Monday, October 8, 2012

20121008 1806 FCPO EOD Daily Chart Study.

FCPO closed : 2368, changed : -47 points, volume : lower.
Bollinger band reading : downside biased.
MACD Histogram : recovering, seller taking profit.
Support : 2350, 2300, 2250, 2230 level.
Resistance : 2400, 2450, 2490, 2520 level.
Comment :
FCPO closed recorded loss with lesser volume changed hand. Soy oil currently trading weaker after last Friday closed recorded small loss while crude oil price currently trading lower by more than 1%.
Price resume falling lower after recent technical rebound on higher stockpile concern as traders awaits Wednesday official exports, output and inventories data with news on Malaysia government delays lower crude palm oil exports tax decision.
Daily chart study revised to suggesting a downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20121008 1722 FKLI EOD Daily Chart Study.

FKLI closed : 1663.5 changed : +1 point, volume : higher.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : weakening, buyer taking profit.
Support : 1660, 1657, 1651, 1645 level.
Resistance : 1670, 1680, 1690, 1700 level.
Comment :
FKLI closed recorded marginal gain with improved volume traded doing 3 points premium compare to cash market that closed flat. Last Friday U.S. market closed mixed and today Asia markets traded mostly lower while European markets currently registering loss.
World markets traded lower despite last Friday better than forecast unemployment data from the U.S. on slower earnings concerns while awaits Europe area finance ministers debt crisis meeting outcome.
FKLI daily chart study continue calling a pullback correction upside biased market development.
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.

20121008 1613 Global Markets & Commodities Related News.

STOCKS: European shares looked set to open lower and Asian shares fell as investors remained cautious about the outlook for the global economy and corporate earnings despite better-than-expected U.S. jobs numbers last week. The S&P 500 broke a four-day string of gains, ending slightly lower on Friday as an unexpected drop in the U.S. unemployment rate was overshadowed by concerns about the coming earnings season, which begins with Alcoa next week. (Reuters)

FOREX-Dollar dips vs yen, retreats from 2-week high
SINGAPORE, Oct 8 (Reuters) - The dollar eased against the yen on Monday, backing off from a two-week high hit late last week after a surprise drop in the U.S. unemployment rate soothed investor concerns about the U.S. economy's outlook.
The dollar fell 0.1 percent to 78.58 yen , down from Friday's high of 78.88 yen hit on trading platform EBS, the U.S. currency's strongest level since Sept. 19.

Semblance of stability as world financial leaders meet (Reuters)
When finance officials from the world's leading economies meet this week, it is against the backdrop of a global economy that shows a glint of stability, with a deluge of Chinese data due in the coming days at best expected to confirm that.

HSBC China services PMI recovers to 54.3 after one-year low (Reuters)
China's services sector rebounded in September after its growth hit a one-year low in August, according to a private sector survey on Monday that follows last week's much more gloomy official assessment.

Euro zone mulls 20-bln euro separate budget -report (Reuters)
European diplomats discussing the possibility of a separate budget to improve monetary union in the euro zone are considering a sum of around 20 billion euros ($26 billion), according to the Financial Times Deutschland (FTD).

ANALYSIS- Australia's success story takes a chilling turn
SYDNEY, Oct 8 (Reuters) - Australia faces a gathering threat to its 21-year run of recession-free growth that will likely require the central bank to cut interest rates to record lows and keep them there for some time, if the winning streak is to stretch to 22.
The slowdown in China has deflated prices for Australia's key resource exports while forcing miners to scale back on their most ambitious expansion plans. When the country reported its widest trade deficit in three years for August, it seemed just a taste of what was to come.

FOREX: The dollar eased against the yen, backing off from a two-week high hit late last week after a surprise drop in the U.S. unemployment rate soothed investor concerns about the U.S. economy's outlook. (Reuters)

GRAINS: U.S. corn slid for a second consecutive session, as investors took into account analyst forecasts estimating higher production ahead of a key U.S. government report on supply and demand of agricultural products due out later this week. Wheat rose 0.6 percent, recouping some of Friday's losses, as forecasts of dry weather this week in much of Australia's grain belt raised concerns about a further reduction in yields in the world's second largest exporter. (Reuters)

Next leg of soy drought rally hinges on USDA (Reuters)
The U.S. soybean market, which has tumbled 11 percent in three weeks following a drought-fueled rally, could get some fresh price direction when the U.S. government updates crop yield and production estimates for the United States on Thursday.

Euro Coal-Prices steady, market watches S.Africa strikes
LONDON, Oct 5 (Reuters) - Prompt physical coal prices were little changed on Friday after a series of trades for South African, delivered Europe and Newcastle cargoes.
Prices dipped by up to 25 cents a tonne, traders said.

Betting on black: China risks $14 bln on coal-to-gas pilot (Reuters)
China is spending $14 billion on pilot projects to turn coal in remote parts of the country into natural gas, a risky bet that could help meet the country's surging demand for the cleaner fuel.

OIL: Brent crude slipped below $112 per barrel, dropping for a second straight session on concerns a fragile global economy could curb oil demand, but supply worries stemming from tensions in the Middle East may help check losses. (Reuters)

Shanghai steel hits near 2-month top after break on demand hopes
SINGAPORE, Oct 8 (Reuters) - Shanghai rebar steel futures climbed nearly 2 percent on Monday to the highest in almost two months as Chinese traders returned from a week-long break armed with hopes demand in the world's top consumer will pick up as the economy stabilises.
Steel's rise suggests prices of raw material iron ore are likely to rebound this week, with Chinese mills also expected to return to the spot market to replenish stocks.

Higher risk investors eye minor metals on supply outlook
LONDON, Oct 5 (Reuters) - A tight supply outlook is expected to lift prices for a number of minor metals over the next three to five years, although investors will need to take on a higher degree of risk to endure illiquid and opaque markets in order to reap benefits.
While the weak global economy has sapped appetite for risk-sensitive commodities, longer-term investors are looking to strategic metals indium, germanium and tungsten as supplies are restricted and demand for high-tech gadgets is expected to remain resilient.

BASE METALS: London copper fell more than 1 percent, giving up last week's gains as worries about the world economy resurfaced, while traders awaited data from top consumer China later this week for clues on demand. (Reuters)

PRECIOUS METALS: Gold lost half a percent, on course for its sharpest one-day loss in three weeks as a surprisingly upbeat U.S. job market report dented the precious metal's appeal as a hedge against inflation. (Reuters)

Managed money increases US gold, silver, copper longs
Oct 5 (Reuters) - Hedge funds and money managers bought enough gold futures last week to acquire the largest overall bullish position in 7 months, as rising risk appetite among investors and hopes of more bullion-friendly monetary stimulus boosted gold buying.
For a third week, speculators also boosted platinum net longs to the largest effective bullish bet since at least October 2007 when Reuters began tracking the Commodity Futures Trading Commission's Commitments of Traders data. Supply worries due to mine labor unrest in South Africa prompted speculators to buy.

METALS-LME copper down as dollar firms after US jobs data
SHANGHAI, Oct 8 (Reuters) - London copper fell more than 1 percent on Monday, giving up last week's gains as worries about the world economy resurfaced, while traders awaited data from top consumer China later this week for clues on demand.
Fears over the outlook for the global economy, struggling with a worrisome debt crisis in Spain and Greece and a fragile economic recovery in the United States, are blunting optimism over the measures major central banks rolled out last month to support fragile economies.

PRECIOUS-Gold dips as upbeat US jobs data saps buying interest
SINGAPORE, Oct 8 (Reuters) - Gold lost half a percent on Monday, on course for its sharpest one-day loss in three weeks as a surprisingly upbeat U.S. job market report dented the precious metal's appeal as a hedge against inflation.
The U.S. unemployment rate unexpectedly dropped to a near four-year low of 7.8 percent in September, raising some doubts on whether the stimulus measures put in place by the Federal Reserve to boost the labour market would last as long as initially thought.

Baltic index up for sixth day on improved sentiment
Oct 5 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, gained for the sixth straight day on Friday on anticipation that China would build up inventories after returning from a week-long holiday.        
The main index, which gauges the cost of shipping commodities including iron ore, coal and grain, rose 30 points or 3.6 percent to 875 on Friday.

20121008 1455 Palm Oil Related News.

VEGOILS-Palm oil inches lower in choppy trade, industry data eyed
Palm oil's rebound limited to 2,503 ringgit -technicals
    * Malaysia delays decision on crude palm oil export tax
    * Dalian's soybean oil falls to 4-month low after week-long
    * Coming up: Malaysia Sept stocks, output on Wednesday

 (Updates prices, adds details)
    By Chew Yee Kiat
    SINGAPORE, Oct 8 (Reuters) - Malaysian palm oil futures
slipped on Monday as traders braced for rising inventory levels,
but losses were capped by bargain-hunting after the market
suffered steep declines last week.
    A monthly report by the Malaysian Palm Oil Board (MPOB) on
Wednesday could show September stock levels hitting a record
high, setting a bearish tone for fundamentals.
    But prices look poised to stage a technical rebound after
falling to a near 3-year low and posting a third straight weekly
loss last week.
    "The market has no specific direction to go yet after
falling so much," said a Singapore-based trader with a global
commodities house.
    "We have the MPOB report for September's end-stock. The
market has been expecting the worst so if it is a bit better
than market expectations, that will help for a good rebound,"
the trader added.
    By the midday break, the benchmark December contract
 on the Bursa Malaysia Derivatives Exchange had inched
down 0.3 percent to 2,409 ringgit ($785) per tonne, after
trading in a 2,396-2,446 ringgit range.
    Total traded volumes stood at 15,743 lots of 25 tonnes each
in choppy trading, higher than the usual 12,500 lots.
    Technicals showed palm oil is expected to end its rebound at
or below 2,503 ringgit per tonne, and fall towards 2,230
thereafter, said Reuters market analyst Wang Tao.
    Palm oil investors are looking out for Malaysia export data
for Oct. 1-10, also on Wednesday, after weaker-than-expected
numbers in September failed to alleviate concerns over high
stock levels.
    The market received a temporary boost last week on a
possible Malaysian move to slash crude palm oil export taxes to
8-10 percent from 23 percent, but an official said on Friday
that a decision had been delayed.
    China's soybean oil futures fell to a 4-month low on Monday
after trade resumed following a week-long holiday and in line
with steep losses on the Malaysian palm oil market last week.

    The most active January 2013 soybean oil contract
on the Dalian Commodity Exchange was trading 2.3 percent lower
at 9,062 yuan per tonne by the midday break, after going as low
as 9,052 yuan, a level last seen on June 5.
    In a bearish sign for palm oil, Brent crude slipped below
$112 per barrel on Monday, dropping for a second straight
session on concerns a fragile global economy could curb demand,
but supply worries stemming from tensions in the Middle East may
help check losses.
    In other vegetable oil markets, U.S. soyoil for December
delivery was almost flat in Asian trade.

20121008 1115 Global Markets & Energy Related News.

GLOBAL MARKETS-Asia shares down after earnings caution sets in
SINGAPORE, Oct 8 (Reuters) - Asian stocks edged lower and other riskier assets such as commodities fell as investors remained cautious about the outlook for the global economy and corporate earnings despite better-than-expected U.S. jobs numbers at the end of last week.
"Although the U.S. unemployment figures were encouraging, this in itself is not sufficient to create momentum in the market towards one direction or another," said Cho Byung-hyun, an analyst at Tong Yang Securities in Seoul.

OIL-Oil dips as weak global economy offsets rise in US jobs
NEW YORK, Oct 5 (Reuters) - Oil prices fell in volatile trading on Friday and posted weekly losses as a fragile global economy and uncertainty about Europe's debt crisis offset support from a better-than-expected U.S. employment report.
"I don't really believe the jobs data, many oil traders don't, and there is a feeling that if prices get too high the SPR (Strategic Petroleum Reserve) will be released before the election," said Richard Ilczyszyn, chief market strategist and founder of in Chicago. Ilczyszyn added that the oil market is well supplied and that the strong refined products futures market has been lifted by refinery and supply issues.

Oil losing grip on transport fuel market-report
LONDON, Oct 8 (Reuters) - The transport industry that burns over half the world's oil is wriggling free from dependence on gasoline and diesel at a rate that should alarm producers, an independent research report said on Monday.
"The oil industry can no longer rely on its monopoly of the transport market," said the Chatham House study in its principle finding.

Hedge fund bets on oil prices down 22 pct in 2 weeks
Oct 5 (Reuters) - Hedge funds and other large speculators cut their bets on higher oil prices for the second straight week in the seven days to October 2, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
The speculator group cut its combined net long position in U.S. crude oil futures and options traded in New  York and London by 10,222 contracts to 188,993 during the period.

U.S. CFTC-Speculators sharply increase bullish natgas bets
Oct 5 (Reuters) - Money managers, including hedge funds and commodity trading advisers sharply increased their net length in natural gas futures, options and swaps in the week to Oct. 2, data from the U.S. Commodity Futures Trading Commission showed on Friday.
The investor group added 62,645 contracts in NYMEX natural gas futures and options, NYMEX Henry Hub Swaps, NYMEX Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps, raising their net long position to 138,823.

NATURAL GAS- US nearby natgas futures end lower, deferreds higher
NEW YORK, Oct 5 (Reuters) - U.S. natural gas futures ended lower in the front-month November contract pressured by Thursday's bearish weekly inventory report and by forecasts for mild mid-month weather that should slow demand.
"I think November pulled back today because the storage number (EIA build) came in above expectations, and the extended weather forecasts look like the back half of October will be trending mild," said Steve Mosley at SMC Advisory Services.

EURO COAL-Prices steady, market watches S.Africa strikes
LONDON, Oct 5 (Reuters) - Prompt physical coal prices were little changed on Friday after a series of trades for South African, delivered Europe and Newcastle cargoes.
Prices dipped by up to 25 cents a tonne, traders said.
"Swaps rallied and want to go higher despite coal's fundamentals remaining fairly weak but physical prices did not move," one European trader said.

20121008 1048 Malaysia Corporate Related News.

Oversea-Chinese Banking Corp and  CIMB Group Holdings Bhd are considering bidding for General Electric Co’s US$1.6bn stake in Thailand’s Bank of Ayudhya Pcl, said three people with knowledge of the matter.  The two lenders have signed non-disclosure agreements that allow them to examine in closer detail the accounts of the Bangkok-based bank, the people said, asking not to be identified as the process is private. GE’s finance unit owns 25% of Thailand’s fifth-largest lender. Malayan Banking Bhd, Malaysia’s biggest lender, would be interested in one-on-one discussions with GE about its Bank of Ayudhya stake, though doesn’t want to compete with other bidders, one person familiar with the matter said. Maybank hasn’t signed a non-disclosure agreement, this person said. (BT)

Maybank proposed to place out 300m new shares, representing 3.68% of its enlarged share capital as at 30 Sep 12, with a possible upsize, depending on investor demand. At this juncture, the identity of the placees of the shares is unknown. The proposed private placement will not be implemented in tranches. The issue price has also not been determined yet. (BMSB)

WCT proposed an internal restructuring exercise involving the creation of WCT Holdings (WCTH), which will assume the listing status of  WCT Berhad (WCTB). The group's existing key business segments, i.e. construction, property development, property investment and concessions, will remain under WCTB and WCT Land. The shareholding structure post restructuring will be unchanged. All ownership of shares and warrants will be exchanged between WCTB and WCTH on a 1-for-1 basis. WCTB's ESOS will be terminated accordingly. The consent of all lenders/bond holders of WCTB may be required as the exercise may involve novating WCTB's borrowings to WCTH, where ever applicable. The internal reorganisation is targeted to be completed in 2Q13. (BMSB)

LTE will give DiGi leverage to seriously pursue the large screen (notebook, PC) market, said DiGi's CEO Henrik Clausen. "...with the launch of LTE, we will be more aggressive in large screens because we will have a more effective technology to provide services to the market on top of a more effective network." "We are waiting anxiously for the spectrum allocation because we are ready to launch LTE services," says Clausen. (The Edge Weekly)

The Malaysian government has deferred a decision on a proposal to cut the export tax on  crude palm oil to 8%-10% from 23% because it needs more time to study the issue, an aide to Commodities Minister Bernard Dompok said last Friday. The Malaysian government will make a decision soon, the official, who declined to be named, said in a text message.  Malaysian palm oil refiners have been seeking a lower export tax for nearly a year, since the Indonesian government cut its export tax, boosting Indonesian refiners’ margins and enabling them to capture market share from their Malaysian competitors. (Dow Jones)

Indonesia, will maintain its current palm oil  export tax  despite a potential export tax cut by its top competitor, Malaysia. Deputy Trade Minister Bayu Krisnamurthi said the current 10% export tax could further boost the development of the local downstream industries. He said the government needs to monitor a three-year average prices before changing its export tax policy instead of reacting to a single price drop. "Business players expect a consistent (government's) policy. We must anticipate the market, but at the same time, must remain consistent," Bayu was quoted. (Bernama)

Felda Global Ventures Holdings (FGV) plans to develop a complete supply chain of its three core businesses  - palm oil, sugar cane and rubber  - in Myanmar. To realise the goal, the group has signed a memorandum of understanding (MoU) with local partner, Pho La Min Trading Ltd (PLM), to explore rubber plantations and rubber processing in the country. President and Chief Executive Officer Sabri Ahmad said under the deal, a joint-venture company will be set up to develop rubber business in three phases, starting with the establishment of a processing plant. "We hope to conclude this in December or early next year and then we will plan to grow rubber trees on 30,000 hectares in Myeik. "As for the third phase, we are looking at downstream opportunities such as tyre manufacturing and rubber glove," he added after the MoU signing. (Starbiz)

Alliance Financial Group (AFG) has quashed market rumours that it plans to sell its investment banking operations. "The investment bank is still an important part of our franchise. It's not for sale," group CEO Sng Seow Wah said. (BT)

The construction sector will remain the darling of the Malaysian economy for the next couple of years if its performance in 1H12 is a measure.  CIDB CEO Datuk Seri Dr Judin Abdul Karim is confident that the momentum can be maintained through 2016. "For the next few years, the projects would have already started, and they are adequately large to pull us through by which time the world economy would have picked up its reins," he said. Thanks to robust activity in the civil engineering and residential sub-sectors, the construction sector expanded by 18.9% in 1H12, the fastest pace enjoyed since 1995. The construction sector grew by 22% Apr-Jun 2012  and he does not see any reason why 3Q12  would not be as good if not better. "The MRT and oil and gas projects will change the face of the industry as they are international and offer our contractors to move up the value chain and become competitive." he said. (BT)

The US$1.5bn initial public offering (IPO) from broadcast TV operator, Astro Malaysia Holdings, became Malaysia's third multi-billion dollar listing this year and pushed the volume of IPOs from Malaysian companies to US$7.3bn for year-to-date 2012, already beating the all-time annual record set in 2010 (US$6.9 bn). According to Thomas Reuters Investment Banking Scorecard, bolstered by a flurry of offerings, Kuala Lumpur listings now rank fourth globally behind Nasdaq, the New York Stock Exchange and Tokyo First Section, by proceeds raised. It said CIMB Group leads the ranking for Malaysia IPO underwriting this year with proceeds of US$1.4bn for 20.1% market share, followed by Deutsche Bank and Maybank, each with 12.2% market share this year. JP Morgan and Morgan Stanley round out the top five. (StarBiz, Bernama)

Axiata Group is vying for a piece of Myanmar's market. Axiata has said it hopes to play a major role in the Myanmar telecoms market and has no qualms about partnering a Burmese party for that purpose. Global players like Norwegian firm Telenor (parent of DiGi.Com Bhd), Digicel, the largest mobile operator in the Caribbean, Vietnam's VNPT-Fujitsu, Russian heavyweight VimpelCom and Sweden's TeliaSonera AB, are all jockeying for a chance for the four telecom licences that will be dished out, according to reports. Telecoms suppliers like China's Huawei are fast positioning themselves as network suppliers and consultants. The Myanmar government is in the midst of selecting a consultant that will oversee an upcoming tender for the telecom licences. It is yet unclear when the tenders will be out. (StarBiz)

SapuraKencana Petroleum has acquired 38%  in derrick lay barge, Quippo Prakash from Indian company, Quippo Oil and Gas Infrastructure Ltd (QOGIL) for US$122m (RM373m). Outfitted in Singapore and commissioned in 2010, the state-of-art offshore construction support barge, upon delivery was placed on term charter with a major offshore contractor in South East Asia, generating positive returns and cashflows immediately. Equipped with a 2000MT crane, the barge was designed to provide offshore construction support and underwater pipe-lay capability. (BT)

Perisai Petroluem is poised to move one notch up the ladder in the supply chain of the industry by going into the lucrative floating, production, storage and offloading (FPSO) market. Sources said that Perisai is looking at acquiring a stake in an FPSO vessel from its shareholder  Ezra Holdings Ltd and the vessel is to be used for providing services to an offshore O&G field in Malaysia. Sources said a consortium led by Ezra has put in a bid to supply the FPSO vessel to cater to the North Malay Basin field located off the coast of Terengganu and Kelantan. (Financal Daily)

Gadang Holdings has accepted an LOA from  Petronas to conduct site preparation works for Phase 1 of Petronas' proposed  Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, Johor. Sources said the contract is valued at some RM330m. MD/CEO Tan Sri Kok Onn said the group was looking towards “better performances” in the coming quarters, as a result of the inflow of jobs. Currently Gadang's profits come mostly from its engineering and construction unit. It does have other business segments such as plantation, property development and utilities. Outstanding order book stood at about RM1.7bn  which will last for another two to three years. “And we are actively participating in tenders of more than RM5bn,” he said. As for its property division, ongoing GDV stood at RM894m. Gadang is also actively involved in the Indonesian water supply sector. Over the years, Gadang's wholly owned Asian Utilities Pte Ltd has acquired controlling stakes in five Indonesian water supply companies. It's water  supply division contributed about 13% to group pre-tax profit in the last fiscal year. Gadang is actively exploring investment opportunities in other utility segments and could partner with parties to work on projects to build and manage mini-hydro power plants in Indonesia, he said. Gadang made inroads into the plantation sector about three years ago after joining forces with landowners to develop two parcels of land, measuring 5.2k acres in Ranau, Sabah. Planting for the entire land is scheduled to be completed by the end-12. (StarBiz)

Sunway's property development division is on track to achieve its targeted sales of RM1.3bn in 2012. YTD sales is RM1bn, MD of property division (M'sia) Ho Hon Sang said. The major drivers of property sales this year include new phases at Sunway South Quay,  and Sunway Velocity in KL. New developments such as Sunway Geo @ Sunway South Quay, Sunway Velocity's Phase 3C1 and Sunway Wellesley Phase 1 in Penang had recorded take-up rates of more than 80% during previews. GDV of these projects is RM700m. He said the recent preview of Sunway Geo's 31 units of retail shops and 220 units of flexi suites, priced at RM7m and RM400k onwards per unit, has received overwhelming response. “The shops recorded take-ups of more than 80%.” he said. Sunway has undeveloped land bank of 2.8k acres, with a possible GDV of RM32bn. About 93% of the group's undeveloped land bank is in Malaysia with a GDV of RM24.5bn. The balance is in Singapore. The group's launch plans in the Klang Valley in 4Q12 include townhouses in Sunway Montana (phase two) at Desa Melawati, cluster homes in Sunway Alam Suria (phase 2C1) in Shah Alam and three-storey park residences in Sunway Eastwood (phase two) in Puchong. (StarBiz)

DiGi believes it is only a matter of time before it closes the gap with its rivals. The company is currently in the midst of a three-year transformation agenda, which ultimately allows it to compete better against rivals in terms of quality of services as well as prices. "There are two things you need to make sure in order to make data profitable  - first is to ensure that you can provide the capacity and coverage at the right cost and therefore the right price, and that's why we are currently in a transformation agenda. All that is to drive down our unit cost. By driving down unit cost, we will be able to support the demand of our customers in a profitable way," CEO Henrik Clausen said. DiGi is embarking on a network-swapping exercise - swapping the older equipment with newer ones that could handle  all 2G, 3G and the Long-Term Evolution (LTE) technologies under one platform. Besides the swapping of its network, the company is also teaming up with Celcom Axiata to share base station sites and to build fibres. By the end of this year, the partnership  is expected to have built about 1,000km of fibres. Clausen added that with the LTE technology and fibre in place, it will allow DiGi to re-enter the big screen mobile broadband market more effectively. DiGi has committed a capital expenditure of RM700m to RM750m in 2012, plans to boost its 3G coverage from about 50% currently to 70% in the first half of next year. It is also keeping its fingers crossed on the reallocation of the 900Mhz spectrum. DiGi currently has only 4 MHz of the 900MHz spectrum band,  comprising 2 MHz it owns and 2 MHz it is leasing from. In contrast, its rivals Celcom and Maxis have more than 30MHz. (BT)

Lion Forest Industries Bhd's wholly owned subsidiary, LFIB Plantations Sdn Bhd, has entered into an agreement with PT Karya Tekhnik  Utama and Kyosen Transport Pte Ltd to acquire the entire stake in Indonesia based PT Varita Majutama for RM197.63m. PT Varita has a total landbank of 52,641ha in Papua Barat, Indonesia. (Malaysian Reserve, Bursa Malaysia)

The softened global hard-disk drive (HDD) market is driving two local HDD component manufacturers to pursue different business directions.  Eng Teknologi Holdings will produce components such as actuators and baseplates for the new 5mm-thick HDD used in ultrabooks and hybrid drives starting early next year. Meanwhile, Dufu Technology Corp will work towards reducing the contribution of its HDD component business to about 60% in 2013 from 70% presently. Eng Teknologi CEO Datuk Y.K. Teh said that the multimedia storage sector, servers, hybrid drives and ultrabooks would continue to drive the demand for HDD for at least another 5 to 10 years. “Due to competition from tablets, the growth may not be double-digit percentage but will be single digit. A key area of growth is the hybrid drive segment, which uses both solid state drives and thinner HDD to enable quicker access to data,” he said. Dufu CEO P.Y. Yong said the group expected global demand to remain flat for the next two years due to the growing popularity of tablets using solid state drives. Yong said the group would ramp-up production of medical, sensor and control devices to reduce the contribution of HDD components to its revenue in 2013. “We are returning to the black this year, thanks to these new products and a weakened ringgit, which boosted margins. (StarBiz)

20121008 1047 Local & Global Economy Related News.

Exports declined 4.5% yoy in Aug (-2.6% in Jul) while imports increased by 2.8% yoy (+9.5% in Jul), resulting in a trade surplus of RM7.1bn (RM3.6bn in Jul). Economists had forecast for a 1.5% decline in Aug. In 8M12, exports rose 1.5% while imports increased 7.4%. (BT)

Bank Negara Malaysia’s (BNM) international reserves stood at RM421.3bn (US$137.5bn) as at 28 Sep 2012, up from RM432.2bn (US$135.3bn) as at 14 Sep 2012. The reserves position was sufficient to finance 9.2 months of retained imports and was 3.8 times the short-term external debt. (BNM)

US non-farm payrolls gained 114,000 in Sep (a revised 142,000 in Aug), slightly higher than the consensus estimate of 113,000. The  unemployment rate dipped to 7.8% from 8.1% in Aug, better than consensus of no change. Average hourly earnings gained 0.3% mom (no change in Aug), overshooting consensus of 0.2%. The  average workweek of all employees ticked up to 34.5 hours from 34.4 hours in Aug and the consensus estimate. Private payrolls gained 104,000 from a revised 97,000 in Aug, undershooting consensus of 130,000. (Bloomberg)

The US Monster Employment Index fell three points in Sep to 153 from 156 in Aug, indicating a mom slowing in online recruiting activity.  Small monthly declines were posted by manufacturing, wholesale trade, educational services, and public administration, whilst small gains were posted by utilities, information, and retail trade. (Bloomberg)

US consumer credit rose  US$18.12bn in Aug, the biggest gain since May, following Jul's revised  US$2.45bn decline. Revolving credit, which mostly measures credit-card use, climbed  US$4.2bn. Nonrevolving credit, which includes student and auto loans, rose US$13.92bn. (Reuters)

The US federal budget deficit for the just-ended 2012 fiscal year shrank by US$207bn from the prior year to register at US$1.09tr, but still marked its fourth straight year above  US$1tr.  The deficit  equalled about 7% of US  GDP, down from 8.7% in 2011, 9% in 2010 and 10.1% in 2009, but it was still greater than in any other year since 1947. (Reuters)

Euro-zone finance ministers meeting today are likely to make a positive statement on Greece’s progress toward meeting austerity targets needed to free the nation’s next bailout payment, European Union Commissioner for Economic and Monetary Affairs Olli Rehn said. (Bloomberg)

Germany will start talks with Singapore next week on a deal to prevent its citizens from  evading taxes by shifting their money to the Asian state, a government source said. (Reuters)

Toyota plans to reduce output at its car factories in China by more than half this month and suspend exports of Lexus luxury vehicles to the country, in the latest sign that a consumer backlash in China sparked by a territorial dispute between the two countries is hurting Japanese brands. (FT)

Overall retail sales revenue in  China grew 15% to hit Rmb800.6bn (US$127.4bn) during the National Day holiday, which coincided with the Mid-Autumn Festival to provide a rare eight-day break, a cool down from the 17.5% growth last year during a seven-day holiday. (Reuters)

India said on Saturday its financial markets were safe from "systemic risk" after a more than 900-pt "flash crash" in the National Stock Exchange's Nifty index caused by erroneous trading orders. (CNA)

Thailand’s Commerce Ministry is rushing to adjust its export strategy for major traditional markets, particularly Asean and other trading partners with free trade agreements with Thailand. (The Nation)

Industrial estates in Bangkok and the East have been warned to be on alert for heavy rainfall heading towards Thailand. Somchai Baimuang, deputy director-general of the Meteorological Department, said 90% of Bangkok will experience heavy rainfall today. Army chief Prayuth Chan-ocha has ordered all army units to be prepared. Flood-relief materials, including 880,000 sandbags, have been mobilised to deal with possible flooding in Bangkok. (Bangkok Post)

Exports from Indonesia in 2012 is expected to fall between 5 to 9% over last year’s US$203.62bn. Edy Putra Irrawaddy, Deputy Coordinating Minister for Economic Affairs, Industry and Trade, said the decline in export was due to lower commodity prices, declining global demand due to the economic crisis, and the downstream program. (IFT)

Vietnamese foreign reserves surged from US$9bn last year to US$20bn at the end of last month, equivalent to 2.4 months of imports and the highest level since 2009, according to Asian Development Bank figures. (Vietnam News)

Inflation in the Philippines eased to 3.6% yoy in Sep (3.8% in Aug), which was lower than analysts had been expecting. Core inflation also moderated to 3.8% (4.3% in Aug). (Bloomberg)

The Philippines’ foreign reserves for Sep stood at US$81.9bn, higher than US$80.7bn in Aug. (Bloomberg)

Thailand’s foreign reserves for the week ended 28 Sep rose a touch to US$183.6bn, from US$183.4bn the previous week. (Bloomberg)

20121008 0943 Global Market Related News.

Asian Stocks Drop Before European Finance Ministers Meet (Bloomberg)
Asian stocks dropped, with a regional index that excludes Japan heading for its first decline in three days, ahead of a meeting by European finance ministers today aimed at easing the region’s debt crisis. LG Display Co. (034220), the world’s second-largest maker of liquid- crystal displays that gets about 18 percent of sales from Europe, slipped 1.9 percent in Seoul. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, fell 0.9 percent as crude dropped for a second day. QR National Ltd., Australia’s No. 1 haulage company, jumped 4.6 percent after announcing a share buyback. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) fell 0.3 percent to 443.50 as of 8:34 a.m. in Hong Kong before trading in the city begins. Japanese markets are closed today, while China will resume trading following a week-long holiday. European finance ministers will meet in Luxembourg today, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the sovereign-debt crisis erupted.
“Europe isn’t quite finished discussing its policy response to the crisis,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “There would be some posturing by countries like Spain and Italy to extract the best bailout terms. That would generate some negative and positive headlines. Markets have had a good run and we’ll probably see some consolidation.”

U.S. Stocks Erase Gains as Optimism Over Jobs Data Fades (Bloomberg)
U.S. stocks erased gains, after an early rally among benchmark indexes, as optimism about an unexpected drop in the American unemployment rate faded and Apple Inc. shares slumped. Apple tumbled 2.1 percent, helping to reverse an early advance among technology shares. Bank of America Corp. (BAC) dropped 1 percent after surging as much as 2.6 percent. Zynga Inc. (ZNGA) slid 12 percent after cutting its forecast for full-year bookings. Avon Products Inc. climbed 7.2 percent as the door-to-door cosmetics seller said Andrea Jung will step down as executive chairman. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,460.93 at 4 p.m. in New York, after climbing as much as 0.7 percent. The index rose 1.4 percent this week. The Dow Jones Industrial Average added 34.79 points, or 0.3 percent, to 13,610.15, the highest level since December 2007. Volume for exchange-listed stocks in the U.S. was 5.7 billion shares, or 4.6 percent below the three-month average.
“Today’s trading is a pattern we’ve seen before this week, with a strong start and then we give up gains later in the day,” Frederic Dickson, who helps oversee about $32 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a phone interview. “There’s still a lot of the dark cloud of the European financial situation hanging over the market, which sets the tone for the short-term intraday trading.” The unemployment rate unexpectedly fell to 7.8 percent in September, the lowest since President Barack Obama took office in January 2009, as employers took on more part-time workers. The economy added 114,000 workers, in-line with economists’ estimates, and August’s growth was revised higher by 46,000 jobs to 142,000.

European Stocks Post Weekly Advance on U.S. Jobless Rate (Bloomberg)
European stocks posted their biggest weekly gain in a month as the U.S. unemployment rate dropped to the lowest level since January 2009 and stress tests bolstered confidence in the Spanish banking system. Banco Espirito Santo SA, Portugal’s largest publicly traded bank by market value, jumped the most in more than three years. EasyJet Plc (EZJ) surged 6.7 percent in London trading as Europe’s second-biggest discount airline said full-year earnings topped its forecasts. Bayerische Motoren Werke AG and Daimler AG led a rally in automakers. The Stoxx Europe 600 Index (SXXP) rose 2.1 percent to 274.11 this past week, the largest increase since the period ended Sept. 7. The benchmark measure has advanced 12 percent in 2012 as European Central Bank policy makers approved a plan to buy the bonds of the most-indebted euro-area members and the Federal Reserve unveiled a third round of stimulus measures.
“Equities are going up, house prices are going up and now unemployment is going down,” said Jacob de Tusch-Lec, a London- based money manager who helps oversee about $20 billion at Artemis Investment Management LLP. “You have all these three things happening at the same time and that is a very potent picture. The wealth effect is alive.” A report on Sept. 25 showed U.S. home prices climbed more than forecast in July. The S&P/Case-Shiller index of property values in 20 cities increased 1.2 percent from a year earlier, the biggest 12-month advance since August 2010.

U.K. Stocks Rise as U.S. Unemployment Rate Declines (Bloomberg)
U.K. stocks climbed, with the FTSE 100 Index advancing for the first week in three, after unemployment in the U.S. unexpectedly declined last month. Burberry (BRBY) Group Plc jumped 2.8 percent after Morgan Stanley recommended investors buy the retailer’s shares. John Wood Group Plc (WG/) climbed by the same amount after the company said it is confident of meeting full-year projections. BAE Systems Plc (BA/) fell amid a report its merger with European Aeronautic, Defence & Space Co. may fall through. The FTSE 100 rose 43.24 points, or 0.7 percent, to 5,871.02 at the close in London, extending its advance this week to 2.3 percent. The gauge swung between gains and losses yesterday as central-bank policy makers kept borrowing costs at record lows. The FTSE All-Share Index also increased 0.8 percent today, while Ireland’s ISEQ Index added 1.1 percent.
“Good employment figures from the U.S. were always going to lift equity markets,” said Angus Campbell, head of market analysis at Capital Spreads in London. The unemployment figure “could almost certainly be enough to keep Barack Obama in office following next month’s U.S. elections. The markets are likely to be happy with such a result.” U.S. jobless rate unexpectedly fell to 7.8 percent in September, the lowest since President Barack Obama took office in January 2009, from 8.1 percent as employers took on more part-time workers, a report showed.

Aussie Dollar Touches 3-Month Low as Rate Cut Bets Climb (Bloomberg)
Australia’s dollar touched the lowest level in almost three months before a report this week that may show unemployment increased and amid prospects the Reserve Bank will reduce its key rate next month. The so-called Aussie weakened versus most of its 16 major counterparts after Treasurer Wayne Swan said yesterday that reduced interest rates will help Australia weather deteriorating conditions in the world economy. New Zealand’s dollar, nicknamed the kiwi, remained lower after its biggest weekly drop in more than four months, as Asian shares declined. If Australian employment data due Oct. 11 is weak, that “will just get the market even more excited about RBA rate cuts,” said Joseph Capurso, a Sydney-based strategist at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “Aussie cross selling has been going on for quite a while and that’s been dragging the Aussie lower.”
Australia’s dollar fell 0.2 percent to $1.0165 at 11:12 a.m. in Sydney after earlier touching $1.0150, the lowest since July 13. It declined 0.2 percent to 79.99 yen. New Zealand’s currency was little changed at 81.82 U.S. cents after falling 1.5 percent in the week through Oct. 5, the most since the period ended May 18. It bought 64.39 yen from 64.37. Australia’s 10-year yield rose three basis points to 3.08 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, added one basis point to 2.65 percent. The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent. Japan’s markets are shut for a holiday. Australia’s jobless rate probably climbed to 5.3 percent last month from 5.1 percent in August, according to the median estimate of economists surveyed by Bloomberg News. Payrolls probably climbed by 5,000 in September from the previous month, when they fell by 8,800, the survey showed.
Interest-rate swaps data compiled by Bloomberg show traders see an 89 percent chance the RBA will lower its overnight cash rate target by 25 basis points to 3 percent on Nov. 6. That compares with 82 percent odds on Oct. 5.

Euro Weakens Against Most Peers Before German Production Data (Bloomberg)
The euro weakened against most of its 16 major counterparts before German data today that may show industrial production and exports fell, adding to evidence the region’s debt crisis is damping growth. The 17-nation currency broke a seven-day stretch of gains versus the yen as a technical indicator signaled the euro’s advance was too rapid. European finance ministers will meet in Luxembourg today, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. “The headlines from Europe are probably going to get worse over the course of next three to four months,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. Europe’s economic fundamentals are “lackluster,” and its currency may head towards $1.20, he said.
The euro lost 0.2 percent to $1.3014 as of 7:09 a.m. in Singapore from the close in New York on Oct. 5. It fell 0.1 percent to 102.48 yen after reaching 102.80 on Oct. 5, the highest since Sept. 19. The greenback was little changed at 78.70 yen. Japanese markets are shut today for a national holiday, and the U.S. is observing Columbus Day. The euro’s 14-day relative strength index versus the yen rose to 68 at the end of last week, the highest since Sept. 19 and near the 70 level that some traders see as a sign an asset’s price has risen too fast and is poised to reverse. Industrial production in Germany probably decreased 0.6 percent in August from July, according to the median estimate of economists surveyed by Bloomberg News, which would be the biggest decline since April. A separate report may show the nation’s exports slid 0.6 percent in August, economists forecast.

U.S. Jobless Rate Declines to 7.8%; 114,000 Jobs Added (Bloomberg)
The unemployment rate in the U.S. unexpectedly fell to 7.8 percent in September, giving President Barack Obama’s re-election campaign a boost a month before the election. The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington. The jobless rate dropped from 8.1 percent to the lowest level since Obama took office in January 2009, and hourly earnings climbed more than forecast. “We’re seeing some firming in the labor market,” said Dean Maki, New York-based chief U.S. economist at Barclays Plc. “It’s still not booming or extraordinarily robust, but it is a labor market that we expect to continue to be firm enough to push the unemployment rate lower.”
Today’s report, the penultimate before the election, gives Obama a chance to point to an improving economy after he stumbled in this week’s debate against Republican challenger Mitt Romney. Better job prospects will give workers the wherewithal to boost spending, helping cushion the economy from a global slowdown. Stocks reversed early gains as Spanish Prime Minister Mariano Rajoy damped speculation the nation was nearing a decision to seek a bailout to secure its finances. The Standard & Poor’s 500 Index slipped less than 0.1 percent to 1,460.93 at the close of trading in New York after rising as much as 0.7 percent. The yield on the benchmark 10-year Treasury note climbed to 1.74 percent from 1.67 percent late yesterday.

More Americans Working Part-Time; Unemployment Declines (Bloomberg)
Britt Zaragoza is among a growing number of part-time workers in a U.S. economy that is simultaneously experiencing slowing growth and declining unemployment. The 48-year-old single mother found employment as a receptionist at a Columbus, Ohio, law firm in August after searching for two years. Not working a full day gives her the flexibility to take care of her 10-year-old son and pursue a career in catering. “I knew sooner or later something would come up and thank God it did,” she said. “It was the perfect hours that I was looking for so I jumped on it real quick.” Joblessness unexpectedly fell to 7.8 percent in September, the lowest since President Barack Obama took office in January 2009, from 8.1 percent, according to Labor Department data issued today in Washington. Falling unemployment, as job gains exceed labor-force growth, means more people are earning paychecks, which in turn may boost the consumer spending that accounts for about 70 percent of the economy.
“You’d rather have full-time than part-time employment for sure, but a job is a job,” said Ray Stone, managing director of Stone & McCarthy Research Associates in Princeton, New Jersey. Still, “if it’s part-time for economic reasons it takes some of the benefit away.” Some 582,000 more Americans, the most since February 2009, were working part-time last month because of slack business conditions or because those jobs were the only work they could find, according to Labor Department estimates.

Romney Undercuts Jobs Numbers, Calls Unemployment ‘Inexcusable’ (Bloomberg)
Republican presidential nominee Mitt Romney moved to undercut the latest U.S. jobs report showing unemployment at its lowest rate since President Barack Obama assumed office, saying the true number is much worse. Romney’s comments to more than 6,000 people in Apopka, Florida, came the day after new Labor Department data showed an unexpected drop in the unemployment rate to 7.8 percent in September, the lowest since Obama took office in January 2009. “If we calculated, by the way, our unemployment rate in a way that was consistent with the way it was calculated when he came into office, it would be a different number,” Romney said tonight. “You see, if the number of people -- if the percentage of the American population who were in the workforce were the same today as the day he was elected, our unemployment rate would be above 11 percent. This is inexcusable.”
Romney appeared to be referring to the workforce- participation rate, which was 63.6 percent last month, compared with 65.7 percent in January 2009. That figure isn’t incorporated into the monthly unemployment number released by the government, and wasn’t before Obama took office. The penultimate jobs report before the Nov. 6 election took on outsized significance in the presidential race, in which Obama’s economic record and Romney’s claim to have the business experience to do better at creating jobs are central themes.

Cheapest Chinese Stocks Since 1997 Not Enough to Signal Rally (Bloomberg)
The last time China’s stocks were this cheap in 2008, the benchmark index rose 83 percent in a year. Now is different as policy makers struggle to reverse the worst economic slowdown in more than a decade, the most-accurate strategists say. While the Shanghai Composite Index trades at 11.4 times the earnings of China’s biggest companies, the lowest level since at least 1997, economists predict the world’s second-largest economy will grow at its slowest annual pace in 13 years. Investors (SHCOMP) anticipate the government will lack focus on the slowdown as the Communist Party prepares for a once-in-a-decade leadership transition.
Haitong Securities Co. strategist Chen Ruiming, who correctly predicted on Aug. 1 the index would fall below the 2,000 level, says the measure is poised to drop a further 14 percent to 1,800 this year. China’s stocks will end down for a third year, according to Bank of Communications Co.’s Hao Hong, the only forecaster among 13 strategists surveyed by Bloomberg at the start of the year to predict declines for equities in 2012. Falling interest rates and increasing copper prices -- which foreshadowed the rally in 2009 -- aren’t predictive this time around, said David Cui, chief China strategist at Bank of America Corp. He sees more losses for the index after saying in Feb. 22 that it would slump to 2,100 by year-end.
“These signals are only indicative of a market turnaround if and when there are signs of a genuine turnaround in economic growth and the prospect of sustained improvement in corporate earnings,” Shanghai-based Cui wrote in e-mailed comments on Sept. 25. “Right now, things appear to be still heading downhill and the market cannot figure out where the bottom is.”

Europe Seeks to Contain Spanish Troubles as Finance Chiefs Meet (Bloomberg)
European officials will move to prevent Spain from dragging the single currency into a new round of convulsions this week as a series of high-level meetings aim to ease the three-year-old European debt crisis. European finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation, while on Oct. 10, Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande in Paris. Germany’s Chancellor Angela Merkel tomorrow makes her first visit to Greece since the crisis began in 2009. “It feels as if we are in for a month or so of Spanish trouble,” Erik Nielsen, London-based chief global economist at UniCredit SpA (UCG), wrote in a note yesterday. Nielsen cited the risk that Spain will wait too long to request financial assistance and that a rescue package will be badly designed.
A month after European Central Bank President Mario Draghi unveiled a plan to gain the upper hand through central-bank bond purchases, handing the burden of crisis resolution over to European governments, leaders have yet to agree on a blueprint for rescue conditions and centralized bank supervision. Finance ministers from the 17-member euro area will discuss issues including Spain at 5 p.m. in Luxembourg; ministers from all 27 nations in the European Union will meet the next day. EU leaders gather for a summit in Brussels the following week on Oct. 18-19.

Cameron Says U.K. Rich Will Pay More Tax Without Mansion Levy (Bloomberg)
U.K. Prime Minister David Cameron said his government will announce additional measures to increase taxes on the rich, while ruling out a so-called mansion tax wanted by his Liberal Democrat coalition partners. “We are going to take further action to make sure that the richest people in our country pay their fair share towards deficit reduction,” Cameron told BBC television’s “Andrew Marr Show” yesterday as his Conservative Party began its annual conference in Birmingham, central England. He said people who save and buy large houses shouldn’t be hit “every year with a massive great tax. That’s not going to happen.” The Conservatives have lost voter support since a cut in the top income-tax rate in the March budget allowed them to be painted by their opponents as the party of the rich. Cameron’s refusal to accept a levy on the most expensive properties risks increasing tensions with the Liberal Democrats, who say they will only support further cuts to welfare if he introduces new taxes on the wealthy.
The prime minister pointed to moves to stop tax evasion, remove tax reliefs and increase stamp duty on purchases of the most expensive homes as examples of measures his government has already implemented. Cameron said the rich “are paying a greater percentage on their total income than they ever did” under the previous Labour government. He defended reducing the top rate of income tax to 45 percent from 50 percent on the grounds that the higher levy was “completely uncompetitive.”

Pound Drops Against Euro on U.K. Growth Concern; Gilts Decline (Bloomberg)
The pound fell for the first time in three weeks against the euro as evidence the U.K. economy is struggling to grow damped demand for the nation’s assets. The pound was little changed against the dollar after dropping to the lowest in more than three weeks. An Oct. 3 report showed a gauge of U.K. services rose at a slower pace than economists forecast last month, while the nation’s manufacturing industry shrank for a fifth month in September, according to separate data on Oct. 1. Government bonds fell after the U.S. employment rate unexpectedly slid to the lowest level in almost four years. “Euro-pound has definitely broken lower out of its range,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “The U.K. economy is not great. The pound doesn’t seem to have many friends right now.”
The pound was at 80.61 pence per euro at 5 p.m. London time yesterday, down 1.3 percent since Sept. 28. It fell to 80.67 pence yesterday, the weakest since Sept. 18. Sterling traded little changed at $1.6194, after touching 1.6067 on Oct. 3, the least since Sept. 12. The Bank of England kept its benchmark interest rate unchanged at a record-low 0.5 percent at a monthly policy meeting on Oct. 4, in line with the estimate of all 50 analysts surveyed by Bloomberg News. The central bank also maintained its bond-purchase target of 375 billion pounds.

Spanish Notes Rise on Bailout Speculation; Portugal Debt (Bloomberg)
Spain’s two-year notes advanced for the first time in four weeks amid speculation the nation was preparing to seek a sovereign bailout that will trigger European Central Bank purchases of its debt. Spain’s 10-year yields fell the most in almost a month yesterday after the European Central Bank’s President Mario Draghi reiterated on Oct. 4 the institution is ready to start buying the bonds of indebted countries as soon as the necessary conditions are fulfilled. German bunds fell for the first time in three weeks as the ECB kept its key rate at a record-low 0.75 percent. Portugal’s 10-year bonds rose for five days, the longest streak of gains since the period ended Aug. 21, after the nation completed a debt swap. “Markets are focused on the idea that we will see Spain ask for a bailout and this is helping the country’s bonds,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Asking for aid would clear the way for the ECB to buy the bonds.”
Spanish two-year note yields dropped 38 basis points, or 0.38 percentage point, to 3.05 percent at 5 p.m London time yesterday. The 4.75 percent security due July 2014, climbed 0.65, or 6.50 euros per 1,000-euro ($1,305) face amount, to 102.925. Ten-year Spanish rates declined 25 basis points to 5.69 percent, and touched 5.68 percent yesterday, the least since Sept. 25. The ECB’s plan to buy bonds, called Outright Monetary Transactions, has already lowered borrowing costs for sovereigns across Europe, Draghi said on Oct. 4 at a press conference after the central bank announced its rate decision.

ECB’s Coeure Says Euro Economy Will Grow Again in 2013: Delo (Bloomberg)
European Central Bank Executive Board member Benoit Coeure said the euro-area economy will return to growth next year, Slovenia’s Delo newspaper reported, citing an interview. “Economic growth will come back in the course of 2013,” Coeure was quoted as saying. “At first it will be slow. It will then accelerate gradually, thanks to reforms.” He said the ECB is ready to start its new bond-purchase program “once all the prerequisites are in place,” and the ECB can support economic growth and financial stability as long as that’s consistent with its price-stability mandate. The idea of a common euro-area budget “is interesting and should be examined,” Coeure said, adding it is “not a short- term prospect.”

Draghi says ECB primed to buy bonds when ready (Reuters)
European Central Bank President Mario Draghi said on Thursday the ECB was primed to buy troubled euro zone bonds when conditions were right and that this had already calmed financial market tension.

20121008 0943 Global Commodities Related News.

Hedge Funds End Rout as Prices Reach Two-Month Low: Commodities (Bloomberg)
Hedge funds increased bullish bets on commodities for the first time in three weeks as prices dropped to a two-month low on signs of slowing Chinese growth and rising supplies of everything from crude oil to coffee. Money managers raised net-long positions across 18 U.S. futures and options by 0.2 percent to 1.24 million contracts in the week ended Oct. 2, Commodity Futures Trading Commission data show. They fell 6.6 percent in the previous two weeks. Silver wagers climbed to the highest in almost two years while bullish oil bets fell to a seven-week low. Gold holdings rose for a seventh week before prices reached an 11-month high.
Commodities retreated 4 percent since the Federal Reserve announced a third round of debt buying Sept. 13. While raw- material prices surged in the previous two rounds from December 2008 through June 2011, weaker growth and rising supplies are driving futures lower this time. Non-manufacturing industries in China expanded at the slowest pace in at least 18 months in September, European Union unemployment held at a record in August and U.S. crude output is the highest since 1996. “It’s harder to put money on the table right now in commodities,” said David Goerz, the chief investment officer at Highmark Capital Management Inc., which oversees about $17 billion of assets. “Commodities are increasingly focused on what’s happening in the fundamental economy, and China is a very big part of that. Overall, the real issue is whether the economy is able to strengthen.”

World food prices rise, stay close to crisis levels (CME)
World food prices rose in September and are seen remaining close to levels reached during the 2008 food crisis, the United Nations' food agency said on Thursday, while cutting its forecast for global cereal output.

DTN Closing Grain Comments 10/05 14:42 (CME)
Grains Mostly Lower Friday
The grain complex slid mostly lower during another quiet day. Contracts across the board closed well off session highs, setting the stage for weakness when trade resumes Sunday evening.

Pro Farmer: After The Bell Wheat Recap (CME)
Wheat futures closed lower today, with nearby Chicago contracts posting 10- to 11-cent losses to lead the decline. For the week, wheat futures posted sharp losses, but remained within the boundaries of the extended, choppy trading range. USDA will update its 2012-13 balance sheet for wheat, including the final 2012-crop production estimates from the Annual Small Grains Summary that was released Sept. 28.

Wheat Market Recap Report (CME)
December Wheat finished down 11 3/4 at 857 1/2, 15 1/4 off the high and 1 1/4 up from the low. March Wheat closed down 11 at 868 3/4. This was 1 1/2 up from the low and 14 1/4 off the high. December wheat closed 11 3/4 cents lower on the session and closed down 45 cents for the week. The close was a new low for the week as speculative sellers were active late. The market pushed under yesterday's lows and was trading down 8 cents on the day shortly after the pit opening. Weakness in the corn market plus sluggish export demand news plus talk of improving weather for the new crop into later next week helped to pressure. Traders see increasing chances of rain for the central and southern plains into late next week. Chicago wheat is weaker than Minneapolis or Kansas City. Ideas that wheat is already priced too high to attract feedgrain demand plus further weakness in corn today is helping to pressure. A weaker US dollar has been offset as a supportive force due to weakness in metal and energy markets.
December Oats closed down 3 1/2 at 367 1/4. This was 1/4 up from the low and 8 off the high.

Pro Farmer: After The Bell Corn Recap (CME)
Corn futures were little changed from last week's close as the market chopped sideways this week. Today, futures ended around 7 to 9 cents lower through the September 2013 contract, while far-deferred contracts were mostly 1 to 3 cents lower. Traders will ready positions for USDA's Crop Production Report next Thursday.

Corn Market Recap for 10/5/2012 (CME)
December Corn finished down 9 at 748, 10 1/4 off the high and 1 3/4 up from the low. March Corn closed down 8 3/4 at 748 1/2. This was 1 3/4 up from the low and 9 3/4 off the high.
December corn closed 9 cents lower on the session and closed down 8 1/4 cents for the week. A private forecaster pegged corn production at nearly 11.2 billion bushels as compared with the September USDA forecast at 10.727 billion and this was seen as a bearish force. The market pushed moderately lower on the day into the mid-session as traders see active harvest in the next week, poor demand for export and positioning ahead of next week's USDA Crop Production and Supply/demand report. News that South Korea bought corn from Russia is seen as a negative factor as South Korea has traditionally purchased US corn. However, both Black Sea and Brazil corn is moving at a discount to US corn and this has helped to pressure. Weekly export sales yesterday came in at just 326,900 tonnes as compared with 440,300 tonne average necessary each week to reach the USDA projection for the year. A bounce in soybeans provided some support for the market early but weakness in wheat, gold, energy markets helped to pressure. Traders see an active harvest weekend ahead. November Rice finished down 0.265 at 15.105, 0.005 off the high and equal to the low.

GRAINS: Chicago soybean futures edged higher building on the last two sessions of gains with support from a revival in U.S. exports and a surprise decline in estimates for Canada's canola crop. Corn edged higher, in line with the trend in soybeans, but the market is on track to finish the week nearly flat as the record pace of the U.S. harvest kept a lid on prices. (Reuters)

USGC sees record large 2012 China corn crop (CME)
By Thomson Reuters - Fri 05 Oct 2012 12:19:47 CT
China will produce a record large corn crop this year that, along with its existing stocks, would be sufficient to meet domestic demand, but the country could import supplies to build its reserves, the U.S. Grains Council said on Thursday after completing an annual crop tour.

India's Sept oilmeal exports down 64 pct yr/yr (CME)
By Thomson Reuters - Fri 05 Oct 2012 12:18:54 CT
India's oilmeal exports fell to 143,990 tonnes in September from 402,500 tonnes a year earlier, led by a sharp drop in the overseas sales of soymeal and rapeseed meal, a leading trade body said on Friday.

SOFTS: ICE Raw sugar futures on ICE eased off the previous session's eight-week high as upward momentum waned and the expected global surplus capped prices, while arabica coffee digested recent losses and cocoa was firm. (Reuters)

Top rubber producers set mechanism to prop up prices-source (Reuters)
The world's top rubber-producers, Thailand, Indonesia and Malaysia, have set up a support mechanism to intervene if rubber prices fall below $2.70 per kg, a Malaysian industry source told Reuters on Friday, in a bid to prop up prices.

U.S. Natural Gas Rises on Outlook for Colder Weather (Bloomberg)
Natural gas futures advanced for the seventh time in eight days as an expected blast of cold air signaled stronger demand for heating fuel. Gas gained 0.3 percent as the National Weather Service predicted below-normal temperatures for most of the lower 48 states over the next six to 10 days. Prices retreated from steeper gains after the Energy Department said supplies rose 77 billion cubic feet last week, above the median of 26 analyst forecasts showing an increase of 73 billion. “It’s a shoving match between the bulls and the bears,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “This is a seasonal play as supply is secured for the winter and speculators look to make end users pay up for it. You have so much supply in the ground so people are really bearish on the market rallies.”
Natural gas for November delivery gained 1.1 cents to settle at $3.406 per million British thermal units on the New York Mercantile Exchange after rising as high as $3.464. The futures have climbed 14 percent this year. November $3 puts, bets that prices will fall, were the most active gas options in electronic trading. They fell 0.7 cent to 1.7 cents on volume of 1,411 contracts as of 2:40 p.m. Puts accounted for 63 percent of options volume. The discount for November futures widened to 0.6 cent versus December contracts from yesterday to 27.4 cents. The low temperature in Detroit on Oct. 12 may be 37 degrees Fahrenheit (3 Celsius), 9 below normal, and New York City may drop 8 below the usual reading to 43 degrees, according to AccuWeather Inc. in State College, Pennsylvania.

Natural Gas Prices Hit Highest Level Since December (CME)
Temperatures Dip Below Normal, Especially in New England
Benchmark U.S. natural gas prices rose sharply for the second week in a row, reaching the highest levels since December amid cooler weather in New England, the Energy Information Administration said. Henry Hub gas as of October 3 was $3.21 per million British thermal units, up 29 cents, or almost 10%, from a week earlier. In midday NYMEX futures trading October 5, November gas fell 1.3 cents to $3.393, up 7.3 cents, or 2.2%, from the end of last week. On October 2, futures touched $3.546, the highest price for a nearby contract since early December. During the week ended October 2, U.S. gas demand fell 0.3% from the previous week, though consumption was up 6.9% from the same period in 2011. Average U.S. temperatures over the past week were about 3.4 degrees cooler than a year ago. Working natural gas in underground storage increased to 3.653 trillion cubic feet as of September 28, an implied net injection of 77 billion cubic feet from the previous week and 8% over year-ago levels.

Oil Drops a Second Day on Demand Outlook Amid Europe Debt Crisis (Bloomberg)
Oil fell for a second day in New York amid speculation Europe’s debt crisis will curb fuel demand. Futures slid as much as 0.3 percent after dropping for a third week on Oct. 5, the longest run of declines since June. European finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation. China’s economy may expand 7.7 percent this year, the slowest rate since 1999, according to the median estimate in a Bloomberg survey. Hedge-fund managers and other large speculators cut their bullish bets on oil in the week ended Oct. 2, a report showed. “The sentiment about demand may have a negative impact on prices with the global economic slowdown, particularly the concern over Spain and the recent growth revision in China,” Fahad Alturki, Riyadh-based senior economist at Jadwa Investment Co, said yesterday.
Crude for November delivery slipped as much as 28 cents to $89.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.70 at 10:35 a.m. Sydney time. The contract dropped 2 percent to $89.88 on Oct. 5, the lowest close since Oct. 3. Prices slid 2.5 percent last week and are 9.2 percent lower this year. Brent oil for November settlement fell 39 cents to $111.63 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $21.93, from $22.14 on Oct. 5. Hedge-fund managers cut their net-long position in oil by 11,590 contracts, or 6.52 percent, from a week earlier, according to data from the Commodity Futures Trading Commission on Oct. 5.

Recap Energy Market Report (CME)
November crude oil trended lower throughout the US trading session and back toward this week's low. Early pressure in the market came on disappointing European economic news and ideas that yesterday's 4.0% rally might have been overdone. November crude oil was able to pare some of its early morning loss in response to reports that showed the US unemployment rate falling to the lowest level since January 2009. However, those early gains dissipated and prices fell into new lows on the session. Some traders indicated that fears of slowing global growth weighing on demand kept the market under pressure. Additionally, talk of a new oil find off the coast of Mexico might have offered added downside pressure. November crude oil ended the week with a loss of 3.25%.

OIL- Oil slides below $112 ahead of U.S. jobs data
LONDON, Oct 5 (Reuters) - Oil slid below $112 per barrel as investors awaited data that is expected to show U.S. unemployment is on the rise, reinforcing concern that a fragile global economic recovery is still under threat.
"A bad non-farm payroll number would only likely have a negative impact on equity and commodities prices," said Jason Schenker, president of research firm Prestige Economics.
"It is unlikely the Fed would act significantly in the wake of having done so much at the September meeting."

U.S. off-line refining capacity seen rising - IIR
Oct 5 (Reuters) - U.S. oil refiners expect to have about 1.6 million barrels per day (bpd) of off-line capacity in the week ending Oct. 5, up from 1.43 million bpd the week before, data from research company IIR showed on Friday.
The firm expects off-line capacity to fall to 1.55 million bpd in the week ending Oct. 12.

Despite fiscal cliff, U.S. should not sell SPR
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, Oct 4 (Reuters) - Now that domestic oil production is rising and imports are falling, should the United States reduce the amount of emergency oil it holds in giant salt caverns along the coast of Louisiana, or at least switch from stockpiling crude to holding refined products like gasoline, jet fuel and diesel?
"The United States will soon start selling oil from its Strategic Petroleum Reserve (SPR)," predicted leading energy analyst Phil Verleger in a thought-provoking article for "Petroleum Intelligence Weekly" last month ("Major SPR oil sales likely over next few years" Sep 17).

Oil prices lower for third week in a row (CME)
By Dominick Chirichella - Sun 07 Oct 2012 05:27:13 CT
The second half of last week was laden with volatility as the oil market reversed direction several times. The battle between the slowing global economy and thus potential for a further slowing of oil demand growth versus the potential impact of money printing from central banks around the global as well as the impact of the recent rash of refinery issues that has resulted in gasoline shortages in California accompanied by surging retail gasoline prices. Sprinkled over the aforementioned price battle line is the ever evolving geopolitical risk in and around the middle east in particular Iran's nuclear program.
Crude oil prices declined for the third week in a row (see below for a more detailed discussion) as concerns over the slow growth global economy dominated all of the other price drivers last week. The biggest loser in the oil complex was WTI as the balances in the US are still biased to the surplus side for crude oil even though there are gasoline issues on the West Coast. The vast majority of macroeconomic data released last week from around the world was biased to the bearish side for oil and most risk asset markets as most of the date continued to support the slow growth viewpoint.
Even the US jobs picture was not all that supportive even though the headline unemployment rate dropped to 7.8% as only 114,000 new jobs were created in September or well below what is needed to keep up with the normal population growth in the jobs market let alone enough to impact the huge number of Americans still out of work. The jobs report is symptomatic of a slowing economy in the US. Moving over to China the data has continued to suggest the main economic growth engine of the world is also slowing. Last week the Golden week holiday... a major retail sales week in China... was also a bit disappointing with retail sales increasing by about 15% versus last year's Golden week which showed an increase in retail sales of close to 18%. Not a major absolute difference but the trend is indicative of a slowing of this economy. A slowing of China's economy will directly impact and result in a slowing of oil demand growth going forward.
Although there are no shortages of oil from any of the evolving geopolitical issues in the middle east these issues are bubbling up from many different locations. In just the last several days there are now conflicts at the Syrian/Turkey border and an unmanned drone was shot down over Israel this weekend (thought to be an Iranian drone). The overall tensions throughout the middle east are continuing to increase and thus the risk of a supply disruption is also increasing ...especially if there is an overreaction by any of the main players in the region...Israel or Iran in particular.
The oil complex ended the week lower... with the exception of RBOB gasoline... as shortages of gasoline have emerged in California as a result of refinery outage related shortages. WTI declined the most of everything in the oil complex even after a surprise draw in crude oil stocks for the second week in a row. WTI decreased by 2.51% or $2.31/bbl as Brent held up significantly better decreasing by only 0.33% or $0.37/bbl. Crude oil stocks in PADD 2 were modestly higher while Cushing inventories increased by about 135,000 barrels on the week. The Nov Brent/WTI spread widened significantly on the week by $1.94/bbl as the normalization process is only slowly proceeding. In fact the spread is currently trading at the highest level in months as the North Sea is still experiencing a slow recovery from maintenance.
On the distillate fuel front the Nymex Nov HO contract decreased by 0.1% or $0.0033/gal on the week as distillate fuel inventories decreased modestly on the week. Gasoline prices increased strongly on the week. The Nov Nymex gasoline price increased by 1.11% or $0.0324/gal this past week.
Nat Gas futures were strong during the first half of the week and enough to end the week in positive territory. The November Nat Gas futures contract increased by 2.29% or $0.076/mmbtu on the week and is solidly trading above the key psychological level of $3.00/mmbtu as the market continues to be focusing on the upcoming winter heating season.
In spite of moderating temperatures forecast in the latest NOAA six to ten day and eight to fourteen day projections the spot Nat Gas futures market is holding up relatively well with prices hovering either side of unchanged throughout the session so far. The market is clearly in a winter heating season thinking mode. It would seem that in spite of the lack of strong nearby fundamental support market players are moving their focus to the perception mode of what the winter heating season may portray for upcoming Nat Gas demand. As I have been indicating I still believe that the market will need strong fundamentals for an extended period of time for prices to rally strongly from current levels and for the rally to last for a sustained period of time.
From a technical perspective the spot futures contract remains below the breakout level or new resistance area from the inverted head and shoulders pattern discussed earlier this week. at the moment the market still has the possibility of testing the next technical support level of around $3.20/mmbtu. For the moment the technicals remain biased to the downside.
On the financial front equity markets around the world were mostly higher for the week as market participants continued to digest the new solution presented by the ECB along with QE3 by the US both of which are viewed as actions that will bolster the global economy. The increase in equities were mostly a result of the view that all of the money printing by central banks around the globe will have a positive impact on the global equity markets. Global equity values increased as shown in the EMI Global Equity Index table below but are still solidly in positive territory for the year.
The EMI Index increased by 0.3% on the week with the Index now showing a year to date gain of 7.0%. Over the last week the Index increased in value in most all of bourses with just one bourse remaining in negative territory for the year... China. Over the last several months the global equity markets have been struggling to stay in positive territory but the perception of what the new rounds of global easing might do to the global economy has moved market participants back into a risk on trading sentiment.
The euro was higher on the week while the US dollar was lower. Last week the global equity markets were a neutral to bullish price driver for oil and most commodity markets for most of the week's trading sessions.
The oil complex has breached all of its current support levels and as such I am keeping my view at neutral for today with an eye toward the bearish side if the correction continues further. The battle continues between the negativity from the slowing of the global economy compared to what global stimulus programs might do to the economy going forward while geopolitics has moved toward the background for the short term.
I am keeping my Nat Gas price view at neutral with a neutral bias as the market seems to entering a downside correction mode. Even though current prices favor coal over Nat Gas (based on a macroeconomic comparison) the market is now more focused on the upcoming winter heating season and what it may due to Nat Gas demand.

Copper Futures Drop in Commodity Slump Paced by Energy (Bloomberg)
Copper futures fell for the second time in three days as commodities tumbled, spurred by slumping energy prices. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell as much as 1.4 percent. Crude oil headed for the third straight weekly decline, the longest slump in four months, on signs of ample supplies. Most industrial metals traded in London dropped. “With oil weakening, it spills over,” Edward Meir, an analyst at FCStone Inc. in New York, said in a telephone interview. “Many of the funds trade in baskets of commodities, and when they see oil falling, they get nervous. Oil is sort of the locomotive because it’s such an important commodity.” Copper futures for December delivery declined 0.2 percent to settle at $3.778 a pound at 1:21 p.m. on the Comex in New York. The price climbed 0.5 percent this week. More signs this week of a slowing economy in China, the world’s biggest metal user, may weaken copper, Meir said.
On the London Metal Exchange, copper for delivery in three months fell 0.1 percent to $8,295 a metric ton ($3.76 a pound). Tin, lead, nickel and aluminum dropped, while zinc rose.

Silver Market Recap Report (CME)
Like gold, the December silver contract forged a rather extensive trading range today of roughly 83 cents an ounce. Also like gold, silver seemed to flirt with the prior session's high but then came under liquidation pressure in the wake of the down tick in the US unemployment rate. While silver hasn't paid that much attention recently to South African mining turmoil, that news could begin to influence platinum and gold prices more significantly ahead and that in turn could mean that outside market action in the metals might have more of a daily impact on silver prices.

Gold Falls From Highest Since November on Jobless Data (Bloomberg)
Gold futures fell from the highest in almost 11 months after the U.S. unemployment rate unexpectedly dropped, easing pressure on the Federal Reserve to expand monetary stimulus. Silver also slid. The jobless rate in September declined to 7.8 percent from 8.1 percent, government data showed today. Earlier, gold reached a 10-month high close to $1,800 an ounce on speculation that stimulus programs in the U.S., Europe and Japan enhanced the appeal of the metal as an alternative to currencies. “People are throwing in the towel,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Investors are now speculating on how long the third round” of qualitative easing will continue in the U.S., he said. Gold futures for December delivery fell 0.9 percent to settle at $1,780.80 at 1:44 p.m. on the Comex in New York. Prices earlier touched $1,798.10, the highest for a most-active contract since Nov. 9, and gained 0.4 percent this week.
The unemployment rate, derived from a survey of households, was forecast by analysts to rise to 8.2 percent. Silver futures for December delivery declined 1.5 percent to $34.572 an ounce. Yesterday, the metal closed at the highest since March 1. Silver has jumped 24 percent this year, while gold advanced 14 percent. Platinum futures for January delivery retreated 1 percent to $1,707.20 an ounce on the New York Mercantile Exchange, ending an eight-session rally. Palladium futures for December delivery slumped 1.7 percent to $663.20 an ounce on the Nymex.

Gold Market Recap Report (CME)
The December gold contract forged a rather significant trading range today of roughly $24 an ounce. Gold was in favor at times as the December gold contract at times returned to the vicinity of the prior session's high before giving ground off what appeared to be declining US easing prospects. The gold market might have been technically overdone after the gains forged earlier in the week but the gold market might also be able to benefit from ongoing violence in the mining sector in South Africa directly ahead. Some traders suggested that respect for the $1,775 level in the December gold contract in the post payroll report washout could make that level a critical pivot point in the coming sessions.

20121008 0942 Soy Oil & Palm Oil Related News.

Pro Farmer: After The Bell Soybean Recap (CME)
Soybean futures saw a choppy day of trade today and favored a weaker tone on the close. For the week, soybeans posted losses and extended the decline from contract highs. November beans ended the week about 50 cents below last week's close. Traders had plenty of demand news to digest this week, but instead focused on reports of "better-than-expected" yields.

Soybean Complex Market Recap (CME)
November Soybeans finished unchanged at 1551 1/2, 18 off the high and 7 up from the low. January Soybeans closed unchanged at 1551. This was 6 3/4 up from the low and 18 off the high. December Soymeal closed up 2.3 at 471.2. This was 3.7 up from the low and 5.4 off the high. December Soybean Oil finished down 0.25 at 51.19, 0.69 off the high and 0.21 up from the low.
November soybeans closed near 1 cent higher on the session but down about 48 1/2 cents for the week. The market saw choppy and two-sided trade early in the day and managed a strong rally to as much as 18 cents higher on the day after the pit opening. News that China bought another 180,000 tonnes of US soybeans for the 2012/13 season helped to support the market. The rally fell short of yesterday's highs as traders seem to feel that the bounce off of Wednesday's lows has helped to alleviate the short-term oversold condition of the market. The market set-back to near unchanged on the day into the mid-session due to weakness in the other grains and bearish crop production estimates for next week's reports with more and more traders looking for a 2-4 bushel per acre increase in soybean yield. While a constant flow of bullish demand news has helped to provide support, the market is still trying to absorb news of higher than expected soybean yields and weather which is very conducive to an active harvest. Basis levels on the river are firm today supported by active demand news. The solid China buying comes just one day after a weekly sales total of 1.3 million tonnes and traders are somewhat optimistic that China buyers may be active again next week after returning from holiday.

Palm Oil Exports From Indonesia Set to Sink Most in Four Months (Bloomberg)
Palm oil shipments from Indonesia, the world’s largest producer, are poised to tumble the most in four months in October because of weak demand from importers. Exports may slump 12 percent to 1.41 million metric tons from 1.6 million tons in September, according to the median of estimates from four plantation executives, a refiner and an analyst compiled by Bloomberg. That’s the biggest drop since June when shipments fell 13 percent. Output may climb to 2.43 million tons from 2.05 million, the survey showed. Stockpiles are about 2.6 million tons, according to three respondents. Palm oil has plunged 20 percent since the end of August as the global slowdown hurt demand for the oil used in everything from candy to biofuel amid an increase in production in Indonesia and Malaysia. Buyers are monitoring prices to see what the export tax will be in November, said Sahat Sinaga, executive director at the Indonesian Vegetable Oil Industry Association.
“The tax will probably decline if the price direction stays the same, by how much we will have to see,” Sinaga said on Oct. 4. Indonesia kept the tax for crude palm oil exports at 13.5 percent in October and will decide the November rate at the end of this month, using average prices in Rotterdam, Kuala Lumpur and Jakarta from Sept. 20 to Oct. 19. For now, the price decline may prompt buyers to renegotiate contracts or defer fresh orders, Sinaga said last week. Some buyers in India, the biggest importer, may default or review contracts as purchases are unprofitable, according to Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd.

EDIBLE OIL: Malaysian palm oil futures gained as steep losses earlier in the week continued to lure buyers back into the market, while there was also some positioning ahead of a government decision on a proposal to cut palm oil export taxes. (Reuters)