Friday, July 6, 2012

20120706 1832 FCPO EOD Daily Chart Study.

FCPO closed : 3130, changed : -34 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward, buyer taking profit.
Support : 3100, 3070, 3050, 3020 level.
Resistance : 3150, 3200, 3250, 3270 level.
Comment :
FCPO closed lower with declined volume transacted. Soy oil currently registering loss by more than 1.5% after overnight resume trading and surged up by 2.3% while crude oil price currently plunging lower after overnight climb.
Price hit new 5 weeks high before make a u turned falling lower into negative territory as traders decided to lock in profit after recent rallies ahead of the weekend reducing exposure with broad commodities trading lower due to stronger U.S. dollar(Euro weaker after ECB interest rate cut).
Technical daily chart analysis revised to calling a pullback correcyion upside biased market development.
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.

20120706 1813 FKLI EOD Daily Chart Study.

FKLI closed : 1624 changed : +6 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histogram : rising, buyer in control.
Support : 1620, 1610, 1600, 1590 level.
Resistance : 1630, 1640, 1650, 1660 level.
Comment :
FKLI closed recorded gain for the 6 consecutive days with little improved volume changed hand hitting new year high again doing 3.5 points premium compare to cash market that also closed higher. Overnight U.S. markets closed lower and today Asia markets ended mixed while European markets currently declining little lower.
World market having mixed reaction on European Central Bank and China Central Bank rate cut decision as ECB cheif statement on lower rate may not able to boots growth while investor choose to reduce exposure ahead of tonight U.S. jobs data.
Back home, Malaysia market remained upbeat as daily chart reading still calling an upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20120706 1729 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : pullback correction upside biased.
 Hang Seng chart reading : pullback correction upside biased.
KLCI chart reading :  upside biased.

20120706 1629 Global Market & Commodities Related News.

Asian shares slipped and European stock index futures pointed to a lower open as sentiment stayed cautious with the focus now on U.S. jobs data due later in the day. U.S. stocks edged down on Thursday as economic stimulus measures by major central banks failed to excite investors.

The euro languished at five-week lows against the greenback and record troughs versus commodity currencies such the Australian dollar  as markets were underwhelmed by the European Central Bank's latest attempt to bolster the area's economy.

FOREX-Euro nurses hefty losses, U.S. jobs data in focus
TOKYO/SYDNEY, July 6 (Reuters) - The euro languished at five-week lows against the greenback and at record troughs versus commodity currencies such the Australian dollar as markets showed themselves thoroughly uninspired by the European Central Bank's latest attempt to bolster the EU economy.
"The euro dropped on the ECB, but other risk assets have underperformed in the second half of the week too, as some think that job figures may come in stronger than expected and diminish chances of more quantitative easing by the Fed," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

Chicago corn slid almost 2 percent  after recent steep gains, although prices were set for their biggest three-week rally in 3-1/2 years, sparked by the worst U.S. Midwest drought in nearly a quarter century.

Brazil corn output to jump as U.S. crop suffers
Brazil boosted its corn harvest estimate by 2.5 percent to a record 69.48 million tonnes, a welcome increase as a heat wave threatens United States grains.

U.S. House farm bill cuts $35 bln, boosts crop supports
With time running out for a new U.S. farm law, agriculture leaders in the House of Representatives insisted on keeping traditional farm subsidies that the Senate wants to kill and called for big cuts in food stamps for the poor.

Brazil customs dispute boosts checks on exports
Brazilian customs officials are stepping up inspections on goods leaving through the country's ports to pressure the government to address their wage hike demands, their union said, but the action was having only minimal effect on commodities shipments.

US ethanol output falls to 10-month low, drought darkens outlook
U.S. ethanol production dropped to its lowest level in 10 months last week as dwindling pre-harvest corn stocks crushed profit margins, while a deepening drought in the Midwest threatens to extend the pain into next year.

Crude futures fell more than $1 to stand below $100 per barrel as stimulus moves by central banks failed to allay investor concerns about demand, although supply worries stemming from a labour dispute in Norway are expected to check losses.

Vale ships 300,000 T iron ore pellets to India cos-source
Brazil's Vale SA , the world's largest iron ore producer, has shipped about 300,000 tonnes of iron ore pellets to major Indian steel makers so far in 2012, a company source said.

LME iron ore ambitions at risk after steel failure
LONDON, July 5 (Reuters) - Traders are not likely to take notice of the London Metal Exchange's plans for a new iron ore contract after widespread disappointment over its handling of steel billet futures and while competition is strong from other exchanges.
The Hong Kong stock exchange , which agreed to buy the London Metal Exchange last month, said it had an ambitious expansion programme in mind for the LME, including the introduction of a new iron ore contract that would take advantage of China's insatiable appetite for the vital industrial material.

Chinese banks resume loans, cut rates to some steel traders
SHANGHAI, July 6 (Reuters) - A growing number of Chinese banks have agreed to resume lending to some of the country's steel traders after the cash-strapped firms made a joint appeal to banks earlier last month, industry sources said on Friday.
Chinese banks had clamped down on new lending to steel traders since April after the country's regulator warned of rampant illicit borrowing to speculate in other sectors such as property and stocks.

Use of copper in financing loses allure in China
Chinese companies are cutting the use of copper as collateral for loans, a common practice in the country to get round curbs on credit in the past year, after a key rate used for short-term loans fell below 5 percent last month, traders said on Thursday.

Copper fell, in step with most commodities, as moves by China, the euro zone and Britain to loosen monetary policy to boost growth spooked investors who saw the measures as a sign of growing alarm about the global economic slowdown.

Gold remained on track for a second straight week of gains , though it was little changed from the day before as investors waited for more U.S. jobs data to help gauge the health of the world's top economy and provide trading cues.

METALS-Copper weakens on caution over demand outlook
SHANGHAI, July 6 (Reuters) - Copper fell, in step with most commodities, as moves by China, the euro zone and Britain to loosen monetary policy to boost growth spooked investors who saw the measures as a sign of growing alarm about the global economic slowdown.
"Today's markets show that investors are starting to be unmoved by monetary easing policies in this uncertain global economic environment," said Great Wall Futures analyst Li Rong.

PRECIOUS-Gold steady before US jobs data, 2nd wk of gains likely
SINGAPORE, July 6 (Reuters) - Gold remained on track for a second straight week of gains, though it was little changed from the day before as investors waited for more U.S. jobs data to help gauge the health of the world's top economy and provide trading cues.
"People are concerned that tonight's non-farm payrolls figures might be better than expected, which will decrease the chances of quantitative easing by the Fed - bad news for gold," said Yuichi Ikemizu, head of commodity trading, Japan, Standard Bank.

Iron Ore-Shanghai rebar slips on China growth worry
SINGAPORE, July 6 (Reuters) - Shanghai steel futures fell on Friday, snapping a three-day rise, after China's second rate cut in less than a month raised concern of a sharper economic slowdown that is hurting demand in the world's top steel market.
"People are worried that the GDP data next week will be much lower than expected," said an iron ore trader in Shanghai. "Also a rate cut will push up demand, but the effect will not be felt quickly."

Baltic Index buoyant on firm vessel demand
July 5 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Thursday as strong cargo demand flared up rates for capesize and panamax vessels.
"With a slow end to last week and slow start to this one, the Atlantic basin has finally got a more positive feel with some positional tightness and very few ballasters arriving in the next few weeks," ship broker Fearnleys said in its weekly note.

Baltic commits to ship futures screen despite slump
LONDON, July 5 (Reuters) - The Baltic Exchange remains committed to its money-losing central electronic trading platform for dry freight derivatives, confident that it will grow despite a shipping market slump, exchange officials said on Thursday.
In June 2011, it began providing the first central marketplace for freight forward agreements (FFAs), which allow a buyer to take a position on freight rates at a point in the future.

S.Korea ship classifier defends Iran marine work
LONDON, July 5 (Reuters) - A South Korean ship classification society on Thursday sidestepped calls from a U.S. lobby group to halt its verification work in Iran, saying it was concerned that vessel safety and marine environment protection could be compromised by political issues.
Without verification from such bodies, ships are unable to call at international ports.

20120706 1117 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares pressured by growth worries despite stimulus, focus on US jobs
TOKYO, July 6 (Reuters) - Asian shares paused, pressured by falls overnight in global shares as sentiment remained cautious despite new stimulus steps taken by three major central banks, with focus now pinned to the U.S. jobs data due later in the day.
"We expect to see fresh 2012 lows in the EUR/USD as the fundamental outlook for the region turns increasingly bleak," said David Song, currency analyst at DailyFX.

COMMODITIES-"Sell the fact" douses rally as central banks ease
LONDON/NEW YORK, July 5 (Reuters) - Commodities failed to get a boost on Thursday from efforts by the central banks of the UK, Europe and China to prop up flagging growth, with copper and gold sliding as the dollar spiked against the euro.
"You are getting a very strong 'sell the fact' move off these global rate moves this morning," said Mike Guido, managing director of hedge fund sales and energy markets at Macquarie in New York.

OIL-Brent up on Norway supply woes, some policy easing
NEW YORK, July 5 (Reuters) - Brent crude oil futures rose on Thursday, ending at a five-week high on worries about tighter supplies following a lockout of striking oil workers in Norway and hopes that some policy-easing steps by some central banks would improve oil demand.
"You are getting a very strong 'sell the fact' move off these global rate moves this morning," said Mike Guido, managing director of hedge fund sales and energy markets at Macquarie in New York.

POLL-US crude stocks drop sharply; Debby hits imports -EIA
July 5 (Reuters) - U.S. crude oil stocks dropped more sharply than expected last week after Tropical Storm Debby disrupted imports, while improving demand kept most refiners operating at high rates, government data showed on Thursday.
Domestic stocks of crude, excluding oil held in the Strategic Petroleum Reserve, dropped 4.27 million barrels to 382.9 million barrels in the week to June 29, the Energy Information Administration reported.

Iran losing billions as oil exports extend slump
SINGAPORE/TOKYO, July 5 (Reuters) - Iran will see its July oil exports more than halved from regular levels seen last year because tough new Western sanctions are stifling flows and costing Tehran more than $3 billion in lost revenue per month.
Declining oil exports, the lifeblood of the Iranian economy, will increase Tehran's struggle to contain spiralling inflation and mounting unemployment amid its standoff with the West over its nuclear programme.

Brazilian oil, gas output rises 1.89 pct in May
RIO DE JANEIRO, July 5 (Reuters) - Brazilian oil and natural gas output rose 1.89 percent i n May from April to 2.78 million barrels of oil and gas equivalent a day (boepd) as crude output from giant, new offshore fields increased, Brazil's oil agency ANP said on Thursday.
Production fell 0.5 percent compared with a year earlier, the ANP said in its monthly "Oil and Natural Gas Production Bulletin."

OPEC exports to rise in 4 weeks to July 21-analyst
LONDON, July 5 (Reuters) - Seaborne oil exports from OPEC, excluding Angola and Ecuador, will rise by 410,000 barrels per day (bpd) in the four weeks to July 21, an analyst who estimates future shipments said on Thursday.      
Exports will reach 24.13 million bpd on average, compared with 23.72 million bpd in the four weeks to June 23, UK consultancy Oil Movements said in its latest weekly estimate.  

NATURAL GAS-Sweltering heat boosts U.S. natgas
NEW YORK, July 5 (Reuters) - U.S. natural gas futures ended higher on Thursday buoyed by strong gas-fired power demand as scorching heat blazed through much of the U.S. and homes and businesses cranked up the air conditioning.
"It looks like around mid-month the Northeast trough will be replaced with another similar ridge building west from the mid Atlantic Ocean hooking up with the mid U.S. ridge to form another hot week," said Jerry Paul, senior meteorologist with Weather Insight, a Thomson Reuters company, in Houston.

20120706 1106 Global Market Related News by Reuters.

Three central banks take action in sign of alarm 06-Jul-2012 03:28
    China, Europe and Britain all loosen monetary policy
    ECB's Draghi denies action coordinated
    Says situation nowhere near as bad as 2008
    Eyes on Fed meeting at end of the month
(Adds U.S. data, poll, payrolls data due Friday)
BEIJING/FRANKFURT, July 5 (Reuters) - China, the euro zone and Britain loosened monetary policy in the space of less than an hour on Thursday, signalling a growing level of alarm about the world economy, although suggestions of coordinated action were played down. Of the three, the surprise move was from Beijing which lowered its lending rate by 31 basis points to 6 percent following an interest rate cut just a month ago that also came out of the blue. The European Central Bank cut rates to a record low 0.75 percent following a dire run of economic data. But it steered clear of bolder moves such as reviving its government bond-buying programme or flooding banks with more long-term liquidity. Still, a Reuters poll found the ECB is expected to follow the rate cut with more steps to help the region's economy in coming months.
The Bank of England, whose rates are already at a record low 0.5 percent, said it would restart its printing presses and buy 50 billion pounds ($78 billion) of assets with newly created money to help the economy out of recession. "It is a surprise that they are moving so quickly. It shows that policymakers' concerns about the global economy have only grown," Mark Williams, an economist at Capital Economics in London, said of the People's Bank of China's action. A raft of Chinese data is due next week, including second-quarter gross domestic product that officials may know to be poor, he said. But they may also be trying to foster suggestions of acting in concert. "Policymakers may have felt that cutting rates on the day that the ECB (did) the same would deliver a bigger impact, encouraging talk of a coordinated response to the slowdown in the global economy," Williams said. "Again, though, this might simply underline the seriousness of the downside risks."

In Frankfurt, ECB President Mario Draghi denied any globally coordinated central bank action of the sort seen after the collapse of Lehman Brothers in 2008. "On coordination, no, there wasn't any ... that went beyond the normal exchange of views on the state of the business cycle, on the state of the economy, and on the state of global demand," he told a news conference. Asked if conditions were now as bad as they were in late 2008 when the world's financial system was teetering, Draghi replied: "Definitely not." The action puts even more focus on what the U.S. Federal Reserve will do when it holds its next meeting on July 31 and Aug. 1. The Bank of Japan meets next week. Last month, the Fed held off on another round of bond-buying but its chief, Ben Bernanke, said there was "considerable scope to do more" and Wall Street bond firms polled by Reuters saw a 50 percent chance of another asset purchase programme.
Some encouraging data on the labor market on Thursday tempered anticipation the central bank could undertake a third round of bond purchases, known as quantitative easing or QE3. But more weight will be given to Friday's nonfarm payrolls report, which is expected to show job growth picked up in June but still remained tepid at 90,000 jobs. "If we get a couple of more bad jobs reports, (the Fed) will come in with more stimulus. Today's reports suggest they might hold off, but they will want to see more data before they decide," said John Canally, economist and investment strategist at LPL Financial in Boston. In recent weeks, economic evidence from Asia, Europe and the United States has pointed to a world economy running out of steam.

20120706 1007 Local & Global Economy Related News.

Malaysia: Retains interest rate amid slow global recovery
Malaysia's central bank decided to retain the benchmark overnight policy rate at 3% for a sixth consecutive rate-setting meeting, citing weakness in global economy. The last policy change was in May when the rate was hiked by 25bps to the current level. (RTTNews)

China: Announces surprise rate cuts amid economic downshift
China's central bank announced surprise cuts in the benchmark interest rates for the second time this year as the world's second largest economy is expected to slow further in the second quarter. The People's Bank of China said it will reduce the benchmark interest rate for one-year deposits by 25bps and that for one-year lending by 31bps. The move came less than a month after the previous rate cuts announced on 7 June, when the benchmark rates were slashed by 25bps in their first cuts since December 2008. (

Japan: BOJ raises assessment for all 9 regions
The Bank of Japan raised its assessment for all of Japan's nine regional economies in a quarterly report as robust private consumption and spending for rebuilding from last year's earthquake and tsunami underpinned growth. It was the first time since Oct 2009 that the central bank had raised its assessment for all nine regions. (Reuters)

UK: BOE restarts QE as euro crisis threatens to prolong slump
The Bank of England restarted bond purchases two months after halting its expansion of stimulus as the deteriorating outlook spurred policy makers to ramp up efforts to kick start a recovery. The Monetary Policy Committee led by Governor Mervyn King raised its asset-purchase target by GBP50bn (USD78bn) to GBP375bn and said the purchases will take four months to complete. Separately, the European Central Bank cut its key interest rate below 1% for the first time and China lowered benchmark rates for the second time in a month. (Bloomberg)

Germany: Factory orders unexpectedly rose on euro-area demand
German factory orders unexpectedly rebounded in May, driven by demand from the euro region. Orders, adjusted for seasonal swings and inflation, rose 0.6% from April, when they declined a revised 1.4%. Economists forecast orders would hold steady in May, according to the median of 36 estimates in a Bloomberg News survey. From a year earlier, orders fell 5.4% when adjusted for work days. (Bloomberg)

EU: ECB cuts rates to new low, no move on bolder measures
The ECB cut interest rates to a record low to breathe life into a deteriorating euro zone economy but steered clear of more dramatic measures such as buying government bonds or flooding banks with fresh liquidity. The quarter-point cut in its main refinancing rate to 0.75% was in line with market expectations. (Reuters)

US: Fewer Americans than forecast file unemployment claims
Fewer Americans filed first-time claims for unemployment insurance payments and companies added more workers than forecast, easing concern the labor market is faltering further. Applications for jobless benefits fell 14,000 in the week ended 30 June to 374,000. (Bloomberg)

US: Service sector weakest since January 2010
In another signal of a slowing US economy, the services sector grew at its slowest pace since January 2010, according to an index released Thursday. The Institute for Supply Management said its services index dropped to a reading of 52.1% in June from 53.7% in May. (MarketWatch)

US: Private sector payrolls pick up in June
Private sector payrolls picked up in June, suggesting that the nation’s unemployment may have declined, according to a report released by payrolls processor Automatic Data Processing (ADP). According to its data, private sector payrolls rose 176,000 in June, led by small businesses and the service-providing sector. Economists had expected an increase of 100,000. The May level was revised to a gain of 136,000 from a prior estimate of 133,000. (MarketWatch)

20120706 1007 Malaysia Corporate Related News.

Gadang bags RM900m job
Gadang Holdings is likely to sign a contract valued at almost RM900m with Mass Rapid Transit Corp SB (MRT Corp) today. The contract for Package V2 covers viaduct and associated works from Kota Damansara Station to the Dataran Sunway Station. “It is more or less concluded… the job is Gadang’s. The relevant parties are expected to sign the agreement tomorrow,” said an executive familiar with the MRT project yesterday. (Financial Daily)

HSL wins RM291m campus contract
Hock Seng Lee (HSL) has secured a RM291m contract to build campus facilities for the proposed Universiti Teknologi Mara in Mukah, Sarawak, pushing the value of its projects in hand to a record of RM2.07bn. The company said in a statement that it had signed an agreement with the concessionaire KP Mukah Development SB to undertake the project. The contract is expected to contribute positively to HSL’s earnings and net assets for the financial years ending 2012 to 2015. (StarBiz)

Bank Negara maintain OPR at 3%
Bank Negara has maintained the overnight policy rate (OPR) at 3% after the monetary policy committee (MPC) meeting yesterday, a move widely expected by economists. The central bank said headline inflation was expected to remain moderate for the remainder of 2012. (StarBiz)

EPF admits 20% stake in Battersea
After weeks of skirting involvement in the acquisition of London’s iconic Battersea Power Station for GBP400m (RM1.97bn), the Employees Provident Fund (EPF) yesterday came out admitting its 20% stake participation, together with two other Malaysian companies in the consortium – Sime Darby and SP Setia. (Malaysian Reserve)

Eduspec sets up JV unit in Manila
Information & communications technology programs provider Eduspec Holding has set-up a joint-venture company (JVC) First Eduspec Inc in the Philippines to provide IT outsourcing and consulting services to schools and educational institutions in the country. “The JVC will commence operations immediately,” said the company in an exchange filing yesterday. The authorized and paid-up capital of the JVC are 20m pesos (RM1.52m) and five million pesos, respectively. (Malaysian Reserve)

Gunung Capital in joint bid for Saudi job
Gunung Capital has signed a memorandum of Understanding (MoU) with a Saudi Arabian company to jointly bid for a public bus project in Riyadh. The MoU entered into with Mohammad Abdulaziz Al-Habib & Sons Holding Co is to tender for the procurement, operation and maintenance service of Arriyadh Comprehensive Bus Transit System. The High Commission for Development of Arriyadh, represented by Arriyadh Development Authority, intends to develop a comprehensive public transport with 600km of bus lines. (BT)

MAS: Targets 20%-30% digital revenue growth. MAS aims to achieve 20% to 30% growth in digital revenue this year, driven by the introduction of the PayPal payment method for its ticket bookings. The national airline recorded 10% to 15% growth in digital revenue last year. MAS will roll out seven currencies in the near future to meet customers demand, including the US dollar, euro and yen. (Source: The Edge Financial Daily)

AirAsia: F&B segment aims to boost revenue contribution. AirAsia Bhd's food and beverage (F&B) segment plans to contribute 7% to the company's revenue next year. In a move to boost revenue contribution, the company is in talks to partner other food and beverage companies that want to have their products on board. The food and beverage segment contributed about 5% to AirAsia's revenue last year. (Source Business Times)

Oil & Gas: Coastal Energy Announces Signing of Small Field Risk Service Contract (RSC) With Petronas. Coastal Energy Company has entered into a Small Field RSC with Petronas for the development and production of petroleum from the Kapal, Banang and Meranti cluster of small fields offshore Peninsular Malaysia. In accordance with the Small Field RSC, Coastal is currently finalising an arrangement for a Malaysian company to participate in the Small Field RSC for 30-40% equity interest. A total of seventeen wells will be drilled with ten planned at Kapal, four at Banang and three at Meranti. (Source: Globe Newswire)            
Outside Malaysia

20120706 1005 Soy Oil & Palm Oil Related News.

MPOB Official Data for the month of Jun 2012 vs May 2012
Exports up 4.3% to 1.46 million tonnes
Stocks down 2.2% to 1.73 million tonnes
Output up 7.7% to 1.49 million tonnes

Soybeans (Source : CME)
Soybean trade is 32 to 36 higher with weather and demand continuing to push trade. Meal is $13 higher, and oil is 60 to 70 higher. The trade is set up for a run to the multi-year high at $15.44 as the chart lacks significant resistance. Support will be $15.00 for now. Weather remains far less than ideal, although there is more time to bail the beans out with a pattern change. The bean charts are pretty overbought which could open up some short term corrections, with the extensive fund length. Exports are delayed until tomorrow. Final Brazlian production was estimated at 67.4 million metric tons.

Soybean Complex Market Recap (Source : CME)
August Soybeans finished up 53 1/2 at 1583, 2 1/2 off the high and 38 1/2 up from the low. November Soybeans closed up 51 3/4 at 1526 1/2. This was 33 1/2 up from the low and 2 1/2 off the high. August Soymeal closed up 18.6 at 465.8. This was 13.8 up from the low and 0.7 off the high. August Soybean Oil finished up 1.19 at 54.33, 0.06 off the high and 1.02 up from the low. November soybeans gapped higher at the opening bell and seemed to gain in strength through the day to finally close near the highs of the session. The July contract gained on the August and November contracts after no deliveries were made. Soybean meal and oil both traded sharply higher into the closing bell. Continued concern over decreasing new crop soybean yields due to blistering temperatures this week supported the soybean market to new highs on the day. The forecast calls for cooler temperatures next week and a chance for better rainfall in dome areas, but confidence in those forecasts remain low. Afternoon weather maps call for a little warmer 1-5 day forecast for the northern U.S. and extreme heat is expected to stick around for another 3-4 days in central and southern Midwest. Changes also include a chance for better rainfall in the Midwest and western U.S. plains in the 6-10 day map. Brazil's government announced that their 2011/12 soybean crop would amount to 66.37 million tonnes, which is unchanged from their last estimate. Outside markets offered minimal resistance to soybeans, as the U.S. Dollar surged over 1% on the day and stocks were marginally lower. Traders continue to anticipate demand shifting to the U.S. market following one of the worst Brazilian droughts in years.

VEGOILS-Palm eases ahead of ECB rate meeting, weather caps losses
SINGAPORE, July 5 (Reuters) - Malaysian crude palm oil futures eased as investors turned cautious ahead of the European Central Bank's (ECB) policy decision later in the day, booking profits from a weather-fuelled rally earlier in the week.
"The market is a little overbought technically and we see some initial profit taking. Fundamentally, end-stocks in Malaysia are tight while weather remains hot and dry in the U.S. Midwest," said a trader with a local commodities brokerage in Malaysia.

20120706 1005 Global Market Related News.

Market Briefs (Source : Reuters)
• US June ADP National Employment 176k; f/c 105k prev to revised 136k from 133k
• US Weekly Jobless Claims 374k; f/c 385k prev to 388k from 386k
• US Continuing Claim 3.306mm; f/c 3.3mm prev 3.302mm revised up from 3.296mm
• US June ISM Non-Mfg. 52.1; f/c 53 prev 53.7
• US June ICSC Chain Store Sales 2.6% y/y (prev +4.0% y/y)
• BRL June Vehicle Prod. 237.5k, prev 280.7k; Vehicle Sales 353.2k, prev 287.4k
• China C. Bank cuts Deposit Rate 25bps to 3%; Cuts Lending Rate 31bps to 6%; Lowers the floor for Lending Rates to 70% of benchmark rates from 80%
• EBC cuts Refinancing Rate 25bps to 0.75%; Cuts Deposit Rate 25bps to 0.0%
• ECB’s Draghi: Econ growth in EZ remains weak; Now see weakening of growth in whole of Euro area; Q2 indicators point to weakening growth; Downside inflation risks from weaker than expected growth
• Germany’s Merkel- Germany entered no agreements at last EU summit that go beyond existing treaties
• ECB’s Weidman-Aid-providing countries should have preferred creditor status, conflicts of interest could arise if ECB took over banking supervisory role

Asia FX (Source: CME/
The appetite for risk sank on Thursday after the PBoC and the ECB cut rates, and after the BoE added to its quantitative easing measure. The US economic data was steady after showing weakness in the past weeks; but the economy is far from strong. The European currencies tanked, but the commodity currencies remained firm. The US stock indexes, gold and oil fell.
The short-term outlook for most of the European and commodity currencies is sideways with additional downside risk. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen.  Good luck!
China: The People's Bank of China lowered the one-year deposit rate by 0.25% and the one-year lending rate by 0.31%.
Eurozone: The European Central Bank cut its refinancing rate was cut by 0.25% to 0.75%, its deposit rate by 25% to zero, and the marginal lending facility rate to 1.50% from 1.75%.
UK: The Bank of England launched a third round of monetary stimulus, announcing it would buy 50 billion pounds of asset purchases with newly created money to help the economy out of recession. The BoE maintained its bank rate at 0.50% as expected.
US: ADP said the private sector added 176,000 jobs in June following an upwardly revised increase of 136,000 jobs in May (133,000 jobs originally reported).
US: New unemployment claims fell 14,000 to 374,000 new claims for unemployment for the week ending June 30 from the previous week's revised figure of 388,000 (up from the 386,000).

Recap Stock Index Market Report (Source: CME)
The September S&P 500 rallied to its highest level since May 4th during the initial morning hours, helped by central bank support from China, Europe and England. Stocks gained an added lift in response to a couple of US labor market stats that showed improvement. However, some traders indicated that the positive data points could delay potential US Fed easing. It also seemed that the excitement over the European rate cut fizzled as the day wore on, and that weakness weighed on US shares. The September S&P 500 slumped to its low of the session in the wake of US service sector readings that showed slower than expected growth in June. Meanwhile, tech-related shares helped the NASDAQ hold in slightly higher territory throughout the session. Apple shares were up 2.0% on the session, fueled by talk that the company could introduce a smaller version of its iPad in the fall. Financials were one of the laggards on the session, weighed down by a 3.5% loss in the shares of JP Morgan.

Recap Interest Rate Market Report (Source: CME)
Treasury prices started out higher and then fell back slightly in the face of confirmation of foreign central bank easing action. Ultimately Treasury prices regained their footing and returned to almost the middle of the last two month's consolidation zone into what could be seen as an extremely critical monthly US Non Farm payroll result. Perhaps a softer than expected ISM Non Manufacturing result rekindled US slowing fears again and perhaps the slightly better than expected US data released earlier in the session today was simply cause for some traders to discount the prospect of fresh easing dialogue from the Fed Chairman during the Friday US trade action. It is also possible that dialogue from the ECB's Draghi fostered some fresh flight to quality buying of Treasuries as his comments suggested the EU situation remains very precarious.

Asian Stocks Drop 2nd Day on Central Bank Disappointment (Source: Bloomberg)
Asian stocks fell for a second day, paring this week’s gain on the regional benchmark index, as interest-rate cuts in Europe and China failed to assure investors the moves will be enough to boost economic growth. Canon Inc. (7751), a Japanese camera maker that gets 31 percent of its sales in Europe, slid 2 percent. Miner BHP Billiton Ltd. (BHP), whose biggest market is China, declined 0.9 percent as investors sold shares of companies with earnings tied to economic growth. Parco Co. (8251) climbed 3.5 percent in Tokyo after J Front Retailing Co. said it will buy a majority stake in the rival department- store operator. The MSCI Asia-Pacific (MXAP) slid 0.2 percent to 118.82 as of 9:53 a.m. in Tokyo, before markets in China and Hong Kong opened. About the same number of stocks rose as fell. The gauge has fallen 7.8 percent from this year’s highest level in February amid concern economic growth in China and the U.S. is slowing as Europe’s debt crisis deepens. The measure has gained 1.4 percent this week.
“We are still reasonably cautious,” said Tim Riordan, who helps manage $200 million at Parker Asset Management Ltd., a hedge fund in Sydney. “All of these moves by central banks had been expected, so they were baked into the price. ECB rate cuts are getting to the point where each cut is met with diminishing returns.”

Japan Stocks Swing From Loss, Gain as ECB Disappoints (Source: Bloomberg)
Japanese stocks swung between gains and losses as rate cuts and asset purchases by central banks in the euro zone, England and China failed to boost investor confidence before a U.S. jobs report today. Konica Minolta Holdings Inc. (4902), a film maker that depends on Europe for more than a quarter of its sales, sank 3.1 percent. GS Yuasa Corp. sank 4.1 percent after Barclays Capital cut the battery maker’s rating to underweight. Parco Co. climbed 3.3 percent after J Front Retailing Co. said it will buy a majority stake in the rival department store. The Nikkei 225 Stock Average (NKY) rose less than 0.1 percent to 9,080.85 as of 9:39 a.m. in Tokyo. The broader Topix Index advanced 0.1 percent to 777.46 after falling as much as 0.3 percent. The European Central Bank and People’s Bank of China cut their benchmark borrowing costs, while the Bank of England increased its bond-buying program.
“All of these moves by central banks had been expected, so they were baked into the price,” said Tim Riordan, who helps manage $200 million at Parker Asset Management Ltd., a hedge fund in Sydney. “ECB rate cuts are getting to the point where each cut is met with diminishing returns.”

S&P 500 Snaps 3-Day Rally on ECB Ahead of Jobs Report (Source: Bloomberg)
U.S. stocks declined, halting a three-day advance for the Standard & Poor’s 500 Index, amid disappointment over Europe’s efforts to tame the region’s debt crisis as investors awaited tomorrow’s American jobs report. Financial (S5FINL) shares had the biggest loss among 10 groups in the S&P 500 as Spanish and Italian bonds plunged. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) retreated at least 3 percent. Retailers in the benchmark measure rose 1 percent amid June sales data. Apple Inc. (AAPL), the world’s most valuable company, advanced 1.8 percent to pace gains in technology companies. The S&P 500 decreased 0.5 percent to 1,367.58 at 4 p.m. New York time. The Dow Jones Industrial Average fell 47.15 points, or 0.4 percent, to 12,896.67. Volume for exchange-listed stocks in the U.S. was 5.3 billion shares, 21 percent below the three- month average. The market was closed yesterday for a holiday.
“There’s a bit of disappointment with the ECB,” said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas. “Meantime, people are not willing to take big bets going into the jobs report tomorrow.”

China’s Stocks Decline Most in Week on Property, Bank Concerns (Source: Bloomberg)
China’s stocks fell, dragging the benchmark index down by the most in a week, on concern proposed rules for banks may curb credit growth and speculation intensified the government won’t loosen property restrictions. China Citic Bank Corp. led declines for lenders after a China Banking Regulatory Commission official said the nation plans to retain a cap on loans at 75 percent of deposits and may add further requirements that constrain credit growth under draft rules. Sany Heavy Industry Co. extended the biggest machinery maker’s losses to a fourth day amid concern demand may falter. China’s recent increase in home prices was the result of a “misinterpretation” of the nation’s economic policies, a government think tank researcher said. The Shanghai Composite Index (SHCOMP) fell 26 points, or 1.2 percent, to 2,201.35 at the close, the biggest drop since June 25. The CSI 300 Index (SHSZ300) slid 1.4 percent to 2,430.37. U.S. financial markets were closed yesterday for a national holiday.
“Investors are concerned about company earnings in the second quarter and there are expectations of further cuts in profit forecasts,” said Chen Liqiu, a strategist at Jianghai Securities Co. in Shanghai. “They are expecting property curbs to ease and it turns out it may be quite the opposite so this is dragging on sentiment.”

European Stocks Drop as Draghi Sees Risks; Banks Retreat (Source: Bloomberg)
European stocks retreated as European Central Bank President Mario Draghi said downside risks to the economy remain, offsetting monetary policy easing by countries from China to the U.K. Spanish and Italian banks fell as bond yields climbed after the ECB refrained from announcing new measures to support growth. Volkswagen AG (VOW) jumped 5.1 percent after reaching an agreement with Germany’s tax authorities to buy the 50.1 stake in Porsche SE that it doesn’t already own. GKN Plc jumped 13 percent after buying Volvo AB (VOLVB)’s aircraft-engine unit. The Stoxx Europe 600 Index (SXXP) lost 0.2 percent to 256.93 at the close in London after earlier falling as much as 0.8 percent and rising as much as 0.8 percent. The equity benchmark is still headed for a fifth-straight week of gains, which would be its longest winning streak since January. The Stoxx 600 has climbed 9.9 percent from this year’s low on June 4 amid speculation that central banks would ease monetary policy.
“A lot of today’s announcements were largely anticipated,” said Edmund Shing, an equity strategist at Barclays Capital in London. “You could argue that over the last few days, markets have been pricing in increasing expectation of central-bank action.”

Most Swiss Stocks Fall as ECB Outlook Offsets U.S. Data (Source: Bloomberg)
Most Swiss stocks dropped as European Central Bank President Mario Draghi said he sees risks to the euro-area economic outlook, overshadowing better-than-forecast U.S. jobs reports. Adecco SA (ADEN), the world’s biggest supplier of temporary workers, declined 2.2 percent. Logitech International SA (LOGN), the largest maker of computer mice, slipped 1.3 percent. Barry Callebaut AG (BARN) fell 2 percent after the biggest maker of bulk chocolate posted sales that missed analysts’ estimates. The Swiss Market Index (SMI) rose less than 0.1 percent to 6,202.32 at the close of trading in Zurich. Thirteen stocks declined and seven rose even after the ECB and the People’s Bank of China cut their benchmark borrowing costs and the Bank of England boosted the size of its asset-purchase program. The gauge has rallied 2.2 percent this week, extending the 2012 advance to 4.5 percent. The Swiss Performance Index was also little changed percent today.
“The ECB, China, and BOE news today may have already been baked into the cake over the past few trading sessions,” said Serge Berger, a trader at Blue Oak Advisors LLC in Zurich. “The central banks gave the market what it wanted, which is likely why the investors are selling the news.”

Temasek Spends More on Investments, Adds Energy Holdings (Source: Bloomberg)
Temasek Holdings Pte, Singapore’s state-owned investment company, said it spent the most on new holdings in four years as it added more energy and resources producers to its portfolio. The company said it made S$22 billion ($17 billion) of investments in the year to March 31, boosting assets to a record S$198 billion. It invested S$2 billion in FTS International, a U.S. shale energy production service provider which it has a 40 percent stake in, and S$1.3 billion in The Mosaic Co., a U.S. fertilizer producer. The deals helped Temasek weather Europe’s debt crisis and a lackluster U.S. economic recovery that roiled markets. Total shareholder return, which includes changes in asset values and dividends, gained 1.5 percent in a year when market volatility reached the highest level since the 2008-2009 crisis, while the MSCI World Index (MXWO) lost 1.7 percent.
“My sense is that Temasek’s modus operandi in difficult years is actually to be even more aggressive in terms of its acquisitions,” said Eugene Tan, an assistant law professor at Singapore Management University and a nominated member of Parliament who’s not affiliated with a political party. “They have the bandwidth to go into many investments, which many others may be somewhat hesitant. It reflects their confidence of what they feel will work out for them in the medium to long term.”

Aussie Heads for 5th Weekly Gain as Global Easing Boosts Demand (Source: Bloomberg)
Australia’s dollar headed for a fifth weekly gain, the longest winning streak since February, on prospects a new round of global monetary stimulus will keep economic recovery from faltering. China yesterday cut its key interest rate for the second time in a month, the European Central Bank lowered borrowing costs to a record and the Bank of England expanded asset purchases. New Zealand’s dollar traded near a two-month high after the government said the budget deficit was narrower than forecast. Demand for the South Pacific nations’ currencies was limited after a jump in Spanish and Italian bond yields added to concern Europe’s debt crisis is far from a resolution. “Global monetary easing is sending money into commodity- related currencies,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “The Australian dollar is well supported.”
Australia’s dollar was at $1.0281 as of 9:34 a.m. in Sydney from $1.0287 in New York yesterday, set for a 0.4 percent advance this week. The currency fetched 82.17 yen from 82.22. New Zealand’s dollar traded little changed at 80.38 U.S. cents after touching 80.76 yesterday, the highest since May 3. It bought 64.27 yen from 64.22.

Euro Set for Weekly Loss Before Spanish, German Output (Source: Bloomberg)
The euro headed for its biggest weekly decline in more than six months amid signs the region’s debt crisis is weighing on economic growth. The 17-nation currency held a two-day decline against the yen before data today forecast to show industrial production in Germany and Spain declined. The European Central Bank and the People’s Bank of China cut their benchmark borrowing costs yesterday, while the Bank of England expanded the size of its asset-purchase program. “The economic fundamentals surrounding the euro area look dire,” said Takuya Kawabata, researcher at Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency- margin company. “We can’t expect any economic indicators that can bolster the euro.”
The euro was little changed at $1.2394 as of 8:38 a.m. in Tokyo from $1.2392 yesterday, when it touched $1.2364, the lowest since June 1. The shared currency is poised for a 2.2 percent drop this week, the sharpest decline since the five-days ended Dec. 16. Europe’s currency was at 99.05 yen from 99.03, set for a 2 percent weekly drop. The greenback bought 79.92 yen from 79.92 yen. Japan’s currency fetched 82.20 per Australian dollar from 82.22 yesterday when it reached 82.36, the weakest since May 4.

FOREX-Euro steady, seen vulnerable to expected ECB cut
LONDON, July 5 (Reuters) - The euro steadied versus the dollar but looked vulnerable to selling as market players braced for a widely expected interest rate cut by the European Central Bank.
"The bigger questions have to be over potential surprises. If the ECB were to signal something more aggressive like another LTRO, in this environment that could get a euro positive response," said Daragh Maher, currency strategist at HSBC.

Top Won Forecaster Sees 5% Loss as Europe Crisis Damps Exports (Source: Bloomberg)
South Korea’s won will post its worst quarter in a year as Europe’s financial crisis saps demand for exports, according to Credit Suisse Group AG, the top forecaster. The currency will fall 5.4 percent to 1,200 per dollar in three months, the weakest level since October, Ray Farris, the Singapore-based head of Asia Pacific fixed-income strategy, said in a July 4 interview. The second-largest Swiss bank had the closest estimates in the last six quarters as measured by Bloomberg Rankings. The projection is more bearish than the 1,170 median estimate in a Bloomberg survey of 27 analysts. Slowing growth in the euro area has prompted the South Korean government to cut forecasts for gross domestic product in 2012 and those for exports, which contribute about 50 percent to the $1 trillion economy. A 4 percent rally in the won over the past month will fade as risk aversion once again becomes the dominant theme for Asian markets, according to Sydney-based Westpac Banking Corp. (WBC), the second-best forecaster.
“Most indicators point to weaker Asian export growth, and with domestic demand extremely weak in South Korea, slower exports will have a disproportionately negative impact on the economy,” Farris said. “We still have concerns about the euro area, predominantly from a growth perspective.”

Treasuries Poised for Weekly Advance Before Jobs Report (Source: Bloomberg)
Treasuries headed for a weekly gain on speculation the U.S. government’s monthly employment report today will show hiring slowed in the second quarter to less than half the pace of the prior three months. Waning U.S. economic growth is increasing pressure on the Federal Reserve to implement a third round of bond purchases as the central bank strives to reduce long-term interest rates to support the expansion. The European Central Bank and People’s Bank of China cut their benchmark borrowing costs yesterday, while the Bank of England increased its asset-purchase program. The Fed bought $2.3 trillion of bonds in two rounds of so-called quantitative easing, known as QE1 and QE2, from 2008 to 2011. “The economic situation is weak,” said Hiromasa Nakamura, who helps oversee the equivalent of $41.2 billion in Tokyo as an investor at Mizuho Asset Management Co., a unit of Japan’s third-largest publicly traded bank. “There is a high probability they will do QE3 this year.”
Benchmark 10-year notes yielded 1.60 percent as of 9:53 a.m. in Tokyo, according to Bloomberg Bond Trader data. The 1.75 percent note due in May 2022 changed hands at 101 13/32.

U.S. Exit Risks Afghan Economy as Cash Pumped Into Dubai Villas (Source: Bloomberg)
Afghan central bank inspector Fahim Satari stands in Kabul airport in front of a local businessman headed for Dubai, counting by hand the stack of $100 bills that police found the passenger carrying to the gate. Satari declares the cash to be under the $20,000 limit imposed to stem the flood of money leaving through the terminal, which swelled to $4.6 billion in the year to March and equals almost one-fourth of the economy. While Satari’s team has slowed the airborne outflow, Kabul brokers who arrange informal transfers say business has jumped. In a country where only 7 percent of the population has a bank account and 15 percent of the economy depends on opium, cash is fleeing Afghanistan. The lost billions are undercutting U.S. efforts to stabilize the country as it prepares to withdraw its troops by 2014 and exit an 11-year war with the Taliban.
President Hamid Karzai needs to build an economy capable of financing long-term security and spurring the development that can help unite a nation fractured by decades-old ethnic rivalries. “The money leaving the country shows that Afghans fear the war will escalate after NATO troops leave,” Saifuddin Saihoon, an economics professor at Kabul University, said by phone. The government and international community need to reassure companies that their assets will be protected or risk a business collapse, he said.

ADP Says U.S. Companies Added 176,000 Workers in June (Source: Bloomberg)
Companies in the U.S. added more workers than forecast in June, which may ease concern the labor market is deteriorating, a private payrolls report showed. The 176,000 increase followed a revised 136,000 gain the prior month that was higher than initially estimated, according to figures released today by Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 100,000 advance. A pickup in hiring that’s sustained will help generate the wage growth needed to spur consumer spending, which accounts for about 70 percent of the world’s largest economy. A Labor Department report due tomorrow may show that private payrolls accelerated in June from a month earlier, while the unemployment rate held at 8.2 percent, economists projected. “The economy is weakening but we’re not falling off a cliff,” said Neil Dutta, head U.S. economist at Renaissance Macro Research LLC in New York.
“You should see some employment growth but it won’t be enough to lower the unemployment rate in any meaningful way.”

Fewer Americans Than Forecast File Unemployment Claims (Source: Bloomberg)
Fewer Americans filed first-time claims for unemployment insurance payments and companies added more workers than forecast, easing concern the labor market is faltering further. Applications for jobless benefits fell 14,000 in the week ended June 30 to 374,000, Labor Department figures showed today. Private employers expanded payrolls by 176,000 last month, according to figures released today by Roseland, New Jersey- based ADP Employer Services, exceeding the most optimistic estimate in a Bloomberg News survey of economists. “Before today it was pretty clear the labor market had softened over the past few months,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “Today’s reports show a little bright spot. The fear of a much weaker payroll number has been reduced.”
Labor Department data tomorrow may show the pace of hiring accelerated in June while remaining at less than half the average for the first quarter of the year. The report covers both private and government employers. Other figures today showed service industries expanded at a slower pace in June, underscoring Federal Reserve concern that economic growth isn’t strong enough to reduce unemployment.

Service Industries in U.S. Grew Less Than Forecast in June (Source: Bloomberg)
Service industries in the U.S. expanded in June at the slowest pace since January 2010, a sign the biggest part of the economy is struggling to gain momentum. The Institute for Supply Management’s non-manufacturing index dropped to 52.1, less than projected, from 53.7 in May, the Tempe, Arizona-based group said today. The median forecast of 70 economists surveyed by Bloomberg News called for 53. Readings above 50 signal expansion. Companies from Family Dollar Stores Inc. (FDO) to FedEx Corp. (FDX) are seeing waning demand, underscoring concern about Europe’s debt crisis, cooling global markets and an absence of U.S. fiscal policy clarity that’s also hurting manufacturing. Limited hiring and income growth indicate households will be reluctant to step up purchases, which account for about 70 percent of the economy.
“Business activity in the services, construction and government sectors of the economy decelerated in June but is still growing at a modest pace,” Steven Wood, principal economist at Insight Economics LLC in Danville, California, said in an e-mail to clients. “A cyclical economic expansion is currently in place but it has softened in the past three months.”

On Bus Tour in Ohio, Obama Pushes Trade, Hammers Bain (Source: Bloomberg)
President Barack Obama told voters in the battleground state of Ohio today that his administration filed a claim with the World Trade Organization against China, charging it with unfair tariffs on U.S. autos, a welcome message in the U.S. rust belt. “Americans aren’t afraid to compete. We believe in competition,” Obama said while campaigning in Maumee, Ohio. “But we’re going to make sure competition is fair.” The WTO complaint came as Obama began a two-day bus trip in Ohio and Pennsylvania. The “Betting on America” tour, as his campaign has dubbed it, runs through areas reliant on the auto industry. The label is designed to draw a contrast with presumed Republican presidential nominee Mitt Romney, a former private- equity executive whose business made investments overseas. Romney’s experience “has been in owning companies that were called ‘pioneers of outsourcing,’” Obama said. “My experience has been in saving the American auto industry, and as long as I’m president, that’s what I’m gonna be doing.”

China Cuts Benchmark Rates for Second Time in Month (Source: Bloomberg)
China cut benchmark interest rates for the second time in a month and allowed banks to offer bigger discounts on their borrowing costs, stepping up efforts to reverse a slowdown in the world’s second-biggest economy. The one-year lending rate will fall by 31 basis points and the one-year deposit rate will drop by 25 basis points effective tomorrow, the People’s Bank of China said on its website today. The discount banks can offer on loans was widened to 30 percent from 20 percent, according to the statement. China is moving more aggressively to promote growth as Europe’s turmoil crimps exports and domestic property restrictions curb the housing market. Today’s cuts coincided with decisions by the European Central Bank and Bank of England to increase monetary stimulus and preceded government data next week that may show expansion decelerated for a sixth quarter.
“Although most people were expecting further cuts, very few were expecting the second one to come so soon,” said Mark Williams, Asia economist at Capital Economics Ltd. in London. One possible reason for today’s action is that “policy makers have had an early look at the June data and didn’t like what they saw, suggesting the economy is weaker than they previously thought.”

Singh Adviser Warns Against Portfolio Investor Tax-Rule Changes (Source: Bloomberg)
India should refrain from changing the way foreign investors in stocks and bonds are taxed, a key adviser to Prime Minister Manmohan Singh said, as the nation prepares rules to clamp down on tax avoidance. “We should clarify that it is not the intention to change the tax treatment of bona fide foreign institutional investors,” Montek Singh Ahluwalia, 68, deputy chairman of India’s Planning Commission, said in an interview in New Delhi yesterday. “I hope they will clarify it in a way in which FIIs will be reassured that their investment is welcome.” Prime Minister Singh has made reviving investment in India a priority after taking charge of the finance ministry on June 26 with growth at a nine-year low. Ahluwalia also said he hopes India will “very soon” allow foreign companies to open supermarkets selling multiple brands, an industry closed off to overseas businesses and one that Singh is trying to open up.
The prime minister decided to lead the finance ministry after Pranab Mukherjee resigned to vie for the presidency. Mukherjee outlined steps to tackle tax avoidance, the so-called General Anti-Avoidance Rule, or GAAR, in the budget in March, before retreating on the proposals in May by delaying implementation until 2013 to salvage investor confidence.

Central Banks Deliver 45-Minute Salvo as Growth Weakens (Source: Bloomberg)
Global central banks went on the offensive against the faltering world economy, cutting interest rates and increasing bond buying as a round of international stimulus gathers pace. In a 45-minute span, the European Central Bank and People’s Bank of China cut their benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase program. Two weeks ago, the Federal Reserve expanded a program lengthening the maturity of bonds it holds and Chairman Ben S. Bernanke indicated more measures will be taken if needed. “The actions had the look and feel of a coordinated global easing campaign,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “The central banks are trying to arrest the synchronized slowdown in global economic growth that has taken shape.”
Almost five years since the financial crisis first forced them into action, policy makers are reacting anew as Europe’s debt crisis persists, U.S. hiring slows and emerging markets soften. The jury is out on whether the additional monetary medicine will work or if even more will be needed. The steps by the U.K. and euro area pushed JPMorgan Chase & Co. (JPM)’s average interest rate for developed economies to a crisis- era low of 0.48 percent and will add to the balance sheets of major central banks, which have already swelled 40 percent since mid-2007.

Draghi Move to Zero Rates Fuels Talk of QE in ECB Armory (Source: Bloomberg)
The European Central Bank’s step into the world of zero interest rates is fueling speculation it may eventually be forced to follow the Federal Reserve and the Bank of England with large-scale asset purchases. The ECB yesterday reduced its benchmark rate to a record low of 0.75 percent and took its deposit rate to zero, with President Mario Draghi saying the cuts may have only a “muted” economic impact. While deflecting questions about further measures such as quantitative easing, Draghi said “there is no feeling that we are running short of policy options” and “we still have all our artillery ready to contain inflationary risks” in either direction. “They have practically exhausted their conventional armory,” said Julian Callow, chief European economist at Barclay Plc (BARC) in London. “Cutting the deposit rate to zero has practically brought them to the door of QE, even though that is not what they may have intended.”
The ECB’s rate cuts came within 45 minutes of China lowering borrowing costs and the Bank of England restarting its asset purchases, adding to a new round of global monetary stimulus. With Europe’s debt crisis curbing growth across the continent and damping the outlook for the world economy, the ECB was under pressure to ease policy even though Draghi last month voiced misgivings about the effectiveness of a rate reduction.

Lagarde Consumed by Crisis Steers IMF Tough Love to EU (Source: Bloomberg)
Discussing climate change was a welcome break for Christine Lagarde from the European debt crisis that has consumed her first year as director of the International Monetary Fund. “I’m very pleased to be here today, not only because we’re not going to talk at all about the euro zone, not at all about Greece, not at all about Spain,” she said in a June 12 talk to the Center for Global Development in Washington, drawing laughs from her audience. Then Europe caught up with her, again. Four days after the event, Lagarde, 56, canceled plans to join leaders at a summit on sustainable development in Rio de Janeiro. Instead, she flew to Luxembourg to urge finance ministers of the 17 euro countries to take further steps to save their monetary union, which has already required almost 500 billion euros ($629 billion) in funds for indebted nations and their banks.

Made-in-London Scandals Risk City’s Reputation as Finance Center (Source: Bloomberg)
London risks losing its status as the world’s top financial center as the $360 trillion interest-rate fixing probe follows a series of market abuses by banks that eroded trust in a city already shrinking faster than rivals. JPMorgan Chase & Co. (JPM)’s trading loss of at least $2 billion, the alleged $2.3 billion fraud at UBS AG (UBSN) and the investigation of at least a dozen banks including Barclays Plc (BARC) for rigging global interest rates all happened in London in the last year. The effect is taking a toll on the capital of a country enduring its first double-dip recession since the 1970s, which fired more financial-services workers than any other country in 2011 and again this year.
“My heart sinks every time there is a scandal and the perpetrators are in London, even if it is not always the U.K.’s responsibility, it is under our noses,” Sharon Bowles, chairwoman of the European Parliament’s economic and monetary affairs committee, said in an interview. “There is an effect on the U.K.’s reputation, and it reinforces the view that even after all the apologies there is much to do.” London, ranked as the world’s number one financial center by research firm Z/Yen Group Ltd., was where American International Group Inc. (AIG) and Lehman Brothers Holdings Inc. booked transactions that helped lead to their downfall. This week saw Bank of England and U.K. government officials tied to the interest-rate fixing scandal that cost Robert Diamond, London’s best-known banker, his job at Barclays. With the European debt crisis on its doorstep, London now faces calls to cull its bonus culture, rein in risk-taking and beef up a light- touch regulatory system that fueled a decade-long boom.

Draghi Says Rate Cuts May Have ‘Muted’ Impact on Economy (Source: Bloomberg)
European Central Bank President Mario Draghi said today’s cut in interest rates to a record low may have only a limited impact on the euro-area economy as it slides toward recession. “It’s clear that when demand is weak the transmission of price signals to the aggregated economy is muted,” Draghi said at a press conference in Frankfurt after lowering the benchmark and deposit rates by 25 basis points to 0.75 percent and zero respectively. The cuts will reduce the cost of central bank loans for struggling banks, Draghi said. China also lowered rates today and the Bank of England restarted its asset purchases, adding to a new round of global monetary stimulus. With Europe’s debt crisis curbing growth across the continent and damping the outlook for the world economy, the ECB was under pressure to ease monetary conditions, even though Draghi last month voiced misgivings about the effectiveness of a rate reduction.
“The impact of today’s decision on the euro area will not be large” and “there is now little left for the ECB to do in terms of lowering interest rates,” said Julian Callow, chief European economist at Barclay’s Capital in London. “If the economy does not turn around during the second half, the Governing Council will have to address the case for outright large-scale asset purchases.”

Denmark Cuts Rates to Record Lows as Zero Threshold Breached (Source: Bloomberg)
Denmark’s central bank cut its main borrowing costs to record lows and brought the rate it offers on certificates of deposit below zero, as policy makers test uncharted territory to fight a capital influx. The benchmark lending rate was cut to 0.2 percent from 0.45 percent, while the deposit rate was reduced to minus 0.2 percent from 0.05 percent, Copenhagen-based Nationalbanken said in a statement today. The move followed a quarter of a percentage point cut in the European Central Bank’s main rate to 0.75 percent. Nationalbanken doesn’t hold scheduled meetings and only adjusts rates to defend the krone’s peg to the euro.
“There’s no experience of how negative deposit rates will affect the financial markets and the krone,” Jacob Graven, chief economist at Sydbank A/S, said in a phone interview today before the decision was announced. “It’s a sign of the strong Danish economy. This is good. The opposite situation would be far worse, if the central bank would have to hike rates to defend the krone. We have a luxury problem.” Denmark has stepped up its battle to prevent the krone from strengthening beyond its currency band as the nation’s haven status attracts investors. Danske Bank A/S (DANSKE), the country’s biggest lender, said last week it now has a risk scenario that envisages Denmark abandoning the peg should the cost of fighting currency appreciation grow too high. The bank doesn’t view this as a likely outcome, it said.

BOE Restarts QE as Euro Crisis Threatens to Prolong Slump (Source: Bloomberg)
The Bank of England restarted bond purchases two months after halting its expansion of stimulus as the deteriorating outlook spurred policy makers to ramp up efforts to kick start a recovery. The Monetary Policy Committee led by Governor Mervyn King raised its asset-purchase target by 50 billion pounds ($78 billion) to 375 billion pounds and said the purchases will take four months to complete. Separately, the European Central Bank cut its key interest rate below 1 percent for the first time and China lowered benchmark rates for the second time in a month. The Bank of England’s resumption of quantitative easing is a part of a twin-pronged effort that includes a new credit- boosting program by the central bank to pull Britain out of a recession. With inflation easing and reports this week showing that factory, services and construction activity weakened in June, policy makers were spurred to act by continued concerns about the threat from the euro-area debt crisis.
“It’s a good decision and they need to do it because the recovery is taking so long,” said George Buckley, an economist at Deutsche Bank AG in London. “This is as much a decision to offset the future downside risks from the euro area as it is to try and support the rather flagging recovery.”

20120706 1005 Global Commodities Related News.

Weather Pushing Grains Higher at Midday (Source : CME)
Grain trade is continues to ride the poor weather higher. By David Fiala DTN Contributing Analyst

The U.S. stock market indices are mixed with the Dow index down 30 points. The interest rate products are lower. The dollar index is 106 higher. Energies are mixed with crude down $0.45. Livestock trade is mixed. Precious metals are lower with gold down $14.

General Comments
Corn trade is 14 to 18 higher with the weather marketing rolling on, in addition to stiumulus from Europe and China. The weather pattern remains dry for most growing areas, although the heat looks to abate somewhat this weekend. There are scattered systems of rain out there right now. December put in a new contract high on the close Tuesday, and traded briefly through 7 dollars this morning The bear argument will be demand destruction at these price levels. Ethanol production is expected to slide again this week, and driving demand for fuel has been soft all year. The amount fund interest in buying corn will also remain a wild card, and they are not heavily invested in corn compared to the recent past, and if they jump in it will add a lot of explosiveness to the market. Exports are delayed until tomorrow. In our expanded trading hours it seems like we fall asleep a little bit during the day. It appears the biggest moves and activity occur near the afternoon closes and during the first few hours of our evening opens.

Soybean trade is 32 to 36 higher with weather and demand continuing to push trade. Meal is $13 higher, and oil is 60 to 70 higher. The trade is set up for a run to the multi-year high at $15.44 as the chart lacks significant resistance. Support will be $15.00 for now. Weather remains far less than ideal, although there is more time to bail the beans out with a pattern change. The bean charts are pretty overbought which could open up some short term corrections, with the extensive fund length. Exports are delayed until tomorrow. Final Brazlian production was estimated at 67.4 million metric tons.

Wheat trade is 15 to 20 higher across three exchanges. Russian weather remains less than ideal as harvest continues with disappointing yields, and the above normal heat in the US is stressing spring wheat during the heading phase. Rising cash prices in Russia and Europe are going to support US export competitiveness, and they have pushed to new highs. The fund interest is still pretty limited at this point, and if the funds want to be aggressive they could push the charts pretty good. Jordan skipped a tender because of price yesterday. El Nino still looks probably for fall which will hurt Australia.

Wheat Market Recap Report (Source : CME)
September Wheat finished up 38 3/4 at 838, 2 3/4 off the high and 28 3/4 up from the low. December Wheat closed up 33 1/4 at 847. This was 23 3/4 up from the low and 2 1/2 off the high. Chicago wheat traded sharply higher heading into the close of the session on concern over weather and the decline of new crop corn yields. Chicago wheat gapped higher at the opening bell and has reached contract highs not seen since September 2011. Kansas City and Minneapolis wheat both traded sharply higher on the day and posted new highs for the move. The afternoon forecast calls for cooler temperatures next week and a chance for better rainfall in some areas, but confidence in those forecasts remain low. Afternoon weather maps call for a little warmer 1-5 day forecast for the northern U.S. and extreme heat is expected to stick around for another 3-4 days in central and southern Midwest. Paris Matif wheat traded over 2% higher in anticipation of the sharply higher open for U.S. markets. Wheat is also seeing strength from a drier forecast for the Spring Wheat region of Russia where a third of their crop could see yield reduction. The market is anticipating lower production estimates for Russia on the next WASDE report. Jordan canceled their wheat tender from Wednesday after Russian offers were thought to be too high. Russian domestic and export cash wheat has surged this week in the wake of an expected lower production forecast and sharply higher U.S. markets. Wheat was able to shake off the negative outside market action as the U.S. Dollar gained 1% and stocks were marginally weaker. September Oats closed up 14 1/4 at 365 1/4. This was 8 1/4 up from the low and 1 3/4 off the high.

Corn Market Recap for 7/5/2012 (Source : CME)
September Corn finished up 35 1/2 at 709 1/2, 4 1/2 off the high and 22 1/2 up from the low. December Corn closed up 34 at 708 1/2. This was 23 up from the low and 4 1/2 off the high. December corn gapped higher on the open and surged past 7.00 early in the session. After a brief mid-day dip on profit taking, corn surged into the closing bell to finish the day near it's highs. Continued concern over decreasing new crop corn yields due to blistering temperatures this week continued to support the corn market. Afternoon weather maps called for a little warmer 1-5 day forecast for the northern U.S. and extreme heat is expected to stick around for another 3-4 days in the central and southern Midwest. Changes also include a chance for better rainfall in the Midwest and western U.S. plains in the 6-10 day map. Ethanol production for the week ending June 29th averaged 857,000 barrels per day. This is down 2.9% vs. last week and down 5.2% vs. last year. Corn used in last week's production is estimated at 91.3 million bushels, posting a new 16 week low and displaying further signs of demand destruction from the rally in corn. Corn use needs to average 98.25 million bushels per week to meet 2011/12 USDA estimate of 5.05 billion bushels. Ethanol Stocks as of June 29th were 20.3 million barrels which is also a 16 week low. This is down 2.2% vs. last week but up 9.3% vs. last year. The Brazilian government adjusted their 2011/12 corn crop production to 69.48 million tonnes, nearly 2 million tonnes higher than their last revision. Outside markets are offering minimal resistance as the U.S. Dollar surged over 1% and stocks were marginally weaker. September Rice finished up 0.145 at 15.15, equal to the high and 0.08 up from the low.

Thai rice intervention a slow motion smash
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 4 (Reuters) - The Thai government's intervention in the rice market is like watching a train wreck in slow motion: you can see every step of the unfolding disaster but can't do anything to stop it.
The latest twist in the saga is the government's failure to sell even a tiny amount of its record stockpile of the grain that is the staple food of two-thirds of the world's population.

U.S. crop worry to fuel world food prices in July-UN
MILAN, July 5 (Reuters) - Searing heat in the U.S. Midwest is expected to see global food prices snap three months of declines in July, the UN said on Thursday, as some international grain prices surged to highs last seen during the 2007-08 food crisis.
Concerns about extreme hot and dry weather hitting U.S. corn and soybeans ignited a grain rally in the second part of June and a series of crop quality downgrades by the U.S. Department of Agriculture has added fuel to the rally which brought Chicago corn futures to a 10-month high this week.

Asian corn buyers caught off guard as U.S. crop wilts
SINGAPORE, July 4 (Reuters) - Corn buyers in Asia, who account for just under half of the world's imports, have been caught on the wrong side of the market as worsening U.S. drought threatens to squeeze global supplies, driving prices to a 10-month top.
Asian buyers, including top world importer Japan, had expected the corn market to soften on hopes of a record harvest in top exporter the United States.

Bulgaria to reap over 4 mln T of wheat-Agmin
SOFIA, July 4 (Reuters) - Bulgarian farmers will harvest over 4 million tonnes of wheat this year, more than initially expected due to rains in May, deputy Agriculture Minister Svetlana Boyanova said on Wednesday.
"The expected crop of over 4 million tonnes of wheat and over 700,000 tonnes of barley will completely cover domestic needs and will allow for exports," Boyanova said a statement.

Philippine H1 rice output likely up 5 pct y/y - official
MANILA, July 5 (Reuters) - The Philippines' unmilled rice production in the first six months of the year likely grew 5 percent from a year earlier to a hit a record volume, supported by favourable weather, a senior government official said on Thursday.
"We expect record rice production in the first half because of good weather," Dante Delima, assistant secretary and coordinator of the National Rice Program at the Department of Agriculture, told reporters, adding the government's irrigation support also boosted harvests. He did not give the exact volume.

Ukraine sees 20-21 mln T early grains crop in 2012
KIEV, July 4 (Reuters) - Ukraine, hit by poor weather during the sowing and wintering of major crops, expects to harvest 20 million-21 million tonnes of early grains - mostly wheat and barley - in 2012 against 34 million tonnes in 2011, farm minister Mykola Prysyazhnyuk said.
"Taking into account the grain yields in steppe and forest zones of Ukraine, we expect to harvest about 20-21 million tonnes of early grain," the ministry on Wednesday quoted Prysyazhnyuk as saying.

Indonesia to targets zero rice imports, 5.5 mln t surplus
JAKARTA, July 4 (Reuters) - Indonesia is unlikely to import rice in 2012 and is forecast to have a 5.5 million tonne surplus of the staple by the end of the year, the state rice procurement agency, Bulog, said on Wednesday.
Indonesia's unmilled rice production is forecast to rise 4.3 percent this year on good weather, the statistics bureau said on Monday.

Vietnam to stockpile up to 500,000 T rice -govt
HANOI, July 4 (Reuters) - Vietnam exporters will stockpile up to 500,000 tonnes of rice from the summer-autumn harvest in a bid to keep prices from falling, the government said. The businesses will buy the grain from July 10 to Aug. 10, the government said in a statement seen by Reuters on Wednesday.

SOFTS-ICE sugar touches 2-1/2-month high, coffee dips
LONDON, July 5 (Reuters) - Raw sugar futures on ICE rose to their highest level in 2-1/2 months supported by delays in shipments from Brazil, and readjusting after a rise in Liffe futures during Wednesday's U.S. Independence Day holiday.
Cocoa futures on ICE eased, adjusting to Wednesday's fall on Liffe, while robusta coffee posted modest losses in light volumes.

Brazil sugar delays to increase as harvest peaks
July 4 (Reuters) - Waiting times at Brazilian sugar ports, which have shortened thanks to drier weather, are likely to increase again in the coming weeks as harvesting gathers pace, a shipping agency director said.
"As the rain has subsided, there is an improvement in loadings, but with the peak of the crop coming, the waiting times should increase a bit," Glynne Williams, of Williams (Servicos Maritimos) Ltda, told Reuters in an email late on Tuesday.

Ivorian San Pedro cocoa arrivals 589,719 T by June 24-CCC
ABIDJAN, July 4 (Reuters) - Cocoa arrivals at Ivory Coast's port of San Pedro reached 589,719 tonnes by June 24 since the start of the season in October, according to data from the Coffee and cocoa council (CCC) obtained by Reuters on Wednesday.
That compared with 493,207 tonnes delivered to the port during the same period of the 2010/11 season.

Bahia cocoa flow slows as warehouses fill up
SAO PAULO, July 4 (Reuters) - Deliveries of cocoa from Brazil's top producing state Bahia eased off in the last week as warehouses became crammed after weeks of abundant arrivals, data from Bahia Commercial Association and comments from analyst Thomas Hartmann showed.
The pace of harvesting also slowed due to a local celebration held over several days each June in Brazil, Bahia-based Hartmann said. He said the storage problems were apparent in other smaller cocoa states as well as Bahia.

Australian raw sugar exports face wet weather delay
SYDNEY, July 4 (Reuters) - Australian raw sugar exports are likely to be delayed as wet weather slows the harvest of sugar cane, even though most of the crushing operations that were disrupted last week by rain have resumed, refining firms said on Wednesday.
The delays from the world's third largest sugar exporter are likely to boost sugar prices, which have firmed in the last few days as wet weather also threatens to delay exports from largest exporter Brazil.

Milk Rallying as New Zealand Weather Sours: Commodities (Source: Bloomberg)
Goldman Sachs Group Inc. says this may be the first time in five years that New Zealand, the world’s biggest dairy exporter, produces less milk, at a time when surging corn prices are raising costs for U.S. farmers. The country’s output will drop 2.4 percent in the 12 months ending June 30 as the weather turns less favorable, according to Goldman’s New Zealand unit. Supply from the seven biggest exporting regions may gain 1.2 percent in the second half of 2012, slowing from 3.2 percent in the first six months, according to Rabobank International. Futures, which rose 20 percent since mid-April, will climb a further 15 percent to $20 per 100 pounds in Chicago by Dec. 31, said Shawn Hackett, the agricultural adviser who correctly predicted the rally in March.
Milk tumbled 33 percent in the eight months to April 18 as New Zealand’s production was boosted by abundant rain that gave cattle more to eat and U.S. yields reached a record after an unusually mild winter. Global food costs tracked by the United Nations fell 15 percent since reaching a record in February 2011. The worst Midwest drought in a decade is now parching corn crops, driving prices for the feed 33 percent higher since June 15 and increasing the incentive for farmers to cull herds. “Last year was a perfect weather scenario that happens once in a long, long, long while,” said Hackett, the president of Boynton Beach, Florida-based Hackett Financial Advisors Inc. who has specialized in agriculture for almost a decade. “Animals are going to be stressed. They’re not likely to produce as much milk as last year.”

Sugar Bulls Strongest in Six Months on Brazil Rain: Commodities (Source: Bloomberg)
Sugar traders are the most bullish in six months after prices moved to within a percentage point of exiting a year-long bear market as rain delayed cane processing in Brazil, the biggest producer. Nine of 11 analysts surveyed by Bloomberg said they expect raw sugar to keep rallying next week and two were bearish, the highest proportion of bulls since Jan. 6. Futures reached an 11- week high of 22.69 cents a pound in New York yesterday. Hedge funds increased wagers on rising prices by 29 percent to the highest since April in the week ended June 26, U.S. Commodity Futures Trading Commission data show.
The sweetener has been in a bear market since September as forecasters from Rabobank International to Macquarie Group Ltd. predicted a third annual glut. Prices rallied 19 percent since the start of June after above-average rainfall in Brazil’s main growing region increased concern about shortages. Copersucar SA, which owns mills in the country, said July 2 it took delivery of about 112,000 metric tons of raw sugar against the ICE Futures U.S. exchange’s expired July contract. “The sugar turnaround has been fast because the short term supply issues in Brazil are bullish,” said Keith Flury, an analyst at Rabobank in London. “We are in a weather market.”
Raw sugar is still 3.3 percent lower since the start of the year at 22.53 cents, extending a 27 percent retreat in 2011. The Standard & Poor’s GSCI Agriculture Index (MXWD) of eight commodities rose 8.7 percent after grain prices rallied because a U.S. heat wave is wilting crops. The MSCI All-Country World Index of equities advanced 4.8 percent and Treasuries returned 1.8 percent, a Bank of America Corp. index shows.

Oil Drops in New York as Europe Concern Weighs on Demand Outlook (Source: Bloomberg)
Oil dropped a second day in New York, trimming a weekly gain, on speculation Europe’s economy will weaken, threatening global growth and demand for raw materials. Futures slipped as much as 0.7 percent, extending the 0.5 percent decline from July 3, after European Central Bank President Mario Draghi said some “downside risks to the euro- area economic outlook have materialized” as the ECB cut interest rates to a record low. London-traded Brent surged 0.9 percent yesterday as Norwegian oil producers planned to shut all offshore operations amid an 11-day strike over pensions. Oil for August delivery decreased as much as 63 cents to $86.59 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.75 at 9:10 a.m. Sydney time. Prices are 2 percent higher this week for a second weekly gain, the longest winning streak since April. Crude is down 12 percent this year.
West Texas Intermediate settled at $87.22 yesterday after slipping 44 cents. Floor trading was closed July 4 for the U.S. Independence Day holiday and transactions since the July 3 close were booked with July 5 trades for settlement purposes. Brent oil for August settlement gained 93 cents, or 0.9 percent, to $100.70 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark’s premium to West Texas Intermediate closed at $13.48.

POLL-China's top refineries cut July throughput on weak demand
BEIJING, July 4 (Reuters) - Top Chinese refineries will cut crude oil processing runs in July, following gains in the previous two months, as sluggish demand, poor refining margins and high fuel stocks hurt operations, a Reuters poll showed.
The 12 plants, which make up nearly a third of the capacity in China, the world's No.2 oil consumer, are located mostly in coastal areas, and plan to process 2.88 million barrels per day (bpd) of crude oil this month, the poll showed.

OIL-Oil jumps $2 on Norway strike
LONDON, July 5 (Reuters) - Oil prices jumped $2 to more than $102 a barrel as Norway's state oil major Statoil  said it would start shutting down production at its North Sea fields after its dispute with the unions over pensions hit a deadlock.
"A lockout is still a part of the legal strike," said Gro Oerset, senior adviser at the Labour Ministry.

Saudi oil prices show no Iran worries
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 5 (Reuters) - If you were looking for a sign that the oil market has shrugged off the loss of Iranian supplies, look no further than the Saudi decision to raise prices for August cargoes to Asian refiners.
While Saudi Aramco uses a formula to calculate changes in its official selling price (OSP), it's also very unlikely that the state-controlled company would have boosted them if there was any doubt that the market was sufficiently supplied.

Mongolia Mining Bets China Will Double Coal Imports (Source: Bloomberg)
Mongolian Mining Corp. (975) is betting there’s enough demand from China to support the construction of an $800 million railway that will double export capacity to the nation that counts Mongolia as its biggest coal supplier. Expanding transportation links between the adjacent countries “will improve the position of Mongolia as the leading coking coal supplier to China,” Battsengel Gotov, chief executive officer of MMC, as the company is known, told reporters in the Mongolian capital of Ulan Bator. Mongolia, the world’s fastest growing economy, overtook Australia as China’s biggest coking coal supplier last year, exporting 20 million metric tons of the raw material used to make steel. MMC is building a 250 kilometer (155 mile) rail to add 30 million tons of export capacity direct to China. “There’s still room for everybody in Mongolia” to mine and sell commodities, Gotov said from the company’s head office.
MMC shares rose 3.6 percent to close at HK$4.36 in Hong Kong compared with a 2.2 percent gain in the benchmark Hang Seng index. The stock has dropped 25 percent this year as coal prices declined.

Indonesia’s Tin Exports Set to Decline as Low Prices Curb Output (Source: Bloomberg)
Refined-tin shipments from Indonesia, the largest exporter, probably dropped to the lowest level in five months in June as miners reduced production because of lower prices and bad weather disrupted ore supplies to smelters. Exports fell 7.2 percent to 7,300 metric tons last month from 7,866 tons in May, according to the median estimate of four smelter executives and an analyst in a Bloomberg survey. That’s the least since shipments of 5,380 tons in January and compares with sales of 10,875 tons in June 2011. The Trade Ministry is expected to release the data next week.
Prices have plunged 26 percent from a six-month high in February on concern the debt crisis in Europe and slower growth in China may erode demand for the metal used in soldering and packaging. Falling supplies may limit the slump, helping boost revenues at producers including Malaysia Smelting Corp. (SMELT) and PT Timah (TINS), the world’s second and third-largest producers. Prices below $20,000 ton have some adverse impact on small-scale production in Indonesia, according to ITRI Ltd. Last month’s shipments may be as low as 7,000 tons, Peter Kettle, research manager at the St. Albans, England-based ITRI, said by e-mail July 2. “My reason is lower prices resulting in lower volumes through the independent smelters.” Three-month tin fell 0.3 percent to $19,100 a ton on the London Metal Exchange at 4:55 p.m. in Singapore yesterday. The metal dropped 4.2 percent in June for the fifth straight monthly loss. The price peaked this year at $25,880 a ton on Feb. 8.

Gold Futures Fall on Stimulus Outlook, Dollar’s Rally (Source: Bloomberg)
Gold fell the most in a week on bets that the Federal Reserve may refrain from more U.S. stimulus measures, while the dollar’s rebound eroded the appeal of the metal as an alternative investment. Data from ADP Employer Services showed today that U.S. companies added more workers than forecast in June, which may ease concern that the labor market is deteriorating. The euro tumbled to a four-week low against the dollar after the European Central Bank cut its benchmark interest rate to a record. “There is now less impetus for the policy makers to expand the balance sheet,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities Inc., said in a telephone interview. “The dollar’s strength is not helping matters.” Gold futures for August delivery fell 0.8 percent to settle at $1,609.40 an ounce at 1:40 p.m. on the Comex in New York, the biggest drop for a most-active contract since June 28.
In the second quarter, the metal slumped 4 percent as the dollar gained 3.3 percent against a basket of major currencies.