Thursday, May 17, 2012

20120517 1818 FCPO EOD Daily Chart Study.

FCPO closed : 3095, changed : +10 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : falling, seller in control.
Support :  3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250 level.
Comment :
FCPO closed pullback upward slightly with slower volume transacted. Soy oil price currently also correcting upward after overnight closed weaker by nearly 2% while crude oil price trading side ways.
Price closed recovered slightly after recent steep dive on profit taking but traders remained cautions monitoring closing Greece development.
Technical chart reading revised back to 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.

20120517 1739 FKLI EOD Daily Chart Study.

FKLI closed : 1534 changed : +10 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : falling lower, seller in control.
Support : 1530, 1515, 1500, 1485 level.
Resistance : 1540, 1550, 1565, 1550 level.
Comment :
FKLI closed rebounded higher with reduced volume changed hand doing 10 points discount compare to cash market that also closed higher. Overnight U.S. markets closed lower and today Asia markets ended mostly higher while European markets still trade weaker today.
Most of Asia market doing small recovery after last night U.S. Federal Reserve statement will do more to stimulate its economy and Japan better than forecast economy growth while European region markets trading lower as ECB stop lending to Greece banks to reduce risk.
Daily chart reading adjusted to 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 resistance or strength with quick cut loss and profit target.

20120517 1708 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : downside biased with possible pullback.
 Hang Seng chart reading : downside biased with possible pullback correction.
KLCI chart reading :  pullback correction downside biased.

20120517 1656 Global Market & Commodities Related News.

Asian shares recovered a bit of the ground lost in the previous day's sell-off, but investors found no reason to bet on risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies. U.S. stocks closed lower on Wednesday, with the S&P 500 logging its fourth straight decline as investors worried about Greece's future as a member of the euro zone.

The euro inched up after plunging to a four-month low the day before, as some Greek banks faced emergency funding needs, compounding fears that the country's exit from the euro may put more pressure on other struggling European nations.

U.S. wheat jumped more than 1 percent, rising for a fourth straight session to its highest since May 1, as concerns over dry weather in top exporters the United States and Russia prompted short covering.

China's corn supply to stay tight in 2012/13 -CNGOIC
China's corn supply is expected to stay tight in 2012/2013 (Oct/Sept), fuelling a continued increase in imports of the grain by the world's second largest consumer and prompting feed millers to boost the use of cheaper wheat, an official think-tank said.

Thai 2012/13 sugar output to surpass record
Thailand, the world's second-biggest exporter of sugar, will produce 10.2 to 10.3 million tonnes of the sweetener in the 2012/13 season, eclipsing the record 10.2 million tonnes it had produced in the 2011/12 season.

Cargill says no change in sugar trading direction
U.S. commodity company Cargill Inc said on Wednesday it has not changed its trading strategy despite its recent absence in the delivery of the sweetener to the raw sugar market, a process it  dominated over more than a decade.

Brent crude slipped to a near four-month low as investors shunned riskier assets following turmoil in Greece and the euro zone, while oil supplies could rise as G8 countries may tap emergency reserves ahead of sanctions on Iran in July.

US Senate to consider new Iran sanctions Thursday
U.S. Senate Democratic leader Harry Reid will ask the chamber to approve a new package of oil and economic sanctions on Thursday aimed at further pressuring Iran to abandon its nuclear program, a Democratic leadership aide told Reuters.

US crude stocks rise for 8th week, products fall-EIA
U.S. crude oil stockpiles jumped for an eighth straight week, while product inventories fell as refineries processed more crude, according to weekly data from the U.S. Energy Information Administration on Wednesday.

Saudis, soaring costs may keep oil above $100
Oil industry executives and bankers are assuming oil prices will stay above $100 a barrel in the year ahead, despite mounting economic worries, as any fall below that level would trigger a cut in Saudi Arabia's output and force closures at high-cost projects around the world.

Commerzbank cuts 2012, 2013 base metals price forecasts
May 16 (Reuters) - Commerzbank cut its 2012 and 2013 price forecasts for base metals on Wednesday on numerous risk factors and high levels of uncertainty in the market.
"We believe the risks currently outweigh the opportunities. In the short term we therefore see further correction potential for all commodities, to which base metals will also not be immune," the bank said in a note to clients.
Indonesia extends export duty to 21 metal ores
JAKARTA, May 16 (Reuters) - Indonesia will apply an export duty of 20 percent to 21 metal ores and concentrates, the finance minister said on Wednesday, extending a list of 14 metals proposed earlier this month to be subject to the duty.
In total 65 mineral categories will be affected by the new regulation, effective immediately, finance minister Agus Martowardojo said. This did not include coal.

London copper edged higher for the first time in five sessions, with a firmer euro aiding its bounce from four-month lows hit in the previous session amid a deepening debt crisis in Europe exacerbated by Greece's political instability.

Gold rose half a percent as bargain hunters resurfaced after prices tumbled to another 4-1/2 month low in the previous session and the euro rebounded, but gains could be limited by fears of a deepening debt crisis in Greece.

20120517 1343 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares steady after sell-off, Greece fears weigh
TOKYO, May 17 (Reuters) - Asian shares steadied on Thursday from the previous day's sell-off, but investors found no reason to bet on risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies.
"Unless these are remedied, pressure will mount on others to leave. In our opinion, the costs associated with an exit are high for all parties and are likely too high in the current fragile environment."

COMMODITIES-Major markets drop on Greek woes, ag prices up
NEW YORK, May 16 (Reuters) - Major commodity markets including oil and copper ended lower on Wednesday, pressured by concerns over Greece's financial situation.  
Losses were tempered by big gains in natural gas and agricultural markets, which rose on their own fundamentals.
The European Central bank said on Wednesday that it had stopped providing liquidity to some Greek banks, further fueling worries over Greece's place in the euro zone.

Italy Iran oil imports edge up, Libya top supplier
MILAN, May 16 (Reuters) - Italy raised crude oil imports from Iran by about 6 percent in March from February ahead of the planned new sanctions against Tehran, while total crude import fell amid weak demand for refined oil products, according to oil industry body Unione Petrolifera (UP).  
Italy, which relies on Iran to cover 10.4 percent of its   crude oil import needs, raised oil purchases from the Islamic   Republic to 425,200 tonnes in March from 401,600 tonnes in February, the UP data showed on Wednesday.

China W.Africa crude imports remain above 1 mbpd
LONDON, May 16 (Reuters) - China's imports of West African crude oil were expected to dip in June from May, but the volume was significantly higher than a year ago, Reuters survey of West African flows showed on Wednesday.
China has been building strategic oil reserves (SPR) since last year and is reducing imports from Iran this year due to difficulty hiring and insuring tankers ahead of the EU embargo on Iranian oil.

Oil price still serious risk to global recovery-IEA
PARIS, May 16 (Reuters) - Oil prices remain a threat to the fragile global economic recovery despite a recent fall, the International Energy Agency's chief economist said on Wednesday, adding the IEA remained ready to release emergency oil stocks if needed.
North Sea Brent crude oil  reached a peak of more than $128 in March before declining around $15 gradually over the last two months as tensions in the Middle East have eased and oil supplies have increased.

OIL-Oil falls as equities dip on Greek, euro zone woes
NEW YORK, May 16 (Reuters) - Crude oil futures tumbled on W ednesday, pressured along with U.S. equities as banking troubles in Greece sparked risk aversion across markets worried about euro zone debt.
"The S&P 500 turned negative, deepening the weakness in the stock market on concerns about Greece and that has speeded up the pace of oil's slide today," said Mark Anderle, trader at TAC Energy in Dallas.

NATURAL GAS-US natgas futures end up 5 pct, hit 2-1/2-month high
NEW YORK, May 16 (Reuters) - U.S. natural gas futures ended higher on Wednesday for a second day, with supportive supply and demand fundamentals and expectations for another light weekly inventory build driving the front-month contract to a 2-1/2-month high.
"The current rally has been driven by a combination of increases in consumption (mostly from coal to gas switching) and some production cuts. This has resulted in this year's injection season underperforming versus last year and the five year average," EMI's Dominick Chirichella said in a report.

20120517 1341 Malaysia Corporate Related News.

SapuraKencana earmarks RM5bn capex
SapuraKencana Petroleum, which will be listed today, is spending about USD1.5bn (RM4.7bn) over the next three years, a move deemed pivotal to expand the oil and gas (O&G) support services provider’s geographical presence. President and group CEO Datuk Seri Shahril Shamsuddin said the capital expenditure (capex), to be financed via bank loans, will fund the group’s projects involving drilling rigs and pipe-laying vessels. “We are using Brazil as our beachhead to venture into West Africa,” he said after SapuraKencana’s corporate identity and prospectus launch yesterday. (Financial Daily)

WCT eyes RM1bn worth of jobs
Construction and civil engineering outfit WCT is targeting to secure at least 20% out of its RM5bn tender book for the remaining quarters of this year. During 1Q, WCT managed to secure about RM630m worth of construction projects locally. The projects are the construction of the new headquarters for the Ministry of International Trade and Industry (Miti) in Kuala Lumpur and a medical centre in Kota Kinabalu, Sabah. (Financial Daily)

UMW disposes of subsidiary in Vietnam
UMW Holdings’ indirect subsidiary, Vina Offshore Holdings, had divested 100% charter capital of VND53.4bn (RM8.0m) in Vietnam Offshore Fabrication & Engineering (VOFE) to Technics Offshore Engineering. “An announcement will be made in due course on the completion of the proposed disposal,” UMW said in a stock exchange filing yesterday, adding that exercise is in line with the group’s strategy to rationalize its oil and gas investments and focus on its core business activities with the industry. (Malaysian Reserve)

HSL wins RM73m in jobs
Hock Seng Lee (HSL) has won contracts worth RM73m, bringing the total value of contracts secured so far this year to RM155m. The company said in a filing with the Bursa Malaysia yesterday that the latest projects were sub-contracts for further flood mitigation works in Sibu, Sarawak worth RM45.7m, earthworks as well as construction works for a RM10.6mn orphanage complex and a RM16.9m government office, both of which are in Bintulu, Sarawak. (StarBiz)

KPJ unit buys commercial land in Johor for RM45m
KPJ Healthcare’s unit, Kumpulan Perubatan (Johor) SB, is acquiring a parcel of commercial land in Tebrau, Johor for RM45m. In a statement to Bursa Malaysia in Kuala Lumpur yesterday, KPJ said a private specialist hospital would be built on the 5.4ha land, which in turn would expand its customer base thus contributing positively to the company’s yearly financial performance. (Malaysian Reserve)

Media Prima outlook strong despite 1Q setback
Media Prima's net profit and revenue for the first quarter ended March 2012 fell 40.4%and 5.3% to RM20.8m and RM335.3m, respectively, from the previous corresponding quarter due to lower advertising expenditure amid the current volatile global economy. The media conglomerate, however, is optimistic of the remaining part of the year as it anticipates positive growth of the country's economy while special events taking place in the subsequent quarters are expected to bring in advertisement revenue. It said the first quarter of the year has traditionally been the lowest one in terms of advertising expenditure (adex). (BT)

Axiata may not infuse fresh capital in the company if the government accepts the telecom regulator's recommendation to auction spectrum. Axiata's CEO Jamaludin Ibrahim said that Indian telecom sector would not be able to attract foreign investment in the current environment. Ibrahim met senior government officials including telecom minister Kapil Sibal, telecom secretary R Chandrasekhar and newly appointed Trai chairman Rahul Khullar. Whether Axiata would infuse capital in case Idea Cellular raises fresh funds through equity issue, is a hypothetical issue, said Ibrahim. "However, in case government accepts Trai's recommendations, they may not infuse fresh capital." "We are here for the long term, so we are not exiting... (but) the extent of how much we invest will be determined vis-a-vis the additional cost of spectrum... It will have to be carefully considered," he said. Expressing concerns over the recommendation of Trai, Ibrahim said the reserve price is disruptive and 'very much above what we have asked.' "Either we accept the fate and may be some of us will die a natural death or increase the price for the customer, one of the two things will have to happen," he said. On re-farming, he said it doesn't happen too often where the spectrum is just taken away from you. Shifting to other bands will incur huge capex and opex on the company. (Economic Times of India)

SapuraKencana expects its bidding order book to increase to RM12bn by year-end from RM7bn now. The success rate is between 30% and 45%. Group CEO Dato’ Seri Shahril Shamsuddin said the size of secured order book is RM13.5bn now. He expected capex to be US$1.5bn over three years. (Star)

Petra Energy could come into focus in the coming weeks ahead on the stock market following the planned stake sale by its present shareholder Perdana Petroleum. The stake sale is progressing as planned and the results will be announced in the weeks ahead if anything materialises. Perdana has put its entire 26.9% block in Petra Energy up for tender late last month with CIMB being appointed to undertake a restricted tender process for the proposed divestment of its 57.7m shares. An observer said the potential of a new shareholder entering the company could be a catalyst for the stock moving forward. (Star)

The EPF will take a significant stake in the SPV that is proposing to buy out QSR and KFC Holdings, said sources. The involvement of EPF in the buyout exercise is likely to be aimed at giving the buyout vehicle, Massive Equity Sdn Bhd, a firmer footing from the standpoint of funding as well as governance. The EPF is now going to be a major shareholder of the 49% portion of Massive Equity, while JCorp's 51% in the SPV remains intact. CVC portion of Massive Equity will be reduced. The equity portion of the EPF in Massive Equity will be announced soon. (Star)

Hektar Asset Management Sdn Bhd, the manager of Hektar REIT announced it has obtained the Securities Commission's (SC) approval for its proposal to increase its fund size and list new units on the Main Market of Bursa Malaysia Securities Bhd. With the approval, Hektar REIT is looking to increase its fund size by up to 93.859m units to a maximum of 413.855m units. Approval was also given for the valuation of two retail properties in Kedah to be acquired by Hektar REIT, it said in a statement. The properties are Landmark Central Shopping Centre and a major portion of the Central Square Shopping Centre, which are collectively worth RM184m, it said. The RM181m acquisition of both malls at a purchase consideration price will also increase REIT’s gross asset value to RM1bn, it said. Hektar REIT's enlarged net lettable area is expected to increase by about 52% after Kedah malls proposed acquisition. "Our next step is to meet our unitholders to obtain their approval for the proposed acquisition and rights issue through an extraordinary general meeting,” said Datuk Jaafar Abdul Hamid, Chairman and CEO of Hektar Asset Management Sdn Bhd. (Bernama)

AirAsia X will start to fly 4 times a week from KL LCCT to Beijing Capital International Airport effective June 22 and will offer daily flights from Aug 6. To celebrate the launching of the new route, special fares will be offered at RM249 one-way on economy class and minimum RM1,129 one way on premium flat beds.The fares include fuel surcharge and tax. (Bernama)

20120517 1340 Local & Global Economy Related News.

The Inland Revenue Board (IRB) has received 2,019,924 income tax return forms as of 15 May, up 14.7% as compared with 1,761,503 forms last year. CEO Datuk Dr Mohd Shukor Mahfar said acceptance of the forms via e-Filing was very encouraging. The IRB's target to receive 2.5m income tax return forms via e-Filing would be realised by year-end, he said. (Bernama)

Japan: March machinery orders fall 2.8% from previous month
Japan’s machinery orders fell less than economists forecast in March, as earthquake reconstruction helped to support the nation’s growth. Bookings decreased 2.8% from the previous month, when they rose by the same amount, a Cabinet Office report showed in Tokyo yesterday. Orders can swing between gains and declines depending on the timing of major projects. Japan’s government may report today that the world’s third-biggest economy returned to growth in the first quarter after shrinking in the final three months of last year. Europe’s sovereign-debt crisis and gains by the yen against the dollar may limit the full-year expansion by capping exports. (Bloomberg)

The Bank of Japan’s asset-purchase program hit a snag when financial institutions only agreed to sell ¥480.5bn of one- to two-year debt, less than the BOJ’s planned ¥600bn of purchases. (Bloomberg)

Japan’s tertiary industry index fell a seasonally adjusted 0.6% mom in Mar to 98.6 (0.0% in Feb), missing forecasts for a contraction of 0.4%. (RTTNews)

South Korea’s unemployment rate fell to 3.5% in Apr (3.7% in Mar; 3.7% in Apr 2011) as the economy added 455,000 jobs compared with 379,000 a year earlier. (AFP)

Thailand’s manufacturing sector is only utilising about 60% of its production capacity due to last year’s floods, slow US growth and the European debt crisis, according to the Federation of Thai Industries. (Bangkok Post)

Euro: Greece prepares 17 June elections under caretaker government
A Greek caretaker government will prepare new elections probably on 17 June that are shaping up as a ballot on whether the country should remain a euro member. “Greeks are faced with two choices in this election,” Antonis Samaras, leader of the New Democracy party, said in a statement on state-run NET TV. “We can change everything in Greece, together with a Europe that is changing. Or we can live through the horror and isolation of a euro exit and the collapse of all that we have built.” The new vote follows inconclusive 6 May elections that pushed a political party opposed to Greece’s international bailout into second place, raising the specter of Greece leaving the euro. (Bloomberg)

Euro: Inflation slowed in April, March exports declined
European inflation slowed last month and exports dropped in March as the euro region’s spreading fiscal crisis undermined the economy and consumer demand. The inflation rate in the 17-nation euro area fell to 2.6% from 2.7% in March, the European Union’s statistics office in Luxembourg said yesterday. That’s in line with an initial estimate published on April 30. Euro-region exports fell 0.9% in March from the previous month, when they rose 2.2%, it said in a separate statement. The euro-area economy is showing few signs of recovery after stalling in the first quarter as budget cuts and increasing unemployment undermine consumer demand and leave companies with little room to raise prices. (Bloomberg)

Euro-region exports fell 0.9% mom in Mar (+2.2% in Feb), whilst imports fell 1.1% mom (+3.2% in Feb), widening the trade surplus to a seasonally adjusted €4.3bn from €4.0bn. (Bloomberg)

The ECB has stopped providing liquidity to some Greek banks as they have not been successfully recapitalised, the ECB said. The ECB only conducts its refinancing operations with solvent banks. Banks which fail to meet strict ECB rules but are deemed solvent by the national central bank (NCB) concerned can nonetheless go to their NCB for emergency liquidity assistance (ELA). (Reuters)

The ECB is conducting a comprehensive review of all its policy tools and has no immediate plans to increase stimulus even as market tensions mount, two euro-area officials said. (Bloomberg)

UK: Unemployment extends decline in sign of stabilization
UK jobless claims fell for a second month in April and a wider measure of unemployment dropped in the first quarter, providing further evidence of stability in the labor market. Jobless-benefit claims fell by 13,700 from March, the biggest drop since July 2010, to 1.59 million, the Office for National Statistics said yesterday. Unemployment as measured by International Labour Organization methods fell to 8.2% in the first quarter from 8.3% in the three months through February. The figures provide a boost for Prime Minister David Cameron, with the economy in recession and his approval ratings at all-time lows. (Bloomberg)

US: Home starts join factories topping forecasts
Housing starts and industrial production exceeded forecasts in April, pointing to strength in the U.S. economy at the start of the second quarter. Starts rose 2.6% to a 717,000 annual rate from March’s revised 699,000 pace that was stronger than previously reported, Commerce Department figures showed yesterday. Industrial production climbed 1.1%, the most since December 2010, the Federal Reserve said. The reports indicate the world’s largest economy is withstanding the fallout from the European debt crisis. (Bloomberg)

The US MBA purchase applications index fell 2.4% wow in the week ended 11 May (+3.4% in the prior week), whilst the refinance index gained 13.0% wow (1.3% in the earlier week). (Bloomberg)

US industrial production rose 1.1% mom in Apr (a revised -0.6% in Mar), more than doubling consensus of 0.5%, whilst the capacity utilisation rate rose to 79.2% (a revised 78.4% in Mar). (Bloomberg)

The US Federal Reserve sees a quick, sharp tightening of US spending as a "sizable risk" to the economy, minutes from its last FOMC meeting in Apr revealed. "Several" members of the Fed's interest rate-setting panel have expressed fears that uncertainty about dramatic budget cuts could curb business hiring and economic growth. "If agreement is not reached on a plan for the federal budget, a sharp fiscal tightening could occur at the start of 2013," the minutes noted. (Channel News Asia)

20120517 1022 Global Market Related News.

Asian Stocks Swing Between Gains, Losses on Japan, Greece (Source: Bloomberg)
Asian stocks swung between gains and losses as faster-than-estimated economic growth in Japan and optimism the Federal Reserve will do more to stimulate the U.S. economy offset concern Greece’s debt crisis is worsening. Canon Inc., a Japanese camera maker that depends on Europe for almost a third of its sales, declined 0.4 percent in Tokyo. James Hardie Industries SE (JHX), an Australian supplier of building materials that gets more than half of its sales from the U.S., advanced 1.1 percent in Sydney. Korea Gas Corp., the world’s biggest buyer of liquefied natural gas, jumped 4.7 percent in Seoul after a report it discovered gas in Mozambique. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 114.52 as of 9:43 a.m. in Tokyo, after falling as much as 0.2 percent. Two stocks rose for each that fell on the measure, which yesterday declined to its lowest level this year and dropped more than 10 percent from its Feb. 29 high, a level some traders call a correction.
The Asian gauge advanced before markets in Hong Kong and China open. Japan’s Nikkei 225 Stock Average rose 0.2 percent after the Cabinet Office reported the nation’s economy grew an annualized 4.1 percent in the first quarter, exceeding the 3.5 percent estimate of economists surveyed by Bloomberg.

Most Japan Stocks Fall as Greece Outweighs Economic Data (Source: Bloomberg)
May 17 (Bloomberg) --  Japanese stocks fell, with the Topix Index sliding a seventh day, as concern Greece’s debt crisis is worsening outweighed better-than-expected economic growth in Japan, and U.S. housing and factory data that beat estimates. Canon Inc. (7751), a camera maker that gets 31 percent of its revenue in Europe, lost 1.3 percent. Kansai Electric Power Co. led the sector lower after R&I cut credit ratings on seven utilities, citing delays in restarting nuclear plants. Melco Holdings Inc. rose 5.5 percent after the manufacturer of computer peripherals said it expects a 22 percent rise in profit. The Topix lost 0.3 percent to 737.05 as of 9:20 a.m. in Tokyo, with 21 of its 33 industry groups falling. The Nikkei 225 Stock Average (NKY) declined 0.2 percent to 8,781.92. Trading volume was 0.5 percent below the 30-day average.
The uncertainty in Greece “seems likely to confine equity markets to several weeks of nervous limbo,” said Michael Kurtz, head of global equity strategy at Nomura Holdings Inc., Japan’s largest brokerage. “We will look back on this juncture as an extraordinary buying opportunity even if events ultimately conspire to eject Greece from the euro.”

S&P 500 Caps Longest Slump in 1 Month on Europe Concerns (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) dropped a fourth day, the longest decline in a month, as concern Greece’s debt crisis is worsening offset better-than-estimated reports on U.S. housing starts and industrial production. Financial stocks fell the most in the S&P 500 among 10 groups as Bank of America Corp. (BAC) and JPMorgan (JPM) Chase & Co. sank at least 2.1 percent. Alcoa Inc. (AA) slid 2.5 percent as commodities retreated after the Dollar Index rose for a record 13th straight day. J.C. Penney Co. (JCP) tumbled 20 percent, the biggest drop ever, on disappointing results. General Motors Co. (GM) rose 2.3 percent as Berkshire Hathaway Inc. disclosed a stake in the automaker.
The S&P 500 retreated 0.4 percent to 1,324.80 at 4 p.m. New York time, reversing an earlier advance of as much as 0.8 percent. The Dow Jones Industrial Average decreased 33.45 points, or 0.3 percent, to 12,598.55, the lowest level since Jan. 18. About 7.6 billion shares changed hands on U.S. exchanges today, or 15 percent above the three-month average. “The situation in Europe is extremely precarious,” said Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc. “More needs to be done. You can’t have a lot of confidence that assets will stabilize.”

U.K. Stocks Retreat as Greece Plans Election in June (Source: Bloomberg)
U.K. stocks retreated for a third day as Greece set a date for another election amid speculation the country will leave the euro currency. British American Tobacco Plc (BATS) slipped 1.7 percent. Barclays Plc rose 1.6 percent as UBS AG recommended that its clients buy the stock. The benchmark FTSE 100 benchmark index lost 0.6 percent to 5,405.25 at the close in London, after earlier climbing as much as 0.2 percent and dropping as much as 1.5 percent. The gauge has fallen 9.4 percent from its 2012 high on March 16. The FTSE All-Share Index also slid 0.6 percent today, while Ireland’s ISEQ Index increased 0.1 percent.
“People are still very unsure about the ramifications of what’s going on in Greece, so in the absence of anything else investors keep selling on that,” said Edmund Shing, an equity strategist at Barclays Capital in London. “Stocks can’t go down forever. Sooner or later it’ll change and one catalyst will be the French parliament election and the next Greek one.” The FTSE 100 (UKX) fell yesterday as Greece called a new general election after President Karolos Papoulias failed to cajole the country’s political parties into forming a new government.

European Stocks Extend Four-Month Low Amid Greek Concern (Source: Bloomberg)
European stocks dropped for a third day, to their lowest level this year, amid growing concern Greece will be forced to leave the euro area. National Bank of Greece SA tumbled 13 percent as the country’s central bank chief said citizens had withdrawn as much as 700 million euros ($891 million) since the May 6 election. Italy’s Banca Carige SpA (CRG) fell to its lowest since at least 1995. Cie. Financiere Richemont SA rose as earnings topped estimates. The Stoxx Europe 600 Index (SXXP) slipped 0.6 percent to 244.4 at the close of trading, having earlier advanced as much as 0.3 percent and lost 1.4 percent. The gauge has tumbled 10 percent from this year’s peak on March 16 amid continued political uncertainty in Greece, entering a so-called correction.
“I have felt for quite a long time that Greece’s exit from the euro was a matter of when, not if,” Michael Spencer, chief executive officer of ICAP Plc, said in an interview on Bloomberg Television. “I think it is better for Greece in the long run and certainly better for the euro zone.”

Emerging Market Stocks Drop on Concern Over China, Greece (Source: Bloomberg)
Emerging-market stocks dropped to the lowest in four months as commodities declined and concern deepened Europe’s debt crisis will spread and China’s economic growth will slow. The MSCI Emerging Markets Index (MXEF) fell 2.2 percent to 925.41 as of 1:30 p.m. in London, the lowest since Jan. 2. The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks in Hong Kong slumped 3.4 percent, with benchmarks gauges in Russia and India losing at least 1.4 percent. Samsung Electronics Co. (005930), with the biggest weighting in the emerging market index, fell the most since October 2008 after Digitimes reported that Apple Inc. increased its purchases of semiconductors from a competitor.
Greece will hold new elections after President Karolos Papoulias failed to form a ruling coalition, threatening spending cuts required to secure 240 billion euros ($306 billion) in bailouts. Chinese banks and property developers fell in Hong Kong after the Shanghai Securities News said combined net lending for the nation’s four biggest banks was almost zero in the first two weeks of this month. The S&P GSCI index of 24 commodities fell to the lowest level this year.

GLOBAL MARKETS-Greek political turmoil heightens euro exit fears
LONDON, May 16 (Reuters) - Fears of a Greek exit from the euro zone worsening the debt crisis facing other European nations gripped financial markets , sending shares and other riskier assets lower as investors shifted funds into safe havens like the U.S. dollar.
"The idea that you can contain the spillover, the contagion, into the likes of Portugal, the likes of Spain, I just don't see that as being feasible," said James Ashley, senior European economist at RBC Capital Markets.

FOREX-Greek worries push euro to 4-mth low; more losses eyed
TOKYO, May 16 (Reuters) - The euro hit another four-month low against the dollar and was likely to extend hefty losses sustained so far this month after Greece said it would hold new elections, boosting the risk Athens could exit the euro.  
"An entry to the euro zone was supposed to be irrevocable. They tore down the bridge so people wouldn't be able to go back to the other side of river. But the Greeks seem to be starting to try to swim across," said a Japanese bank trader.  

Dollar Falls From 4-Month High Versus Euro: Yen Declines (Source: Bloomberg)
The dollar retreated from a four- month high against the euro after minutes from the last Federal Reserve meeting showed some policy makers said further easing may be needed should the economy lose momentum. The yen weakened against the majority of its 16 major peers amid speculation the Bank of Japan (8301) may ease policy next week. Demand for the euro was limited as Greece’s leaders prepare for a second election, with the nation’s future in the currency bloc and an international bailout at stake. “There’s a sign from the FOMC that they can see the possibility of more policy combination if certain conditions are met,” said Joseph Capurso, a Sydney-based strategist at Commonwealth Bank of Australia (CBA), referring to the Federal Open Market Committee. “That means the U.S. dollar may start to stabilize rather than continue to rocket higher. It’s going to give people a bit more of a reason to pause before they pile into U.S. dollars.”
The dollar fell 0.2 percent to 1.2745 per euro as of 10:20 a.m. in Tokyo from yesterday, when it climbed to 1.2681 per euro, the strongest since Jan. 17. The yen slid 0.2 percent to 102.32 per euro from yesterday when it touched 101.91, the strongest since Feb. 14. The Japanese currency was little changed at 80.28 per dollar from 80.33 yesterday.

Treasuries Fall Before TIPS Sale, Auction Announcement (Source: Bloomberg)
Treasuries fell, snapping a rally that sent yields to within eight basis points of a record low, before the U.S. sells $13 billion of inflation-protected notes today and gives the size of three auctions for next week. The 10-year Treasury Inflation Protected Securities are poised to draw a record low negative yield. The U.S. will probably sell $35 billion of two-year securities on May 22, the same amount of five-year debt on the following day and $29 billion of seven-year notes on May 24, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey, that specializes in government finance. Ten-year yields increased two basis points to 1.78 percent as of 10:05 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.75 percent security due in May 2022 fell 7/32, or $2.19 per $1,000 face amount, to 99 22/32. The rate slid to 1.75 percent yesterday, approaching the all-time low of 1.67 percent.
“Everybody thinks it’s expensive,” said Masazumi Fukuoka, a senior dealer at the Singapore branch of Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly traded lender, referring to the level of bonds.

Several on FOMC Said Easing May Be Needed on Faltering (Source: Bloomberg)
Several Federal Reserve policy makers said a loss of momentum in growth or increased risks to their economic outlook could warrant additional action to keep the recovery going, minutes of their last meeting showed. The members of the rate-setting Federal Open Market Committee “indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough,” according to minutes of the panel’s April 24-25 meeting released today in Washington. Central bankers saw Europe’s debt crisis and a fiscal tightening caused by a failure of U.S. lawmakers to agree on a budget as risks to the recovery, the minutes showed. A discussion of such risks may give central bankers greater scope to ease policy than a focus on indicators such as growth or inflation, said Roberto Perli, a former member of the Fed’s Division of Monetary Affairs staff.
“It is easy to see how downside risks to the forecasts could become large because you have Europe which could hit in the near term, and you have a U.S. fiscal cliff as we approach the end of the year,” said Perli, a managing director at International Strategy & Investment Group in Washington.

Housing Starts Join U.S. Factories Topping Forecasts (Source: Bloomberg)
Housing starts and industrial production exceeded forecasts in April, pointing to strength in the U.S. economy at the start of the second quarter. Starts rose 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Industrial production climbed 1.1 percent, the most since December 2010, the Federal Reserve said. The reports indicate the world’s largest economy is withstanding the fallout from the European debt crisis. Borrowing costs kept low by the Fed and labor-market gains are spurring consumer demand for autos and housing, lifting sales at companies from PulteGroup Inc. (PHM) to Chrysler Group LLC.
“The improvement in housing is more noticeable now, and manufacturing is pretty solid,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “It makes the expansion more resilient. Europe is affecting U.S. business sentiment more than it is impacting U.S. economic data.”

Mortgage Delinquency Rate in U.S. Fall to 2008 Levels (Source: Bloomberg)
The U.S. mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as an improving job market helped more borrowers pay their bills and tighter lending standards resulted in fewer defaults. The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association. The rate peaked at 10.1 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent. “Delinquencies are clearly continuing to improve,” Michael Fratantoni, the group’s vice president of research and economics, said in a statement. “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future.”
Falling delinquencies may help limit foreclosures and solidify a recovery in the housing market as low interest rates combine with decreased prices to stimulate demand. Housing affordability reached a new high in the first quarter and sales of previously owned homes rose 5.3 percent from a year earlier, data from the National Association of Realtors show.

Industrial Production in U.S. Climbs More Than Forecast (Source: Bloomberg)
Industrial production in the U.S. climbed more than forecast in April, propelled by gains in auto manufacturing and utility use. Output at factories, mines and utilities increased 1.1 percent last month, the most since December 2010, after a 0.6 percent decline in March that was revised from no change, the Federal Reserve reported today in Washington. Economists forecast a 0.6 percent gain, according to the Bloomberg News survey median. Manufacturing, which makes up about 75 percent of total production, rose 0.6 percent. Utility output climbed the most in two years. Motor vehicles sales in the first quarter that were the strongest in four years have buoyed manufacturing, helping make up for a slowdown in corporate equipment purchases. While U.S. exports accelerated during the first three months of 2012, weaker economies in Europe and parts of Asia remain a hurdle for American factories.
“Things are looking brighter than they were a few months ago,” said Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York. “Auto production is doing well because consumers are buying vehicles, and consumers are buying vehicles because they feel more positive about their job prospects.”

China Slowdown to End in Third Quarter, Survey Shows (Source: Bloomberg)
China’s economic growth is likely to accelerate for the first time in seven quarters after banks’ reserve requirements were cut, buoying global expansion threatened by Greece’s possible exit from the euro. Third-quarter growth will rebound to 8.3 percent from 7.9 percent this quarter, according to the median estimate of 21 economists surveyed by Bloomberg News. Analysts forecast a further reduction of 100 basis points in reserve ratios this year, while a majority of respondents expect benchmark lending and deposit rates to be unchanged. The forecasts reflect optimism that the ruling Communist Party has enough monetary and fiscal firepower to support the world’s second-biggest economy as leaders prepare for a once-a- decade power handover later this year. Even with the pickup next quarter, annual growth is forecast at a 13-year low after reports showed April industrial production and trade grew less than forecast and renewed European debt turmoil roiled markets.
“The recent spate of poor data should convince the authorities to take additional measures to prevent a further slowdown in the run-up to the Party Congress later this year,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong, who previously worked for the International Monetary Fund and China’s central bank.

China Likely to Approve Nuclear Plan by End June, Official Says (Source: Bloomberg)
China’s state council, or cabinet, will probably hold a meeting before the end of June to approve a safety and development plan for the nuclear industry, according to Xu Yuming, the vice secretary general of the China Nuclear Energy Association. The government can resume approval of new nuclear plants after the plan is passed, Xu said before a conference in Beijing today. The plan was rejected earlier and amendments are being made to some “minor” details, he said. China has four nuclear reactors that were approved prior to the Fukushima disaster in Japan and had suspended construction, he said. The country will start two new reactors by the end of the year, he said. The facilities, at Hongyanhe and Ningde, resumed construction after a nationwide safety inspection that started in April 2011, he said.

Japan’s Economy Grows More-Than-Estimated 4.1% on Quake Work (Source: Bloomberg)
Japan’s economy expanded faster than estimated in the first quarter, boosted by reconstruction spending that’s poised to fade just as a worsening in Europe’s crisis threatens to curtail export demand. Gross domestic product rose an annualized 4.1 percent, the Cabinet Office said today in Tokyo. The median estimate of 27 economists surveyed by Bloomberg News was 3.5 percent. In the fourth quarter, growth was 0.1 percent, revised data showed. The yen’s more than 4 percent gain against the dollar since mid-March may encourage politicians to keep pressing the Bank of Japan to add stimulus, with the first-quarter expansion likely to mark the peak for the year. Europe’s debt turmoil threatens to disrupt exports and financial markets as Greece teeters on the edge of exiting from the euro. “Japan is on a steady recovery path but this high growth probably won’t continue,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “We can’t be optimistic about the outlook.”
Economic growth may be 2.2 percent in the second and third quarters, and 1.7 percent in the final three months of the year, according to the average forecast of 40 economists in a Japan Center for Economic Research survey released May 15.

Singapore Warns of Europe Default Risk as Economy Expands 10% (Source: Bloomberg)
Singapore’s government said the risk of a “disorderly” debt default in Europe can’t be ruled out, clouding the outlook for its economy even as growth rebounded last quarter. Gross domestic product rose an annualized 10 percent in the three months through March 31 from the previous quarter, more than an initial estimate of 9.9 percent growth, the Trade Ministry said today. The median of 14 estimates in a Bloomberg News survey was for a 10.6 percent gain. Greece’s inability to form a new government after an inconclusive election could reverse progress made in resolving Europe’s debt turmoil, compounding risks stemming from a China growth slowdown and an uneven U.S. recovery. While Singapore tightened policy in April through faster currency gains to curb persistent price pressures, most Asian policy makers are holding or cutting interest rates to bolster their economies.
“While it all appears good and rosy, downside risks in the global environment have once again re-emerged,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said before the report. “A pullback in Singapore’s GDP growth in the second quarter should not be a surprise.”

ECB Stops Loans to Some Greek Banks as Draghi Talks Exit (Source: Bloomberg)
The European Central Bank said it will temporarily stop lending to some Greek banks to limit its risk as President Mario Draghi signaled the ECB won’t compromise on key principles to keep Greece in the euro area. The Frankfurt-based ECB said yesterday it will push the responsibility for lending to some Greek financial institutions onto the Greek central bank until they have sufficiently boosted their capital. “Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations,” the ECB said in an emailed statement. The move comes after Draghi acknowledged for the first time that Greece could leave the monetary union. While the bank’s “strong preference” is that Greece stays in the 17-nation euro area, the ECB will continue to preserve “the integrity of our balance sheet,” he said in a speech in Frankfurt yesterday.
“A Greek exit was seen as an absurdity up to now,” said Thomas Costerg, an economist at Standard Chartered Bank in London. “It is gradually becoming the main scenario. The ECB is prioritizing its balance sheet over monetary-union geography.”

Greece Heads to Elections With Euro, Bailout at Stake (Source: Bloomberg)
Greece is heading toward national elections six weeks after the last vote, with its future in the 17-nation euro area and the international bailout at stake. Panagiotis Pikrammenos, head of Greece’s Council of State, the highest administrative court, was sworn in as head of the caretaker administration yesterday. The formal announcement of the election date, probably June 17, will be made after the new parliament is sworn in today and then dissolved. “I have read that due to my name I am the most appropriate prime minister,” Pikrammenos, whose name means “bitter” in Greek, told the country’s president. “It is a great joy and also a great burden.” The new vote will follow inconclusive May 6 elections that pushed a political party opposed to Greece’s international bailout into second place, raising the specter of Greece leaving the euro. Public opinion polls say that the party, Syriza, may come in first next time, complicating Greece’s efforts to avoid running out of cash by early July.

ECB Said to Stick to Current Crisis Stance as Tools Reviewed (Source: Bloomberg)
The European Central Bank is conducting a comprehensive review of all its policy tools and has no immediate plans to increase stimulus even as market tensions mount, two euro-area officials said. The review, mandated by the central bank’s six-member Executive Board, intends to assess the effectiveness of its measures, including the bond-buying program and long-term refinancing operations, and is scheduled to be completed in June or July, said the officials, who spoke on condition of anonymity because the deliberations are private. A third official said the ECB may not consider taking any further policy action until July, and that the bank sees current market tensions as a way of focusing politicians’ minds on reform efforts. An ECB spokesman, who asked not to be named in line with the bank’s practice, declined to comment.
Bond yields in Spain and Italy have reached levels that last year pushed the ECB to restart its bond-purchase program, while the prospect of new elections in Greece has fueled concerns that the country may leave the 17-nation euro region. The third official said the ECB won’t do anything until after the next Greek election and that Governing Council members have been warned not to comment on the nation at all.

Greece Plans for June 17 Vote Under Caretake Government (Source: Bloomberg)
A Greek caretaker government will prepare new elections probably on June 17 that are shaping up as a ballot on whether the country should remain a euro member. “Greeks are faced with two choices in this election,” Antonis Samaras, leader of the New Democracy party, said in a statement on state-run NET TV. “We can change everything in Greece, together with a Europe that is changing. Or we can live through the horror and isolation of a euro exit and the collapse of all that we have built.” The new vote follows inconclusive May 6 elections that pushed a political party opposed to Greece’s international bailout into second place, raising the specter of Greece leaving the euro. Public opinion polls say that the party, Syriza, may come in first next time, complicating Greece’s efforts to avoid running out of cash by early July. Samaras’s New Democracy party came first in the May 6 election, short of an outright majority.
President Karolos Papoulias failed in a bid to broker a governing coalition in meetings yesterday with party leaders in Athens.

King Says BOE Braced for Euro Debt Crisis Risks: Economy (Source: Bloomberg)
Bank of England Governor Mervyn King said officials have prepared for dangers posed by Europe’s debt crisis, after the bank lowered growth forecasts and raised predictions for inflation this year. “Contingency plans have been discussed and have been for a considerable time,” King said at a press conference to present the bank’s quarterly Inflation Report today in London. “We are navigating through turbulent waters with the risk of a storm heading our way from the continent.” Greece is heading for new elections after a political stalemate that’s sent stocks lower, pushed up bond yields and raised concern the nation may leave the euro area. King said the currency region is facing a prolonged period of “sluggish” growth that will affect the U.K. and that the bank hasn’t ruled out responding with more stimulus if needed.
Policy makers voted to stop increasing bond purchases last week after some officials stepped up their rhetoric on inflation, which has been above their goal for more than two years. King said today that there’s a case both to expand bond purchases or to hold fewer securities and that the risks to inflation in two years are “broadly, evenly balanced.”

20120517 1021 Global Commodities Related News.

Commodities Sink Canadian Stocks as Jobs, Housing Boom (Source: Bloomberg)
Canada’s commodity shares have fallen to their cheapest prices since the recession, wiping out the stock market’s best start to the year since 2004 as global economic concerns overshadowed the best two-month job growth in more than 30 years. Energy (STENRS) and materials stocks in the Standard & Poor’s/TSX Composite Index (SPTSX) trade for 15.3 times and 11.9 times reported earnings, the lowest since 2009. Both groups traded for as much as 29 times earnings in March last year. The S&P/TSX has fallen 7.9 percent this month, and is off 5.3 percent in 2012 after rallying 5.8 percent in January and February.
While employment rose by 58,200 in April after a 82,300 jump in March and housing starts rose to their highest since September 2007 last month, energy and mining shares are dragging the country’s stock benchmark toward a second-straight yearly loss. Commodity stocks account for 44 percent of the S&P/TSX compared with 17 percent in the MSCI World Index, which has gained 1.9 percent in 2012, and 14 percent in the S&P 500 Index, up 5.3 percent. “For the gold and energy companies, people aren’t valuing the fundamentals or cash flow,” Craig Basinger, chief investment officer for Macquarie Group Ltd.’s Canadian private wealth unit in Toronto, said in a May 7 telephone interview. The unit oversees about C$15 billion ($14.9 billion) of assets. “Those factors are taking a back seat to a lot of the global market events we’re seeing develop around the world.”

GRAINS-Soy, corn dip on economic concerns; wheat firm on weather
SINGAPORE, May 16 (Reuters) - U.S. soybeans edged lower on Wednesday, falling for three out of four sessions, while corn lost ground amid a broadbased weakness in financial markets triggered by fears of Greece's exit from the euro zone.
"The U.S. dollar is a little bit higher which is adding pressure on prices," said Victor Thianpiriya, an agricultural commodity strategist at ANZ.

Russian wheat exports flat in April m/m -analyst
MOSCOW, May 16 (Reuters) - Russian wheat exports remained flat in April compared to the previous month at 1.3 million tonnes, after increased shipments to Turkey compensated for reduced supplies to Egypt, SovEcon agricultural analysts said in a note on Wednesday.
Russia could become the world's No. 2 wheat exporter after the United States this year, rebounding after a catastrophic 2010 drought, although a lack of rainfall this spring could damage the forthcoming crop in some key southern export regions.

China 2012 corn output seen at record 197.5 mln T, soy down -CNGOIC
BEIJING, May 16 (Reuters) - China, the world's second largest corn consumer, will reap another record harvest of the grain this year as it planted more acres to meet surging demand at home, while soy output is set to drop again, according to estimates from an official think-tank.
China, traditionally a net corn exporter, has become a major importer of the grain in recent years as Beijing strives to supply livestock feed to meet fast-growing demand for meat amid near-record domestic corn prices.

Russia spring drought damaged crop in South-analyst
MOSCOW, May 15 (Reuters) - A spring drought in parts of Russia's southern grain export regions has raised concerns about the condition of the forthcoming crop, although rains could bring relief to some areas in coming days.
"Drought conditions create concern among the producers and market participants across the vast region of Rostov, Stavropol, Volgograd, some parts of Krasnodar and Voronezh," Dmitry Rylko, head of the Institute for Agricultural Market Studies, told Reuters in an emailed market comment.

Ukraine seeks grain trade deal with China
KIEV, May 15 (Reuters) - Ukraine, which plans to boost its corn exports this season, hopes to secure a quarantine agreement with China to gain access to its huge market, Ukrainian Agriculture Minister Mykola Prysyazhnyuk said on Tuesday.
"We are in talks on a quarantine agreement. We are waiting for the delegation from the Chinese agriculture ministry (to arrive) within a month,' Prysyazhnyuk told Reuters.

India's 2012 monsoon rains to arrive on time
May 15 (Reuters) - India's 2012 monsoon rains are likely to hit the southern coast on time on June 1, the weather department said on Tuesday, brightening farm output prospects as farmers can plant crops like cotton and paddy on time and reap good yields.
The four-month long rainy season starts over the Kerala coast and covers the rest of India and neighbouring countries by mid-July.

Wheat Jumps Most Since March as Dry Weather Hampers Kansas Crop (Source: Bloomberg)
Wheat rose the most since March on speculation that hot, dry weather will curb production in Kansas, the biggest U.S. grower of winter varieties. Little or no rain has fallen in parts of southwest and central Kansas in the past month, National Weather Service data show. The dry weather has affected the critical filling stage when grain forms inside the head of the wheat plant, Kansas State University agronomist Jim Shroyer said. Plants turned white, and heads formed with little or no grain inside, he said. “The center part of the state is one of the worst areas, and dry areas are expanding because we haven’t had any moisture,” Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas, said by telephone. “We have another chance for rain this weekend, but they’re talking about spotty thundershowers, and that’s not what we need.”
Wheat futures for July delivery gained 5 percent to settle at $6.3875 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest one-day gain since March 30. The commodity earlier touched $6.3975, the highest since May 2. The price has jumped 7 percent this week on the dry Kansas weather.

Market Recap: Wheat Futures (Source: CME)
Wheat futures rallied into the close, with Chicago and Kansas City wheat finishing mostly 20-plus cents higher, while Minneapolis wheat was around 3 to 12 cents higher. Wheat futures benefitted from a wave of technical buying and short-covering heading into the close.

Wheat Market Recap Report (Source: CME)
July Wheat finished up 30 1/4 at 638 3/4, 1 off the high and 34 3/4 up from the low. December Wheat closed up 27 1/4 at 671. This was 32 1/2 up from the low and 3/4 off the high. July wheat closed more than 30 cents higher on the session as a steady flow of short-covering from fund traders helped to drive the market higher for much of the day and to new highs right into the close. Traders have taken some of the rain out of the winter wheat area forecast and traders remain concerned over possible deteriorating crop conditions in western Kansas. Traders see mostly dry weather for the plains for the next ten days. Talk of a hefty net short position by fund traders in wheat and ideas that demand could be strong over the near-term helped to support. Iraq plans on buying 400,000 tonnes of wheat from the US, Australia and FSU countries. For the weekly export sales report, traders see sales near 500,000 tonnes as compared with 550,500 tonnes last week. July Oats closed up 7 1/4 at 337 1/2. This was 8 1/2 up from the low and equal to the high.

Market Recap: Corn Futures (Source: CME)
Corn futures reversed overnight price declines to close 10 to 22 3/4 cents higher and just off session highs. Funds were active on the long side of the market today, buying an estimated 18,000 contracts (90 million bu.) of corn. With the strong, high-range close, market bulls carry momentum into the overnight session. Futures fought off macro-economic concerns that pressured the market overnight and sparked relatively widespread risk aversion throughout the investment world.

Corn Market Recap for 5/16/2012 (Source: CME)
July Corn finished up 22 3/4 at 620, 3/4 off the high and 29 1/4 up from the low. December Corn closed up 11 3/4 at 526 1/4. This was 19 up from the low and 1 3/4 off the high. July corn closed sharply higher on the session and to a 5-session peak. Less than expected selling pressures from outside market forces and news of continued buying from China helped support the higher opening and buyers remained active for much of the session with a push to new highs for the day late in the session. Private exporters reported to the USDA sales of 900,000 metric tonnes of US corn for China. The breakdown was 180,000 tonnes for the 2011/12 season and 720,000 for the 2012/13 season. Of this total, only 240,000 tonnes for 2012/13 season were new sales as the rest was previously reported as "unknown" destination. Ethanol production for the week ending May 11th averaged 904,000 barrels per day. This is up 0.78% vs. last week and up 0.44% vs. last year. Corn used in last week's production is estimated at 96.3 million bushels. Corn use needs to average 93.9 million bushels per week to meet the USDA estimate for the season. Stocks were 20.63 million barrels. This is down 3.5% vs. last week and the drawdown in stocks combined with the highest weekly production since March 2nd leaves an implied weekly demand for ethanol at 7.32 million barrels, up from 5.88 million just a few weeks ago and the highest weekly implied demand total since December 9th, 2011. While buying in December corn was limited by the perception of excellent weather for a fast start to the crop, strong cash basis levels and a lack of producer selling in spite of the strong basis continues to support the old crop corn. For the weekly export sales report, traders see sales near 1.1 million tonnes as compared with 473,400 tonnes last week. July Rice finished down 0.36 at 15.115, equal to the high and equal to the low.

SOFTS-ICE sugar, coffee slip as commodities retreat
LONDON, May 16 (Reuters) - ICE sugar, coffee and cocoa futures all fell in early trade , tracking a broad-based setback in commodity markets linked to the deepening crisis in the euro zone.
Raw sugar futures on ICE were lower as investors sold riskier assets in a move linked to concern about a possible Greek exit from the euro zone.

Nicaragua coffee exports up 10 pct in April
MANAGUA, May 15 (Reuters) - Coffee exports from Nicaragua rose 10 percent in April compared with the same month a year ago, reaching 214,710 60-kg bags in the month, the national coffee association CETREX said on Tuesday.  
CETREX said exports through the first seven months of the 2011/2012 harvesting season totaled 756,174 bags, a 23 percent drop from the same period for the previous season.

Indian sugar mills oppose 10,000 T export cap
NEW DELHI, May 15 (Reuters) - The Indian government should withdraw an order that prohibits  sugar exporters from seeking approval for overseas sales of more than 10,000 tonnes in one application, a leading industry body said on Tuesday as it goes against a decision to free exports.
Ministers agreed to lift restrictions on sugar exports on May 2 and the food ministry on Friday issued a formal order removing the need for its permission for shipments. But it asked millers to disclose the quantities they sold overseas.

Ivorian cocoa prices rise on quality, demand-farmers
May 15 (Reuters) - Farmgate cocoa prices in Ivory Coast's main growing regions rose last week, supported by improved quality of beans and firm demand from buyers for export and local grinding, farmers and buyers said on Tuesday.
The mid-crop in the world's top cocoa producer is marketed from April to September, but a five-month dry spell that carried into March delayed the start of harvesting. Farmers said the first beans of the crop are now starting to leave the bush.  

Pakistan approves export of 200,000 T white sugar
ISLAMABAD, May 15 (Reuters) - Pakistan on Tuesday allowed the export of 200,000 tonnes of white sugar and directed the state trading corporation to buy 200,000 tonnes from local mills for domestic stocks, the chairman of the Pakistan Sugar Mills Association (PSMA) said.
"The export will be handled by the mills themselves," Javed Kayani told Reuters.

ICO sees 2011 coffee consumption below avg growth
LONDON, May 15 (Reuters) - The International Coffee Organization (ICO) estimates global coffee consumption grew 1.7 percent in 2011 though growth was below the average annual rate.
In its first 2011 forecast, the ICO said world consumption hit around 137.9 million 60-kg bags, but the rate of growth fell below the 12-year average of 2.5 percent.

Roadblocks extortion endangers Ivorian cocoa reform
SAN PEDRO, Ivory Coast, May 15 (Reuters) - The government's failure to dismantle extortion rackets run by police, soldiers and customs agents is cutting into the profits of Ivory Coast's cocoa growers and threatens to undermine a  current major reform of the sector, farmers say.
The world's top cocoa producer is emerging from a decade-long political crisis that ended with a four-month civil war last year.  

OIL-Oil falls on euro zone, WTI at six-month low
LONDON, May 16 (Reuters) - Oil prices slid with world shares and the euro as investors fled from riskier assets, while a surprise build in U.S. crude inventories helped send the WTI benchmark to a more than six-month low.  
"One element contributing to the decline in oil prices is general investor risk aversion stemming from euro zone concerns and an increased risk of a general economic slowdown," said Gareth Lewis-Davies, a senior energy strategist at BNP Paribas.

Oil Advances After Japan’s Economy Expands Faster Than Forecast (Source: Bloomberg)
Oil rose for the first time in five days in New York after Japan’s economy expanded faster than forecast and technical indicators signaled declines in crude prices may be exaggerated. Futures advanced as much as 0.6 percent. Japan’s gross domestic product gained an annualized 4.1 percent in the first quarter, the Cabinet Office said today in Tokyo. The median estimate of 27 economists surveyed by Bloomberg News was for a 3.5 percent expansion. Oil, down 11 percent this month, also rebounded after falling to long-term technical support. Crude for June delivery rose as much as 57 cents to $93.38 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.31 at 11:12 a.m. Sydney time. The contract yesterday fell 1.2 percent to $92.81, the lowest close since Nov. 2. Prices are 5.6 percent lower this year. Brent oil for July settlement dropped 23 cents to $109.52 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark contract was at a premium to West Texas Intermediate of $15.80. Oil advanced in New York after reaching technical support at $92.75 a barrel, according to data compiled by Bloomberg. On the daily chart, that’s the 50 percent Fibonacci retracement of the rise from October’s intraday low of $74.95 to the March high of $110.55 and is where futures reversed a decline in December.

Gold Tumbles Into Bear Market on Greece Euro-Exit Concern (Source: Bloomberg)
Gold, on the brink of a bear market, declined for a fourth straight session as concern that Greece will have to leave the euro boosted the dollar and cut the metal’s appeal as an alternative asset. The U.S. Dollar Index, a measure against six major counterparts, rose for a 13th day to a four-month high after Greece’s political leaders failed to form a ruling coalition. “The market no longer seems to be seems pricing in whether Greece will leave the Europe Union, rather when it will happen,” Steve Scacalossi, a New York-based vice president at TD Securities Inc., wrote in a report. “The risk-off tone continued.” Gold futures for June delivery fell 1.3 percent to settle at $1,536.60 at 1:45 p.m. on the Comex in New York. The settlement leaves prices down 19 percent from a record close of $1,891.90 reached on Aug. 22, about 1 percentage point shy of a bear market.
Earlier, bullion slumped to $1,526.70, the lowest since Dec. 29 and 21 percent below the record $1,923.70 it touched on Sept. 6. The metal erased its gains for the year on May 14. Investor George Soros increased his holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded fund, in the first quarter, while billionaire John Paulson maintained his stake, filings showed yesterday.

20120517 1020 Soy Oil & Palm Oil Related News.

Market Recap: Soybean Futures (Source: CME)
Chalk it up as another highly volatile day of price action in the soybean market, as early morning losses were met with buying interest and futures ended mixed. July through September beans closed 1 1/2 to 9 cents higher, with the rest of the market down mostly around 2 cents. Meal also closed higher, while soyoil ended weaker on spillover from sharp losses in crude oil.

Soybean Complex Market Recap  (Source: CME)
July Soybeans finished up 9 at 1422, 1 off the high and 35 3/4 up from the low. November Soybeans closed down 2 3/4 at 1302 1/4. This was 20 up from the low and 7 3/4 off the high. July Soymeal closed up 7.8 at 425.0. This was 15.6 up from the low and 0.3 off the high. July Soybean Oil finished down 1.04 at 50.43, 1.09 off the high and 0.38 up from the low. July soybeans opened 10 cents lower on the day session and closed 9 cents higher on the day. A surge higher in wheat and strong gains in old crop corn helped turn the market from negative to positive. The market pushed lower early due to the sharp break in the China stock market and fears of continued economic issues in the eurozone due to Greek politics and this sparked a continued long liquidation selling trend early. However, a turn more positive in outside market forces plus a strong rally in the other grains helped to support higher trade on the day. Bull spreads were also active and November soybeans rallied 20 cents from the overnight lows but still closed slightly lower on the day. The surge in meal helped to pressure the soybean oil market and the sharp break of 3.9% in Malaysia palm oil added to the bearish tone early. The China National Grains and Oils Information Centre sees China soybean production down 7% this year to 13 million tonnes. The group sees 2011/12 imports of soybeans near 58 million tonnes as compared with the USDA estimate of 56 million tonnes. New crop exports are pegged at 60 million vs. USDA at 61 mmt. For the weekly export sales report, traders see sales near 1.2 million tonnes as compared with 1.827 million last week.

Malaysian Palm-Oil Refiners Urge Tax Overhaul as Indonesia Gains (Source: Bloomberg)
Malaysia, the world’s second-largest palm-oil producer, needs to reform the industry’s tax structure to counter new rates in Indonesia that improved the competitiveness of refiners there, according to a trade group. Without changes to create a so-called level playing field, there will be “a slow death of the refining industry when the independent refiners move away,” said Mohammad Jaaffar Ahmad, chief executive of the Palm Oil Refiners Association of Malaysia. The tax changes by Indonesia last year made local crude palm oil, or CPO, cheaper than in Malaysia, cutting costs for refiners, according to Jaaffar. Southeast Asia’s largest economy is seeking to boost the value of commodity shipments, including metals, to raise investment flows and spur economic growth. Bernard Dompok, Malaysia’s plantation industries and commodities minister, said that changes are being drawn up.
“The problem is that the refiners are feeling the pinch of the tax changes in Indonesia and they want a level playing field,” Dompok told Bloomberg on May 11. “We will be proposing to the government a solution to the problem for the producers and the refiners,” he said, without giving details. Palm oil, the world’s most-consumed cooking oil, is used in everything from candy bars to biofuel. Malaysia and largest producer Indonesia account for about 89 percent of global shipments. Crude palm oil, which has more than doubled in the past decade, traded at 3,095 ringgit ($993) a metric ton on the Malaysia Derivatives Exchange at 5:56 p.m. yesterday.

Red-hot soymeal due for a slip?
--Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum--
CHICAGO, May 15 (Reuters) - Corn and soybeans may have grabbed more headlines l ately (and attention), but soymeal has actually been the top performer of the agriculture arena so far in 2012, with prices recently up more than 30 percent since early January.  
But the recent decline in speculator interest across the commodities arena as a whole leaves the meal market vulnerable to a steep price break, especially after soymeal speculative net length recently hit a record high just as end-user demand showed signs of softening.

VEGOILS-Palm hits new 3-mth low as Greek political crisis drags
SINGAPORE, May 16 (Reuters) - Malaysian palm oil futures tumbled to their lowest in more than three months , as traders feared a prolonged political crisis in Greece could slow the global growth momentum and dampen commodity demand.
"Palm is not spared from the broad-based selling as commodities including crude oil, gold, silver, soybeans and soybean oil are all dropping," said a trader with a foreign commodities brokerage in Malaysia.

Oil World cuts forecast of EU 2012 rapeseed crop
HAMBURG, May 15 (Reuters) - Hamburg-based oilseeds analysts Oil World said on Tuesday it has again cut its forecast of the European Union's 2012 rapeseed crop because of bad weather, this time by 0.1 million tonnes.
The EU crop will fall to a six-year low of 18.10 million tonnes from 19.12 million tonnes in 2011 after poor autumn sowing weather and a bitterly cold winter which damaged plants, Oil World said.