Wednesday, October 24, 2012

20121024 1813 FCPO EOD Daily Chart Study.

FCPO closed : 2578, changed : +38 points, volume : lower.
Bollinger band reading : correction range bound little downside biased.
MACD Histogram : resume rising downward, buyer still in control.
Support : 2570, 2550, 2520, 2490 level.
Resistance : 2600, 2620, 2650, 2670 level.
Comment :
FCPO closed recorded gains with decreasing volume changed hand. Soy oil currently trading higher after overnight closed declined lower while crude oil price rebounding little higher after yesterday fell lower.
Price traded higher on better demand prospect due to festival factor ahead of tomorrow exports figures to be release by 2 cargo surveyor and news on Malaysia and Indonesia official to discuss crude palm oil collaboration in coming November.
FCPO daily chart reading still suggesting a correction range bound little downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20121024 1736 FKLI EOD Daily Chart Study.

FKLI closed : 1672 changed : +2.5 points, volume : lower.
Bollinger band reading : correction range bound upside biased.
MACD Histogram : rising higher, buyer in control.
Support : 1670, 1660, 1657, 1651, 1645 level.
Resistance : 1680, 1690, 1700, 1710 level.
Comment :
FKLI closed recorded gain for the 3rd day touched new all time high with reducing volume transacted doing 4 points premium compare to cash market closed firmer. Overnight U.S. markets declined lower and today Asia markets traded mixed while European markets currently registering small loss.
World markets traded mixed after news on a report showing China’s manufacturing may decline less and recent weaker U.S. corporate earnings amid slowing global economy growth concern.
FKLI daily chart reading remained suggesting a correction range bound 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.

20121024 1624 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a higher open while Asian shares limited losses after manufacturing data from China suggested that a recovery in the world's second-biggest economy was strengthening. U.S. stocks fell on Tuesday, driving the Dow industrials to the biggest drop since June 21, as weak results from index members DuPont and United Technologies showed profit growth is slowing. (Reuters)

FOREX: The dollar hovered near a three-month high versus the yen, supported by hopes for more Bank of Japan monetary easing, while the Australian dollar rose as traders trimmed back bets for its central bank to cut interest rates next month. (Reuters)

China making slow, steady economic recovery -surveyBEIJING, Oct 24 (Reuters) - China's economy is making a slow, steady recovery from its weakest period of growth in three years, a survey of purchasing managers signalled on Wednesday, with new orders and output at their highest in months.
The lacklustre nature of the rebound revealed by the HSBC Flash Manufacturing Purchasing Managers Index (PMI) though comes in its headline reading of 49.1 points for October - a three month high, but still below the 50-point mark that separates expanding from shrinking business activity.

Fed to keep buying bonds despite firmer U.S. growth (Reuters)
The U.S. Federal Reserve appears intent to stick to its bond-buying stimulus on Wednesday, having already indicated it would take more than a modest show of economic strength for policymakers to begin taking their foot off the gas.

US futures regulator unveils customer fund protection plan (Reuters)
U.S. futures regulators unveiled a proposal on Tuesday to strengthen protections for customer money, a move designed to bolster confidence in the wake of the high-profile failures of brokerages MF Global and Peregrine Financial Group.

GRAINS: Chicago soybeans edged higher, rising for six out of the last seven sessions as the market was buoyed by strong demand and tightening supplies as U.S. farmers hold back freshly harvested crops.Corn eased for a third day in a row on lacklustre demand for U.S. supplies, while wheat slid 0.3 percent with losses being capped by concerns over production in top exporting nations. (Reuters)

Brazil corn exports beat annual record, to surpass Argentina (Reuters)
Brazil's 2012 corn exports have already surpassed an annual record and the country could replace Argentina as the world's second-largest exporter of the grain this year, according to government data and local analysts.

Iran says may stop oil sales if sanctions tighten (Reuters)
Iran said on Tuesday it would stop oil exports if pressure from Western sanctions got any tighter and that it had a "Plan B" contingency strategy to survive without oil revenues.

OIL: Brent crude futures climbed more than $1 to over $109 a barrel, snapping a six-day losing streak after economic data from China suggested a gradual recovery in the world's No. 2 oil consumer. (Reuters)

Euro Coal-Prices fall $1/T with oil
LONDON, Oct 23 (Reuters) - Prompt physical coal prices dropped by up to $1.00 a tonne on Tuesday in line with oil's $2 a barrel fall on concerns about slowing economic growth and the eurozone debt crisis.

Brent crude futures fell more than $2 to the 100-day moving average on Tuesday.
India's H1 2012/13 coal imports jump 18 pct y/y-ministry
NEW DELHI, Oct 23 (Reuters) - India's thermal and coking coal imports rose 18 percent to 63.98 million tonnes in April to September from a year ago, coal ministry figures provided by an official showed, as local supplies continued to lag galloping demand.
Asia's third-largest economy imported 102.853 million tonnes of thermal and coking coal in the 2011/12 fiscal year, jumping nearly 50 percent from a year earlier, the figures given to Reuters on Tuesday showed.

BASE METALS: London copper rebounded from a six-week low on signs of growth recovery in top consumer China, although gains are likely to be capped as investors wait to hear from the U.S. Federal Reserve which ends a policy meeting later in the day. (Reuters)

PRECIOUS METALS: Gold nudged up as bargain hunters and buyers from top consumer India reappeared after prices dropped to their lowest in more than a month and the U.S. dollar retreated, but worries about the global economy could cap gains. (Reuters)

METALS-Copper rebounds from 6-wk low on China optimism

SHANGHAI, Oct 24 (Reuters) - London copper rebounded from a six-week low on signs of growth recovery in top consumer China, although gains are likely to be capped as investors wait to hear from the U.S. Federal Reserve which ends a policy meeting later in the day.
"London copper is buoyed by today's PMI numbers, but Shanghai copper was mainly held back from further gains by a still-sluggish Chinese copper physical market," said Orient Futures analyst Andy Du.

PRECIOUS-Gold pares early gains; holds near 7-week low
SINGAPORE, Oct 24 (Reuters) - Gold trimmed gains after early bargain hunting tapered off and worries about the global economy resurfaced, but festive demand from top consumer India could help shore up prices.
"Of course, towards $1,700 you can see some support over there. I think the most important thing is the U.S. election," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Global crude steel output flat in Sept, China edges up
LONDON, Oct 22 (Reuters) - Global crude steel production in September was little changed from a year earlier, World Steel Association (Worldsteel) data showed on Monday, with China raising production slightly while western producers held back output in the face of weak demand.
Output of steel, used in automaking and construction, was 123.63 million tonnes in September versus 123.62 million a year earlier, Worldsteel figures showed.

Baltic index up on Chinese iron ore demand
Oct 23 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Tuesday as rates for larger capesizes remained strong on Chinese iron ore demand.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, rose 6.94 percent to 1,109 points.

20121024 1450 Palm Oil Related News.

VEGOILS-Palm oil futures inch up on festival demand
Wed Oct 24, 2012 1:58am EDT
* Demand expected to pick up as festive season nears -trader
    * Stockpiles could ease on peaking production, monsoon rain
    * Palm oil still targets 2,676 ringgit -technicals
    * Palm oil prices to rise as importers seek cheaper
alternatives -Oil World

    By Anuradha Raghu
    KUALA LUMPUR, Oct 24 (Reuters) - Malaysian palm oil futures
inched up on Wednesday as investors bet on increased festival
demand for the tropical oil, although prices were locked in a
tight range due to lingering concerns over record-high stocks.
    The upcoming Diwali festival celebrated by major vegetable
oil importer India could lead buyers to snap up palm oil, easing
a growing stockpile in the world's No.2 producer.
    In addition, cargo surveyor data showing Malaysia's palm
exports grew as much as 17 percent for Oct. 1-20 from a month
ago also lifted sentiment.
    "Exports were good, but inventory is still on the high
side," said a trader with a foreign commodities brokerage in
    "But production should be toppish in the last quarter as we
move into the monsoon season, while at the same time demand is
picking up because of the festive season," he added.
    Palm oil production hits a seasonal peak in the last quarter
of the year before slowing, lifting traders' hopes this will
reduce stocks from a record high of 2.5 million tonnes in
    By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange was up 0.6 percent at
2,556 ringgit ($836) per tonne. Prices traded in a tight range
between 2,551 and 2,570 ringgit per tonne.
    Total traded volumes stood at 9,567 lots of 25 tonnes each,
thinner than the usual 12,500 lots.
    Technical analysis showed a bullish target for Malaysian
palm oil remains unchanged at 2,676 ringgit per tonne, said
Reuters market analyst Wang Tao.
    Palm oil prices are expected to rise sharply in the coming
months on brisk buying interest as global importers seek cheaper
alternatives to competing soyoil, said Hamburg-based oilseeds
analysts Oil World on Tuesday.
    Analysts also say the Malaysian government's move to slash
export taxes on crude palm oil and scrap duty free export quotas
on the crude grade in January 2013 could benefit industry
players in the long term.
    "Despite the short-term pain for upstream players, we reckon
the change is positive for the long run as it should result in
better CPO prices after the high inventory is reduced," Kenanga
Investment's Alan Lim Seong Chun said in a research report on
    In a bullish sign for palm oil, Brent crude futures climbed
towards $109 a barrel on Wednesday, snapping a six-day losing
streak after economic data from China suggested a strengthening
recovery in the world's No. 2 oil consumer.
    In other vegetable oil markets, U.S. soyoil for December
delivery inched up 0.5 percent in early Asian trade. The
most-active May 2013 soybean oil contract on the Dalian
Commodity Exchange fell 0.2 percent by the midday break.

20121024 1104 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares slip, focus on China data
TOKYO, Oct 24 (Reuters) - Asian shares faltered while the yen firmed as investors maintained their risk aversive, spurred by continued weak corporate earnings results worldwide and worries about economic slowdowns.
"With uncertainty in global markets, investor concern is growing about the growth prospects of large-cap companies," said Park Jung-sup, an analyst at Daishin Securities, of Korean equities market.

Oil slumps on growth concerns, corporate forecast cuts
NEW YORK, Oct 23 (Reuters) - Oil prices fell sharply on Tuesday as slowing global economic growth, Europe's continuing debt crisis and weak earnings forecasts from U.S. corporations pressured commodities and equities.
"The main bearish driver is the state of the economy," said Filip Petersson, an analyst at SEB in Stockholm. "And that's taken all markets down quite a bit."

Iran says may stop oil sales if sanctions tighten
DUBAI, Oct 23 (Reuters) - Iran said on Tuesday it would stop oil exports if pressure from Western sanctions got any tighter and that it had a "Plan B" contingency strategy to survive without oil revenues.
Western nations led by the United States have imposed tough sanctions on the Islamic Republic this year in an attempt to curb its nuclear programme that they say is designed to produce atomic weapons. Tehran says its nuclear plans are peaceful.

POLL-US crude stocks projected up for third straight week
Oct 23 (Reuters) - U.S. crude oil inventories are expected to have risen for a third straight week on a recovery in imports, an extended Reuters poll of analysts showed on Tuesday.
Crude inventories are seen 1.9 million barrels higher for the week ended Oct. 19. All 13 analysts forecast a build in crude stockpiles.

NATURAL GAS - U.S. natgas futures rebound 2 pct after Monday slide
NEW YORK, Oct 23 (Reuters) - U.S. natural gas futures ended higher on Tuesday, underpinned by technical buying after Monday's steep slide and by colder Northeast and Midwest weather forecasts for later this week and next that should stir more heating demand.
"Prices moved up today on some bargain hunting near the bottom of the recent range and on a cooler forecast than what was indicated on Monday, but the market has been range bound for most of the month," said Aaron Calder, market analyst at Gelber & Associates in Houston.

Euro Coal-Euro Coal-Prices fall $1/T with oil
LONDON, Oct 23 (Reuters) - Prompt physical coal prices dropped by up to $1.00 a tonne on Tuesday in line with oil's $2 a barrel fall on concerns about slowing economic growth and the eurozone debt crisis.
"We're either at the bottom of the market yet or very close to it," one producer said.

20121024 1019 Palm Oil Related News.

MALAYSIA-PRESS-Malaysia, Indonesia to discuss palm oil collaboration in November-The Edge - RTRS
24-Oct-2012 08:58
Malaysian and Indonesian senior officials are set to meet in November to discuss potential areas of collaboration between the world's two largest palm oil producing nations.
Speaking at a press conference after officiating the 2012 National Seminar on Oil Palm Mechanisation, Plantation Industries and Commodities Minister Bernard Dompok said the two nations had brought forward its annual meeting to early November.
"We have agreed to look at many areas such as the amount of biodiesel that should be allowed in the market and how much area of old palm trees should be replanted," the minister said.

Strong demand to raise palm oil prices -Oil World - RTRS
23-Oct-2012 21:30
Global consumers to switch to cheap palm oil Brisk demand will in turn push up palm prices
HAMBURG, Oct 23 (Reuters) - Palm oil prices are likely to rise sharply in coming months on brisk buying interest as global importers seek cheaper alternatives to more expensive products including soyoil, Hamburg-based oilseeds analysts Oil World said on Tuesday.
“We expect a pronounced recovery in palm oil prices due to strong demand and spillover strength from other vegetable oils,” Oil World said.
Palm oil prices have been generally weak in the past two months, partly on fears about large stocks in Asian producing countries, and is currently about $250 a tonne cheaper than Argentine soyoil, Oil World said.
“Prices of crude and processed palm oils have already recovered by $30-$40 (a tonne) during the past 2-3 weeks,” it said. “Additional advances are likely to occur in the next 2-3 months, but most of the price appreciation will probably occur in the first 3-4 months of 2013.”
“We expect an increase in crude palm oil futures to a high of about 3,300 ringgit ($982 a tonne) on the Bursa Malaysia Derivatives up to March or April 2013.”
The benchmark January palm oil contract FCPOc3 on the Bursa Malaysia exchange was trading around 2,541 ringgit ($833) per tonne on Tuesday. (Full Story)
“In Rotterdam, crude palm oil prices may advance to a high of $1,150 (a tonne), approximately $300 above the current level,” Oil World added.
Global vegetable oil consumption will still rise in coming months, it forecast. The sluggish economic environment and reduced demand for biofuels will slow down the rate of increase but not cause a fall, it said.
Looming declines in export supplies of soyoil, sunflower oil and rapeseed oil will raise global demand for palm, it said.
“The current very attractive palm oil prices give an incentive to switch already now,” it added.

20121024 1001 Global Economy Related News.

Singapore: Inflation hits 4.7% in Sept
Singapore's inflation quickened in September as car prices and rents soared from a year ago, increasing the pressure on the government for a more aggressive stance including further measures to cool the property market. The city-state's consumer price index rose 4.7% in September from a year ago, up from August's 3.9% increase. (BT)

Taiwan: September industrial production gains less than estimated
Taiwan’s industrial output rose less than economists estimated in September as a global growth slowdown tempered gains in manufacturing and exports. Output climbed 3% last month from a year earlier, after gaining a revised 1.37% in August, the Ministry of Economic Affairs said. The median estimate of 11 economists in a Bloomberg survey was 6.5%. (Bloomberg)

Hong Kong: Defends peg second time as currency tests limit
The Hong Kong Monetary Authority sold its own currency for a second time in a week to stem appreciation after it traded near the upper limit of a 29-year-old peg to the US dollar. The central bank bought a combined USD1.25bn at a rate of HKD7.75 per US dollar in Hong Kong and New York, the authority said. That followed a USD603m intervention on 19 Oct, when it stepped into the market for the first time since 2009. (Bloomberg)

Euro: Consumer confidence little-changed after four-month slump
Euro-area consumer confidence remained little-changed in October after decreasing in the previous four months as record unemployment and the deepening economic slump weighed on sentiment. An index of household sentiment in the 17-nation euro area rose to -25.6 from -25.9 in September, the European Commission in Brussels said in an initial estimate. September was the lowest reading since May 2009. Economists had forecast an unchanged reading, the median of 26 estimates in a Bloomberg survey showed. (Bloomberg)

Spain: Output shrinks for fifth quarter amid bailout talk
Spain’s economy contracted for a fifth quarter, adding pressure on Premier Mariano Rajoy to seek more European aid even as the euro area’s fourth-largest economy met a bill-sales target. GDP fell 0.4% in the three months through September from the previous quarter, matching the contraction of the second quarter, the Bank of Spain said. That compares with a median forecast for a 0.7% contraction in a Bloomberg News survey of 10 economists. (Bloomberg)

Dow Average falls most since June amid disappointing earnings
US stocks retreated, triggering Dow Jones Industrial Average’s biggest decline since June, amid disappointing results by companies from 3M Co. to DuPont Co. and as commodities erased their gains for the year. The Standard & Poor’s 500 Index decreased 1.4% to 1,413.11, the lowest level since 5 Sept. The Dow slumped 243.36 points, or 1.8%, to 13,102.53. Volume for exchange-listed stocks in the US was 6.6bn shares, or 9.1% above the three-month average. (Bloomberg)

20121024 1000 Malaysia Corporate Related News.

Daya Materials secures a RM120m Sabah project
Daya Materials has secured a contract to undertake a property project in Penampang, Sabah with a gross development cost of RM120m. Yesterday, it said that its unit signed a Memorandum of Understanding (MoU) with Chang Cheng Realty SB to build one block of 28-storey retail service suites and 40 blocks of four-storey shop offices and eight blocks of three-storey shops. The company added that the RM120m comprised of the total construction cost and interest. However, the estimated gross development value was more than double, at RM250m. (StarBiz)

Squabble at Scomi
The ongoing squabble at Scomi Group is likely to turn the attention to an upcoming EGM where shareholders will have to approve the issuance of new shares amounting to around 15% in equity to IJM Corp, according to insiders. IJM, which had already bought a 10% stake in Scomi, subscribed to Scomi's redeemable convertible secured bonds that can be converted into new shares. If and when that transpires, IJM will emerge as the clear single-largest shareholder of Scomi with a 25% stake. Sources said the EGM would probably be called in two to three months and the only party that cannot vote is IJM. (StarBiz)

Halim Saad in running for bridge project
Tan Sri Halim Saad, the brains behind the construction of the North-South Expressway and who is now said to be worth a staggering RM60bn, is making a return to the corporate world by attempting to build yet another multi-billion ringgit project: this time, a bridge in Bangladesh. Halim’s fleet of companies is believed to be in the running for the almost USD3bn (RM9.3bn) Padma Bridge project in the South Asian nation. The project is to be implemented under a government-to-government understanding via a memorandum of understanding signed on 10 April 2012. (BT)

Astro wins Singapore court ruling against Lippo
Malaysian billionaire T. Ananda Krishnan's Astro group won a Singapore court ruling upholding a USD250m (RM763m) arbitration award against Lippo Group, its former Indonesian partner, Bloomberg reported yesterday. A three-member arbitration tribunal in 2010 ruled against Lippo for a failed television venture. Toby Landau, Lippo's lawyer, argued that time limit to oppose the arbitration award didn't apply in the case and that the company hadn't agreed to arbitration. Ananda's Astro All Asia Networks plc had said it ended the venture after its Lippo partners failed to pay RM805m in bills. (BT)

MAHB proposes reinvestment plan
Malaysia Airport Holdings (MAHB) has proposed a dividend reinvestment scheme. In the plan, shareholders will have the option to reinvest their cash dividend in new shares of RM1 each. Yesterday, the company announced a single-tier interim dividend of 6sen for its financial year ending 31 Dec 2012. MAHB posted a net profit of RM113m for its third quarter ended 30 Sept 2012, 3.5% lower than RM117.2m in the previous corresponding quarter, which the company attributed to increased operating costs and depreciation. (Malaysian Reserve)

Bumi Armada FPSO gets RM100m contract extension
The contract for Bumi Armada’s floating, production, storage and offloading (FPSO) vessel, FPSO Armada Perkasa, has been extended for one year by Afren Energy Resources Ltd (AER). AER is a subsidiary of London-listed Afren plc, an independent exploration and production company. The vessel has been deployed offshore in Nigeria since 2008 and the one-year extension, effective 1 July 2013 is valued at RM100m. The FPSO has a potential production capacity of 35k barrels per day of fluids and has uplifted 24m barrels of oil to date. (Malaysian Reserve) Please see accompanying report

Singapore and Malaysia agree on SGD1.2bn project
Singapore government-linked firm Ascendas will help build a SGD1.2bn (RM3bn) industrial park in Iskandar Malaysia's economic zone, boosting an area Malaysia has been promoting aggressively, in a sign of improving ties between the neighbours. Ascendas, whose projects include the Singapore Science Park and the International Tech Park in Bangalore, India, said it would team up with UEM Land Holdings to develop a 519-acre site. Ascendas will hold a 60% stake while UEM Land will take the remaining 40%. The park will be in Nusajaya, a part of Iskandar near a bridge connecting Singapore and Malaysia. (Financial Daily)

Petronas to meet Canadian officials over Progress bid
Petroliam Nasional (Petronas) and Progress Energy Resources will be meeting government officials in Ottawa to better understand Canada's requirements with respect to the proposed acquisition of the latter by the national oil corporation. In a statement, Petronas said that it had up to 30 days or longer to make any additional representations and submit any further undertakings, based on the announcement by the Canadian Minister of Industry. "Petronas and Progress will work together to ensure that the minister has the necessary information to determine that the proposed acquisition would likely be of benefit to Canada", said the company said. (Financial Daily)

The slowdown in the domestic tourism industry, together with  Malaysian  Airline's (MAS) effort to cut capacity, dampened passenger growth at KLIA,  said Faizal Mansor, CFO of Malaysia Airports (MAHB). Nevertheless, he  said the outlook remained positive. "We note that the airline winter schedules  indicate a growth of 8.7% in seat numbers in October, which could translate into  higher passenger numbers in the coming quarter. We also expect more new  airlines at our airports before year-end," said Faizal.  On reports that AirAsia has decided to move its operations to KLIA2  once it is completed, Faizal said MAHB has not received confirmation.  Nonetheless, he said it was good news that MAHB and AirAsia could  finally agree on some issues. But there were still a few outstanding  issues that needed to be ironed out, for instance, the airline's office and  check-in counters. (Financial Daily)

Ascendas Land International Pte Ltd, a unit  linked to Singapore's  state-controlled JTC Corp, has inked a landmark deal to help build an integrated  technology park over 210ha in Gerbang Nusajaya, Johor. The projected  investment to build the technology park is around RM3.7bn, with Ascendas  holding a 60% stake in the joint venture. UEM Land will hold the balance 40%.  Iskandar Malaysia's integrated eco-friendly technology park in Nusajaya,  which is scheduled to be ready by 2022, will help create some 34,000  job vacancies. UEM Land MD/CEO Datuk Wan Abdullah Wan Ibrahim  said the first phase will see more than 100 foreign companies investing  in Nusajaya. (BT)

Sime Darby Auto ConneXion, a subsidiary of Sime Darby Motors and the  country's sole Ford vehicles distributor since 2008, plans to open up five more  3S centres nationwide next year in line with its expansion strategy. Its Managing  Director Lee Eu San said the new centres would be located mainly in the Klang  valley which accounted for 40% of the market last year.  "Last year Ford captured 1.2% of the country market share in the pick  up segment and we believe the figure will go up this year. We also  foresee the Sabah and Sarawak sales to go up 30 to 32% next year with  the new Ranger Model," Lee added. (BT)

Dialog Group has proposed to sell its 50% stake in Tracerco Asia Sdn Bhd to  Johnson Matthey Investments for a total cash consideration of RM6m. Tracerco  provides diagnostic services using radioisotope technology in the oil, gas and  petrochemical industry. On completion of the sale, Johnson Matthey will own  100% of Tracerco. (BMSB)

Malaysian and Indonesian senior officials are set to meet in November to  discuss potential areas of  palm oil collaboration. Plantation Industries and  Commodities Minister Tan Sri Bernard Dompok said the two nations had  brought forward its annual meeting to early November. "We have agreed to look at many areas such as the amount of biodiesel  that should be allowed in the market and how much area of old palm  trees should be replanted," said Dompok. Responding to whether crude palm oil taxes will be one of the areas of discussion, Dompok said tax  issues should be left to the individual countries. (Financial Daily)

Astro Malaysia's top management has been buying the group's share on the  open market. Four of Astro's key management including chief executive  Rohana Rozhan, have collectively bought half a million Astro shares for a  total of RM1.37m. (Financial Daily)

AirAsia is currently negotiating terms with Malaysia Airports to formulate a  service-level agreement at KLIA2. CEO Aireen Omar said, "It's something that is  in progress. Generally, there would be a SLA but I cannot comment much."  (Bernama)

Masterskill Education Group Bhd is embarking on a transformational plan  aimed at nudging it back into the black by the  1Q13, sources close to the  company said. Among the initiatives are to allow its facilities to be used by a few  foreign universities as an "offshore campus" as well as introducing innovative  marketing techniques to push up student numbers.  A sources explained that Masterskill was looking at bringing in at least  three strong foreign universities from the UK and Australia under this  "offshore campus" and that the first batch of students under this  arrangement may come in as early as first quarter of next year. (StarBiz)

Malaysia will likely impose an anti-dumping duty by Feb 19 next year if the  Government is satisfied that the import of steel wire rods (SWR) from certain  countries indeed constitutes dumping and is causing material injury to domestic  steel players. The matter will be decided after the  International Trade and  Industry Ministry concludes its investigations.  If affirmative, the rates of the anti-dumping duty to be imposed will  vary for each alleged country, depending on the pricing and volume. As  a temporary measure, Miti has imposed a provision anti-dumping duty  ranging from 0-33.62% which will be applied on imports from the  alleged countries and shall take effect from yesterday to Feb 19, 2014.  (Star Biz)

MOL AccessPortal Sdn Bhd (MOL),  Asia's leading e-payment service  provider and a subsidiary of MOL Global Pte Ltd, aims to relist on Bursa  Malaysia by early 2014, says CEO Ganesh Kumar Bangah. The company was  previously listed on the then Mesdaq Market of the stock exchange.  "We are looking at a number of different markets and, of course, Bursa  Malaysia is a key choice ... I will target a relisting towards end-2013 or  early 2014," Ganesh said at an agreement signing between the company  and US-based Rixty Inc here yesterday.  The agreement is to facilitate MOLAccessPortal's majority investment in  Rixty, an alternative e-payment platform, which would provide the  company a strong foothold in North and South America, while  supporting its continued global expansion. (Bernama)

Cocoaland Bhd is looking forward to Thai Beverage Pcl emerging officially  as the new controlling shareholder of Fraser and Neave Ltd (F&N) to help  drive Cocoaland's business strategy forward. "When you think about the impact  of the shareholder changes in Singapore-listed F&N, it can only be positive for  us, as Thai Beverage is well established in Thailand. And not only that, it is one  of the largest beverage producers in Asia," said Cocoaland founder and executive  director Lew Fook Ming. (StarBiz)

Asian Pac Holdings Bhd, a property developer and investment group,  expects to generate annual revenues of around RM45m from Imago, its new  retail mall in Kota Kinabalu, Sabah. Imago comprises 300 retail, catering,  lifestyle and entertainment outlets. It is earmarked to be completed by the  fourth quarter of 2013. (BT)

20121024 0957 Global Markets Related News.

Asia FX By Cornelius Luca - Tue 23 Oct 2012 17:10:54 CT (Source:CME/
The appetite for risk averse imploded for the second day in the past three days amid mixed corporate earnings and a credit rating downgrade of five Spanish regional governments. The European and commodity currencies succumbed and the yen ended marginally near a 3 1/2-month low. The US stock markets cratered, so the Asian markets should follow. Gold, oil and silver plunged as well. The short-term outlook for the European and commodity currencies is sideways with downside risk. The medium-term outlook for most of the foreign currencies is still slightly bullish. The LGR short-term model is short on yen, sterling and Canadian dollar, and long euro, franc and Australian dollar. Good luck!

Canada: Retail sales rose 0.3% in August, down from +0.7% in July.
Canada: The BoC left interest rates unchanged at 1%.

Today's economic calendar
Australia: Consumer Price Index  for the third quarter
China: HSBC manufacturing PMI for October

Asian Stocks Decline as Global Slowdown Erodes Earnings (Bloomberg)
Asian stocks dropped, with the regional benchmark index heading for its fourth straight loss, as the global economic slowdown crimps corporate earnings and after commodities erased this year’s gains. BHP Billiton Ltd. (BHP), the world’s biggest mining company, declined 1.6 percent in Sydney. Daiki Aluminium Industry Co. sank 3.9 percent in Osaka after the Japanese supplier of the light metal used in the automobile industry lowered its full- year profit forecast. SK Hynix Inc. gained 2 percent in Seoul after the world’s second-largest maker of computer memory chips reported its first profit in four quarters on lower costs and currency gains.
The MSCI Asia Pacific Index (MXAP) slid 0.4 percent to 122.98 as of 9:29 a.m. in Tokyo, with almost four stocks falling for each that rose, before markets in China and Hong Kong open. The gauge rebounded 13 percent from this year’s low on June 4 through yesterday as stimulus measures in the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis. Spain’s borrowing costs rose yesterday after the Bank of Spain said the natiion’s recession will worsen in coming months. “Weaker earnings from some of America’s biggest companies, along with a sense that Europe isn’t making good progress on the debt crisis, has shaken investor confidence,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “After the run-up in markets we’ve seen, technical indicators are pointing to some overheating.”

Japan Stocks Decline as Global Slowdown Erodes Earnings (Bloomberg)
Japanese stocks fell, retreating from the Nikkei 225 (NKY) Stock Average’s longest winning streak since July 2011, on concern a global economic slowdown is crimping earnings and as commodities erased this year’s gains. Canon Inc., camera maker that gets 80 percent of its revenue overseas, lost 1.3 percent. Kawasaki Heavy Industries Ltd. sank 5.1 percent after the gas-turbine maker said in a preliminary statement first-half earnings missed its forecasts on the economic slowdown in China and Europe. Inpex Corp., Japan’s top oil explorer by market value, slid 1.4 percent after crude prices dropped. The Nikkei 225 slid 0.7 percent to 8,956.65 as of 9:24 a.m. in Tokyo, falling for the first time in eight days. The broader Topix Index lost 0.5 percent to 745.77, with four shares dropping for each that rose.
“Investor sentiments are being swayed” as major U.S. companies cut earnings forecasts in addition to the global economic slowdown, said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “More investors are likely to sell shares as the markets are kind of overheated.” Volume on the Nikkei 225 was 4.3 percent higher than the 30-day average.

Cnooc Drives Drop as Economy Cuts Rally: China Overnight (Bloomberg)
Chinese stocks tumbled from a five- month high in New York, spurred by declines in energy and commodities producers, on speculation the past month’s rally was overdone given lingering concerns over the global economy. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. sank 1.3 percent to 95.41 yesterday, the biggest drop in a month. PetroChina Co. slipped as crude declined to a three-month low. Cnooc Ltd. (883) slumped to widen the discount to its Hong Kong shares to the most in four months, on concern the Beijing-based oil producer’s bid for Nexen Inc. (NXY) may not get Canadian approval.
Chinese equities in the U.S. rallied over the past month to trade at their highest valuation since August last week, as data showing rising industrial production and retail sales sparked optimism the slowdown in Asia’s largest economy was bottoming. The basis for economic stabilization isn’t “firm” enough and China will remain proactive on fiscal policy, the Finance Ministry said yesterday, according to a Xinhua News Agency report posted on the government’s website. “Markets had gotten very high and there has been too much complacency, yet there are a whole host of global economic issues that have yet to be resolved,” Kevin Pollack, a managing director at Paragon Capital in New York, said by phone yesterday. “Investors should be cautious going into the end of the year and early next year as there remains significant downside risk.”

Dow Drops Most Since June Amid Disappointing Earnings (Bloomberg)
U.S. stocks retreated, giving the Dow Jones Industrial Average its biggest decline since June, amid disappointing results at companies from 3M Co. to DuPont (DD) Co. and as commodities erased their gain for the year. 3M, the maker of products ranging from Scotch tapes to dental braces, and DuPont, the most valuable U.S. chemical maker, slumped at least 4.1 percent. Freeport-McMoRan Copper & Gold Inc. (FCX) and Halliburton Co. (HAL) dropped more than 3.1 percent as commodities sank amid concern about a global economic slowdown. Facebook Inc. (FB) surged 9.5 percent at 4:39 p.m. New York time after posting sales that topped analysts’ projections. The Standard & Poor’s 500 Index decreased 1.4 percent to 1,413.11 at 4 p.m. New York time, the lowest level since Sept. 5. The Dow slumped 243.36 points, or 1.8 percent, to 13,102.53. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or 9.1 percent above the three-month average.
“That’s the reality of the situation that investors are facing,” said Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $85 billion. He spoke in a phone interview. “There’s not much growth in the economy. There’s lack of demand. How can revenues grow?” Thirty-three companies in the S&P 500 were scheduled to release results today. Third-quarter sales missed forecasts at 60 percent of companies, according to data compiled by Bloomberg. Earnings at about 70 percent of the index’s companies beat analysts’ estimates, the data showed.

Recap Stock Index Market Report (CME)
The December S&P 500 traded sharply lower on the session, falling to its lowest level since September 6th. The primary source of weakness in the market came from a round of corporate earnings that showed disappointment, with concerns over upcoming business conditions and slowing economic growth. Disappointing earnings from DuPont and plans to slash 2% of their workforce seemed to underscore concerns over slowing economic growth. The December S&P 500 managed to bounce from its morning lows in early afternoon trade, helped by a rebound in the shares of Apple following the debut of their new iPad mini. All of the major S&P sector indices were in negative territory, led by declines in material and energy-related firms. The market will get more corporate earnings after the close from Amgen, Facebook and Netflix.

European Stocks Decline to Seven-Week Low on Results (Bloomberg)
European stocks declined for a third day, with the Stoxx Europe 600 Index (SXXP) sliding to its lowest level in almost seven weeks as results from companies including Alfa Laval AB and D.E Master Blenders (DE) 1753 NV disappointed investors. Alfa Laval and D.E Master Blenders fell at least 5 percent each. Mulberry Group Plc (MUL) plunged 24 percent after unexpectedly saying profit will fall. Chemical makers including Arkema SA (AKE) tumbled after DuPont Co.’s earnings lagged forecasts. The Stoxx Europe 600 Index lost 1.7 percent to 268.40 at the close of trading, its lowest level since Sept. 5. The gauge has erased most of the gains since European Central Bank officials agreed on an unlimited bond-purchase program. “An ugly session for equity markets has unfolded today as sellers drove stocks lower on the back of some disappointing corporate earnings,” said Angus Campbell, head of market analysis at Capital Spreads in London.
“With a lack of macro-economic data releases, the focus has been very much on companies and there were some car-crash type profit warnings and well-below-expectation results which sent investors into risk aversion mode.” European stocks fell yesterday as investors speculated that Spain will face less pressure to seek a bailout after a victory in regional elections for Prime Minister Mariano Rajoy. Moody’s Investors Service lowered its credit rating on Catalonia and four other Spanish regions. The decision was “driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs,” the ratings company said.

Emerging ETF Sinks Most Since July on Declining Earnings (Bloomberg)
The exchange-traded fund tracking emerging-market shares slipped the most since July in New York and stocks slumped on concern the global slowdown is crimping company earnings and as commodities erased this year’s gains. The iShares MSCI Emerging Markets Index ETF, which tracks companies including Korea’s Posco and Moscow-based OAO Gazprom, sank 2.1 percent to $41.04 at the close of trading in New York, the biggest one-day slide since July 23. The MSCI Emerging Markets Index (MXEF) lost 1 percent to 996.82, the steepest drop since Oct. 8. About 63 percent of companies in the MSCI gauge that reported quarterly earnings have trailed analyst estimates, according to data compiled by Bloomberg. Posco, the third- biggest Asian steelmaker by output, fell to the lowest level since March 2009 after reporting earnings for the third quarter that missed estimates and cutting its 2012 sales forecast for the third time this year.
Itau Unibanco Holding SA (ITUB4), Latin America’s largest bank by market value, slipped to the lowest since July as profit dropped in the third quarter. “Concerns about weaker earnings keep the markets down today,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management in The Hague, said by e-mail. There are questions about “the longer-term growth outlook for China, the earnings momentum and a deteriorated macro policy mix in several key emerging economies,” he said. The Standard & Poor’s GSCI Index tracking prices for 24 commodities sank for a third day, losing 1.4 percent to 639.30, while crude oil for December delivery declined $1.98 to $86.67 a barrel in New York, the lowest settlement since July 12. Russia is the world’s largest energy exporter, while metals and other commodities account for 45 percent of South Africa’s exports.

U.S. Home Prices Rose 0.7% in August From July, FHFA Says (Bloomberg)
U.S. house prices rose 0.7 percent in August from July as buyers competed for a dwindling supply of property listings, the Federal Housing Finance Agency said. The average estimate of 15 economists in a Bloomberg survey was for a 0.4 percent gain. Prices climbed 4.7 percent from a year earlier, according to the FHFA. The previously reported 0.2 percent increase in July was revised downward to a 0.1 percent gain. The agency posted the data on its website a day before its regularly scheduled release date. The FHFA’s index has climbed as improving employment, a tight inventory of available homes and record-low borrowing costs help strengthen a real estate recovery. A home value index by Zillow Inc. jumped 1.3 percent in the third quarter from the previous three months, the biggest gain since 2006, the Seattle- based property-data company reported today.
The FHFA report, which is based on single-family houses with mortgages backed by Fannie Mae or Freddie Mac, doesn’t provide a specific price. The median price of an existing single-family home, as measured by the National Association of Realtors, was $188,700 in August, up 10 percent from a year earlier.

Euro Stays Lower Before PMI; Yen Trades Near 3-Month Low (Bloomberg)
The euro maintained losses against most of its major peers before data that may add to evidence Europe’s debt turmoil continues to weigh on economic growth. The 17-nation currency traded 0.2 percent from a one-week low against the U.S. dollar amid investor uncertainty whether Spain will seek a bailout. Reports today are forecast to show manufacturing and services industries in the euro area contracted for a ninth month and German business confidence hovered close to the lowest since February 2010. The yen was near the weakest level in more than three months on speculation the Bank of Japan (8301) will expand stimulus at a meeting next week. “We would see a bit more downside in the near term for the euro,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “Economic numbers are hurting the euro and the lack of a Spanish bailout is also hurting.”
The euro traded at $1.2983 as of 10:09 a.m. in Tokyo from $1.2987 yesterday, when it touched $1.2952, the lowest since Oct. 16. The common currency was little changed at 103.68 yen, after it dropped 0.7 percent in New York. The yen was at 79.86 per dollar from 79.85 yesterday, when it slipped to 80.01, the weakest since July 6.

Bernanke QE3 Stocks Miss Greenspan Irrational Exuberance (Bloomberg)
Federal Reserve Chairman Ben S. Bernanke is trying to inject a little of the exuberance his predecessor Alan Greenspan called “irrational” into markets for everything from stocks to housing. Bernanke, who is seeking to spur the economy with a third round of so-called quantitative easing, has said his stimulus works by lowering borrowing costs and encouraging investors to seek higher-yielding assets. Boosting home and equity prices through bond buying will encourage consumers and businesses to spend more, according to Bernanke. Since these are the same assets that plummeted during the financial crisis after reaching record highs, “is there some risk you could start a new bubble and repeat the whole cycle? I suppose there is,” said Robert Shiller, the Yale University professor who forecast the end of the Internet boom in his book, “Irrational Exuberance,” which was published in March 2000, the month the Nasdaq Composite Index peaked before crashing 78 percent. (CCMP)
Bernanke’s approach risks “distorting” decisions, and “it might be economically inefficient to try to push prices up so much,” Shiller, who also predicted the bursting of the subprime-mortgage bubble, said in a New York interview Oct. 15.

Despite Romney Resurgence, Obama Still the Man Election Day (CME)
By The Economist Intelligence Unit - Mon Oct 22 10:10:00 CDT 2012 CT
GOP Candidate Has Struggled to Persuade Voters
Despite Mitt Romney's recent resurgence in polls, the Republican presidential candidate still faces an uphill battle and probably won't unseat Barack Obama from the White House in the November 6 election, according to the Economist Intelligence Unit. "Our forecast for the U.S. presidential election is that Barack Obama will be re-elected," the Economist Intelligence Unit said in a recent report. While Romney had a strong performance in the first debate early this month, "we do not believe he has enough time to overcome the president's lead" in many polls, the group said. Sluggish job growth and unemployment near 8% should be a boon to Romney, allowing him to plausibly argue Obama has been a poor steward of the economy and the country should consider a change of political leadership. Still, Romney has not converted his advantages into a lead.
Romney has "struggled to persuade voters," who seem to be giving Obama the benefit of the doubt over the slow economic recovery, the group said. Romney has suffered from "poor campaigning decisions" and failed to criticize "consistently and forcefully the president's performance."

Hong Kong Intervenes to Defend Peg as Upper Limit Tested (Bloomberg)
The Hong Kong Monetary Authority sold its own currency for a second time in a week to stem appreciation after it traded near the upper limit of a 29-year- old peg to the U.S. dollar. The central bank bought a combined $1.25 billion at a rate of HK$7.75 per U.S. dollar in Hong Kong and New York yesterday, the authority said in an e-mailed statement. That followed a $603 million intervention on Oct. 19, when it stepped into the market for the first time since 2009. The Hong Kong dollar was at HK$7.7501 as of 6 a.m. Hong Kong time today, according to data compiled by Bloomberg. Local financial markets were closed yesterday for a public holiday. “They will have no choice but to keep intervening,” said Irene Cheung, a currency strategist in Singapore at Australia & New Zealand Banking Group. “The Hong Kong dollar’s strength reflects the capital flows we see into most Asian currencies.”
The central bank fixed the currency in 1983 and in 2005 committed to keep the exchange rate between HK$7.85 and HK$7.75. The link has given Hong Kong companies stability in commercial contracts while tethering monetary policy to that of the U.S., where borrowing costs are being held down to spur hiring and prop up the housing market. Hong Kong’s jobless rate is near a four-year low and home prices are at all-time highs.  Policy makers from around the world have bemoaned the economic threat of stronger exchange rates as asset purchases by the Federal Reserve boost the supply of dollars. At International Monetary Fund meetings in Tokyo this month, Philippine central bank Governor Amando Tetangco said the Fed was causing “challenges to monetary policy in emerging markets.” The HKMA first intervened during Hong Kong hours yesterday by buying $505 million and bought a further $350 million later, it said in e-mailed statements. It then purchased $395 million in New York, according to a later e-mail.

Priciest Malaysian Phone Stocks Attract Top Fund: Southeast Asia (Bloomberg)
Investor demand for bigger dividends and smaller stock swings has pushed Malaysian telecommunications shares to record valuations and convinced at least one of the nation’s top-ranked fund managers the rally isn’t over. The MSCI Malaysia Telecommunication Services Index (MXMY0TC) has climbed to 24 times estimated earnings, the highest level since Bloomberg began tracking the data in 2006 and the most expensive among peers in emerging and advanced nations. Telecommunications shares pay the biggest dividends of nine industries in Malaysia, where stock volatility is lower than any major market worldwide.
While Samsung Asset Management Co. is avoiding the companies after valuations surged, Hwang Investment Management Bhd.’s David Ng says he’s hanging on to shares of Axiata Group Bhd. (AXIATA) and DiGi.Com Bhd. (DIGI) that rallied at least 29 percent this year and helped his Hwang Select Dividend Fund (HWDBDIV) beat 97 percent of peers. The companies, which benefit from growing demand for smartphones in Southeast Asia’s third-biggest economy, pay dividend yields that exceed returns on Malaysian bonds. “Dividend stocks have done well because a lot of these businesses are more stable,” Ng, who oversees the equivalent of $5.6 billion as the chief investment officer of Hwang Investment in Kuala Lumpur, said in a phone interview on Oct. 16. “Investors just want income and certainty.”

Carney Strengthens Rate-Increase Bias on Debt Concern: Economy (Bloomberg)
The Bank of Canada signaled it may seek to curb record household debt levels by raising interest rates for the first time in more than two years, sharpening the divide with other Group of Seven nations focused on easing policy to combat a cooling global economy. Governor Mark Carney said in Ottawa today that “some modest withdrawal of monetary policy stimulus will likely be required,” even as it kept the benchmark rate at 1 percent, and that “imbalances in the household sector” will influence the timing of any move. Strategists such as Jimmy Jean at Desjardins Capital Markets in Montreal predicted the central bank would drop or weaken its tightening bias. Canada’s banking system and housing market were unscathed by the global financial crisis, allowing the world’s 11th largest economy to recover ahead of other G-7 countries. The bank said in July that the expansion is threatened by consumer debt that’s climbed to 165.8 percent of disposable income, higher than the U.S. peak before its property bubble burst.
Canadian house prices have risen 56 percent since June 2005. “They kept the hawkish bias as a warning to consumers and to curb the real-estate market,” said Denis Senecal, vice president and head of fixed income and cash for State Street Global Advisors, Canada, which manages C$1.4 trillion ($1.41 trillion) of assets. Carney also said that household debts, already at record levels, will rise further. His concern has intensified since April, when he said monetary policy should be the “last line of defense” against high debt. Canadian Finance Minister Jim Flaherty told CBC Radio Oct. 20 that he isn’t planning further measures to restrain the housing market because steps to tighten mortgage regulations have already slowed gains in some of the country’s major cities.

N.Z.’s Wheeler May Resist Rate-Cut Calls in First Policy Meeting (Bloomberg)
New Zealand central bank Governor Graeme Wheeler will probably resist pressure from unions and exporters to counter a rising currency by cutting interest rates in his first policy decision. All 17 economists surveyed by Bloomberg News predict Wheeler will leave the official cash rate at 2.5 percent tomorrow in Wellington, prolonging a period of record-low borrowing costs that began in March 2011. There is a 92 percent chance of no change, according to swaps data compiled by Bloomberg, and the New Zealand Institute of Economic Research Inc.’s shadow board also sees Wheeler extending the pause. The Council of Trade Unions wants the new governor, a former World Bank official who started on the job a month ago, to respond to the slowest inflation in more than a decade by reducing the benchmark rate, saying that will curb demand for New Zealand’s currency and make exports more affordable.
Weakening the argument for a cut are signs of a stronger housing market and prospects for inflation to rise even as the economy struggles to accelerate. “A good case for an easing can be made,” said Darren Gibbs, chief New Zealand economist at Deutsche Bank AG in Auckland and a former Treasury and Reserve Bank of New Zealand economist. Still, “the economic case for easing policy further is not watertight at this stage, especially as he will likely be concerned not to further stoke price pressures in the housing market.”

ESM Fund Plans ‘Prudent’ Investments, May Buy Bank Debt (Bloomberg)
The head of Europe’s permanent rescue fund said the countries bailed out by the region’s governments should be in a position to finance themselves by the end of 2014. “That should be well underway in two years,” Klaus Regling, head of the European Stability Mechanism, said in a Bloomberg Television interview in Luxembourg yesterday. He didn’t name specific countries. While “there will not be a feeling that the crisis is over” as workers adjust to wage and pension cuts, measures taken by governments may be sufficient by then to help them pass “the ultimate test” and return to the bond market, he said. European policy makers are working to draw a line under a crisis that is now in its fourth year. While market turmoil has eased since the European Central Bank pledged to buy unlimited quantities of government bonds to stop the euro from falling apart, economists and investors say they still expect Spain to apply for aid from the bailout fund in coming months.
Regling, who didn’t mention Spain, said that the ESM can give a precautionary credit line to distressed nations more quickly than the two or three weeks it takes to put together a full sovereign bailout. “If a country asks for a precautionary arrangement, we can act relatively fast,” he said. “Secondary market intervention” could be done in two days, he said. The ESM was declared operational on Oct. 8 and will rely on paid-in capital by European governments to underpin its full firepower of 500 billion euros ($649 billion.) By 2014, governments will have paid in 80 billion euros in capital. Regling said that the 32 billion euros currently paid in will be invested by the end of November. The ESM has so far invested 4 billion euros in “highly rated” government bonds and the bonds of international institutions. The securities are “mainly in euro,” he said. “We do it in small amounts of money, otherwise we would move the market, which we don’t want to do,” he said.

King Says BOE Is Ready to Add to Stimulus If U.K. Recovery Fades (Bloomberg)
Bank of England Governor Mervyn King said the Monetary Policy Committee is ready to add to stimulus again as it assesses the strength of the domestic recovery amid signs that global economic weakness is spreading. “At this stage, it is difficult to know whether some of the recent more positive signs will persist,” King said in a speech late yesterday in Cardiff, Wales. “Should those signs fade, the MPC does stand ready to inject more money into the economy.” King said gross domestic product data tomorrow may confirm a “zig-zag” pattern of recovery in the U.K. that is likely to continue. His comments come two weeks before officials must decide whether to increase bond purchases and at a time when the economies that have driven global growth through the crisis have shown signs of faltering. “The storm clouds coming from the euro area have not yet lifted, and in other parts of the sky new clouds have drifted over,” he said. “China, India and Brazil, the three largest emerging market economies, are all slowing.” The Bank of England is in the final weeks of the 50 billion-pound ($80 billion) round of quantitative easing it put in place in July. The MPC will announce its next policy decision on Nov. 8, and King said it will think “long and hard” about expanding the program from the current target of 375 billion pounds. King also said he doesn’t have concerns about the bank’s scope to add to bond purchases. On the question of the effectiveness of QE, he said that while its direct impact on gilt yields may be reduced as sovereign borrowing costs decline, raising the price on other assets is an “equally important” objective.

Rajoy Sees Case for Slowing Spain’s Austerity as Economy Shrinks (Bloomberg)
Spanish Prime Minister Mariano Rajoy said there is a case for easing budget-deficit targets set by the European Union as the recession undermines tax revenue. “I think what a lot of other people think,” Rajoy told the Spanish senate yesterday. “Things could be done more calmly, taking into account especially that we are in a recession, but in any case I can’t give up on Spain’s commitments.” Rajoy’s comments undercut Budget Minister Cristobal Montoro’s insistence that Spain can stick to the path of budget consolidation demanded by the EU even after the Bank of Spain said the euro area’s fourth-largest economy contracted for a fifth quarter between July and October. “In 2012, we definitively will comply with our target,” Montoro said as he presented the 2013 budget to the Parliament in Madrid. The EU has set Spain a goal of 6.3 percent of gross domestic product this year, after overspending amounted to 9.4 percent last year, as much as Greece and the second-highest shortfall behind Ireland.
Spain’s borrowing costs rose 12 basis points to 5.6 percent yesterday after the Bank of Spain said the recession will worsen in coming months and called on the government to take further measures to fulfill its commitments. Rajoy didn’t mention seeking aid even as he praised the European Central Bank’s offer to help lower countries’ borrowing costs. “The ECB has set up a mechanism to purchase a country’s bonds in the secondary market if it requests it, that’s an important step forward,” he said. Economy Minister Luis de Guindos meanwhile told lawmakers that Spain’s access to funding has improved. “We are starting to see foreign investors coming back to back Spanish debt purchases,” he said. “That is fundamentally due to two reasons: because the government is doing what it has to do, and because we are all acting to dissipate doubts on the euro’s future.”

Euro-Area Bailout Fund Faces Challenge at Highest Court (Bloomberg)
The euro area’s 500 billion-euro ($652 billion) bailout fund faces another test as the European Union’s highest court weighs claims that the firewall violates EU law and should be banned in its current form. A complaint by Thomas Pringle, an independent member of the Irish parliament, today reached the EU Court of Justice, which has the power to topple the European Stability Mechanism, or ESM. A ruling is possible as soon as the end of the year under a fast-track procedure. “Developed in haste, the ESM treaty is at odds with and undermines the EU legal order,” John Rogers, a lawyer for Pringle, told the court in Luxembourg today. “In trying to defend the compatibility of the ESM with the EU treaties, the intervening member states and institutions have had to engage in mischaracterization and distortion in the confusion of form and substance and in legal and conceptual contradictions.”
The EU court case follows a separate decision last month by Germany’s Federal Constitutional Court in Karlsruhe not to block the ESM. The German ruling handed a victory to Chancellor Angela Merkel, who championed the bailout facility as vital to save the euro area from a fiscal meltdown as it lurches between crises. The EU court has engaged all 27 judges for the first time in a case referred by a national tribunal.

ECB Would Gain Power Over Banker Bonuses in Oversight Plan (Bloomberg)
The European Central Bank would get power to oversee bankers’ compensation under draft legislative proposals to establish the ECB as a bank supervisor. The Frankfurt-based institution would get the power to monitor risk management, capital standards and “remuneration policies and practices,” according to the draft dated today. The blueprint also says the ECB would be able to carry out stress tests and “where appropriate publish the results.” EU banking supervisors would send decisions to the ECB’s Governing Council for an up-or-down vote under the new draft, which builds on previous efforts to clarify how participating non-euro nations could take part in bank oversight decision. The draft says supervisory board leaders would not have to be Governing Council members and it lays out conditions in which the central bank’s top panel could exercise an oversight veto.
European Union officials will discuss the proposal this week as they push to design a framework by the end of the year for a euro-area bank supervisor. Leaders last week renewed their commitment to give the ECB oversight powers over all banks in the 17-nation currency union as well as in other nations that choose to participate.

EU Said to Loosen Female Board Rule in Bid For Support (Bloomberg)
European Union plans to set a 40 percent quota for women on company supervisory boards by 2020 stalled after EU commissioners failed to agree on the measures at a meeting today. The European Commission’s legal service warned that a binding quota for women may be illegal ahead of the meeting, according to a person familiar with the talks. Lawyers said EU regulators don’t have the right to mandate binding targets for results obtained by companies, said the person who asked not to be identified because the process is private. EU rules can require companies to make efforts toward a target. EU commissioners postponed discussion of EU Justice Commissioner Viviane Reding’s plan until Nov. 14. Reding said she has “strong support” from other commissioners and drafted a compromise in line with lawyers’ guidelines to win consensus from her colleagues. She declined to give details, beyond saying she would retain the 40 percent target.
“It took centuries to get gender equality on the map,” Reding told reporters. “Therefore, boardrooms can wait for three more weeks. I will not give up.” U.K. business secretary Vince Cable and ministers from nine other countries wrote the European Commission last month seeking more time for national efforts aimed at encouraging female appointments to take effect. The lack of female candidates for a seat on the European Central Bank’s Executive Board saw a European Parliament committee yesterday oppose the appointment of Luxembourg’s Yves Mersch. Reding’s proposal had the support of eight of the 27 European commissioners, including economy commissioner Olli Rehn and antitrust chief Joaquin Almunia, ahead of today’s meeting, according to another person familiar with the situation. Seven others are opposed, said the person yesterday, who declined to be identified because the matter is private.

Spain Output Shrinks Fifth Quarter Amid Bailout Talk: Economy (Bloomberg)
Spain’s economy contracted for a fifth quarter, adding pressure on Premier Mariano Rajoy to seek more European aid even as the euro area’s fourth-largest economy met a bill-sales target. Gross domestic product fell 0.4 percent in the three months through September from the previous quarter, matching the contraction of the second quarter, the Bank of Spain said in an estimate in its monthly bulletin released in Madrid today. That compares with a median forecast for a 0.7 percent contraction in a Bloomberg News survey of 10 economists. Spain’s bonds have declined since European Union leaders last week failed to discuss further aid for the nation at a Brussels summit. Rajoy has struggled to trim a 2011 budget deficit that was more than three times the EU limit, after the country’s deepening recession pushed the jobless rate over 25 percent, sapping demand and tax revenue.
“Progress isn’t conclusive, there is a huge amount of uncertainty in Spain right now,” said Ebrahim Rhbari, a London- based economist at Citigroup Inc. “There are question marks about the banking sector and public finances and economic fundamentals suggest we will see a bailout sooner than later.” Spain’s economy probably contracted 1.7 percent in the third quarter from a year ago, as job losses continued, households ate into their savings and low disposable income reduced their ability to pay down debt, the Bank of Spain said. The euro weakened 0.7 percent against the dollar and was at $1.2972 as of 6:03 p.m. in Brussels. The Stoxx Europe 600 Index dropped for a third day, falling 1.7 percent.

Draghi Takes Pitch Into Lion’s Den as German Faith in ECB Wavers (Bloomberg)
Mario Draghi is taking his sales pitch into the lion’s den. By appearing before a joint session of three committees of the German parliament in Berlin tomorrow, the European Central Bank president is seeking popular support in Europe’s largest economy for his plan to purchase government bonds to stem the debt crisis. While Draghi says his so-called Open Market Transactions are required for price stability, some German policy makers say they are an affront to the monetary orthodoxy upon which the ECB was founded. “Draghi is on a mission to smooth concern that OMT won’t send inflation skyrocketing or lumber German taxpayers with liabilities they can’t pay,” said Frank Schaeffler, finance spokesman for the Free Democrats, who are in coalition with Chancellor Angela Merkel’s Christian Democrats. “Many lawmakers -- even if they don’t admit it -- have grown suspicious of the ECB and its head, once dubbed the most German of non-German central bankers.”
While the announcement of Draghi’s yet-to-be-deployed bond- buying program has calmed financial markets, Germany’s revered Bundesbank has openly opposed the plan, fanning concerns among politicians and the public. Some 42 percent of respondents to a Stern survey published Sept. 6 said they had little or no trust in the ECB president, compared with just 18 percent who judged him favorably.

Banks Awarded Higher Credit Ratings for Business, ECB Study Says (Bloomberg)
Big banks are awarded higher grades from ratings firms because the lenders provide them with business including evaluating securitized debt, according to a European Central Bank study. Larger financial institutions were more likely to receive better grades, according to the research report, which reviewed about 39,000 quarterly bank ratings from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings from 1990 to 2011. Inflated grades on bonds backed by subprime mortgages during the housing boom helped ignite the worst financial crisis since the Great Depression when their values plummeted five years ago. Analysts at the three firms were pressured to give their stamp of approval to complex investments to win lucrative business from Wall Street banks, the Senate Permanent Subcommittee on Investigations said last year in a report.
The “bias mostly reflects credit rating agencies’ conflicting incentives with respect to large banks,” authors Harald Hau, Sam Langfield and David Marques-Ibanez wrote in the report posted on the European Central Bank’s website, whose findings don’t represent that of the ECB. “We strongly disagree with the methodology and conclusions of the study,” Michael Adler, a spokesman for Moody’s, said in a telephone interview, declining to give more details. “To suggest that large bank ratings are conflicted simply because those banks might also be in a ’stronger client position’ is in our view a cynical leap -- or what the ECB report calls a ’hypothesis’,” Dan Noonan, a spokesman for Fitch, wrote in an e-mail. “No business model is completely free from potential conflicts of interest -- what matters is how well they are managed and communicated to the market.”

German Business Confidence May Rise on ECB Bond-Buy Plan (Bloomberg)
German business confidence probably climbed for the first time in seven months in October as the European Central Bank’s plan to buy government bonds eased concern about the region’s debt crisis. The Ifo institute’s business climate index, based on a survey of 7,000 executives, will rise to 101.6 from 101.4 in September, according to the median forecast of 39 economists in a Bloomberg News survey. Ifo releases the report at 10 a.m. in Munich today. Financial markets have rallied since ECB President Mario Draghi pledged to do whatever is needed to preserve the euro and unveiled a plan to buy government bonds. German investor confidence gained for a second month in October. Still, Europe’s largest economy may shrink in the fourth quarter as euro-area and global demand for its exports wanes, the Bundesbank said on Oct. 22.
“Business confidence in Germany and in Europe is supported by the ECB,” said Thomas Costerg, an economist at Standard Chartered Bank in London. “Even if there is some uncertainty at the moment, Germany’s economy should be back to growth in the first half of next year.” Ifo’s measure of executives’ expectations probably rose to 93.6 from 93.2 in September, while a gauge of the current situation may have slipped to 110 from 110.3, the survey shows.

20121024 0957 Global Commodities Related News.

DTN Closing Grain Comments 10/23 14:50 Soybeans Rally; Wheat, Corn Struggle Tuesday (CME)
The soybean market staged an impressive rally hinting at fresh export business while corn and wheat were limited by solid commercial selling and bearish outside markets.

Commodities Erase 2012 Gain on Global Economic Woes (Bloomberg)
Commodities declined, erasing this year’s advance, on speculation that demand for energy, industrial metals and some agricultural products will slump because of the sluggish global economy. The Standard & Poor’s GSCI Spot Index (MXWD) of 24 raw materials fell 1.4 percent to settle at 639.3 at 4 p.m. New York time. Earlier, the gauge touched 635.1, the lowest since Aug. 3. The measure also erased 2012 gains in May and July. The last annual drop was in 2008. The International Monetary Fund cut its 2012 global-growth forecast to 3.3 percent on Oct. 9 from a July prediction of 3.5 percent and said the euro area will contract 0.4 percent. The economy in China, the biggest user of everything from copper to cotton, has slowed for seven straight quarters.
“The commodity complex is very sensitive to the demand destruction that is happening because of the global slowdown,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York-based Aegis Capital Corp. “We are due for a big sell-off in the risk assets, and so commodities will not do well as the macro concerns remain.” Cotton futures fell the most in 10 weeks, and crude oil dropped to the lowest since mid-July. Gasoline declined for the ninth straight session, the longest slump since at least October 2005. Copper dropped to the lowest since Sept. 7. European leaders have struggled to contain the region’s debt crisis that prompted Greece, Ireland and Portugal to get bailouts.

‘Collateral Damage’
“People are still worried about demand from Europe and the collateral damage from Europe itself,” said Dan Denbow, a portfolio manager of the $2.1 billion USAA Precious Metals & Minerals Fund in San Antonio. “If Europe continues to slide and if it slides further into recession, does that tip the Chinese soft landing into something worse and therefore hurts commodity demand even more?” Spain’s economy contracted for a fifth quarter, adding pressure on Premier Mariano Rajoy to seek more European aid. Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling company earnings may deteriorate further. “For a while, global growth is off the table,” said John Stephenson, who helps manage $2.7 billion at First Asset Investment Management Inc. in Toronto. “You’ve got Europe clearly in the middle of a crisis. Commodities go lower and investors should adopt the fetal position.”

Wheat Harvest in Australia Falling 28% to Five-Year Low (Bloomberg)
Wheat production in Australia, the world’s second-biggest shipper, will probably decline 28 percent to the lowest level in five years, missing a government estimate, after dry weather reduced yields. The harvest (ALHVS) will total 21.2 million metric tons in the 2012-2013 marketing year, according to the median of estimates from four analysts and two traders compiled by Bloomberg. That compares with 23.25 million tons in a survey last month and an official forecast of 22.5 million tons. The crop was a record 29.5 million tons last year. Wheat climbed 33 percent this year as dry weather in parts of the European Union and Russia cut global stockpiles to the lowest in four years, helping boost food costs 7.7 percent the past three months. The U.S. Department of Agriculture cut its estimate for Australian output 12 percent to 23 million tons on Oct. 11. That may be lowered by 2 million tons in coming reports because of dry conditions, said Rabobank International.
“Western Australia had a very prolonged dry stretch through the cropping year,” said David Johnson, general manager of risk and pricing at Emerald Group Australia Pty in Melbourne. Eastern Australia “hasn’t been getting convincing rain to be able to fulfill crop potential, so the crop has just been slowly declining.” The Australian Bureau of Agricultural and Resource Economics and Sciences, or Abares, will revise its estimate in December.

Price Gains
Wheat for delivery in December declined 0.9 percent to $8.70 a bushel on the Chicago Board of Trade at 4:41 p.m. in Singapore. Futures rose 0.7 percent yesterday, advancing for the fourth straight session. The grain is the best performer this year on the Standard & Poor’s GSCI Spot Index of 24 commodities. CBH Group, Western Australia’s top grain handler, said Oct. 3 it expects to receive from the region between 9.1 million tons and 9.3 million tons this harvest, down from a record 15 million tons last year, after a dry July and August. That compares with its prediction of 9 million tons to 10 million tons on Sept. 5. Western Australia’s southwest had the driest July on record while the state had below-average rainfall in August and near- average rain in September, according to the Bureau of Meteorology. Wheat output in the nation’s biggest producer may drop 39 percent to 7.1 million tons, according to Abares.
“The crop has been really under pressure the whole way through,” Emerald’s Johnson said by phone Oct. 19. The east coast is set for an average year, he said. Global stockpiles will be 173 million tons on May 31, down from a previous estimate of 176.71 million, the USDA said Oct. 11. World output was forecast at 653.05 million tons, down 0.9 percent from the prediction a month earlier, it said.

Pro Farmer: After The Bell Wheat Recap  (CME)
Wheat futures settled 3 1/2 to 9 1/2 cents lower in Chicago, mostly 1/2 to 8 cents lower in Kansas City and around 2 to 3 cents lower in all but the far-deferred contracts that were firmer in Minneapolis. Futures got caught up in the broad, risk-off move in the investment world today. Despite heavy outside market pressure, wheat was able to rebound well off session lows into the close as corn trimmed losses and many of the soybean contracts worked higher.

Wheat Market Recap Report (CME)
December Wheat finished down 9 1/2 at 868 3/4, 9 3/4 off the high and 8 3/4 up from the low. March Wheat closed down 8 1/4 at 882. This was 9 1/4 up from the low and 8 off the high. December Chicago wheat traded lower on the day and led all thee wheat classes in losses. Poor corporate earnings and a higher dollar forced bulls to the sidelines as long liquidation spread across most commodity markets. Reports that US exporters sold Taiwan 104,000 tonnes of wheat for November through December shipment was moved aside after it was clear the US was uncompetitive in a hard wheat tender to Iraq. Traders noted that Black Sea cargoes were offered at a steep discount which triggered profit taking. The bull camp is beginning to take notice to the wheat emergence problems in the western plains which could add support to wheat in the long term. This week's Planting Progress report showed 49% of the entire winter wheat crop had emerged as of October 21st vs. 51% for the same period last year. Emergence in Colorado, Montana, Nebraska, and South Dakota remain well behind the 5 year average. A dry pattern is expected to persist in the western plains this week but longer term forecasts suggest a better chance for rainfall after October 31st. December Oats closed down 9 1/2 at 386. This was 2 1/2 up from the low and 10 off the high.

Pro Farmer: After The Bell Corn Recap  (CME)
December through July corn futures ended fractionally to 5 3/4 cents lower, with far-deferred contracts fractionally to 1 3/4 cents higher. Corn futures favored a weaker tone throughout the day, but deferred futures found late-session spillover support as soybean futures came off their lows. Negative outside markets tempered buying throughout the day.

Corn Market Recap for 10/23/2012 (CME)
December Corn finished down 5 1/4 at 756, 6 1/2 off the high and 6 1/2 up from the low. March Corn closed down 3 1/4 at 756. This was 7 1/2 up from the low and 4 1/4 off the high. December corn traded lower on the day, along with most other commodity markets. Worse than expected corporate earnings along with fears of a global economic slowdown sent crude oil down almost 2% on the day. Afternoon strength was seen in the soybean market which helped corn pick itself off the session lows. Corn bids were weaker in river markets midday as barge freight firmed and on slow export demand. Physical traders noted that basis was steady to slightly firm in processor markets. The USDA reported this morning that exporters switched 270,000 tonnes of US corn sold to Mexico to a non-US origin for the 2012/13 crop year. This may have added to the downside influence but the weakness in the broader market overshadowed fundamentals. Iowa ethanol margins remain in negative territory as of October 19th. Public data suggests facilities are now losing 46 cents per bushel which is up from a 51 cent per bushel loss the week prior. This is the 12th straight week of negative margins. The weak ethanol margins continue to favor the bear camp however the potential for a pickup in exports later this crop year is adding long term support to the market. November Rice finished up 0.08 at 14.98, equal to the high and 0.11 up from the low.

U.S. corn harvest 87 pct done, soybeans 80 pct (Reuters)
U.S. corn harvest was a record 87 percent complete and farmers had finished 80 percent of soybean harvest as of Sunday, according to a U.S. Agriculture Department report issued on Monday, but the tail end of their combining efforts was expected to be slow due to rain.

Argentine storms to help grain output, hurt quality (Reuters)
Argentine grains output will benefit from this year's early and potent arrival of El Nino-related rains, but low crop quality linked to flooding is likely to undermine the expected increase in soy and corn volume.

Ivorian cocoa arrivals seen at 51,000 T by Oct 21 (Reuters)
Cocoa arrivals at ports in top grower Ivory Coast reached around 51,000 tonnes by Oct. 21 since the since the start of the season Oct. 3, exporters estimated on Monday, compared with 50,381 tonnes in the same period of the previous season.

Oil Near Three-Month Low on Speculation U.S. Stockpiles Rose (Bloomberg)
Oil traded near a three-month low in New York before a report forecast to show that stockpiles gained amid surging U.S. production. Futures were little changed after dropping 2.3 percent yesterday, the biggest decline since Sept. 19. The Energy Department will show in a report today that U.S. crude supplies climbed for a third week, according to a Bloomberg News survey of analysts. The industry-funded American Petroleum Institute reported yesterday that oil inventories increased by 313,000 barrels last week to 369.6 million. Crude for December delivery was unchanged at $86.67 a barrel in electronic trading on the New York Mercantile Exchange at 8:38 a.m. in Tokyo. The contract fell $2.06 yesterday to its lowest close since July 10 and is down 12 percent this year.
Brent oil for December settlement dropped $1.19, or 1.1 percent, to end yesterday’s session at $108.25 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to the New York-traded West Texas Intermediate grade widened to $21.58. Today’s Energy Department report will probably show that U.S. crude supplies increased after output climbed to the highest level in more than 17 years, according to the median of 11 analyst estimates in a Bloomberg survey. Crude inventories rose by 1.8 million barrels in the week ended Oct. 19, the survey showed. A gain of that size would leave stockpiles at the highest level since July. Gasoline supplies climbed 500,000 barrels, the analysts forecast.
Stronger U.S. economic data later this week may spur a rally in oil prices, said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. The Commerce Department is projected to report that U.S. new home sales and house prices increased in August, according to a Bloomberg survey of analysts.

Iran Threatens to Halt Crude Exports If Sanctions Intensify (Bloomberg)
Iran will suspend all oil exports, pushing global crude prices higher, if the U.S. and Europe tighten sanctions further on the OPEC member’s economy, Oil Minister Rostam Qasemi warned. “If you continue to add to the sanctions, we will stop our oil exports to the world,” he said at a news conference in Dubai. “The lack of Iranian oil in the market would drastically add to the price.” Iran wants “reasonable” prices for crude and doesn’t seek an increase, he said earlier today. Brent crude for December settlement was $1.09 lower at $108.35 a barrel on the London- based ICE Futures Europe exchange at 2:36 p.m. local time. Prices for the grade have risen 11 percent since the European Union banned purchases of Iranian crude on July 1.
Iran’s oil exports have dwindled in the face of U.S. and EU sanctions on its energy and financial industries. The International Energy Agency, which advises the world’s biggest industrialized economies, reported that Iranian shipments slumped to 860,000 barrels a day in September from 1.1 million barrels in August. About 40 percent of Iran’s exports last month were destined for China, according to tanker-tracking data compiled by Bloomberg. A unilateral halt in Iran’s oil sales would be “extremely unlikely,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management.

Recap Energy Market Report  (CME)
December crude oil traded sharply lower throughout the session and fell to its lowest level since July 10th. Weakness in the crude oil market originated from slowing economic growth prospects, strength in the US dollar and a sell off in global equity markets. Disappointing corporate earnings from a couple of large multi-national companies, like DuPont and 3M, sparked further concerns over a slowing global economy. Some traders indicated that prospects for slowing growth were seen tamping down global oil demand. Meanwhile, West-Texas crude oil was decisively weaker than Brent crude oil throughout the session, perhaps in the wake of the TransCanada Keystone pipeline restart. Another force weighing on December crude oil was expectations that this week's EIA inventory report will likely show a build in crude stocks last week in the range of 1.5 million barrels.

Gold Futures Fall to Six-Week Low as Dollar Extends Rally (Bloomberg)
Gold futures fell to a six-week low as the dollar’s advance curbed demand for the metal as an alternative investment. Palladium tumbled the most since March. The greenback rose for the fourth straight session, the longest rally in five months. The euro dropped as Spain’s economy contracted for the fifth straight quarter and French industrial confidence fell to the lowest in more than three years. Gold has declined 4.1 percent this month. “Spain continues to drive the direction of the market, and people are moving toward the dollar and staying away from riskier assets,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said in a telephone interview. Gold futures for December delivery fell 1 percent to settle at $1,709.40 an ounce at 1:48 p.m. on the Comex in New York. Earlier, the price touched $1,705.10, the lowest for a most- active contract since Sept. 7.
On the New York Mercantile Exchange, palladium futures for December delivery plunged 4.6 percent to $593.85 an ounce, the biggest drop since March 22. Earlier, the metal touched $590.40, the lowest since Aug. 17. Platinum futures for January delivery fell 2.3 percent to $1,575.60 an ounce. The price dropped as low as $1,573.70, the cheapest since Sept. 7. Silver futures for December delivery slid 1.4 percent to $31.793 an ounce on the Comex. The price touched $31.65, the lowest since Sept. 4. In 2012, silver has climbed 14 percent. Platinum has gained 12 percent, and gold has advanced 9.1 percent. Palladium has dropped 9.5 percent. Today, the Standard & Poor’s GSCI Spot Index of 24 raw materials, which includes gold and silver, erased this year’s gain.

Silver Market Recap Report (CME)
The silver market didn't exhibit as much range down action as the gold market today but December silver still managed to reach the lowest level since September 4th. Like gold, silver was clearly undermined by the sharp washout in global equities and silver was probably put under additional pressure because of weak US data. Surprisingly silver seemed to discount hard range down action in a host of industrial commodities but silver ultimately managed to spend a large portion of the Tuesday trade above the prior low!

Gold Market Recap Report  (CME)
Significant technical damage was seen today as December gold prices at times were as much as $93 an ounce below the October highs. Fears of slowing joined fears of a change in leadership at the Fed to produce an aggressive wholesale liquidation of gold prices. While the market started out in a risk-off mode, seeing soft scheduled data, hard down equity market action and uncertainty toward the leadership of the Fed was apparently enough to force a number of longs from positions. While gold hasn't paid that much attention to currency influences recently, adverse currency market action was probably another element turning up the liquidation pressure on gold prices. The real test of the bear's resolve might come in the lead up to the FOMC statement release Wednesday afternoon.

20121024 0956 Soy Oil & Palm Oil Related News.

Sime Sees Palm Rally as Mistry Says Worst Not Over: Commodities (Bloomberg)
The six-month bear market in palm may be ending as declining output in Malaysia curbs a record glut, with Sime Darby (SIME) Bhd., the largest producer, forecasting a rally in the world’s most-used cooking oil. Reserves will diminish as exports accelerate, said Franki Anthony Dass, an executive vice president at Sime Darby Plantation Sdn. Futures will rally 9 percent to 2,775 ringgit ($909) a metric ton in Kuala Lumpur by the end of the quarter, based on the median of 13 analyst and trader estimates compiled by Bloomberg. Prices may go as high as 3,100 ringgit by the end of the first half, Dass said in an interview.
Palm, used in everything from biofuels to candy to noodles, slumped to a three-year low this month as Malaysian inventories reached a record, spurring the government to cut export taxes to clear the glut. Dorab Mistry, who has traded the oil for 35 years and correctly forecast previous slumps, said that won’t be enough and prices have yet to bottom. Analysts expect Felda Global Ventures Holdings Bhd. (FGV), the third-largest palm-plantation operator, to report a 21 percent increase in profit next year. “The drop was a lot more excessive than was warranted,” said Abah Ofon, an agricultural analyst at Standard Chartered Plc in Singapore, predicting prices as high as 3,250 ringgit this quarter. “We’re going to see a drop in output and seasonally we’re going to see an uptake in demand,” said Ofon, who correctly forecast in November that prices would rally.

Crops Wilting
Palm retreated 20 percent to 2,544 ringgit on the Malaysia Derivatives Exchange this year, slumping as low as 2,230 ringgit on Oct. 3. That contrasts with record corn and soybean prices as the worst U.S. drought since 1956 wilted crops. The Standard & Poor’s GSCI Agricultural Index of eight commodities gained 13 percent since the start of January as the MSCI All-Country World Index of equities rose 11 percent. Treasuries returned 1.5 percent, a Bank of America Corp. index shows. Global consumption will rise 5.3 percent to 51.7 million tons in the 2013 marketing year, driving stockpiles relative to demand to a four-year low, the U.S. Department of Agriculture estimates. Reserves will be equal to 11 percent of demand at the end of the period, a drop of about 1 percentage point, according to the USDA, whose estimates include several national years.
The commodity is extracted from the fruit of the oil palm grown in tropical regions. Indonesia and Malaysia account for 87 percent of global supply. Malaysian output reached a record 2 million tons in September, taking inventories to 2.48 million tons, industry data show. Output peaked in October last year, then fell 38 percent in the following four months. Prices have risen every fourth quarter in all but one of the past six years.

Duty Free
The government said Oct. 12 that export taxes will drop to 4.5 percent to 8.5 percent from Jan. 1, down from 23 percent, and a quota on duty-free shipments would end. India, the biggest importer, may buy as much as 50 percent of its supply from Malaysia after the change, from 20 percent now, according to B.V. Mehta, the executive director of the Mumbai-based Solvent Extractors’ Association, an industry group. The tax change will reduce reserves, Sime Darby’s Dass said Oct. 19 in Subang Jaya, outside Kuala Lumpur. Higher demand from India and steady consumption in Europe and China will boost shipments, said Dass, who’s been in the industry for 30 years and oversaw 2.45 million tons of production last year.

Global Economy
Slowing global economic growth may curb demand and limit the rally. The 17-nation euro area will contract 0.5 percent this quarter and not expand again until the third quarter, the median of as many as 25 economist estimates compiled by Bloomberg shows. The 27-nation European Union accounted for 14 percent of imports last year, according to USDA data. China, the second-biggest buyer, has slowed for seven straight quarters. Prices plunged 44 percent in 2008 as the global economy endured its deepest recession since World War II. The world is “awfully close” to another slump, Bank of Israel GovernorStanley Fischer said in a Bloomberg Television interview broadcast Oct. 15. The International Monetary Fund cut its 2012 global growth forecast to 3.3 percent on Oct. 9, compared with a July prediction of 3.5 percent.
The economy doesn’t “look bullish” for palm, Mistry, a director at Godrej International Ltd., told a conference in Kuala Lumpur on Oct. 16. Malaysian stockpiles may exceed 3 million tons by Jan. 1 and futures may drop to 2,200 ringgit within six weeks, he said. Mistry became known as Mr. Titanic after he compared the market in 1998 to the ill-fated liner.

Southeast Asia
Indicators of an El Nino, caused by a warming of the Pacific Ocean that can parch Southeast Asia, remain neutral after being close to thresholds for the weather pattern in recent months, Australia’s Bureau of Meteorology said yesterday. Output dropped 8.3 percent in 1998 because of an El Nino event, data from the Malaysian Palm Oil Board show. Demand for palm may be boosted by curbs in supplies of soybeans and sunflowers, according to Thomas Mielke, the executive director of Oil World, a Hamburg-based research company. Global stockpiles of soybean oil, the most-consumed after palm, have started falling toward the smallest since 1994 because of the U.S. drought, USDA data show. Total inventories of palm, soybean, rapeseed and sunflower oils will decline to about 8.2 percent of consumption this year, the lowest since 1977, according to data compiled by Bloomberg using USDA estimates.

Soybeans Rally
Soybeans advanced 27 percent on the Chicago Board of Trade this year, reaching a record $17.89 a bushel in September, and soymeal surged 49 percent. While soybean oil retreated 1.9 percent, its premium to palm widened to as much as $379 a ton this month, the most since 2008. China’s imports of palm may rise 5.3 percent to 6 million tons in 2013, according to Desmond Ng, the Malaysian Palm Oil Council’s regional manager for China. The Asian nation is consuming about nine times more than a generation ago, leading a fourfold gain in global demand, the USDA estimates. Felda’s profit will increase to 1.14 billion ringgit next year from 943.2 million ringgit, according to the mean of 18 analysts’ estimates compiled by Bloomberg. The Kuala Lumpur- based company raised $3.3 billion in June in what was the year’s biggest initial public offering since Facebook Inc. Its shares have fallen 12 percent since the end of June. All producers are profitable with prices at 2,200 ringgit or more, Mistry said.
“The supply situation for oilseeds is very tight historically,” said Erin Fitzpatrick, an analyst at Rabobank International in London. “That is going to be supportive for palm oil.”

Pro Farmer: After The Bell Soybean Recap  (CME)
Soybean futures faced heavy pressure in early trade, but the market improved around midday and extended gains into the close to settle steady to 6 3/4 cents higher through the September contract. Far deferred months closed 2 cents lower. Early in the session, soybean futures faced heavy profit-taking pressure due to strong gains in the U.S. dollar index and sharp losses in the stock market and crude oil futures.

Soybean Complex Market Recap (CME)
November Soybeans finished up 6 3/4 at 1553 1/4, 1 3/4 off the high and 24 1/4 up from the low. January Soybeans closed up 6 1/2 at 1555 3/4. This was 24 1/2 up from the low and 1 1/4 off the high. December Soymeal closed up 5.2 at 476.2. This was 10.3 up from the low and 0.7 off the high. December Soybean Oil finished down 0.34 at 51.32, 0.7 off the high and 0.36 up from the low. November soybeans traded sharply lower in early trade today but managed to climb into positive territory and close on the highs of the day in impressive fashion. Soybean oil finished the day lower while meal finished the day higher. Futures were able to hold above yesterday's lows despite broad-based commodity liquidation throughout the day. Worse than expected corporate earnings also added to the negative tone as stocks traded down sharply and the US Dollar rose. Soybean basis in the Gulf of Mexico ticked higher midday on demand interest from China and slow country movement. Calendar spreads held steady to firm despite the sharp selloff in futures early on which suggests a bullish fundamental bias. South American weather remains mostly favorable but temperatures are expected to rise in the central west to south central regions of Brazil this week. South Brazil and Argentina will continue to see heavy rainfall through the next 7-10 days but drier than normal conditions in central and northern Brazil remains a concern. The longer term forecast for South America should favor row crop planting and maturity.

EDIBLE OIL: Malaysian palm oil futures fell as investors booked profits after the previous session's three-week high on worries that October's stronger-than-expected exports were not enough to trim record high stocks in the world's No.2 producer. (Reuters)