Monday, July 2, 2012

20120702 1832 FCPO EOD Daily Chart Study.

FCPO closed : 3088, changed : +68 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histogram : turned upward, buyer in control.
Support : 3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250 level.
Comment :
FCPO closed recorded substantial gains with increasing volume particiaption. Soy oil price currently trading firmer after last Friday rallied substantially higher while crude oil price currently pullback lower after surging siginificantly higher last Friday.
Crude palm oil price rallied reaching 1 month high after export data reported by 2 cargo surveyor improved amid strong demand due to coming Ramadan festival plus dryer weather development across America pressure higher soy bean and soy oil prices and positive development over Europe region.
Technical daily chart study turned to suggesting an upside biased market development breaking out from 3060 resistance turned supoort level today.
When to buy : buy at support or weakness with larger cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120702 1741 FKLI EOD Daily Chart Study.

FKLI closed : 1604 changed : -2 points, volume : higher.
Bollinger band reading : correction range bound upside biased.
MACD Histogram : weakenning, buyer taking profit.
Support : 1600, 1590, 1580, 1570 level.
Resistance : 1610, 1620, 1630, 1640 level.
Comment :
FKLI closed recorded marginal loss with better volume traded doing 3 points premium compare to cash market that closed slightly higher. Last Friday U.S. markets closed rallied higher and today Asia markets ended mostly higher while European markets currently recording gains.
Sentiment improved for the time being as European leaders meeting agreed to counter debt problem with easing measure and taking steps to boots growth while Japan's Tankan survey and China purchasing manager's index data beat estimates.
Daily chart study remained suggesting a correction range boung upside biased market development with price still trading within a upward price channel.
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.

20120702 1702 Regional Markets EOD Daily Chart Study.

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

20120702 1610 Global Market & Commodities Related News.

Most Asian shares traded higher and Europe looked set for a higher open, extending gains from the previous session, after European leaders on Friday agreed to shore up the region's troubled bank. U.S. stocks surged on Friday to close out a sour quarter on a high note.

China HSBC PMI hits 7-mth low of 48.2 in June
China's factory activity shrank in June at the fastest pace in seven months as new export orders tumbled to depths last seen in March 2009, a private sector survey showed, underlining the risk of a lurch lower for the Chinese economy.

The euro dipped , giving up a bit of ground after its biggest one-day climb in eight months, as investors looked for fresh reasons to extend a rally sparked by initial euphoria over the latest European push to ease the region's debt crisis.

FOREX-Euro sags, takes breather after EU deal rally
SINGAPORE, July 2 (Reuters) - The euro dipped on Monday, giving up a bit of ground after its biggest one-day climb in eight months, as investors looked for fresh reasons to extend a rally sparked by initial euphoria over the latest European push to ease the region's debt crisis.
Markets cheered after euro zone leaders agreed on Friday to let their rescue fund inject aid directly into stricken banks from next year and intervene on bond markets to support troubled members.

Chicago new-crop corn jumped more than 3 percent  to its highest since early September, with a worsening U.S. drought hurting the crop in its crucial pollination phase, while soybeans hit a contract high.

Argentine wheat crop thriving on moisture - gov't
Argentine farmers have planted nearly half of the area estimated for 2012/13 wheat seedings and crops in top growing province Buenos Aires are in good shape thanks to moist soils, the Agriculture Ministry said on Friday.

Little wetter for northwest Midwest next week
Midday weather updates indicate a little more rain for next week in the northwest U.S. Midwest crop region than earlier outlooks indicated but forecasts for the following week were drier than previous forecasts, an agricultural meteorologist said on Friday.

Larger US corn sowings menaced by drought, USDA says
U.S. farmers planted slightly more corn and far more soybeans than they originally planned, the government said on Friday in a report that failed to ease concerns over a Midwest drought that has jeopardized a bumper harvest.

Argentine gov't approves more 2011/12 corn exports
Argentina's government has approved the export of about 3.0 million tonnes more of 2011/12 corn as farmers near the end of the harvest, a senior Agriculture Ministry official said on Friday.

Brazil rain may revive wilting coffee prices
High quality coffee prices could be plucked from 2 year lows as weather problems in world top grower Brazil damage beans, but demand remains tricky as cash-strapped consumers seek out cheaper blends.

India sells 1st wheat cargo to Asia in 7 years
Agribusiness giant Cargill Inc has sold about 32,000 tonnes of Indian wheat to Indonesia in the first large shipment of the grain to Asia in at least seven years, traders said on Friday.

Brent crude fell towards $96 a barrel , dragged down by weak factory data from top energy consumer China and as doubts remained over an EU deal which had helped prices post their fourth biggest daily gain on record in the previous session.

POLL-Global oil demand growth seen at slowest since 2008
Global oil demand is expected to grow at the slowest pace this year since the financial crisis on mounting economic weakness, a Reuters poll showed, with China's slowing consumption growth expected to barely offset falling demand in developed economies.

London copper fell back giving up part of its gains of 4 percent in the previous session, after weekend data showed a factory slump had deepened in June in one of Asia's biggest exporters, China.

Gold prices edged down, taking a breather after a 3-percent rally in the previous session, as the initial euphoria over a euro zone deal to help its debt-laden members gave way to caution over its effectiveness.

METALS-London copper dips on China, Japan factory activity
SHANGHAI, July 2 (Reuters) - London copper fell back on Monday, giving up part of its gains of 4 percent in the previous session, after weekend data showed a factory slump had deepened in June in one of Asia's biggest exporters, China.
The decline in China's purchasing managers' index (PMI) fanned concerns over demand for industrial metals and followed weak factory activity data in Japan on Friday.

PRECIOUS-Gold edges down, pauses after EU deal rally
SINGAPORE, July 2 (Reuters) - Gold prices edged down on Monday, taking a breather after a 3-percent rally in the previous session, as the initial euphoria over a euro zone deal to help its debt-laden members gave way to caution over its effectiveness.
Spot gold posted its biggest one-day rally in a month on Friday after euro zone leaders agreed to bend their aid rules to shore up banks and bring down the borrowing costs of countries like Italy and Spain, in a sign that the bloc is adopting a more flexible approach to solving its debt crisis.

20120702 1250 Global Economy Related News by Reuters.

GLOBAL ECONOMY-China, Japan factory activity hits 7-mth low
02-Jul-2012 09:23

    China official PMI above 50, Japan PMI below 50
    Both weakest levels in seven months as exports crumble
    India, EU and U.S. to post purchasing managers' data Monday
    Heightens concerns over health of global economy
By Koh Gui Qing

BEIJING, July 2 (Reuters) - A factory slump in Asia's two biggest exporters China and Japan deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.
The latest sign that China's economic growth is sliding came on Sunday with a government purchasing managers' index (PMI) dropping to 50.2 in June from May's 50.4. The outcome was stronger than expected but it still showed that growth in manufacturing sector activity was close to stalling.
Shrinking new orders and the steepest fall in export orders since December suggested no immediate pick up for the world's second-biggest economy.
The story was similar in Japan, home to big brand exporters such as camera and printer maker Canon Inc 7751.T, which earns about 80 percent of its income outside Japan.
The June PMI, released on Friday, slipped to 49.9, below the 50-point mark that separates expansion from contraction. Japan's index for new export orders dropped to 47.5, the sharpest pace of contraction since February.
South Korea's PMI fell to 49.4, suggesting the factory sector shrank in June for the first time in five months. The report also indicated new export orders were falling.
PMIs are closely watched as a leading indicator of economic activity. Export orders, especially for major trading nations such as China and Japan, point to activity even further into the future and give a sense of the economic health of major demand centres such as North American and Europe.

The China and Japan orders' data increase the risk that purchasing managers' data from Europe and the United States may disappoint when released later on Monday.
The euro zone's PMI is forecast to show activity still shrinking as the region deals with the debt crisis that has forced five member states to seek international financial support and threatened the future of the bloc.
Europe's manufacturing sector is already languishing at three-year lows as the region's debt crisis batters confidence and saps new orders. The outlook for U.S. manufacturers is brighter, with factories still expanding, albeit more slowly.

To shield itself from a possible recession in Europe, and a patchy U.S. economic recovery, analysts believe China needs to further relax monetary policy as early as this month.
Beijing could lower the reserve requirement ratio, or the level of cash commercial banks must hold as reserves, by another 100 basis points from a lofty 20 percent, analysts say.
The central bank has already cut the ratio three times since November and surprised financial markets in June by cutting interest rates for the first time since the global financial crisis.
"The weakness of the PMI... will likely push policymakers to introduce incremental measures such as reserve requirement ratio cuts and easing lending restrictions to stabilise growth," said Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong.
Japan's factory sector shrank in June for the first time in seven months, data showed late last week, a s a rebuilding boom after the 2011 earthquake and tsunami lost steam.
Japan's PMI slipped to 49.9 in June, which indicates activity was contracting. Japan's index for new export orders fell to 47.5, pointing to the sharpest pull back since February.
"This bodes ill for growth heading into the second half of the year, especially given the fragility of demand in external markets," said Alex Hamilton, an economist at Markit, which gathers the data.
The Bank of Japan has loosened monetary policy this year and the central bank has repeatedly said it is willing to do so again if needed.
Many central banks in Asia, and elsewhere, have loosened policy this year as Europe's debt crisis weighed on the global economy.
Most economists polled by Reuters expect the European Central Bank to cut borrowing costs on Thursday in the latest efforts to try to revive the regional economy. But internal resistance to the central bank reviving its bond-buying programme remains high.
An India PMI is released later on Monday. ECONKR ECONIN
India's PMI has remained above the 50 level for more than three years, although the country reported its weakest economic growth in nine years in the March quarter at 5.3 percent.

20120702 1123 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares rise on euro zone bank relief, data in focus
TOKYO, July 2 (Reuters) - Asian shares rose with sentiment brightening at the start of the third quarter after Europe agreed to shore up the region's banks, while investor attention is turning to the health of the U.S. economy.
"The agreement by euro zone leaders gives relief especially for the banking sector and supports the euro," said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.

China HSBC PMI hits 7-mth low of 48.2 in June
BEIJING, July 2 (Reuters) - China's factory activity shrank in June at the fastest pace in seven months as new export orders tumbled to depths last seen in March 2009, a private sector survey showed, underlining the risk of a lurch lower for the Chinese economy.
The HSBC Purchasing Managers' Index (PMI) fell to 48.2 after seasonal adjustments, its lowest since November 2011, and little changed from a flash, or preliminary, estimate of 48.1.

COMMODITIES-Biggest 2012 rally as EU acts, but Q2 in red
NEW YORK, June 29 (Reuters) - Commodity markets posted their biggest rally for the year o n F riday, with oil prices rocketing 9 percent, as a long-awaited debt deal in Europe pushed buyers back into a sector that had logged few gains since May.
"Only when you have structural fixes can you think about a third quarter that will look a lot more positive," said Pau Morilla-Giner, who runs London & Capital's $280 million Global Commodities Fund.

OIL-Oil posts fourth biggest daily gain on record
NEW YORK, June 29 (Reuters) - Oil surged on Friday in heavy trading to the fourth biggest daily gain on record, as a deal by European leaders to shore up euro zone banks triggered frantic short-covering by funds that had been riding crude's price collapse over the last quarter.
"The NYMEX just went wild. It never looked back. Just up, up and away." said John Troland, an independent energy advisor in Houston, referring to the New York Mercantile Exchange where benchmark U.S. crude oil futures trade.

Iraq oil exports fall to 2.403 mbpd in June -govt
BAGHDAD, July 1 (Reuters) - Iraq's oil exports fell to 2.403 million barrels per day (bpd) on average in June compared with 2.452 million bpd in May, the oil ministry said on Sunday.  
Exports from southern Basra were 2.085 million bpd in June while shipments from northern Kirkuk were 318,000 bpd, including 6,000 bpd by truck through Jordan, ministry spokesman Asim Jihad said.

Norway oil strike into second week, unions to meet Tues
OSLO, July 1 (Reuters) - A strike by offshore workers in Norway's oil sector entered its second week on Sunday with labour unions bracing for a long conflict and possible escalation to further lower output from the eighth largest oil exporter.
Operator Statoil  said the strike had cut production of oil and natural gas liquids by 230,000 to 250,000 barrels per day, or up to 13 percent of Norway's capacity. Some natural gas output has also been affected.

US Congress eases way for BP oil spill settlement
WASHINGTON, June 29 (Reuters) - The U.S. Congress on Friday removed an obstacle to settling legal claims emerging from the 2010 BP Gulf of Mexico oil spill, when it approved a spending plan for the billions of dollars it expects the government to collect.
The plan, which President Barack Obama is expected to sign, directs 80 percent of Clean Water Act penalties related to the spill to a new trust fund for restoration efforts in five states along the Gulf coast.

NATURAL GAS-US natgas futures end up 4 pct, backed by heat
NEW YORK, June 29 (Reuters) - U.S. natural gas futures shrugged off bearish production data and ended higher on Friday supported by a vast heat wave that should extend into next week and force homeowners and businesses to crank up air conditioners.
"There's still a lot of heat around, and it looks like we're in for some peak power gen (generation) load next week," a New York-based analyst said.

EURO COAL-S.African rebounds above $90/T FOB
LONDON, June 29 (Reuters) - Prompt South African FOB physical coal prices continued the rally begun last week to trade at $90.00 a tonne FOB Richards Bay on Friday, over $10.00 higher than prices seen a few weeks ago amid the panic over widespread Chinese cargo defaults.
"The market does seem to have bottomed-out - for now - $90 is the number for Richards Bay and DES," one trader said.

20120702 1003 Malaysia Corporate Related News.

CIMB acquires fourth Aussie commercial building for RM182m
CIMB Bank has acquired yet another commercial building in Brisbane, Australia. The building at 150 Charlotte Street, Brisbane was purchased for AUD56m (RM182m) from Australia’s Stockland Trust. The purchase was made through CIMB TrustCapital Advisors (CIMB-TCA), who manages CIMB TrustCapital Australian Office Fund No 1 (CIMB-TCA AOF1). The acquisition is CIMB-TCA AOF1’s fourth acquisition in Australia since it entered the market in early 2011. (Malaysian Reserve)

The withdrawal of CIMB Bank from a restructuring scheme to revive Asia Petroleum Hub is likely to lead to a face-off between the bank and the contractors. Muhibbah Engineering has expressed its disappointment. “…We were looking forward to the deal. Now we will have to ensure that our interest is not compromised.” It said. Bankers close to ZAQ construction, the managing contractor of the APH project, said that the company will go ahead with its plan to wind APH up to recover the RM419.7m owed to it. Another source said that the reasoning for transferring the project into an SPV is to speed the restructuring process, but this will not go down well with ZAQ and Muhibbah as it will leave limited room for the to recover the amount owed to them. There are also plans to tender the APH project to the highest bidder, but with APH bogged down with legal suits, its difficult for a new party (investor) to come in. (Edge Weekly)

Maybank fully committed to Singapore operations
Malayan Banking Bhd is fully committed to its operations in Singapore, said president and chief executive officer Datuk Seri Abdul Wahid Omar. The bank currently has 22 branches in Singapore, which is about 5% of the Singapore market. The bank is also seeking clarification regarding the terms set by the Monetary Authority of Singapore for foreign banks that fall under the Qualifying Full Bank (QFB) programme to establish a local subsidiary for retail operations. (Malaysian Reserve)

EP Manufacturing expects an excess of RM100m in revenue
If the proposed takeover of Maju Expressway SB materializes, EP Manufacturing Bhd (EPMB) expects an excess of RM100m in revenue in 2013, said its executive chairman, Hamidon Abdullah. He added that EPMB, an automotive systems and components manufacturer, is hopeful for the deal to go through, as the company has done its due diligence but understands that there are policy issues at hand. (Malaysian Reserve)

Tokio Marine aims for top five
Tokio Marine Life Insurance (M) Bhd aims to be a top five insurance company, growing its business organically through doubling its manpower and expanding its bancassurance distribution channel in the next three to five years. The Japan-based insurance company plans to grow its new agents from about 2,500 agents to 5,000 while growing its bancassurance business to contribute 50% of its revenue. The company has invested RM1.7m in staff training this year while its tie-up with RHB Bank for its bancassurance business will be propelled via RHB’s own expansion strategy. (StarBiz)

MAA seeks exemption from Competition Act
The Malaysian Automotive Association (MAA) is seeking an exemption from complying with the Malaysian Competition Act 2010 after some of its members stopped submitting their vehicle registration figures to the association. A local automotive news report on Wednesday claimed that several car companies, most notably Mercedes-Benz Malaysia and BMW Group Malaysia, had stopped submitting their figures, citing the competition act as a reason. (StarBiz)

Broad plan to clinch top position
After spending more than six years rebuilding its foundation, Celcom Axiata, the country’s second largest mobile operator, believes it now has what it takes to clinch pole position. Its chief executive officer Datuk Seri Shazalli Ramly in a recent interview said that they are already number one in some segments so moving forward, they just need to continue to do things smart. He added that the group hopes to secure the top position in five years. (BT)

AirAsia has LCCT back-up plan
AirAsia Bhd will likely shift to its other hubs in Malaysia should the budget carrier decide not to move to the new low-cost carrier terminal, KLIA2. Newly-appointed AirAsia chief executive officer Aireen Omar said that there is a backup plan in case KLIA2 is not built as per the airline’s requirements that emphasise on safety, security as well as cost effectiveness. (BT)

Three weeks ago, Australian billionaire James Packer flew into KL for a dinner meeting with Genting's chieftian Tan Sri Lim Kok Tay. What transpired at the session isn't clear, but one financial executive who confirms the dinner engagement between the two gaming magnates dimisses any speculation of any joint bid for Echo, which owns Sydney's only casino and three others in Queensland. He also says that whatever designs Genting may have on the Australian casino won't happen overnight. Gaming is tightly regulated and the laws in Australia are strict. Genting group's Lim and his corporate lieutenants are scheduled to hold talks this week with Australia's gaming regulators in Queensland and New South Wales. The outcome of these meetings will shape Genting's corporate stratgy for Echo, which bankers close to the group say could either culminate in a full-blown takeover of remain a portfolio investment to be sold down the road for a profit. (EdgeWeekly)

Malaysia Airlines’ (MAS) brand new A380 fleet will be fuelled by Petron Corp, the oil and gas arm of San Miguel Corp, in which Mirzan Mahathir sits as one of its directors. MAS inked a special six-month deal with Petron. The new deal will be used as a launch pad for joint brand promotions by the two companies. (Malaysian Insider)

After spending more than six years rebuilding its foundation, Celcom Axiata believes it now has what it takes to clinch pole position. "I believe being number one is a realistic target, it's achievable, but I don't want to go out and shout about being number one. I don't want the market leader to react," said Celcom CEO Datuk Seri Shazalli Ramly. "In some segments, we are already number one. Moving forward, we just need to continue doing things smart. Hopefully, we would be able to secure the top position in five years." The company's ability to grow consistently was driven by a few factors, including fixing its billing system, segmented marketing strategy, focusing on mobile broadband and tieing up with mobile virtual network operators on market segments it is weak at. Besides tying up with mobile virtual network operators and implementing segmented marketing strategy, the company has also upgraded its network based on the Single RAN platform - a move that potentially translates to lower operating costs. It also means that as soon as the government awards the 4G spectrum, Celcom will be able to quickly launch its 4G services to the market. "While segmented marketing strategy based on demographics has been effective, our next approach is to segment the market based on behaviour and personality. When you do that, it is easier to penetrate the products into consumers," he explained. (BT)

The much awaited Boston Consulting Group’s (BCG) four month study and its recommendations to enhance the competitiveness of the country’s RM40bn steel sector is completed and has been submitted to the International Trade and Industry Ministry (MITI) for further action. The study will help to speed up MITI’s next course in formulating an effective mechanism to address the issues, disputes and challenges faced by the sector. (Starbiz)

Yik Sook Ling has been appointed the new CFO in Public Bank Bhd. She has 22 years of working experience in area of auditing, accounting and finance. She started her career with Arthur Andersen and subsequently assumed the role of finance controller, Vice President of Finance, and Finance Director of various commercial organisations and financial institutions. The former CFO, Chang Siew Yen has been promoted as Senior GM, handling a wider area of responsibilities. (BMSB)

UMW Holdings is now building up its drilling assets to drive the division to profitability. This will be categorised as the core business under the O&G division. UMW acquired a jack-up rig from Standard Drilling PLC for US$214m. The rig will be completed and delivered by February 2013, adding to UMW’s total fleet of three oil rigs. UMW has the option to purchase another rig priced at US$212m. The new rig does not have a charter yet but is confident that UMW will land a contract soon. (Financial Daily)

The Port of Tanjung Pelepas (PTP) is investing RM1.4bn over the next three years in new cranes, electrifying existing rubber-tyred gantries (RTGs) and building new berths. “The industry is continuously evolving and shipping lines continue to build largest vessels to achieve economies of scale. Ports will therefore need to deploy bigger capacity cranes,” said PTP chairman Datuk Mohd Sidik Shaik Osman. Sidik said the port was on track to handle 8m teus for the full year 2012. (Star Biz)

Datuk Clement Hii Chee Kok is considering building up his stake in SYF Resources Bhd, but is tightlipped if there will be a second offer to take SEG International Bhd (SEGi) private. "I don't know if there will be another offer, as I am just a party acting in concert," Hii, told BT in an interview. While Hii was reserved about SEGi, he was much more candid on SYF, a furniture maker, which seems to have turned around financially.(BT)

MAHB: 6.9% growth in KLIA first-quarter passenger movement
Kuala Lumpur International Airport (KLIA) recorded a 6.9% growth in passenger movement to 9.6m in 1Q CY2012 from 8.9m in the previous corresponding quarter. MAHB COO Datuk Abdul Hamid Mohd Ali said the company is on track to achieve the target of 40m passengers for KLIA by the end of 2012.  The airport served 37.7m passengers in 2011, an increase of 10.7% against 34.1m in 2010. He said the growth was attributed by factors such as an increase in flight frequencies,  commencement of new routes from airline partners and the airline's incentive initiative, which included low landing charges for aircraft. (StarBiz)

Tradewinds Corporation: To redevelop Crowne Plaza & Kompleks Antarabangsa
Tradewinds Corp (TCB) confirmed last Friday that it will demolish the Crowne Plaza Mutiara Hotel and Kompleks Antarabangsa in Jalan Sultan Ismail to pave the way for a RM6bn mixed development project. The company said it will redevelop the 2.8 hectare land on its own, and not via a JV as reported previously. The project comprising grade A+ offices, serviced apartments and retail space, is scheduled to be completed in 7 years. Chief Executive Officer Shaharul Farez Hassan said the project will be funded by bank loans and debt equity, with a ratio of 70:30. Crowne Plaza is a 35-storey hotel with over 500 rooms while Kompleks Antarabangsa is a 21-storey office building. The project once completed, will reportedly, be known as the Tradewinds Centre. (Bernama)

Starhill REIT: Revalues “The Residences”
Starhill REIT has carried out a revaluation of The Residences which is housed under its portfolio of assets to comply with Clause 10.03 of the Securities Commission's REIT Guidelines. The trust told Bursa Malaysia that the revaluation had been carried out by Azmi & Co Sdn Bhd, an independent professional valuer, on June 8 and would increase the net asset value per unit from RM1.151 to RM1.155 per unit after incorporation of a revaluation surplus of RM5m. (StarBiz)

Green Packet: To place out to strategic investor
Green Packet current private placement exercise will result in the entry of a new major shareholder, according to group MD and CEO CC Puan. He said the main aim of the private placement is to be able to form a strategic partnership and not fundraising. (Financial Daily)Kelington Group: Aims for bigger share of China’s light emitting diodes market Kelington Group (KGB), which installs ultra-high purity gas and chemical infrastructure, is eyeing more opportunities in China's light emitting diodes (LED) market. Group president and COO Ong Weng Leong said the company already had LED jobs in China but expected to capitalise further on the growth prospects there. Ong said the company had also done jobs for companies in Malaysia, but felt that the prospects were nowhere near as great as China. According to reports, the 2010 Chinese lighting market reached US$12.2bn (RM39bn) in 2010, accounting for 15.4% of the global market share, buoyed by continued economic growth and infrastructure expansion. Reports claim that the Chinese lighting market share is expected to rise to 18.3% in 2015, with the total Chinese market value reaching US$20bn. Ong said the demand for LED lights was spurred by international events such as the 2008 Olympics. (Bloomberg)

TSR Capital: Optimistic of winning more MRT jobs
TSR Capital’s wholly-owned construction arm, TSR Bina Sdn Bhd, is optimistic that it would win two mass rapid transit (MRT) packages for the construction of multi-storey car park and maintenance of depots. TSR Capital COO Datuk Wan Abdul Razak Ismail said as TSR Capital is one of the 12 pre-qualified contractors, chances are high that they will get some MRT packages that are yet to be handed out. (Financial Daily)

20120702 1002 Global Economy Related News.

The annual growth in broad money (M3) moderated to 13.2% in May from 15% in Apr. Net financing to the private sector expanded by RM22.3bn or 13.1% in May (+RM6.1bn or 12.8% in Apr). Total loans outstanding rose 12.5% yoy in May (12.1% in Apr). (Bank Negara Malaysia)

Malaysia and India have joined hands in a venture that will offer local government authorities a revolutionary technology transfer platform involving the automation of building planning approval process. This collaboration is through a memorandum of understanding (MoU) signed between Global Concerts (M) Sdn Bhd (GC), a local management consulting company, and Indian-based Vinzas Solutions India Private Limited, a technology-consulting firm. The MoU will help in sharing of technology for document regulatory control system called Smart Development Control Regulation (DCR) to speed up and offer greater fluency through the automation of the building plan scrutiny and approval process, with respect to "dealing with construction permits." The Smart DCR was developed by Vinzas. Malaysia will be the second country in the world to implement this system after India. (Bernama)

PM Datuk Seri Najib Tun Razak said although Malaysia is an oil producer, domestic demand equals the oil exported making it a marginal net exporter. Malaysia's oil is more suitable for international market and domestic needs and the government had to import and process oil from Middle East countries. The government also contributed significantly to the people via subsidy of more than RM2bn per year for each litre of petroleum products. "One litre of RON95 has subsidy of 82 sen per litre. We are paying RM1.90 per liter although we should be paying RM1.90 plus 82 sen. A full tank of about 25 litres will save us between RM25 and RM30," he said. The government chose to adopt a prudent policy and not give high subsidy because the funds could be used for economic development, he said. (Bernama)

With fewer than 10 months before the parliamentary term ends, it is increasingly likely that parliamentary and all state elections, except in Sarawak, will be held simultaneously. Political pundits and politicians said a June, self-imposed cut-off point by Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim had lapsed, leaving Pakatan Rakyat-led state governments with no more excuses to hold state elections at a later date. Asked over the weekend whether Selangor would hold concurrent elections, Khalid said: "We will never reveal our strategy." The Election Commission said it did not favour having parliamentary and state elections at different times, given the additional cost of RM30m for Selangor alone. (NST)

Bank lending in Singapore rose by 22.5% yoy (24% in Apr), totaling about S$445bn in May. (Channel News Asia)

Thailand’s foreign reserves for the week ending 22 Jun stood at US$173.1bn from US$174bn the previous week. (Bloomberg)

Vietnam's economy is showing signs of stable development in the face of difficulties caused by the global economic crisis, whilst the domestic real estate market has shown signs of light recovery after the Government outlined solutions to stimulate sluggish activity. (Vietnam News)

Vietnam’s GDP expanded 4.7% yoy in the Apr-Jun period, accelerating from a 4.0% expansion in the previous quarter. (WSJ)

Vietnam’s retail sales gained 19.5% yoy in Jun (20.8% in May). (Bloomberg)

Vietnam’s consumer price index in Jun rose 6.9% yoy, the slowest pace since Dec 2009, and well off a recent peak of 23% in Aug last year. (WSJ)

India’s current-account deficit in the three months through Mar was US$21.7bn, or 4.5% of GDP, compared with US$6.3bn a year earlier, or 1.3% of GDP (US$19.6bn in Oct-Dec). (WSJ)

China: Flagging growth in mainland factories
Growth in manufacturing activity on the mainland slowed to a six-month low in June as domestic and export demand fell. The purchasing managers' index (PMI) edged down to 50.2 in June, from 50.4 in May. A PMI reading of above 50 indicates growth in manufacturing activity, while a reading of below 50 indicates a contraction. Output and stocks of finished goods expanded in June but new domestic and export orders as well as employment contracted. Although the PMI was down, it was higher than a market consensus forecast of 49.9. (South China Morning Post)

China’s official manufacturing PMI fell to 50.2 in Jun (50.4 in May), the slowest pace since Nov but exceeded market expectations of 49.8. (WSJ)

Chinese industrial companies’ profits fell for a second month in May. Income dropped 5.3% from a year earlier to RMB390.9bn. That compares with a 2.2% decline in Apr and 4.5% gain in Mar. (FT)

Japan’s industrial output fell 3.1% mom in May (-0.2% in Apr; -2.8% in the consensus), the most since the Mar 2011 earthquake, whilst consumer prices excluding fresh food fell 0.1% yoy in May. (Bloomberg)

Japan has found a large deposit of rare earth minerals in its Pacific seabed amounting to around 6.8m tonnes, enough to supply its hi-tech industries for more than 200 years. (AFP)

Japan faces the same risks that plague financially-embattled European states, Prime Minister Yoshihiko Noda warned. (AFP)

South Korea: Inflation moderated to slowest pace in 32 months in June
South Korea’s inflation moderated in June, giving the central bank more leeway to forgo raising borrowing costs at a policy meeting on 12 July. Consumer prices increased 2.2% y-o-y after a 2.5% gain in May. The median estimate was for a 2.5% gain. Prices fell 0.1% m-o-m. Core consumer prices, which exclude oil and agricultural products, advanced 1.5% y-o-y in June. South Korea’s GDP may expand 3.3% this year, less than a December estimate of 3.7%. Inflation this year may be 2.8% rather than a past 3.2% prediction. (Bloomberg)

South Korea: Exports expand as weak won offsets European crisis
South Korea’s exports rose in June, snapping three months of declines, after a weaker won fueled overseas sales even as China’s growth slowed and Europe’s debt crisis deepened. Overseas shipments rose 1.3% y-o-y, after a revised 0.6% decline in May. The median estimate was for a 0.5% gain. The won has fallen about 6% over the past 12 months. South Korea’s imports fell 5.4% y-o-y in June and the trade surplus for the month was USD4.96bn. The ministry also cut its estimate for export growth this year to 3.5% from a January projection of 6.7%, citing a slowdown in major economies. It now expects the value of overseas shipments this year to reach USD574.5bn from a previous estimate of USD595bn. (Bloomberg)

Australia: RBA to halt rate cuts after growth accelerates
Reserve Bank of Australia Governor Glenn Stevens probably will keep interest rates unchanged tomorrow after cutting them in each of the past two months, as the nation’s strongest economic expansion in five years reduces the need to guard against fallout from Europe’s debt crisis. Interest-rate swaps indicate a 67% chance the RBA will keep the overnight cash-rate target at 3.5%. Investors pulled back last month from bets the RBA will add to its 1.25 ppt of reductions since November after data showed Australia’s economic growth was the strongest since 2007. (Bloomberg)

UK: House prices stagnate on subdued demand
UK house prices stopped rising in June for the first time in four months as economic uncertainty and a seasonal slowdown curtailed activity in a market that now faces “downward pressure.” Prices stayed unchanged from May, Hometrack Ltd said. The number of new buyer registrations fell 0.5%, the first drop in five months, while the volume of properties being put up for sale rose 1.5%. On the month, London was the only one out of 10 areas tracked by Hometrack that showed a price gain in June, with a 0.3% increase. Y-o-y, values nationally fell 0.5%. (Bloomberg)

S&P 500 caps best June since 1999 on European agreement
The Standard & Poor’s 500 Index (SPX) capped the biggest June rally since 1999 after European leaders reached an agreement that alleviated concern banks will fail. The S&P 500 jumped 2.5%, the most in 2012, to 1,362.16 while the Dow Jones Industrial Average added 277.83 points, or 2.2%, to 12,880.09. Stocks gained, joining a global rally, as European leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis. (Bloomberg)

US Federal Reserve officials said they were keeping an eye out for any signs that slowing growth is raising deflation risks but differed on how worrisome sluggish job markets are for the modest US economic recovery. (Reuters)

US personal income grew 0.2% mom in May (0.2% in Apr), undershooting consensus of 0.3%, whilst consumer spending experienced no change (a revised 0.1% mom in Apr), matching consensus. The PCE price index fell 0.2% mom (no change in Apr), overshooting consensus of -0.1%, whilst the core PCE price index gained 0.1% mom (0.1% in Apr), half the consensus of 0.2%. (Bloomberg)

20120702 1001 Global Market Related News.

Biggest June Advance in Decade Pushes Stocks Past Bonds in 2012 (Source: Bloomberg)
The biggest June rally for global stocks since 1999 is handing equity investors the year’s top returns, beating the dollar, bonds and commodities. The MSCI All-Country World Index (MXWD) of shares in 45 nations climbed 6 percent over the first six months, led by the U.S., where $1.1 trillion was added to share values. The gain is about 1.1 times the increase in global bonds and 1.8 times more than the dollar after adjusting for daily swings, data compiled by Bloomberg show. Before the adjustment, fixed income climbed 2.9 percent, the U.S. currency added 1.7 percent and the S&P GSCI Total Return index of commodities sank 7.2 percent.
In a year when billionaire Wilbur Ross predicted the U.S. is on the “verge of a recession” and former Federal Reserve Chairman Alan Greenspan said the economy “looks very sluggish,” American companies anchored a rebound that pushed the MSCI gauge up 5 percent in June. Analysts say earnings in the Standard & Poor’s 500 Index will reach a record in 2012 amid forecasts for a 2.2 percent expansion in gross domestic product, the median prediction in a survey of 70 economists by Bloomberg. “The U.S. is the best house in the neighborhood,” Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston, said in a June 27 telephone interview. “We believe that the recovery here is self- sustainable. If you look outside of the United States, it’s a different story. Europe is still in the middle of their crisis. As concern rises, you begin to find a safer place.”

Asian Stocks Rise After Europe Leaders’ Debt-Crisis Deal (Source: Bloomberg)
Asian stocks rose for a fourth day as measures taken by European leaders to address flaws in their bailout programs eased concern about the sovereign-debt crisis and an index of manufacturer sentiment in Japan improved. BHP Billiton Ltd. (BHP), the world’s largest mining company, climbed 1.2 percent after commodity prices rallied. Sony Corp. (6758), Japan’s largest consumer electronics company that gets one fifth of its sales in Europe, gained 1.4 percent. Aristocrat Leisure Ltd. (ALL), an Australian manufacturer of gaming machines, slumped 12 percent after reporting preliminary earnings for the first half of this year. The MSCI Asia Pacific Index advanced 0.4 percent to 117.62 as of 9:46 a.m. in Tokyo, with two stocks rising for each that fell. Markets are closed in Hong Kong today. The Asian benchmark last week capped the biggest weekly gain since January, jumping 2.7 percent, as euro-zone leaders agreed to relax conditions for recapitalizing lenders.
“These appear to be some tangible measures that could help reduce anxiety over the region’s fiscal condition,” said Matthew Sherwood, Perpetual Investments’ head of investment markets research in Sydney. Perpetual manages about $23 billion. “It is another small step that will help boost market liquidity and confidence.” Japan’s Nikkei 225 Stock Average added 0.3 percent after the quarterly Tankan index on sentiment among the nation’s manufacturers beat estimates. South Korea’s Kospi Index increased 0.1 percent and Australia’s S&P/ASX 200 Index rose 1 percent. Futures on the Standard & Poor’s 500 Index slid 0.1 percent today.

Japanese Stocks Advance After Tankan Beats Estimates (Source: Bloomberg)
Japanese stocks rose, with the Topix Index set for its highest close it almost two months, after a survey of sentiment among the country’s biggest manufacturers topped estimates and a European deal on the debt crisis lifted investor sentiment. Canon Inc. (7751), a camera maker that depends on Europe for almost a third of its sales, gained 1 percent. Mitsubishi Corp. (8058), Japan’s top commodities trader by revenue, gained 2.1 percent after crude prices rose the most in more than three years. Nippon Yusen K.K., Japan’s top shipping line, jumped 2.9 percent as it aims to double sales at logistic operations. The Topix gained 0.4 percent to 772.76 as of 9:17 a.m. in Tokyo, set for the highest close since May 8. The Nikkei 225 Stock Average (NKY) rose 0.3 percent to 9,035.31, with volume almost 20 percent above the 30-day average. The gauge rose for a fourth day as the yen weakened against the euro and Spanish and Italian bond yields fell after last week’s European summit.
“Investors are now in a situation to take risks,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities Co. in Tokyo. “The European Central Bank may lower interest rates this week.”

U.S. Stocks Rally to Give Dow Best Month Since October (Source: Bloomberg)
U.S. stocks rallied for the week, lifting the Dow Jones Industrial Average to the best monthly gain since October, amid optimism an agreement by European leaders on banks will help contain the region’s debt crisis. All 10 industry groups in the Standard & Poor’s 500 Index rose. Energy companies jumped the most, climbing 4.8 percent, as oil rebounded. A gauge of homebuilders rallied 13 percent as housing data beat forecasts and Lennar Corp.’s profit surged. Hospital companies including Tenet (THC) Healthcare Corp. jumped after the Supreme Court upheld the core of President Barack Obama’s industry overhaul. Nike Inc. (NKE) sank 12 percent while Research In Motion Ltd. (RIM) plunged 25 percent amid disappointing earnings. The S&P 500 advanced 2 percent to 1,362.16 during the week, extending its increase in June to 4 percent, the most since February. The Dow gained 239.31 points, or 1.9 percent, to 12,880.09 for the week, finishing the month up 3.9 percent.
“It looks like Europe is moving toward a resolution of keeping the euro together,” George Young, a partner at St. Denis J. Villere & Co. in New Orleans, said in a telephone interview. His firm oversees about $1.6 billion. “We are putting money into stocks. We believe that the U.S. is going to do well longer term.”

Emerging-Market Stocks Rise Most in 2012 on EU Meeting (Source: Bloomberg)
merging-market stocks rose the most in eight months after European leaders agreed to ease repayment conditions for loans to Spanish banks, boosting demand for riskier assets. The MSCI Emerging Markets Index (MXEF) jumped 3.4 percent to 937.35 by the close in New York, the steepest gain since Oct. 27. Energy companies rallied the most since October as OGX Petroleo e Gas Participacoes SA surged in Sao Paulo after naming a new chief executive officer. Brazil’s Bovespa rose 3.2 percent while Russia’s Micex Index (INDEXCF) added the most in four months. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares rose by 2.6 percent.
European leaders agreed to drop requirements that governments receive preferred creditor status on crisis loans to Spain’s banks and relax conditions on potential help for Italy. The 21 countries in MSCI’s emerging-market index send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show. Consumer spending in the U.S. was unchanged. European authorities “worked really hard and they did make some progress on a number of important issues, although we are still far away from what I would call a major breakthrough, which is ultimately what we need,” Benoit Anne, head of emerging-market strategy at Societe Generale, wrote in an e- mailed note to clients today. “The most significant development is probably the tiny steps towards creating a banking rescue framework at the EU level.”

European Stocks Climb for a Fourth Week on EU Agreement (Source: Bloomberg)
European stocks rose for a fourth week as the region’s leaders agreed to address flaws in their bailout programs to ease the sovereign-debt crisis. CRH Plc rallied 12 percent, leading a gauge of construction companies to the biggest gain in six months. Colruyt NV (COLR) jumped 16 percent as Belgium’s biggest discount food retailer reported a surprise increase in profit. Barclays Plc (BARC) slumped 19 percent after paying a record fine to settle claims it sought to rig the London and euro interbank offered rates. The Stoxx Europe 600 Index (SXXP) climbed 1.9 percent to 251.17 this past week, extending the longest stretch of gains since January, after policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion economic growth plan. The advance pushed the measure to the highest level since May 11 and trimmed the second-quarter decline to 4.6 percent.
“The results were as good as we could have expected from the summit,” said Derry Pickford, who helps oversee $1.7 billion at Ashburton Ltd. in Jersey, the Channel Islands. “There are two important caveats: expectations were very low and the measures are short-term analgesics rather than fundamental cures.”

China Stocks to Extend Drop After Losing 2012 Gains (Source: Bloomberg)
China’s stocks are poised to extend losses after erasing this year’s gains amid concerns over a slowing economy, according to the only strategist who forecast declines for Chinese shares in 2012. The economy probably expanded at a “subpar” rate in the second quarter and investors should buy shares of companies such as consumer-staples producers, whose earnings may be sheltered from the slowdown, Hao Hong, head of Chinese research at Bank of Communications Co. in Hong Kong, said by e-mail yesterday, declining to name stocks. The Shanghai Composite Index may fall “briefly” below 2,000 in a worse-case scenario, he said. The gauge is down 0.2 percent this year after losing 1 percent yesterday to 2,195.84, the lowest level since Jan. 6. It tumbled 7.4 percent in June, the second-worst performance of 95 major indexes tracked by Bloomberg, as lower-than-estimated industrial output and retail sales data overshadowed the central bank’s first interest-rate cut since 2008.
“The market is collapsing,” said Hong, who was previously a global equity strategist at China International Capital Corp. “I am again waiting for a capitulation like the one in January.”

Dubai Shares Gain on Europe Plan; Kuwait Rises on Cabinet Shift (Source: Bloomberg)
Dubai’s shares advanced the most in three weeks, helping gains in Persian Gulf stock markets, after oil surged on optimism that Europe’s debt crisis may be contained, boosting the appeal for riskier assets. Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper, climbed 1.8 percent. Dubai Islamic Bank PJSC (DIB), the United Arab Emirates’ biggest bank complying with Islamic banking rules, rose the most since May. Dubai’s benchmark DFM General Index (DFMGI) increased 0.7 percent, the most since June 11, to 1,462.52 at the 2 p.m. close in the emirate. The gauge slumped 12 percent in the second quarter. The Bloomberg GCC 200 Index (BGCC200) of the Persian Gulf region’s top 200 equities rose 0.1 percent, while Kuwait’s shares advanced as the resignation of the nation’s cabinet was accepted.
Oil for August delivery surged 9.4 percent on June 29 to $84.96 a barrel in New York after European leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on help for Italy. It was the biggest increase since March 2009. Gulf Arab oil exporters, including the U.A.E. and Saudi Arabia (SABIC), supply about a fifth of the world’s oil.

Billionaire Catsimatidis Says Buy JPMorgan as Cuban Shuns Stocks (Source: Bloomberg)
Stock markets can soar or falter in an instant. One day the European debt crisis is receding, the next day the region’s on the brink of disaster. Economic statistics never give investors the whole picture. In these jarring times, Bloomberg Markets magazine in its August issue asked six billionaires for their advice on which stocks might outperform the market in the next 12 months. Their responses showed much disagreement: Peter Hargreaves, the largest shareholder of Hargreaves Lansdown Plc, the U.K.’s biggest retail broker, said water, health care and technology stocks will outperform in the next 12 months. Casino mogul Phil Ruffin, who controls the Treasure Island Hotel Casino in Las Vegas, and Mark Cuban, the owner of the Dallas Mavericks basketball team, both say to avoid stocks unless you have better information than the market.
“Pay off debt,” says Cuban. “Search online for the best price on items your household needs. Pay local merchants in cash, while still paying sales tax. You’ll never lose money or sleep.”

Euro Falls Against Peers Before Jobs, Manufacturing Data (Source: Bloomberg)
The euro fell against most peers before data today that may show the currency bloc’s jobless rate climbed to a record and manufacturing contracted, boosting prospects the European Central Bank will cut interest rates. The ECB, which has kept borrowing costs at a record low of 1 percent since December, will probably lower the benchmark rate by 0.25 percentage point on July 5, a Bloomberg News survey of economists shows. The 17-nation currency posted the biggest jump in more than a year versus the yen on June 29 after euro leaders eased terms on loans to Spanish banks, taking a step toward resolving the region’s debt crisis. “We can’t buy the euro yet,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “The outlook for Europe’s economy is still bleak, and it still remains to be seen what economic measures will be undertaken there.”
The euro dropped 0.3 percent to $1.2632 as of 10:08 a.m. in Tokyo from the close in New York on June 29. It fell 0.3 percent to 100.77 yen after rising 2.2 percent at the end of last week, the biggest advance on a closing basis since March 2011. The greenback was little changed at 79.77 yen.

FOREX-Euro stages relief rally on EU agreement
LONDON, June 29 (Reuters) - The euro rose sharply against the dollar after European leaders agreed on decisive action to lower the borrowing costs of Italy and Spain and create a single supervisory body for euro area banks.
"The proposed changes to the EFSF/ESM have come as a surprise and these are bringing down euro zone peripheral bond spreads and pushing the dollar and the yen lower," said John Hardy, currency strategist at Saxo Bank.

Treasuries Snap Decline Before Manufacturing, Jobs Data (Source: Bloomberg)
Treasuries snapped a decline before reports this week that economists said will show manufacturing growth slowed and the U.S. added fewer than 100,000 jobs for a third month. Benchmark 10-year yields were 20 basis points from the record low, reflecting demand for the relative safety of U.S. debt. Jim Yong Kim, who took over as World Bank president yesterday, said his first task will be to help emerging markets keep expanding at a time of stress for the world economy. “The economy is getting worse” in the U.S., said Hajime Nagata, an investor in Tokyo at Diam Co., which manages the equivalent of $124 billion and is an arm of Dai-ichi Life Insurance Co., Japan’s second-biggest life insurer. “Manufacturing and the labor market are disappointing. We bought in June,” in the Treasury market, he said.
Benchmark 10-year notes yielded 1.64 percent as of 9:32 a.m. in Tokyo, according to Bloomberg Bond Trader data. The all- time low yield was 1.44 percent set June 1. The 1.75 percent note due in May 2022 changed hands at 101.

Kim Says World Bank’s First Priority Is to Aid Growth (Source: Bloomberg)
Jim Yong Kim, who took over as World Bank president yesterday, said his first task will be to help emerging markets keep expanding at a time of stress for the world economy. “We begin our work together at a crucial moment” as the global economy “remains vulnerable,” Kim wrote in an e-mail to the Washington-based bank’s staff obtained by Bloomberg News. “My immediate priority will be to intensify the Bank Group’s efforts to help developing countries protect growth and jobs.” The 52-year-old Kim, the former president of Dartmouth College, succeeds Robert Zoellick at the helm of a poverty- fighting institution that made loans worth almost $53 billion last year. Kim, a physician by training, has little time to ease into a job that stretches beyond his expertise as global growth is threatened by the European debt crisis and a slowdown in China.
“This is about financial crisis management, macroeconomics, understanding the workings of the European monetary union and what the risks are and prioritizing countries” according to their needs, said Uri Dadush, director of international economics at the Carnegie Endowment for International Peace in Washington and a former World Bank director of economic policy.

China’s Manufacturing Growth Weakens as New Orders Drop (Source: Bloomberg)
China’s manufacturing expanded at the weakest pace in seven months as overseas orders dropped, and South Korea cut its estimate for export growth this year, underscoring risks to Asian economies from Europe’s debt crisis. The Purchasing Managers’ Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. South Korea’s Ministry of Knowledge Economy lowered its projection for overseas sales to an increase of 3.5 percent from 6.7 percent, citing a slowdown in major economies. Manufacturing data from China, the world’s biggest exporter, signal the government may need to add stimulus to arrest an economic slowdown that probably extended into a sixth quarter. The downturn is rippling through Asian nations, with South Korea’s sales to China, its biggest market, stalling in the first 20 days of June.
“It’s clear the slowdown of export growth as a result of weakness in Europe and the U.S. continues to weigh on the Chinese economy,” said Lu Ting, head of greater China economics at Bank of America Corp. in Hong Kong. The weaker PMI reading “will likely push policy makers to introduce incremental measures such as reserve-ratio cuts and easing lending restrictions to stabilize growth,” he said.

Hiring Probably Cooled in Second Quarter: U.S. Economy Preview (Source: Bloomberg)
The jobs tally in June probably crowned the weakest quarter for employment in more than two years, evidence the U.S. recovery has lost momentum, economists said before reports this week. Employers increased payrolls by 90,000 workers last month after a 69,000 gain in May, according to the median forecast of 59 economists surveyed by Bloomberg News ahead of Labor Department figures due July 6. Excluding government agencies, private hiring may have climbed by 100,000, concluding the smallest quarterly advance since the first three months of 2010. The job slump has shaken confidence and stalled household spending, which accounts for about 70 percent of the economy, making the expansion more susceptible to any fallout from the European debt crisis. Slowing consumer and global demand is also leading to a cooling in manufacturing, a mainstay of the recovery, another report this week may show.
“We really need to see job creation pick up, which is the only thing that’s going to get households spending on a sustained basis,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in London. “The economy isn’t going to get exceptionally weak from here, but neither is it going to get much stronger.”

Mao College Town Booms Signaling Offset to Slowing China Growth (Source: Bloomberg)
In a hard hat and muddy boots, Ren Jinbo sits below a half-finished railway bridge, happy to be back mixing cement in the central Chinese city of Changsha. “It’s certainly better than plowing the field back home,” said Ren, 41, who was laid off and returned to rural Shaoyang in January as national efforts to cool construction spending and house prices slowed building. “My boss phoned me in early May that the work must be accelerated, so here I am again.” The boom in Changsha and other inland cities is cushioning China and the world at a time when global growth is slowing, and may help relieve the damping effects of the debt crisis in Europe, China’s largest export market. First-quarter growth in Changsha was 10.8 percent, compared with 8.1 percent nationally.
“The key target of government spending is in central and western Chinese places like Changsha,” said Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase & Co. “Economic growth in inland provinces has been stronger than coastal areas and the trend is expected to continue for another five to 10 years.”

Japan Tankan Improves Even as Yen Gain Limits Exports (Source: Bloomberg)
Japan’s large manufacturers became less pessimistic as declines in commodity prices aided profitability, boosting the outlook for the world’s third- biggest economy even as a stronger yen crimps exports. The quarterly Tankan index of sentiment was minus 1 in June from minus 4 in March, the Bank of Japan said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg News was for a reading of minus 4. A negative number means pessimists outnumber optimists. Bank of Japan (8301) policy makers meeting on July 11 and 12 will weigh whether improved sentiment and progress in tackling Europe’s debt crisis are enough to warrant withholding further stimulus. Today’s report showed Japanese businesses estimate their capital spending will rise 6.2 percent in the year ending March, up from a previous forecast of no change.
“Today’s data won’t deliver relief to the Bank of Japan,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co., who correctly forecast the minus 1 reading and predicts the central bank will expand its asset purchases. “It’s increasingly unclear that global demand, which is key for Japan’s economy, can gain traction to lead the recovery.”

S.Korea Inflation Moderated to Slowest Pace in 32 Months (Source: Bloomberg)
South Korea’s inflation moderated in June, giving the central bank more leeway to forgo raising borrowing costs at a policy meeting on July 12. Consumer prices increased 2.2 percent from a year earlier after a 2.5 percent gain in May, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 12 economists was for a 2.5 percent gain. Prices fell 0.1 percent from May. The Finance Ministry on June 28 lowered its forecasts for inflation and economic growth for this year, citing the European debt crisis as a “long-term threat.” The Bank of Korea, which targets inflation at between 2 percent and 4 percent, will determine borrowing costs on July 12. “Inflation is going to decelerate for months to come,” said Lim Ji Won, an economist at JPMorgan Chase & Co. in Seoul. “Prices of manufactured goods have been falling with oil prices so this is being reflected in June.”
The won jumped to a seven week high on June 29 as European leaders made progress in aiding the region’s indebted countries, strengthening 0.8 percent to 1,145.40 per dollar at the close in Seoul, according to data compiled by Bloomberg. The Kospi stock index rose 1.9 percent.

South Korea Exports Expand as Weak Won Offsets Europe Crisis (Source: Bloomberg)
South Korea’s exports rose in June, snapping three months of declines, after a weaker won fueled overseas sales even as China’s growth slowed and Europe’s debt crisis deepened. Overseas shipments rose 1.3 percent from a year earlier, the Ministry of Knowledge Economy said in a statement today, after a revised 0.6 percent decline in May. The median estimate in a Bloomberg News survey of 16 economists was for a 0.5 percent gain. South Korea announced 8.5 trillion won ($7.4 billion) of economic support measures on June 28 and cut its growth outlook, citing Europe’s “long-term threat” to the nation’s expansion. The Bank of Korea kept borrowing costs unchanged for a 12th month in June and the ministry today cut its estimate for export growth this year. “South Korean exporters are coping with the European crisis with a weaker currency and by diversifying their products and markets,” Kong Dong Rak, a fixed-income analyst at Taurus Investment & Securities Co. in Seoul, said before the release.
The won has fallen about 6 percent over the past 12 months. It strengthened 0.8 percent to a seven week high of 1,145.40 per dollar on June 29, according to data compiled by Bloomberg, as European leaders made progress in aiding the region’s indebted countries. The Kospi stock index rose 1.9 percent.

Clinton Says Sanctions Pushing Iran Toward Negotiations (Source: Bloomberg)
Secretary of State Hillary Clinton said Iran will face increasing pressure from economic sanctions aimed at its disputed nuclear program. “The pressure track is our primary focus now, and we believe that the economic sanctions are bringing Iran to the table,” Clinton said in an interview with Bloomberg Radio in Geneva on June 30. “They are going to continue to increase and cause economic difficulties for them.” Sanctions advocates in the Obama administration and U.S. lawmakers have been weighing ways to tighten American sanctions. Proposals under discussion include expanding the restrictions to cover all Iranian financial institutions and trading companies, sanctioning money-changers and alternative payment systems, and banning trade and investment in all of Iran’s energy sector.
Three rounds of international talks since April have failed to achieve a deal to satisfy international concern that Iran is seeking the capability to build nuclear weapons. Those skeptical about sanctions, such as Trita Parsi, president of the National Iranian American Council, have questioned whether they are effective in compelling regimes such as Iran’s to compromise. They say in some cases economic penalties have strengthened hardline factions.

Euro Leaders Turn to Central Bankers for Help to Tackle Crisis (Source: Bloomberg)
Europe’s political leaders turn to the European Central Bank this week, seeking assistance from monetary policy makers to reinforce gains following euro-area leaders’ moves to calm markets and accelerate the currency bloc’s integration. The Frankfurt-based ECB may offer help on July 5, with economists expecting an interest rate cut. The bank has a track record of action following political progress, including bond purchases that followed bailout programs and unlimited three- year loans on the heels of pledges supporting fiscal discipline. European Union leaders ushered in the strongest rally in the single currency and in Spanish bonds this year after agreeing at their June 28-29 summit to loosen bailout rules, lay the foundations for a banking union and break the link between sovereign and banking debt through the direct recapitalization of lenders. EU leaders will try to maintain the muscle-flexing by seeking to convince investors that the euro area will do everything it can to end the three-year crisis.
“The summit produced several tangible outcomes that will help us address the challenges,” ECB Executive Board member Joerg Asmussen told Greek newspaper Kathimerini in an interview. The comments were confirmed by the ECB on June 30.

ECB May Need to Buttress Bond-Market Respite Leaders Made (Source: Bloomberg)
The European Central Bank is now the focus of investors urging the ECB to reclaim the lead in crisis- fighting after euro-area governments yesterday delivered relief to the bond markets of Spain and Italy. By addressing flaws in their bailout programs, moving toward a banking union and trying to break a negative loop between troubled sovereigns and lenders, leaders sparked the biggest rally in Spanish bonds and the euro this year. Whether the gains continue may depend on the willingness next week of ECB policy makers to reward political progress with greater crisis-fighting steps of their own. Governments must also avoid their past mistake of declaring victory too soon as investors press them to move faster on binding the 17-nation euro region more tightly.
“The ball is very much in the ECB’s camp,” Gilles Moec, co-chief European economist at Deutsche Bank AG in London, said in an interview with Bloomberg Television. “The statement creates an environment in which it makes it easier for them to take more unorthodox decisions.”

Greenspan Says Europe Like a ‘Leaking Boat’ With Holes (Source: Bloomberg)
Alan Greenspan, a former Federal Reserve chairman, today compared Europe to a “leaking boat” and said political consolidation is the only solution to the region’s financial crisis. “The problems in Europe are the fiscal deficits of all the various countries that are involved,” Greenspan said in an interview on CNBC television. “It’s like a leaking boat in which we keep bailing it out and we’re very pleased with ourselves that we’d be able to keep bailing it out. The problem is we haven’t fixed the holes yet.” European leaders in Brussels this week held their 19th summit since the sovereign-debt crisis started more than two years ago. Euro-area nations granted immediate respite to the stressed bond markets of Spain and Italy, leaving investors looking to the European Central Bank to provide more lasting relief.
“The only solution to the European crisis is political consolidation of Europe. I think we’re gradually moving in that direction; in fact I know we are,” Greenspan, 86, said in the interview. “The only issue is, will we ever reach that?” By addressing flaws in their bailout programs, moving toward a banking union and trying to break a negative loop between troubled sovereigns and banks, euro-area officials triggered the biggest rally in Spanish bonds and the euro this year. Weekly Market Update: Germany softens its stance, allowing EU summit to exceed low expectations, sparking risk on rally; 'Obamacare' upheld
By - Fri 29 Jun 2012 15:49:52 CT
The week commenced with investors eagerly anticipating two key events, the EU summit and a Supreme Court ruling on healthcare. Both had surprising outcomes. On Thursday the US top court upheld the constitutionality of the individual mandate, the backbone of President Obama's Affordable Care Act. The ruling provided a lot of political fodder for Washington, while overall market sentiment softened upon its release. With that out of the way, attention turned squarely back to Europe as the month and quarter end drew near. On Monday, Spain submitted its formal request for bank sector aid, and then European officials turned their attention to setting details of a growth pact to compliment the fiscal compact. Leading up to the opening of EU summit, expectations were being tamped down, particularly by German officials, who repeatedly vowed their staunch opposition to the notion of mutual liability, most notably to Eurobonds and deposit insurance. Late into the summit's first day President Van Rompuy confirmed that leaders had agreed on a growth agenda valued at €120B, or 1% of EU GDP. The surprise turn came later that night when EU leaders agreed to direct the firewall funds of the EFSF and ESM toward direct recapitalization of banks, reversing the German stance against it. Additionally and more importantly, countries not currently involved in bailout programs (Spain & Italy) will be allowed to access funds, and any ESM loans made to Spanish banks will not have creditor seniority. The potential for a break in the cycle of ever higher borrowing rates across Europe really goosed sentiment. European peripheral yields plummeted and the US 10-year yield moved below that of the German Bund for the first time since early February.
Investors aggressively piled into risk trades, and even some backtracking by German Chancellor Merkel had little effect after she reminded everyone that the ESM bank recapitalization plan would need unanimous approval and aid from the EFSF/ESM will always have certain conditions and could take up to one year. After trading below $80 for much of the week, crude futures rocketed up over 9% on Friday, and gold simultaneously gained over 3%, ending the week near $1600. The EUR/USD surged two big figures briefly approaching 1.27. Thanks to the huge rally on Friday stocks were up this week: the DJIA gained 1.9%, the S&P500 rose 2% and the Nasdaq added 1.5%, making it the best June for stocks since 1999.
The US Supreme court decision on Thursday held that the mandate at the center of President Obama's healthcare overhaul is constitutional as a tax (but not as a 'penalty' as it was framed by the Obama Administration). Chief Justice Roberts joined the left wing of the court to uphold the mandate, not based on the Commerce Clause but on the basis that Congress has the authority to set taxes. The court also ruled to limit Medicaid expansion but did not invalidate it. This decision was a real stunner as almost no one expected the law to be upheld in this manner. Almost every lower court rejected the tax argument and the key to almost every decision was the Commerce Clause. Republicans quickly reiterated calls to repeal the law and healthcare insurance industry groups said that major provisions (premium tax) in the healthcare reform law will have unintended consequences including cost increases. Some also argued that the law being upheld will inflame partisanship, making it harder to get a budget deal done heading into next year's fiscal cliff. Congress demonstrated some ability to compromise this week, however, passing the $120B highway transportation and student loan bill in both chambers on Friday.
Several drug names were in the news prior to the Obamacare ruling. Arena Pharma's lorcaserin weight loss pill was approved by the FDA for obese adults (i.e. body mass index of 30 or greater). The company will be required to conduct post marketing studies but because it was the first weight loss drug approved in more than a decade it brought buyers into the entire sector. Teva opened the week with surge after receiving a favorable court ruling in its copaxone patent infringement litigation with Momenta Pharma. The decision covers several patents, the last of which expires on September 1, 2015. Shares of Bristol-Myers and Pfizer moved lower after receiving a complete response letter from the FDA on the application for its eliquis stroke prevention drug, requesting additional information on data management and verification from the Aristotle trial.
Though it took a back seat to Europe and Obama care, the US housing market quietly had a good week. The data continues to point to a potential bottom as sentiment is beginning to brighten. Monday's May new homes sales registered a 25-month high while month's supply figures dropping to levels not seen since late 2005. The April S&P/CaseShiller house price survey showed the smallest y/y decline since Dec 2008. Also May pending home sales registered a 6-month high. After the data, the chief economist at the NAR commented that if housing starts do not rise in a meaningful way over the next two years due to the difficulty in getting construction loans, and barring an unexpected shift in the economy, the steady shedding of inventory could lead to shortages where home prices could get bid up close to 10 percent in 2013. Among the homebuilders, Lennar reported strong results that beat on the bottom line while coming up short of analyst revenue estimates. New home orders rose 40% though with average selling prices climbing and the cancellation rate dropping which has provided a boost for the sector.
Thursday's initial jobless claims were roughly in line with analyst expectations but remained elevated at 386K, further dampening the prospects for a recovery in the monthly payrolls data next week. The data followed a disappointing Q4 earnings report from Paychex, which cuts its FY13 revenue forecast. The payroll, human resource, and benefits outsourcing solutions provider is often viewed as a good barometer of the employment landscape.
Anheuser-Busch confirmed the purchase of the remaining stake in Groupo Modelo shares this week. The $20.1B deal represented roughly at 30% premium bringing the estimated total enterprise value north of $32B. The transaction is expected to close during Q1 2013 and financing has been fully committed.
Throughout the week cracks to the global economic growth story emerged. In their quarterly report the Brazilian central bank cut its 2012 growth forecast to 2.5% from 3.5%. German economic data was generally softer culminating in Friday's disappointing decline in May retail sales figures. Prior to that several large German companies provided commentary indicating they were not immune to Europe's woes. Chip maker Infineon guided Q3 revenues to be "slightly" lower on a sequential basis due to current global economic uncertainties. Siemens CFO said he expected some difficulty in meeting the lower end of its earnings guidance range due to slowdown in China and continued European uncertainty. Salzgitter also revealed it no longer expects to be able to achieve breakeven results for its steel unit this year which weighed on the entire group. By Friday, North American multinational corporations had joined the chorus. Nike shares plunged more than 10% after Q4 results were shy of consensus expectations on weaker margins, while Research in Motion fell nearly 20% as its Q1 Blackberry shipments plunged.
For much of the week the EUR/USD pair hovered in the lower end of its established range from mid-June, with the 1.2450 support seen as pivotal. The higher yields in the Spanish and Italian auctions coupled with weak Italian retail sales offset any benefits of a potential EU fiscal union deal at the upcoming summit. Growth remained a concern for Europe. The German engine showed signs of sputtering while peripherals faced renewed headwinds, exemplified by the Bank of Spain comment that its Q2 GDP contraction would be worse that Q1. Softer inflation data in Europe and weaker German employment figures boosted expectations for an ECB rate cut next week. Analysts are now calling for a 25-50bps cut in the main refi rate from its current historic low level of 1.00%. By Friday the EUR/USD pair exhibited it biggest one day gain in eight months following the EU announcement of its roadmap towards further integration. The EUR/USD moved off its Asian lows of 1.2433 and approached 1.27 by mid-morning before consolidating its gains throughout the European morning.
The USD/JPY currency pair maintained a firm tone despite the Japanese Lower House passing a national sales tax hike legislation and May inflation data disappointing expectations. While PM Noda had succeeded in pushing through his consumption tax increase proposal, the victory in the Diet may have political repercussions for his own party. Former DPJ leader Ozawa is expected to decide as early as Monday on whether he and some 50 of his supporters would bolt the DPJ in opposition to the legislation. Although the initial estimates suggest the number of departing lawmakers would be below the 54 threshold required for DPJ to maintain its lower house majority, the fracture may leave the ruling party in a far more vulnerable state. Meanwhile, Japan May core CPI data returned to deflationary territory, falling into negative territory for the first time in 4 months and potentially signaling yet another increase in the Bank of Japan asset purchase facility at its next meeting on July 12th. The concerns over Europe and cross currency flows caused the JPY to benefit from risk aversion throughout much of the week. But risk was back on during Friday's European session following Day one of the EU Leader Summit. The USD and JPY currencies were weaker against the European and commodity-related pairs.
Over in China, May industrial profits saw its third consecutive month of decline at -2.4% y/y, as attention shifts to the weekend release of the official manufacturing PMI data. Recall the HSBC flash PMI last week shocked to the downside, falling to a 7-month low 48.1. While the official PMI figures have stayed above the 50 threshold until now, analyst consensus appears to be on the side of a contraction this time - the first below-50 print since November of 2011.

20120702 1001 Global Commodities Related News.

Funds Win With Bull Bets Before Biggest Rally Since ’09 (Source: Bloomberg)
Hedge funds lifted their bullish commodity bets for a third week, just before a European agreement to contain the region’s debt crisis spurred the biggest rally in raw-material prices in three years. Money managers increased their combined net-long positions across 18 U.S. futures and options by 15 percent to 724,783 contracts in the week ended June 26, Commodity Futures Trading Commission data show. That’s the biggest gain since January. Corn holdings rose to the most in five weeks, and sugar wagers climbed to the highest since mid-April. Most markets surged June 29 after European leaders agreed to a 120 billion-euro ($152 billion) plan to stimulate growth and ease terms for loans to Spanish banks. The Standard & Poor’s GSCI Spot Index of 24 commodities jumped 5.6 percent, the biggest gain since April 2009, the euro climbed the most this year and Spanish bonds rallied. Europe consumes 18 percent of the world’s copper and accounts for 22 percent of oil demand, data from Barclays Plc and BP Plc show.
Policy makers “are addressing a lot of issues that were taboo,” said Mihir Worah, who manages Pacific Investment Management Co.’s $22 billion Commodity Real Return Strategy Fund from Newport Beach, California. “Whether this plan works or not, the fact that they’re talking about them is important. Stable or growing economies support more commodity demand.”

Commodities Up Most in Six Months on Europe Optimism (Source: Bloomberg)
Commodities jumped the most in 39 months on optimism that Europe’s debt crisis may be contained after leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on help for Italy. The Standard & Poor’s GSCI Spot Index (MXWD) of 24 raw materials rose 5.6 percent to 599.44, the biggest gain since April 2, 2009. The increase trimmed the quarterly loss to 13 percent, still the worst since the final three months of 2008. Crude oil jumped 9.4 percent, reducing its quarterly drop to 18 percent. After 12 hours of talks that ended at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped the requirement that governments get preferred creditor status on crisis loans to Spain’s blighted banks, European Union President Herman Van Rompuy said. Banks can also be recapitalized directly with funds rather than going through governments, he said.
“We had a spark out of Europe that caused the fire to blow up,” said James Dailey, who manages $215 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. “It’s the response to the news out of Europe combined with what had become deeply oversold conditions, specifically in crude oil, which basically fell off a cliff in the last couple of months.”

DTN Closing Grain Comments 06/29 15:14 : Hot Weather, Outside Markets Support Grains (Source: CME)
Traders shrugged off larger-than-expected row-crop planted acreage numbers, with bean contracts leading the grain complex higher. Corn trailed well behind in deferred contracts on profit-taking by investors despite hot weather that is causing more damage by the day to the once highly-touted bumper crop.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures saw two-sided trade today, but the market rallied into the close to finish mostly around 7 to 15 cents higher. Wheat futures finished with sharp gains for the week. Wheat staged an impressive corrective rally this week, but this was largely thanks to the weather rally in corn. If corn continues to trend higher, so will wheat. But a reversal in corn would also send wheat lower... and weather rallies are typically short-lived.

Wheat Market Recap Report (Source: CME)
September Wheat finished up 11 1/4 at 757 1/4, 5 3/4 off the high and 17 1/4 up from the low. December Wheat closed up 10 at 776 3/4. This was 17 up from the low and 6 1/4 off the high. Chicago September wheat traded an outside-day-up but failed to take out the Wednesday high at 7.63 1/2. Minneapolis and Kansas City wheat traded higher following the lower than expected planted acreage number. The USDA reports this morning were considered mixed to slightly bullish, with the wheat market pushing higher and following the other grains up. The Chicago July contract gained on the September after no deliveries were made today. The USDA pegged total wheat planted acreage at 56.017 million acres compared with trade expectations for 56.679 million. Spring wheat planted area was 11.995 million acres compared with trade expectations at 12.558 million acres. June 1st wheat stocks came in at 742 million bushels compared with trade expectations near 723 million. The range was 723 to 748 million bushels. Commodity markets saw broad based support after positive news came out of the European Leaders Summit overnight and the US Dollar weakened. Crude oil surged nearly 9% into the closing bell which offered supplemental support to wheat, as well as other grains. September Oats closed up 2 at 338. This was 5 up from the low and 6 1/2 off the high.

Corn Market Recap for 6/29/2012 (Source: CME)
September Corn finished up 2 1/4 at 628 1/2, 19 1/2 off the high and 13 up from the low. December Corn closed up 2 1/4 at 634 1/2. This was 12 1/2 up from the low and 20 1/2 off the high. The corn market traded higher into the close but well off session highs. December corn had an outside day but failed to take out Wednesday's highs at 6.56 3/4. July corn gained on September corn as there were no deliveries on First Notice Day today. The USDA reports this morning were considered mixed against trade expectations and the market focus quickly shifted back to a threatening weather outlook. Weather forecasts call for slightly wetter conditions in parts of the central Midwest to eastern Midwest next Monday through Wednesday. The excessive heat is also expected to affect a smaller portion of the lower Midwest over the weekend. The northern Corn Belt saw showers this morning and afternoon. The storms systems should track southeast from Chicago and run through north-central Indiana and Ohio. The Argentina government approved the export of nearly 3 million more tonnes of old crop corn which tempered the sharply higher trade midday as corn demand weakens due to the sharp rally in prices. The USDA pegged corn planted acreage at 96.4 million acres compared with trade expectations near 95.9 and compared with 95.864 as the March estimate. This was slightly negative against expectations. June 1st stocks were pegged at 3.148 billion bushels as compared with trade expectations at 3.18 billion with a range of 2.98 to 3.5 billion. This was slightly positive. The corn market also saw support from broad based commodity buying after positive news was reported out of the European Leaders Summit. Crude oil was up 7.00% near the close as money jumped back into commodities after the U.S. Dollar sank to it's lowest level since June 20th. Crop Condition ratings are expected to decline sharply next Monday, which is adding to the firmer trade. September Rice finished down 0.415 at 14.49, 0.51 off the high and 0.085 up from the low.

Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures posted sharp gains for the week, with new-crop futures ending slightly higher today amid dollar strength and yield concerns. December corn ended around 80 cents above last week's close. Next week will be key for the corn market. The crop has begun to pollinate and price trends are known to reverse or accelerate after the July 4th holiday. All eyes will be on the sky this weekend, as eastern and southern areas of the Corn Belt badly need moisture after this week's scorching temps.

USDA Ups Soybean Stocks, Acreage. Few Surprises in USDA’s Grain Stocks and Acreage Report (Source: CME)
There were few surprises in Friday morning's USDA Grain Stocks and Acreage reports for corn, while soybean acres came in toward the high end of expectations and quarterly soybean stocks were larger than traders expected. Despite the larger-than-expected jump in corn and bean acreage in Friday's report, the grain complex was posting strong gains at midday Friday. Hot, dry weather shrinking the size of the U.S. crop and supportive outside markets sparking a fresh inflow of investment money were the main factors in control of the grain complex, according to DTN Analyst John Sanow.

Crop Outlook for Summer 2012 (Source: CME)
The main U.S. crop areas go into the prime reproductive phase of the growing season— pollination for corn and blooming and pod--‐ setting for soybeans—with a pronounced stressful condition. There is considerable question over whether yields will be able to meet current USDA projections,

GRAINS-US corn rebounds, notches 15 pct gains this week
SINGAPORE, June 29 (Reuters) - Chicago corn bounced back on Friday, rising for five out of six sessions as a severe drought in the U.S. Midwest curbs yields of what was once estimated to be a record-large crop.
"The general mood is very bullish as the Midwest drought is expected to worsen and result in lower yields," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore. "The market is speculating lower output and it is pre-positioning before the report."

India releases 4.5 mln T non-levy sugar for July-Sept
June 29 (Reuters) - India has allowed millers to sell 4.5 million tonnes of sugar from July to September in the open market, unchanged from the previous quarter, according to a government statement on Friday.
The quantity of non-levy, or free-sale sugar that millers can sell on the open market is fixed by the federal government.

Larger US corn, soy area may not ease drought worry
WASHINGTON, June 29 (Reuters) - American farmers likely sowed far more soybean seeds than they had originally intended this year and planted the most corn acreage in 75 years, the U.S. government is expected to say on Friday in a report that has been overshadowed by a deepening drought in the Midwest.
The U.S. Agriculture Department's acreage and quarterly stockpile reports, normally among the most important of the year for estimating supplies from the world's top grower, may be set aside by traders who fear that intense heat and a lack of rain is damaging corn stalks every day. Those conditions also may have dissuaded some farmers from planting soybeans on recently harvested wheat fields.

Brazil boosts gov't farm credit by 7.5 pct
BRASILIA, June 28 (Reuters) - Brazil will make it easier and cheaper for its farmers to obtain loans this season, as global credit normally available to its world-leading growers of coffee, sugar and grains dries up.
The government will expand funds allocated to farm credit by 7.5 percent from last year to 115.2 billion reais ($55 billion) for investments in land, machinery, planting, harvesting and selling crops, Agriculture Minister Mendes Ribeiro said in the announcement of the annual Farm Plan on Thursday.

Argentina farmers plant wheat, weather helps
BUENOS AIRES, June 28 (Reuters) - Argentine wheat farmers have planted nearly half the area forecast for the 2012/13 crop, and seedlings are off to a good start due to favorable weather, the Buenos Aires Grains Exchange said on Thursday.
Argentina is the world's sixth-biggest wheat exporter and the key supplier to neighboring Brazil, but growers have been planting less of the crop in recent years. They say a government system of export quotas depresses prices in the local market.

Trade expects no CBOT July corn, soy deliveries
CHICAGO, June 28 (Reuters) - Tight grain supplies in the U.S. cash market should prevent any deliveries of corn and soybeans against Chicago Board of Trade July futures on Friday, traders and analysts said Thursday.
Friday is first notice day for deliveries of grain and soy against CBOT July futures contracts.

U.S. crops cook under Midwest heat dome
CHICAGO, June 28 (Reuters) - Stifling heat and bone dry conditions will persist across the center the U.S. Midwest for at least the next 10 days, adding more stress to young corn and soybean plants already suffering from a lack of rain, agricultural meteorologists said on Thursday.
A high pressure ridge hovering over the central Midwest is creating a heat dome, causing temperatures to spike to well over 100 degrees Fahrenheit.

Extreme heat spreads across U.S., could break records
KANSAS CITY, Mo, June 28 (Reuters) - The Midwest cities of Cincinnati, St. Louis, Chicago and Kansas City could approach or break heat records on Thursday, as a massive high pressure system sent temperatures higher throughout most of the country.
Drought conditions have contributed to the early and sustained heat, according to Alex Sosnowski, expert senior meteorologist at He said both St. Louis and Kansas City, Missouri could hit 107 degrees Thursday. The high temperatures will move into the northeast Friday.

ICE sugar, coffee rise after EU summit
LONDON, June 29 (Reuters) - Sugar, coffee and cocoa futures on ICE rose , in line with other commodities, a fter euro zone leaders agreed at a summit to take emergency action to bring down Italy's and Spain's borrowing costs, buoying investors' spirits.
SUGAR Dealers said delays to shipments from Brazil had helped to tighten nearby supplies.

Ghana 2011/12 cocoa main crop total down 12.8 pct
ACCRA, June 28 (Reuters) - Total main crop purchases declared by private buyers to Ghana's industry regulator Cocobod were 798,736 tonnes, down 12.8 percent on the 916,810 tonnes produced in the same part of last year's season, according to Cocobod data.
The data, seen by Reuters, covered all 33 weeks of the 2011/12 main crop which began in October and closed on May 31. Ghana is the world's second largest grower after neighbouring Ivory Coast.

Colombia faces price pressure on coffee exports
GENEVA, June 28 (Reuters) - Coffee exporter Colombia will likely have to cut prices when its production eventually recovers from a three-decade low in order to win back lost buyers, analysts said on Thursday.
Colombia - a top producer of high quality arabica beans used for gourmet blends - has historically been able to command premiums over other arabica varieties.

Stray buoy lifts Brazil sugar vessel lineup
SAO PAULO, June 28 (Reuters) - The lineup of ships waiting to load sugar in Brazil jumped to 70 from 60 a week ago, after a channel buoy broke free and interupted ships moving through the main port of Santos for a day, Williams shipping agents said.
Normal shipping traffic resumed by Tuesday afternoon, after the buoy, which broke free of its moorings late on Monday and halted the movement of ships at Santos port, was put back.

Oil Little Changed After Rising Most in Three Years on Europe (Source: Bloomberg)
Oil was little changed in New York after rising the most in three years on speculation an agreement by European leaders will help contain the region’s debt crisis and sanctions on Iran’s crude shipments will curb supply. Futures traded near the highest close in more than three weeks after surging 9.4 percent June 29, the most since March 12, 2009. European Union leaders agreed last week to loosen bailout rules, lay the foundations for a banking union and break the link between sovereign and banking debt. An EU ban on the purchase, transport, financing and insurance of oil from Iran, OPEC’s second-largest producer, started yesterday. “Sentiment is still positive from the euro zone summit,” Paul Gamble, the head of research at Riyadh-based Jadwa Investment Co., said in an interview yesterday. “We’ve come down a long way pretty rapidly, so there is certainly room for prices to rise.”
Oil for August delivery was at $84.70 a barrel, down 26 cents, in electronic trading on the New York Mercantile Exchange at 9:28 a.m. Sydney time. The contract surged $7.27 on June 29 to $84.96, the highest close since June 6. Prices decreased 17.5 percent last quarter, the biggest decline since the final three months of 2008.

COLUMN-High prices result in soaring oil reserves
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, June 28 (Reuters) - For all that Malthusians worry about oil running out, and analysts cite the rising costs of exploration and production, the oil industry has been adding reserves faster than they are being consumed since 2005, as high prices spur an investment boom across the industry.
Contrary to the alarming predictions made a few years ago, and still periodically revived by peak oilers, there is no sense in which oil is running out.

Oil- Brent back up to $93, but deep quarter loss
LONDON, June 29 (Reuters) - Oil rallied with other commodities and the euro, rising over $2 after European leaders agreed on a strategy to tackle soaring borrowing costs in Italy and Spain, but was still set for the deepest quarterly loss since 2008.
"I think the expectation was there would take the EU most of the weekend to reach an agreement, so I think this has taken the market a bit by surprise," said Thorbjoern Bak Jensen, oil analyst at Global Risk Management.

POLL-Global oil demand growth seen at slowest since 2008
SINGAPORE/NEW YORK, June 29 (Reuters) - Global oil demand is expected to grow at the slowest pace this year since the financial crisis on mounting economic weakness, a Reuters poll showed, with China's slowing consumption growth expected to barely offset falling demand in developed economies.
While overall demand is still expected to rise, the rate of growth for this year and next has been lowered sharply since January, and with the latest batch of economic data pointing to a deepening slowdown in many major economies several analysts see further downward revisions as likely.

OPEC should consider output cut if surplus persists -Iraq's Shahristani
SINGAPORE, June 29 (Reuters) - Oil producer cartel the Organization of the Petroleum Exporting Countries (OPEC) should consider a production cut if an oil surplus continues much longer, Iraq's Deputy Prime Minister told reporters on Friday.
"The market now is oversupplied and if the surplus continues much longer, OPEC will need to revise oil production levels," Iraq's Deputy Prime Minister Hussain al-Shahristani, who is on a visit to Singapore, said when asked if OPEC should cut production.

Hong Kong Brightoil eyes slice of massive China crude market
SINGAPORE/BEIJING, June 29 (Reuters) - Hong Kong-listed Brightoil Petroleum (Holdings) Ltd  will commence crude trading operations in the third quarter, aiming to become a key supplier to China, the world's second-largest oil consumer, industry sources said on Friday.
Brightoil, with a market capitalisation of $3 billion, is eyeing a slice of China's massive 5-million-barrels-per-day crude import market that is dominated by state-owned PetroChina Co Ltd  , China Petroleum and Chemical Corp (Sinopec Corp) , China national Offshore Oil Corp (CNOOC Group)  and Sinochem Group.

Libya's largest refinery restart delayed-official
LONDON, June 29 (Reuters) - Libya's largest refinery at Ras Lanuf will not restart in early July as planned, but a petrochemical unit, which does not run on crude oil, will resume operations, a senior National Oil Corporation (NOC) official told Reuters on Friday.
Ras Lanuf, which can process 220,000 barrels of oil per day(bpd), accounts for well over half of Libya's oil refining capacity and is an important source of refined oil products in the Mediterranean region.

Iran-Oil Sanctions Risk Biggest OPEC Export Loss Since Libya (Source: Bloomberg)
European Union sanctions on Iran entered into full force yesterday after exemptions on some contracts and insurance ended, boosting crude prices and pressure on the Persian Gulf nation to halt its nuclear- enrichment program. The reduction in Iranian exports may become the biggest supply disruption from a member of the Organization of Petroleum Exporting Countries since an armed rebellion all but halted pumping in Libya last year, according to the International Energy Agency. It also comes as a strike by Norwegian workers is curbing flows from North Sea fields. “We expect Brent oil prices to be supported by Iranian oil sanctions and potential loss of supplies from the North Sea,” Gordon Kwan, the head of regional energy research at Mirae Asset Securities based in Hong Kong, said in a June 28 report. “The imminent EU insurance ban on tankers carrying Iranian crude could drive up demand for Brent and Dubai crude.”
Brent futures fell below $90 a barrel on June 21 for the first time in 18 months as concern that Europe’s debt crisis would spread sapped the outlook for fuel use worldwide. Now, the Iran embargo and Norwegian strike are stoking speculation about a rebound in prices, according to analysts such as Kwan and Ole Hansen at Saxo Bank A/S. Brent for August settlement surged 7 percent on June 29 to close at $97.80 a barrel on the ICE Futures Europe exchange.

Carbon Polluters, Coal Miners Pay in Australian Tax Overhaul (Source: Bloomberg)
Australia is charging its largest polluters for carbon emissions and taxing profits of iron ore and coal producers starting today in the biggest change since 2000 in how the government collects and spends money. The country will assess almost 300 of its largest polluters a fixed price of A$23 ($23.55) a metric ton for their greenhouse gases. Mining companies including BHP Billiton Ltd. (BHP), Rio Tinto Ltd. and Fortescue Metals Group Ltd. (FMG) face a separate levy on 30 percent of earnings from iron ore and coal starting today. Prime Minister Julia Gillard, who pushed her climate law through Parliament last year, is trailing in opinion polls behind the Liberal-National coalition led by Tony Abbott, who has vowed to repeal carbon pricing. Gillard is counting on payouts and credits worth about A$30 billion over the next four years to placate Australian business and households facing higher power bills.
“This is the most effective and efficient way to drive innovation to find better, less-polluting ways of producing power, goods and services,” Treasurer Wayne Swan said in his weekly economic note today. “It will help reduce Australia’s annual emissions by at least 159 million tons per annum by 2020, equivalent to taking 45 million cars off the road.”

Gold Traders Extend Bullish Call on European Debt Crisis (Source: Bloomberg)
Gold traders are bullish for a sixth week on speculation that Europe’s debt crisis will boost demand from investors seeking to protect their wealth and drive prices higher after moving to within 1 percentage of a bear market. Sixteen analysts surveyed by Bloomberg said they expect a rally next week and 10 were bearish. Another five were neutral. Investors added almost $2 billion to holdings in gold-backed exchange-traded products this month, the most since November, according to data compiled by Bloomberg. Hedge funds and other speculators have increased bets on a rally for four consecutive weeks, U.S. Commodity Futures Trading Commission data show. Spain formally asked for a bailout for its banks on June 25 and Cyprus that day became the fifth member of the 17-nation euro zone to ask for outside help. European leaders agreed today to ease repayment rules for emergency loans to Spanish banks and relax conditions on potential help for Italy.
Gold came close to a bear market in May as some investors sold bullion to cover losses in stock markets as $7 trillion was erased from global equities in about two months. “While demand has been weaker for bullion in recent months, it has picked up in the last month,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “A resolution to the crisis is not going to be seen in the short term. A lot more speculators could pile back into the market.”