on Wednesday.

OIL-Brent rises on Greece bailout payment, technicals
NEW YORK, May 9 (Reuters) - Brent crude futures climbed back into positive territory in late trading o n W ednesday, snapping five days of losses after approval of a bailout payment to Greece eased worries about euro zone debt.
"Brent keeps stalling and finding resistance trying to get back to its 200-day moving average and U.S. crude is running into support and can't make a decisive move below its 200-day average," said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania.  

NATURAL GAS-US natgas futures end up 3 pct, third straight gain
NEW YORK, May 9 (Reuters) - U.S. natural gas futures powered higher o n Wednesday for a third straight day amid expectations for a supportive weekly inventory report on Thursday and on signs a tighter market may offset milder weather this weak that has slowed demand.
"We're looking at this as technical momentum, though it's not without fresh reminders of last week's weather drag on injection size at a time of sharp coal displacement," Gelber & Associates analyst Pax Saunders said in a report.

EURO COAL-Trades 50c higher but bids drop to $84/T
LONDON, May 9 (Reuters) - European prompt physical coal prices were little changed on Wednesday, having touched fresh two-year lows the previous day, traders and utilities said.
"Global thermal coal markets experienced increased pressure and disruption from the boom in shale gas production in the U.S.," commodities giant Glencore said in its Q1 production report issued on Wednesday.

20120510 0944 Local & Global Economy Related News.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed expects electrical and electronic (E&E) product exports to recover in 2H12 based on feedback from E&E companies on the book-to-bill and consensus. He said E&E product exports decreased slightly by 1.7% yoy in 1Q12. He added that the country is on track to meet 5-6% export growth target for full year. (Bernama, Bloomberg)

Malaysia expects total trade with fellow members of the Organisation of Islamic Cooperation (OIC) to grow by double digits this year from the RM146.15bn last year (RM115.87bn in 2010), said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. Total exports to OIC member rose 14% to RM76.33bn last year while total imports also increased by 27% to RM69.85bn. (Starbiz)

Based on the latest economic indicators, Malaysia's economy is on a stable foundation and this is expected to continue in 2H12, the Dewan Negara was told Wednesday. Deputy Finance Minister Datuk Dr Awang Adek Hussein said between Jan and Feb this year, exports rose 7.1% yoy while imports grew 10.2% yoy. The industrial production index, meanwhile, expanded by 3.8% yoy in the same period. Awang Adek said on the same date the Kuala Lumpur Composite Index (KLCI) was at a higher level at 1,579 pts against 1,530 pts at end-Dec last year. (Bernama)

The government is looking into raising the minimum threshold of debt for a bankruptcy petition to be issued against someone from RM30,000 to RM50,000. Deputy Minister in the Prime Minister's Department Datuk Liew Vui Keong said these are among amendments that the Insolvency Department proposes towards renewing the existing legislation. Based on Insolvency Department records from 2007 till Mar this year, the department has administered 85,175 bankruptcy cases. Of the total, 20,374 or 23.9% are from private sectors, 10,203 (12%) from the business sector, 7,134 (8.4%) are self-employed people, 2,482 (2.9%) professionals, 2,345 (2.8%) from the public sector, 2,300 (2.7%) were unemployed, 535 (0.6%) government pensioners, 128 (0.2%) from the entertainment sector, 139 (0.2%) students, 36 (0.04%) athletes, and 39,499 (46.4%) were from other sectors, said Liew at the Dewan Negara yesterday. Liew explained that among reasons for bankruptcy were defaulting on car hire purchase loans (21,796 cases), other debts (15,827 cases), personal loans (12,547) and housing loans (12,098). (The Sun)

Malaysia: Exports unexpectedly fall, supporting case to hold rate
Malaysia’s exports unexpectedly fell in March as manufacturers shipped fewer electrical and electronics products, bolstering the case for the central bank to hold off from interest-rate increases. Overseas shipments fell 0.1% to RM61.79bn (USD20bn) from a year earlier after gaining 14.5% in February, according to a Trade Ministry statement yesterday. Malaysia’s imports rose 1.6% in March from a year earlier. The trade surplus narrowed to RM10.45bn from RM10.58bn in February. (Bloomberg)

Indonesia’s government is pessimistic about this year’s economic growth of 6.5%, if exports continue to perform below the target of 10%. (IFT)

Thailand's foreign debt rose to a record high of US$119bn or THB3.6tr in Mar, but the Bank of Thailand insists the country's external exposure is balanced by asset holdings, such as trade receivables or foreign-exchange hedging contracts. (The Nation)

China's ruling Communist Party is seriously considering a delay in its upcoming five-yearly congress by a few months amid internal debate over the size and makeup of its top decision-making body as the party struggles to finalize a once-in-a-decade leadership change. (Reuters)

China will cut fuel prices by 3.6% or Rmb330 to Rmb8,850 a tonne from 10 May, following a retreat in global crude costs and amid concerns over inflation. (AFP)

China: China Investment stops buying European debt on crisis concerns
China Investment Corp has stopped buying European government debt because of an economic crisis on the continent, though it continues to look for new investments there, said CIC President GaoXiqing. “What is happening in Europe right now is of course of concern,” Gao said yesterday in an interview. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.”European leaders are struggling to contain a debt crisis that has entered its third year and led to bailouts of Greece, Portugal and Ireland. (Bloomberg)

Japan’s foreign reserves edged up to US$1.290tr in Apr (US$1.289tr in Mar), posting the first rise in 3 months buoyed by higher prices of US Treasuries. (Bloomberg, MNI)

Japan’s leading index rose to 96.6 in Mar from 96.3 in Feb. Economists had forecast the reading to rise to 96.9. The coincident index improved to 96.5 in Mar (95 in Feb), ahead of market expectations of 96.2. (Bloomberg, RTT News)

The Mortgage Bankers Association’s seasonally-adjusted index of mortgage application activity gained 1.7% in the week ended 4 May. Refinance applications rose 1.3% in the week with the four-week average up 1.8%. Rates moved mostly lower with 30-year conforming loans down 4bp to 4.01%. (Bloomberg, Reuters)

The eurozone has blocked €1bn out of €5.2bn in bailout loans for Greece until 14 May amid uncertainty over the country's political future, a European government source said. (Reuters)

The head of the European Commission said that there would be no re-negotiation of a pact that would oblige 25 EU states to aim for balanced budgets. Asked whether there could be a re-negotiation of the fiscal treaty, as demanded by incoming French president Francois Hollande, Jose Manuel Barroso replied "No." A meeting of European Union leaders has been called for May 23, at which debate on how best to boost growth is expected to feature heavily. (Channel News Asia)

EU: Greece Euro-exit debate goes public as officials air concerns
From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro. Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes. After EUR386bn (USD499bn) in aid pledges for Greece, Ireland and Portugal, EUR214bn in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase. (Bloomberg)

UK: Retail sales plunge as BOE begins crucial meeting
UK retail sales fell the most in more than a year last month as poor weather and consumer caution on spending curbed demand at stores. Sales at stores open at least 12 months, measured by value, declined 3.3% from a year earlier, the London-based British Retail Consortium said yesterday. That’s the biggest monthly drop since March 2011. Including stores open less than 12 months, sales decreased 1%. With Britain suffering its first double-dip recession since 1975, the Bank of England’s Monetary Policy Committee will decide tomorrow whether to add more stimulus to its existing GBP325bn (USD524bn) of bond purchases. (Bloomberg)

US: Job openings rise to highest level since 2008
Employers in the US were seeking to fill more jobs in March than at any time in almost four years, showing growing confidence in the US economy. The number of open positions increased by 172,000 to 3.74m, the most since July 2008, from a revised 3.57m the prior month that was larger than previously estimated, the Labor Department said yesterday. Another report showed small companies were more optimistic on their outlook. More vacancies are a sign American companies were planning to expand at the end of the first quarter, undaunted by the jump in fuel costs or concerns that global economic growth will slow. (Bloomberg)

US wholesale inventories increased 0.3% mom to a record US$480.4bn in Mar (+0.9% in Feb), that suggested a downward revision to the initial first-quarter growth estimate. (Reuters)

Dow Falls 6th Day in longest slump since August on Greece
The Dow Jones Industrial Average declined for a sixth straight day amid concern Greece’s debt crisis is worsening as the nation struggles to form a coalition government. The Standard & Poor’s 500 Index fell 0.7% to 1,354.58, a two-month low while the Dow slid 97.03 pts, or 0.8%, to 12,835.06. It had the longest slump since August last year, three days before S&P stripped the US of its AAA credit rating. Global stocks fell as Greece’s political turmoil looks set to enter a fourth day with coalition talks deadlocked. The standoff has reignited concerns over its ability to hold to the terms of its two bailouts negotiated since May 2010. With Parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro. (Bloomberg)

20120510 0943 Malaysia Corporate Related News.

Shell Malaysia to divest LPG ops to Oman’s National Gas
Shell Malaysia Trading SdnBhd (SMTSB) has signed a sale and purchase agreement with Oman's National Gas Co SAOG (NGC) to divest its liquefied petroleum gas (LPG) business in Peninsular Malaysia to the latter at an undisclosed amount. SMTSB managing director Tuan Haji Azman Ismail said the divestment was part of its strategy to concentrate on other businesses and streamlined its downstream business. Azman said the divestment underwent a thorough tender process for about a year and NGC succeeded based on its competitive bid. He said the sale of its LPG business would not affect other businesses and the handover would be a “seamless transition”. However, he said the deal was still pending regulatory approval as any company looking to retail petroleum products needed to obtain a licence. (StarBiz)

Sabah food, fruits industry to see RM1bn American investment
Sabah is expected to receive an investment of more than RM1bn from US-based company Dole, in the food and fruits industry. Sabah Chief Minister Datuk Seri Musa Aman said further discussions are being held to determine the best method of collaboration with one of the state government agencies. “They (Dole), a major company in the food and fruits industry, have expressed deep interest in a collaboration." Musa said foreign companies were keen to invest in Sabah as it was known as a peaceful state and suitable for investing. He said under the five years of the Ninth Malaysia Plan, Sabah’s economy had expanded at the rate of 5% annually, with the agricultural sector contributing RM7.24m to the 2010 GDP compared to RM3.8m in 2005. (StarBiz)

Sime, CapitaMalls plan RM500m mall
Sime Darby Property, the country’s largest developer by landbank size, plans to develop a RM500m shopping mall in the Klang Valley, in partnership with CapitaMalls Asia Ltd. The mall, to be located on 242,000 sq-ft freehold land in Taman Melawati here, is expected to be completed in 2016. It will have a net lettable area of around 635,000 sqft and serve a catchment population of about 800,000 people within a 10-minute drive. For CapitaMalls Asia, the project will be its first greenfield developments in Malaysia. The mall is surrounded by the residential areas of Taman Melati, WangsaMaju, Taman Permata and Kemensah Heights. (BT)

Felda eyes Louis Dreyfus
Global commodities trading powerhouse Louis Dreyfus has emerged as the frontrunner candidate in Felda's search for a strategic partner ahead of its USD3.3bn (RM10.13m) public offering. Industry executives said soon-to-be listed Felda Global Ventures Holdings (FGVH) wants the French trading company as its cornerstone investor for its upcoming IPO. Louis Dreyfus is also being touted as a strategic partner to bolster the downstream business of FGVH, which is set to become the world's largest listed palm oil producer when its shares are listed at end-June. (Financial Daily)

Four companies get Sg Buloh-Kajang MRT line contracts
Mass Rapid Transit Corp (MRT Corp) has awarded four additional packages for the construction of the Sungai Buloh-Kajang (SBK) MRT Line, totalling RM3.22bn. The big winners for the new contracts were Syarikat Muhibbah Perniagaan & Pembinaan SB (SMPP) and Sunway Construction SB, which won jobs worth RM1.09bn and RM1.17bn respectively. The packages, awarded after the conclusion of the One Stop Procurement Committee (OSPC) meeting yesterday, are for Viaduct 1, Viaduct 4, Viaduct 7 and Depot 1. MRT Corp is expected to award more tenders over the next month. (Malaysian Reserve)

DRB-Hicom’s takeover offer for Proton Holdings shares closed at 5pm yesterday, with it ending up holding 99.09% of the national carmaker’s 544.1m shares. It had bought a 42.7% stake in Proton from Khazanah Nasional at RM5.50 a share, or RM1.29bn, in January before making an offer for the remaining stakes at the same price. (BT)

As Malaysia faces a growing gap in gas supply-demand, the International Gas Union (IGU) says that Malaysia has to change the subsidised gas approach and move to a market-based mechanism. ICU's 2009-2012 triennium president Datuk Dr Abdul Rahim Hashim said that price adjustments would be necessary to sustain the industry's long-term growth and viability as exploration and production efforts would need to be intensified to meet with demand. Dr Abdul Rahim said that targeted subsidies would be the better approach as the Economic Planning Unit will gradually increase the natural gas prices to the power sector by RM3 per MMBtu for every six months, with the target of reaching market pricing by 2016. (Malaysian Reserve)

The government has issued a stern warning to hauliers that it would not hesitate to take stern action against any party that tries to undermine the smooth operation of any port. A dispute arose recently between container drivers and depot operators on the sudden increase in the depot gate charges (DGCs) and alleged inefficiencies at the port terminal in Port Klang. As a result, container drivers went on strike on 2 May 12. The government is working hard to resolve the dispute and negotiations are continuing. (Malaysian Reserve)

Malaysian Flour Mills (MFM) will spend around RM160m to expand the production capacity of its Vietnamese and Malaysian operations. The company has earmarked US$15m (RM46m) to increase capacity at its two plants in the north and south of Vietnam to 2,500 tonnes of wheat per day from 1,600 tonnes currently. It was also targeting a market share of 30% from the present 25% there after the upgrading was done in two years, executive director Lim Pang Boon said. For Malaysia, executive director Thong Kok Mun said the expansion at its Lumut and Pasir Gudang facilities was ongoing, with RM80m worth of works yet to be completed and another RM30m to RM40m to be spent on its breeder and broiler farms. (Starbiz)

Malaysia's first digital cable TV network provider, Asian Broadcasting Network Malaysia (M), expects to roll out more than 100 channels comprising a variety of content to households in the Klang Valley, Johor and Penang by June. ABN CEO Sreedhar Subramaniam said the cabling work, installation of satellite dishes and testing works were underway. "By the end of this month, our transmission will be on. "We are conservatively looking at more than 1,000 households signing up in June," he said. With a set-up cost of RM2bn over the next 10 years, ABN aims to reach out to all TV households in the country. On content, Sreedhar said ABN is open to collaborating with local content developers. This, he added, is to build a sustainable local content ecosystem in producing world class content for both the local and global markets. "Our goal is to bring out as much variety as possible to the general market, including travel, food, history, culture and not forgetting dramas and telemovies. However, if we try everything by ourselves, it will never work. "We will work closely with the creative people in bringing in this variety. The MCFA 2012 is the first step towards establishing the network," he added. (Bernama)

British insurer Aviva plc has put its Malaysian operations on the block and is close to hiring a bank to help with the sale process, sources familiar with the matter said, in a deal potentially worth about US$200m (RM614.75m). The sale is part of Aviva’s retreat from non-core markets globally and comes at a time when Dutch financial firm ING is exiting its Asian insurance and investment management operations. Aviva’s Asia-Pacific spokeswoman did not respond to a request for comment. Sources decline to be identified as the process is confidential. (Reuters)

Southern Steel: To form joint venture with Bekaert of Belgium. Southern Steel Bhd is partnering Belgian steel wire producer NV Bekaert SA to set up a joint-venture company, to which both parties will sell their assets worth USD44.6m (MYR135m). The joint venture would be involved in the manufacturing and sales of specified steel wires in Asean. (Source: Bursa Malaysia)            

20120510 0942 Global Market Related News.

Asian Stocks Fall for Second Day on Greece Impasse (Source: Bloomberg)
Asian stocks fell for a second day as concern grew that Greece will be forced out of the euro, weakening the outlook for Asian exporters to Europe. LG Display Co. (034220), the world’s second-largest maker of liquid- crystal displays that depends on Europe for about 18 percent of sales, slipped 2.4 percent in Seoul. Inpex Corp., Japan’s No. 1 energy explorer, lost 1 percent in Tokyo as crude oil headed for its seventh day of decline, the longest losing streak since December 2009. Toyota Motor Corp., Asia’s biggest carmaker, gained 1.3 percent after saying net income this fiscal year may more than double to a five-year high. “The European crisis is going to be with us for some time,”said Cameron Peacock, a Melbourne-based analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “There’s the chance of further elections in Greece and the whole stability of Europe has been put into doubt.”
The MSCI Asia Pacific Index (MXAP) dropped 0.2 percent to 119.67 as of 9:40 a.m. in Tokyo, with about three shares declining for every two that rose. The measure is heading for its worst week in almost six months as political changes in France and growing instability in Greece threatened to derail austerity plans and worsen Europe’s debt crisis.

Japan’s Nikkei Falls Below 9,000 on Greece (Source: Bloomberg)
May 10 (Bloomberg) -- Japanese stocks fell for a second day, with the Nikkei 225 Stock Average (NKY) dipping below 9,000 for the first time in three months, as concern Greece may be forced to exit the euro outweighed improved earnings outlooks. Toyota Motor Corp. rose after forecasting profit will more than double. Mitsubishi Motors Corp. (7211), an automaker that gets 27 percent of its sales from Europe, slid 2.4 percent. Nippon Yusen K.K., Japan’s biggest shipping company by sales, fell 3.2 percent after a gauge of cargo rates declined. Toyota advanced 1.6 percent. Tokyo Electric Power Co. (9501) rose 6 percent after the government took control of the utility. The Nikkei 225 Stock Average lost 0.5 percent to 9,002.10 as of 9:20 a.m. in Tokyo, headed for its lowest close since Feb. 10. The broader Topix Index fell 0.2 percent to 764.11, with more than three stocks declining for each that rose.
“The European crisis is going to be with us for some time,” said Cameron Peacock, a Melbourne-based analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “There’s the chance of further elections in Greece and the whole stability of Europe has been put into doubt.”

Dow Falls 6th Day in Longest Slump Since August on Greece (Source: Bloomberg)
The Dow Jones Industrial Average (INDU) declined for a sixth straight day, the longest losing streak since August, amid concern Greece’s debt crisis is worsening as the nation struggles to form a coalition government. Equities trimmed losses as Europe’s bailout fund said it will pay the next installment of aid to Greece. General Electric Co. (GE) and JPMorgan Chase & Co. (JPM) slid more than 1.7 percent to pace declines among the largest companies. Macy’s Inc. (M), the owner of its namesake department stores, slumped 3.7 percent as its profit forecast for this year trailed projections. Walt Disney Co. (DIS) advanced 1.6 percent, to an all-time high, after the world’s largest entertainment company said earnings surged 21 percent.
The Standard & Poor’s 500 Index fell 0.7 percent to 1,354.58 at 4 p.m. New York time, a two-month low. The Dow slid 97.03 points, or 0.8 percent, to 12,835.06. It had the longest slump since Aug. 2, three days before S&P stripped the U.S. of its AAA credit rating. About 7.8 billion shares changed hands on U.S. exchanges, or 18 percent above the three-month average. “It’s a tense situation in Greece,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “The elections in Europe opened up the possibility of a new look at bailout packages. That’s tough to analyze and uncertainty as always troubles investors.”

European Stocks Drop on Greek Impasse; Spanish Banks Fall (Source: Bloomberg)
European stocks dropped for a second day, to the lowest level in almost four months, as investors awaited a resolution to the political impasse in Greece and as Spanish credit risk surged. Bankia SA led a selloff in Spanish banks. Kloeckner & Co. and Mediaset SpA (MS) both plunged more than 8 percent after reporting first-quarter results. ING (INGA) Groep NV and Carlsberg A/S (CARLA) paced advancing shares. The Stoxx Europe 600 Index (SXXP) lost 0.3 percent to 249.73 at the close of trading, the lowest since Jan. 13, as the euro weakened for an eighth day. The Stoxx 600 has tumbled 8.3 percent from this year’s high on March 16, trimming this year’s advance to 2.1 percent.
“The real concern isn’t about Greece, it’s about the euro and whether it breaks up -- that is key,” Mark Tinker, a fund manager at AXA Framlington Investment Management said on Bloomberg Television in London. “We don’t make a big economic scenario after a couple of days of moves, but I think there is a lot of anxious market repositioning going on right now.”

Emerging Stocks Fall to 4-Month Low on Europe Concerns (Source: Bloomberg)
Emerging-market stocks slid, pushing the benchmark index to a four-month low, as industrial equities tumbled on concern political gridlock will derail Europe’s debt crisis recovery, crimping demand for riskier assets. The MSCI Emerging Markets Index (MXEF) lost 1.5 percent to 977.90 at the end of trading in New York, the lowest close since Jan. 17. Brazilian crude producer OGX Petroleo & Gas Participacoes SA dropped the most in two weeks, as oil declined for a sixth day. China Shipping Container Lines Co. (2866), the nation’s second-biggest cargo-box carrier, plunged the most in seven months on concerns Europe’s economic recovery may wane.
Leaders in debt-stricken Greece are struggling to form a new government after May 6 elections where voters flocked to anti-bailout parties. China’s Shanghai Composite Index (SHCOMP) sank the most in six weeks today, while Brazil’s Bovespa (IBOV) Index dropped for a second day to the weakest level since Jan. 13, based on closing prices. The Standard & Poor’s GSCI Spot Index of commodities slipped to the lowest this year. “Whether we like it or not, emerging markets remain a play on risk appetite,” Jose Morales, who oversees $1.6 billion in emerging market equities at Mirae Asset Global Investment in New York, said in a phone interview. “At the moment, risk appetite is declining because of the concerns coming out of Europe.”

Stocks Decline With Commodities, Euro on Greece Concern (Source: Bloomberg)
Stocks fell, sending the Standard & Poor’s 500 Index to a two-month low, while the euro extended its longest slump since 2008 as Greece struggled to form a government and concern grew that Spanish banks are underfunded. The S&P 500 slipped 0.7 percent to 1,354.58 at 4 p.m. in New York, trimming an earlier tumble of as much as 1.5 percent as developments in Europe whipsawed markets. The euro depreciated 0.5 percent to $1.2940, weakening for an eighth day and reaching the lowest level since January. Spain (IBEX)’s benchmark IBEX 35 Index sank 2.8 percent to an eight-year low and costs to protect the nation’s government debt rose to a record. The S&P GSCI Index of 24 commodities lost 0.1 percent as wheat and corn led declines and oil fell for a sixth consecutive day. Concern that Greece will be forced out of the euro zone grew after weekend elections resulted in a parliament divided over whether to implement austerity measures needed to qualify for rescue funds.
The nation’s political turmoil was set to enter a fourth day with coalition talks deadlocked, raising the possibility that another election will have to be held. “There’s something to worry about here,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management. “We expected there would be flare-ups again in Europe. People were scratching their heads why they didn’t show up a little sooner. Certainly as a result of the elections in Greece, the odds of a default and an exit from the euro have increased.”

Korean Won Climbs, Bonds Fall on IMF Forecast, Spain (Source: Bloomberg)
South Korea’s won slid to a one-month low as a political impasse in Greece heightened concern Europe’s debt crisis will worsen, possibly leading to a breakup of the euro. Government bonds were steady before the central bank’s policy meeting today. Political leaders in Greece are struggling to form a coalition government following a May 6 election, reigniting concern about the country’s willingness to comply with the terms of its bailouts. The Kospi Index (KOSPI) fell as overseas investors sold more Korean shares than they bought for a seventh day, exchange data show. The Bank of Korea will leave the benchmark rate at 3.25 percent, according to all 17 economists in a Bloomberg News survey. The result is due around 10 a.m. local time. “With concerns over Greece and overseas investors selling Korean stocks, the won is facing downward pressure, but investors are on alert for possible government intervention,” said Kim Seong Soo, a Seoul-based currency dealer at Kyongnam Bank.
“The central bank meeting will have little effect on currencies as it’s clear the rate will be on hold.” The won dropped 0.4 percent to 1,145.20 per dollar as of 9:22 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1,145.33, the weakest level since April 11. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, jumped 58 basis points, or 0.58 percentage point, to 8.51 percent.

Euro Holds Near 3-Month Low on Greece Stalemate (Source: Bloomberg)
The euro traded 0.2 percent from a more-than three month low as Greece remained divided on forming a new government, stoking concern that another election could set the stage for the country’s exit from the trading bloc. The 17-nation currency remained lower, extending its longest losing streak since 2008, before French data that may show industrial production declined in March as the region’s debt crisis weighed on growth. Demand for the yen was supported after Japan posted a second monthly current-account surplus. The Australian dollar fell for a third day before the statistics bureau releases jobs data for April. “The market has started anticipating Greece’s exit from the euro,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “Investors are also concerned that the Greek shock will spread to other periphery nations like Spain. Selling pressure for the euro remains intact.”
The euro was at $1.2936 as of 8:53 a.m. in Tokyo from $1.2929 yesterday, when it touched $1.2912, the lowest since Jan. 23. The shared currency added 0.1 percent to 103.03 yen from yesterday, when it fell to 102.76, the lowest since Feb. 16. The yen traded at 79.67 per dollar from 76.64 yesterday when it strengthened 0.3 percent.

FOREX-Euro on the edge as political risk mounts
LONDON, May 9 (Reuters) - The euro fell close to a recent three-month low on Wednesday and was set for further falls on worries that Greek political uncertainty and a French leadership change may undermine the euro zone's austerity measures.  
"We still think the euro will head lower with $1.2950 the level to break in the near-term," said Lauren Rosborough, Senior FX strategist at Societe Generale, who have a medium-term target of $1.2500.
Moody’s Bank Downgrades Risk Choking European Recovery (Source: Bloomberg)
Moody’s Investors Service will this month start cutting the credit ratings of more than 100 banks, a move that risks pushing up their funding costs and forcing them to curb lending in a threat to economic growth. BNP Paribas SA (BNP), France’s biggest lender, Deutsche Bank AG, Germany’s largest, and New York-based Morgan Stanley are among firms that face having their short- and long-term debt downgraded to their lowest-ever levels by Moody’s, the ratings company said in February. The cuts, which would follow downgrades by Standard & Poor’s and Fitch Ratings last year, could erode profits, trigger margin calls and leave some firms unable to borrow from money- market funds that have strict rules on who they can lend to. Without access to funding from private sources, banks have had to sell assets and reduce lending.
“I’d like to say the views of the rating agencies don’t matter anymore but, unfortunately, they do,” said Philippe Bodereau, London-based head of European credit research at Pacific Investment Management Co., the world’s largest bond investor. “This is a setback for the banks, particularly when you consider how much progress they have made in making themselves safer and more transparent.”

Wages Bolster Spending as Americans Extend Hours: Economy (Source: Bloomberg)
Consumer spending in the U.S. is rising even though hourly pay isn’t. The reason: More Americans are finding jobs and putting in longer hours in the office and on the factory floor. Wages and salaries -- the total paycheck for all Americans -- climbed 2.2 percent in the 12 months through March after adjusting for inflation, according to calculations by RBS Securities Inc. economist Omair Sharif. Earnings per hour on average dropped 0.7 percent in real terms over the same period, according to Labor Department data. Incomes are getting a boost from job growth and gains in hours, which will give Americans the means to increase spending at the fastest pace in six years, say Sharif and Pierpont Securities LLC economist Stephen Stanley. That’s allaying concern that hourly earnings, a widely watched measure of consumer buying power, are stagnating.
“If you were just to look at the average hourly earnings number, it would suggest pretty dire consequences for consumption,” Sharif said. “If you look at wages and salaries, consumption should be able to grow.” Sharif predicts consumer spending, which accounts for about 70 percent of the economy, will rise 2.5 percent this year, the most since a 2.9 percent increase in 2006. Stanley, the most accurate forecaster of personal spending in the two years through March, according to data compiled by Bloomberg News, is even more bullish, seeing a gain of 2.5 percent to 3 percent.

Home Prices Rise in Half of U.S. Cities as Markets Stabilize (Source: Bloomberg)
Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized. The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report today. In the fourth quarter, only 29 areas had gains. The U.S. housing market is showing signs of bottoming as improving employment and record-low mortgage rates boost demand while inventories of available properties tighten. At the end of March, 2.37 million previously owned homes were available for sale, 22 percent fewer than a year earlier, the Realtors said. “The housing market is still depressed but it had a good quarter,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a telephone interview today. “We’re on the mend but it’s still something that will take two or three years before we’re back to normal.”

U.S. March Wholesale Inventories Rise 0.3%, Sales Climb 0.5% (Source: Bloomberg)
Inventories at U.S. wholesalers rose in March at the slowest pace in four months as companies kept their stockpiles in line with demand. The 0.3 percent gain in stockpiles, which was less than the median forecast in a Bloomberg News survey, followed a 0.9 percent increase in February, the Commerce Department reported today in Washington. Sales climbed 0.5 percent in March after rising 1.1 percent a month earlier. As the U.S. expansion cools, inventory accumulation may slow with it after stockpiles helped boost fourth-quarter economic growth to the fastest pace in more than a year. Wholesalers had enough goods on hand to last 1.17 months at the current sales pace, the same as in February, the report showed.
“Firms are in a pretty decent shape on their inventories,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before the report. “Firms are just being very cautious. I don’t think there’s a lot of visibility on demand going forward, so firms are not willing to assume strong demand six or nine or twelve months out. The median estimate in a Bloomberg News survey of 28 economists called for a 0.6 percent gain. Forecasts ranged from increases of 0.4 percent to 0.9 percent. Wholesalers make up about 30 percent of all business stockpiles.

CIC Stops Buying Europe Government Debt on Crisis Concern (Source: Bloomberg)
China Investment Corp. has stopped buying European government debt because of an economic crisis on the continent, though it continues to look for new investments there, said CIC President Gao Xiqing. “What is happening in Europe right now is of course of concern,” Gao said yesterday in an interview in Addis Ababa, Ethiopia, during the World Economic Forum on Africa. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.” European leaders are struggling to contain a debt crisis that has entered its third year and led to bailouts of Greece, Portugal and Ireland. Officials have pledged to tighten fiscal frameworks amid concern the situation would envelop Italy and Spain, the euro region’s third- and fourth-biggest economies.
“China has a significant interest in Europe being a strong economic region; that’s clearly not the case at the moment,” said Stephen Halmarick, Sydney-based head of investment market research at Colonial First State Global Asset Management, which oversees about $150 billion. “It’s probably not surprising that the Chinese authorities are looking elsewhere for investment. Other investors in other parts of the world will be very cautious about European debt at this moment.” The euro posted its longest slump since 2008 and European shares fell to the lowest in almost four months as concern that Greece will be forced out of the euro zone grew. Spain said yesterday it would take over Bankia SA (BKIA), the banking group with the most Spanish real estate, as part of efforts to bolster confidence in the country’s lenders.

Japan Reports Current-Account Surplus for Second Month (Source: Bloomberg)
Japan posted a current-account surplus for a second month in March on an increase in overseas investment income, even as higher energy demand boosted imports. The excess in the widest measure of the nation’s trade was 1.59 trillion yen ($20 billion), the Ministry of Finance said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a surplus of 1.43 trillion yen. Evidence of a sustained surplus may ease concern that Japan is at immediate risk of needing overseas funding to service the world’s biggest public debt burden. Income from investment abroad is aiding the nation even as the import bill swells because of increased energy imports after nuclear reactors were shut down because of last year’s crisis at the Fukushima plant.
“The surplus has been shrinking at a slower pace than I expected because gains in the income surplus have been quite strong,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo and a former central bank official. “But in the late 2010s when a current-account deficit will be in sight, the problem of funding government debt will become an issue.”

Elderly at Record Spurs Japan Stores Chase $1.4 Trillion (Source: Bloomberg)
Unicharm Corp. (8113)’s sales of adult diapers in Japan exceeded those for babies for the first time last year. At Daiei Inc. (8263) supermarkets, customers can feel Japan aging -- literally: It has made shopping carts lighter. Companies are rushing to grab a bigger chunk of the estimated 109 trillion yen ($1.4 trillion) that consumers over 60 spent in the year ended March 31 in Japan. The number of Japanese over 65 hit a record 23.3 percent of the population in October. “We perceive this change as a golden opportunity for growth,” Shohei Murai, executive vice president of supermarket operator Aeon Co. (8267), told reporters in March. “In the ‘80s and ’90s, Aeon set families that were the massive majority in terms of population as its main target. Now the elderly are going to be the engine of consumption.” Aeon, Asia’s largest retailer, is putting medical clinics in some of its locations.

Biggest Brazil Price Jump in Year Undermines Rate Cut Goal (Source: Bloomberg)
Brazilian consumer prices rose more than economists expected in April, jumping the most in a year, reinforcing bets the central bank will have to unwind interest rate cuts after lowering borrowing costs to a record low in coming months. Prices, as measured by the benchmark IPCA index, rose 0.64 percent in April, the national statistics agency said in Rio de Janeiro today. The increase was more than all but three of 47 analysts surveyed by Bloomberg whose median estimate was for a 0.59 percent increase. Annual inflation slowed to 5.10 percent from 5.24 percent. A 12.3 percent decline in the real over the past three months is pushing up the cost of imports, adding to price pressures in Latin America’s biggest economy fueled by near- record low unemployment. Today’s report reinforces bets that the central bank will miss its 4.5 percent inflation target this year as the economy recovers, prompting yields on most interest rate futures to rise.
“The perception in the market is that the interest rates will continue to fall, but will go up next year,” Jose Francisco de Lima Goncalves, chief economist at Banco Fator SA, said in a phone interview from Sao Paulo.

Brazil Bulls Capitulate as State Intervention Spurs Outflows (Source: Bloomberg)
Brazil’s efforts to boost economic growth with the most aggressive interest rate cuts are driving away investors, reducing equity valuations to five-year lows and fueling the world’s biggest currency tumble. MSCI Inc.’s Brazil Index has dropped to the cheapest level since 2006 versus global shares as investors pulled $869 million from the nation’s mutual funds this year, the only country among the four largest emerging markets to post outflows, according to data compiled by Bloomberg and EPFR Global. Brazil’s debt handed foreign investors the worst losses since September last month. Three months after saying Brazil was in a “sweet spot,” JPMorgan Chase & Co. is advising clients to reduce stock holdings as President Dilma Rousseff, 64, orders state banks to slash lending rates, threatening profits. The real is the world’s most overvalued major currency even after posting the worst slump in the past month, Morgan Stanley says.
Stone Harbor Investment Partners began buying debt tied to consumer prices as six interest-rate cuts since August spur economists to predict inflation will top the central bank’s target for a third year. “We would share market concerns that the central bank may move too far and cause an inflation problem down the line,” said Phillipe Langham, who helps oversee about $40 billion as a London-based senior emerging-market fund manager at RBC Global Asset Management and holds fewer Brazilian shares than are represented in benchmark indexes. Government interference in the economy may be “accelerating with pressure on bank margins,” he said.

Greece Euro-Exit Debate Goes Public (Source: Bloomberg)
From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro. Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes. “If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels yesterday. “They will decide whether to stay in the euro zone or not.” After 386 billion euros ($499 billion) in aid pledges for Greece, Ireland and Portugal, 214 billion euros in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase.
The world is witnessing an “important moment in European Union history, a moment of crisis,” EU President Herman Van Rompuy said in Brussels on the 62nd anniversary of the declaration by Robert Schuman, then France’s foreign minister, that launched postwar European integration.

U.K. Retail Sales Drop Most in More Than a Year, BRC Says (Source: Bloomberg)
U.K. retail sales fell the most in more than a year last month as poor weather and consumer caution on spending curbed demand at stores. Sales at stores open at least 12 months, measured by value, declined 3.3 percent from a year earlier, the London-based British Retail Consortium said today. That’s the biggest monthly drop since March 2011. Including stores open less than 12 months, sales decreased 1 percent. With Britain suffering its first double-dip recession since 1975, the Bank of England’s Monetary Policy Committee will decide tomorrow whether to add more stimulus to its existing 325 billion pounds ($524 billion) of bond purchases. Officials have to balance the need to bolster the economy with the threat of inflation, which has been above their 2 percent target for more than two years.
“If the MPC wants to expand quantitative easing, it has no shortage of justifications,” said Simon Hayes, an economist at Barclays Plc (BARC) in London. Still, inflation pressures and doubts about the effect of stimulus means the MPC may “prefer to hold fire unless a fresh crisis, or more prolonged weakness in demand, makes the case for QE irresistible.”

German Exports Unexpectedly Rose for Third Month in March (Source: Bloomberg)
German exports unexpectedly increased for a third month in March as demand from outside the euro region offset weaker sales in Europe. Exports, adjusted for work days and seasonal changes, rose 0.9 percent from February, when they gained 1.5 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a drop of 0.5 percent, according to the median of 11 estimates in a Bloomberg News survey. Imports climbed 1.2 percent. Today’s report is the third in as many days to suggest Germany may have returned to growth in the first quarter after the economy shrank in the final three months of 2011. Factory orders and industrial production both rose more than economists forecast in March. “The indicators clearly confirm our view that the German economy did not slide into a technical recession at the turn of the year,” said Alexander Koch, an economist at UniCredit Group in Munich. “Net exports should have made a sizeable positive contribution to growth at the beginning of this year.”

Euro Global Poll Shows More Than 50% Predicting an Exit (Source: Bloomberg)
The 17-nation euro area is on the verge of losing one of its members, with more than 50 percent of investors predicting an exit this year as Greece’s election impasse threatens to push the debt crisis to new depths, according to the Bloomberg Global Poll. As Greece faces political paralysis and voters balk at austerity, 57 percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end and 80 percent expected more pain for Europe’s bond markets. With a majority identifying a deterioration in Europe as a large threat to the world economy, respondents to the May 8 survey were increasingly worried Spain will default and less willing to buy French debt as Francois Hollande takes power.
Europe’s financial turmoil is reigniting on the second anniversary of policy makers’ first attempt to prevent Greece’s fiscal woes from turning toxic. That raises fresh doubt over the crisis-fighting strategy just as Greece’s inconclusive election spurs concern that the country may not meet the terms of its international rescues and will seek a solution outside the euro. “Certainly from a financial perspective the crisis can only intensify,” said Michael Derks, a poll respondent and chief strategist at FXPro Financial Services Ltd in London. “We’re likely to get more debt restructurings and it would be remarkable if Greece didn’t leave the euro within a year.”

20120510 0941 Soy Oil & Palm Oil Related News.

MPOB Official Data for the month of Apr 2012 vs Mar 2012
Exports up 0.1% to 1.33 million tonnes
Stocks down 5.4% to 1.85, million tonnes
Output up 5.1% to 1.27 million tonnes

SGS CPO export down 14.2% to 419,364 tonnes for the period of 1~10 May 2012.
ITS CPO export down 6% to 450,269 tonnes for the period of 1~10 May 2012.

Market Recap: Soybean Futures  (Source: CME)
Soybean futures closed 7 to 11 3/4 cents lower, which was in the middle of today's trading range. Meal futures finished mixed, while soyoil was solidly lower. Soybean futures faced heavy pressure from outside markets today as traders reacted to building euro-zone concerns with broad-based risk aversion. But the soybean market was able to brush aside some of this strong spillover pressure as the market recovered well off session lows. Futures were also pressured by position squaring ahead of tomorrow morning's Supply & Demand Report from USDA.

Soybean Complex Market Recap  (Source: CME)
July Soybeans finished down 8 at 1430 1/4, 11 1/2 off the high and 17 up from the low. November Soybeans closed down 7 at 1333 1/2. This was 15 up from the low and 12 3/4 off the high. July Soymeal closed down 1.3 at 416.0. This was 7.6 up from the low and 3.1 off the high. July Soybean Oil finished down 0.45 at 52.82, 0.73 off the high and 0.02 up from the low. July soybeans closed moderately lower on the session but the market saw a very strong recovery from the early lows. Funds were noted as massive sellers; especially early today. Eurozone debt concerns were a key negative force for the market early today as a sharp break in global equity markets and a surge higher in the US dollar helped spark a continued long liquidation selling trend early today. The selling left July soybeans down as much as 99 1/4 cents in just six trading sessions. Outside markets turned much less negative into the mid-session which helped support the very strong recovery off of the lows into the mid-session with July down just a few cents on the day. Soybean oil was slightly higher on the day into the mid-session but closed sharply lower while meal saw the lows early and closed slightly lower on the session but near the highs of the day. For the report, traders see Argentina production down to near 42 million tonnes from 45 million last month and Brazil production near 64.5 million tonnes from 66 million last month. As a result, world ending stocks for the 2011/12 season are expected to drop to near 53.3 million tonnes from 55.52 million last month. Stocks for the new crop season are expected to recovery to near 59.3 million tonnes. US ending stocks for the 11/12 season are seen near 215 million bushels as compared with 250 million posted in the April update. For 2012/13 season, traders see ending stocks near 165 million bushels but with a range of near 90 to as high as 250 million bushels. For the weekly export sales, traders see soybean sales near 1.32 million tonnes as compared with 1.732 million last week.

GRAINS-U.S. soy drops for 3rd day on euro zone concerns
SYDNEY, May 9 (Reuters) - U.S. soybeans fell for a third consecutive session, while corn and wheat ticked lower, amid a broad-based weakness in financial markets which was triggered by escalating fears about Greece's political crisis.
"There was obviously a heavy selloff last night, particularly in soybeans, and we are seeing a continued selloff in Asia on macroeconomic sentiment," said one commodity analyst, who declined to be named. "There is also a slightly strong U.S. dollar which is driving down commodity prices."

VEGOILS-Palm slips as Europe political concerns weigh; data eyed
SINGAPORE, May 9 (Reuters) - Malaysian palm oil futures edged lower, as political uncertainty in Europe and a slew of industry data due the following day deterred traders from taking risky positions.
"Currently it's more like a positioning ahead of the MPOB (Malaysian Palm Oil Board) data and USDA (U.S. Department of Agriculture) report," said Ker Chung Yang, an analyst with Phillip Futures in Singapore.

Oil World cuts Argentine soybean crop forecast
HAMBURG, May 8 (Reuters) - Hamburg-based oilseeds analyst Oil World has cut its forecast of Argentina's 2012 soybean crop for the second time in two weeks by 1.5 million tonnes because of drought damage.  Oil World now forecasts Argentina's 2012 soybean crop at 41.0 million tonnes, down from 49.2 million harvested in 2011, the analyst said on Tuesday.
The latest reduction follows a series of cuts in Oil World's Argentine crop forecasts in April totalling 4.0 million tonnes because of bad weather in the country. Oil World had only on April 24 cut its forecast by 1.5 million tonnes.

The long overdue revision of Malaysia's crude palm oil (CPO) export tax policy which has been unchanged since the 1960s will likely take place by year-end or early next year, according to sources close to the industry. Sources said Plantation Industries and Commodities Ministry had last month submitted to the Cabinet several proposals including a fall-back plan to abolish the duty-free CPO export quota while seeking lower CPO export duty. (StarBiz)

20120510 0941 Global Commodities Related News.

Hong Kong Exchanges Said to Hire Banks for LME Bid Loan (Source: Bloomberg)
Hong Kong Exchanges & Clearing Ltd. (388) hired Deutsche Bank AG (DBK), HSBC Holdings Plc (HSBA) and UBS AG to arrange a loan to finance an offer for the London Metal Exchange, according to a person familiar with the matter, who asked not to be identified because the details are private. LME, the world’s biggest metals bourse, began a process in September that it said may lead to its sale. CME Group Inc. (CME), NYSE Euronext (NYX) and IntercontinentalExchange Inc. (ICE) were among suitors to submit offers before a May 7 deadline, according to five people with direct knowledge of the matter. Hong Kong Exchanges “continues to participate in the process,” Henry Law, a spokesman for the world’s second-biggest bourse by market value, said in an e-mailed response to questions yesterday.
The LME, founded more than a century ago in London’s financial district, handles about 80 percent of global trading in metals futures and reported record volume of $15.4 trillion last year. The company said May 8 that it received multiple proposals that may lead to it being acquired.

Commodities Drop a 6th Day as Greek Crisis Fuels Concerns (Source: Bloomberg)
Commodities fell, marking the longest slump since August, as a global equity rout and an unraveling bailout of Greece increased the risk that a slowdown in the global economy will curb demand for raw materials. The Standard & Poor’s GSCI Spot Index (MXWD), which tracks 24 commodities, lost less than 0.1 percent to settle at 648.28 at 3:44 p.m. in New York, leaving the gauge up 0.5 percent this year. The index fell to 641.8 yesterday, the lowest since Dec. 29, as the euro extended a drop. Silver and gold plunged to four-month lows. The MSCI All-Country World Index of equities dropped to the lowest since January today.
Wheat, corn and zinc led the commodity decline today after the head of Greece’s biggest party failed to reach an agreement on a new government. That left responsibility for forming an administration to Alexis Tsipras of the Syriza party, who said he’ll cancel the bailout. Services and manufacturing shrank in April in the euro region, and unemployment soared to a 15-year high, according to reports last week. The U.S. added fewer jobs than forecast last month, government data showed last week. “Investors should adopt the fetal position,” said John Stephenson, who helps to manage $2.7 billion at First Asset Investment Management Inc. in Toronto. Commodity prices may extend declines, he said.

Market Recap: Wheat Futures (Source: CME)
Wheat futures faced pressure throughout the session and selling intensified ahead of the closing bell. Chicago wheat ended with losses of 12 1/4 to 17 3/4 cents, Kansas City closed around 17 cents lower and Minneapolis wheat ended mostly around 2 cents lower. Wheat traders focused on removing risk ahead of USDA’s Supply & Demand Report tomorrow, encouraged by a firmer dollar and mounting global economic headwinds.

Wheat Market Recap Report  (Source: CME)
July Wheat finished down 15 at 600, 18 off the high and 1 3/4 up from the low. December Wheat closed down 13 1/2 at 639. This was 1 3/4 up from the low and 16 1/4 off the high. July wheat closed sharply lower on the session and managed to push into new contract lows late in the day. The surge in the US dollar and selling across a wide spectrum of commodity markets helped to pressure the market early today. Traders look for another rain event in the western and southern plains late in the weekend to help support a continued high yield potential for the central plains. Traders see a hefty production total for the crop production report in the morning and the selling in corn seemed to have opened the door for more aggressive selling. Even a strong recovery in the US stock market and energy markets failed to provide much support to the market. For the reports tomorrow morning, traders see winter wheat production near 1.64 billion bushels as compared with 1.494 billion last year. All wheat production is expected near 2.195 billion bushels as compared with 1.999 billion last year. For ending stocks for the 2011/12 season, traders see stocks near 780 million bushels as compared with 793 million posted in the April update. For the 2012/13 season, traders see ending stocks near 785 million bushels but with a range of near 600-925 million bushels. For the weekly export sales, traders see wheat sales near 600,000 tonnes as compared with 711,600 tonnes last week. July Oats closed down 1 3/4 at 336. This was 2 up from the low and 3 1/4 off the high.

Market Recap: Corn Futures (Source: CME)
Corn futures faced sharp price pressure into the close, with nearby contacts leading losses. May corn ended 24 3/4 cents lower, with July down 15 3/4 cents. The rest of the market ended mostly 11 to 12 cents lower. Funds sold an estimated 14,000 contracts (70 million bu.) of corn today. Sell stops were triggered into the close due to negative outside markets. The U.S. dollar index returned above the 80.00 level, but came off its high as corn was closing.

Corn Market Recap for 5/9/2012  (Source: CME)
July Corn finished down 15 3/4 at 607 1/4, 15 3/4 off the high and 1 3/4 up from the low. December Corn closed down 11 1/4 at 516 3/4. This was 1 3/4 up from the low and 12 off the high. July corn saw another round of aggressive selling late in the day to close sharply lower on the day and to the lowest close since April 25th. Continued demand fears coming out of Europe plus a bearish weather forecast for the Midwest helped spark the aggressive sell-off ahead of the key USDA Supply/Demand update for tomorrow. December corn closed sharply lower and matched the lows from Monday and Friday as traders expect the first outlook for the new crop season to show a surge in US ending stocks for the 2012/13 season. US cash traders indicate that China has bought near 8 cargoes or about 500,000 tonnes of US corn in the past week. Traders await confirmation on the daily wires. Ethanol production for the week ending May 4th averaged 897,000 barrels per day. This is up 0.34% vs. last week and up 4.06% vs. last year. Total Ethanol production for the week was 6.279 million barrels which is the highest weekly total since March 2nd. Corn used in last week's production is estimated at 95.55 million bushels as compared with 94 million bushels per week necessary to meet the USDA estimate for the year. Stocks were 21.4 million barrels. This is down 3.8% vs. last week and up 4.6% vs. last year. The implied demand for the week is 7.127 million barrels which would be the highest since December 9th. For the report in the morning, traders see US ending stocks for the 2011/12 season near 750 million bushels as compared with 801 million posted in the April update. For the 2012/13 season, traders see ending stocks near 1.71 billion bushels but with a range of near 1.2 billion to well above 2 billion bushels. World ending stocks for the 2011/12 season are expected to drop to near 122 million tonnes from 122.71 million last month. Stocks for the new crop season are expected to recovery to near 137 million tonnes. For the weekly export sales, traders see corn sales near 1.2 million tonnes as compared with 3.472 million last week. July Rice finished up 0.1 at 15.395, 0.045 off the high and 0.185 up from the low.

Corn's cash/futures breakdown annoying spec longs
--Gavin Maguire is a Reuters market analyst. The views expressed are his own.--
CHICAGO, May 8 (Reuters) - According to the law of convergence -- the foundation of confidence in the futures arena as an effective medium for grain hedgers and speculators -- the recent blistering rise in cash corn values should be bringing about a similar firming in May futures prices as that contract enters its final week of trade.
But with less than five full trading days left before May futures expire, they continue to trade at an historically wide discount to physical corn at the U.S. Gulf, distressing futures traders who are sitting on long positions in the contract fully expecting it to trade more closely in tandem with its physical counterpart.

French farm body ups 11/12 wheat stocks, cuts exports
PARIS, May 9 (Reuters) - Farm office FranceAgriMer on Wednesday raised its forecast of French 2011/12 soft wheat ending stocks, reflecting a cut in its export outlook, data released on the office's website showed.
The office increased its forecast of soft wheat stocks at the end of the current 2011/12 season to 2.36 million tonnes against 2.1 million seen last month. This was still down 19.2 percent on stocks at the end of 2010/11.

Indonesia cuts 2012 unhusked rice output target to 67.8 mln T
JAKARTA, May 9 (Reuters) - Indonesia revised down its unhusked rice output target for 2012 to 67.8 million tonnes from 72.02 million tonnes forecast in February, Agriculture Minister Suswono said on Wednesday.
"We are facing the impact of climate change, pests and diseases, ageing agricultural infrastructure, land conversion, limited farmer access to financing, inter-commodity competition and high rice consumption," Suswono told reporters.

Philippines on track for record rice output-official
MANILA, May 9 (Reuters) - The Philippines is unlikely to exceed its rice import target this year as its rice harvest remains on track to rise to a record 18 million tonnes, a senior farm official said on Wednesday.
Agriculture Assistant Secretary Dante Delima told Reuters a day before official farm output data is due to be released that the unmilled rice output in the first quarter will be little changed from last year's record level of 4.037 million tonnes.

Australia says wheat exports drop 13 pct in March
SYDNEY, May 9 (Reuters) - Australian wheat exports fell 13 percent in March from February, when exports hit a nine-year high, government data showed on Wednesday.
Wheat exports totalled 2.1 million tonnes in March, down 301,000 tonnes on February, the Australian Bureau of Statistics said. Despite the fall, March wheat exports were the third largest monthly figure in the last nine years.

Argentine grains port workers threaten pay strike
BUENOS AIRES, May 8 (Reuters) - Workers at leading grains export ports in Argentina will go on strike on Thursday and blockade soy-crushing plants unless their minimum wage is hiked to reflect brisk inflation, a union spokesman said on Tuesday.
A prolonged work stoppage by members of the San Lorenzo branch of the CGT labor federation could slow shipments of soybeans, soymeal and oil from Argentina, the world's biggest supplier of soy products.
S.Africa's 2011 wheat output at 2 mln T -CEC
JOHANNESBURG, May 8 (Reuters) - South Africa produced 2 million tonnes of wheat during the 2011 season, up from 1.43 million tonnes in 2010, the country's Crop Estimates Committee (CEC) said on Tuesday.
The output was also 5 percent more than the committee's final forecast of 1.905 million tonnes because of higher-than-expected yields, the CEC said.

Brazil’s $2 Billion Cane Revival Plan Fails: Commodities (Source: Bloomberg)
Brazil’s 4 billion-real ($2.1 billion) drive to revive sugar-cane production has faltered as government bureaucracy and a curb on foreign loans choked credit needed to finance planting. Cane refiners, who also grow the crop, couldn’t complete paperwork in time to qualify for loans from the state development bank known as BNDES before the main planting season ended last month, said Maurilio Biagi Filho, president of the ethanol producer Grupo Maubisa. In March, the government imposed a tax on overseas borrowing to stifle capital inflows that are boosting the currency. The shortage of credit dried up funds for replacing older sugar-cane stalks, which must be renewed every five years to maintain yields. At least eight of the nation’s 420 processing mills are idle because of a lack of cane, threatening Brazil’s lead over the U.S. as the biggest ethanol exporter. Brazil is the world’s largest sugar producer.
Brazil’s growers “need to plant but simply don’t have the financial resources,” said Alexandre Grendene Bartelle, who is seeking to tap a credit line from BNDES to expand fields around two sugar-cane facilities he co-owns. “Mills are in financial troubles. They need this line of credit.” Brazilian growers replanted about 15 percent of their fields last year, less than the 17 percent annual replacement rate needed to maximize productivity, said Marcio Perin, an analyst at Informa Economics FNP, a consulting company in Sao Paulo. As much as 20 percent may be replanted this year.

SOFTS-Sugar hovers above 20-month low, coffee firms
LONDON, May 9 (Reuters) - Raw sugar futures reversed early losses after touching a fresh 20-month low as the global sugar surplus dragged on prices, while coffee firmed and cocoa dipped, weighed by weaker outside markets.  Raw sugar futures on ICE firmed after earlier touching a fresh 20-month low, as recent upward revisions to the expected 2011/12 global surplus weighed on prices.

Indonesia sees 2012 processed cocoa bean exports at 380,000 T
JAKARTA, May 9 (Reuters) - Indonesia estimates that exports of processed cocoa beans this year will total 380,000 tonnes, up from 249,188 tonnes in 2011, Sindra Wijaya, executive director of the Indonesian Cocoa Industry Association (AIKI) said on Wednesday.
The association sees installed industry capacity at 680,000 tonnes in 2012, up from 580,000 tonnes last year, Wijaya told Reuters.  "Increasing investment in the cocoa industry will boost Indonesian cocoa processing capacity in the coming years," Wijaya said.

Colombia coffee output up for first time in a year
BOGOTA, May 8 (Reuters) - Colombia's coffee production rose 11 percent in April versus the same month last year, after 12 months of declines due to heavy rains that had battered coffee crops, the growers federation said on Tuesday.
Colombia, the world's top producer of high-quality arabica beans, produced 580,000 60-kg bags in April, the federation said in a statement. However, exports last month fell 14.6 percent to 495,000 bags compared with the same month a year earlier.

Brazil April green coffee exports down 30 pct on yr
BRASILIA, May 8 (Reuters) - Brazil exported 1.72 million 60-kg bags of green coffee in April, down 30 percent from the 2.47 million bags shipped in the same month a year earlier, the Council of Green Coffee Exporters, Cecafe, said on Tuesday.
The 2011 harvest was a smaller off-year crop estimated officially at 43.5 million bags, versus 48.1 million bags in the larger on-year crop that preceded it. Output rises and falls from one year to the next due to a biennial production cycle.

Guatemala's coffee crop hit by killer fungus
GUATEMALA CITY, May 8 (Reuters) - A mutant strain of one of the world's most devastating coffee diseases is attacking crops in Guatemala, putting farmers on high alert for a wider outbreak across Central America.
Growers are battling a new form of leaf rust fungus, or roya, which kills leaves on coffee trees and makes the weakened plants produce less.

India cotton exports may hit record 13.5 mln bales
MUMBAI, May 9 (Reuters) - India could ship up to 2 million additional bales of cotton in the current crop year, reaching a record 13.5 million bales    after the government allowed export sales to resume, a trade association said on Wednesday.
Last month, India reversed a ban on cotton exports imposed in March as concerned eased that supplies would fall short for the textile industry, the country's second largest employer, allowing firms in the world's second-biggest producer and exporter to resume shipments abroad.

Honduras coffee boom feels growing pains
MARCALA, Honduras, May 8 (Reuters) - In the small town of Marcala in the western mountains of Honduras, farmers are harvesting more coffee than ever before, part of a nationwide push to capitalize on higher prices that has doubled production in less than 10 years.
But the boom comes with a cost.The coffee is coming in faster than growers can handle it and they are running out of space to dry all the beans, which need time in the sun or in drying machines to stop fermenting.

Euro Coal-Fresh lows draw out trader buying
LONDON, May 8 (Reuters) - European and South African coal prices dipped by around $1.00 to fresh lows on Tuesday, a move which drew out buying by traders rather than end-users.
European DES ARA prices hit two-year lows last week and have slipped a little further, pressured by oversupply.

Asia Coal-Australia prices top $122/T, fat-finger entry blamed
SHANGHAI, May 8 (Reuters) - Australia's thermal coal price spiked over $20 overnight to top $122 a tonne on Tuesday, a jump which traders said was likely due to a "fat finger" entry since there were no trades recorded.
Australia's Newcastle spot index  for the week to date closed Tuesday at $122.50 per tonne, up from $99.24 the previous day, data provided by online trading platform globalCOAL showed.

Saudi says producers pumping enough to deal with Iran sanctions
TOKYO, May 9 (Reuters) - Saudi Oil Minister Ali al-Naimi said on Wednesday oil markets would remain well supplied even after fresh international sanctions against Iran take effect, as global crude oversupply is already as much as 1.5 million barrels per day (bpd).
U.S. and European Union sanctions on Iran's oil exports take effect in June and July, and are aimed at stemming the flow of petrodollars to Tehran to force it to halt a nuclear programme the West suspects is intended to produce weapons.

China gas reforms spark investment boom
HONG KONG, May 9 (Reuters) - China's big state companies, confident on the outlook for domestic natural gas reforms, are buying up local distributors and raising fresh capital - and making gas the hottest prospect for energy investment in the world's top energy consumer.
The prospects for expansion and acquisitions also have China's natural gas distributors trading like growth stocks, instead of bog-standard utilities.

OIL-Oil slips on Greece jitters, strong supply
LONDON, May 9 (Reuters) - Brent crude oil slipped towards $112 on Wednesday, on track for its longest losing streak in nearly two years, as political turmoil in the debt-laden euro zone deepened worries about prospects for fuel demand.
"The weakness in oil was the result of higher Saudi production and concerns for the U.S. economy and a slow-down in China," said Christopher Bellew at Jefferies Bache.

Oil Futures Pare Losses to Trade Little Changed in New York (Source: Bloomberg)
Oil traded little changed in New York after falling yesterday to the lowest in more than three months. Futures for June delivery traded at $96.77, down 4 cents, on the New York Mercantile Exchange at 8:49 a.m. in Singapore. They earlier fell as much as 46 cents to $96.35.

Crude Oil Falls for a Seventh Day in Longest Decline Since 2009 (Source: Bloomberg)
Oil dropped for a seventh day, the longest losing streak in more than two years, as U.S. crude stockpiles climbed to the highest level since 1990 and Europe’s debt crisis worsened. Futures slipped as much as 0.5 percent in New York. Crude inventories increased 3.7 million barrels last week to 379.5 million, data from the Energy Department showed. They were forecast to climb 2 million barrels, according to a Bloomberg News survey. Oil also slipped as Greece struggled to form a government and the cost of insuring against a Spanish default on its debt climbed to a record. Crude for June delivery decreased as much as 46 cents to $96.35 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.45 at 9:26 a.m. Sydney time. The contract yesterday slid 20 cents to $96.81, the lowest close since Feb. 2. Prices are down 2.4 percent this year. The run of declines is the longest since December 2009.
Brent oil for June settlement gained 47 cents, or 0.4 percent, to $113.20 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $16.39. China Investment Corp., the nation’s sovereign wealth fund, has stopped buying European government debt because of the economic crisis there, CIC President Gao Xiqing said yesterday in an interview in Addis Ababa, Ethiopia.

Aluminum Fee by Japan May Jump to Record as Asia Supply Drops (Source: Bloomberg)
Aluminum buyers in Japan, Asia’s largest importer, may pay a record-high fee to producers after China boosted its own purchases and smelters cut output. Premiums for the three months starting in July may rise by more than $30 from fees this quarter ranging between $115 to $127 a metric ton over the London Metal Exchange cash price, four executives, representing smelters and buyers, said before pricing talks this month. The highest fee since Japanese buyers began purchasing most requirements through long-term contracts in 1996 was $125 to $130 for the first quarter of 2010, said the people, declining to be identified as the negotiations are private.

 Iron Ore-Shanghai rebar falls 3rd day to 2-1/2 month low
SINGAPORE, May 9 (Reuters) - Shanghai steel futures fell on Wednesday for a third straight day, reaching their lowest level since February amid sluggish demand in top consumer China that also kept pressure on iron ore prices.
Excess steel supply has weighed on prices in China where mills continued to produce at a record clip even as inventories of steel products fell at a slower pace than last year.

Promising start for China iron ore trading platform
SINGAPORE/SHANGHAI, May 8 (Reuters) - An Australian cargo was among three sold via China's first physical iron ore platform on Tuesday, a promising start for the electronic trading system, although traders say volumes must rise before the platform can create price benchmarks.  
Run by state-owned China Beijing International Mining Exchange (CBMX), the platform is the boldest effort so far by the world's top iron ore buyer to determine pricing, an area it believes has long been dominated by global miners Rio Tinto , Vale  and BHP Billiton .

China eyes upper hand in pricing with iron ore platform
SINGAPORE/SHANGHAI, May 7 (Reuters) - China's first physical iron ore trading platform is set to debut on Tuesday, helping the world's biggest buyer of the commodity boost its price-setting influence.
The timing looks perfect. Nearly all iron ore sold to China is now based on spot prices, with the industry evolving over the past two years after four decades of yearly-set contracts.

Australian port's April iron ore shipments rebound
SYDNEY, May 7 (Reuters) - Iron ore shipments to China from Australia's Port Hedland rose nearly 6 percent in April from the previous month, according to port authority data released on Monday, after weather-related disruptions in March.
Iron ore shipments to China rose to 14.84 million tonnes in April from 14.04 million tonnes in March, it said.

Baltic sea index rises on higher iron ore activity
May 8 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, inched higher on Tuesday as Chinese interest in buying iron ore kept rates steady for large capesize vessels.  
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 8 points or 0.69 percent to 1,165 points.