Monday, May 21, 2012

20120521 1807 FCPO EOD Daily Chart Study.

FCPO closed : 3098, changed : +2 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller lock in profit.
Support :  3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250 level.
Comment :
FCPO closed edge up 2 ticks with slower volume transacted. Soy oil price currently having rebound trading higher after last Friday closed lower while crude oil price registering small gains.
Price traded side ways range bound between gains and losses after export data released today shows better demand while most commodities recovering higher.
End of day chart study remained unchanged 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.

20120521 1748 FKLI EOD Daily Chart Study.

FKLI closed : 1537 changed : +10.5 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward, seller taking profit.
Support : 1530, 1515, 1500, 1485 level.
Resistance : 1540, 1550, 1565, 1570 level.
Comment :
FKLI closed rebounded higher with shrinking volume exchanged doing about 2 points discount compare to cash market that also closed recorded gain. Last Friday U.S. markets closed lower for the 6th continuous day and today Asia markets ended mostly higher while European markets currently registering small gain.
Most regional markets having recovery after China Premier Wen pledge to boots economy and investors awaits G-8 leaders meeting.
Technical chart reading still 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.

20120521 1731 Regional Markets EOD Daily Chart Study.

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

20120521 1630 Global Market & Commodities Related News.

Markets recovered some ground on value hunting after last week's heavy losses, but investors remained wary over the euro zone despite world leaders calling for Greece to stay in the monetary union and for Europe to balance austerity with growth. U.S. stocks fell after a sloppy debut by Facebook Inc  spoiled hopes that a spectacular open for the most-anticipated stock sale in years would brighten the mood in what has been a gloomy month for equity markets.

The euro extended its rebound from last week's four-month low but investors remained concerned over the financial turmoil in Greece and Spain, drawing little comfort from a broad G8 pledge to take steps to fight the euro zone's debt crisis.

FOREX-Euro bounces off 4-month low, but remains under pressure
TOKYO, May 21 (Reuters) - The euro extended its rebound from last week's four-month low on Monday but investors remained concerned over financial turmoil in Greece and Spain, drawing little comfort from a broad G8 pledge to take steps to fight the euro zone's debt crisis.
"We are entering a consolidation phase with regard to the euro. It will not be known for a while whether Greece will stay in the euro or not with a Greek election a few weeks away," said Minori Uchida, chief analyst at the Bank of Tokyo-Mitsubishi UFJ.

U.S. wheat rose as much as 3.8 percent on Monday to its highest in nearly nine months, adding to last week's steep gains, as dry weather stoked fears about production losses in top exporters the United States and Russia.

Algeria's Jan-April wheat imports down
Algeria's soft and durum wheat imports in the first four months of this year were down 15.6 percent on the same period in 2011, customs data showed, after high purchases last year boosted stocks.

Brazil sugar output gap filled by other origins
Brazil's faltering sugar output has created a supply gap that is being filled by alternative origins, triggering uncertainty for refiners who would normally use the Brazilian sweetener, commodities house Czarnikow said on Friday.

Thailand to import rubber, TOCOM prices jump
Thailand, the world's biggest rubber producer and exporter, will import rubber for the first time to meet deliveries at a time when domestic supply is tight because of the impact of unseasonal rains, The Thai Rubber Association said on Monday.

China April cotton imports at 510,000 T-CCS
China, the world's top cotton buyer, imported 510,000 tonnes of cotton in April, down from 625,196 tonnes in March, according to official Customs data issued by the China Customs Statistics (CCS) Information Center.

Brent crude rose towards $108 recovering from a 2012 low, on hopes that China could take new steps to stimulate growth and lift fuel demand at the world's second largest oil user, although concerns about the euro zone crisis capped gains.

China April gasoline exports at 140,000 tonnes - CCS
China's gasoline exports stood at 140,000 tonnes in April and outbound shipments in the first four months declined 36.4 percent from a year earlier to 1.15 million tonnes, data from the China Customs Statistics Information Centre (CCS) showed on Monday.

US oil demand down in April, gasoline demand tepid-API
U.S. crude oil demand dipped slightly in April as gasoline consumption posted a small gain for the month, the American Petroleum Institute said on Friday.

Euro Coal-Prices dip, Jly S.African trades at $93.10
LONDON, May 18 (Reuters) - European prompt physical coal prices dipped again by $1-2 on Friday, drawing some buying interest although most market participants are increasingly bearish about coal's near-term price outlook.
Coal inventories are high in Europe's main import hub Amsterdam-Rotterdam-Antwerp, in China and at U.S. ports and mines, but demand has not kept pace over the past several months with growing supply.

Chinese buyers default on coal shipments -traders
SHANGHAI/SINGAPORE, May 21 (Reuters) - Chinese traders have defaulted on some thermal coal contracts following a drop in prices over the past month, traders said on Monday, providing more evidence that a slowdown in the world's second-largest economy is hitting the appetite for commodities.
The coal defaults also come after sources at steel mills and traders said last week that some iron ore shipments had been postponed.

China April gasoline exports at 140,000 tonnes - CCS
BEIJING, May 21 (Reuters) - China's gasoline exports stood at 140,000 tonnes in April and outbound shipments in the first four months declined 36.4 percent from a year earlier to 1.15 million tonnes, data from the China Customs Statistics Information Centre (CCS) showed on Monday.
The world's second-largest oil consumer also exported 80,000 tonnes of diesel last month, while importing 40,000 tonnes of the fuel.

Weak coal shipments weigh on U.S. railroads
May 18 (Reuters) - More cars, less coal. That sums up the shipping trends at the biggest U.S. railroads so far in the second quarter.  
Three of the biggest freight railroads -- Kansas City Southern , Norfolk Southern Corp  and CSX Corp.  -- reported strong growth in auto shipments but weakness in their key coal-hauling businesses, as they gave mid-quarter updates to a transportation conference on Friday.  

Kansas City Southern says coal shipments weaken
NEW YORK, May 18 (Reuters) - Railroad operating company Kansas City Southern  said on Friday shipments of coal, farm products and chemicals are weaker than it had expected a month ago, but it kept its full-year profit forecast unchanged, saying shipments should pick up once the railroad moves past some temporary factors.
"We had a much more positive outlook 30 days ago," Chief Financial Officer Michael Upchurch told the Bank of America Merrill Lynch global transportation conference.

Japan April copper cable shipments up 0.4 pct y/y
Japanese copper wire and cable shipments rose 0.4 percent from a year earlier to an estimated 56,400 tonnes in April, an industry body said on Monday.

COLUMN-What does sliding iron ore say about China?
(Andy Home is a Reuters columnist. The opinions expressed are his own)
LONDON, May 18(Reuters) - Prices of industrial metals traded on the London Metal Exchange (LME) have taken a hammering over the last week or so.
That of copper , the investment darling of the complex, has sunk back to levels last seen in January in response to deepening euro zone crisis and deepening Chinese slowdown.

China's towering metal stockpiles cast economic shadow
QINGDAO, China, May 18 (Reuters) - When metals warehouses in top consumer China are so full that workers start stockpiling iron ore in granaries and copper in car parks, you know the global economy could be in trouble.
At Qingdao Port, home to one of China's largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-storey building, spill over into an area signposted "grains storage" and almost to the street.

Japan April crude steel output rises 7.60 pct yr/yr
TOKYO, May 21 (Reuters) - Japan's crude steel output rose 7.60 percent in April from a year earlier to 9.07 million tonnes, the Japan Iron and Steel Federation said.
Output, which is not seasonally-adjusted, decreased 2.70 percent from March.

Vale sees iron ore price rising in 2nd half of 2012
RIO DE JANEIRO, May 18 (Reuters) - Brazilian mining company Vale SA  remains confident the price of iron-ore, its main product, will rise in the second half of 2012, relieving environmental and economic pressures on the company which have hurt growth and delayed new projects.
Iron ore fell to its lowest level in nearly six months on Friday, slipping 1.7 percent to $131.30 a tonne. The medium- to long-term price, though, should be in the range of $120 to $180 a tonne, Jose Carlos Martins, Vale's head of ferrous metals and strategy, said at a lunchtime gathering with reporters in Rio de Janeiro.

Iron Ore-Sellers cut prices further as China demand wanes
SINGAPORE, May 21 (Reuters) - Sellers of imported iron ore in China slashed price offers further on Monday as weak demand continued to weigh on spot steel prices, opening more downside room for iron ore after a fall of nearly 5 percent last week.
Some Chinese mills have delayed deliveries of iron ore shipments from miners, as appetite for the raw material from the world's biggest consumer continues to thin.

Vale sees iron ore price rising in 2nd half of 2012
RIO DE JANEIRO, May 18 (Reuters) - Brazilian mining company Vale SA  remains confident the price of iron-ore, its main product, will rise in the second half of 2012, relieving environmental and economic pressures on the company which have hurt growth and delayed new projects.
Iron ore fell to its lowest level in nearly six months on Friday, slipping 1.7 percent to $131.30 a tonne. The medium- to long-term price, though, should be in the range of $120 to $180 a tonne, Jose Carlos Martins, Vale's head of ferrous metals and strategy, said at a lunchtime gathering with reporters in Rio de Janeiro.

China's towering metal stockpiles cast economic shadow
QINGDAO, China, May 18 (Reuters) - When metals warehouses in top consumer China are so full that workers start stockpiling iron ore in granaries and copper in car parks, you know the global economy could be in trouble.
At Qingdao Port, home to one of China's largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-storey building, spill over into an area signposted "grains storage" and almost to the street.

Copper extended gains on bargain-hunting, short-covering and a weaker dollar after it bounced off four-month lows in the previous session.

METALS-Copper extends gains; euro zone weighs
SHANGHAI, May 21 (Reuters) - Copper extended gains on bargain-hunting, short-covering and a weaker dollar on Monday, after it bounced off four-month lows in the previous session.
"Some technical buying during the session should cause the metal's prices to flourish a bit, with stop-loss selling coming in at around $7,780. I see copper ranging from $7,600 to $7,800," said an LME trader.

Gold inched up to extend last week's rise, tracking a steady euro after world leaders pledged to combat financial turmoil, although worries about Greece and the euro zone debt crisis continued to feed caution in the financial markets.

PRECIOUS-Gold gains on steady euro; Europe concerns stay
SINGAPORE, May 21 (Reuters) - Gold inched up on Monday to extend last week's rise, tracking a steady euro after world leaders pledged to combat financial turmoil, although worries about Greece and the euro zone debt crisis continued to feed caution in the financial markets.
"We suspect that any early gains will eventually be rolled back, as the markets refocus their attention on the more pressing problems at hand, and ones that cannot be easily papered over by well-intentioned communiques," said Ed Meir, an analyst at INTL FCStone, in a research note.

Baltic sea index up as panamax rates rebound
May 18 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Friday as rates for smaller panamax vessels rebounded.
The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, was up 4 points at 1,141 points.

20120521 1158 Global Market & Commodities Related News.

GLOBAL MARKETS-Markets regain ground but still edgy over Greece
TOKYO, May 21 (Reuters) - Markets recovered some ground on Monday after heavy losses last week, but investors remained wary about the euro zone despite world leaders calling for Greece to stay in the monetary union and for Europe to balance austerity with growth.
"The fate of Greece won't become clear until the election, and markets will be swung around by comments from European leaders in the meantime, all of which makes it extremely difficult for investors to take any positions," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.

COMMODITIES-Wheat, gold make stunning runs in nervous markets
NEW YORK, May 18 (Reuters) - Wheat charged higher on Friday to post its biggest weekly gain in 16 years and gold continued its recovery from four-month lows as commodity markets saw selective buying amid lingering worries about the euro zone.
"Given how critical the situation is in Europe at present, policy makers may well feel the need to come up with something to soothe the markets and the possibility of that might lead to some book squaring ahead of the weekend," Fastmarkets said in a note.  

OIL-Oil slips and posts 3rd weekly loss
NEW YORK, May 18 (Reuters) - Oil prices fell on Friday in tug-of-war trading, posting a 2012 low and a third straight weekly loss as debt problems in Greece and Spain kept concerns about the euro zone economy in focus.
"The problems in Europe, highlighted by the political instability in Greece, remain as the primary factor for today's slide in oil prices," said Kyle Cooper, managing partner at IAF Advisors in Houston.

Saudi non-oil exports rise 31 percent-paper
RIYADH, May 19 (Reuters) - Saudi Arabia's non-oil exports rose 31 percent in 2011 to 176.6 billion riyals ($47.1 billion) compared to 2010, Arab News reported on Saturday citing the Central Department of Statistics.
Petrochemicals and plastics combined accounted for 114.9 billion riyals, Arab News reported, reflecting last year's surging commodities prices which helped state-run producer Saudi Basic Industries Corp (SABIC)  achieve record profits.

Colombia says will increase natgas flow to Venezuela
CARACAS, May 18 (Reuters) - Colombia said on Friday it would send 50 percent more natural gas this year to neighboring Venezuela, which has yet to start producing the fuel commercially despite huge reserves.
Colombia currently exports about 200 million cubic feet (mcf) of natural gas per day to OPEC-member Venezuela, but Energy Minister Mauricio Cardenas said that would rise to 300 mcf in September.

G8, raising pressure on Iran, puts oil stocks on standby
CAMP DAVID, Md., May 19 (Reuters) - Leaders of the Group of Eight major economies raised the pressure on Iran on Saturday, signaling their readiness to tap into emergency oil stockpiles quickly this summer if tougher new sanctions on Tehran threaten to strain supplies.
"We remain united in our grave concern over Iran's nuclear program," the G8 leaders said in a statement summing up the results of their meeting in Camp David in rural Maryland.

China April gasoline exports at 140,000 tonnes &#8211 CCS
BEIJING, May 21 (Reuters) - China's gasoline exports stood at 140,000 tonnes in April and outbound shipments in the first four months declined 36.4 percent from a year earlier to 1.15 million tonnes, data from the China Customs Statistics Information Centre (CCS) showed on Monday.
The world's second-largest oil consumer also exported 80,000 tonnes of diesel last month, while importing 40,000 tonnes of the fuel.

Oman sees oil output rising to 915,000 bpd in 2012
BUBAI, May 20 (Reuters) - Small non-OPEC producer Oman expects to raise its average oil and condensate production to 915,000 barrels per day (bpd) in 2012, up from the 885,000 bpd last year, the oil ministry said on Sunday.
Based on an average price of $102.9 per barrel that Oman sold its oil for last year, the additional 30,000 bpd could increase the sultanate's oil revenues by around $1.13 billion this year, assuming all the additional production is exported.

NATURAL GAS-Warm forecast sends US natgas futures to 3-1/2-mth top
NEW YORK, May 18 (Reuters) - Front-month U.S. natural gas futures rose to a 3-1/2-month high on Friday, as tighter supply-and-demand fundamentals and warmer extended weather forecasts continued to drive gains despite overbought technicals.
"There are expectations for warmer temperatures ahead, and power generation demand has been influencing (slowing) storage injections," Eric Bickel, analyst at Summit Energy, told Reuters, noting that production numbers were also not as strong as earlier in the year.

Euro Coal-Prices dip, Jly S.African trades at $93.10
LONDON, May 18 (Reuters) - European prompt physical coal prices dipped again by $1-2 on Friday, drawing some buying interest although most market participants are increasingly bearish about coal's near-term price outlook.
"There is still U.S. coal being offered but the last thing anybody wants is more coal because who would you sell it to?," one European trader said.

20120521 1156 Local & Global Economy Related News.

Data from the United Nations World Tourism Organisation (UNWTO) revealed that Malaysia maintained its 14th place among 25 top destinations by international tourism receipts. Thailand has moved up a notch to 11th placing, raking in a total of US$26.3bn (RM82.5bn) in revenue last year while Singapore leapt to the 15th position from 18th place in 2010, raking in US$18bn (RM56.4bn). Malaysia's tourism receipts last year was marginally above that of Singapore's at US$18.3bn (RM57.4bn). (BT)

Motor vehicle sales last month dwindled to 47,736 units from 50,936 units in the same month last year, the Malaysian Automotive Association (MAA) said. Sales volume in April 2012 was 5,847 units or 10.9% lower compared to 53,583 units in the previous month. "Rush for deliveries and invoicing by companies having financial year ended March 31 resulted in higher March sales," it said. MAA said although consumer sentiments remained stable, tightening of the hire purchase loan approvals had resulted in longer leadtime for completion of sales process and had caused some slowdown in new vehicle registrations. MAA expects car sales to improve this month due to introduction of new models. (Bernama, Malaysian Reserve)

Financial markets are becoming unhooked from economic fundamentals, Asia's officials warned, as policy makers monitor the dangers posed by any Greek exit from the euro region. Malaysian central bank Governor Zeti Akhtar Aziz said such an event could cause contagion comparable to the Asian financial crisis. South Korea’s Finance Minister Bahk Jae Wan said the range of won fluctuation is excessive while noting that economic fundamentals “are strong.” There are no plans for new measures to encourage stability in the markets at the moment. “Market participants have used the heightened uncertainty to raise volatility in financial markets,” Philippine central bank Governor Amando Tetangco said. “Risk appetite is weak and flight-to-quality trades will likely be prevalent in the market.” “We have room in our enhanced policy tool kit to respond should there be excesses in market movements, and should such movements begin to put our inflation target at risk,” Tetangco said. The developments in Greece this have deepened the risk of contagion, he said. Thailand’s banking system has THB2.5tr (US$80bn) of liquidity, five times more than required, central bank Governor Prasarn Trairatvorakul said. The Bank of Thailand doesn’t see a need to add additional liquidity, which could fuel inflationary pressures, he said. (Bloomberg)

Group of Eight leaders pushed for Greece to stay in the euro area and supported boosting growth whilst affirming “the importance of a strong and cohesive euro zone for global stability and recovery.” They also sent a strong message to Iran that tough energy sanctions would be firmly applied, vowing to ensure oil markets are well supplied to prevent crude prices soaring. (Bloomberg)

China: Home prices, car inventories add to signs of slower growth
China’s home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts, adding to signs of slowing growth in the world’s second-largest economy. The eastern city of Wenzhou led declines in new-home prices last month with a 12.3% drop y-o-y while prices in Beijing fell 1% and in Shanghai slid 1.3%. A monthly survey showed average car prices fell 1.9% y-o-y in April, a fourth straight decline this year. China had cut banks’ reserve requirements by 50bps for the third time in six months on 12 May to spur lending. (Bloomberg)

China’s State Information Center expects annual growth to slow to 7.5% in 2Q12, the slowest since 1Q09, largely due to curbs on the property sector and external headwinds. (Reuters)

Chinese Premier Wen Jiabao said the government will focus more on bolstering economic growth, indicating policies may be loosened further as inflation moderates. (Bloomberg)

China’s State Administration of Foreign Exchange has approved US$26bn in quotas for 138 qualified foreign institutional investors (QFII) as of 16 May, and is working to speed up further approvals, after doubling quotas for QFIIs last month to US$80bn from US$30bn. (Bloomberg)

China's state-owned companies reported an 8.6% yoy profit decline in the first four months as the world's second-biggest economy continued to slow. (Global Times)

China’s MNI flash business sentiment index reading eased to 52.99 in May from 56.04 in Apr. (MNI)

Japan’s nationwide department-store sales rose 1.3% yoy in Apr to ¥480bn (14.1% in Mar), the second straight rise on the back of improved consumer confidence and warm weather. Tokyo’s department-store sales rose 6.7% yoy in Apr (26.7% in Mar), also the second consecutive monthly gain. (MNI)

Japan’s Cabinet Office raised its assessment of the economy on the back of “emerging demand for reconstruction,” whilst lowering its evaluation of its largest trading partner China for the first time in three months. Economy Minister Motohisa Furukawa said the economy shows upward movement and gradual growth may continue. (Bloomberg)

Japanese Finance Minister Jun Azumi said he was monitoring currency moves with extra care and was prepared to respond as appropriate. (Reuters)

India: Consumer price inflation accelerated to 10.36% in April
India’s consumer-price inflation accelerated in April, as prices of cereal, pulses, milk and meat products rose. The consumer-price index climbed 10.36% y-o-y, compared with a revised 9.38% advance in March. The Reserve Bank of India last month slashed the benchmark repurchase rate by 50 bps and signaled that inflation might limit the room for further cuts, flagging price risks from the fiscal deficit, energy costs and a weaker currency. India’s wholesale-price index also unexpectedly accelerated in April to 7.23%. (Bloomberg)

EU: Spain raises 2011 deficit to 8.9% on regions’ unpaid bills
Spain revised up its 2011 budget deficit to 8.9% of GDP after accounting for the unpaid bills of regional governments. The revision, from 8.5%, won’t affect this year’s deficit goal of 5.3% of GDP. Most of the slippage in unpaid bills came from Madrid and Valencia. The revision risks fueling investor doubts about Spain’s ability to rein in the euro region’s third-largest budget deficit while battling a second recession in as many years and a 24% unemployment rate. Spain’s new 2011 deficit figure compares with 9.1% for Greece last year and 13.1% for Ireland. (Bloomberg)

The US government loosened a ban on American investments in Myanmar in the strongest acknowledgment yet of the political and economic transformation put in motion by a new government of former army generals. President Barack Obama also appointed Derek Mitchell the first US ambassador to Myanmar in 22 years. (Bloomberg)

US President Barack Obama welcomed Europe's focus on rekindling growth and expressed confidence that Europe has the capacity to meet its economic challenges. (Reuters)

Guarantees provided by US lenders to holders of Greek, Portuguese, Irish, Spanish and Italian government, bank and corporate debt rose 10% qoq to US$567bn in 4Q11, according to the most recent data from the Bank for International Settlements. (Bloomberg)

European officials are working on contingency plans in case Greece exits of the euro zone, the EU's trade commissioner said, while Berlin said it was prepared for all eventualities. (Reuters)

US: Payrolls increase in 32 states
Payrolls increased in 32 states in April, while the unemployment rate dropped in 37, indicating the labor market improved across much of the US. Indiana led the nation with a 17,100 gain in payrolls, followed by Texas with 13,200 more jobs. Nevada remained the state with the highest jobless rate even after it dropped to 11.7% from 12% in March. Unemployment in Rhode Island climbed to 11.2%, putting it in second place, followed by California at 10.9%. The US added the fewest number of workers in April, while the jobless rate unexpectedly fell to a three-year low of 8.1% as people left the labor force. (Bloomberg)

Canada: Inflation accelerates to 2% in April on transport
Canadian consumer price inflation accelerated last month on higher prices for automobiles and clothing, supporting the view that interest rates will probably rise sooner than in the US. The consumer price index rose 2% in April y-o-y compared with a 1.9% gain the prior month. The core inflation rate, which excludes eight volatile components, increased to 2.1% after a March gain of 1.9%.Transportation costs rose 3.2% in April y-o-y, with passenger vehicles up 3.4%. Gasoline prices rose 3.3% y-o-y. Clothing and footwear prices rose 2.4% as stores stocked new spring and summer outfits. Food costs rose 2.5%, with restaurant meals gaining 2.8%. (Bloomberg)

20120521 1155 Malaysia Corporate Related News.

Feasibility of KLORR in question
The final stretch of the Kuala Lumpur Outer Ring Road (KLORR) has yet to take off because of project feasibility constraints that may require financial support from the government, said sources. Ahmad Zaki Resources (AZRB) has been given the mandate to construct the 40km toll highway linking the Silk Highway in Kajang to the Gombak toll of the Kuala Lumpur-Karak Highway. Although the company received the letter of intent from the government in 2008, it has yet to commence construction because certain stretches of the highway are not commercially viable, sources said. According to sources, AZRB would have no problem building the stretch from Semenyih to Klang Gates as there would be enough traffic to ensure that it would recoup its investments. (Financial Daily)

LTH closer to RM3bn sale
The first condition of Lembaga Tabung Haji’s (LTH) RM3bn proposed sale of a 95% stake in plantation company, PT TH Indo Plantations (THIP) has been fulfilled, sources said. LTH has found a buyer for THIP which has 83,879ha of plantation land in Riau, Indonesia. This is believed to be the biggest single piece of plantation landbank in the world. Apart from the land, THIP has a kernel crushing plant, six palm oil mills and one biomass plant. Since negotiation began in February, the buyer has obtained all the regulatory approvals from the Indonesian government as well as satisfied the due diligence requirements imposed by LTH and also put in a hefty cash pre-payment to signify its seriousness in the deal. At RM3bn, the sale is valued at a PBV of more than 3x and a PER in excess of 45x. LTH is set to make a gain of some RM2bn from this sale. Both the P/B and PER are based on the current net book value of the plantation land. (StarBiz)

Shareholders to decide on Ramunia’s future at upcoming EGM
Come Wednesday, shareholders of Ramunia will have to vote on significant issues facing the once-troubled company. Since July 2010, Ramunia has had a new CEO, Nor Badli Munawir Mohamad Alias Lafti, who has laid out plans to turn the company around. “It is early days yet, but signs of the turnaround are becoming clearer. Once we get the nod from our shareholders for the proposals, we expect to implement and complete our PN17 regularization plan by end-July and thereafter, apply to Bursa Malaysia for the upliftment of our PN17 designation”, Nor Badli said. He said with the company’s new fabrication yard, coupled with a fresh rebranding, Ramunia was ready to relaunch itself and tap into the numerous opportunities in the fabrication sector, which is expected to face capacity constraints offered by the current players over the next three years. (StarBiz)

SEB opens 3 more power transmission line projects for bidding
Sarawak Energy Bhd (SEB) has dished out three more power transmission line projects for open bidding, including a 275kV line from Mambong near here to neighbouring West Kalimantan to facilitate the export of electricity to the Indonesian province. The other two 275kV transmission lines will supply electricity from SEB Samalaju sub-station to OM Materials (Sarawak) SB proposed manganese and ferro alloy smelting plant and Japan’s Tokuyama Corp polycrystalline silicon plant (phase II), both in Samalaju Industrial Park, Bintulu. Tenders for the Tokuyama (phase II) transmission line project are being evaluated. The 132kV transmission line to its phase I project is near completion. SEB has just awarded a contract to Sawaja Timur SB to build a 275kV line to supply power to Asia Minerals Ltd (AML) manganese and ferroalloy smelter, sources told StarBiz. Construction work on the AML smelting plant is expected to start in the next few months on completion of earthworks. (StarBiz)

AirAsia and MAS terminate warrants agreement
Air Asia has entered into a formal agreement on the termination of a proposed warrants exchange with MAS in due course. In an exchange filing last Friday, it said on 18 May 2012, it had entered into a letter of termination on the warrants exchange agreement with MAS to formally terminate the proposed warrants exchange. Both companies had entered the exchange agreement on 21 Oct 2011, when both companies were still exploring the possibility of share swap exercise, which was called off earlier this month. (Malaysian Reserve)

The strategic venture partnership between Felda Global Ventures Holdings and commodities giant Louis Dreyfus was a closely calculated decision that considered all political and economic factors, said FGVH president and CEO Datuk Sabri Ahmad. The decision was reached after FGVH concluded that the French private holding company could synergise best with Felda's operations, Sabri said. "Felda is strong in its up- and mid-stream activities. We are confident that the strategic venture partnership with Louis Dreyf

The Sustainable Energy Development Authority (SEDA) is looking at adjusting the feed-in-tariff (FiT) for renewable energy (RE) before it calls for the next round of quotes in July-Aug 2012 as there is an imbalance in the RE resource mix. At a recent talk on RE updates, SEDA said that almost half of the installed capacity for RE being generated since the beginning of the FiT on 1 Dec 2011 was using solar energy, which could be a wrong signal for the market. (Malaysian Reserve)

Selangor State Development Corp (PKNS) aims to build 9,831 units of affordable housing in phases in the Klang Valley with a total GDV of RM1.5bn in the span of 10 years beginning 2012. PKNS wants to offer more options to buyers from low and middle income groups. PKNS general manager Othman Omar said it has shifted into high-end development to induce higher yield to finance its affordable housing development as it does not receive any funding from the Selangor state government to finance its affordable housing development. (Malaysian Reserve)

YTD April 2012 adex in the country slipped 0.8% yoy to RM3.15bn, according to Nielsen. However, industry experts are not pushing any alarm bells yet, as they feel that the numbers are within expectations. MEC Malaysia managing director Law Chan Keong said adex in the first quarter was slow due to shorter working days in January as a result of Chinese New Year holidays. The other reason could also be due to uncertainty in the global economy, especially with the eurozone crisis which has had a chain effect. It is not about consumer sentiments. Some clients are maintaining a cautious mindset in terms of spending. They are still investing and spending but they are adopting a more cautious approach, he said. The YTD adex dip was led by free-to-air television, which shrank 9.1%. Newspapers still continued to command the lions share of total ad spend, accounting for 42% of total YTD April adex this year. The product/service categories with the highest ad spend in the first four months of 2012 were local Government institutions, mobile line services, womens facial care, fast-food outlets and photography. According to Nielsen, adex in April, however, increased to RM878.24m from RM873.89m a year earlier. Vogiatzakis expects adex to improve in Q2. I am confident it will bounce back in Q2, especially with the Euro (European Football Championship in June) and Olympics (in July), he said. Law concurred, pointing out that the two sporting events would be critical in determining ad spend for the rest of 2012. Also, the timing of the General Elections will be critical, as it will be a factor that will trigger adex growth, he said, adding that Q2 would be the defining quarter for the rest of the year in terms of ad spend. How Q2 performs will set the tone for the rest of the year. Vogiatzakis said this year's adex could mirror that of 2008, which also featured the General Elections, Olympics and Euro tournament that year. Ad spend that year began slow and peaked in Q3 during the major sports seasons. Hari Raya was also in Q3, so we expect a huge amount of spend in that quarter (for 2012). (Starbiz)

Shareholders of QSR Brands Bhd (QSR) and KFC Holdings (M) Bhd (KFCH) stand to get nearly RM5.4bn from the sale of the companies’ shares to Massive Equity Sdn Bhd. QSR and KFCH signed deals with Massive Equity to sell all the shares and warrants in the companies for up to RM5.4bn and said they would give back all the money to their shareholders via capital repayment schemes. Johor Corp (JCorp), being the largest direct shareholder of QSR and indirectly of KFCH, is poised to get the bulk of the money from the proposed capital repayment. JCorp, which is Johor’s investment arm, owns 56.6% of Kulim (Malaysia) Bhd. Kulim will get RM1.16bn from the sales of QSR and KFCH. This means that JCorp will get more than half of the money, given its controlling stake in Kulim. Kulim said in a filing to Bursa Malaysia it would distribute the RM1.16bn to its shareholders by way of a special dividend. This would work out to a special dividend of 93 sen per Kulim share, based on its issued and paid-up capital of about 1.23bn shares as of December 31 last year. In separate statements to Bursa Malaysia yesterday, QSR and KFCH announced that they had signed definitive agreements of a share sale with Massive Equity. Massive Equity, through wholly-owned Triple Platform Sdn Bhd, will buy the entire business and undertaking, including all of the assets and liabilities of KFCH, for up to RM3.29bn or RM4 per share and RM1 per warrant. It will also fork out up to RM2.12 bn, or RM6.80 per share and RM3.79 per warrant, to buy all QSR securities, assets and liabilities. The QSR and KFCH acquisitions were expected to be completed in the second half of the year, the companies said, adding that their boards of directors had no intention to maintain their listing status upon completion of the deals. (BT)

Masterskill announced that it decided to defer the construction of buildings for their proposed main campus for the time being and to reallocate the unutilised amount allocated for the purchase of land and construction of buildings amounting to RM76.9m for use as working capital in view that such sum has not been utilised within the expected timeframe of 24 months as disclosed in the prospectus. It will continue to aggressively pursue growth in the domestic and international markets via franchising and under the business diversification strategy. The group will realign offerings from medical and allied health science programmes into business, hospitality and tourism programmes. (BMSB)

Time dotCom will continue to focus on gaining market share by managing its costs, strengthening its network, having coverage in key areas, and improving its product offerings. Its initiatives could require higher costs for initial set-up and deployment but would be beneficial for the company in the long term. Moving forward, with its proposed acquisitions of several communications companies, the company hopes to tap into its acquirees’ regional customer base as well as give Time access to international bandwidth. (Malaysian Reserve)

The final stretch of the Kuala Lumpur Outer Ring Road (KLORR) has yet to take off because of project feasibility constraints that may require financial support form the government. Ahmad Zaki Resourced Bhd (AZRB) has been given the mandate to construct the 40km toll highway linking the SILK Highway in Kajang to the Gombak toll of the Kuala Lumpur-Karak Highway. While AZRB received the letter of intent for the project in 2008, the company has yet to commence construction because certain stretches of the highway are not commercially viable. (Financial Daily)

Wearnes Automotive Group's local unit Swedish Marque Sdn Bhd will cease as a Volvo dealer in Malaysia by June 30, leaving MBM Resources subsidiary Federal Auto Cars as the sole dealer in Peninsular Malaysia. Wearnes Automotive said it has the ambition to grow further in Malaysia like what it is doing in other markets where it represents Volvo. "Unfortunately, [the principal] of Volvo Car Malaysia is not supportive of our strategy for expansion and growth to become a multi-brand dealer for premium cars in Malaysia," it added. "Volvo is fully committed to the Malaysian market. We are working on informing Swedish Marque's customers and will refer them to Federal Auto outlets," said Volvo Asia vice-president of sales, marketing and PR Peter Johnson. (Financial Daily)

Gas Malaysia Bhd will spend RM130-140m to expand its 1,800km pipeline by 70km to 90km to supply new customers and strengthen its supply network. Gas Malaysia said that the funding for the expansion will be financed via internal funds and no additional capital would need to be raised. (Malaysian Reserve)

Dataprep Holdings Bhd is likely to announce its partnership with several strategic partners soon to grow its business as part of its plan to turnaround the company. We are looking to partner three to four companies. It is almost final. We will make the announcement in the next few weeks, chief executive officer Ahmad Rizan Ibrahim said. Other strategies included moving away from its low-margin businesses, building greater recurring income, going into new industries, being less dependent on government projects and venturing overseas. It also intends to change the companys revenue mix between the government and the private sector to 50:50 from the current 60:40. Separately, it is also looking at securing contracts in Indochina to tap on the vast ICT potential in Cambodia, Vietnam and Laos. It is also looking at Indonesia. Overseas contribution to the groups revenue at the moment is minuscule, only about 1%. Currently, Dataprep has a backlog order worth RM35m out of which RM23m are recurring income. Its orderbook will last the company for more than a year. Its most notable contract is being appointed as the main ICT and Project Delivery Partner for the Secret Garden Resorts Project in the city of Chong Li, Province of Hebei, China. With an estimated gross development value of US$6bn (RM3.1bn), Secret Garden Resorts, which is located 250km west of Beijing, aims to be a world-class integrated ski resort development covering an area of 100 sq km. It will be built over several years. (StarBiz)

20120521 1147 Global Market Related News.

Asia Stocks Rise After China Premier Says Growth Is Focus (Source: Bloomberg)
Asian stocks rose, with the regional index rebounding from its biggest drop in six months, after Premier Wen Jiabao said China will focus more on bolstering economic growth. China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, rose 1 percent in Hong Kong. BHP Billiton Ltd. (BHP) climbed 1.1 percent in Sydney after RBC Capital Markets said the world’s largest mining company may start a new share buyback. Nintendo Co., a manufacturer of game consoles that gets a third of its sales in Europe, slumped 1 percent in Tokyo. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 112.80 as of 11:25 a.m. in Tokyo, with about about the same number of stocks rising and falling. The gauge fell 2.5 percent on May 18, the most since Nov. 10 and wiping out this year’s gains as Europe’s debt crisis worsened and U.S. economic data missed estimates.
Wen’s pledge on Chinese growth “will be a support for the market when we see clear signs of it,” said Shintaro Takeuchi, portfolio investment group manager at Tokio Marine & Nichido Fire Insurance Co. that manages $109 billion in assets. “Stocks are becoming cheaper and fewer people are selling them, but they’re not enough to buy either.”

Japan Stocks Swing From Gains, Losses on Euro Uncertainty (Source: Bloomberg)
May 21 (Bloomberg) -- Japanese stocks swung between gains and losses as French and German leaders discussed the future of the European Union after the Group of Eight nations failed to deliver a unified strategy to tame the debt crisis. Shares rose earlier on a weaker yen and on speculation they were oversold. Sony Corp. (6758), a consumer electronics company that depends on Europe for a fifth of its revenue, slid 0.6 percent after earlier gaining 1.6 percent. Renesas Electronics Corp. slumped 8 percent after Goldman Sachs Group Inc. cut the chipmaker’s investment rating. Fanuc Corp. (6954), Japan’s biggest maker of factory robotics, rose 3 percent on a report it plans to boost production. The Topix Index slid 0.1 percent to 724.97 as of 10:15 a.m. in Tokyo after swinging between gains and losses at least seven times. The measure fell 4.3 percent last week, capping the longest weekly losing streak since September 2011. The Nikkei 225 Stock Average (NKY) gained 0.3 percent to 8,640.95.
“It’s very important that a clear way forward is established” for the European debt crisis, said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Given we had a number of false starts until we reached this juncture, people will await a lot more clarity before reverting to a risk-on stance.”

S&P 500 Falls for 3rd Week in Longest Slump Since August (Source: Bloomberg)
U.S. stocks tumbled for a third week, pushing the Standard & Poor’s 500 Index to its longest losing streak since August, amid concern global economic growth is slowing and Greece may leave the euro area. All 10 industries in the S&P 500 fell. Financial and raw- material companies dropped at least 6.5 percent as shareholders sued JPMorgan Chase & Co. (JPM) over the company’s $2 billion trading loss and the Dollar Index’s longest rally ever reduced the prices of commodities. J.C. Penney Co. and Abercrombie & Fitch Co. (ANF) each plunged 23 percent after reporting sales that missed analysts’ estimates. Facebook Inc. climbed 0.6 percent in its trading debut, erasing most of an 18 percent rally. The S&P 500 tumbled 4.3 percent to 1,295.22, the biggest retreat since November. The index sank 7.7 percent over three weeks, trimming its 2012 gain to 3 percent.
The Dow Jones Industrial Average slipped 451.22 points, or 3.5 percent, to 12,369.38, the lowest level since Jan. 6. The Nasdaq Composite Index (CCMP) plunged 5.3 percent, the most since September, to 2,778.79, extending its loss from a March high to 11 percent. “We sort of hit an air pocket in terms of positive catalysts and meanwhile Europe keeps weighing on the market,” John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $1.7 billion, said in a phone interview. “It was a very good earnings season, but that catalyst is behind us.”

European Stocks Post Biggest Weekly Drop in Eight Months (Source: Bloomberg)
European stocks posted the biggest weekly drop since September as Greece moved closer to a possible exit from the euro and concern mounted that Spanish banks will need rescue. A gauge of lenders slumped for the third week, as Banco Espirito Santo SA (BES) lost the most since at least 1993. Bankia SA lost 15 percent. Opap SA (OPAP) closed in Athens trading with the biggest slide since it sold shares to the public in 2001, after first-quarter profit decreased 21 percent. The Stoxx Europe 600 Index (SXXP) fell 5.2 percent to 238.88 this week. The gauge has tumbled 12 percent since this year’s high on March 16 as Greek leaders failed to form a government after elections, squabbling over austerity measures.
“The markets are signaling a risk-off attitude and signs of fatigue regarding the question about what to do with Greece are evident,” said Ben Hauzenberger, a Zurich-based fund manager at Swisscanto Asset Management AG, which oversees $53 billion. “Investors are wondering what will happen to the euro in the case of a Greek exit and which countries could follow in its footsteps.”

Bovespa Futures Gain on Cheapest Valuation in Four Months (Source: Bloomberg)
The Bovespa index snapped its longest losing streak in 10 years as the cheapest valuations since January spurred speculation the rout was excessive. Vale SA (VALE3) rose the most in five weeks after saying it expects a recovery in iron ore prices in the second half of the year. Retailer Lojas Renner SA advanced as traders stepped up bets on interest rate cuts after a report showed Brazil’s economy unexpectedly contracted in March. PDG Realty SA Empreendimentos e Participacoes (PDGR3) led declines on the BM&F Bovespa Real Estate Index (IMOBBV), which dropped to a seven-month low. The Bovespa added 0.9 percent to 54,513.16 at the close in Sao Paulo, paring its weekly decline to 8.3 percent. Brazilian stocks entered a bear market yesterday after tumbling 21 percent from this year’s high on March 13. The benchmark trades at 9 times analysts’ earnings estimates for the next four quarters, the lowest since Jan. 2.
“Some stocks look cheaper, and given how fast the market plunged in the past few days, a short-term rebound was expected,” Jose Luiz Garcia, who helps manage 3.2 billion reais ($1.6 billion) at Mercatto Gestao de Recursos, said by phone from Rio de Janeiro. “Still, I don’t think we’re seeing a sustained recovery. The outlook for growth seems to be getting worse everywhere.”

Investors Least Bullish in 2012 as Crisis Escalates: Commodities (Source: Bloomberg)
Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans. Money managers reduced net-long positions across 18 U.S. futures and options by 15 percent to 616,841 contracts in the week ended May 15, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Gold bets fell for a second week and to the lowest since December 2008, while copper holdings tumbled 69 percent, the most in five weeks. Cotton wagers tumbled to the lowest in five years.
About $4 trillion was erased from the value of global equity markets this month as Europe’s debt crisis escalated. Moody’s Investors Service lowered debt ratings on 16 Spanish banks on May 17, while Fitch Ratings cut Greece’s credit rating on concern that the country may be the first to exit the 17- nation currency bloc. Home prices in China, the biggest metals consumer, fell in a record number of cities last month, government data showed. “The outlook for commodities is not good,” said Eric Sprott, who runs Toronto-based Sprott Asset Management LP, which manages $9 billion of assets. “The world economies are slowing down. China’s growth rate is softening, and it’s not even debatable whether there will be a recession in Europe.”
The Standard & Poor’s GSCI Spot Index of 24 commodities fell for a third consecutive week, losing 2 percent and capping the longest slump since September. The MSCI All-Country World Index of equities dropped 5.3 percent, and the dollar climbed 1.3 percent against a basket of six major currencies. Treasuries returned 0.7 percent, a Bank of America Corp. index shows.

FOREX-Euro at 4 month low against dollar as crisis spins
LONDON, May 18 (Reuters) - The euro hit a four-month low against the dollar and 3-1/2 month trough versus the yen as concerns about a chaotic Greek exit from the euro zone and instability in the Spanish banking system fuelled demand for safer currencies.
"If it's not Greece, it's Spain that we talk about to sell the euro. People are looking for bad news and they are concerned there appears to be no solution for the situation," said Lutz Karpowitz, currency analyst at Commerzbank.

Yen Drops Versus Peers on Prospects BOJ to Add Stimulus (Source: Bloomberg)
The yen dropped versus all of its major counterparts on speculation the Bank of Japan (8301) will add to stimulus measures this week to support growth and weaken the nation’s currency. The yen trimmed its gain from last week against the U.S. dollar before a May 23 report that may show Japan had a trade deficit for a second-straight month. Demand for the euro was limited ahead of data forecast to show consumer confidence in the 17-nation currency bloc dropped to a four-month low in May amid concern the debt crisis is worsening. The Dollar Index (DXY) fell for a second day as Asian stocks advanced, curbing demand for the relative safety of the U.S. currency. “If the yen continues to strengthen, there will be more pressure on the BOJ to act,” said Takuya Kawabata, a researcher at Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency-margin company. “There may be more verbal intervention to weaken the yen.”
The yen fell 0.2 percent to 79.15 per dollar as of 11:36 a.m. in Tokyo after it climbed 1.2 percent in the five days ended May 18. The Japanese currency declined 0.3 percent to 101.31 per euro. The euro was at $1.2801 from $1.2780 on May 18, when it completed a 1.1 percent weekly slide.

Korean Won Rebounds as Investors Await EU Summit; Bonds Fall (Source: Bloomberg)
South Korea’s won rebounded from a five-month low and government bonds fell on speculation European leaders will come up with a strategy to ease the region’s debt crisis when they meet this week. German Finance Minister Wolfgang Schaeuble will discuss the 17-nation currency with his French counterpart, Pierre Moscovici, today before European Union leaders meet for a summit meeting in Brussels on May 23. The won jumped the most in four months and the Kospi Index (KOSPI) advanced as overseas investors boosted their holdings of Korean shares, ending a 13-day run of net sales. “The won is taking a breather after sharp losses,” said Han Sung Min, a Seoul-based currency dealer at Busan Bank. “Some investors think Europe-related negative issues were all reflected in last week’s declines.”
The won gained 0.7 percent to 1,164.32 per dollar as of 9:25 a.m. in Seoul, after sliding 2.2 percent last week, according to data compiled by Bloomberg. The currency touched 1,175.30 on May 18, the weakest since Dec. 20. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, fell 14 basis points, or 0.14 percentage point, to 11.79 percent.

Treasuries in Longest Winning Streak Since ’98 on Europe (Source: Bloomberg)
Treasuries posted the longest streak of gains in more than 13 years, pushing 10-year yields close to a record low, as investors sought the safety of U.S. government securities while Europe’s debt crisis worsens. U.S. debt rallied as Greece failed to form a government after elections May 6 gave no political party control of the legislature and as Moody’s Investors Service cut the credit ratings of 16 Spanish banks, citing economic weakness and the government’s mounting budget strain. The U.S. auctioned $13 billion of 10-year inflation-protected notes at a record negative yield and will sell $99 billion in notes next week. “I can’t make the argument for rates to move up visibly higher from here because you still have all of these forces weighing on the whole U.S. rate structure,” said Kevin Flanagan, a Purchase, New York-based fixed-income strategist for Morgan Stanley Smith Barney.
The 10-year yield fell 12 basis points this week, or 0.12 percentage point, to 1.72 percent in New York, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2022 rose 1 1/32, or $10.31 per $1,000 face amount, to 100 1/4.

Payrolls Increase in 32 States, Led by Indiana and Texas (Source: Bloomberg)
Payrolls increased in 32 states in April, while the unemployment rate dropped in 37, indicating the labor market improved across much of the U.S. Indiana led the nation with a 17,100 gain in payrolls, followed by Texas with 13,200 more jobs. The jobless rate dropped the most in Arizona and Oklahoma from the prior month. The U.S. added the fewest number of workers in April, while the jobless rate unexpectedly fell to a three-year low of 8.1 percent as people left the labor force, data showed this month. The world’s largest economy needs faster hiring to spur consumer spending and to help reduce unemployment, which Federal Reserve policy makers have said remains elevated. “There has been improvement in the labor market,” Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York, said before the report. “Employment is increasing.”

Fed May Prefer Another Twist to Adding Assets (Source: Bloomberg)
Federal Reserve policy makers may find another round of Operation Twist is preferable to an outright asset-purchase program if the economy shows further signs of weakness or risks increase. Chairman Ben S. Bernanke on April 25 said he was prepared to take further action to aid the economy if necessary, even as he signaled that he didn’t see an immediate need to add stimulus with inflation near the Fed’s goal and unemployment falling. The minutes from the Fed’s April meeting showed several policy makers said additional action could be necessary if the recovery slips. “If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse and the Fed feels like it needs to move,” said Nathan Sheets, Global Head of International Economics at Citigroup Inc. in New York. Until August, Sheets was the Fed’s top international economist.
Economists such as Sheets and Credit Suisse Securities’ Dana Saporta say the Fed’s $400 billion program to extend the maturity of bonds has been just as effective as earlier programs to expand its balance sheet, known as quantitative easing. That may make another version of the maturity extension, which is dubbed Operation Twist and is set to expire in June, preferable because it doesn’t risk the same political backlash.

Manufacturing, Housing Probably Improved: U.S. Economy Preview (Source: Bloomberg)
Manufacturers probably received more orders in April and home sales rose, a sign the U.S. expansion is still on track, economists said before reports this week. Factory bookings for long-lasting goods rose 0.3 percent last month after falling 3.9 percent in March, according to the median forecasts of 61 economists surveyed by Bloomberg News before a May 24 Commerce Department report. Other figures may show purchases of existing and new houses also climbed. Manufacturers may keep forging ahead as automakers crank out more cars and trucks, while housing will probably benefit from record-low mortgage rates that are making properties more affordable. Nonetheless, those industries alone will fail to spur a pickup in growth without bigger increases in employment throughout the economy that will propel consumer spending.
“The economy is growing, but it’s just not growing at an inspiring pace,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “The production numbers look OK, the housing market looks OK, the thing we’re more concerned about is the labor market.”

JPMorgan’s Home-Loan Debt in Europe Increases Anxiety: Mortgages (Source: Bloomberg)
JPMorgan Chase & Co. (JPM)’s holdings of home-loan bonds from outside the U.S. soared 35-fold in the past three years. Now, with its chief investment office facing scrutiny after a $2 billion trading loss, investors are raising concern the European market’s biggest buyer will pull back. The largest U.S. bank by assets accelerated its purchases last quarter, adding $8.5 billion to lift its total to $74.5 billion, according to regulatory filings. The New York-based company’s investments approached 9 percent of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on. If they stop buying, it would be pretty bad as they are one of the major buyers at the moment,” said Frank Erik Meijer, head of asset-backed securities at The Hague-based Aegon Asset Management, which manages 220 billion euros ($280 billion). “If they need to sell, that would certainly give rise to quite some” increases in yields relative to benchmark rates.
JPMorgan bolstered prices and issuance when Europe’s lenders were forced to shrink and other potential buyers shunned asset-backed notes after U.S. subprime mortgage debt sparked a global credit crisis, according to six people at banks and investment firms active in the home-loan bond market who declined to be identified because they were speaking about a competitor. Chief Executive Officer Jamie Dimon, 56, last month described the securities as part of the chief investment office’s “very conservative” holdings, four weeks before announcing an unrelated $2 billion derivative loss that highlighted the division’s influence in certain credit markets.

Facebook Stalls in Public Debut After Record $16B in IPO (Source: Bloomberg)
Facebook Inc. (FB) hovered near the initial public offering price in its trading debut, following a record IPO that made the social network more costly than almost every company in the Standard & Poor’s 500 Index. (SPX) The shares rose 23 cents above the IPO price of $38 as of 4 p.m. in New York. Facebook sold 421.2 million shares to raise $16 billion yesterday, giving the company a $104.2 billion market value. Underwriters bought Facebook’s stock to keep it from falling below the IPO price, people with knowledge of the matter said today. The offering valued the company at 107 times trailing 12-month earnings, more than every S&P 500 member except Inc. and Equity Residential. The performance disappointed some investors who expected a first-day pop.
“They squeezed the lemon dry here,” said Dan Veru, chief investment officer at Palisade Capital Management, who didn’t participate in the IPO. “They didn’t leave enough on the table. You want to price these things a little lower, so that the shares have better support in the aftermarket.”

Premier Wen Says China Will Focus on Growth, Xinhua Reports (Source: Bloomberg)
Chinese Premier Wen Jiabao said the government will focus more on bolstering economic growth, indicating policies may be loosened further as inflation moderates. “The country should properly handle the relationship between maintaining growth, adjusting economic structures and managing inflationary expectations,” Wen said during a tour of Wuhan, the capital of China’s Hubei province, from Friday to Sunday. “We should continue to implement a proactive fiscal policy and a prudent monetary policy, while giving more priority to maintaining growth,” Wen said. Wen’s remarks cited in the report, which didn’t mention concern about inflation, indicate the government might take more aggressive steps to support the economy after April data showed the slowdown may be sharper than expected. The central bank this month cut banks’ reserve requirement ratio for the third time since November to boost liquidity.
“Going forward, we expect a clearer easing in macro policy and a pickup in sequential growth,” Goldman Sachs Group Inc. economists said in a research note on May 18, adding liquidity conditions will probably be loosened while approvals on new infrastructure projects could be accelerated.

China Will Quicken Approvals for Qualified Foreign Investors (Source: Bloomberg)
China will work to speed up approvals of qualified foreign institutional investors looking to buy into its domestic securities, as part of reforms to add depth to the country’s capital markets. The foreign exchange regulator has already accelerated approvals for long-term foreign investors such as pension funds, raising their initial investment quotas and simplifying procedures after the government last month more than doubled quotas for QFIIs to $80 billion from $30 billion, according to a statement on the State Administration of Foreign Exchange's website yesterday.
Introducing more long-term funds from abroad will help improve market confidence, promote stable growth in China’s capital markets and provide “robust” investment returns to domestic investors, the China Securities Regulatory Commission said in a statement on its website on May 18. The CSRC is mulling amendments to QFII rules to lower entry requirements, broaden the types of investors and relax restrictions on quota and investment scope, the securities regulator said. “SAFE has been working closely with China Securities Regulatory Commission to facilitate the capital market reforms,” Sun Lujun, head of the capital-account management department at the foreign exchange regulator, said in yesterday’s statement. “We’ll look to speed up the QFII approval process and enlarge the size of investment.”

Alibaba Buys Back About 20% Stake From Yahoo for $7 Billion (Source: Bloomberg)
Alibaba Group Holding Ltd., China’s largest e-commerce provider, agreed to repurchase about a 20 percent stake in itself from U.S. Web portal Yahoo! Inc. (YHOO) for about $7.1 billion ahead of a potential initial public offering. Yahoo will receive at least $6.3 billion in cash and as much as $800 million in newly issued Alibaba preferred stock, the companies said in a statement today. Alibaba also will be required to either buy back a quarter of Yahoo’s current stake at the price of a future IPO or let Yahoo sell the shares in the IPO. The purchase price, based on equity financings, is subject to a floor valuation of about $35 billion. Alibaba has been trying to buy back the stake in itself for more than a year and stepped up efforts in September as its prospects rise for growth and expansion beyond China.
While the deal reduces Yahoo’s presence in China, the world’s largest Internet market, it may aid turnaround efforts as the Web portal competes with Google Inc. and Facebook Inc. (FB) for users and advertising dollars. “The cash from a transaction will help Yahoo as it grapples with the challenges in its business,” Jim Tang, a technology analyst at Shenyin Wanguo Securities in Shanghai, said before the announcement. “While Alibaba is the clear leader in the Chinese e-commerce market, it’s been difficult for Yahoo to cash out of its investment, since Alibaba is not publicly traded.”

Vietnam Economic Slowdown Seen in Cobweb-Covered Crates (Source: Bloomberg)
Nguyen Thi Ha sighs as she looks at the dust and cobwebs covering crates full of colorful, enameled tiles in her factory by Hanoi’s Red River. “We’re struggling to keep our business alive,” said Ha, who laid off more than half of her 60 employees this year as luxury hotels in the beach resort of Danang halted orders. “If the situation doesn’t improve, it will be hard for us to hold out beyond this year.” Ha’s factory is among thousands in Vietnam that cut production or closed this year after policy makers curbed a lending spree and bad debts mounted. As demand also slows from Europe to China, the shakeout of businesses that mushroomed during the 2002-2007 boom is slowing economic growth and may temper a stocks rally that made Vietnam the world’s third-best performer this year.
“There’s no way we can meet the economic growth target of 6 percent this year when so many companies are in serious trouble,” said Le Dang Doanh, an economist who has advised Prime Minister Nguyen Tan Dung and who estimates 2012 expansion may slow to as low as 5 percent, the least since 1999. “Many businesses are on their last breath.”

Iran Finds Its First Caspian Sea Oil for More Than a Century (Source: Bloomberg)
Iran has discovered oil in its Caspian Sea waters for the first time in more than a century, the state-run Fars news agency reported. The deposit was found at a depth of 2.5 kilometers (1.5 miles) during drilling on a natural-gas field and may contain 10 billion barrels of crude, Fars said, citing the National Iranian Oil Co. That’s equal to 7 percent of Iran’s known reserves. While Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, most existing fields are in the south and the Persian Gulf. Hampered by sanctions over nuclear ambitions, it doesn’t yet extract crude in the Caspian, where nations including Azerbaijan are tapping deposits and demarcation lines over territory are disputed.
“Iran has never found anything in its section of the Caspian because it’s deep water, so these would be the first wells ever drilled,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management. “Ten billion barrels is certainly something to talk about. The question is whether Iran has the technology to develop it.”

Euro Crisis Resolution Sought by Franco-German Leaders After G-8 (Source: Bloomberg)
German and French leaders meet this week to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain’s budget deficit widened. German Finance Minister Wolfgang Schaeuble will for the first time discuss the 17-nation currency at a meeting with his newly installed French counterpart, Pierre Moscovici, in Berlin today as European Union leaders prepare for a summit meeting in Brussels on May 23. After three shorter meetings in the last week, Chancellor Angela Merkel and French President Francois Hollande will seek to balance France’s desire to jump-start growth with Germany’s preference for spending cuts. “We’re all very pleased that France wants to offer new initiatives with its newly elected president,” Schaeuble told the Bild am Sonntag newspaper in an interview yesterday. “The German government is ready to talk about anything,” Schaeuble said, though he ruled out measures that would raise debt.
G-8 leaders on May 19 urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the EU’s bailout deal. With the country preparing for a second ballot on June 17, renewed concerns about the currency area were fanned last week as Spain revised its 2011 deficit upward -- even as its borrowing costs approached levels that prompted bailouts in Greece, Ireland and Portugal.

Australian Budget Prices Contracting Euro Economy, Swan Says (Source: Bloomberg)
Australia’s federal budget, targeting a return to surplus next fiscal year, is taking a conservative view of Europe’s economic outlook, forecasting a 0.75 percent contraction this year, Treasurer Wayne Swan said. “Determined, consistent and continuing action will be required by European policy makers to deal with the sovereign debt crisis, get their budgets back on a sustainable footing, and restore growth,” Swan said in his weekly economic note yesterday. Australia’s “budget takes a conservative view of Europe’s economic outlook, with the euro area forecast to contract by 3/4 of a percent in 2012.” Prime Minister Julia Gillard’s minority government, seeking to impress voters as a sound economic manager, this month promised to achieve a budget surplus of A$1.54 billion ($1.52 billion) for fiscal 2012-13, ending four years of deficits. Her Labor Party faces a general election next year.
“Australia is not immune from events in Europe,” Swan said in the note. “But it’s important we don’t lose sight of the fact that our economic credentials are among the strongest in the world: we have one of the lowest unemployment rates in the developed world, we have sturdy public finances with very low public debt.”

Boom-Era Debt Sparking German Apartment Sales: Mortgages (Source: Bloomberg)
Germany’s multi-family housing market is set to have the most deals in five years as investors including private-equity firms are forced to sell almost 100,000 apartments to pay debt amassed in last decade’s buyout boom. There were 2.9 billion euros ($3.7 billion) of apartment property transactions in the first quarter alone, more than three times the amount a year earlier, and the total this year may exceed 6 billion euros, the most since 2007, according to estimates by London-based real-estate broker Savills Plc. Fortress Investment Group LLC (FIG) and Guy Hands’s Terra Firma Capital Partners Ltd. are among private-equity firms facing debt maturities after buying thousands of German properties with the easy credit available in the years before the financial crisis hit in 2008. Loans for the deals were typically packaged and sold as commercial mortgage-backed securities. A total of 10 billion euros of German multifamily CMBS is now set to mature by the end of 2014, according to data compiled by Bloomberg.
“The main issue facing the larger players is purely refinancing risk on maturity due to the size of their outstanding debt,” said Nassar Hussain, founder of London-based real-estate debt adviser Brookland Partners LLP.

20120521 1147 Global Commodities Related News.

Grain-Pit Traders Squeezed Out as CME Expands to Match ICE Hours (Source: Bloomberg)
CME Group Inc. (CME), the world’s largest futures exchange, extends grain-trading hours today in response to the threat of competitors seeking a share of the electronic transactions that now dominate the market. Access to the CME’s Chicago Board of Trade, which first offered corn futures in 1877, is rising to 21 hours a day from 17, a week after the 12-year-old IntercontinentalExchange Inc. (ICE), or ICE, introduced a 22-hour session and its first-ever grain contracts. The Kansas City Board of Trade and Minneapolis Grain Exchange also start expanded hours today. While CBOT corn, wheat and soybean trading rose more than 15 percent to 182.8 million contracts last year, 93 percent of the volume was electronic rather than through open outcry in its Chicago trading pits, exchange data show. That compares with 63 percent in 2007. ICE had sought to lure speculators by allowing transactions to continue when market-moving U.S. government crop reports are issued and CBOT markets were closed.
“The electronic platform is a big, giant liquidity pool that is sometimes an inch deep and other times a mile deep,” said Douglas Carper, the principal of Omaha, Nebraska-based DEC Capital Inc., a commodity trading adviser and hedge-fund consultant. “Grains will become more or less an institutional and professional market, just like it is already in stocks, foreign exchange and global bond markets.”

Market Recap: Wheat Futures (Source: Bloomberg)
Wheat futures surged today, finishing 26 to 37 cents higher in Chicago, 29 to 33 cents higher in Kansas City and mostly 19 to 24 cents higher in Minneapolis. For the week, Chicago and Kansas City futures rallied around $1, while Minneapolis futures posted slightly lesser gains. Bulls have the strong upper hand heading into next week. But the challenge will be build on upside momentum, especially with scattered rains in the forecast for areas of the Southern Plains during the weekend and early next week.

Wheat Market Recap Report  (Source: Bloomberg)
July Wheat finished up 37 1/2 at 695 1/4, 2 1/4 off the high and 42 3/4 up from the low. December Wheat closed up 31 1/4 at 720. This was 36 1/2 up from the low and 5 1/4 off the high. July wheat capped off a strong up week with a surge higher on the day. European milling wheat futures surged more than 5% to see 11-month highs. The late call was just 3-5 cents higher so the market found strong buying again early in the session today to drive the market sharply higher on the day into the mid-session pushing to the highest level since February 3rd. The market was up as much as $1.05 1/4 from Monday's lows. Weather concerns for western plains in the US and portions of Ukraine and Russia for next week helped spark the buying and short-covering has emerged again to help support. Outside market forces were somewhat positive with a little more stability in the US equity market and a strong gain in gold and corn helping to provide some support. July Oats closed up 1 1/2 at 340. This was 5 up from the low and 1 off the high.

Market Recap: Corn Futures (Source: Bloomberg)
Corn futures ended firmer today to post sharp gains for the week. July corn ended 54 1/2 cents higher than last week's close, with December corn up 31 3/4 cents. Key for corn futures to build on this week's gains is how outside markets and the cash market performs. Gulf basis surged this week on additional Chinese purchases to reflect the tight supply situation. But if the dollar continues its move higher, traders would be less concerned about rationing remaining old-crop supplies as they would anticipate a slowdown in exports.

Corn Market Recap for 5/18/2012  (Source: Bloomberg)
July Corn finished up 10 1/2 at 635 1/2, 3 off the high and 16 up from the low. December Corn closed up 8 3/4 at 537. This was 15 up from the low and 5 1/2 off the high. December corn took over as the leader for the first time in a long time as a less than perfect weather outlook and some second-guessing on using a record yield helped to support. July corn opened 6 cents higher on the session but found strength from wheat and strong cash markets to drive sharply higher and pushed to the highest level since April 10th. A continued firm cash market and some continued uncertainty over a generally warmer and drier outlook for portions of the Midwest helped to support. In addition, a more positive tilt to outside market forces with a jump in wheat and gold prices and a firm tone to the US equity markets helped to support. After closing at 581 last week, July corn closed sharply higher on the week. July Rice finished down 0.09 at 15.175, 0.005 off the high and equal to the low.

GRAINS-US wheat off 6-week top, heads for best week since July
SYDNEY, May 18 (Reuters) - U.S. wheat fell 0.7 percent  as the market took a breather after climbing to a six-week high in the previous session on fears that dry conditions in the United States and Russia could curb global supply.
"The macroeconomic picture remains bleak, the Australian dollar is down significantly, crude oil is down, and the U.S. dollar if firmer, all of these are weighing on grains," he said.

Italy wheat, maize imports fell in Jan-Feb - Anacer
MILAN, May 18 (Reuters) - Imports of wheat and maize into Italy, a major grain buyer in Europe, fell sharply in the first two months of this year compared to the same period of 2011 when they jumped, Italian cereals body Anacer said on Friday.
Imports of soft wheat rose 17 percent to 689,270 tonnes in the January-February period of 2012 while maize imports dropped 29 percent to 387,632 tonnes and imports of durum wheat used for making pasta fell to 196,165 tonnes from 366,024 tonnes, Anacer said in a statement.

India considering wheat exports to Iran - govt source
NEW DELHI, May 18 (Reuters) - India plans to export wheat to Iran, a government source said on Friday, as New Delhi, which has huge stockpiles of grains, hopes to boost exports to the sanctions-hit nation to help settle a part of its oil imports bill through a bilateral mechanism.
"That is under consideration," a government source told reporters on Friday, when asked whether the government would export the grain to Iran.

Farmers plant guar early, spurred by high prices
MUMBAI, May 18 (Reuters) - Farmers in India are planting guar seed at least a month ahead of normal as they hope to take advantage of high prices, raising expectations supply shortages will ease earlier than previously forecast, traders and farmers said.
State government officials of Rajasthan, Haryana and Punjab -- major guar growing areas -- confirmed farmers were sowing now instead of waiting for the start of monsoon rains in June, which increase soil moisture, but declined to give further details.

Argentina farm lobby blitz halts provincial tax hike
BUENOS AIRES, May 17 (Reuters) - A last-minute lobbying blitz by farmers in Argentina's top grains-producing province stopped lawmakers from approving a tax increase that some growers said would force them to sell their fields.
Buenos Aires provincial lawmakers loyal to presidential hopeful Gov. Daniel Scioli failed to assemble a quorum in the Chamber of Deputies on Thursday after two days of demonstrations and legislative arm-twisting by farmers in provincial capital La Plata.

Russia could cut grain crop forecast -source
MOSCOW, May 17 (Reuters) - Russia may cut its 2012/13 grain crop forecast in May from the current 94 million tonnes due to spring drought, a government source told Reuters on Thursday.
"It is clear now that the forecast should be decreased, but it is too early to do it now. We need to wait for a week and a half," the source said, adding that weather conditions will determine the extent of the losses in the coming weeks.

Heat, wind sap wheat crop's potential in key grower Kansas
May 17 (Reuters) - The promise of a bumper U.S. hard red winter wheat crop is eroding by the hour as scorching temperatures and high winds in key growing areas of the U.S. Plains sap soils of needed moisture, wheat experts said on Thursday.
In Kansas, the nation's top producer of the favored bread-making hard red winter wheat, harvest is slated to begin next week, about three weeks earlier than is typical.

Russia may export up to 26 mln T of grain in 2011/12-RIA
MOSCOW, May 17 (Reuters) - Russia may export up to one million tonnes of grain by July in addition to 25 million tonnes already exported in 2011/12 season, Russian state news agency RIA Novosti quoted Deputy Agriculture Minister Ilya Shestakov as saying on Thursday.
"I think from 800,000 to one million tonnes could be exported in the next one month and a half. But, of course, everything will depend on global prices," Shestakov told RIA Novosti in Tel Aviv.

China sees tighter corn supply, imports to rise
BEIJING/SINGAPORE, May 17 (Reuters) - China's corn supply is expected remain tight in the year to September 2013, leading to higher imports, an official think-tank said, with a likely record harvest still falling short of a rapidly growing domestic demand.
China is estimated to consume 199 million tonnes of corn in 2012/2013, the China National Grain and Oils Information Center (CNGOIC) said on Thursday. Domestic production was projected at a record 197.5 million tonnes.

Dry weather threatens Australia wheat output -farmers
SYDNEY, May 17 (Reuters) - Dry weather in grain belts on both sides of Australia, one of the world's biggest wheat exporters, is delaying planting and threatening to hurt crop yields of the grain in 2012/13, representatives of farming groups said on Thursday.
Farmers are growing increasingly concerned volumes will be affected, although analysts say it is too early to say if the country's forecast 24-million-tonne crop this year will be significantly hit.

SOFTS-ICE sugar, coffee dip, euro zone crisis weighs
LONDON, May 18 (Reuters) - ICE sugar and arabica coffee eased, as the worsening euro zone debt crisis and a stronger dollar weighed on the commodity complex.
Cocoa was steady, with market fundamentals overshadowed by the gloomy macroeconomic outlook.    
Arabica coffee futures on ICE edged lower, as commodities were swept up in the weakness across capital markets.
London July robusta coffee was near unchanged, trading up $2 at $2,189 per tonne, below the previous session's eight-month high of $2,220.

Vietnam April coffee exports drop, local prices jump
HANOI, May 18 (Reuters) - Vietnam's actual coffee export loading in April dropped 19 percent from the previous month to 168,200 tonnes, or 2.8 million 60-kg bags, the Vietnam Customs said on Friday, while domestic prices rose to their highest in almost seven months.
Coffee exports in the first four months of 2012 eased 0.5 percent year-on-year to 699,600 tonnes, the Finance Ministry-run customs department said in its monthly report.

Mix of rain, drought threaten Brazil's sugar cane
BRASILIA, May 17 (Reuters) - Excess rain is slowing the progress of Brazil's cane harvest and could threaten output if the winter turns out wetter this year as expected, forecaster Somar said this week, while the opposite problem of drought is now afflicting the country's northeast.
The world's top sugar producer is struggling to raise output after a combination of bad weather and aging cane plants caused the harvest to shrink last year for the first time in at least a decade, after years of steady expansion.

Cameroon robusta coffee exports nosedive
YAOUNDE, May 17 (Reuters) - Cameroon robusta coffee exports hit 7,433 tonnes by the end of April since the season started in December, marking a nearly 60 percent decline from the 18,042 tonnes exported during the same period a year ago, according to official figures.
The National Cocoa and Coffee Board, which released the figures late on Wednesday, said the decline in exports may be due to farmers stockpiling coffee beans in hopes prices will rise later in the season.

El Nino could cut global 2012/13 cocoa output - ICCO
LONDON, May 17 (Reuters) - Possible El Nino weather conditions later this year could exacerbate a potential global cocoa deficit in the coming 2012/13 season, causing prices to climb, the International Cocoa Organization (ICCO) said.
"We know that when we have El Nino conditions it's likely that this will impact negatively on world cocoa production. We would have less production and this would have an impact on price," ICCO statistician Laurent Pipitone told Reuters.

OIL-Brent hits 2012 low on Europe turmoil, weak US data
SINGAPORE, May 18 (Reuters) - Brent crude slipped below $107 per barrel to its lowest in 2012 as a worsening euro zone crisis and weak U.S. economic data raised fears of a global slowdown that could dent oil demand.
"We've got a bit of a perfect storm at the moment," Michael McCarthy, a markets strategist at CMC Global Markets in Sydney said, pointing to the worsening euro zone crisis, lower demand as industrial output slows and bloated crude inventories in the United States.

Qatar says its condensate output to beat crude 'very soon'
SEOUL, May 18 (Reuters) - Gas-rich Qatar expects its condensate production to exceed its crude output 'very soon', even while it produces its maximum OPEC quota of oil, the Gulf Arab country's energy minister said on Friday.
Qatar, one of the OPEC's smallest producers, is producing a about 1.45 to 1.5 million barrels per day (bpd) of crude oil and condensate together on average, Qatari energy minister Mohammed al-Sada told reporters in Seoul.

Vietnam Jan-April crude exports -16.4 pct y/y - customs
HANOI, May 18 (Reuters) - Vietnam's crude oil exports in the first four months fell 16.4 percent from a year ago to 2.37 million tonnes (144,700 barrels per day), versus the government's initial estimate of 2.42 million tonnes, Vietnam Customs said on Friday.  
The country imported 2.99 million tonnes of oil products, down 27.8 percent from the same period last year, the Finance Ministry's customs department said in monthly reports.

Oil Gains First Day in Seven; Goldman Sees Tighter Market (Source: Bloomberg)
Oil rose for the first time in seven days after Goldman Sachs Group Inc. said the balance between supply and demand of crude is tightening and China’s government pledged to boost the nation’s economy. Futures gained as much as 0.6 percent after falling to the lowest close in almost seven months on May 18. The extent of oil’s decline was unwarranted, Goldman said in a report e-mailed today. China, the world’s second-biggest crude user, will focus more on bolstering economic growth, the official Xinhua News Agency reported yesterday, citing Premier Wen Jiabao. Prices slid earlier after Saudi Arabia’s output in March climbed to the second-highest level in at least 31 years before a European Union embargo on Iran that starts in July.
“With Saudi ramping up production to meet the need for oil once sanctions against Iran come into full effect, the oil market was pushed into surplus this year,” David Greely, head of energy research at Goldman Sachs in New York, said in the report. “However, as Iranian supplies are increasingly shut out from the market as the sanctions take effect, that surplus is disappearing.” Crude for June delivery rose as much as 56 cents to $92.04 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.93 at 12:04 p.m. Sydney time. It fell 1.2 percent on May 18 to $91.48, the lowest close since Oct. 26. The more-actively traded July contract climbed 43 cents to $92.23 today. Front-month prices are 7 percent lower this year.

Crude Rises First Day in Seven; Goldman Says Decline Unwarranted (Source: Bloomberg)
Oil for June delivery rose as much as 49 cents, or 0.5 percent, to $91.97 a barrel in electronic trading on the New York Mercantile Exchange, and was at $91.93 at 11:36 a.m. Sydney time. Prices have fallen the past six days and are down 12 percent this month. The extent of the sell-off was unwarranted as the balance between supply and demand is tightening, Goldman Sachs Group Inc. said in a report e-mailed today.

20120521 1144 Soy Oil & Palm Oil Related News.

ITS CPO export up 2.1% to 862,337 tonnes for the period of 1~20 May 2012.
SGS CPO export up 3.1% to 865,570 tonnes for the period of 1~20 May 2012.

Market Recap: Soybean Futures (Source: Bloomberg)
Soybean futures got off to a firmer start, but late, heavy selling sent the market plummeting 16 to 33 cents on the close. Today’s losses brought the market to a steady to lower close for the week. Given favorable weather this week, traders expect Monday’s Crop Progress Report to reflect bean planting surged ahead. This will limit the market’s upside. Fresh demand news will be needed to prevent further selling in beans as it appears money is flowing out of beans and into corn and wheat.

Soybean Complex Market Recap (Source: Bloomberg)
July Soybeans finished down 33 at 1405, 33 3/4 off the high and equal to the low. November Soybeans closed down 18 1/2 at 1288. This was equal to the low and 29 1/2 off the high. July Soymeal closed down 10.1 at 417.9. This was 0.9 up from the low and 12.9 off the high. July Soybean Oil finished down 0.4 at 50.32, 0.52 off the high and 0.29 up from the low. July soybeans sold off sharply today but still managed to close 1cent higher on the week. Funds were noted as unwinding long soybean short wheat and short corn spreads, and this helped support the other grains and pressure soybeans. November soybeans stayed in a choppy range into mid-session, as the market seemed to find support from the dry weather forecast, but a new round of selling emerged this afternoon, which send the market sharply lower. The jump in wheat provided some early support, but the market drifted lower to trade moderately lower on the session into the mid-session. Further weakness in China and ideas that the China economy may suffer short-term with so much uncertainty coming out of Europe has helped to spark some long liquidation selling recently, and news that China plans to offer 600,000 tonnes of soybeans from state reserves next week which could help to slow the short-term import demand helped to limit the advance. Ideas that the rally yesterday was a bit overdone added to the negative tone. July meal pushed sharply lower after surging to its highest level since May 2nd yesterday, while July oil pushed moderately lower, to its lowest level since December 16th to 50.03 before a bounce off of the lows. Traders believe there needs to be some progress in Europe over the weekend and early next week, otherwise macroeconomic weakness could continue to pressure the market next week as well.

China to sell 600,000 T domestic soy reserves next week  (Source: Bloomberg)
China, the world's top soy importer, will sell 600,000 tonnes of domestic soy from state reserves next week to draw down old government stocks, and analysts expect the sales could pressure crushing margins and slow down imports.
The government will offer the soy for public bidding on May 24, said an official announcement posted on the web site It did not publish any prices.

Large specs eye move out of soy into wheat
(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 17 (Reuters) - Large speculative traders in the grains and oilseeds arenas look to be on the verge of rotating some of their record-high long exposure in soybeans to winter wheat, given that soybean values are backing away from four-year highs while wheat prices remain close to the lower third of their trading range seen since 2008 and potentially primed for strength on concerns over global crop supplies.
Worries about global soy supply tightness continues to draw speculator interest to that arena, but judging by recent price action many large traders appear to be paring back that exposure while building positions in wheat.

VEGOILS-Palm oil ends off 5-month low on Europe fears
SINGAPORE, May 18 (Reuters) - Malaysian palm oil futures ended almost flat  after hitting a near 5-month low, as lingering worries over Greece's potential exit from the euro zone dampened investors' risk appetite.
"The sell down has not happened only to palm oil, it also happened to gold, crude oil and the equities market. Sentiment is very bad," said Alan Lim, research analyst with Malaysia's Kenanga Investment Bank.

Argentine govt cuts soy view, eyes new wheat area
BUENOS AIRES, May 17 (Reuters) - Argentina cut its 2011/12 soy forecast to 41.5 million tonnes from 42.9 million last month and predicted 2012/13 wheat area would shrink nearly 14 percent from last season, the government said on Thursday.
A six-week drought in December and January took a toll on both soy and corn yields. The South American country is the world's No. 2 corn exporter and top soyoil and soymeal supplier.

China to sell 600,000 T domestic soy reserves next week
BEIJING, May 17 (Reuters) - China, the world's top soy importer, will sell 600,000 tonnes of domestic soy from state reserves next week to draw down old government stocks, and analysts expect the sales could pressure crushing margins and slow down imports.
The government will offer the soy for public bidding on May 24, said an official announcement posted on the web site It did not publish any prices.