Wednesday, September 5, 2012
Bollinger band reading : pullback correction upside biased.
MACD Histogram : weakening, buyer closing position.
Support : 2970, 2950, 2920, 2900 level.
Resistance : 3020, 3050, 3070, 3100 level.
FCPO plunged lower by more than 2% with slower volume transacted. Soy oil currently trading lower after overnight rise nearly 2% while crude oil trading weaker after yesterday downward correction.
Long liquidation activities sent price lower on global economy slowdown concern and after Reuters survey shows rising inventories level.
Daily chart study adjusted to calling a pullback correction upside biased market development possibly testing support near middle Bollinger band.
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.
Posted by MW Chong at 6:18 PM
Bollinger band reading : side way range bound with possible pullback correction.
MACD Histogram : resume falling, seller taking exposure.
Support : 1630, 1623, 1615, 1600 level.
Resistance : 1640, 1650, 1660, 1670 level.
FKLI closed recorded substantial loss with increased volume changed hand doing 6 points discount compare to cash market that also closed lower. Overnight U.S. market traded lower and today Asia markets ended weaker again while European markets currently having mixed development.
Negative sentiment picking up across the world after overnight U.S. manufacturing declined, today lower China PMI reported and Australia slower than expected 2nd quarter economy growth while investors focus on ECB policy meeting.
FKLI daily chart reading revised to suggesting a side way range bound with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.
Posted by MW Chong at 5:34 PM
DJIA chart reading : side way range bound little downside biased.
Hang Seng chart reading : downside biased with possible pullback correction .
KLCI chart reading : correction range bound little upside biased.
Posted by MW Chong at 5:00 PM
GLOBAL MARKETS: Asian shares slid to near six-week lows and the euro fell, as investors turned edgy ahead of a pivotal European Central Bank meeting on Thursday and U.S. payroll data on Friday. European shares were expected to open little changed, pausing after sharp losses in the previous session, in a sign sentiment was still underpinned by expectations that central banks will take a active role in tackling the global financial crisis. The S&P 500 closed slightly lower on Tuesday as investors continued to await clarity on European Central Bank plans to shore up heavily indebted countries, but the market ended off its lows on a rally in Apple Inc. (Reuters)
FOREX-Euro slips but support seen intact as ECB awaited
TOKYO, Sep 5 (Reuters) - The euro dipped slightly against the dollar in Asian trading on Wednesday, but support for the single currency stayed intact a day ahead of a European Central Bank meeting that is expected to unveil more details of a long-awaited debt-buying plan.
The European unit was down 0.3 percent at $1.2526 , off its Tuesday session high of $1.2629 but still not far from Friday's high of $1.26378 on trading platform EBS, which was its strongest level since early July.
FOREX: The euro dipped slightly against the dollar in Asian trading, but underlying support for the single currency stayed intact ahead of a European Central Bank meeting on Thursday that is expected to unveil details of a long-awaited debt-buying plan.(Reuters)
Pressure mounts on ECB to bring down bond yields(Reuters)
France and Italy piled more pressure on the European Central Bank on Tuesday to agree steps this week to reduce crippling borrowing costs for southern euro zone states.
Manufacturing another headache for U.S. economy(Reuters)
U.S. manufacturing shrank at its sharpest clip in more than three years last month, while separate data showed exports and hiring in the sector slumped in another shot to the country's struggling economy.
U.S. corn harvest 10 pct done; a record but below forecast(Reuters)
U.S. farmers made little progress in harvesting corn during the past week as rains related to Hurricane Isaac kept them out of their fields, but the harvest was still at a record pace because early planting and the summer's drought caused the crop to mature earlier than usual.
GRAINS: Chicago wheat eased, falling for a fourth consecutive session as rains across the U.S. Plains improved the prospects for winter crop planting and as exports from the Black Sea region continued to pressure the market. (Reuters)
Importers to snap up Russia wheat, wary of export plans
HAMBURG, Sept 4 (Reuters) - Major importers will quickly buy up Russian wheat in coming weeks, wary of the drought-hit country's plans even after the key global supplier said it would not restrict grain exports, traders said on Tuesday.
Russia's government, coping with a drought which has slashed grain yields by more than a quarter, said on Friday it would not restrict grain exports even if its exportable surplus was exhausted.
Euro Coal-Stable, bearish signals from China
LONDON, Sept 4 (Reuters) - Physical coal prices in Europe held steady for the second day on Tuesday, supported by oil which rose in early trading and largely ignoring bearish fundamentals.
There were too many variable price-driving factors currently at work for the market's direction to be clear, traders and end-users said.
China coal under more pressure as demand falters
BEIJING, Sept 4 (Reuters) - China's coal prices, already near a two-year low, are likely to fall further as industrial demand growth slows and imports add to pressure on domestic stocks, i nd ustry officials said on Tuesday.
Benchmark prices in China, the world's top producer and importer of the fuel, have been lolling at two-year lows of 626 yuan ($98.50) a tonne since end-July amid a global supply glut.
High global oil prices cause for concern-IEA chief(Reuters)
High global oil prices are a cause of concern for the International Energy Agency, the head of the body which represents 28 importing countries said, although crude markets were better supplied than those for refined fuels.
OIL: Brent futures hovered in a tight range near $114 a barrel on caution ahead of a keenly awaited European Central Bank meeting, while global growth concerns deterred buyers.(Reuters)
Europe's spare copper stuck in Glencore's Dutch warehouses (Reuters)
A warehouse company owned by commodity trader Glencore has attracted most of Europe's scarce copper stocks to its backlogged warehouses in the Dutch port of Vlissingen, exacerbating a supply squeeze for product makers.
BASE METALS: London copper was steady, supported by hopes that central banks will announce new plans to lift global growth following a boost to China's railroad spending and ahead of a European Central Bank meeting on Thursday. (Reuters)
PRECIOUS METALS: Gold inched lower, pulling back from a near six-month high in the previous session after weak U.S. data reinforced speculation of imminent stimulus action, as investors await a key meeting of the European Central Bank this week. (Reuters)
China steel use in home building won't peak until 2024-RBA study
SYDNEY, Sept 5 (Reuters) - China's demand for steel to build homes will not peak for another 12 years, a study from the Reserve Bank of Australia (RBA) predicts, boding well for the outlook for Australia's iron ore exports.
In a study paper on Chinese residential construction, RBA researchers Leon Berkelmans and Hao Wang used projections of urbanisation rates, building size and construction quality to estimate that steel use would not peak until 2024 when it would be 30 percent higher than in 2011.
Flagging China zinc demand hits hopes for increased Q4 use -trade
HONG KONG/SINGAPORE, Sept 4 (Reuters) - China's demand for refined zinc weakened further in August from July, traders said on Tuesday, diluting hopes for a fourth-quarter rise in consumption in the world's top consumer of the metal.
China's worsening demand could pressure benchmark London Metal Exchange zinc prices , which have already fallen nearly a sixth from the year's high struck in January, thanks to a global economic slowdown.
INTERVIEW-Brazil iron mining outlook undimmed by price drop
RIO DE JANEIRO, Sept 3 (Reuters) - Investment in new Brazilian iron ore mining capacity will be strong for at least two to three years despite plunging prices and problems in China and Europe that could sap demand, according to Brazil's state development bank BNDES.
While the bank's total mine lending fell 45 percent in the first six months of the year, demand for credit by Brazilian and foreign companies suggest that final 2012 lending may be close to the 3 billion reais ($1.48 billion) loaned for mine projects in 2011, Guilherme Cardoso, chief of BNDES's basic industry department, and department manager Pedro Landim told Reuters late Friday.
Iron ore near 3-year trough, Shanghai steel at record low
SINGAPORE, Sept 5 (Reuters) - China steel futures fell to an all-time low on Wednesday as poor demand in the world's top steel market kept the pressure on prices, sending iron ore further below $90 a tonne to its weakest since October 2009.
Iron ore has dropped 36 percent since early July, the main casualty among industrial commodities of China's slowdown, and analysts say the downturn still has momentum.
METALS-Copper finds support on stimulus hopes ahead of ECB meeting
SINGAPORE, Sept 5 (Reuters) - London copper was steady supported by hopes that central banks will announce new plans to lift global growth following a boost to China's railroad spending and ahead of a European Central Bank meeting on Thursday.
A string of worsening factory reports from top metals user China, the United States and Europe this week has darkened the outlook for commodities demand, but has also raised expectations that monetary officials will have to ease policy or boost spending, providing a year-end fillip to prices.
PRECIOUS-Gold inches down, holds near 6-mth top; ECB eyed
SINGAPORE, Sept 5 (Reuters) - Gold inched lower on Wednesday, but did not stray far from a near six-month high hit in the previous session as weak U.S. data reinforced hopes of stimulus measures, while investors eyed a key European Central Bank meeting this week for trading cues.
U.S. manufacturing activities shrank at their sharpest clip in more than three years last month, feeding hopes the Federal Reserve could act soon to shore up the frail economy. The ECB is also under increasing pressure to cut excess borrowing costs ahead at a policy setting meeting on Thursday.
Baltic index drops as panamax rates weaken
Sept 4 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday as rates for panamax vessels continued to slip.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, fell 5 points or 0.72 percent to 693 points.
Posted by MW Chong at 4:38 PM
VEGOILS-Growing stocks weigh on palm oil futures - Reuters
Palm oil prices capped by high inventory levels Neutral range of 3,032 to 3,093 ringgit per tonne expected-technicals Global dependency on palm oil seen rising in next 12 months-Oil World
By Anuradha Raghu
KUALA LUMPUR, Sept 5 (Reuters) - Malaysian crude palm oil prices slipped on Wednesday on market expectations of a stock build although losses were curbed by prospects of tight global edible oil supplies from the drought-hit, soy-exporting U.S. Midwest.
Palm oil prices have been treading water even though the U.S. soy market hit a record high the previous day, as traders were on the lookout for Malaysian August stocks data due next week.
"(The) upside will be capped by the coming Malaysian Palm Oil Board (MPOB) inventory data, which we expect will remain above the psychological range of 2 million tonnes," Kenanga Investment's Alan Lim said in a note.
"On the other hand, the downside will be supported by crude palm oil’s above-average discount of $290 per tonne against soybean oil," he added.
By the midday break, the benchmark November 2012 contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 3,040 ringgit ($976)per tonne.
Total traded volume stood at 8,727 lots of 25 tonnes each, lower than the usual 12,500 lots, mirroring investor caution ahead of a European Central Bank meeting on Thursday and slew of global economic data on Friday.
Reuters analyst Wang Tao said technicals for palm oil looked neutral with a range of 3,032 to 3,093 ringgit per tonne.
The market expects Malaysia's August palm oil stocks to have climbed to their highest in nine months as still-high production offset strong exports, a Reuters poll showed.
Higher palm oil stocks could signal more demand in months to come. Hamburg-based oilseeds analysts Oil World said global dependence on palm oil is expected to rise significantly in the next 12 months to compensate for insufficient supplies of other vegetable oils.
U.S. soyoil for December delivery BOZ2 fell 0.7 percent in Asian trade hours after soybeans hit a record high and lower crude oil market.
The most active January 2013 soyoil contract DBYF3 on the Dalian Commodity Exchange dropped 0.5 percent.
Posted by MW Chong at 3:53 PM
GLOBAL MARKETS-Asian shares, euro fall, investors brace for ECB, US payrolls
TOKYO, Sept 5 (Reuters) - Asian shares and the euro eased on Wednesday, with investors waiting for a European Central Bank meeting on Thursday and U.S. payrolls on Friday for signs of more action to counter European debt woes and support growth.
"I don't recall anyone having had good economic indicators lately. Everyone knows the global economy is in a trough. The policies that will be announced to tackle the problems will be much more important," said Lee Seung-woo, an analyst at KDB Daewoo Securities in Seoul.
EQUITIES RETREAT AS THE RBA PONDERS NEW RATE CUT (Reuters)
WEDNESDAY, SEPTEMBER 5, 2012
Risk markets diverged dramatically overnight with Spanish and Italian yields tumbling on ECB President Draghi’s bond-buying remarks while equities slumped as the euro lost ground.
Draghi indicated on Monday that the ECB will be able to purchase sovereign bonds with up to 3-year maturities without this representing state aid and thereby circumventing German opposition.
His comments triggered 47bp and 27bp drops in Spanish and Italian 2-year yields yesterday to 3.03% and 2.43%.
Long ends also benefited with Spanish 10-year yields ending 29bp lower at 6.59% as expectations grow for decisive action at tomorrow’s ECB meeting.
This enthusiasm was certainly not shared by European and US stock markets.
The FTSE 100 and DAX plunged 1.50% and 1.17% as German Finance Minister Schauelbe turned his attention to Athens and ruled out a third Greek bailout package.
The Dow Jones finished 0.42% in the red after a disappointing August ISM data that bodes ill for Friday’s non-farm payrolls report.
The Australian dollar remained on the back foot amid ongoing China hard landing speculation while yesterday’s RBA statement indicated a more dovish stance with plenty of talk in the local media this morning about an October rate cut.
Australia Q2 GDP is released at 11.30 Sydney time (01:30 GMT) with the consensus forecast for a 0.7% quarter-on-quarter rise.
An hour later HSBC releases its August Services PMI report which came in at 53.1 in July.
ANZ returned to the US dollar covered bond market overnight with a two tranche, 3-year tranche print alongside a 5-year senior unsecure note.
The USD750m 3-year FRN pays 3-month LIBOR+61bp while the USD1.5bn 1.0% 3-year fixed-rate piece priced at 61bp over mid swaps.
The USD750m 1.875% 5-year fixed rate came at Treasuries plus 135bp, at the tight end of T+137.5bp area guidance.
Oversea-Chinese Banking Corp Ltd (OCBCSP) also visited the US dollar market via a USD1bn 10.5-year non-call 5.5 Tier II issue that priced at T+255bp until the first call date.
It is another hectic week for Singapore investors with at least three credits holding investor meetings.
Dutch bank ABN Amro held a presentation in Singapore yesterday via ABN Amro, Bank of America Merrill Lynch, Citigroup, HSBC and UBS while UK life assurance company Friends Life is hosting investor meetings today with HSBC.
Hong Kong property company Sino Land will be marketing in Singapore tomorrow via DBS and HSBC with a meeting also planned for Hong Kong.
The G7 is pushing on an oily string
(Robert Campbell is a Reuters market analyst. The views expressed are his own)
NEW YORK, Sept 4 (Reuters) - It is a problem familiar to central bankers: under certain weak economic conditions the tools available to policymakers become ineffective, hence the expression "pushing on a string."
Western governments wishing to undo this summer's geopolitically-induced oil rally (incidentally, one of their making) face a conundrum similar to central bankers' puzzles.
Oil prices re-enter the "danger zone"
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, Sept 4 (Reuters) - Get ready for a prolonged slowdown in the major industrial economies.
If Brent crude oil prices stay substantially above $100 per barrel, the economies of the United States and Western Europe will almost certainly struggle in the next few months.
At no point in the last five years have U.S. manufacturing and the wider economy managed to expand strongly when international oil prices have been above $100.
OIL-Oil falls on economic concerns, weak U.S. data
NEW YORK, Sept 4 (Reuters) - Oil prices fell on Tuesday as concerns about slowing economic growth and curbed demand for petroleum countered hopes for more monetary stimulus from central banks in the United States and Europe.
"You need to see demand coming through," said Michael Hewson, a markets analyst at CMC Markets in London. "And the only way you are going to get demand growth is if oil prices fall. Any upside in oil is going to be limited."
High global oil prices cause for concern-IEA chief
NEW DELHI, Sept 4 (Reuters) - High global oil prices are a cause of concern for the International Energy Agency (IEA), the head of the body which represents 28 importing countries said, although crude markets were better supplied than those for refined fuels.
"Crude markets are reasonably well supplied but there are clearly signs of tightening in product markets," IEA Executive Director Maria van der Hoeven said in response to questions from reporters on Tuesday over a possible release of emergency stocks.
POLL - US crude, product stocks seen down due to Hurricane Isaac
Sept 4 (Reuters) - U.S. commercial crude oil and refined product stockpiles were forecast to have fallen last week as Hurricane Isaac disrupted oil production, imports and refinery activity in the Gulf Coast region, a preliminary Reuters poll showed on Tuesday.
The survey of six analysts, ahead of weekly inventory reports from industry group American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA), forecast that crude stocks would drop 5.3 million barrels on average for the week ended Aug. 31.
NATURAL GAS-U.S. natgas futures rise 2 pct, end higher for 4th day
NEW YORK, Sept 4 (Reuters) - U.S. natural gas futures rose nearly 2 percent on Tuesday, up for a fourth straight session along with stronger cash gas as industrial demand returned after the long U.S. Labor Day holiday weekend.
"As the market recovers from the impact of Hurricane Isaac many traders and investors are starting to look at the fact that even with only preemptive shut-ins there is still an impact on supply as well as the weekly inventory levels," said Energy Management Institutes' Dominick Chirichella.
EURO COAL-Stable, bearish signals from China
LONDON, Sept 4 (Reuters) - Physical coal prices in Europe held steady for the second day on Tuesday, supported by oil which rose in early trading and largely ignoring bearish fundamentals.
"While some have begun to call for a bullish turn in thermal prices, we remain skeptical that the fundamentals are yet ripe for such a change," Credit Suisse said in a research note on Tuesday.
Posted by MW Chong at 11:05 AM
The Minority Shareholder Watchdog Group, an influential shareholder group has raised concerns about the impending IPO of Astro Holdings but market watchers dispute its analysis. "Our grouses still remain with regard to the listing and delisting exercises currently being done by many Malaysian conglomerates," its head Rita Benoy Bushon said in the association's latest newsletter. She said that if Astro was floated at RM3.60 per share as has been reported, it would be valued at RM18.7bn, a price far exceeding the RM8.3bn it cost to take it private. Analyst Salvatore Dali notes, the pricing in 2010 was never disputed. "The price was a significant premium to the average trading price for the past six months before the privatisation offer," he said in his financial blog on investment. "You should not put a claim that it is now valued much higher now." Ms Bushon also seemed miffed that the proceeds of "around two-thirds of the IPO" would go to the major owner and not the company. Mr Dali was unmoved by that. "One would be more concerned if it was an absolutely new listing or a young company," he noted. "This is a mature business, growth is not going to be spectacular. One may even argue that Astro may be churning good cash flow which would not have needed much more capital investment." Ms Bushon was also vexed about the portion allocated for retail investors (2%), arguing for a way out. "We hope the advisers and the company would consider allowing the clawback provision from other portions, including cornerstone investors, if there is an oversubscription of the retail portion," she said. (SBT)
EPF has dismissed talk that it is planning to sell its entire stake in MRCB, "It is not true that we are selling our stake in MRCB. We are still holding it for now," an official said. Speculation has been rife that EPF is looking to dispose of its stake in MRCB, the reason being the company has not won any major government projects since a year ago. The last big win for MRCB was in August 2011 when it won a RM1.3bn contract for the Ampang LRT extension project. (BT)
MRT Corp has denied accusations that it had sidelined members of the Malay Chamber of Commerce Malaysia (DPMM) in awarding of contracts to Bumiputera contractors. CEO Datuk Azhar Abdul Hamid said some packages of the project were exclusive to Bumiputera companies and some Bumiputera companies had also won in the open category. "Furthermore, all these packages were open for competitive bidding so the issue of sidelining cannot arise at all," he said. He pointed out that as at end of July, more than 17 packages worth RM7.6b from the MRT SBK line were offered to Bumiputera companies. (BT)
The creditors of Asia Petroleum Hub have sought the assistance of the government in their bid to salvage the stalled petroleum hub and bunkering facilities. Executives close to the creditors, including CIMB Bank, said their representatives together with the receiver and manager met up with the Ministry of Transport officials earlier this week with a view to getting the greenlight to change the shareholders of APH. (Financial daily)
Felda and KFC Holdings (M) Bhd (KFCH) unit, Ayamas Integrated Poultry Industry Sdn Bhd (Ayamas IPI), have set up a joint-venture company to run a modern broiler farm in Tenggaroh, Johor. The joint-venture company, 49% owned by Felda and 51% by Ayamas IPI, was part of the authority's effort to encourage more settlers, especially the new generations, to get involved in other viable agro-based business. Under the agreement, Felda will manage the selection of workers who will be trained by Ayamas IPI. Ayamas IPI will undertake overall management of the project and build modern poultry pens and other infrastructure for the farm and management aspects of running the farm. (StarBiz)
AirAsia is adding three more aircraft to its operating fleet by leasing them from Industrial and Commercial Bank of China (ICBC). The lease term will start in the fourth quarter and last for 12 years. AirAsia is expecting 21 A320 aircraft to be delivered this year, with another 21 next year. AirAsia's CEO Aireen Omar also said, "Earnings are going to be strong. Jet fuel prices have been lower. You will see the impact in the third quarter because of the lagging effect. Also, we do have Malaysia Airports incentives this year but we haven't booked them in yet. We are in negotiation with MAHB to secure the incentives," she added. (Financial Daily)
AirAsia may take over Serbia's state-owned JAT Airways, according to a Serbian newspaper Vercernje Novosti. AirAsia may make a bid for the unprofitable airline as it may decide to use the Serbian capital as its regional hub for flights to Asia. (Malaysian Reserve)
DRB-HICOM has appointed Datuk Mohamed Razeek Md Hussain as its chief operating officer - services and properties, effective September 1 2012. Group managing director Datuk Seri Mohd Khamil Jamil said Mohamed Razeek's appointment came at an opportune time as the company positions itself for continued growth while managing the diversity of its business activities. (BT)
The Real Estate and Housing Developers' Association of Malaysia (REHDA) is requesting the government to establish a structured mechanism for housing developers to automatically release unsold properties allocated for Bumiputera buyers.Its president, Datuk Seri Michael K.C. Yam, said REHDA has never complained about allocating a significant portion for Bumiputera buyers in each development project as it is part of the basic principle of local developers but at the moment, the unsold Bumiputera properties are causing harm to housing developers' cash flow moving forward. "We are asking for a very structured mechanism. Maybe six months after a project receives Certificate of Fitness and the Bumi allocation is unsold, we can release it to other buyers. (Starbiz)
The property market is showing signs of cooling even as developers and homebuyers take sides over the critical issue of housing affordability and the government mulls further steps to make it easier for Malaysians to own a home ahead of a crucial general election. The home loan approval rate has dipped nearly seven percentage points in the first half of the year to 46.8% from 50.1% during the same period last year. The trend is indicative of the residential market cooling following tightening measures by Bank Negara, Malaysia Property Inc, a government agency in charge of marketing Malaysian property abroad, said today. Despite official statistics pointing to flattish growth in property prices since last year, many Malaysians are feeling fed-up over what they feel are continued unreasonable surges in house prices driven by market greed and warn of social consequences and even a potential backlash at the polls. There are indications that the government is poised to take more fiscal measures to tackle affordability following previous tightening measures, such as a slight increase in real property gains tax, a cap on the loan-to-value ratio and efforts to curb household debt such as basing loans on net income rather than gross income. (Malaysian Insider)
DiGi introduced new 'Easy Prepaid', a new prepaid plan that offers 24-hour free calls, short message service (SMS) and Facebook access."They can interact with three Buddyz freely at zero charges within their self-created 'mini community of four' via phone calls, SMS and Facebook," said DiGi. Its head of prepaid, Ting Shiew Han, said with 80% of Malaysian mobile subscribers being prepaid users, DiGi was leading the charge to address their needs by delivering the best value in the market with relevant and richer mobile features that consumers could truly appreciate. "DiGi has a strong brand affinity with youths and is confident that this vibrant market segment will find our latest proposition appealing." (Bernama)
Time dotCom launched TIME Fibre 100Mbps Home Broadband, Malaysia’s fastest home broadband service with speeds up to 100Mbps. TIME’s package offers 100Mbps priced at RM179/mth. The maximum speed currently offered in Malaysia is just 30Mbps. TIME’s fibre optic network reaches approximately 100,000 homes in the Klang Valley and Penang. (Time dotCom)
Firefly is negotiating to buy new planes to fuel the airlines' robust expansion plans two years from now, CEO Ignatius Ong said. He said the airline is keeping its options open on the range of aircraft, which might be bigger than the turboprops currently. "If Firefly buys bigger aeroplanes, it can shift its focus to medium-haul routes from the current short-haul destinations," he said. (Financial Daily)
Malaysian rubber glove manufacturers will investRM300-500m over the next five years to automate their manufacturing operations in order to reduce the dependence on foreign workers and increase productivity. This could help reduce the number of foreign workers by 30-50% according to the Malaysian Rubber Glove Manufacturers Association (MARGMA). (Sun Biz)
The Malaysian Rubber Glove Manufacturers Association (MARGMA) has appealed to the government to accord tax breaks for glove makers who aggressively reinvest to automate production lines and develop more innovative gloves for use in the medical sector. (BT)
Digistar Corporation has fixed the issue price for the private placement of 22.4m new shares of 10 sen each at 32.5 sen each. It said the issue price for the placement shares was a discount of 9.47% to the five-day weighted average market price of the shares up to and including Sept 3 of 35.9 sen. Digistar's private placement is part of its fund-raising exercise. The private placement will enable it to raise RM7.28m. (StarBiz)
Favelle Favco has received orders to supply offshore cranes to P.T. Pal Indonesia (Persero)-Offshore Oil Engineering Co Ltd and Favelle Favco Cranes Pty Ltd Technip France for RM89.6m. (BT)
Petron Corp has no intention of de-listing the Malaysian entity it bought into last year and still holds the view that it did not underpay for the asset. "De-listing is not a need but we may consider it if there is an opportunity later," Petron's chairman and CEO Ramon S, Ang said. Petron had acquired 65% in Esso Malaysia Bhd (EMB) in March at a price of RM3.50 which had disappointed some shareholders who had chased the stock up to RM5.84 prior to the announcement of the deal. (StarBiz)
Kimlun has submitted fresh job tenders worth several hundred million ringgit and is expecting to replenish its current orderbook of RM1.8bn with these jobs. "We expect some results within the next three months, our track record is that we normally get 20% of what we've tendered for," its CEO Sim Tian Liang said. (Star Biz)
Posted by MW Chong at 10:09 AM
Fresh graduates looking for their first job will find it tougher, as more employers expect to reduce hiring or not to hire at all in the next 12 months, according to the Job Outlook Report for the 3Q12 released by JobStreet.com. The report shows that 33% of the respondents felt that general job outlook would be “slightly worse” or “much worse” in 3Q12 (vs. 22% in 2Q12 and 23% in 3Q11). Only 31% of the respondents felt the general job outlook would be “slightly better” or “much better for the next 12 months (vs. 44% in 2Q12 and 47% in 3Q11). Hiring has been slower, especially in the manufacturing sector, as global economic conditions deteriorate, particularly in Europe and the US, it said. In the next 12 months, major industries such as manufacturing, wholesale and retail trade, and finance are likely to experience the slowest job growth while the construction industry expects a robust growth. Some 43% of employers surveyed said they are either expanding or maintaining their hiring rate while 46% said they will be hiring fewer people, replacing or filing essential positions only, while 11% said they will not be hiring in the foreseeable future. (Financial Daily)
The construction industry is expected to secure RM120bn worth of projects next year, the Construction Industry Development Board (CIDB) said. Its general manager (corporate division), Ahmad Asri Abdul Hamid, said the projects would be mainly in the oil and gas and transportation sectors. "We estimate the Petronas Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang would bring in RM60bn and the Mass Rapid Transit project, RM40bn. If we add all these and other ongoing projects, it will accumulate to RM120bn," he said. (BT)
The 1Malaysia Broadband Affordable Package, ranging from RM20 to RM25 per month for a wireless connection and RM38 for a wired one, will be made available in Sabah, Sarawak, Terengganu, Kelantan and Pahang from 16 Sep. Information Communication and Culture Minister Datuk Seri Dr Rais Yatim said the package was being introduced as the five states had yet to reach the national broadband penetration rate of 64%. He said if the package received a favourable response, it would also be introduced to other states. (Bernama, BT)
The outlook for the US banking system remains negative in the face of macroeconomic challenges even as most banks have returned to profitability since 2010, according to a report from Moody's Investors Service. (WSJ)
The US ISM manufacturing index fell to 49.6 in Aug (49.8 in Jul), worse than consensus of 50.0. (Bloomberg)
The final reading of the US Markit manufacturing PMI stood at 51.5 in Aug (51.4 in Jul). (Bloomberg)
US construction spending fell 0.9% mom in Jul (+0.4% in Jun), worse than consensus of +0.4%, whilst on a yoy basis, the measure gained 9.3% (7.0% in Jun). (Bloomberg)
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small American companies, rose to 103.8 in Jul from 100.5 in Jun, PayNet said. (Reuters)
Moody's lowered the EUs long-term issuer rating outlook from stable to negative, saying the move reflected the negative outlooks of the bloc's key budget contributors. (AFP)
European Central Bank President Mario Draghi said the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. (Bloomberg)
The European Central Bank is willing to take on a supervisory role for the European banking system only if certain conditions are met, ECB executive board member Joerg Asmussen said. (AFP)
Slower growth in energy and food prices despite some tough climate conditions trimmed 12-month inflation in advanced economies to 1.9% in Jul from 2.0% in Jun, the OECD said. (AFP)
The United Nations warned of a possible repeat of the 2007-2008 food crisis and called on world leaders to act quickly to prevent a catastrophe which would affect tens of millions of people. (AFP)
Japan's cash-starved central government postponed payments worth trillions of yen to local administrations, forcing the Bank of Japan to inject ¥1.9tr into the market to pre-empt any disruptive impact. The ministry had planned to transfer ¥4.1tr in tax grants to municipalities during the day, about a quarter of the annual payments the national government is scheduled to make to the regions. (WSJ)
South Korea’s government was preparing a new stimulus package to support the economy. Previously, the Seoul government had announced in Jun that it would use existing state funds for a stimulus package of 8.5tr won (US$7.5bn) for the second half of 2012. (WSJ)
HSBC's PMI for Vietnam rose to 47.9 in Aug from Jul's 43.6, indicating only a modest deterioration. (WSJ)
Vietnam is considering a proposal by the Bulgarian Government on a new bilateral co-operation model based on exports of Vietnam's semi-processed goods to Bulgaria. (Vietnam News)
Australian Prime Minister Julia Gillard denied claims that the mining boom was over, saying its benefits would last decades even as a key forecaster warned more projects may be shelved. (AFP)
The Reserve Bank of Australia left its cash rate unchanged at 3.5% even as signs emerge that the nation's mining boom is cooling quicker than expected. Economists had expected the central bank to keep its cash rate on hold. (WSJ)
Singapore will cap the number of homes that can be developed in suburban projects as it seeks to curb the increasing trend of so-called shoebox apartments (smaller than 50 sqm). The new rules will be implemented from 4 Nov 2012. (Bloomberg)
China may expand exporters’ tax rebates to help them cope with a slump in trade growth. The government may give a full rebate of the 17% value-added tax on products including furniture, shoes and toys, up from 13% to 15% currently. The policy may be rolled out as soon as this month, depending on whether trade remains weak. (Bloomberg)
Indian banks need to mobilize an additional five trillion rupees (US$90bn) by Mar 2018 to meet the stringent capital requirements of Basel III, the country's central-bank governor Duvvuri Subbarao said. (WSJ)
Indonesia’s money supply growth (M2) slowed to 19.1% yoy in Jul from 20.9% in Jun. (Bloomberg)
Massive global supply will prevent rice prices from soaring even as Thailand continues its paddy pledging and India restricts its exports, says the Asian Development bank. (Bangkok Post)
Thailand’s consumer confidence index rose to 68.4 in Aug from 68.2 in Jul. (Bloomberg)
Average new home prices in major Chinese cities continued to rise in Aug for the third straight month to Rmb8,738 (US$1378) in Aug, an increase of 0.24% from Jul. (Xinhua)
Singapore’s purchasing managers index (PMI) was 49.1 in Aug, compared with 49.8 in Jul. But the electronics sector PMI rebounded from a contraction to expand at 50.7 in Aug, up 1.5 points from 49.2 in Jul. (AFP)
Posted by MW Chong at 10:08 AM
Asia FX By Cornelius Luca - Tue 04 Sep 2012 17:37:59 CT (Source:CME/www.lucafxta.com)
The appetite for risk was mixed on Tuesday amid conflicting opinions about easing in the Eurozone and the US. ECB President Draghi signaled how the central bank is going act on the euro crisis. The markets also hope that the Federal Reserve is moving towioard open-ended bond purchases. All foreign currencies but the Aussie and yen remained relatively firm after advancing on Friday. The Aussie was hurt by additional evidence that the Chinese economy is slowing. The US indexes closed slipped, while the gold/oil ratio advanced. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is long on most foreign currencies. Good luck!
US: Construction spending contracted 0.9% in July after expanding 0.4% in June.
US: The manufacturing ISM slipped to 49.6 in August from 49.8 in July.
US: The Markit manufacturing PMI fell to 51.5 in August from 54.0 in July.
Today's economic calendar
Australia: AiG Performance of Services Index for August
Australia: Gross Domestic Product for the second quarter
China: HSBC China Services PMI for August
Asian Stocks Fall 5th Day as U.S. Manufacturing Contracts (Bloomberg)
Asian stocks fell, with the regional benchmark index headed for the longest losing streak in eight weeks, as U.S. manufacturing contracted for a third month, adding to signs the world’s biggest economy is slowing. Samsung Electronics Co. (005930), South Korea’s largest exporter of consumer electronics that gets 20 percent of its revenue in America, lost 0.9 percent. BHP Billiton Ltd. (BHP), Australia’s biggest mining company and oil producer, slid 1.7 percent as oil dropped. Toyota Motor Corp. (7203), Asia’s No. 1 carmaker by market value, rose 1.5 percent after sales of its Lexus luxury brand increased 34 percent last month. The MSCI Asia Pacific Index dropped 0.4 percent to 116.78 as of 9:54 a.m. in Tokyo, heading for a fifth day of losses, before markets in Hong Kong and China opened. Almost three stocks declined for each that rose on the index.
“Clearly it’s in the contracting territory again, which is never a good thing,” Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies, said of U.S. manufacturing. Federal Reserve Chairman Ben S. “Bernanke has indicated that they are growing a bit tired and frustrated about the lack of progress.” The MSCI Asia Pacific Index was little changed this quarter through yesterday as expectations for further stimulus measures overshadowed signs of a global economic slowdown. The Asian benchmark traded at 12.3 times estimated earnings as of last week, compared with 13.6 times for the Standard & Poor’s 500 Index (SPXL1) and 11.6 times for the Stoxx Europe 600 Index.
Japanese Stocks Decline For Fifth Day Before ECB Meeting (Bloomberg)
Japan stocks declined for a fifth day amid concern tomorrow’s European Central Bank meeting may fail to ease investor concerns about the debt crisis and as U.S. manufacturing contracted for a third-straight month. Canon Inc., a camera maker that generates 31 percent of its sales in Europe, lost 1.9 percent. Nissan Motor Co., Japan’s second-largest automaker, dropped 1 percent as its vehicle sales in the U.S. missed estimates. Kakaku.com Inc. declined 1.7 percent after Mitsubishi UFJ Morgan Stanley advised selling the price-comparison website’s shares. The Nikkei 225 Stock Average (NKY) lost 0.5 percent to 8,734.76 as of 9:25 a.m. in Tokyo, heading for the longest streak of losses in two months. The broader Topix Index slid 0.5 percent to 723.13. The ECB’s Governing Council is due to decide tomorrow on President Mario Draghi’s bond-buying proposal, which he says is necessary to ensure the euro’s survival.
“The market has set itself up to be disappointed both from the Fed and from the ECB,” said Philip Poole, head of investment strategy at HSBC Global Asset Management, said in a Bloomberg TV interview. “For the ECB it takes longer to get the plan in place than the market is anticipating.”
S&P 500 Trims Loss Amid Speculation Europe to Take Steps (Bloomberg)
The Standard & Poor’s 500 Index fell, after trimming steeper declines, as speculation European leaders will announce new steps to tame the debt crisis tempered concern the economic recovery is slowing. Apple Inc. (AAPL) climbed 1.5 percent amid speculation the company is close to introducing a new iPhone with a larger screen and thinner body. Morgan Stanley (MS) added 3.4 percent after the shares were upgraded at CLSA Ltd. Netflix Inc. slumped 6.4 percent as Amazon.com Inc. reached a deal with pay-television channel Epix. Facebook Inc. (FB) fell 1.8 percent to a record low after Morgan Stanley cut its price forecast on the company’s shares. The S&P 500 lost 0.1 percent to 1,404.94 at 4 p.m. New York time, trimming a drop of as much as 0.7 percent. The Dow Jones Industrial Average retreated 54.90 points, or 0.4 percent, to 13,035.94. Volume for exchange-listed stocks in the U.S. was 5.6 billion shares, or 7.3 percent below the three-month average.
The European Central Bank’s plans “to stabilize Europe takes the big-event risk off the table,” Frank Ingarra, who helps manage $1.4 billion at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a telephone interview. “Everyone is kind of digesting and getting back to the game today,” he said. As speculation about Europe swirls, he said, “people are happier that it’s happening now and willing to go long equities.” ECB President Mario Draghi said the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. Draghi “appears willing to write two- to three-year ‘checks’” to debt-strapped euro-bloc nations in a reflationary move, Bill Gross, co-chief investment officer and founder of Pacific Investment Management Co., said in a Twitter post.
Profits Matter Most for U.S. Stocks as Economy Fixation D (Bloomberg)
Profits (SPX) are moving U.S. equity prices more than any time since the bull market began 3 1/2 years ago, rewarding investors for picking stocks based on company data instead of following the herd rocked by Europe’s debt crisis and the slowing U.S. economy. Companies in the Standard & Poor’s 500 Index rose or fell an average of 4.4 percent the day after releasing results since July, according to data compiled by Bloomberg. The last time they moved more was in the second quarter of 2009. Daily swings in the benchmark gauge narrowed to 0.4 percent last month from 2.2 percent a year ago, as economic and policy changes battered investors. More than 475 S&P 500 stocks moved in the same direction in six of the first nine days of August 2011, with all 500 down on Aug. 8.
Bulls say lockstep moves are diminishing because investors are changing their behavior, making choices based on corporate results at a time when analysts estimate profits for companies in the S&P 500 will rise almost 10 percent a year through 2014 . Bears say the focus on earnings won’t bring back individuals who have drained more than $420 billion from U.S. equity mutual funds over the past four years even as stocks rallied 108 percent since March 2009 and net income was unchanged in the second quarter. “I’m not saying it’s an easy job to be a stock picker in this environment, but it’s certainly easier,” Sandy Lincoln, the Chicago-based chief market strategist with BMO Global Asset Management, which oversees about $100 billion, said in an Aug. 28 interview. “Stock selection does have the opportunity here to finally show a face with a smile.”
Emerging Market Stocks Decline on China, Europe Concerns (Bloomberg)
Emerging-market stocks fell for the first time in three days as Goldman Sachs Group Inc. cut Chinese earnings estimates and a report showed contraction in U.S. manufacturing for a third straight month. The MSCI Emerging Markets Index (MXEF) slipped 0.6 percent to 947.37. Brazil’s Bovespa stock index retreated to a one-month low, with homebuilder Rossi Residencial SA (RSID3) and JBS SA (JBSS3), the world’s largest beef producer, leading the decliners. China Merchants Bank Co. (3968) dropped for a fifth day in Hong Kong, while the Shanghai Composite Index closed at its lowest level since February 2009. Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) retreated more than 2 percent in Seoul. Goldman Sachs cut its projections for Chinese earnings this year and next while Credit Suisse Group AG reduced its target for the MSCI China Index and Societe Generale (GLE) SA lowered forecasts for the nation’s economic growth.
The Institute for Supply Management’s factory index fell to 49.6 last month, the longest slide since the recession ended. “You have weaker growth in the U.S., China’s slowdown and the euro zone debt crisis all adding to a reduced appetite for risk,” Win Thin, global head of emerging-market strategy at Brown Brothers Harriman & Co., said by phone from New York. “I still believe in emerging markets in the long-term, but in the shorter term, I am a little bit more nervous and defensive.”
European Stocks Decline on U.S. Manufacturing Report (Bloomberg)
European stocks retreated the most in two weeks as a report showed that U.S. manufacturing unexpectedly contracted in August. Vodafone Group Plc (VOD) fell 2.6 percent after Sanford C. Bernstein & Co. downgraded the world’s second-largest mobile- phone operator. Royal Ahold NV rose 2.5 percent after saying it may sell its 60 percent stake in Scandinavian retailer ICA, possibly through an initial public offering. The Stoxx Europe 600 Index slid 1.1 percent to 265.43 at the close of trading, its biggest drop since Aug. 22. The equity benchmark has still surged 13 percent from its lowest level this year on June 4 amid speculation that central banks will do more to support growth.
“Investors won’t be willing to do much before the European Central Bank’s meeting on Thursday,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen, where he helps oversee $220 billion. The ECB’s president “should reveal details of what he plans to do. There’s a limit to how many times investors are willing to accept no news.” European (SXXP) stocks advanced the most in a month yesterday as an unexpected drop in Chinese manufacturing increased speculation that the government will announce further stimulus.
Treasury 10-Year Yields Near 1-Month Low Before Jobs Data (Bloomberg)
Treasury 10-year yields were within three basis points of a one-month low before reports this week forecast to show U.S. employment is struggling to pick up. U.S. government bonds snapped a decline ahead of a private report due tomorrow that may show U.S. companies added the fewest workers in three months amid rising speculation the Federal Reserve will undertake a third round of bond purchases, known as quantitative easing. It will be followed by Labor Department figures the next day projected to indicate payrolls grew at a slower pace in August. “If the payroll number undershoots the market consensus, expectations of another round of quantitative easing will rise, and Treasury yields will fall further,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Even if it doesn’t, expectations of additional easing are more likely to remain.”
The benchmark 10-year yield was little changed at 1.57 percent as of 9:27 a.m. in Tokyo. It fell to 1.54 percent yesterday, the lowest since Aug. 6. The 1.625 percent note due in August 2022 traded at 100 17/32. Japan’s government bonds were little changed, with five- year rates at 0.2 percent. ADP Employer Services is forecast to say tomorrow that U.S. employment increased 143,000 in August, the smallest gain since May, according to the median estimate of economists surveyed by Bloomberg News. It will be followed by the Labor Department report on Sept. 7 that may show payrolls rose by 125,000 last month, down from 163,000 the prior month, based on another poll. Speaking on Aug. 31 in Jackson Hole, Wyoming, Fed Chairman Ben S. Bernanke said the costs of “nontraditional policies” appear manageable when considered carefully. That implies Fed policy makers “should not rule out the further use of such policies if economic conditions warrant,” he said.
Euro Remains Lower Against Most Peers Before ECB Meets (Bloomberg)
The euro fell for second day before the European Central Bank meets tomorrow to discuss measures to tackle the debt crisis. ECB President Mario Draghi told lawmakers in a closed-door session in Brussels this week the bank’s primary mandate compels it to intervene in bond markets to ensure the euro’s survival. The 17-nation currency remained lower versus most of its major counterparts before data forecast to show retail sales declined and services contracted in the euro area. The Australian dollar touched a six-week low before the government reports second- quarter gross domestic product today. “A lot of expectations have been built into the ECB meeting since President Draghi’s comments,” said Yuki Sakasai, a currency strategist at Barclays Plc in New York. “There’s a risk of a disappointment, so the euro may face some downward pressure into the meeting.”
The euro fell 0.3 percent to $1.2532 as of 9 a.m. in Tokyo from yesterday when it declined 0.2 percent. It climbed to $1.2638 on Aug. 31, the strongest since July 2. The shared currency dropped 0.2 percent to 98.34 yen. The yen fetched 78.48 per dollar from 78.43. Australia’s dollar slid 0.2 percent to $1.0205, the weakest level since July 25.
FOREX-Euro firms on ECB expectations, gains seen limited
LONDON, Sept 4 (Reuters) - The euro rose versus the dollar on optimism the European Central Bank will unveil a plan to tackle the region's debt crisis this week, although gains were capped by concerns the plan may lack detail.
"If we just get the bare bones of what the bond-buying programme will look like we may see a 150 to 200 point fall in the euro," said Adam Cole, global head of FX strategy at RBC Capital Markets.
Aussie Touches Six-Week Low on Global Economic Concern (Bloomberg)
The Australian dollar touched its lowest level in six weeks as weakening economic data from Europe add to signs of a slowdown in global growth, damping demand for higher-yielding assets. The so-called Aussie also dropped to a six-week low versus the yen before reports today that may say euro-area retail sales dropped in July and services shrank last month. Data yesterday showed a contraction in U.S. manufacturing. Australia’s currency was supported before a report predicted to show the nation’s gross domestic product advanced in the second quarter. Losses in New Zealand’s dollar, nicknamed the kiwi, were tempered after construction gained. “There’s still a theme of very weak economic data out of the euro zone,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “Both the Aussie and kiwi have turned down and are heading towards the bottom” of their ranges, he said.
The Australian dollar lost 0.2 percent to $1.0205 at 10:30 a.m. in Sydney after earlier touching $1.0197, the lowest since July 25. It reached 79.996 yen, also the weakest since July 25, before trading at 80.07, 0.2 percent lower than yesterday’s close. New Zealand’s currency fell 0.1 percent to 79.38 U.S. cents and 62.27 yen. Australia’s 10-year yield declined three basis points, or 0.03 percentage point, to 3.06 percent. It completed a 12-day drop on Sept. 3, the longest stretch of declines on record, according to data compiled by Bloomberg since 1990. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, slid 3.5 basis points to 2.645 percent.
Sales in the euro region probably fell 0.2 percent in July after advancing 0.2 percent the previous month, according to the median estimate of economists in a Bloomberg News survey before the European Union’s statistics office releases the figures today. A final reading due today of an index based on a survey of purchasing managers in services industries in the currency bloc may confirm a drop to 47.5 in August from 47.9 in July, a separate poll showed.
Manufacturing in U.S. Shrank in August for Third Month (Bloomberg)
U.S. manufacturing shrank for a third month in August in the longest decline since the recession ended in 2009, threatening to deprive the world’s largest economy of a driver of growth. The Institute for Supply Management’s factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July, the Tempe, Arizona-based group said today. Economists in the Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction. Measures of orders and production dropped to three-year lows. Stocks fell early on concern American factories, which sparked the U.S. expansion three years ago, are succumbing to a manufacturing slowdown that stretches from Asia to Europe. The data underscore Federal Reserve Chairman Ben S. Bernanke’s view that the economy is too weak to spur hiring and may require additional monetary stimulus.
“Manufacturing has been one of the stalwarts of an otherwise lackluster recovery but it’s starting to show some cracks,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, who correctly forecast the index. “Until we get more clarity on the fiscal policy outlook here, more clarity on Europe and some signs on the course of China’s economy, manufacturing is just going to languish.” The Standard & Poor’s 500 Index, which had fallen as much as 0.7 percent, dropped 0.1 percent to 1,404.94 at the close in New York as shares of Apple Inc. rallied. The yield on the benchmark 10-year Treasury note climbed to 1.57 percent from 1.55 percent on Aug. 31.
China Said to Plan Boosting Export-Tax Rebates on Some Goods (Bloomberg)
China may expand exporters’ tax rebates to help them cope with a slump in trade growth, according to three people with direct knowledge of the plan, deploying a stimulus tool used during the global credit crunch. The government may give a full rebate of the 17 percent value-added tax on products including furniture, shoes and toys, up from the current range of 13 percent to 15 percent, said the people, who asked not to be identified because the discussions are private. The policy may be rolled out as soon as this month, depending on whether trade remains weak, they said. Premier Wen Jiabao has pledged policy “fine tuning” to cope with a deepening slowdown in the world’s second-largest economy that saw export gains slump to an annual 1 percent pace in July from 11 percent in June. The deterioration in trade escalated the risk that Wen will miss his full-year economic expansion target for the first time since he took office in 2003.
“The tax rebates cover mainly labor-intensive products, and it reflects the government’s concern about rising unemployment pressures,” said Joy Yang, chief Greater China economist for Mirae Asset Securities (HK) Ltd. in Hong Kong. The policy change is unlikely to increase exports, said Yang, who formerly worked for the International Monetary Fund. “The biggest problem for Chinese exports now is the weak demand from overseas markets, and tax rebates won’t help much in boosting demand.”
Japan Fiscal Impasse Threatens Stimulus to Spur Growth: Economy (Bloomberg)
Japan’s political gridlock threatens to curtail the government’s ability to apply fiscal stimulus as a rebound falters in the world’s third-largest economy. Opposition parties in the upper house of parliament stymied legislation approved in the lower house Aug. 28 that enables the issuance of 38.3 trillion yen ($490 billion) of deficit- financing bonds, seeking to force Prime Minister Yoshihiko Noda into an early election. The government could hit a spending ceiling as soon as October, according to the Finance Ministry. The freeze may suspend outlays from this year’s budget for the first time, according to Goldman Sachs Group Inc., and limits Noda from proceeding with the supplementary spending package he mooted in July. With economists increasingly seeing an economic contraction this quarter, the deadlock adds to risks facing global expansion that include a so-called fiscal cliff of spending cuts and tax increases in the U.S. at year-end.
“The impasse on deficit-covering bonds may delay the compilation of a stimulus package and would be a drag for the economy,” said Taro Saito, Tokyo-based director of economic research at NLI Research Institute and a past winner of a Japan Center for Economic Research award for accuracy in forecasting. “This is not as severe as the U.S. fiscal cliff but could be said to be Japan’s fiscal slope.”
Singapore REITs Yield World’s Best Returns: Southeast Asia (Bloomberg)
Singapore’s real estate investment trusts, the best performing in the world this year, are luring investors after a shopping spree for properties across Asia gives them a broader stream of rental income. Singapore’s $38 billion REIT market has returned an average 37 percent in 2012, twice the gains in the U.S., U.K. and Japan, according to data compiled by Bloomberg. Australia, the largest REIT market in the Asia-Pacific region with $86 billion, advanced 24 percent. Growth among Singapore REITs was led by asset acquisitions and rental appreciation, with total rental revenue increasing 5.8 percent annually between 2008 and 2011, according to property broker CBRE Group Inc. In the first half, Singapore REITs were the second-most active purchasers after Japan in Asia, buying assets in Australia, China, Japan, Malaysia and South Korea, and accounting for 33 percent of acquisitions by the region’s REITs since 2009, CBRE said.
“Singapore remains amongst the last few AAA rated economies,” Priyaranjan Kumar, Singapore-based regional director of the capital markets group at broker Cushman & Wakefield, said in an interview. “Its real estate market has received unprecedented attention from most investors as it’s seen to offer a good proxy for the increasingly recognized strength of the Asian consumer.” The gap between their yield and interest rates is double that in Australia, according to data compiled by Bloomberg. Property trusts in the island-state offer an average 413 basis- point income return premium relative to 10-year government bonds, while in Australia they average 192 basis points, data compiled by Bloomberg showed. A basis point is 0.01 percentage point.
Sharp Is Said to Seek Syndicated Loan After Yen Borrowings (Bloomberg)
Sharp Corp. (6753), the Japanese electronics maker that widened its loss forecast eightfold last month, is in talks with potential lenders for a syndicated loan, a person with knowledge of the matter said, declining to be identified because the negotiations are private. Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc., Sharp’s two main lenders, provided the company with 210 billion yen ($2.7 billion) of loans over the past two months, according to another person with knowledge of the matter. The Osaka-based company obtained a short-term facility of about 60 billion yen in July and an approximately 150 billion-yen credit last month, the person said.
Sharp, which widened the full-year loss projection to 250 billion yen, is seeking to raise cash and cut costs as 706 billion yen of its bonds, commercial paper and borrowings mature within one year. The company has said it will cut 5,000 jobs to help reduce fixed costs by 100 billion yen after the Japanese currency rose to a postwar high and slumping global TV demand led to a record loss last fiscal year. “We cannot comment on the amount of money we borrow from each bank,” Miyuki Nakayama, a Tokyo-based spokeswoman for Sharp, said by phone yesterday when asked about the loans and extra financing. “We believe financial institutions, including our main banks, are considering a lending plan for us.”
Sharp shifted from a drop of as much as 3.4 percent and advanced 3.8 percent to 217 yen as of 9:56 a.m. in Tokyo trading. Shares of the company, Japan’s biggest liquid-crystal display maker, have declined 68 percent this year, the second- biggest percentage loser on the MSCI Asia-Pacific Index. (MXAP)
RBA Holds Key Rate as Economy Withstands Global Slowdown (Bloomberg)
Australia maintained the highest benchmark interest rate among major developed economies as domestic demand weathers a global slowdown that’s driving down the price of iron ore, the nation’s biggest commodity export. Reserve Bank of Australia Governor Glenn Stevens and his board left the overnight cash-rate target at 3.5 percent, according to a statement today in Sydney. While domestic consumption was “quite firm” in the first half of the year, commodity prices have fallen “sharply” in recent months and China’s growth outlook is more uncertain, he said. In Australia, “growth has been running close to trend, led by very large increases in capital spending in the resources sector,” Stevens said. “Labor market data have shown moderate employment growth, even with job shedding in some industries, and the rate of unemployment has thus far remained low.”
The currency rebounded from near a six-week low after the decision as investors pared bets on rate reductions. While Europe’s fiscal crisis is weighing on global growth and Chinese demand, Stevens’s 75 basis points of cuts in May and June helped spur domestic spending and stabilize the housing market in an economy that’s avoided a recession for 21 years. “It is clear that the Reserve Bank is happy to remain on the interest rate sidelines,” said Savanth Sebastian, an economist in Sydney at a unit of Commonwealth Bank of Australia. (CBA) “Policy makers seem comfortable with domestic economic conditions but continue to watch the global situation carefully. Europe, the U.S. and Asia have slowed and the central bank seems particularly focused on the slowdown in China.”
Merkel, Monti Step Up Diplomacy as ECB Comes in Focus (Bloomberg)
European leaders are stepping up shuttle diplomacy this week as details of a bond-buying plan emerged from the central bank, fueling a surge in some Spanish and Italian debt. European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French President Francois Hollande in Rome. They were given a hint about what may be in store when European Central Bank President Mario Draghi said yesterday he would be comfortable buying three-year government bonds to aid nations struggling to fund themselves. The stewards of the single currency, who have sparred as borrowing costs diverged in the 17 nation-euro area, have a chance to fall in line behind Draghi. Merkel, whose country shoulders the largest cost of bailing out weaker governments, has indicated she would back a more active crisis-fighting role at the ECB and yesterday told a crowd of beer drinkers in Bavaria that Germany must show solidarity with Europe.
“I think there is broad agreement among these people,” said Luca Jellinek, head of European interest-rate strategy at Credit Agricole Corporate & Investment Bank in London. “Many people are realizing that monetary policy is broken in Europe, badly broken.”
Russian Inflation Quickens to 5.9% in August, Below Forecast (Bloomberg)
Russia’s inflation accelerated in August to near the upper limit of the central bank’s target as food prices grew after a three-month drought seared millions of hectares of cropland and pasture. Consumer prices rose 5.9 percent from a year earlier, the highest level since December, from 5.6 percent in July, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 14 economists in a Bloomberg survey was for 6 percent. Prices grew 0.1 percent from a month earlier, less than the 0.2 forecast in a separate poll. Breaching the 6 percent inflation target may force the hand of policy makers in Russia, the last major emerging economy to keep borrowing costs unchanged this year. A drought since May has curbed production and affected 5.99 million hectares (14.8 million acres) of plantings in 22 of Russia’s 83 regions, with 20 of them declaring an emergency.
“August’s data suggest that supply-side price pressures continue mounting on the back of rising food and commodity prices, which is at least partially being passed on by producers to consumers,” Johannesburg-based Tradition Analytics said in an e-mailed research note. “There is scope for CPI growth to continue edging higher.” The ruble is the fourth-worst performer of 25 emerging- market currencies tracked by Bloomberg over the past six months. The ruble strengthened 0.6 percent to 32.1726 per dollar at 4:44 p.m. in Moscow. Non-deliverable forwards, which provide a guide to expectations of currency movements, showed the ruble at 32.6283 per dollar in three months.
Poland Lowers 2013 Growth Forecast Amid Euro Debt Crisis (Bloomberg)
Poland’s government lowered its forecast for economic growth next year as the euro area’s debt crisis damps demand for the European Union’s biggest eastern economy’s exports. Gross domestic product will rise 2.2 percent instead of a previously forecast 2.9 percent, according to a new 2013 draft budget, the government in Warsaw said in an e-mailed statement yesterday. Employment will grow 0.2 percent, wages will increase 1.9 percent and inflation will average 2.7 percent, it said. “This change of macroeconomic assumptions means making them more realistic, but they still can’t be described as conservative in the context of the recent deterioration of the economic outlook,” Maciej Reluga, chief economist at Bank Zachodni WBK in Warsaw, said in an e-mail yesterday.
The slowing economy is putting pressure on Prime Minister Donald Tusk to ease deficit cuts to avoid the fate of other EU nations where austerity measures to tackle the debt crisis helped suffocate growth. While the Polish Cabinet still enjoys broad support in polls, governments across Europe have collapsed after protests against austerity policies that helped plunge economies from Romania to Spain into recession. Tusk, the first Polish premier to serve a second term since communism ended in 1989, must weigh EU deficit demands against concerns that further spending cuts may damp growth in the nation of 38 million people, whose GDP per capita is 40 percent below the 27-nation bloc’s average. Tusk has said he will give a parliamentary speech, probably next week, to outline measures aimed at tackling threats to the economy.
Slowing Polish Economy May Force Tusk to Ease Budget Cuts (Bloomberg)
Poland’s slowing economy is putting pressure on Prime Minister Donald Tusk to ease deficit cuts to avoid the fate of other European Union nations where austerity measures to tackle the debt crisis helped suffocate growth. Tusk’s Cabinet approved a revised 2013 budget after the economy expanded at the slowest pace in 11 quarters in the three months through June, the government’s office said in an e-mailed statement. Growth will ease to 2.2 percent instead of a previously forecast 2.9 percent, according to the statement, which didn’t release a new deficit target. While Poland will stick to a plan to cut the 2012 budget gap within the EU’s limit of 3 percent of output, keeping its 2.2 percent goal for 2013 would “mean we end up next year with zero growth or even a recession,” said Jakub Szulc, a member of Tusk’s Civic Platform who sits on Parliament’s Public Finances Commission.
“We can’t drop the long-term goal for a 1 percent deficit in 2015, but next year’s plan obviously needs to be adjusted,” Szulc said by phone from Warsaw today. “Foreign investors will understand this because it’s growth that matters for the international credibility of countries these days.” Tusk, the first Polish premier to serve a second term since communism ended in 1989, must weigh EU deficit demands against concerns that further spending cuts may damp growth in the nation of 38 million people, whose GDP-per-capita is 40 percent below the 27-nation bloc’s average. While his Cabinet still enjoys broad support in polls, governments across Europe have collapsed after protests against austerity policies that helped plunge economies from Romania to Spain into recession.
Hungary Surprise Rate Cut Sends Yield to Year-Low Before Auction (Bloomberg)
Hungary’s borrowing costs tumbled to the lowest level in a year before a bond auction tomorrow as investors bet on further interest-rate cuts after the central bank’s surprise reduction last week’s to fight recession. Yields on three-year government forint bonds dropped to 6.732 percent on Sept. 3, the lowest since September 2011, according to data compiled by Bloomberg. Investors demanded 6.75 percentage points more to hold Hungarian debt rather than similar-maturity German bunds on Sept. 3, the narrowest spread since the end of October. The Debt Management Agency is offering 45 billion forint ($200 million) of debt due in 2015, 2017 and 2022, according to data from the agency on Bloomberg. The Magyar Nemzeti Bank cut rates by 25 basis points to 6.75 percent on Aug. 28, citing Hungary’s slide into its second recession in three years.
Rate reductions may continue as the four Monetary Council members appointed by Prime Minister Viktor Orban’s government outvote central bank President Andras Simor and his two deputies, according to Peter Attard Montalto at Nomura International Plc. Traders are betting on additional cuts of as much as 50 basis points before year end, according to forward rate agreements. “The rate cut lifted the bond market,” Sandor Jobbagy, a Budapest-based analyst at Intesa Sanpaolo SpA’s CIB Bank unit, wrote in an e-mailed comments yesterday. “The move also strengthened expectations for further easing this year.”
ECB bond-buying would not breach rules-Draghi (Reuters)
Purchases of short term sovereign bonds by the European Central bank would not breach European Union rules, the ECB's President Mario Draghi told European lawmakers on Monday, according to a recording obtained by Reuters.
Germany in row with Brussels over banking supervision (Reuters)
Germany clashed with Brussels on Monday over plans to give the ECB new banking supervision powers, saying it was unrealistic for it to oversee more than the bloc's biggest institutions and wrong to expect the new body to be in place by year-end.
Moody's changes EU rating outlook to negative (Reuters)
Moody's Investors Service has changed its outlook on the Aaa rating of the European Union to negative, warning it might downgrade the bloc if it decides to cut the ratings on the EU's four biggest budget backers: Germany, France, UK and Netherlands.
Posted by MW Chong at 9:57 AM
DTN Closing Grain Comments 09/04 14:31 Grains Finish Mostly Higher Tuesday (CME)
Corn and bean contracts were able to finish to the plus side but well off session highs, while the three wheat markets closed near unchanged due to a lack of interest from either side of the market.
Pro Farmer: After the Bell Wheat Recap (CME)
Wheat futures saw a choppy day of trade and ended low-range. Chicago and Minneapolis wheat closed narrowly mixed, while Kansas City wheat settled with slight gains in all but the front-month, which was fractionally lower. A flurry of wheat export buys this weekend and today initially supported wheat futures, but as gains in the corn market waned, attention shifted to the fact many countries were meeting their wheat needs via cheaper alternatives to U.S. supplies.
Wheat Market Recap Report (CME)
December Wheat finished down 3/4 at 888 3/4, 15 1/4 off the high and 7 3/4 up from the low. March Wheat closed unchanged at 899 1/2. This was 7 1/2 up from the low and 13 1/2 off the high. December Chicago wheat ended the day slightly lower but the July 2013 contract saw marginal gains into the close. Traders cited calendar spread selling was active in today's session. Kansas City and Minneapolis wheat finished the day lower as well. Support came from thoughts that the pace of Russian exports could stall in the next 1-3 months after this year's drought slashed wheat yields, which could push more demand to the US later this year. The Russian Agriculture of Ministry reported that Russian grain yields have fallen 27% from last year to 1.89 tonnes per hectare with 65% of the harvest complete as of September 3rd. Export inspections for the week ending August 30th were pegged at 25.45 million bushels vs. 18.89 the week prior and were well above market expectations of 10-15 million bushels.
The current inspection pace is 21.5% of the USDA estimate for this crop year vs. the 5 year average of 25%. The US Dollar traded slightly higher through the day which offered a bit of resistance to price gains. December Oats closed down 2 1/4 at 395 1/4. This was 10 3/4 up from the low and 18 3/4 off the high.
Pro Farmer: After the Bell Corn Recap (CME)
Corn futures fought back from an early afternoon price slump to end 3 3/4 to 7 3/4 cents higher, although that was well off session highs. Corn futures got the bulk of their price support from the soybean market today. But news that Japan purchased 180,000 metric tons of U.S. corn for 2013-14 did provide some fundamental support.
Corn Market Recap for 9/4/2012 (CME)
December Corn finished up 5 1/4 at 805, 10 off the high and 8 up from the low.
March Corn closed up 5 3/4 at 807 3/4. This was 7 3/4 up from the low and 9 off the high. December corn ended the day slightly higher but well off session highs made Monday night. Underlying support was seen from a sharply higher soybean market but calendar spread selling added resistance to gains in the September and December contracts. The USDA announced that US exporters sold 180,000 tonnes of corn to Japan for 2013/14 delivery this morning which added to the positive tone of the market but the price trend turned lower following reports that the Argentina government had approved 2.75 million tonnes of corn exports in 2011/12. The market continues to hear reports of worse than expected yields as harvest advances across the Corn Belt and the trade believes harvest could be near 11% complete in this afternoons harvest progress report.
Numerous private yield and production forecasts will be issued this week ahead of the September 12th USDA report which may have triggered buying interest early in today's session. Export inspections for corn for the week ending August 30th were pegged at 6.37 million bushels vs. 15.06 the week prior. This was well below trade expectations of 12-15 million bushels. The US Dollar traded slightly higher for most of today's session which added pressure to commodity markets, including corn. November Rice finished down 0.11 at 15.175, 0.085 off the high and 0.015 up from the low.
Indonesia corn imports seen down 35 pct in 2012 –association (Reuters)
High global corn prices will contribute to Indonesian imports falling by about 35 percent to 2 million tonnes this year, an industry group said on Tuesday.
GRAINS: Chicago soybeans climbed to a record high as falling exports from Brazil highlighted the decline in global supplies after poor production in South America and a historic drought in the United States.Corn and wheat jumped around 1 percent with rising expectations of global economic stimulus measures underpinning the commodity markets, including oil and metals. (Reuters)
SOFTS: ICE raw sugar and arabica coffee futures edged up in early trading readjusting to the London market after the U.S. Labor Day holiday in the prior session.ICE cocoa made a technical correction lower from overbought positions last week, as dealers tracked weather conditions in the main growing regions of West Africa before the start of the main crops. (Reuters)
Thai 2012/13 sugar output could miss previous forecast (Reuters)
The 2012/13 sugar crop in Thailand, the world's second-biggest exporter of the sweetener, is expected to be slightly lower than a forecast of 10.2 million to 10.4 million tonnes because the crop was hit by poor rain, a senior government official said.
‘Mounting Evidence’ of Bug-Resistant Corn Seen by EPA (Bloomberg)
There’s “mounting evidence” that Monsanto Co. (MON) corn that’s genetically modified to control insects is losing its effectiveness in the Midwest, the U.S. Environmental Protection Agency said. The EPA commented in response to questions about a scientific study last month that found western corn rootworms on two Illinois farms had developed resistance to insecticide produced by Monsanto’s corn. Rootworms affect corn’s ability to draw water and nutrients from the soil and were responsible for about $1 billion a year in damages and pesticide bills until seeds with built-in insecticide were developed a decade ago. The agency’s latest statement on rootworm resistance comes a year after the problem was first documented and just as U.S. corn yields are forecast to be the lowest in 17 years amid drought in the Corn Belt. Corn is St. Louis-based Monsanto’s biggest business line, accounting for $4.81 billion of sales, or 41 percent of total revenue, in its 2011 fiscal year.
“There is mounting evidence raising concerns that insect resistance is developing in parts of the corn belt,” the EPA said Aug. 31 in an e-mail. The studies of rootworms in Illinois and Iowa don’t confirm resistance in the field, Kelly J. Clauss, a spokeswoman for St. Louis-based Monsanto, said in an e-mail. More data is needed to prove resistance and the company is working with the EPA to investigate and respond to fields where rootworms cause “greater-than-expected damage,” Clauss said.
Cotton Glut Seen Extending Slump as Levi’s Costs Slide (Bloomberg)
Cotton warehouses from China to Australia are bulging with the biggest-ever glut, a year after record prices spurred farmers to expand output. Harvests will exceed demand for a third year, swelling stockpiles by 10 percent to 74.67 million 480-pound bales by August, the U.S. Department of Agriculture estimates. Inventories in China, the biggest user, will triple over two years to a record as domestic demand slumps to the lowest since 2005, USDA data show. Cotton may drop 10 percent to 67.87 cents a pound by the end of the year, according to the average of 20 analyst and merchant estimates compiled by Bloomberg. Slowing economic growth means the surplus will widen even as China, Australia, Brazil and India produce less this season, leading to the first global output decline in three years, the USDA predicts. Prices already plunged 66 percent from last year’s peak of $2.197 a pound, reducing costs for buyers from Hanesbrands Inc. (HBI), the maker of Champion apparel, to San Francisco-based Levi Strauss & Co.
“There’s an awful lot of cotton around,” said David Wookey, a managing director and trader at Isis Commodities Ltd., a cotton merchant in Boston, England, founded 17 years ago. “You’ve got a large stocks situation that’s been coupled with weaker global consumption.”
Oil Advances From One-Week Low as Crude Stockpiles Seen Falling (Bloomberg)
Oil rose from the lowest level in almost a week before a report that may show stockpiles fell the most since July in the U.S., the world’s biggest crude user. Futures advanced as much as 0.3 percent in New York after dropping 1.2 percent yesterday. Inventories probably slipped 5.5 million barrels last week, the most since the period ended July 27, as Hurricane Isaac shut crude output in the Gulf of Mexico, according to a Bloomberg News survey before an Energy Department report tomorrow. The American Petroleum Institute will release separate supply data today. Oil for October delivery increased as much as 32 cents to $95.62 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.55 at 9:24 a.m. Sydney time. The contract decreased $1.17 yesterday to close at $95.30, the lowest level since Aug. 30. Front-month prices are down 3.3 percent this year.
Brent oil for October settlement declined $1.60, or 1.4 percent, to $114.18 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $18.88. U.S. gasoline stockpiles probably fell 3 million barrels last week, according to the median estimate of nine analysts in the Bloomberg survey. Distillate supplies, a category that includes heating oil and diesel, dropped 1.5 million barrels, the survey shows. Production lost because of Isaac totals about 7.8 million barrels of oil and 33.7 billion cubic feet of natural gas, LCI Energy Insight, an energy analysis firm in El Paso, Texas, said on its website. About 52 percent of crude output and 29 percent of gas production from the Gulf of Mexico remained shut as of 12:30 p.m. East Coast time yesterday, the Bureau of Safety and Environmental Enforcement said on its website.
OIL-Oil up at around $116 on stimulus hopes
LONDON, Sept 4 (Reuters) - Oil prices rose for a fourth day to around $116 per barrel, supported by hopes for further stimulus measures from central banks in the United States and Europe, and a slow restart in the Gulf of Mexico after Hurricane Isaac.
"The main driver at the moment is the expectation around an ECB announcement on Thursday - investors are looking for some indications of more bond buying," said Filip Petersson, Commodity Strategist at SEB Commodity Research.
Iraq oil exports rise to 2.565 mln bpd in August-SOMO
BAGHDAD, Sept 1 (Reuters) - Iraq's oil exports rose to 2.565 million barrels per day (bpd) on average in August, their highest level for three decades, the head of the State Oil Marketing Organisation (SOMO) told Reuters on Saturday. Iraq exported 2.516 million bpd in July.
Exports from Basra in the south were 2.252 million bpd in August while shipments from northern Kirkuk were 313,000 bpd, including around 6,000 bpd by truck through Jordan, SOMO chief Falah Alamri said. "It's the highest export level in three decades and we are moving ahead to reach another record next month," Alamri said.
Russia's Aug oil hits post-Soviet high of 10.38 mln bpd
MOSCOW, Sept 2 (Reuters) - Russia extracted oil at a record pace of 10.38 million barrels per day in August, a level unseen since the collapse of the Soviet Union, as companies took advantage of high oil prices, Energy Ministry data showed on Sunday.
Rising production will be welcomed by the administration of President Vladimir Putin, who embarked on a social programme spending spree prior to his election campaign and return to the Kremlin in May. Oil and gas sales account for about half of state revenues.
Bullion Industry Says India May Raise Import Tax to Cut Deficit (Bloomberg)
India, the largest gold buyer, may raise an import duty for a third time this year to curb purchases and reduce a record current-account deficit, according to industry executives, who said an increase would hurt demand. “The government may look at increasing the duty to 7.5 percent,” Prithviraj Kothari, president of the Bombay Bullion Association, said in a phone interview. D.S. Malik, a finance ministry spokesman in New Delhi, declined to comment. The tax on bars and coins was doubled to 4 percent in March after imports jumped to a record 969 metric tons in 2011. A further increase may deter jewelry buyers and investors during India’s festival season, which starts this month, as a decline in the rupee against the dollar boosts domestic gold prices to an all-time high. Imports plunged 42 percent to 340 tons in the first half, according to the producer-funded World Gold Council.
“Any increase in duty will play havoc on the industry,” said Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation. “The industry is grappling with high gold prices and demand is slow.” Gold priced in dollars has risen 8.2 percent this year, supported by investor demand as central banks may add stimulus to support the recovery. Immediate-delivery bullion, which reached a record $1,921.15 an ounce in September last year, traded at $1,691.65 an ounce at 8:20 a.m. in Singapore.
Gold Tops $1,700 on Bets Central Banks to Boost Stimulus (Bloomberg)
Gold futures topped $1,700 an ounce for the first time since March on speculation that a sluggish global economy will spur central bankers to boost monetary stimulus, increasing demand for the metal as an inflation hedge. In August, a U.S. factory index showed contraction for the third straight month, and manufacturing in the euro area shrank more than estimated, suggesting the region’s economy may struggle to avoid a recession in the third quarter. Last month, gold’s jumped 4.5 percent, the most since January. “Bad economic news is good for gold,” Pratik Sharma, a fund manager at Miami-based Atyant Capital, said in a telephone interview. “People are getting additional confirmation that central banks are ready to unleash more stimulus measures.”
Gold futures for December delivery gained 0.5 percent from Aug. 31 to settle at $1,696 at 1:36 p.m. on the Comex in New York. Earlier, the price reached $1,701.60, the highest for a most-active contract since March 13. Floor trading was closed yesterday for a U.S. holiday. Federal Reserve Chairman Ben S. Bernanke said on Aug. 31 that the U.S. central bank will provide additional stimulus as needed. The European Central Bank may reveal details of a plan to buy bonds of debt-saddled nations when officials meet on Sept. 6. Gold surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of quantitative easing. Silver futures for December delivery rose 3.1 percent to $32.411 an ounce on the Comex, after reaching $32.435, the highest since April 13.
On the New York Mercantile Exchange, platinum futures for October delivery advanced 2 percent to $1,567.50 an ounce. Palladium futures for December delivery gained 1.9 percent to $641.45 an ounce.
Reuters Survey :
Malaysia Aug 2012 Crude Palm Oil
- Exports seen up 11.8% at 1.45 million tonnes from Jul 2012
- Stocks seen up 4.5% at 2.09 million tonnes from Jul 2012
- Output seen down 3% at 1.64 million tonnes from Jun 2012
Low soy crop to push palm oil price up -Oil World - Reuters
Surging soy prices to transfer demand to palm oil Demand will raise palm oil price Indonesia and Malaysia to up palm oil output
HAMBURG, Sept 4 (Reuters) - Record soybean prices will cause a major swing in demand towards cheaper palm oil in coming months which in turn will push palm prices up, Hamburg-based oilseeds analysts Oil World said on Tuesday.
“Global dependence on palm oil will rise significantly in the next 12 months to compensate (for) insufficient supplies of other vegetable oils,” Oil World said. “We expect palm oil prices to recover owing to increased export demand.”
Soybean prices remain close to a record high hit on Aug. 30 caused by concerns about drought devastation to the U.S. crop, following similar drought damage earlier this year to major exporters Brazil and Argentina.
But palm oil did not achieve the same price rises as seen in soyoil in August, Oil World said.
“Palm oil prices are undervalued,” it said.
The price discount of refined, bleached and deodorised (RBD) palm olein oil fob Malaysia against Argentine soyoil widened by around $100 a tonne fob in the past four weeks and in recent days touched $280 to $290 a tonne, Oil World said.
This price difference will transfer demand from soyoil to the leading palm oil exporters Indonesia and Malaysia but palm output is also likely to rise in Thailand, Central America and South America, it said.
“We now expect world palm oil production to reach around 54.0 million tonnes in Oct. 2012/Sept. 2013 compared with around 50.8 million tonnes in 2011/12,” it said.
Indonesia’s Oct. 2012/Sept. 2013 palm oil output will rise to 26.60 million tonnes from 25.02 million tonnes in 2011/12 and Malaysia’s 2012/13 output will rise to 19.36 million tonnes from 18.06 million tonnes, Oil World estimates.
Pro Farmer: After the Bell Soybean Recap (CME)
Soybean futures posted an all-time high of $17.89 on the weekly continuation chart, but ended low-range. September through January futures ended with gains of 6 1/2 to 15 1/4 cents, with the rest of the market closing mostly 30-plus cents higher. Meal ended mixed amid bull spread unwinding, with soyoil stronger. Early support in the bean pit came from ideas the market had more work ahead of it to ration shrinking supplies.
Soybean Complex Market Recap (CME)
November Soybeans finished up 11 3/4 at 1768 1/4, 20 3/4 off the high and 12 3/4 up from the low. January Soybeans closed up 15 1/4 at 1766 1/4. This was 12 1/2 up from the low and 15 1/4 off the high. December Soymeal closed unchanged at 533.4. This was 1.6 up from the low and 8.4 off the high. December Soybean Oil finished up 1.14 at 58.22, 0.38 off the high and 0.96 up from the low.
November soybeans closed higher on the day and the July 2013 contract surged to post a new high for the move. Some talk of tightening supply ahead due to poor closing weather for the western Corn Belt helped to support. Parts of South Dakota and Minnesota have had very little rain in the past two weeks and the region saw temperature highs into the 100's again this past weekend. Traders noted heavy selling of calendar spreads which added significant pressure to the September and November contracts. Export inspections came in at 15.13 million bushels which was higher than expected and shows strong upfront demand. With only 1 day left in the season (inspections for the week ending August 30th) cumulative shipments have reached 101.2% of the USDA forecast for the season. This means that old crop exports will be revised higher and this will pull down beginning stocks. Traders see some harvest progress this week and this has helped to limit the advance as basis levels slip.
Talk that Argentina meal is competitively priced with US meal was also seen as a limiting factor. Talk of low bean pod counts and talk of even smaller production for the September report continue to add underlying support to the market.
EDIBLES: Malaysia palm oil futures closed lower after rising to their highest level in a week, as traders booked profits from a rally triggered by record high soybean prices. (Reuters)