Wednesday, July 18, 2012

20120718 1819 FCPO EOD Daily Chart Study.

FCPO closed : 2994, changed : -68 points, volume : higher.
Bollinger band reading : side way range bound.
MACD Histogram : falling, seller taking exposure.
Support : 2970, 2950, 2920, 2900 level.
Resistance : 3020, 3050, 3070, 3100 level.
Comment :
FCPO closed recorded substantial losses for the 2nd day with better volume changed hand. Soy oil currently trading weaker after overnight closed recorded loss while crude oil price currently pulling back lower after yesterday gains.
Declining exports and gloomy China and the U.S. economy outlook raised concern on slowing down demand will continue to take place for a longer period sent FCPO price lower by more than 100 points in 2 days despite higher crude oil price and dry weather development across U.S. supporting soy oil prices.
Technical chart study adjusted to calling a side way range bound market development with immediate resistance at middle Bollinger band level and MACD indicator having negative crossed down.
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.

20120718 1749 FKLI EOD Daily Chart Study.

FKLI closed : 1645.5 changed : +3 points, volume : lower.
Bollinger band reading : upside biased with possible pullback correction.
MACD Histogram : resumed rising, buyer in control.
Support : 1640, 1630, 1620, 1610 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed recorded gain for the 4th day hitting new all time high with quiet volume exchanged doing half point premium compare to cash market that also closed higher. Overnight U.S. markets rebounded and today Asia markets ended mixed while European markets currently registering small gain.
Global market having mixed reaction after U.S. Federal Reserve said prepared to implement stimulus measure with the current slowing economy and jobs recovery while China premier continue to give warning statement on its declining economy growth development. On the other hand, some European banks reported better than estimates profit.
Back home, Malaysia market continue to stayed bullish with daily technical chart study remained calling an upside biased market development with possible pullback correction.
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.

20120718 1731 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.

20120718 1618 Global Markets & Commodities Related News.

GLOBAL MARKETS: Asian shares were on the backfoot after Federal Reserve Chairman Ben Bernanke offered a gloomy view of the U.S. economy, but hopes that the central bank is moving closer to more stimulus measures limited the day's losses. European shares were likely to rise, mirroring overnight gains on Wall Street, with above-forecast earnings from some U.S. firms raising expectations that the European reporting season could also surprise markets on the upside. U.S. stocks rose on Tuesday after Coca-Cola and Goldman Sachs joined the growing roster of S&P companies that beat profit forecasts and as Federal Reserve Chairman Ben Bernanke left the door open to more stimulus.

FOREX: The euro rose versus the made limited gains against the dollar after Federal Reserve Chairman Ben Bernanke said the central bank is ready to support the U.S. economy if needed, without being more specific.

FOREX-Yen gains as risk appetite wanes
TOKYO, July 18 (Reuters) - The yen rose against its major counterparts in Asia on Wednesday as investors' appetite for risk faded ahead of an address later in the session by Federal Reserve Chairman Ben Bernanke, a day after he flustered markets with mixed signals.
Bernanke will address the House Financial Services Committee, following his testimony on Tuesday to the U.S. Senate Banking Committee that was downbeat on the U.S. economy, but contained no explicit outline of stimulus steps.

China home prices show signs of stabilising in June
China home prices were flat in June versus May, calculations based on official data showed on Wednesday, breaking eight straight months of decline in a tentative sign that pro-growth government economic policies are gaining traction.

Bernanke offers gloomy view but few new hints on easing
Federal Reserve Chairman Ben Bernanke on Tuesday offered a gloomy view of the economy's prospects, but provided few concrete clues on whether the U.S. central bank was moving closer to a fresh round of monetary stimulus.

GRAINS: U.S. corn rose as the Midwest continued to endure its worst drought in over 50 years, increasing fears of further declines in yield forecasts as 2012/13 supplies tighten.

Gasoline prices dampen US inflation, Fed action eyed
U.S. consumer prices were flat in June as the cost of gasoline dropped, offering some relief for cash-strapped Americans and scope for the Federal Reserve to ease monetary policy further to help the faltering recovery.

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


Euro Coal-Prices steady, Colombia bombs ignored
LONDON, July 17 (Reuters) - Physical prompt coal prices were again little changed on Tuesday although stronger oil gave some support in earlier trading.
"Oil was higher but fell back in the afternoon, pulling swaps with it, but there were no big moves in other markets to affect coal," one European trader said.


China daily crude steel output dips over July 1-10 -industry data
SHANGHAI, July 18 (Reuters) - China produced 1.958 million tonnes of crude steel a day over the July 1-10 period, down 0.4 percent from the preceding 10 days, industry data showed on Wednesday.
Daily output for large members of the China Iron & Steel Association (CISA) edged up 0.44 percent to 1.657 million tonnes over the period from the preceding 10 days, Chinese industry consultancy Custeel.com said, citing CISA data.

BHP iron ore output up, China worries clip shares
MELBOURNE, July 18 (Reuters) - BHP Billiton  posted strong growth in iron ore production in the June quarter and said it expects to lift Australian iron ore output by 5 percent in the 2013 financial year, despite risks of cooling demand in top customer China.
With Australia's top three iron ore producers, Rio Tinto , BHP and Fortescue Metals Group , busy expanding output, worries are growing over a profit squeeze with iron ore prices down around a quarter from a year ago as Chinese steel mills cut stocks.

OIL: Brent crude slipped below $104 a barrel, snapping five days of gains as Federal Reserve Chairman Ben Bernanke offered no signs of further monetary stimulus to boost growth in the world's top oil consumer.


Iron Ore-Spot hits 8-month low as China steel market sags
SINGAPORE, July 18 (Reuters) - Price offers for imported spot iron ore cargoes in top buyer China fell further after the benchmark ate hit its lowest since November, as a weak steel market thinned demand for the raw material.
"People have been comparing this year to the 2008 crisis. The difference is in 2008, traders wanted to get a loan and the banks refused. But this year, banks want to lend, but traders have refused because they are really pessimistic about the market and the global economy," said an iron ore trader in the port city of Rizhao in China's eastern Shandong province.


BASE METALS: Copper traded higher in what traders called a technical rebound from a fall of 1.2 percent in the prior session after the U.S. Federal Reserve gave few concrete hints of future stimulus measures for the world's largest economy.

PRECIOUS METALS: Gold traded below $1,580 an ounce, after the release of Bernanke's prepared remarks to the Senate Banking Committee, in which he simply repeated the Fed's pledge to act if needed.

METALS-Copper snaps two sessions of losses; gains seen limited
SHANGHAI, July 18 (Reuters) - Copper traded higher on Wednesday in what traders called a technical rebound from a fall of 1.2 percent in the prior session after the U.S. Federal Reserve gave few concrete hints of future stimulus measures for the world's largest economy.
But gains are likely to be capped by lingering worries over the global economy after Fed Chairman Ben Bernanke painted a bleak picture of U.S. economic prospects and as the euro zone struggles with debt problems.

PRECIOUS-Gold steady above $1,580 on Fed stimulus uncertainty
SINGAPORE, July 18 (Reuters) - Gold stayed put above $1,580 an ounce on Wednesday, after dropping in the previous session when the U.S. Federal Reserve Chairman Ben Bernanke disappointed gold bugs by offering no signs of imminent monetary stimulus measures.
The central bank chief reiterated the stance that the Fed was prepared to take further action should the economic conditions worsen, but offered few hints on the timing of such action.


Falling capesize rates pull Baltic index down
July 17 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday for the sixth straight day on dropping capesize rates.
"We continue to expect the oversupply of tonnage to keep rates relatively weak over the near to intermediate term," analyst Michael Webber of Wells Fargo said.

20120718 1125 Global Markets & Commodities Related News.

GLOBAL MARKETS-Asian shares, euro firmer on Fed easing hopes
HONG KONG, July 18 (Reuters) - Asian shares edged higher on hopes the U.S. central bank has left the door open for more stimulus measures later in the year, after chairman Ben Bernanke outlined a gloomy view of the U.S. economic recovery.
Quarterly earnings from the likes of Goldman Sachs  and Coca-Cola  came in better than expected, calming concerns about the impact of the global slowdown and underpinning mild gains in stocks.

COMMODITIES-Oil up for fifth day, corn nears record highs
NEW YORK, July 17 (Reuters) - Oil rose for a fifth straight day on Tuesday, proving its resilience to other commodity markets, after Federal Reserve Chairman Ben Bernanke left the door open for more stimulus but did not say when that would occur.
"It's post-Bernanke buying because, while he was not explicit about doing something, the door is clearly open," said John Kilduff, partner at Again Capital LLC in New York.

Brent de-links from global oil balance
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 17 (Reuters) - Far too many analysts and commentators are still linking rising Brent futures prices to geopolitical tensions in the Middle East and macroeconomic factors, rather than looking for a more localised cause in the North Sea.
It is always tempting to seize on a single piece of hard evidence to make a larger point, especially when that data confirms an already-held belief (something which behavioural economists call "confirmation bias"). But in this case it could not be more wrong.

US crude stocks fall, products mixed-API
NEW YORK, July 17 (Reuters) - U.S. crude inventories fell more than analysts expected last week, and oil product inventories were mixed as gasoline stocks fell unexpectedly and distillates rose, data from the American Petroleum Institute showed on Tuesday.
Crude inventories fell by 2 million barrels in the week to July 13 compared with a forecast for a 1.2-million-barrel decline in a Reuters poll of analysts.

Iran offers to insure foreign ships to skirt EU ban
DUBAI, July 17 (Reuters) - Iran said it would insure any foreign ships that enter its waters, in an effort to skirt a European Union ban on insuring ships carrying Iranian crude that has hampered the country's oil exports.
"The Islamic Republic of Iran will take all responsibility for insuring any foreign shipping line and any ship that enters Iranian waters," the Fars news agency on Tuesday quoted Seyyed Ataollah Sadr, the managing director of Iran's Ports and Maritime Organization, as saying.

Iran arrests oil decline as China imports record
DUBAI, July 17 (Reuters) - Iran is set to arrest a slide in oil shipments in July as China increases imports to a record high to account for more than half of Iran's crude exports and prevent a further slump in Tehran's oil revenues, an industry report said.
Iranian supplies are expected to average 1.084 million barrels a day in July, little changed from 1.094 million bpd of exports in June, in what Geneva-based consultancy Petrologistics said was a preliminary report.

Oilfield service outlook dims as offshore view brightens
July 17 (Reuters) - A brightening outlook for offshore drillers indicates they will emerge looking relatively healthy from what is set to be a tough round of quarterly earnings for companies serving the oil and gas business.
Brisk production and exploration activity at sea contrasts with the troubles facing U.S.-focused oilfield services companies. Halliburton  and Baker Hughes  face supply chain challenges and costlier materials, which have been flagged by analysts and companies for months.

OIL-Oil up on Bernanke leaving stimulus door open
NEW YORK, July 17 (Reuters) - Oil prices rose a fifth straight session on Tuesday, after U.S. Federal Reserve Chairman Ben Bernanke left the door open for more monetary stimulus but gave no signal on whether the Fed was closer to such a move.
"It's post-Bernanke buying because, while he was not explicit about doing something, the door is clearly open," said John Kilduff, partner at Again Capital LLC in New York.

NATURAL GAS-US natgas futures end down for 2nd day, heat limits loss
NEW YORK, July 17 (Reuters) - U.S. natural gas futures, lightly pressured by milder late-week weather forecasts, ended lower on Tuesday for a second day, but the current heatwave and expectations for another light weekly inventory build on Thursday helped limit selling.
"The overall trend for hotter weather has backed off. It's still above normal, but as we said the other day...less hot," Gelber & Associates analyst Pax Saunders said in a report.

EURO COAL-Prices steady, Colombia bombs ignored
LONDON, July 17 (Reuters) - Physical prompt coal prices were again little changed on Tuesday although stronger oil gave some support in earlier trading.
"Oil was higher but fell back in the afternoon, pulling swaps with it, but there were no big moves in other markets to affect coal," one European trader said.

20120718 1001 Local & Global Economy Related News.

The government is currently engaging with all quarters to provide more in-depth knowledge on the proposed goods and service tax (GST), said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah. He said the authorities, through many initiatives, were in the consultation phase of the new tax involving the Malaysian public, business community and the private sector. The GST Bill was tabled in Parliament for first reading in Dec 2009 but its second reading, originally planned for Mar 2010, was postponed. (BT)

The Inland Revenue Board (IRB) is eyeing an annual tax revenue growth of 15%, from a record RM109.7bn collected last year, under its newly-launched IRB Corporate Plan 2012-2015. CEO Tan Sri Mohd Shukor Haji Mahfar said the target was within reach as the board has identified ways to improve tax administration and compliance for direct tax collection. The three-year strategic plan, which complements the 10th Malaysia Plan, will focus on tax management, service delivery, organisation risk management, information technology management, coordination, human resource optimisation, human capital development and teamwork. (BT)

Consumer confidence in Malaysia rose 4 pts to an index of 111 in 2Q12, a six-year high according to the latest global online consumer confidence findings by Nielsen. Nielsen said Malaysia advanced to fifth place from seventh among the 56 countries surveyed, after Indonesia (120), India (119), the Philippines (116) and Saudi Arabia (115). (Bernama)

After two quarters of contraction, the Retail Trade Index (RTI) finally breached the 100 pts threshold to settle at 119.4 pts in 2Q12 (85.3 pts in 1Q12). Heightened consumer spending due to various government initiatives may have shored up retail spending, according to the Malaysian Institute of Economic Research (Mier). (Bernama)

Malaysia's economic scenario next year will depend on domestic demand and external factors, particularly developments unraveling in the protracted euro zone debt crisis. Malaysian Institute of Economic Research (Mier) Executive Director Dr Zakariah Abdul Rashid said the global economic picture was not very encouraging as China's economy was moderating while Europe's was shrinking. The continuing weaknesses in the US, particularly its weak job market, was also contributing to the sluggish economy. The infrastructure contracts and the completion of already-commissioned projects under the ETP will likely to sustain investment momentum this year amid a boost to consumer spending will bode well for the economy, Mier said. (Bernama, Financial Daily)

Weakness in the global outlook clouds Malaysia’s prospects given the country‟s close integration with the world economy, according to the Asian Development Bank (ADB). In its revised Asian Development Outlook (ADO) 2012 indicated that growth in Malaysia is moderating to about 4% in 2012, then quickening to 5% in 2013 as the external environment improves and domestic demand will again play its role to anchor growth in the region. Inflation rate will most likely recede to 2.4% because of the moderation of domestic demand coupled with the lower prices of imported commodities. Inflation is predicted to pick up to 2.8% in 2013. (Financial Daily)

Thailand's car sales in Jun surged to 123,471 units, up 75.7% yoy (107.6% yoy in May), driven by a recovery in both domestic and external demand. (Reuters)

The Thai cabinet approved a Baht15bn budget to shore up rubber prices, of which Baht10bn will come from the state Rubber Estate Organisation and the remaining Baht5bn will be an extra allocation. (Bangkok Post)

Singapore: Export growth unexpectedly quickens on pharmaceuticals

Singapore’s export growth unexpectedly quickened in June as pharmaceutical shipments rebounded, countering a smaller increase in electronics sales. Non-oil domestic exports climbed 6.8% from a year earlier, after a 3.2% gain in May, the trade promotion agency said. The median of 13 estimates in a Bloomberg News survey was for a 2% increase. (Bloomberg)


India's potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity since the financial crisis of 2008-09 has increased now, Reserve Bank of India Governor Duvvuri Subbarao said. (WSJ)

FDI in China fell by 3% in 1H12 to US$59.1bn, well below the US$60.89bn recorded in the same period last year, according to the commerce ministry. (AFP)

China: Boosts treasuries holdings amid slowing economic growth

China, the largest foreign US creditor, boosted its holdings of government securities in May to the most in six months as the American economy stalled and Europe’s sovereign-debt crisis deepened. Chinese holdings rose 0.4% to USD1.17tn, Treasury Department data released show. Those of Japan, the US’s second-largest lender, rose 1.4% to an all-time high of USD1.11tn. Net foreign purchases of Treasuries increased USD54.2bn, or 1%, to a record USD5.26trn in May, the data show. (Bloomberg)

Germany: Investor confidence falls to six-month low
German investor confidence declined for a third month in July as the euro area’s debt crisis and cooling global demand dimmed the economic outlook. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to minus 19.6 in July from minus 16.9 in the previous month. (Bloomberg)


Greece is seeking extra money from its international creditors in the form of a bridge loan to cover a €3.1bn bond redemption entirely held by the ECB in late Aug and is hoping to avoid introducing additional cutbacks for this year. The government is putting together a plan to save €11.5bn (US$14bn) over the next two years. (WSJ)


Italy: Contracted more than 0.5% in second quarter, BOI says
Italy’s recession-hit economy shrank more than 0.5% in the three months through June amid the European debt crisis and declining domestic demand, the Bank of Italy said. The drop in GDP was “slightly more than half a percentage point” in the period, the central bank said. Industrial output probably fell 1.5% in the second quarter from the first, the Rome-based bank said. (Bloomberg)

US: Consumer price index unchanged, core up 0.2%
The cost of living in the US was little changed in June, a sign inflation may stay subdued as Federal Reserve officials have predicted. No change in the consumer-price index followed a 0.3% drop in May, a Labor Department report showed. The measure matched the median forecast of economists in a Bloomberg News survey. The so-called core measure that excludes volatile food and fuel costs rose 0.2% for a fourth month. (Bloomberg)


US Federal Reserve Chairman Ben Bernanke admitted that US economic data had been "disappointing" and that a future reduction in unemployment would likely prove "frustratingly slow." He added that revelations that the Libor had been rigged were "very troubling," undermined confidence in the financial system and should be fixed. He also said that the central bank was considering a range of tools it could employ to help the economy but he hewed closely to the message of watchful waiting that the central bank's policy panel delivered in June. (AFP, Reuters)

The US ICSC-Goldman Store Sales Index experienced no change on a wow basis in the 14 Jul week (2.0% in the previous week), whilst on a yoy basis, the measure gained 2.6% (3.0% in the earlier week). (Bloomberg)

US industrial production gained 0.4% mom in Jun (a revised -0.2% in May), overshooting consensus of 0.3%. The capacity utilisation rate rose to 78.9% from a revised 78.7% in May. Analysts expected 79.2%. (Bloomberg)

20120718 1000 Malaysia Corporate Related News.

KEuro to sign West Coast Expressway concession within 2 months
Kumpulan Europlus (KEuro) is set to ink the concession agreement for the West Coast Expressway within the next two months. Its chairman Datuk Abdul Halim Mustapha said on Tuesday the draft agreement was ready to be signed. “Construction work will begin in the second quarter of 2013 while a tender will be called in the early part of 2012”, said Abdul Hamid. He said work on the Banting to Taiping stretch would take five years with the first three years in works will take place in the Selangor stretch. (Financial Daily)

SILK Unit wins ExxonMobil job
SILK Holdings unit Jasa Merin (M) SB has won a RM35m contract from ExxonMobil Exploration and Production Malaysia Inc for two anchor-handling tug-supply vessels. It said the 18-month contracts were expected to take effect this month, with an extension option exercisable by ExxonMobil for 12 months. “The contracts are expected to contribute positively to the group’s earnings and assets for the financial tears, ending 31 July 2012 and 2013,” it added. (StarBiz)

Naim plans RM21m private placement
Naim Indah Group will raise gross proceeds of RM21.4m from its private placement. Naim told Bursa Malaysia it planned to implement a private placement of up to 70.2m new ordinary shares of 20 sen each to an independent third-party investor. The proceeds would be used for working capital (RM12m), repayment of bank borrowings (RM3m), capital expenditure (RM5.8m) and estimated expenses for the exercise (RM600,000). (StarBiz)

Aeon scraps land purchase plan
Aeon Co (M) has terminated a sale and purchase agreement with the Datuk Bandar Kuala Lumpur and Dwitasik Sdn Bhd to acquire a piece of land with a proposed shopping centre for RM107.2m. Aeon said the 18 Feb 2009 agreement was terminated due to the non-fulfillment of the conditions precedent. Under the RM107.2m aborted deal, Aeon was to acquire 6.25 acres or 272,250 sq ft of land for RM27.2m and a shopping centre and department store for RM80m. (StarBiz)

Several parties keen to take Ingress private
Speculation has been rife that major shareholders of Ingress are mulling taking the company private in a deal worth more than RM300m. Ingress Corp, a car parts supplier listed on Bursa Malaysia's Main Market, has received offers from several parties to take the company private, but so far nothing has been decided."There are several parties who have approached us, asking us to take the company private. But nothing has been decided," chairman and chief executive officer Datuk Rameli Musa told Business Times after a shareholders' meeting yesterday. (BT)


Top Glove Corp Bhd has entered into a conditional sale and purchase agreement to acquire 100% of the equity in GMP Medicare Sdn Bhd (GMP Medicare) from Matang Manufacturing Sdn Bhd for RM24.1m. Management expects to complete the transaction within six months of the execution fo the sales and purchase agreement. (BMSB)

Tenaga National Bhd and a consortium of Pendekar Power Sdn Bhd (Pendekar Power) and Mitsui & Co Ltd are said to have put in the lowest bids for the new Prai gas-fired power plant in Penang. Although the exact tariffs are not known, the range is said to be between RM0.35-0.40/kwh. The first generation power plants had rates that ranged from RM0.35-0.50/kwh. The Energy Commission (EC) is expected to announce the winning bid in Oct 2012. The capacity of the Prai-power plant will range from 1.0-1.4GW. The gas price quoted in the tender documents is RM42/mmbtu compared with the subsidised rate of RM13.70/mmbtu. The bidding closed on Monday. Pendekar Power comes under the umbrella of Powertek Bhd, whose parent company Tanjong Energy Holdings Sdn Bhd was recently bought over by 1Malaysia Development Bhd. (Financial Daily)

CIMB Group is introducing Indonesia‟s first Shariah-compliant fixed returns on deposits, five years after their adoption in its home market. PT Bank CIMB Niaga Syariah, a unit of the Kuala Lumpur- based bank, started offering the accounts to lenders on June 24 and plans to introduce them for consumers, Badlisyah Abdul Ghani, the head of Islamic banking at the parent, said in a July 4 interview. Indonesia‟s Islamic finance assets total 147.9tr rupiah (RM50bn), trailing Malaysia‟s RM350.4bn, partly because depositors only receive floating payments based on profits or price swings. (BT)

Sime Darby Bhd's former president and chief executive officer Datuk Seri Zubair Murshid @ Ahmad Zubair Murshid, was charged at the Sessions Court in Kuala Lumpur on two counts of criminal breach of trust (CBT) in a Native Customary Rights (NCR) land development project in Sarawak causing the company to incur losses of more than RM100m. Ahmad Zubair pleaded not guilty to both charges and to two alternative charges of deceiving the company's board of directors on the same project. (Malaysian Reserve)

Maxis unit in India, Aircel, will invest US$500m (RM1.6bn) to launch its 4G services between October and December this year. Business Standard reported that Aircel, which has spectrum in eight circles, would start rolling out the services from Chennai and other cities of Tamil Nadu. "Our focus is on creating a big data business. We‟ll award contracts for 4G equipment soon and launch between October and December. We are putting in US$500m," Maxis‟ chief executive officer, Sandip Das, said. Aircel would be an integrated provider of 4G services, he said. The telecommunications firm would not only provide mobile 4G services through dongles and devices but also get into consumer homes by offering broadband internet, broadcasting, video on demand, education and healthcare services, among others, he said. "It is already working on creating a fibre optic backbone, partly by leasing and partly by investing on its own," he said. On speculation that the telco was up for sale and has been approached by buyers like Sistema, Sandip said, Aircel was open to the idea of going into a strategic partnership, which could include having financial investors, but would continue to hold a majority stake in the company. (Bernama)

Malaysia's broadband penetration rate continued to expand at a brisk pace of 19.6% by the end of the first quarter 2012 from 19.4% as of last year, reflecting the people's propensity to embrace information, communications and technology. According to a pocket book of statistics released by the Malaysian Communications and Multimedia Commission (MCMC) Tuesday, the 19.6% increase from a population of 28.78m clearly signalled the acceptance and adaptation of the latest internet revolutions by Malaysians. The increase was also in line with the government's National Broadband Initiative, it said. MCMC said the percentage reflected 5.75m subscriptions from fixed broadband lines, wireless and 1 Malaysia Netbook. (Bernama)

Telekom Malaysia (TM) is tying up with Milan Utama Sdn Bhd to provide enhanced content, including Yellow Pages, for a global positioning system (GPS) navigation system. Milan Utama, a member of the Amtel group, develops GPS navigation system under the brand Lokatoo. The tie-up will result in all new Lokatoo GPS navigators to be embedded with Yellow Pages business listings and TM WiFi sites. This means by using the device, one will be able to locate any companies listed in the Yellow Pages or the nearest TM WiFi sites. To date, there are more than 3,500 of existing categories in Yellow Pages' listing and over 23,000 TM WiFi sites. Azizi added that the partnership will benefit TM's Yellow Pages business significantly as it would increase the user base of the product. Milan Utama executive chairman Datuk Wan Mohd Saleh Wan Mahmood said "This year, with the partnership, we are looking at a 20% increase in sales". The company, which sells its navigation systems to Proton, Perodua as well as Isuzu, hopes to expand to the overseas market soon. "We are looking at a few neighbouring countries, in particular Indonesia and Thailand. We hope to set up our presence in these countries by the end of this year," he said. (BT)

Permodalan Nasional Bhd (PNB), through investee company UMW Holdings Bhd, has announced plans to sell three more firms, namely U-Travelwide Sdn Bhd (U-Travel), U-Insurance Sdn Bhd and Inobel Sdn Bhd to qualified Bumiputera entrepreneurs. "The proposed divestments will be carried out via the process of open tender," UMW and PNB said in an advertisement published in BT yesterday. At a Bumiputera Agenda Action Council meeting on Feb 9, Prime Minister Datuk Seri Najib Razak announced that PNB would sell five assets to Bumiputera companies.(BT)

Boustead Holdings Bhd's unit BH Petroleum Marketing Sdn Bhd is building between 10 and 12 petrol stations a year, adding to its current portfolio of 330 stations in peninsular Malaysia. The company‟s MD stated that the average cost was about RM4m to RM5m per station. BHPetrol‟s newly launched fully synthetic SynGard 8000 was also expected to double monthly sales of the company‟s fully synthetic oil, of which 100 cartons were sold monthly. (Star Biz)

Trinity Corporation Berhad is planning further land sale worth RM100m to RM200m in the current financial year ending Jan 31, 2013 to strengthen its financial footing. The group has 1229.2 hectares balance land bank, mainly in Selangor, comprising commercial, residential, and industrial properties. In the last financial year, Trinity signed a settlement agreement with and disposed RM363.58m worth of properties to Menteri Besar Selangor to reduce some of its long-standing debts owed to financial firms and creditors following long-delayed projects. (Bernama)

Ingress Corp Bhd is in talks with Japan's Katayama Kogyo to penetrate the Indian automotive market. Talks were also centred on Ingress' plan to raise its stake in Ingress-Mayur Autoventures Pvt Ltd, chairman Datuk Rameli Musa said. Ingress currently has a 40% stake in Ingress-Mayur, which designs, develop, manufactures and distribute auto parts to carmakers in India. The rest of the stake is held by India's Mayur Industries Ltd, a subsidiary of Haryana Industries. "Mayur has asked us to take the driver's seat in the joint venture. We are still in negotiations. We believe having Katayama as our technical partner in the joint venture will hold strong."Suzuki also wants our Japanese partner to come in before they hand us more jobs. Talks are on-going," Rameli said after Ingress shareholders' meeting yesterday. Rameli said Ingress is also talking to Korea's Woo Young Group to help penetrate the automotive market in India and Turkey.(BT)

Astro Malaysia Holdings and The Walt Disney Co South-East Asia have teamed up to introduce a new channel for older children. Malaysia is the first of South-East Asian countries to launch the Disney XD, a new channel catered for children aged between six and 14. It will be the first international channel for children on Astro‟s basic platform, offering its content in English, Bahasa Malaysia, Mandarin and Tamil. It will be home to new Marvel series featuring superheroes, amongst others. (Star Biz)

OSK Property Holdings Bhd has fixed the issue price of its rights shares at RM1 and the warrants at 1.0sen each. It said on Tuesday the issue price of RM1 per rights share was equal to the par value of the shares as well as the theoretical ex-all price of RM1 based on the five-day weighted average market price of RM1.20 per share up to July 16. The corporate exercise involved a renounceable rights issue of up to 23.73m new rights shares on the 1:10 basis with up to 71.2m free warrants. This was on the basis of three free warrants for every one rights shares subscribed for. It also proposed a bonus issue of up to 47.4m OSK Property shares on the basis of two new shares for every one rights shares subscribed by the existing shareholders.(Starbiz)

AT Systematization Bhd and MaoMing JiaCheng Industrial Co Ltd of China have formed a joint venture for a possible listing as well as to set up a renewable energy plant in Malaysia. The 50:50 JV could raise at least US$20m (RM63m) from a possible listing in London. "The company is looking at a possible listing in London as it is flushed with capital. We hope to list it in six months," AT Systematization executive director Auniah Ali said during a media briefing yesterday.The funds will be used to build a renewable energy plant in Malaysia, possibly in Klang. (BT)

Fitters Diversified aims to grow its green solutions division into a core business, with a target revenue contribution of 50% by 2014. MD director Datuk Richard Wong said the company expected to grow its renewable energy business by 5% this year and 20% to 30% in 2013. The growth will be achieved through its venture into renewable, alternative and waste-to-energy projects such as palm oil green mills, biomass plants, biogas capture plants and medical waste management. (Star Biz)

Malaysia Building Society (MBSB) expects another year of record profits this year, said its CEO Datuk Ahmad Zaini Othman. The higher profits would be possible because MBSB expected 20% loan growth this year and NPL to be lower at 6% compared with 8% last year. (Star Biz)

KFC Holdings has set aside an annual fund of RM65m for the expansion of its fast food outlets - KFC and Pizza Hut nationwide with the growth projection of 10% yearly. Managing director of QSR Brands dan KFCH Jamaludin Ali said RM40m was allocated for KFC restaurants and RM25m was set aside for Pizza Hut. "The bulk of the allocations would be utilised for the construction of the drive-thru concept which generates higher revenue for us," he said. (Starbiz)

20120718 0956 Global Commodities Related News.

An expanding US drought, now deemed the worst since 1956, dealt another blow to the corn and soybean crops, with conditions deteriorating for a second straight week in the world's top exporter of the grain. The drought, previously considered to be the worst since 1988, has been wreaking havoc on developing crops in the US farm belt. The drought also pummelled the soybean crop, which was rated 34% good to excellent, down 6% from the previous week and 1% below estimates of 35%. The latest weather forecasts call for the drought afflicting the US Midwest to worsen. (Reuters)

Pro Farmer: After the Bell Wheat Recap (Source:CME)
Wheat futures were choppy today, with Chicago softening late to end mixed. Kansas City and Minneapolis ended with slight to mostly moderate gains. As corn and soybean futures softened in late trade, Chicago wheat followed amid profit-taking. But pressure was limited by ongoing weather concerns that have raised competition between corn and wheat as a feed ingredient.

Wheat Market Recap Report (Source:CME)
September Wheat finished up 1/2 at 885, 13 1/2 off the high and 19 up from the low. December Wheat closed down 1/2 at 897 1/4. This was 18 1/2 up from the low and 13 1/2 off the high. September Chicago wheat traded lower into the close after posting new highs for the move overnight. Kansas City and Minneapolis gained on Chicago today. Wheat continues to find strength from unfavorable weather conditions the next 2 weeks in the US Midwest and on production concerns in the Black Sea. Above normal temperatures and below normal rainfall for areas in the Black Sea could mean further production downgrades to their spring wheat crop. Jordan canceled their tender for 100,000 tonnes of wheat as offers were too high. Jordan canceled their July 4th tender because of the same reason. Major importers have moved to the sidelines until world price levels stabilize. Chicago wheat remains a follower of the corn market as the likelihood of a much small US corn crop could mean better feed wheat demand. Outside markets are providing pressure to commodities with the US Dollar trading sharply higher on the day. September Oats closed down 2 1/2 at 377 3/4. This was 3 3/4 up from the low and 9 1/2 off the high.

Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures saw two-sided trade today with bulls holding a slight advantage most of the day. Trader activity was very active heading into the close and futures ended mid-range in a narrowly mixed trading range. The weather rally gave signs of sputtering today as all the "easy" money is already in the market. Driving buying interest is worrisome heat and dryness and resulting dire condition of the corn crop.

Corn Market Recap for 7/17/2012 (Source:CME)
September Corn finished up 2 3/4 at 779 1/2, 17 off the high and 12 1/2 up from the low. December Corn closed down 1 1/4 at 771 1/4. This was 9 up from the low and 17 3/4 off the high. December corn traded both sides of the unchanged today but moved higher into the closing bell. The weather outlook for most of the Midwest looks unfavorable the next two weeks. Limited rainfall is expected east of the Mississippi River and the western Corn Belt will remain dry. Temperatures are expected to reach 95-105 degrees for corn growing regions this week. The best chance for rain will reach the southeast and delta in the next two weeks but will not be beneficial to corn. One closely followed crop scout pegged the US corn yield at 140 bushels/acre, down 6 bushels/acre from his prior estimate. A corn yield under 140 bushels/acre will require further demand rationing from higher prices. Blistering temperatures this week are expected to stress corn entering into the pollination stage in the western and northern regions of the Corn Belt, reducing yield further for states like South Dakota, Iowa, and Nebraska. Outside markets were mixed today with stocks trading stronger and the US Dollar offered resistance to commodities after trading stronger on the day. September Rice finished down 0.085 at 15.555, 0.145 off the high and equal to the low.

Corn Poised to Resume Rally on Concern Drought Is Harming Yields (Source: Bloomberg)
Corn is poised to resume a rally as the worst drought in decades wilts crops in the U.S., the biggest grower and exporter, boosting concern that production may decline. Corn for December delivery was little changed at $7.7225 a bushel on the Chicago Board of Trade at 8:04 a.m. in Singapore, erasing an earlier drop of 1 percent. The price reached $7.89 yesterday, the highest level for a most-active contract since June 9, 2011, and near the record $7.9925 set in 2008. About 55 percent of the contiguous U.S. states were in moderate-to-extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. Corn has surged 52 percent since mid-June, while soybeans and wheat advanced, increasing concern that world food costs may increase.
“Ongoing crop concerns in the U.S. continue to provide a solid floor under the market,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today. “The trade is now asking at what price will grain demand be sufficiently rationed.” U.S. corn yields may drop to 138 bushels an acre compared with 146 bushels forecast by the U.S. Department of Agriculture, AccuWeather.com said yesterday. Soybeans for November delivery were little changed at $15.9225 a bushel after declining as much as 0.4 percent. Prices rose to $16.07 yesterday, the most expensive since July 2008.

GRAINS-US corn, soy surge to contract highs on drought damage
SYDNEY, July 17 (Reuters) - Chicago corn surged to a contract high extending a drought-fed rally of more than 40 percent over the last four weeks, after data showed searing heat in the U.S. grain belt dealt another heavy blow to crop yields last week.
"It is all weather related," said Victor Thianpiriya, an agricultural strategist at ANZ.

Cooperatives raise German 2012 wheat crop forecast
HAMBURG, July 17 (Reuters) - The German Farm Cooperatives Association said on Tuesday it has raised its forecast of Germany's 2012 wheat harvest to 21.9 million tonnes from 21.3 million tonnes estimated in June and so up from the 22.7 million tonnes of wheat Germany harvested in 2011.
The association also raised its forecast of Germany's 2012 winter rapeseed crop to 4.70 million tonnes from 4.51 tonnes it forecast in June and 3.8 million tonnes Germany harvested in 2011.

Kazakh drought signals alarm for grain crop
YESIL-AGRO FARM, Kazakhstan, July 17 (Reuters) - Kazakhstan is preparing for a below-average grain crop this year due to an "alarming" drought in the Central Asian country's main grain-growing regions, Deputy Agriculture Minister Muslim Umiryayev said on Tuesday.
While reiterating the ministry's latest 2012 crop forecast of 14 million tonnes, a decline of 48 percent on last year's post-Soviet record, Umiryayev said hot and dry weather conditions in northern regions were giving cause for concern.

Italy wheat, maize imports fall in Jan-April-Anacer
MILAN, July 17 (Reuters) - Imports of wheat and maize into Italy, a major grain buyer in Europe, fell in the first four months of the year compared with the same period in 2011, while exports of other grains and products mostly decreased, Italian cereals body Anacer said on Tuesday.
Imports of soft wheat fell about 4 percent to 1.54 million tonnes while maize imports dropped nearly 24 percent to 0.793 million tonnes in the January-April period, Anacer said in a statement. It did not provide explanations for trade flows.

India grains output hit record in 2011/12
NEW DELHI, July 17 (Reuters) - India's food grains output is seen at 257.44 million tonnes in the crop year ended June 30, 2012, the farm ministry's latest production estimates on Tuesday showed, as rice and wheat harvests rode to records.
The latest or fourth advance estimates which are the final production estimates for the 2011/12 crop year are 1.93 percent higher than the previous estimates of 252.56 million tonnes which were announced in April, 2012.
The crop year in Asia's third-largest economy runs from July to June.

Ukraine grain exports fall 87 pct July 1-11
KIEV, July 17 (Reuters) - Ukraine's grain exports totalled about 108,000 tonnes in the first eleven days of July, the first month of the new 2012/13 season, which runs from July to June, analyst ProAgro said on Tuesday.
Ukraine exported 840,350 tonnes of grain in the same period in June. Exports totalled 1.47 million tonnes of grain last month.

U.S. drought worsens crop damage, raising world food, fuel worry
CHICAGO, July 16 (Reuters) - Corn and soybeans in the U.S. Midwest baked in an unrelenting heat wave on Monday with fears rising of big crop losses that will boost food and fuel prices and cut exports and aid from the world's top shipper of the key crops.
The condition of the nation's corn and soybeans as of Sunday deteriorated even more than grain traders had feared, and the U.S. Agriculture Department cuts its weekly corn crop condition rating by the biggest amount in nearly a decade.

Argentina to approve 15 mln tonnes corn exports-president
BUENOS AIRES, July 16 (Reuters) - Argentina's government will approve the exportation of 15 million tonnes of 2012/13 corn, with an announcement scheduled for Wednesday, President Cristina Fernandez said on Monday.
Fernandez's center-left government sets a ceiling on corn and wheat exports to guarantee affordable local food supplies and help tame high inflation.

Nebraska farms told to halt irrigation as drought drains rivers
July 16 (Reuters) - More than 1,100 farmers in Nebraska have been ordered by the state's Department of Natural Resources to halt irrigation of their crops because the rivers from which they draw water have dropped due to a worsening drought.
The orders come as the central United States bakes under the worst drought in a quarter century which has parched corn and soybean crops and sent prices of both commodities to near-record highs.

SOFTS-Sugar dips, eyes on Brazil weather, coffee steady
LONDON, July 17 (Reuters) - Sugar futures on ICE dipped in early trade underpinned by concerns over the impact of wet weather in Brazil, while coffee and cocoa were steady.
Dealers awaited results later on Tuesday following expiry of the Liffe August white sugar futures contract on Monday, anticipating a modest delivery tonnage. Sugar futures eased in light volumes as the market focused on weather in top producers Brazil, where rains delayed harvesting, and India, where monsoon progress was slow.

India imposes 10 pct duty on raw sugar imports - report
MUMBAI, July 17 (Reuters) - India, the world's top sugar consumer, has imposed ten percent duty on raw sugar imports, the Hindu Business Line newspaper reported on Tuesday, without citing any source.
The duty is unlikely to affect demand-supply in the local market as mills in India are not importing sugar currently, the report quoted G.S.C. Rao, chief executive of Simbhaoli Sugars .

Nicaragua coffee exports soar nearly 90 pct in June
MANAGUA, July 16 (Reuters) - Coffee exports from Nicaragua jumped 88.8 percent in June compared to the same month a year earlier, totaling 217,371 60-kg bags in the month.
But Nicaragua's export agency Cetrex said Monday coffee exports through the first nine months of the 2011-12 harvesting season totaled 1.17 million bags, down 10.2 percent compared with the same nine-month period during the 2010-11 season.

Wet weather mixed blessing for Brazil sugarcane crop
SAO PAULO, July 16 (Reuters) - Recent wet and overcast weather throughout Brazil's main sugarcane belt is a blessing for cane to be harvested in early 2013 but a curse for mills currently crushing and trying to ship sugar through the ports, meteorologists Somar said on Monday.
Unusually rainy weather in May and June over the main center-south sugarcane belt in Brazil let up in the first two weeks of July. This should improve the volume of sugar and ethanol produced by mills over the fortnight, Somar's long-term forecaster, Marco Antonio dos Santos, said.

Poor mid-crop, rains drive up cocoa prices in Cameroon
YAOUNDE, July 16 (Reuters) - The dearth of beans due to a poor mid-crop and steady rains in parts of the country have pushed up cocoa farmgate prices in Cameroon so far this month, farmers and industry sources said on Monday.
The warning came after a senior official from the National Cocoa and Coffee Board told Reuters that output from the world's No. 5 grower is expected to fall some 10-15 percent from last year's record 240,000 harvest.

Oil Drops From Seven-Week High on Outlook for Economy (Source: Bloomberg)
Oil fell from a seven-week high on concern fuel demand may falter after China signaled more economic weakness and analysts cut their profit forecasts for European companies at the fastest rate since 2009. Futures slid as much as 0.4 percent in New York after advancing a fifth day yesterday, the longest run of gains since April. The labor situation in China, the world’s second-biggest crude user, will become more “severe,” Premier Wen Jiabao said, according to a statement on the central government’s website. Profits at Euro Stoxx 50 Index companies will rise 6.8 percent this year, more than 12,000 estimates compiled by Bloomberg show. That compares with a 19 percent gain predicted at the start of the year. “If $90 can’t be breached then I think we’ll come in for a bit of a correction lower,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “You can possibly see a pretty ugly scenario from Europe developing.”
Oil for August delivery fell as much as 37 cents to $88.85 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.89 at 10:59 a.m. Sydney time. The contract gained 79 cents, or 0.9 percent, to $89.22 yesterday, the highest close since May 29. Prices are 10 percent lower this year. Brent crude for September settlement declined 67 cents, or 0.6 percent, to $103.33 a barrel on the London-based ICE Futures Europe exchange. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $14.10.

Brent prices mask plentiful supply in wider market
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 16 (Reuters) - The big jump in headline oil prices since the end of June highlights the growing disconnect between Brent and the rest of the oil market.
It owes more to North Sea production problems and the broken nature of the benchmark Brent contract than rising tensions with Iran or hopes for more stimulative policies from the major central banks.

OIL-Oil rises to $104 on Fed stimulus hopes
LONDON, July 17 (Reuters) - Brent crude oil rose to $104 a barrel ahead of a speech by U.S. Federal Reserve Chairman Ben Bernanke that could signal more measures to stimulate economic growth.
"The oil market appears to be looking for reasons to go higher," said Eugen Weinberg, head of global commodity research at Commerzbank in Frankfurt. "If Bernanke indicates more stimulus is needed, that would be the catalyst for a rise in prices."

US crude stocks seen down, products up
July 16 (Reuters) - U.S. commercial crude oil stockpiles were projected down for last week due to higher refinery utilization, and increases in petroleum products were expected, a preliminary Reuters poll showed on Monday.
The poll of five analysts of oil and products data due this week forecast a 500,000-barrel drop in domestic crude inventories for the week to July 13. Two analysts called for a decline, one analyst expected an increase, and the other two forecast an unchanged reading.

OPEC 2011 exports jump, Angola's reserves slide
LONDON, July 16 (Reuters) - OPEC's petroleum exports jumped in value by 40 percent in 2011 year-on-year and the producers' GDP climbed 18 percent, according to their latest report, before a further increase in supplies this year that could bolster income further.
The gains, announced in OPEC's Annual Statistical Bulletin 2012 on Monday, reflect higher prices and steadily climbing output last year from many members of the Organization of the Petroleum Exporting Countries.

Asia crude demand to fall in Sept on refinery disruptions
SINGAPORE, July 17 (Reuters) - Asia's sweet crude market could come under pressure for a second month in September as demand is expected to fall with the shutdown of an Australian refinery and a slower pace of operations at a Thai refiner, trade sources said on Tuesday.
Demand, mainly for Malaysian and Vietnamese grades, is expected to fall by nearly 130,000 barrels per day (bpd), or 6-1/2 cargoes of 600,000 barrels each, on refinery shutdowns.

India's top buyer of Iran oil turns to Azeri, Saudi
NEW DELHI, July 16 (Reuters) - India's biggest buyer of Iranian oil, MRPL, has bought Azeri, Saudi and Emirati crude to replace imports from Iran in July and it may halt purchases from Tehran altogether as sanctions make shipments more difficult, industry sources said on Monday.
Loss of exports to Mangalore Refinery and Petrochemicals (MRPL)  would be a blow to Iran, which has seen overseas sales decline by more than half from a year ago due to U.S. and European Union sanctions.

Mosaic Says China Potash Price More Likely to Rise (Source: Bloomberg)
China, the world’s largest potash consumer, is more likely to pay a higher price for imports of the fertilizer after grain prices soared because of a drought in the U.S., according to Mosaic Co. (MOS) Corn futures have jumped 52 percent in Chicago in the past month and soybeans have climbed 21 percent as the worst U.S. drought in a generation damages crops. Mosaic Chief Executive Officer Jim Prokopanko said that will influence talks currently in progress between China and North American potash suppliers about a six-month supply accord. “That strengthens our hand,” he said yesterday in a telephone interview from Mosaic’s headquarters in Plymouth, Minnesota. “The more grain is worth, the more fertilizer is worth.” Mosaic, based in Plymouth, Minnesota, rose 5.1 percent to close at $58.21 yesterday in New York, the biggest gain since April 25.
Most market watchers expect China will end up paying the same or less, Edlain Rodriguez, an analyst at Lazard Capital Markets LLC in New York, said yesterday in a telephone interview.

BHP Iron Ore Output Rises 15% to Beat Analyst Estimate (Source: Bloomberg)
BHP Billiton Ltd. (RIO)’s fourth-quarter iron ore production gained 15 percent as the world’s largest mining company expands operations in Australia’s Pilbara region, setting a 12th consecutive annual record. Output was 40.9 million metric tons in the three months ended June 30, compared with 35.5 million tons a year earlier, Melbourne-based BHP said today in a statement. That beat the 37.3 million ton median estimate of five analysts surveyed by Bloomberg. Rio Tinto Group (RIO), the world’s third-largest miner, yesterday reported iron ore production in line with expectations as Chief Executive Officer Tom Albanese warned of deteriorating global economic conditions. “Operationally in iron ore it’s a good result,” said Shaun Manuell, chief investment officer of Equity Trustees Ltd., which manages A$2.4 billion ($2.5 billion), including BHP and Rio shares. “Despite all this noise and concern about China we still haven’t seen a dramatic collapse in the iron ore prices that people were forecasting.”
BHP shares fell 0.9 percent to A$30.51 at 10:11 a.m. in Sydney trading, after declining 0.7 percent in London yesterday BHP, planning to more than double production capacity of the steelmaking raw material, said last month it must be flexible in the face of falling commodity prices and deepening global uncertainty. The International Monetary Fund this week cut its 2013 world economic growth forecast to 3.9 percent from 4.1 percent estimated in April as Europe’s debt crisis slows expansion.

Looming Copper Surplus Contracting as Mining Fails: Commodities (Source: Bloomberg)
Analysts are slashing predictions for the first copper glut in four years as producers from Chile to Indonesia contend with aging mines and strikes at a time of record demand. The global surplus will total 18,500 metric tons, according to the median of 22 analyst estimates compiled by Bloomberg, 85 percent less than a January forecast of 124,000 tons. Barclays Plc expects shortages in the first half of next year and Morgan Stanley and JPMorgan Chase & Co. anticipate an annual deficit. Prices will rally as much as 14 percent to $8,700 a ton by Dec. 31, the median in a survey of 15 analysts shows.
Mining companies on average are processing about 15 percent more ore than they were in 2000 to extract the same amount of metal, according to Macquarie Group Ltd. Freeport-McMoRan Copper & Gold Inc. (FCX) shut Grasberg, site of the world’s largest reserves, for two weeks in the first quarter after violent protests, following a three-month strike in 2011. Demand growth will accelerate to 4.7 percent next year from 1.5 percent in 2012, Morgan Stanley estimates. “It’s really a matter of scarcity in copper, with mined supply lagging behind expectations,” said Thomas Benedix, a Stuttgart, Germany-based metals analyst at Tiberius Group, which manages about $2.1 billion of assets. “At the start of the year people were expecting that the supply side could really start delivering on their targets, and now it’s not going to happen.”

Gold Drops as Fed Chief Fails to Discuss Further Stimulus (Source: Bloomberg)
Gold fell for a second day as Federal Reserve Chairman Ben S. Bernanke refrained from discussing steps to boost the U.S. recovery, while insisting the central bank will act if labor markets don’t improve. Bernanke, responding to questions from lawmakers today in Washington, said Fed tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate it pays on reserves banks keep with the Fed, and altering its communications on the outlook for interest rates. Gold surged 70 percent from the end of December 2008 to June 2011 as the central bank kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. This year, the price is up 1.4 percent. “The market wants to know specifics even as it’s clearer that some form of easing will be announced soon,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview.
Gold futures for August delivery slid 0.1 percent to settle at $1,589.50 an ounce at 1:36 p.m. on the Comex in New York, after earlier slipping as much as 1.3 percent. The price is down 0.9 percent in July, after dropping in four of the previous five months. Bullion pared losses today after Bernanke’s answers to questions from the Senate Banking Committee signaled he doesn’t view inflation as a hindrance to providing more stimulus to spur the economy.

20120718 0956 Global Market Related News.

Asia FX By Cornelius Luca - Tue 17 Jul 2012 16:55:35 CT (Source:CME/www.lucafxta.com)
The appetite for risk was relatively firm on Tuesday.  Federal Reserve Chairman Ben Bernanke reiterated that the Fed is prepared to take further action to jump start the sluggish US recovery, but offered no hints that is planning another round of quantitative easing, as expected. Most of the European and commodity currencies advanced for a third day. The US stock markets advanced, while the gold/oil ratio declined. The short-term outlook for the European and commodity 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: CPI came in unchanged in June following -0.3% in May. The core CPI rose 0.2% in June, the same as in May.
US: Industrial production rose by 0.4% in June following a revised 0.2% decrease in May. Capacity utilization edged up to 78.9% from 78.7%.
US: Net long-term TIC flows rose to $55.0 billion in May from April's $25.6 billion. Total net TIC flows rose to $101.7 billion from -$20.5 billion in April.
US: The NAHB Housing Market Index rose to 35 in July from 29 in June.
Canada: The BoC left interest rates at 1%, as expected.
Canada: Manufacturing sales contracted 0.4% during May after falling 1.1% in April.

Today's economic calendar
Japan: The BoJ Monetary Policy Meeting Minutes
Japan: Machine tool orders for June

Stocks, Commodities Rise on Bernanke; Dollar Erases Gain (Source: Bloomberg)
U.S. stocks rose, reversing earlier losses, and commodities climbed as Federal Reserve Chairman Ben S. Bernanke said the central bank is prepared to act to boost growth if labor markets don’t improve. The Dollar Index erased gains while Treasuries retreated. The Standard & Poor’s 500 Index added 0.7 percent to 1,363.67 at 4 p.m. in New York after retreating as much as 0.6 percent. The Dollar Index, a gauge of the currency against six major peers, fell 0.1 percent after rallying as much as 0.6 percent. Ten-year Treasury yields rose three basis points to 1.50 percent, while a gain in oil helped lead the S&P GSCI Index to a fifth straight advance, its longest rally in 11 weeks, even as 16 of its 24 commodities decreased.
Stocks turned lower in the first hour of trading and the dollar rallied as Bernanke’s prepared testimony to Congress provided no specific plans for boosting growth. Equities recovered as the Fed chairman’s answers to senators’ questions signaled he’s concerned about the economic recovery and doesn’t view inflation as a hindrance to providing more stimulus. “His downbeat assessment of the economy left the impression that QE3 may be coming soon,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in an e-mail. “QE3” refers to a third round of stimulus measures known as quantitative easing. Bernanke’s testimony followed data yesterday showing a contraction in June retail sales and a report today that the cost of living in the U.S. was little changed in June, a sign inflation may stay subdued.

Asian Stocks Rise as Bernanke Keeps Stimulus Option Open (Source: Bloomberg)
Asian stocks rose after Federal Reserve Chairman Ben S. Bernanke said U.S. policy makers are prepared to act to boost growth if the labor market doesn’t improve, buoying the earnings outlook for Asian exporters. Nissan Motor Co. (7201), which gets a third of its revenue from North America, rose 2 percent in Tokyo. Uny Co., a Japanese department store operator, slumped 10 percent after saying it plans to raise money in a public share sale. Air China Ltd., a Beijing-based carrier, may be active today in Hong Kong after saying first-half profit may fall more than 50 percent. The MSCI Asia Pacific Index rose 0.4 percent to 116.51 as of 9:30 a.m. in Tokyo, with almost twice as many stocks advancing as declining. Japan’s Nikkei 225 Stock Average gained 0.4 percent, while Australia’s S&P/ASX 200 Index (AS51) was little changed. South Korea’s Kospi Index advanced less than 0.1 percent. Markets in Hong Kong and China are yet to open.
Bernanke “continued to indicate that the Fed would ease policy further if they thought that was necessary,” said Stephen Halmarick, Sydney-based head of investment market research at Colonial First State Global Asset Management, which oversees about $150 billion. There were “certainly no hints on when that action might be or what it might entail.”

Topix Poised to Snap Eight-Day Loss on Bernanke Remarks (Source: Bloomberg)
Japanese stocks rose, with the Topix Index poised to snap an eight-day loss, after Federal Reserve Chairman Ben S. Bernanke said U.S. policy makers are prepared to act to boost growth if the labor market doesn’t improve, lifting the earnings outlook for exporters. Nissan Motor Co. (7201), Japan’s third-largest carmaker by market value, rose 2 percent. Econach Holdings Co. led real estate stocks higher. Sumco Corp. (3436), a maker of silicon wafers for semiconductors, lost 3.1 percent after industry bellwether Intel Corp.’s sales forecast missed estimates. Department-store operator Uny Co. plunged 11 percent on a share sale plan. The Topix advanced 0.5 percent to 747.29 as of 9:21 a.m. in Tokyo after capping an eight-day loss yesterday, the longest such streak since July 2010. The Nikkei 225 Stock Average (NKY) gained 0.5 percent to 8,796.75 with about four stocks rising for each that fell.
Stocks also rose after members of the Bank of Japan said they’ve been pursuing “powerful easing,” according to minutes of its June policy meeting released today.

U.S. Stocks Gain as Bernanke Says Fed Prepared to Act (Source: Bloomberg)
U.S. stocks rose, erasing earlier losses, as Federal Reserve Chairman Ben S. Bernanke told senators the central bank is prepared to act to boost growth if the labor market doesn’t improve. All 10 groups in the Standard & Poor’s 500 Index rose. Walt Disney Co. (DIS) rallied 3.1 percent to a record after Bank of America Corp. analysts raised the world’s largest entertainment company to a buy. Coca-Cola Co. (KO) advanced 1.6 percent after earnings beat projections. Mattel Inc. jumped 9.7 percent after second-quarter profit exceeded the average analyst estimate. The S&P 500 added 0.7 percent to 1,363.67 at 4 p.m. in New York after losing as much as 0.6 percent. The Dow Jones Industrial Average increased 78.33 points, 0.6 percent, to 12,805.54. Trading of S&P 500 stocks was 4.6 percent below the average level at this time of day over the past three months.
“The stock market has faith in the Fed,” said Jack Ablin, chief investment officer at BMO Harris Private Bank in Chicago, which oversees about $60 billion of assets. “With all of the headlines, and all of the slowing, investors still believe the Fed will do anything in its power to keep the ship afloat.”

Canadian Stocks Advance as Rising Oil Prices Boost Energy Shares (Source: Bloomberg)
Canadian stocks gained for a third day as rising oil prices drove energy shares higher and expectations grew that the U.S. Federal Reserve will take further action to boost growth. Imperial Oil Ltd. (IMO) and Canadian Natural Resources Ltd. (CNQ), two of the nation’s largest energy providers, added at least 1.4 percent. Heroux-Devtek Inc. (HRX) surged 33 percent after the maker of landing gear agreed to sell four factories to Precision Castparts Corp. for C$300 million. Energy stocks contributed the most among 10 industries to the advance in the Standard & Poor’s/TSX Composite Index. The S&P/TSX advanced 50.01 points, or 0.4 percent, to 11,571.19. It lost as much as 0.4 percent in earlier trading. The gauge is down 3.2 percent in 2012.
Fed Chairman Ben S. Bernanke told senators that the central bank is prepared to act to boost growth if the labor market doesn’t improve. Oil rallied 0.9 percent to a seven-week high after his comments and as a Bloomberg survey of analysts showed inventories of the commodity falling. “Ben Bernanke understands that to make a deleveraging feel not as bad, you can add a lot more money to the system than you normally could,” Arthur Salzer, who manages C$200 million at Northland Wealth Management, said in a phone interview. “He’s doing everything in his power to keep the patient alive.”

European Stocks Drop as Alcatel Profit Falls (Source: Bloomberg)
European stocks fell for the first time in three days as companies including Alcatel-Lucent SA (ALU) reported lower earnings and Wolseley Plc said it would sell its French business. Alcatel plunged the most in almost 14 years after France’s largest telecommunications equipment supplier posted a second- quarter loss. Wolseley slid 1.9 percent after saying it may sell its French business and write down the value of the unit. CSR Plc (CSR) surged 34 percent after Samsung Electronics Co. agreed to buy its wireless technology unit. U.S. Federal Reserve Chairman Ben S. Bernanke told congress that more easing tools are available and the central bank is examining what to do if more needs to be done to boost jobs.
The Stoxx Europe 600 Index (SXXP) slipped 0.3 percent to 256.09 at the close of trading, erasing an earlier advance. The benchmark measure has still climbed 9.5 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 conditions for possible Italian aid. “The market was trading most of the day on hopes that Fed Chairman Bernanke would signal some more QE moves,” said Stephane Ekolo, chief European strategist at Market Securities in London. “But what Bernanke said is that easing tools shouldn’t be used lightly, which means we are somehow far from another round of QE. I think that after that kind of statement there will be more bears than bulls.”

Dollar Trades Near Week-Low Before Fed’s Beige Book Data (Source: Bloomberg)
The dollar was 0.3 percent from its lowest level in a week against the euro before the Federal Reserve releases its Beige Book assessment of economic conditions today. Demand for the U.S. currency was tempered after Fed Chairman Ben S. Bernanke said yesterday in testimony to the Senate Banking Committee that policy makers are studying options for further easing. Bernanke is set to appear before a House committee today. The euro failed to extend an advance from yesterday versus the yen before Germany’s lower-house lawmakers vote tomorrow on aid to recapitalize Spanish banks. “Markets are tilted toward the view that additional monetary easing will be needed, leading to dollar selling,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The possibility of more easing is gradually increasing as a series of economic indicators is worsening.”
The dollar fetched $1.2286 per euro as of 8:01 a.m. in Tokyo from yesterday, when it touched $1.2317, the weakest level since July 10. The greenback was at 79.11 yen after climbing 0.2 percent to 79.06 yesterday. The 17-nation euro was little changed at 97.20 yen after rising 0.4 percent to 97.21 in New York.

FOREX-Dollar struggles before Bernanke testimony
LONDON, July 17 (Reuters) - The dollar fell against the euro and other major currencies before testimony from Federal Reserve Chairman Ben Bernanake who could hint at more monetary stimulus after recent disappointing U.S. data.
"The market is positioned aggressively for more QE, but I think Bernanke would want to wait for a bit more data, which leaves it at risk of a disappointment and a dollar bounce," said John Hardy, FX strategist at Saxo Bank.

Treasuries Stay Lower on Speculation Housing Starts Rose (Source: Bloomberg)
Treasuries stayed lower following the biggest decline in two weeks on speculation a U.S. housing report today will underpin industry figures yesterday showing an improvement in the real-estate market. Government securities tumbled yesterday after Federal Reserve Chairman Ben S. Bernanke said policy makers are studying options for further easing that could be deployed in case economic growth remains too feeble to produce a lasting decline in unemployment. “Yields will rise,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s third- largest publicly traded bank by assets. “The economy will pick up. The housing market has bottomed out.” Benchmark 10-year notes yielded 1.50 percent as of 9:23 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 1.75 percent security maturing in May 2022 changed hands at 102 1/4. Yields climbed four basis points, or 0.04 percentage point yesterday, the most since July 3. The all-time low was 1.44 percent set June 1.
Housing starts rose 5.2 percent last month to a 745,000 annual pace, the strongest since October 2008, according to the median estimate among economists surveyed by Bloomberg News. Building permits, a proxy for future construction, dropped 2.4 percent to a 765,000 rate, the survey showed.

Bernanke Sees Range of Options for Additional Fed Easing (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said policy makers are studying options for further easing that could be deployed in case economic growth remains too feeble to produce a lasting decline in unemployment. Bernanke, responding to questions during testimony today to the Senate Banking Committee in Washington, said easing tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate that the Fed pays on reserves banks keep with the Fed, and altering its communications on the outlook for interest rates. “We haven’t really come to a specific choice at this point, but we are looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market,” Bernanke said.
Bernanke and his colleagues on the Federal Open Market Committee meet in two weeks to continue debating whether further action is needed to reduce a jobless rate stuck above 8 percent since February 2009. Last month, they decided to extend to the end of the year their program, known as Operation Twist, to lengthen maturities of assets on the Fed’s balance sheet. “They probably want to see more evidence that the labor market has stalled,” said Roberto Perli, a managing director at International Strategy and Investment Group Inc. in Washington and a former senior staff economist in the Fed’s division of monetary affairs. “If they do become convinced of that, then further easing is in the cards, but we’ll probably have to wait beyond the next meeting for that.”

Factories in U.S. Show Resilience as Production Rises: Economy (Source: Bloomberg)
Industrial production increased in June, paced by gains among auto and machinery makers that may ease concern some of the drivers of the U.S. economic expansion were floundering. Output at factories, mines and utilities rose 0.4 percent last month after a revised 0.2 percent drop in May that was larger than previously reported, according to Federal Reserve data issued today in Washington. Other figures showed consumer prices were unchanged and homebuilder confidence jumped. Fed Chairman Ben S. Bernanke today acknowledged the recovery had lost momentum in the first half of the year as a result of the European crisis and the prospect of fiscal tightening. Factories still face challenges of a slower global economy and an American consumer hobbled by 8.2 percent unemployment and stagnant income growth.
“Production is showing some signs of life,” said Robert Brusca, president of Fact & Opinion Economics in New York, who correctly projected the gain in output. “If you look at all of the data, what you see is an economy that is mixed. The industrial production report is one of the stronger pieces of data we have.” Stocks fluctuated between gains and losses as Bernanke, in testimony before the Senate, refrained from detailing specific steps the central bank could take to boost the world’s largest economy. The S&P 500 Index was at 1,353.53 at 11:42 a.m. in New York, down less than 0.1 percent from yesterday’s close.

Bernanke Predicts Slow Progress on Unemployment (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke told lawmakers that progress in reducing unemployment is likely to be “frustratingly slow” and repeated that the central bank is ready to take further action to boost the recovery, while refraining from pledging any new policies. Bernanke, responding to questions during testimony today to the Senate Banking Committee in Washington, said easing tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate that the Fed pays on reserves banks keep with the Fed, and altering its communications on the outlook for interest rates. Bernanke and his colleagues on the Federal Open Market Committee are considering whether the economy will need additional stimulus to reduce a jobless rate stuck above 8 percent since February 2009. Last month, they decided to extend to the end of the year their program, known as Operation Twist, to lengthen maturities of assets on the Fed’s balance sheet.

Fed Shifts Focus to Jobs as Unemployment Stalls Above 8% (Source: Bloomberg)
Joblessness is the blemish on Ben S. Bernanke’s report card. Since the recession ended in June 2009, the Federal Reserve chairman has achieved inflation near his target of 2 percent, bolstered capital across the banking system and helped underpin confidence in the U.S. economy that’s contributed to record-low borrowing costs for the nation. Meanwhile, the unemployment rate has stalled above 8 percent for 41 consecutive months. The failure to bring joblessness closer to Fed officials’ longer-run goal of 5.2 percent to 6 percent has prompted Bernanke and his lieutenants to emphasize the need for economic growth over price stability, said John Silvia, chief economist at Wells Fargo Securities LLC. Bernanke added to his record monetary stimulus last month and said more action will be needed without “sustained improvement” in the jobs outlook.
“The employment number just isn’t improving; it’s the thing that’s out of whack,” Silvia said in a telephone interview from his Charlotte, North Carolina, office. “Yes, you’ve got a dual mandate, but like everything else in life sometimes you’ve got to focus on one more than the other.”

Consumer Price Index in U.S. Was Unchanged, Core Up 0.2% (Source: Bloomberg)
The cost of living in the U.S. was little changed in June, a sign inflation may stay subdued as Federal Reserve officials have predicted. No change in the consumer-price index followed a 0.3 percent drop in May, a Labor Department report showed today in Washington. The measure matched the median forecast of economists in a Bloomberg News survey. The so-called core measure that excludes volatile food and fuel costs rose 0.2 percent for a fourth month. Companies from Supervalu Inc. (SVU) to Chrysler Group LLC are offering incentives to boost sales as weak job gains squeeze households, underscoring limited pricing power among businesses. With inflation less of a concern, Fed policy makers have room to take additional steps to ensure the world’s largest economy keeps expanding.
“Inflation is not a concern at this time,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who was among economists projecting no change in June consumer prices. “The central bank is more worried about growth. Policy makers have signaled they may lean toward more easing.”

Homebuilder Confidence in U.S. Rises Most Since September 2002 (Source: Bloomberg)
Confidence among U.S. homebuilders increased in July by the most in almost a decade, indicating further improvement in residential real estate. The National Association of Home Builders/Wells Fargo confidence index climbed 6 points, the biggest gain since September 2002, to 35 this month, a report from the Washington- based group showed today. The gauge exceeded the most-optimistic projection in a Bloomberg News survey of 46 economists. Readings below 50 mean more respondents said conditions were poor. Builders said they were more upbeat about sales prospects as both current purchases and buyer traffic improved, showing the industry is being fueled by record-low mortgage rates and cheaper properties. At the same time, limited job growth, stricter credit standards and foreclosures are hurdles for the industry that precipitated the last recession.
“The housing market has turned the corner as more buyers perceive the benefits of purchasing a newly built home while interest rates and prices are so favorable,” Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Florida, said in a statement.

Gross Says U.S. Nearing Recession as BlackRock Sees Fed Step (Source: Bloomberg)
Bill Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co., said the U.S. is approaching a recession as BlackRock Inc. (BLK) expects the Federal Reserve to take more steps to support growth. Five-year Treasury yields slid to a record 0.577 percent yesterday after an unexpected drop in U.S. retail sales rekindled speculation Fed Chairman Ben S. Bernanke will use testimony today to hint at further monetary easing. That followed data earlier this month showing American employers added fewer-than-estimated workers to payrolls. Goldman Sachs Group Inc. (GS) and Deutsche Bank AG cut forecasts for U.S. growth. The U.S. is “approaching recession when measured by employment, retail sales, investment, and corporate profits,” Gross, who manages the $263 billion Pimco’s Total Return Fund (PTTRX), wrote on Twitter yesterday.
Ten-year Treasury yields added one basis point to 1.48 percent as of 4:11 p.m. in Singapore, compared with the all-time low of 1.44 percent reached June 1. The MSCI World Index (MXWO) of shares rose 0.2 percent. Bernanke will present his semi-annual monetary policy report to lawmakers in the Senate and House of Representatives today and tomorrow. He said on June 20 that the central bank will be prepared to take more steps, including additional asset purchases, if the labor market doesn’t improve continuously.

International Demand for U.S. Assets Rises on Europe Crisis (Source: Bloomberg)
International demand for U.S. financial assets rose in May as investors sought shelter from the debt crisis in Europe. Net buying of long-term equities, notes and bonds totaled $55 billion during the month, compared with net purchases of $27.2 billion in April, the Treasury Department said today in Washington. Economists surveyed by Bloomberg News projected net buying of $41.3 billion of long-term assets, according to the median estimate. Including short-term securities such as stock swaps, foreigners bought a net $101.7 billion in May, compared with net selling of $8.2 billion the previous month.
“The euro zone troubles had not yet reached their zenith in May and the dollar’s surge against the euro is a sign that global investors shifted assets into the safe haven of U.S. Treasuries and other securities,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said by e-mail before today’s report. “The U.S. despite its slower economic growth remains an oasis of safety for investors seeking to keep their portfolio’s free from danger.”

Asean Shares Best With Top Risk-Adjusted Returns: Southeast Asia (Source: Bloomberg)
Southeast Asia (MXSO), the heart of the 1997 currency crisis, produced the best risk-adjusted returns for Asian stocks since global markets started to rebound three years ago, as investors sought a haven from Europe’s debt turmoil. Benchmark indexes in the Philippines, Malaysia, Thailand, Indonesia and Singapore returned the most among Asia-Pacific markets worth more than $100 billion in the three years ended July 17, according to the BLOOMBERG RISKLESS RETURN RANKING. All five beat an index of developed markets by risk-adjusted returns, and four came out on top over five years.
“Investors have been focused on and rewarded in the smaller Asean markets because they have been more defensive and domestic-oriented,” said Timothy Moe, a Hong Kong-based strategist at Goldman Sachs Group Inc., referring to the Association of Southeast Asian Nations. “That’s been a better source of growth than what we see in the other more cyclical markets in North Asia. It probably will continue,” he said in a Bloomberg television interview in Hong Kong on June 26. Southeast Asian governments have bolstered spending on infrastructure and stepped up efforts to spur domestic consumption in a bid to reduce their economies’ reliance on exports. That’s helping to shield the nations from Europe’s debt crisis and a global economic slowdown, which has fueled volatility in the northern Asian markets.

China Raises Treasury Holdings First Time in Three Months (Source: Bloomberg)
China, the largest foreign U.S. creditor, boosted its holdings of government securities in May to the most in six months as the American economy stalled and Europe’s sovereign-debt crisis deepened. Chinese holdings rose 0.4 percent to $1.1696 trillion, Treasury Department data released yesterday show. Those of Japan, the U.S.’s second-largest lender, rose 1.4 percent to an all-time high of $1.1052 trillion. Net foreign purchases of Treasuries increased $54.2 billion, or 1 percent, to a record $5.264 trillion in May, the data show. “Slowing U.S. growth and increasing uncertainty about Greece is what caused more private and official demand,” said Shyam Rajan, an interest-rate strategist in New York at Bank of America Merrill Lynch, one of the 21 primary dealers that trade with the Federal Reserve. “U.S. data has actually gotten weaker since.”
Investors continued to seek a haven in U.S. Treasuries in May as concern mounted regarding the potential need for Spain to seek a bailout and amid uncertainty whether a party seeking to cancel the terms of earlier bailouts would win elections in Greece. The balloting was seen as a referendum on whether the country would stand by its international-bailout commitments.

China’s Wen Warns of Severe Job Outlook as Growth Yet to Rebound (Source: Bloomberg)
Premier Wen Jiabao said China’s labor situation will become more “severe,” underscoring concern that the weakest economic growth since 2009 will lead to increasing job losses. The government will continue to implement a more “proactive” labor policy, Wen said yesterday at a government meeting on employment, according to a statement posted on the central government’s website. The job situation will become more “complex,” Wen said. The comments build on the premier’s warning published three days ago that the nation’s economic rebound lacks momentum and difficulties may persist for a while. Authorities are intensifying efforts to halt a slowdown in expansion as the ruling Communist Party prepares for a once-a-decade leadership handover later this year.
“Party commissions and governments at all levels should further enhance the awareness that employment work is extremely important and earnestly put promoting employment at a priority place among all work tasks,” Wen said, according to the statement. The country should maintain steady and relatively rapid economic growth and enhance the economy’s role of driving job growth, he said. More than 2,000 Hong Kong-owned factories in China’s Pearl River Delta may close this year as export orders fall and wages rise, the Federation of Hong Kong Industries said this week. China’s gross domestic product rose 7.6 percent in the second quarter from a year earlier, the statistics bureau said July 13, the sixth straight quarterly slowdown.

China Slowdown Stymies Plan to Curb Shadow-Banking Risks (Source: Bloomberg)
China’s economic slowdown threatens to derail efforts to curb underground lending -- measures championed by Premier Wen Jiabao as crucial to future growth. The country grew in the second quarter at the slowest pace since the depths of the global financial crisis in 2009, 7.6 percent, putting pressure on China’s leaders to boost stimulus spending. Wen’s proposals to rein in the shadow-banking system, estimated to be about one-third the size of official lending, may be sidelined as a result, according to half a dozen economists interviewed by Bloomberg News.
“With an economy slowing more aggressively than the authorities perhaps want, the imperative to crack down on shadow financing becomes increasingly conflicted,” said Alistair Thornton, a Beijing-based economist with research firm IHS Global Insight Ltd. (IHS) “With the government increasingly in firefighting mode, the desire to push through tough reform in the financial sector inevitably takes a back seat to staving off a hard landing and managing global economic volatility.” Wen, whose term ends next year, has led calls to control what IHS estimates is $1.3 trillion of private financing, an amount equal to last year’s U.S. budget deficit. He has proposed channeling that money through government-regulated institutions to break what he called a “monopoly” on lending by state-owned banks and open a cascade of capital to China’s 42 million small and medium-sized businesses.

Bank of Canada Keeps Higher Rate Bias in Slower Rebound (Source: Bloomberg)
The Bank of Canada kept its main interest rate at 1 percent and said an increase remains possible, while adding the domestic recovery will be slowed by weaker global demand for exports. The world’s 10th largest economy won’t reach full output until the second half of next year, compared with an April prediction for the first half of 2013, the Ottawa-based central bank said. The decision was forecast by all 24 economists surveyed by Bloomberg News. “While global headwinds are restraining Canadian economic activity, domestic factors are expected to support moderate growth,” policy makers led by Governor Mark Carney, 47, said in a statement. “Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.” The statement comes as central banks around the world are easing policy. The U.S. Federal Reserve and the Bank of England expanded programs to buy assets in the last month, while the People’s Bank of China and the European Central Bank cut their main interest rates.
Canadian policy makers are “quite worried about the situation in Europe and the possible collateral damage,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto, who predicts no increase for a year. “There is very little urgency to raise interest rates.”

ZEW Investor Confidence Declines to Lowest Since January (Source: Bloomberg)
German investor confidence declined for a third month in July as the euro area’s debt crisis and cooling global demand dimmed the economic outlook. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to minus 19.6 in July from minus 16.9 in the previous month. In the U.K., inflation dropped to the lowest in 2 1/2 years. Germany’s economy, which grew 0.5 percent in the first quarter, is running out of steam as austerity measures across Europe and weakening global growth curb demand for its goods and damp confidence. The International Monetary Fund yesterday cut its global growth forecast for 2013 to 3.9 percent from a 4.1 percent estimate in April.
“Germany’s export prospects to Europe are in the doldrums and the U.S. and China cooling doesn’t bode well either,” said Carsten Brzeski, an economist at ING Group in Brussels. “A stronger domestic economy can’t offset that, so we are looking at a long period of stagnation, albeit at a high level.” Economists forecast a drop to minus 20, according to the median of 38 estimates in a Bloomberg News survey. ZEW’s gauge of sentiment in the 17-nation euro region fell to minus 22.3 from minus 20.1. A measure of current conditions in Germany slumped to 21.1 from 33.2.

Draghi Meets Noonan as ECB Shift Strengthens Irish Hand (Source: Bloomberg)
European Central Bank President Mario Draghi said the question of senior bondholders sharing the burden of ailing banks is “evolving” in Europe and he expects developments to be reflected in Ireland’s bailout program. Draghi acknowledged the “successful implementation” of Ireland’s program in a meeting with Irish Finance Minister Michael Noonan in Frankfurt today, the ECB said in a statement. As there aren’t bondholders now in Irish banks where burden- sharing “would be of any great solution,” Ireland will benefit from policy changes “in some other way,” Noonan said. Ireland is “making progress” in easing the terms of its international bailout, Noonan told reporters after his talks with Draghi. “In the context where policies change elsewhere in the euro zone, these changes will be reflected in the Irish program to improve its sustainability.”
The discussions took place against the backdrop of a move by the ECB to advocate losses on senior bondholders at crippled euro-area banks, as cited yesterday by two officials with knowledge of the ECB’s thinking.

Hungary Starts IMF Talks as Economists Predict Delay (Source: Bloomberg)
Hungary will probably miss its goal of obtaining an International Monetary Fund loan by the end of October as Prime Minister Viktor Orban gears up for a re- election bid in 2014, according to a survey of economists. Talks which started today in Budapest will yield an agreement after October, according to eight of 12 economists surveyed by Bloomberg News yesterday. Four expect a deal in October, six by the end of the year and two in 2013. IMF and EU officials will focus on untangling policies that contributed to an economic contraction in the first quarter and the downgrade of Hungary’s credit to junk last year. While the forint has gained this year on optimism the country would reach a bailout agreement, that may weaken Orban’s resolve to reach a loan agreement as he seeks to regain investor confidence, boost growth and reduce financing costs without shedding more support halfway through his four-year term.
“Orban is more concerned about domestic politics than investors,” Juri Kren, a London-based economist with IdeaGlobal, said in a phone interview. “Given that the popularity of his Fidesz party has decreased and bearing in mind elections are approaching, unless market conditions deteriorate significantly and force him to sign a deal quickly, I don’t think it will happen before December.”

Merkel Export Machine’s Gains Exceed Bailout Costs (Source: Bloomberg)
German Chancellor Angela Merkel’s export machine is generating far more in revenue than her anti- bailout voters are committing to euro-crisis fighting as the weakening currency adds to the country’s competitive edge. German exporters are enjoying a 100 billion-euro ($122 billion) annual advantage amid the turmoil, said Nathan Sheets, chief international economist at Citigroup Inc. (C) in New York. That’s more than 10 times the 8.7 billion euros the country is contributing this year to the rescue fund being set up. The figures underscore the benefits to Europe’s biggest economy of Merkel’s austerity-first strategy, which channels her voters’ doubts about propping up debt-laden countries. Her approach has drawn criticism from policy makers around the world and pleas for easing from southern Europe, where bond spreads have climbed to euro-era records amid concern about whether the 17-nation currency region can hold together.
“Do they care? I don’t think so,” David Buik, a market strategist at Cantor Index in London, said in a July 13 telephone interview, referring to German policy makers. “It’s dog eat dog out there. It is a question of shore up the dams and do what we can for ourselves.”

20120718 0955 Soy Oil & Palm Oil Related News.

Pro Farmer: After the Bell Soybean Recap (Source:CME)
Soybean futures capped off a choppy day of trade by coming off the session lows for a mixed close. Meal was higher and soyoil ended lower amid spreading. Weather remains front-and-center in traders' minds, but even when the news is bullish (continued hot and dry weather), futures are vulnerable to periods of profit-taking. Traders responded today to the overbought situation of the market by reevaluating positions.

Soybean Complex Market Recap (Source:CME)
August Soybeans finished up 5 1/4 at 1639, 8 3/4 off the high and 22 1/4 up from the low. November Soybeans closed unchanged at 1590 1/2. This was 15 1/4 up from the low and 16 1/2 off the high. August Soymeal closed up 6.7 at 494.0. This was 10.5 up from the low and 0.7 off the high. August Soybean Oil finished down 0.51 at 54.14, 0.69 off the high and 0.24 up from the low. November soybeans traded mixed today, but closing nearly unchanged on the day. August soybean meal traded higher into the close while soybean oil settled lower. The weather outlook for most of the Midwest looks unfavorable the next two weeks. Limited rainfall is expected east of the Mississippi River and the western Corn Belt will remain dry. Rains in the southeast and delta should be beneficial to soybean growth. Blistering temperatures, mixed with terrible topsoil conditions will continue to stress soybeans west of the Mississippi River. The market is beginning to take down US soybean yield projections as soybean pollination advances during this stretch of record high heat. One closely followed crop scout pegged the US soybean yield at 39 bushels/acre, down 1 bushels/acre from previous forecast. Above normal temperatures this week should advance pollination and pod setting significantly, while at the same time increasing the stress on soybean crops. Outside markets were mixed today with stocks trading stronger and the US Dollar offered resistance to commodities after trading stronger on the day.

VEGOILS-Palm oil inches down, U.S. dry weather caps losses
SINGAPORE, July 17 (Reuters) - Malaysian crude palm oil futures edged down as traders booked profits from the previous day's rally, although losses were limited as persistent hot and dry weather in the United States reduced global oilseeds supply.
"The market is caught between weak internals and strong externals," said a trader with a local commodities brokerage in Malaysia.