20120326 1031 Local & Global Economy Related News.

Malaysia: Inflation rate eased to 14-month low in February
Malaysia’s inflation eased to the slowest pace in 14 months in February, giving the central bank room to keep interest rates low and support an economy threatened by global growth risks. Consumer prices rose 2.2% from a year earlier. That compares with 2.7% in January and is less than the 2.4% median estimate in a Bloomberg News survey of 21 economists. (Bloomberg)

Singapore’s consumer price index rose 4.6% yoy in Feb (4.8% in Jan), but declined 0.3% mom (+0.9% in Jan). Both readings came below consensus forecasts of 4.9% yoy and 0.1% mom respectively. (Bloomberg, Reuters)

The Singapore Tourism Board has projected visitor arrivals to be between 13.5m and 14.5m this year, an increase of 10% from last year (13.8% in 2011). (Channel News Asia)

Taiwan: February industrial output rebounds as demand recovers
Taiwan’s industrial production rose in February for the first time in four months, signaling a recovery in demand. Output climbed 8.4% last month from a year earlier, after falling a revised 16.8% in January. The central bank said yesterday it will focus on inflation after leaving interest rates unchanged for a third meeting. Taiwan’s export orders, an indication of shipments in the next one to three months, rose 17.6% last month from a year earlier. (Bloomberg)

China: Leading economic index rose at slower pace last month
A leading index for China rose at a slower pace in February, adding to evidence of moderating growth in the world’s second-biggest economy that may prompt Premier Wen Jiabao to loosen policy further. The gauge gained 0.8% from the previous month to 227.2, the Conference Board said. That compares with a 1.5% gain in January. (Bloomberg)

China’s energy consumption in the first quarter is likely to grow by 7 to 8% yoy, up from a 6.7% in the first two months of this year, according to a report from the China Electricity Council. (Xinhua)

China's outstanding external debt in 2011 totaled nearly US$695bn, the highest since 1985, and a 27% growth from 2010 according to data released by the State Administration of Foreign Exchange. The proportion of short-term external debt to the total also climbed to a record high of 72% from 68% in 2010. Medium- and long-term external debt, which accounted for 28% of total external debt, showed a marked increase last year of 12%, compared with a 2% gain in the previous year. Other external debt indicators, such as the 9.52% liability ratio, the 33.31% foreign debt ratio and 1.72% debt-service ratio, all fell into the "safety" range, according to international standards. (China Daily)

China will extend a property tax trial, currently in operation in Shanghai and Chongqing, to more cities at an "appropriate time" this year and deepen resource tax reform, said the National Development and Reform Commission. (Shanghai Daily)

China and Indonesia signed 15 prospective cooperation agreements worth potentially more than US$17bn in fields including mining, hydropower and steel. (Reuters)

France: Sentiment rose as Sarkozy lifts growth forecast
French business confidence jumped more than economists forecast this month, the latest sign of an economic rebound that allowed President Nicolas Sarkozy to lift his growth forecast in the midst of an election fight. Sentiment among factory executives rose to 96 from 93 in February. Economists forecast an increase to 93 from a previously reported February reading of 92, according to the median of 19 estimates in a Bloomberg survey. It is the first time the gauge has increased for two consecutive months in more than a year. (Bloomberg)

Canada: February core inflation rate fastest in three years
Canadian inflation accelerated for a second month in February on higher costs for electricity and meat, as the central bank’s key price measure reached the fastest in more than three years. The consumer price index rose 2.6% in February from a year earlier, following January’s 2.5% gain. (Bloomberg)

US: Sales of new houses fall for second month
Purchases of new homes in US unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven. Sales dropped 1.6% to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000. (Bloomberg)

20120326 1028 Malaysia Corporate Related News.

KPJ buys into Indonesia firm
KPJ Healthcare said its wholly-owned subsidiary Kumpulan Perubatan (Johor) SB has proposed to acquire an 80% stake in Indonesia-based PT Khidmat Perawatan Jasa Medika for RM15.84m cash. The deal would be financed with the group’s internal funds. (StarBizWeek)

KLB names PDagangan partner, supplier of lubricants
Konsortium Logistik (KLB), a logistics service provider has signed a long-term contract agreement with Petronas Dagangan, making the latter its exclusive partner and supplier of lubricants. The new contract would see all KLB’s prime movers and vehicles using Petronas synthetic grade engine oil for five years. KLB CEO Datuk Che’ Azizzudin Che’ Ismail described the partnership as a testament of excellent collaborative spirit between two major players in the Malaysian transportation industry. (StarBizWeek)

Perak Corp unit enters joint venture
Perak Corp subsidiary PCB Development SB has entered into a heads of agreement with Sanderson Project Development (Malaysia) SB (SPDM) for a joint venture to develop and operate an international standard animation theme park, resort hotel and serviced apartments in Ipoh. The project has a gross development value of RM506.7m. The intended equity participation in the joint venture shall be 20% to be held by PCB Development and the balance 80% by SPDM. (StarBizWeek)

Genetec clinches RM28m orders
Genetec Technology, an ACE-listed high-precision engineering design and build specialist, has secured new orders amounting to RM27.9m, bringing its order-book to RM106.4m. Genetec executive chairman Ron Ortscheid said in a statement that the global demand for hard-disk drive had strengthened in tandem with the growing demand for more cost-effective but also ever increasing storage space. (StarBizWeek)

MAS increases regional, long-haul frequencies
Malaysia Airlines (MAS) is offering increased full-service weekly frequencies effective yesterday between Kuala Lumpur and Beijing, Manila, Phnom Penh, Los Angeles, Taipei, Bangkok, Medan and Jakarta, taking advantage of an expected rise in demand on these routes. These sectors will see a gradual increase in total capacity from the current 19,540 seats to 24,820 by 1 May. (Malaysian Reserve)

Malaysia Airlines (MAS) denied claims by an in-house union that it was forcing employees to quit in order to „bulk transfer‟ staff to a new sister airline. MAS said the MAS Employees Union’s (Maseu) allegations were inaccurate and misleading as applications to the still-unnamed short-haul service were completely voluntary. Successful candidates will be offered employment under terms and conditions of the new airlines, including salaries and benefits. It added that over 850 MAS employees had applied to join the new regional off-shoot for a broad variety of positions. (Malaysian Insider)

Malaysia and Indonesia are on a joint mission to correct and update a United States Environmental Protection Agency (EPA) report that could impact future exports of palm-based biofuels. Plantation Industries and Commodities Minister Tan Sri Bernard Dompok described the current EPA report as "errorneous" and felt the need to "come personally to the US" for discussions with senior US officials, saying the EPA data did not reflect the current standards practised in the producing countries. (Bernama)

Wah Seong is believed to have secured a Petronas Carigali contract to coat about 90km of gas pipes in Turkmenistan. Petronas Carigali is one of the main partners in developing the field. The pipe-coating deal is an extension of an existing job that Wah Seong secured in FY08. (Edge Weekly)

Fears that the proposed privatisation of QSR Brands Bhd by Johor Corp (JCorp) and CVC Capital Partners Ltd may fall through may be the reason why the company's share price has been under selling pressure since last week. According to an earlier report, QSR and KFC were expected to call for an EGM by end-March to seek the approval of shareholders for the proposal. However, QSR and KFC have yet to requisition the EGMs. It had been reported that the buyout deal had been proving challenging due to some concerns that Yum! Brands Inc, the licensor and owner of the KFC and Pizza Hut brand names, have over the takeover. However, reliable sources said that some significant progress had been made, with the buyers (namely JCorp and CVC) having had a series of meetings with Yum officials in Singapore over the past few weeks.
The buyout deal is conditional on the approval of Yum! while Lembaga Tabung Haji, being the single largest minority shareholder with a 23% stake in KFC, will have a major say on whether privatisation takes place. “The negotiations are not stalled, it's tough but it's progressing,” one source told StarBizWeek. “The deal will go through, there's a debt to take care off,” the source said. (Starbiz)

Perodua is still open to collaboration talks with DRB-Hicom, the new owner of Proton Holdings, managing director Datuk Aminar Rashid Salleh said. However, he reiterated that the country's largest carmaker is still against any kind of merger between the two entities. Aminar Rashid said it is up to the new owners to decide whether there is a need for a strategic collaboration. (Bernama, Malaysian Reserve)

U Mobile has given six months' notice for the termination of its 2G domestic roaming deal with Celcom. The roaming may be terminated earlier if both parties agree to it. While the identity of U Mobile‟s new partner is unknown, the market talk is that Maxis is the new ally. (BT)

The Federal Government is allowing Selangor to operate the recently completed Labu treatment plant, possibly sending a signal that the water talks could move to more amicable ground. “The Selangor government insisted on operating the plant; otherwise, it would not approve the extraction of water from Sungai Labu,” Minister of Energy, Green Technology and Water Datuk Seri Peter Chin said. The Sungai Semenyih plant is now overloaded in capacity by as much as 40%. The Labu plant will be like a dedicated plant for the KLIA region, bearing in mind that KLIA 2 will be coming up. “We are always amicable to look at the water restructuring exercise in a manner that will benefit consumers,” he said. “But the restructuring proposal has to be a workable one.” “We allowed Selangor to buy out. Go ahead, negotiate with them and buy them out. But they did not offer enough for these people to be comfortable to exit." he said. (StarBiz)

Datuk Seri Najib Razak has approved a RM7.5m allocation for short term flood mitigation measures in Hulu Langat where more than 3,000 families were badly affected by floods early this month. A bridge on a major route that would cost RM3.5bn, two culverts costing RM1m and RM3m for relocation of utilities are covered under the allocation. (Financial Daily)

Malaysia Building Society (MBSB) targets between RM8bn-9bn in total financing disbursements for its Islamic personal financing (PF-i) for this year, CEO Datuk Ahmad Zaini Othman said. Last year, total financing disbursements for PF-I surpassed RM6.5bn, a major increase of 101% from 2010, and the company anticipates similar substantial growth for the segment for this year. “For the past two months, we have already achieved 3% of our target and we are keeping the numbers easy, as we feel the trend and our strategy is right.” (Malaysian Reserve)

An India-based joint-venture bank is close to getting final regulatory approvals to open for business in Malaysia, some two years after receiving a commercial banking license from Bank Negara Malaysia (BNM). India International Bank, a JV between three Indian banks is now awaiting the go-ahead from the central bank to start operations. All systems are in place. The JV is established by Bank of Baroda (40%), Indian Overseas Bank (35%) and Andhra Bank (25%) and is expected to have a total capital of RM300m. (Malaysian Reserve)

Glomac is targeting a 30% profit growth for FY12 backed by strong take-up rate in its current development projects and high unbilled sales of RM588m. CEO Gerard Tan Boon Chuan said the take-up rate for most of its projects in townships in the Klang Valley is above 75%. “We believe our RM500m sales target for FY12 is on track with consistent sales as well as other projects worth RM4.5bn in GDV in the pipeline. Moving forward, Glomac expects to record about RM6bn in GDV over the next six to eight years.” (Bernama)

When Malaysians go on the Internet for news, The Star Online (thestar.com.my) is still the top destination, according to the latest data released by the Malaysian Digital Association (MDA). In the association's top 30 list of local and international websites visited by users within Malaysia, The Star Online occupies the No. 9 spot. It is ahead of other news portals such as Malaysiakini.com (No.11), themalaysianinsider.com (No.23), and the online versions of Harian Metro (No.15), Utusan Malaysia (No.16) and Kosmo! (No.28). The top five in this combined list are all familiar names facebook.com, google.com.my, local online marketplace Mudah.my, yahoo.com and youtube.com. (Starbiz)

Automotive industry players and observers are still maintaining a „wait-and-see‟ approach about the impact of Bank Negara‟s responsible lending guidelines on total industry volume (TIV) for this year. “We will relook the TIV forecast for 2012 when we hold our half-year review sometime during the third week of July,” said Malaysia Automotive Association (MAA) president Datuk Aishah Ahmad. The MAA had forecast TIV to grow 2.5% to 615,000 units this year. Kavan Mukhtyar, of Frost & Sullivan also said he was maintaining his TIV forecast of 612,000 units as they had already factored in the tightening of lending rules as one of the market restraits for 2012. (Star Biz)

Tanjung Offshore is going back to basics focusing on its core strengths in offshore support vessels, maintenance services and engineered equipment supply to bring the company back to the black for FY12. MD Omar Khalid said the company had been involved in too many different business activities, which distracted from its core strengths and focus. “With the largest network of workshops located throughout Malaysia dedicated to servicing offshore oil and gas clients, our maintenance division is posed to leverage off stronger expected activity in the industry.” On the ongoing business review and rationalisation, Omar said this would involve divesting loss-making businesses and reabsorbing businesses into a nucleus company, thereby enabling them to reduce fixed overhead costs. (Star Biz)

Masterskill group CEO Datuk Seri Edmund Santhara bought more shares the company, forking out some RM7.7m to mop up 7m shares at a price of RM1.10. This acquisition raised his shareholding in the company to 23.81% or 97.6m shares. (BMSM, StarBiz)

AEON Co (M) MD Nur Qamarina Chew Abdullah told The Edge Financial Daily of the group‟s strategy to further expand its reach in Malaysia and how its aggressive rebranding exercise will help strengthen its name in a regional context. The group, which is in the midst of entering the northern region in a big way, will launch two new malls in Perak – Sri Manjung and Ipoh and has aquired land in Kedah and Penang worth RM86m, with plans to develop these sites into malls by 2014. It also purchased land in Johor for RM22.2m. AEON plans to spend RM15m in the next 2 years on the rebranding exercise to move away from the long-time Jusco brand that Malaysian consumers are accustomed to. The rebranding is not only aimed at promoting the group‟s new image to be aligned with its corporate identity but as a means to enter other emerging markets like Cambodia, Indonesia and Vietnam. “The potential of ASEAN is huge. The ASEAN office is based here in KL. ” said Chew. On whether AEON, which is 51% owned by AEON Group Japan will take part in those regional moves, Chew said that all regional expansion decisions will be determined by the parent company. (Financial Daily)

Petronas Dagangan: Named as KLB’s partner and supplier of lubricants Konsortium Logistik Bhd (KLB), a logistics service provider has signed a long-term contract agreement with Petronas Dagangan making the latter its exclusive partner and supplier of lubricants. The new contract would see all KLB's prime movers and vehicles using Petronas synthetic grade engine oil for 5 years. KLB is one of Malaysia's leading logistics company with 28 years of experience in logistics operations. (StarBiz)

MAHB: KLIA aviation hub of Southeast Asia?
At a recent press conference, MAHB CFO, Faizal Mansor said the construction of KLIA2, which is the largest low-cost carrier terminal (LCCT) in the world with an annual capacity of 45m passengers will make KLIA one of the aviation hubs in Southeast Asia. Faizal said this is one of the reasons MAHB is building a bigger and grander KLIA2, with the aim of serving the booming low-cost carrier industry. KLIA2, slated for opening in Apr 2013 will cost between RM3.6bn and RM3.9bn, almost doubles its original cost estimate of RM2bn. Group MD Tan Sri Bashir Ahmad said MAHB has made several changes to KLIA2, involving a longer runway and bigger floorspace. (Financial Daily)

GuocoLand Malaysia: Expects 18% yield from PJ City, PJ Corp acquisitions
GuocoLand Malaysia expects a firm yield of 18% from the recent related party transaction to purchase PJ City Development Sdn Bhd and PJ Corporate Park Sdn Bhd from Guoline Asset Sdn Bhd and MPI Holdings Sdn Bhd respectively.  GuocoLand will buy PJ City for RM29.79m from Guoline Asset; and will then purchase PJ Corp from MPI Holdings for RM258,000. These companies house developments which are mainly parked under PJ City, including commercial land of 3 acres which already has existing buildings on them as well as an industrial land of 7.75 acres fronting Jalan 225, PJ.  GuocoLand said it would develop the industrial land for factories after tenancy agreements for the open air carpark and the cement batching plant expires on Mar 31, 2012. The shareholder statement said the purchases of PJ City and PJ Corp would be funded entirely from borrowings which would increase its gearing ratio basing on its shareholders’ funds from 1.13 to 1.20. (StarBiz)

Proton: Perodua still open to tie-up
Perusahaan Otomobil Kedua Sdn Bhd (Perodua)’s MD Datuk Aminar Rashid Salleh said the company is still open to collaboration talks with DRB-Hicom, which is the new owner of national carmaker Proton Holdings. However, he reiterated that the country’s largest car maker was still against any kind of merger between the two entities. Aminar Rashid said that there was a proposal for the two national auto makers to merge but after it was rejected by both Proton and Perodua, the International Trade and Industry Ministry came up with several areas of strategic collaboration However, Aminar Rashid said it was up to the new owners to decide whether there was a need for a strategic collaboration. (StarBiz)

UOA Development: Banks on strategic projects
Pursuing pocket developments in mature neighbourhoods will be the forte of UOA Development to build up a stronger presence in the Klang Valley property market. UOA COO (development) David Khor says the company is looking for opportunities to tap new growth markets like Penang and Johor. However, he said UOA is not in a hurry to ramp up its gearing as  it prefers to acquire strategic parcels.  Khor says the 40 acres of undeveloped land in Bangsar South and another 60 acres in other parts of the Klang Valley will keep the company busy for the next 7 years. He also said it is their strategy to continue with the business model of having smaller parcels of land and building good quality projects at  their own pace, instead of rushing through projects which may compromise on quality. He says the other option is for the company to form joint ventures with landowners, and preliminary negotiation is underway for two potential sites in the Klang Valley. (StarBiz)

Glomac: Sees 30% profit growth
Glomac’s COO Tan Boon Chuan said the company is on track to grow its net profit by 30% in this fiscal year ending Apr 30, 2012. Tan is confident of a better showing this year based on strong take-up rates for its properties as well as a high unbilled sales of RM588m. For the current financial year, Glomac is set to launch about RM1.5bn worth of properties with a sales target of RM500m. Next week, the developer is slated to launch the RM270m Reflection Residences located in Mutiara Damansara. Tan said Glomac has close to RM6bn worth of property projects that would keep the company busy for the next 8 years. (Business Times)

Syarikat Takaful Malaysia: Spending RM5m to go paperless
Syarikat Takaful Malaysia (Takaful Malaysia) is investing up to RM5m to convert all its documents into paperless processing by the end of this year. The Islamic insurer on Friday launched a cutting-edge technology - Document Management System - with its technological partner, Serial Data Sdn Bhd. Takaful Malaysia's new system integrates two software solutions marketed by Serial Data over the last one year. The two software solutions, namely Readsoft and Onbase, are deployed in both Takaful Malaysia's individual and group family operations, covering the end-to-end process cycle. Takaful Malaysia is the first insurer in Malaysia leveraging on the system. It expects to fully execute the plan by year-end. In going paperless, the company anticipates cost savings of up to RM1m annually. (Business Times)

Texchem Resources: Focuses on high growth segment
Having unlocked value in its household insecticide segment, Texchem Resources is keen on doing the same for its other business segment to return to profitability. Its CEO, Tan Peng Lam said the group will concentrate on its profit-making and high growth segments – the polymer engineering, restaurant and industrial divisions. Apart from the three divisions, the company has also food, family-care and venture incubation business. (Financial Daily)

AIC Corporation: LTAT to seek board seat on Temasek Formation
According to sources close to the deal, Lembaga Tabung Angkatan Tentera (LTAT) will seek a board seat on the soon-to-be listed Temasek Formation, following the acquisition of 20m shares or 11.5% stake in AIC Corporation. The source said LTAT had last Wed acquired the block of shares at RM1.40 a share from major shareholders of AIC, primarily Datuk Goh Tian Chuan. One of the conditions for the block sale was for LTAT to get a board seat on the merged entity and Goh is agreeable to this. (Financial Daily)

Automotive: MAA says new rules already impact sales of new vehicles
New rules mean new consequences and the first industry to raise its displeasure over new funding guidelines was the auto industry. Their concerns were stoked by a steep drop in sales in Jan and was echoed by Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad. According to reports, loan applications for the purchase of passenger cars contracted by 15.5% y-o-y in Jan from 7.8% y-o-y growth in Dec 2011. Aishah says while the MAA commends Bank Negara's action in promoting prudent and responsible financing practices among local financial institutions, she however feels that imposing more stringent financing conditions for hire purchase loans under the present economic environment will not help to stimulate the market and instead make it worse. (StarBiz)

S&P downgrades MISC credit rating
Standard & Poor’s Ratings Services (S&P) had lowered its long-term corporate credit rating on energy shipping company MISC Bhd to BBB from BBB+ with a negative outlook. S&P had also lowered its issue rating on the US$700mil 6.125% senior unsecured notes due July 1, 2014, issued by MISC Capital (L) Ltd to BBB from BBB+ where MISC fully guaranteed the notes “We lowered the rating on MISC because the company’s weak operating performance has undermined its cashflow protection, as reflected in weaker credit ratios," said its credit analyst Abhishek Dangra in a statement. (Source: Business Times)

Major breakthrough for Deleum
The provider of oilfield equipment and services is partnering Petronas Carigali Sdn Bhd to form a global patent for a breakthrough product that will greatly improve oil extraction rates, say sources. (Source: The Edge)

SC: No basis for further action over E&O, AirAsia
The Securities Commission (SC) says it has found no basis for further action in its probes into the trading of shares of Eastern & Oriental Bhd (E&O) and AirAsia Bhd prior to the listed firms' respective deals. The SC had set up an independent committee consisting of two senior independent commission members to supervise the review in the case of E&O. The SC also said that it had conducted a review on the trading of shares in the runup to the announcement of the Malaysia Airlines-AirAsia share swap and collaboration agreement on August 9 2011, and of Sime Darby's 30 per cent purchase of E&O on August 29 2011. "Based on the SC review and the opinion of the market expert, the SC found no basis to take further action on the AirAsia share transactions," it said. (Source: Business Times)

20120326 1016 Global Market Related News.

Japan Stocks Gain as Commodities Offset U.S. Homes Data (Source: Bloomberg)
Japanese stocks rose after higher commodity prices offset an unexpected decline in U.S. home sales. Mitsubishi Corp. (8058), Japan’s biggest commodities trader by revenue, added 0.8 percent. Kyocera Corp. (6971), an electronics maker that gets almost 20 percent of its sales in Europe, rose 0.5 percent after the yen weakened against the euro, cutting earnings outlook for the exporter. Nippon Sheet Glass Co. rebounded 2.4 percent after its bond ratings were slashed last week. The Nikkei 225 Stock Average (NKY) rose 0.3 percent to 10,038.49 as of 9:01 a.m. in Tokyo. Volume on the gauge was 31 percent lower than the 30-day average. The broader Topix Index lost 0.3 percent to 854.96, with more than twice as many shares advancing as falling. “Commodity prices including oil have risen, which is a catalyst for stronger commodity-related shares such as trading firms,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo.

U.S. Stocks Fall in S&P 500’s Biggest Weekly Drop in 2012 (Source: Bloomberg)
U.S. stocks retreated this week, with the Standard & Poor’s 500 Index having its biggest decline since December, amid weaker-than-estimated housing data and reports showing manufacturing contracted in Europe and China. Stocks rose on March 23 as a jump in oil prices lifted energy shares. The rally failed to help the industry avoid posting the worst performance for the week among the S&P 500’s 10 groups, falling 3 percent as Baker Hughes Inc. (BHI) slumped 11 percent. The Dow Jones Transportation Average lost 2.5 percent, the most since Nov. 25, as FedEx Corp. tumbled amid a disappointing earnings forecast. Apple Inc. (AAPL) advanced 1.8 percent after announcing its first dividend in 17 years.
The S&P 500 slipped 0.5 percent to 1,397.11 after rallying in 10 out of 11 weeks this year. The benchmark index is still up 2.3 percent for March and has risen for four straight months, poised for its longest string of monthly gains since September 2009. The Dow Jones Industrial Average lost 151.89 points, or 1.2 percent, to 13,080.73 after reaching its highest level since December 2007 on March 15.

European Stocks Post Biggest Weekly Loss of 2012 (Source: Bloomberg)
European stocks posted their biggest weekly decline this year as economic data from China to the U.S. and Europe raised concerns the global economic recovery is faltering. Randgold Resources Ltd. tumbled 13 percent after a coup toppled the government in Mali, where the company mines two- thirds of its gold. Bayerische Motoren Werke AG (BMW) slipped 7 percent after an official at China’s carmakers association said vehicle sales may miss its forecast. Misys Plc (MSY) surged 8.4 percent after Vista Equity Partners said it will acquire the company. The Stoxx Europe 600 Index (SXXP) lost 2.5 percent to 265.65 this week, the biggest decline since December. The benchmark measure has still rallied 8.6 percent this year as the European Central bank provided loans of 1 trillion euros ($1.3 trillion) to the region’s banks and U.S. economic data surpassed estimates.
“Markets are getting too optimistic,” Gerard Lyons, chief economist at Standard Chartered Plc in London, said in an interview on Bloomberg Television. “Overall, the eurozone is in a double-dip recession. The Chinese economy is cooling. The U.S. is not having a double-dip but it’s not having a strong recovery.”

Hedge Funds Make Wrong-Way Bets for a Fourth Week: Commodities (Source: Bloomberg)
Hedge funds wagered the wrong way on commodity prices for a fourth consecutive week, boosting bullish holdings just before reports showing a contraction in manufacturing from China to Europe drove prices lower. Money managers lifted combined net-long positions across 18 U.S. futures and options by 2.9 percent to 1.17 million contracts in the week ended March 20, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 1 percent last week, led by declines in lead and corn. Orange juice tumbled 11 percent, the most since August. The S&P GSCI fell to a three-week low on March 22 after reports showed factory output in Germany and France unexpectedly shrank in March and a measure of China’s manufacturing was the weakest since November. U.S. government data the following day showed purchases of new homes unexpectedly fell last month, increasing investor concerns about the durability of the world’s largest economy.

Pimco’s Gross Says Fed May ‘Hint’ at QE3 at April Meeting (Source: Bloomberg)
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the Federal Reserve will probably signal it plans to arrange a third round of debt purchases when policy makers meet in April. While Fed officials upgraded the outlook for the U.S. economy at their March 13 meeting, they reiterated their intent to keep interest rates near zero until at least late 2014. The central bank under Chairman Ben S. Bernanke has purchased $2.3 trillion of bonds in two rounds of so-called quantitative easing, known as QE1 and QE2. The Fed is “likely to hint” at QE3 at its April 25 gathering, Gross wrote on Twitter. Housing reports last week showed a key part of the U.S. economy remains under pressure. The Commerce Department said March 23 that new home sales fell to a 313,000 annual pace in February, the slowest since October. Earlier in the week, the National Association of Realtors said existing-home sales eased to a 4.59 million rate last month from January’s 4.63 million.

Most Asia Stocks Rose as Commodity Price Offset U.S. Data (Source: Bloomberg)
Most Asian stocks rose after higher oil and commodity prices offset an unexpected decline in U.S. home sales. Aurora Oil & Gas Ltd., an Australian energy explorer, rose 1.4 percent in Sydney. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, added 0.5 percent after the yen dropped against all of its 16 major counterparts. Leighton Holdings Ltd. (LEI) rose 3 percent after Australia’s largest builder announced A$400 million ($419 million) in new work and a new managing director of its Asian, Indian and offshore divisions. The MSCI Asia Pacific Index (CRY) was little changed at 126.34 as of 9:53 a.m. in Tokyo after falling 1.3 percent last week. About three stocks rose for every two that fell. The measure has gained 11 percent in the quarter ending this week, the biggest advance since the three months ended September 2010.
“Commodity prices including oil have risen, which is a catalyst for stronger commodity-related shares such as trading firms,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo.

FOREX-Yen falls after rally, but global risks linger
TOKYO, March 23 (Reuters) - The yen softened after Tokyo importers took advantage of its broad rally the day before, while risk currencies such as the Australian dollar were poised to end the week sharply lower on fresh concern about the health of the global economy.  
"Importers who were late into the dollar rally have been very active since late New York trading, both in dollar/yen and in euro/yen," said Teppei Ino, currency strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo.

GLOBAL MARKETS-World stocks stabilise below recent highs; dlr slips
LONDON, March 23 (Reuters) - World stocks held steady below this week's 8-month peak while the dollar fell broadly as concerns about growth in China and the euro zone and a renewed focus on sovereign debt problems in Italy and Spain kept investors cautious.
"After impressive gains over the last months, the recent losses are not more than a drop in a bucket. Hence investors have enough reason to remain calm," said Roger Peeters, a market strategist at Close Brothers Seydler Bank.

Orders Probably Picked Up With Spending: U.S. Economy Preview (Source: Bloomberg)
Manufacturers in the U.S. probably received more orders for durable goods in February and consumer purchases climbed the most in five months, economists said reports this week will show. Bookings for long-lasting factory goods rose 3 percent last month after decreasing 3.7 percent in January, according to the median estimate of 70 economists surveyed by Bloomberg News. Personal spending increased 0.6 percent last month, boosted in part by stronger auto sales. “It’s employment that’s really driving the bus for spending growth right now,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “As our economy expands, it’s going to allow manufacturing to build right along with it.”
Six months of the strongest job growth since 2006 is helping sustain incomes and spending, just as companies upgrade equipment, keeping the nation’s producers at the forefront of the almost three-year-old expansion. At the same time, higher transportation costs and slowdowns in Europe and China represent hurdles for manufacturing. The Commerce Department’s report on March 28 is projected to show orders for goods meant to last at least three years climbed for the fourth time in five months, helped by a jump in demand for commercial aircraft. Boeing Co. received orders for 237 airplanes in February from 150 a month earlier, data from the Chicago-based company show.

Treasuries Rise for Fourth Day on Global Growth Concern (Source: Bloomberg)
Treasury (YCGT0025) 10-year note yields dropped the most since January as slowing growth in China and Europe and an uneven recovery in the American housing market rekindled the refuge appeal of U.S. government securities. Yields on the benchmark notes declined from the almost five- month high reached after the Federal Reserve upgraded its economic outlook last week, prompting traders to unwind bets for more monetary stimulus. Treasuries rallied even the U.S. prepared to auction $99 billion in two-, five- and seven-year securities next week. “We continue to hear that we have turned the corner and we are starting to get a lot of upbeat data, but with Europe and a possible slowdown in China hanging over our heads, it tempers some of the optimism,” said Paul Montaquila in San Ramon, California, head of fixed-income trading at Bank of the West. “We’ve seen a bit of an overreaction in the sell-off.”
Yields on 10-year notes declined six basis points, or 0.06 percentage point, the most in a week since Jan. 27, to 2.23 percent in New York, according to Bloomberg Bond Trader prices. They gained 27 basis points the previous week. The 2 percent securities due in February 2022 rose 17/32, or $5.31 per $1,000 face amount, to 97 30/32.

Bernanke Sees Need for Higher Household Spending to Fuel Growth
2012-03-23 04:08:12.360 GMT
By Joshua Zumbrun
March 23 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is operating below its level prior to the financial crisis, and that increased household spending is needed to sustain the expansion.
“Consumer spending is not recovered, it’s still quite weak relative to where it was before the crisis,” Bernanke said yesterday in the second of four lectures on the history of the Fed that he plans to deliver at George Washington University. “In terms of debt and consumption and so on we’re still way low relative to the patterns before.”
The Federal Open Market Committee said in a statement after a March 13 meeting that subdued inflation and high unemployment still warrant holding the benchmark interest rate near zero at least through late 2014. Signs the economy is improving don’t dispel risks to growth that include rising gasoline prices, fiscal cutbacks and a weak housing market, New York Fed President William C. Dudley said on March 19.
Bernanke today plans to open a Fed conference in Washington involving policy makers from the U.K. and Japan that will focus on topics including new policy tools for fueling economic growth and challenges for central bankers.
The Fed chairman plans at 1:45 p.m. to give the opening speech at a two-day conference entitled “Central Banking: Before, During and After the Crisis.” Fed Vice Chairman Janet Yellen, Bank of England Governor Mervyn King, Bank of Japan Governor Masaaki Shirakawa and former European Central Bank President Jean-Claude Trichet are scheduled to speak.

Spur Growth
The conference will first consider a research paper by New York University Professor Mark Gertler saying the Fed’s asset purchase programs will help spur growth by reducing interest rates rather than by increasing the amount of reserves in the banking system.
Gertler, an adviser to the Federal Reserve Bank of New York who has co-written research with Bernanke, said in an interview yesterday that the economy may not need such a stimulus program at all.
“Inflation still appears to be contained so that’s good,” Gertler said in a phone interview. “Employment growth is picking up, so that’s good. It seems like the controls are at the right setting now.”
The unemployment rate was 8.3 percent in February, down from 9.1 percent as recently as August. The personal consumption expenditures index rose 2.4 percent in the 12 months through January, above the Fed’s 2 percent goal.
The Fed’s policy is “always subject to change as the news changes,” Gertler said. “But the economy is definitely picking up and inflation is contained and it seems like stimulus, at least from the Fed, is not appropriate now.”

Turning Point
Some policy makers say the Fed should hold off from more accommodation as the economy rebounds.
With policy currently “on pause, it may be a good time to take stock of whether we may be at a turning point,” Federal Reserve Bank of St. Louis President James Bullard said in a speech in Hong Kong. “As the U.S. economy continues to rebound and repair,” further action “may create an overcommitment to ultra-easy monetary policy.”
Economic reports yesterday added to evidence the world’s largest economy is gaining strength.
The number of Americans saying the economy is getting better rose in March to the highest level since 2004. Thirty-four percent of respondents to Bloomberg’s monthly consumer expectations survey said the economy was improving, the largest share since January 2004.

Leading Index
The index of U.S. leading indicators rose in February by the most in 11 months, the Conference Board said. Applications for unemployment benefits dropped last week to the lowest level in four years, a Labor Department report showed.
U.S. stocks retreated, trimming the longest monthly rally since September 2009 for the Standard & Poor’s 500 Index, as manufacturing contracted in China and Europe and FedEx Corp. tumbled amid a disappointing forecast.
The S&P 500 declined 0.7 percent to 1,392.78 at 4 p.m. New York time, slumping 1.2 percent in three days. The gauge has risen 2 percent in March, on pace for a fourth monthly rally.
Bernanke said yesterday the central bank’s interest-rate policies last decade weren’t responsible for the housing price bubble that led to the recession.
“Some have argued that the Fed’s low interest-rate monetary policy in the early 2000s contributed to the housing bubble, which in turn was a trigger of the crisis,” he said.

Overseas Booms
“Most evidence suggests otherwise,” Bernanke said, focusing on history and not on current monetary policy or the economic outlook. In defense of the Fed, Bernanke cited house price booms in foreign countries and said the size of the asset bubble was too large to be explained by changes in mortgage rates. Also, home prices began to rise in the late 1990s, before the Fed lowered rates, he said.
Bernanke, a former economics professor at Princeton University, is returning to the classroom this week and next to explain the central bank’s actions during the financial crisis and the longest recession since the Great Depression. His lesson yesterday is titled “The Federal Reserve after World War II.”
Following a recession in 2001, the central bank lowered interest rates to 1 percent in 2003 and 2004 even as home price gains accelerated. Bernanke’s defense of the Fed actions drew on a January 2010 speech he gave in Atlanta, he said.
Though its interest-rate policies were appropriate, Bernanke said, the Fed “made mistakes in supervision and regulation.”

Bank Supervision
“In our supervision of bank and bank-holding companies we didn’t push hard enough on this issue of measuring your risks,” Bernanke said. “Another area where the Fed performed poorly was I think in consumer protection.”
Bernanke, 58, also said government policies to increase homeownership were not principally to blame for the housing bubble.
“I think to put it all on the government is probably wrong,” Bernanke said in response to student questions. “Most of the worst loans were made by private sector lenders and then sold through private-sector securitizations. They didn’t touch Fannie or Freddie,” he said, referring to government-sponsored entities Fannie Mae and Freddie Mac.
While his lecture focused on historical topics, Bernanke noted that today’s policy benefits from the low inflation brought about as the result of former Fed Chairman Paul Volcker’s battle against price increases.
“After a long period of low inflation most people are pretty comfortable that inflation will stay reasonably low,” Bernanke said. “And that helps a lot” since “with inflation staying low the Fed has more leeway.”
In response to a question about Fed transparency, Bernanke said “most of the time transparency can make monetary policy work better” and promote accountability of the central bank.
Bernanke plans to speak on March 27 and March 29 about the Fed’s response to the financial crisis and the ensuing recession. The lecture series will be streamed live on the Fed’s website and on ustream.tv.


Euro Gains Versus Yen on Prospect of Combined Rescue Fund (Source: Bloomberg)
The euro rose for a second day against the yen on prospects the single-currency region may agree to combine two rescue funds to halt the spread of its sovereign-debt crisis. The 17-nation euro gained before a report forecast to show German business confidence held at the highest level since July. The yen dropped against all its major counterparts before a U.S. report that may suggest the housing sector in the world’s largest economy is improving, boosting demand for higher- yielding assets. “It’s possible to see euro pick up slightly as people work out the implications of the bailout package and better economic statistics,” said Hans Kunnen, Sydney-based chief economist at St. George Bank Ltd. “Sentiment toward Europe is slowly improving.” The euro rose 0.5 percent to 109.82 yen as of 9:31 a.m. in Tokyo from the close last week in New York. It traded at $1.3278 from $1.3270 on March 23, when it touched $1.3294, the most since March 2. The yen fell 0.4 percent to 82.69 per dollar.

China Soft Landing May Be Hard for Commodity Exporters (Source: Bloomberg)
The good news: China’s government will engineer a soft landing. The bad news: Even a soft landing is painful for industries that have become dependent on the world’s fastest-growing major economy as their main profit engine.
Analysts at Deutsche Bank AG, Nomura Holdings Inc. and Daiwa Capital Markets raised forecasts this month for 2012 expansion to as high as 8.6 percent, partly on anticipation of looser monetary policy. The projections, still below last year’s 9.2 percent rate, offer little comfort for Australian mining company BHP Billiton Ltd. (BHP), seeing slower steel production in China, or German automaker Daimler AG (DAI), whose Mercedes dealers in the nation are giving record discounts. “China’s still going to be growing reasonably strongly,” said Nicholas Lardy, senior fellow at the Peterson Institute for International Economics in Washington and author of the 2012 book “Sustaining China’s Economic Growth after the Global Financial Crisis.” Even so, “the super commodity cycle that was driven by China is moderating, and exporters that have ridden the property boom over the last four or five years face a much tougher time.”
Premier Wen Jiabao’s curbs on property sales and his plan to tilt the economy toward consumption and away from a dependence on capital spending have reduced production of steel and cement and helped push iron-ore prices down more than 20 percent from last year’s high. At the same time, policy makers are ready to take any action necessary to avert a steep deceleration in a year when the ruling Communist Party desires a stable leadership transition, said Tim Condon of ING Financial Markets.

Minsheng Bank Seeks $1.46 Billion in Hong Kong Share Sale (Source: Bloomberg)
China Minsheng Banking Corp. (1988), the nation’s first non-state lender, is seeking as much as $1.46 billion in a Hong Kong share sale to shore up capital amid tightened rules for risk buffers. The Beijing-based bank is offering 1.65 billion shares at HK$6.65 to HK$6.86 apiece, according to terms for the deal obtained by Bloomberg News. That represents a discount of as much as 7 percent to the March 23 closing price of HK$7.15. Minsheng joins local rivals Bank of Communications Co. and Industrial Bank Co. (1398) in seeking funds after a two-year, $2.7 trillion lending spree sapped their finances. China’s banking regulator is planning tougher capital requirements for lenders to fend off rising credit risks.
The China Banking Regulatory Commission said in August that it would require the country’s largest, or so-called systemically important, lenders to have a minimum capital adequacy ratio of 11.5 percent by the end of next year. Smaller banks would be required to have at least 10.5 percent under “normal conditions” by the end of 2016, the CBRC had said.

BOJ Crosses Rubicon With Desperate Monetary Policy, Hirano Says (Source: Bloomberg)
The Bank of Japan’s decision to expand bond purchases and set a 1 percent inflation goal was a step too far that leaves the monetary authority likely to finance government deficit spending, a former executive said. “They looked like really desperate measures,” Eiji Hirano, 61, who was a BOJ executive director in charge of international affairs from 2002 to 2006, said in an interview last week in Nagoya, central Japan. The yen weakened and stock prices rose in the world’s third-largest economy after Governor Masaaki Shirakawa and his policy board unexpectedly pledged on Feb. 14 to buy 10 trillion yen ($121 billion) in government debt and set the inflation target. That market reaction creates the “illusion” that monetary policy alone can cure Japan’s economic woes and may compel the BOJ to bolster bond purchases further and monetize public debt, Hirano said.
“It looks like they have crossed the Rubicon,” said Hirano, who is now executive vice president at Toyota Financial Services Corp. That term means passing a point of no return and refers to Julius Caesar leading his army across the river in an act of war. Japan’s benchmark Nikkei 225 Stock Average rose to the highest in a year and the yen fell to an 11-month low against the dollar after the February decision, buoying earnings prospects for exporters who last year faced a currency at a postwar high against the dollar. Easing concerns on Europe’s debt crisis and optimism about the U.S. economy have been factors in yen and stock moves, Hirano said.

Leung Victory in Hong Kong Poll Turns Focus to Democracy Plans (Source: Bloomberg)
Leung Chun-ying, a former property surveyor, pledged to address Hong Kong’s wealth gap and demands for universal suffrage as the city’s next chief executive after winning a poll in which only one in 5,900 people could vote. A 1,193-member panel of Hong Kong billionaires, academics and professionals chose Leung over two other candidates to lead the city for the next five years. Crowds outside the election venue protested the lack of democracy in the former British colony, with one waving the colonial-era flag and others holding signs opposing China’s ruling Communist Party. Leung, 57, will help shape the city’s economy and relationship with China through 2017, when Beijing has pledged to allow Hong Kong to elect its own leaders. He must also address anger over rising living costs spawned by an influx of money from mainland China and surging property prices that have made Hong Kong the world’s most expensive place to buy a home.
“Rule of law, human rights, integrity, lack of corruption and press freedom are all part of our life,” Leung told reporters after his selection. “This election has helped build a foundation for universal suffrage in 2017.” While the city’s 7.1 million people couldn’t vote, public opinion helped shape yesterday’s selection, with some committee members saying they had to heed opinion polls that put Leung 17 percentage points ahead of his main rival, Henry Tang. Tang was seen as the front-runner and Beijing’s favored candidate until an admission of an extra-marital affair and a basement built without proper permits damaged his poll numbers.

Hungarian Market Collapses After Forex Loans Debacle: Mortgages (Source: Bloomberg)
Erzsebet Zolyom counted on a quick sale of the two-bedroom apartment in downtown Budapest she inherited last May to ease her financial troubles. Instead, it’s put her deeper in the hole. After a costly renovation and a parade of viewers, Zolyom still can’t sell the 87-square-meter (936-square-foot) property, even though she has slashed the price by almost a fifth to 23 million forint ($104,000). “I thought it’d be sold in the blink of an eye,” the 47- year-old geography teacher said. “I can see now how naïve I was. It feels like a cruel joke by fate.”
Hungary’s residential real-estate industry ground to a halt after foreign-currency mortgages, which fueled a boom before they were banned in 2010, saddled homeowners with ballooning repayments when the forint sank to a record and prompted buyers to flee the market. The slump in demand forced home construction to fall last year to the lowest level since the government started collecting data in 1930 as Hungarian banks booked hundreds of billions of forint in losses.

EU’s Rehn Expects Debt-Crisis Firewalls to Be Reinforced (Source: Bloomberg)
European Union Economic and Monetary Affairs Commissioner Olli Rehn said the region will toughen debt-crisis defenses to guard against future risks. “The key thing now is to conclude the comprehensive crisis response,” Rehn told reporters today in Saariselkae, Finland. Rehn said he trusts that euro-area finance ministers “will take a convincing decision on the reinforcement of the firewalls” next week. Europe has so far set aside a total of 500 billion euros ($663 billion) for crisis-busting measures in two war chests. The temporary rescue fund, the European Financial Stability Facility, has disbursed 192 billion euros in three bailouts. Under the current rules, the unused funds would be passed on to the permanent fund, the European Stability Mechanism.
Policy makers are discussing how to add to the funds. Under the least-ambitious option, the ESM would be allowed to start afresh with its entire half-trillion euro capacity available for future use, a euro-area official said on March 16. The EFSF would continue to administer the programs in progress while its unused capacity would no longer be available. That would bring the total crisis backstop to 692 billion euros.

Central Bankers Debate Best Criteria for Setting Interest Rates (Source: Bloomberg)
Central bankers at a Federal Reserve conference in Washington rekindled a debate over the best criteria for altering interest rates, pitting simple rules against complex models that estimate growth and inflation. Lars Svensson, a deputy governor for Sweden’s central bank, said policy makers when setting interest rates should learn from an array of models and indicators and monitor an economy’s changing structure, while pursuing specified goals such as inflation. European Central Bank governing council member Athanasios Orphanides argued for using a price rule when setting interest rates because of the inaccuracy of estimating the gap between real and potential economic growth. Orphanides noted large errors in forecasting the euro area’s potential growth rate in recent years. “In the euro area, the whole history” of output gap forecasting “has not been very encouraging,” he said.
While persisting for decades, the debate among policy makers over whether to follow basic rules or more flexible approaches has taken on increased urgency as they try to sustain post-crisis economic growth.

Euro Leaders Need to Step Up Austerity, Finland’s PM Says (Source: Bloomberg)
European policy makers can’t rely on the central bank to manage the region’s crisis and must now follow with measures to cut debt and restore economic confidence, Finland’s Prime Minister Jyrki Katainen said. “Crisis management can’t be outsourced to the central bank,” Katainen said in an interview in Saariselkae, Finland. “Member states have a couple of years to take austerity measures to restore and strengthen credibility for when the operations end.” The European Central Bank’s 1 trillion euros ($1.3 trillion) of three-year loans to lenders since December were “extremely necessary and successful,” helping avoid an acute crisis and buying time for fiscal changes, he said. The Frankfurt-based ECB’s actions have helped ease pressure on bond yields of peripheral countries as the debt crisis has entered its third year following bailouts of Greece, Ireland and Portugal. The central bank kept its benchmark interest rate at a record-low of 1 percent on March 8.

Europe Must Use Calm on Markets to Do Reforms, Asmussen Says (Source: Bloomberg)
European Central Bank council member Joerg Asmussen said the region’s governments must make use of the calm period in the markets created by the central bank’s three-year loans. “All countries of the euro zone have to do their homework,” Asmussen told reporters in Saariselkae, Finland, 1,100 kilometers (684 miles) north of Helsinki. They have to “do structural reforms, create jobs. This is true for all countries.” The Frankfurt-based ECB has lent banks 1 trillion euros ($1.3 trillion) for three years in two operations since December, easing pressure on bond yields of peripheral countries. The bank kept its benchmark interest rate at a record-low of 1 percent on March 8. ECB’s actions buy time for governments to balance budgets, reform economies and create jobs to boost economic growth.
The ECB “has done its part, the governments must do theirs,” Erkki Liikanen, who heads the Bank of Finland and sits on the ECB’s governing council, said in an interview on March 15. The 17-nation euro economy will contract 0.1 percent this year and grow 1.1 percent in 2013, the central bank forecast on March 8.

Monti Signals Spanish Euro Risk as EU to Bolster Firewall (Source: Bloomberg)
Italy’s Prime Minister Mario Monti warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region’s financial firewall. Monti pointed to Spain’s struggle to control its finances ahead of a finance ministers meeting in Copenhagen starting on March 30, where officials will seek agreement to raise a 500 billion-euro ($664 billion) ceiling on bailout funding. “It doesn’t take much to recreate risks of contagion,” Monti said during the weekend at a conference in Cernobbio, Italy. Days after his Cabinet approved a bill to overhaul Italy’s labor laws, Monti praised Spain’s efforts to loosen work regulations while advising it to focus on cutting the national budget. Spain “hasn’t paid enough attention to its public accounts,” he said.
The euro crisis has eased after the European Central Bank last month boosted liquidity through three-year loans to banks, while European Union leaders this month sealed a second Greek bailout package. Still, signs of a deepening economic recession in the region and struggles to meet austerity goals have kept decision makers on alert, underscored by rising Spanish and Italian yields.

Australian, N.Z. Dollars Maintain Gains on U.S. Outlook (Source: Bloomberg)
The Australian and New Zealand dollars advanced against the yen before U.S. data that may show consumer confidence held near a one-year high, buoying demand for assets linked to growth. Both South Pacific currencies climbed this year as shares and commodities rose on signs of economic improvement in the U.S. and as concern eased that Europe’s debt crisis would damp global growth. New Zealand’s dollar maintained a gain versus the U.S. currency from the end of last week after data showed the smaller nation posted a bigger-than-estimated trade surplus. “U.S. economic indicators are good,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides currency margin-trading services. “What’s supporting the Australian and New Zealand dollars are commodity prices that remain elevated.”
Australia’s dollar, known as the Aussie, climbed 0.4 percent to 86.52 yen as of 12:12 p.m. in Sydney and was little changed at $1.0464. The New Zealand dollar advanced 0.2 percent to 67.52 yen. It bought 81.66 U.S. cents after rising 1.1 percent to 81.82 on March 23. The Aussie has advanced 2.5 percent this year against the greenback, while the New Zealand dollar has gained 5.1 percent. The Standard & Poor’s GSCI Total Return Index for commodities has risen 8.1 percent during the period, while the MSCI All Country World Index (MXWD) of stocks has climbed 11 percent.

20120326 1016 Global Commodities Related News.

USDA Sees Food Inflation At 2.5%-3.5% In 2012 (Source: CME)
Federal forecasters left the outlook for U.S. food-price inflation unchanged at 2.5% to 3.5% in a monthly update. The U.S. Department of Agriculture continues to see a slight moderating of food inflation this year after a 3.7% jump in 2011. Food prices have averaged an annual increase of about 2.8% since 1990, according to the agency. Driving the recent gains in food prices has been a nearly two-year surge in crop prices as world demand climbs and harvests fall short of expectations. The USDA continues to see prices for meats, poultry and fish outpacing overall food inflation, forecasting a 3.5% to 4.5% increase this year. The only category federal forecasters changed from a month ago was what's known as other foods. It lifted the forecast range to 3% to 4% from 2% to 3%. Other food includes a variety of mostly processed items such as soups, baby food and frozen prepared foods.
Rising commodity prices tend to trickle down to such items last because of their long shelf life and the time it takes for them to move from raw materials on the farm to finished products in the grocery store, the agency said.

Corn (Source: CME)
US corn futures closed higher, fueled by speculative buying tied to a weaker U.S. dollar and spillover support from strong gains in soybean futures. Corn is rebounding from losses from earlier in the week, as traders even positions ahead of next week's closely watched prospective planting and stocks report from USDA, analysts say. The absence of fresh news to direct prices kept traders focused on movement in soybean futures. Corn can't afford to become a less attractive planting option economically compared to soybeans amid the need to rebuild depleted U.S. corn supplies next year. CBOT May corn ended up 2c at $6.46 1/2/bushel.

Wheat (Source: CME)
US wheat futures ended higher, with CBOT wheat settling at a one-week high. Speculative short covering ahead of the weekend and next week's key government crop reports encouraged traders to reduce risk exposure in the market, analysts say. Spring wheat futures garnered additional support from concerns farmer may opt to plant corn at the expense of wheat in the Northern Plains, analysts say. Otherwise, US dollar weakness provided general strength in commodity markets. CBOT May wheat ended up 8c at $6.54 1/4/bushel; May MGEX wheat finished up 10 1/4c to $8.17 1/4; and May KCBT wheat ended up 10 1/2c at $6.94 1/2.

Rice (Source: CME)
US rice futures closed higher, supported by broad strength in commodities, with crude oil and wheat and corn futures all up. CBOT May rice ends up 19 1/2c or 1.4% at $14.60 a hundredweight.

GRAINS-Soybeans edge back; wheat, corn extend gains
NEW DELHI, March 23 (Reuters) - Chicago grains rose with soybean prices fuelled by the prospect of drought in leading producers Brazil and Argentina, while wheat and corn benefited from robust export numbers
"Traders see a good deal of buying opportunity in soybean as prices dropped last night and that is the reason for soy to edge up," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne.

Ukraine to harvest at least 45 mln T grain in 2012
KIEV, March 23 (Reuters) - Ukraine is likely to harvest no less than 45 million tonnes of grain in 2012 despite the poor weather which has damaged about a third of winter grain crops, the First Deputy Prime Minister Valery Khoroshkovsky said on Friday.
"Agricultural producers do not forecast a significant decrease in the grain harvest which could total 45 to 50 million tonnes this year," Khoroshkovsky told parliament.

Warmest March ever drives US farmers to plant early
CHICAGO, March 22 (Reuters) - Ethan Cox is sowing corn on his 5,000-acre Illinois farm earlier than ever this year, betting that the premium he may collect for delivering an early crop is worth the risk of a damaging late-spring frost.
Lured into the fields by what is so far the warmest March since records began in 1871, Cox is toiling alongside dozens of farmers across the Midwest who have begun seeding what may be a record crop weeks earlier than usual, according to agronomists, farm managers and analysts who keep close tabs on farm activity.

S.Africa maize output f'cast seen cut to 11.3 mln T
JOHANNESBURG, March 23 (Reuters) - South Africa is likely to lower its maize output forecast for the 2011/12 season as late-season drought hits some parts of the country, a Reuters survey showed on Friday.
The Crop Estimates Committee's (CEC) second survey of output may show that South Africa would harvest 11.3 million tonnes from 11.7 million tonnes in the previous government forecast, according to an average estimate
of seven trading houses polled by Reuters.

Argentine grains truckers agree to lift strike
BUENOS AIRES, March 22 (Reuters) - Argentine grain truckers have reached a deal to end a four-day-old strike over hauling rates that had delayed deliveries to export ports, a spokeswoman for the drivers said.    
The FETRA group of trucking companies began the protest on Monday to press demands for a unified hauling tariff system, sharply reducing truck arrivals at terminals in the Rosario grains export hub.

Argentina sees 2011/12 corn crop at 21.2 mln T
BUENOS AIRES, March 22 (Reuters) - Argentina expects this season's corn crop to total 21.2 million tonnes versus its previous official estimate of 20.5 million to 22.0 million tonnes, the Agriculture Ministry said on Thursday.
The ministry, in its monthly crop report, also changed its 2011/12 soy harvest forecast to 44 million tonnes from a previous range of 43.5 million to 45.0 million tonnes.

Russia 2011/12 grain export may exceed 27 mln t
MOSCOW, March 22 (Reuters) -  Russian grain exports could exceed official estimates of 27 million tonnes in 2011/12 as ports thaw and return to normal operations, new export outlets emerge, state stocks are sold and demand from Iran continues, SovEcon agricultural analysts said.
"Despite a noticeable export decline in January and February, total export of cereals, including flour, rice and legumes, reached 21.4 million tonnes from July to February, or 23.2 million tonnes, including an estimate for March," SovEcon said on Thursday.

EU clears 440,000 tonnes wheat exports this week
PARIS, March 22 (Reuters) - The European Union this week granted export licences for 440,000 tonnes of soft wheat, taking the total since the beginning of the 2011/12 (July-June) season to 10.3 million tonnes, official data showed on Thursday.
This was the highest volume of weekly export licences granted by the EU since mid-November.


Singapore Eyes Rice Futures Trading (Source: CME)
Singapore is exploring the feasibility of hosting international futures trading in rice as part of efforts to control price volatility across Southeast Asia, government and industry officials said. The viability of establishing a regional rice futures exchange in Singapore or launching rice futures through one of the existing exchanges is being examined, and Nanyang Technological University has been asked to conduct due diligence and solicit the views of various stakeholders, one of the government officials said. The initiative involves Singapore's National Policy Coordination Secretariat, the Ministry of Trade and Industry and the state-run International Enterprise Singapore. Experts from the government and private sector met Thursday and Friday at Nanyang Technological University to discuss the proposal.
Rice, the staple diet of billions of people, is a politically sensitive commodity. Record-high prices of more than $1,000 a metric ton reached in 2008 have led to a range of proposals intended to control price volatility, including creating regional buffer stocks and lowering trade barriers. The latest government-linked initiative reflects the importance of rice in official circles. Usually, bourses directly make a business decision to start futures trading in a commodity, subject to regulatory approval of authorities. Singapore is politically neutral and a major regional trading hub, so it is ideally suited to put a rice derivatives platform in place, a participant at the meeting said. However, most participants said establishing an international rice futures trading platform in Singapore would be a challenge because global trade in rice is relatively small while intervention of governments in pricing, import levels and tariffs is heavy and widespread.
Most rice is consumed where it is produced. Globally traded rice totals barely 30 million tons compared with 95 million tons in corn and 135 million tons in wheat, and the market structure is fragmented, said Mohammed Ismet, a Jakarta-based agricultural economist and former adviser to Indonesia's state-run procurement agency, Bulog. In addition, the number of grades and varieties makes it difficult to set a common standard for trading purposes, he noted. However, some analysts say such fragmentation and multiple grades is true of all agricultural commodities, and that futures trading in rice hasn't taken off in Asia because of massive government intervention. Government price intervention and a lack of liquidity are responsible for the low volume of trade in Thai rice futures, said Korbsook Iamsuri, president of Thai Rice Futures Association.

Strike Hits Argentine Grain Transport (Source: CME)
Not a single grain truck made it to the port complexes lining the Parana river, the hub for Argentine grain exports, on Thursday as a truckers' strike dragged on through it's third day, according to the Rosario Grain Exchange. Representatives with the transport union Fetra have been in talks with grain exporters and labor ministry officials, but little progress has been made in a dispute over minimum transport fees. "The indefinite [strike] measures continue," Fetra said in a statement Thursday. Earlier this week, Argentina's grain exchanges, exporters and farm groups asked for the government to step in to mediate the dispute. The Fetra strike is the latest in a series of union walkouts coinciding with the start of the corn and soybean harvests, when exporters face heavy pressure to reach a quick deal to get boats loaded. Argentina is the world's second-largest corn exporter, leads soymeal and soyoil exports, and ranks third in soybean shipments.
Exports are dominated by many of the leading international grain brokers, including Louis Dreyfus SA, Noble Argentina, Nidera, Vicentin, and the local units of Bunge Ltd. (BG) and Cargill Inc. Work stoppages are common this time of year but Argentina's grain exporters are gearing up for a particularly tense strike season this year as workers press for steep pay raises at a time of double-digit inflation. Economists have said those wage increases are the product of inflation most private-sector forecasters estimate at between 20% and 25%. While those strikes will delay many shipments and add costs, the overall impact on international markets is expected to be limited. Analysts have said a walkout would have to extend three weeks before grain importers shift buying to other markets like the U.S., where corn and soybeans are trading at a premium to South American grains.

China Corn Deficit Seen Worsening (Source: CME)
China's corn deficit may rise in coming years because of a swift increase in demand for corn used for processing, state-run Xinhua news agency reported Thursday, quoting a senior cabinet analyst. Cheng Guoqiang, the deputy director of the executive office of the State Council Development Research Center, the cabinet's think tank, was cited as saying that the balance of supply and demand of corn in China appeared to be reaching a tipping point, with demand now outpacing supply. Domestic corn-processing demand has risen 40% from 2008 to 45 million-50 million metric tons annually, he said, speaking at a conference. Even with a record harvests, China could see a supply deficit because of the swift rise of processing demand, he said at the Bo'ao Forum for Asia. Cheng said China imported about 5 million tons of corn in 2011, and he projected the figure to rise in 2012. The 2011 figure may include bookings that have not yet been delivered to China, according to Dow Jones Newswires' assessment of customs data.
Other local media reports said Cheng projected that by 2020 China may see a corn deficit of around 20 million tons annually.

Japanese Rice Growers Test Soil (Source: CME)
Japanese rice growers in north-eastern prefectures are testing soil for radiation levels before they embark on their 2012 plantings and preliminary indications are that production will be little changed on year at 7.7 million metric tons, industry officials said. Japan was hit by a devastating earthquake and tsunami in March last year that damaged the nuclear reactor in Fukushima and raised radioactive levels in the vicinity. Detailed testing of soil is being carried out, and in those fields where radiation levels are above normal, planting won't take place this year, General Manager of Tokyo Grain Exchange, Masahiro Yamashita, said on the sidelines of a meeting of rice experts here at the Nanyang Technological University. Last year, the Japanese government restricted the planting of rice in soil with more than 5,000 becquerels per kilogram of cesium.
Around 200,000 tons of rice was lost last year, mostly in north-eastern Japan due to lower plantings, damage to warehouses, or the inability to sell grain with high radiation levels, Yamashita said. Fukushima's rice production in milled terms fell to around 365,000 tons last year from an average of 420,000 tons and at least another 10% was unfit for consumption due to high radiation levels, President of Continental Rice Corp., Nobuyuki Chino, said. Rice plantings will take place in some areas such as Hokkaido in April but in the north-eastern prefectures it is mostly during mid-May to early-June period, Chino said. The quake and tsunami affected mainly the Aomori, Iwate, Miyagi and Fukishima prefectures which together account for about 17%-18% of Japan's annual rice production but timely plantings ensured that the harvest wasn't significantly affected, though many areas were also hit by saline ocean water.
Even though the country is self-sufficient in rice production and Japanese consumers have a very clear preference for domestically produced, higher quality rice, the government is required to import 770,000 tons of rice a year to meet various market access commitments under its international trade obligations. But the government rarely releases imported rice into the market as this can depress prices and drive high-cost domestic farmers out of business, Chino said. Imported rice is periodically sold off as animal feed to make room for fresh imports. When a global supply shortage pushed up international prices in 2008, the Japanese government was able to re-export some of the imported at a profit. Japanese rice prices are fixed through monthly or quarterly agreements between agricultural cooperatives and local wholesalers. Some supermarkets and retailers also have direct tie-ups with the cooperatives.
However, Chino said the re-launch of rice futures in Japan after more than 70 years in 2011 has created an alternative pricing tool and many growers are tracking the prices on Tokyo Grain Exchange Inc. The rice futures is yet to take off in a big way but open interest at one point did rise above 5,000 contracts and is currently around 3,000 contracts, Yamashita said. Around 500 contracts are traded daily but volume may pick up when the new crop is harvested later this year, he said.

Soybeans, Corn Climb as Smaller Argentina Crops Boost U.S. Sales (Source: Bloomberg)
Soybeans and corn rebounded from one-week lows on speculation that declining production in Argentina will boost demand for U.S. exports. Soybean output in Argentina, the world’s largest shipper of cooking oil and animal feed made from the oilseed, will fall to 44 million metric tons this year, down from 49 million collected in 2011 and 46.5 million estimated by the U.S. government this month, the Agriculture Ministry said yesterday. The corn harvest may fall to 21 million from 22.5 million last year. “Smaller crops in Argentina mean global supplies are getting tight, and that could boost overseas purchases from the U.S.,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview.
Soybean futures for May delivery advanced 1.2 percent to close at $13.6575 a bushel at 1:15 p.m. on the Chicago Board of Trade, after prices yesterday touched $13.385, the lowest since March 13. Still, the oilseed fell 0.6 percent this week, snapping five straight weekly gains.

India sugar seen going to Iran if exports approved
GENEVA, March 22 (Reuters) - Indian raw sugar from a possible fresh tranche of exports, which could be authorised by ministers next week, is likely to be destined for sanctions-hit Iran, European trade sources said.
The sources said a significant portion of so-called Open General Licence (OGL) sugar exports, which could be approved at a ministerial meeting in India on March 26, may be sold to Iran.

Water scarcity to cut key Indian state's sugar output
MUMBAI, March 22 (Reuters) - India's top sugar producing Maharashtra state is likely to see a nearly 17 percent drop in output in the next marketing year beginning from October as water scarcity is deterring farmers from cane cultivation, state government officials told Reuters.
Lower output in the state will trim the world's top consumer's total production and subsequently surplus available for exports in 2012/13.

Indonesia sugar price hits 14-month peak on import uncertainty
JAKARTA, March 22 (Reuters) - Domestic sugar prices in Indonesia, Southeast Asia's largest consumer, approached their highest levels in more than a year this week on uncertainty over when a government-appointed trading house would start importing the sweetener.
The average retailer's daily white sugar price was 11,099 rupiah ($1.21) per kg on Tuesday, up from 11,024 rupiah the previous day and not far from the 11,178 rupiah touched last January, Indonesian trade ministry data showed late on Wednesday.  

Arabica Coffee Will Rebound on Tighter Supplies, Illy Says (Source: Bloomberg)
Arabica-coffee futures may rebound to as high as $2 a pound by year-end as global stockpiles tighten, world demand remains firm and climate change keeps production trailing demand, according to Illycaffe SpA. “World inventories are still very low at producing and importing countries,” Andrea Illy, chief executive officer of the Trieste, Italy-based specialty coffee company, said in an interview during the National Coffee Association’s annual conference in Charleston, South Carolina. Next year’s Brazilian crop, the world’s largest, will enter the low-cycle of the biennial harvest, reducing the small surplus left by the bigger production this year, Illy said. In addition, Colombia’s output, the second biggest grower of the arabica beans, has not recovered from weather-induced losses seen in the last three years, which may leave global stockpiles in a tight situation, as demand remains resilient, he said.
Climate changes have been disrupting global coffee production, as was the case in Colombia and parts of Central America in the last couple of years, Illy said during a presentation.

Wilmar sees world sugar surplus until 2013/14
SINGAPORE, March 22 (Reuters) - The world's sugar market is likely to continue in surplus until at least 2013/14, leading agricultural commodities firm Wilmar International  said on Thursday, signalling a likely collapse in prices.
"If we enter into this type of big surplus cycle, the sugar market price will have to reach a point where production will be reduced," Wilmar managing director Jean-Luc Bohbot told Reuters in an interview.

Oil Trades Near Two-Day High on Economic Strength Signals (Source: Bloomberg)
Oil traded near the highest level in two days in New York before data this week that may show a strengthening U.S. economy, signaling rising fuel demand in the world’s biggest crude-consuming nation. Futures were little changed after climbing 1.4 percent on March 23. Manufacturers in the U.S. probably received more orders for durable goods in February and consumer purchases climbed the most in five months, economists said data this week will show. West Texas Intermediate crude prices have climbed this year on concern that tension with Iran may lead to military conflict in the Middle East, where more than half the world’s oil reserves are located.
“We’ve priced-in the major supply and demand issues and really in terms of West Texas it’s going to take a fair bit to break us out of that $103.50 to $108.50 a barrel range,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “The swing factor here is the U.S. economy and for that reason I expect, when or if we do see a break, it’s likely to be on the topside.” Oil for May delivery was at $106.66 a barrel, down 21 cents, in electronic trading on the New York Mercantile Exchange at 11:15 a.m. Sydney time. It rose $1.52 to $106.87 on March 23, the highest close since March 21. Prices slid 0.2 percent last week and are 7.9 percent higher this year.

Oil Rises Almost $3 a Barrel on Iran Report (Source: Bloomberg)
Oil climbed after Reuters reported Iranian oil exports will drop by 300,000 barrels a day this month because of tighter sanctions. Futures gained 1.4 percent on the New York Mercantile Exchange after earlier spiking more than 2 percent in three minutes, following the report, which cited Petrologistics, a Geneva-based consulting company. Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, said the gain may have triggered traders’ automatic buy orders. “The Reuters item came out at the same time we spiked,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. “It doesn’t look like much, but it’s a reminder that the tensions will probably only increase. If there is a cutoff of Iranian oil, the Saudis will have a hard time making up for the lost supply.”
Crude oil for May delivery rose $1.52 to settle at $106.87 a barrel on the Nymex. It touched $108.25 a barrel, the highest intraday price since March 2. Futures dropped 19 cents this week and are up 8.1 percent this year.

India govt moves to quell $211 bln coal furore
NEW DELHI, March 22 (Reuters) - India lost up to $211 billion in revenue by selling coalfields too cheaply, a government auditor's draft report said, sparking a furore in parliament on Thursday that added to pressure on the prime minister after months of scandals and policy missteps.
The prime minister's office called the estimated loss "exceedingly misleading," after the report - leaked from the federal auditor and published in the Times of India - prompted lawmakers to demand an explanation and rattled investors.

Euro Coal-Prices stable, few trades seen
LONDON, March 22 (Reuters) - Prices of prompt physical coal were range-bound for a fourth day, with bids and offers too far apart for much to trade.
A May loading South African cargo traded early in the afternoon at $103.00, but the market still lacks clear enough direction for more players to take fresh positions.

Asia takes 78 pct of S.Africa's Feb coal
LONDON, March 22 (Reuters) - Asia's share of South Africa's coal exports rose to 78 percent or 4.7 million tonnes in February out of a total of 6 million, up from 61 percent in the previous month, exporters said.
Asia, including India, has taken an increasing proportion of South Africa's coal during the past few years and despite the substantial rise in monthly export tonnages seen since last June, while Europe's share has been shrinking.

China may miss new target to cut coal output growth
BEIJING/SHANGHAI, March 22 (Reuters) - China plans to slow annual growth in coal output to about 2 percent over the next four years from around 10 percent to conserve resources and protect the environment, but analysts said rising demand will make reaching that target difficult.
The government has set targets of overall production capacity of 4.1 billion tonnes and annual output of 3.9 billion tonnes by 2015, up 11 percent from the 3.52 billion tonnes dug last year, according to a plan issued by the National Development and Reform Commission (NDRC).

Indonesia govt keeps coal output forecast at 332 mln T in 2012
JAKARTA, March 22 (Reuters) - Indonesia's coal production will rise 1.5 percent to 332 million tonnes this year, unchanged from a previous forecast, Thamrin Sihite, the director general of coal and minerals, said on Thursday.
Indonesia, the world's largest exporter of thermal coal, produced 326.7 million tonnes last year, according to government data.

Brent holds above $123, supply worries support
SINGAPORE, March 23 (Reuters) - Brent was steady above $123 a barrel, as the possibility of supply disruptions put a floor under a market that fell sharply in the previous session on weak manufacturing activity in China.
"The Iran situation has a long way to run and that will keep the market tight and support crude oil," said Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo. "The market had fallen enough yesterday and trading will be locked in a range for now."

India min: "systematic" plan for Iranian oil imports
NEW DELHI, March 23 (Reuters) - India will continue to import oil from Iran without violating any international law and has requested the United States and the European Union to take into account the country's oil needs, India's oil minister said on Friday.
"We have a systematic plan for receiving oil from Iran," Jaipal Reddy told reporters at the Asia Gas Partnership Summit, but did not elaborate.
 
Sri Lanka to buy Oman crude, reduce reliance on Iran
COLOMBO, March 23 (Reuters) - Sri Lanka has signed a deal to buy crude from Oman, as it looks to reduce its reliance on Iran for oil after pressure from the United States.
Sri Lanka, despite being a small player in the world crude market, is one of the 12 countries listed that buy Iranian oil and could be subject to U.S. sanctions unless they significantly cut purchases, a U.S. State Department official said on Wednesday.

IEA sees no disruption in global oil supplies
NEW DELHI, March 23 (Reuters) - The Iran dispute is unlikely to disrupt global oil supplies and there is no need to release oil from the strategic storage as of now, a senior official at the International Energy Agency (IEA)  said on Friday.
Maria van der Hoeven, executive director at the IEA, is attending the Asia Gas Partnership Summit in the Indian capital.

EU agrees some Iran oil insurance exemptions
BRUSSELS, March 22 (Reuters) - The European Union will allow some insurance on Iranian oil shipments before its full embargo starts on July 1, member states agreed on Thursday, responding to concerns from Asian importers heavily reliant on the EU for their cover.
The decision, expected to be formally approved by EU foreign ministers on Friday, should make it easier for the likes of Japan and South Korea to import Iranian crude at least until the deadline, EU diplomats said.

Malaysia to halt Iranian oil imports from April -sources
KUALA LUMPUR/SINGAPORE, March 23 (Reuters) - Malaysia's state oil firm Petronas will halt all imports of Iranian crude from April, two months before a U.S. embargo takes effect, joining a growing list of buyers bowing to Western pressure to isolate Iran, Petronas sources said on Friday.
China, India, Japan and South Korea are the four biggest buyers of Iranian crude in Asia and all are cutting imports. Iran sells most of its 2.6 million barrels per day (bpd) of exports in the region.

Global oil outages at 1.2 mln bpd in March-survey
LONDON, March 23 (Reuters) -     Global oil supply outages are running at more than a million barrels a day, a Reuters survey has found, helping provide justification for the United States and Britain should they release strategic reserves in a bid to cut oil prices.
Civil unrest, adverse weather and technical glitches disrupted 1.2 million barrels per day (bpd) of global oil output in March on the 90 million bpd world market, according to a Reuters calculation from information provided by companies, government agencies and traders.

No hard landing for the iron ore market
--Andy Home is a Reuters market analyst. The views expressed are his own.--
LONDON, Mar 22 (Reuters) - When BHP Billiton   speaks the whole world listens.Ian Ashby, president of the resource giant's iron ore division, said on Tuesday that China's "steel growth rates will flatten and they have already flattened."
Markets immediately swooned, from Asian equities to the Aussie dollar  to industrial touchstone copper

Iron Ore-Shanghai rebar falls on weak demand concerns
SHANGHAI, March 23 (Reuters) - China's benchmark steel futures slipped on Friday on lingering concerns about sluggish demand growth in the world's top steel consumer, but prices for iron ore remained firm as traders expect high steel output to support demand for the raw material.
"Demand for construction steel products will apparently improve in the second quarter from the previous period as more construction projects resume operations along with warmer weather," Xie Zhaowei, analyst with Huatai Great Wall Futures, said in a research note.

Steel price hikes set to boost Voestalpine-CEO
VIENNA, March 22 (Reuters) - Austrian steel group Voestalpine  expects results to improve from April as it benefits from price hikes and solid demand, Chief Executive Wolfgang Eder told Reuters.
He also forecast business conditions would gradually improve over the course of the year as confidence slowly returns that the worst of the sovereign debt and banking crises are over.

Australia lifts iron ore exports forecast, bets on China demand
PERTH/SYDNEY, March 21 (Reuters) - Australia expects to produce record tonnages of iron ore through much of the decade, nearly all of which will be used to manufacture steel in China, shrugging off signs demand was cooling off and that prices would drop.    
Australia raised its forecast on Wednesday for iron ore exports in the current fiscal year by nearly 3 percent to 473 million tonnes, and also sounded a bullish note on the outlook for shipments in the longer term.

Copper Bear Streak Extends as Manufacturing Shrinks (Source: Bloomberg)
Copper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe. Twelve of 29 analysts surveyed by Bloomberg expect the metal to decline next week and seven were neutral. Inventories at bonded warehouses in Shanghai more than doubled since the fourth quarter, a survey of seven traders and analysts showed. Separate stockpiles monitored by the Shanghai Futures Exchange are near the highest in at least nine years, bourse data show. China consumes 40 percent of the world’s copper. Factory output in Germany and France unexpectedly shrank in March, adding to signs Europe is sliding into recession, and a measure of China’s manufacturing fell to the weakest since November, reports showed yesterday. Chinese Premier Wen Jiabao cut the country’s annual growth target to 7.5 percent earlier this month, the lowest since 2004. Europe accounts for about 18 percent of global copper demand, Barclays Capital data show.
“A slowdown in Europe and China is not good for the long- term outlook,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “It feels that we could repeat 2011, where we had a good first half and then there was a correction.”

Spot Gold, Futures Advance After Weekly Gain; Silver Climbs (Source: Bloomberg)
Gold for immediate delivery gained 0.2 percent to $1,665.75 an ounce at 9:09 a.m. Melbourne time, while bullion for April delivery in New York advanced 0.2 percent to $1,665.60 an ounce. Futures advanced the most in four weeks on March 23 on speculation that investors will buy more bullion as an alternative to the slumping dollar. Silver for May delivery rose 0.2 percent to $32.335 an ounce.

Smaller vessels prop up Baltic sea index
March 22 (Reuters) - The Baltic Exchange's main sea freight index tracking rates for ships carrying dry commodities, rose on Thursday, a  s rates for smaller vessels edged up due to high fixture activity in both the Atlantic and Pacific basins.
The overall index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, climbed 6 points or 0.67 percent to 902 points.

Asia Dry Bulk-Rates to fall on weak iron ore demand
SINGAPORE, March 22 (Reuters) - Rates for capesize dry bulk carriers on key Asian freight routes are expected to fall next week because of slower Australian iron ore shipments to China, ship brokers said on Thursday.
"The Pacific has remained largely inactive with the exception of one miner covering a couple of positions and managing to bring the market down in the process," said broker Fearnleys.

Baltic sea index rises on Atlantic activity
March 21 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose for the 20th straight day on Wednesday as demand in the Atlantic basin pushed up rates of smaller vessels.
"The overall dry bulk market has continued to improve slowly, feeding off a much improving Atlantic basin," George Lazaridis of Intermodal Shipbrokers Co said.

20120326 1015 Soy Oil & Palm Oil Related News.

ITS CPO export up 7.7% to 1,068,774 tonnes for the period of 1~25 Mar 2012.
SGS CPO export up 6.6% to 1,055,071 tonnes for the period of 1~25 Mar 2012.


Palm Gains to 10-Month High as Malaysian Exports Climb on Demand
2012-03-26 04:21:17.230 GMT
By Swansy Afonso
March 26 (Bloomberg) -- Palm oil climbed for a second day to the highest level in almost 10 months as rising exports from Malaysia, the second-largest producer, signaled increased demand among importers.
The June-delivery contract gained as much as 0.9 percent to 3,457 a metric ton on the Malaysia Derivatives Exchange, the highest level since June 3, and traded at 3,453 ringgit at 12:19 a.m. in Kuala Lumpur. Futures gained 0.8 percent last week.
Exports from Malaysia advanced 7.7 percent to 1.07 million tons in the first 25 days of March from the same period in February, surveyor Intertek said.
“Exports were expected to increase this month because of some bulk buying from Thailand, which is not a regular buyer,” Aurobinda Prasad, research head at Karvy Comtrade Ltd., said by phone from the India city of Hyderabad. “Chinese demand will continue to remain higher.”
Imports by China, the world’s largest vegetable oil buyer, may rise to 6.7 million tons in 2011-2012 from 6 million tons a year earlier, Thomas Mielke, executive director of Oil World, said at a forum in Beijing today.
Futures may climb to 4,000 ringgit in the next two to three months as production will fall in Malaysia, Prasad said. Output, which reached a record in 2011, may drop each month from March on a year-on-year basis, Dorab Mistry, a director at Godrej International Ltd., said March 7.
Soybeans for May delivery rose 0.6 percent to $13.735 a bushel on the Chicago Board of Trade. Soybean oil advanced 0.3 percent to 55.06 cents a pound.
Palm oil for delivery in September gained 1.3 percent to 8,752 yuan ($1,388) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month climbed 0.7 percent to 9,724 yuan a ton.


Soybeans (Source: CME)
US soybean futures finished higher, boosted by concerns about possible low US plantings and tighter supplies than expected. Those risks are being priced in ahead of USDA acreage and inventory reports due next Friday. Support also comes from hopes for more Chinese demand and expectations for a smaller South American soy crop. CBOT May soybeans end up 16 1/4c at $13.65 3/4 a bushel.

Soybean Meal/Oil (Source: CME)
May soymeal rose $2.90 to $373/short ton, and May soyoil ends up 0.92c to 54.88 cents/lb.

VEGOILS-Palm oil rebounds on upbeat demand prospects
SINGAPORE, March 23 (Reuters) - Malaysian palm oil futures edged up, as an upbeat demand outlook for the edible oil supported prices, although investor optimism was somewhat capped by fears of a slowdown in global growth and commodity demand.
"Exports should be better than last month, and that should hold the market above 3,300 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.

Palm Oil Advances, Paring a Weekly Drop, on Production Concern
2012-03-23 05:50:57.932 GMT
By Ranjeetha Pakiam
March 23 (Bloomberg) -- Palm oil gained, paring a weekly drop, on concern that output in the second-largest producer Malaysia will decline, and as South American soybean crops may be smaller than forecast.
The June-delivery contract advanced as much as 1 percent to end the morning session at 3,375 ringgit ($1,096) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Futures are poised for a 0.7 percent drop this week. Output dropped 7.9 percent to 1.19 million tons in February from a month earlier, while inventories held above 2 million tons for a sixth month, the Malaysian Palm Oil Board said March 12. Production, which reached a record in 2011, may drop each month from March on a year-on-year basis, Dorab Mistry, a director at Godrej International Ltd., said March 7. “Last year was a very good production year for Malaysia, so we feel that it has probably peaked out,” Kishore Narne, head of research at AnandRathi Commodities Ltd., said by phone from Mumbai. “Yields and oil content and production will be less,” leading to lower inventories, he said.
Palm oil was also tracking soybeans, with South American production set to be smaller than expected, according to Narne. Argentina’s output will be “slightly less than market expectations” due to drought, he said. Palm oil and soybean oil are substitutes in food and fuel uses. Argentina’s 2011-2012 crop will be 44 million tons, according to a report from the Agriculture Ministry yesterday. A previous forecast set the crop at as much as 45 million tons. Soybeans for May delivery rose 0.9 percent to $13.615 a bushel on the Chicago Board of Trade. Soybean oil rose 0.8 percent to 54.43 cents a pound. Palm oil for delivery in September gained 0.8 percent to 8,578 yuan ($1,361) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month climbed 0.7 percent to 9,594 yuan a ton.

Port of Rotterdam Authority (PRA) is banking on growing demand for biofuels in The Netherlands and Europe, as well as its state-of-the-art infrastructure, to attract Asian palm oil producers to set up or expand their facilities at the port. The company had recently visited several Asian palm oil producers in Malaysia, including the top three major palm oil producers in the country. The trip was to update the producers on the port's latest development and plans, as well as to see if they are keen for further investment. "So far, the response we got was very favourable. The producers agreed that biofuels will play an increasing role in the future and are prepared to further invest and expand when the need arises," said Joris Hurenkamp, business manager of PRA, in an interview recently. However, Hurenkamp said investments from this region may not flow in immediately. This is due partly to the current oversupply of biodiesel in the industry. (BT)

20120323 1823 FCPO EOD Daily Chart Study.

FCPO closed : 3426, changed : +84 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histrogram : turned upwards, buyer returned.
Support : 3420, 3380, 3350, 3300 level.
Resistance : 3450, 3470, 3500, 3550 level.
Comment :
FCPO closed rallied higher with ultra high volume participation. Soy oil price also rising higher after overnight closed declined lower while crude oil price currently rebounding higher after yesterday falls.
FCPO price surged upwards hitting 9 month high on upbeat demand prospect and lower production anticiaption after yesterday news on Indonesia official annoucement to raised export tax for the month of April and awaits Monday export data.
Chart analysis adjusted to suggesting an upside biased market development with MACD indicator having positive crossed up today.
When to buy : buy at support or weakness with larger cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.