Friday, October 12, 2012

20121012 1822 FCPO EOD Daily Chart Study.

FCPO closed : 2500, changed : -23 points, volume : higher.

Bollinger band reading : pullback correction downside biased.
MACD Histogram : rising higher, buyer testing market.
Support : 2520, 2490, 2450, 2400 level.
Resistance : 2490, 2520, 2550, 2570 level.
Comment :
FCPO closed recorded small loss with higher volume participation. Soy oil currently registering loss after overnight closed higher by nearly 1.5% while crude oil price retreat little lower after yesterday advance.
Price traded extremely wild today within 150 point range by diving more than 5% lower and recovered back upward to record small loss as markets seems reacted differently to the news on government tax structure plan, discontinue duty free export facility and export quota scraps.
Chart wise, study remained calling a pullback correction 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.

20121012 1739 FKLI EOD Daily Chart Study.

FKLI closed : 1653 changed : -4 points, volume : higher.
Bollinger band reading : pullback correction upside biased. 
MACD Histogram : weakening, buyer closing position. 
Support : 1651, 1645, 1640, 1635 level.
Resistance : 1657, 1660, 1670, 1680 level.
Comment :
FKLI closed recorded loss with better volume traded almost on par with cash market that closed little lower. Overnight U.S. markets closed flat and today Asia markets ended mostly recorded little gains while European markets currently trading little lower. 
Asia markets traded little higher after lower U.S. jobless claims data and reduce tension between China and Japan after both parties agreed to hold discussion over island dispute. Back home, lower overnight industrial production and  manufacturing index data continue to keep investors at sideline and reducing exposure ahead of the weekend. 
Malaysia FKLI daily chart study still suggesting 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.

20121012 1609 Global Markets & Commodities Related News.

STOCKS: Asian stocks steadied, but were on course for a losing week as worries about weak corporate earnings and slowing global economic growth limit the appeal of riskier assets. European stocks opened lower as expectations for a weak earnings season and lingering uncertainty about Spain's debt crisis kept investors on the back foot after healthy gains in the previous session. U.S. stocks ended flat on Thursday after gains brought by a sign of improvement in the labor market were erased in part by a drop in Apple shares after a legal setback in a court ruling. (Reuters)

FOREX: The euro steadied after snapping a three-day decline the day before when the International Monetary Fund said indebted euro zone economies should have more time to cut budget deficits, while the yen was capped as risk aversion eased. (Reuters)

FOREX-Euro steadies, yen weighed as risk aversion eases
TOKYO, Oct 12 (Reuters) - The euro steadied on Friday after snapping a three-day decline the day before when the International Monetary Fund said indebted euro zone economies should have more time to cut budget deficits, while the yen was capped as risk aversion eased.
Markets are stuck in ranges as investors continue to wait for Spain, the euro zone's fourth-largest economy gasping under the weight of huge public deficit, to request a bailout and activate the European Central Bank's new scheme aimed at easing the refinancing pains of highly-indebted euro zone countries.

U.S. jobless claims fall to lowest in 4-1/2 years (Reuters)
The number of Americans filing new claims for jobless benefits slid last week to the lowest level in more than four and a half years, according to government data that may provide a boost to President Barack Obama a month before voters go to the polls.

World corn stocks tighten on smaller U.S., EU crops (Reuters)
U.S. and world corn stocks will be tighter than expected well into 2013 and drought has cut the wheat crop in leading exporter Australia, the U.S. government forecast, driving up futures as world farm ministers prepare to meet on high food prices.

GRAINS: Chicago corn and wheat eased but the grain markets are on track for biggest weekly gain in almost three months, buoyed by a U.S. government forecast of tighter global supplies.  (Reuters)

BP to export U.S. crude to Canada, Shell seeks permit (Reuters)
Oil major BP Plc has secured U.S. government permission to ship U.S. crude oil to Canada, and Royal Dutch Shell has applied for an export license, as rising production in the world's top oil consumer upends global energy flows.

North Sea oil output to fall, supporting Brent (Reuters)
North Sea crude oil output from 12 production streams is set to fall by about 1 percent in November as oilfields return from maintenance more slowly than expected, adding a source of support for Brent oil prices.

OIL: Brent crude hovered around $115 a barrel, trading near four-week highs and on course for its biggest weekly gain in two months, supported by tensions between Turkey and Syria, lower output at North Sea oilfields and upbeat U.S. data. (Reuters)

Striking S.African gold miners reject pay offer (Reuters)
Striking gold miners in South Africa have rejected the industry's latest wage offer, a trade union said on Thursday, dimming hopes that strikes that have led to dozens of deaths and paralysed the sector could end soon.

Nickel production to outstrip consumption in 2012/13-INSG
LONDON, Oct 11 (Reuters) - World primary refined nickel production is likely to outstrip consumption this year and next as new capacity comes online and projects ramp up, the International Nickel Study Group (INSG) said on Thursday.
Production of nickel, this year is expected to reach 1.69 million tonnes, and will possibly increase to 1.78 million tonnes in 2013. Consumption is estimated at around 1.64 million tonnes this year, and 1.71 million next year.

Barclays lowers aluminium price forecasts
Oct 11 (Reuters) - Barclays lowered its aluminium price forecasts on Thursday citing its expectation that aluminium would be the weakest performing base metal over the coming quarters.
The investment bank reduced its aluminium price forecast for the fourth quarter to $1,950 a tonne from $2,150 previously.

China smelters to boost spot alumina imports in 2013 -trade
HONG KONG, Oct 11 (Reuters) - China's aluminium smelters are expected to step up imports of spot alumina next year to skirt more expensive term deals, industry sources said on Thursday, in a move that could boost spot prices of the raw material in Asia.
Chinese smelters have received term alumina offers for 2013 at 15.5-16.5 percent of London Metal Exchange aluminium prices, free on board, higher than 15.2-15.5 percent they paid for 2012 shipments, smelter sources and traders said.

Copper risks correction on China housing-Goldman
SINGAPORE, Oct 11 (Reuters) - Copper prices should be underpinned by house completions in top metals consumer China until late next year, but could post a sharp correction when a boom in house construction fizzles out in 2014, Goldman Sachs said.
The social house building boom in China, spurred by massive government spending after the 2009 financial crisis, will result in a raft of completions next year, it said in a report.

BASE METALS: London copper slipped, and was set for a 1 percent weekly loss, on worries about sluggish economic growth while traders waited for China's trade data over the weekend to gauge the economic health of the world's top metals consumer. (Reuters)

PRECIOUS METALS: Gold was little changed after gaining in the previous session when the dollar eased from a one-month high, although it remained on target for its biggest weekly drop in two months.  (Reuters)

METALS-Copper down, eyes weekly loss on growth worries
SINGAPORE, Oct 12 (Reuters) - London copper slipped on Friday, and was set for a 1 percent weekly loss, on worries about sluggish economic growth while traders waited for China's trade data over the weekend to gauge the economic health of the world's top metals consumer.
Three-month copper on the London Metal Exchange  edged down 0.4 percent to $8,205 a tonne by 0424 GMT, reversing small gains in the previous session when prices rebounded after hitting their lowest in two weeks at $8,105 a tonne.

PRECIOUS-Gold flat, but headed for biggest weekly loss in 2 months
SINGAPORE, Oct 12 (Reuters) - Gold was little changed on Friday after gaining in the previous session when the dollar eased from a one-month high, although it remained on target for its biggest weekly drop in two months.
Gold has been fluctuating between $1,760 and $1,780 so far this week, with no fresh catalysts to drive it from that range, after stimulus measures by central banks pushed prices near $1,800 earlier this month.

Iron ore steady, but headed for best week in a month
SINGAPORE, Oct 12 (Reuters) - Spot iron ore prices in top importer China steadied after a rally earlier this week spurred caution among buyers worried demand in the world's top steel consumer might not rebound significantly.
But iron ore is up 11 percent so far for the week, its best showing in a month after prices surged earlier this week as Chinese steel mills replenished stockpiles after a week-long holiday.

Shanghai steel falls on demand doubts, iron ore at 11-week top
SINGAPORE, Oct 11 (Reuters) - Shanghai steel futures fell over 1 percent on Thursday after a three-day climb as the outlook for Chinese demand remained hazy despite recent gains in prices, while iron ore hit its highest since July as mills continued to replenish stockpiles.
Iron ore prices have surged 13 percent between Monday and Wednesday after the Chinese snapped up spot cargoes to boost run-down inventories following a week-long break.

Asia Dry Bulk-Cape rates to decline on China demand worries
SINGAPORE, Oct 11 (Reuters) - Rates for capesize vessels on key Asian dry bulk freight routes are likely to decline over the next week on concerns that Chinese steel mills will slow their purchases of seaborne iron ore, ship brokers said on Thursday.
In the capesize market, benchmark rates from Australia to China dropped to $8.350 a tonne on Wednesday, down more than 7 percent from a nine-month high of $9.018 on Friday.

Baltic index flat as capesize rates down
Oct 10 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, remained flat on Wednesday as lower rates for capesizes continued to offset rising panamax rates.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, remained at 875 points.

Strong iron ore, coal fixtures drive Baltic index
Oct 11 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Thursday on increased demand for coal and iron ore fixtures.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, rose 3.2 percent to 903 points.

20121012 1527 Palm Oil Related News.

Malaysia to cut crude palm oil export tax, scrap quotas 0#FCPO: - RTRS
12-Oct-2012 15:41
KUALA LUMPUR, Oct 4 (Reuters) - Malaysia will cut crude palm oil (CPO) export taxes and discontinue a tax free shipment quota for the grade from Jan 1 2013, a government minister said on Friday, as the world's No.2 producer seeks to snatch back market share from top producer Indonesia.
"The implementation of reduced export duty on CPO will also allow the refineries in Malaysia to market their products at competitive prices to the global markets," Commodities Minister Benard Dompok said in a statement.
"In tandem with reduced CPO export duty, the government will discontinue with the duty free CPO export facility beginning 1 January 2013," he said after Malaysia's cabinet met earlier in the day to discuss measures to support the palm oil sector.
Dompok did not disclose the quantum of the cut in crude palm oil export taxes from the current 23 percent duty.

VEGOILS-Palm oil slips ahead of tax cut decision - RTRS
12-Oct-2012 13:22
Palm oil may retrace to 2,399 ringgit-technicals Malaysian may issue details of crude palm oil tax cut later in the day
By Anuradha Raghu
KUALA LUMPUR, Oct 12 (Reuters) - Malaysian palm oil futures slipped on Friday ahead of a possible government decision to lower export taxes of the crude grade although losses were limited by a U.S. report showing tighter soybean supplies.
The U.S. Department of Agriculture showed the stocks to use ratio for soybeans was at its tightest since the mid-1960s, signalling tighter supplies of competing soyoil at a time when palm oil stocks in Malaysia hit a record.
Palm oil investors are awaiting a decision on Friday by Malaysia on the quantum of a cut in crude palm oil export tax, which may support prices that have lost a fifth so far this year as the move may spur more shipments and eat into stocks.
"There needs to be more positive news for the market to negate higher, and that includes a tax cut," the trader said, adding that prices in the next two weeks could range between 2,400-2,600 ringgit per tonne.
"They are worried about inventory. The demand cant cope up with production, and the market is trying to hold."
By the midday break, the benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 1.0 percent to 2,497 ringgit ($815.6) per tonne.
Total traded volumes stood at 9,708 lots of 25 tonnes each, thinner than the usual 12,500 lots as traders waited for further cues from the tax cut decision.
Technicals showed that palm oil faces a resistance at 2,528 ringgit per tonne and may retrace to 2,399 ringgit, and a break above 2,528 ringgit will lead to a moderate gain to 2,579 ringgit, said Reuters analyst Wang Tao. (Full Story)
Malaysia's cabinet has given the greenlight to slash export taxes from the current 23 percent per tonne but will only finalize the size of the cut in a government meeting later today. (Full Story)
A larger tax cut could boost Malaysia's crude exports and claw back market share from top producer Indonesia, and help ease stockpiles which climbed to a record high of 2.48 million tonnes in September.
Brent crude held above $115 a barrel on Friday, trading near four-week highs and on course for its biggest weekly gain in two months, supported by tensions between Turkey and Syria, lower output at North Sea oilfields and upbeat U.S. data. O/R
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 was flat in Asian trade as traders booked profits after the market posted strong gains in the previous session.
The most active January 2013 soyoil contract DBYF3 on the Dalian Commodity Exchange also edged down 0.4 percent on weak demand for edible oils in China, the world's No.2 buyer.
Palm, soy and crude oil prices at 0503 GMT

20121012 1133 Local & Global Economy Related News.

Industrial production index (IPI) declined by 0.7% yoy in Aug (+2.9% n Jul) due to the decrease of manufacturing index (-1.8% vs. +6% in Jul). However, the mining and electricity indexes registered an increase of 1.6% and 2.7% respectively (vs. -5.7% and +2.8% respectively in Jul). Economists had projected the IPI would decline by 1.3% yoy in Aug. 8M12 IPI rose 3.4% (0.6% in 8M11). (Department of Statistics, BT)

The manufacturing sales increased by 1.8% yoy to RM51bn in Aug (+4.8% to RM52.3bn in Jul). On a mom basis, the sales value however, decreased by 2.4% (-0.9% in Jul). In 8M12, the sales rose 5.8% to RM414bn (+10.9% to RM391.1bn in 8M11). Total employees engaged in the manufacturing sector rose 1% yoy to 1.024m persons in Aug (+0.6% to 1.029m persons in Jul). Total salaries & wages paid in Aug rose 5.6% to RM2.4bn (+3.8% to RM2.5bn in Jul). Average salaries & wages per employee up 4.6% yoy to RM2,391 (+3.2% to RM2,422 in Jul).Productivity increased by 0.8% yoy in Aug (+4.2% in Jul). (Department of Statistics)

US export prices gained 0.8% mom in Sep (a revised 1.0% in Aug), double the consensus of 0.4%, whilst on a yoy basis, the measure fell 0.5% (-0.9% in Aug). Import prices gained 1.1% mom in Sep, matching Aug’s revised pace and overshooting consensus of 0.7%, whilst on a yoy basis, the gauge lost 0.6% (-2.2% in Aug). (Bloomberg)

US jobless claims fell to 339,000 in the 6 Oct week for a 30,000 decline that’s the biggest since Jul (a revised 369,000 in the prior week). Consensus called for a level of 370,000. (Bloomberg)

The US trade deficit expanded to US$44.2bn in Aug from US$42.5bn in Jul (originally US$42.0bn). This compares to market expectations of a trade gap of US$44.0bn. (Bloomberg)

Moody’s Investors Service says Asian Liquidity Stress Index rose for the third consecutive month in Sep and now stands at 23.8%, the highest since 1Q2010 and is up from 21.8% in Aug and 16.8% in Jul. (StarBiz)

China is likely to take  "very aggressive" steps  to kickstart its slowing economy after a once-in-a-decade leadership shuffle next month, the  World Bank's newly installed chief Jim Yong Kim said. (AFP)

China has raised its planned railway investment by Rmb20bn (US$3.2bn) to  Rmb630bn for 2012, the Ministry of Railways said, marking a third such increase this year as part of steps to support the slowing economy. (Reuters)

China's top four state-owned banks extended Rmb166bn (US$26.42bn) in new loans in Sep, down from Rmb220bn the previous month. Citing unidentified sources, the 21st Century Business Herald said the reason for the slowdown in lending was due to liquidity tightness at the quarter-end and after the central bank instructed some banks to stop selling commercial paper at discounts to raise funds. (Reuters)

China’s biggest banks are  resisting government pressure to lower borrowing costs amid an economic slowdown as they seek to maintain the profitability of their lending operations, officials at the top four lenders said.(Bloomberg)

Japan's economy minister Seiji Maehara said that  Tokyo may intervene in the currency market on its own to rein in the yen's strength, even without the consent of the US. (WSJ)

Japan’s machine tool orders fell a preliminary 3.0% yoy in Sep from -2.7% in Aug. (Bloomberg)

Japan’s machine orders fell 3.3% mom in Aug (+4.6% in Jul), worse than consensus of -2.3%. (Bloomberg)

Japan’s bank lending (ex-trusts) gained 1.2% yoy in Sep (1.1% in Aug), whilst including trusts, the measure gained 1.0% yoy (a revised 0.8% in Aug). (Bloomberg)

Japanese Prime Minister Yoshihiko Noda called for talks to  contain economic damage from a  diplomatic dispute with China as Japan’s largest trading partner downgraded its delegation to an annual gathering in Tokyo. (Bloomberg)

The  European Union may consider  pushing back when lenders need to start phasing in tougher Basel bank-capital rules by as much as a year after warnings that pressing ahead with the original timetable may drive up costs, according to three people familiar with the talks. (Bloomberg)

Greece's badly stressed economy will need a further two years before it is righted, IMF managing director Christine Lagarde said, adding that the Fund had also advocated giving more time to Portugal and Spain. (AFP)

Greece's budget deficit for Jan-Sep narrowed sharply to €12.6bn, down from €20.1bn during the corresponding period a year earlier. (WSJ)

South Korea's central bank cut its key interest rate by 25 bps to 2.75% and slashed its economic growth estimate for 2012 to 2.4% from 3.0% in its Jul estimate as a result of the global downturn. It also lowered its 2013 forecast from 3.8% to 3.2%. (AFP)

India will end a 14-year policy of solely depending on private capital to build major roads, with the government ready to award US$2.3bn of state-funded highway contracts by end-Mar after a credit crunch left builders unable to find bank loans, Road Transport Minister C. P. Joshi said. (Bloomberg)

Australia's unemployment rate rose to an almost two-and-a-half-year high of 5.4% in Sep from 5.1% in Aug, with the rise largely blamed on more people looking for work. (AFP)

Thai Prime Minister Yingluck Shinawatra and  Myanmar president Thein Sein are set to announce a joint partnership to support the Dawei deep-sea port megaproject  at the Asean Summit in mid-Nov. (Bangkok Post)

Thailand’s Industry Ministry is confident all  industrial estates will be safe from floods this year, with industry permanent secretary Witoon Simachokedee assuring that “all estates are being closely monitored 24 hours a day and the Industrial Works Department has sent officials to x-ray every area, especially those at risk of floods, as well as locations near the floodway." (Bangkok Post)

Thailand’s Excise Department set a collection target of THB80bn from fuel sales in fiscal 2013, up 35% from last year, with the higher target based on assumptions of increased fuel demand with higher passenger car sales under the government's first-time car buyer rebate programme.. (Bangkok Post)

Thailand has competitive strengths to become an energy hub in Asean and reap the benefits of regional integration, but policies are required to create more a diversified, efficient and integrated energy structure, says a report prepared by the World Economic Forum. (Bangkok Post)

Bank Indonesia kept the policy interest rate at 5.75% for an eighth straight month on 11 Oct. (Bloomberg)

The Indonesian government may be softening its stance on the decision to ban the export of raw materials, potentially giving relief to miners who have complained of the law’s impact on profitability. (Jakarta Globe)

According to the latest Hudson report on employment trends in Singapore, 35.9% of respondents plan to increase headcount, while 57.3% will maintain it, a modest increase in hiring expectations from last quarter. (CNA)

Vietnam’s Ministry of Finance has said it will enhance tax inspections at enterprises in the coming months to curb tax fraud and evasion amid concern about the rising State budget deficit. (Saigon Times)

The  Bangko Sentral ng Pilipinas (BSP) reported that the  net inflow of “hot” money reached US$407.42m in Sep, up by 171% yoy. (Philippine Daily Inquirer)

The  Asian Development Bank and the  World Bank were to  waive Myanmar's outstanding debt, ministers said, according to Japanese news reports. It was to be cleared of its debts of US$500m to the ADB and US$400m to the World Bank, its second- and third-largest creditors, as early as Jan. (The Nation)

20121012 1133 Malaysia Corporate Related News.

AirAsia has acquired 121.67m shares or 20% of  Tune Ins Holdings for RM16m. AirAsia said it had exercised its call option agreement with Tune Ins and Tune Money, dated April 20, to acquire the shares. Tune Ins provides insurance products and services including travel insurance. (Star Biz)

AirAsia and Indonesian ally PT Fersindo Nusaperkasa are not buying PT Batavia Air now as all parties have failed to reach an agreement, Dow Jones Newswires quoted the Indonesian domestic airline as saying today. “We will continue to seek strategic partners to develop our business,” Batavia Air chief executive director  Yudiawan Tansari said. The newswire reported that Tansari declined to specify whether they failed to reach an agreement on the value of Batavia Air. (Malaysian Insider)

AirAsia  says it made a mistake flying to Paris and London via long-haul unit AirAsia X, but may reintroduce the cancelled routes.  Tan Sri Tony Fernandes said it may consider remounting the flights in 2016 once its new Airbus aircraft are delivered. Fernandes was speaking after announcing AirAsia Japan's new flights from Narita in Tokyo to Busan in South Korea yesterday. He also said that AirAsia Japan will be moving to its temporary low- cost terminal at the Narita International Airport within two months. (BT)

Members of the Malaysia Airlines Employees Union (Maseu) are seeking a fresh election a day before the announcement of the results of the polls held two weeks ago. A few members of Maseu filed a complaint and served a petition with the Trade Unions Department director-general to seek a fresh election because the polls held on Sept 29 were "misconducted". They alleged there was a mismatch of the number of voting papers that were disbursed to members and the final number of papers in the ballot boxes. (Financial Daily)

Maybank remains interested in building its presence in Thailand although the immediate focus is to expand in the markets where it has a strong presence. Maybank group CFO  Mohamed Rafique Merican, however, said any acquisition of Thai banks would be based on terms and an environment that it was comfortable with and would not be purely for the sake of having a representation. (Star Biz)

The fluctuation in the price of crude palm oil (CPO) is "part and parcel" of the industry, and will not negatively impact Felda Global Ventures Holdings Bhd (FGV), according to Federal Land Authority (FELDA) chairman Tan Sri Mohd Isa Abdul Samad. He said FGV would shift its focus to the production of biogas from CPO mill effluent in times of excess stocks of CPO and low prices. (Malaysian Reserve)

Petronas  has said that its planned RM170bn in capex over the next 5 years would be at risk if the petroleum royalty paid to oil producing states rose to 20% from 5% currently. Higher royalties would therefore deter Petronas and PSCs from further investing in these projects. Subsequent reduction in O&G production would eventually threaten the country's energy security over time. The statement by Petronas was issued after Pakatan Rakyat  released its alternative budget. (Financial Daily)

QSR Brands Bhd and subsidiary KFC Holdings (Malaysia) Bhd will call for an EGM next month to deliberate on the privatisation of the two listed entities, said QSR executive director  Sheik Sharufuddin Sheik Mohd. "We're very close (to completing the privatisation exercise). It's a sensitive issue and we target to complete the exercise before the end of the year," he added. (Sun)

The  US Department of Agriculture estimated that farmers will harvest 2.86bn bushels of soybeans this fall, up 9% from its estimate last month. The soybean crop would still be the nation's smallest in five years. The country produced 3.09bn bushels of soybean during the previous harvest. (WSJ, USDA)

MISC's proposed disposal of its 50% equity interest in  Gumusut-Kakap Semi-FPS (GKL) to E&P Venture Solutions, a unit of Petronas Carigali, will not result in any gain or loss to MISC. It said that this was because the stakes were sold at the cost of the company's equity investment in GKL (BT)

OSK: Approved to own 99% interest in OSK Nusadana. Indonesian financial authorities have formally granted the approval for OSK Investment Bank Bhd (OSKIB) to own a 99% interest in PT OSK Nusadana Securities Indonesia. (Source: Bursa Malaysia)

Alam: Wins MYR62m jobs. Alam Maritim Resources Bhd's wholly owned subsidiary has received a contract that worth up to MYR69.2m from a local oil and gas company for the provision of a workboat. The contract was for a primary period of one year with an extension option. (Source: Bursa Malaysia)

Celcom is offering the new nano-Subscriber Identity Module (SIM)  at the lowest switchover prices in Malaysia, for users of the newest generation of smartphones to take advantage of. Celcom said in a statement new Celcom First customers can request a nano-SIM at no additional charge, and customers of more than 12 months can upgrade their current SIM for free. It added customers who have been with Celcom for less than 12 months will be charged RM5 to change to the new SIM, which can used with all Celcom postpaid or prepaid plans as well as mobile data and broadband bundles. The new replacement SIM will be available at 80 Celcom branches and Blue Cube stores nationwide from Oct 6 for postpaid customers and from Oct 15 for prepaid customers. (Bernama)

AIA Group Ltd is set to turn its Malaysian operations into the largest life insurer in the country following its US$1.73bn (RM5.3bn) acquisition of ING Insurance Bhd (ING Malaysia). The deal, which was finalised yesterday, will push AIA Malaysia into the leading position from fourth currently, with a market share of 24.8% from 11.3% previously.AIA Group regional chief executive Ng Keng Hooi expects the deal to be completed by Mar-2013. The acquisition will strengthen AIA's distribution channel and reach with the number of agents growing to 16,600 from 7,400 currently. It will also broaden AIA's existing bancassurance distribution network through the addition of an exclusive long-term bancassurance arrangement with Public Bank Bhd. Ng said AIA will also become the second biggest bancassurance player in the country with its market share jumping to 14% from 1% currently.(BT)

Haisan Resources Bhd agreed to sell its 100%stake in Iglo (Guangzhou) Co Ltd, a temperature-controlled logistics firm, to Asia Logistic Ltd, for RM14.6m. The sale sealed on Oct 10 is to rationalise its capital resources tied to long-term assets to repay its borrowings and improve its financial performance. The proposed disposal is expected to be completed by 1Q13. (BT)

The IPO fervour surrounding maverick businessman  Tan Sri Tony Fernandes continues  - now he is considering to float the  Tune Group. Fernandes said, "There are no immediate plans but this certainly is an interesting thought. It has a fantastic collection of inter-related companies although it is not a conglomerate. Tune Group is all about low-cost businesses. The idea has certainly crossed my mind. Actually, I just sent an email out for the management team to look at the numbers." (Star Biz)

General Electric (GE) announced a collaboration with  EV World to collaborate on technology development and strategic initiatives to support the roll out of electric vehicles in Malaysia and Singapore. The companies said the collaboration would lead to a collaborate research and development centre of excellence for EV technology. (Bernama)

20121012 1121 Global Market Related News.

Asia FX By Cornelius Luca - Thu 11 Oct 2012 19:13:03 CT (Source:CME/
The appetite for risk was fleeting on Thursday after another too-good-to-be true bit of US unemployment data left traders scratching their heads. The Australian dollar lead the European and commodity currencies higher in part because the People's Bank of China set its yuan midpoint stronger than expected, signaling it may tolerate slight appreciation of the currency. The US stock markets ended mixed, but the DJI fell again and suggests a double top formation for a second day in a row. Gold and oil and silver closed up. 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 short on all foreign currencies. Good luck!

US: The initial jobless claims tumbled to 339,000 from the previous week's revised figure of 369,000 (from the 367,000 originally reported).
US: The trade deficit widened to $44.2 billion in August from a revised $42.5 billion in July.
Canada: The international merchandise trade posted a deficit of C$1.32 billion in August vs. a July's deficit at C$2.53 billion.
Canada: The new housing price index edged up to 0.2% in August from 0.1% in July.

Today's economic calendar
Japan:  Domestic Corporate Goods Price Index for September
Japan:  Tertiary Industry Index for August

GLOBAL MARKETS-Stocks steady, set for losing week on growth concerns
SINGAPORE, Oct 12 (Reuters) - Asian stocks and the euro steadied, but were on course for a losing week as worries about weak corporate earnings and slowing global economic growth limit the appeal of riskier assets.
"Later today in the U.S., J.P. Morgan  will release its earnings," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo. "Then we'll have more earnings next week, and the expectations are not high. If results are disappointing, stocks will sell off, so that makes it difficult to buy now.

Asian Stocks Rise on U.S. Data, Japan-China Dispute Talks (Bloomberg)
Asian stocks rose for the first time this week after U.S. jobless claims fell more than estimated and China and Japan agreed to hold talks over a territorial dispute that has disrupted trade. Honda Motor Co., a Japanese whose sales in China slumped last months after rioters torched dealerships in protests over disputed islands, added 2.3 percent. Mitsui O.S.K. Lines Ltd., Japan’s No. 1 shipping company, gained 1.1 percent as commodity freight rates rose in London. Softbank Corp. sank 16 percent as Japan’s third-largest mobile-phone company said it’s in talks to invest in Sprint Nextel Corp. Billabong International Ltd. slumped 16 percent after TPG International LLC withdrew its bid for the Australian surfwear maker.
The MSCI Asia Pacific Index gained 0.7 percent to 121.13 as of 11:20 a.m. in Tokyo, with more than twice as many stocks rising as falling. The measure is poised for its biggest weekly drop since August after the International Monetary Fund cut its global growth forecasts and Japanese car sales fell in China. The two countries have agreed to hold talks to reduce tensions. “It will take a while to fully recover the pre-dispute situation, but at least we’re seeing some gradual improvement in the China-Japan relations,” said Yoji Takeda, who oversees about $1.2 billion as head of Asian equities at RBC Investment Management (Asia) Ltd. “As investors see more positive earnings reports, people may start to turn confident. We’re seeing moderate growth in the U.S. and the stock market there has held up quite well.”

China’s Stocks Rise to Four-Week High; Publishing Shares Rally (Bloomberg)
China’s stocks rose to a four-week high as falling U.S. jobless claims bolstered the outlook for exports to the world’s biggest economy and publishing companies rallied after Mo Yan won the Nobel Prize in Literature. China Construction Bank Corp., the nation’s second-largest lender by assets, led banks higher after officials at the top four lenders said they are resisting government pressure to lower borrowing costs to maintain the profitability of lending operations. Shanghai Xinhua Media Co. surged by 10 percent on speculation Mo’s award will spur book sales. “The U.S. economy is doing better and psychologically, it creates positive sentiment for investors here, who believe the global economy is improving,” said Zhang Gang, a strategist at Central China Securities Holdings Co. in Shanghai. “Also there’s expectation economic data will start to look good and stabilize. With the change of leadership soon, investors are eyeing more reforms to boost the economy.”
The Shanghai Composite Index rose 0.8 percent to 2,119.79 at 9:55 a.m. local time, the highest since Sept. 10 and adding to this week’s gain of 1.6 percent. The CSI 300 Index climbed 0.9 percent to 2,322.40, led by financial companies. The Shanghai index has fallen 3.6 percent this year on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough to counter the slowdown in the economy. The gauge is valued at 9.9 times estimated earnings, compared with the 17.8 average since Bloomberg began compiling the weekly data in 2006. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong rose 1.2 percent today. The Bloomberg China- US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, gained 1.5 percent yesterday.

Japan Stocks Swing Between Gains, Losses on China Talks (Bloomberg)
Japanese stocks swung between gains and losses after the Nikkei 225 Stock Average recorded its biggest three-day slump since June. Automakers rose after China and Japan agreed to hold talks over a territorial dispute that led to mainland protests and boycotts of Japanese products. Nissan Motor Co., the leading Japanese carmaker in China, rose 2.1 percent. Canon Inc., a camera manufacturer that gets 27 percent of sales in the Americas, gained 2.8 percent after U.S. jobless claims fell more than expected. Softbank Corp., Japan’s third-largest mobile-phone company, plummeted 16 percent on a report it may invest in loss-making Sprint Nextel Corp. Fast Retailing Co. plunged 10 percent after its profit forecast missed estimates. The Nikkei 225 was little changed at 8,546.96 at the 11:30 a.m. trading break in Tokyo after falling as much as 0.2 percent. The gauge has dropped 3.6 percent this week, headed for a four-week decline. The broader Topix added 0.7 percent to 719.04.
“The market is rebounding after it fell a good amount without many decisive factors,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 5 trillion yen ($64 billion). The diplomatic dispute “is weighing on China as much as on Japan. I think the both sides will try to seek some form of compromise.” The Topix dropped 2 percent this year through yesterday as a slowdown in the global economy boosted demand for the yen as a haven and as a territorial dispute with China saw Japanese production there disrupted, weighing on earnings. Policy makers in Asia, the U.S. and Europe have introduced a series of stimulus measures to support growth.

U.S. Stocks Erase Gains as Optimism on Jobless Data Fades (Bloomberg)
U.S. stocks erased gains as optimism about a drop in jobless claims faded and a slump in Apple Inc. (AAPL) dragged down technology shares. The Standard & Poor’s 500 Index pared an advance of 0.8 percent as Apple extended its retreat from a September record to more than 10 percent. Bank of America Corp. (BAC) and Morgan Stanley advanced at least 1.4 percent as energy and financial stocks posted the biggest rallies out of 10 groups in the S&P 500. Sprint Nextel Corp. (S) jumped 14 percent as it said it’s in talks with Japan’s Softbank Corp. about a potential transaction. The S&P 500 increased less than 0.1 percent to 1,432.84 at 4 p.m. in New York. The benchmark gauge fell to the lowest level in a month yesterday on concern that the global economy is slowing down. The Dow Jones Industrial Average lost 18.58 points, or 0.1 percent, to 13,326.39. More than 6 billion shares traded hands on U.S. exchanges today, in line with the three- month average.
“Weakness in Apple continues to be watched and traders are eyeing the S&P 50-day moving average as we slowly slip back towards that level,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an e-mail. His firm oversees $250 billion in assets. The S&P 500 (SPX) has slipped 2.3 percent since reaching an almost five-year high of 1,465.77 on Sept. 14. The benchmark index is less than 1 percent higher than its 50-day moving average of 1,427.11. Apple, the world’s most valuable company, sank 2 percent to $628.10, erasing an earlier rally of as much as 1 percent and helping to reverse gains for technology companies as a group in the S&P 500. The iPhone maker is down 11 percent since reaching its all-time high of $702.10 on Sept. 19.

European Stocks Rise First Day in Four; Burberry Gains (Bloomberg)
European stocks advanced for the first time in four days as U.S. jobless claims fell to a four- year low and Burberry Group Plc (BRBY) led luxury-goods makers higher. Burberry jumped the most in more than 10 years as it reported second-quarter same-store sales that topped analyst estimates. Carrefour SA (CA) climbed 3.7 percent after the world’s second-largest retailer posted third-quarter sales that beat estimates. Banco Popular Espanol SA (POP) led Spanish banks lower after Standard & Poor’s downgraded the country’s debt to one level above junk. The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent to 270.84 at the close of trading. The measure has still lost 1.2 percent so far this week as the International Monetary Fund cut its global growth forecasts and European Union leaders met to discuss the region’s debt crisis.
“The U.S. jobless report was very positive,” said Pierre Mouton, a portfolio manager who helps oversee $6 billion at Notz Stucki & Cie. in Geneva. “These numbers are encouraging and should help the market recover.” Jobless claims in the world’s biggest economy fell unexpectedly to the lowest since February 2008. Applications for unemployment benefits dropped 30,000 to 339,000 in the week ended Oct. 6 from 367,000 for the prior period, Labor Department data showed. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.

Emerging Market Stocks Snap Three Days of Declines (Bloomberg)
Emerging-market stocks increased for the first time in four days as central banks in Brazil and South Korea cut rates to bolster growth and a unit of China’s sovereign wealth fund vowed to support banking shares. The MSCI Emerging Markets Index (MXEF) rose 0.4 percent to 995.95. Brazil’s Bovespa index gained with oil company Petroleo Brasileiro SA (PETR4) fueling the advance. Turkey’s benchmark stock index jumped to the highest level since May 2011, while equity gauges in India, Hungary, Mexico and South Africa also surged. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, climbed to a five-month high in Hong Kong. South Korea cut interest rates hours after Brazil as economies around the world shield themselves from the risk of a deeper slowdown driven by weakness in China and austerity measures in Europe. First-time jobless claims in the U.S. dropped to the least since February 2008, adding to signs of improvement in the labor market.
“Investors tend to perceive the rate cut as a positive in the short term,” Michael Henderson, an economist at Capital Economics, said in a phone interview from London. “A lot of people were expecting a little more easing to happen and this move has been welcomed.” The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, rose 0.9 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 4.9 percent.

Aussie Trades Near Week-High on Commodity Price Gains (Bloomberg)
Australia’s dollar rose, trading 0.1 percent from its highest level in more than a week as gains in commodity prices boosted demand for the currency. The so-called Aussie strengthened versus most of its 16 major counterparts this week after prices for iron ore, Australia’s top export, climbed to the most in more than two months. A report yesterday showed claims for jobless benefits in the U.S. fell to the least since February 2008. Figures today may show confidence in the world’s biggest economy remained near the strongest level since May. New Zealand’s currency, nicknamed the kiwi, rose as Asian stocks advanced. “Iron ore prices have improved,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. “The labor market may be picking up a touch in the U.S. It’s positive for the Aussie and it’s positive for risk.”
The Australian dollar added 0.2 percent to $1.0283 as of 1:11 p.m. in Sydney from $1.0264 yesterday, when it reached $1.0294, the highest since Oct. 2. It gained 0.4 percent to 80.69 yen. New Zealand’s currency strengthened 0.3 percent to 82 U.S. cents. It bought 64.33 yen, 0.5 percent higher than the close in New York. Australia’s 10-year yield rose one basis point to 3.04 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.615 percent.

Yen Falls on U.S. Stability Signs; Singapore Dollar Gains (Bloomberg)
The yen declined against its major counterparts as signs that the U.S. economy is stabilizing curbed demand for safer assets. Japan’s currency fell versus the euro for a second day before data today forecast to show confidence among U.S. consumers hovered near the highest since May. A report yesterday showed applications for jobless benefits fell to the fewest since February 2008. The euro headed for a weekly drop before figures that economists said will show industrial production in the currency bloc decreased. Singapore’s dollar rose after the central bank kept its monetary policy unchanged. “There are certainly some signs of improvement in terms of U.S. data,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “Market sentiment is pretty stable at the moment.”
The yen slid 0.2 percent to at 78.46 per dollar as of 11:09 a.m. in Tokyo from 78.34 yesterday, when it lost 0.2 percent. It dropped 0.3 percent to 101.53 per euro, after sliding 0.6 percent to 101.27 in New York. The 17-nation euro fetched $1.2940 from $1.2928, set for a 0.8 percent decline this week. The MSCI Asia Pacific Index of shares rallied 0.6 percent today. The MSCI World Index of developed-nation shares gained 0.3 percent yesterday, snapping a three-day decline. The Thomson Reuters/University of Michigan preliminary sentiment index was probably 78.0 in October, little changed from 78.3 in September, the highest since May, according to the median forecast of economists in a Bloomberg News survey before the data today. Labor Department figures yesterday showed applications for jobless benefits in the world’s largest economy decreased 30,000 to total 339,000 in the week ended Oct. 6, the fewest in more than four years.

G-7 Discusses Potential Fiscal Measures If Growth Falters (Bloomberg)
Some Group of Seven nations raised the possibility of extra fiscal measures if the global recovery weakens, Canadian Finance Minister Jim Flaherty said after a G-7 meeting in Tokyo yesterday. “There has been some discussion by some of the participants along those lines, generally relating to the European situation,” Flaherty said on a conference call with reporters today. “The continent is in recession and there’s rising unemployment.” Europe’s woes are at the center of this week’s meetings of the World Bank and International Monetary Fund in Tokyo as finance chiefs work to sustain a flagging global recovery. The Washington-based lender said this week that failure to remedy them was helping to generate an “alarmingly high” risk of a steeper slowdown. Flaherty also said it’s worth considering proposals by IMF Managing Director Christine Lagarde to give Greece and other troubled European countries more time to meet fiscal targets.
“I think it’s certainly worth considering,” Flaherty said. “The challenge in Europe now is the European economy is in a recession and there is some interest in trying to create some economic growth in the euro zone.”

Jobless Claims in U.S. Fall to Four-Year Low (Bloomberg)
Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a quarter. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labor Department spokesman said as the data were issued to the press. A decline in dismissals may mean employers are seeing enough demand to maintain current staff, a necessary first step to bigger gains in hiring. At the same time, a slowing global economy that is hurting exports and concern over looming changes in U.S. fiscal policy remain hurdles to a pickup in employment.
The report “is consistent with a labor market that is gradually getting better,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who had predicted a decline in claims. “Layoffs are at a low level and don’t seem to be going anywhere. Hiring is still very muted.” Last week’s decline in claims may be short-lived. Before adjusting the data for seasonal variations, claims typically surge at the start of a quarter as people receiving benefits reapply in order for the government to recertify their applications, the Labor Department spokesman said. The unadjusted increase in claims last week was smaller than projected because one large state showed a drop rather than an increase, said the spokesman, who declined to name the state. The breakdown by state will show up in next week’s report.

Fed Presidents Dismiss Allegation of Job Data Tampering (Bloomberg)
Presidents of two Federal Reserve district banks dismissed a suggestion that the Bureau of Labor Statistics manipulated the September employment report to aid the re-election campaign by President Barack Obama. “I can’t imagine that’s the case,” Charles Plosser, president of the Federal Reserve Bank of Philadelphia, told reporters after a speech today in Avondale, Pennsylvania. “I don’t think there is a conspiracy,” St. Louis Fed President James Bullard said to reporters in St. Louis. The two regional Fed bank chiefs commented on suggestions by Jack Welch, the former chief executive officer of General Electric Co., that an Oct. 5 report from the bureau showing an unexpected decline in the jobless rate had been altered. The report showed the jobless rate fell in September to 7.8 percent, the lowest level since President Barack Obama took office in January 2009, from 8.1 percent in August. The rate was forecast to rise to 8.2 percent, according to the median estimate of economists surveyed by Bloomberg.
“The statisticians and the people that work on this stuff have a lot of integrity,” Plosser said. Bullard said that while unemployment and other economic reports can have “measurement error,” it’s wrong to suspect anything improper. “There are lots of people involved,” he said. “They have done it the same way for years and years.” Welch, 76, in a Twitter message immediately after the report, suggested the numbers were phony. “Unbelievable jobs numbers ... these Chicago guys will do anything ... can’t debate so change numbers,” he wrote. Obama administration officials denounced Welch’s claims as baseless. Welch revisited his criticism later in a column in the Wall Street Journal. “The coming election is too important to be decided on a number,” Welch wrote. “Especially when that number seems so wrong.”

Bullard Backs Limiting Banks’ Size to Proportion of GDP  (Bloomberg)
Federal Reserve Bank of St. Louis President James Bullard said he would back limiting the size of individual U.S. banks to a proportion of gross domestic product, while warning of the risks from “too-big-to-fail” firms. “Scaling by GDP would make sense,” Bullard said to reporters today in St. Louis. “Of course, the devil is in the details of exactly how you would do that.” Fed Governor Daniel Tarullo said yesterday that the U.S. Congress should weigh capping the size of the largest financial institutions. U.S. law permits the biggest banks to grow to such an extent that they increase “perceptions of at least some residual too-big-to-fail quality,” he said in a speech. “I appreciate that Governor Tarullo is entertaining the idea of size restrictions,” Bullard said. “This is something I do back. We would be better served by putting size restrictions generally on financial firms.”
Tarullo told the University of Pennsylvania Law School that “it would be most appropriate for Congress to legislate on the subject” of limiting size. The idea “that seems to have the most promise would limit the non-deposit liabilities of financial firms to a specified percentage of” GDP, he said. Fed presidents including Richmond’s Jeffrey Lacker, Philadelphia’s Charles Plosser and Richard Fisher of Dallas have said the Dodd-Frank Act enacted in 2010 won’t necessarily end taxpayer bailouts because it gives regulators discretion to provide rescues. Plosser has called for a bankruptcy law that would set rules for the wind-down of a large financial company.

Transport Shares Showing U.S. Slowdown Due for Surprise: Freight (Bloomberg)
Investors have driven down transportation stocks on concern a recession is looming in the U.S. That may be an opportunity for those who see the industry getting a fresh boost from holiday sales. Landstar System Inc. (LSTR) and Old Dominion Freight Line Inc. (ODFL) were among companies making early announcements of results that fell below forecasts after activity in the third quarter was slower than anticipated. Carriers were working through a small inventory glut, creating “sluggishness,” said John Larkin, managing director in Baltimore at Stifel Nicolaus & Co. Still, there’s no indication the “economy is cratering,” said Larkin, who has been covering or involved in transportation since 1977. “The slowdown appears to have been more of a mid- course correction, similar to others we have experienced since the economic trough formed in early 2009.”
While volume since June has been consistent with a “very slow-growth” expansion, more recently there’s been a “modest pre-holiday peak” for transportation companies carrying imports from the west coast, Larkin added. His favorite picks are Swift Transportation Co. (SWFT), Ryder System Inc. (R), Celadon Group Inc. (CGI) and CSX Corp. (CSX) These companies became more attractively valued after the earnings announcements, he said. U.S. gross domestic product is forecast to grow at a 1.8 percent annual rate in the third quarter and 1.9 percent in the three months ending Dec. 31, based on the median estimates of economists surveyed by Bloomberg News. That suggests a rebound from the second quarter’s 1.3 percent annual rate.

Consumer Comfort in U.S. Stayed Near Three-Month High Last Week (Bloomberg)
Consumer confidence in the U.S. stayed near a three-month high last week, with more Americans saying it was a good time to make purchases even as they grew more pessimistic about the economy. The Bloomberg Consumer Comfort Index fell to minus 38.5 in the week ended Oct. 7 from minus 36.9 in the prior period. The drop was within the gauge’s margin of error of 3 percentage points and ended a six-week upswing that was the longest since early 2006. The measure has been higher than minus 40, a level associated with recessions and their aftermath, for the last three weeks. “Consumer sentiment appears to have stabilized, albeit at historically low levels,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. A drop in gasoline prices since the mid-September “likely boosted household perceptions of the buying climate despite clear signs of discontent over the direction of the economy,” he said.
Labor Department figures last week that showed the U.S. jobless rate at a three-year low of 7.8 percent in September may help explain an 8.9-point rise in the sentiment index since mid- August. At the same time, further improvement in the labor market may be needed to shore up confidence in an economy that 86 percent of those surveyed said was bleak. Fewer Americans than forecast filed first-time claims for unemployment benefits last week, the Labor Department reported today. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labor Department spokesman said.

Trade Deficit in U.S. Widened in August as Exports Dropped (Bloomberg)
The U.S. trade deficit widened in August as slower global growth reduced demand for American exports. The gap grew 4.1 percent to $44.2 billion from $42.5 billion in July, Commerce Department figures showed today in Washington. Exports decreased to the lowest level since February. A separate report showed the cost of goods shipped to the U.S. rose more than forecast in September. A stagnant Europe and slower growth in China and other emerging markets may curtail demand for American products, which had been a source of strength for U.S. manufacturers earlier this year. At the same time, the pickup in energy costs may push up the nation’s import bill, keeping the trade gap elevated. “For the first time, the U.S. economy is gradually feeling the impact from the global growth slowdown,” said Harm Bandholz, chief economist at UniCredit Group in New York, who forecast the deficit would widen to $44 billion. “In the third quarter, the weaker global economy will leave its mark also on the U.S.”
The median forecast in a Bloomberg survey of 73 economists projected the deficit would expand to $44 billion. Estimates ranged from a gap of $41 billion to $47.5 billion. July’s deficit was revised from an initially reported $42 billion. Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a new quarter, figures from the Labor Department also showed today.

China’s Banks Said to Resist Cutting Lending Rates (Bloomberg)
China’s biggest banks are resisting government pressure to lower borrowing costs amid an economic slowdown as they seek to maintain the profitability of their lending operations, officials at the top four lenders said. The banks are limiting discounts for their best corporate clients to 10 percent of the benchmark lending rate, the officials said, asking not to be identified as they’re not authorized to speak publicly. The central bank in July began allowing lenders to offer credit at 30 percent less than the benchmark rates. Keeping borrowing costs high may blunt efforts to revive growth that has decelerated for six straight quarters in the world’s second-largest economy. Credit expansion is also limited by the central bank’s loan quotas, the officials said, highlighting the conflicting efforts within China to curb bad debts while boosting funding for local governments’ infrastructure projects.
“Banks can no longer afford to ramp up lending recklessly, as they’ve learned a lesson from the past and their operating environment has deteriorated significantly,” said Rainy Yuan, a Shanghai-based analyst at Masterlink Securities Corp. “The lack of consensus from the top on whether and how to fund local governments’ stimulus projects strengthens our view that China’s economic recovery will be L-shaped.”

China Room to Ease Seen Fading as Inflation Lull Set to End (Bloomberg)
A U.S. drought that pushed soybean and corn prices to records is adding to the risk of a rebound in inflation in China, where consumer-price gains were probably close to the slowest in two years in September. Inflation was 1.9 percent last month, according to the median forecast in a Bloomberg News survey before a report on Oct. 15. Credit Agricole CIB says the rate may approach 4 percent by year-end and Citigroup Inc. estimates a pace of about 3.5 percent. The prospect of faster price gains in coming months may encourage policy makers to refrain from cutting interest rates for a third time this year, contrasting with reductions in Brazil, South Korea and Australia and adding to the risk economic growth will be the weakest since 1999. Increased grain costs are feeding into pork prices and the government is also battling to prevent a rebound in the housing market.
“Inflation will rise in the fourth quarter as pork and other food prices are expected to climb and housing costs are creeping up,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. “This means there is no room for the central bank to cut interest rates.” The benchmark one-year lending rate is now 6 percent and the one-year deposit rate stands at 3 percent after reductions in June and July.

Singapore Refrains From Monetary Easing as Economy Shrinks (Bloomberg)
Singapore’s central bank unexpectedly refrained from easing monetary policy even as the economy contracted last quarter, saying inflation will remain elevated for some time. The island’s dollar climbed. Gross domestic product fell an annualized 1.5 percent in the three months through September from the previous quarter, when it expanded a revised 0.2 percent, the Trade Ministry said in a statement today. The median estimate of 16 economists in a Bloomberg News survey was for a 1.6 percent contraction. The central bank, which uses the currency to manage inflation, said it will maintain a modest and gradual appreciation of the dollar.
Singapore joins Asian nations from China to India in limiting monetary stimulus as they guard against inflation risks even as fiscal austerity in the euro area to fight the region’s debt crisis weighs on the world economy. The International Monetary Fund this week cut its projections for global expansion this year and next, saying it sees “alarmingly high” risks of a steeper slowdown. “The monetary authority is in a policy quagmire where it has sticky inflation on one hand and on the other, it is dealing with unknown but downside risks from the external economy,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “It’s judging that it’s too premature to send out dovish signals. Growth will remain sub-par and bumpy, with many blind corners.”

Australia to Hit Gas as Record Rate Cuts Fail: Mortgages (Bloomberg)
Australia’s central bank is set to extend the developed world’s steepest interest rate cuts after banks failed to match its reductions, blunting their impact. The Reserve Bank of Australia probably will lower its cash rate to a record-low 2.75 percent by February, from the current 3.25 percent, interest-rate swap prices show. The nation’s four biggest lenders, accounting for 85 percent of the bank mortgage market, have withheld about a quarter of the RBA’s 1.5 percentage points of cuts since November. The efforts of RBA Governor Glenn Stevens to stimulate the economy with lower borrowing costs are also being hampered as Australians boost savings to a record and repay debt instead of increasing spending. Recent economic releases have suggested lower borrowing costs are needed as newly built homes fell to the lowest on record in August and mortgage lending is growing at the weakest pace since records began in 1977.
“The fall in the cash rate has overstated the degree to which monetary policy has eased,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. “The easing we’ve seen so far has just involved the Reserve Bank taking its foot off the brake, it hasn’t actually put its foot on the accelerator until perhaps now.” National Australia Bank Ltd. (NAB) and Commonwealth Bank of Australia (CBA) passed on 20 basis points of the RBA’s latest 25 basis point cut last week. Westpac Banking Corp. (WBC) cut by 18 basis points, while Australia & New Zealand Banking Group Ltd. (ANZ) is scheduled to respond on Oct. 12. A basis point is 0.01 percentage point.

U.K. Home Values Drop as Olympic Knock-On Extends Summer Lull (Bloomberg)
U.K. house prices fell for a third month in September as mortgage availability remained constrained and a lull during the London Olympics the previous month reduced sales, Acadametrics Ltd. said. The average cost of a home in England and Wales fell 0.1 percent from August to 225,374 pounds ($362,000), Acadametrics and LSL Property Services Plc (LSL) said in a report in London today. Transactions fell 24 percent to 50,000, the second-lowest level for a September since records began in 1995, it said. “A lethargic mortgage market and the knock-on impact of reduced buyer activity in August took its toll,” David Brown, LSL’s commercial director, said in a statement. “The lack of lending, especially to first-time buyers, is choking off first- time buyer sales outside of prime London.”
The Bank of England and the Treasury started a program in August to boost bank lending to households and help the economy. A central bank report last month showed that secured credit to U.K. households rose “significantly” in the three months through September and may increase further, suggesting mortgage availability is set to improve. “If this is the case and the cheaper finance reaches those waiting to purchase their first home, it could provide a welcome new impetus for transactional activity, and a new source of optimism for would-be buyers,” Brown said. From a year earlier, house prices rose 2.2 percent in September, Acadametrics said. While values have increased on an annual basis for the past six months “due to a shortage of properties,” the rate of increase is slowing, it said.

20121012 1121 Global Commodities Related News.

DTN Closing Grain Comments 10/11 14:30 (CME)
Grains Surge Ahead
Grains closed sharply higher Thursday, driven by strong buying interest from both sides of the market. Corn was the clear leader, trading near limit-up for a lion's share of the session.

Pro Farmer: After The Bell Wheat Recap  (CME)
Wheat futures settled high-range with gains in the mid-teens in Chicago, in the upper teens to low 20s in Kansas City and roughly 10 to 15 cents higher in Minneapolis. Friendly USDA reports for both the wheat and corn market today encouraged followthrough buying in wheat futures. USDA trimmed 2012-13 wheat carryover from September to 654 million bu., which was 27 million bu. less than expected.

Wheat Market Recap Report (CME)
December Wheat finished up 16 1/4 at 886, 8 off the high and 27 up from the low. March Wheat closed up 16 at 897. This was 26 1/2 up from the low and 7 1/2 off the high.
December Chicago wheat traded sharply higher on the day along with KC and Minneapolis wheat. The USDA report for wheat was considered neutral but the rally in other grains supported the bounce. World ending stocks for the 2012/13 season came in at 173 million tonnes as compared with 176.7 million last month and vs. trade estimates of 172.81 million tonnes. Total FSU production was estimated at 77.71 million tonnes vs. 78.96 last month. Australian production was cut by 3 million tonnes to 23 million tonnes which was in line with market estimates. US all wheat carryout was also cut to 654 million bushels which was 24 million bushels above market expectations but below the September estimate of 698. Long term headwinds remain for wheat as it remains uncompetitive in the world wheat market but the prospects of better feed wheat demand could support. The EU granted export licenses for 376,000 tonnes of soft wheat today which takes the total for this crop year to 4.2 million tonnes vs. 4.05 for the same time period last year and the government of Argentina expects wheat production near 10.12 million tonnes vs. 11.50 by the USDA. This was slightly supportive to the trade midday.
December Oats closed up 5 at 388 1/2. This was 7 up from the low and 6 1/2 off the high.

Pro Farmer: After The Bell Corn Recap  (CME)
Corn futures surged in reaction to USDA's report data today and posted fresh monthly highs. Nearby futures ended 30-plus cents higher, with deferreds posting gains mostly in the mid-teens. The high-range close gives bulls the upper hand heading into the next trading session. Traders responded to this morning's USDA report with strong gains, as 2012-13 carryover was trimmed more than expected to 619 million bushels.

Corn Market Recap for 10/11/2012 (CME)
December Corn finished up 36 1/2 at 773 1/4, 2 3/4 off the high and 39 1/2 up from the low. March Corn closed up 35 1/2 at 773 1/4. This was 38 3/4 up from the low and 2 1/2 off the high.
The USDA report this morning was considered bullish against trade expectations and December corn traded sharply higher on the day and nearly posted a limit move higher. US ending stocks were pegged at just 619 million bushels which was down from 733 million last month. The average US corn yield was reported at 122 bushels/acre compared with 122.8 last month. Corn production was pegged at 10.706 billion bushels which was 105 million above trade expectations and compared with 10.727 last month. Furthermore, total demand declined by just 100 million bushels due to lower exports. Long term headwinds may remain for the corn market with export demand lagging the pace needed to meet this year's forecast and negative ethanol margins for many areas of the US Midwest remain. Ethanol production for the week ending October 5th averaged 800,000 barrels per day. This was up 1.9% vs. last week and down 6.9% vs. last year. Corn used in last week's production was estimated at 84 million bushels however this fell just short of the 86.45 million bushels per week that is needed to meet this crop year's USDA estimate of 4.5 billion bushels which was left unchanged on today's USDA report.
November Rice finished down 0.05 at 14.975, 0.095 off the high and equal to the low.

Corn Center of Attention as USDA Cuts Supply Outlook (CME)
Corn was the center of attention following the government's latest crop updates, as the U.S. Department of Agriculture further trimmed its estimate for this year’s harvest in the wake of severe drought and said supplies of the grain at the end of next summer will be even lower than previously forecast. The nation's farmers will harvest 10.71 billion bushels of corn, down 0.2% from a September estimate and down 13% from last year, according to the USDA's Crop Production report October 11. In the USDA's monthly Supply and Demand report, also released October 11, corn supplies at the end of the 2012-13 marketing year were reduced 16% to 619 million bushels, a 17-year low. CME Group grain futures rose sharply after the release of the reports, with corn prices surging over 37 cents. There wasn’t really any surprise in the numbers, DTN Senior Analyst Darin Newsom wrote in a report. Still, "did the markets react like there was? Yes," he said.
The USDA hiked its estimate for the U.S. soybean crop by 8.7% from last month’s forecast, to 2.86 billion bushels, down 7.4% from 2011. The increase was larger than the estimates from many analysts, who on average expected a decline of 5.3% from the USDA's August forecast.

Corn Surges to Three-Week High as USDA Sees Smaller World Supply (Bloomberg)
Corn futures jumped to a three-week high after a government report showed global inventories will drop more than expected as the worst U.S. drought in more than 50 years cuts output by the most since 1996. Worldwide inventories on Oct. 1 will be 117.27 million metric tons, down from 123.95 million predicted a month ago and 131.54 million estimated this year, the U.S. Department of Agriculture said today. Reserves as a percent of consumption will fall to 13.7 percent, the lowest since 1974, USDA data show. Stockpiles in the U.S., the largest grower and exporter, will fall 37 percent to 15.73 million tons, from last year. “This report signals there is absolutely no supply cushion,” Dale Schultz, the buyer-relations manager for AgWest Commodities LLC in Holdrege, Nebraska, said in a telephone interview. “We have to raise prices and reduce demand immediately to prevent a real shortage.”
Corn futures for December delivery rose 5 percent to close at $7.7325 a bushel at 2 p.m. on the Chicago Board of Trade, after touching $7.76, the highest since Sept. 17. The gain was the biggest since Sept. 28. Prices have rallied 53 percent since June 15. June and July in the Midwest were the hottest and driest since 1936, according to Donald Keeney, a senior meteorologist for MDA Information Systems Inc. in Gaithersburg, Maryland. About 50 percent of the crop was in poor or very poor condition as of Sept. 30, government data show.

Wheat Has Longest Rally in Seven Weeks on Supply Outlook (Bloomberg)
Wheat rose, capping the longest rally in seven weeks, after the U.S. Department of Agriculture lowered its forecast for global stockpiles and said domestic cattle producers will use more of the grain as livestock feed. Global stockpiles will be 173 million metric tons on May 31, down from 176.71 million estimated on Sept. 12, the USDA said today in a report. World production was forecast at 653.05 million tons, down 0.9 percent from last month. About 315 million bushels in the U.S. will be fed to cattle, up from last month’s estimate of 220 million, the USDA said. “The wheat crop in Russia is down, Canada is down, Australia is down,” Jason Britt, the president of Central States Commodities Inc., a Kansas City, Missouri-based broker, said in a telephone interview. “There seems to be a trend.”
Wheat futures for December delivery rose 1.9 percent to settle at $8.86 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Sept. 28. The price gained for the fourth straight day, the longest rally since late August. The grain has climbed 41 percent since mid-June after a drought scorched the Midwest. Australian production was forecast at 23 million tons, down 12 percent from September, and Russian output was cut to 38 million tons from 39 million, USDA data show. Canadian farmers will harvest 26.7 million tons, down from 27 million estimated last month. The U.S. was expected to be the top exporter this year, followed by Canada, Australia and Russia. Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Coffee Harvest in Vietnam to Drop From Record on Dry Weather (Bloomberg)
Coffee production in Vietnam, the world’s biggest grower of the robusta variety used by Nestle SA (NESN) in instant drinks, is poised to decline from a record as dry weather cuts yields, bolstering prices. The harvest may drop 9.4 percent to 1.45 million metric tons in the season that started Oct. 1 from an all-time high of 1.6 million tons in 2011-2012, according to the median of eight trader and shipper estimates compiled by Bloomberg. That’s less than the 26 million bags (1.56 million tons) estimated by Volcafe Ltd. A bag weighs 132 pounds. Robusta rallied 16 percent in London this year on rising demand from roasters after arabica beans, favored for specialty drinks such as those made by Starbucks Corp. (SBUX), soared to a 14- year high. A smaller harvest in Vietnam may help sustain the rally, potentially raising costs for Nestle, the world’s biggest food company. Consumption of robusta will grow at a faster rate than arabica, Luigi Lavazza SpA said last month.
“There wasn’t much rain this year, so there wasn’t enough water for the trees to develop and for the beans to grow,” said Mai Ky Van, a deputy director at October Coffee-Cocoa One Member Ltd. in Dak Lak province, Vietnam’s biggest growing region. “Coffee output in my area may fall about 20 percent.” Krong Pak district, where October Coffee-Cocoa is based, is among the largest coffee-growing areas in Dak Lak. Rainfall was 23 percent less than normal in the first nine months of this year, according to the Meteorology and Hydrology Department. The district received 756.1 millimeters from the start of the year to Sept. 30, less than the 986.2 millimeters average, it said.

OIL-Oil rises as Turkey-Syria tensions fuel supply concerns
NEW YORK, Oct 11 (Reuters) - Oil prices rose on Thursday to their highest levels in weeks as tensions between Syria and Turkey escalated, while maintenance on North Sea oilfields pushed the premium for Europe's Brent crude to another one-year high.
"The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region," said Bjarne Schieldrop, analyst at SEB in Oslo.

NATURAL GAS-US natgas futures end up, front hits 2012 high
NEW YORK, Oct 11 (Reuters) - U.S. natural gas futures settled higher on Thursday for a fourth straight day, with a government report showing a weekly inventory build well below market expectations driving the front contract to a new high for the year.
"This injection has provided a catalyst for the market to make a move. There is clear buying pressure behind this move ... creating the potential for further gains, but today's price response was a bit of an overreaction," Gelber & Associates analyst Aaron Calder said in a report.

EURO COAL-Prices drop $1-2/T
LONDON, Oct 11 (Reuters) - Prompt physical coal prices fell by $1-2 a tonne on Thursday in line with coal swaps' weakness in early trading.
A November loading South African cargo was bid at $80.00 and offered at $84.00 a tonne, down more than $2.00 on the offer.
"Industrial growth (in India) is the problem, not the price of coal," one major Indian trade importer said.
"The cement sector is oversupplied, so is sponge iron and at the same time their costs have been rising so they need less coal," he said.

Oil Gains a Second Day on Falling Jobless Claims, Mideast Unrest (Bloomberg)
Oil gained for a second day in New York after U.S. claims for jobless benefits dropped to the lowest level in four years and rising tension in the Middle East prompted concern crude supplies may be disrupted. Futures advanced as much as 0.6 percent and are headed for the first weekly gain in a month. First-time unemployment claims fell to 339,000 last week, the lowest since February 2008, according to data from the Labor Department. Brent oil traded near the highest premium to West Texas Intermediate in a year after Turkey said a Syrian plane that it grounded contained munitions, while Italian Foreign Minister Giulio Terzi said Europe is prepared to tighten sanctions on Iran. “The potential for a blow-up in the Middle East is being reflected in that persistently wide spread between Brent and WTI,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Jobless claims were better-than-expected.”
Crude for November delivery climbed as much as 53 cents to $92.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.38 at 10:45 a.m. Singapore time. The contract yesterday rose 82 cents to $92.07 a barrel. Prices are up 2.8 percent this week and down 6.5 percent this year. Brent oil for November settlement fell 9 cents to $115.62 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $23.24 to WTI. It reached $23.64 yesterday, the widest gap since October 2011.

Recap Energy Market Report  (CME)
November crude oil prices trended higher throughout the US trading session, supported by weakness in the US dollar, a boost in risk-taking sentiment and ongoing tensions between Syria and Turkey. This morning US economic data showed US jobless claims falling to their lowest level in more offered a measure of support. November crude oil prices traded up to their high of the morning following EIA inventory data that showed a build of 1.672 million barrels. The refinery operating rate was down 1.5% to 86.7%, which compared to 84.2% last year. Prices drifted lower into the close as equity markets erased most of their early morning gains.

Silver Market Recap Report  (CME)
December silver prices waffled around both sides of unchanged today and clearly silver was a follower today instead of a leading market. The bull camp were probably emboldened by gains in a number of physical commodity markets but seeing supportive currency and equity market action simply rounded out the market environment in favor of the risk-on vibe. Residually high open interest in silver seems to favor the bull camp but a continued rise in open interest on a sharp slide in silver prices could shift that indicator squarely into the bear camp.

Gold Gains as Investor Demand Increases ETP Holdings to Record (Bloomberg)
Gold advanced for a second day, paring this week’s losses, as holdings in bullion-backed exchange traded products climbed to a record on added measures by the world’s central banks to stimulate growth. Spot gold climbed as much as 0.2 percent to $1,771.30 an ounce and traded at $1,770.40 at 9:51 a.m. Singapore time, heading for a 0.6 percent drop this week, the most since August. Holdings in exchange-traded products rose for an 11th straight day, reaching an all-time high of 2,582.98 metric tons yesterday, according to data compiled by Bloomberg. Gold jumped 11 percent in the third quarter, the most since June 2010, as the U.S. Federal Reserve announced a third round of monetary stimulus. The European Central Bank held interest rates at a record low last week after agreeing on an unlimited bond-purchase program in September when the Bank of Japan added 10 trillion yen ($127 billion) to an asset-purchase fund. Brazil and South Korea cut interest rates yesterday to boost growth.
“Gold is supported by the U.S. quantitative easing program and other countries’ stimulus measures,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “On the other hand, the U.S economy is doing relatively better than the euro zone. That will drive the dollar higher and limit further gains in gold prices.” U.S. jobless claims fell 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, government data showed yesterday. The Dollar Index, a gauge against the currencies of six major U.S. trading partners, weakened from a one-month high reached yesterday. Bullion rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. Gold for December delivery was little changed at $1,771.30 an ounce on the Comex in New York. Spot silver gained 0.3 percent at $34.09 an ounce, heading for a weekly loss of 1.2 percent, the most since July. Cash platinum advanced 0.4 percent at $1,684.50 an ounce, set for a drop of 1.4 percent for the week. Palladium rose 0.2 percent to $652.50 an ounce.

Gold Market Recap Report  (CME)
The bull camp suggests that the gains today were primarily built off hopes that the latest debt downgrade for Spain would result in that country moving forward with requests for bailout funds, which in turn was thought to get Spain beyond its near term troubles. Others think that the gold market was lifted because of dovish talk from the Fed, others think that strength in equities lifted gold and others thing that ultimately beneficial US scheduled data provided the primary lift for gold prices. However, the initial reaction by gold today was for prices to slide but eventually that news seemed to be able to pull gold prices back up. Unresolved labor issues in South African might have been another theme prompting the bulls into action during the session today.

20121012 1120 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
November Soybeans finished up 25 1/4 at 1548 1/2, 19 1/2 off the high and 27 1/4 up from the low. January Soybeans closed up 24 3/4 at 1548 1/2. This was 26 3/4 up from the low and 18 1/4 off the high. December Soymeal closed up 9.6 at 472.2. This was 10.4 up from the low and 7.3 off the high. December Soybean Oil finished up 0.7 at 51.33, 0.96 off the high and 0.74 up from the low.
November soybeans traded sharply higher throughout the day and the positive trade followed a USDA report that was considered slightly bullish against traded expectations. The USDA pegged US soybean production at 2.86 billion bushels which was 101 million bushels above trade expectations and compares with the September estimate of 2.634. The initial increase in production was considered bearish but the report also showed an increase in domestic crush demand by 40 million bushels and exports by 210 million bushels to offset the increase in overall supply. This left ending stocks at 130 million bushels vs. traded expectations of 130 million bushels. The average US soybean yield rose to 37.8 bushels per acre vs. trade estimates of 37. Long term support in soybeans comes from consistent demand from China and an explosive export sales pace so far this year. China soybean imports were increased to 61 million tonnes vs. 59.50 in September.

Pro Farmer: After The Bell Soybean Recap (CME)
Soybean futures traded as much as 40-plus cents higher at times today, and the market ended mid- to high-range with gains ranging from the upper teens to the high 30s, with November and January futures around 25 cents higher. After trending lower ahead of this morning's USDA reports, soybeans benefited from corrective short-covering as USDA data confirmed that supplies are very tight and more rationing is needed.

Malaysia OKs plan to cut crude palm oil export tax-govt official (Reuters)
Malaysia has approved a plan to cut crude palm oil export taxes from 23 percent per tonne, a government official said on Thursday, as the world's No.2 producer tries to grab market share from top producer Indonesia.

EDIBLE OIL: Malaysian palm futures rose to their highest in more than a week, as a government plan to cut an export tax on crude palm oil offset record stockpiles and weak exports, while traders took positions ahead of a key U.S. report on demand and supply. (Reuters)

VEGOILS-Palm oil at 1-week high as tax cut trumps high stocks
Thu Oct 11, 2012 6:17am EDT
    By Chew Yee Kiat
    SINGAPORE, Oct 11 (Reuters) - Malaysian palm futures rose on
Thursday to their highest in more than a week, as a government
plan to cut an export tax on crude palm oil offset record
stockpiles and weak exports, while traders took positions ahead
of a key U.S. report on demand and supply.
    Malaysia has approved a plan to slash export taxes from the
current level of 23 percent per tonne and will discuss the size
of the cut on Friday, a government source said.
    The move could boost Malaysia's crude exports and help ease
stockpiles from a record of 2.48 million tonnes in September.
    "We believe that most of the negative news from the high
inventory level has been priced in as crude palm oil prices are
currently at a high discount of $350 per tonne against soybean
oil," said Alan Lim Seong Chun, research analyst with Malaysia's
Kenanga Investment Bank, in a note.    
    The benchmark December contract on the Bursa
Malaysia Derivatives Exchange gained 2.7 percent to close at
2,523 ringgit ($822) per tonne, just off an earlier high of
2,525 ringgit, a level last seen on Oct. 1.
    Total traded volumes stood at 41,253 lots of 25 tonnes each,
far higher than the usual 25,000 lots.
    Technicals showed palm oil faces resistance at 2,503 ringgit
per tonne, a break above which will open the way towards 2,588
ringgit, according to Reuters market analyst Wang Tao.

    Traders are taking positions ahead of the October supply and
demand report by the U.S. Department of Agriculture due at 1230
GMT, which is likely to show a larger U.S. soybean crop than
initially expected.
    A bigger crop of soybeans to be crushed into soybean oil
could shift demand away from palm oil.
    Palm oil stocks hit an all-time high in September, thanks to
record production, but prices are heading for their first weekly
gain after three weeks of losses, further suggesting the sharp
rise in inventory may already have been factored in.
    "The worst may be over, with palm oil production starting on
a seasonal downcycle, which should ease the high stockpile,"
Alvin Tai, an analyst with Malaysia's OSK Investment Bank, said
in a research note.
    "We note that Q4 tends to be the best quarter for both the
palm oil price and plantation stocks."    
    In a bullish sign for palm oil, Brent crude oil headed on
Thursday for its highest close in a month, lifted by escalating
tension between Syria and Turkey, maintenance in the North Sea
and a supply crunch in oil products.
    In other vegetable oil markets, U.S. soyoil for December
delivery was up 1.4 percent. The most active January 2013
soybean oil contract on the Dalian Commodity Exchange
closed 0.2 percent higher.