Thursday, July 12, 2012

20120712 1816 FCPO EOD Daily Chart Study.

FCPO closed : 3012, changed : -70 points, volume : higher.
Bollinger band reading : side way range bound.
MACD Histogram : weakenning, buyer closing position.
Support : 2970, 2950, 2920, 2900 level.
Resistance : 3020, 3050, 3070, 3100 level.
Comment :
FCPO closed recorded severe loss again with ultra high volume transacted. Soy oil currently trading weaker after overnight closed recorded loss while crude oil price currently recording loss.
Selling activities continue to take place today on weak exports concern due to gloommy global economy will cause lower demand plus the latest weather forecast news of coming heavy rains across U.S. planting area.
Technical chart reading revised to reccommending a side way range bound testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120712 1722 FKLI EOD Daily Chart Study.

FKLI closed : 1623.5 changed : -12.5 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward, buyer taking profit.
Support : 1620, 1610, 1600, 1590 level.
Resistance : 1630, 1640, 1650, 1660 level.
Comment :
FKLI closed recorded loss after hitting new year high again with declined volume changed hand doing 2 points discount compare to cash market that closed little lower. Overnight U.S. markets continue to closed weaker and today Asia markets ended registered loss while European markets currently trading lower.
World market sentiment remained negative after news on U.S. Federal Reserve failed to signal more measures to spur economy, South Korea cut interest rate unexpectedly and surprising lower employment rate recorded in Australia.
FKLI technical chart reading adjusted to calling a pullback correction 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.

20120712 1701 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : side way range bound wth MACD crossed down.
 Hang Seng chart reading : side way range bound wth MACD crossed down.
KLCI chart reading :  pullback correction upside biased.

20120712 1626 Global Market & Commodities Related News.

GLOBAL MARKETS: Asian shares slid as a surprise rate cut from South Korea and an unexpected drop in Australian employment deepened worries about global economic growth, further sapping appetite already hit by a lack of clear clues on possible U.S. stimulus.European shares were set to fall, mirroring losses on Wall Street and in Asia, with investors seen cutting their exposure to riskier assets following uncertainty over whether the U.S. Federal Reserve would launch more stimulus measures.The Dow and the Nasdaq lost ground on Wednesday as minutes from the Federal Reserve's June meeting showed policymakers are open to the idea of more economic stimulus, but that conditions might need to worsen first.

FOREX: The dollar enjoyed a short-lived rise against the yen after the Bank of Japan refrained from easing policy but made a technical change to its asset buying programme.

FOREX-Dollar rises, then falls, on BOJ policy news
TOKYO, July 12 (Reuters) - The dollar enjoyed a short-lived rise against the yen on Thursday after the Bank of Japan refrained from easing policy but made a technical change to its asset buying programme.
The BOJ stood pat as expected, despite moves in that direction last week by central banks in the euro zone, Britain and China. It held its key policy rate in a range of zero to 0.1 percent by a unanimous vote, though it did tweak its asset-buying and lending programme.

Glum Fed keeping easing options open, minutes show
The U.S. Federal Reserve is open to the possibility of buying more bonds to stimulate the economy, but conditions might need to worsen for a consensus to build, minutes from the central bank's June meeting released on Wednesday showed.

S.Korea c.bank cuts interest rates in surprise move
The Bank of Korea cut interest rates for the first time in more than three years on Thursday, contrary to market expectations,  after China cut for the second time in weeks, as risks in the global economy mounted and it sought to boost domestic demand.

Surprise Australia June employment drop raises bets on rate cut
Australian employment fell by 27,000 in June, a surprisingly weak outcome that sent the local dollar lower and led investors to price in a greater chance of further cuts in interest rates.

US crude stocks fall modestly, products mixed-API
U.S. crude inventories fell less than analysts had expected last week, and oil product inventories were mixed as gasoline stocks rose and distillates fell, according data from the American Petroleum Institute showed on Tuesday.

Chicago Board of Trade hits back against grain traders' lawsuit
The Chicago Board of Trade on Wednesday criticized a group of floor traders for suing the exchange over new rules for settling end-of-day grain prices instead of raising their concerns with federal regulators.

GRAINS: Chicago corn rose 0.8 percent, recouping some of last session's losses with support from U.S. government's estimates showing deeper reduction in yields although gains were capped by forecasts of rains in parts of the grain belt.

OIL: Brent crude stayed above $100 per barrel, after a more than 2 percent rally in the prior session, as uncertainty over whether the U.S. Federal Reserve would launch more stimulus measures curbed investor appetites for riskier assets.

INTERVIEW-South Korea to lift metals purchases if prices dip further
SEOUL, July 11 (Reuters) - South Korea, the world's fourth-biggest buyer of industrial metals, will lift purchases by its state-run procurement agency in the second half from a planned 297 billion won ($260 million) if metal prices drop further, a senior agency official said.
The Public Procurement Service (PPS) also intends to raise copper and tin purchases due to low inventory levels, PPS administrator Kang Ho-in said in an interview.

BASE METALS: Copper edged down, dropping for its fifth session in seven, as uncertainty that the U.S. Federal Reserve would launch more stimulus measures soured market sentiment, with prices in tight ranges on caution before China's GDP data.

PRECIOUS METALS: Gold edged lowe, dropping for a fourth session out of six, as investors remained cautious on indications the Federal Reserve was unlikely to launch more monetary stimulus until U.S. economic conditions weakened further.

METALS-Copper steady ahead of China GDP; Fed stimulus uncertainty weighs
SHANGHAI, July 12 (Reuters) - Copper edged down on Thursday, dropping for its fifth session in seven, as uncertainty that the U.S. Federal Reserve would launch more stimulus measures soured market sentiment, with prices in tight ranges on caution before China's GDP data.
The figures, which will be released on Friday, are expected to be the weakest since the three months to March 2009, during the global financial crisis, but may strengthen the chance of Beijing further easing its monetary policy.
 
PRECIOUS-Gold slips on uncertain Fed stimulus outlook
SINGAPORE, July 12 (Reuters) - Gold edged lower on Thursday, dropping for a fourth session out of six, as investors remained cautious on indications the Federal Reserve was unlikely to launch more monetary stimulus until U.S. economic conditions weakened further.
Gold's fortunes this year have largely depended on the Fed's attitude towards monetary easing and its related impact on the dollar. The greenback and bullion typically move in opposite directions and lately the dollar has trumped gold as the preferred safe-haven bet.

20120712 1219 Soy Oil & Palm Oil Related News by Reuters. (India June Vegetable Imports Survey)

PREVIEW: India's June refined palm oil imports seen down - Reuters
11-Jul-2012 23:56 By Ratnajyoti Dutta
NEW DELHI, July 11 (Reuters) - India's refined palm oil imports fell in June as the world's biggest vegetable oil importer looked likely to raise taxes to cut cheap supplies from Indonesia, traders surveyed by Reuters said. India's refined vegetable oil imports have been rising since October 2011 when Indonesia, the world's No. 1 palm oil producer, tweaked its export duties to make refined oils more attractive than crude palm oil to promote its own refineries. Traders' forecasts for refined palm oil imports in June ranged between 110,000 and 150,000 tonnes, with the average at 128,333 tonnes, down 22.4 percent from May. Stung by Indonesia's move, many Indian refiners have been requesting the government to take steps to protect local refineries, with some units facing closure. On Thursday, ministers are likely to review the demand of domestic processors to make refined palm oil imports costlier by raising taxes.
Expectations of a possible increase in import taxes in June led to lower purchases of refined palm oils. In May, imports rose in the run up to the Muslim holy month of Ramadan when fasting in the day is followed by an elaborate feast at night. In the first seven months of the current year from November, India's refined palm oil imports almost doubled to 1.1 million tonnes from the year-ago period, stoking fears of falling margins for domestic refineries. Traders said refined palm oil imports were likely to stay over last year's average of 90,000-100,000 tonnes per month if the government did not introduce protective measures. Imported palm oils were about $40-50 per tonne more expensive in June than in the previous month due to worries over supplies of soyoil when dry weather conditions hit the soybean crop in the United States. Imported refined palm oil was quoted at around $1,050 per tonne on a cost and freight basis on India's west coast, while imported crude palm oil was quoted at $990 per tonne.
Higher prices cut total palm oil imports by 15.5 percent last month to 583,125 tonnes, according to the average of a survey of eight traders. On Wednesday, benchmark September palm oil futures FCPOc3 on the Bursa Malaysia slipped 1.5 percent to close at 3,082 ringgit ($970) per tonne. The Solvent Extractors' Association of India, a leading trade body, is scheduled to release June import figures later this week. India, the world's leading vegetable oil importer, mainly buys palm oils from Indonesia and Malaysia, and small quantities of soyoil from Argentina and Brazil. About half of India's 15-16 million tonnes of annual demand is met through imports. Traders said imports of soyoil rose in June due to the arrival of some delayed vessels from South America, while sunflower fell, reflecting lower demand for fried food stuffs during the summer.
Soyoil imports in June are seen more than doubling from May to 151,875 tonnes, while the monthly sunflower oil imports were down by about a quarter to 94,375 tonnes in June, the survey showed. Lower domestic demand and higher imports in April and May pushed up June stocks at Indian ports by 21.5 percent to 708,750 tonnes, it showed. Total June vegetable oil imports, including small amounts of non-edible oils, are likely to have fallen by 4.7 percent to 854,375 tonnes from May. "Imports will be around 800,000-850,000 tonnes in July," said Sadeep Bajoria, chief executive of Mumbai-based Sunvin Group. About 80 percent of India's total cooking oil imports are palm oils, while the rest are soft oils.

20120712 1119 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares capped as Fed offers no stimulus clue
TOKYO, July 12 (Reuters) - Asian shares barely budged as the U.S. Federal Reserve appeared to put off taking more aggressive stimulus steps until economic conditions worsen, offering investors few reasons to take risks with second-quarter earnings painting a globally gloomy picture.
"Investors will be disappointed by the prospects that there may likely be no decisive, growth-stimulating measures on the near horizon while worries of a slowing economy continue to nag," said Park Suk-hyun, an analyst at KTB Securities.

COMMODITIES-Oil jumps as stockpiles drop; corn, soy down
NEW YORK, July 11 (Reuters) - Crude oil closed up more than 2 percent on Wednesday to recover the previous session's losses after data showed a decline in U.S. crude stockpiles last week, while metals, sugar and coffee also posted gains.
"The Fed policymakers still don't know what to do and are waiting for more information. If the economy deteriorates, then they will act," said Jason Schenker at Prestige Economics in Austin, Texas.

US crude stocks fall modestly, products mixed-API
NEW YORK, July 10 (Reuters) - U.S. crude inventories fell less than analysts had expected last week, and oil product inventories were mixed as gasoline stocks rose and distillates fell, according data from the American Petroleum Institute showed on Tuesday.
Crude inventories fell by 695,000 barrels in the week to July 6, compared with a forecast for a 1.2 million barrel decline in a Reuters poll of analysts.

OIL-Oil up 2 pct, Brent paces on tight North Sea outlook  
NEW YORK, July 11 (Reuters) - Crude oil futures surged on Wednesday, ending more than 2 percent higher after a volatile session despite a mixed message from the U.S. Federal Reserve that it may opt for more easing policies, but only if the economy weakens further.
"Today's FOMC meeting (minutes) weighed heaviliy on equities and the euro but was largely shrugged off by the energy complex," said Jim Ritterbusch, president of the Ritterbusch & Associates consultancy in Galena, Illinois.

NATURAL GAS- US natgas futures up 2 pct ahead of Thursday's EIA data
NEW YORK, July 11 (Reuters) - U.S. natural gas futures closed higher on Wednesday, lifted by technical buying ahead of Thursday's weekly inventory report and by forecasts for warmer weather later this week and next week that should increase air conditioning use.
"It's been a very choppy market, but I think we're going to test higher levels. The storage surplus, while still big, should continue to shrink with more hot weather ahead," a New England-based broker said, noting expectations that government data on Thursday will show another below average storage build.

EURO COAL-S.African prices slide as more offers seen
LONDON, July 11 (Reuters) - South African physical prompt coal prices fell sharply for the fourth day running as more sellers emerged and buyers withdrew, waiting for lower numbers.
"There were far more buyers a few weeks ago but for August cargoes in particular, it seems to be almost all sellers," one trader said.

20120712 1054 Malaysia Corporate Related News.

Maxis has held preliminary discussions to sell its Indian unit, Aircel, with bankers representing Russia's Sistema as it 'listens to offers' because of regulatory uncertainty and the probe against its founder T Ananda Krishnan and other top officials for alleged involvement in a telecom scandal in India. "Maxis sees itself as a long-term player in India, but will listen to offers, in the wake of regulatory and policy uncertainty. Bankers have brought many potential permutations and combinations for mergers and strategic alliances, including that of Sistema, to the company. The Malaysian company has held a few rounds of discussions with bankers representing Sistema but the discussions could be considered serious only if they reach a stage where the potential suitor begins a due diligence of Aircel's accounts," said an executive close to Maxis with direct knowledge of the discussions. The executive said Maxis was also upset with the way the investigating agencies had dragged Krishnan and other top officials into the probe surrounding the circumstances under which the Malaysian company acquired Aircel from serial entrepreneur C Sivasankaran. The Central Bureau of Investigation is probing Sivasankaran's charge that he was pressurised to sell Aircel to Maxis by former telecom minister Dayanadhi Maran and that the Malaysian company's subsidiary made a quid pro quo investment of Rs 550 crore (RM315m) in a DTH company owned by the Maran family in return for the ex-minister's role in the Aircel transaction. Maran and Maxis have vehemently denied all wrongdoing. (Economic India Times)

The Sime Darby Property Lifestyle Collection recorded a total gross sales value of close to RM800m since its launch in early April. This came on the back of a strong take-up of the wide ranging residential and commercial properties located in Sime Darby Property's 10 known townships in the Klang Valley and Nilai, Negeri Sembilan. The campaign saw an impressive 80% take-up within 2.5 month period, with some launches realising a 100% take-up rate. (Bernama)

Mudajaya Group Bhd and Gadang Holdings Bhd have received a letter of acceptance from Mass Rapid Transit Corp Sdn Bhd for jobs worth over RM800m each. Mudajaya said that the project was for the construction and completion of a viaduct guideway and other related works from the Dataran Sunway Station to Section 17 in Petaling Jaya. The company said that the works project is valued at over RM816.2m and works are expected to be physically completed by Feb-2016. In the meantime, Gadang Holdings would be involved in the construction of the same kind of viaduct guideway and other associated works from Kota Damansara Station to the Dataran Sunway Station. The job is valued at over RM863.3m. (BT)

The Penang government is seeking as much as 20% of the net reclaimed land from Eastern & Oriental Bhd (E&O), which holds the concession to reclaim up to 980 acres (396.5 ha) at the seafront Tanjung Tokong strip. Penang Chief Minister Lim Guan Eng said the state government has been in negotiations with E&O to obtain the additional land to settle the property developer's obligation to install traffic dispersal infrastructure. "Earlier, they were supposed to give us about 5% to 10% of the land but we negotiated and now we are getting 20%," said Lim. (Financial Daily)

Ahmad Zaki Resources Bhd's (AZRB) unit has secured a syndicated Islamic term financing-i facility of RM458.3m from three local banks to finance the development of a teaching hospital in Kuantan.AZRB said on Wednesday its unit Peninsular Medical Sdn Bhd had executed the financing agreements with CIMB Investment Bank Bhd, Bank Kerjasama Rakyat Malaysia Bhd and Bank Muamalat Malaysia Bhd. (Starbiz)

Khazanah Nasional Bhd and Temasek Holdings have kicked off their property alliance in the island republic with a S$7bn (RM17.6bn) central business district project. The Marina One development in Marina South is one of two big projects on six plots of land in Singapore to be undertaken under a joint venture called M+S Pte Ltd. The other project is at Ophir-Orchor. The joint venture stems from a land swap deal that Singapore and Malaysia agreed on in 2010 that included the development of the six parcels of land in Singapore. In return, Singapore gained six plots of Malayan Railway land - three in Bukit Timah and one each in Tanjong Pagar, Kranji and Woodlands. Khazanah has a 60% stake in M+S, while the rest is owned by Temasek. M+S' seven-member board is made up of representatives from Khazanah, Temasek and the private sector. At the ground-breaking ceremony yesterday, it was revealed that 60% of Marina One will be for office space, 35% residential, while the rest is for retail. The entire development will have a gross floor area of 341, 000sqm or 3.67m sf, and be completed in 2017. (BT)

The Naza Group of Companies, developer of the RM15bn KL Metropolis project in Kuala Lumpur, is bidding for more joint-venture developments with Syarikat Prasarana Negara. Yesterday, the group's flagship property development arm, Naza TTDI Sdn Bhd, inked its first joint-venture agreement with Prasarana, to build a 26-storey condominium tower on a 0.4ha site in Taman Tun Dr Ismail. The land cost for the project is around RM12m and it is expected to generate a gross development value (GDV) of RM153m. (BT)

Port Klang Authority (PKA) and Lagenda Erajuta Sdn Bhd formed a joint venture to give Klang a new landmark by developing a RM500m 1Gateway project in the royal town. Chairman Datuk Dr Teh Kim Poo said the project will be on a piece of 6.47ha of land in Taman Datuk Abdul Hamid along Persiaran Raja Muda Musa. It is expected that the project will be completed within five years. The commercial project will consist of two internationally branded hotels, office towers, Cineplex and shopping mall, he said. Official consent was received from the Public Private Partnership Unit of the Prime Minister Department. The landowner of the project is PKA. Teh said as part of the joint venture agreement, Lagenda Erajuta have to pay PKA a guaranteed minimum amount of RM45m for the cost of the land which belongs to PKA. (BT)

In a move to expand its apparel business, Hing Yiap Group Bhd plans to buy six companies, including baby clothes-maker Anakku Sdn Bhd and lingerie-maker Audrey Sdn Bhd, for RM245m. Hing Yiap, which manages brands such as Antioni, Bontton and B.U.M Equipment, will be buying the companies from Asia Brands Corp Bhd (ABCB). The deal will involve RM179.3m cash and 30.1m new Hing Yiap shares issued at RM2.18/share. The cash portion will come from bank borrowings and internal funds. The other companies it is buying are Mickey Junior Sdn Bhd, Asia Brands Global Sdn Bhd, Asia Brands Assets Management Sdn Bhd and Asia Brands HR Services Sdn Bhd. The six companies made a collective net profit of RM28.7m in the FY-Mar 2011. (BT)

Esso Malaysia has proposed to change its name to Petron Malaysia Refining & Marketing. (BMSB)

American International Group (AIG) will invest RM906m to expand its Malaysian operations to provide support services for its businesses worldwide. The operations will include those of AIG Global Services Sdn Bhd (AIGGS), an information infrastructure service provider; and Chartis Technology and Operations Management, a shared service centre for insurance and financial services and operations management. Chartis, a global property-casualty insurer, is a division of AIG. AIG's commitment to Malaysia is one of the 21 new projects worth RM20.4bn under the Economic Transformation Programme (ETP) unveiled by Prime Minister Datuk Seri Najib Razak in May this year. (BT)

CB Industrial Products Holdings Bhd's wholly-owned subsidiary Modipalm Engineering Sdn Bhd has been awarded a contract for the design, supply, installation and commissioning works of a continuous sterilisation palm oil mill with a 45-tonne per house capacity. CB Industrial said the contract was awarded by Indonesia-based PT Astra Agro Lestari TBK's subsidiary. (Bernama)

Timber producer Jaya Tiasa Holdings Bhd plans to raise RM332m from a proposed share placement exercise, of which RM226m will be used to build palm oil mills. About RM100m would be used to repay its borrowings and the remaining RM6.3m would be used for estimated expenses for the placement and bonus issue. (StarBiz)

Silver Bird Group Bhd has received a notice of demand from OSK Trustees Bhd, the trustee for the holders of the underwritten medium-term notes facility of up to RM30m, demanding for the payment of RM15m. This is together with interest thereon at the default rate of 1% per annum above the prevailing base lending rate quoted by Malayan Banking Bhd from April 6 until settlement in full. In a filing with the stock exchange, the bread and confectionary maker’s board said this would not have any financial or operational impact as such claims were envisaged to be restructured pursuant to the regularisation plan being formulated. (Starbiz)

Seeking more land from E&O
The Penang government is seeking as much as 20% of the net reclaimed land from E&O, which holds the concession to reclaim up to 980 acres at the seafront Tanjung Tokong strip. The state government has been in negotiations with E&O to obtain the additional land to settle the property developer’s obligation to install traffic dispersal infrastructure. E&O were supposed to provide 5%-10% of the land, but the state government will now obtain 20%, according to Penang Chief Minister Lim Guan Eng. (Financial Daily)

Prasarana aims non-fare revenue of 20%-30%
Prasarana aims to increase its non-fare revenue to 20%-30% in five years. The segment currently contributes about 7%, translating into RM30m of revenue. The company said that venturing into the property development business would open new and constant non-fare revenue income. Prasarana has identified other areas with development potential, including its landbank in Ara Damansara, Brickfields, Dang Wangi, Putra Heights and Taman Melawati. (Malaysian Reserve)

Puncak Semangat eyes Fibrecomm stake
Puncak Semangat SB, a company linked to Tan Sri Syed Mohktar Al-Bukhary, has made overtures to Tenaga Nasional for its 49% stake in wholesale broadband service provider Fibrecomm Network SB, according to industry executives. The remaining 51% in Fibrecomm is owned by Telekom Malaysia. (Financial Daily)


AirAsia: JV with Expedia takes off with strong regional presence
AirAsiaExpedia Inc, the JV firm between low-cost airline, AirAsia, and online travel company, Expedia Inc, has taken off to a flying start since its launch in July last year. A first of its kind partnership between a low-cost carrier and an online travel agent, the  JV has served to strengthen both brands and extend the breadth and depth of their offerings to an expanded audience of travel shoppers across Asia. Over the past year, AirAsiaExpedia has launched two localised Expedia sites in Singapore and Thailand which offers travellers a selection of over 400 airlines, 150,000 hotels and build-your-own dynamic holiday packages. Underpinned by the monumental growth of tourism in Asia, AirAsiaExpedia plans to launch full-service Expedia sites in Asia over the next nine months, reinforcing its commitment and investment in this region. (Financial Daily)

Malaysia Building Society: Aims to open 10 branches this year
Malaysia Building Society (MBSB) targets to open at least 10 branches in line with the company’s business expansion. MBSB senior vice-president of retail business Azman Aziz said some branches will open soon in Kelana Jaya, Putrajaya as well as in Sabah and Sarawak. (Financial Daily)

KSK Group: To grow insurance business in Indonesia and Thailand
KSK Group plans to boost its insurance business in Indonesia and Thailand via organic and inorganic growth strategies and aims to reach the top 10 within the next 5 years. Its COO Joanne Kua said KSK, formerly known as Kurnia Asia, will focus on growing its general insurance business via PT Kurnia Insurance Indonesia (KII) and Kurnia Insurance (Thailand) Co Ltd (KIT). (Financial Daily)

UOA REIT: Raises RM1.3m from sale of property
UOA Asset Management Sdn Bhd, the manager of UOA Real Estate Investment Trust (UOA REIT), said the REIT trustee yesterday entered into a sale and purchase agreement for the sale of an office suite that raises RM1.33m net proceeds for the REIT to pare borrowings. The disposal of the 1,464 sq ft office suite at Level 7 of Menara UOA II for RM1.41m to Sipo Holdings Sdn Bhd would result in an estimated net capital gain of RM611,782 based on its net book value of RM727,539 as at end-2011. (Financial Daily)

SAAG Consolidated: Buys unit with Mara concession for RM110m
SAAG Consolidated is buying a private company poised to get a 25-year concession managing 5 Junior Mara Colleges for 110m via issue of new shares. SAAG said it plans to buy out beta Asset Sdn Bhd from Norhisham Mohamad Noor and Muhamad Nazrul Akmam Norhisham. The purchase consideration of RM110m  – to be satisfied via 916.67m new SAAG shares issued at 12 sen a pieace – is based on discounted cash flow analysis of the projects and is still subject to new valuation reports to be done within 30 days. (Financial Daily)

Banking: India International Bank targets 5 branches in Malaysia
India International Bank Malaysia (IIBMB) is targeting to set up five branches in the first year of operations. The locally incorporated IIBMB is a JV between 3 Indian government-owned banks: the Bank of Baroda with a 40% stake, Indian Overseas Bank 35% and Andhra Bank 25%. The full-fledged commercial bank opened its first branch in Jalan Raja Chulan in downtown KL yesterday. IIBMB director M. Narendra said that in the next 3 years, they plan to have a minimum 10 (branches) and their medium-term plan is for 25 branches in another 5 years. He added that the bank aimed to have a presence not just in the capital but also in major urban areas where there was a sizeable number of Indians. Narendra said the bank had an internal target of RM550m in total loans and deposits in the first year of operations while in the next 3 years, this figure was expected to grow to RM2.5bn. (StarBiz)

20120712 1054 Local & Global Economy Related News.

Industrial production index (IPI) rose 7.6% yoy in May (+3.2% in Apr), beating economists’ estimate of 4.8%. The uptrend in May was due to the rise in the manufacturing (6.5%), mining (11.5%) and electricity (6.6%) indices. On a monthly basis, the IPI was up by 3.5% (-5.2% in Apr). In Jan-May, IPI increased 4.1% yoy. (Bernama, BT)

The manufacturing sales rose 10% yoy to RM52.5bn in May (+5.3% to RM52.4bn in Apr). On a month-on-month basis, the sales value also increased by 0.2% (-5.2% in Apr). In Jan-May, the sales increased 7% to register RM258.5bn. Total employees engaged in the manufacturing sector rose 0.3% yoy to 1.025m persons in May (+0.7% to 1.027m persons in Apr). Salaries & wages paid in May increased 10.7% yoy to RM2.54bn (+10.3% to RM2.57bn in Apr). Average salaries & wages per employee up 10.3% yoy to RM2,475 (+9.5% to RM2,501 in Apr). Productivity rose 9.7% yoy (+4.6% in Apr). (Department of Statistics)

The Nielsen Global Survey of Investment Attitudes has revealed that Malaysians are among the worst credit card repayers in the Asia-Pacific region. According to the survey, Malaysia has one of the lowest repayment rates among the developing markets that were surveyed. About 15% repay more than the minimum requirement while 18% of Malaysians repay only the minimum amount required. In contrast, the highest repayment rate was in Taiwan, where 89% of respondents service their credit card bills in full followed by Japan (87%), South Korea (85%), Singapore (80%) and Indonesia (59%). Only Vietnam came off worse than Malaysia at 27%. Malaysians are generally one of the top ten savers in the world, but 45% of the online respondents also have various loans and insurance payments. The survey also showed almost two out of five Malaysian consumers are investing their money via various channels. According of those investing, two-thirds (67%) prefer mutual fund/unit trust, about half (49%) prefer stocks, 27% invest in gold, silver and other precious metals, one-fourth in structured investment products, 15% in foreign currencies, 10% in bonds and 8% in derivatives. (The Star)

Malaysia is set to become an ageing nation by the year 2030 and it would pose a challenge to the government, said Deputy Minister of Women, Family, and Community Development Datuk Heng Seai Kie. This was due to 15% of the country’s population turning 60 and above in the next 18 years, she said. She compared Malaysia to Europe, saying it would take the nation only 26 years to reach such a status instead of a hundred-year span it took in the continent. (Malaysian Insider)

Employers were optimistic about employment prospects in 2Q12 in Malaysia, with 10 top specialisations in current demand for employment, according to JobStreet.com. In a Job Outlook Report released by JobStreet.com, the Job Outlook Index registered 58 pts in 2Q12, which was a 3 pts rise from 55 pts in the preceding quarter. A higher index means that the industries are creating job positions ad employment and vice versa. On the hiring trend for the next 12 months, the report showed that 52% of employers were hoping to either expand or maintain their hiring rate, whilst 40% said they will be hiring less and will only be replacing employees or fill in crucial positions in the next 12 months. A handful of respondents (8%) will not be hiring anytime in the near future. (Financial Daily)

Indonesia's broad money supply (M2) in May rose 20.9% yoy, compared to 20.2% growth in Apr. (Reuters)

Bank Indonesia said the 28% yoy growth in bank credits in the first half of the year would not cause economic overheating, despite exceeding the target of 24% set in the Bank Business Plans. (Antara News)

The Obama administration cleared American companies to invest in Myanmar, a delayed but important step toward openness. (AWSJ)

China has given foreign hedge funds permission to tap its wealthy citizens inside the country for funds to invest overseas, according to people in the industry. (FT)

China: Investment now key to stabilizing growth, says Wen
China’s Premier Wen Jiabao said promoting investment growth is the key now to stabilizing the nation’s economic expansion, signaling officials may boost spending to counter a slowdown that probably extended into a sixth quarter. “Growth-stabilizing policies include boosting consumption and diversifying exports, but currently, what is important is to promote a reasonable growth in investment,” Wen said. (Bloomberg)

Japan’s Tertiary Industry Index improved 0.7% mom in May (-0.2% in Apr), outperforming market expectations of a 0.2% increase. (Bloomberg)

Japan’s domestic corporate goods price index for Jun decreased 0.6% mom in Jun (-0.5% in May) and 1.3% yoy (-0.7% in May). (Bloomberg)

Japan’s machine tool orders contracted 15.5% yoy in Jun following a 3% decline in May. (Bloomberg)

South Korea and Indonesia will hold their first round of talks this week on forging a free trade pact. (AFP)

Total motor-vehicle sales in China, which include passenger and commercial vehicles, rose 2.9% from last year's first half to 9.6m vehicles. Passenger-vehicles sales rose 7.1% to 7.61m vehicles. Auto sales rose 9% to 1.58m cars in Jun. (AP, WSJ)

The Philippines’ money supply M2 gained 7.9% yoy in May, compared to 9.1% growth in Apr. Credit growth slowed to 13.6% in May (16% in Apr). (Bloomberg)

The Bangko Sentral ng Pilipinas will further relax the single borrower’s limit (SBL) by exempting securities being underwritten by banks from the computation of their exposure to a client. Under the SBL, bank’s exposure to a single client must not exceed 25% of the bank’s net worth. (Philippine Daily Inquirer)

Spain announced new austerity measures that should help Madrid cut its budget deficit by €65bn (US$80bn) through to 2015, and warned the euro-zone's fourth-largest economy may not grow at all next year. (WSJ)

Food prices are expected to climb in the next decade as higher oil prices lift the cost of production as well as demand for biofuels, according to the OECD and the United Nations’ Food & Agriculture Organization. (Bloomberg)

US Federal Reserve officials sent new signals they are seriously considering more actions to bolster the economic recovery but disappointed many investors by not indicating they are committed to taking action, according to minutes of the central bank's 19-20 Jun meeting. (WSJ)

The US trade deficit narrowed 3.8% mom to US$48.7bn in May (US$50.6bn in Apr) as exports climbed 0.2% (-0.9% in Apr), and imports fell 0.7% (-1.6% in Apr). (AFP, Reuters)

Total US wholesale inventories increased 0.3% mom to US$484.1bn in May (0.5% in Apr), matching the median forecast in a Reuters poll of economists. (Reuters)

The Mortgage Bankers Association’s seasonally adjusted index of mortgage application activity fell 2.1% in the week ended 6 Jul. The index of refinancing applications fell 3.4%, but the gauge of loan requests for home purchases rose 3.3%. (Reuters)

20120712 1048 Global Market Related News.

Asia FX (Source: CME/www.lucafxta.com)
The appetite for risk soured again late on Wednesday after the Fed minutes provided no hint that a third round of quantitative easing while the economy expanded at a moderate pace amid an increasingly sluggish labor market. More broadly, no improvement can be envisioned in the gloomy state of the global markets. The European currencies resumed losses, the yen reversed gains and commodity currencies closed only a little higher after falling on Friday and Tuesday. The US stock indexes fell. The gold/oil ratio also fell. The short-term outlook for the foreign currencies is sideways. 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!
Overnight
US: The trade deficit shrank 3.8% to $48.7 billion in May from April's trade deficit at $50.6 billion.
US: The economy continues to expand at a moderate pace despite an increasingly sluggish labor market, minutes of the central bank's June meeting said Wednesday. But the Fed gave no hint that a third round of quantitative easing is imminent.
Canada: The trade deficit widened to C$793 million in May from C$623 million in April.

Today's economic calendar
Australia: Consumer inflation expectation in July
Australia: Unemployment rate in June
Japan: The BoJ will leave interest rate at 0.1%

Asian Stocks Fall Sixth Day ahead of China Growth Report (Source: Bloomberg)
Asian stocks fell for a sixth day, extending the regional benchmark’s longest losing streak since May, before a Bank of Japan policy decision today and economic reports from China and Europe that may signal a deeper slowdown in the global economy. Asahi Glass Co. (5201) led makers of the material lower in Tokyo after cutting its forecast for operating profit by almost a third. Shionogi & Co. climbed 4.1 percent after saying its experimental HIV drug beat an existing treatment in trials. Kingway Brewery Holdings Ltd. may be active in Hong Kong after saying it expects a loss. The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 116.31 as of 10:13 a.m. in Tokyo, with about the three stocks falling for every two that rose. Shares fell before the open of markets in Hong Kong and China.
“Investors will sit on the fence until results of the BOJ meeting come out,” said Mitsushige Akino, Tokyo-based executive officer at Ichiyoshi Investment Management Co., which oversees about 40 billion yen ($502 million). “Few expect the BOJ to do more easing this time.” Japan’s Nikkei 225 Stock Average declined 0.3 percent, with volume 15 percent below its 30-day average. Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi Index rose 0.1 percent after its central bank unexpectedly cut its key interest rate.

Japan Stocks Fall Sixth Day Before BOJ Policy Decision (Source: Bloomberg)
July 12 (Bloomberg) -- Japanese stocks fell for a sixth day on speculation the Bank of Japan will refrain from boosting stimulus measures at the end of its two-day policy meeting today. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, fell 1 percent. Asahi Glass Co. dropped 6.8 percent after cutting its operating profit forecast. Best Denki Co. surged 11 percent on a report Yamada Denki Co. will acquire the electronics retailer. The Nikkei 225 Stock Average (NKY) fell 0.4 percent to 8,817.96 as of 10:21 a.m. in Tokyo, with three stocks dropping for each that rose. Trading volume on the Nikkei was 13 percent below the 30-day average. The broader Topix Index lost 0.5 percent to 753.89.
“When you look at domestic economic conditions, you see few reasons to expect a move out of the BOJ,” said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Yet there are still lingering expectations for more easing this time. The market hasn’t reached its consensus, and that’s why people are wavering.” The Topix rebounded about 8.5 percent since June 4, when it closed at its lowest since 1983, after euro leaders agreed to ease bailouts for lenders and on optimism central banks around the world will ease policy.

S&P 500 Erases Loss as Investors Look for Stimulus Signs (Source: Bloomberg)
The Standard & Poor’s 500 Index erased losses in the final hour of trading as investors weighed the Federal Reserve’s latest policy minutes for evidence that the central bank may be closer to additional stimulus actions. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) added more than 1 percent as financial companies rallied. Exxon Mobil Corp. rose 1.5 percent as oil rebounded from the lowest close in more than a week. DuPont Co. and Google Inc. (GOOG) fell at least 1.1 percent after analysts said the companies may miss estimates. Best Buy Co. sank 8.4 percent after electronics retailer Hhgregg (HGG) Inc. cut its forecasts.
The S&P 500 fell less than 0.1 percent to 1,341.45 at 4 p.m. New York time, after sinking as much as 0.6 percent earlier. The benchmark gauge has retreated 2.4 percent over five days amid concern about corporate profits. The Dow Jones Industrial Average lost 48.59 points, or 0.4 percent, to 12,604.53. Volume for exchange-listed stocks in the U.S. was 6 billion shares, 9.5 percent below the three-month average. “You didn’t see any kind of commitment one way or another from the Fed in the minutes from last time,” Robert Pavlik, who helps manage $1.4 billion as chief market strategist at Banyan Partners LLC in New York, said in a phone interview. “You have to be taking a cautious approach to this market here, especially heading into the earnings season. I’m optimistic, but I’m not fully committed to the possibility of a terrific earnings season.”

Most European Stocks Decline Before Fed Minutes Released (Source: Bloomberg)
Most European stocks fell before the release of minutes from the latest Federal Reserve meeting, as investors waited for clues about further measures to spur economic growth. Burberry Group Plc (BRBY) tumbled to its lowest this year after quarterly sales growth missed projections. UniCredit SpA and BNP Paribas SA led bank shares higher. Getinge AB (GETIB) rose 3.9 percent after saying it expects “significant improvement” in second- half earnings growth. The Stoxx Europe 600 Index dropped less than 0.1 percent to 255.59 at the close of trading. Two out of three shares on the gauge slid. The benchmark measure yesterday rose for the first time in a week as manufacturing in the U.K. and Italy unexpectedly rose. The Fed will release the minutes of the June meeting at 2 p.m. in Washington. The Federal Open Market Committee said on June 20 it will expand its Operation Twist program to extend the maturities of assets on its balance sheet.
“All eyes are now on the FOMC minutes, in the hope that the Fed is ready to take further steps to prop up the U.S. economy,” said Stephane Ekolo, chief European (SXXP) strategist at Market Securities in London. “There is no clear direction in the market and the main catalyst is definitely the FOMC minutes.”

Emerging Stocks Fall to Two-Week Low on Fed Minutes, Earnings (Source: Bloomberg)
Emerging-market stocks fell, dragging the benchmark index to a two-week low, as Federal Reserve meeting minutes disappointed investors looking for a stronger signal of stimulus to fight the global slowdown. The MSCI Emerging Markets Index (MXEF) dropped 0.2 percent to 932.38 in New York, retreating for a sixth straight day, the longest losing streak since May 18. Russia’s Micex Index (INDEXCF) slumped 1.2 percent after UBS AG put VTB Group on its list of least- preferred stocks. Embraer SA, a Brazilian aircraft maker, sank 7.3 percent to push the Bovespa lower after saying its backlog of orders declined in the second quarter.
Technology companies sank the most among industry groups in the developing-nations gauge after Applied Materials Inc. (AMAT), the U.S. chipmaking-equipment provider, said sales won’t reach the previous outlook as demand in Europe and China ebbs. Federal Reserve minutes from a June meeting today showed comments of members that strains in global markets stemming from Europe’s debt crisis had increased since their April meeting. More action may be necessary to boost the labor market and meeting its inflation target, a few members said. “Talks that indicate more easing and stimulus is not enough to satisfy the markets today the possibility of easing has already been anticipated,” Dave Lutz, head of exchange- traded fund trading and strategy at Stifel Nicolaus & Co., said by phone from Baltimore yesterday. “We’ll probably see a sharp sell-off and get back to our lows until there is more action.”

SEC Votes to Require Consolidated Audit Trail for Markets (Source: Bloomberg)
The U.S. Securities and Exchange Commission adopted a rule today that would build a single system to monitor and analyze trading activity across U.S. equity and options markets. In a 3-2 vote, the SEC’s members agreed to require securities exchanges and the Financial Industry Regulatory Authority to create a so-called consolidated audit trail that will enable the reconstruction of market crises and analyze trading on 13 equity exchanges, 10 options markets and more than 200 broker-dealers that execute stock trades away from public venues. The effort is part of the agency’s response to the May 6, 2010, stock rout that temporarily erased $862 billion in U.S. equity value. “A consolidated audit trail that accurately tracks orders throughout their lifecycle and identifies the broker-dealers handling them will provide us with an unprecedented ability to effectively oversee the markets we regulate,” said SEC Chairman Mary Schapiro.
The SEC has already implemented circuit breakers to halt trading when a company’s shares move 10 percent in five minutes. Still, Schapiro has pressed for tools that would allow faster and broader oversight of trading activity. After the 2010 market disruption, it took a 20-person SEC team three months to collect and process quote and trade data that arrived in different formats from exchanges and brokers. Schapiro, a political independent appointed by President Barack Obama, had to rely on the support of Republican Commissioners Troy Paredes and Daniel Gallagher to adopt the rule. The two Democrats on the SEC, Elisse Walter and Luis Aguilar, opposed the measure, saying it doesn’t go far enough.

Treasury 30-Yield Is 10 Basis Points From Low Before Sale (Source: Bloomberg)
Treasury 30-year bond yields were 10 basis points from the least ever after minutes from the Federal Reserve’s last meeting showed some members favored increasing the central bank’s bond purchases to spur the economy. The government is scheduled to auction $13 billion of 30- year bonds today, after a 10-year sale yesterday drew an all- time low rate. Demand for the relative safety of U.S. debt is sending yields down as U.S. economic growth slows and European governments struggle to find ways to pay their debts. “There’s a possibility that yields will go lower,” said Yoshiyuki Suzuki, the head of fixed income in Tokyo at Fukoku Mutual Life Insurance Co., which has the equivalent of $69 billion in assets. “The central bank may continue purchases of bonds.” U.S. 30-year bonds yielded 2.61 percent as of 9:44 a.m. in Tokyo, according to Bloomberg Bond Trader data. The record low was 2.51 percent set June 1. The 3 percent security due in May 2042 changed hands at 108 1/8 today.
Ten-year notes yielded 1.51 percent, versus the all-time low of 1.44 percent. Japan’s 10-year rate was little changed at 0.79 percent after reaching a nine-year low of 0.785 percent yesterday.

FOREX-Vulnerable euro steady near 2-yr low vs dollar
LONDON, July 11 (Reuters) - The euro held near two-year lows versus the dollar as it emerged there would be no  quick resolution to a German court hearing on activating euro  zone bailout funds, adding to unease over how policymakers will  tackle the debt crisis.
"People will be aware the non-decision we have got (from the court) might be a severe problem if yields really pick up and  then euro/dollar will come under pressure," said Lutz Karpowitz, currency strategist at Commerzbank.

Yen Gains Before BOJ Decision, Europe and China Data (Source: Bloomberg)
The yen rose versus all of its major peers on bets the Bank of Japan (8301) will refrain from taking steps to stem the currency’s gains as it concludes a meeting today and as signs of a global slowdown boosted demand for haven assets. The yen was 0.4 percent from its highest level in a month against the euro before a report today that may show manufacturing output in the 17-nation region remained stagnant in May and ahead of figures tomorrow forecast to indicate a moderation in China’s gross domestic product and retail sales growth. South Korea’s central bank unexpectedly lowered its key rate. Australia’s dollar dropped after data showed employment fell in June, driving the jobless rate to a three-month high. “The BOJ has disappointed me on a number of occasions this year and I don’t feel all that optimistic that the BOJ would be able to meet and beat expectations” this time, said Robert Rennie, chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. “I expect the yen to outperform the euro.”
The yen rose 0.3 percent to 97.37 per euro as of 10:53 a.m. in Tokyo from yesterday, when it touched 97, the strongest level since June 4. Japan’s currency gained 0.1 percent to 79.65 per dollar. The greenback fetched $1.2233 per euro from $1.2239 yesterday, when it reached $1.2213, the highest since July 2010.

Some on FOMC Said More Stimulus Probably Will Be Needed (Source: Bloomberg)
A few Federal Reserve policy makers said the central bank will probably need to take more action to boost the labor market and meet its inflation target, according to minutes of their June meeting. “A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the Committee’s goal,” according to the record of the Federal Open Market Committee’s June 19-20 gathering released today in Washington. Stocks fell as the report disappointed investors looking for a stronger signal that additional stimulus was likely. Fed Chairman Ben S. Bernanke last month said policy makers were prepared to “take additional steps” to boost the economy following their decision to extend the Operation Twist program aimed at lowering long-term interest rates.
“The Fed is being cautious,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We are not at the threshold yet to justify additional securities purchases and a further increase in the balance sheet. We have to wait for a more of a slowdown before the Fed will act.”

Trade Gap in U.S. Narrowed in May as Imports Decreased (Source: Bloomberg)
The trade deficit in the U.S. narrowed in May as falling crude oil prices and weakening demand for consumer goods trimmed the import bill. The gap shrank 3.8 percent to $48.7 billion, in line with the median estimate of economists surveyed by Bloomberg News, from $50.6 billion in April, Commerce Department figures showed today in Washington. Purchases from abroad fell to the lowest level in three months, while exports climbed to the second- highest on record. Slowing global growth, which led central banks from Europe to China to cut interest rates and announce more stimulus a week ago, may signal American companies will have a harder time boosting overseas sales. At the same time, an increase in imports of business equipment indicates sustained investment in the U.S., and more inbound shipments of cars point to continued strength in the auto industry.
“The trade deficit will drift slightly lower because of the decline in the price of oil,” said Jay Bryson, senior global economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who was the only analyst to correctly project the trade outcome. “Exports are holding up, but as we go forward we are going to see pretty weak numbers given the slowdown abroad. Our economy has slowed as well.”

Wholesalers in U.S. Lift Stockpiles at Slower Pace as Sales Fall (Source: Bloomberg)
Inventories at U.S. wholesalers rose in May at a slower pace as sales dropped by the most in three years. The 0.3 percent gain in stockpiles followed a 0.5 percent increase in April that was smaller than previously estimated, the Commerce Department reported today in Washington. Sales decreased 0.8 percent, the biggest decline since March 2009. Businesses are lowering inventories in line with concern about the outlook for demand, indicating stockpiling will contribute less to gross domestic product. Wholesalers had goods on hand to last 1.18 months at the current sales pace, the most since July 2011. “Demand’s been unimpressive, though we’ve had some decent inventory growth in the last couple quarters, and I think it’s time for some slowing,” David Sloan, a senior economist at 4Cast Inc. in New York, said before the report. Third-quarter GDP growth is likely to suffer from the slackening demand, he said.
The median estimate in a Bloomberg survey of 29 economists called for a 0.3 percent gain. Forecasts ranged from a drop of 0.2 percent to an increase of 0.5 percent.

Industry Suppliers-Box Makers May Show Slow U.S. Growth (Source: Bloomberg)
Investors may see more signs of slowing U.S. manufacturing growth when makers of corrugated boxes and distributors of supplies report quarterly earnings this month. W.W. Grainger Inc. (GWW) and Packaging Corp. of America are among companies that offer “good insight into industrial America,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group, based in Bedford Hills, New York. Data from these businesses can be particularly useful in verifying or contradicting the pace of activity measured by the government and third-party groups, he said. “These types of companies are a great way of evaluating real demand in manufacturing,” Ghriskey said. The consensus reflects slowing expansion, with no signs of recession, as concerns intensify that the world’s largest economy may be faltering.
The business environment “continues to move sideways” for Memphis, Tennessee-based International Paper Co. (IP), the world’s largest pulp and paper maker, Tom Ryan, a spokesman for the company, said in a June 29 interview. Even so, an improving housing market has made demand for durables, such as appliances, a “bright spot,” he said.

San Bernardino Third California City to Choose Bankruptcy (Source: Bloomberg)
San Bernardino’s City Council voted to become the third California municipality this year to seek bankruptcy protection after officials learned they may not have enough cash to pay workers. The council last night voted 4 to 2, with one abstention, to authorize a filing under Chapter 9 of U.S. bankruptcy law. The city of 209,000, about 65 miles (105 kilometers) east of Los Angeles, is so broke it can’t cover its payroll, interim City Manager Andrea Travis-Miller said. San Bernardino would follow Stockton, a community of 292,000 east of San Francisco, which on June 28 became the biggest U.S. city to enter bankruptcy. Mammoth Lakes, a mountain resort of 8,200, sought court protection from creditors July 3 saying it can’t pay $43 million owed on a legal judgment, more than twice its general-fund spending for the year. Declining tax revenue, growing worker costs, accounting discrepancies and an unemployment rate in the metropolitan area of almost 12 percent helped propel San Bernardino toward court.

China Slowdown Seen Forcing Wen’s Hand on Property Curbs (Source: Bloomberg)
China’s weakest growth in three years may pressure Premier Wen Jiabao to further ease the government’s crackdown on a property industry that accounts for more than a quarter of final demand. Gross domestic product expanded 7.7 percent in the second quarter from a year earlier following an 8.1 percent increase in the first quarter, according to the median estimate of 38 economists surveyed by Bloomberg News before a report tomorrow. The slowdown may test Wen’s pledge to sustain controls aimed at cooling home prices as he seeks to buoy growth ahead of a once-in-a-decade leadership transition later this year. China’s efforts to prevent a property bubble limit its policy options as the European debt crisis curbs exports and contrast with the Federal Reserve’s attempts to jump-start the U.S. housing market amid a five-year slump.
“It will be extremely hard to stimulate a strong rebound in the economy without involving the property sector,” said Mark Williams, Asia economist at Capital Economics Ltd. in London. “They may have to look again at their property tools.” While China’s leaders probably want growth of around 8.5 percent for the world’s second-biggest economy, they may fail to exceed 8 percent without contributions from real estate, said Williams, who previously worked for the U.K. Treasury. “It would only take a shock from Europe for things to suddenly look a lot worse,” he said.

‘Good Neighbor’ China Pushes Asean for Joint Development in Seas (Source: Bloomberg)
China repeated a call for joint development of energy resources in waters claimed by Vietnam and the Philippines before a regional security meeting today that includes U.S. Secretary of State Hillary Clinton. Envoys from 26 Asia-Pacific nations and the European Union are meeting in Phnom Pehn, Cambodia, to discuss security concerns in the region. China warned nations this week to avoid mentioning the territorial spat, which Clinton called a “critical issue” two days ago in a visit to Vietnam. “Pending the settlement of the disputes, the parties concerned may put aside their differences and engage in joint development,” Zhang Jianmin, spokesman for the Chinese delegation to the meetings, told the official Xinhua News yesterday. “China will always be a good neighbor, good friend and good partner for other Asia-Pacific countries,” he said.
The Philippines and Vietnam reject China’s map of the waters as a basis for joint development and have sought a regional solution to increase their bargaining power with Asia’s biggest military spender. Clinton has urged the countries to define their territory based on the United Nations Law of the Sea, a move China has resisted because it may lead to a loss of some waters it now claims.

Rajoy Outlines Budget Cuts as Protests Hit Madrid (Source: Bloomberg)
Spanish Prime Minister Mariano Rajoy rolled back social-welfare protections and raised taxes to clinch emergency aid and pacify investors as anti-austerity protesters marched in the capital. Rajoy announced cuts in unemployment benefits and public wages, signaled reductions in pensions and raised sales taxes as part of a 65 billion-euro ($80 billion) package of deficit cuts, risking a deeper recession. As striking miners clamored for aid to keep their industry alive in a march along Madrid’s main boulevard, Rajoy trimmed union funding by 20 percent. Spain’s desperation for foreign capital to sustain public services and keep its banks afloat has ripped control of policy from the government, leaving officials to implement the diktats of markets and the European Union. Preventing a meltdown in the fourth-biggest euro economy is key for policy makers to limit risks to the 17-nation currency union.
“We have very little room to choose,” Rajoy told the national parliament in Madrid. “I pledged to cut taxes and now I’m raising them. But the circumstances have changed and I have to adapt to them.”

Rajoy Announces 65 Billion Euros of Cuts to Fight Crisis (Source: Bloomberg)
Spanish Prime Minister Mariano Rajoy announced tax increases and spending cuts totaling 65 billion euros ($80 billion), risking a deepening recession to keep the euro financial crisis at bay. Rajoy’s fourth austerity package in seven months will raise the sales levy to 21 percent from 18 percent; scrap a tax rebate for home buyers; scale back unemployment benefits and study pension cuts; consolidate local governments and eliminate the year-end bonus for public workers. The budget measures, covering the next two-and-a-half years, are about double those previously announced. The prime minister addressed Parliament in Madrid today as European officials put the finishing touches to a 100 billion- euro bailout for Spain’s banks. The amendments to the budget come less than two weeks after it went into effect and a day after the European Union loosened Spain’s deficit targets.
“I know that the measures I’ve announced aren’t agreeable,” Rajoy said in his 70-minute speech to lawmakers. “They aren’t agreeable but they are essential. We are in an extraordinarily serious situation.”

German Inflation Rate Dropped to Lowest in 17 Months (Source: Bloomberg)
Germany’s inflation rate dropped to the lowest level in 17 months in June as energy prices declined. Inflation, calculated using a harmonized European Union method, eased to 2 percent, the lowest since January last year, from 2.2 percent in May, the Federal Statistics Office in Wiesbaden said today, confirming a June 27 estimate. In the month, consumer prices fell 0.2 percent. Oil prices have dropped 22 percent since the end of February and are 10 percent lower than a year ago. The sovereign debt crisis is also damping economic growth across the 17-nation euro area, prompting the European Central Bank to last week cut its benchmark rate to a record low of 0.75 percent. German unemployment at a two-decade low and rising wages are helping Europe’s largest economy to weather the turmoil.
“The crisis and the drop in oil prices mean that any inflation threats have been banished in Germany,” said Alexander Koch, an economist at UniCredit Group in Munich. “At the same time, the strong labor market and rising wages mean that the inflation rate is unlikely to drop as much as in other euro-area countries.” ECB President Mario Draghi told lawmakers on July 9 that euro-area inflation will drop below the bank’s 2 percent limit in 2013 from 2.4 percent currently.

Portugal’s international creditors may soon have to ease terms of the country’s bailout to prevent the plan from derailing as the government faces setbacks in attaining its deficit goals. (Source: Bloomberg)
Prime Minister Pedro Passos Coelho’s struggle to meet deficit pledges were further hampered last week when about 2 billion euros ($2.5 billion) of planned cuts to pensions and civil servants’ holiday pay were ruled unconstitutional. With Portugal’s 10-year bond yield above 10 percent, returning to the markets next year may be untenable, requiring more international aid despite the premier’s insistence he won’t seek concessions. “Lisbon’s strategy is to continue to be the good student among bailed-out countries until it becomes clear that Brussels and Berlin must ease the rules of the game for it to succeed,” said Antonio Barroso, a London-based analyst at Eurasia group.
Portugal completed the fourth review of its 78 billion-euro bailout plan on June 4 and progress helped bring down the benchmark yield from a euro-era record of 18.3 percent on Jan. 31. Now a deepening recession and the court ruling are putting pressure on government finances, and raising doubts about the chances of the nation reducing its deficit to within the European Union’s limit of 3 percent of gross domestic product next year.

Colombia Rate Cut More Likely Than Rise, Central Banker Says (Source: Bloomberg)
The Colombian central bank’s next move is more likely to be an interest-rate cut than a rise, board member Cesar Vallejo said. The peso pared gains and interest rate swaps fell. “There’s more chance of a reduction than an increase,” Vallejo said in an interview in Bogota yesterday, citing turmoil in European markets and the weak global economy. “That doesn’t mean we’re going to cut rates at the next meeting.” The peso reversed earlier gains, falling 0.1 percent to 1,787.90 per dollar at 11:29 a.m. in Bogota. The yield on three- month interest-rate swaps fell 3 basis points, or 0.03 percentage point, to 4.97 percent. The yield has fallen 28 basis points since March 3, indicating traders expect an interest rate cut within the next three months.
Colombia held its benchmark interest rate at 5.25 percent for a fourth straight meeting last month, and at least one member of the central bank’s seven-person policy committee voted for a cut. Vallejo said Colombia’s economy is growing close to its long-run potential, meaning that any change in borrowing costs would be a form of “fine-tuning.”

China Rebound to Help Peru Reach Economic Targets, Velarde Says (Source: Bloomberg)
Peru may reach or exceed its economic growth targets for this year, bolstered by domestic demand and a rebound in China in the third quarter, the president of the Peruvian central bank said. Inflation in South America’s sixth-largest economy is no longer a problem, allowing the government to keep interest rates on hold for a while, Julio Velarde said in an interview in Shanghai today. “I believe we are going to grow close to 6 percent,” Velarde said. “I am optimistic the slowdown in China will be only in the second quarter and the third quarter it will recover and there won’t be a meltdown in Europe.” Peru’s economy expanded at the slowest pace in more than two years in April as weaker demand for metals and manufacturing exports offset a surge in construction. Growth will be 5.8 percent this year and 6.2 percent in 2013, which is close to potential, the central bank said in a June 15 report.
The price of copper, Peru’s top export, is down about 21 percent in the past year as the slowdown in China, the biggest consumer of industrial metals, crimps demand. Metal prices are poised to rebound, Velarde said.

20120712 1048 Global Commodities Related News.

Disaster Declared in 26 U.S. States as Drought Sears Midwest (Source: Bloomberg)
More than 1,000 counties in 26 states are being named natural-disaster areas, the biggest such declaration ever by the U.S. Department of Agriculture, as drought grips the Midwest. The declaration makes farmers and ranchers in 1,016 counties -- about a third of those in the entire country -- eligible for low-interest loans to help them weather the drought, wildfires and other disasters, Agriculture Secretary Tom Vilsack said today. The USDA is also changing procedures to allow disaster claims to be processed more quickly and reducing the penalty ranchers are assessed for allowing livestock to graze on land set aside for conservation. “Agriculture remains a bright spot in our nation’s economy,” Vilsack said. “We need to be cognizant of the fact that drought and weather conditions have severely impacted farmers around the country.” The declaration is effective as of tomorrow.
Moderate to extreme drought now covers about 53 percent of the Midwest, the country’s main growing region, fueling crop- price gains that are the biggest this year among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. The rallies are boosting costs for companies from McDonald’s Corp. (MCD) and Coca-Cola Co. (KO) to Archer Daniels Midland Co. (ADM) and Smithfield Foods Inc. (SFD)

U.S. From Midwest to Coast Faces Hot Weather Next Week (Source: Bloomberg)
The eastern U.S. from the Midwest to the Northeast may swelter next week as another round of temperatures in the 90s Fahrenheit (30s Celsius) raises energy use by as much as 30 percent and dries crops. Temperatures along the East Coast may be 5 degrees above normal while reaching 8 degrees higher in the Midwest, including Chicago, from July 16-20, according to Commodity Weather Group LLC in Bethesda, Maryland. “The heat indexes can get up into the 100s” because the higher temperatures will be accompanied by higher humidity, CWG President Matt Rogers said in a telephone interview. “It’s going to be a strong demand period, that’s for sure.” More than 6,000 high temperature records have been broken or tied in the U.S. since June 1, the start of summer for meteorologists, while natural gas futures advanced 13 percent from June 1 through yesterday amid increased demand for fuel to run air conditioners. Natural gas is used to produce about 32 percent of U.S. power.
From Chicago to New York, residents may need at least 30 percent more energy to cool down next week, said David Salmon, owner of Weather Derivatives in Belton, Missouri. Parts of upstate New York may use 80 percent more.

DTN Closing Grain Comments 07/11 14:48 : Grains Ride Roller-Coaster Wednesday (Source: CME)
After trading sharply higher tied to the bullish USDA reports, grain contracts proceeded to run out of buying interest and closed well off session highs following a volatile day. Pressure came from technical selling despite a long-term supply and demand outlook that continues to grow more bullish. Adding to the odd day, wheat was able to close higher with a late round of commercial buying interest.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures were highly volatile today, posting double-digit gains and losses during the session. Buyers returned late in the session to pull futures to a mid-range close. Chicago wheat closed mostly 2 to 5 cents higher; Kansas City ended around 7 to 9 cents higher; and Minneapolis wheat closed narrowly mixed. Futures followed corn early in the session, but traders shifted their attention to report data into the close, helping the market to a more favorable finish than the other feed grain amid spread unwinding.

Wheat Market Recap Report September (Source: CME)
Wheat finished up 6 1/4 at 827 1/2, 21 off the high and 24 1/4 up from the low. December Wheat closed up 3 3/4 at 839. This was 22 3/4 up from the low and 21 1/2 off the high. Chicago wheat traded lower midday but rallied into the close on short covering and continued concern over Black Sea production. The report this morning was considered bullish for the wheat market. All wheat production was pegged at 2.224 billion bushels which is 23 million below expectations and compares with 2.234 billion last month. The USDA pegged spring wheat production at 435 million bushels while the trade was expecting something close to 500 million bushels. US ending stocks for the 2012/13 season were reported at 664 million bushels which was 54 million lower than trade expectations and 30 million lower than the June estimate. World ending stocks for the 2012/13 season came in at 182.4 million tonnes as compared with 185.7 million last month. The 3 million tonne revision was in line with market estimates. The 2012/13 Russian wheat production was cut by 4 million tonnes to 49 million tonnes and Kazakhstan production was revised lower by 2 million tonnes to 13 million tonnes. The USDA made headway in revising world wheat production lower but the trade believes further revisions will be made in the future. September Oats closed down 12 3/4 at 364 1/4. This was 5 1/4 up from the low and 19 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
Traders' initial reaction to USDA's report led to sharp gains in corn futures, but that was eventually followed by profit-taking to result in a wide daily trading range. Futures ended with losses in the teens in most contracts, but well off session lows. Headlining USDA's reports was the 20-bu.-per-acre reduction in its 2012 yield projection to 146 bu. per acre. But profit-taking increased as news circulated that USDA was going to make a drought-related announcement, as well as the increased attention on corn in the general media.

Corn Market Recap for 7/11/2012 (Source: CME)
September Corn finished down 14 1/4 at 704 1/4, 44 3/4 off the high and 18 3/4 up from the low. December Corn closed down 13 1/2 at 704. This was 18 3/4 up from the low and 44 off the high. December corn traded sharply lower on the day after posting a new high for the move at 748. The market was trading a potential corn yield below 150 bushels/acre prior to the report and traders took profits after the USDA confirmed the yield. The USDA report this morning was considered bullish against trade expectations. The USDA pegged ending stocks for the 2012/13 season at 1.183 billion bushels which was about 100 million below expectations and compares with 1.881 billion last month. The USDA pegged corn yield at 146 bushels per acre as compared with 166 bushels/acre last month and 147.2 last year. Total usage revised down by 1.055 billion bushels with 300 million in export, 650 million in feed usage and down 100 million in ethanol. To show further evidence of demand destruction, the ethanol production for the week ending July 6 averaged 821,000 barrels per day. This is down 4.20% vs. last week and down 5.85% vs. last year. Corn used in last week's production is estimated at 87.45 million bushels, a new 16 week low. Corn use needs to average 99.621 million bushels per week to meet this crop year's USDA estimate of 5.05 billion bushels. The weather forecast is still questionable for the central Midwest with rain in the forecast for the southeast and drier conditions in the west. Continued stress on pollinating corn will risk further yield loss. September Rice finished down 0.335 at 15.11, 0.5 off the high and 0.15 up from the low.

Corn Drops From 10-Month High as Rally Curbs Demand; Soy Falls (Source: Bloomberg)
Corn futures tumbled from a 10-month high on speculation that a drought-fueled rally in prices will curb demand. Soybeans fell from a four-year peak on forecasts for rain that may boost yields. Ethanol output in the U.S. fell 4.2 percent last week to the lowest in almost two years, the government said today, and Valero Energy Corp. (VLO) has halted production at two distilleries. The U.S. Department of Agriculture predicted that 2012 meat and poultry output will be 0.7 percent smaller than forecast last month. Corn prices through yesterday surged 42 percent since mid-June as crops withered under the worst drought since 1988. “Demand is shutting down, led by the ethanol slowdown,” Chad Henderson, a market analyst at Prime Agricultural Consulting Inc. in Brookfield, Wisconsin, said in a telephone interview. “People are already liquidating the hog-breeding herd and dairy cows. Physical consumers can’t use corn and turn a profit at these prices.” Corn futures for December delivery fell 1.9 percent to close at $7.04 a bushel at 2 p.m. on the Chicago Board of Trade, the third drop in four sessions. Earlier, the grain reached $7.48, the highest for the most- active contract since Sept. 13. Today, the USDA cut its domestic production estimate by 12 percent, a month after predicting a record harvest. The U.S. is the world’s largest grower and exporter. Crop conditions as of July 8 were the worst for that date since the drought of 1988, and areas of moderate to extreme drought have expanded to 53 percent of the Midwest, government data show.
Soybean Weather
Soybean fields from Louisiana to southern Ohio will get 1 inch (2.5 centimeters) to 4.5 inches of rain in the next five days, according to the National Weather Service. As much a 1 inch may help crops in the northern and western Midwest beginning next week, the government said. The USDA said today that dry weather may cut yields by 7.7 percent, leaving output at 3.050 billion bushels this year, compared with 3.205 billion estimated in June. “Some of the weather models are wetter into next week, and that set off selling in soybeans,” which can produce new flowers and boost yields in July and August, Richard Feltes, a vice president at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “It’s a classic run-up in prices into a key USDA report, and people sold on the news.” Soybean futures for November delivery fell 1 percent to $15.225 a bushel in Chicago. Earlier, the price rose as much as 2.4 percent to $15.75, the highest since July 2008.
Demand Cuts
U.S. corn usage in the year that begins Sept. 1 may reach 12.72 billion bushels, down 7.7 percent from the forecast in June, the government said today. Demand for soybeans was cut 4.6 percent to 3.105 billion bushels from a month earlier. “Trade action today suggests much of the U.S. crop-yield erosion is already accounted for by USDA,” Feltes said. “Dismal chart action today could mark a near-term top as some fund-longs opt to lock in profit amid a belief that necessary corn rationing is under way.” Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Crops Surge as U.S. Cuts Harvest Outlooks Amid Parching Drought (Source: Bloomberg)
Corn surged to the highest price since September and soybeans reached a four-year high after the U.S. cut its production forecasts because of the worst drought since 1988. Wheat extended this year’s rally. The U.S. Department of Agriculture reduced its forecast of this year’s domestic corn crop, the world’s largest, by 12 percent just a month after predicting a record harvest. The domestic soybean estimate was cut 4.8 percent, and global wheat production will be less than expected in June as a dry spell hurts yields in Russia, the USDA said today in a report. Areas of moderate to extreme drought have expanded to 53 percent of the Midwest, the main growing region, fueling crop- price gains that are the biggest this year among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. The rallies are boosting costs for companies from McDonald’s Corp. (MCD) and Coca-Cola Co. to Archer Daniels Midland Co. and Smithfield Foods Inc.
“The drought of 2012 will be one for the records,” said Peter Meyer, the senior director for agricultural commodities at PIRA Energy Group in New York. “Whether it’s ethanol or livestock, no one is immune from this impending disaster. The ramifications will be widespread, affecting everything from your food to your gasoline.” Corn futures for December delivery rose 0.7 percent to $7.2275 a bushel at 10:26 a.m. on the Chicago Board of Trade, after reaching $7.48, the highest for the most-active contract since Sept. 13.

GRAINS-Corn near 13-mth high, wheat firm ahead of US report
SINGAPORE, July 11 (Reuters) - Chicago corn rose 1 percent to trade near a 13-month peak, while soybeans hovered close to record highs as investors took positions ahead of a U.S. report expected to show sharply lower yields due to a drought.
"We could see some more upside for grains as most people are expecting the USDA to slash grain crop estimates," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Ukraine AgMin cuts grain export outlook to 20 mln T
KIEV, July 11 (Reuters) - Ukraine's Agriculture Ministry has cut its outlook for the former Soviet republic's grain exports in the current season to 20 million tonnes from 22-23 million tonnes, minister Mykola Prysyazhnyuk said on Wednesday.
"We see (exports) at 20 million tonnes now. We are seeing very slow pace of exports in July, having exported just 260,000 tonnes so far," he told reporters.

USDA expected to slash corn crop forecast by a third
WASHINGTON, July 11 (Reuters) - The U.S. government will cut its corn supply forecast by a third on expectations a severe drought will shrivel the crop across the Midwest, traders said ahead of a key report on Wednesday.
The worst drought in a quarter-century has scorched the Farm Belt and will cut corn stocks to their lowest in 16 years, the third year in a row for tight stocks.

PFGBest scandal deals farmers another blow after MF Global
CHICAGO, July 10 (Reuters) - Farmers on Tuesday fumed at the prospect of financial losses, or at a minimum a lengthy wait for the return of frozen funds, due to alleged mismanagement at brokerage PFGBest, and some said they had been burned for the last time.
The U.S. futures industry reeled as regulators accused Iowa-based PFGBest of misappropriating more than $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global's collapse.

Rain to fall on parched US Midwest by end of week-forecasters
CHICAGO, July 10 (Reuters) - Corn and soybean fields in much of the U.S. Midwest will remain dry until the end of the week, with temperatures hovering in the 80s and 90s degrees Fahrenheit, forecasters predicted Tuesday.
However, the return of typical summer weather is unlikely to reverse the damage to corn and soybean crops caused by the crippling drought and heat wave that hit the Midwest during the past month.

Texas drought, British heat linked to climate change
WASHINGTON, July 10 (Reuters) - Climate change increased the odds for the kind of extreme weather that prevailed in 2011, a year that saw severe drought in Texas, unusual heat in England and was one of the 15 warmest years on record, scientists reported on Tuesday.
Overall, 2011 was a year of extreme events - from historic droughts in East Africa, northern Mexico and the southern United States to an above-average cyclone season in the North Atlantic and the end of Australia's wettest two-year period ever, scientists from the U.S. National Oceanic and Atmospheric Administration and the United Kingdom's Met Office said.

Black Sea region cuts grain forecast on bad weather
KIEV, July 10 (Reuters) - Hot and dry weather, which has dominated Black Sea regions for much of the growing season, has forced Russia, Ukraine and Kazakhstan to reduce their harvest forecasts and the region's total grain output could be at least 35 million tonnes less than in 2011.
Russia, hit by severe drought first in the southern breadbasket regions and then in Siberia, could lose 10 to 15 million tonnes this year against 2011.

EU wheat crops need sun after wet summer start
HAMBURG, July 10 (Reuters) - Wheat crops in west Europe urgently need sunshine to push them towards ripeness and high quality after a very wet and cloudy start to the summer, analysts and traders said on Tuesday.
Harvest forecasts are still generally optimistic for the top three EU producers France, Germany and Britain. But the wet weather which has spoilt countless holidays is now starting to worry wheat farmers.

Kazakhstan lowers grain crop forecast on dry weather
ASTANA, July 10 (Reuters) - Kazakhstan has lowered its 2012 grain crop forecast to a "below-average" 14 million tonnes due to a drought in southern parts of the vast, landlocked country, Agriculture Ministry officials said on Tuesday.
The latest forecast falls below the ministry's previous crop estimate of between 15 million and 16 million tonnes and is only slightly more than half of the post-Soviet record 27 million tonnes harvested last year.

SOFTS-ICE sugar, cocoa edge up early, coffee eases
LONDON, July 11 (Reuters) - Raw sugar futures on ICE edged up in early trade as the market continued to derive support from concern about production prospects in parts of India and Brazil linked to adverse weather. Sugar futures on ICE rose with October  up 0.11 cent or 0.5 percent to 22.60 cents a lb by 0901 GMT. The contract touched 23.05 cents on Tuesday, the highest level for the benchmark front month since April 18.

Survey highlights failures of Indonesia cocoa scheme
JAKARTA, July 11 (Reuters) - A $350 million government programme aimed at reviving Indonesia's cocoa industry has suffered a serious setback after most newly planted trees died, a survey showed, with many farmers now switching to oil palms instead.
Indonesia is the world's third largest cocoa producer but disease and adverse weather conditions have hampered supplies for years.

Ghana 2012 mid-crop cocoa seen down 60 pct-sources
ACCRA, July 10 (Reuters) - Ghana's minor mid-cocoa output for the 2012 season is expected to fall 60 percent to 42,000 tonnes, compared with about 107,000 tonnes harvested in the previous seasons, three sources close to industry regulator Cocobod said on Tuesday.
Ghana runs a two-cycle cocoa year comprising the major harvest from October to May, which is mainly exported and the July to September light crop which is discounted to local processors.

Dry weather to boost Colombia's 2013 coffee crop
BOGOTA, July 10 (Reuters) - Colombia's coffee crop for the first half of 2013 is shaping up to be one of the best in years as drier weather and the possible return of the El Nino weather phenomenon may boost production, exporters and growers said.
After years of too much rain, good sunlight over the past six weeks has boosted flowerings, which could lead to a greater number of ripe cherries and help the country reach the 9 million 60-kg bag target for 2013, they said.

Sudan Crude Stuck Off Singapore Shows Trade as War Victim (Source: Bloomberg)
More than 15 miles offshore Singapore a black-and-red hulled tanker has been stranded for about 150 days holding South Sudanese crude worth almost $60 million, a hostage of a two-decade war. South Sudan says its northern neighbor stole the shipment on the ETC Isis and about 2 million barrels more. Sudan says it had the right to sell the oil. The feud over the cargoes, worth more than seven days of the South’s annual economic output, has entangled lawyers in London, shipowners in Cairo, buyers in Japan, dealers in the British Virgin Islands and Trafigura Beheer BV, the world’s third-biggest oil trader.
The dispute underscores the difference between the physical commodities market, where prices and identities of buyers and sellers are typically kept private, and the regulated exchanges of Wall Street and London, where investors deal in futures and options representing billions of barrels of crude every day. It’s in the buying and selling of the world’s 84 million barrels of daily oil output, far from the financial markets at least 14 times bigger, that trading and war collide. “You have this dispute between two parties over the oil and the tanker is now stuck in no-man’s land,” said Mark Tan, a partner at law firm Watson, Farley & Williams in Singapore who has more than 14 years’ experience in dispute resolution and heads the shipping litigation practice. “It’s always better to be cautious about what you’re carrying. Sometimes a cargo can be trouble.”

Iraq Crude Production Overtakes Iran as OPEC Trims Output (Source: Bloomberg)
Iraq’s crude production overtook Iran’s last month for the first time in more than two decades as Iran led a decline in OPEC output ahead of a European Union ban on purchases from the nation, according to the producer group. Iraq pumped 2.984 million barrels a day in June, outpacing Iran’s 2.963 million, the Organization of Petroleum Exporting Countries’ Vienna-based secretariat said today in its Monthly Oil Market Report. That’s the first time Iraq’s output has exceeded Iran’s since 1988, when the countries ended their eight-year war, statistics compiled by BP Plc (BP/) show.
The reduction from Iran, ahead of full sanctions by the EU that started on July 1, led to the second monthly decline in total OPEC production to 31.36 million barrels a day in June, versus 31.47 million in May, according to the group’s estimates, which are based on secondary sources including analysts and news agencies. Falling OPEC production last month coincided with a 4 percent drop in Brent crude on London’s ICE Futures Europe exchange, contributing to a 20 percent price decline for the second quarter. “Iran and Angola led the crude oil output decrease, while crude oil output from Iraq, Kuwait, and Libya experienced the largest increase in June,” the monthly report said, without elaborating on reasons for the changes

OIL - Brent rises above $98, shrinking US stockpiles eyed
SINGAPORE, July 11 (Reuters) - Brent rose above $98 a barrel, recovering slightly from the previous session's losses, ahead of U.S. inventory data that is expected to show crude stocks shrinking for a third week in the world's largest oil consumer.
"The market is neutral at the moment, stabilizing after a sharp decline in the second quarter," said Ken Hasegawa, a commodity sales manager at Newedge Japan.

Iran keeps oil flowing to China despite freight dispute
BEIJING, July 11 (Reuters) - Iran is shipping crude oil to its top buyer China despite a dispute over freight terms, sending so far a third of the 12 million barrels due to load in the first 20 days of July, traders and shipping sources said.
The dispute between Chinese state refining giant Sinopec  and the National Iranian Tanker Co (NITC) threatens to delay the sale of millions of barrels of crude exports from Iran as it faces tough Western sanctions targeting its oil sector.

Norway restarts fields, no strike repeat for 2 years
OSLO, July 10 (Reuters) - Norway restarted some major oil and gas fields on Tuesday after the government ordered an end to a 16-day strike by offshore workers, still unhappy about pensions and retirement issues but unable to repeat the action for at least two more years.
About 10 percent of Norway's 7,000 offshore staff - among the best paid in the global oil industry - had been on strike to demand retirement with full pensions at 62, causing a 13 percent loss of the country's oil output and 4 percent of gas production.

Sanctions squeeze forces Iran to cut oilfield flow
LONDON, July 10 (Reuters) - Tough Western sanctions are forcing Iran to take drastic action and shut off wells at its vast oilfields, reducing production to levels last seen more than two decades ago and costing Tehran billions in lost revenues.
Iran struggled to sell its oil in the run-up to the European Union ban on July 1, yet it managed to sustain oilfield flows at lofty rates above 3 million barrels per day (bpd) by stashing unwanted barrels in tanks on land and on ships in the Gulf.

EIA cuts global oil demand forecast on slower economy
WASHINGTON, July 10 - The U.S. Energy Information Administration on Tuesday cut its 2012 world oil demand growth forecast by 130,000 barrels per day to 670,000 bpd, citing expectations for slower global economic growth.
In its monthly forecast, the agency also cut its oil demand growth estimate for 2013 by 360,000 bpd to 730,000 bpd.

Euro Coal-Prices drop $1-$2/T, in line with oil
LONDON, July 10 (Reuters) - Physical prompt coal prices dropped by $1 to $2 a tonne on Tuesday in line with weaker oil - a third consecutive daily fall as buyers stayed on the sidelines.
Daily coal price moves of $2 to $4 have been frequent during the past month, following months of largely range-bound trading when prices moved in cents rather than dollars.

China H1 coal imports up 65.9 pct to 140 mln T -customs
BEIJING, July 10 (Reuters) - China imported 140 million tonnes of coal in the first six months of the year, up 65.9 percent compared to the same period of 2011, according to preliminary customs data issued on Tuesday.
A more detailed figure for the month of June alone will be issued later on Tuesday.

Oil Trades Near Two-Day High as U.S. Stockpiles Counter Europe (Source: Bloomberg)
Oil traded near the highest level in two days in New York after U.S. stockpiles fell and refinery utilization rose, countering concern that fuel demand will falter as manufacturing stagnates in Europe. Futures swung between gains and losses after rising 2.3 percent yesterday. Crude supplies in the U.S., the world’s biggest oil user, slid 4.7 million barrels last week, the Energy Department said. They were forecast to drop by 1.38 million, according to the median estimate in a Bloomberg News survey. Refineries ran at 92.7 percent of capacity, the most since July 2007. Industrial output in the euro area was probably unchanged in May from April, a survey showed before a report today. “To move higher from here we would need to see two out of three big global economies - Europe, the U.S. or China - firmly back into growth territory,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney who predicts oil will trade between $81.50 a barrel and $88.50 a barrel.
The stockpile drop was “clearly the driver” for yesterday’s gains, he said. Oil for August delivery was at $85.71 a barrel, down 10 cents, in electronic trading on the New York Mercantile Exchange at 11:46 a.m. Sydney time. The contract yesterday increased $1.90 to $85.81, the highest close since July 9. Prices are down 13 percent this year.

Iron Ore-Shanghai steel at contract low, ore shaky
SINGAPORE/SHANGHAI, July 11 (Reuters) - Key China rebar futures hit a contract low on Wednesday, dogged by soft demand in the world's top steel consumer, curbing appetite for raw material iron ore with bids for spot cargoes staying weak.
Major miners, such as Vale  and BHP Billiton  , are offering several cargoes on the spot market, although traders expect the material to be sold at prices lower than previous deals.

China iron ore imports fall 8.7 pct in June from May
SHANGHAI, July 10 (Reuters) - China's iron ore imports fell 8.7 percent in June from the previous month, as the world's largest buyer cut shipments on tepid demand, while traders expect a further decline in bookings in July, given little recovery in steel prices.
Iron ore imports dropped to 58.31 million tonnes in June from 63.84 million the previous month, preliminary data from customs showed on Tuesday.

Gold 22% Rally to Record Seen by Eric Sprott: Commodities (Source: Bloomberg)
Gold will climb to a record by yearend as the global economy slows from the weight of too much debt, says Eric Sprott, the founder and chairman of Canadian fund manager Sprott Inc. (SII) “I just can’t imagine the demand for gold is going down,” he said in a July 9 interview at Bloomberg’s Toronto office. “I don’t personally see a solution to the problem that we’re in, the financial leveraging issue that we all have where everybody wants to shed debt and there’s no buyers.” Sprott’s company manages funds investing mainly in gold, silver, and precious-metals equities. He expects bullion will rise as investors seek the safest assets while governments spend to stimulate their economies, increasing chances that inflation will accelerate. Gold, which had advanced for 11 successive years, is almost unchanged so far in 2012. It’s 18 percent lower than the record $1,923.70 an ounce traded on Sept. 6 in New York after investors favored buying the dollar amid Europe’s escalating debt crisis.
The metal “should go to new highs before yearend, that would be my guess,” said Sprott, 67. “Gold has blown away every financial market in the world since 2000, let’s not forget that.”

Weak capesize rates push Baltic index lower
July 10 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday driven by a drop in capesize vessel rates.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, slipped 2 points or 0.17 percent to 1,160 points. It has fallen about 33 percent this year.

20120712 1047 Soy Oil & Palm Oil Related News.

SGS CPO export down 22.2% to 331,978 tonnes for the period of 1~10 Jul 2012.

Pro Farmer: After the Bell Soybean Recap (Source: CME)
July soybeans closed 25 3/4 cents lower, while the August through January 2013 contacts posted losses in the teens. Despite the sharp losses, futures closed well off session lows. Far-deferred contracts posted lesser declines. The July Supply & Demand Report was bullish as USDA reduced its old-crop carryover estimate, the 2012-crop production projection and projected 2012-13 ending stocks from month-ago.

Soybean Complex Market Recap (Source: CME)
August Soybeans finished down 16 at 1574 1/2, 50 1/2 off the high and 21 1/2 up from the low. November Soybeans closed down 15 at 1523 1/2. This was 18 1/4 up from the low and 51 1/2 off the high. August Soymeal closed down 5 at 463.3. This was 8.3 up from the low and 17.5 off the high. August Soybean Oil finished down 0.47 at 53.82, 1 off the high and 0.36 up from the low. November soybeans traded sharply higher following the release of the USDA report but slowly lost ground to trade lower into the close. Technical traders see the sweeping key reversal from a contract high as a negative technical development. Soybean meal and oil also traded sharply lower on the day. Soybeans saw spillover pressure from a sharply lower corn market after the report was considered supportive for soybeans. The USDA pegged US soybean ending stocks for the 2012/13 season at 130 million bushels as compared with 140 million last month. Yield was adjusted lower to 40.5 bushels/acre from 43.9 posted last month. This is a 4.18% stocks to usage ratio and the USDA had to cut demand by 150 million bushels (crush and export) from last month's estimates to make the numbers fit. This would be the lowest stocks/usage number since the 1964/65 season. World ending stocks for the 2012/13 season came in at 55.66 million tonnes compared with 58.5 million tonnes last month and 52.51 million this year. The longer term outlook for soybeans remains positive as traders are anticipating an increase in U.S. soybean demand in the coming year due to the lower crop production out of South America. The weather forecast is still questionable for the central Midwest with rain in the forecast for the southeast and drier conditions in the west. Temperatures in the west could reach 90 to 100 degrees adding further stress to soybeans.

VEGOILS-Palm down on weak exports, tight supply in focus
SINGAPORE, July 11 (Reuters) - Malaysian crude palm oil futures slipped on weaker exports data, although losses were curbed by a tight global oilseed supply at a time when festival demand is supposed to rise.
"Despite the lower end-stocks yesterday, demand is slipping away," said a trader with a local commodities brokerage in Malaysia. "Empirical evidence suggests end-stocks could recover back up to 2 million tonnes by end September."

Cooking-Oil Imports by India Fall as Rupee Plunge Boosts Costs (Source: Bloomberg)
Cooking-oil purchases by India, the world’s biggest consumer after China, probably dropped for the first time in five months in June as a slump in the rupee to a record low deterred importers. Shipments slid to 850,000 metric tons last month from 862,550 tons a year earlier, according to the median estimate in a Bloomberg survey of five processors and brokers. Imports of crude and refined palm oil declined 16 percent to 600,000 tons from 712,356 tons, the survey showed. The Solvent Extractors’ Association of India will publish shipment data next week. Palm oil, used in candy and fuel, has slumped 15 percent from a 13-month high in April on concerns that a slowdown in China and the European debt crisis may curb demand. Lower Indian imports may boost inventories in Malaysia, second-largest palm oil supplier, as production enters the peak period. The rupee sank to a low of 57.3275 to a dollar on June 22, raising the cost of commodities priced in the U.S. currency.
“The rupee depreciation made imports expensive and kept importers away,” said Sandeep Bajoria, chief executive officer of Mumbai-based brokerage Sunvin Group. “Buyers were also holding back purchases to take advantage of the lower Indonesian export tax in July.” Indonesia cut the tax rate for exports of crude palm oil in July to 15 percent, a level last seen in January, from 19.5 percent in June, Deddy Saleh, director general of foreign trade at the Trade Ministry, said June 25. The base price to calculate the levy was cut to $944 a ton from $1,098, he said.
Monsoon Delay
Palm oil for September fell 1.5 percent to 3,082 ringgit ($970) a ton on the Malaysia Derivatives Exchange in Kuala Lumpur yesterday. The most-active contract rose to a 13-month high of 3,628 ringgit on April 10. A surge in imports in the past four months lifted cooking- oil inventories including those at Indian ports to a record 1.7 million tons last month, according to the extractor’s association. Stockpiles may be about 1.6 million tons as of July 1, Sunvin’s Bajoria said. Purchases will increase in the next four months as the worst start to the monsoon in three years delays soybean and peanut sowing, he said. Imports will be between 800,000 tons and 900,000 tons a month until October, Bajoria said. The area under oilseeds dropped to 2.65 million hectares (6.5 million acres) as of July 6 from 3.73 million hectares a year earlier, according to the farm ministry. Soybean planting was 26 percent lower at 1.89 million hectares, it said.
Dwindling Supplies
Imports in the seven months through May jumped 32 percent to 5.61 million tons, according to the extractors’ association. India bought 8.7 million tons in 2010-2011. Purchases will climb to 9.7 million tons this year as local supplies are set to decline to 6.65 million tons from 7.25 million tons, GG Patel & Nikhil’s managing partner Govindlal G. Patel, who has traded edible oils for more than three decades, said last month. Crude soybean-oil imports probably surged to 125,000 tons in June from 50,616 tons a year earlier, while sunflower-oil purchases may have risen to 110,000 tons from 50,560 tons, the Bloomberg survey showed. Palm oil comprises almost 80 percent of India’s cooking-oil imports. The nation buys palm from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.