Tuesday, August 9, 2011

20110809 1814 FCPO EOD Daily Chart Study.

FCPO closed : 2920, changed : -74 points, volume : lower.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histrogram : falling, seller taking position.
Support : 2930, 2900, 2850, 2800 level.
Resistance : 2970, 3020, 3050, 3070 level.
Comment :
FCPO closed recorded loss with lower volume transacted while overnight soy oil closed severely lower and currently continue to trade weaker.
Weak global sentiment especially U.S. and European economy triggered broad commodities to have massive sell down including crude oil (except gold) pressure palm oil price to trade lower. On the other hand, market awaits tomorrow export and official MPOB Jul 2011 data with anticipation of production to peak in July 2011.
Daily chart formed a down doji bar candle with long upper shadow positioned below lower Bollinger band level after market opened gap down, move side way, recover upwards closing the down gap and slide lower followed by last minute sell down to closed near the low of the day.
Technical reading turned to suggesting a downside biased market development with possible upward pullback correction support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with moderate cut loss and profit target.

20110809 1752 FKLI EOD Daily Chart Study.

FKLI closed : 1459.5, changed : -26 points, volume : higher.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histrogram : falling, seller in control.
Support : 1458, 1445, 1425, 1405 level.
Resistance : 1470, 1485, 1500, 1515 level.
Comment :
FKLI closed recorded huge losses for the thrid day with increasing volume changed hand doing 12.5 points discount compare to cash market that also closed significant lower.  Overnight U.S. market dive lower and Asia markets closed recorded losses again while European markets currently also trading in negative territory.
Global sentiment remained bearish and fear over U.S. economy recovery plus European Central Bank action on buying Italian, Spanish, Irish and Portuguese bonds to defuse crisis amids potential risk from the continental region.
Daily chart formed an big up doji bar candle closed below lower Bollinger band level after market opened gap severely lower, tested lower near support level and recovered upward closing the down gap before ease little lower to closed near the middle of the high low range.
Chart reading suggesting a downside biased market development with potential upward pullback correction testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with moderate cut loss and profit target.

20110809 1731 Regional Markets EOD Daily Chart Study.

DJIA chart reading :
downside biased with possible pullback correction.

Hang Seng chart reading : 
downside biased with possible pullback correction.

KLCI chart reading :
downside biased with possible pullback correction.

20110809 1547 Global Market & Commodities Related News.

Asia shares nosedive; gold scales another peak
SINGAPORE, Aug 9 (Reuters) - Stock markets plunged and the Swiss franc held near a record high as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.
"We have been cautious about the unfolding events in Europe for some time and are concerned about China slowing more than what is priced into the market," said Alex Hill, co-founder of Singapore-based hedge fund Tantallon Capital, which manages more than $300 million in assets.

GLOBAL MARKETS: Asia shares nosedive; gold scales another peak
SINGAPORE, Aug 9 (Reuters) - Asian stock markets nosedived on Tuesday and the Swiss franc held near a record high, as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.
"Market players are seeking emergency refuge and fleeing to safe assets," said a customer trader at a major Japanese bank in Tokyo. "In the money market, where there is heightened demand for dollars, dollar lenders are running away."

COMMODITIES: Gold hits peak, oil slumps on debt, growth fears
NEW YORK/LONDON, Aug 8 (Reuters) - Gold soared anew to an all-time high on Monday while riskier assets including oil, grains and copper dived, as investors feared the U.S. loss of its prized AAA credit rating could stall economic growth.
"You're going to see a very high correlation with risk assets because there's still a perception that commodities are cyclical and the only area that will perform differently is the gold space," said Pau Morilla-Giner, head of commodities and senior portfolio manager at London & Capital.

Soy at 4-1/2 month low, corn falls as recession fear spreads
SINGAPORE, Aug 9 (Reuters) - U.S. soy lost more ground, dropping to its lowest since mid-March, while corn fell to a one-week low and wheat hovered near a one-month low on fears of recession in the United States following a cut in the country's credit rating.
"Grain and oilseed markets are sharply lower on pressure from external markets," said Kazuhiko Saito, chief commodities analyst at Tokyo-based trading company Fujitomi.

Vietnam 2011 coffee exports to dip to 1.15 mln T -Vicofa
HANOI, Aug 9 (Reuters) - Vietnam, the world's second-largest coffee producer after Brazil, will export 1.15 million tonnes of coffee, or 19.17 million bags, in calendar 2011, a drop of 5.43 percent from last year, an industry group said on Tuesday.
The estimate, released after an industry meeting, is below a forecast by the Agriculture Ministry last week, when it revised down the country's coffee export projection this year by nearly 5 percent to 1.2 million tonnes, or 20 million bags.

Mexico July coffee exports jump, harvest ends lower
MEXICO CITY, Aug 8 (Reuters) - Mexico's coffee exports rose 37 percent in July compared with the same month last year as the 2010/11 harvest draws to a close with 4.1 million bags of production, Mexico's coffee officials said on Monday.
Mexico shipped 256,828 60-kg bags of coffee last month compared with 187,131 exported in July last year, the national coffee association said.

Ivorian cocoa arrivals seen 25 pct over last season
ABIDJAN, Aug 8 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast reached around 1,382,000 tonnes by August 7, some 25 percent ahead of the same period last season, exporters estimated on Monday.
The figure compared with 1,108,560 tonnes in the same period of the previous season. Exporters estimated around 15,000 tonnes of beans were delivered to the West African state's two ports between Aug. 1 to 7, up from 7,953 tonnes in the same week a year ago.

Russia harvests grain from 30 pct of sown area
MOSCOW, Aug 8 (Reuters) - Russia has so far harvested 39.8 million tonnes of grain by bunker weight as the campaign gained momentum in almost all grain-growing regions after a slow start caused by rains, Agriculture Ministry said on Monday.
Farmers harvested grain from 30 percent of the sown area by Aug. 8, the ministry said, without providing a comparison for the same date last year, when the country was hit by a severe drought and had to accelerate the harvesting campaign.

Brazil soy area seen growing 3 pct - Agroconsult
SAO PAULO, Aug 8 (Reuters) - Brazil's soybean area is expected to grow 3 percent next season as attractive prices push producers to expand planting in frontier areas, analysts Agroconsult said on Monday.
The analysts said the area planted to soybeans would reach 25 million hectares (61.8 million acres) in 2011/12, up from the 24.2 million hectares this season.

Brazil coffee frost damage seen light in places
BRASILIA, Aug 8 (Reuters) - Damage from a frost that swept over Brazil's southeastern coffee belt on Friday should be light in some of the areas hit in the south of Minas Gerais state, cooperative Minasul said Monday.
Agronomist Gustavo Renno from Minasul, which handles around 1 million bags or roughly 2 percent of Brazil's crop each year in the top coffee state Minas Gerais, said few of its members' plantations were affected by the freeze.

OIL: Oil slumps 5 pct, US downgrade stokes econ angst
NEW YORK, Aug 8 (Reuters) - Oil plunged 5 percent on Monday, crashing below technical support levels as the reduction of the top-tier U.S. credit rating hammered markets and stoked concerns of an economic slowdown.
"In the tumultuous aftermath of the U.S. downgrade from S&P, the world also is downgrading the oil market," said Phil Flynn, analyst at PFGBest Research in Chicago.

Brent dives to 6-mth low below $99, U.S. crude at $76
SINGAPORE, Aug 9 (Reuters) - Brent crude plunged to a six-month trough below $99 a barrel in a two-session drop of more than $10, after a U.S. credit downgrade intensified fears about a global slowdown in demand for energy, sending commodities markets tumbling.
"I'm surprised how far it has fallen in all markets, this is panic," said Jeremy Friesen, a commodity strategist at Societe Generale in Hong Kong.

NATURAL GAS: NYMEX - Natgas shrugs off oil slide, ends flat on tech buying
NEW YORK, Aug 8 (Reuters) - U.S. natural gas futures ended little changed on Monday, as more technical buying after last week's rout underpinned prices despite comfortable supplies, a steep slide in oil and moderating Northeast and Midwest weather this week that should slow demand.
"The market was short and technically oversold, but there's still some heat forecast for Texas and the South, and there's still the potential for a weather (storm) event," said Pax Saunders, analyst at Gelber & Associates in Houston.

EURO COAL: Prices soften on oil slide, turmoil
LONDON, Aug 8 (Reuters) - Prompt physical coal prices fell on Monday in light trade with the market tracking a more than 3 percent slide in oil due to growing financial turmoil.
"The whole thing has come off on other factors such as oil," said a trader in Europe. "It's certainly outside factors and not fundamental coal issues. It's fairly balanced."

LME copper bounces off lowest in more than 8 mths
SHANGHAI, Aug 9 (Reuters) - London copper hit an eight-month low as investors dumped riskier assets in a global rout triggered by fears political leaders are failing to tackle debt crises in the United States and Europe.
"Sentiment is still dampened by the U.S. credit downgrade and most risk assets are seeing a downtrend. But we are seeing some mid-morning paring of losses. We have to look to the U.S. and Europe to see if they have any measures to calm the markets," said Shanghai Dongzheng futures trader Du Xiao Hua.

Gold hits record for second day as investors dump stocks
SINGAPORE, Aug 9 (Reuters) - Bullion gained more than 2 percent, roaring to all-time highs for a second consecutive session to stand above $1,750 as equity markets dived on growing fears of a global recession following last week's U.S. credit downgrade.  
"Markets are now worried about another global recession. Out of Europe, French bond yields have widened on expectation of sovereign debt downgrade because of the country's exposure to peripheral European debt," said Natalie Robertson, a commodities strategist at ANZ.

20110809 1505 Global Economy Related News.

Singapore: Singapore narrows 2011 growth forecast range as global risks threaten Asia
Singapore reduced the top end of its growth forecast for 2011 as a faltering US economy and the European debt crisis heightened the risks to global expansion. The Southeast Asian nation’s gross domestic product will probably rise 5% to 6% this year, Prime Minister Lee Hsien Loong said in a televised message yesterday on the eve of the island’s National Day. The government previously predicted growth of as much as 7%. “Asia, led by China and India, is expected to continue growing but the global outlook remains uncertain,” Lee said. “Europe’s debt problems are far from solved despite the recent bailout of Greece by the European Union. The U.S. economy remains sluggish.” (Bloomberg)

China : China’s central bank raised its reference rate for the yuan by 0.23% to 6.4305 per dollar, the biggest gain since Nov. The currency is allowed to trade as much as 0.5% on either side of the daily fixing, which was set at the strongest level since a dollar peg ended in 2005. (Bloomberg)

China : China sold Japan’s medium- and long- term debt for the first time in nine months in Jun as the yen traded near a record high against the dollar and benchmark yields approached their lowest level since Nov. China sold a net JPY508.5bn (US$6.5bn) of the fixed-income securities in Jun, according to a statement released by Japan’s Ministry of Finance. China was a net seller of JPY8.4bn in short-term notes maturing in less than a year, data also showed. (Bloomberg)

Japan : Japanese bank lending fell 0.5% yoy in Jul (-0.6% in Jun), marking the 20th straight month of declines, the Bank of Japan said. Outstanding loans held by the country's four main categories of banks, including "shinkin" or credit unions, stood at JPY455.07tr (US$5.80bn). Excluding factors such as loan write-offs, the loan balance fell 0.2% yoy. (Reuters)

Japan :
Japan’s surplus in the current account fell 50.2% yoy to JPY526.9bn (US$6.72bn), the fourth straight drop since the disaster, the ministry of finance said. Economists had expected a 35.8% yoy decline in the surplus to JPY678.3bn, but said the bigger-thanexpected drop was due mainly to a minor fallback in investment income following recent jumps. (WSJ)

G-7: G-7 vows to take ‘all necessary measures’ to stabilize economies, markets
Group of Seven nations sought to head off a collapse in investor confidence after the U.S. sovereign- rating cut and a slump in Italian and Spanish debt intensified threats to the global economy. G-7 finance ministers and central bank governors pledged in a statement to “take all necessary measures to support financial stability and growth.” Officials will inject liquidity and act against disorderly currency moves as needed, they said after a call late yesterday European time. The G-20, which includes emerging markets, issued a similar communiqué. Stocks extended declines that have wiped USD5.4trn off equity markets since 26 July, driven investors to Treasuries and gold and rattled consumer confidence already hurt by European fiscal tightening and elevated American unemployment. The European Central Bank signaled it will buy Italian and Spanish bonds, and Japan warned it may intervene again to stem gains in the yen. (Bloomberg)

EU: ECB buying Italian, Spanish bonds in high-risk strategy to defuse crisis
The European Central Bank bought more Italian and Spanish government bonds to drive yields lower, according to four people with knowledge of the transactions. The ECB also bought Irish and Portuguese bonds, said two of the people, who asked not to be identified because the deals are confidential. A spokesman for the central bank declined to comment. The yield on the Italian 10-year bond slid 74 basis points to 5.35% at 1:55 p.m. in London, with the Spanish yield dropping 82 basis points to 5.24%. The Irish two-year yield declined 27 basis points to 13.29%, while the Portuguese note yield tumbled 117 basis points to 12.34%. (Bloomberg)

EU: ECB financing to Portuguese lenders rose 0.8% last month on debt crisis
The European Central Bank’s financing to Portuguese lenders rose in July for the first time in three month as the sovereign-debt crisis drove up bond yields across Europe’s periphery. ECB financing increased 0.8% to EUR44.2bn (USD62.7nn) from EUR43.9bn in June, the Lisbon- based Bank of Portugal said today on the BPStat portion of its website. ECB financing levels peaked at EUR49.1bn in August 2010. Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland. It will receive EUR78bn under the agreement with the International Monetary Fund and the European Union. (Bloomberg)

US stocks sink, treasuries rally
US stocks sank the most since December 2008, while Treasuries rallied and gold surged to a record, as S&P’s reduction of the nation’s credit rating fueled concern the economic slowdown will worsen. The Dow Jones Industrial Average plunged 634.76 pts, or 5.6%, to 10,809.85 as approximately USD2.5trn was erased from global equities. The S&P 500 Index lost 6.7% to 1,119.46 as all 500 stocks fell for the first time since Bloomberg began tracking the data in 1996. A surge in Treasuries sent the 10-year note yield down 22 basis pts to 2.34%, the lowest since January 2009, and the two-year rate slid to a record low. The S&P GSCI commodities index lost 3.9%. Equities extended losses after the ratings cut prompted S&P to also lower debt rankings on Fannie Mae, Freddie Mac and other lenders backed by the government. (Bloomberg)

US: Senate probing S&P downgrade of AAA rating
The Senate banking committee has begun probing last week's decision by Standard and Poor's to downgrade the US credit rating, a committee aide told Reuters Monday. The aide said the panel was gathering information about the S&P move but no decision had been made on whether it will hold hearings into the downgrade. But, the aide added, "all options [are] on [the] table." The S&P downgraded the U.S.'s triple-A credit rating Friday for the first time after it said "political brinkmanship" over the fight to raise the debt ceiling had called into question the U.S.'s ability to manage its finances. “It’s always possible the rating will come back, but we don’t think it’s coming back anytime soon,” said David Beers, head of S&P’s government debt rating unit. (CNBC)

US: Fannie Mae, Freddie Mac ratings cut by S&P amid reliance on US backing
Standard & Poor’s lowered credit ratings on debt issued by U.S.-backed lenders including mortgage giants Fannie Mae and Freddie Mac, citing its own 5 August downgrade of the federal government’s AAA status. Fannie Mae and Freddie Mac, which own or guarantee more than half of the almost USD11tn in outstanding U.S. mortgage debt, were lowered one step from AAA to AA+, S&P said in a statement yesterday. The downgrade reflects their “direct reliance on the U.S. government,” the ratings firm said. The two companies have operated under U.S. conservatorship since September 2008, when they were seized amid subprime mortgage losses that pushed them toward insolvency. Since then, the government-sponsored enterprises have drawn almost USD170bn in Treasury Department aid. In cutting the nation’s credit rating on 5 Aug, S&P faulted lawmakers for failing to reduce spending or increase revenue enough to reduce the nation’s budget deficit.
Banking regulators including the Federal Deposit Insurance Corp. said that day that government-issued securities would be unaffected by the sovereign downgrade. (Bloomberg)

US: The  U.S.  is unlikely to regain its top long-term  credit rating  quickly even as the dollar remains the world’s main reserve currency, said Standard & Poor’s analysts David Beers and John Chambers. (Bloomberg)

20110809 1503 Malaysia Corporate Related News.

Civil servants to receive half-month bonus
All 1.27m civil servants in the country will be getting an early Hari Raya gift as the Government will be making a half-month bonus payout soon. The bonus, with a minimum payment of RM500, will be paid out in the middle of this month. Pensioners will also be getting a RM500 special payment at the same time before Hari Raya. Prime Minister Datuk Seri Najib Razak said the payouts were in appreciation of their contributions and dedication in successfully carrying out the country’s development plans. He said the payouts would cost the Government RM2bn. (NST)

SapuraCrest buys Australian marine outfit for RM400m
SapuraCrest is acquiring Australian-based Clough Ltd’s marine construction and offshore operations spanning Australia, the UK and the US for a total of AUD127m (RM400m) to be settled in cash. The acquisition will allow SapuraCrest access to Clough’s expertise as well as its existing customer base in Australia. SapuraCrest says the rationale for the acquisition is to strengthen the company’s prospects, especially in the area of pipeline installation and facilities for the oil & gas sector. It will also provide the company the opportunity to expand its activities in the subsea and deepwater segments. (Financial Daily)

AirAsia and MAS to become allies
AirAsia and MAS’ major shareholders Khazanah and Tune Air SB will today announce a share swap deal worth just over RM2bn, which will turn the rivals into collaborating partners. According to sources, Khazanah will acquire a 10% stake in AirAsia from Tune Air SB. Sources also said Khazanah was in talks to acquire a 10% stake in AirAsia X but this would be announced at a later date. MAS would issue new shares and Tune Air would end up with a 20% stake in MAS, according to a source. Khazanah will still remain as MAS’ single largest shareholder. The source added that MAS would also make a rights issue soon. (StarBiz)

Asia Petroleum Hub (APH) and its bankers have reached an understanding, resulting in Datuk Gan Ah Tee of BDO-Binder being discharged on 20 July as receiver and manager amid talks of new investors emerging to revive the company. (Star Biz)

CIMB Group has been named Malaysia's Best Bank for the second time and the country's Best Investment Bank for the fifth consecutive year by Euromoney magazine.  The awards were presented at the Euromoney Awards for Excellence 2011 in Hong Kong recently.
For the sustained recognition as the leading investment bank in Malaysia, Euromoney also acknowledged the group's feat in "comfortably topping the league tables in equity capital markets, debt capital markets and mergers and acquisitions". (Bernama)

Hong Leong Group's property arm Guocoland has awarded Ssangyong Engineering & Construction a RM431.1m construction contract for Parcel 1 of the integrated Damansara City project. The construction contract involves the construction and completion of two luxury condominium blocks, six-level elevated car park and five to six levels of basement of the proposed mixed development project in Damansara Heights. (Malaysian Reserve)

RGB International is disposing of its entire equity interest in Cambodian gaming unit Club 88 to a private individual, Heng Long, for a total cash consideration of one US dollar. "The disposal of C88 is in line with the intention of the group to dispose of dormant and nonoperating companies in Cambodia," said RGB. The company is expecting to see a gain of RM86,070 from the disposal, which is due to be completed by 3Q this year. RGB's initial investment in C88 as at end-Dec last year was US$5,000. (Financial Daily)

CB Industrial Product Holding has won a RM171m contract from Ministry of Housing and Local Government to supply, deliver, install, test and commission 100 unit “Fire Rescue Transport (FRT) C/W Fitting and Accessories” to the Fire & Rescue Department of Malaysia. (BT)

20110809 1447 Global Market Related News.

GLOBAL MARKETS-Shares hit by U.S. unease; ECB supports Italy, Spain
LONDON, Aug 8 (Reuters) - World stocks racked up more losses on Monday on deep-rooted jitters about the U.S. ratings cut, but signs the European Central Bank was buying Italian and Spanish debt gave some respite to battered bond markets.
"The downgrade to the U.S. is not great. These markets are going to remain unsettled for a while, we had recommended investors to raise cash in anticipation of this volatility," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Asian Stocks Extend Biggest Slide Since 2008 as U.S.-Debt Rout Continues (Source: Bloomberg)
Asian stocks fell, with the region’s benchmark index plunging the most in almost three years, as the ripple effects of Standard & Poor’s downgrade of U.S. debt continued to roil global equity markets. Toyota Motor Corp., the world’s largest carmaker, retreated 4.9 percent in Tokyo. Sony Corp. (6758), which earns almost half its revenue in the U.S. and Europe, slumped 4.2 percent. Samsung Electronics Co., South Korea’s No. 1 exporter of consumer electronics, fell 7.2 percent in Seoul. BHP Billiton Ltd. (BHP), the biggest global mining company, sank 3.9 percent in Sydney as commodity prices tumbled. National Australia Bank Ltd. (NAB), the country’s largest business lender, slumped 4.3 percent even after saying third-quarter profit surged. The MSCI Asia Pacific Index, which last week entered a so- called correction after falling more than 10 percent from its May peak, slumped as much as 5.5 percent.
It was down to 4.9 percent to 116.84 as of 11:38 a.m. in Tokyo. Just 13 of the 1,018 companies on the gauge advanced. All industry groups tracked by the measure dropped.

Group of Seven’s Tools May Be Wrong Fit for Stocks Seeing Recession Danger (Source: Bloomberg)
The Group of Seven nations’ pledges of liquidity injections and exchange-rate cooperation may be ill-suited to addressing the concern at the heart of the past week’s stock-market rout: another global recession. Currency markets lack the systemic misalignment of the sort seen with the dollar strength in 1985 that distorted global demand, according to Atsushi Ito, a senior rate strategist in Tokyo at UBS AG. With fiscal policies across developed nations restrained by attempts to shore up sovereign ratings, and U.S. companies and households boosting their savings, the challenge this time may be lack of a source of demand to sustain global growth.
While European banks have faced risks of losses on securities issued by nations from Greece to Italy, global money markets show little sign of the types of strains experienced in 2008 that the G-7 combated by pumping cash into the system. The U.S. Libor-OIS spread -- a stress barometer for dollar-based bank-to-bank lending markets -- stood at 0.20 percentage point today, down from 0.22 percentage point a year ago.

G-7 Vows to Take ‘All Necessary Measures’ to Stabilize Economies, Markets (Source: Bloomberg)
Group of Seven nations sought to head off a collapse in investor confidence after the U.S. sovereign- rating cut and a slump in Italian and Spanish debt intensified threats to the global economy. G-7 finance ministers and central bank governors pledged in a statement to “take all necessary measures to support financial stability and growth.” Officials will inject liquidity and act against disorderly currency moves as needed, they said after a call late yesterday European time. The G-20, which includes emerging markets, issued a similar communique. Stocks extended declines that have wiped $5.4 trillion off equity markets since July 26, driven investors to Treasuries and gold and rattled consumer confidence already hurt by European fiscal tightening and elevated American unemployment. The European Central Bank signaled it will buy Italian and Spanish bonds, and Japan warned it may intervene again to stem gains in the yen.

Global Banks Poised to Slash 101,000 Jobs in Fastest Reductions Since 2008 (Source: Bloomberg)
The biggest global banks are cutting jobs at the fastest rate since 2008 as a weak U.S. economy squeezes revenue, regulators push firms to hold more capital and companies restructure businesses to improve profitability. The 50 largest banks, including HSBC Holdings Plc (HSBA), Credit Suisse Group AG (CSGN) and Bank of America Corp. (BAC), disclosed plans for almost 60,000 reductions since Jan. 1, according to company statements and data compiled by Bloomberg Industries. At that pace, they’ll cut more than 101,000 jobs this year -- the most since 192,000 positions were targeted in 2008 amid loan losses, a global credit crunch and unprecedented government bailouts. HSBC’s aim to shed 30,000 workers, unveiled by the London- based firm on Aug. 1, was the single biggest job-cutting announcement since Bank of America said in December 2008 that it would eliminate as many as 35,000 positions, the data show.

Central Bankers Confront Decision on Which Risk Scares Them Most (Source: Bloomberg)
Central bankers from the U.S. to China may have to decide which is their worst nightmare: the Great Inflation of the 1970s or Great Depression of the 1930s. As stock markets slump worldwide and the global economy sputters, monetary-policy makers are struggling to come up with new strategies to spur growth. The catch is that they risk adding to price pressures if they pump more money into the financial system as inflation climbs. It’s what “are you most scared of” -- the risk of spiraling prices or a plunging economy, said Vincent Reinhart, who was the Federal Reserve’s chief monetary-policy strategist from 2001 until 2007 and is now a resident scholar at the American Enterprise Institute in Washington.

Bernanke May Try to Boost Confidence Amid Financial Turmoil (Source: Bloomberg)
Federal Reserve officials tomorrow may move to bolster investor confidence after an unprecedented downgrade to America’s credit rating and concern the U.S. may be headed for a recession sent global share prices tumbling. Chairman Ben S. Bernanke and his colleagues may prolong a pledge to maintain record monetary stimulus, said economists at JPMorgan Chase & Co., BNP Paribas and Goldman Sachs Group Inc. The Fed could do so by making a commitment to hold its $2.87 trillion balance sheet steady for an “extended period.” The Fed also may replace shorter-term securities with longer maturities to reduce rates on longer-term debt. “Those steps are all about bolstering confidence,” said Michael Feroli, chief U.S. economist at JPMorgan Chase in New York and a former Fed economist. “It wouldn’t do tons to alter economic and financial conditions, but the perception that the Fed will act and do something is reassuring.”

Employers Ready to Hire in U.S. Can’t Find Qualified Workers Among Jobless (Source: Bloomberg)
Bill Begal says he has spent almost $2,000 since March on help-wanted ads in newspapers, websites, and state employment services up and down the East Coast to find sales and administrative staff for his Rockville, Maryland-based disaster-cleanup company. “I want people to come out and work for me,” said Begal, 42, whose teams responded to hurricanes Katrina and Wilma, which struck New Orleans and Florida in 2005. “Where are they? I just don’t see it.” Behind the highest unemployment levels in more than a quarter century is an unexpected twist: Employers like Begal and Microsoft Corp. (MSFT) are having a difficult time filling some positions, even as 13.9 million Americans remain without work. The problem is especially acute in pockets such as Washington, D.C., and North Dakota, which bucked the worst of the 18-month recession that ended June 2009, and in industries such as technology where competition for recruits remains high.

Geithner Decision to Stay Gives ‘Continuity’ Amid Market Turmoil (Source: Bloomberg)
Timothy F. Geithner’s decision to stay on as Treasury secretary allows the Obama administration to maintain continuity in economic policy amid investor concern that the two-year-old expansion may be stalling. Geithner, the last remaining member of President Barack Obama’s original economic team, will continue at least through the 2012 election, according to an administration official who wasn’t authorized to comment publicly. Geithner, 49, made his announcement after months of speculation over his future. He told White House officials this year that he was considering leaving once a deal to raise the nation’s borrowing limit was reached. Obama signed an increase in the limit on Aug. 2.

S&P Cuts AAA Muni Ratings Linked to U.S. (Source: Bloomberg)
Standard & Poor’s lowered the AAA ratings of thousands of municipal bonds tied to the federal government, including housing securities and debt backed by leases, following its Aug. 5 downgrade of the U.S. The rating company assigned AA+ scores to securities in the $2.9 trillion municipal bond market including school- construction bonds in Irving, Texas; debt backed by a federal lease in Miami; and a bond series for multifamily housing in Oceanside, California. Olayinka Fadahunsi, an S&P spokesman, said he couldn’t provide a dollar figure on the affected debt. S&P also cut ratings on securities backed by Fannie Mae and Freddie Mac, prerefunded issues and munis repaid by using federal assets, also known as defeased or escrow bonds. No state general-obligation ratings were affected and the company said some may remain unchanged.

Rogoff: Fed Will Embark on QE3, Act ‘Decisively’ (Source: Bloomberg)
Federal Reserve policy makers are likely to embark on a third round of large-scale asset purchases, moving “more decisively” to secure the U.S. recovery, said Harvard University economist Kenneth Rogoff. “They certainly should do something right away,” said Rogoff, a former International Monetary Fund chief economist who attended graduate school with Fed Chairman Ben S. Bernanke. It’s “hard to know” if Bernanke would immediately be able to gain the support of Federal Open Market Committee members, Rogoff said in an interview today on Bloomberg Television. The FOMC meets today in Washington a day after the worst day for U.S. stocks since December 2008. Bernanke last month outlined policy options including additional asset purchases or strengthening the commitment to low interest rates after the first two rounds of so-called quantitative easing failed to keep the unemployment rate below 9 percent.

U.S. Stocks Fall as S&P 500 Has Biggest Slump Since November ’08 (Source: Bloomberg)
U.S. stocks tumbled, giving the Standard & Poor’s 500 Index its worst slump since November 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown. The 10 groups in the S&P 500 fell between 1.7 percent and 5.6 percent. Ford Motor Co. (F), Dow Chemical Co. (DOW) and Caterpillar Inc. (CAT) slumped at least 5.1 percent, pacing losses in stocks most- tied to the economy. Bank of America Corp. (BAC) tumbled 15 percent to lead a gauge of financial companies lower. Energy shares had the second-biggest decline in the S&P 500, sinking 4.4 percent as oil fell to an eight-month low. Newmont Mining Corp. (NEM) rallied 4.9 percent after gold climbed to a record. The S&P 500 fell 3.7 percent to 1,154.64 at 12:29 p.m. in New York. The gauge slumped 8.5 percent in three days, the most since November 2008, and fell to the lowest since Oct. 4, on a closing basis.
The Dow Jones Industrial Average slid 339.33 points, or 3 percent, to 11,105.28. Equity indexes extended losses after S&P changed the outlook for Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) to "negative" from "stable."

U.S. stock index futures tumble on S&P downgrade
LONDON/NEW YORK, Aug 8 (Reuters) - U.S. stock index futures fell sharply on Monday, pointing to further declines in equities, as Standard & Poor's decision to cut the country's top-tier AAA credit rating rattled already jittery investors.
"It won't be long now before other ratings agencies follow suit, considering the state of the U.S.'s finances. One thing is for certain, and that's that volatility will continue to remain high, making trading conditions difficult," said Angus Campbell, head of sales at Capital Spreads.

Stocks Could Rebound From Downgrade Plunge, U.S. Equity Strategists Say (Source: Bloomberg)
America’s debt downgrade won’t keep the nation’s stocks down in the long term, and investors should consider buying large companies and dividend-paying stocks, according to U.S. equity strategists. Bigger companies will do better than smaller ones because they hold so much cash and will be viewed as safer, according to an Aug. 7 Citigroup Inc. (C) note. Investors should also look for stocks that pay dividends as the world’s largest economy slow, Oppenheimer & Co. wrote in a note today. JPMorgan Chase & Co. (JPM) said that while the next two weeks may be “turbulent” for equities, the overall impact will be minimal.
Standard & Poor’s lowered the U.S. long-term rating one level to AA+, from AAA, after markets closed on Aug. 5 while keeping the outlook “negative,” citing less confidence that Congress will end Bush-era tax cuts or tackle entitlements. Fitch Ratings and Moody’s Investors Service still hold a AAA rating. Some strategists say that while the downgrade may hurt the economy, last week’s 7.2 percent drop in the Standard & Poor’s 500 Index shows equity investors were anticipating it.

China’s Inflation May Limit Response to Crisis (Source: Bloomberg)
China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing to support growth as plunging stock markets signal the global recovery is weakening. Consumer prices climbed 6.5 percent from a year earlier as food costs surged, reports from the Beijing-based National Bureau of Statistics showed today. That was more than the 6.4 percent median estimate in a Bloomberg News survey of 26 economists. In June, inflation was 6.4 percent. Shanghai stocks extended losses after tumbling into a bear market yesterday on a widening European debt crisis and Standard & Poor’s downgrade of the U.S. debt rating. Elevated inflation shows that China is still dealing with the after-effects of an unprecedented monetary expansion during the last global slump and may have limited room for more stimulus.

China's Stocks Slump to One-Year Low as Inflation Quickens, Markets Tumble (Source: Bloomberg)
China’s stocks fell, dragging the benchmark index to a 12-month low, amid concern the global recovery will falter and as inflation increased at the fastest pace in three years. PetroChina Co. and Jiangxi Copper Co., the nation’s largest oil and copper producers, paced declines by commodity companies after crude and metal prices slumped. China Shipping Container Lines Co., the nation’s second-biggest container line, led shipping lines lower on concern global trade will be curtailed. Consumer prices rose 6.5 percent in July from a year earlier, the National Bureau of Statistics said today. “The overwhelming pessimism has swept all markets,” said Sun Zhanjun, a fund manager at Bosera Asset Management Co., which oversees more than $29 billion. “The economic turmoil may drag down the stock market for the short term and keep it fluctuating at a bottom for some time.”

Singapore Narrows 2011 Growth Forecast Range as Global Risks Threaten Asia (Source: Bloomberg)
Singapore reduced the top end of its growth forecast for 2011 as a faltering U.S. economy and the European debt crisis heightened the risks to global expansion. The Southeast Asian nation’s gross domestic product will probably rise 5 percent to 6 percent this year, Prime Minister Lee Hsien Loong said in a televised message yesterday on the eve of the island’s National Day. The government previously predicted growth of as much as 7 percent. “Asia, led by China and India, is expected to continue growing but the global outlook remains uncertain,” Lee said. “Europe’s debt problems are far from solved despite the recent bailout of Greece by the European Union. The U.S. economy remains sluggish.”

ECB Financing to Portuguese Lenders Rose 0.8% Last Month on Debt Crisis (Source: Bloomberg)
The European Central Bank’s financing to Portuguese lenders rose in July for the first time in three month as the sovereign-debt crisis drove up bond yields across Europe’s periphery. ECB financing increased 0.8 percent to 44.2 billion euros ($62.7 billion) from 43.9 billion euros in June, the Lisbon- based Bank of Portugal said today on the BPStat portion of its website. ECB financing levels peaked at 49.1 billion euros in August 2010. Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland. It will receive 78 billion euros under the agreement with the International Monetary Fund and the European Union. ECB President Jean-Claude Trichet on April 7 said the central bank “encouraged” Portugal to seek aid, adding that the country’s banks needed to reduce their reliance on ECB funding.

ECB Buying Italian, Spanish Bonds in High-Risk Strategy to Defuse Crisis (Source: Bloomberg)
The European Central Bank bought more Italian and Spanish government bonds to drive yields lower, according to four people with knowledge of the transactions. The ECB also bought Irish and Portuguese bonds, said two of the people, who asked not to be identified because the deals are confidential. A spokesman for the central bank declined to comment. The yield on the Italian 10-year bond slid 74 basis points to 5.35 percent at 1:55 p.m. in London, with the Spanish yield dropping 82 basis points to 5.24 percent.

ECB buying steadies Europe, U.S. downgrade weighs
LONDON, Aug 8 (Reuters) - Italy and Spain's borrowing costs fell on Monday as reports filtered in that the European Central Bank was buying their bonds, lifting European shares and partly overcoming jitters about a rating downgrade for U.S. debt.
"The downgrade to the U.S. is not great. These markets are going to remain unsettled for a while, we had recommended investors to raise cash in anticipation of this volatility," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Aussie Dollar Drops Below Parity (Source: Bloomberg)
Australia’s dollar dropped below parity with the greenback for the first time in five months as concern over a slowdown in the U.S. economy and the euro- region’s debt crisis sapped demand for higher-yielding assets. The Aussie dropped for a ninth day, heading for its longest losing streak since it was freely floated in 1983, as Asian stocks extended a global slump. New Zealand’s dollar slid versus most major peers after volatility in foreign-exchange markets surged. The South Pacific currencies extended declines after data showed China’s consumer prices rose by more than economists forecast, stoking concern the government will take more measures to cool growth.
“We have maintained a more risk-aversive view,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “While the U.S. has been squabbling over the debt ceiling, its economy has slowed too, and the European sovereign crisis risks a recession in the region next year. None of that is good news for pro- cyclical currencies like the Aussie dollar and the kiwi.”

Yen, Franc Gain as Havens on U.S. Slowdown, Europe Debt-Crisis Concerns (Source: Bloomberg)
The yen and Swiss franc rose versus the majority of their counterparts as concern about a U.S. economic slowdown and the euro-region’s debt crisis spurred demand for the two currencies as a refuge. The dollar advanced against higher-yielding currencies as a global slump in stocks prompted investors to buy Treasuries, pushing two-year yields to a record low. Australia’s currency dropped below parity with the greenback the first time since March after Chinese data showed consumer prices rose more than economists had expected, stoking concern the Asian nation will take measures to cool growth. “Risk aversion is stemming from dollar selling and euro selling, which means demand will rise for the yen as an alternative and the franc,” said Junichi Ishikawa, a Tokyo- based market analyst at IG Markets Securities Ltd. “More money flowing into Treasuries boosts demand for the dollar, but people prefer the yen and franc to the greenback.”

FOREX-ECB bond plan boosts euro, dollar volatile
TOKYO/SYDNEY, Aug 8 (Reuters) - The euro jumped on Monday after the European Central Bank announced steps to ease tensions in the euro zone debt market, while the Group of Seven major industrial nations reaffirmed their vow to support financial market stability and growth.
But as both insitutions fell short of details, the dollar wallowed not far from its record low against the Swiss franc, weakened after Standard & Poor's downgrade of the U.S. credit rating, with dollar-funding pressure emerging.

FOREX-Euro rises on signs of ECB bond buying
LONDON, Aug 8 (Reuters) - The euro rose against the dollar on Monday as traders cited the European Central Bank buying Spanish and Italian government bonds to lower their yields and ease tensions in the euro zone debt market.
"(ECB buying bond buying) will have a short term effect. It won't have any lasting positive impact on the euro," said Richard Falkenhall, currency strategist at SEB in Stockholm.

20110809 1446 Global Commodities Related News.

Commodities Slump as U.S. Rating Cut May Worsen Slowdown, Eroding Demand (Source: Bloomberg)
Commodities extended the biggest weekly drop in three months on speculation the U.S. credit- rating cut will worsen the economic slowdown, eroding demand. Gold climbed to a record as investors sought a haven. The Standard & Poor’s GSCI Spot Index of 24 commodities fell as much as 2.5 percent and was down 2 percent by 11:41 a.m. in London. The measure lost 5.9 percent last week, the most since the start of May. Crude oil led the decline, sliding as much as much as 4.3 percent in New York. Gold for immediate delivery soared as much as 3.1 percent. Group of Seven nations said they will take every action necessary to stabilize financial markets after S&P lowered the U.S. rating by one level to AA+. Policy makers held emergency conference calls over the weekend to stave off a collapse in confidence that has already wiped out about $5.4 trillion in global equity values since July 26. The European Central Bank signaled it’s ready to start buying Italian and Spanish bonds.

Goldman maintains constructive view on commodities
Aug 8 (Reuters) - Goldman Sachs said on Monday that although risk to its constructive commodity views has risen, it still maintains its long trade recommendations and overweight recommendation on commodities relative to other assets.
"Several factors are leading us to keep our constructive commodity views over the next year intact, including still-high expectations of global GDP growth sufficient to tighten key commodity markets, expected strong growth in EM (Emerging Markets)," the bank said.

Corn (Source: CME)
US corn futures end lower on spillover pressure from steep losses in external markets. Traders reduce risk as concerns increase about the world economy, dragging down equities and commodities. There was a lack of other news to drive grain prices, with weather forecasts looking mostly favorable for crops, traders say. Cooler weather is welcome in the Midwest after intense heat hurt the crop during a critical period of development in July. "The cooler weather may prevent further reductions in yield," says Kyle Tapley of MDA EarthSat Weather. CBOT December corn drops 17c to $6.86/bushel.

Wheat (Source: CME)
US wheat futures close lower as jitters about the global economy spark broad selling of equities and commodities. A lack of demand adds pressure to prices as the US continues to face stiff competition for export business from Russia. Traders say Egypt, typically the world's top wheat buyer, is seeking wheat after today's slide in prices and will likely buy from the Black Sea region. CBOT September wheat falls 22 1/2c to $6.56 1/2 a bushel, KCBT September loses 25c to $7.55 1/4 and MGE September drops 22 1/4c to $8.05 1/4.

Rice (Source: CME)
US rice futures slip as widespread selling of commodities and equities drag down the grain markets. The market succumbs to spillover pressure but avoids steep losses due to concerns about output. Traders are waiting for the USDA to update its global supply-and-demand estimates in a monthly report Thursday. Recent reports have sent prices higher as they cut forecasts for plantings and inventories. CBOT September rice falls 2 1/2c to $16.27/hundredweight.

Australia eyes above average wheat crop, weather a risk
SYDNEY, Aug 8 (Reuters) - Australia, typically the world's fourth-largest exporter of wheat, remains on track to produce an above average crop in 2011/12 provided weather conditions stay favourable ahead of the upcoming harvesting, a crop analyst and farmers said on Monday.
As long as there were no adverse weather events such as late frosts or a heat wave the harvest should exceed 24 million tonnes, they said.

Soil moisture aids Argentine wheat seeding- gov't
BUENOS AIRES, Aug 5 (Reuters) - Argentine farmers made progress toward finishing wheat plantings in the last week thanks to good soil moisture in many growing regions, the Agriculture Ministry said on Friday in its weekly report.
Argentina is a top global wheat exporter and Brazil is its biggest market.
"(Farmers) finished planting due to good weather conditions, low temperatures and soil moisture," the ministry report said about Veinticinco de Mayo in central Buenos Aires province, the country's top wheat-growing region.

No relief in sight for Texas heat and drought
WASHINGTON Aug 5 (Reuters) - The nation's triple-digit heatwave -- which hit its 34th day on Friday -- could last until the end of August, while extensive drought in and around Texas may last into October, forecasters said.
The deadly heat event that has broken numerous records has left the southern Plains and Mississippi Valley struggling to meet demand for power and water and has caused billions of dollars in damage to crops and livestock.

Weather Services Warn Of Potential 'La Nina' Return (Source: CME)
A new round of the extreme weather patterns that devastated production of iron ore, coal and agricultural crops such as wheat in Australia, South America and the U.S. in late 2010 could be poised to return this autumn and hit prices in the process, but with less serious consequences overall than last year, weather forecasters said. Sentiment towards commodities lying in the traditional path of conditions known as La Nina is starting to turn more bullish, exacerbated by supply shortages in a number of products like iron ore and coal. Forecasting models by the U.S. National Weather Service's Climate Prediction Center predict La Nina will redevelop this autumn. "Atmospheric patterns continue to reflect La Nina-like conditions," the weather body said. La Nina is a periodic climatic phenomenon that brings more rain to the western Pacific, and to a lesser extent, to the eastern Pacific.
Climatologists blamed La Nina for last year's floods that gripped Australia, resulting in major losses to coal and iron ore stockpiles. Australia, the world's largest exporter of coking coal, lost around 10 million metric tons of its supply last year as mines were flooded, causing prices of the commodity used in steelmaking to soar. But while it isn't clear what impact La Nina might have on the production and shipment of commodities, its return isn't expected to cause the same serious problems as in 2010. That's because historically the La Nina weather phenomenon occurs in bursts of three consecutive years, with the first one being the worst and the next two much milder. Yet that doesn't mean the changing weather patterns won't hit the production of crops and products like coal this time around.
Joe Vaclavik, grains broker at Chicago-based MF global, said from an agricultural commodity markets perspective, the biggest fear of a second La Nina would be the continuation of the current drought in the U.S. southern plains, causing further damage to the winter wheat crop. Futures prices for winter wheat grown in the southern Plains are already up 13% from a year ago at about $7.65 a bushel at the Kansas City Board of Trade, as weather-related concerns mount over the next crop. Matt Rogers, President of Maryland-based Commodity Weather Group, warned that possible effects from the second round of La Nina could bring above-normal precipitation in eastern Australia, but would actually benefit the wheat and barley crops in terms of moisture. Yet, dryness concerns could be an issue for Argentina and southern Brazil, which would experience lower amounts of rainfall, causing damage to wheat, corn and soybean yields.

Japan rice market faces volatility over radiation scare
TOKYO, Aug 5 (Reuters) - Japan's rice futures market, to be launched for the first time in 72 years, is braced for high volatility from the start as the price outlook is clouded by the unclear impact on rice crops of radiation leaked from the Fukushima nuclear plant.
Tokyo Grain Exchange (TGE) and the smaller Kansai Commodities Exchange will start trading rice futures on Aug. 8 on a trial basis for two years, to assess the pros and cons of the trading and see if there are any structural issues that need to be addressed before moving to full-fledged trading.

BASF Sees Crop Protection Growth In Emerging Markets (Source: CME)
German chemicals company BASF SE expects strong growth in crop protection in coming years, particularly in emerging markets, an executive board member said in a recent interview. "We make a good 40% of our crop protection sales in emerging markets... by 2015 we want to make over 50% of sales from there," said Stefan Marcinowski, BASF's board member in charge of crop protection and plant biotechnology. "We're expecting a good performance in South America in the second half of the year," he said. The manager couldn't promise that the division will reach its targeted 2011 earnings before interest and taxes, or Ebitda, margin of 25%. "The 25% Ebitda margin is our general aim, good weather conditions and stable foreign exchange rates and stable harvest prices permitting," he said, adding that weather and currency were "not optimal" in the first half of the year.
BASF's Agricultural Solutions unit, which contains the crop protection and plant biotechnology businesses, is the company's smallest subsidiary with sales of EUR4 billion in 2010, making up just 6.3% of the company total. The unit should achieve its aim of increasing sales and earnings in 2011, Marcinowski said. North and South America and certain Asian countries are the focus for BASF's genetically modified products, as those countries show "more willingness to accept these future technologies," than Europe, he added. The manager doesn't expect strong resistance to genetically modified crops in Europe to dissipate in the near future. However Germany will remain a base of genetic technology development for the time being, he said. He didn't rule out acquisitions in the crop protection business, which makes primarily fungicides, herbicides and insecticides amongst other things, but said the potential acquisition targets are limited and currently very expensive.
Marcinowski also expects strong growth in sales of genetically modified seeds in the coming years. Unlike peers Bayer AG, Syngenta AG, Monsanto Co., BASF doesn't have its own seed business, preferring to market its knowledge in partnerships with other companies, a strategy which Marcinowski said won't change. These partnerships focus on the largest crops such as wheat, corn, soya, rice, rapeseed and sugar cane and beet, he said. BASF expects 2020 gross sales of genetic traits - the technology it develops to modify plants, for instance, to increase their resistance to drought or increase yield - of EUR1.9 billion from the plant technology pipeline based on an exchange rate of EUR1 to $1.30, Marcinowski said, a figure which doesn't include sales costs and the partners' share. At the moment, BASF doesn't make any money from its plant biotechnology business as it's still under development.
So far, BASF has invested more than EUR1 billion in plant technology and plans to invest an additional EUR150 million annually in research and development.

EPA, USDA Outline Plan to Help Rural Water Systems (Source: CME)
The federal government is stepping in to help cash-strapped local governments improve rural water systems. The Environmental Protection Agency and the U.S. Department of Agriculture said they would provide grants to help communities that rely on small water and sewage systems. The program will also provide training for water- and sewer-system operators, a move the government agencies said could bring some jobs into rural areas. "A critical part of this agreement is to ensure that we have a well trained, professional work force available to replace workers when they leave or retire," said Nancy Stoner, acting assistant administrator for EPA's Office of Water. Small community water systems often lack resources to keep their facilities upgraded and in compliance with rules such as the Clean Water Act. EPA officials said many community systems have aging infrastructure in need of maintenance but lack funding to deal with problems.
The program will be funded jointly by the EPA and USDA, although the total cost isn't yet known. The money will come from existing funds.

Food Processors Sweat Over Corn Crop (Source: CME)
The U.S. corn crop is in trouble, with a blistering heat wave threatening to stunt growth and leave consumers with higher food bills and food producers with lower profits. The scale of the problem will come into focus on Thursday, when the U.S. Department of Agriculture gives the first crop supply-and-demand projections of the year to include field surveys -- rather than just an analysis of statistical trends. The early signs are far from promising, which has helped to propel corn prices back above $7 a bushel, a shift that will likely ripple through farmers, food producers and retailers. The photographs of the crop right now -- pored over by traders and food producers a month before harvest -- have been alarming, said Hussein Allidina, head of commodities research at Morgan Stanley. "The entire cob is the size of a can of coke," Mr. Allidina said. "Normally it's just shy of a one-liter [bottle]."
While farmers have planted more corn to take advantage of tight global markets and a price that is up 80% from a year ago, a weak crop could exacerbate existing food shortages. Prolonged drought in the U.S. Southwest has seen ranchers push cattle north, and meat production is set to fall for the third consecutive year as the country's cattle and hog herds decline in size. Tyson Foods Inc., which produces chicken, beef and pork, will provide an update on how it is handling these problems, when it reports third-quarter earnings. Thursday's USDA report will be "a very important day for all of us in agriculture," said Mike Cockrell, chief financial officer of Sanderson Farms Inc., a large chicken producer. The Midwest weather is one of the first things Mr. Cockrell checks from his southern Mississippi office each morning. Throughout July, the weather was blistering during the day and, just as important, hot at night.
High night-time temperatures causes corn to devote more energy to maintaining the plant rather than adding to the size of its kernels. Both Iowa and Illinois climatologists say July was the hottest month since 1955. Across the Midwest, the month was among the top-10 hottest of all-time, and there has been little relief so far in August. That will affect the price consumers pay at the grocery store for chicken, as well as beef and pork produced by companies such as Tyson and Smithfield Foods Inc. There are implications throughout the food chain, as the USDA last month forecast overall food inflation at 2.5% to 3.5% in 2012 but said price levels will hinge on Midwest weather through the end of this summer. Morgan Stanley's Mr. Allidina said that both the USDA's yield and acreage projections are too high. Corn supplies are already at their lowest level in 15 years.
Meat producers won't be the only ones closely watching the report. For fertilizer companies such as Mosaic Co. and Potash Corp. of Saskatchewan, a smaller crop estimate could reaffirm that boom times will continue through next year, with high corn prices prompting farmers to plant more acres and putting more money in their pockets, allowing them to withstand high fertilizer prices. The report also serves as an indicator of the likely strength in the farm economy for equipment makers such as Deere & Co. The USDA's report won't be the final word on the corn crop. Cooler temperatures later this month, followed by a late first frost, could help the crop rebound. Plus, the report comes amid growing dissatisfaction with what market analysts have said are erratic month-to-month projections. In August of 2010, the USDA projected a record average yield of 165 bushels per acre, well above the actual final tally of 152.8 bushels.
While the USDA last month forecast a national yield of 158.7 bushels per acre, many expect the crop to be closer to 155 bushels, if not lower. Pilgrim's Pride Corp., the world's second-largest poultry producer, expects to spend an additional $500 million to $600 million this year on corn. Chief Executive Bill Lovette said recently that the company, which filed for bankruptcy in 2008 due largely to soaring corn costs, was closing a Texas plant, and that the USDA's most recent corn acreage estimate for the U.S. is too high. He added that the July heat could "jeopardize the crop," and is betting that prices will go higher. "We still believe there is potential upside risk," he said.

ICE sugar, coffee slip on shaky global economic outlook
LONDON, Aug 8 (Reuters) - ICE sugar and coffee futures fell on Monday, as most commodity markets were lower on fears of a prolonged global economic slowdown, after ratings agency Standard & Poor's cut its U.S. rating late on Friday to AA-plus from AAA.  Raw sugar futures dipped over 2 percent lower at the market opening, before paring losses, trading around 14 percent off the contract high of 31.68 cents a lb touched last month.

Frost damages trees in Brazil's coffee belt
BRASILIA, Aug 5 (Reuters) - Frost struck the heart of Brazil's coffee belt in the early hours of Friday, a freeze cooperatives said was certain to cut output next year though the full extent of damage was not known.
Local forecaster Somar said the southern Minas Gerais coffee heartland would again be the coldest coffee area in the early hours of Saturday, with lows of 6 Celsius around Pocos and 12 Celsius further east in the important coffee growing region around the town of Varginha.

Uganda bans sugar exports to ease shortage
KAMPALA, Aug 5 (Reuters) - Uganda has taken steps to ease a severe sugar shortage including banning exports and applying to the East African Community trade bloc to be allowed tariff-free sugar imports, instead of the 100 percent now imposed, officials said on Friday.
Drought and a temporary closure of Uganda's second-biggest raw sugar producer have caused shortages of the commodity in the east African nation, and prices have doubled.

Uganda lifts 2010/2011 coffee export forecast
KAMPALA, Aug 5 (Reuters) - Uganda, one of Africa's leading exporters of coffee, lifted its coffee export forecast to 2.8 million 60 kg bags for 2010-2011 on expectations for good harvests, just months after scaling down its estimate owing to a drought.
Exports of the beans rose in July compared with the same month last year after good harvests in the southwestern part of the country, the state-run Uganda Coffee Development Authority (UCDA) said on Friday.

Uganda seeks zero-rated sugar imports to ease shortage
KAMPALA, Aug 5 (Reuters) - Uganda has applied to the East African Community regional trade bloc to be allowed to import sugar free of tariffs, instead of the 100 percent imposed at present, to ease a shortage, a junior cabinet minister said on Friday. Drought and a temporary closure of Uganda's second-biggest raw sugar producer have caused severe shortages of the commodity in the east African nation, forcing prices to double.The supply crunch has forced supermarkets in Kampala, the capital, and other major towns to start rationing the sweetener, while members of the public and government have accused some traders of hoarding stocks and escalating the crisis.

Bumper cocoa crop upsets view I.Coast in decline
LONDON, Aug 5 (Reuters) - A bumper 2010/2011 Ivory Coast cocoa crop, even at a time of violent political conflict, indicates output from the top producer may not be in long-term decline from lack of investment, as traders and analysts had previously assumed.
High prices encouraged a surprisingly high level of crop husbandry, which combined with ideal weather to produce about 1.6 million tonnes of cocoa beans, including an estimated 200,000 smuggled through neighbours Togo and Ghana, according to a European fund analyst.

Ivory Coast cocoa field spraying up 50 pct-GCFCC
YAMOUSSOUKRO, Aug 4 (Reuters) - Ivory Coast's Cocoa Management Committee (GCFCC) plans to spray 775,000 hectares of cocoa trees against pests for the 2011/12 season starting in October, up from 500,000 hectares this season, a top GCFCC official told Reuters on Thursday.
In an interview, Boloba Silue, the head of the GCFCC's cocoa producers' development fund, said a campaign of treatment to ensure plantations are protected against insects and fungal black pod disease would start in the next two weeks.

Oil falls $3 as U.S.downgrade spurs growth worries
LONDON, Aug 8 (Reuters) - Oil fell as much as $3 a barrel on Monday as worries over a possible double-dip recession spread after Standard & Poor's cut the United States' top-tier credit rating and European central banks struggled to contain a deepening debt crisis.
"Chances of a double-dip recession have increased over the last week," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "I still don't think another recession is a probability, but economic growth forecasts are being lowered."

Oil Falls to Eight-Month Low in New York as Investors Buy Treasuries, Gold (Source: Bloomberg)
Oil fell to the lowest level in more than eight months as investors fled commodities for assets such as Treasury bills and gold after Standard & Poor’s downgraded the U.S. credit rating for the first time. Futures dropped 6.4 percent on the first trading day after the ratings service cut the U.S. one level to AA+ late on Aug. 5 and kept the outlook at “negative.” Two-year Treasury yields fell to a record low and gold touched a record high on the Comex in New York. The MSCI All-Country World Index of stocks slid as much as 5.1 percent. “There’s flight away from any kind of risky assets at the moment,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s hard to say where the bottom is.”

Crude Oil Heads for Biggest Two-Day Decline Since 2009: Brent Below $100 (Source: Bloomberg)
Oil in New York headed for its biggest two-day plunge in more than two years as the U.S. credit rating cut and rising stockpiles stoked concern an economic slowdown will worsen, reducing demand in the world’s biggest crude consumer. Brent tumbled below $100 a barrel. New York futures fell to the lowest in more than 10 months. Asian stocks dropped for a sixth day after U.S. equities slumped the most since December 2008 in the first trading session since Standard & Poor’s Aug. 5 downgrade. An Energy Department report tomorrow may show crude inventories climbed for a third week. Brent oil traded in London slipped below $100 for the first time since Feb. 8.
“Until we can see some confidence coming back to the U.S. consumer, the situation is probably not going to change that much in terms of another strong price rally,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who kept his forecast for New York crude to average $115 this year. “A recession would obviously have the potential to reduce consumption and that will place pressure on prices.”

Crude Oil Drops Below $80 for First Time Since October in Extended Decline (Source: Bloomberg)
Oil fell below $80 a barrel in New York for the first time since October 20, 2010. Crude for September delivery slid as much as $1.76, or 2.2 percent, to $79.55 a barrel.

China begins new crackdown on rare earth sector
BEIJING, Aug 8 (Reuters) - China will punish rare earth producers that fail to stick to a nationwide production quota after launching a inspection of the sector at the beginning of August, the country's industry ministry said on Monday.
In a notice posted the Ministry of Industry and Information Technology (MIIT) said enterprises that exceed quotas or continue to employ environmentally destructive production
techniques will have their licenses and quotas cancelled.

China port iron ore stocks hit record in week ending Aug 5
BEIJING, Aug 5 (Reuters) - Stockpiles of imported iron ore at major Chinese ports rose by 1 percent to reach a record 95.35 million tonnes by the end of this week, data by industrial consultancy Mysteel showed on Friday.
Port inventories declined for the first time in nearly three months last week following a 6.5 percent decline in Indian ores, with many mills seeking to replenish their own stockpiles without making costly forward bookings.

Japan steelmakers' price talks with Korea hit stalemate
TOKYO, Aug 5 (Reuters) - Japanese steelmakers' talks with South Korean customers on August-October exports have reached stalemate as a slowdown in the global economy and low-priced exports from China weigh on the market and the yen's strength makes price cuts difficult for Japanese exporters.  
Japanese steelmakers are aiming for a price of $750 a tonne for hot-rolled coil for shipments during the three months, but South Korean customers insist on a level closer to $600, citing recent Chinese prices sold to South Korea of $600, two industry sources familiar with the matter said.

Copper to Extend Slump by 6.4% on Head-and-Shoulders: Technical Analysis (Source: Bloomberg)
The slump in copper on the London Metal Exchange may not be over, according to technical analysis by Sucden Financial. Prices that dropped 9.3 percent in the past four sessions to an 11-week low of $8,750 a metric ton yesterday are testing a potential “neckline” in a so-called head-and-shoulders pattern, Brenda Sullivan, a senior market strategist at Sucden, said yesterday in a telephone interview from London. A drop below that line, which connects the lows on Nov. 17 and May 12, could “open targets beginning at $8,219,” or a 6.4 percent drop from yesterday’s close, within a few weeks, she said. While prices were up 19 percent from a year earlier, after touching a record $10,190 on Feb. 15, the pattern of the past few months may mean the long-term rally is “under pressure,” Sullivan said.

METALS-LME copper up 0.2 pct after falling on US downgrade
SHANGHAI, Aug 8 (Reuters) - London copper recouped early losses on Monday after hitting a session low below $9,000 following a global rout on news that rating agency Standard & Poor's had cut the United States's prized triple-A credit rating.
Three-month copper on the London Metal Exchange  edged up 0.2 percent to $9,061.25 a tonne by 0724 GMT, after breaching the $9,000-mark at one point to $8,950, its lowest since June 27. It dropped 4.2 percent in the last session.

PRECIOUS-Bullion strikes record above $1,700 on S&P downgrade
SINGAPORE, Aug 8 (Reuters) - Bullion roared to record highs above $1,700 an ounce on Monday as an unprecedented downgrade to the U.S. credit rating sent investors scrambling out of riskier assets, hammering equity markets and the dollar.
Both U.S. gold futures and cash gold could rise further if pledges by the Group of Seven nations to support battered financial markets fail to bear fruit as investors turn their attention to the Federal Reserve's policy-setting committee, the FOMC, meeting on Tuesday.

Gold Tops $1,750 for First Time as Equity Rout Stokes Demand (Source: Bloomberg)
Gold futures exceeded $1,750 an ounce for the first time as the global rout in equities and commodities deepened on concern the economic slowdown will worsen after Standard & Poor’s cut the U.S. credit rating. Gold for December delivery in New York advanced 2.5 percent to a record $1,756.80 an ounce and traded at $1,752.60 at 1:17 p.m. in Melbourne. Immediate-delivery gold rose as much as 2 percent to $1,754.63, also an all-time high. The precious metal has surged 23 percent this year, heading for an 11th year of gains, as the global sovereign-debt crisis and a faltering economy boost demand for wealth protection from investors. Gold holdings climbed the most since May last year while U.S. stocks had the biggest slump since December 2008 yesterday as investors retreated from riskier assets. Gold was costlier than platinum for the first time since December 2008.

Gold bar premiums steady in Asia, defy record prices
SINGAPORE, Aug 8 (Reuters) - Premiums for gold bars were mostly steady in Asia as purchases from investors who are worried about the state of the global economy helped the physical market offset pressure from record bullion prices, dealers said on Monday.
Rising gold prices normally spur heavy selling in the physical market, which could drastically cut premiums for gold bars, but dealers noted buying interest in Asia even as spot gold  hit an all-time high above $1,700 an ounce.

Shanghai Gold Exchange to raise margins on gold forwards
SHANGHAI, Aug 8 (Reuters) - The Shanghai Gold Exchange (SGE) will raise trading margins on three of its gold forward contracts to 11 percent from 10 percent starting from Aug. 12 to limit trading risk, it said in a statement on Monday.
The contracts to be affected include , Au(T+N1)  and Au(T+N2) , while trade margins for its various spot gold contracts will remain unchanged, the SGE said.

20110809 1445 Soy Oil & Palm Oil Related News.

US soybean futures drop to 1-month lows, succumbing to broad-based selling amid fears of a global economic slowdown. Widespread reduction of risk across broader markets served as the catalyst for soybeans' losses, with sharp losses in equities and crude oil encouraging investors to limit exposure in riskier commodity markets. Improved weather for developing crops fueled further pressure, says Don Roose at US Commodities. CBOT November soy dropped 1.8% to $13.11 1/2 a bushel.

Soybean Meal/Oil
Soyoil futures were also influenced by spillover pressure crude oil's sharp declines and soymeal drew weakness from slower domestic demand. December soymeal slid 1.7% to $346.50/short ton while soyoil dropped 2% to 54.44c/pound.

Soy at 1-mth low on US credit downgrade; corn, wheat fall
SINGAPORE, Aug 8 (Reuters) - U.S. soybeans slid to a one-month low on Monday, while corn and wheat dropped after Standard & Poor's downgraded the United States' top-tier credit rating, raising concerns over growth in the world's largest economy.
"It is more of a macro story today, it is continued flight to safety and that suggests outflow of capital from agricultural commodities," said Brett Cooper, a senior markets manager at FCStone Australia. "I think the market has probably priced in much of the fundamental news at the moment."

Palm oil hits lowest since Oct after US credit downgrade
KUALA LUMPUR, Aug 8 (Reuters) - Malaysian palm oil futures dropped on Monday to its lowest in more than nine months, as investors were concerned over global economic growth and the outlook for commodity demand after the United States lost its top AAA credit rating.
"Investors are cutting back some positions but in palm oil the declines are not so pronounced as it is the cheapest vegetable oil and consumers will fall back on this," said a trader with a foreign commodities brokerage.

Malaysian palm oil output to fall after July peak-MPOB
KUALA LUMPUR, Aug 8 (Reuters) - Malaysia's palm oil production has hit its highest for this year in July and will start a downward trend expected to last until December, a top official of industry regulator Malaysian Palm Oil Board said on Monday. "Crude palm oil production in August and September is expected to decline as foreign labourers which constitute a higher percentage of harvesters take long leave for Eid," Choo Yuen May said in an online presentation.

India's vegoil import seen up 5.7 pct in 2011/12- Mistry
MUMBAI, Aug 6 (Reuters) - India's vegetable oil imports in the 2011/12 financial year beginning in November could rise by up to 5.7 percent, to 9.2-9.3 million tonnes, despite steady domestic output as rising prosperity will boost demand, a leading industry analyst Dorab Mistry said on Saturday.
India, the world's biggest importer of edible oils, is expected to import 8.8 million tonnes in the current year ending in October, according to industry forecasts.

U.S. soy to benefit most from coolness, showers
CHICAGO, Aug 5 (Reuters) - Cooler temperatures and showers were expected through most of next week in the U.S. crop belt which will halt deterioration of the corn crop and particularly enhance production prospects for soy, an agricultural meteorologist said Friday. "The corn crop already has been hurt but this will stabilize the crop, and the most benefit will be for soybeans," said Andy Karst, meteorologist for World Weather Inc.

Talks about Malaysia introducing its own sustainable palm oil certification scheme have surfaced many times. But now they could become a reality following the recent directive by the Government for local oil palm authorities to work together to formulate a draft on the Malaysia Sustainable Palm Oil (MSPO) certification.

  • The proposed MSPO will see Malaysia joining Indonesia, which has launched its own palm oil certification body the Indonesian Sustainable Palm Oil (ISPO) in the middle of last year. Indonesia has put in place over 100 ISPO requirements that were compulsory for all palm oil growers since January this year.  
  • While the MSPO may unlikely be introduced within the next one to two years, industry observers said the formation of the ISPO and the MSPO would indeed challenge the role of pioneering “voluntary” palm oil certification body - the Roundtable on Sustainable Palm Oil (RSPO). (Starbiz)

A draft on the Malaysia Sustainable Palm Oil (MSPO) certification scheme is currently being formulated with the Malaysian Palm Oil Board (MPOB) earmarked as the main moderator, said an industry source. He told StarBiz  yesterday that MPOB was getting feedback from the palm oil fraternity after a directive from the Plantation Industries and Commodities Ministry.

  • “We heard Sirim Bhd will also be roped in for the MSPO certification scheme to make the scheme mandatory for all local oil palm planters. “Everything is still at its preliminary stage but the Government is serious about introducing its national green palm oil certification scheme as an alternative to the current voluntary Roundtable on Sustainable Palm Oil (RSPO) certification,” said the source. (Starbiz)  

Palm oil output in Malaysia, the world’s second-biggest grower, may increase by 6.5% to 18.1m metric tons in 2011, according to the Malaysian Palm Oil Council. Prices of the tropical oil may average at RM3,300 a ton in the second half of 2011, Faudzy Asrafudeen, director of marketing and market development, said on the council’s website. (Bloomberg)

Malaysia's  palm oil  production has hit its highest for this year in July and will start a downward trend expected to last until December, a top official of industry regulator Malaysian Palm Oil Board said on Monday. "Crude palm oil production in August and September is expected to decline as foreign labourers which constitute a higher percentage of harvesters take long leave for Eid," Choo Yuen May said. "This downward trend is expected to continue until December following normal downwards trend for oil palm fruits production each year," she added. (Reuters)

Palm oil  slumped to the lowest level in more than nine months as crude oil led declines among commodities after the U.S. lost its top credit rating, fueling concern that the global economic slowdown will worsen.The October-delivery contract lost 1.9 percent to close at RM2,994 (US$987) per metric ton on the Malaysia Derivatives Exchange, the lowest level since Oct. 21. Futures declined 1.5% last week. (Bloomberg)