Friday, May 11, 2012

20120511 1814 FCPO EOD Daily Chart Study.

FCPO closed : 3275, changed : -74 points, volume : higher.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : resume falling, seller in control.
Support :  3270, 3250, 3200, 3150 level.
Resistance : 3300, 3300, 3350, 3380 level.
Comment :
FCPO plunged substantially lower with improving volume participation. Soy oil price currently falling lower by more than 1% after overnight closed recorded gains while crude oil price continue to trade lower.
Price opened and traded lower after market digested yesterday MPOB report and weaker export data plus Reuters reported significant drop in India palm oil imports while Brazil raised crop forecast on soybean pressured soy oil price to trade lower.
Technical chart reading adjusted to suggesting downside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120511 1731 FKLI EOD Daily Chart Study.

FKLI closed : 1575.5 changed : -7 points, volume : higher.
Bollinger band reading : downside biased.
MACD Histogram : resumed falling again, seller still in.
Support : 1570, 1565, 1550, 1540 level.
Resistance : 1580, 1590, 1595, 1600 level.
Comment :
FKLI closed recorded loss with rising volume transacted doing 9 points discount compare to cash market that closed little lower. Overnight U.S. markets closed little higher having technical rebound and today Asia markets ended recorded loss while European markets drifting between gain and losses.
Global markets sentiment stayed negative after news on market shocking JP Morgan announcement of 2 billion trading losses, China reported lower inflation rate and slower industrial production growth plus Greece governmenr forming process.
Daily chart analysis revised to calling a downside biased market development pending a triangle break down.
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.

20120511 1658 Regional Markets EOD Daily Chart Study.

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

20120511 1624 Global Market & Commodities Related News.

Asian shares slid, spawning declines in other risk assets, as deepening political turmoil in the euro zone fuelled concerns about global growth and a huge loss from JPMorgan added to jittery sentiment.  U.S. stock index futures fell sharply on Thursday evening as JPMorgan Chase & Co stunned investors with news that its chief investment officer had incurred "significant mark-to-market losses" that it said could "easily get worse."

China Industrial Output, Inflation Boost Easing Odds
China’s industrial production grew the least since 2009 in April, retail sales rose less than estimated and inflation was below target, boosting speculation Premier Wen Jiabao will take steps to stimulate the economy. Output increased 9.3 percent from a year earlier, lower than all 32 estimates in a Bloomberg News survey and the biggest negative surprise in two years, data compiled by Bloomberg show. Consumer prices rose 3.4 percent from a year earlier, the National Bureau of Statistics said today, staying below the annual goal for the third month. The data show China’s slowdown is deepening after Wen’s campaign to rein in property and consumer prices reduced economic growth last quarter to the least in almost three years. India’s March industrial production unexpectedly contracted and Japan’s central bank pledged to provide emergency liquidity if needed as Europe’s debt woes sap global confidence.
“This set of data will definitely force the government’s hand to ease,” said Yao Wei, China economist for Societe Generale SA in Hong Kong. A cut in the reserve ratio may happen “any minute now,” and “more fiscal easing is also highly likely,” Yao said. China’s retail sales in April gained 14.1 percent from a year earlier, compared with estimates of 15.1 percent and March’s 15.2 percent increase. Fixed-asset investment excluding rural households rose 20.2 percent in the first four months of the year, the lowest for the period since 2001, compared with forecasts for a 20.5 percent gain.

The euro hit a 3-1/2-month low as news of JPMorgan's trading losses from a failed hedging strategy spooked investors and lent support to the safe haven dollar, with stop-loss selling adding to the euro's drop.

FOREX-Euro steady near 3-1/2 mth low; Aussie eyes China data
SINGAPORE, May 11 (Reuters) - The euro held steady near a recent 3-1/2 month low on Friday, with the single currency still seen vulnerable due to ongoing political deadlock in Greece that has left investors fretting about the risk of the country exiting the euro zone.
"The issue is no longer whether Greece will default or not, but whether or not it will leave (the euro zone)," said Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo.

Chicago corn languished near a 14-month low , after the U.S. government predicted stocks of the grain would climb this autumn to their highest in seven years, while wheat was little changed following a firm close in the last session.

China to issue 1 mln T of cotton import quotas -traders
China, the world's top cotton consumer, will soon issue about 1 million tonnes of extra cotton import quotas to help textile mills buy cheaper overseas cotton to cut costs, traders said on Friday.

On verge of 22-hour grain trading, an era passes
The ka-chunk, ka-chunk of punch clocks echoed across the silent trading floor at the Chicago Board of Trade, as a tiny group of traders gathered at the soybean oil pit for a ritual as routine as the seasons -- the U.S. government's monthly crop report.

Rebel union workers strike at Argentine grains port
A group of port workers launched a pay strike on Thursday at Argentina's biggest grains hub, Rosario, even though labor leaders suspended the measure for 48 hours to keep negotiating, a union official said.

Brazil coffee crop seen at record 50.45 mln bags-govt
 Brazil's will produce a record 50.45 million 60-kg bags of coffee in the 2012/2013 season as producers in the world's largest coffee exporter planted more trees in response to strong prices, the agriculture ministry said on Thursday.

Brazil raises soy crop view after aggressive cuts
The soybean forecast from Brazil's agriculture ministry on Thursday bounced back by more than a million tonnes, after the government overshot in April when it slashed more than 3 million tonnes from an earlier estimate of the drought parched crop.

Brazil's early 2012/13 sugar output down 34 pct
Early sugar output from Brazil's main center-south cane belt fell 34 percent from a year ago, as the region struggled to recover from the first drop in output in a decade last season, the sugar milling industry association Unica said Thursday.    

Brent crude dropped below $112 a barrel, tracking losses in the euro amid a political deadlock in Greece that has renewed worries about the fate of the debt-laden euro zone and clouded the outlook for global oil demand.

OPEC exports to fall in 4 weeks to May 26 -analyst
Seaborne oil exports from OPEC, excluding Angola and Ecuador, will fall by 430,000 barrels per day (bpd) in the four weeks to May 26, an analyst who estimates future shipments said on Thursday.

LME meets to discuss bidders' proposals-sources
LONDON, May 10 (Reuters) - The London Metal Exchange (LME) was holding an emergency meeting with its board members on Thursday to discuss proposals from a short list of bidders vying to buy the 135-year-old exchange and could make recommendations to shareholders soon, sources familiar with the matter said.
The LME, the world's largest metals marketplace, received a second round of bidders' proposals on Monday, and said the board would consider them before giving shareholders more information.

COLUMN-Chinese copper imports still too strong
--Andy Home is a Reuters columnist. The opinions expressed are his own--
LONDON, May 10 (Reuters) - China's copper imports dropped 19 percent in April, generating the all-too-predictable spate of headlines about slumping demand and excess stocks in the world's largest consumer of the red metal.
And true, at 375,258 tonnes aggregate imports of refined metal, alloy, anode and products were the lowest monthly print since August last year.

Copper prices eased a touch on Friday, reversing gains from the previous session ahead of the release of China industrial output data that is expected to shed light on the health of the economy as investors worry about slower growth.

Gold slipped more than half a percent, tracking equities lower, as investors failed to shake off worries about Europe's debt crisis and its impact on global economic growth.

China copper, ore imports slump as high stocks bite
SHANGHAI, May 10 (Reuters) - China's copper and iron ore imports slumped to multi-month lows in April as bulging stocks and muted demand prompted shippers to cut orders, while unexpectedly weak export numbers sparked doubt over whether the slowdown in the world's No.2 economy has bottomed out.
However, commodities investors appeared unfazed by the disappointing data, with some analysts saying the weak numbers could serve as a wake up call to Beijing to further ease monetary policy - which would boost prices in the second half.

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. Shipments hit 64.98 million tonnes in February, the highest since January 2011.

METALS-Copper eases as investors eye China data
SINGAPORE, May 11 (Reuters) - Copper prices eased a touch on Friday, reversing gains from the previous session ahead of the release of China industrial output data that is expected to shed light on the health of the economy as investors worry about slower growth.
"With China's economy slowing down and the investment-intensive growth mode being phased out, sentiment on copper is weakening," said Zhu Bin, an analyst at Nanhua Futures in the eastern Chinese city of Hangzhou.

PRECIOUS-Gold heads for worst weekly fall since March
SINGAPORE, May 11 (Reuters) - Gold slipped more than half a percent on Friday, tracking equities lower, as investors failed to shake off worries about Europe's debt crisis and its impact on global economic growth.
"We are still uncertain about what's happening out of the euro zone. For now, I think gold will trade largely like a risk asset and probably track equities as well. Support level is about $1,500," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Baltic sea index drops on weak Chinese demand
May 10 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Thursday for a second day as weak Chinese demand weighed on rates for dry bulk vessels.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 10 points or 0.87 percent to 1,146 points.

Asia Dry Bulk-Rates to hover near 3-wk lows on oversupply
SINGAPORE, May 10 (Reuters) - Rates for panamax dry bulk carriers on key Asian freight routes are expected to hover near three-week lows over the next week, pressured by an abundance of vessels and limited Chinese activity, ship brokers said on Thursday.
The rate for panamax vessels traveling via the transpacific route dropped to a three-week low of $9,795 a day on Wednesday from $11,581 last week as ample ship supplies outweighed an increase in demand for Indonesian exports.

20120511 1137 Global Market & Commodities Related News.

GLOBAL MARKETS-Asian shares retreat, China data, Europe eyed
TOKYO, May 11 (Reuters) - Asian shares retreated on Friday, spooked by JPMorgan's   $2 billion huge loss from a failed hedging strategy, with   investors warily watching political turmoil in the euro zone as they await new Chinese data for clues on its growth outlook.
"We expect the EUR to remain under pressure as a result, especially as the market debate regarding the use of the EUR as a policy tool gains momentum," suggesting that a rate cut aimed at weakening the euro is likely, Morgan Stanley said in a note.

COMMODITIES-Most markets up, corn down; CRB flat
NEW YORK, May 10 (Reuters) - Most commodity markets rose on Thursday as better-than-expected U.S. jobs data boosted investor confidence, although oil closed mixed and corn tumbled on a government forecast that a bumper crop would help swell domestic stocks of the grain.
The dollar's drop against the euro for the first time in eight sessions helped lift prices of various dollar-denominated commodities.

OIL-Oil ends mixed on China, OPEC, U.S. jobs data
NEW YORK, May 10 (Reuters) - Oil prices ended mixed in choppy trading on Thursday as weaker-than-expected Chinese trade data, higher OPEC production and evidence of a strengthening U.S. jobs market muddied the oil demand outlook.
"Basically, the oil markets are watching Europe and looking for what will happen next, which is not easy to predict," said Mark Waggoner, president of Excel Futures in Bend, Oregon.

New bill takes aims at U.S. oil tax breaks
WASHINGTON, May 10 (Reuters) - Hoping to build on voter anger about high gasoline prices, two U.S. lawmakers launched a new attack on tax breaks for U.S. oil, gas and coal companies on Thursday with a bill they said would cut more than $113 billion in subsidies over 10 years.
The bill goes beyond other recent efforts that have targeted tax breaks for oil companies and includes research programs, loan guarantees and infrastructure funding, said its authors, Senator Bernie Sanders, a left-leaning independent, and Democratic Representative Keith Ellison.

OPEC exports to fall in 4 weeks to May 26 -analyst
LONDON, May 10 (Reuters) - Seaborne oil exports from OPEC, excluding Angola and Ecuador, will fall by 430,000 barrels per day (bpd) in the four weeks to May 26, an analyst who estimates future shipments said on Thursday.  
Exports will reach 23.96 million bpd on average, down from 24.39 million bpd in the four weeks to April 28, UK consultancy Oil Movements said in its latest weekly estimate.

Canada trade surplus rises despite oil-price dip
OTTAWA, May 10 (Reuters) - The value of Canada's imports and exports both dipped in March on weaker energy prices, but analysts said growing export volumes meant the outlook for trade was brighter than it looked.
Statistics Canada said on Thursday the trade surplus rose to C$351 million ($351 million) from $273 million in February as imports declined at a faster rate than exports.

Kazakhstan counts on oil wealth to navigate crisis
ASTANA, May 10 (Reuters) - Kazakhstan is ready to tap a $50 billion oil fund to steer its economy through a possible second crisis, Deputy Prime Minister Kairat Kelimbetov said, also signalling fresh efforts to clean up and privatise the country's struggling banks.
In an interview with Reuters, Kelimbetov said he expected a separate "problem loan" fund to begin operating this month or next, with the capacity to take on between $1 billion and $2 billion in toxic assets held by the banking sector.

NATURAL GAS-US natgas futures end higher after choppy session
NEW YORK, May 10 (Reuters) - Front-month U.S. natural gas futures ended higher on T hursday in a seesaw session as signs of a tightening market and another light weekly inventory build offset moderate temperature forecasts that should slow weather-related demand.
"The (EIA) build was below consensus. It looks like demand is getting a lot of support from the power generation sector, which is eating away at the storage surplus, but I don't think the market is tight enough yet to balance," said Eric Bickel, analyst at Summit Energy, noting supply was still strong.

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.

20120511 1132 Malaysia Corporate Related News.

Infineon to inject RM4bn into Kulim plant operations
Infineon Technologies (Kulim) SB will invest RM4bn in its operations at the Kulim Hi-Tech Park over a 10-year period. The German company is expanding its wafer fabrication facility, Kulim 2, to include a manufacturing centre for the production of megatrend technologies for energy efficiency and automotive industries. (Malaysian Reserve)

MAS to get up to RM1.5bn bridging loan from CIMB
Malaysian Airline System (MAS) is close to securing up to RM1.5bn in a bridging loan from CIMB Group Holdings, giving it ample time to structure a RM3bn bond for its long-term needs. According to three separate sources, the one-year bridging loan is intended to finance the national carrier’s daily operational needs and this would give MAS some time to structure the bonds. (Financial Daily)

IGB JVs to acquire Johor land for RM259m
IGB Corp’s two 70%-owned subsidiaries will acquire 1.57m sq ft of land in Johor Bahru for a consideration of RM259.14m or at RM165 per sq ft. The land, to be acquired from Selia Pantai SB, is for the development of a shopping mall plus other commercial components. Selia Pantai also owns a 30% stake in the two IGB subsidiaries that will develop the land. (Financial Daily)

Contracts from TNB a boost to Pestech
Pestech International, which plans to list on the Main Market of Bursa Malaysia on 30 May, expects an increase in contribution from its local operations with the addition of two new contracts worth RM105.7m from TNB recently. The contracts are JV with TNB to build electric sub-stations in the Sarawak Corridor of Renewable Energy (SCORE) and Teluk Ramunia, Johor. (Financial Daily)

Harvest Court MD pares stake
Harvest Court Industries managing director Ng Swee Kiat substantially pared his shareholding in the company, selling more than 10% equity interest over two days, filings showed. In a statement yesterday, Harvest Court said Ng sold shares amounting to about 6% of its share base during the closed period on Wednesday, disposing of 9.26m shares or a 5.1% stake at an average of 71.2 sen apiece. (Financial Daily)

Property: Former Star site to undergo MYR900m development. The Pacific Star, with a gross development value of about MYR900m, would sit on the former site occupied by Star Publications (M) Bhd in Jalan 13/6, which had since been converted to commercial 99-year leasehold. The project is a 51:49 joint venture between JAKS Sdn Bhd, the contractor, and Island Circle respectively. (Source: The Star)

Petrochemical: RM61b Johor project is timely. The USD20 b (MYR61b) refinery and petrochemical integrated development (Rapid) project to be undertaken by Petroliam Nasional Bhd (Petronas) in southern Johor will be timely in meeting burgeoning demand for energy and petrochemical products, especially in Asia, in the next 20 years. (Source: Business Times)

ECM Libra-Kenanga: Merger finalized. The widely-speculated merger between the two stand-alone investment banks, ECM Libra Financial Group Bhd and K&N Kenanga Holdings Bhd, has been finalised and will be announced soon, according to banking sources. In February, it was reported that Kenanga was close to an agreement to buy the investment banking and broking unit of ECM Libra for about MYR900m. (Source: The Star)        

20120511 1131 Local & Global Economy Related News.

Malaysia: March industrial output growth short of expectations
Malaysia’s Industrial Production Index (IPI) grew by 0.6% due to the rise of manufacturing and electricity indices by 2.0% and 4.9% respectively. The major sub-sectors which reported increases in manufacturing output in March included petroleum, chemical, rubber and plastic products as well as transport equipment and other manufactures. (BT)

China: Trade lagging behind estimates adds easing pressure. Overseas shipments rose 4.9% YoY while import growth of 0.3% YoY trailed forecast. The trade surplus was USD 18.4b, almost double estimates of USD 9.9b. (Source: Bloomberg)

Russia: Refrains from rate cut as Putin craves growth. Bank Rossii in Moscow indicated that containing inflation is its priority by leaving the refinancing rate at 8%, in line with all 15 forecasts in a Bloomberg survey. The level of borrowing costs is "appropriate for the coming months," the central bank said in a statement on its website. (Source: Bloomberg)

India: Trade deficit was USD 13.4b in April as a struggling global recovery curbed overseas shipments. Merchandise exports climbed 3.2% YoY last month to USD 24.5b, Commerce Secretary Rahul Khullar told reporters in New Delhi. Imports gained 3.8% YoY to USD37.9b, he said. (Source: Bloomberg)

S. Korea: The Bank of Korea held off from altering borrowing costs for an 11th straight month after inflation eased and policy makers cut their forecasts for economic growth. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 3.25%. (Source: Bloomberg)

Indonesia: Takes steps to reduce cash as interest rate held. Bank Indonesia will raise the rates on central bank bills and term deposits of all tenors to absorb liquidity, it said in Jakarta, without specifying the levels. Governor Darmin Nasution and his board held the reference rate at 5.75%. (Source: Bloomberg)

Philippines: Exports unexpectedly fell in March as faltering global growth crimped demand for its electronics and agriculture products. Shipments abroad declined 1.2% YoY to USD 4.3b after a revised 12.8% YoY gain in February, the National Statistics Office said. (Source: Bloomberg)

Australia: Jobless rate drops to 4.9%, lowest level in year
Australia's unemployment rate unexpectedly dropped to a one-year low as payrolls rose for a second straight month, driving the local currency higher and reducing bets on interest-rate cuts next month. The jobless rate fell in April to 4.9%, matching the lowest level since Dec 2008, from 5.2% in March. (Bloomberg)

Greece: Strives for government after election raises doubt
Greece’s political leaders go into a fifth day of talks today to carve out a government with Evangelos Venizelos, the socialist Pasok leader, set to press counterparts on a proposal for a unity government that would avert a new election. Venizelos, who received the mandate to form a government yesterday, said there was a first “good omen” since the inconclusive 6 May election, after Democratic Left leader Fotis Kouvelis outlined a proposal designed to keep the country in the euro area. (Bloomberg)

Italy: Industrial output rebounds amid recession
Italian industrial production rebounded in March even as the country’s fourth recession since 2001 weighs on demand for manufactured goods. Output rose 0.5% from February, when it declined 0.7%. Production fell 5.8% from a year ago on a workday-adjusted basis. (Bloomberg)

U.K: Consumer confidence declines on weak economy, jobs outlook. An index of sentiment fell to 44 from 53 in March, the Swindon, England-based customer-owned lender said. A gauge of consumers' expectations for the economy also plunged. (Source: Bloomberg)

UK: Manufacturing grows more than forecast
UK manufacturing output rose more than economists forecast in March as producers of chemicals, transport equipment and electronics led a recovery from disruptions caused by snowfall the previous month. Factory output rose 0.9% from February, when it fell a downwardly revised 1.1%. The median of 29 economists estimate in a Bloomberg News survey was for an increase of 0.5%. (Bloomberg)

UK: King confronts recession risk as BOE seen halting stimulus
Bank of England Governor Mervyn King is about to make the policy decision that may define his final year in office. The central bank's nine-member Monetary Policy Committee will today halt bond purchases at GBP325bn, ending a second round of stimulus, according to 43 of 51 economists in a Bloomberg News survey. The remainder sees an increase of at least GBP25bn in the biggest split on the direction of policy since October, when the bank unexpectedly restarted quantitative easing. (Bloomberg)

US: Posted budget surplus of USD59.1bn in April
The US government posted a budget surplus in April, the first in more than three years, as tax revenue climbed and spending dropped. Receipts topped outlays by USD59.1bn compared with a deficit of USD40.4bn in April 2011. It was the first surplus since Sept 2008 and the biggest since April 2008. (Bloomberg)

US: Jobless claims allay concern on job market
Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the US labor market is faltering. First-time claims dropped by 1,000 to 367,000 in the period ended 5 May. Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. (Bloomberg)

20120511 1127 Global Market Related News.

Asian Stocks Fall Third Day as JPMorgan Loses $2 Billion (Source: Bloomberg)
Asian stocks dropped for a third day after JPMorgan Chase & Co. said it had a $2 billion trading loss as positions in credit securities proved riskier than expected, overshadowing signs U.S. employment is improving. National Australia Bank Ltd. (NAB), the nation’s fourth-largest lender, slipped 1 percent in Sydney. Yamada Denki Co. sank 5.6 percent in Tokyo after the electronics retailer forecast lower first-half profit. Genting Singapore Plc slipped 4.2 percent after the theme park and casino operator reported a 33 percent decline in first-quarter net income. Nissan Motor Co., the carmaker that gets about one-third of sales from North America, climbed 2.4 percent. “Clearly JPMorgan got it wrong,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “I suspect it’s probably a one off, but it comes during a week where we’ve seen risk off in a big way.”
The MSCI Asia Pacific Index fell 0.6 percent to 118.99 as of 10:54 a.m. in Tokyo, with about three shares falling for each that rose. The measure is heading for its biggest weekly loss in almost six months as France’s political changes and instability in Greece threaten to derail austerity plans and worsen Europe’s debt crisis.

Japanese Stocks Advance on U.S. Jobs, Progress in Greece (Source: Bloomberg)
Japanese stocks snapped a two-day loss after U.S. jobless claims fell and Greek officials reported progress forming a government, boosting the outlook for exporters. Shares also advanced on positive earnings forecasts. Nissan Motor Co. (7201), a carmaker that gets half its revenue in North America and Europe, rose 2.3 percent. Nikon Corp. jumped 7.8 percent after the camera maker’s net-income forecast beat estimates. Chubu Electric Power Co. paced declines among utilities after it was among seven power companies whose ratings were cut by Moody’s Investors Service. The Nikkei 225 Stock Average (NKY) added 0.2 percent to 9,030.55 as of 10:18 a.m. in Tokyo. The measure headed for a 3.7 percent drop this week, falling for the sixth week, the longest streak of losses since July 2008. The broader Topix Index was little changed at 765.39.
“Greece is unlikely to choose to exit the euro or reject a bailout,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about 1.9 trillion yen ($23.5 billion). “Japanese companies have reported conservative but solid earnings and remain on the path toward higher profits. The more selling we see due to risk aversion, the more we realize stocks are cheap.”

European Stocks Advance; Deutsche Telekom, Repsol Climb (Source: Bloomberg)
European stocks rose, erasing an earlier decline, as companies from Deutsche Telekom AG (DTE) to Repsol YPF SA (REP) posted better-than-estimated quarterly profit. Deutsche Telekom AG added 3 percent and Repsol YPF jumped 8.2 percent as the companies posted earnings that exceeded analysts’ forecasts. National Bank of Greece SA (ETE) led gains by lenders. KBC Groep NV (KBC) surged after reporting a smaller-than- estimated drop in profit. Bankia SA (BKIA) slid after Spain’s government said it will take over the lender. The Stoxx Europe 600 Index climbed 0.6 percent to 251.1 at the close in London, erasing an earlier decline of as much as 0.7 percent and snapping two days of losses. The benchmark measure has still slumped 7.8 percent since its highest level this year on March 16.
“Earnings continue being very supportive,” said Henk Potts, an equity strategist at Barclays Wealth in London, which oversees $239 billion. “They continue to beat estimates despite the very difficult environment. Corporate positions still look very bright and profitability very strong. Valuations are undemanding.”

S&P 500 Rises From 2-Month Low on Greece Government Talks (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) rose, rebounding from the lowest level in two months, as Greece attempted to form a new government and a decline in American jobless claims helped allay concern of a labor market setback. Wells Fargo & Co. (WFC) and U.S. Bancorp rose at least 1.4 percent to pace gains in banks. News Corp., the media company run by Rupert Murdoch, and Monster Beverage Corp. (MNST), an energy- drink maker, rallied more than 4.8 percent as earnings beat estimates. Cisco Systems Inc. (CSCO) sank 10 percent as its forecasts disappointed investors. S&P 500 futures fell 0.5 percent at 5:01 p.m. as JPMorgan Chase & Co. (JPM) slumped 3.8 percent after saying one of its divisions had “significant” mark-to-market losses.
The S&P 500 rose 0.3 percent to 1,357.99 at 4 p.m. New York time. The Dow Jones Industrial Average added 19.98 points, or 0.2 percent, to 12,855.04. The Nasdaq-100 Index (NDX) dropped 0.2 percent to 2,616.24, led by Cisco, which comprises 3.1 percent of the measure. About 6.6 billion shares changed hands on U.S. exchanges, almost in line with the three-month average. “They are still talking in Greece and that brings some relief,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “The crash off the cliff in terms of an extreme political alliance didn’t play out today. In the U.S., jobless claims didn’t surprise negatively. That was seen as a positive.”

U.S. Stock-Index Futures Drop as JPMorgan Reveals Losses (Source: Bloomberg)
U.S. stock futures fell as investors assessed a disclosure by JPMorgan (JPM) Chase & Co., the biggest U.S. bank by assets, that it had a $2 billion trading loss after positions in credit securities proved riskier than expected. JPMorgan tumbled 6.7 percent after the close of regular trading as Chief Executive Officer Jamie Dimon said the bank made egregious mistakes and that trading losses were “self inflicted.” Bank of America Corp., Citigroup Inc. (C), Goldman Sachs (GS) Group Inc. and Morgan Stanley (MS) lost at least 2.3 percent. Standard & Poor’s 500 Index futures expiring in June slumped 0.7 percent to 1,347.70 at 9 a.m. Tokyo time. Financial companies in the S&P 500 had the biggest gain among 10 groups in 2012, surging 15 percent, or almost double the benchmark measure’s advance. Dow Jones Industrial Average futures dropped 80 points, or 0.6 percent, to 12,754.
“JPMorgan has held to a higher standard among the banks,” Walter Todd, who oversees about $950 million as chief investment officer at Greenwood Capital in Greenwood, South Carolina, said in a telephone interview. “If this happens to them, it raises the question: if they have these issues, who else does?” JPMorgan led a slump in financial shares after the close of regular trading. The group comprises 15 percent of the S&P 500 for the second-biggest weighting among 10 industries. The bank’s shares retreated 6.7 percent to $38.

Euro at 3-Month Low as Greek Concerns Weigh on Debt Sales (Source: Bloomberg)
The euro slid to a three-month low before Italy, Spain and France sell bonds next week amid concern the region’s debt crisis is deepening. The shared currency headed for a second weekly drop as Greek political leaders go into a fifth day of talks to form a government and before an official report forecast to show the euro region’s economy contracted for a second quarter. The dollar and the yen were poised to rise versus most major peers this week as concern Greece will be unable to stay in the euro bloc boosted demand for safer assets. “We can’t become positive and buy the euro,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “Regardless of whether Greece exits the euro, it will take a lot of time to resolve the region’s debt crisis.”
The euro weakened to $1.2907, the lowest since Jan. 23, before trading at $1.2909 as of 10:38 a.m. in Tokyo, 0.2 percent lower than the close in New York. It’s poised for a 1.4 percent decline this week. The common currency slid 0.2 percent to 103.16 yen, set for a 1.3 percent drop since May 4. The dollar was little changed at 79.92 yen. Italy will sell securities on May 14 maturing in 2015, 2020, 2022 and 2025, followed by Spanish and French debt sales on May 17. It will be the first French auction after Francois Hollande is sworn in as president on May 15.

Facebook IPO Said to Get Weaker-Than-Forecast Demand (Source: Bloomberg)
Facebook Inc. (FB)’s initial public offering has so far generated lower-than-expected demand from institutional investors who are concerned about the company’s growth prospects, people with knowledge of the matter said. Some investors expressed reluctance after Facebook said on May 9 that advertising growth hasn’t kept pace with the increase in users, said the people, who asked not to be identified because the process is private. Facebook is also telling analysts that sales may not meet their most optimistic projections, two people said. Facebook executives have another week to market the IPO, scheduled to price on May 17, and underwriters are stepping up efforts to drum up interest from large shareholders, one person said.
Underscoring concerns that growth may taper for the world’s biggest social network, 79 percent of respondents in the Bloomberg Global Poll of 1,253 investors, analysts and traders who are Bloomberg subscribers said Facebook doesn’t deserve a valuation at $96 billion, the high end of its projected range. Lackluster interest from institutional investors at this stage could compel the company to rely more on buying from retail investors, from whom demand remains robust, people said. The company could still elicit enough demand to sell shares at or above the high end of a projected range, people said.

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.

Korean Won Climbs, Bonds Fall on IMF Forecast, Spain (Source: Bloomberg)
South Korea’s won headed for its biggest weekly loss in five months and government bonds advanced as political changes in Europe heightened concern the region’s debt crisis will worsen, sapping demand for riskier assets. Greece’s political leaders enter a fifth day of talks today to carve out a government following a May 6 election. French Socialist Francois Hollande, who has called for a re-negotiation of the budget-discipline pact crafted by European leaders, was elected president. The Bank of Korea held its benchmark interest rate at 3.25 percent for an 11th month yesterday, citing a “mild” recession in Europe. Global funds cut their holdings of Korean stocks by $1.3 billion this month through yesterday and the Kospi (KOSPI) Index is set for its lowest close since January.
The won slid 1.1 percent this week to 1.143.45 per dollar as of 9:31 a.m. in Seoul, the biggest drop since the five days ended Dec. 9, according to data compiled by Bloomberg. The currency fell 0.1 percent today. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, jumped 82 basis points, or 0.82 percentage point this week, to 8.2 percent.

Treasuries Head for Longest Weekly Rally Since 1998 (Source: Bloomberg)
Treasuries headed for an eighth weekly gain, the longest run since Russia devalued the ruble in 1998, as Europe’s debt crisis and signs of slower growth increased demand for the relative safety of U.S. securities. The Federal Reserve plans to buy as much as $2 billion of Treasuries due from February 2036 to February 2042 today, according to the Fed Bank of New York’s website. The purchases are part of the central bank’s effort to replace $400 billion of shorter-term debt in its holdings with longer maturities by the end of June to hold down borrowing costs. “The U.S. is our favorite bond market,” said Hiromasa Nakamura, who is based in Tokyo and invests Treasuries for Mizuho Asset Management Co., which oversees the equivalent of $41.2 billion. “The U.S. economy is very fragile.” Benchmark 10-year yields were little changed at 1.87 percent as of 9:40 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 1.75 security due in May 2022 was 98 30/32.
Ten-year yields declined two basis points this week, approaching the record low of 1.67 percent set Sept. 23. A basis point is 0.01 percentage point.

U.S. Posted Budget Surplus of $59.1 Billion in April (Source: Bloomberg)
The U.S. government posted a budget surplus in April, the first in more than three years, as tax revenue climbed and spending dropped. Receipts topped outlays by $59.1 billion compared with a deficit of $40.4 billion in April 2011, the Treasury Department said today. Economists projected a $35 billion surplus, according to the median estimate in a Bloomberg News survey. It was the first surplus since September 2008 and the biggest since April 2008. “The total federal budget deficit is slowly shrinking,” said Steven Wood, president of Insight Economics LLC in Danville, California. “However, this improvement has been halting, due largely to erratic economic and employment growth.” President Barack Obama, in his campaign to win a second term, is trying to make the case that while the recovery has been uneven, the U.S. is making progress. The administration has said won’t accept any of the dozen spending bills House Republicans are working on unless they agree to abide by a budget deal reached last year.
The dispute may lead to a government shutdown shortly before the November elections unless lawmakers agree on legislation to keep agencies operating in the 2013 fiscal year, which starts Oct. 1.

Jobless Claims Allay Concern on U.S. Job Market: Economy (Source: Bloomberg)
Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the U.S. labor market is faltering. First-time claims dropped by 1,000 to 367,000 in the period ended May 5, the Labor Department said today in Washington. Other reports showed that a gauge of consumer confidence declined to a three-month low, and the trade deficit widened on rising demand for imports from oil to autos. Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. Declines in dismissals point to a brighter labor market that would help sustain consumer spending after payroll growth slowed last month.
“The health of the labor market is improving,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. Hoffman is the most accurate forecaster of payrolls in the two years ended in March, according to Bloomberg data. “It gives me a little bit of encouragement that the May employment report won’t be a third-strike-you’re-out type of number.” Stocks rose as Greece attempted to form a new government to try and remain in the euro area. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,357.99 at the close in New York.

Bernanke Speaks About Risks From End of Pro-Growth Plans (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke spoke to a group of senators today about the potential harm to the economy from the expiration of several pro-growth policies, according to senators who attended the meeting. Bernanke discussed the scheduled end of programs including the Bush tax cuts, the payroll tax holiday and extended unemployment benefits, as well as budget cuts that are set to take effect in January of 2013, said Kent Conrad, a North Dakota Democrat. “It’s clear to all of us and he stressed that if all of these things occur it could drive us back into a worse recession,” said Richard Durbin of Illinois, the chamber’s No. 2 Democrat, after the meeting. “The sooner we can resolve these issues, the more likely we are to give confidence to consumers and investors across America.”
Bernanke has warned before of a possible setback to growth from the expiration of tax cuts and reductions in federal spending. The policy changes could more than offset the economy’s progress in recovering from the longest recession since the Great Depression, he said in an April 25 press conference.

Fed’s Kocherlakota Sees ‘Persistent’ Damage to Job Market (Source: Bloomberg)
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said damage to the labor market may persist even as the expansion continues, holding U.S. unemployment higher than the usual rate since World War II. Central bankers must “contemplate the possibility that the erosion in labor market performance that we’ve seen in the United States over the past five years may be highly persistent, even under appropriate monetary policy,” Kocherlakota said today in a speech in Minneapolis. Accelerating inflation is “a signal that our country’s current labor market performance is much closer to ‘maximum employment’ than the post-World War II U.S. data alone would suggest.” The Fed in an April 25 statement affirmed a plan to keep its main interest rate near zero through at least late 2014, citing “elevated” joblessness. Kocherlakota added today that he believes interest rates may need to be raised earlier because the economy is improving.
“We have to be careful not to let things get ahead of ourselves in the sense that we might have to start to move as early as I indicated, in six to nine months,” the district bank head told reporters after the speech. The central bank would need to begin to “prepare the ground for raising rates” if “we continue to see inflation ticking upwards,” he said, citing his forecasts for 2 percent inflation this year and 2.3 percent in 2013.

Senator Blunt Says New Rules on Labor Data Risk Market Turmoil (Source: Bloomberg)
The Department of Labor’s move to restrict how journalists transmit market-sensitive economic data risks disrupting financial markets, Senator Roy Blunt said. In a letter to Secretary of Labor Hilda Solis, Blunt, a Missouri Republican, objected to the agency’s plan to have media organizations remove from the department computer software, hardware and communications lines used to transmit news on data such as the unemployment rate and consumer prices. “Given the market-moving impact of these numbers and the largely automated processes of today’s market institutions, even a minor flaw in the timing or accuracy of this data could result in a destructive impact on global markets,” Blunt wrote in his letter, dated today.
Reporters in so-called lockups are given data in advance of its release to the public, allowing time to prepare stories using their own hardware, software and data lines. The new system would force journalists, including Bloomberg News reporters, to use government-provided equipment and Internet access, with no guarantee they can send their stories at exactly the same moment.

Volcker Rule Proponents Say JPMorgan Loss Bolsters Case (Source: Bloomberg)
U.S. lawmakers and interest groups favoring tighter restrictions on proprietary trading said JPMorgan Chase & Co. (JPM)’s $2 billion loss on synthetic credit securities bolsters their case. Senator Carl Levin, the co-author of the so-called Volcker rule and chairman of the Permanent Subcommittee on Investigations, said the New York-based bank’s disclosure yesterday served as a “stark reminder” to regulators drafting the proprietary-trading ban required by the 2010 Dodd-Frank Act. “The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too-big-to-fail’ banks have no business making,” Levin, a Michigan Democrat, said in a statement.
The Federal Reserve, Securities and Exchange Commission and Federal Deposit Insurance Corp. are among regulators drafting the so-called Volcker rule to limit bets banks can make with their own funds. JPMorgan, with other Wall Street banks including Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), have lobbied regulators to expand exemptions included in a draft proposal released last year.

China’s April Consumer Inflation Slows to 3.4% (Source: Bloomberg)
China’s inflation was below the government’s target for a third month, giving Premier Wen Jiabao more room to ease policy to stimulate an economy that expanded last quarter at the slowest pace since 2009. Consumer prices rose 3.4 percent from a year earlier after a 3.6 percent gain in March, the National Bureau of Statistics said today. That matched the median estimate in a Bloomberg News survey of 35 economists and compares with the government’s 4 percent annual goal. Inflation under control may boost odds of additional monetary or fiscal stimulus after Wen’s campaign to rein in property and consumer prices slowed growth in the world’s second-largest economy. The government may also have an easier path to loosen controls on prices of resources and utilities.
“Moderating inflation will leave the window open for further policy easing in coming months,” Shen Jianguang, chief Asia economist for Mizuho Securities Asia Ltd. in Hong Kong, said before the release. “Authorities may gradually ease some restrictions on the property market and accelerate infrastructure projects and social housing construction to boost growth.”

China Confidence Unshaken by Bo Crisis in Global Poll (Source: Bloomberg)
China’s deepest political turmoil since 1989 has failed to shake confidence in the strength of its economy and allure of its markets, a Bloomberg poll indicated.
A 51 percent majority are confident in the policies of President Hu Jintao, the quarterly Bloomberg Global Poll of investors, analysts and traders who are subscribers showed. The share was the same as in January, unaffected by the aftermath of former Chongqing Communist Party boss Bo Xilai’s March ouster, which clouded the outlook for this year’s once-in-a-decade leadership change. China’s economy will either improve or remain stable this year, according to 68 percent of respondents, with the share anticipating a deterioration falling to 30 percent, the lowest level since the question was first included in the poll in September. Bo’s exit may prove positive by helping to rein in the type of debt-fueled growth that drove Chongqing’s expansion, according to Redward Associates Ltd.
“Chongqing highlighted that you can accelerate growth temporarily by ramping up debt and by driving state-directed capitalism,” said Peter Redward, 40, principal of Auckland- based Redward, an ex-head of emerging markets Asia research at Barclays Capital and participant in the poll. "A growth model of less state-owned enterprise and bank-directed growth and more private enterprise and social welfare is the way forward.”

Hong Kong Exchanges Said to Make Offer for London Metal Exchange (Source: Bloomberg)
Hong Kong Exchanges & Clearing Ltd. (388), Asia’s biggest bourse operator, submitted a takeover bid for the London Metal Exchange, two people with knowledge of the matter said. “LME is a big opportunity for all exchanges,” Kenneth Yue, an analyst at CCB International Securities Ltd., said in Hong Kong. “If Hong Kong Exchanges can win the bidding, it will definitely be good for the exchange in the long run. Many analysts think that the cash market is mature.” Hong Kong Exchanges, which this year was overtaken as the world’s largest market company, will be making its first overseas acquisition should it beat competing offers from CME Group Inc. (CME), NYSE Euronext (NYX) and IntercontinentalExchange Inc. (ICE) for the LME. The Asian bourse operator is seeking to stem two consecutive quarters of profit declines as trading volumes and initial public offerings slow.
Scott Sapp, a spokesman for Hong Kong Exchanges, declined to comment beyond an April 30 statement from the bourse that said it “continues to participate in the process.” The people familiar with the bourse’s bid asked not to be identified because the process is confidential. Hong Kong Exchanges has declined 5.6 percent in trading this year, valuing the company at $16.3 billion. Shares of Chicago-based CME, owner of the world’s biggest futures exchange, have gained 6.7 percent for the same period, increasing its market value to $17.3 billion.

Germany Examines Bank Use of ECB Loans on Bubble Fear (Source: Bloomberg)
German lenders’ use of cheap loans from the European Central Bank is under examination by the country’s top banking supervisor amid concerns the influx of funding may eventually create “a new bubble.” Banks that took “implausibly high” amounts have to explain how they plan to use the money, said Raimund Roeseler, head of banking supervision at the country’s financial regulator Bafin. The exercise is part of a strategy change focusing more on what banks plan for the future than looking at what they did in the past, he said. The ECB has flooded financial markets with more than 1 trillion euros ($1.3 trillion) of cheap cash to prevent credit markets from freezing up. European Union lawmakers have already demanded that banks disclose profits from carry trades derived from the so-called longer-term refinancing operations and exclude the money from bonus pools.
“In the short-term perspective, the main problem is the European sovereign-debt crisis; in the medium term it’s the question: what happens with all that liquidity?” Roeseler said in an interview at his office in Bonn. “If I see a huge number of banks all go into one field, I’m afraid of a new bubble.” Bafin will review whether borrowing is in line with refinancing needs, he said.

Greece Strives for Government After Election Raises Doubt (Source: Bloomberg)
Greece’s political leaders go into a fifth day of talks today to carve out a government with Evangelos Venizelos, the socialist Pasok leader, set to press counterparts on a proposal for a unity government that would avert a new election. Venizelos, who received the mandate to form a government yesterday, said there was a first “good omen” since the inconclusive May 6 election, after Democratic Left leader Fotis Kouvelis outlined a proposal designed to keep the country in the euro area. “Our views are very close,” Venizelos said to reporters in Athens after meeting with Kouvelis. “I will continue the effort, preparing the ground for the phase of negotiation that will be coordinated by the president of the republic.”
Greece’s political impasse has raised the possibility another election will have to be held as early as next month, threatening the implementation of austerity pledges. The standoff has reignited European concerns over Greece’s ability to hold to terms of its two bailouts negotiated since May 2010 and sparked concerns about the country leaving the euro.

Spain Stakes Credibility on Fourth Bank Cleanup in Three Years (Source: Bloomberg)
Spain will make a fourth attempt to convince investors its banking system is solid after failing to do so with three prior tries in as many years. “All the previous efforts have been announced with a drumroll and a big clash of cymbals but they weren’t credible in the end,” said Javier Diaz-Gimenez, an economics professor at the University of Navarra’s IESE business school in Madrid. “They must get it right this time.” Spain took control of the nation’s fourth-biggest lender on May 9 and Prime Minister Mariano Rajoy, who said for the first time he may use public money to save banks, will announce further measures today to help cleanse lenders of real estate assets. A failure to shore up the system and assuage investors’ concerns threatens to escalate Europe’s sovereign-debt crisis.
Rajoy said in a radio interview on May 7 his government would put forward plans to bolster confidence in Spanish lenders today. Economy Minister Luis de Guindos said on May 3 he was preparing rules that would allow banks to offload real estate that has been written down to market prices into separate management companies.

Italy Industrial Output Unexpectedly Rebounds Amid Slump (Source: Bloomberg)
Italian industrial production rebounded in March even as the country’s fourth recession since 2001 weighs on demand for manufactured goods. Output rose 0.5 percent from February, when it declined 0.7 percent, national statistics office Istat said in Rome today. Economists forecast a gain of 0.1 percent, according to the median of 18 estimates in a Bloomberg News survey. Production fell 5.8 percent from a year ago on a workday-adjusted basis. Mario Monti, the unelected premier who took over after Silvio Berlusconi’s resignation in November, has pushed through 20 billion euros ($26 billion) in spending cuts and tax increases in a bid to eliminate the budget gap. The austerity measures tipped Italy into a recession in the fourth quarter and Monti was forced last month to push back the government’s goal to balance the budget by one year to 2014.
“Recovery is becoming more distant as domestic demand declines more than forecast and the exports lost momentum compared with few months ago,” employers’ lobby Confindustria said in an-emailed statement. Industrial output declined 0.6 percent in April, while gross domestic product dropped 1 percent in the first quarter and “may fall” even more in the three months through June, the group estimated.

20120511 1127 Global Commodities Related News.

S&P GSCI Spot Index of Commodities Erases Advance for the Year (Source: Bloomberg)
The Standard & Poor’s GSCI Spot Index, which tracks raw materials, dropped for an eighth day, losing 0.7 percent to 642.93 at 10:02 a.m. in Singapore. That puts the gauge on course for erasing this year’s gains after it ended 2011 at 644.91. The index droppd today as crude oil and base metals declined.

Inside the commitments of traders report
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, May 9 (Reuters) - Research and analysis into commodity prices and derivatives almost always relies on the commitments of traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC).
Except for some correlation studies published by the European Central Bank and International Monetary Fund, every major report on the formation of commodity prices, supply/demand, the role of index funds, and the possible "financialisation" of the asset class, published in the last five years, has relied on data taken from the COT report.

Indian monsoon onset seen around normal date
NEW DELHI, May 9 (Reuters) - India's monsoon rains are expected to arrive nearly on time, a former government forecaster said on Wednesday, adding to hopes of another drought-free year which would enable the major crop producer to continue its liberal export policy.
Monsoon rains usually arrive around June 1 over the south coast, and P.V. Joseph, now professor emeritus in the atmospheric science department at Cochin University of Science and Technology in Kerala, said they could arrive on that date, give or take three days - a timeframe considered to be normal.

GRAINS-U.S. grains futures climb; USDA report eyed
SYDNEY, May 10 (Reuters) - U.S. grain futures firmed  , with wheat gaining more than 1 percent, as traders picked up bargains after steep losses in the previous session when mounting fears that a euro zone debt crisis could worsen dented sentiment.
"We've seen a significant sell-off over the last week or so, and this is a little bit of buying, position squaring, ahead of tonight's USDA reports," Luke Mathews, commodity strategist at CBA said.

Syria buys grain via Lebanon to beat sanctions
HAMBURG, May 9 (Reuters) - Syria is importing significant volumes of grain via Lebanon to work around western sanctions and secure vital supplies, European traders told Reuters.
The trade is not illegal because food imports are not included in sanctions imposed by the European Union, the United States and other Western countries on President Bashar al-Assad's government over his crackdown on a revolt.

France exported 1.6 MT of wheat in March - customs
PARIS, May 10 (Reuters) - France exported 1.6 million tonnes of soft wheat in March, bringing the total since of the start of the 2011/12 season on July 1 to 12.6 million tonnes, down 17 percent on the same period last season, customs data showed on Thursday.
Shipments outside the European Union amounted to 1 million tonnes, marking the second biggest monthly haul this season, with volumes boosted by shipments to Algeria, Morocco and Egypt.
Asia faces threat to crops if El Nino unleashed again
SINGAPORE, May 10 (Reuters) - A return of the El Nino weather pattern may threaten food output in Asia, the world's top producer of rice and palm oil, but drier conditions in some areas could also benefit crops such as coffee and cocoa and keep global prices in check.
With memories of the devastating El Nino in the late 1990s still fresh in their minds, farmers are braced for the return of the weather anomaly, which can bring drought in some places and heavy storms in others.

USDA to see global grain stocks on rise at last-analysts
WASHINGTON/CHICAGO, May 10 (Reuters) - 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.
A breakneck start on planting the U.S. corn crop and timely rains in the drought-hit wheat fields of the southern Plains may encourage the USDA to estimate higher-than-average yields, analysts said ahead of the first USDA report to project crops and ending stockpiles for the 2012/13 crop year.

Philippines says Q1 farm output up 1.08 pct on yr
MANILA, May 10 (Reuters) - 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.
Unmilled rice output was down 1 percent to 4 million tonnes compared to last year's record harvest of 4.037 million tonnes, Agriculture Secretary Proceso Alcala told reporters. Corn production was up 5.4 percent at 2.02 million tonnes.

Workers at Argentina's key grains port to strike
BUENOS AIRES, May 9 (Reuters) - Workers at most of the installations of Argentina's key grains port, Rosario, will start an indefinite pay strike at midnight on Wednesday, CGT labor union official Edgardo Quiroga said.
The work stoppage will include oilseed-crushing workers, dock workers and other staff at the giant export terminals in San Lorenzo and other areas close to the river port city of Rosario, from which 80 percent of Argentine grains are shipped.

Frost seen for W.Canada, most crops should be okay
WINNIPEG, Manitoba, May 9 (Reuters) - Parts of Western Canada may see freezing temperatures later this week, but the damage to crops would be minimal with seeding still just getting underway, weather and crop specialists say.
Frost should reach southern Alberta and Saskatchewan on Thursday or Friday and stay below freezing overnight, said Andrew Owen, meteorologist at U.S.-based World Weather Inc.

French farm body ups wheat stocks forecast
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.

Argentine wheat area seen down, quality suffers
BUENOS AIRES, May 9 (Reuters) - Farmers in grains powerhouse Argentina will plant less wheat this year, sowing other crops instead to skirt government export curbs that are hobbling investment in wheat, the head of industry group ArgenTrigo said.
Reforms to the country's export rules have failed to revive interest among wheat growers while worries mount that faltering quality, is costing the world's sixth biggest wheat exporter its competitiveness. Algeria rejected an offer of Argentina wheat last month.

Recap: Wheat Futures (Source: CME)
Wheat futures traded on both sides of unchanged today and finished likewise, with Chicago slightly firmer, Kansas City narrowly mixed and Minneapolis slightly lower. The wash-finish in the wheat market can be attributed to a mix of bullish and bearish data in USDA’s balance sheet adjustment today. However, this was countered by smaller-than-expected carryover for both old- and new-crop wheat.

Wheat Market Recap Report  (Source: CME)
July Wheat finished up 1 1/4 at 601 1/4, 6 1/4 off the high and 6 1/4 up from the low. December Wheat closed up 1 3/4 at 640 3/4. This was 6 1/2 up from the low and 5 3/4 off the high. July wheat experienced two-sided choppy trade and closed slightly higher on the day. The higher close after posting a new low for the move is seen as a positive technical factor. While production numbers came in higher than expected, usage was also higher than expected and stocks are tightening. Weakness in corn was offset by strength in soybeans and the tightening stocks situation for both the US and world for wheat is a positive force as well. The USDA pegged winter wheat production at 1.694 billion bushels which was about 55 million above trade expectations and compares with 1.494 billion last year. All wheat production was pegged at 2.245 billion bushels which is up 50 million from expectations and compares with 1.999 billion last year. The USDA pegged US ending stocks for the 2011/12 season at 768 million bushels which was about 12 million below trade expectations and down from 793 million last month. For the 2012/13 season, ending stocks were pegged at 735 million bushels which is 50 million below trade expectations. World ending stocks for the 2011/12 season came in at 197.03 million tonnes as compared with 206.27 million last month as feed usage was revised up by 16.5 million tonnes. For the 2012/13 season, world ending stocks were pegged at 188.13 million. Weekly export sales came in at 221,600 metric tonnes for the current marketing year and 328,900 for the next marketing year for a total of 550,500 which was about as expected. Cumulative wheat sales stand at 98.6% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 97.1%. Sales of 95,000 metric tonnes are needed each week to reach the USDA forecast. The Buenos Aires Grains Exchange pegged the 2012/13 planted area for wheat at 4.0 million hectares, down 13% from last year. July KC wheat closed lower and managed to push to the lowest level since July of 2010. July Oats closed unchanged at 336. This was 2 up from the low and 3 1/4 off the high.

Recap: Corn Futures (Source: CME)
Pressure on old-crop corn futures built into the close, with those contracts ending 15 3/4 to 19 3/4 cents lower. September corn ended 13 1/2 cents lower, with new-crop down 5 3/4 to 9 1/2 cents. Traders' initial reaction to USDA's 50-million-bu. increase in 2011-12 corn carryover was muted, as the general belief in the market is supplies are tighter than that. But as the day progressed, sell stops were triggered to sharply extend losses.

Corn Market Recap for 5/10/2012  (Source: CME)
July Corn finished down 19 3/4 at 587 1/2, 24 3/4 off the high and 2 up from the low. December Corn closed down 9 1/2 at 507 1/4. This was 2 1/4 up from the low and 12 off the high. July corn closed sharply lower on the session and saw the lowest close since March 16th. The USDA had enough bearish factors to drive futures lower early in the day with December corn pushing down to the lowest level since February 25th. The USDA pegged ending stocks for the 2011/12 season at 851 million bushels which was up 50 million from last month and up about 100 million from trade expectations. Feed usage was adjusted lower by 50 million bushels and other usage numbers were left unchanged on the month. Traders see US producers using more domestic wheat and even UK feedwheat imports into the East Coast as reasons for the decline. Brazil production was revised to 67 million tonnes from 62 million last month. As a result, world ending stocks came in at 127.5 million tonnes as compared with expectations at near 122 million. For the new crop season, the USDA pegged yield at a record high 166 bu/acre which pushed ending stocks to a whopping 1.881 billion bushels which is up from trade expectations near 1.71 billion. The record high yield was calculated by "not" using last years yield in their 20 year trend calculation and by raising the yield by 2 bu/acre due to early plantings. In the May report last year they used the trendline yield for the 1990 to 2010 seasons and the same years for the calculation this year. Total usage was pegged at 13.775 billion from 12.655 billion this season. Weekly export sales came in well below trade expectations at 224,200 metric tonnes for the current marketing year and 249,200 for the next marketing year for a total of 473,400. Cumulative corn sales stand at 86.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 84.0%. Sales of 327,000 metric tonnes are needed each week to reach the USDA forecast. July Rice finished up 0.395 at 15.79, equal to the high and 0.32 up from the low.

SOFTS-Sugar firms near 20-month low, coffee up
LONDON, May 10 (Reuters) - Raw sugar futures on ICE firmed in early trading and stood above Wednesday's 20-month low, with upside potential limited by plentiful global supplies.  Raw sugar futures on ICE firmed and stood close to Wednesday's 20-month low, as recent upward revisions to the expected 2011/12 global surplus weighed on prices.

Marex Spectron sees smaller 2011/12 world cocoa deficit
LONDON, May 10 (Reuters) - Marex Spectron estimates 2011/12 world cocoa output will fall 19,000 tonnes short of grindings, smaller than its February estimate of a 94,000 tonne deficit, partly due to improved production prospects, the commodities brokerage said in a report.
This compares with a record surplus of 442,000 tonnes the previous year when West Africa saw a bumper harvest after ideal weather.

China 2012/13 cotton output seen dropping-attache
May 9 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in China:
"MY12/13 domestic cotton production is forecast to drop to 6.85 million tonnes on lower forecast planted area of 5.05 million hectares, while cotton consumption is expected to increase to 10 million tonnes. High domestic stock levels could weaken import demand in MY12/13, depending on the level of China's market intervention measures. The U.S. remains China's largest cotton supplier with MY10/11 sales of 1.2 million tonnes."

Ivorian cocoa crop to hit 1.35 mln T -ICCO
ABIDJAN, May 9 (Reuters) - Ivory Coast will produce around 1.35 million tonnes of cocoa during the current season, down from a record 1.5 million last season, the International Cocoa Organisation said on Wednesday.
"For the 2011-2012 season currently underway, we estimate production lowering in Ivory Coast to around 1,350,000 tonnes," Jean-Marc Anga, executive director of the ICCO, told a conference in the country's commercial capital, Abidjan. An ICCO official had said in late March that cocoa output from the world's top producer country would likely reach 1.3 million tonnes.  

Saudi to supply full contract June crude to Asian buyers-sources
TOKYO/SEOUL, May 10 (Reuters) - Saudi Arabia, the world's top crude exporter, will supply full contracted volumes of crude oil in June to at least three Asian term buyers, as the region's crude buyers strive to find alternative sources to Iran, industry sources said on Thursday.
The June volume offers were unchanged from May, the sources familiar with the matter said. Saudi Arabia has supplied full contractual volumes to most Asian buyers since late 2009.

China April crude oil imports up 3.3 pct on yr
BEIJING, May 10 (Reuters) - China's April imports of crude oil rose 3.3 percent from the same month a year ago to 5.42 million barrels per day (bpd), but high oil prices reduced the level of purchasing from the previous month, customs data showed.
China is the world's second biggest oil consumer and crude buyer, and its demand growth i s one of the biggest drivers of global crude markets.

Ghana aims to almost double oil revenues in 2012
CAPE TOWN, May 9 (Reuters) - Ghana expects to almost double its oil revenues to $650 million in 2012 as it ramps up production, a senior energy ministry official said on Wednesday.
"Last year the government got about $350 million of revenue from the sector and this year we are projecting $650 million from the sector," Thomas Mba Akabzaa, chief director in the ministry of energy, told Reuters on the sidelines of an Africa-EU energy conference.

OIL-Brent drops below $113 after China trade data
SINGAPORE, May 10 (Reuters) - Brent crude slipped below $113 on Thursday, after weaker-than-expected Chinese trade data that raised concerns over energy demand by the world's second-largest oil consumer.
"The weak Chinese data is putting more pressure on oil. With demand for oil looking bleak and rising inventories, I don't expect crude oil prices to rebound any time soon," said Miguel Audencial, a trader with CMC Markets in Sydney.

Oil Heads for Second Weekly Drop as Supply Exceeds Demand (Source: Bloomberg)
Oil fell in New York, heading for a second weekly drop, on concern Europe’s debt crisis will worsen and curb fuel demand as global crude supplies increase. Futures slid as much as 1 percent, retreating for the seventh day in eight. Oil may extend declines next week amid rising U.S. stockpiles and concern the crisis in Europe will spread, threatening the global economic recovery, according to a Bloomberg survey. OPEC is producing 8.3 percent more crude than it considers necessary this quarter, data released yesterday by the Vienna-based group showed. “The outlook remains mixed to negative and I think that’s the state of play for a little while,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded. We still continue to see inventory builds.”
Crude for June delivery fell as much as 95 cents to $96.13 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.32 at 10:54 a.m. Sydney time. The contract yesterday rose 27 cents to $97.08. Prices are 2.2 lower this week and down 2.5 percent this year.

ArcelorMittal Profit Falls 24%, Exceeds Estimates (Source: Bloomberg)
ArcelorMittal (MT), the world’s biggest steelmaker, posted first-quarter profit that beat estimates after a recovery in North America countered declining revenue from mining and weaker European demand. Earnings before interest, tax, depreciation and amortization were $1.97 billion, ArcelorMittal said today in a statement, exceeding the $1.67 billion median estimate of 13 analysts surveyed by Bloomberg. The company maintained guidance that first-half Ebitda will be higher than the prior six months. “North America was a lot stronger than I would have thought, up very strongly sequentially driven by both volumes and prices,” Tim Cahill, a Dublin-based analyst at J&E Davy Holdings Ltd., said by phone. “That was definitely a surprise.”
Profit at ArcelorMittal’s Americas flat-steel business more than doubled from the prior three months as production rose by 4 percent to meet demand for use in cars, appliances and farming equipment -- so-called yellow goods. U.S. consumption of the metal is forecast by the World Steel Association to rise 5.7 percent this year, contrasting with slumping European demand.

Goldman Stands By Gold-Rally Forecast Even as Price Drops (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) stood by its forecast for a rally in gold this year, saying that the precious metal will advance to $1,840 an ounce over six months as the U.S. central bank embarks on a third round of stimulus in June. Gold remains the “currency of last resort,” according to analysts led by Jeffrey Currie in a report dated yesterday, the same day that the price sank to the lowest level in four months as Europe’s escalating debt crisis boosted the dollar. The restated gold forecast implies a 16 percent surge. Concerns that Greece may leave the euro reignited Europe’s crisis this week, driving commodities including gold lower along with base metals, crude oil and equities as the dollar climbed. The 17-nation euro area is on the verge of losing one of its members, according to a Bloomberg Global Poll published today.
“In early 2009, we suggested that gold had become the currency of last resort, overtaking the U.S. dollar’s status due to the rising risk of sovereign default and debasement concerns,” Currie wrote. Even as the U.S. currency advanced and gold fell on the European crisis in recent months, “it is too early for the dollar to reclaim this status,” he wrote.

Gold Bulls Weakest in Month as Investors Buy Dollar (Source: Bloomberg)
Gold traders are the least bullish in five weeks after the metal erased almost all of this year’s gains, as political turmoil in Europe and mounting optimism about the U.S. economy drives investors to favor the dollar. Fourteen of 32 analysts surveyed by Bloomberg expect prices to gain next week and six were neutral, the lowest proportion since April 6. Bullion futures slid to a four-month low of $1,578.50 an ounce this week and hedge funds are making their smallest bet on a rally in about three years, Commodity Futures Trading Commission data show.
The Dollar Index, a measure against six major counterparts, rose for eight consecutive days through May 9, the longest winning streak since September 2008. Gold fell on seven of those days, a sign that investors are favoring the currency over the metal to protect their wealth amid concern that Greece may have to leave the euro. The U.S. economy will accelerate this quarter and in the following three months, according to the mean of 72 economists surveyed by Bloomberg. “When the market gets very nervous, then they buy dollars and gold finds it difficult to rally,” said Jesper Dannesboe, an analyst at Societe Generale SA in London. “Given what’s going on in the markets at the moment, any rally will probably just be a bounce before another setback.”

20120511 1125 Soy Oil & Palm Oil Related News.

Rueters : India's April 2012 refined palm oil imports at 97,547 tonnes (Reuters poll: average at 134,000 tonnes) VS 186,788 tonnes in March 2012.

Reuters Survey : India's April 2012 total palm oil imports seen up 12.5%, soy oil imports up 106.2%  vs March 2012

Reuters Survey : India's April 2012 refined palm oil imports seen down 28.3% vs March 2012

Recap: Soybean Futures  (Source: CME)
Soybean futures closed with gains of 23 1/2 to 25 1/2 cents in the May through January 2013 contracts. Farther deferred months ended with lighter gains. This was good for a high-range close. Soybean traders had no shortage of bullish news to digest today. USDA trimmed carryover for 2011-12 to 210 million bu., 11 million bu. more than the average pre-report trade guess. USDA’s 2012-13 carryover projection came in 25 million bu. below traders’ expectations at 145 million bushels.

Soybean Complex Market Recap  (Source: CME)
July Soybeans finished up 25 at 1455 1/4, 3 1/2 off the high and 25 3/4 up from the low. November Soybeans closed up 25 1/2 at 1359. This was 27 1/2 up from the low and 9 off the high. July Soymeal closed up 8.6 at 424.6. This was 9.6 up from the low and 0.9 off the high. July Soybean Oil finished up 0.68 at 53.5, 0.15 off the high and 0.6 up from the low. July and November soybeans closed sharply higher on the day but closed off of the early-in-the-day highs. The USDA confirmed a very tight outlook for the coming season. The USDA pegged US ending stocks for 11/12 at 210 million bushels, which was slightly supportive against expectations and compares with 250 million estimated last month. For the 2012/13 season, ending stocks are projected at just 145 million bushels which is 20 million below expectations and is the lowest May estimate since 1988. November soybeans pushed sharply higher early in the session trading as much as 34 1/2 cents higher on the day. World ending stocks for the 2011/12 season came in at 53.2 million tonnes which was right on expectations and compares with 55.52 million last month and down from 70.1 million last year. Brazil production came in at 65 million, down from 66 million last month and Argentina was revised down to 42.5 million from 45 million last month. However, the Brazil agriculture ministry this morning revised their crop estimate higher to 66.7 million tonnes from 65.6 as their previous forecast. Weekly export sales for soybeans came in better than expected at 466,500 metric tonnes for the current marketing year and 1.36 million tonnes for the next marketing year for a total of 1.827 million. Old crop sales of 76,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 138,400 metric tonnes for the current marketing year and 97,100 for the next marketing year for a total of 235,500. Oil sales came in at 30,100 tonnes. Weakness in corn and the outlook for good weather in the Midwest were seen as negative forces. Meal was the leader on the upside. The Rosario Grains Exchange pegged the Argentina crop at just 40.9 million tonnes from 43.1 as their previous estimate.

VEGOILS-Palm oil gains on lower stocks view; USDA eyed
SINGAPORE, May 10 (Reuters) - Malaysian palm oil futures edged up, as traders bet on lower palm oil stocks, although gains were capped by lingering euro zone fears and weaker-than-expected Chinese trade data.
"The market is looking at the MPOB (Malaysian Palm Oil Board) report today, market is a little bit positive on that," said a trader with a foreign commodities brokerage in Malaysia.

China to release 2.5 mln T state soy reserves in northeast
BEIJING, May 10 (Reuters) - China, the world's top soy importer, will offer 2.5 million tonnes of soybeans to crushers from state reserves, mainly in inland provinces in the northeast, to cut government stocks before the new harvest, industry sources said on Thursday.
Sources expected the release, which will start late May, to have only a minor impact on imports because soy plants in the country's northeast use only domestic soybeans for crushing.

Soybeans Rise as U.S. Predicts Plunging Inventory in 2013 (Source: Bloomberg)
Soybeans rose the most in more than two weeks after the U.S. forecast a 31 percent plunge in domestic inventories next year, as drought damage in South America boosts demand for supplies from the Midwest.
Reserves will drop to 145 million bushels (3.94 million metric tons) on Aug. 31, 2013, from an estimated 210 million this year, the U.S. Department of Agriculture said today in a report. The average estimate of analysts surveyed by Bloomberg was 172 million bushels. U.S. exports will jump 14 percent to make up for smaller crops in Brazil and Argentina this year and rising global demand, the USDA said. “U.S. carryover is already projected to be very small, and that means South America will have to harvest big crops to prevent a bigger global shortage from developing,” Bill Gentry, a broker at Risk Management Commodities Inc. in Lafayette, Indiana, said in a telephone interview. “We will need to see increased export demand to keep this rally going.” Soybean futures for July delivery advanced 1.7 percent to close at $14.5525 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain since April 20. The oilseed has rallied 20 percent this year.
Reduced soybean supplies in the U.S., the world’s largest grower and exporter last year, may raise feed costs for meat producers including Tyson Foods Inc. (TSN) and Smithfield Foods Inc. (SFD) Craig Huss, the chief risk officer at Decatur, Illinois-based Archer Daniels Midland Co., the world’s largest grain processor, said May 1 that reduced South American exports would make it “difficult to buy beans going forward.”

South America
Combined production in Brazil and Argentina will fall to 107.5 million metric tons in the marketing year that ends Sept. 30, from 111 million forecast in April and 124.5 million a year earlier, the USDA said. Output will rise to 133 million next season, the agency said in its first forecast of the crops. Estimated global production in the marketing year that begins Oct. 1 will rise to 271.42 million metric tons, from a revised 236.87 million tons this year, the USDA said in today’s report. World consumption is forecast at 265.14 million tons next year, up from a record 254.14 million forecast this year. Reserves before the 2013 Northern Hemisphere harvest will rise to 58.07 million tons, up from 53.24 million this year, the lowest in three years, the USDA said. Eighteen analysts surveyed by Bloomberg News expected 58.24 million, on average. Soybeans are the second-largest U.S. crop, valued at $35.8 billion in 2011, behind corn, government data show.