Thursday, July 19, 2012

20120719 1809 FCPO EOD Daily Chart Study.

FCPO closed : 3045, changed : +52 points, volume : lower.
Bollinger band reading : side way range bound.
MACD Histogram : falling, seller taking exposure.
Support : 3020, 2970, 2950, 2920 level.
Resistance : 3020, 3050, 3070, 3100 level.
Comment :
FCPO closed recorded gains recovered most muge portion of yesterday loss with slower volume participation. Soy oil currently trading higher after overnight closed recorded small loss while crude oil price continue to test higher ground trading firmer after yesterday climb.
Price traded higher ahead of tomorrow exports data release by cargo surveyor, news on India's firm increased tenders for 18,000 tonnes of palm olein plus surging crude oil and grain base commodities prices.
FCPO daily chart study continue to suggesting a side way range bound market development possibly testing immediate resistance at middle Bollinger band level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120719 1739 FKLI EOD Daily Chart Study.

FKLI closed : 1648.5 changed : +3 points, volume : lower.
Bollinger band reading : upside biased with possible pullback correction.
MACD Histogram : rising, buyer in control.
Support : 1640, 1630, 1620, 1610 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed recorded small gain hitting record high again with dying volume transacted doing about 4 points premium compare to cash market that slipped marginally lower. Overnight U.S. markets traded firmer and today Asia markets ended positively while European markets currently trading firmer.
Good news from U.S. housing data, better than estimates corporate earnings from Europe region and continue further stimulus measure speculation play pushed global markets higher.
Technical daily chart analysis continued to recommending 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.

20120719 1701 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.

20120719 1650 Global Markets & Commodities Related News.

GLOBAL MARKETS: Asian shares rose as strong corporate profits from U.S. bellwethers allayed fears of a slowdown in earnings, particularly for the beleaguered tech sector, while the euro steadied after overnight weakness. European equities are set to open higher, potentially nudging 2-1/2 month highs thanks to a strong performance in Asia and Wall Street fuelled by a relatively upbeat start to the corporate earnings season. The S&P 500 touched its highest level since early May as corporate profits from bellwethers Intel and Honeywell defied fears of a collapse in earnings.

Merkel set to win Spanish aid vote despite rebels
German lawmakers look set to approve on Thursday Berlin's contribution to a euro zone aid package for Spain's ailing banks  in a vote seen as a test of Chancellor Angela Merkel's authority within her centre-right coalition.

FOREX: The euro steadied in Asian trade but remained under pressure after reported comments by German Chancellor Angela Merkel rekindled fears about the euro zone debt crisis, to the benefit of the safe-haven yen.

FOREX-Euro steadies as yen gains on renewed Europe concerns
TOKYO, July 19 (Reuters) - The euro steadied in Asian trade on Thursday but remained under pressure after reported comments by German Chancellor Angela Merkel rekindled fears about the euro zone debt crisis, to the benefit of the safe-haven yen.
Merkel said in an interview posted on her Christian Democratic Union party's website that "We have not yet shaped the European project in a way that we can be sure that everything will turn out well, we still have work to do,"  according to a media report.

GRAINS: U.S. soybeans rose to a record high as weather maps showing no signs of an end to the drought that has damaged U.S. crops and raised concerns about food supplies.

U.S. drought wilts crops as officials pray for rain
Oppressive heat and a worsening drought in the U.S. Midwest pushed grain prices near or past records on Wednesday as crops wilted, cities baked and concerns grew about food and fuel price inflation in the world's top food exporter.

U.S. crude stocks fall, oil products mixed
U.S. crude oil stockpiles fell less than expected last week  even as crude imports rose and refineries scaled back their processing rates, federal government data showed on Wednesday.

OIL: Brent crude held steady above $105, near a seven-week high on geopolitical fears, while comments by the U.S. Fed about the world's biggest economy avoiding a double-dip recession renewed hopes of a recovery in oil demand growth.

Vale Q2 iron ore production rises to 80.54 mln tonnes
Brazilian miner Vale produced 80.54 million tonnes of iron ore in the second quarter, the company said in a securities filing Wednesday.

Goldman Sachs expands physical base metals team
NEW YORK, July 18 (Reuters) - Goldman Sachs  has hired Jeff Romanek as a physical metals trader in New York as the U.S. bank continues to bolster its physical commodities trading business, sources told Reuters.
Romanek joined earlier in July after a brief stint at commodities warehousing company CWT Commodities, two sources familiar with the matter said.

China to expand precious metals trading to interbank market-WSJ
July 18 (Reuters) - China has proposed to expand trading of precious metals to its vast interbank market from designated exchanges, in a bid to boost liquidity and help Beijing gain better pricing power amid growing appetite for commodities such as gold, the Wall Street Journal reported.
Citing a person involved with the matter, the Journal said on Wednesday the Shanghai Gold Exchange (SGE) has released draft rules for such interbank trading, which will include spot, forward and swap contracts for precious metals.

INTERVIEW-Steel customers eyeing U.S. election - Steel Dynamics
NEW YORK, July 18 (Reuters) - Steel prices have inched up recently, but the U.S. economy is still moving slowly and buyers are holding off, awaiting the outcome of the presidential election, the chairman of Steel Dynamics  said on Wednesday.
"If the economy backs up in a significant way, then we haven't reached the bottom," Keith Busse told Reuters. "But if the economy is not going to regress by any wider measure, I think we probably have."

Italy steel plant facing pollution case shutdown
MILAN, July 18 (Reuters) - Italy's main steel plant faces a possible partial shutdown if a magistrate rules its fumes and dust particles endanger the health of thousands of workers and nearby residents.
The imminent decision follows a lengthy probe into whether dioxin and other chemicals pumped from the ILVA plant have caused an abnormal increase in cancer cases and respiratory and cardiovascular diseases in the southern port of Taranto.

Italy's H1 steel output flat at 14.8 mln T-industry
MILAN, July 18 (Reuters) - Steel output in Italy, the European Union's second-biggest producer after Germany, was flat year on year at 14.8 million tonnes in the first six months of 2012, Italy's steel industry body Federacciai said on Wednesday.
June output dropped 7.9 percent to 2.4 million tonnes, extending a downward monthly output trend seen since April,  data published on Federacciai's website ( showed.

BASE METALS: Copper held steady after better-than-expected housing data from the United States and China, eased concerns over the impact on demand from a slowdown in the global economy.

PRECIOUS METALS: Gold edged up after two straight sessions of losses as the dollar weakened, although investors were less than convinced of its direction given the uncertainty over Fed's stimulus measures and persistent worries about Europe.

METALS-Copper edges up, cheered by China, U.S. housing data
SHANGHAI, July 19 (Reuters) - Copper inched higher on Thursday after better-than-expected housing data from the United States and China eased concerns about the impact on demand from a slowdown in the global economy.
Prices were also propped up by investors' expectations that China may announce further monetary easing measures as soon as this weekend after Premier Wen Jiabao recently said the government would step up efforts to boost the economy in the second half of the year.

PRECIOUS-Gold edges up on weak dollar, still lacks direction
SINGAPORE, July 19 (Reuters) - Gold edged up on Thursday after two straight sessions of losses as the dollar weakened, although investors were less than convinced of its direction given the uncertainty over Fed's stimulus measures and persistent worries about Europe.
The dollar hit its lowest against a basket of currencies in nearly two weeks. But the greenback, a favoured safe-haven asset, was still up more than 3 percent so far this year.

20120719 1154 Interview: Dry weather to keep Cargill palm output flat in 2012 by Reuters.

INTERVIEW: Dry weather to keep Cargill palm output flat in 2012 WLIL.SI - RTRS 
18-Jul-2012 20:49
By Michael Taylor
JAKARTA, July 18 (Reuters) - Crude palm oil output at Cargill will be unchanged at 300,000 tonnes this year, the U.S. agribusiness company said on Wednesday, as dry weather in Indonesia hurts production.
Crude palm oil shipments from the world's top producer have been hit by dry weather this year. For most of the archipelago, the rainy season is from October until April, although this can fluctuate. (Full Story) (Full Story)
"Why no improvement? We've gone through dry spells," said John Hartmann, chief operating officer at Cargill Tropical Palm Holdings, which runs the company's palm oil plantations, all of which are in the archipelago.
"The last two months have been very dry, and it's having an impact on our production," Hartmann told Reuters.
Cargill's plantations are in South Sumatra and West Kalimantan.
"Kalimantan was down and is recovering, and now we're seeing the down cycle go through Sumatra," Hartmann said.
Minneapolis-based Cargill, one of the world's largest privately held corporations, has about 70,000 hectares of palm oil plantations, up 6,000 hectares on 2011, said Hartmann.
"I don't know if it is an El Nino type of impact or not but certainly we went through a three-year cycle of above average rainfall, and now for the last 12 months or so it's been below average," he added.
Indonesia is not the only major commodity producer suffering from dry weather. The U.S. grain belt has been scorched by the worst drought since 1956, cutting estimated output and quality of corn and soybean crops, and bumping up benchmark global prices. (Full Story)
Malaysian crude palm oil futures dropped to a near three-week low on Wednesday, as traders booked profits partly on weaker exports and better production outlook in Malaysia after the U.S. weather-fuelled rally. (Full Story)
Weather, softening demand and falling oil prices could all play a role in prices for the second half, said Hartmann, who was unable to give an exact forecast.

Cargill's palm plantations in Sumatra are all certified by the Roundtable on Sustainable Palm Oil (RSPO), and Hartmann said he expected the Kalimantan plantations would gain similar certification within one year.
The biggest challenges for the Indonesian palm industry are sustainability, land availability, and yield intensification.
"Cargill has some investments in Africa and interest in what's going on there," Hartmann added.
"(But) the heart of growth in the sector now is Indonesia and will continue to be for the mid-term -- the next decade."
Cargill's crude palm oil is primarily processed in Indonesia's domestic refineries, such as those operated by Singapore's Wilmar International WLIL.SI.
The company itself does not run any palm refineries in Southeast Asia's largest economy.
Indonesia has seen a more than $2.5 billion wave of investment to develop its refining industry since it slashed export duties for processed oil last October. (Full Story)
The move, intended to double its capacity and potentially supply the entire needs of Asia's top food consumers -- India and China -- is expected to increase competition with rivals such as Malaysia.
"We have no set plans at the moment, but it is our sector so we're always interested in monitoring it," Hartmann said on downstream processing in Indonesia.
However, Cargill does run palm refineries in Malaysia, processing Malaysian palm oil, he added.

20120719 1114 Global Markets & Commodities Related News.

GLOBAL MARKETS-Shares up on U.S. earnings, euro steadies
HONG KONG, July 19 (Reuters) - Asian shares rose as strong corporate profits from U.S. bellwethers allayed fears of a slowdown in earnings while the euro steadied after being hit by reported comments from German Chancellor Angela Merkel that rekindled fears about the euro zone debt crisis.
"We have not yet shaped the European project in a way that we can be sure that everything will turn out well, we still have work to do," Merkel said in an interview posted on her Christian Democratic Union party's website, according to a media report.

COMMODITIES-Soybeans at record high; oil up for 6th day
NEW YORK, July 18 (Reuters) - Soybeans hit record highs on Wednesday on fear that it will be the next to wither after corn from the worst U.S. drought in 56 years, while oil markets climbed for a sixth day on escalating violence in Syria and tensions over Iran.
"Equity markets turning solid is probably the best thing that is working for the copper market," said Sterling Smith, vice president of commodity research at Citibank's Institutional Client Group in Chicago.

OIL-Oil at 7-wk peak on Middle East tensions, strong gasoline
NEW YORK, July 18 (Reuters) - Oil prices rose on Wednesday, hitting a seven-week peak as violence in Syria and tensions with Iran reinforced geopolitical fears and U.S. Federal Reserve Chairman Ben Bernanke downplayed the risk of a double-dip recession.
"Crude continues to show upside bias after the (second-quarter) sell-off, with the economy slowing seeming to be priced in and geopolitical worries and the gasoline draw down supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

NATURAL GAS-Heat, nuke outages back big U.S. natgas futures gain
NEW YORK, July 18 (Reuters) - Front-month U.S. natural gas futures ended 6 percent higher on Wednesday as widespread heat across much of the nation and several unexpected nuclear plant outages triggered strong demand for gas.
"Weather (heat) was the big early driver. Multiple nuclear reactors (went) offline today due to unplanned maintenance issues. Also looming out there is the storage picture," Gelber & Associates analyst Pax Saunders said in a report.

EURO COAL-Oct ARA trades at $90/T, down 25 cents
LONDON, July 18 (Reuters) - Physical prompt coal prices were little changed for a third day on Wednesday, with a few DES ARA European trades reported at numbers a few cents away from the most recent deals done at around $90.25 a tonne.
"Oil has been one of the major factors because there's been so little to give coal direction and the prompt months in particular are still under pressure from oversupply," one European trader said.

20120719 1055 Malaysia Corporate Related News.

Market: Government plans trading platform for unlisted securities, mercantile exchange. The government will promote the establishment of a trading venue for unlisted companies in a move that will further strengthen the capital market, says the Prime Minister. The government would also work towards setting up a mercantile exchange to provide opportunities to invest and hedge in gold futures and other precious metals. The Securities Commission (SC) would present a comprehensive proposal to the government after taking into account the domestic landscape and experiences of similar markets around the world. (Source: The Star)

Automotive: Perodua grabs 31% market share in first half. Perodua grabbed 31% of the local passenger car market in the first 6 months of this year, with sales of 93,000 units almost reaching the 95,000 units in the same period of the year. For the second half of the year, Perodua put a sales target of 95,000 units, maintaining its earlier full-year sales projection of 188,023 units in 2012. (Source: The Edge Financial Daily)

BI announces 40% foreign ownership cap for banks
Bank Indonesia (BI) has announced a 40% cap on foreign ownership of financial institutions yesterday, but has also stipulated exceptions to the rule in acknowledgement of the presence of current and future foreign stakeholders. Previously, foreign entities were allowed ownership of up to 99%. To own more than 40% of a local bank, the owning bank must obtain the approval of BI and must be publicly-listed and fulfill minimum capital obligations according to its risk profile. If not, the purchased bank will need to sell off at least 20% of its shares to the public within five years of the acquisition. (Malaysian Reserve)

Tanjung Offshore receives purchase order worth RM40m
Tanjung Offshore unit Gas Generators (M) SB has received a purchase order from Farab International LLC, Dubai for the supply of gas generators worth RM40m. The purchase order involves the engineering, construction, commissioning and delivery of gas generator packages which is expected to be completed in August 2013. (Malaysian Reserve)

MBSB to sell subsidiary for RM56m
Malaysia Building Society (MBSB) proposed to dispose of 3.97m shares in its unit, Gadini SB to Ken Holdings for RM56.17m. The cash proceeds will be utilized to expand the financing business of MBSB. The proposed disposal is in line with the group’s objective to dispose of non-income generating assets, foreclosed properties and properties acquired previously. (Malaysian Reserve)

MISC sees profit after exiting liner business
MISC is confident of returning to the black in the 2Q after making a total provision of RM1.67bn from exiting its liner business. This provision was the main factor dragging down the shipping giant into the red in the previous two quarters. President and CEO Datuk Nasarudin Md Idris said he hoped to put the liner chapter behind and that it would unlikely be providing further provisions. (StarBiz)

George Kent still awaits LRT bid result
George Kent (M) has not received any indication on the award of the RM960m Ampang LRT line extension contract, said chairman Tan Sri Tan Kay Hock. The George Kent consortium consists of China Railway Construction Corp and Tewet GmbH, a project consultant firm. The tender for the LRT extension project closed on 16 June last year. (StarBiz)

Tenaga Nasional Bhd is ready to provide electricity supply for use in the MyRapid Transit (MRT) Sungai Buloh-Kajang line. The company said it has no problem in providing the power supply as the company has excess capacity. Tenaga said that it has an electricity power capacity of 6,480MW and the amount of daily use or maximum demand only comes to 2,219MW or 34%. The project only requires 50MW and this will not be a burden on the company. (Bernama)

Malaysia's new car sales reached 303,100 units in the first half of this year, up almost 2% from 297,200 units sold in the same period last year. Perodua managing director Datuk Aminar Rashid Salleh estimates the total industry volume to hit between 612,000 units to 615,000 units this year. The Malaysian Automotive Association had forecast car sales of 615,000 units this year over the 599,877 units recorded last year. (BT)

Naza Group is discussing with its principals to manufacture and assemble big
bikes in Malaysia, capitalising on the common effective preferential tariff (CEPT) where no import duty is imposed for importation of such bikes between Asean member countries. Its joint group executive chairman, Datuk Wira SM Faisal SM Nasimuddin, said the company's diversification into other industries is vital since the automotive industry is becoming more competitive. (Malaysian Reserve)

Mudajaya Corp Bhd has extended the validity period of its letter of intent (LOI) to Zelan Bhd for the civil works on a 1,000MW coal-fired power plant project in Tanjung Bin, Johor. Zelan said the LOI was dated October 25 2011 to January 25 2013. All other terms and conditions as stipulated remained unchanged and enforceable, Zelan said. (BT)

Office rentals in Kuala Lumpur had remained stable over the past three years until end-2011, easing concerns over a possible property bubble. Overall, office rentals within the Kuala Lumpur-Golden Triangle zone are higher than average. In the fourth quarter, the rent per sq ft was RM4.66 compared with the median rent of RM4.50 per sq ft. Similarly, rentals in the suburban areas including Bangsar, Bukit Kiara and Damansara Heights are termed "extreme high rent" as per-sq-ft rent in the final quarter of 2011 was RM3.51. (BT)

Ingress Corp has denied a news report on the privatisation of the company by its major shareholders. There is no basis, whatsoever, for the RM300m amount for the deal as mentioned in the article, the company said. (Financial Daily)

20120719 1054 Local & Global Economy Related News.

Malaysia: Inflation weakens in June
Malaysia's consumer price inflation slowed in June, with annual inflation slowing to 1.6% in June from 1.7% in May. Food and non-alcoholic beverages prices advanced 2.9% annually, while clothing and footwear prices edged down 0.6%. Housing costs and utility prices were higher by 1.5% compared to last year, and transportation costs by 0.2%. On a monthly basis, the consumer price index edged up 0.1% in May. In the six months ended June, consumer prices advanced 2.0% from the corresponding period a year earlier. (Bloomberg)

China: June home prices rebound as sentiment improves
China’s new home prices in June rose in the most number of cities tracked by the government in 11 months as buyer sentiment improved after the central bank cut interest rates. Prices climbed in 25 cities out of the 70 the government looks at, the most since July last year. Prices fell in 21 cities from a month earlier. The eastern city of Hangzhou led the gain with a 0.6% jump from May, while major cities Beijing and Shanghai recorded gains of as much as 0.3%. (Bloomberg)

India: Consumer-price inflation slowed in June while exceeding 10% and remaining the fastest among major economies. The consumer-price index climbed 10.02% YoY, compared with 10.36% YoY in May, the Statistics Ministry said. (Source: Bloomberg)                                                                                  

UK: Jobless rate hits nine-month low, defying recession
UK unemployment fell to a nine-month low in the quarter through May as the London Olympics helped to create jobs, underlining the resilience of the labour market in the face of a recession and Europe’s debt crisis. The jobless rate based on International Labour Organization methods fell to 8.1% from 8.2% in the period through April. Jobless claims rose 6,100 in June. The increase, though larger than the 5,000 median forecast in a Bloomberg News Survey, was inflated by a benefit-rule change that took effect 21 May 21. (Bloomberg)

US: Bernanke outlines range of options for additional easing
Federal Reserve Chairman Ben S. Bernanke outlined options to ease policy further in case the flagging economic recovery fails to lower unemployment. Easing tools include further purchases of Treasuries and mortgage-backed securities, and altering the Fed’s language on the outlook for interest rates. Another option is to use the so-called discount window for direct lending to banks. (Bloomberg)

US: New home construction rises 6.9% in June
US builders started construction on new homes in June at the fastest pace since fall 2008, though building permits fell. Housing starts rose 6.9% to an annual rate of 760,000 last month from an upwardly revised 711,000 in May. (MarketWatch)

US: More Fed districts report slowdown according to Beige Book
US grew at a “modest to moderate” pace over the last month and a half as more districts are reporting slowing growth, according to the latest survey of anecdotes on the economy released by the Federal Reserve. The so-called Beige Book, which covered the economy between June and early July, was less enthusiastic than the “moderate” assessment of the last Beige Book. And now three regions, up from one, reported slowing growth. (MarketWatch)

US stocks gain with treasuries, commodities; Euro halts rally
US stocks rose for a second day amid better-than-estimated earnings and a jump in housing starts. Treasuries climbed while the dollar fell against most peers and natural gas led commodities to a sixth straight gain. The Standard & Poor’s 500 Index added 0.7% to 1,372.78 and the Stoxx Europe 600 Index closed up 1.1%. Ten-year Treasury yields dropped one basis point to 1.49%. German two-year notes rose after the nation sold EUR4.17bn (USD5.1bn) of the securities with a negative yield for the first time, and the government’s five-year rate declined to the lowest ever. The euro halted a three-day advance to trade 0.1% lower. (Bloomberg)

20120719 1052 Global Market Related News.

Asia FX By Cornelius Luca - Wed 18 Jul 2012 17:12:18 CT (Source:CME/
The appetite for risk was divergent on Wednesday. While foreign currencies made little progress, the US stocks surged in very thin volume and the gold/oil ratio fell. The market is still digesting comments by German Chancellor Angela Merkel that not all is well in the Eurozone debt crisis; whereas this is obvious, the market was unnerved by the mere fact that she approached the issue. In the US, the Beige Book stated the obvious: low growth and even lower job creation. 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!

US: Housing starts expanded 6.9% to a seasonally adjusted annual rate of 760,000 in June compared to May's upwardly revised to 711,000 from the 708,000 initially reported. Building permits fell 3.7% to a seasonally adjusted annual rate of 755,000 in June from May's upwardly revised figure of 784,000 from 780,000.
US: In its latest "Beige Book", the Federal Reserve said that economic activity continued to expand at a modest to moderate pace in June and early July, while job growth grew at a slow pace across most of the twelve Federal Reserve districts.

Today's economic calendar
Japan: All Industry Activity Index for May
Japan: Leading economic index for May

Asian Stocks Rise as U.S. Housing Data Boosts Confidence (Source: Bloomberg)
Asian stocks rose, with the benchmark index headed toward its biggest gain in almost three weeks, after U.S. housing starts jumped to the highest level in four years. Yaskawa Electric Corp. (6506), an industrial robots maker, jumped 8.6 percent after raising its first-half profit forecast. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, increased 1.7 percent as crude prices exceeded $90 a barrel for the first time since May. Li & Fung Ltd. (494), which gets about two-thirds of its sales from the U.S., climbed 1.7 percent in Hong Kong. The MSCI Asia Pacific Index (MXAP) gained 1.1 percent to 117.02 as of 10:51 a.m. in Tokyo, headed for its steepest advance since June 29. About four shares rose for each that fell. The Asian gauge dropped 10 percent from this year’s high on Feb. 29 through yesterday as U.S. and China reported economic reports that signaled the world’s two largest economies are slowing.
“The U.S. economy has gone through a bit of soft patch, but the housing sector does seem to be heading for recovery, which is positive from a longer-term perspective for America,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The market still likes what it sees.”

Hong Kong Stocks Rise on China Easing Speculation (Source: Bloomberg)
Hong Kong stocks rose, headed for the third day of increase this week, amid speculation China will take more action to bolster growth and after new housing starts in the U.S. jumped to the highest since 2008.
Bank of Communications Co., China’s fifth-largest bank by value, rose 1.9 percent. Cnooc Ltd., China’s No. 1 offshore oil producer, climbed 2.6 percent as crude traded near a seven-week high. Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., advanced 1.6 percent for a fourth day of gain. The Hang Seng Index advanced 1 percent to 19,438.44 at 9:46 a.m., with five companies climbing for each that dropped in the 49-member gauge. The Hang Seng China Enterprises Index of mainland companies rose 1.5 percent to 9,430.75. The benchmark Hang Seng Index (HSI) fell 11 percent from this year’s high in February through yesterday on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop cut the value of shares on the gauge to 10.2 times estimated earnings on average, compared with 13.2 for the Standard & Poor’s 500 Index and 10.9 for Stoxx Europe 600 Index.

Topix Heading for First Gain in 10 Day on U.S. Housing (Source: Bloomberg)
Japanese stocks rose, with the Topix Index rising for the first time in 10 days, after U.S. housing starts jumped to the highest in almost four years, boosting the outlook for exporters. Machinery maker Komatsu Ltd. (6301), which depends on the Americas for 23 percent of its sales, gained 3.3 percent. Advantest Corp., the world’s top producer of memory-chip testers, surged 5 percent after industry bellwether Intel Corp. topped profit estimates. Yaskawa Electric Co. jumped 7.8 percent after the robotics maker beat earnings expectations. The Topix gained 0.7 percent to 745.63 as of 10:40 a.m. in Tokyo after yesterday capping a nine-day losing streak, the longest since July 2009. The Nikkei 225 Stock Average (NKY) added 0.7 percent to 8,786.43, with about four shares rising for each that fell. Stocks pared gains as the yen rose against most of its major counterparts, weighing on exporters.
“The U.S. economy has gone through a bit of soft patch, but the housing sector does seem to be heading for recovery, which is positive from a longer-term perspective for America,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The market still likes what it sees.” The Topix rebounded 7 percent from a 29-year low on June 4 as concern eased about Europe’s debt crisis and central banks around the world cut interest rates to shore up growth. Shares on the index are valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index (SPXL1) and 1.4 for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.

U.S. Stocks Rise After Housing Starts Increase (Source: Bloomberg)
U.S. stocks rose for a second day after companies from Intel Corp. (INTC) to Honeywell (HON) International Inc. reported profit that beat estimates and housing starts increased to the fastest rate in almost four years. Technology stocks had the biggest advance out of 10 groups in the Standard & Poor’s 500 Index as Intel jumped 3.3 percent after posting profit that topped projections while scaling back its annual sales forecast. Honeywell surged 6.7 percent, pacing gains in industrial companies. EMC Corp. rallied 9.4 percent after announcing a new chief executive officer at VMWare Inc. (VMW), the software maker in which it owns a majority stake. The S&P 500 (SPX) gained 0.7 percent to 1,372.78 at 4 p.m. in New York. The benchmark gauge rose 0.7 percent yesterday. The Dow Jones Industrial Average added 103.16 points, or 0.8 percent, to 12,908.7.
“There’s some reduced pessimism about earnings season and the outlook going forward,” Peter Tuz, who helps manage about $800 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a telephone interview. “People were expecting worse numbers from lots of companies.” Housing starts rose 6.9 percent last month to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate. Building permits fell, reflecting a drop in applications for apartment construction.

European Stocks Advance as Banks Beat Analyst Estimates (Source: Bloomberg)
European stocks advanced for the third time in four days after lenders including Credit Suisse Group AG (CSGN) reported profits that beat estimates, while minutes showed the Bank of England may reconsider the case for an interest-rate cut. Credit Suisse, the second-biggest Swiss bank, jumped 4.5 percent after announcing a higher cost cutting-target and boosting capital. Bankia SA (BKIA) surged 14 percent after Economy Minister Luis de Guindos said Spain will block banks selling preferred stocks to retail investors. ASML Holding NV (ASML) was among the main gainers on a measure of technology stocks. The Stoxx Europe 600 Index (SXXP) added 1.1 percent to 258.93 at the close of trade. Shares have climbed 11 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.
“We have a lot of monetary stimulus coming from others like the ECB and the Bank of England and even if the Fed doesn’t join in with QE3, the feeling is still that QE3 could be forthcoming, should the economy weaken,” Edmund Shing, an equity strategist at Barclays Capital, said, referring to a potential third round of quantitative easing by the Federal Reserve. “The hope is that the economy will improve and if that doesn’t happen there will be monetary stimulus.”

Emerging Stocks Fall From 1-Week High on China, Profit Concerns (Source: Bloomberg)
Emerging-market stocks declined from a one-week high after Chinese Premier Wen Jiabao warned of a “severe” jobs outlook and amid concern corporate earnings growth is slowing. The MSCI Emerging Markets Index fell 0.2 percent to 930.90 at the close of trading in New York, snapping a three-day advance. The benchmark index pared some of its retreat after housing starts in the U.S. approached a four-year high. Mining company Vale SA (VALE5), whose biggest export market is China, was among companies falling in Brazil. Inotera Memories Inc. (3474) tumbled to a five-month low after the Taiwanese chipmaker reported a loss and as Intel Corp., the world’s largest semiconductor maker, cut its forecast.
Wen’s comments yesterday about the labor situation underscored concern that China’s weakest economic growth since 2009 will lead to increasing job losses. Intel Chief Financial Officer Stacy Smith said slower spending in Europe and the U.S. as well as weaker growth in China forced the company to reduce its sales target for the year. Beginning construction of U.S. homes rose more than forecast in June, indicating a brighter outlook for the residential real estate market. “Investors are concerned that China may be facing a hard landing as economic activity has been decelerating,” Morgan Harting, a portfolio manager at AllianceBernstein Investments Inc., managing about $100 million in assets, said by phone. “Economic trends in the U.S. and China are central to any view on emerging markets.”

Yen Gains Versus Euro, Dollar Before German Bailout Vote (Source: Bloomberg)
The yen advanced against most major counterparts as concern about the implementation of measures to stem Europe’s debt crisis supported demand for Japan’s currency as a haven. The yen held gains from yesterday before German lawmakers vote on a bailout for Spanish lenders. Chancellor Angela Merkel called on fellow leaders to work harder to make Europe succeed without waiting for unconditional German help. The dollar slid to the lowest in 2 1/2 months versus its Australian counterpart before a U.S. report today that may show first-time claims for jobless benefits climbed, boosting prospects the Federal Reserve will add to easing measures that debase the greenback. “Nothing has been resolved on Europe’s debt crisis and it won’t end any time soon,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “The yen is being bought in such a negative situation because there are few other choices.”
The yen gained 0.1 percent to 96.71 per euro as of 10:06 a.m. in Tokyo. It touched 96.17 on July 16, the strongest level since June 1. The 17-nation euro was little changed at $1.2287. The dollar slid 0.1 percent to 78.69 yen and touched 78.67, the weakest since June 18. It traded at $1.0371 per Australian dollar after earlier reaching $1.0379, the weakest since May 1. German lawmakers are due to vote in a special session of the lower house today in Berlin after the Finance Ministry asked parliament in a July 16 letter to support aid of as much as 100 billion euros ($122.8 billion) for Spain’s banks. The money would come from the temporary backstop, the European Financial Stability Facility, and then transfer to the future European Stability Mechanism.

FOREX-Euro steadies vs dlr, door to Fed easing open
LONDON, July 18 (Reuters) - The euro steadied against the dollar as investors focused on a gloomy assessment of the U.S. economy from Federal Reserve Chairman Ben Bernanke, that left the door open for more monetary easing and dampened demand for
the greenback.
"Bernanke did not give any clear signal of policy easing but left the door open to more easing if required. It's a reiteration of Fed policy from the last meeting but has not really provided fresh impetus to market direction," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi.

Treasury Yield Is Near Record Low After Bernanke Speech (Source: Bloomberg)
Treasury benchmark 10-year yields were five basis points from the record low after Federal Reserve Chairman Ben S. Bernanke said the U.S. fiscal situation is “unsustainable,” supporting demand for the safest assets. Bernanke said yesterday economic activity “decelerated” during the first half of the year, adding that the central bank is “prepared to take further action as appropriate.” The Treasury is scheduled to auction $15 billion of 10-year inflation-indexed debt today. “Our economy certainly isn’t moving anywhere fast,” said Marc Fovinci, who helps oversee $3.1 billion as head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon. “That’s going to keep a flight-to-quality bid.” The 10-year note yielded 1.49 percent as of 9:50 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2022 changed hands at 102 11/32. The all-time low yield was 1.44 percent set June 1.
A year-end “fiscal cliff” would damage the recovery, Bernanke said in response to questions before the House Financial Services Committee in Washington, referring to tax cuts on wages, capital gains, dividends and estates that are scheduled to lapse. “He seems to be a little more negative on the economy than most people thought, so that’s why you have a very good bid for Treasuries,” Ray Remy, head of fixed-income in New York at Daiwa Capital Markets America Inc., one of 21 primary dealers that trade directly with the Fed, said yesterday.

Buyers Bet Wen Can’t Keep Prices Down as Home Sales Gain (Source: Bloomberg)
Sales at Sunac West Chateau, a residential project in Beijing, surged almost 50 percent in June as the developer opened new buildings to attract buyers betting on a recovery even as the government pledges to keep a lid on the housing market. “In the first half of the year, it was like gazing at flowers in a fog,” said Lou Yanqing, deputy sales manager of the project, using a Chinese expression to describe the uncertainty over the government’s policies to curb house price gains. “We’re seeing some sunshine now, and going forward there’s a big chance that the clouds will clear,” she said. Premier Wen Jiabao said July 7 that citizens are worried prices will rise again, reiterating a pledge that his government will “unswervingly” continue property controls. Recent data suggest buyers aren’t listening: property sales and prices have rebounded as local governments relaxed some housing restrictions and the central bank cut interest rates.
“The possibility that history will repeat remains,” Credit Suisse Group AG analyst Vincent Chan said in a phone interview from Hong Kong, referring to past property surges that followed sales increases. A 20 percent to 30 percent rebound is possible if the government, similar to past cycles, “mildly drops its tightening policy,” Chan wrote in a July 4 report. Existing home prices in Beijing, Shanghai, Guangzhou and Shenzhen surged 42 percent, 58 percent, 79 percent and 69 percent respectively in the 24 months from February 2009 as China loosened property curbs, according to Credit Suisse.

Home Starts in U.S. Rise to Highest Level Since 2008 (Source: Bloomberg)
New U.S. home construction rose in June to the highest level in almost four years, indicating the residential real estate market is strengthening even as other parts of the economy cool. Housing starts rose 6.9 percent to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate. Record-low mortgage rates and cheaper properties are luring buyers, prompting builders such as Ryland Group Inc. (RYL) to boost construction. The gain underscores comments by Federal Reserve Chairman Ben S. Bernanke that the industry is on the mend, three years since the start of the expansion.
“Low borrowing costs certainly help at the margin, but the biggest thing is affordability in terms of the pricing,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who correctly forecast June starts. Housing is “making a very modest contribution to growth. Unfortunately, it feels like everything around it is crumbling.” The June pace was the fastest since October 2008, and estimates in the Bloomberg survey ranged from 710,000 to 800,000. Ground-breaking on new homes in May was revised from a previously reported 708,000.

Bernanke Says Fed Can Remove ‘Punch Bowl,’ Curb Inflation (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke sought to assure lawmakers the Fed can limit inflation while providing record stimulus and won’t allow consumer prices to rise in return for faster economic growth. “It will be a similar pattern to what we’ve seen in previous episodes where the Fed cut rates, provided support for the recovery, and when the recovery reached a point of takeoff where it could support itself on its own, then the Fed pulled back, took away the punch bowl,” Bernanke told the House Financial Services Committee today in Washington. Bernanke, on his second day of testimony to Congress, responded to lawmakers who questioned his ability to control inflation after cutting the Fed’s key interest rate almost to zero and expanding its balance sheet to a record $2.87 trillion in a bid to boost growth. “There is so much money out there that this thing is going to really go and inflation is going to be a huge problem,” said Representative Stephen Fincher, a Republican from Tennessee.
Republican Representative Jeb Hensarling of Texas questioned why the “greatest monetary and fiscal stimulus thrown at an economy in our history” has failed to reduce unemployment and boost growth, and whether the economy suffered a “profound failure of monetary policy” because of the Fed’s unprecedented actions.

Fed Beige Book Says Growth Was ‘Modest to Moderate’ in June (Source: Bloomberg)
The Federal Reserve said the economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions. “Manufacturing activity continued to expand slowly in most districts,” the Fed said today in its Beige Book business survey, which is based on reports from its 12 district banks. “Employment levels improved at a tepid pace.” The New York, Philadelphia, and Cleveland districts “noted that activity continued to expand, but at a slower pace since the last report, while Richmond cited mixed activity.” The report, which gives central bankers anecdotal evidence on the economy two weeks before they meet in Washington, supports Fed Chairman Ben S. Bernanke’s view that the U.S. lost momentum in the first half of 2012. Bernanke, in a second day of congressional testimony today, repeated that progress on unemployment may be “frustratingly slow” and the Fed is ready to take further action to boost the recovery if necessary.
“Overall, the report is tepid,” Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago, said in an interview on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays. “It really echoes what the chairman has been telling us for the last two days, and that is that economic outlook is not looking too great. The economy has slowed.”

Housing Starts in U.S. Probably Climbed in June as Rates Fell (Source: Bloomberg)
Builders probably broke ground on U.S. homes in June at the fastest pace in almost four years, indicating the outlook for residential real estate is brightening, economists said before a report today. Housing starts rose 5.2 percent last month to a 745,000 annual pace, the strongest since October 2008, according to the median estimate of 79 economists surveyed by Bloomberg News. Building permits, a proxy for future construction, dropped 2.4 percent to a 765,000 rate, the survey showed. Record-low mortgage rates and cheaper properties are attracting buyers, encouraging builders faced with lean inventories to boost construction. At the same time, limited employment opportunities and competition from distressed properties are hurdles for the industry.
“The long-awaited housing market recovery is definitely under way as demand is improving,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “Continued growth in the number of households, pent-up demand, very low prices and mortgage rates that have resulted in record- high affordability” are underpinning demand, he said.

Temporary Work Demand Rises as Companies Avoid Commitments: Jobs (Source: Bloomberg)
As orders from food makers have picked up during the past year, Create-A-Pack Foods Inc. turned to a staffing company, Kelly Services Inc. (KELYA), to add about 100 workers. Hiring on a temporary basis saves money if an employee doesn’t work out and expands recruiting beyond Create-A-Pack’s Ixonia, Wisconsin, headquarters, Chief Executive Officer Glenn Cochrane said. “You can build good crews with temp services,” he said, noting that the company -- which packages products including sauces and icings in pouches, bottles and jars -- is seeking to fill another 28 positions. Create-A-Pack is among a growing number of businesses turning to staffing companies for temporary workers, reflecting employer concern about the U.S. economic outlook. The number of people on the payrolls of temp-staffing businesses grew 10.7 percent in June to 2.5 million from a year earlier, the biggest increase since May 2011, based on data from the Labor Department.
Demand for temporary employees is gaining momentum as companies seek more flexible staffing arrangements, according to Tobey Sommer, director of equity research in Nashville at SunTrust Robinson Humphrey Inc. This has helped create a shift within the labor force, as a “not-easily-forgotten recession” has made many executives cautious about hiring, he said.

Romney Seals Republican Nomination With Victory in Texas (Source: Bloomberg)
Voter disapproval of President Barack Obama’s handling of the economy is hindering his re- election prospects and keeping close his race with Republican challenger Mitt Romney, a New York Times/CBS News national poll shows. Romney is backed by 47 percent in the survey released today, Obama by 46 percent in figures that include voters who said they leaned toward one of the candidates. Excluding those voters, Romney led with 45 percent to 43 percent for Obama. The results, while within the poll’s error margin of plus- or-minus 3 percentage points, represent the first time Romney has had an edge in the Times/CBS survey since he emerged as the presumptive Republican nominee in early April. Obama led by 3 percentage points in a Times/CBS poll in March. The two were tied in an April survey with 46 percent each.
Since that poll, voter attitudes toward Obama’s economic record have declined. In the latest survey, 55 percent said they disapproved of his handling of the economy, while 39 percent expressed approval. In April, 48 percent disapproved and 44 percent approved.

China’s June Home Prices Rebound as Sentiment Improves (Source: Bloomberg)
China’s new home prices in June rose in the most number of cities tracked by the government in 11 months as buyer sentiment improved after the central bank cut interest rates.
Prices climbed in 25 cities out of the 70 the government looks at, the most since July last year. Prices fell in 21 from a month earlier, according to data released by the statistics bureau today. The eastern city of Hangzhou led the gain with a 0.6 percent jump from May, while major cities Beijing and Shanghai recorded gains of as much as 0.3 percent. Home prices were unchanged from May in 24 cities. The result poses a dilemma for outgoing Premier Wen Jiabao, who is trying to spur the slowest economic growth in three years with interest rate cuts. Shares of developers declined as the data makes it more difficult to loosen property policies, according to Nomura Holdings Inc. “There are no good methods in the short term,” said Yao Wei, a Hong Kong-based economist at Societe Generale SA. “If the government tightens further, that will hurt economic recovery. But easing will drive home prices to rebound.”

BOJ Opens Door to Negative Rates by Ending Yield Floor: Economy (Source: Bloomberg)
The Bank of Japan (8301) scrapped a 0.1 percent yield floor for government bond purchases, opening the door to the possibility of buying debt with negative returns. The central bank removed the limit on purchases of securities with maturities of one year or less in its so-called rinban operation, BOJ spokesman Tsuyoshi Nakamura said in Tokyo. The central bank is struggling to buy enough bonds to execute a stimulus program to strengthen the world’s third- biggest economy as Europe’s crisis and a global economic slowdown boost demand for the government’s debt. UBS AG said that the latest move indicated the central bank’s determination to press on with asset purchases and gave policy makers an extra tool if ever needed.
“I don’t think negative interest rates are going to happen any time soon in Japan, but this is probably a message from the BOJ that it’s ready to cope with any market turmoil stemming from the European crisis,” said Atsushi Ito, a senior rate strategist in Tokyo at UBS. “This shows their determination to fulfill their asset purchases as they’ve pledged.”

Japan Property Billionaire Mori Bets $202 Million on China (Source: Bloomberg)
Billionaire Akira Mori, the owner of Japan’s most profitable closely held developer, said he has formed a company to invest in China and advise Japanese companies on expanding there. “Japan’s environment is getting difficult; I want to build a company that is willing to take risks,” said Mori, 76, in an interview in Tokyo. Mori said he plans to expand the assets of MA Platform Group, set up with 16 billion yen ($202 million) of capital, to 50 billion yen in five years. MA Platform has invested 18 billion yen including financing so far. Mori seeks to invest in educational services and mass media in China, he said. The company became the second-largest shareholder in closely held Beijing-based Tsingda eEdu Corp., which offers classes over the Internet.
Japan’s more than a decade of deflation and sluggish economic growth has forced the Bank of Japan (8301) to keep interest rates near zero. In contrast, China surpassed Japan as the world’s second-largest economy in 2010 and has introduced a series of tightening measures to keep its economy from expanding too rapidly. Mori plans to take advantage of the near-zero interest rates in Japan to invest in one of the world’s fastest- growing economies.

BOE Policy Makers Say They May Reassess Rate-Cut Case: Economy (Source: Bloomberg)
Bank of England policy makers may reconsider the case for an interest-rate cut after assessing the impact of new lending and liquidity measures as Europe’s debt crisis keeps pressure on them to do more to stoke growth. The Monetary Policy Committee said while the arguments for and against cutting the benchmark rate from the current record low of 0.5 percent hadn’t changed since June, they may be reviewed in the coming months, according to the minutes of its July 4-5 meeting. The MPC voted 7-2 to increase quantitative easing by 50 billion pounds ($78 billion) to 375 billion pounds at the meeting. The Bank of England has joined counterparts around the world in expanding measures to support growth as the threat from the euro-area turmoil increases. The Bank of Japan has opened the door to buying debt with negative returns, and Federal Reserve Chairman Ben S. Bernanke said yesterday the Fed may take further action to boost the recovery.
“Central banks are looking to add to their options for further easing and reevaluate all the tools at their disposal,” said Chris Scicluna, an economist at Daiwa Capital Markets Europe in London. “With the exception of Japan, the outlook has deteriorated markedly across the major economies, and there may be further weakness in the euro area going into the end of the year.”

U.K. Unemployment Hits 9-Month Low as Labor Market Defies Slump (Source: Bloomberg)
U.K. unemployment fell to a nine- month low in the quarter through May as the London Olympics helped to create jobs, underlining the resilience of the labor market in the face of a recession and Europe’s debt crisis.
The jobless rate based on International Labor Organization methods fell to 8.1 percent from 8.2 percent in the period through April, the Office for National Statistics said today in London. Jobless-benefit claims rose 6,100 in June. The increase, though larger than the 5,000 median forecast in a Bloomberg News Survey, was inflated by a benefit-rule change that took effect May 21. The strength of the labor market is providing a boost for Prime Minister David Cameron as his government axes hundreds of thousands of state jobs to help cut the budget deficit and struggles to lift the economy out of its second recession since 2009. “The big question is can the labor market remain resilient given the economy’s ongoing weakness and the current very worrying and uncertain outlook,” said Howard Archer, an economist at IHS Global Insight in London. “In the very near term, the staging of the Olympics is likely to help matters further. However, further out the jobs outlook seems more problematic.”

20120719 1052 Global Commodities Related News.

Record Heat Wave Pushes U.S. Belief in Climate Change to 70%(Source: Bloomberg)
A record heat wave, drought and catastrophic wildfires are accomplishing what climate scientists could not: convincing a wide swath of Americans that global temperatures are rising. In the four months since March there has been a jump in U.S. citizens’ belief that climate change is taking place, especially among independent voters and those in southern states such as Texas, which is now in its second year of record drought, according to nationwide polls by the University of Texas. In a poll taken July 12-16, 70 percent of respondents said they think the climate is changing, compared with 65 percent in a similar poll in March. Those saying it’s not taking place fell to 15 percent from 22 percent, according to data set to be released this week by the UT Energy Poll.
Following a winter of record snowfall in 2010, the public’s acceptance of climate change fell to a low of 52 percent, according to the National Survey of American Public Opinion on Climate Change, which was published by the Brookings Institution in Washington. After this year’s mild winter, support jumped to 65 percent, the same as that found by the UT Energy Poll in March. “There has been a rebound in belief” in global warming, Barry Rabe, a University of Michigan professor who published the research on the Brookings study. “All respondents are quite likely to use observations of weather as a big part of their explanation.”

India to Review Farm-Export Rules, Curb Hoarding on Weak Monsoon(Source: Bloomberg)
India, the second-biggest grower of rice, wheat and sugar, will review its export rules and consider curbing the amount of food crops that traders can stockpile as the worst monsoon in three years fuels a rally in prices. “I am concerned about the deficient rain,” Food Minister K.V. Thomas told reporters after a meeting with Prime Minister Manmohan Singh yesterday. “We will get a clear picture about the situation after 15 days.” Dry weather from the U.S. to Australia has parched fields, pushing up global corn and wheat prices and curbing a decline in food costs. El Nino weather conditions, which can parch Asia and bring cooler weather to the U.S., may develop during July to September, the World Meteorological Organization said June 26. India extended a ban on exports of sugar, rice and wheat in 2009, following the weakest monsoon since 1972.
“One of the big concerns about a repeat of the food crisis is whether we are likely to see the export policy in key producing and exporting countries changing,” Sudakshina Unnikrishnan, an analyst at Barclays Plc in London, said by phone. “An underperforming Indian monsoon does raise concern that potentially there could be some sort of export curbs.” More than 235 million farmers depend on the monsoon for crops such as rice, peanuts, soybeans and cotton. Sowing of monsoon crops begins in June and harvesting starts in October.

Pro Farmer: After the Bell Wheat Recap(Source: CME)
Wheat futures saw a volatile day of trade, but bulls gained the late upper hand. All three locations ended with gains through the May 2013 contract. Far-deferred months closed slightly lower in Kansas City and Chicago. Action in the wheat pit closely mirrored choppy trade in the corn market today. As corn rallied into the close on concern about heat and dryness in the Corn Belt, so did wheat.

Wheat Market Recap Report (Source: CME)
September Wheat finished up 18 1/4 at 903 1/4, 5 1/4 off the high and 37 3/4 up from the low. December Wheat closed up 15 1/4 at 912 1/2. This was 32 3/4 up from the low and 5 1/2 off the high. September Chicago wheat traded sharply higher into the close and settled above 9.00. After taking profits midday, wheat bulls re-entered the market, as corn began to climb higher. 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. Temperatures are expected to reach 95-105 degrees this week in the western Corn Belt, adding to corn stress. A well-known Russian, agricultural consultant expects Russian wheat exports to slow to 10 million tonnes for the 2012/13 crop year. Continued dry weather in the southern districts of Russia could mean further yield destruction. Wheat remains a follower of corn in the short-term but the outlook for a small US corn crop could mean better demand for feed wheat going forward. Outside markets offered support with stocks and crude oil trading higher today. September Oats closed up 2 1/4 at 380. This was 8 1/2 up from the low and 1/2 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn were lower much of the day but firmed around midday. The September through July contracts ended 10 3/4 to 15 1/2 cents higher, with deferred contracts mostly around a penny lower. Traders viewed early weakness brought on by profit-taking as a buying opportunity given ongoing drought conditions. Scattered showers are bringing relief to areas of the Corn Belt today, but for some areas, the rains are too late to provide much benefit.

Corn Market Recap for 7/18/2012(Source: CME)
September Corn finished up 15 1/2 at 795, 2 off the high and 31 1/2 up from the low. December Corn closed up 13 at 784 1/4. This was 28 1/2 up from the low and 1 1/2 off the high. December corn traded sharply higher into the close after posting slight loses early in today's session. Corn rallied off it's lows after the EPA stated it had no plans to cut the ethanol mandate due to this year's drought stricken corn crop. Traders viewed this news as bullish as prices will need to rise high enough to slow other sources of demand. The ethanol production report for the week ending July 13th show production averaged 802,000 barrels per day. This is down 2.3% vs. last week and down 8.1% vs. last year. Furthermore, total ethanol production for the week was 5.61 million barrels, a 16 week low. Corn usage for the week was estimated at 85.4 million bushels as compared with 101.7 million bushels needed each week to reach the USDA forecast for the marketing year. The weather forecast calls for 95-105 degree temperatures for the central and western Corn Belt this week. The southeast and delta are expected to see showers this week, along with restricted rainfall in parts of Northern Illinois and Indiana. Rainfall is not expected to benefit corn a great deal as most of the eastern corn crop is done pollinating. The market continues to add risk premium to prices as stressful weather conditions could result in a much lower than anticipated US corn yield. September Rice finished down 0.02 at 15.535, equal to the high and 0.105 up from the low.

Corn Seen Rallying to Record $8.50 as Drought Kills Crops(Source: Bloomberg)
Corn may rally to a record $8.50 a bushel as the worst U.S. drought in decades cuts production in the world’s biggest exporter, driving global stockpiles lower, according to broker Newedge USA LLC. he U.S. harvest may drop to 11.8 billion bushels (299.7 million metric tons), said Dan Cekander, director of grain research, who correctly predicted in March that soybeans would trade at the most expensive level relative to corn since 2010. Cekander’s output forecast is 29.75 million tons less than the latest estimate from the U.S. Department of Agriculture, and would be the smallest crop since 2006-2007. Futures traded as high as $7.89 yesterday, near the $7.9925 record set in 2008. The drought is baking farms from Arkansas to Ohio, reducing yields, after frosts followed by drought cut wheat harvests in the former Soviet Union, prompting the United Nations and the USDA to pare estimates for world grain harvests.
Dimming corn- crop prospects in the U.S. may push global food costs higher, the Food & Agriculture Organization said earlier this month. “If it doesn’t start raining the rest of July, you’re going to have a significant shortfall here in production,” said Cekander, a fourth-generation farmer who grows corn and soybeans in Illinois, the second-largest U.S. grower of both crops. “That would put the 2012-2013 world corn carry-out below last year,” he said, referring to year-end stockpiles.

Corn Drops on Concern Rally Is Curbing Demand; Wheat Declines(Source: Bloomberg)
Corn fell for a second day in Chicago on speculation a drought-fueled rally to a 13-month high may curb demand for supplies from the U.S., the world’s largest grower and exporter. Wheat also dropped. U.S. output of ethanol, made from corn, fell 4.2 percent in the week ended July 6 to the lowest in almost two years, Energy Department data show. U.S. feedlots likely cut cattle purchases by 1.5 percent in June from a year earlier amid higher corn costs, according to a Bloomberg survey of analysts before a government report July 20. Corn has surged 51 percent since mid- June as Midwest crops withered under the drought. “Demand is being rationed,” Arnaud Saulais, a broker at Starsupply Commodity Brokers, said by telephone today from Nyon, Switzerland. End users “are just buying day after day, week after week. They are not buying for the long term.”
Corn for December delivery fell 0.2 percent to $7.695 a bushel on the Chicago Board of Trade by 1:05 p.m. in London. The grain yesterday reached $7.89, the highest level for a most- active contract since June 9, 2011, and near the record $7.9925 set in 2008. September-delivery wheat fell 0.8 percent to $8.7775 a bushel after yesterday reaching $8.985, the highest for a most- active contract since February 2011. Soybeans for November delivery lost 0.2 percent to $15.87 a bushel after yesterday touching $16.07, the most expensive since July 2008.

Current corn famine may lead to a feast in 2013
--Gavin Maguire is a Reuters market analyst. The views expressed are his own--
CHICAGO, July 17 (Reuters) - The corn story of 2012 may still be unfolding as drought and searing temperatures sap yield potential, but many traders are already turning their attention to next year's crop after December 2013 prices bolted to life-of-contract highs lately to score a hefty advantage over soybeans that may heavily skew planted acres in corn's favor next spring.
Indeed, corn's early claim on next spring's acreage may be so strong that it could potentially threaten an oversupply of the crop next year if growing conditions avoid another drought and demand contracts as expected.

GRAINS-U.S. corn firms on threat of further weather damage
SYDNEY, July 18 (Reuters) - 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.
"There is talk of demand destruction going round, which is probably tempering gains, but the market is waiting for further confirmation of lower than expected yields from the drought, which is supportive of prices," said Brett Cooper, senior manager of markets at FCStone Australia.

Repeated rain stops German barley harvest- farmers
HAMBURG, July 18 (Reuters) - Repeated rain in the last two weeks has mostly halted harvesting of Germany's barley crop while fears about lost barley volumes and quality damage to wheat are increasing, the German farmers' association DBV said on Wednesday.
"Because of the continued forecasts of unsettled weather there is increased worry among farmers about crop losses caused by stems snapping and grains being beaten over, while there is also worry about quality loss to wheat," the DBV said in its first harvest report.

India to wait until August to review farm exports policy
NEW DELHI, July 18 (Reuters) - India, the world's second-biggest producer of rice, wheat, sugar and cotton, will wait until August to review its export policy on farm commodities as the monsoon scenario will be clearer by then, the country's food minister said.
India allowed exports of sugar, wheat, rice and cotton after a bumper harvest last year.

Punishing drought in US Midwest shows no sign of abating
July 17 (Reuters) - Broiling heat blanketed much of the U.S. Midwest again on Tuesday, exacerbating the region's worst drought in more than 50 years and devastating corn, soy and other vital crops.
Across the country's agricultural heartland, elected officials met with farmers and ranchers affected by the growing disaster promising government relief.

Stand-off looms over U.S. plans to cut GMO crop oversight
July 17 (Reuters) - Efforts to write benefits for biotech seed companies into U.S. legislation, including the 2013 Farm Bill, are sparking a backlash from groups that say the multiple measures would severely limit U.S. oversight of genetically modified crops.
From online petitions to face-to-face lobbying on Capitol Hill, an array of consumer and environmental organizations and individuals are ringing alarm bells over moves they say will eradicate badly needed safety checks on crops genetically modified to withstand herbicides, pests and pesticides.

Russia deputy PM sees no need for grain export limits
MOSCOW, July 17 (Reuters) - Russia has no grounds to ban grain exports this year, a senior government official said on Tuesday as a top analyst said drought damage and low stocks could slash Russian wheat exports to just 10 million tonnes.
A newly formed commission on food security is due to meet on Wednesday under the chairmanship of Deputy Prime Minister Arkady Dvorkovich, in charge of industry and commodity producers in the new government of Prime Minister Dmitry Medvedev.

U.S. corn crop shrinking by the hour
CHICAGO, July 17 (Reuters) - U.S. corn production has shrunk 7 percent versus the government's downgraded estimate a week ago, a Reuters poll found on Tuesday, with a worsening drought likely to cause more damage before the month is out.
As the worst drought since 1956 begins to expand to the northern and western Midwest, areas that had previously been spared, analysts are slashing corn yield estimates by the hour. Some analysts are also starting to cut their forecasts on the number of acres that will be harvested as farmers opt to plough under their fields to claim insurance.

Rains make French grain exporters use German wheat
LONDON/PARIS, July 17 (Reuters) - French grain exporters are turning to German wheat to fulfil contracts as quality concerns and harvest delays plague farmers, traders said on Tuesday.
Unseasonably wet weather in France has delayed the start of the top EU producer's harvest and damaged quality, prompting French exporters to buy six cargoes of German wheat last week, a European trader said.

Rains threaten quality of wheat crops in western Europe
LONDON, July 17 (Reuters) - Repeated rains threaten to reduce the quality of wheat crops in western Europe, though there remains the potential for reasonable yields in most areas, crop analysts said on Tuesday.
"There is still potential, but there are threats to quality," Jean-Paul Bordes, head of research at Arvalis, said, referring to the crop in France, the European Union's top wheat grower.

Kazakh drought sounds alarm for grain crop
YESIL-AGRO FARM, Kazakhstan, July 17 (Reuters) - Kazakhstan expects a below-average crop this year due to an "alarming" drought across its northern grain belt, although carryover stocks from last year's record harvest should allow the country to remain a top-10 global wheat exporter.
Deputy Agriculture Minister Muslim Umiryayev forecast on Tuesday that hot and dry weather would cut Kazakhstan's grain crop to 14 million tonnes this year, a decline of 48 percent on last year's post-Soviet record and undershooting the average of 17 million tonnes over the last nine years.

UK wheat exports fall sharply in May
LONDON, July 17 (Reuters) - UK wheat exports fell to 70,262 tonnes in May, sharply down from the prior month's 136,484 tonnes and the lowest monthly total so far in the 2011/12 season, customs data showed on Tuesday.
The Netherlands was the largest customer, taking 44,598 tonnes.

SOFTS-Sugar, coffee little changed early in cautious trade
LONDON, July 18 (Reuters) - Sugar, coffee and cocoa futures on ICE were barely changed in thin early trade, reflecting a cautious mood in financial markets after U.S. Federal Reserve Chairman Ben Bernanke offered little guidance as to whether the central bank was moving closer to new stimulus.

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.

OIL-Oil eases on Fed economy outlook
LONDON, July 18 (Reuters) - Oil retreated slightly, snapping five days of gains as U.S. Federal Reserve Chairman Ben Bernanke offered few signs of further monetary stimulus and a gloomy view of the economy of the world's top oil consumer.
"Oil fell pretty rapidly after traders and investors had seen what was in the testimony, so crude was responding to whether we are going to see (quantitative easing) or are we not," said David Morrison, analyst at GFT Global."

China plan to expand eastern oil reserve storage delayed by 2 years
BEIJING, July 18 (Reuters) - China's state-run Sinochem Corp has started expanding a facility that will become the country's largest oil reserve storage site after a two-year delay due to environmental and safety concerns, local officials and industry executives said.
The extension of the facility is part of the second phase of China's plan to build capacity to store strategic petroleum reserves.

BP makes small gas find in Norwegian Sea
OSLO, July 18 (Reuters) - British oil major BP  has made a small gas find in the Norwegian Sea, with reserves preliminary estimated at between 1.2 and 2.3 billion cubic metres, the Norwegian Petroleum Directorate said on Wednesday.
The wildcat well drilled to a total vertical depth of 2,923 metres below the sea surface proved gas about 20 kilometres north of the Skarv field and about five kilometres east of the Marulk field, it said in a statement.

Taiwan's Formosa raises refinery crude throughput to near 80 pct
SINGAPORE, July 18 (Reuters) - Taiwan's Formosa Petrochemical has raised crude throughput at its 540,000 barrels per day (bpd) refinery by about 20 percentage points to about 80 percent after the restart of a crude distillation unit (CDU), a spokesman said on Wednesday.
But it will shut a No. 1 residue fluid catalytic cracker (RFCC) soon after it discovered a steam leak, he added.

POLL-US crude stocks seen down, products up
July 17 (Reuters) - U.S. crude oil stockpiles likely fell last week due to higher refinery utilization, while gasoline and distillate inventories were forecast to have increased, an expanded Reuters poll showed on Tuesday.
The 10 analysts polled on oil and products data due this week forecast a 1.2 million barrel drop in domestic crude inventories for the week to July 13.

Oil Trades Near Seven-Week High on Gasoline Stockpiles, Housing(Source: Bloomberg)
Oil traded near the highest close in seven weeks after U.S. gasoline stockpiles unexpectedly dropped and housing starts beat estimates, signaling fuel demand may increase amid an economic recovery. Futures were little changed in New York after advancing for a sixth day yesterday, the longest run of gains since April. Gasoline supplies decreased 1.8 million barrels, an Energy Department report showed. They were forecast to climb by 1.2 million, according to a Bloomberg News survey. Total petroleum consumption rose 0.3 percent to 18.6 million barrels a day. New U.S. home construction increased in June to the highest level in almost four years, figures from the Commerce Department showed. “U.S. inventory figures are doing the right thing,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Housing is an area of the U.S. economy where we have seen what looks to be quite a step-up in growth in recent months, so that’s a mild positive.”
Oil for August delivery was at $89.89 a barrel, up 2 cents, in electronic trading on the New York Mercantile Exchange at 11:18 a.m. Sydney time. The contract expires tomorrow, and the more-active September future was up 3 cents at $90.20. Front- month prices gained 65 cents to $89.87 yesterday, the highest close since May 29, and are 9.1 percent lower this year. Brent crude for September settlement was at $105.29 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract closed at a premium to West Texas Intermediate of $15.09, from $14.99 yesterday.

Nuclear Resurgence Seen Luring Paladin Bids: Commodities(Source: Bloomberg)
Australian uranium producer Paladin Energy Ltd. (PDN) is tempting acquirers from Canada to China with a stock price that’s less than the value of its net assets as Japan restarts idled nuclear reactors. Paladin, which lost almost 80 percent of its value after Japan suffered the worst atomic crisis in a quarter century, is now trading at a 22 percent discount to book value, according to data compiled by Bloomberg. While uranium prices have tumbled 26 percent since the meltdowns at the Fukushima Dai-Ichi plant in March 2011, the Perth-based company is projected this fiscal year to post its first profit since beginning production of the nuclear fuel, analysts’ estimates compiled by Bloomberg show. With Japan’s decision to turn two reactors back on this month signaling a possible bottom for uranium prices, Paladin, which operates mines in Africa and explores for the fuel in Australia and Canada, may attract interest from Saskatoon, Saskatchewan-based Cameco Corp. (CCO), Resource Capital Research said.
Chinese companies seeking uranium as the country builds 26 new reactors are also potential bidders for the $917 million company, according to Octa Phillip Securities Ltd. “Paladin is a target,” Andrew Shearer, a Melbourne-based analyst for Octa Phillip, said in a telephone interview. “It could be an opportunistic purchase at a time when the uranium market is potentially at its bottom.”

Looming Copper Surplus Contracting as Mining Fails(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.”

20120719 1051 Soy Oil & Palm Oil Related News.

Pro Farmer: After the Bell Soybean Recap(Source: CME)
Soybean futures finished with strong gains in the August through January 2013 contracts. March 2013 soybeans posted lesser gains, while far-deferred futures ended lower for the day. August soybean futures posted an intra-day high of $16.85 1/2, which represents a new all-time high on the weekly continuation chart. Old-crop soybean futures led the price surge today as traders search for a price that actively slows demand amid tight supplies and declining new-crop potential.

Soybean Complex Market Recap (Source: CME)
August Soybeans finished up 44 1/2 at 1683 1/2, 2 off the high and 57 1/2 up from the low. November Soybeans closed up 29 1/2 at 1620. This was 44 up from the low and 2 off the high. August Soymeal closed up 20 at 514.0. This was 22.4 up from the low and equal to the high. August Soybean Oil finished down 0.13 at 54.01, 0.33 off the high and 0.71 up from the low. August and November soybeans traded sharply higher into the close. August soybean meal traded $20 higher while August soybean oil lost 30 cents. The weather outlook for most of the Midwest looks detrimental to US soybean yields the next two weeks. The southeast and delta could see showers this week and restricted rainfall may fall in parts of Northern Illinois and Indiana by this weekend. Rainfall amounts are expected to be light but will benefit soybean crops. Temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska this week; increasing stress on row crops. Cash soybean markets were firm today, causing the August soybean contract to gain on forward months. The trade is expecting soybean yields to fall near 40 bushels/acre with some estimates near 37 bushels/acre. The sharply higher trade in soybeans reflects the fear of extremely tight soybean supplies mixed with increased demand over the next couple months.

VEGOILS-Palm down on weak exports, higher output
SINGAPORE, July 18 (Reuters) - Malaysian crude palm oil futures edged down as traders booked profits partly on weaker exports and better production outlook in Malaysia after a recent U.S. weather-fuelled rally.
"I think the market just doesn't have enough push to go up further at the moment. But it won't be going down much also because of the wide spread between soybean oil and palm oil," said a Singapore-based trader with a commodities house.  

Oil World raises global rapeseed crop forecast
HAMBURG, July 17 (Reuters) - Hamburg-based oilseeds analysts firm Oil World on Tuesday raised its estimate of the global 2012/13 rapeseed crop by 0.3 million tonnes to 61.9 million tonnes, which is up from the 2011/2012 harvest of 59.63 million tonnes.
But high export demand for rapeseed, also known as canola, as buyers seek alternatives to tighter soybean supplies are likely to keep prices supported in coming months, it said.

Soybeans Rally Near Record as U.S. Drought Forecast to Persist(Source: Bloomberg)
Soybeans advanced to a four-year high and traded within 1 percent of a record set during the global food crisis in 2008 on concern a drought in the U.S. will hurt supplies from the biggest producer. Corn and wheat fell even amid forecasts that the dry weather may last through summer. Soybeans for November delivery rose as much as 0.3 percent to $16.24 a bushel on the Chicago Board of Trade, the highest level for a most-active contract since July 2008. The price, which reached a record $16.3675 four years ago, was little changed at $16.2075 at 7:45 a.m. in Singapore. Corn fell as much as 1 percent, while wheat declined as much as 0.6 percent. The drought in the Midwest may persist for the rest of the growing season, the U.S. Department of Agriculture said yesterday. Agriculture Secretary Tom Vilsack said the drought may cause a “small decline” in corn and soybean exports.
The surge in grain and soybeans may spur a third wave of food inflation, after global price shocks in 2008 and 2011 that incited civil unres t in developing countries, Barclays Plc said. “Market participants may be starting to think about how high prices are going to begin to ration demand,” Michael Creed, an economist at National Australia Bank Ltd., said by phone from Melbourne. Soybeans are poised for a fifth weekly gain. Corn for December delivery traded 0.5 percent lower at $7.8075 a bushel. The most-active price rallied to $7.89 on July 17, the highest level for a most-active contract since June 9, 2011, and near the record $7.9925 set in 2008. September- delivery wheat was 0.2 percent lower at $9.0175 a bushel. The price reached $9.085 yesterday, the highest since Feb. 14, 2011.
“It looks like the dome of high pressure that has been dominating the continental United States will continue to park itself over the Plains and parts of the Midwest for at least the next two weeks,” Brad Rippey, a USDA meteorologist, said in a statement yesterday. “More than likely, this will persist through the remainder of the 2012 crop season.” Mostly above-normal temperatures and below-normal rainfall are expected to continue across the Midwest for at least the next 10 days, Telvent DTN said in a report yesterday. That will lead to further deterioration of corn and soybean crops, it said.