Friday, July 27, 2012

20120727 1811 FCPO EOD Daily Chart Study.

FCPO closed : 2927, changed : +45 points, volume : higher.
Bollinger band reading : pullback correction little downside biased.
MACD Histogram : turned upward, seller reducing exposure.
Support : 2920, 2900, 2850, 2800 level.
Resistance : 2950, 2970, 3020, 3050 level.
Comment :
FCPO rebounded higher with better volume transacted. Soy oil currently registering gains after overnight decline by more than 1% while crude oil price currently rising higher.
Price rebounded after news on ECB pledge to save Euro send broad commodities price higher and Thailand will imports 30,000 tonnes of crude palm oil by end of August to prevent shortage supply due to bad weather has cut productions.
Daily technical chart reading remained suggesting 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.

20120727 1754 FKLI EOD Daily Chart Study.

FKLI closed : 1623.5 changed : +1.5 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 edge up little higher with ultra high volume traded doing 1.5 point discount compare to cash market that also closed marginally higher. Overnight U.S. markets rallied higher and today Asia markets closed higher while European markets currently swing between gain and losses.
Pledged by European Central Bank to save the Euro and rising speculation on additional stimulus measure by Federal Reserve ahead of tonight U.S. GDP figure(slower growth forecast) send global markets soaring higher.
However, FKLI technical chart study still calling a pullback correction upside biased market development with increasing rollover activities.
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.

20120727 1727 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.

20120727 1632 Global Markets & Commodities Related News.

GLOBAL MARKETS: Asian shares rallied, led higher by a strong result from smartphone maker Samsung Electronics, after the European Central Bank rejuvenated risk appetite and steadied the euro by signalling its resolve to defend the euro zone. European shares were set to extend the previous day's rally, driven by hopes of strong action by the European Central Bank after President Mario Draghi pledged to take all necessary steps to protect the euro zone from collapse. U.S. stocks rode a wave of hope inspired by comments from European Central Bank President Mario Draghi on Thursday, ignoring mixed corporate results to focus on the strongest signal yet of the ECB's intentions to protect the euro zone.  

FOREX: The euro steadied in Asian trading after rallying on European Central Bank chief Mario Draghi's vow to hold the euro zone together, as investors prepared for U.S. second-quarter gross domestic product data later in the session.

FOREX-Euro takes breather after Draghi sparks short-covering
TOKYO, July 27 (Reuters) - The euro steadied in Asian trading on Friday after rallying on European Central Bank chief Mario Draghi's vow to hold the euro zone together, as investors prepared for U.S. second-quarter gross domestic product data later in the session.  
The euro traded at $1.2294 , down from a two-week high of $1.2330 hit overnight but well above a two-year low of $1.2042 marked on trading platform EBS earlier this week. The next upside target is $1.2395-$1.2407, which is 50 percent retracement of the decline from 1.2748 on June 18 to this week's low.

U.S. jobless claims fall, still volatile due to auto jobs
The number of Americans filing new claims for jobless benefits fell last week to near a four-year low but an unusual pattern for summer factory shutdowns kept hopes in check that the weak labor market was improving.

CME Q2 profit beats view, CEO says climate challenging
July 26 (Reuters) - CME Group Inc , the biggest U.S. futures exchange operator, reported a better-than-expected second-quarter profit on Thursday, a bright spot amid the pall cast on the industry after the recent failures of two futures brokerages.
The collapse Of MF Global last October and of smaller Peregrine Financial Group this month have shaken investor confidence in the industry's ability to safeguard funds, ratcheting up the pressure on CME, which is already struggling to attract trading amid a sluggish and uncertain economic recovery.

ICE to end New York floor trading after 142 years
The 142-year-old tradition of floor-based open-outcry trading at the former New York Cotton Exchange is coming to an end as the last of its contracts -- options on futures tied to agricultural products such as sugar and cocoa -- go exclusively electronic.

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.

Largest U.S. farm lender watching legislative 'tug of war'
The worst U.S. drought in more than 50 years has exposed grain and especially livestock producers to substantial credit risks so farmers will count on Congress to deliver a new Farm Bill that addresses their needs, the head of the U.S. Farm Credit Administration (FCA) said.

China-Canada oil deal raises political hackles in Washington
The U.S. government should block a bid by China's state oil company CNOOC  for Canadian oil company Nexen  until China's government provides fair access for U.S. companies that want to invest in China, a top Democratic senator plans to tell Treasury Secretary Timothy Geithner on Friday.

OIL: Brent remained over $105 per barrel, buoyed by a European Central Bank pledge to protect the euro zone and hopes for fresh stimulus in the United States, though it stayed on track for its biggest weekly drop in more than a month.

Euro Coal-Prices steady, Oct ARA trades at $90/T
LONDON, July 26 (Reuters) - Physical prompt coal prices moved only slightly higher by around 25 cents on Thursday to touch $90.00 a tonne with an October DES trade, but activity remained minimal.
"The indexes (of benchmark prices) are not accurate - the market is really weaker than they show," one European trader said.

Iron Ore-Spot prices drift lower amid lacklustre Chinese demand
SHANGHAI, July 27 (Reuters) - Spot prices for iron ore cargoes to China extended losses, putting the index on course for its biggest weekly fall since October 2011, with buying interest from Chinese steelmakers still low despite a slight recovery in rebar futures prices.
"The majority of steel mills that I've spoken to remain pessimistic about the steel and iron ore market outlook in the near future, and a further fall to $110 a tonne isn't far away," said an iron ore trader in coastal Dalian city.

Italy partly closes ILVA steel plant after pollution probe
Eight executives linked to the ILVA steel plant in southern Italy have been placed under house arrest and prosecutors have ordered the plant's partial closure, in a clampdown on pollution which threatens thousands of jobs in an impoverished region.

PREVIEW-Brazil steel mills seen posting mixed earnings
SAO PAULO, July 26 (Reuters) - Brazil's steelmakers are likely to post mixed earnings in the second-quarter, when stronger sales volumes and prices are expected to have largely offset high inventory, costs and weak demand for some products, a Reuters poll of analysts showed on Thursday.
Results are seen reaffirming analysts' views that Brazilian mills, facing their worst industry crisis in years, are headed for a very gradual recovery. Better-than-expected data could help reverse drops in steel shares, which have priced in a grim quarterly profit outlook.

Japan June rolled copper output down 6.1 pct yr/yr
TOKYO, July 26 (Reuters) - Japan's rolled copper output fell 6.1 percent in June from a year earlier, hit by sluggish sales of air conditioners and weak demand for chips on the global market in the wake of a European credit woes.
June production fell to 67,953 tonnes after seasonal adjustment, in its 12th consecutive year-on-year decline, the Japan Copper and Brass Association said.

China's daily crude steel output rises near 2 pct in mid-July-CISA
SHANGHAI, July 27 (Reuters) - China's daily crude steel output rose 1.8 percent from early July to 1.993 million tonnes over July 11-20, data from the China Iron & Steel Association (CISA) showed on Friday.
CISA estimated China's total steel production based on its major members accounted for about 80 percent of the total production.

Vale says well-positioned for slowdown, eyes recovery
SAO PAULO/RIO DE JANEIRO, July 26 (Reuters) - Brazil's Vale  sought to reassure investors on Thursday that it is well-positioned to weather a slowdown in Chinese demand, a day after it posted its worst earnings results in two years.
On a conference call to discuss second-quarter results, Vale executives said the company's low-cost production model would help shield it from the drop in demand for metals. They also said the company expects the global iron ore market to rebound soon, even though prices show no signs of an imminent recovery.

BASE METALS: Copper edged higher, buttressed by returning confidence in the euro after the European Central Bank's chief reinforced a commitment to the single currency, while focus shifted to a key U.S. economic indicator later in the session.

PRECIOUS METALS: Gold held steady above $1,600 an ounce, on course for its biggest weekly gain in more than a month, after European Central Bank President Mario Draghi signalled the bank would do whatever was necessary to hold the euro zone together.

METALS-Copper edges up after Draghi; eyes US data
SINGAPORE, July 27 (Reuters) - Copper edged higher on Friday, buttressed by returning confidence in the euro after the European Central Bank's chief reinforced a commitment to the single currency, while focus shifted to a key U.S. economic indicator later in the session.  
Three-month copper on the London Metal Exchange  traded at $7,502 a tonne by 0244 GMT, up 0.43 percent and adding to small gains seen in the prior session.

PRECIOUS-Gold steady, heads for best week since mid-June
SINGAPORE, July 27 (Reuters) - Gold held steady above $1,600 an ounce on Friday, on course for its biggest weekly gain in more than a month, after European Central Bank President Mario Draghi signalled the bank would do whatever was necessary to hold the euro zone together.
Gold in the past few months has moved largely in tandem with the euro and riskier assets, with a relentless debt crisis in the euro zone chipping away at bullion's safe-haven appeal with investors piling into assets perceived safer, such as the dollar, yen and US Treasuries.

Baltic index drops on lower capesize, panamax rates
July 26 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell for the thirteenth straight time on Thursday, as sluggish activity continued to pull down panamax and capesize vessel rates.
"Demand continues for yet another week to lack the required momentum needded to allow any improvement in the capesize market. Both basins are showing limited interest and tonnage list have swollen considerably in both Australia and South America," said George Lazaridis, head of research with Greek shipbroker Intermodal.

20120727 1442 Global Markets & Commodities Related News.

GLOBAL MARKETS-ECB's Draghi warms risk appetite, lifts shares
TOKYO, July 27 (Reuters) - Asian shares rose and the euro held steady on Friday after the European Central Bank signalled its resolve to defend the euro zone, raising expectations it will move quickly to tackle skyrocketing borrowing costs in countries like Spain.
"Expectations have heightened after Draghi's remarks for the ECB to do something next week, along with an expected rate cut," said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.

COMMODITIES-ECB pledge lifts oil, metals; rain pressures grains
NEW YORK, July 26 (Reuters) - Oil rose for a third straight day on Thursday and most other commodities ended up as well after the European Central Bank pledged to do all it could to prevent a euro zone collapse.
"The comments by Draghi are likely to bring that confidence back," said Eugen Weinberg, head of commodities research at Frankfurt's Commerzbank.

UK natural gas future clouded by CO2
--Gerard Wynn is a Reuters market analyst. The views expressed are his own--
LONDON, July 26 (Reuters) - Natural gas has strong political support in Britain, shown by a tax break choreographed this week to balance support for wind power, but it is also on a collision course with the country's carbon emissions targets.
That pits the country's energy and climate change ministry against the Treasury, and ranges arguments for a green economy against affordability, splitting the coalition government and suggesting doubt will continue to cloud the fossil fuel's future.

OIL-Oil rises a third day on Draghi pledge, U.S. data
NEW YORK, July 26 (Reuters) - Oil futures rose for a third straight day on Thursday after a pledge by the European Central Bank to protect the euro zone  eased some worries about the region's debt crisis.
"The comments by Draghi are likely to bring that confidence back," said Eugen Weinberg, head of commodities research at Commerzbank.

NATURAL GAS-US natural gas futures end up, 6th gain in 7 sessions
NEW YORK, July 26 (Reuters) - U.S. natural gas futures ended higher on Thursday in a seesaw session, underpinned by a slightly supportive weekly inventory report and fairly warm weather forecasts for the next two weeks that should continue to lift demand and slow storage builds.
"Above normal temperatures still are a positive for natural gas prices even though the current forecast is not as severe as the temperatures actually were back in June," said the Energy Management Institute's Dominick Chirichella.

EURO COAL-Prices steady, Oct ARA trades at $90/T
LONDON, July 26 (Reuters) - Physical prompt coal prices moved only slightly higher by around 25 cents on Thursday to touch $90.00 a tonne with an October DES trade, but activity remained minimal. "The indexes (of benchmark prices) are not accurate - the market is really weaker than they show," one European trader said.

20120726 1003 Malaysia Corporate Related News.

Tycoon Ananda selling Maxis stake
Tan Sri Ananda Krishnan is selling up to 375m shares worth around RM2.35bn in Maxis, according to a source familiar with the deal. The shares are being priced at a range between RM6.21 and RM6.34 per share, representing a 3% to 5% discount to the last closing price of RM6.54. The deal follows a RM8.9bn sale of his power assets, a proposal to hive off a stake in his satellite operator MEASAT Global in March and the sale of a minor stake in offshore oilfield services firm Bumi Armada in April. (Malaysian Insider)

AirAsia swoops on Batavia Air for RM253m
AirAsia announced that it hsd acquired a majority stake of 76.95% in Batavia Air and will eventually complete the entire 100% by acquiring the remaining 23.05% from the public. The RM253m acquisition is the first for AirAsia in Indonesia, which is experiencing double-digit growth in air travel. “The Batavia Air acquisition will provide greater domestic connectivity and an extensive feeder network into Indonesia for AirAsia’s existing hubs in Jakarta, Bandung, Denpasar, Medan and Surabaya,” Tan Sri Tony Fernandes said. (Malaysian Reserve) Please see accompanying report

High-speed rail talks with Singapore to start soon
Discussions between Malaysia and Singapore on the high-speed rail project linking Kuala Lumpur and the island city-state is expected to commence soon, says a key official from the Land Public Transport Commission (SPAD). SPAD is in the second phase of a feasibility study which looks into the corridors, alignment, terminal points and the stops in-between. Its chief development officer Azmi Abdul Aziz said the high-speed rail is targeted to start next year with tenders to be called by end-2013. He confirmed that 95% of the investments for the project would be domestic-driven. (BT)

SapuraKencana secures RM250m-RM300m contracts
SapuraKencana Petroleum has secured two contracts worth RM250m-RM300m from Murphy Sarawak Oil. The contracts are for the provision of engineering, procurement, construction and commissioning of Patricia Satellite-A Platform and Serendah Accommodation-A Platform topsides facilities for the SK309/311 Serendah, Patricia & South Acis Development projects. These are part of Murphy Sarawak’s SK309/SK311 oil and gas field developments located offshore Bintulu. (StarBiz)

Menang awarded RM101m MOHE project
Menang has entered into a concession agreement with the Government to construct a University Institut Teknologi Mara (UiTM) training institute in Nilai, Negri Sembilan, costing about RM101m. The proposed project, awarded by the Ministry of Higher Education, will be carried out on a private finance initiative under a build-lease-maintain-transfer concept. The 23-year concession includes three years for construction and a 20-year lease to UiTM, during which Menang will maintain the institute. Menang will receive availability charges of RM1.3m monthly over the 20-year lease period from UiTM. It will also be paid RM0.4m monthly for asset maintenance services. (Malaysian Reserve)

MAHB: KLIA2 cost expected to remain at RM4bn
Malaysia Airports Holdings (MAHB) is expected to make an official announcement today stating that the cost for low-cost carrier terminal KLIA2 in Sepang has not swelled to RM5bn as alleged by some quarters. MAHB will also affirm that KLIA2 will stick to the April 2013 opening date as announced earlier. Sources told Business Times that the airport operator would stand by the earlier figure of RM4bn for the new low-cost carrier terminal and lay to rest concerns over speculation of a spiraling increase in cost. MAHB will clear the air on the matter at the company’s second-quarter result announcement this afternoon.  (Business Times)

MAHB: KLIA2 timeliness necessary to cool tension
Tan Sri Rafidah Aziz said timeliness and a concrete black and white commitment on fixed airport charges in the new low-cost carrier terminal is needed to cool down the ongoing tension between AirAsia Chief Tan Sri Tony Fernandes and Malaysia Airports Holdings (MAHB). The chairman of AirAsia X, the long-haul unit of AirAsia, said the no-frills airline was seeking two concrete commitments from the airport operator, first on when the new airport would be ready for operations and second, that airport charges would not be raised once the new terminal is ready. Asked whether AirAsia was demanding a service-level agreement, the former international trade and industry minister said "as long as there is something in black and white to say the charges would not be raised, it's fine with us”. (Business Times)

Petronas Chemicals, MISC: Fire breaks out on vessel in Labuan
Petronas Chemicals Group said there was a fire at its subsidiary, Petronas Chemicals Methanol Sdn Bhd in Labuan early Thursday. It said the fire broke out on board an MISC vessel, Bunga Alpinia, about 2.30am. It said the vessel was alongside the Petronas Chemicals Methanol terminal in Labuan when the incident took place. It added that based on preliminary assessment, the impact was minimal as it was limited to plant one deliveries only while plant two operations were unaffected.  Plant one has a capacity of 700,000 tonnes while the capacity at plant two was 1.7m tonnes. Petronas Chemicals said the Labuan Fire Department had taken action to put out the blaze. (StarBiz)

Parkson Holdings: Parkson Retail Asia moves into Sri Lanka with Odel buy
Parkson Retail Asia Ltd (PRA), the Singapore-listed department store unit of Parkson Holdings, is making a move into Sri Lanka as it expands its foothold in Asean and South Asia region. Parkson Holdings said PRA had acquired a 41.82% stake in Sri Lanka’s Odel Plc, which is listed on the Colombo Stock Exchange, for S$13.6m (RM34.3m). The stake was acquired from the Gunewardene family at about 9.8% premium to the weighted market price of Odel on Wednesday. (Financial Daily)

TSR Capital: Awarded RM330m MRT jobs
TSR Capital, through its wholly-owned subsidiary TSR Bina Sdn Bhd, has received two contracts from Mass Rapid Transit Corp Sdn Bhd, the concessionaire for the Mass Rapid Transit (MRT) project. It said the contracts were for work packages for the Klang Valley MRT line alignment between Sungai Buloh and Kajang costing RM330m. (StarBiz)

Integrax: Poised to seal 25-year TNB coal contract
Integrax is said to be close to sealing a 25-year port utilization agreement with Tenaga Nasional (TNB) for the handling of coal for the latter’s coal fired Janamanjung power plant in Manjung, Perak. It is believed that the deal would entail Integrax handling an additional 3m tonnes of coal per year for TNB’s new 1,000MW coal-fired power plant which is expected to be ready for commercial operations by 2015. The new agreement would be a substantial boost for Integrax as it would substantially increase its coal throughput at its deep-water terminal, Lekir Bulk Terminal (LBT) by 50% to 9m tonnes per year. (Financial Daily)

Dorab Mistry, director of Godrej International Ltd, is forecasting another retreat in palm oil prices as weakening demand outweighs a decline in Malaysian production. Malaysia will reap less than 18.6m tonnes, at least 2.1% below the goverment's 19m-tonne forecast, according to Mistry. "Production has actually underperformed, even worse than I expected," said Mistry. However, there is also mounting concern about demand as European economies sink back into recession and growth slows from China to Mexico. (StarBiz)

Malaysian rubber glovemakers say they are bracing for the implementation of the minimum wage policy and removal of natural gas subsidies, both of which will result in higher production costs. However, they intend to pass the incremental expenses to buyers to mitigate the impact from the implementation of both policies. The minimum wage is effective from 1 Jan 2013 and will prompt glovemakers to further automate their manufacturing processes. Meanwhile in anticipation that gas subsidies will be removed, glovemakers are diversifying their energy needs. Some have adopted the use of biomass to reduce their dependency on natural gas. (Financial Daily)

Advertisers increased their media spending only by a marginal 1.8% in the first half of the year (H1) to RM5.08bn (excluding Internet spending), according to the latest data from Nielsen Malaysia. The UEFA European Football Championship (Euro), which began on June 8, seemed to have little effect looking at the six-monthly data but adex for June itself managed to grow 8%. However, the growth was still below the double-digit (11.9%) annual growth recorded in 2011. The two biggest advertising media, newspapers and free-to-air television, attracted 0.4% and 3.8% less ad revenue respectively in the first six months compared with a year earlier. (Starbiz)

The heat is on for Penang Port as the Penang Chinese Chamber of Commerce (PCCC) comprising top businessmen, has offered to form a consortium to take over the port, rivalling a bid by tycoon Tan Sri Syed Mokhtar Al-Bukhary’s group. PCCC president Tan Sri Tan Kok Ping said funding would not be a problem subject to federal government’s approval for their proposal. “We object to Syed Mokhtar taking over Penang Port as this is against the spirit of the law anti-trust.” (Financial Daily)

20120727 1002 Global Economy Related News.

Philippines: Central bank cuts interest rate to a record low
The Philippines unexpectedly cut interest rates a third time this year to a record low, as easing inflation gives the central bank scope to spur growth while tempering the peso’s gains. Bangko Sentral ng Pilipinas reduced the rate it pays lenders for overnight deposits to 3.75% from 4%. “The decision to reduce borrowing costs is “a pre-emptive move against the risks associated with the global slowdown,” Governor Amando Tetangco said. At 3.75%, the benchmark rate is the lowest since central bank data started in 1990. (Bloomberg)

South Korea: Current account surplus widens to record on import decline
South Korea’s current-account surplus widened to a record in June as concern over slowing global growth capped consumer sentiment and demand for imports. The surplus was USD5.8bn, compared with a revised surplus of USD3.6bn in May. The surplus on traded goods was USD5bn last month compared with a revised USD1.7bn surplus in May. Total exports on a customs-cleared basis rose to USD47.3bn in June from USD47bn in May. Imports were at USD42.3bn, down from USD44.7bn May, partly due to falling oil prices. (Bloomberg)

Brazil: Consumer default rate falls for first time since March
Brazil’s consumer-loan default rate fell in June for the first time in three months, as the government’s drive to lower borrowing costs provides relief to indebted families. The consumer default rate declined to 7.8% from a revised 7.9% in May, while the company loan default rate slid to 4% from 4.1%. Average rates on consumer loans climbed 1.3 ppt to 37.8%, while rates on corporate loans fell 0.4 ppt to 23.4%. (Bloomberg)

EU: Draghi says ECB will do what’s needed to preserve Euro
European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, suggesting it may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. “To the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.” (Bloomberg)

US: Jobless claims in US decrease, extending July volatility
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending the period of volatility typically seen in July. Applications for jobless benefits decreased by 35,000 in the week ended 21 July to 353,000. The number of people continuing to collect jobless benefits shrank by 30,000 in the week ended July 14 to 3.29m. Those who have used up their traditional benefits and are collecting emergency and extended payments increased by about 27,000 to 2.59m in the week ended 7 July. (Bloomberg)

US stocks gain on Draghi pledge
US stocks snapped four days of losses and commodities rallied after European Central Bank President Mario Draghi pledged to preserve the euro. The Standard & Poor’s 500 Index climbed 1.7% to 1,360.02. The Dow Jones Industrial Average also rose 1.7% to 12,887.93 for the biggest gain in almost two weeks. The euro rose as much as 1.4% after touching USD1.2043 on 24 July, the lowest since June 2010. Of the 278 index members to have reported results this quarter, 72% have topped analysts’ projections. (Bloomberg)

20120726 1001 Global Market Related News.

Asia FX By Cornelius Luca - Thu 26 Jul 2012 16:52:51 CT (Source:CME/
The appetite for risk accelerated after European Central Bank President Mario Draghi said the central bank is prepared to take whatever measures needed to preserve the euro. That was a nice pep talk, obviously sufficient to trigger another short squeeze, but facts will need to back up the optimistic speech. More realistically, an economist at Citi said that there is a 90% chance of Greece leaving the euro zone over the next 12 to 18 months. The foreign currencies open little changed in the US after all but the pound recovered on Wednesday. The US stock markets, gold, oil and silver surged. 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: The initial jobless claims fell to 353,000 from the previous week's revised figure of 388,000 (from 386,000).
US: New orders for durable goods rose 1.6% in June and May's figures were revised upward to +1.6% percent from +1.1%. Excluding transportation orders, the durable goods orders fell 1.1% after rising 0.8%.
US: The pending home sales index fell 1.4% to 99.3 in June.

Today's economic calendar
Japan: National Consumer Price Index for June
Japan: Tokyo Consumer Price Index for July
Japan: Retail trade for June

Asian Stocks Rise a Second Day on Draghi Pledge for Euro (Source:Bloomberg)
Asian stocks rose for a second day, with the regional benchmark index paring its weekly loss, after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro. Konica Minolta Holdings Inc. (4902), a maker of photographic film that gets 28 percent of its sales in Europe, rose 4 percent in Tokyo. LG Display Co., which makes digital products, gained 6.6 percent in Seoul on expectations earnings will improve. Hitachi Chemical Co., a Japanese manufacturer of chemical products, jumped 6.4 percent after raising its profit forecast. The MSCI Asia Pacific Index rose 0.9 percent to 114.87 as of 10:10 a.m. in Tokyo before markets in Hong Kong and China opened. About six stocks advanced for each that fell on the measure, which has lost 1.5 percent this week.
“There’s a fear things are getting out of control, and so Draghi came out with a very strong statement in support of the market that they are going to do everything necessary to support the euro,” said Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “We are looking at a fairly strong finish to the end of the week.” 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 11.6 times estimated earnings as of yesterday, compared with 13.2 for the Standard & Poor’s 500 Index (SPXL1) and 10.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan Stocks Advance on Draghi’s Pledge to Preserve Euro (Source:Bloomberg)
Japan shares rose for a second day, with the Nikkei 225 Stock Average headed for its biggest gain in a month, after European Central Bank President Mario Draghi said policy makers will do whatever it takes to preserve the euro. Makita Corp. (6586), a maker of power tools that generates 42 percent of sales in Europe, advanced 3.7 percent. Nomura Holdings Inc. (8604), Japan’s largest brokerage, climbed 2.7 percent after its net income topped estimates. Nippon Steel Corp. (5401) rose 2.7 percent after the Nikkei newspaper reported that the company agreed to cut material prices for Toyota Motor Corp. The Nikkei 225 gained 1.2 percent to 8,540.76 at 10:06 a.m. in Tokyo, paring this week’s decline to 1.5 percent as it heads for a third week of losses. The broader Topix Index advanced 1.1 percent to 723.06, with more than four shares rising for each that fell.
“There’s pressure on Draghi to act,” Tony Crescenzi, a strategist at Newport Beach, California-based Pacific Investment Management Co., said in a Bloomberg TV interview. “Draghi has created an expectation that must be followed through on.” The Topix fell 17 percent from this year’s high on March 27 amid concern the U.S. and Chinese economies are slowing and that Europe’s debt crisis will worsen. The decline has left shares on the Topix valued at 0.9 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.4 for the Stoxx Europe 600 Index. A number below one means investors can buy companies for less than the value of their assets. Stocks in Japan fell this week as the yen rose to a 11-year high against the euro amid concern Greece may exit the currency bloc, hurting the outlook for exporters.

Dow Caps Biggest Gain in One Month Amid Draghi’s Pledge (Source:Bloomberg)
The Dow Jones Industrial Average (INDU) capped its biggest advance in almost a month after European Central Bank President Mario Draghi pledged to defend the euro. 3M Co. (V), the maker of Post-It Notes, and Visa Inc., the world’s largest payments network, rose at least 2 percent amid better-than-estimated earnings. PulteGroup Inc. (PHM), the nation’s largest homebuilder by revenue, surged 18 percent on a jump in orders. Sprint Nextel Corp. (S) and MetroPCS Communications Inc. rallied more than 20 percent after their results. Facebook Inc. (FB) fell 9.8 percent at 5:23 p.m. New York time after posting a narrower profit margin as sales and marketing costs surged.
Seven stocks rose for every three falling on U.S. exchanges at 4 p.m. New York time. The Standard & Poor’s 500 Index added 1.7 percent to 1,360.02. It fell 2.8 percent over the previous four days. The Dow gained 211.88 points, or 1.7 percent, to 12,887.93. Volume for exchange-listed stocks in the U.S. was 7.7 billion shares, or 15 percent above the three-month average. “It is a big deal,” said Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab Corp., which has $1.8 trillion in client assets. “The markets have been looking for a more definitive acknowledgement by key people like Draghi that they are willing to do what they need to do. We feel that if they want to save the euro, it would involve true QE,” she said, referring to bond buying to stimulate the economy.
Global stocks rallied and the euro rose by the most in almost a month against the dollar after Draghi suggested policy makers may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. The ECB mothballed its bond-buying program in March as it pushed governments to do more to control their deficits.

European Stocks Rally as Draghi Pledges to Preserve Euro (Source:Bloomberg)
European stocks climbed the most in almost a month, halting a four-day selloff, after European Central Bank President Mario Draghi said policy makers will do whatever it takes to preserve the euro. Banco Santander SA (SAN) surged 11 percent and UniCredit SpA jumped 9.2 percent, leading a rally in bank stocks. Unilever (UNA) rose 5.4 percent to the highest price in more than 20 years after sales beat analyst estimates. France Telecom (FTE) SA added 6.4 percent after it also reported results that topped projections. The Stoxx Europe 600 Index (SXXP) jumped 2.5 percent to 256.58 at the close of trading, for its biggest gain since June 29. The gauge had dropped 4.4 percent the previous four sessions as a surge in Spanish bond yields above 7 percent reignited concern that Europe’s debt crisis is yet to be contained.
“Policy makers don’t want the euro to break up and ultimately will take the necessary decisions to ensure that it keeps together,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about 4 billion pounds ($6.2 billion). “Spain really needs bond yields below 5 percent for the economy to be sustainable -- policy action has to follow.”

Emerging Stocks Rise Most in Week on Earnings, Stimulus (Source:Bloomberg)
Emerging-market stocks rose for the first time in five days as China announced measures to bolster growth in the world’s second-largest economy and investors bet central banks will take more actions to stimulate spending. The MSCI Emerging Markets Index (MXEF) gained 1.2 percent to 916.44 as of 5:10 p.m. in New York. Brazil’s Bovespa index advanced as pulp producer Fibria Celulose SA jumped after reporting a quarterly loss that was narrower than forecast. Mexican equities rose after Mexichem SAB (MEXCHEM*) reported earnings that beat estimates. Russian stocks gained 1.2 percent as oil, the nation’s chief export earner, rose for a third day. Local Chinese governments are expanding efforts to stimulate their regional economies after the country’s gross domestic product fell to a three-year low in the second quarter while growth in industrial production and retail sales slowed in June.
Stocks extended gains after European Central Bank President Mario Draghi said the ECB will do whatever is needed to preserve the euro. “These are indications that China’s government is going to stimulate, and they are in a better fiscal position than anyone to step on the gas,” Kevin Carter, co-founder and chief executive officer at Baochuan Capital Management LLC, where he helps oversee about $282 million, said by phone from Walnut Creek, California. “There’s been a lot of negativity in the market lately, and while sentiment could get worse, this is at least a short-term bounce.

Apple Sales Shortfall May Be Time to Buy Stock: Chart of the Day (Source:Bloomberg)
Anyone buying Apple Inc. (AAPL)’s stock after last quarter’s sales shortfall at the iPhone maker has history on their side, according to Gene Munster, a Piper Jaffray Cos. analyst. The CHART OF THE DAY shows how Apple performed after four earlier cases of disappointing quarterly revenue, as tracked by Munster. They occurred in fiscal 2006, 2007, 2008 and 2011, with iPhone sales trailing estimates in the latter case. Six months later, the shares were 23 percent higher on average. “It’s going to be an in-vogue stock again shortly,” Munster said yesterday in a Bloomberg Radio interview. He cited the pending introduction of the next iPhone model, known as the iPhone 5, which he expects in October. “We’re going to see a significant rebound in the December quarter, and that’s probably an understatement,” he said. The Minneapolis-based analyst rates Apple outperform, meaning he expects the stock to beat the median percentage change for companies he covers.
Apple’s revenue was $35 billion during the fiscal third quarter, which ended in June. Analysts expected $37.2 billion on average from the company, based in Cupertino, California, according to a Bloomberg survey. IPhone sales of 26 million trailed an average projection of 28.4 million.

Dollar Trades Near 2-Week Low Versus Euro Before U.S. GDP (Source:Bloomberg)
The dollar traded 0.4 percent from a two-week low against the euro before data today forecast to show the U.S. economy expanded at the slowest pace in a year. The greenback headed for a weekly loss versus most of its major peers as gains in global shares yesterday sapped demand for the currency as a refuge and amid speculation the Federal Reserve will engage in a third round of quantitative easing, or QE3. The euro maintained a two-day advance against the dollar and yen after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the 17- nation currency. “The combined possibility that the Fed begins to pave the way for QE3 and that we see, for instance, a reopening of the Securities Markets Program from the ECB would argue for a softer dollar and risk-on at least in the short-term,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. (WBC) in Sydney, referring to the respective asset-purchase programs of the U.S. and euro-area central banks.
The dollar was little changed at $1.2276 per euro as of 9:46 a.m. in Tokyo from the close in New York yesterday, when it touched $1.2330, the weakest since July 10. It has fallen 1 percent this week. The greenback fetched 78.22 yen from 78.21, set for a 0.3 percent loss since July 20. The euro traded little changed at 96.03 yen, after yesterday climbing 1.1 percent, the sharpest advance since June 29.

FOREX-Euro dips as Spain worries keep investors wary
LONDON, July 26 (Reuters) - The euro gave back some of the previous day's gains, with persistent worries about the possibility of Spain applying for a full bailout leaving investors inclined to sell the currency on any rally.
"The only thing that could change the downtrend in the euro is if the Fed launched further quantitative easing or some other additional policy measures. Otherwise it's all about what happens in the euro zone," said Richard Falkenhall, currency strategist at SEB in Stockholm.

Aussie Bonds Fall, Currency Holds Gains on Draghi Pledge (Source:Bloomberg)
Australia’s government bonds declined and the local currency maintained two days of gains against the dollar and the yen as Asian stocks extended a global rally, boosting investor appetite for riskier assets. The so-called Aussie dollar was poised for a second monthly advance after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro. ECB council member Ewald Nowotny said this week there were arguments in favor of giving the region’s rescue fund, the European Stability Mechanism, a banking license. Demand for the New Zealand dollar was limited on signs global growth is slowing. “The comments from ECB President Draghi echoed those from ECB council member Nowotny earlier this week about granting the ESM a banking license to increase its firepower,” said Gavin Stacey, chief rate strategist at Barclays Plc in Sydney. “You would expect the risk-on to last into the European session. The Australian dollar will benefit over the near term.”
Australia’s government bonds declined, pushing the yield on the 10-year security up by seven basis points, or 0.07 percentage point, to 2.90 percent as of 10:35 a.m. in Sydney. The three-year rate rose as much as 12 basis points to 2.37 percent, the highest since July 12.

Jobless Claims in U.S. Decrease, Extending July Volatility (Source:Bloomberg)
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending the period of volatility typically seen in July. Applications for jobless benefits decreased by 35,000 in the week ended July 21 to 353,000, Labor Department figures showed today. Economists forecast 380,000 claims, according to the median estimate in a Bloomberg News survey. Changes in the annual auto plant shutdowns that occur this time of year have made it difficult to adjust the data for seasonal variations, the Labor Department has said. Statistical noise aside, slowing economies in Europe and China, which have reduced global demand for goods, may continue to curb employment. The U.S. presidential election and a looming battle over tax cuts and government spending may also be making businesses reluctant to hire.
“All in all, the labor market is gradually healing,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We’ve got to take this report with a grain of salt. The jobs market is still tough and we’re setting ourselves up for a soft second half of the year.”

Orders Signal Slowdown in U.S. Business Spending: Economy (Source:Bloomberg)
A slump in June orders for equipment such as computers and machinery signals U.S. business investment will probably cool in the second half of the year and contribute less to the economic expansion. Bookings for non-defense capital goods excluding aircraft, a proxy for future corporate spending, dropped 1.4 percent, the third decrease in the past four months, according to Commerce Department data issued today in Washington. Another report showed claims for unemployment benefits declined more than forecast last week, which may have resulted from difficulty adjusting data for seasonal shutdowns of auto factories. Softening overseas demand, slowing U.S. consumer spending and gridlock in Washington over fiscal policy may prompt businesses to put off replacing old equipment, hurting profits at companies like Xerox Corp. (XRX) A report tomorrow is projected to show the world’s largest economy expanded in the second quarter at the weakest pace in a year.
“Business investment has definitely shifted lower,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York. The European debt crisis and fiscal cliff “will put downward pressure on orders, which will translate into weaker growth in the U.S.” Stocks jumped today as European Central Bank President Mario Draghi said the central bank will do whatever it takes to preserve the euro. The Standard & Poor’s 500 Index climbed 1.7 percent to 1,360.02 at the 4 p.m. close in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 1.43 percent from 1.40 percent late yesterday.

Pending Sales of U.S. Homes Unexpectedly Fell 1.4% in June (Source:Bloomberg)
Contracts to purchase previously owned homes unexpectedly dropped in June for the second time in the last three months, a sign of limited momentum in housing. The index of pending home resales decreased 1.4 percent to 99.3 after a revised 5.4 percent gain in May that was less than initially reported, figures from the National Association of Realtors showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 0.3 percent June increase. Slower job growth that’s holding down confidence and strict lending standards are restraining housing even with cheaper properties and mortgage rates at all-time lows. While acknowledging the improvement in housing, Federal Reserve Chairman Ben S. Bernanke said last week that policy makers are ready to take further action to boost an economy that faces a headwind from Europe’s debt crisis.
“One of the cruel facts of this current backdrop is that few people have really been able to take advantage of these historically low rates -- whether that’s by choice or force,” Tom Porcelli, chief U.S. economist for RBC Capital Markets LLC in New York, said before the report. “You really haven’t seen purchase applications pick up in any meaningful way at this stage.” Estimates in the Bloomberg survey of 34 economists ranged from a drop of 4 percent to a gain of 4 percent.

Democrats Exceed Republicans in Optimism for Record 18 Weeks (Source:Bloomberg)
Consumer confidence has been higher among Democrats than Republicans for a record 18 straight weeks, indicating that politics are driving perceptions of well-being. Confidence among Republicans fell to minus 45.1 in the week ended July 22, 47.9 points below their long-term average, according to the Bloomberg Consumer Comfort Index. Among Democrats, confidence was at minus 27.8, two points lower than their long-term average, although it did fall 4.2 points from the previous week. The current stretch of Democratic optimism surpassing that of Republicans is triple the previous record -- a six-week period encompassing the re-election of President Bill Clinton in November 1996. Republicans have been more hopeful than Democrats in data going back to 1990, in part because they tend to be more affluent, according to Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg.
“Historically voters have looked at politics through an economic lens,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California in Los Angeles. “Now they’re looking at the economy through a political lens.” Regardless of political affiliation, tepid job growth and unemployment stuck above 8 percent since February 2009 are hurting confidence, making consumers less likely to spend. The overall Consumer Comfort Index last week declined to minus 38.5, a two-month low, from minus 37.9, the survey showed.

China Cities Roll Out Stimulus as Changsha Targets $130 Billion (Source:Bloomberg)
The central Chinese city of Changsha unveiled an 829.2 billion yuan ($130 billion) investment plan, joining peers seeking to shore up local economies as national growth slows. Changsha, the capital of Hunan province, is wooing banks to finance 195 projects, which include an airport and subway lines and will take several years to complete, the official China News Service reported yesterday. Local governments are stepping up efforts to bolster the economy, with the cities of Nanjing and Ningbo saying over the last two weeks that they will introduce measures including tax cuts and incentives to boost consumption. Premier Wen Jiabao said July 10 that promoting investment is the key to stabilizing China’s growth, which has slowed for six quarters.
“We expect Changsha, Nanjing and Ningbo to be the start of a wave of nationwide stimulus packages, with more announcements from other local governments to come,” Shen Jianguang, Hong Kong-based chief Asia economist for Mizuho Securities Asia Ltd., said in a note yesterday. “With the central government’s tight controls on local government lending previously, there has been widespread panic among local governments in regard to the recent downturn.” Changsha’s plan “will be spread over the next few years and eventually the actual amount of investment recorded could be discounted to a third of its original target,” said Shen, who previously worked for the International Monetary Fund. Fiscal stimulus will be the focus of policy easing in the second half and the central government will expedite approvals of infrastructure investments to stabilize the economy, he said.

South Korea’s Current-Account Surplus Widens to Record (Source:Bloomberg)
South Korea’s current-account surplus widened to a record in June as concern over slowing global growth capped consumer sentiment and demand for imports. The surplus was $5.8 billion, compared with a revised surplus of $3.6 billion in May, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income. Asia’s fourth-largest economy grew at the slowest pace in almost three years last quarter, with BOK Governor Kim Choong Soo warning this week the nation risks failing to meet a 3 percent growth estimate for 2012. HSBC Holdings Plc and Citigroup Inc. have said policy makers may follow a July 12 rate cut with more easing this year.
“Imports declined across the board from capital goods to consumer goods, boding ill for the economy,” said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. “The quality of trade is deteriorating fast with both exports and imports shrinking. We may see another rate cut as early as next month.”

Brazil Consumer Default Rate Falls First Time Since March (Source:Bloomberg)
Brazil’s consumer-loan default rate fell in June for the first time in three months, as the government’s drive to lower borrowing costs provides relief to indebted families. The consumer default rate declined to 7.8 percent from a revised 7.9 percent in May, the central bank said in a report distributed today in Brasilia. The company loan default rate slid to 4 percent from 4.1 percent over the same period. Lower interest rates, higher income levels and a more conservative selection process by banks have caused default rates to fall, the central bank’s head of economic research, Tulio Maciel, told reporters in Brasilia today.
Since August, Brazil has cut the benchmark Selic rate 450 basis points to the record low 8 percent and pressured banks to lower rates on loans to accelerate a sluggish economic recovery. Easier credit access, a drop in delinquency rates and record-low unemployment will help drive consumption in the world’s second- largest emerging market, central bank President Alexandre Tombini told reporters July 23. Policy makers have also implemented growth measures such as tax breaks on automobiles and consumer goods.

Greek Budget Talks Stumble as EU Urges Samaras to Deliver (Source:Bloomberg)
Greek political leaders struggled to clinch agreement on an 11.5 billion-euro ($14 billion) package of budget cuts, as international creditors began a review of Greece’s progress that may determine its future in the euro. Prime Minister Antonis Samaras and his coalition partners, Evangelos Venizelos of Pasok and Fotis Kouvelis of Democratic Left, are to meet again on July 30 to determine the savings required to receive the funds pledged under Greece’s two rescue packages totaling 240 billion euros. European Commission President Jose Barroso urged Samaras to make good on promises. “The key word here is deliver,” Barroso said after meeting the premier, the first visit to Greece by a senior European Union official in more than a year. “Deliver, deliver, deliver. The delays must end. Words are not enough.”
Greece, which held consecutive elections in May and June as public opposition to spending cuts grew, risks running out of money without the disbursement of 4.2 billion euros due last month as the first instalment of a 31 billion-euro transfer. Citigroup Inc. (C) said there’s now a 90 percent chance Greece will leave the euro in the next 12 months to 18 months. The coalition government leaders met after Finance Minister Yannis Stournaras held his first talks of the review with the “troika” of officials representing the euro area, the European Central Bank and the International Monetary Fund.

Draghi Says ECB Will Do What’s Needed to Preserve Euro: Economy (Source:Bloomberg)
European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, suggesting they may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. “To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said in a speech at the Global Investment Conference in London today. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.” Financial markets surged on speculation the ECB will act to lower Spanish borrowing costs after yields on the nation’s bonds rose to levels that prompted bailouts for Greece, Portugal and Ireland. The ECB reluctantly started buying Spanish and Italian debt in August last year as part of its bond purchase program. The buying had little lasting effect and the ECB suspended the program in March.

Spain at 7% Stresses Inadequacies of Rescue Options: Euro Credit (Source:Bloomberg)
Money managers with more than $800 billion are betting European policy makers can only offer Spain a temporary respite from record borrowing costs. Yields on Spain’s two-, five-, 10- and 30-year government securities climbed to euro-era highs this week amid speculation the nation will need a bailout to backstop its regions and banks. While the Organization for Economic Cooperation and Development called for the European Central Bank to buy Spanish debt, investors including AllianceBernstein Ltd. and M&G Group Plc said policy makers are hamstrung in how to rescue an economy twice the combined size of Greece, Ireland and Portugal. “This crisis is unprecedented so the responses need to be unprecedented,” said Arif Husain, the London-based director of European fixed-income at AllianceBernstein, which oversees $407 billion. “Anything the ECB can do would prove temporary. The whole problem is that anything that’s happening at the moment is unconvincing, and markets hate uncertainty.”
Spain’s 10-year yield reached as much as 7.751 percent yesterday, and was at 7.05 percent as of 12:20 p.m. London time. Five- and 30-year yields also reached the most since the common currency was introduced in 1999 this week, while the cost of insuring against a default climbed to its highest ever.

20120727 1001 Global Commodities Related News.

Gauging The Effects of the 2012 Drought (Source:CME)
One of the worst U.S. droughts in 50 years is striking the Midwest, withering crops in their fields and sending corn and soybean futures to all-time record price highs.
The Midwest experienced some of the driest Junes and Julys in history and the abnormally high temperatures and low rainfall may continue into autumn. The National Weather Service said in mid-July that the normal temperatures and below-normal precipitation could persist from August through October. The worst of the adverse weather is in the eastern Midwest, but several market watchers said if the conditions persist, this could spread to the western Midwest, too.
That means farmers and traders will likely be dealing with the weather market for a while, possibly until harvest. That could mean volatile price action so both market users need to be nimble.
Ken Morrison, founder and editor of online commodities newsletter, Morrison on the Markets, remembers the last big weather market for grains was the year most people use to compare to this year – 1988.
“The behavior is similar,” he says. “I was trading. I was in charge of Cargill’s minor grains trading – oats, grain-sorghum and barley. In 1988 it was just as volatile. That year, oats went premium to corn. It was one of the wildest summers we had. In that degree (minor grains) it was wilder and more volatile than even this market.”
That volatility means traders need to be cautious. He explains: “Most traders are just trading smaller sizes, not changing their strategies. Whenever volatility gets like this it happens. If you usually trade a 50-lot before, now you trade five lots. That’s pretty common.”

What Now?
Mike Zuzolo, president, Global Commodity Analytics and Consulting, advises farmers how to hedge their agriculture production. Zuzolo is in Lafayette, Ind., in the heart of the worst of the drought for that state. Because of the intensity of the dryness, he urges his clients to focus on their local cash basis and be in contact with their grain elevator. Specifically, he tells them not to be in a hurry to lock in basis, especially if their test yields are coming in lower than expected. Basis is the difference between the futures price and local cash grain prices.
“First call your wife, then call your elevator, because everyone is probably going through the same scenario… If the reports are as bad … the elevator is going to have to raise basis calls in order to get grain,” Zuzolo says, adding that farmers need to review their crop insurance options to help limit downside risk.
He says in a ballpark estimate, some Indiana fields may see 70 percent to 80 percent loss.
Iowa farmer Pam Johnson, who farms 1,200 acres with her husband in Floyd, Iowa, divides her acreage between corn and soybeans. While not nearly as damaged as some crops east of the Mississippi river, her fields are under stress. Johnson, who is also first vice president for the National Corn Growers Association, says since June, Iowa corn crops have received a fraction of the one inch per week rain that corn needs to have optimal yield.
In June, Iowa crops received 1.55 inches for the month and as of July 19, they received seven-tenths of an inch. Her corn crops are done pollinating – and they pollinated under severe heat stress – so there’s little that can help boost yield at this point. Johnson said she’s expected yields to be down at least 10 percent this year.
“The beans, too, they’re suffering, but if they get rain soon they could recover,” she says, adding that soybeans have not pollinated yet. Pollination is when crops set yield.

“No Bowl of Cherries” for Livestock
Grain farmers have been the focus of this year’s drought, but cattle farmers are facing more problems – both high grain prices and stressed animals because of the heat.
“It’s really hard on them (the cattle),” says Lester Aldrich, a broker at Zia Commodities, a private ag consultancy with cattle clients in Texas and Kansas. “You can just see it on them when they get off the trucks. They’re hot, they’re tired, they’re thirsty.” He adds that heaviest-weight cattle can sometimes fall ill just before slaughter. So far, though, there are few reports of death losses, he says.
Feedlot operators who have no hedges are likely losing anywhere from $150 to $250 per head because of the price of corn has jumped nearly 50 percent from mid-June to mid-July. “The breakevens for cattlemen are just awful,” Aldrich says. “It’s just the pits. There’s no bowl of cherries for them at all.”
For farmers looking to hedge 2013 production or for traders looking to put on longer-dated trades, Morrison says, wait: “Fundamentally I find it difficult to short the back months because of the big discount to the front months. You never know how the front months will correct.”

Pro Farmer: After the Bell Wheat Recap(Source:CME)
Wheat futures saw choppy trade today and heavily favored the downside into the close. Chicago wheat ended 1 1/4 to 19 1/4 cents lower; Kansas City wheat closed mostly 6 3/4 to 14 cents lower. Minneapolis wheat futures ended with losses in the teens to 20s. Nearby contracts led losses at all locations. Wheat futures need strength in the corn market to rally; when that faded this morning, wheat futures also softened. Adding incentive to take profits was a disappointing weekly export sales tally of 367,000 metric tons (MT) for 2012-13.

Wheat Market Recap Report (Source:CME)
September Wheat finished down 19 1/4 at 884, 20 1/2 off the high and 10 1/4 up from the low. December Wheat closed down 17 3/4 at 897 1/4. This was 10 1/4 up from the low and 19 1/4 off the high. September Chicago wheat traded sharply lower into the close with KC and Minneapolis following. The wheat complex is still uncertain as to how low Russia wheat production really is. This has sparked rumors that Russia may enact export restrictions, however local analysts believe supply is healthy enough to withstand this type of action. The Russian Agricultural Ministry estimates their 2012 grain harvest at 80-85 million tonnes which is unchanged from prior forecasts. The wheat market set aside the Russian news and followed corn lower on the day. The Wheat Quality Council wrapped up their US Spring Wheat crop tour today and pegged the US yield at 44.9 bushels/acre vs. 41.5 bushels/acre in 2011. Export sales were disappointing this morning with Net weekly export sales for wheat, came in at 367,000 metric tonnes for the current marketing year and none for the next marketing year. Traders were expecting sales near 500,000 tonnes. As of July 19, cumulative wheat sales stand at 25.7% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 30.0%. Sales of 536,000 metric tonnes are needed each week to reach the USDA forecast. September Oats closed down 3 1/4 at 369 1/2. This was 3 1/2 up from the low and 2 1/2 off the high.

Pro Farmer: After the Bell Corn Recap(Source:CME)
Corn futures ended low-range with the September and December contracts down 13 1/4 and 11 3/4 cents, respectively. Other contracts posted losses of 4 to 9 cents. Corn futures enjoyed slight gains this morning thanks to a sharply weaker U.S. dollar index and recognition recent and forecast rains will at best stabilize the crop. But spillover from soybeans and net sales reductions for the 2011-12 and 2012-13 marketing years in this morning's Weekly Export Sales Report that signal high prices have reduced export demand gave bears the advantage.

Corn Market Recap for 7/26/2012(Source:CME)
September Corn finished down 13 1/4 at 781 1/4, 18 1/4 off the high and 5 up from the low. December Corn closed down 11 3/4 at 776 1/4. This was 5 1/4 up from the low and 17 1/4 off the high. December corn traded sharply lower into the closing bell. The lower trade is linked to showers that moved across the US Midwest overnight and this morning plus very poor export sales. The corn market is struggling to find new buyers as signs of demand destruction are beginning to show up. The showers provided slight relief to soil moisture and some corn acreage. Temperatures are expected to cool over the weekend but another ridge is expected to set up in the western Midwest by next week. Warm and dry weather is expected in the central and western Midwest with a better chance for showers and cooler temperatures in the northern and eastern Midwest. Net weekly export sales for the week ending July 19th came in at -9,100 tonnes for the current marketing year and -131,300 tonnes for the 2012/13 marketing year for a total of -140,400. The negative sales were due to Chinese corn cancelations. Cumulative corn sales stand at 96.3% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 99.2%. Sales of 240,000 metric tonnes are needed each week to reach the USDA forecast. Outside markets were supportive today but the technical sell signals were hard to overcome. September Rice finished down 0.185 at 15.38, 0.12 off the high and equal to the low.

GRAINS-Soy falls 2 pct on Midwest rain forecast, wheat down
SINGAPORE, July 26 (Reuters) - 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.
"In terms of the outlook for soybeans, there is still chance to improve with rain forecast but for corn what is done is done," said a Melbourne-based agricultural commodities analyst.

India's scant rains won't hit rice, cane output-Food Min
NEW DELHI, July 26 (Reuters) - India's rice and cane production are not expected to be hit by the poor monsoon rains, Food Minister K.V. Thomas said on Thursday.
India, the world's second biggest producer of rice and sugar, is implementing contingency plans as rains in the current monsoon season are around 22 percent below average.

India ministers to meet on drought-Farm Minister
NEW DELHI, July 26 (Reuters) - India's farm minister raised the prospect of drought for the first time this year, saying on Thursday officials would discuss next week the so-far meagre monsoon rains that are key to the economy of this major consumer and producer of food crops.
Farm Minister Sharad Pawar said members of the Empowered Group of Ministers (EGoM) on drought would meet as early as Tuesday for the first time since 2009, which saw the driest monsoon in nearly four decades.

Drought-hit corn overshadows good crops in Illinois
CORALVILLE, Ill., July 25 (Reuters) - The corn crop in central and western Illinois showed lower yield potential than last year as the worst U.S. drought in decades eroded grain production in the country's second largest corn growing state, scouts on a crop tour reported on Wednesday.
Corn in the typically high production areas of the state was under clear stress from temperatures that reached the triple-digits Fahrenheit at midweek, with leaves on many plants dried and brittle.

Vietnam Jan-July rice exports dip 2 pct on year
HANOI, July 26 (Reuters) - Vietnam's rice exports between January and July eased 2 percent from the same period last year to an estimated 4.62 million tonnes as key buyers the Philippines and Indonesia cut purchases of the grain, the Agriculture Ministry said on Thursday.
Rice export revenues in the seven-month period also fell an estimated 8.7 percent from a year ago, to $2.12 billion, the ministry said in its monthly report for July.

Spring wheat in northwest North Dakota above average-U.S. tour
DEVILS LAKE, North Dakota, July 25 (Reuters) - Favorable growing conditions should result in above-average yields for the U.S. spring and durum wheat crops in northwest North Dakota, scouts on an annual crop tour said Wednesday.
Wheat in northern North Dakota benefited from timely rains after planting in April and adequate moisture this summer even as a historic drought ravaged corn and soybean crops farther south, in the core of the Corn Belt.

Vietnam quickly running down coffee stocks -assoc
HANOI, July 26 (Reuters) - Vietnamese coffee farmers have been selling their crop quickly in the 2011/2012 season, meaning no stocks are likely to be brought forward for loading in the first period of the next crop year, an industry official said on Thursday.
Low stocks in Vietnam, the world's second-largest producer after Brazil, before the next harvest picks up, could boost robusta prices.

Big US crop insurers say losses manageable despite drought
July 25 (Reuters) - Two of the largest crop insurers in the United States played down concerns over the financial impact of the worst drought in more than 50 years, saying they expected only modest losses even as claims rise to record levels.
Wells Fargo's  RCIS and Ace Ltd's  Rain & Hail and said this week that between careful underwriting and reinsurance, they could handle what many expect to be billions of dollars in total payouts for crop losses this year.

Drought still stressing US crops despite showers
CHICAGO, July 25 (Reuters) - Rainfall this week and more rain for the next 10 days will boost crop prospects in the northern and eastern U.S. Midwest, but crops in the rest of the growing region will still struggle against extreme heat and drought, an agricultural meteorologist forecast Wednesday.
"There is improvement in the north and east, and we expect more showers today and tomorrow in the west central to northwest," said Don Keeney, meteorologist for MDA EarthSat Weather.

SOFTS-Sugar slips as Brazil harvest progresses, cocoa up
LONDON, July 26 (Reuters) - Sugar futures fell as Brazil's harvest picked up pace and weather conditions in India improved, while cocoa and coffee edged higher. Sugar futures dipped in early trading following higher than expected sugar production data from Brazil's industry association on Wednesday and forecasts for improving monsoon rains in key producer India.

Mexico 2012/13 sugar crop seen up 5 pct yr/yr-cane union
MEXICO CITY, July 25 (Reuters) - Mexico's national cane growers union said on Wednesday the coming 2012/13 sugar harvest, which begins in November, will reach 5.3 million tonnes, a 5 percent jump from the current cycle that ended this month.
Mexico produced 5.048 million tonnes of sugar in the 2011/12 season, said Carlos Blackaller, the head of the union that groups cane farmers across the country.

Brazil's sugar mills at full throttle in early July
July 25 (Reuters) - Brazil's center-south cane mills kicked into high gear in early July after rains receded, producing more sugar and ethanol than a year before for the first time this season, the milling industry association Unica said on Wednesday.
Although cumulative sugar output since the start of crushing in April remains 22 percent behind last year, mills churned out nearly a third of the total sweetener produced so far this season in the first two weeks of July, Unica said.

Sugar Traders Most Bearish Since April on Brazil: Commodities (Source:Bloomberg)
Sugar traders are the most bearish in three months on speculation that drier weather will accelerate harvesting in Brazil, the world’s largest producer. Ten of 16 analysts surveyed by Bloomberg said they expect raw sugar to drop next week and three were bullish. A further three were neutral, making the proportion of bears the highest since April 13. Sugar output in Brazil’s center south, the biggest producing region, rose 2 percent in the first half of this month, industry group Unica said July 25. Cane-growing areas will be mostly dry through the start of August, according Somar Meteorologia, a Sao Paulo-based weather forecaster. Prices rebounded from a 21-month low last month and entered a bull market on July 9 after rain in May and June delayed Brazil’s harvesting and exports. Sugar is now poised for its worst weekly performance since March as the drier weather eased concern about the crop and refocused attention on the prospects for a glut.
Czarnikow Group Ltd., which traded the commodity in 90 countries last year, is forecasting a second consecutive surplus in the season that starts Oct. 1. “The harvest in Brazil is catching up and that is a good bearish signal for the market,” said Jonathan Bouchet, a trader at Boman Capital SA, a Geneva-based hedge fund. “The weather in South America at the moment is adequate to harvest and ship, which will increase supplies and keep pressure on prices.”

Oil Rises for Third Day on U.S. Economy, Euro Pledge (Source:Bloomberg)
Oil rose for a third day as U.S. reports on durable goods and jobless claims reduced concern that economic growth is slowing, and the head of the European Central Bank pledged that the euro will survive. Prices gained 0.5 percent as bookings for goods meant to last at least three years climbed more than projected in June and fewer Americans than forecast filed first-time claims for unemployment insurance payments last week. ECB President Mario Draghi said policy makers will do whatever is needed to preserve the European common currency. “The bullish economic news is the main thing pushing oil prices up, and it does look a little more like we are seeing a turnaround in the economy,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Draghi said they are going to defend the euro and it gave the market more confidence.”
Crude for September delivery rose 42 cents to settle at $89.39 a barrel on the New York Mercantile Exchange. Prices have increased 15 percent from the year’s closing low of $77.69 a barrel on June 28. Brent oil for September settlement climbed 88 cents, or 0.8 percent, to end the session at $105.26 a barrel on the London- based ICE Futures Europe exchange. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said in a speech at the Global Investment Conference in London today. “Believe me, it will be enough.”

OIL-Brent falls below $104, gloomy demand outlook weighs
LONDON, July 26 (Reuters) - Oil prices dropped below $104 a barrel as a stronger dollar weighed and disappointing corporate earnings contributed to a gloomy outlook for demand growth.
"We have to keep in mind that next Wednesday there is a U.S. Fed FOMC meeting which will create some short-term flat price volatility," wrote Olivier Jakob of Petromatrix in a note on Thursday.

Libya sees return to pre-war oil output in Oct
TRIPOLI, July 26 (Reuters) - Libya expects to be back to pre-war oil production in October, later than previously forecast due to interruptions and the slow return of oil services firms to the North African country, Deputy Oil Minister Omar Shakmak told Reuters.
Output has climbed back close to pre-war levels of 1.6 million barrels per day (bpd) since a virtual standstill during last year's uprising that ousted Muammar Gaddafi but protests and interruptions have dealt the sector several setbacks.

NORWAY GAS-Flows to Europe rise on higher exports to Germany
OSLO, July 26 (Reuters) - Norwegian gas flows to Europe rose by 8.3 percent on Thursday morning from the previous day average on increased exports to Germany.
Supplies to Europe rose to 283.8 million cubic metres (mcm) at 0700 GMT on Thursday from Wednesday's average of 262.1 mcm, data from Norway's gas system operator Gassco showed.

20120727 1000 Soy Oil & Palm Oil Related News.

Pro Farmer: After the Bell Soybean Recap (Source:CME)
Soybean futures faced pressure most of the day and softened into the close to settle low-range with losses of 34 1/4 to 48 cents in the August through March 2013 contracts; farther deferred months saw lighter losses. Soymeal futures posted sharp losses, while soyoil futures were moderately lower. Soybean futures initially held up well in the face of profit-taking thanks to a weaker dollar and an export sales tally that topped expectations and signaled significant demand rationing has yet to take place.

Soybean Complex Market Recap (Source:CME)
August Soybeans finished down 38 1/2 at 1655 3/4, 41 1/4 off the high and 7 up from the low. November Soybeans closed down 48 at 1567 1/2. This was 6 up from the low and 47 1/2 off the high. August Soymeal closed down 11 at 518.8. This was 4.3 up from the low and 17.2 off the high. August Soybean Oil finished down 0.56 at 51.68, 0.67 off the high and 0.18 up from the low. August and November soybeans traded sharply lower into the close today after storm systems pushed across the Corn Belt last night and this morning. Technical sell signals pressured soybeans towards the low end of the range as funds continue their profit taking this week. The rain likely stabilized topsoil conditions in the Midwest and offered relief to soybean crops in certain areas. Another ridge is expected to build in the western Midwest next week bringing on another round of warm and dry conditions for the central Midwest. Net weekly export sales for the week ending July 19th, came in at 193,200 tonnes for the current marketing year and 517,300 for the next marketing year for a total of 710,500. Cumulative soybean sales stand at 105.0% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 101.3%. Current sales continue to outpace the USDA export forecast for the 2011/12 marketing year. Net meal sales came in at 150,500 tonnes for the current marketing year and 106,500 for the next marketing year for a total of 257,000. As of July 19, cumulative soybean meal sales stand at 95.0% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 88.4%. Sales of 40,000 tonnes are needed each week to reach the USDA forecast. Soybean oil sales came in at 7,200 tonnes for the current marketing year and -6,000 for the next marketing year for a total of 1,200. Cumulative soybean oil sales stand at 92.3% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 81.1%. Sales of 4,000 tonnes are needed each week to reach the USDA forecast. The strong export sales pace for soybeans, year to date, continues to be supportive to prices going forward.

VEGOILS-Palm oil slips on favourable U.S. weather
SINGAPORE, July 26 (Reuters) - Malaysian crude palm oil edged down in a quiet trading session as investors turned more cautious on forecasts of rain in parts of U.S. Midwest that could offer some relief to drought-hit soy crop.
"Cautious mode certainly prevailed as observed in a low volume trading session," said a dealer with a foreign commodities brokerage in Malaysia. "Range trading should continue until further signal from production data."