Thursday, July 26, 2012

20120726 1822 FCPO EOD Daily Chart Study.

FCPO closed : 2882, changed : -69 points, volume : lower.
Bollinger band reading : pullback correction little downside biased.
MACD Histogram : falling, seller in advantage.
Support : 2900, 2850, 2800, 2770 level.
Resistance : 2920, 2950, 2970, 3020, 3050 level.
Comment :
FCPO declined significantly lower with lesser volume changed hand. Soy oil currently trading lower by more than 1% surrendered all overnight advances while crude oil price currently trading weaker.
News on rains across America plantation area and slowing demand worries after weaker global economy data reported send FCPO price traded lower after yesterday rebound.
FCPO daily chart analysis adjusted to calling a pullback correction little downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120726 1732 FKLI EOD Daily Chart Study.

FKLI closed : 1622 changed : -17 points, volume : higher.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : falling lower, buyer taking profit.
Support : 1623, 1615, 1600, 1595 level.
Resistance : 1630, 1640, 1650, 1660 level.
Comment :
FKLI closed recorded substantial loss with increasing volume transacted doing about 2 points discount compare to cash market that also closed lower. Overnight U.S. markets rebounded and today Asia markets traded mixed while European markets currently trading lower.
Overnight news on declined U.S. home sales, weaker U.K. GDP resulted today Global market to trade mixed with some speculation play on further stimulus measure to be implemented after sign of slower growth and investores awaits some key corporates earnings report.
Despite the big slumps today, FKLI daily chart reading remained unchanged calling a pullback correction upside biased market development with rollover activities kicked start.
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.

20120726 1655 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : side way range bound.
 Hang Seng chart reading : side way range bound little downside biased.
KLCI chart reading :  pullback correction upside biased.

20120726 1632 Global Markets & Commodities Related News.

GLOBAL MARKETS: Asian shares rose on bargain hunting as hopes grew for more U.S. stimulus to support growth and new European measures to contain the euro zone's debt woes, but sentiment remained frail. European stocks will likely open narrowly mixed, reflecting Asia's cautiously positive mood and nearly flat U.S. stock futures which signals a mild start on Wall Street. The S&P 500 fell for a fourth day and the Nasdaq dropped on Wednesday after a rare earnings stumble from Apple, while strong results from Boeing and Caterpillar lifted the Dow.  

FOREX: The euro gave back some gains from a short-covering rally the previous day, as persistent worries about Spain's debt woes cloud the outlook for the single currency.

FOREX-Euro dips, takes breather after short-covering bounce
SINGAPORE, July 26 (Reuters) - The euro gave back some gains on Thursday from a short-covering rally the previous day, as persistent worries about Spain's debt woes cloud the outlook for the single currency.
The euro eased 0.1 percent to $1.2146 , but stayed above a two-year low of $1.2042 hit on trading platform EBS earlier this week.

U.S. new home sales tumble but upward trend intact
New U.S. home sales recorded their biggest drop in more than a year in June and prices resumed their downward trend, dealing a setback for the budding housing market recovery.

GRAINS: Chicago new-crop soy slid 2 percent, weighed down by forecasts of rain in parts of the U.S. Midwest which is likely to offer some relief to the drought-hit crop, while corn lost almost 1 percent.

OIL: Brent slipped below $104 per barrel as investors remained worried about fuel demand after a series of weak economic data, although losses were capped by hopes for more U.S. stimulus measures to support growth.

Brazil's Vale profit slumps on China, currency woes
SAO PAULO, July 25 (Reuters) - Brazil's Vale  became on Wednesday the latest victim of China's economic slowdown after second-quarter profit tumbled because of slowing demand for iron ore that will spill over into the coming quarters.
Net income at the world's largest producer of the mineral  hit its lowest level in more than two years, underscoring its dependence on Chinese purchases of its flagship product. Profit also plummeted after a weakening Brazilian currency lifted debt-servicing and the use of derivatives for hedging.

Chinese iron ore traders sell stock at loss as outlook darkens
SHANGHAI/BEIJING, July 25 (Reuters) - Sharply falling iron ore prices have pushed small Chinese traders to breaking point, forcing them to sell off loss-making inventory as they give up hope for a market rebound anytime soon.
Big trading firms have the financial muscle to hold on for much longer -- traditionally they have been able to hang on until prices recovered. But even state-owned giants like Sinosteel and Minmetals were selling small amounts of stock at a loss, traders said.

Vote seals Hong Kong purchase of London Metal Exchange
LONDON, July 25 (Reuters) - London Metal Exchange (LME) shareholders voted convincingly on Wednesday to accept a $2.2 billion offer by the Hong Kong bourse for the 135-year-old British institution, underscoring a global shift in manufacturing to China, Asia's economic powerhouse.
Hong Kong Exchanges and Clearing Ltd  (HKEx) and the LME announced on June 15 they had agreed on an acquisition that would give LME members a gateway to China, the world's biggest metals buyer. The LME is the largest marketplace for materials such as copper, aluminium and zinc.

Slowing U.S. demand hits steel-maker SSAB
STOCKHOLM, July 26 (Reuters) - A slowdown in America hit Swedish specialty steel maker SSAB  in the second quarter, adding to the burden of weak European demand and a cooling Chinese economy.      
Steelmakers globally are struggling with the debt crisis in Europe, weak growth in Japan and a slower pace of expansion in China, the world's largest producer and consumer.

China refined lead production seen up 10 pct in H2
HONG KONG, July 25 (Reuters) - China's production of refined lead is expected to rise by about 10 percent or 260,000 tonnes in the second half from the first six months of the year, industry sources said, as new capacity comes onstream amid growing demand from battery manufacturers.
Higher production of refined lead, which reached a record 459,000 tonnes in June, means imports are unlikely to grow for much of the second half after falling 7.5 percent from a year earlier in the first half, although traders had hoped weak prices on the London Metal Exchange  would spur purchases by China.

China says to tighten regulation of rare earths despite WTO probe
BEIJING, July 25 (Reuters) - China will abide by the outcome of an ongoing World Trade Organisation (WTO) investigation into its policies for the rare earths sector, but will continue to tighten regulation of the industry, an industry ministry spokesman said on Wednesday.
The WTO confirmed on Monday that it would establish a panel to look into complaints made by Europe, Japan and the United States over China's curbs on exports of rare earths, a group of 17 elements used in advanced technologies for the defence, electronics and renewable-energy industries.

BASE METALS: London copper steadied, recovering from a one-month low hit in the prior session as investor sentiment stabilised, but concerns the European debt crisis could yet deepen signalled the bounce could be brief.

PRECIOUS METALS: Gold struggled to extend gains from the previous session and stood steady above $1,600 an ounce, as investors pondered the possibility of more stimulus measures from central banks to revive a flagging global economy.

METALS-Copper steadies from one-month low; euro woes cap gains
SINGAPORE, July 26 (Reuters) - London copper steadied on Thursday, recovering from a one-month low hit in the prior session as investor sentiment stabilised, but concerns the European debt crisis could yet deepen signalled the bounce could be brief.
Three-month copper on the London Metal Exchange  traded at $7,434.75 a tonne by 0251 GMT, down 0.15 percent from the previous session, when it hit its lowest in one month, at $7,344.25 a tonne.

PRECIOUS-Gold rises for 3rd day on stimulus expectations
SINGAPORE, July 26 (Reuters) - Gold edged up on Thursday, extending gains to a third session, as hopes of more stimulus measures from central banks to revive a flagging global economy boosted bullion's appeal as a hedge against inflation.
Gold rose to a three-week high on Wednesday, buoyed by expectations that the European Central Bank (ECB) will intervene to prop up the euro zone's ailing finances after an official suggested leveraging a rescue fund to increase its capacity.

20120726 1117 Global Markets & Commodities Related News.

GLOBAL MARKETS-Shares, euro regain footing on hopes for stimulus, rescue fund
TOKYO, July 26 (Reuters) - Asian shares and the euro steadied  after bouncing from recent lows as hopes grew for more U.S. stimulus to support growth and new European policy measures to keep the euro zone's debt crisis from deepening further, but sentiment was fragile.
"We are getting ever closer to the point where central banks will pull the trigger and ease," said Sebastian Galy, strategist at Societe General. "The outcome of this potential easing should be to stabilise sentiment."

COMMODITIES-Oil up on fears over Syria; grains jump after 2-day drop
NEW YORK, July 25 (Reuters) - Oil rose on Wednesday on fear about Syria's threat to use chemical weapons, and U.S. grains rebounded strongly from a two-day selloff on renewed worries about drought-ravaged crops.
"The geopolitical risk is out there, with worries about Syria and chemical weapons if they got into the wrong hands, and there is positive sentiment about the Fed and (potential) stimulus," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Oil defies gravity for now on QE hopes, geopolitics
--Robert Campbell is a Reuters market analyst. The views expressed are his own--
NEW YORK, July 25 (Reuters) - After an almost unambiguously bad U.S. weekly inventory report, it is clear that the bulk of support for oil prices is not coming from any global physical market fundamentals.
Very short term logistical disruptions in the North Sea and the Baltic have helped skew Brent futures higher, but the overall news flow on global oil supplies has been neutral to bearish.

OIL-Brent hits $104 on Mideast fear, hopes for Fed action
NEW YORK, July 25 (Reuters) - Crude oil futures made a strong comeback on Wednesday, with Brent closing above $104, recovering from session lows on fears that Middle East turmoil could worsen and rising hopes for more U.S. Fed stimulus.
"The geopolitical risk is out there, with worries about Syria and chemical weapons if they got into the wrong hands, and there is positive sentiment about the Fed and (potential) stimulus," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Shell ups China presence with CNOOC tie-up
LONDON, July 25 (Reuters) - Oil major Shell  sealed an exploration tie-up with China's state-run oil firm CNOOC  on Wednesday in a move which will help secure longer term growth from projects in the world's energy-hungry second largest economy.
Shell said it agreed two partnership deals with CNOOC, one to explore for oil and gas in the Yinggehai basin in the South China Sea, and one to look for hydrocarbons off the coast of Gabon.

Big oil on the back foot in changing energy world
LONDON, July 25 (Reuters) - It happens every time. Oil prices fall and the industry turns cannibal: big energy companies hunt out bargains among overstretched producers and promising explorers. It's the season for takeovers and asset deals again.
Only this time, there are no easy pickings for the U.S. and European heavyweights such as Exxon , BP , Shell  and Chevron . The oil "majors", which report second quarter results in the next few days, have rarely looked so threatened.

POLL-US natgas storage projected up 26 bcf in weekly EIAs        
NEW YORK, July 25 (Reuters) - U.S. natural gas inventories, on average, were forecast to have risen 26 billion cubic feet last week, according to a Reuters poll of industry traders and analysts on Wednesday.
There were 24 participants in the Reuters poll, with injection estimates ranging from 19 bcf to 31 bcf. Storage rose by an adjusted 48 bcf in the same week last year. The five-year average build for the week is 61 bcf. The median build in the survey was 27 bcf.

NATURAL GAS-US natural gas futures end down, first loss in 6 sessions
NEW YORK, July 25 (Reuters) - U.S. natural gas futures ended lower on Wednesday, pressured by profit taking after five straight session gains and ahead of the front-month August contract expiration on Friday.
"The physical (cash) market has been very strong because of all the heat, but we were bound to see some length get out, particularly with (August) expiration coming up on Friday," a Texas-based trader said.

EURO COAL-Prices creep up 25 cents
LONDON, July 25 (Reuters) - Physical prompt coal prices moved slightly higher on Wednesday but remained below $90.00 a tonne. "Everybody is being hurt by China, everybody - and anybody who says they're not is lying," a Pacific-based producer said.

20120726 1017 Malaysia Corporate Related News.

More initial public offerings (IPOs) are coming down the pipe for the rest of the year although their size won't match those of Felda Global Venture Holdings Bhd and IHH Healthcare Bhd, Bursa Malaysia Bhd CEO Datuk Tajuddin Atan said. "There are a few in store, but not as large as Felda and IHH. Some of them have gotten their approval already, but the issue is timing. Some may want to be listed this year and some next year," he said. "So far, I am quite happy with where we are at this point in time. I would say we are the most productive (stock exchange) in 1H2012," he said. Pay-TV operator Astro All Asia Networks Plc is expected to be relisted sometime in the fourth quarter, while Karex Industries Sdn Bhd, the world's biggest condom maker, is considering an IPO. Year to date, Bursa Malaysia has seen 10 new listings, including that of SapuraKencana Petroleum Bhd, Felda Global Ventures, Gas Malaysia Bhd, OCK Group Bhd and IHH. (Sun)

Former head of Proton Holdings Bhd Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir may surface in a top management role in recently-listed Felda Global Ventures Holdings Bhd (FGVH), industry sources told StarBiz. Sources said Syed Zainal may be brought into FGVH to play a supportive role to group president and chief executive officer Datuk Sabri Ahmad. Sabri was appointed to FGVH's helm in July 2010 for a contractual period of two years. Sources also said that Sabri's contract was recently renewed. When contacted by StarBiz, Syed Zainal declined to comment, but did say: “Nothing has been firmed up yet.” (Starbiz)

AirAsia group carried 8.285m passengers in 2Q, which was a 13% increase from a year ago. The capacity increased by 13% to 10.46m seats. Load factor was 79% compared with 80% while the number of aircraft increased to 100 planes from 93 planes a year ago. The number of passengers carried increased by 10% to 4.90m. The load factor was 80% compared with 81% a year ago. As for Thai AirAsia, it posted a load factor of 79%, up 1% point, while it carried a 20% yoy increase on passengers of 1.9m for the quarter. Indonesia AirAsia recorded a load factor of 78%, up 2% point yoy due to capacity expansion and strong passenger demand. Passengers carried increased by 15% whereas capacity increased by 12% yoy. (Star Biz)

Malaysia Airlines (MAS) is eyeing an additional US$100m interlining passengers’ revenue a year through the induction of the carrier into the oneworld alliance early next year. MAS senior vice-president (international affairs) Germal Singh Khera said the full-fledged premium carrier currently registers RM750m annual interlining passenger revenue. “We are currently at the last lap of our project to synchronise our system to accommodate the oneworld alliance members to give our customers a better and holistic network coverage," he said. Germal said MAS expects to conclude all work and officially join the alliance in the first quarter of next year. (Bernama)

Checks by the Selangor Water Monitoring Committee showed that treated water reserve level in the state is at 11% and not 2 % as claimed by the Syarikat Bekalan Air Selangor Sdn Bhd (Syabas). Mentri Besar Tan Sri Abdul Khalid Ibrahim said the committee in it first report to the state executive councillor meeting revealed that Syabas has been operating below its capacity. “The output capacity for all 34 water treatment plants is 4,807m litres per day (MLD) compared to Syabas distribution capacity of 4,371 MLD. This means there is a buffer of 436 MLD and this proves that Syabas has been operating undercapacity,” said Khalid. Khalid also said that the Mitigation 1 Project, which is currently ongoing and scheduled to be completed in March next year, will increase the treated water level output to 5,319 MLD, a difference of 768 from Syabas’ distribution capacity. “The 2 % reserve that Syabas previously reported is untrue and misleading as the reserve capacity at present is 11 % and will rise to 18 % after the Mitigation 1 Project completed in 2013," he added. (Sun)

Malaysia's palm oil exports fell 14% between July 1 and 25 compared with the same period in June, according to independent surveyor Intertek. It said a total of 1.03m tonnes of the commodity were tracked compared with 1.2m tonnes in the same period last month. (StarBiz)

Datuk Sreesanthan Eliathamby, a director of Sime Darby Bhd, has taken a leave of absence from the board of the company and its subsidiaries. Sime Darby said that the board of directors had met on Tuesday to discuss the charges brought by the Securities Commission against Sreesanthan for insider trading of securities. It added that Sreesanthan had indicated his intention to retire by rotation at the forthcoming AGM. (StarBiz)

T. Ananda Krishnan’s Astro group said Lippo Group, its former Indonesian partner in a failed television venture, is avoiding paying US$300m in arbitration awards and is too late to challenge it. Lippo didn’t challenge the awards within a stipulated time frame of three months and can’t attack their validity of the awards, said David Joseph, a lawyer for eight Astro units. Justice Belinda Ang reserved her judgment after the three-day hearing. Lawyers for three units within James Riady’s Lippo Group, which has media, financial services and property businesses in Asia, have said they didn’t consent to the confidential arbitration. The time limit to oppose the awards doesn’t apply to this case, Lippo’s lawyer Toby Landau said. Krishnan’s Astro All Asia Networks Plc has said it ended the venture after its Lippo partners failed to pay RM805m in bills. (Bloomberg)

The former group managing director of AmBank Group Bhd, Cheah Tek Kuang, was appointed chairman of Berjaya Sports Toto Bhd with effect from Wednesday. He was also appointed as an independent and non-executive director and also the chairman of the audit committee. Cheah joined the AmBank group in 1978 and retired as the group MD on Apr-2012. He still remains as non-executive director of AmBank (M) Bhd, AmInvestment Bank Bhd and AmIslamic Bank Bhd.(Starbiz)

SPK-Sentosa Corporation Bhd is venturing into the oilfield services and equipment via a joint venture with the Netherland's Superior Energy Services B.V. (SES). SPK said on Wednesday it had signed a shareholders agreement with SES and Superior Energy Services (KL) Sdn. Bhd to provide the oilfield services and equipment. "The proposed JV will enable SPK to provide specialised oilfield services and equipment, focused on serving the drilling and production-related needs of oil and gas companies, as well as plug and abandonment and decommissioning services required at the end of a well's life," it said. (Starbiz)

The major shareholder of sports shoes maker, Maxwell International Holdings Bhd, may sell some of her stake or issue new shares in the company to bring in investors. Founder and executive chairman Li Kwai Chun, together with her son, currently controls 58% of Maxwell. “She is looking to expand the company to diversify its earnings. If Li sells her stake, it will be in small blocks to maintain ownership of the company,” Maxwell CFO Tan Swee Song said. (BT)

TAS Offshore’s full-year profit jumps 192%
TAS Offshore’s net profit for its fourth quarter ended 31 May jumped 177% to RM7.12m or 4.02 sen per share, from RM2.57m a year ago. However, revenue fell 6.4% to RM33.4m from RM39.8m. In a filing to Bursa Malaysia, the shipbuilding outfit attributed the better earnings to the sale of one of its unit harbour tugs during the quarter and a foreign exchange gain of RM2.2m due to the strengthening greenback. (Financial Daily)

Iris signs deal to buy Oil Field
Iris Corp has signed a sale and purchase of shares agreement to acquire Oil Field Services Ltd, formalising a heads of agreement inked two weeks ago. On 9 July, Iris Corp said it planned to acquire 2.6m shares, or a 51% stake, in United Arab Emirates-based Oil Field Services through its wholly-owned subsidiary IRIS Eco Power SB for RM11.2m. (StarBiz)

MAS revisits JV plan with Qantas
Malaysian Airline System (MAS) may revisit a joint-venture (JV) plan with Australia’s Qantas as part of its strategy to boost interlining revenue by over 40%, as it becomes an official member of OneWorld Alliance in 2013. MAS senior vice-president of international affairs Germal Singh said at a briefing yesterday that the national carrier is particularly interested in teaming up with Qantas and its JV partner British Airways (BA) to tap the “Kangaroo route” which refers to the routes Qantas flies between Australia and the UK, via the Eastern hemisphere. More than 20 airlines operate the route. (Financial Daily)

Fajarbaru MD sells 2.1% stake
Fajarbaru Builder Group managing director and CEO Datuk Low Keng Kok has sold a 2.1% stake of the construction firm to chairman and executive director Datuk Kuan Peng Ching @ Kuan Peng Soon. Stock market filings showed Low disposed of 4.1m shares in a married deal yesterday, whittling his stake to 4.9% from 7%, which means he is no longer a substantial shareholder. Kuan's direct and indirect interests, meanwhile, increased to 6.04%, making him a new substantial shareholder. (StarBiz)

20120726 1017 Global Economy Related News.

US new home sales fell to an annualised pace of 350,000 in Jun (a revised 382,000 in May), 20,000 shy of consensus. (Bloomberg)

US MBA purchase applications fell 3.0% wow in the 20 Jul week (-0.1% in the earlier week), whilst the refinance index gained 2.0% wow (22.0% in the prior week). (Bloomberg)

Chinese health officials called for additional reform of China's health-care system amid mounting costs, problems at public hospitals and a surge of patients with chronic diseases. (WSJ)

The IMF has formally declared that the Chinese renminbi is “moderately undervalued”, an important change in wording that will make it easier for Beijing to rebuff foreign criticism of its exchange rate regime. (FT)

China's economy will rebound in 2H12 after bottoming out in 2Q12 to achieve annual growth of 8% as government policies to spur growth take effect, the IMF said, whilst predicting that the economy would expand by 8.5% in 2013. (AFP)

China may refrain from stepping up its monetary stimulus or increasing spending because measures now in place are sufficient to support growth, IMF senior resident representative Il Houng Lee said. (Bloomberg)

Standard and Poor's expects banks in Brazil, Russia, India, and China (BRIC) to possibly come under pressure over the next 12-24 months, with the banks' ties with the government to underpin their credit profiles. (Reuters)

Bank of Japan Deputy Gov. Hirohide Yamaguchi said that the central bank is ready to loosen monetary policy further if Japan's economic recovery stalls or if downside risks increase. (WSJ)

Japan’s exports rose 1.5% yoy in 6M12, hurt by slowing global demand and a strong yen, whilst imports gained 7.4% amid rising fuel demand, resulting in a trade deficit of ¥2.9tr. However, for the month of Jun, the country posted an unexpected trade surplus of ¥61.7bn as imports fell 2.2% on lower oil prices whilst exports lost 2.3%. Analysts had expected a shortfall of ¥140bn. (BBC, Bloomberg)

A panel charged with outlining the Japanese government’s growth strategy has updated a final draft plan with a pledge to work with the Bank of Japan to combat deflation and the strong yen. (Bloomberg)

Euro-zone banks tightened their credit standards again in 2Q as the slowing economy and spreading debt crisis outweighed the effects of lending operations from the European Central Bank. Majority of banks continue to make credit more difficult by asking for higher margins on loans and, to a lesser extent, in asking borrowers for collateral, an ECB survey showed. (AWSJ)

Regional debts, soaring borrowing costs, a higher deficit and souring market sentiment are all making it nearly impossible for Spain to find €50bn in funding it needs by year end without external aid. (Reuters)

The European Commission proposed the possibility of criminal penalties, including jail time, for manipulating financial benchmarks such as the London interbank offered rate and said the financial industry's role in setting these benchmarks needs stronger public oversight. (WSJ)

Moody's downgraded the outlook for 17 German banks after a similar move against the government's credit rating earlier this week, noting that several of the banks held debt guaranteed by the German central or regional governments. (Bangkok Post)

Beleaguered Spain sought French support in the face of its soaring borrowing costs Wednesday as Europe's economic crisis deepened with a slump in German confidence and worsening British recession. (Bangkok Post)

Reserve Bank of Australia governor Glenn Stevens downplayed fears of a significant slowdown in key trading partner China, describing it as "cyclical" in an upbeat assessment of the domestic economy. (AFP)

The Monetary Authority of Singapore boosted its paid-up capital by S$8bn (RM20.16bn) and withheld contributions to government coffers earlier this year amid rising volatility in financial markets. It also revised its 2012 inflation forecast to 4-4.5% from 3.5-4.5%, although it saw core inflation moderating, indicating a possible loosening of its stance on the SGD at its next half-yearly review in Oct. (Reuters)

Indonesia's foreign direct investment rose 30.2% yoy to Rp56.1tr trillion (US$5.92bn) in 2Q. This compares to the 30.3% increase in 1Q mostly supported by investment in mining and base chemicals. Separately, the Indonesia Investment Coordinating Board (BKPM) said investments this year, which are expected to exceed the target, cannot directly cover the weakening of export activities. (IFT, Jakarta Globe)

Bank Indonesia projects inflation in July 2012 to reach 0.65-0.7% mom, higher than in June with 0.62%. Difi A Johansyah, Public Relations Director of Bank Indonesia, said inflation in July are prompted by, among others, the price increases of three commodities; corn, wheat and soybeans. (IFT)

The Bank of Thailand maintained the benchmark one-day repurchase rate at 3.00%, a decision widely expected, as the eurozone debt crisis remained the biggest threat to the country’s economic recovery. The Monetary Policy Committee also revised downward the 2012 economic growth projection from 6% to 5.7%, whilst anticipating export revenue to expand by only 7% this year, against 8% in the previous forecast. (The Nation)

Thailand’s Jun custom exports unexpectedly fell 2.5% yoy (+7.68% in May). That compares with the median forecast for a 4.5% increase. The Bank of Thailand cut its growth outlook for this year to 5.7% (from 6% previously) and for 2013 (to 5% from 5.4%). It lowered this year’s export outlook to 7% from 8% previously. (Bloomberg)

Thailand’s Cabinet has resolved to allow the Government Savings Bank to lend THB3.54bn to the Industrial Estate Authority of Thailand to help build flood-prevention systems around major industrial estates at risk of inundation. The loan comes with an interest rate of 0.01% per annum with a payback period of 15 years. (Thai Financial Post)

Philippine imports rose 10.1% yoy in May to US$5.386bn from US$4.893bn a year ago, following a 13.6% weakening in imports in Apr, the sharpest decline so far this year. (Business Inquirer)

Vietnam’s consumer price index in Jul fell 0.29% mom (-0.26% in Jun), General Statistics Office figures show, reflecting major problems of stagnant production and lower consumption. (Vietnam News)

20120726 1011 Global Market Related News.

Asia FX By Cornelius Luca - Wed 25 Jul 2012 16:24:35 CT (Source:CME/
The appetite for risk improved on Wednesday after European Central Bank policymaker Ewald Nowotny suggested the enhancement of the Eurozone's new bailout fund by giving it a banking license. The European and commodity currencies generally recovered after sliding since Friday. Only the pound marked time because of the return of the UK economy to recession. Meanwhile, the yen remained firm. The US stock indexes were mixed. Gold, oil and silver advanced. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short only the euro and franc.  Good luck!

US: New home sales tumbled 8.4% to a seasonally adjusted annual rate of 350,000 in June, while the surge in May sales was revised upward to 382,000 from 369,000,

Asia Stocks Snap 4-Day Loss as Home Sales Fuel Fed Bets (Source:Bloomberg)
Asian stocks rose, with the regional benchmark index set to snap a four-day loss, after a drop in U.S. new home sales fueled speculation the Federal Reserve may take new steps to spur growth. Gains were limited as Japanese companies such as Canon (7751) Inc. slumped on earnings results. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, paced gains among material shares as metal and commodity prices rose. Canon, the world’s No. 1 camera maker, slumped 11 percent after cutting its net-income forecast. Olympus Corp. (7733) rose 6.5 percent after Terumo Corp., a Japanese medical device maker, proposed to invest 50 billion yen ($640 million) in the camera maker and merge with it. The MSCI Asia Pacific Index rose 0.3 percent to 113.23 as of 9:57 a.m. in Tokyo, with almost three stocks rising for each two that fell. Markets in Hong Kong and China are yet to open. Utility, finance and material firms led gains in the measure, which closed yesterday at the lowest level since June 12.
“Company-specific news is driving us, but the market is generally a bit more positive based on the QE3 expectation,” Matt Riordan, a portfolio manager who helps manage about $6.5 billion in Sydney at Paradice Investment Management Pty., said, referring to a third-round of quantitative easing in the U.S. “Europe is lurching and no closer to a solution.” The MSCI Asia Pacific Index fell about 12 percent from this year’s high on Feb. 29 through yesterday amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark index traded at 11.5 times estimated earnings as of yesterday, compared with 13 for the Standard & Poor’s 500 Index (SPXL1) and 10.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan Stocks Swing From Gains, Losses on Earnings, China (Source:Bloomberg)
Japanese stocks swung between gains and losses on positive earnings from Fanuc (6954) Corp. and after the International Monetary Fund said China may refrain from additional easing. Fanuc, the world’s largest maker of factory robotics, advanced 4.2 percent after reporting an increase in first- quarter profit. Canon slumped the most since 2008 after cutting its earnings forecast on expectations for weaker global growth. Sharp Corp., an electronics maker that gets 20 percent of its sales in China, fell 2.3 percent. Olympus Corp. led gains on the Nikkei 225 (NKY) Stock Average as Terumo Corp. moved to merge with the optics maker, aiming to scupper a tie-up with Sony Corp. The Nikkei 225 advanced 0.1 percent to 8,372.89 at 9:32 a.m. in Tokyo. The broader Topix Index (TPX) slid less than 0.1 percent to 706.11 after rising as much as 0.5 percent.
“We’re probably going to see this first quarter for fiscal 2012 posting the first positive sequential rise in profitability for corporate Japan,” said Kathy Matsui, the chief Japan strategist at Goldman Sachs Group Inc. in Tokyo, in a Bloomberg TV interview. “That average will mask two very differentiated trends within the market. On the one hand you’re going to see a lot of weakness from global cyclical export companies. On the other hand you’re going to see surprisingly resilient results coming from domestic demand orientated companies.”

S&P 500 Erases Advance as Apple’s Plunge Offsets Banks (Source:Bloomberg)
The Standard & Poor’s 500 Index (SPX) erased gains in the final hour of trading as a rally in bank and industrial shares wasn’t enough to overcome disappointing results at Apple (AAPL) Inc. and an unexpected drop in new home sales. A gauge of homebuilders in S&P indexes slumped 3.2 percent. Apple tumbled 4.3 percent as iPhone sales missed forecasts. Netflix Inc. (NFLX), the largest video-subscription service, plunged 25 percent after raising doubts on user growth. JPMorgan Chase & Co. (JPM) and Citigroup Inc. rose at least 1.2 percent. Boeing Co. (BA) and Caterpillar Inc. (CAT) added more than 1.4 percent, pacing gains in industrial shares, after raising their earnings forecasts.
About five stocks rose for every four falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 slid less than 0.1 percent to 1,337.89, after gaining 0.4 percent earlier. The benchmark gauge has lost 2.8 percent in four days. The Dow Jones Industrial Average rose 58.73 points, or 0.5 percent, to 12,676.05. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or about in line with the three-month average. “There’s a huge amount of uncertainty out there,” Rob McIver, co-portfolio manager at Jensen Investment Management in Lake Oswego, Oregon said in a phone interview. His firm manages $5.5 billion. “It’s a somewhat anemic U.S. recovery. And you see that starting to be reflected in corporate results. It’s certainly a difficult environment for investors.”

German Stocks Rise as Carmaker Rally Offsets Confidence (Source:Bloomberg)
German stocks advanced, rebounding from the biggest three-day drop since November, as a rally in carmakers offset a worse-than-expected decline in business confidence in July and lower-than-forecast U.S. new home sales. Daimler AG (DAI) rose 4.1 percent as it reported increased sales and stuck to its goal of keeping earnings steady. Volkswagen AG (VOW), the world’s second-largest carmaker, added 1.3 percent. Deutsche Bank AG (DBK) slumped 4.1 percent as second-quarter profit missed analysts’ estimates. The DAX Index (DAX) gained 0.3 percent to 6,406.52 at the close in Frankfurt, after earlier rising as much as 1.3 percent. The measure has increased 7.3 percent from its 2012 low on June 5 as euro-area leaders eased repayment terms for Spanish lenders and central banks took measures to support growth. The broader HDAX Index also added 0.3 percent today.
“Technically, today’s rise is just a firewall as the index corrects upwards but the bad news just keeps on coming,” said Duarte Caldas, a market strategist at IG Markets in Lisbon. “I do not expect a reversion of the negative trend in equities markets.” German business confidence fell for a third straight month in July to the lowest in more than two years as the worsening sovereign debt crisis damped the outlook for economic growth and company earnings.

European Stocks Drop as U.K. GDP Shrinks (Source:Bloomberg)
European (SXXP) stocks retreated for a fourth day as reports showed the U.K. economy shrank the most in three years last quarter and U.S. new-house sales unexpectedly dropped last month. BT Group Plc (BT/A) slid 3.3 percent after the U.K.’s largest fixed-line phone company posted falling sales. Drax Group Plc (DRX) tumbled 15 percent after the U.K. government revised its subsidies for renewable energy. Daimler AG (DAI) jumped 4.1 percent after forecasting that operating profit will not drop in 2012. The Stoxx Europe 600 Index slid 0.1 percent to 250.39 at the close of trading. The benchmark measure has slipped 4.4 percent over the last four days on concern that Greece will default and more Spanish regions will follow Valencia in seeking a bailout from the central government.
“The U.K. gross domestic product number was a bit of a startler,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “After three quarters of negative growth, the U.K.’s now firmly in the European camp of stagnation. Decent earnings results, particularly from the big international companies, are providing some support.” In the U.K., the economy shrank the most since 2009 in the second quarter, deepening the country’s double-dip recession. Gross domestic product fell 0.7 percent from the first quarter, the Office for National Statistics said today. Economists had forecast a 0.2 percent drop, according to the median of 36 estimates in a Bloomberg News survey.

Emerging Stocks Fall to 7-Week Low on China, Earnings (Source:Bloomberg)
Emerging-market stocks declined, sending the benchmark index to the lowest level in a month, on concern a global economic slowdown will erode developing nations’ earnings. The MSCI Emerging Markets Index dropped for a fourth day, losing 0.4 percent to 905.65 at 5:52 p.m. in New York. Technology companies, which make up 13 percent of the gauge, slid 1.4 percent, after Apple Inc. (AAPL) reported lower-than-estimated earnings. Brazil’s Bovespa (IBOV) stock index fell for a fourth day with port developer LLX Logistica SA (LLXL3) and iron-ore producer Vale SA (VALE3), the heaviest-weighted stocks on the gauge, declining.
Earnings for emerging-market companies have trailed forecasts by 4.6 percent on average since July 1, according to data compiled by Bloomberg. Demand for new U.S. homes dropped in June from a two-year high, indicating the country’s housing recovery will be uneven. European Central Bank council member Ewald Nowotny suggested the bank may boost the region’s bailout fund to curb the worsening European debt crisis. “A slowdown in emerging markets has meant that corporate profitability is being hit and remains vulnerable with little visibility ahead,” Kunal Vora, an analyst at FM Capital Partners Ltd. in London, wrote in a note to clients. “All in all, clouds of a global recession seem to be getting darker.”

FOREX-Euro jumps on ESM comments, outlook still bleak
LONDON, July 25 (Reuters) - The euro recovered from a two-year low against the dollar, jumping sharply higher on comments from European Central Bank policymaker Ewald Nowotny that he could see grounds for giving the euro zone bailout fund a banking licence.
"The market is desperate and jumping on anything that even looks remotely positive. The squeeze higher will fade now and we'll probably print a fresh negative later on today," said Geoff Kendrick, currency strategist at Nomura.

Treasuries Decline on Concern Low Yields to Reduce Demand (Source:Bloomberg)
Treasuries fell on concern a plunge in yields to record lows will erode demand, as investors prepared to bid at the last of three note auctions being held this week. A valuation measure shows U.S. sovereign securities are close to the most costly levels ever. The term premium, a model created by economists at the Federal Reserve, dropped on July 24 to negative 1.02 percent, most expensive level on record. It was negative 0.99 today. A negative reading indicates investors are willing to accept yields below what’s considered fair value. “The market might grind a little bit lower,” said Ali Jalai, who trades U.S. debt in Singapore at Scotiabank, a unit of Bank of Nova Scotia (BNS), one of the 21 primary dealers authorized to deal with the Fed. Demand for the safety of U.S. debt will maintain support for Treasuries, he said.
The yield on benchmark 10-year notes climbed two basis points, or 0.02 percentage point, to 1.42 percent as of 10:05 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.75 percent security due in May 2022 fell 5/32, or $1.56 per face amount, to 103 1/32. The rate slid to 1.379 percent yesterday, the least ever. The Treasury Department is scheduled to sell $29 billion of seven-year debt today. It auctioned $35 billion of five-year notes yesterday and the same amount of two-year securities on July 24.

Central Banks Search Toolbox for Ideas as Growth Slows (Source:Bloomberg)
Central banks are digging deeper into their tool kits in search of innovative ways to unclog bank lending and keep a weakening world economy afloat. With the fifth anniversary of the financial crisis approaching in August, policy makers from the Federal Reserve, the European Central Bank and the Bank of England all meet within 24 hours next week. Central banks, facing a global recovery that’s sputtering even after they delivered trillions of dollars of liquidity and near-zero interest rates, are having to consider fresh strategies to combat the slowdown. “Central banks are thinking hard about other ways to spur their economies and get credit into corners of the economies that need it and aren’t getting it,” said Nathan Sheets, global head of international economics at Citigroup Inc. in New York and director of the Fed’s international finance division until last year.
Among the options up for consideration by the monetary authorities in addition to potentially doubling-down on previous policies: taking some of the credit risk of new lending onto their own balance sheets and forcing commercial banks to pay for parking cash in central banks’ coffers. The likelihood of even easier policies leaves John Stopford, head of fixed income at Investec Asset Management in London, advising investors to buy the bonds of traditionally safe economies such as the U.S. U.S. Treasury 10-year notes yesterday traded at a record low yield of 1.3790 percent. He suggests steering clear of cash.

Sales of New U.S. Homes Decrease From Two-Year High: Economy (Source:Bloomberg)
Sales of new U.S. homes unexpectedly dropped in June from a two-year high, a sign the market is being held back by a lack of inventory after builders curtailed projects. Purchases fell 8.4 percent to a 350,000 annual rate, the weakest since January, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 74 economists was 372,000. The decline was led by a record plunge in the Northeast, where the number of properties available last month was the fewest for any June. “A dearth of construction has led to a very significant inventory shortage,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, who forecast sales would drop to a 345,000 rate, the lowest of those surveyed. “If you want to buy a newly built home, good luck finding one.”
Record-low mortgage rates and stabilizing home prices have spurred buyer traffic, even as unemployment and strict lending standards remain obstacles for the industry that precipitated the last recession. Among companies betting that construction will pick up is Caterpillar Inc. (CAT), which today raised its full- year earnings forecast on improving sales of excavators, scrapers and dozers as builders replace aging equipment.

Caterpillar Echoing Wall Street Rebuts Gross’s Pessimism (Source:Bloomberg)
Caterpillar Inc. (CAT), among the first companies to ring warning bells about the recession in 2007, isn’t subscribing to the pessimism of investors such as Bill Gross even while moderating its global growth projections. A U.S. recession this year is unlikely and the economy will probably grow slightly more than 2 percent, down from an April forecast for about 3 percent, Caterpillar said yesterday in its second-quarter earnings statement. The climate is different than in 2008 because short-term interest rates are lower, central banks are prepared to inject more liquidity and the U.S. housing market is slowly improving rather than falling off a cliff, the company said
“The good news is, this doesn’t feel like 2008,” Chief Executive Officer Doug Oberhelman said in the statement. Caterpillar has a track record of accurate forecasts. In October 2007 it said the U.S. may fall into a recession, in contrast to the outlook of companies including Ford Motor Co., DuPont Co. and Intel Corp. at the time. Caterpillar, considered a U.S. bellwether because it’s the world’s largest maker of construction and mining equipment, proved to be correct as the economy experienced a slump that began in December 2007 and ended in June 2009.

China May Refrain From More Easing, IMF Official Says (Source:Bloomberg)
China may refrain from stepping up its monetary stimulus or increasing spending because measures now in place are sufficient to support growth, the International Monetary Fund’s top official in the nation said. Authorities will probably maintain the “status quo” after already shifting their monetary stance to a “more neutral or accommodating one” and may forgo expanding this year’s budget, Il Houng Lee, 54, the IMF’s senior resident representative in China, said in an interview yesterday in the fund’s Beijing office. Lee’s comments reflect confidence at the IMF, which last week cut its China growth forecasts three months after releasing updated projections, that the pace of expansion will accelerate in the second half of 2012. Premier Wen Jiabao’s government enacted two interest-rate cuts in a month and accelerated approval of investment plans to stem six quarters of deceleration in the world’s second-largest economy.
“Broadly what they have been doing has already been adequate to ensure that the economy is bottoming out,” said Lee, head of the IMF’s China office since 2010. “They most likely maintain the current status quo,” he predicted. Authorities “will most likely allow credit growth to continue to increase,” while avoiding the record scale of lending in the aftermath of the global financial crisis, Lee said.

Japan Flags Yen-Sales Impact as BOJ Eyes More Easing: Economy (Source:Bloomberg)
Japan’s Finance Ministry said its record foreign-exchange intervention last year was effective and central bank Deputy Governor Hirohide Yamaguchi indicated officials won’t hold back on easing. The comments highlight the possibility of further action by policy makers to counter gains in the yen. The currency rose against the dollar this week and was near an 11-year high versus the euro today as Japan reported an unexpected trade surplus and the International Monetary Fund said China faces challenges in securing a “soft landing.” A Ministry of Finance official involved with international affairs said yesterday that he would challenge any assertion that last year’s intervention wasn’t effective. He spoke on condition of anonymity. The Bank of Japan (8301) “will not hesitate” to loosen monetary policy should the world’s third-biggest economy face shocks that weaken the outlook, Yamaguchi told business executives today in Hiroshima, western Japan.
“Given the deepening global slowdown, the BOJ will remain in easing mode,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. “We can’t rule out the chance that the BOJ will expand easing measures next month, depending on the level of yen and discussions with new board members.” The Japanese currency traded at 78.14 per dollar as of 3:55 p.m. in Tokyo while the euro was at 94.20 yen. Japanese Finance Minister Jun Azumi yesterday indicated increased concern at the yen’s advance as Europe’s crisis bolsters the currency’s appeal as a haven.

South Korea’s Growth Slows as Europe Caps Export Demand (Source:Bloomberg)
South Korea’s economy grew at the slowest pace in almost three years as Europe’s sovereign debt crisis capped demand for exports and weakened confidence. Gross domestic product expanded 2.4 percent in the three months through June from a year earlier, the slowest pace since the third quarter of 2009, the Bank of Korea said today. That compares with the median 2.5 percent estimate of 15 economists surveyed by Bloomberg News. From the previous quarter, Asia’s fourth-largest economy grew 0.4 percent. Europe’s debt woes and a slowdown in China are rippling through Asia, forcing policy makers from Japan to Thailand to respond. Bank of Korea Governor Kim Choong Soo said yesterday that growth is losing steam and HSBC Holdings Plc forecasts that the central bank will add this quarter to a July 12 interest- rate cut. “The big tide from Europe is engulfing Asia and leaving many policy makers helpless,” said Lee Sang Jae, a senior economist at Hyundai Securities Co. in Seoul.
“They will try whatever is possible to stave off a global recession but little can be done amid the fiscal debt crisis.” The Bank of Japan (8301) “will not hesitate” to loosen monetary policy should the world’s third-biggest economy face shocks that weaken the growth outlook, Deputy Governor Hirohide Yamaguchi said yesterday. Two new BOJ board members said July 24 they may be willing to consider new forms of monetary easing.

Thailand Signals Room to Ease Policy as Growth Forecast Cut (Source:Bloomberg)
Thailand’s central bank signaled it has room to cut interest rates to protect the economy from a global slowdown as it lowered the country’s growth and inflation forecasts after keeping borrowing costs unchanged. The Bank of Thailand is ready to do more to support growth if risks escalate, Assistant Governor Paiboon Kittisrikangwan said today, after the monetary authority held its benchmark one- day bond repurchase rate at 3 percent as predicted by all 14 economists in a Bloomberg News survey. It cut its growth forecast for the year to 5.7 percent from 6 percent. The Southeast Asian country has refrained from joining nations from Brazil to China in easing monetary policy as the economy recovers from floods last year that disrupted the supply chains of companies including Toyota Motor Corp. Europe’s sovereign-debt crisis has hurt demand for exports from Thailand, which this month marks 15 years since its baht devaluation sparked the Asian financial crisis.
“If Europe’s situation worsens further, it’s possible Thailand will cut interest rates,” said Satoshi Ushijima, the Bangkok-based vice president of the treasury division at Mizuho Corporate Bank Ltd. “If the BOT moves before the end of this year, rather than holding rates, it will be a cut, as they lowered the growth forecast.” The Thai baht rose 0.2 percent to 31.72 per dollar as of 3:29 p.m. in Bangkok. The benchmark SET index was little changed, having gained about 15 percent this year. The currency has declined 0.6 percent.

U.K.’s Bigger-Than-Forecast Slump Pressures Cameron (Source:Bloomberg)
The U.K. economy shrank the most since 2009 in the second quarter and more than economists forecast, increasing pressure on Prime Minister David Cameron to abandon Britain’s biggest budget squeeze since World War II. Gross domestic product fell 0.7 percent from the first quarter, when it dropped 0.3 percent, the Office for National Statistics said in London today. Economists forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg News survey. Second-quarter data were hurt by record rainfall and an extra public holiday which may have masked an underlying better performance, the ONS said.
Signs of a deepening recession may add to calls for the government to do more to boost growth even after the Bank of England started a credit-easing program and increased emergency bond purchases. The International Monetary Fund said last week Chancellor of the Exchequer George Osborne might have to ease his fiscal squeeze and the central bank should expand stimulus further if efforts to kick-start the economy fail to deliver. “It is looking very unlikely that growth on average for this year can get on the right side of zero -- more likely a small contraction,” said Alan Clarke, an economist at Scotiabank in London. “Can the coalition government or the BOE do anything about the rain or lost working days? No, but that won’t stop claims that austerity is to blame and the BOE should do more.”

German Business Confidence Fell More Than Forecast in July (Source:Bloomberg)
German business confidence fell more than economists forecast in July to the lowest in more than two years as the worsening sovereign debt crisis damped the outlook for economic growth and company earnings. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 103.3 from 105.2 in June. That’s the third straight decline and the lowest reading since March 2010. Economists predicted a retreat to 104.5, according to the median of 35 forecasts in a Bloomberg News survey. Moody’s Investors Service on July 23 lowered the outlook on Germany’s Aaa credit rating to negative, citing the risk that Greece could leave the euro and an “increasing likelihood” that countries such as Spain and Italy will require support. While the Bundesbank said this week that the German economy probably grew moderately in the second quarter, aided by domestic demand, latest data show the manufacturing and service industries are contracting.
“The crisis costs Germany money,” said Christian Schulz, senior economist at Berenberg Bank in London. “Not because of the bail-outs it guarantees, not because of a potential ratings downgrade and its impact on borrowing costs, but because the economy is growing much more slowly than it otherwise would. It could stagnate or even fall into recession.”

Spain Debt Costs Seen Unjustified in Berlin Crisis Talks (Source:Bloomberg)
Spanish borrowing costs surged after crisis talks in Berlin late yesterday produced a statement saying bond yields don’t reflect the strength of Spain’s economy. “The current levels of interest rates on sovereign debt markets don’t correspond to the fundamentals of the Spanish economy,” German Finance Minister Wolfgang Schaeuble and Spanish Economy Minister Luis de Guindos said after their meeting in a joint decalaration that also praised Spain’s deficit-cutting efforts. Their words failed to provide market support as the plunge in Spanish securities extended into a 10th day. Spain’s two-year note yield climbed 20 basis points to 7.09 percent at 7:43 a.m. London time, breaching the 7 percent level for the first time. The five-year yield rose 14 basis points to 7.74 percent while the rate on 10-year bonds added 9 basis points to 7.71 percent.
The Spanish government today denied an El Economista report that Germany is urging Spain to request a 300 billion-euro ($363 billion) bailout package that would erase the need to sell debt to investors for as many as two years. Spain’s bank bailout and agreements made among European leaders at the end of June to build a so-called banking union should be implemented “quickly,” they said. Schaeuble starts his three-week vacation today, while de Guindos visits Paris for talks with his French counterpart, Pierre Moscovici.

N.Z. Holds Rate at Record Low on EU Risks, Tame Inflation (Source:Bloomberg)
New Zealand’s central bank extended a pause in the nation’s benchmark interest rate, citing risks from Europe’s fiscal crisis and an outlook for tame inflation in holding borrowing costs at a record low. The decision to keep the official cash rate at 2.5 percent for an 11th straight meeting, spanning almost 17 months, was forecast by all 16 economists in a Bloomberg News survey. The Reserve Bank of New Zealand’s last change in borrowing costs was a cut in March 2011. “New Zealand’s trading partner outlook remains poor, with several euro-area economies in recession,” Governor Alan Bollard said in a statement in Wellington. “There remains a limited risk that conditions in the euro area deteriorate very significantly.” The domestic economy should “grow modestly over the next few years,” Bollard said, with the rebuilding of earthquake-hit Christchurch expected to boost the construction industry. Fiscal consolidation and a strong exchange rate were offsetting that by constraining demand, he said.
New Zealand’s dollar strengthened after Bollard’s comments. It bought 79.10 U.S. cents at 10:16 a.m. in Wellington from 78.90 cents immediately before the statement. The so-called kiwi has gained 1.8 percent this year, the best performer among the Group of 10 currencies tracked by Bloomberg.

20120726 1010 Global Commodities Related News.

Midwest Rains Won’t Dent Drought or Help Crops (Source:Bloomberg)
The Midwest, where record amounts of rain fell in some places yesterday, may remain abnormally dry through the first week of August and the moisture probably won’t be enough to help drought conditions there, forecasters said. Flood advisories were still in force in North Dakota and Minnesota following the thunderstorms, according to the National Weather Service. The storms were local and didn’t extend across the rest of the region. It’s possible rain will fall across a much larger area, including Iowa and Illinois, through the next week, said Joel Widenor, of Commodity Weather Group LLC in Bethesda, Maryland. “This will ease moisture stress a bit, temporarily, in these areas, but will be insufficient for a major turnaround in soil moisture,” said Widenor, co-founder of the company.
Corn and soybean crops are in their worst state since 1988 as drought covers at least 56 percent of the contiguous 48 U.S. states. The lack of a soaking rain in the forecast and the persistence of temperatures 5 to 8 degrees Fahrenheit (2.8 to 4.4 Celsius) above normal until at least Aug. 8 have contributed to a rise in prices. The U.S. Drought Monitor, which measures the extent of drought nationwide, is scheduled to release an update tomorrow. As of July 22, 26 percent of U.S. corn and 31 percent of soybeans were in good to excellent condition, the lowest for the date since 1988, according to the Agriculture Department. In Fargo, North Dakota, 2.35 inches (6 centimeters) of rain fell yesterday an all-time high for the day that broke the old mark set in 1993, according to the Weather Service. A daily record 1.69 inches fell in Minneapolis, according to the agency. The rain caused minor flooding.

Iowa Heat
Farther south, in Des Moines, Iowa, today’s high temperature is expected to reach 104 degrees and there is a slight chance of thunderstorms later today, according to the Weather Service. Chicago may reach 99. While the heat remains fixed over the Midwest, there is a possibility that temperatures will rise about 3 degrees above normal in the U.S. Northeast from Aug. 4 to Aug. 8, according to Commodity Weather Group President Matt Rogers. Computer modeling shows another heat wave may strike the East Coast during the week of Aug. 6, he said. Heat in the large cities along the East Coast raises demand for electricity as people turn to air conditioners to cool off. The increase raises prices on the spot markets and for the fuels, such as natural gas, used to generate power.
The normal average temperature in New York for Aug. 1 is 78, according to MDA EarthSat Weather in Gaithersburg, Maryland. It’s 74 in Boston; 80 in Washington; 85 in Houston; 76 in Chicago; 80 in Atlanta; 67 in Seattle and 76 in Burbank, California.

Pro Farmer: After the Bell Wheat Recap
Wheat futures ended high-range with nearby contracts 20-plus cents higher. Deferred contracts ended with slightly lighter gains. After two days of declines, spillover support from weather-inspired rallies in the corn and soybean markets returned buyers to the wheat pit. This plus a weaker dollar kept attention away from spring wheat harvest pressure and better than expected results from the spring wheat tour.

Wheat Market Recap Report
September Wheat finished up 24 1/2 at 903 1/4, 5 3/4 off the high and 40 3/4 up from the low. December Wheat closed up 26 3/4 at 915. This was 42 1/2 up from the low and 4 1/2 off the high. September Chicago wheat traded sharply higher into the close after reports that more agricultural regions in Russia have declared emergencies due to the recent drought. This has stoked fears in the market that Russia will announce export restrictions in the coming weeks. Kansas City and Minneapolis followed the Chicago market higher. Export tenders have begun to come to market as major importers fear the worst is yet to come. Morocco announced a tender to purchase 300,000 tonnes of wheat and Libya issued a new tender to purchase 50,000 tonnes. Jordan rejected all offers on their 100,000 tonne tender but will likely come back to the market on the next dip. Outside markets have been supportive with the US Dollar trading sharply lower and stocks taking back some of yesterday's losses. There was widespread support in the commodity sector today caused by market optimism that central banks around the world will work together to fight deflation and slow world growth. September Oats closed up 10 1/4 at 372 3/4. This was 17 1/4 up from the low and 3/4 off the high.

Pro Farmer: After the Bell Corn Recap
Corn futures rebounded from losses the past two days and finished with gains of 4 to 11 cents in most contracts. After two days of profit-taking, focus returned to diminishing crop prospects. Traders feel recent rains and any precip that will develop over the coming days will do no more than help stabilize the crop. As a result, sellers were scarce today.

Corn Market Recap for 7/25/2012
September Corn finished up 4 1/2 at 794 1/2, 11 1/4 off the high and 12 3/4 up from the low. December Corn closed up 9 3/4 at 788. This was 17 up from the low and 8 off the high. December corn traded slightly higher into the close but settled off the session highs. The higher trade was linked to a more supportive commodity market tone due to the lower US dollar and continued fear over weather in the coming weeks. The hottest temperatures in the central Midwest will be seen today with modest relief over the weekend. The western Corn Belt will see a break in temperatures this weekend and light rainfall is expected but above normal temperatures is expected to return next week. This morning's ethanol production report and the fact that a US Senator intends to introduce legislation to waive the Renewable Fuel Standard when corn inventories fall to certain levels offered slight resistance. Ethanol production for the week ending July 20th averaged 796,000 barrels per day. This was down 8.9% from last year. Corn used in last week's production is estimated at 84.79 million bushels which is down from 85.430 million bushels last week. This crop year's cumulative corn used for ethanol production is 4.44 billion bushels vs. the USDA's current crop year estimate of 5.05 billion bushels. Corn use needs to average 104.6 million bushels per week to meet this crop year's USDA estimate. September Rice finished up 0.385 at 15.565, equal to the high and equal to the low.

GRAINS-US soy struggles on rain f'cast; corn, wheat rebound
SINGAPORE, July 25 (Reuters) - U.S. new-crop soybeans edged lower, falling for a third straight session with forecasts of rain in parts of the Midwest offering some relief as the crop enters its yield-determining phase.
"Early losses have started to turn around as the grain markets are torn between extremely alarming supply situation on one hand and expectations that current prices will induce demand rationing on the other hand," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

China firm eyes controversial 58-sq-mile Australia farm project
CANBERRA, July 25 (Reuters) - A Chinese property conglomerate is bidding for a 58-sq-mile (15,000-hectare) farming project in the Australian outback as Canberra looks to open the remote north for farming to tap booming demand for food from Asia, especially China.    
Shanghai Zhongfu Group is bidding for the Ord East Kimberley Expansion project in Western Australia state, with plans to develop agriculture business in the sub-tropical region, but may face opposition from politicians increasingly concerned about foreign investment in Australian farms.

Rains give mild relief to US drought, grain prices tumble
CHICAGO, July 24 (Reuters) - Welcome rains provided some relief to heat-stressed cities and worried farmers in the U.S. Midwest on Tuesday, but reports of failed crops, wildfires and other fallout from the worst U.S. drought in more than 50 years tempered any optimism.
The first soaking rains for weeks in parts of the northern Midwest sent U.S. corn and soybean prices sharply lower. But those prices still hover around record highs with weather forecasts for August indicating more heat is on the way.

Tour finds above-average U.S. wheat yield prospects
MANDAN, North Dakota, July 24 (Reuters) - U.S. spring wheat yield prospects in southern North Dakota and neighboring counties in Minnesota and South Dakota are brighter than a year ago and above the average for the last five years, scouts on an annual crop tour said Tuesday.
Hot and dry weather that has scorched the Midwest Corn Belt has reached into the Dakotas as well, preventing the spring wheat crop from reaching its full potential, the scouts said.

TOUR-In Indiana's Putnam County, hopes dying for corn harvest
BLOOMINGTON, Ill., July 24 (Reuters) - On the western edge of Indiana, the Putnam County corn crop shows the effects of the worst U.S. drought in 56 years: the plants failed to form ears and will likely go unharvested, the second day of a U.S. Midwest crop tour found on Tuesday.
The area has so far received none to just a quarter of its normal rainfall since the beginning of June while temperatures have consistently soared above 100 degrees Fahrenheit. Because of the heat and dry conditions, plants are stunted at around 3 feet, leaves are curled and brown at the edges and stalks are brown at the bottom.

US should rethink ethanol target as drought bites-OECD
PARIS, July 24 (Reuters) - The United States should consider lowering its targets for the use of corn-based ethanol as a severe drought devastates the harvest, an OECD official said on Tuesday in a sign that renewed fears of a global food-price surge could revive the debate over biofuels.
Searing heat and the worst drought in half a century has parched crops in the Midwest grain belt, rattling markets that had anticipated big harvests would replenish low stocks; prices hit record highs last week. So far, however, U.S. officials say they see no need to relax a law that requires ethanol to make up nearly 10 percent of all U.S. gasoline.

US biofuel advocates urge Congress to continue Pentagon funding
WASHINGTON, July 24 (Reuters) - Military veterans and former lawmakers urged Congress on Tuesday to continue funding the Pentagon's controversial biofuels program, saying the failure to deal with U.S. dependence on foreign oil was a key factor in the wars of the past 22 years.
"As long as U.S. and global economic security are dependent on oil produced in volatile regions of the world, our military will be required to continue deployments and dangerous missions to ensure the ... security of vital energy resources," the group, led by retired Republican Senator John Warner, said in a letter to President Barack Obama and members of Congress.

Australia’s Liberals Would Expand Far North Farms on Asia Demand (Source:Bloomberg)
Australia, the world’s second- biggest wheat exporter, will seek to expand agricultural production in the country’s far north to meet surging Asian demand if the opposition coalition wins elections due next year, according to Shadow Finance Minister Andrew Robb. About 11 million hectares (27 million acres) of arable land is available in northern Australia, Robb said in an interview in Melbourne yesterday. Horticulture, sugar and rice may be industries suited to the area, he said. “It’s the century of Asia,” Robb said. “There’s so much opportunity in the region and we need to position ourselves to take advantage of that.” The Liberal-National coalition is leading Prime Minister Julia Gillard’s government in opinion polls with elections due by the end of 2013. World agricultural output needs to climb 60 percent over the next 40 years to meet growing demand for food as the global population expands and diets change, according to the United Nations’ Food & Agriculture Organization.
A mix of funding, which may include domestic and foreign investment and public-private partnerships, could be used to develop agricultural projects in northern Australia, Robb said. In northeastern Queensland state, some mining companies are prepared to pay for water at a rate that would fully finance dam construction, he said.

SOFTS-Sugar, coffee firm, buoyed by softer dollar
LONDON, July 25 (Reuters) - Sugar and coffee futures on ICE firmed in light volumes in early trade, underpinned by a weaker dollar. Benchmark October sugar futures on ICE  rose 0.09 cent or 0.4 percent to 23.58 cents a lb at 0836 GMT, having nudged up on Monday to touch 24.00 cents, a three-month high, underpinned by adverse weather in top producer Brazil.

Mexico to tender gov't-controlled sugar mills
MEXICO CITY, July 24 (Reuters) - Mexico will auction off nine government-controlled sugar mills, which together produce around a fifth of the country's sugar, to private companies by the end of the year in a move likely to boost output.
In 2001, the Mexican government took control of 27 heavily-indebted sugar refineries out of more than 50 mills operating in the country.

Better weather ahead for Brazil's coffee harvest
SAO PAULO, July 24 (Reuters) - Cooxupe, Brazil's biggest coffee cooperative, said on Tuesday dry weather in recent days has favored the harvest, which should pick up speed this week as rains stay away from the productive regions.
Harvesting in the areas where the cooperative operates is behind previous years' performance due to the above-normal rainfall that has fallen on the world's largest coffee belt in recent months.

Brazil's CS cane crop seen up at 520 mln tonnes - Safras
SAO PAULO, July 24 (Reuters) - Brazil's main center-south cane output is seen at 520 million tonnes this season, crop analysts Safras e Mercado said on Tuesday, raising their previous estimate 4 percent from 500 million tonnes.
Brazil's cane crop, the source of half the world's sugar exports, suffered its first drop in output in 11 years during the previous crop due to drought and falling yields. Output from last year was 494 million tonnes, down sharply from the record 560 million tonnes of the previous 2010/11 season.

Oil Falls First Day in Three in New York as U.S. Stockpiles Rise (Source:Bloomberg)
Oil dropped for the first time in three days in New York on concern rising stockpiles in the U.S., the world’s biggest crude consumer, signal faltering demand. Futures slipped as much as 0.4 percent after gaining 0.5 percent yesterday. Crude inventories climbed 2.7 million barrels last week, the first gain in five weeks, data from the Energy Department showed. They were forecast to fall 1 million barrels, according to a Bloomberg survey. Sales of new U.S. homes unexpectedly dropped in June from a two-year high, a Commerce Department report showed. “We’re stuck in the $80s until we get a little more confidence around global growth prospects,” Michael McCarthy, a chief market strategist at CMC Markets in Sydney said in a telephone interview. “I would expect, especially given the inventory numbers, oil to gravitate back toward the middle of the $81.50 to $88.50 range over the next few trading days.”
Oil for September delivery slid as much as 34 cents to $88.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.73 at 10:51 a.m. Sydney time. The contract yesterday climbed 47 cents to $88.97, the highest close since July 20. Prices are 10 percent lower this year. Brent crude for September settlement decreased 21 cents to $104.17 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $15.44, from $15.41 yesterday.

Falling output, old fields spur North Sea tax fight
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 25 (Reuters) - UK government revenues from oil and gas production will almost halve over the next four years, as falling output as well as investment in new fields and the cost of decommissioning old ones cut into tax receipts.
Shrinking revenues highlight the rapid depletion of North Sea oil fields, but also the growing costs of plugging and abandoning old wells that are no longer productive as the province becomes more mature.

OIL-Brent steady, Middle East strife offsets Europe gloom
LONDON, July 25 (Reuters) - Brent crude oil gained slightly, as concern about threats to oil supply from the Middle East offset worries about oil demand from the euro zone.
"It seems as though all the bad news is priced in, and people are thinking things can't get much worse," said Christopher Bellew, broker at Jefferies Bache.

Hong Kong’s Largest Bullion Vault Signals Region’s Rising Wealth (Source:Bloomberg)
Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd. The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelry, fine art and precious metals, said Rotbart.
The move in Hong Kong reflects increased demand for gold in Asia even as the commodity struggles to sustain its rally into a 12th year. Gold-demand growth in China, the world’s second- largest user after India last year, is slowing, according to the World Gold Council. Vault charges will depend on each customer’s operations, according to Rotbart, who declined to give a figure for the venture’s cost beyond millions of dollars. Hong Kong is a very important center for gold, especially because it acts as a doorway to China,” said Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank. “Current international hubs are in New York, Zurich and London. There’s still a need to set up an Asian hub for physical gold. The trend is for more people to look at storage and trading in Asia, when it comes to physical metal.”

ArcelorMittal Rises as Profit Withstands Crisis: Amsterdam Mover (Source:Bloomberg)
ArcelorMittal (MT), the world’s biggest steelmaker, rose in Amsterdam trading after indicating its full- year earnings would meet analyst expectations even as the European crisis saps demand. ArcelorMittal advanced as much as 3.6 percent before closing 0.9 percent higher at 11.84 euros. Second-half earnings before interest, tax, depreciation and amortization per ton of steel would be similar to the first, the Luxembourg-based company said today. It reported Ebitda of $4.4 billion in the six months ended June, higher than the $4.2 billion median estimate of seven analysts compiled by Bloomberg. “There is relief that a disaster has been averted,” said Tim Cahill, an analyst at J&E Davy Holdings Ltd. in Dublin. “But before people get too excited we need to get some visibility on steel prices. The tone is a little more positive then we might have thought.”
Steelmakers are posting lower earnings as the European economic crisis erodes demand for steel and commodity prices weaken as Chinese growth slows. Posco (005490), Asia’s third-biggest steelmaker, yesterday reported a 44 percent decline in profit and cut its sales targets for the second time as demand fell.

Gold Futures Gain Most in Three Weeks on Europe Stimulus Outlook (Source:Bloomberg)
Gold gained the most in more than three weeks on speculation that European leaders may take further steps to tame the debt crisis. European Central Bank council member Ewald Nowotny said today there were arguments in favor of giving the region’s rescue fund a banking license. The move would give the permanent bailout fund, the European Stability Mechanism, access to ECB lending, increasing cash available for aid. Gold has dropped 7.3 percent since Jan. 31, partly as Europe’s escalating crisis damped global growth prospects and inflation expectations. “This is a market fueled by emotional readings of certain words coming from certain quarters,” Jon Nadler, an analyst at Kitco Inc., a precious-metal refiner and research company in Montreal, said in a report. “People are expecting some form of stimulus monetary action sooner rather than later.”
Gold futures for December delivery rose 2 percent to settle at $1,612.70 an ounce at 1:43 p.m. on the Comex in New York, the biggest gain for a most-active contract since June 29. Silver futures for September delivery jumped 2.4 percent to $27.466 an ounce on the Comex, the biggest gain since July 3.

20120726 1010 Soy Oil & Palm Oil Related News.

Pro Farmer: After the Bell Soybean Recap
Soybean futures enjoyed strong "value" buying interest today, to pull the market 40-plus cents higher through the January 2013 contract. Most farther deferred contracts saw gains ranging from the 20s to 40s. Soyoil and soymeal enjoyed strong spillover support. After two days of sharp selloffs, improved outside markets and ideas the overbought condition of the market had been corrected allowed soybean traders to shift their attention back to the state of the crop today.

Soybean Complex Market Recap
August Soybeans finished up 44 3/4 at 1694, 7 3/4 off the high and 76 up from the low. November Soybeans closed up 45 3/4 at 1615 1/4. This was 79 1/4 up from the low and 8 3/4 off the high. August Soymeal closed up 20 at 529.8. This was 32.2 up from the low and equal to the high. August Soybean Oil finished up 0.66 at 52.24, 0.39 off the high and 0.88 up from the low. August and November soybeans traded sharply higher into the close but fell off session highs. Traders and end users sought coverage on renewed fears that the recent drought and future weather conditions will diminish soybean yield further. August soybean meal is up $18 while soybean oil is up 61. The warmest temperatures in the Midwest will be seen today and the 6-10 day weather maps continue to keep above normal temperatures in the central and western Midwest. The western Corn Belt will see a break in temperatures this weekend and light rainfall is expected but above normal temperatures is expected to return next week. The delta is also expected to see restricted rainfall, especially in the north where topsoil moisture conditions are already short. Soybeans retraced nearly all of yesterday's move lower which added to the positive tone. Outside markets were positive today as optimism grows that central banks will enact new monetary policies to fight global deflation.

Are soybean spreads doing their job?
(Gavin Maguire is a Reuters market analyst. The views expressed are his own.)
CHICAGO, July 25 (Reuters) - Soybean prices for immediate delivery recently scaled all-time highs on fears of supply depletion after hostile growing conditions slashed U.S. production potential straight after South American growers suffered output setbacks of their own.
But usage rates are as much governed by price spreads as they are by outright price levels, and the recent sharp widening in 2012 to 2013 soybean spreads suggests end users have a strengthening incentive to postpone purchases for as long as possible even after the recent steep pullback in nearby prices.

VEGOILS-Palm oil rebounds; Europe worries cap gains
SINGAPORE, July 25 (Reuters) - Malaysian crude palm oil rebounded on bargain hunting after prices hit a five-week low the previous day, with gains were modest as worries remained that the euro zone debt crisis could hurt demand.
"The market recovered today as it was a little bit oversold. Exports were down 14 percent but that has already been factored in considering the market dropped close to 200 ringgit in the last few days," said a trader with a foreign commodities brokerage in Malaysia.    

Indonesia to scrap soybeans import duty to ease high prices
JAKARTA, July 25 (Reuters) - Indonesia will scrap its 5 percent import duty on soybeans from August until the end of the year in a bid temper global prices which have hit record highs, an official at the industry ministry said on Wednesday.
U.S. soybean futures have risen by as much as 28 percent in the last month as the worst drought in 56 years in the U.S. Midwest threatens harvests. Supplies of the oilseed have also been affected by a drought in Brazil and Argentina, which damaged crops there.

Mr. Titanic Mistry Predicts Sinking Palm-Oil Prices: Commodities (Source:Bloomberg)
Dorab Mistry compared the palm-oil market in 1998 to the Titanic and correctly predicted a slump from then-record prices the next year. He’s now forecasting another retreat as weakening demand outweighs a decline in Malaysian production. Malaysia, the second-largest grower after Indonesia, will reap less than 18.6 million metric tons, at least 2.1 percent below the government’s 19-million-ton forecast, according to Mistry, the director of Godrej International Ltd. who has traded vegetable oils for more than three decades. Futures may decline 8.5 percent to 2,700 ringgit ($851) a ton by the end of the year, the lowest since October 2010, unless the U.S. does more to stimulate growth and boost demand, he said.
“Production has actually underperformed, even worse than I expected,” as Malaysia’s palms enter a less-productive point in their cycle after a bumper crop last year, the 59-year-old said. Demand is “just not there,” he said in a July 5 interview at new offices in Singapore that will become a trading hub for Godrej (GDSP) within five years. Palm, the most-consumed vegetable oil, already tumbled 19 percent from a 13-month high in April on prospects for record global production. Prices for the commodity used in everything from Nestle SA’s Maggi instant noodles and Unilever soaps to candy bars and biofuels, more than doubled in the past decade as producers failed to keep up with consumption. There is now mounting concern about demand as European economies sink back into recession and growth slows from China to Mexico.

Financial Crisis
The slump since April left futures traded on the Malaysia Derivatives Exchange 7.1 percent lower for the year at 2,951 ringgit. Prices may drop as low as 2,200 ringgit if there is a repeat of the 2008 financial crisis, Mistry said in June. The Standard & Poor’s GSCI gauge of 24 commodities fell 1.7 percent since the start of the year and the MSCI All-Country World Index of equities rose 1.3 percent. Treasuries returned 3.2 percent, a Bank of America Corp. index shows. Global palm consumption almost doubled in the past decade to 51.7 million tons, or about 33 percent of total demand for cooking oils, U.S. Department of Agriculture data show. At this year’s average of 3,218 ringgit, total supply is valued at about $54 billion. That compares with about $2.5 billion of outstanding contracts on the bourse in Kuala Lumpur and $10.1 billion of open interest in soybean-oil futures traded on the Chicago Board of Trade, according to data compiled by Bloomberg.

Declining Output
Mistry became known as Mr. Titanic after he compared world vegetable-oil prices to the ill-fated liner and he says his speeches at conferences in Kuala Lumpur over the next five years were preceded by Celine Dion’s theme song from the 1997 movie. He predicted in 1998 that the country’s palm production would decline on reduced yields caused by El Nino, a weather pattern that can parch parts of Asia. Output dropped 8.3 percent to 8.32 million tons, the first decline in four years, Palm Oil Board data show. Prices climbed to a then-record 2,562 ringgit in May that year, before plunging 74 percent by February 2001. The Indian-born trader, now based in London, has also got it wrong. He said in 2011 that palm would advance to 4,000 ringgit by June this year because of declining output in Indonesia and Malaysia. Prices peaked at 3,628 ringgit in April and the subsequent slump prompted Mistry to reverse his predictions and become bearish.
“He is normally on the extreme side on either up or down,” said Ben Santoso, a Singapore-based analyst at DBS Vickers, the brokerage unit of DBS Group Holdings Ltd., Southeast Asia’s biggest bank, who has attended the annual palm oil conference in Malaysia since 2001. “Nevertheless, we have to take consideration of what he said, the reasoning that he put out and see whether we’ve missed something.”

Margarine Use
While Mistry says his forecasts have a 70 percent success rate, he discounts those other analysts might consider accurate. He said in February 2008 that prices would reach 4,500 ringgit. In the four days after his speech, futures jumped 16 percent to 4,486 ringgit before retreating to a three-year low of 1,331 ringgit in October. He says that was “a big failure” because he had predicted a gradual advance over the year. After the crash, his best trade was buying palm stearin, derived from oil and used for products such as margarine. He said prices would rally because the U.S. would intervene to halt the rout. The Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011. Palm futures more than doubled as the Standard & Poor’s GSCI gauge of 24 commodities rose about 90 percent.

Kalimantan Plantations
The Singapore office on the 24th floor of a 50-storey skyscraper will be the regional trading hub for Godrej International Trading and Investments Pte, a unit created in 2010. The company, which Mistry plans to visit once a month, will also oversee about 20,000 hectares (49,400 acres) of land owned with local partners in Indonesia’s Kalimantan, 20 percent of which is already planted. Godrej is investing in plantations to reduce its reliance on suppliers. The group uses vegetable oils for products including its Cinthol soap, sold in India since 1918, and to supply its Godrej Industries Ltd. unit, which makes chemicals. The Godrej Group based in Mumbai, which started in 1897 as a lock manufacturer, is led by Indian billionaire Adi Godrej.
Mistry was born in the western Indian state of Gujarat in 1953, moving with his family to Mumbai three years later. He attended Bombay University and later qualified as an accountant. Since moving to the U.K. with Godrej in 1977, he has been part of the 5,000-strong community of Zoroastrians, who follow an ancient monotheistic religion founded in Persia.

Zoroastrian Role
As a past president of the Zoroastrian community in Europe, Mistry counts the mother of Freddie Mercury as one of his friends, although he never met the singer of rock band Queen, who died in 1991. He was a guest at Queen Elizabeth II’s Golden Jubilee celebration in Westminster Abbey in 2002. As a self-described “one-man research team,” Mistry tracks weather patterns as well as supply and demand. His sources include the plantation industry and data from the USDA and Oil World, a Hamburg-based research company. The married father of three speaks at conferences about five times a year. “Most people do realize that it’s a tough job and it’s brave of someone to openly speak about prices,” Mistry said. “They also know it’s a market: you can’t be right 100 percent of the time.”

Indonesia Suspends Soybean-Import Tax as Tofu-Makers Strike (Source:Bloomberg)
Indonesia will suspend a 5 percent duty on soybean imports until the year-end after makers of tofu and tempeh halted production to protest against surging costs spurred by the oilseed’s rally to a record. The Finance Ministry will issue a ruling this month that will be effective without delay, Coordinating Minister for the Economy Hatta Rajasa said. The Trade Ministry has also held talks with importers to limit margins, he told reporters. Indonesia’s decision, and the strike by local food-makers who’d demanded the levy be dropped, reflect the impact in Asia of the worst U.S. drought in more than 50 years, which has pushed soybeans and corn to all-time highs. South Korea’s government said today it’s considering stockpiling soybeans, corn and wheat to cope with rising prices. Goldman Sachs Group Inc. has said soybeans and corn will extend gains in Chicago.
The government will “provide facility and flexibility for tofu and tempeh cooperatives to directly import soybeans” to ensure supplies, Rajasa told reporters in Jakarta. The 5 percent levy on soybean shipments had been in place since January. Soybeans rallied 32 percent on the Chicago Board of Trade this year as the worst drought since 1956 in the U.S., the world’s biggest grower, hurt supplies. Futures, which reached a record $16.915 a bushel on July 23, traded at $15.92 at 8:37 p.m. in Singapore. Goldman Sachs has a three-month target of $20.

Soybean Rally
Some Indonesian producers of tofu and tempeh, soybean-based staples, stopped production today after local bean prices surged 33 percent in the past three weeks to about 8,000 rupiah per kilogram ($841 a metric ton), according to The Confederation of Indonesian Tofu and Tempeh Makers Cooperatives. The stoppage came during Ramadan, the Muslim holy month, when followers break daylong fasts with communal meals. “About 23,000 members in Banten, Jakarta and West Java provinces that halted output this morning will soon resume production,” said Sutaryo, the group’s head of business, who uses a single name. “Supplies of tofu and tempeh will return to normal on Saturday,” he said, adding that the confederation expects the government to maintain soybean prices at about 6,000 rupiah to 7,000 rupiah per kilogram.
The drought in the U.S. may spark a rebound in global food costs through October, the United Nations Food & Agriculture Organization said on July 5. South Korea’s Agriculture Ministry will also seek to temporarily lift import tariffs on soybeans and wheat, according to an e-mailed statement today.

Import Needs
Indonesia, Southeast Asia’s biggest economy, imports about 70 percent of its soybean needs, according to Deputy Agriculture Minister Rusman Heriawan. Tofu and tempeh, derived from soybeans and eaten mainly with rice, the main staple, are key sources of affordable protein. The foods represent about 88 percent of total soybean use in the country, according to the U.S. Department of Agriculture. Indonesian inflation unexpectedly accelerated in June as food costs climbed, the Central Statistics Office said on July 2. Consumer prices rose 4.53 percent last month from a year earlier after climbing 4.45 percent in May. The country is expected to import 1.97 million tons of soybeans in the marketing year from October 2012, up from 1.9 million tons a year earlier as consumption will exceed output, the USDA’s Foreign Agricultural Service said in a report in May.