Monday, July 16, 2012

20120716 1814 FCPO EOD Daily Chart Study.

FCPO closed : 3122, changed : +51 points, volume : lower.
Bollinger band reading : side way range bound little upside biased.
MACD Histogram : turned upward, buyer still in control.
Support : 3100, 3070, 3050, 3020 level.
Resistance : 3150, 3200, 3250, 3270 level.
Comment :
FCPO closed recorded gains with declining volume transacted. Soy oil currently trading higher by more than 1% after last Friday closed recorded gain while crude oil price currently sliding lower .
Price continue to trade higher despite export figure released by 1 cargo surveyor continue to recorded slower demand as drought weather in U.S. persists pressure grains related commodities to trade higher.
Daily technical chart reading revised to suggesting a side way range bound little upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120716 1732 FKLI EOD Daily Chart Study.

FKLI closed : 1632.5 changed : +6 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : weakening, buyer taking profit.
Support : 1630, 1620, 1610, 1600 level.
Resistance : 1640, 1650, 1660, 1670 level.
Comment :
FKLI closed recorded gain with quiet down volume changed hand doing 3.5 points discount compare to cash market that closed higher. Last Friday U.S. markets rallied higher and today Asia markets ended mostly higher while European markets currently trading little lower.
Asia markets traded mostly firmer after Premier Wen said China will increase measures to support economy growth as economy recovery remained slow.
Back home, FKLI technical chart analysis remained suggesting 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.

20120716 1703 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : side way range bound.
 Hang Seng chart reading : side way range bound.
KLCI chart reading :  upside biased with possible pullback.

20120716 1603 Global Markets & Commodities Related News.

GLOBAL MARKETS: Asian shares extended their rally as fears of an economic hard landing in China subsided, but profit warnings dented gains in Chinese shares, highlighting the impact of the country's slowdown on local and multinational firms. European shares were set for a steady start, with investors waiting for company earnings reports and this week's testimony from U.S. Federal Reserve Chairman Ben Bernanke to determine the market's near-term direction. U.S. stocks shed the sour tone that plagued equities all week on Friday, with a rally that broke a six-day losing streak.

FOREX: The euro eased against the dollar, with the near-term focus on whether U.S. Federal Reserve Chairman Ben Bernanke will give any hint of additional monetary stimulus when he gives testimony to Congress in coming days.

FOREX-Euro inches lower vs dollar, focus on Bernanke
SINGAPORE, July 16 (Reuters) - The euro eased against the dollar on Monday, with the near-term focus on whether U.S. Federal Reserve Chairman Ben Bernanke will give any hint of additional monetary stimulus when he gives testimony to Congress in coming days.
The Australian dollar dipped but held on to the bulk of the gains it made on Friday when it drew strength from data showing that China, the main buyer of Australian exports, posted second quarter GDP growth of 7.6 percent, matching expectations.

Italy's govt sees 2012 GDP falling less than 2 pct
Italy's government will revise down its forecast for the economy this year to a contraction of less than 2 percent when it updates its economic targets in September, new economy minister Vittorio Grilli said in a newspaper interview published on Sunday.

Broker scandals demand futures industry reform, CME says
Futures exchange operator CME Group  questioned on Friday whether brokers should be allowed to hold their customers' collateral, following the disclosure of massive fraud at failed brokerage PFGBest.

GRAINS: Chicago new-crop corn jumped 4 percent, while soybeans gained about 2.5 percent with both markets climbing to contract highs on forecasts of more stressful hot weather in the U.S. grain belt this week.

POLL-Canada canola harvest seen smashing record
Canadian farmers will blow away last year's canola harvest record, due to larger plantings and mostly favorable summer weather, according to a Reuters poll of 17 analysts and traders.

Iran issues new oil blockade warning
Iran could prevent even "a single drop of oil" passing through the Strait of Hormuz if its security is threatened, a naval chief said on Saturday, as tensions simmer over Tehran's nuclear programme.

Euro Coal-Sept DES ARA trades at $87.50/T, up $1
LONDON, July 13 (Reuters) - Physical prompt coal prices were bid slightly higher on Friday after five days of consecutive falls and few trades were reported.
Coal was particularly illiquid on Friday but was partly bolstered by a 1 percent rise in oil prices while it ignored falls in European power prices on more renewables and lower demand.

Thai builder plans gas, hydro, coal plants for Dawei
SIEM REAP, Cambodia, July 13 (Reuters) - Thailand's largest construction firm, Italian-Thai Development Pcl , plans to build separate coal, gas and hydro power plants for the initial stages of its $50 billion Dawei industrial zone in Myanmar, its president said on Friday.
Premchai Karnasuta said its Dawei Development Corp was seeking investors for a 250 megawatt plant fuelled by Burmese gas, a 670 MW hydro-power plant and a 400 MW coal power station using supercritical steam cycle technology.

OIL: Brent crude held steady above $102 per barrel on optimism over the outlook for demand growth as China's Premier Wen Jiabao said the government would step up efforts to boost the economy of the world's second-largest oil consumer.

COLUMN-China slows, China's steel sector doesn't
--Andy Home is a Reuters columnist. The opinions expressed are his own--
LONDON, July 13 (Reuters) - The flurry of data out of China this morning confirmed what everyone already knew.  The engine of global industrial production has shifted down a couple of gears. Headline GDP of 7.6 percent in the second quarter marked the slowest rate of growth in more than three years.
It's not good news for industrial metals, given that China has been the key driver of usage growth since the Great Contraction in 2008-2009.

Managed money cuts gold, silver longs, ups copper shorts
July 13 (Reuters) - Hedge funds and money managers cut their net long position in U.S. gold futures and options by nearly 20 percent in the week to July 10, as a price decline on deflation fears prompted speculators to reduce their bullish bets.
The group trimmed its net longs in gold by 19,305 to 88,973 lots in the period, data from the Commodity Futures Trading Commission's (CFTC) Commitments of Traders showed.

India escalates US steel duties dispute at WTO
GENEVA, July 13 (Reuters) - India has asked the World Trade Organization to set up a panel to adjudicate on its dispute with the United States over U.S. duties on some imports of Indian steel products, the WTO said on Friday.
India complained in April that Washington had wrongly slapped punitive tariffs, so-called countervailing duties, on certain hot rolled carbon steel flat products from India.

Indonesia 2012 steel billet imports forecast to triple to 3 mln T
JAKARTA, July 13 (Reuters) - Indonesia is expected to import 3 million tonnes of steel billet this year, up from 1 million tonnes in 2011, after the local authorities tightened import procedures for scrap metal, restricting domestic supply, an industry group said on Friday.
About 70 pct of Indonesia's scrap consumption is imported, but new obstacles to such imports, raised after some shipments were found to have been mixed with hazardous waste materials, mean many iron and steel companies are switching to billet as a raw material for making steel products.

BASE METALS: London copper edged down after surging to a one-week high in the prior session but expectations of further stimulus from China helped put a floor under prices.

PRECIOUS METALS: Gold traded flat, as investors returned to a wait-and-see mode ahead of a key presentation by the U.S. central bank chief later in the week as bullion remains sensitive to monetary policy changes.

METALS-LME copper comes off 1-week high; China stimulus eyed
SHANGHAI, July 16 (Reuters) - London copper edged down on Monday after hitting a one-week high in the prior session as surging agricultural futures drew some buying power away from base metals, but expectations of further stimulus from China helped put a floor under prices.
China's Premier Wen Jiabao said on Sunday that the government would step up efforts to boost the economy of the world's largest metal consumer, after data showed its economy slowed for the sixth successive quarter to expand by 7.6 percent in the April-June quarter.

PRECIOUS-Gold inches down as investors await Bernanke outlook
SINGAPORE, July 16 (Reuters) - Gold edged lower on Monday, tracking minor losses in the euro, while investors returned to a wait-and-see mode ahead of a key presentation by the U.S. central bank chief later in the week as bullion remains sensitive to monetary policy changes.
U.S. Federal Reserve Chairman Ben Bernanke will present his semi-annual monetary policy report to Congress on Tuesday and Wednesday, from which investors will seek clues on the Fed's attitude towards another round of quantitative easing.

Iron Ore-Shanghai rebar hits contract low, demand woes persist
SINGAPORE, July 16 (Reuters) - China steel futures dropped more than 1 percent to a contract low on Monday as plentiful supplies pressured prices in the world's biggest steel market, where demand is not likely to recover until later in the year.
The decline in Shanghai rebar prices bucked gains elsewhere amid worries China's efforts to stimulate its economy -- which grew at its slowest pace in three years in the second quarter -- may not quickly translate to firm demand.

Indonesia 2012 steel billet imports forecast to triple to 3 mln T
JAKARTA, July 13 (Reuters) - Indonesia is expected to import 3 million tonnes of steel billet this year, up from 1 million tonnes in 2011, after the local authorities tightened import procedures for scrap metal, restricting domestic supply, an industry group said on Friday.
About 70 pct of Indonesia's scrap consumption is imported, but new obstacles to such imports, raised after some shipments were found to have been mixed with hazardous waste materials, mean many iron and steel companies are switching to billet as a raw material for making steel products.

Slump in capesize demand pushes Baltic index down
July 13 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Friday as a slump in capesize activity weighed on rates.
The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, lost 11 points or 0.98 percent to 1,110 points.

20120716 1503 Commodities Related News by Bloomberg.

Worst-in-Generation Drought Dims U.S. Farm Economy Bright Spot
2012-07-16 04:01:00.8 GMT By Joshua Zumbrun and Mark Drajem
July 16 (Bloomberg) -- Cloudless skies seldom look so ominous.

A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops, rural economies, and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the past three years as the country struggled to recover from the recession.

“It might be a $50 billion event for the economy as it blends into everything over the next four quarters,” said Michael Swanson, agricultural economist at Wells Fargo & Co. in Minneapolis, the largest commercial agriculture lender. “Instead of retreating from record highs, food prices will advance.”

The U.S. Department of Agriculture declared July 11 that more than 1,000 counties in 26 states are natural-disaster areas, the biggest such declaration ever. The designation makes farmers and ranchers in affected counties -- about a third of those in the entire country -- eligible for low-interest loans to help manage the drought, wildfires or other disasters.

“The drought will have regional, national and even international impacts,” Ernie Goss, a professor of economics at Creighton University in Omaha, Nebraska, said in an e-mail.

Farm income, which has underpinned the growth of many rural states, will be under “significant downward pressure,” Goss said.

Since 1988
The USDA has said the drought is the worst since 1988 and cut its forecast for the corn harvest for the year by 12 percent. Those estimates could worsen if rain does not come, said Brandon Kliethermes, a senior economist with IHS Global Insight’s agriculture group in Columbia, Missouri.

“We’re not to that point yet but we’re trending that way,” he said.

Indiana has asked residents to conserve water and sent notices to its largest users to request specific cuts as it faces “possibly a historic drought,” according to Al Shipe, a National Weather Service hydrologist in Indianapolis.

The drought is already crimping business for Randy Allen, the store manager at Wright Implement in Crawfordsville, Indiana, who has been selling farm equipment for 22 years and is already seeing farmers pull back.

Not Selling
“Usually at this time we’re selling planters and tillage and we’re not selling near what we have in the past because people are waiting to see how bad this drought is,” said Allen.
“I had a call from one of my farmers who usually buys a combine every three to four years,” said Allen. “If he doesn’t get rain he’ll probably bypass it.”
The acreage impacted by drought have expanded rapidly, according to the government-funded U.S. Drought Monitor in Lincoln, Nebraska. In the high-plains states of North Dakota, South Dakota, Wyoming, Nebraska, Colorado, and Kansas, the areas designated as being in moderate to exceptional drought rose to 84 percent as of July 10 from 74 percent a week earlier.
In the Midwest, 63 percent of the region was in drought as of July 10, up from 53 percent on July 3. Key corn-growing states, including Indiana, Illinois, Iowa and Missouri, are listed as abnormally dry or worse. Yet within those regions, some states have fared better, such as Minnesota and North Dakota, where about 25 percent of each state is experiencing drought.

Still Assessing
Iowa Governor Terry Branstad said he’s still assessing the scale of the drought’s economic impact, which he said varies throughout the state. “We’re starting to become concerned and we’ve seen some deterioration of the crops,” he said in an interview July 14 during the National Governors Association Conference in Williamsburg, Virginia.  The drought looks “to have hit at a very key time,” in the growth cycle of corn and soybean crops, said Missouri Governor Jay Nixon in an interview during the same conference, and “could be dramatically affected.”
Corn futures have risen 46 percent since June 15 as dry and hot weather wilted U.S. crops, closing at $7.4025 in the Chicago Board of Trade on July 13. More than three-quarters of the acres where corn is grown in the U.S. is in a drought zone.
The biggest U.S. crop, worth $76.5 billion last year, corn is the main ingredient in the feed of chicken, cattle and hogs. Meat, poultry and fish prices surged 7.4 percent last year and are expected to gain as much as 4.5 percent this year as rising prices make animal feed more expensive. Soybeans have risen 18 percent since mid-June and wheat has climbed 35 percent.

Food Prices
“Commodity prices play their way through to food,” said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, in response to a question after a speech July 13. “So my immediate concern is that would put upward pressure on food prices and could contribute to unwanted inflation in that subset of the broader inflation numbers.”
The resulting prices could have an effect on food retailers such as Popeyes Louisiana Kitchen and McDonald’s Corp., which face higher meat costs. Cereal and beverage makers such as General Mills Co. and Coca-Cola Co. face elevated corn and sweetener prices.
The drought is eroding the profit outlook for Archer Daniels Midland Co. by boosting costs for the world’s largest corn processor, according to Topeka Capital Markets Inc., a broker-dealer with offices in Chicago and New York. The outlook for ADM’s adjusted earnings, based on the average of 13 analysts’ estimates compiled by Bloomberg, fell to $3.03 a share for the 12 months through June 2013, down 3.8 cents in the past four weeks, data compiled by Bloomberg show.
ADM, based in Decatur, Illinois, uses the grain to make more than two dozen products including ethanol, sweeteners and animal feed, and the company has businesses that store and transport the commodity for customers including farmers.

Monitoring Closely
“Like others in the agriculture industry, we are monitoring the drought and the weather forecasts very closely,” Jackie Anderson, an ADM spokeswoman, said in an e-mail. Spokesman David Weintraub declined further comment on the impact.
Rising prices can benefit farmers who have successful harvests or took out sufficient insurance on their fields. Farm cash receipts are now expected to be a record $140.5 billion for the crop year of 2012-13, up 4 percent from 2011-2012, according to a report from JPMorgan Chase & Co. on July 11.
Still, with such a wide swath of farmland facing damage, that may not matter much.

‘$7 Corn’
“Farmers have always said to me $7 corn is no good if I have no corn,” said Ann Duignan, the JPMorgan analyst who wrote that report, in a Bloomberg Television interview July 10.    
Stocks for agriculture-equipment sellers initially rose as the drought drove up prices for soybeans, corn and wheat. Agricultural-machinery stocks as a whole are up 6 percent over the past month, according to data compiled by Bloomberg. Since July 5, Deere & Co.’s stock has fallen 5.5 percent.
As the impact of the drought on yields is unclear, “it would be premature to make predictions,” Ken Golden, a Deere spokesman, said in an e-mail. “Overall farm cash receipts are the best indicator of future sales of John Deere farm equipment. We have said in the past that our expectation for this year is that farm receipts will remain strong,” he said.
Although farmers’ cash receipts “will be higher, they are not going to spend on equipment because they don’t need it,” Karen Ubelhart, an analyst for Bloomberg Industries, said in an interview. “You are going to see people lower expectations for the full year.”

Boost Purchases
Next year farmers will boost equipment, seed and fertilizer purchases as they try to recoup in production what they lose this year, she said.
This year’s lost crops will force some farmers to take out new loans to get through a poor season, Wells Fargo’s Swanson said.
“In those areas hit the hardest by drought, we will have to work with those farmers to do some additional financing because they’ll be missing the revenue they were expecting,” he said.
Businesses in rural areas are already feeling the effects as farmers postpone purchases.  Eric C. King, 56, co-owner of King’s Furniture on Main Street in Olney, Illinois, said he’s had three farmers’ wives say they were going to hold off on buying. “I can’t blame them,” he said. “It’s just a ripple effect. We’re not farmers but we’re farmer-based.”

Modest Share
Yet with agriculture’s modest share of the U.S. economy, a single season’s drought may have little lasting impact on the national economy, said Bruce Babcock, an economics professor at Iowa State University in Ames.
Even the impact on food prices will likely be fleeting, he said.
“If it’s a one-year drought you’ll see some impact on food price indexes, but it will be a one-time shot,” said Babcock. “It won’t be a sustained inflation.”
Agriculture comprises about 1.2 percent of the U.S. gross domestic product, said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago.
“It may not be big numbers in terms of GDP, but when you look at these Midwestern states you have everything revolving around agriculture from banking, machinery and equipment, the warehousing, the transportation. It’s not as small as the numbers suggest.”

20120716 1106 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares extend rally on China relief, Bernanke next focus
TOKYO, July 16 (Reuters) - Asian shares extended their rally as fears of an economic hard landing in China subsided, with last week's softer growth data within expectations and Premier Wen Jiabao on Sunday raising the prospects of more policy stimulus if needed.
"Expectations have been beaten down quite a bit, displayed by the strong rebound triggered by China's in-line growth data, so there likely won't be any large scale disappointments from sluggish earnings this week," said Jeon Jong-kyu, an analyst at Samsung Securities, about the Korean equities market.

COMMODITIES-Markets boosted by China's Q2 growth; oil up 3rd day
NEW YORK, July 13 (Reuters) - Most commodity prices rose on Friday, with oil up a third straight day and copper hitting a one-week high, on investor relief that the economy China, a major raw materials consumer, did not slow more than expected in the second quarter.
"The headline GDP print of 7.6 percent was far from jaw-dropping stuff," said Tim Waterer, senior trader at CMC Markets, in a report. "However, it was a case of small mercies for the market, with risk assets able to claw back some ground."

Oil market balance emboldens Iran's opponents
--Robert Campbell is a Reuters market analyst. The views expressed are his own--
NEW YORK, July 13 (Reuters) - Western diplomats can hardly believe their luck. Sanctions against Iran's oil exports are proving more effective than hoped yet the impact on the price of crude has so far been minimal.
It was not supposed to be this way. A decade of Iranian intransigence over its disputed nuclear program had finally eroded Western patience. Sanctions were supposed to be a painful, but necessary step.

North Sea oil exports hit new 2012 low in August
LONDON, July 13 (Reuters) - North Sea oil exports for 12 key grades are expected to fall to a new 2012 low in August due to extensive maintenance works at maturing oilfields, loading schedules collected by Reuters showed on Friday.
The premium on the prompt Brent futures contract to the second month soared to the highest in about four months due to the tight supply in the North Sea.

OIL-Oil up third day on China GDP, North Sea problems
NEW YORK, July 13 (Reuters) - Oil prices rose for a third day on Friday after China reported GDP data in line with expectations and slightly above the government's target, soothing concerns about slowing growth in the world's second largest economy.
"The headline GDP print of 7.6 percent was far from jaw-dropping stuff," said Tim Waterer, senior trader at CMC Markets, in a report. "However, it was a case of small mercies for the market, with risk assets able to claw back some ground."

NATURAL GAS-US natgas futures end flat ahead of weekend
NEW YORK, July 13 (Reuters) - Front-month U.S. natural gas futures ended unchanged on Friday in light, choppy trade, with still-warm U.S. weather forecasts for the next two weeks underpinning prices despite lingering concern about record-high supplies.
"We held yesterday's gain, but the market may be overvalued here. At these prices, coal-to-gas switching is questionable, and we may see a little less cooling demand in the next two weeks which could mean higher storage injections," Energy Management Institute's Dominick Chirichella told Reuters.

EURO COAL-Sept DES ARA trades at $87.50/T, up $1
LONDON, July 13 (Reuters) - Physical prompt coal prices were bid slightly higher on Friday after five days of consecutive falls and few trades were reported.
"There have been some people who bought at over $90 on the June rally who've now been selling at $84. Meanwhile, nothing much has changed," one European trader said.

20120716 1055 Malaysia Corporate Related News.

Petronas Gas Berhad (PetGas) has announced that Kimanis Power Sdn Bhd (Kimanis Power), a 60% owned subsidiary of PetGas, has received the approval from the Securities Commission for the proposed issuance of up to RM1.16bn nominal value Islamic securities pursuant to a Sukuk issuance programme. The Sukuk Programme shall have a tenure of 16 years from the date of first issue. The Sukuk has been is rated AA- by the Malaysian Rating Corporation Berhad. (BMSB)

Media Chinese International Ltd (MCIL) is undertaking a capital management programme that will see its shareholders rewarded with a bumper dividend. Industry executives said the leading Chinese media company that publishes four newspapers is looking at paying out more than RM680m, or close to 40 sen per share, to shareholders. The company has seen a strong cash flow from operations in recent years that has allowed it to undertake the capital management programme. (Financial Daily)

Maxis is teaming up with REDtone to fast track their roll out of ultra-high speed 4G networks throughout the country. Maxis said on Friday both companies had inked an infrastructure and spectrum sharing agreement. "This will mean customers will have the opportunity to access the highest 4G broadband speeds in the country -- up to 150 Mbps, with the latest 4G LTE technology through the combined spectrum," it said. Maxis said both companies plan to launch their 4G LTE services early next year in selected areas of the Klang Valley, with other regions to follow closely thereafter. The infrastructure sharing partnership between Maxis and REDtone responds to the government's call for telcos to reduce duplication of network assets, enabling operators to deliver better services. (StarBiz)

Guan Chong Bhd is still going ahead with the proposed secondary listing on the Singapore Exchange, dismissing a wire report that it might scrap the plan. The company said it had undertaken investor roadshows to target not only institutional investors but also potential strategic investors with long-term view. The share sale of up to 62.0m shares would be 18% of Guan Chong's enlarged share capital of 350.7m upon completion of its listing exercise. The shares would also be offered to Singapore public investors. A news wire report said Guan Chong's public offering in Singapore of up to 62m shares would be scrapped if a significant stake was sold to another company prior to the corporate exercise. (Starbiz)

Time dotCom Bhd (TDC) is now involved in two major submarine cable projects with global partners that will help boost its submarine cable transit capacity to Japan, South Korea and the United States and pushes it to become a serious alternative player that is able to compete with incumbent Telekom Malaysia Bhd (TM). The Asia-Pacific Gateway (APG) cable originates from Malaysia to Japan and South Korea, thereby reducing Malaysia's dependence on Singapore as a main gateway for internet traffic to North Asia and the United States. The cash outlay for TDC is only US$50m (RM160m) while the total project cost is US$450m (RM1.4bn). The cable system is scheduled to be ready in the third quarter of 2014. Construction will begin in second half of 2012. The APG consortium members includes global players such as China Mobile, China Telecom, China Unicom, Chunghwa Telecom, Facebook, Inc, KT Corporation, LG Uplus Corporation, NTT Communications, StarHub, Viettel Group, and Vietnam Posts and Telecommunications Group. (StarBiz)

Malaysian palm oil yield can be accelerated if incentives are given to drive research and development activities, said the Malaysia Palm Oil Council (MPOC). MPOC chief executive officer Tan Sri Yusof Basiron said innovation in technology was the driver for progress and sustainability in the palm oil sector. “The Malaysian palm oil industry has not been increasing productivity for the past 30 years. “I am proposing to the Government to consider some ideas and innovation that may solve this problem,” he added. (Starbiz)

Malaysia’s palm oil exports in the first 15 days of July fell 21.3% from the same period in June, independent market surveyor Intertek said.A total 563,603 metric tons of the commodity were tracked, versus 716,322 tons in the same period last month, Intertek said in an e-mailed statement in Kuala Lumpur. (Bloomberg)

Indonesia is seeing a more than US$2.5bn wave of investment to build a palm oil refining industry that will double its capacity and mean it could supply the entire needs of Asia's top food consumers - India and China. A Reuters survey of 30 firms operating in Indonesia - from the world's biggest listed palm oil firm Wilmar to conglomerate Unilever - shows plans to nearly double refining capacity to 43m metric tonnes of palm oil, or 80% of total world output. "There is the threat of over capacity. But palm oil firms with the whole supply chain behind them, we are talking about having plantations to mills and ports, will be the kings." said Thomas Mielke, an analyst at industry publication Oil World.(Reuters)

Local businessman Datuk K.K. Eswaran has acquired a controlling stake in ABN Media Group which owns and operates Malaysia's first digital cable TV (CATV) network. ABN Media said that Allgrow Capital (M) Sdn Bhd, which is owned by Eswaran's family, had bought a controlling equity interest. "The acquisition will mark the entry of Datuk K. K. Eswaran into the local media industry," it said. ABN Media Group's digital CATV services are provided by Asian Broadcasting Network (M) Sdn Bhd that has its broadcast centre in Puchong Gateway and is scheduled to undertake trial runs. (Starbiz)

With its chapter closed on Crabtree & Evelyn's (C&E) global business venture by the end of this month, Kuala Lumpur Kepong (KLK), a plantation giant, is now more driven to undertake new expansion and strategic acquisitions to strengthen its core plantations and downstream oleochemical businesses. Expressing that the disposal of non-core C&E is the right decision, CEO Tan Sri Lee Oi Hian says: “KLK will steadily march along to capture opportunities for plantation development overseas while continuing to ride on our diversification programmes especially in oleochemicals.” (Starbiz)

Group Lotus Plc, the British sportscar maker ultimately owned by DRB-HICOM Bhd through Proton Holdings Bhd, has submitted a fresh plan to put its house in order, bankers familiar with the matter said. The plan was submitted to Lotus' six main creditors, the source said, adding that the revised plan was crucial to stem its losses. DRB-HICOM and Proton officials could not be reached for comments but a source from the financial sector, who has seen the revised plan, said it was a much more realistic plan. (BT)

The Employees Provident Fund (EPF) has ceased to be a substantial shareholder in Felda Global Ventures Holdings (FGVH) after trimming its stake in the plantation giant to 4.94%. A filing with Bursa Malaysia also showed that Lembaga Tabung Haji had trimmed its stake to 7.28%. (Starbiz)

Group Lotus Plc will start production on its new EXIGE S model by as early as this week. The car is described as the "ultimate lightweight high performance sportscar" with more than 100 horse power to its output. Ironically, DRB-HICOM is going ahead with the brand new Lotus model at a time when it is also doing major spring cleaning at the British sportscar maker. (BT)

Perusahaan Otomobil Kedua (Perodua) is optimistic about the results for the first half of 2012 financial year ended June 20, expected to be announced on Wednesday. "This year has been another challenging year but it helped us to be more resilient and we remain positive (on the result)," managing director Datuk Aminar Rashid Salleh said. (Bernama, Financial Daily)

In a rare comment, a top government official admitted that although the local environment provides strong fundamentals for the automotive sector, the national car manufacturers have not reaped economies of scale due to pricing and quality issues. "It is vital for manufacturers to improve their export capabilities to penetrate regional and international markets. This is an area where we are not competitive because of our scale as well as price and quality issues," said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. He said the government aspires to make Malaysia the regional hub for energy-efficient vehicles (EEVs). (Financial Daily)

Port of Tanjung Pelepas will spend RM1.5bn over the next three years on a modernisation drive that will enable it to accommodate the world’s biggest containerships. The port will invest in new cranes and berths and electrify existing rubber-tyred gantries to meet the berthing specifications of ships as large as Maersk Line ’s 18,000 teu vessels, the first of which is due to be delivered in 2013. The announcement follows the release of record throughput figures for the port, which saw volumes rise to 679,617 teu in June, the highest figure ever for the port. Tanjung Pelepas is one of four ports in Asia selected for the daily Maersk service, which will also call at Ningbo, Shanghai and Yantian. The port forecast that it would hit its goal of 8m teu for the year. In 2011, the port reported 7.5 teu, up 15% from the previous year. Plans for the expansion centre on two additional berths, eight new cranes at a cost of RM249m and 32 RTGs for RM201m. (Lloyd’s List)

Cagamas Bhd is issuing RM500m worth of 1, 3, and 5-year Sukuk Wakalah. The National Mortgage Corporation said that the Sukuk, which will be redeemed at full nominal value on maturity, are unsecured obligations of the company, ranking pari passu among themselves and with all other existing unsecured obligations of the company. (Bernama)

Penang Port (PP) says it is not poorly managed nor in dire need to be privatised, despite having to operate under numerous constraints. PP, which manages Penang Port, the country's oldest port, claimed that it had received no fresh capital injection, grants or any form of government assistance. PP is a wholly-owned unit of the Minister of Finance Inc. "We are not a sinking ship. In fact, we are poised to grow if we can continue with the five-year growth plan that we kicked off last year, which was endorsed by our owners. (BT)

Malaysia's land reclamation industry has grown by 68% since 2006 despite high project cost. Malaysia’s land reclamation industry is booming with a steady flow of construction jobs from the private and public sectors. Land reclamation is a complex engineering activity that requires extensive knowledge and study in hydrology, geotechnical and structural engineering. The technology involved and materials used depend largely on the environmental and geological factors at the site. The cost for land reclamation projects is high due to the large amount of raw materials needed, use of expensive and sophisticated heavy machineries, labour force, time to complete and most importantly, the feasibility studies and engineering designs that are unique to each site. (BT)

Tanjung Offshore's subsidiary, Gas Generators, has received a RM80m purchase order (PO) from Dubai's Havayar Trading for the supply of gas generator packages. The PO involves the engineering, construction, commissioning and delivery of gas generator packages, which are expected to be completed in July 2013. (Malaysian Reserve)

Karex Industries Sdn Bhd, the world's biggest condom maker, is looking to float its shares on Bursa Malaysia and tighten its grip on the global market. With factories in Pontian, Klang and Thailand, Karex Group churns out some three billion pieces of condoms a year. This works out to a 15% share of the world's condom market of 20 bn pieces a year. "We want to further expand our factories, including the one in Thailand. All in, we are producing three billion pieces now. We want to double our capacity to six billion pieces by 2015," said Karex executive director Goh Miah Kiat. We are also in discussion with a couple of merchant bankers on our company's initial public offering (IPO). (BT)

Plywood and other timber processing mills in Sarawak need to rely more on planted forests for their supply of raw materials following declining annual log production from natural forests and agro conversion areas. The state authorities projected log production to fall to about 7.6m cu m this year, down by over 20% from 9.61m cu m last year. Last year's production dipped to below 10m cu m for the first time in more than 20 years. (Star)

SapuraKencana unit acquired 74% stake in Singaporean QP
Sapurakencana Petroleum Bhd’s wholly-owned subsidiary, Geomark SB, has entered into a share-sale agreement with four companies to acquire 74,000 ordinary shares of SGD1 (RM2.52) each in Singaporean Quippo Prakash Pte Ltd (Singaporean QP). In an exchange filing last Friday, the oil and gas firm said SapuraKencana, through Geomark, would acquire the shares from the vendors for the sum of USD22.6m (RM71.8m) which represents 74% of the issued and paid-up capital of Singaporean QP. (Malaysian Reserve) Please see accompanying report.

MAS plans to be profitable by 2014 with further improvements
Malaysian Airline System Bhd (MAS) plans to return to profitability by 2014 by improving its product offering and service levels to attract customers, according to group chief executive officer Ahmad Jauhari Yahya. The financially ailing national flag carrier has cut 9% of its routes and intends to take off 36 planes this year, including phasing out its B747 fleet by Mar 2013, with network strategy focus on new and profitable routes. (Malaysian Reserve)

20120716 1055 Local & Global Economy Related News.

Malaysia-France trade reached RM16bn in 2011
Malaysia-France bilateral trade has been increasing sharply, clinching a record level of EUR4bn (RM16bn) last year, French Ambassador to Malaysia Martine Dorance said last Friday. Malaysia is now France’s second-largest partner, with exports totaling EUR2.2bn, mainly electronics and computer components at EUR1.2bn. Other sectors include rubber products, mineral products and petroleum products. (Malaysian Reserve)

Bank Negara Malaysia Governor, Tan Sri Zeti Akhtar Aziz, on 13 July said Malaysia's financial institutions were strong enough to face the impact of Europe's debt crisis following revelations that the European banks' exposure was estimated at less than 5% of the zone's GDP. (Bernama)

US Thomson Reuters/University of Michigan’s consumer sentiment index fell to 72.0 in Jul (73.2 in Jun), undershooting consensus of 73.5. (Bloomberg)

The US producer price index gained 0.1% mom in Jun (-1.0% in May), better than consensus of -0.4%, whilst on a yoy basis, the measure gained 0.8%, matching the pace of the previous month. (Bloomberg)

German Chancellor Angela Merkel gave no ground on Germany’s demands for more European control over member states in return for joint burden-sharing as she conceded that the bloc has yet to master the debt crisis. (Bloomberg)

Italy plans to sell public assets valued at as much as €20bn annually in order to cut its debt by one sixth within five years, Finance Minister Vittorio Grilli said. (Bloomberg)

Spain's new austerity plan will claw back €56bn (US$69bn) for the state between now and 2014. That figure excluded the effects of a planned energy and environment tax, said the document. The estimated impact of these measures is approximately €13.5bn in the remainder of 2012, €22.9bn in 2013, and €20bn in 2014. (Channel News Asia)

The ECB has advocated imposing losses on holders of senior bonds issued by the most severely damaged Spanish savings banks, though finance ministers have for now rejected the approach, according to people familiar with discussions. (WSJ)

The European Union's bailout fund is working on a €100bn package to prop up Spanish banks. (AP)

The European Union investigation into a “shocking” interest-rate rigging scandal in the world's biggest money market in London also includes Japan, EU Competition Commissioner Joaquin Almunia said. (AFP)

China’s Premier Wen Jiabao warned the momentum for a recovery in economic growth isn’t yet in place and that “difficulties” may persist for a while, but the current pace of economic expansion is within the targeted range and government measures to stabilize growth are “bearing fruit.” (Bloomberg)

China’s wages for urban households rose 13% yoy in 1H, and average monthly income for migrant workers rose 14.9%, according to d China's National Bureau of Statistics. (AWSJ)

China’s retail sales grew 13.7% yoy in Jun (13.8% in May), exceeding economist forecasts of 13.4%. (Bloomberg)

China’s business climate index declined to 126.9 pts in 2Q from 127.3 pts in 1Q. Meanwhile its entrepreneur confidence index weakened to 121.2 in 2Q from 123 pts in 1Q. (Bloomberg)

China's economy reported 7.6% yoy growth in 2Q12 (8.1% in 1Q12), the lowest since 1Q09. This was marginally lower than the 7.7% expected by the market. (China Daily)

China's industrial value-added output expanded 9.5% yoy in Jun, a pace faster than a month ago when it eased to a three-year low of 9.3%. (Xinhua)

China's fiscal revenue in the first half of this year grew 12.2% yoy to nearly Rmb6.4tr (US$1.01tr). (Xinhua)

China's urban fixed asset investment rose 20.4% yoy to Rmb15.07tr (US$2.38 trillion) in 1H12. The growth rate moderated by 0.5% pt compared to that in the first quarter, and was down 5.2% pts from the same period last year. (People’s Daily)

In the first half, land supply in China dropped compared to the same period last year. Land bids with a premium price over 50% decreased to 24 cases from 433 cases a year earlier. (China Daily)

India says it plans to issue fresh guidelines on sweeping new anti-tax evasion rules as it seeks to reassure rattled foreign investors and attract vital funds from abroad. The General Anti-Avoidance Rules (GAAR), introduced in this year's budget, had been widely criticised as a money-grabbing exercise by a government battling to curb its budget deficit. (Channel News Asia)

Singapore’s GDP fell an annualized 1.1% qoq in 2Q12, (+9.4% in 1Q12). The median estimate was for a 0.6% gain. (Bloomberg)

Singapore's retail sales growth almost ground to a halt in May, with just a 0.5% yoy increase (2.1% in Apr), and under expectations of a 2.6% gain. (Channel News Asia)

Bank Indonesia says it is confident inflation remains under control, prompting the central bank to hold its benchmark interest rate unchanged for a fifth consecutive month at 5.75%, last week. (Business Times)

The World Bank projects Indonesia’s economic growth in 2012 could fall to as low as 5.7% if the global crisis worsens. (IFT)

Bank Indonesia estimates that capital inflows from Europe will return to Indonesia in 4Q12, following the quantitative easing, bank recapitalization and lower interest rates in Europe. (IFT)

Bank Indonesia will introduce a monetary instrument that allows banks to swap their foreign currency Treasury bonds with foreign currency. This is the central bank’s strategy to deepen the financial market and stabilize the rupiah. (IFT)

The Aquino administration cited its target for the Philippines to land in the upper 30% of competitiveness rankings conducted by key international organizations by 2016. (Philippine Daily Inquirer)

The ADB reduced its inflation estimate for developing Asia to 4.4% this year from 4.6% in Apr. It cut its 2012 growth forecast for Asian economies excluding Japan to 6.6% from 6.9%, citing the impact of Europe’s debt crisis and slower expansion in China and India. (Bloomberg)

Thailand's ruling party said on Friday it would push ahead with plans to change the constitution after a court ruled that proposed amendments did not threaten the revered monarchy, a charge that might have led to the party's dissolution. The decision means the government is not in danger of falling and should ease political tensions that have spiraled in Thailand over the past few days. (Reuters)

The State Bank of Vietnam said the bad debt situation in the banking system is not as bad as feared by the public. (The Saigon Times)

The Economic Cycle Research Institute weekly leading index rose to 123.2 in the week ended July 6 from 121.9 the previous week, the highest level since May 11, when it was 124.5. The index's annualized growth rate rose to -2.2% from -2.8% a week earlier. (Reuters)

20120716 1048 Global Market Related News.

Asian Stocks Rise Amid Optimism on China Stimulus Outlook (Source: Bloomberg)
Asian stocks rose after China’s Premier Wen Jiabao said the government will increase measures to support growth in the world’s second-largest economy. Miner BHP Billiton Ltd., which gets more than a quarter of its sales from China, rose 1.2 percent in Sydney. Coal producer Whitehaven Coal Ltd. (WHC) soared 15 percent after Australian mining magnate Nathan Tinkler offered to buy out the rest of the company. Daekyung Machinery & Engineering Co. fell 8.3 percent in Seoul after a shipmaker dropped its bid for the chemical machinery maker. ZTE Corp., a Chinese telecommunications equipment maker, slumped 16 percent after saying its first-half profit may plunge 80 percent. The MSCI Asia Pacific Excluding Japan Index rose 0.3 percent to 403.89 as of 9:59 a.m. in Hong Kong, with about three stocks gaining for every two that declined. Japan’s equity markets are closed today for a public holiday.
“There remains significant capacity for China to stimulate further,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management. “This is not only from a monetary perspective, which includes further rate cuts or lowering the reserve required ratio again, but also the ability for additional targeted fiscal stimulus.”

Hong Kong Stocks Advance on China Stimulus Speculation (Source: Bloomberg)
Hong Kong stocks rose, with the benchmark index heading for a second day of advance, after Premier Wen Jiabao said China’s government will boost measures to support growth in the world’s second-biggest economy. Belle International Holdings Ltd. (1880), China’s largest retailer of women’s shoes, advanced 1.8 percent. China Everbright International Ltd., a renewable energy company, added 0.8 percent to its highest since January after winning a project to convert waste into energy in Hainan, China. Sun Hung Kai Properties Ltd. slipped 0.7 percent after the billionaire co- chairmen of Hong Kong’s biggest developer were charged with bribery and public misconduct by the city’s anti-graft agency.
“There remains significant capacity for China to stimulate further,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management. “This is not only from a monetary perspective, which includes further rate cuts or lowering the reserve required ratio again, but also the ability for additional targeted fiscal stimulus.” The Hang Seng Index (HSI) gained 0.3 percent to 19,141.60 as of 10:02 a.m. local time, with about three shares rising for every two that fell. The gauge dropped 3.6 percent last week amid concern slowing growth in China and the U.S, will hurt corporate profits. The Hang Seng China Enterprises Index of Chinese companies listed in the city added 0.2 percent 9,258.51.

U.S. Stocks Gain for Week, Erasing Loss on JPMorgan Rally (Source: Bloomberg)
U.S. stocks rose for the week, reversing losses on the final day, as a rally in JPMorgan Chase & Co. (JPM) and speculation China will boost stimulus measures tempered concern about earnings and the global economy. JPMorgan jumped 6.4 percent for the week as Chief Executive Officer Jamie Dimon said the bank will probably post record earnings for 2012 even after reporting a $4.4 billion trading loss. Procter & Gamble Co. (PG) surged 6.2 percent for the second- biggest gain in the Dow Jones Industrial Average. Technology and raw-material shares in the Standard & Poor’s 500 Index slumped more than 1.2 percent amid concern a slowdown in the global economic recovery will damp demand. The S&P 500 gained 0.2 percent to 1,356.78 for the week. The index jumped 1.7 percent on July 13 after falling for six consecutive days. The Dow added 4.62 points, or less than 0.1 percent, to 12,777.09 during the week.
“The market was oversold, JPMorgan news was not as bad, and we had some data that was a little bit better,” Sasha Kostadinov, portfolio manager at Cleveland, Ohio-based Shaker Investments LLC, which manages about $100 million, said in a telephone interview. “Any small change in the outlook can cause a big change, because there’s a lot of money to be put to work.”

European Stocks Rise for Sixth Straight Week; Aegis Jumps (Source: Bloomberg)
European stocks climbed for a sixth straight week, the longest winning streak in more than two years, amid speculation that central bank policy makers will add to stimulus measures to support the economy. Aegis Group Plc (AGS) soared 45 percent for the biggest advance in 19 years after Dentsu Inc. agreed to buy the advertising company. Temenos Group AG sank 26 percent as the Swiss maker of banking software cut its sale forecast and Chief Executive Officer Guy Dubois quit. The Stoxx Europe 600 Index climbed 0.7 percent to 256.26 this week, for the longest stretch of gains since April 2010. The measure has rallied 9.6 percent from this year’s low on June 4 as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy.
“We expect the European Central Bank to cut interest rates again and globally interest rates are being lowered to restart the economy,” said Pierre Mouton, a fund manager who helps oversee $6.5 billion at Notz Stucki & Cie. in Geneva. “European policy makers have made a strong commitment vis-a-vis banks. That eliminates systemic risk for the euro zone and makes investors more optimistic.”

Euro Near Two-Year Low Before Confidence, Inflation Data (Source: Bloomberg)
The euro traded 0.6 percent from its lowest level in two years before reports this week that may show stagnating inflation and weakening confidence in currency bloc as the deepening sovereign crisis curbs growth. The euro weakened versus most of its major peers after German Chancellor Angela Merkel said she hasn’t softened her stance on measures to stem debt contagion that’s prompted five euro states to seek international aid. Demand for the Australian and New Zealand dollars was supported as Asian shares rose and on prospects central banks to add to measures to prop up growth. “The overall picture is still pretty cautious,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There’s been a recession in the euro zone. I would still like to sell the euro on rallies.”
The euro lost 0.1 percent to $1.2237 as of 10:16 a.m. in Tokyo after falling to $1.2163 last week, the weakest level since June 2010. It bought 96.82 yen, 0.2 percent lower than the 96.98 close on July 13. Japan’s currency added 0.1 percent to 79.13 per dollar after completing a 0.6 percent advance last week to close at 79.18.

FOREX-Euro subdued after Italy rating downgrade
LONDON, July 13 (Reuters) - The euro hovered near two-year lows against the dollar on Friday after a Moody's downgrade on Italy added to an already bearish stance on the single currency, while commodity currencies rose on growth figures from China that met expectations. "The auction was not too bad but the bigger news is the double notch downgrade rather than an auction that has gone okay," said Derek Halpenny, European head of FX research at Bank of Tokyo Mitsubishi.

Treasuries Surge on Refuge Demand as Auctions Set Records (Source: Bloomberg)
Treasury yields fell close to all- time lows as an almost insatiable desire for the safest assets amid signs global growth is stalling helped the U.S. draw record rates at 10- and 30-year debt auctions. U.S. government debt rallied for a third consecutive week as Europe’s economy slipped toward its second recession in three years amid a worsening debt crisis, lower-than-forecast growth in China and the Federal Reserve disappointing some traders looking for a hint of more stimulus. Fed Chairman Ben S. Bernanke will present his semi-annual report on the outlook for the economy and monetary policy to Congress on July 18.
“Debt sales were strong even though yields were not far off their record lows, which underscores the fear in investor sentiment,” said Christopher Sullivan, who oversees $1.9 billion as chief investment officer at United Nations Federal Credit Union in New York. “The flight-to-quality demand is still high given the economic slowing in the U.S. and around the world, and the fact that we are no closer to a European resolution.” The yield on the 30-year bond fell nine basis points, or 0.09 percentage point, on the week to 2.57 percent in New York time, according to Bloomberg Bond Trader prices. It touched a record low of 2.5089 percent on June 1.

Retail Sales Probably Rose on Autos: U.S. Economy Preview (Source: Bloomberg)
Sales at U.S. retailers probably rose in June for the first time in three months, reflecting a pickup in demand for automobiles that outshined spending on other goods, economists said before a report this week. The projected 0.2 percent gain in purchases would follow a 0.2 percent decline in May, according to the median forecast of 72 economists surveyed by Bloomberg News ahead of the Commerce Department figures tomorrow. Other data may show the cost of living was little changed and manufacturing accelerated. Receipts at merchants other than auto dealers were probably little changed as a weakening job market sapped households of the confidence and the incomes needed to boost expenditures. Federal Reserve Chairman Ben S. Bernanke will address the outlook for growth when he testifies Congress this week and may hint at steps that can be taken to revive the expansion.
“The overall consumer picture is lackluster -- still growing -- but not particularly strongly,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “The momentum in the economy has clearly waned.”

Fed May Need to Begin New Asset Purchases, Lockhart Says (Source: Bloomberg)
Federal Reserve Bank of Atlanta PresidentDennis Lockhart said the central bank may need to begin a new program of asset purchases if recent economic weakness continues and undermines his forecast for a pickup in the second half of the year. “If the economy continues on the track indicated by the most recent incoming data and information, that forecast will become untenable, as will the policy premises underlying it.” Lockhart said today in Jackson, Mississippi. “My support for the current stance of policy rests on a forecast that sees a step-up of output and employment growth by year-end and into 2013.” Lockhart joins the ranks of Fed officials who are prepared to consider additional stimulus after a report showed that payroll growth lagged behind forecasts in June. The Atlanta Fed president cited the release of minutes from the central bank’s last meeting as showing as many as four policy makers are “quite receptive at this time” to further easing.
The policy-making Federal Open Market Committee voted last month to extend its maturity-extension program, known as Operation Twist, to provide more support for a slowing U.S. economy and said it would consider additional stimulus if needed.

New York Fed Says It Knew Barclays Underreported Libor (Source: Bloomberg)
The Federal Reserve Bank of New York became aware that Barclays Plc was underreporting borrowing costs for the London interbank offered rate in April 2008, according to documents released after U.S. lawmakers demanded information about the rate-rigging scandal. A Barclays employee explained to a New York Fed staff member that the bank “was underreporting its rate to avoid the stigma associated with being an outlier with respect to its LIBOR submissions, relative to other participating banks,” the New York Fed said in a statement posted today on its website. The person “also stated that in his opinion other participating banks were also under-reporting their LIBOR submissions.”
Members of Congress are seeking information from U.S. regulators about the scandal that led to Barclays being fined a record 290 million pounds ($451 million) and cost Chief Executive Officer Robert Diamond his job. At least a dozen banks are being investigated for manipulating Libor, the global benchmark for $360 trillion of securities.

Wen Warns China’s Economic Recovery Yet to Show Momentum (Source: Bloomberg)
China’s Premier Wen Jiabao warned the momentum for a recovery in economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported. Even so, the current pace of economic expansion is within the targeted range and government measures to stabilize growth are “bearing fruit,” the premier said during an inspection tour in southwest Sichuan province, according to a Chinese- language report from Xinhua yesterday. The article didn’t mention government policies toward the property market. Wen’s comments follow data that showed Asia’s largest economy had the weakest expansion in three years as Europe’s fiscal crisis sapped exports and a crackdown on property speculation curbed domestic demand. At the same time, a recovery in home sales and a jump in investment signaled lower interest rates and banks’ reserve requirements may be starting to arrest the slowdown.
“It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” Xinhua cited Wen as saying. “We need to comprehensively assess the situation and recognize the problems, difficulties and risks, in particular the downward pressure on the economy,” Wen said.

Easing Prices Bypass India as RBI Lacks Tetangco Scope (Source: Bloomberg)
Moderating inflation pressure across most of Asia offers central banks scope to cut interest rates further in coming months, with India an exception as consumer prices probably jumped at a faster pace last month. The Asian Development Bank lowered its inflation forecast for the region last week and China reported the smallest price gains in more than two years. By contrast, India today will report wholesale prices rose at a faster pace in June from a year earlier, according to the median estimate in a Bloomberg News survey. India’s accelerating inflation leaves its central bank constrained as counterparts across emerging economies take action. South Korea and China surprised markets with a reduction in interest rates this month and Governor Amando Tetangco said three days ago the Philippines has scope to ease monetary policy.
Emerging-market policy makers “have by far the greatest room to counteract economic weakness,” JPMorgan Chase & Co. analysts led by Jan Loeys, chief market strategist in New York, wrote in a July 13 note. They can “boost spending through monetary stimulus, fiscal stimulus, or simply by providing more clarity about their future actions,” they said.

Merkel Gives No Ground on Demands for Oversight in Debt Crisis (Source: Bloomberg)
Chancellor Angela Merkel gave no ground on Germany’s demands for more central control over euro member states in return for joint burden-sharing as the region struggles to contain the debt crisis. The German leader said yesterday she hadn’t softened her stance at last month’s summit in Brussels and that a so-called banking union involving a bloc-wide financial overseer will have to include joint oversight on a “new level.” She chided member states who had sought to slow moves toward greater central control “since the first summit” in the 2 1/2-year-old crisis. “All of these attempts will have no chance with me or with Germany,” Merkel said in an interview with broadcaster ZDF in Berlin.
Two weeks after a European Union summit aimed at bridging differences over crisis resolution, euro leaders are still squabbling over details of how to lift the bloc out of the turmoil. Merkel hardened Germany’s position that any attempt to share burdens in Europe -- such as jointly issued euro bonds or common banking bodies -- must first be met with greater cooperation and a handover of some sovereignty to Brussels. The euro fell to its lowest level against the U.S. dollar in more than two years last week, sliding to as low as $1.2163 on July 13. Europe’s most credit-worthy government bonds climbed, with German two-year note yields down to a record minus 0.052 percent, as investors sought havens from the euro crisis.

Italy Aims to Cut Its Debt by 20% by 2018, Grilli Tells Corriere (Source: Bloomberg)
Italy plans to sell public assets valued at as much as 20 billion euros ($24.5 billion) annually in order to cut its debt by one sixth within five years, Finance Minister Vittorio Grilli told Corriere della Sera in an interview published today. Under the plan, the government would sell assets each year worth as much as 1 percent of gross domestic product, Grilli told the Milan-based newspaper. That and annual growth of 1 percent would enable Italy to reduce the public debt “by 20 percent within five years,” Corriere cited the minister as saying. Grilli also said that the Italian economy will contract less than 2 percent this year, Corriere reported. That compares with a 1.2 percent GDP contraction forecast by the government on April 18. Italy’s public debt rose to 120.1 percent of GDP in 2011 and is projected to reach 123.4 percent this year, the government said in April.

Aiding Italy on Borrowing Costs Isn’t Justified, Weidmann Says (Source: Bloomberg)
Italy’s borrowing costs don’t justify asking the euro area’s rescue fund for help, Bundesbank President Jens Weidmann said. “Of course I can understand why a country would want to lower its refinancing costs,” Weidmann said in an interview with Boersen-Zeitung e-mailed to Bloomberg News by the German central bank he heads. “But because of the last-resort aspect of financial aid in the currency union, that alone can’t be a justification for granting it.” “If Italy stays the course on reforms, it’s on a good path,” Weidmann told the German newspaper. Asked whether the euro area’s third-largest economy needs to tap the planned European Stability Mechanism, he said, “No, I don’t see Italy in that situation.”
The European Central Bank Governing Council member’s comments indicate German reluctance to allow the government-run bailout funds to buy Italian bonds to insulate that country from the debt crisis. Italian Prime Minister Mario Monti has sought a “debt shield” against spillover from the crisis at Spain’s banks, which are getting as much as 100 billion euros ($122 billion) in rescue loans.

German, French Yields Fall to Records as Investors Seek Havens (Source: Bloomberg)
Europe’s highest-rated government bonds rose this week, pushing German two-year note yields down to a record minus 0.052 percent, as investors sought havens from the euro-area’s financial turmoil. Austrian, French, Belgian and Finnish two-year yields fell to all-time lows this week and those on similar-maturity Dutch debt dropped below zero for the first time. The European Central Bank said overnight deposits from financial firms slid to the lowest since December as it ended paying interest on excess cash after cutting interest rates. Italian notes rose this week even after Moody’s Investors Service cut the nation’s credit rating. “With no credible end in sight to the euro-zone debt crisis, bund yields continue to trend lower with the short-end trading in negative territory,” said Brian Barry, an analyst at Investec Bank Plc in London. “Despite remaining largely risk averse, investors who need to pick up yield are increasing exposure to the semi-core sovereigns that have maintained their high ratings.”
Germany’s two-year yield fell three basis points, or 0.03 percentage point, this week to minus 0.042 percent at 5 p.m. London time yesterday. The zero percent note maturing in June 2014 gained 0.06, or 60 euro cents per 1,000-euro ($1,223) face amount, to 100.08.

Greeks Favor Renegotiation of Loan Even at Risk of Euro Exit (Source: Bloomberg)
Almost three-quarters of Greeks want Antonis Samaras’s coalition government to insist on a renegotiation of the terms of the country’s international loan agreement, an MRB poll showed. Of 1,011 people surveyed, 74 percent said the coalition should insist on discussing the terms, even if such talks lead to the prospect of Greece leaving the euro area, according to the poll in the Sunday edition of the Athens-based Real News newspaper and pre-released today. That compared with 15.5 percent who said the government should accept the current terms of Greece’s bailout without any talks, according to the poll. Samaras, the leader of the New Democracy party, formed a coalition government with the socialist Pasok party and Democratic Left after an election on June 17. The vote followed an inconclusive May 6 election that underlined concern Greece might have to abandon the euro.

Weidmann Says Weaker Outlook, Cheaper Oil Justify Rate Cut (Source: Bloomberg)
The worsening of the euro area’s economic prospects and the decline in oil prices justify this month’s interest-rate cut by the European Central Bank, Bundesbank President Jens Weidmann, who is also an ECB Governing Council member, was cited as saying in an interview published today in Het Financieele Dagblad. The outcome of the last summit of European leaders left room for interpretation and was damaging because it gave the impression the meeting was about only a collective-liability arrangement for banks, the Amsterdam-based newspaper cited Weidmann as saying. Euro-area nations “should discuss giving up sovereignty with the same openness as the question of how to resolve the debt problem collectively,” he told the paper.
The involvement of non-European Union organizations in trying to resolve the euro-zone crisis can help because it brings a neutral party to the table, but it can also be a concern because they don’t fully grasp the complexity of the issue, Weidmann said in response to a question about the role of the International Monetary Fund, according to the newspaper.

Gilts Gain as Europe Debt Crisis Spurs Safety Demand (Source: Bloomberg)
U.K. government bonds gained for a second week and the pound strengthened versus the euro amid signs the euro-region debt crisis is deepening. Ten-year gilt yields dropped to the lowest in six weeks as Moody’s Investors Service downgraded Italy’s bond rating by two levels and reiterated its negative outlook. Sterling climbed to the strongest since November 2008 against the euro as investors bet the U.K. economy will outperform after the Bank of England released details of a new lending program to limit contagion from the single-currency area. “People are very nervous over the outlook in the euro region,” said Charles Diebel, the head of market strategy at Lloyds Banking Group Plc in London. “That continues to drive demand for gilts.”
The U.K. 10-year yield fell four basis points, or 0.04 percentage point, this week to 1.55 percent. The 4 percent bond due in March 2022 gained 0.395, or 3.95 pounds per 1,000-pound face amount, to 121.875. The yield dropped to 1.505 percent on July 12, the lowest level since June 1. Gilts have returned 1.4 percent this month, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. They gained 17 percent over the past year as investors sought alternatives to euro-area assets.

Swiss Stocks Rise on China Stimulus Speculation (Source: Bloomberg)
Stocks in Switzerland advanced, paring weekly losses, as China’s economy slowed down for a sixth quarter, fueling speculation policy makers will add to stimulus measures. Cie. Financiere Richemont SA led gains, adding 3.7 percent. Adecco SA (ADEN) rose 2.6 percent after Morgan Stanley predicted a short-term price increase. Ems-Chemie (EMSN) Holding AG climbed 1.2 percent after the Swiss supplier of resins to General Motors Co. raised its 2012 sales and profit forecast. The Swiss Market Index (SMI) climbed 0.6 percent to 6,181.81 in Zurich, and closed little changed for the week. The benchmark gauge has rallied 8.2 percent since its 2012 low on June 4 as Greek leaders formed a government and global central banks added stimulus to boost growth. The broader Swiss Performance Index added 0.5 percent today.
“They’ve got a lot of scope for just conventional measures intended to stimulate demand,” Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London, said in a Bloomberg Television interview with Caroline Hyde. “I think with the determination of the Chinese to do that we are going to see some modest pickup in momentum in the second-half of the year.”

20120716 1048 Global Commodities Related News.

Food crisis looms as importers sit out grain price highs
LONDON, July 12 (Reuters) - What looks to be the worst U.S. drought in a quarter of a century has given rise to an old-fashioned commodity rally on world markets, with key grain prices hitting highs which caused food crises in vulnerable parts of the globe last time around.
Seeking to protect their populations from hunger this time, many countries relying heavily on imports have held off for now, touting healthy stock levels and hoping other sources will come through and bring prices down.

China commodity demand may not pick up with GDP
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 13 (Reuters) - While China's second-quarter economic growth was encouraging insofar as it wasn't worse than forecast, it actually tells us very little about what commodity demand will be like in the second half.
Gross domestic product expanded 7.6 percent year-on-year, the weakest in three years, but weak enough to add to fears that China is having a hard landing.

Hedge Funds Bet Right Before Longest Winning Streak: Commodities (Source: Bloomberg)
Hedge funds boosted their bullish commodity bets above 1 million contracts as mounting speculation that China will take more steps to boost growth spurred the longest rally in prices since February. Speculators raised their net-long positions across 18 U.S. futures and options by 8.9 percent to 1.05 million contracts in the week ended July 10, Commodity Futures Trading Commission data show. That’s the highest since April 3. Wagers on a wheat rally reached a record. The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed for a third consecutive week, jumping 10 percent in the longest winning streak since Feb. 24. Global equities climbed the most in two weeks on July 13, ending the longest slump since November, after a government report showed China’s economy last quarter slowed to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus measures.
Federal Reserve Bank of Atlanta President Dennis Lockhart said the same day that the central bank may need to begin a new program of asset purchases if recent economic weakness persists. “The Chinese numbers are telling us that there will be more easing,” said James Paulsen, the chief investment strategist at Wells Capital Management, which oversees about $333 billion of assets. “People realize that the effect of the easing that we saw in some countries will be realized over the next few months. There is a change in the direction of the wind because of a combination of these factors, and probably we are seeing some confidence building.”

Grains, Soybeans Extend Rallies on Expanding U.S. Dry Weather (Source: Bloomberg)
Corn futures rallied to a 10-month high, wheat reached the highest since February 2011, and soybeans gained on signs that a drought is expanding in the main growing region of the U.S., the world’s biggest exporter. A “large-scale, intense heat wave” will affect most of the central U.S. during the next 10 days, increasing stress on crops after the seventh driest May-to-June period since 1895, T- Storm Weather LLC said in a report. At least 50 percent of the growing region was pressured by temperatures above 90 degrees Fahrenheit (32 degrees Celsius) in 10 of the last 14 days. This month may be the warmest July in 117 years, the forecaster said. “There is no relief in sight, and most crops are running out of soil moisture to stay alive,” Gregg Hunt, a market analyst at Archer Financial Services Inc. in Chicago, said in a telephone interview. “This is setting up to be an international disaster.”
Corn futures for December delivery climbed 1.1 percent to close at $7.4025 a bushel at 1:15 p.m. on the Chicago Board of Trade, after reaching $7.49, the highest for the most-active contract since Sept. 13. Prices gained 6.8 percent for the week, the fourth straight advance and the longest since November.

GRAINS-Corn extends gains on supply woes, wheat near 17-mth top
SINGAPORE, July 13 (Reuters) - Chicago corn rose for a second straight day extending its drought-driven rally over four weeks to 45 percent, with little relief expected for the crop which has been hit by the worst drought in the U.S. grain belt in 25 years.
"A correction in prices after the release of USDA data has given opportunity for traders to buy back into the market," said Serene Lim, a commodities analyst at Standard Chartered Bank in Singapore. "We are going to see more heat and dryness in the Midwest which may severely impact soybeans as well."
Britain's wheat area highest since 2008-HGCA survey
LONDON, July 13 (Reuters) - Wheat planting in Britain rose two percent to the highest level since 2008, the Home-Grown Cereals Authority said on Friday issuing results of a survey of crops to be harvested this year.
The areas planted with rapeseed and barley also increased.

Australian wheat yields threatened by cold weather
SYDNEY, July 13 (Reuters) - Cold weather across Australia's two largest wheat growing states has slowed crop growth, officials said, threatening yields in the world's fourth-largest exporter and adding to concerns about the risk of dry weather later in the year if El Nino returns.
The grains market is currently very sensitive to any hint of weather damage after a U.S. heatwave has boosted

No flood damage to Russia grain terminal, loadings to rise
NOVOROSSIISK, Russia, July 13 (Reuters) - Russia's largest grain export terminal, the Novorossiisk Grain Terminal on the Black Sea, expects exports to rise in the new crop year to 6 million tonnes of grain even though analysts predict overall Russian exports may fall, its deputy director said.
Sergey Chebotareff, deputy director of the terminal, said in an interview in the port of Novorossiisk late on Thursday the terminal loaded nearly 5.8 million tonnes last year out of Russia's record total exports of 28 million tonnes.

In Iowa, hope fades as relentless drought decimates crops
WELTON, Iowa, July 12 (Reuters) - Bob Bowman runs his hand over a slender green corn leaf here on his Iowa farm, and sighs.
"This corn should be as high as my head right now, and it is only waist high," he says, as a cool morning breeze belies the 90-degree Fahrenheit temperatures forecast to descend by afternoon in Welton, Iowa.

India's monsoon revives, drought fears diminish
NEW DELHI, July 12 (Reuters) - India's monsoon rains were above average in the past week for the first time in the current season, the weather office said, as the downpours resumed after a worrying fortnight-long pause over the central part of the country.
The annual rains are crucial for farm output and economic growth as about 55 percent of the South Asian nation's arable land is rain-fed. The farm sector accounts for about 15 percent of a nearly $2-trillion economy, Asia's third-biggest.

W.Canada heat moderates, rain to cool crops
WINNIPEG, Manitoba, July 12 (Reuters) - A heat wave this week across the Western Canada canola and grain belt has moderated slightly, and rains forecast into next week should sprinkle some relief onto stressed crops, an agricultural meteorologist said.
Temperatures that were forecast to reach around 35 degrees Celsius (95 degrees Fahrenheit) by midweek came in slightly cooler in some areas, said meteorologist Andrew Owen of Kansas City, Kansas-based World Weather Inc, and rain was falling on Thursday morning in western and central Manitoba.

SOFTS-Cocoa steadies, eyes on demand, sugar edges up
LONDON, July 13 (Reuters) - Cocoa futures were steady digesting the previous session's losses, after a sharp fall in European cocoa grindings indicated a slowdown in chocolate demand.
Sugar and coffee markets edged higher, supported by a firmer commodities complex with markets including oil and copper rising.

China cocoa powder buyers renegotiating contracts in SE Asia - trade
SINGAPORE, July 13 (Reuters) - Several cocoa powder buyers in China are renegotiating contracts with grinders in Southeast Asia after prices of the product used in chocolate, beverages and ice cream fell more than 20 percent in the last six months, three dealers said on Friday.
No details were immediately available on the quantity involved.

Light rain, no frost seen for Brazil's coffee crop
SAO PAULO, July 12 (Reuters) - Light rain will fall today over Brazil's coffee belt, and near freezing temperatures in isolated regions of the coffee belt will not damage production areas, local meteorologists Somar said on Thursday.
Rains began falling early on Thursday in Parana state, the southernmost state of Brazil's coffee belt and most exposed to cold snaps crossing over the Andes and Argentina. Showers should spread through the day but then clear by Friday in the leading growing states, Somar said in a daily coffee weather bulletin.

Brazil's sugar output sags due to rains - Unica
SAO PAULO, July 12 (Reuters) - Wet weather over Brazil's cane belt continues to drag down sugar production in the world's largest supplier of the sweetener, with output trailing the last crop by 29 percent by the end of June, milling industry association Unica said on Thursday.
Brazil's main center-south cane region put out 6.69 million tonnes of sugar from April through June compared with 9.4 million tonnes produced over the same period last year.

Oil Drops From One-Week High on Concern China Economy Weakening (Source: Bloomberg)
Oil fell from the highest close in more than a week after Premier Wen Jiabao said China’s economic recovery hasn’t gained momentum, stoking speculation that demand may ease in the world’s second-biggest crude consumer. Futures slid as much as 0.5 percent in New York, slipping for the first time in four days. Wen said “difficulties” may persist for a while, according to the official Xinhua News Agency. Abu Dhabi started exporting its first crude through a pipeline that bypasses the Strait of Hormuz, shipping supplies to a refinery in Pakistan. Iran has threatened to shut the waterway, a transit route for about a fifth of the world’s oil shipments, in response to sanctions on its nuclear program. “News of China’s slowing growth is affecting markets,” Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said in a telephone interview yesterday. “The opening of the Fujairah pipeline that bypasses the Strait of Hormuz also means improved security.”
Oil for August delivery dropped as much as 42 cents to $86.68 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.70 at 11:52 a.m. Sydney time. The contract gained 1.2 percent to $87.10 on July 13, the highest close since July 5. Prices are 12 percent lower this year.

OIL-Brent rises, above $101 as China cooling shows need for policy action
SINGAPORE, July 13 (Reuters) - Brent crude rose above $101 on Friday as a slowdown in China's economy renewed investor expectations that the central bank will announce more measures to revive growth, with fears of supply disruptions providing additional support.
"The headline GDP print of 7.6 percent was far from jaw-dropping stuff," said Tim Waterer, senior trader at CMC markets, in a report. "However, it was a case of small mercies for the market, with risk assets able to claw back some ground."

China's June oil demand down 0.4 pct on yr
BEIJING, July 13 (Reuters) - China's implied oil demand fell 0.4 percent in June from a year earlier, contracting for the second time in three months as refineries scaled back production to trim bulging stockpiles.
The world's second-largest oil user burned 8.96 million barrels of oil per day (bpd) last month, the lowest since October 2010, Reuters calculations based on preliminary government data showed on Friday.

Long-term oil price expectations converge on $90-95
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 12 (Reuters) - In the first six months of 2012, the most remarkable thing about oil prices is not how volatile they have been but how stable.
Spot prices have been whipped around by supply disruptions in the North Sea, Yemen, Syria and Iran, as well as inventory building by Saudi Arabia, frenzied speculation about an imminent air strike on Iran, and the ebb and flow of hopes for the world economy.

Wilbur Ross Says U.S. Coal Is Facing Years of Headwinds (Source: Bloomberg)
Billionaire Wilbur Ross, who built a company from distressed U.S. coal assets and sold it last year for $3.4 billion, says the industry’s current slump differs from earlier setbacks and may last for years because of the shale-gas boom. A combination of cheaper natural gas, environmental regulations and a mild winter has spurred the closure of mines and the loss of thousands of mining jobs in the U.S. Domestic demand is at a 24-year low and the fuel has lost its status as the leading source of electricity, with gas accounting for the same share for the first time in at least four decades. Ross, 74, started International Coal Group Inc. after buying Horizon Natural Resources Co., a mining company that went bankrupt 10 years ago amid a recession. While St. Louis-based Patriot Coal Corp. (PCXCQ) filed for bankruptcy protection last week, he doesn’t see any immediate buying opportunities.
“Last time the cycle was this bad, the problems were essentially just cyclical,” Ross said in a July 10 e-mailed response to questions. “This time the major secular trends are far more likely to be unfavorable for years to come.”

20120716 1047 Soy Oil & Palm Oil Related News.

ITS CPO export down 21.3% to 563,603 tonnes for the period of 1~15 Jul 2012.

VEGOILS-Palm oil gains on supply concerns, ends week lower
SINGAPORE, July 13 (Reuters) - Malaysian crude palm oil futures ended higher as concerns over tighter global oilseed supply came back into play, while traders were mostly relieved that China's gross domestic product data landed in line with forecasts.
The market shrugged off forecasts of weekend rain in parts of the U.S. Midwest, investors betting on lower soybean output after the U.S. Department of Agriculture cut yield estimates in its Thursday report.

India's June refined palm oil imports down from May-trade
NEW DELHI, July 13 (Reuters) - India imported 124,125 tonnes of refined palm oil in June, down nearly 25 percent from May and broadly in line with quantities expected according to the average of a Reuters poll, data released by a leading trade body showed on Friday.  
Total vegetable oil imports in June were 783,315 tonnes, down 12.7 percent from 896,921 tonnes in the previous month, the data from the Solvent Extractors' Association (SEA) showed.

Argentine soy harvest on target, down 20 pct yr/yr
BUENOS AIRES, July 12 (Reuters) - Argentina's 2011/12 soy harvest has come in at an expected 39.9 million tonnes, but 20 percent lower than the previous year's crop after a Pampas dry spell dashed early-season hopes of bumper crop, the Buenos Aires Grains Exchange said on Thursday.
Last year's soy take in Argentina - the world's top exporter of derivatives such as soyoil and meal - was 48.9 million tonnes, according to government data. The country's biggest soy crop ever was the 53 million tonnes collected in 2009/10.