GLOBAL MARKETS-European debt deal ignites rally in stocks, euro
NEW YORK, Oct 27 (Reuters) - A long-awaited plan to staunch the European debt crisis sparked euphoria across financial markets on Thursday, driving up the euro and the price of world stocks and commodities, while thrashing the dollar.
"This is not a magic elixir. It's a very good start and certainly more than people had expected," Bill O'Neill, partner at commodity investment firm LOGIC Advisors, said of the deal.
COMMODITIES-Prices surge as investors toast Europe deal
NEW YORK, Oct 27 (Reuters) - Oil rebounded from a one-day fall to resume a powerful rally from earlier in the week and metals and crops also surged on Thursday as markets rejoiced over Europe's plan to conquer its two-year-old debt crisis.
"This is not a magic elixir. It's a very good start and certainly more than people had expected," Bill O'Neill, partner at commodity investment firm LOGIC Advisors and a commentator on gold, said after bullion prices rose without a break from Friday, finishing up 8 percent over the five days.
China’s Stocks Rise, Extending Best Week in Year, on Profit, U.S. Economy (Bloomberg)
China’s stocks rose, driving the benchmark index to its best weekly gain in a year, after PetroChina Co. reported profit that beat analysts’ estimates and the U.S. economy grew at the fastest pace in a year. PetroChina, China’s biggest oil company, led gains for energy producers after third-quarter net income rose 7.8 percent. Industrial & Commercial Bank of China Ltd., the largest lender, surged for its best five-day rally since November 2010 after reporting a 28 percent jump in profit. Jiangxi Copper Co., the biggest producer of the metal, jumped to a one-month high as commodity prices surged on an improving global economic outlook. “The market sentiment is getting better and investors are not that pessimistic as they were a couple of weeks ago,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “We’ll see some real actions from the government to ease tightening policies as inflation slows.”
Japan Stocks Advance Second Day as U.S. Growth Fuels Rally After Debt Deal (Bloomberg)
Japanese stocks rose for a second day, pushing the Nikkei 225 (NKY) Stock Average toward its biggest weekly gain in a year, as faster U.S. economic growth fueled investor confidence following yesterday’s breakthrough on a European debt deal. Honda Motor Co. led gains among carmakers, rising 4.6 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, advanced for a second day after European leaders yesterday stuck a deal that may help avert a financial crisis. Komatsu Ltd., a maker of construction equipment, jumped 6.2 percent after announcing a share buyback. The Nikkei 225 Stock Average climbed 1.4 percent to 9,048.35 at the 11 a.m. trading break in Tokyo. For the week, the gauge is headed for a 4.3 percent gain, the biggest since the period ended Nov. 5, 2010. The broader Topix index rose 1.5 percent to 774.20. A report that the U.S. economy grew last quarter at the fastest pace in a year helped stocks extend yesterday’s gains.
Oil rallies more than 4 pct on EU rescue deal
NEW YORK, Oct 27 (Reuters) - Crude oil futures rallied more than 4 percent on Thursday, primed by a deal on Greek debt that many analysts said bodes well for resolving the euro zone crisis.
"Given the positive nature of today's GDP report, as well as settling of some European debt concerns, the path has been paved for bullish moves in coming sessions for commodity and equity prices," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas.
Nov natgas expires on weak note, EIA, weather weigh
NEW YORK, Oct 27 (Reuters) - U.S. natural gas futures ended lower on Thursday, with the front-month November contract expiring on a weak note after another big weekly inventory build and ahead of milder weather forecast for next week.
"The (EIA) number was above consensus, and the forecasts went warmer after this cold snap," a Texas trader said, noting cold weather for the next few days should help support prices but strong production was still a problem for the bulls.
Euro Coal-prices rise on European debt relief
LONDON, Oct 27 (Reuters) - European prompt physical coal prices rose on Thursday as markets reacted with relief to the European Union's agreement to tackle the euro zone's sovereign debt crisis.
"Two things are preventing activity from returning to the physical coal market: Firstly, utilities need to burn their stock down, and secondly the market needs to lose its fear of a renewed recession in Europe," one coal trader said.
Friday, October 28, 2011
20111028 1102 Malaysia Corporate Related News.
Maxis announced its official partnership with KiddyTrack and the launch of KiddyTrack's first-of-its kind child locator solution. This innovative GPS/GSM child locator solution is powered by Maxis' Managed Machine-2-Machine (M2M) technology and leverages on the company's strength as the country's widest 3G service provider. (Bernama)
Dutaland and IOI Corp waged a war of words via Bursa Malaysia website regarding the termination of a proposed acquisition of a large piece of oil palm plantation land in Sabah that was to cost IOI Corp RM830m. IOI alleged that Pertama Land failed to maintain the land according to acceptable agronomic practices. IOI also alleged that there were discrepancies in the particulars relating to the properties. It also questioned the “integrity of the title of Pertama Land in relation to one of the properties.” Dutaland said Pertama Land had continued to operate and manage the properties with due diligence and to maintain and cultivate the said properties and harvest the crops according to good husbandry, including timely manuring of the land. (Starbiz)
Tenaga Nasional Bhd (TNB) will build a 132kV sub-station and a district cooling plant for the supply of chilled water and electricity at the new low-cost carrier terminal, also known as KLIA2, in Sepang, Selangor. The deal, struck with Malaysia Airports Holdings Bhd (MAHB), is for a build-operate-transfer model for a concession period of up to 20 years. In a Bursa Malaysia filing, TNB said 80% of the KLIA2 generation plant project's cost of RM388m would be funded through external borrowings while the balance would be via shareholders' equity. The project is not expected to have any material effect to the EPS, NTA, gearing and has no effect on the share capital and substantial shareholders’ shareholding of TNB or MAHB. (Star Biz, BMSB)
Malaysia’s national power producer Tenaga Nasional Bhd’s RM4.85bn (US$1.55bn) Islamic sukuk attracted RM23bn worth of subscriptions and was priced 3.8-4.9 percent, IFR reported. IFR, a unit of Thomson Reuters, said the AAA-rated sukuk was divided into 16 tranches, and pricing was “at or below the tight ends of final guidance”. The bonds were issued via Manjung Island Energy, an special purpose vehicle set up to partially fund the construction of a mew coal-fired power plant in the Malaysian state of Perak (Reuters).
There is no concrete proposal for the collaborative agreement between Proton and Perodua yet but the two would like to work together, said Proton advisor Tun Dr Mahathir Mohamad. The former prime minister stressed that the local car industry is not yet ready for liberalisation although the decision on whether to liberalise is up to the government. "A lot of countries are not liberalising. It is not fair yet," he said. "If we open up, they open up and no special conditions are attached, then it is fine. But today people are using other means to stop others from coming in," he said, giving the example of costly standards to comply with in Europe (Bernama).
The floods in Thailand do not affect the Malaysia Airlines (MAS) and AirAsia flights to the land of the white elephants. The spokesperson from both the airline companies said that so far, there had been no cancellation of flights to Thailand because of the floods. They said the reason being that both the airline companies do not fly to the Don Muang Airport, which is closed since Tuesday when its landing strip was submerged in flood water. Instead, the MAS and AirAsia flights used the Suvarnabhumi Airport, which is not affected by the floods (Bernama).
C.I. Holdings Bhd (CIH) expects to conclude the disposal of its beverage subsidiary Permanis Sdn Bhd (Permanis) to Japan's Asahi Group Holdings Ltd (Asahi) within one or two weeks and expects to pay a minimum of RM4 per share in the form of special dividend to its shareholders. On July 21, CIH signed an agreement with Asahi for the disposal of Permanis for an acquisition price of RM820m in cash, representing 70m shares. Group managing director Datuk Johari Abdul Ghani said CIH is now looking to acquire a company with potential but weak management, adding that CIH is not in a rush to buy a company. "At this moment, I think we will distribute a minimum of RM4 to shareholders back so that will leave about RM200m over. "So with that money we will try (to acquire a new business), but if we cannot find anything concrete in the future, we may distribute back to shareholders in the form of capital repayment or special dividend," he said (Bernama).
Parkson Retail Asia Pte Ltd, a unit of Malaysia’s Parkson Holdings Bhd, raised S$138.2 m (US$110m) in an IPO in Singapore, two people with knowledge of the matter said. The company sold 147m shares at S$0.94 a piece, close to the low end of the S$0.935 to S$1.07 range at which the shares were marketed to investors. It has the option to expand the IPO by 22m shares. The department store operator has 50 outlets, including one supermarket, across Malaysia, Vietnam and Indonesia, according to its prospectus. Parkson Retail, based in Singapore, plans to use proceeds from the IPO to open new stores in Indonesia, Malaysia, Vietnam and Cambodia. Parkson Retail plans to pay dividends of between 40% and 50% of its distributable profits, according to the IPO prospectus. The company posted a S$35.8m profit in the 12 months through June, up from S$22.4m a year earlier. (Bloomberg)
YTL Communications Sdn Bhd (YTL Comms) is the frontrunner for the RM1.5b 1Bestarinet project that involves wiring up schools in the country, sources said. YTL Comms may have edged out 18 other players, including a joint bid by Telekom Malaysia Bhd (TM) and Time dotCom Bhd (TDC) for the 1Bestarinet tender. The project involves providing Internet access and a virtual learning (VLM) platform for 9,924 schools in the country from January. Sources said on Tuesday at about 1pm the YTL Comms' name appeared as the winner of the contract on the Education Ministry's website but two hours later the announcement was taken off the website for reasons unknown. Some have expressed surprise that YTL was the frontrunner. Said an industry player: “If indeed they are the winner, it is shocking as they are an unproven service provider. They also do not have fibre so how are they going to offer the services?” The industry player also pointed out that the tender specifications for 1Bestarinet seemed vague and cautioned that he hoped the project would not suffer the same problems faced by a similar project in the past called Schoolnet. Though the Government is looking at RM4.5bn as the absolute sum for the 15-year contract, those in the know claimed the bids received ranged from RM2-6bn. At RM4.5bn, it works out to RM1.5bn for every five years or RM300m for each year. (Star Biz)
The federal government has extended Faber Group Bhd’s hospital support services concession for an interim period of six months, starting Friday, Oct 28. Its unit Faber Medi-Servce Sdn Bhd had received a letter from the Public Private Partnership Unit of the Prime Minister's Department about the extension of the contract. Faber said the extension was subject to the prevailing terms and conditions of the concession or until the signing of a new concession agreement for the privatisation of services with the Health Ministry, whichever is the earlier. “The six months interim extension is not to be considered as binding on the Government of Malaysia,” it said. Faber said more announcements would be made concerning the privatisation of the services when the negotiations with the government have concluded (Financial Daily).
Auto parts manufacturer MBM Resources Bhd has made a takeover offer for Hirotako Holdings Bhd, which makes car safety restraint equipment, offering 97 per share, which is nine sen above the pre-suspension price of 88 sen. Hirotako said it had received a notice of conditional take-over offer from AmInvestment Bank Bhd on behalf of MBM Resources. MBM Resources was offering 97 per share for all the voting shares of 25 sen each in Hirotako and 5.0 sen per warrant. “The board of directors of Hirotako will hold a meeting tomorrow to deliberate on the offer,” it said. MBM Resources said it had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd -- the largest shareholder with 39.948m shares or 22.85% -- to accept the offer. Hiro-Dapat is controlled by Hirotako group managing director Datuk Kuan Peng Ching @ Kuan Peng Soon. MBM Resources said it did not intend to maintain Hirotako’s listing status (Financial Daily).
Dutaland and IOI Corp waged a war of words via Bursa Malaysia website regarding the termination of a proposed acquisition of a large piece of oil palm plantation land in Sabah that was to cost IOI Corp RM830m. IOI alleged that Pertama Land failed to maintain the land according to acceptable agronomic practices. IOI also alleged that there were discrepancies in the particulars relating to the properties. It also questioned the “integrity of the title of Pertama Land in relation to one of the properties.” Dutaland said Pertama Land had continued to operate and manage the properties with due diligence and to maintain and cultivate the said properties and harvest the crops according to good husbandry, including timely manuring of the land. (Starbiz)
Tenaga Nasional Bhd (TNB) will build a 132kV sub-station and a district cooling plant for the supply of chilled water and electricity at the new low-cost carrier terminal, also known as KLIA2, in Sepang, Selangor. The deal, struck with Malaysia Airports Holdings Bhd (MAHB), is for a build-operate-transfer model for a concession period of up to 20 years. In a Bursa Malaysia filing, TNB said 80% of the KLIA2 generation plant project's cost of RM388m would be funded through external borrowings while the balance would be via shareholders' equity. The project is not expected to have any material effect to the EPS, NTA, gearing and has no effect on the share capital and substantial shareholders’ shareholding of TNB or MAHB. (Star Biz, BMSB)
Malaysia’s national power producer Tenaga Nasional Bhd’s RM4.85bn (US$1.55bn) Islamic sukuk attracted RM23bn worth of subscriptions and was priced 3.8-4.9 percent, IFR reported. IFR, a unit of Thomson Reuters, said the AAA-rated sukuk was divided into 16 tranches, and pricing was “at or below the tight ends of final guidance”. The bonds were issued via Manjung Island Energy, an special purpose vehicle set up to partially fund the construction of a mew coal-fired power plant in the Malaysian state of Perak (Reuters).
There is no concrete proposal for the collaborative agreement between Proton and Perodua yet but the two would like to work together, said Proton advisor Tun Dr Mahathir Mohamad. The former prime minister stressed that the local car industry is not yet ready for liberalisation although the decision on whether to liberalise is up to the government. "A lot of countries are not liberalising. It is not fair yet," he said. "If we open up, they open up and no special conditions are attached, then it is fine. But today people are using other means to stop others from coming in," he said, giving the example of costly standards to comply with in Europe (Bernama).
The floods in Thailand do not affect the Malaysia Airlines (MAS) and AirAsia flights to the land of the white elephants. The spokesperson from both the airline companies said that so far, there had been no cancellation of flights to Thailand because of the floods. They said the reason being that both the airline companies do not fly to the Don Muang Airport, which is closed since Tuesday when its landing strip was submerged in flood water. Instead, the MAS and AirAsia flights used the Suvarnabhumi Airport, which is not affected by the floods (Bernama).
C.I. Holdings Bhd (CIH) expects to conclude the disposal of its beverage subsidiary Permanis Sdn Bhd (Permanis) to Japan's Asahi Group Holdings Ltd (Asahi) within one or two weeks and expects to pay a minimum of RM4 per share in the form of special dividend to its shareholders. On July 21, CIH signed an agreement with Asahi for the disposal of Permanis for an acquisition price of RM820m in cash, representing 70m shares. Group managing director Datuk Johari Abdul Ghani said CIH is now looking to acquire a company with potential but weak management, adding that CIH is not in a rush to buy a company. "At this moment, I think we will distribute a minimum of RM4 to shareholders back so that will leave about RM200m over. "So with that money we will try (to acquire a new business), but if we cannot find anything concrete in the future, we may distribute back to shareholders in the form of capital repayment or special dividend," he said (Bernama).
Parkson Retail Asia Pte Ltd, a unit of Malaysia’s Parkson Holdings Bhd, raised S$138.2 m (US$110m) in an IPO in Singapore, two people with knowledge of the matter said. The company sold 147m shares at S$0.94 a piece, close to the low end of the S$0.935 to S$1.07 range at which the shares were marketed to investors. It has the option to expand the IPO by 22m shares. The department store operator has 50 outlets, including one supermarket, across Malaysia, Vietnam and Indonesia, according to its prospectus. Parkson Retail, based in Singapore, plans to use proceeds from the IPO to open new stores in Indonesia, Malaysia, Vietnam and Cambodia. Parkson Retail plans to pay dividends of between 40% and 50% of its distributable profits, according to the IPO prospectus. The company posted a S$35.8m profit in the 12 months through June, up from S$22.4m a year earlier. (Bloomberg)
YTL Communications Sdn Bhd (YTL Comms) is the frontrunner for the RM1.5b 1Bestarinet project that involves wiring up schools in the country, sources said. YTL Comms may have edged out 18 other players, including a joint bid by Telekom Malaysia Bhd (TM) and Time dotCom Bhd (TDC) for the 1Bestarinet tender. The project involves providing Internet access and a virtual learning (VLM) platform for 9,924 schools in the country from January. Sources said on Tuesday at about 1pm the YTL Comms' name appeared as the winner of the contract on the Education Ministry's website but two hours later the announcement was taken off the website for reasons unknown. Some have expressed surprise that YTL was the frontrunner. Said an industry player: “If indeed they are the winner, it is shocking as they are an unproven service provider. They also do not have fibre so how are they going to offer the services?” The industry player also pointed out that the tender specifications for 1Bestarinet seemed vague and cautioned that he hoped the project would not suffer the same problems faced by a similar project in the past called Schoolnet. Though the Government is looking at RM4.5bn as the absolute sum for the 15-year contract, those in the know claimed the bids received ranged from RM2-6bn. At RM4.5bn, it works out to RM1.5bn for every five years or RM300m for each year. (Star Biz)
The federal government has extended Faber Group Bhd’s hospital support services concession for an interim period of six months, starting Friday, Oct 28. Its unit Faber Medi-Servce Sdn Bhd had received a letter from the Public Private Partnership Unit of the Prime Minister's Department about the extension of the contract. Faber said the extension was subject to the prevailing terms and conditions of the concession or until the signing of a new concession agreement for the privatisation of services with the Health Ministry, whichever is the earlier. “The six months interim extension is not to be considered as binding on the Government of Malaysia,” it said. Faber said more announcements would be made concerning the privatisation of the services when the negotiations with the government have concluded (Financial Daily).
Auto parts manufacturer MBM Resources Bhd has made a takeover offer for Hirotako Holdings Bhd, which makes car safety restraint equipment, offering 97 per share, which is nine sen above the pre-suspension price of 88 sen. Hirotako said it had received a notice of conditional take-over offer from AmInvestment Bank Bhd on behalf of MBM Resources. MBM Resources was offering 97 per share for all the voting shares of 25 sen each in Hirotako and 5.0 sen per warrant. “The board of directors of Hirotako will hold a meeting tomorrow to deliberate on the offer,” it said. MBM Resources said it had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd -- the largest shareholder with 39.948m shares or 22.85% -- to accept the offer. Hiro-Dapat is controlled by Hirotako group managing director Datuk Kuan Peng Ching @ Kuan Peng Soon. MBM Resources said it did not intend to maintain Hirotako’s listing status (Financial Daily).
20111028 1100 Local & Global Economic Related News.
The Asian financial sector has excellent prospects due to favourable demographics, high savings, propelling growth and access to technology and capital. Tan Sri Andrew Sheng, Fung Global Institute president said at the inaugural CIMB Asean Conference yesterday that the current financial crisis has triggered a fundamental review of the international financial order and architecture. Post crisis, advanced countries would see slower growth while emerging markets, especially Asian, are expected to grow strongly, he said. The Asian Development Bank (ADB) has projected an 'Asian Century' scenario where Asia's share of global GDP could double by 51% by 2050, returning the world economic order to what it was before the Industrial Revolution some 250 years ago. By 2050, estimates are that Asia will have half of global financial assets with major financial centres located in Asia. By then, at least three Asian currencies will be global, the Yen, Rmb and Rupee, he added. This prospect has raised the issue of whether Asia can 'go it alone' by 'decoupling'. “In the short term it is not possible but it can be done in the long term provided we integrate and develop our internal capacity," he said. The prospect for decoupling depends on several important factors such as generating domestic engines of consumption and growth, creating own thought leadership, upgrading regional governance and institutionalisation as well as further economic and financial integration. (Bernama)
Should Asia face another financial crisis, chances are it will be more prepared to deal with it than during the 1997/98 Asian economic meltdown, Asean corporate leaders said at the inaugural CIMB Asean Conference yesterday. They, however, added that no country was completely immune to shocks or turbulence, and preparedness for any crisis came from lots of effort and hard work. Khazanah Nasional managing director Tan Sri Azman Mokhtar said if it was not for the 1997/98 Asian crisis, the region would have been worse off in the 2008 global financial meltdown. However, when it came to volatility and instability, the two negative elements were still lingering and Asian countries must not stop working on the best ways to cushion any impact that might arise from yet another crisis, he said. Former Philippine secretary of finance Jose Isidro Camacho said the 1997/98 crisis had resulted in a stronger Asia when it was hit by the 2008 crisis but it did not totally decouple the region from the West. Indonesian Arwin Rasyid, who is CIMB Niaga CEO, said if there was one thing his country learned from the Asian crisis 13 years ago, it was governance. (BT)
The International Trade and Industry Ministry (Miti) welcomes Malaysian companies affected by the massive floods in Thailand to come back, its secretary-general Datuk Dr Rebecca Fatima Sta Maria said. "But keeping in mind the fact that we're still on track to woo high value-added investments to Malaysia," she said. Minister of Miti Datuk Seri Mustapa Mohamed had said about 10 Malaysian companies were affected by severe flooding in Thailand. (Bernama)
Malaysia signed US$10bn economic cooperation deals with China during the roundtable dialogue between PM Datuk Seri Najib Tun Razak and selected Chinese corporate leaders in at the just-concluded 8th China-ASEAN Expo (CAEXPO). Najib also witnessed the signing of memoranda of understanding or agreements between Malaysian and Chinese enterprises. They included engineering, procurement and construction contracts between KLS Energy Sdn Bhd and China Machinery Engineering Corp for the wind/solar hybrid power project in Jaffna (Sri Lanka) and JAKS Resources Bhd and China National Technical Import and Export Corp for thermal power plant project in Vietnam. Others included Perak Transit (The Combined Bus Services Sdn Bhd) and Xiamen King Long United Automative Industry Co Ltd as well as between Proton Marketing Sdn Bhd and Hawtai Motor Group. (Bernama)
The agreement among European leaders to expand a bailout fund to solve the region's debt crisis, creates the right momentum and background for other nations to take action, Minister in the Prime Minister's Department, Tan Sri Nor Mohamed Yakcop said. "Beyond the size of the fund, what is important is the signal that we get from Europe," he said. Under the package, agreed to early yesterday morning, European private banks holding Greek debt, will accept a loss of 50% and banks must also raise more capital to protect themselves against losses resulting from any future government defaults. The main bailout fund will also be boosted to €1tr. (Bernama)
US gross domestic product rose at a 2.5% annual rate in 3Q (+1.3% in 2Q), Commerce Department figures showed. The reading matched economists’ expectations. (Bloomberg)
US household purchases increased at a 2.4% pace in 3Q (+0.7% in 2Q). Economists projected a 1.9% increase. Purchases added 1.7%pts to economic growth. (Bloomberg)
US initial claims for state unemployment benefits slipped by 2,000 to a seasonally adjusted 402,000 in the week ended 27 Oct (403,000 in the prior week), the Labor Department said. Economists forecast claims edging down to 400,000. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 96,000 to 3.645m in the week ended 15 Oct. Economists had forecast so-called continuing claims at 3.7m. (Reuters)
US pending home sales declined 4.6% in Sep (-1.2% in Aug), the biggest since Apr, the National Association of Realtors said. Economists forecast a 0.4% gain. (Bloomberg)
Eurozone economic sentiment eased to 94.8 in Oct (95.0 in Sep). Economists expected a reading of 93.7. (Reuters)
Eurozone industry sentiment fell to -6.6 in Oct from -5.9 in Sep, in line with economists projection of a -6.5 reading. (Reuters, Bloomberg)
Eurozone consumer confidence dropped to -19.9 in Oct from -19.1 in the prior month. (Reuters, Bloomberg)
Eurozone services sector sentiment improved to 0.2 in Oct from 0.0 in Sep. Expectations were for a drop to -1.3. (Reuters, Bloomberg)
Japanese retail sales fell 1.2% yoy in Sep (-2.6% in Aug), suggesting the global economic slowdown and a strong yen dented consumer appetite for spending. The market forecast a 0.1% annual decline. (Reuters)
Bank of Japan governor Masaaki Shirakawa and his policy board expanded their credit and asset-purchase programs to a total of ¥55tr (US$724bn) from ¥50tr in an 8 to 1 vote, the central bank said in a statement. It also kept the overnight lending rate between zero and 0.1%. (Bloomberg)
South Korea’s gross domestic product expanded 0.7% qoq in 3Q (+0.9% in 2Q), the central bank said. Economists expected a reading of 0.6%. (Bloomberg)
China could be willing to contribute between US$50bn and US$100bn to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying key conditions, according to two senior advisers to the Chinese government. (Financial Times).
Thailand’s government said it is losing the battle to protect Bangkok from rising floodwaters. “The flooding is beyond our control now,” said Pracha Promnog, who heads the government’s flood relief operations. “The main wave of water hasn’t arrived in Bangkok yet.” (Bloomberg)
Food inflation in India, based on the wholesale-price index, accelerated 11% yoy, unchanged from the previous week. Prices rose 0.25% wow as vegetables and fruits became more expensive. (Wall Street Journal)
Singapore's growth will stall over the next few quarters before seeing a modest recovery late into 2012, the Monetary Authority of Singapore said on Thursday, raising the possibility that Singapore could only grow below its potential growth rate of 3 and 5%. (ST)
Should Asia face another financial crisis, chances are it will be more prepared to deal with it than during the 1997/98 Asian economic meltdown, Asean corporate leaders said at the inaugural CIMB Asean Conference yesterday. They, however, added that no country was completely immune to shocks or turbulence, and preparedness for any crisis came from lots of effort and hard work. Khazanah Nasional managing director Tan Sri Azman Mokhtar said if it was not for the 1997/98 Asian crisis, the region would have been worse off in the 2008 global financial meltdown. However, when it came to volatility and instability, the two negative elements were still lingering and Asian countries must not stop working on the best ways to cushion any impact that might arise from yet another crisis, he said. Former Philippine secretary of finance Jose Isidro Camacho said the 1997/98 crisis had resulted in a stronger Asia when it was hit by the 2008 crisis but it did not totally decouple the region from the West. Indonesian Arwin Rasyid, who is CIMB Niaga CEO, said if there was one thing his country learned from the Asian crisis 13 years ago, it was governance. (BT)
The International Trade and Industry Ministry (Miti) welcomes Malaysian companies affected by the massive floods in Thailand to come back, its secretary-general Datuk Dr Rebecca Fatima Sta Maria said. "But keeping in mind the fact that we're still on track to woo high value-added investments to Malaysia," she said. Minister of Miti Datuk Seri Mustapa Mohamed had said about 10 Malaysian companies were affected by severe flooding in Thailand. (Bernama)
Malaysia signed US$10bn economic cooperation deals with China during the roundtable dialogue between PM Datuk Seri Najib Tun Razak and selected Chinese corporate leaders in at the just-concluded 8th China-ASEAN Expo (CAEXPO). Najib also witnessed the signing of memoranda of understanding or agreements between Malaysian and Chinese enterprises. They included engineering, procurement and construction contracts between KLS Energy Sdn Bhd and China Machinery Engineering Corp for the wind/solar hybrid power project in Jaffna (Sri Lanka) and JAKS Resources Bhd and China National Technical Import and Export Corp for thermal power plant project in Vietnam. Others included Perak Transit (The Combined Bus Services Sdn Bhd) and Xiamen King Long United Automative Industry Co Ltd as well as between Proton Marketing Sdn Bhd and Hawtai Motor Group. (Bernama)
The agreement among European leaders to expand a bailout fund to solve the region's debt crisis, creates the right momentum and background for other nations to take action, Minister in the Prime Minister's Department, Tan Sri Nor Mohamed Yakcop said. "Beyond the size of the fund, what is important is the signal that we get from Europe," he said. Under the package, agreed to early yesterday morning, European private banks holding Greek debt, will accept a loss of 50% and banks must also raise more capital to protect themselves against losses resulting from any future government defaults. The main bailout fund will also be boosted to €1tr. (Bernama)
US gross domestic product rose at a 2.5% annual rate in 3Q (+1.3% in 2Q), Commerce Department figures showed. The reading matched economists’ expectations. (Bloomberg)
US household purchases increased at a 2.4% pace in 3Q (+0.7% in 2Q). Economists projected a 1.9% increase. Purchases added 1.7%pts to economic growth. (Bloomberg)
US initial claims for state unemployment benefits slipped by 2,000 to a seasonally adjusted 402,000 in the week ended 27 Oct (403,000 in the prior week), the Labor Department said. Economists forecast claims edging down to 400,000. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 96,000 to 3.645m in the week ended 15 Oct. Economists had forecast so-called continuing claims at 3.7m. (Reuters)
US pending home sales declined 4.6% in Sep (-1.2% in Aug), the biggest since Apr, the National Association of Realtors said. Economists forecast a 0.4% gain. (Bloomberg)
Eurozone economic sentiment eased to 94.8 in Oct (95.0 in Sep). Economists expected a reading of 93.7. (Reuters)
Eurozone industry sentiment fell to -6.6 in Oct from -5.9 in Sep, in line with economists projection of a -6.5 reading. (Reuters, Bloomberg)
Eurozone consumer confidence dropped to -19.9 in Oct from -19.1 in the prior month. (Reuters, Bloomberg)
Eurozone services sector sentiment improved to 0.2 in Oct from 0.0 in Sep. Expectations were for a drop to -1.3. (Reuters, Bloomberg)
Japanese retail sales fell 1.2% yoy in Sep (-2.6% in Aug), suggesting the global economic slowdown and a strong yen dented consumer appetite for spending. The market forecast a 0.1% annual decline. (Reuters)
Bank of Japan governor Masaaki Shirakawa and his policy board expanded their credit and asset-purchase programs to a total of ¥55tr (US$724bn) from ¥50tr in an 8 to 1 vote, the central bank said in a statement. It also kept the overnight lending rate between zero and 0.1%. (Bloomberg)
South Korea’s gross domestic product expanded 0.7% qoq in 3Q (+0.9% in 2Q), the central bank said. Economists expected a reading of 0.6%. (Bloomberg)
China could be willing to contribute between US$50bn and US$100bn to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying key conditions, according to two senior advisers to the Chinese government. (Financial Times).
Thailand’s government said it is losing the battle to protect Bangkok from rising floodwaters. “The flooding is beyond our control now,” said Pracha Promnog, who heads the government’s flood relief operations. “The main wave of water hasn’t arrived in Bangkok yet.” (Bloomberg)
Food inflation in India, based on the wholesale-price index, accelerated 11% yoy, unchanged from the previous week. Prices rose 0.25% wow as vegetables and fruits became more expensive. (Wall Street Journal)
Singapore's growth will stall over the next few quarters before seeing a modest recovery late into 2012, the Monetary Authority of Singapore said on Thursday, raising the possibility that Singapore could only grow below its potential growth rate of 3 and 5%. (ST)
20111028 0939 Global Market Related News.
Asia Stocks Rise on U.S. Economic Growth Outlook (Source: Bloomberg)
Asian stocks rose, sending a benchmark index toward its biggest weekly gain since May 2009, as the fastest U.S. economic growth in a year boosted the earnings outlook for Asian exporters after Europe announced measures to contain the region’s debt crisis. Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, rose 3.1 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 2.6 percent. BHP Billiton Ltd. (BHP), Australia’s No. 1 mining company, jumped 2.1 percent after metal and crude prices increased. Fears of a U.S. recession are fading, according toTim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s not an economic scenario at this stage that the U.S. will go into a recession,” he said. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”
U.S. Economy Expands at Faster Pace (Source: Bloomberg)
The U.S. economy grew in the third quarter at the fastest pace in a year as Americans reduced savings to boost purchases and companies stepped up investment in equipment and software. Gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate, up from 1.3 percent in the prior three months, Commerce Department figures showed today in Washington. Household purchases, the biggest part of the economy, increased at a 2.4 percent pace, more than forecast by economists. The biggest drop in incomes in two years, along with declines in home prices and consumer confidence, cast doubt on whether the increase in spending can be sustained. Federal Reserve policy makers, who meet next week, and the Obama administration are considering additional measures to reduce an unemployment rate that has been stuck around 9 percent or higher for 30 months.
S&P 500 Extends Biggest Monthly Rally Since 1974 on European Crisis Deal (Source: Bloomberg)
U.S. stocks rose, extending the biggest monthly rally since 1974 for the Standard & Poor’s 500 Index, as European leaders agreed to expand a bailout fund to $1.4 trillion and American economic growth accelerated. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) advanced at least 8.3 percent, following gains in European lenders. The Dow Jones Transportation Average, a proxy for the economy, jumped 4.5 percent. The index extended its October rally to 20 percent and is poised for its best monthly gain since 1939. Alcoa Inc. (AA) and General Electric Co. climbed more than 6.2 percent to pace gains in companies most-dependent on economic growth.
The S&P 500 rose 3.4 percent to 1,284.59 at 4 p.m. New York time, erasing its 2011 loss and rising to the highest level since Aug. 1. The gauge has climbed 14 percent so far in October. The Dow Jones Industrial Average added 339.51 points, or 2.9 percent, to 12,208.55. The Russell 2000 Index of small companies rallied 5.3 percent and is up 19 percent in October. About 11.9 billion shares changed hands on U.S. exchanges at 4:30 p.m., or 29 percent above the three-month average.
Consumers Negative on Economy (Source: Bloomberg)
Consumer confidence declined last week as Americans’ views of the economy sank to the lowest since the recession, highlighting the challenges facing the recovery. The Bloomberg Consumer Comfort Index fell to minus 51.1 in the week ended Oct. 23, the lowest in a month, from minus 48.4 the prior period. Ninety-five percent of those surveyed had a negative opinion about the economy, the worst since April 2009 and one percentage point shy of a record high. Morass in the housing market, slow hiring and limited wage growth that have soured attitudes may contain consumer spending after a third-quarter pickup. The Obama administration and some Federal Reserve officials said shoring up residential real estate would help speed the recovery.
Jobless Claims in U.S. Decline 2,000 in Limited Labor Market Improvement (Source: Bloomberg)
Fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market. First-time jobless claims decreased by 2,000 to 402,000 in the week ended Oct. 22, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 401,000. The number of people collecting unemployment benefits fell in the prior week by 96,000 to 3.65 million, the fewest since September 2008. Waning dismissals, which lay the groundwork for gains in payrolls, may forestall cutbacks by consumers whose spending accounts for about 70 percent of the economy. At the same time, faster hiring is needed to trim unemployment, lift household confidence and spur the recovery.
“We’re not making much progress,” said Robert Dye, chief economist at Comerica Inc. in Dallas. “Unless we see the labor market improve, we won’t see income growth. The consumer will remain fundamentally constrained.”
Fed Refuses to Share Internal View Traders See Underlying Significant Risk (Source: Bloomberg)
At BNP Paribas (BNP) SA’s New York trading desk, Julia Coronado, the bank’s chief North America economist, watched as three words helped undermine the Federal Reserve’s latest attempt to aid the U.S. economy: “significant downside risks.” The phrase, tucked into a seven-paragraph policy statement about the Fed’s plans to move $400 billion into long-term debt from short-term bonds, warned about the economic outlook while offering no clue on the risks’ severity. The Sept. 21 statement said Fed officials expected “some pickup” in the pace of recovery, though unemployment would “only gradually” decline.
Before they acted last month, members of the Federal Open Market Committee saw far more specific predictions. They had “the Teal Book,” an economic forecast that Fed Chairman Ben Bernanke’s staff of 50 or so Ph.D. economists produces every six weeks -- with numeric forecasts for unemployment, growth and inflation down to the decimal point. The document, so influential it’s been called the “13th member” of the 12- person FOMC, is withheld from the public for five years -- unlike the forecasts of other central banks.
Pending Home Sales Decreases by 4.6% (Source: Bloomberg)
The number of contracts to purchase previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand. The 4.6 percent decrease in the index of pending home sales, the biggest since April, followed a 1.2 percent drop the previous month, the National Association of Realtors said today in Washington. Economists forecast a 0.4 percent gain, according to the median of 38 estimates in a Bloomberg News survey. Consumer sentiment at depressed levels, unemployment above 9 percent and limited access to credit are preventing Americans from taking advantage of near record-low mortgage rates and discounted pricing on homes. The prospect of more foreclosures adding to supply and further weighing on prices means any recovery in housing may take years.
Treasuries Rise on Speculation Growth Won’t Justify Yield Surge (Source: Bloomberg)
Treasuries rose, snapping a loss from yesterday, on speculation the U.S. economy isn’t expanding fast enough to justify the rout that sent yields up in October by the most in 2011. Benchmark 10-year rates climbed 46 basis points this month as European leaders compiled a package to stem the region’s debt crisis and the U.S. economy showed signs of improvement. In September, investors forecasting a recession pushed the rate to a record low as they sought the relative safety of American government debt. Ten-year yields fell two basis points to 2.38 percent as of 9:38 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2.125 percent note maturing in August 2021 rose 1/8, or $1.25 per $1,000 face amount, to 97 25/32. The record low rate was 1.67 percent on Sept. 23.
Japan Stocks Head for Biggest Weekly Gain Since 2010 on Faster U.S. Growth (Source: Bloomberg)
Japan’s Nikkei 225 (NKY) Stock Average rose, set for its biggest weekly gain in a year, as faster U.S. economic growth boosted the earnings outlook for exporters and after Europe struck a deal on measures to solve the debt crisis. Honda Motor Co., a carmaker that gets 83 percent of its sales abroad, rose 3.3 percent. Sharp Corp., a producer of liquid-crystal displays that gets about half of its sales outside Japan, jumped 5.5 percent. Nippon Sheet Glass Co., which counts Europe as its biggest market, advanced 1.7 percent Fears of a U.S. recession are fading, according toTim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s not an economic scenario at this stage that the U.S. will go into a recession,” he said. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”
Sarkozy Temper Boils, Banks Yield to Save Euro (Source: Bloomberg)
The guardians of the euro arrived in Brussels last week knowing their efforts to quell the Greek debt crisis over the past two years had failed to build confidence. Europe’s image is “disastrous,” Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro finance chiefs, said Oct. 21 as the six-day meeting marathon began. By the time everyone headed home in the wee hours yesterday, Europe had its revamped plan to prevent a Greek default, safeguard banks and shield Italy from the contagion. In the meantime, tempers flared, threats were made and French President Nicolas Sarkozy’s simmering resentments toward his British and Italian counterparts boiled over. “We have found a durable solution to the Greece crisis,” said Sarkozy at about 3:55 a.m. yesterday, hustling to the podium to hold the first post-summit press conference.
Even so, the timeline was defined by Germany, where lawmakers demanded the right to ratify the crisis plan, requiring both an Oct. 23 meeting and the gathering that started on Oct. 26.
EU Crisis Deal Buys Time for Greece: Papandreou (Source: Bloomberg)
Prime Minister George Papandreou urged Greeks to support his efforts to revamp the economy after euro-area leaders hammered out a new bailout package for the country and imposed deeper losses on bondholders. “The crisis gives us the opportunity and this agreement gives us time,” Papandreou said on television late yesterday after he and fellow government chiefs forced investors to accept 50 percent writedowns on Greek debt. “We negotiated and managed to erase a very important part of our debt. Tens of billions of euros have been lifted from the backs of the Greek people.” European Union leaders boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) and carved out the second aid package for Greece at a crisis-fighting summit in Brussels lasting into the early hours of yesterday. The 17-nation currency and stocks climbed while bond spreads narrowed on optimism Europe might contain turmoil threatening its economy.
Berlusconi Says Italy Must Follow Through on Vows to Maintain Credibility (Source: Bloomberg)
Prime Minister Silvio Berlusconi warned that Italy will lose its credibility unless it lives up to pledges made to the European Union last night on overhauling the economy and reducing the euro area’s second-biggest debt. “If we don’t respect our commitments, we won’t be credible anymore,” Berlusconi told reporters in Brussels earlier today. His comments came after euro-area leaders urged Italy to pursue an “ambitious timetable” to boost economic growth and cut debt that amounts to about 120 percent of output, the second most in the region after Greece. The premier also said that Italy “isn’t Greece” and will avoid the social unrest that has hit its Mediterranean neighbor amid a wave of austerity measures, even as unions threatened to take to the streets to protest his bid to gradually raise the pension age and ease laws on firing workers.
Sarkozy Wins China Support for European Rescue Fund as Japan Plans to Help (Source: Bloomberg)
French President Nicolas Sarkozy conferred with his Chinese counterpart Hu Jintao as European policy makers seek to build support for an enlarged rescue fund designed to resolve the region’s sovereign-debt crisis. Hu hopes that the measures will help to stabilize markets, state-owned China Central Television reported. The phone call between the leaders came hours after a euro-region summit ended with an agreement to boost the European Financial Stability Facility to about $1.4 trillion, leveraging existing guarantees by as much as five times. Japan plans to support the increase, and is waiting to hear from European officials on details for the program, according to a person familiar with the matter. Sarkozy’s outreach precedes a Group of 20 summit he will host next week, with Europeans seeking to bolster the role of the International Monetary Fund in overcoming the euro-region’s woes.
Australia’s finance chief said that while it’s “appropriate” to look at the IMF’s resources, Europeans must look to themselves first for bailout money. “The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong, said in a Bloomberg Television interview before Sarkozy’s call.
European Stocks Advance on Sovereign Debt-Crisis Deal; Banks Lead Gains (Source: Bloomberg)
European stocks rallied to the highest in 12 weeks after the region’s leaders agreed to expand a bailout fund to halt the sovereign debt crisis. BNP Paribas (BNP) SA, France’s biggest bank, and Deutsche Bank AG (DBK), Germany’s largest, surged at least 15 percent as policy makers decided to boost the firepower of the European rescue fund to 1 trillion euros ($1.4 trillion). PPR SA, the French owner of the Gucci luxury-goods brand, jumped 5.4 percent after third-quarter sales surpassed analyst estimates. The Stoxx Europe 600 Index rose 3.6 percent to 249.42 at the close, the highest since Aug. 3. The index has rallied 16 percent from this year’s low on Sept. 22 amid growing speculation that policy makers would agree on a solution to the region’s debt woes.
South Korea’s Current-Account Surplus Expands on Demand for Autos, Steel (Source: Bloomberg)
South Korea’s current-account surplus widened in September as global demand for cars, steel and oil products bolstered exports. The surplus was $3.1 billion from a revised $292.6 million in August, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income. The central bank this month extended a pause in interest- rate increases as growth concerns outweighed the threat posed by inflation. Asia’s fourth-largest economy grew at a slower pace in the third quarter as companies cut spending, a government report showed yesterday. “The economy is slowing but is unlikely to enter a downturn unless Europe’s fiscal problems deepen,” said Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings Inc. “The BOK will continue to take a wait-and-see stance on rate policy at least until the end of this year as uncertainties remain high.”
Asian stocks rose, sending a benchmark index toward its biggest weekly gain since May 2009, as the fastest U.S. economic growth in a year boosted the earnings outlook for Asian exporters after Europe announced measures to contain the region’s debt crisis. Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, rose 3.1 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 2.6 percent. BHP Billiton Ltd. (BHP), Australia’s No. 1 mining company, jumped 2.1 percent after metal and crude prices increased. Fears of a U.S. recession are fading, according toTim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s not an economic scenario at this stage that the U.S. will go into a recession,” he said. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”
U.S. Economy Expands at Faster Pace (Source: Bloomberg)
The U.S. economy grew in the third quarter at the fastest pace in a year as Americans reduced savings to boost purchases and companies stepped up investment in equipment and software. Gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate, up from 1.3 percent in the prior three months, Commerce Department figures showed today in Washington. Household purchases, the biggest part of the economy, increased at a 2.4 percent pace, more than forecast by economists. The biggest drop in incomes in two years, along with declines in home prices and consumer confidence, cast doubt on whether the increase in spending can be sustained. Federal Reserve policy makers, who meet next week, and the Obama administration are considering additional measures to reduce an unemployment rate that has been stuck around 9 percent or higher for 30 months.
S&P 500 Extends Biggest Monthly Rally Since 1974 on European Crisis Deal (Source: Bloomberg)
U.S. stocks rose, extending the biggest monthly rally since 1974 for the Standard & Poor’s 500 Index, as European leaders agreed to expand a bailout fund to $1.4 trillion and American economic growth accelerated. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) advanced at least 8.3 percent, following gains in European lenders. The Dow Jones Transportation Average, a proxy for the economy, jumped 4.5 percent. The index extended its October rally to 20 percent and is poised for its best monthly gain since 1939. Alcoa Inc. (AA) and General Electric Co. climbed more than 6.2 percent to pace gains in companies most-dependent on economic growth.
The S&P 500 rose 3.4 percent to 1,284.59 at 4 p.m. New York time, erasing its 2011 loss and rising to the highest level since Aug. 1. The gauge has climbed 14 percent so far in October. The Dow Jones Industrial Average added 339.51 points, or 2.9 percent, to 12,208.55. The Russell 2000 Index of small companies rallied 5.3 percent and is up 19 percent in October. About 11.9 billion shares changed hands on U.S. exchanges at 4:30 p.m., or 29 percent above the three-month average.
Consumers Negative on Economy (Source: Bloomberg)
Consumer confidence declined last week as Americans’ views of the economy sank to the lowest since the recession, highlighting the challenges facing the recovery. The Bloomberg Consumer Comfort Index fell to minus 51.1 in the week ended Oct. 23, the lowest in a month, from minus 48.4 the prior period. Ninety-five percent of those surveyed had a negative opinion about the economy, the worst since April 2009 and one percentage point shy of a record high. Morass in the housing market, slow hiring and limited wage growth that have soured attitudes may contain consumer spending after a third-quarter pickup. The Obama administration and some Federal Reserve officials said shoring up residential real estate would help speed the recovery.
Jobless Claims in U.S. Decline 2,000 in Limited Labor Market Improvement (Source: Bloomberg)
Fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market. First-time jobless claims decreased by 2,000 to 402,000 in the week ended Oct. 22, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 401,000. The number of people collecting unemployment benefits fell in the prior week by 96,000 to 3.65 million, the fewest since September 2008. Waning dismissals, which lay the groundwork for gains in payrolls, may forestall cutbacks by consumers whose spending accounts for about 70 percent of the economy. At the same time, faster hiring is needed to trim unemployment, lift household confidence and spur the recovery.
“We’re not making much progress,” said Robert Dye, chief economist at Comerica Inc. in Dallas. “Unless we see the labor market improve, we won’t see income growth. The consumer will remain fundamentally constrained.”
Fed Refuses to Share Internal View Traders See Underlying Significant Risk (Source: Bloomberg)
At BNP Paribas (BNP) SA’s New York trading desk, Julia Coronado, the bank’s chief North America economist, watched as three words helped undermine the Federal Reserve’s latest attempt to aid the U.S. economy: “significant downside risks.” The phrase, tucked into a seven-paragraph policy statement about the Fed’s plans to move $400 billion into long-term debt from short-term bonds, warned about the economic outlook while offering no clue on the risks’ severity. The Sept. 21 statement said Fed officials expected “some pickup” in the pace of recovery, though unemployment would “only gradually” decline.
Before they acted last month, members of the Federal Open Market Committee saw far more specific predictions. They had “the Teal Book,” an economic forecast that Fed Chairman Ben Bernanke’s staff of 50 or so Ph.D. economists produces every six weeks -- with numeric forecasts for unemployment, growth and inflation down to the decimal point. The document, so influential it’s been called the “13th member” of the 12- person FOMC, is withheld from the public for five years -- unlike the forecasts of other central banks.
Pending Home Sales Decreases by 4.6% (Source: Bloomberg)
The number of contracts to purchase previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand. The 4.6 percent decrease in the index of pending home sales, the biggest since April, followed a 1.2 percent drop the previous month, the National Association of Realtors said today in Washington. Economists forecast a 0.4 percent gain, according to the median of 38 estimates in a Bloomberg News survey. Consumer sentiment at depressed levels, unemployment above 9 percent and limited access to credit are preventing Americans from taking advantage of near record-low mortgage rates and discounted pricing on homes. The prospect of more foreclosures adding to supply and further weighing on prices means any recovery in housing may take years.
Treasuries Rise on Speculation Growth Won’t Justify Yield Surge (Source: Bloomberg)
Treasuries rose, snapping a loss from yesterday, on speculation the U.S. economy isn’t expanding fast enough to justify the rout that sent yields up in October by the most in 2011. Benchmark 10-year rates climbed 46 basis points this month as European leaders compiled a package to stem the region’s debt crisis and the U.S. economy showed signs of improvement. In September, investors forecasting a recession pushed the rate to a record low as they sought the relative safety of American government debt. Ten-year yields fell two basis points to 2.38 percent as of 9:38 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2.125 percent note maturing in August 2021 rose 1/8, or $1.25 per $1,000 face amount, to 97 25/32. The record low rate was 1.67 percent on Sept. 23.
Japan Stocks Head for Biggest Weekly Gain Since 2010 on Faster U.S. Growth (Source: Bloomberg)
Japan’s Nikkei 225 (NKY) Stock Average rose, set for its biggest weekly gain in a year, as faster U.S. economic growth boosted the earnings outlook for exporters and after Europe struck a deal on measures to solve the debt crisis. Honda Motor Co., a carmaker that gets 83 percent of its sales abroad, rose 3.3 percent. Sharp Corp., a producer of liquid-crystal displays that gets about half of its sales outside Japan, jumped 5.5 percent. Nippon Sheet Glass Co., which counts Europe as its biggest market, advanced 1.7 percent Fears of a U.S. recession are fading, according toTim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s not an economic scenario at this stage that the U.S. will go into a recession,” he said. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”
Sarkozy Temper Boils, Banks Yield to Save Euro (Source: Bloomberg)
The guardians of the euro arrived in Brussels last week knowing their efforts to quell the Greek debt crisis over the past two years had failed to build confidence. Europe’s image is “disastrous,” Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro finance chiefs, said Oct. 21 as the six-day meeting marathon began. By the time everyone headed home in the wee hours yesterday, Europe had its revamped plan to prevent a Greek default, safeguard banks and shield Italy from the contagion. In the meantime, tempers flared, threats were made and French President Nicolas Sarkozy’s simmering resentments toward his British and Italian counterparts boiled over. “We have found a durable solution to the Greece crisis,” said Sarkozy at about 3:55 a.m. yesterday, hustling to the podium to hold the first post-summit press conference.
Even so, the timeline was defined by Germany, where lawmakers demanded the right to ratify the crisis plan, requiring both an Oct. 23 meeting and the gathering that started on Oct. 26.
EU Crisis Deal Buys Time for Greece: Papandreou (Source: Bloomberg)
Prime Minister George Papandreou urged Greeks to support his efforts to revamp the economy after euro-area leaders hammered out a new bailout package for the country and imposed deeper losses on bondholders. “The crisis gives us the opportunity and this agreement gives us time,” Papandreou said on television late yesterday after he and fellow government chiefs forced investors to accept 50 percent writedowns on Greek debt. “We negotiated and managed to erase a very important part of our debt. Tens of billions of euros have been lifted from the backs of the Greek people.” European Union leaders boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) and carved out the second aid package for Greece at a crisis-fighting summit in Brussels lasting into the early hours of yesterday. The 17-nation currency and stocks climbed while bond spreads narrowed on optimism Europe might contain turmoil threatening its economy.
Berlusconi Says Italy Must Follow Through on Vows to Maintain Credibility (Source: Bloomberg)
Prime Minister Silvio Berlusconi warned that Italy will lose its credibility unless it lives up to pledges made to the European Union last night on overhauling the economy and reducing the euro area’s second-biggest debt. “If we don’t respect our commitments, we won’t be credible anymore,” Berlusconi told reporters in Brussels earlier today. His comments came after euro-area leaders urged Italy to pursue an “ambitious timetable” to boost economic growth and cut debt that amounts to about 120 percent of output, the second most in the region after Greece. The premier also said that Italy “isn’t Greece” and will avoid the social unrest that has hit its Mediterranean neighbor amid a wave of austerity measures, even as unions threatened to take to the streets to protest his bid to gradually raise the pension age and ease laws on firing workers.
Sarkozy Wins China Support for European Rescue Fund as Japan Plans to Help (Source: Bloomberg)
French President Nicolas Sarkozy conferred with his Chinese counterpart Hu Jintao as European policy makers seek to build support for an enlarged rescue fund designed to resolve the region’s sovereign-debt crisis. Hu hopes that the measures will help to stabilize markets, state-owned China Central Television reported. The phone call between the leaders came hours after a euro-region summit ended with an agreement to boost the European Financial Stability Facility to about $1.4 trillion, leveraging existing guarantees by as much as five times. Japan plans to support the increase, and is waiting to hear from European officials on details for the program, according to a person familiar with the matter. Sarkozy’s outreach precedes a Group of 20 summit he will host next week, with Europeans seeking to bolster the role of the International Monetary Fund in overcoming the euro-region’s woes.
Australia’s finance chief said that while it’s “appropriate” to look at the IMF’s resources, Europeans must look to themselves first for bailout money. “The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong, said in a Bloomberg Television interview before Sarkozy’s call.
European Stocks Advance on Sovereign Debt-Crisis Deal; Banks Lead Gains (Source: Bloomberg)
European stocks rallied to the highest in 12 weeks after the region’s leaders agreed to expand a bailout fund to halt the sovereign debt crisis. BNP Paribas (BNP) SA, France’s biggest bank, and Deutsche Bank AG (DBK), Germany’s largest, surged at least 15 percent as policy makers decided to boost the firepower of the European rescue fund to 1 trillion euros ($1.4 trillion). PPR SA, the French owner of the Gucci luxury-goods brand, jumped 5.4 percent after third-quarter sales surpassed analyst estimates. The Stoxx Europe 600 Index rose 3.6 percent to 249.42 at the close, the highest since Aug. 3. The index has rallied 16 percent from this year’s low on Sept. 22 amid growing speculation that policy makers would agree on a solution to the region’s debt woes.
South Korea’s Current-Account Surplus Expands on Demand for Autos, Steel (Source: Bloomberg)
South Korea’s current-account surplus widened in September as global demand for cars, steel and oil products bolstered exports. The surplus was $3.1 billion from a revised $292.6 million in August, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income. The central bank this month extended a pause in interest- rate increases as growth concerns outweighed the threat posed by inflation. Asia’s fourth-largest economy grew at a slower pace in the third quarter as companies cut spending, a government report showed yesterday. “The economy is slowing but is unlikely to enter a downturn unless Europe’s fiscal problems deepen,” said Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings Inc. “The BOK will continue to take a wait-and-see stance on rate policy at least until the end of this year as uncertainties remain high.”
20111028 0938 Global Commodities Related News.
Metals, Oil Lead Commodities Higher After European Debt-Crisis Agreement (Source: Bloomberg)
Commodities advanced to a six-week high, led by metals and gasoline, after European leaders agreed to expand a rescue fund designed to stem the region’s sovereign debt crisis and as the U.S. economy grew in the third quarter at the fastest pace in a year. The Standard & Poor’s GSCI Index rose 3 percent to 657.14, the highest level since Sept. 15, as 20 of the 24 commodities tracked by the gauge climbed. Copper, which was poised for a weekly record rally, led the gains. Lead, silver, zinc and crude oil rounded out the top five movers. European leaders persuaded bondholders to take 50 percent losses on Greek debt and boosted the firepower of the bailout fund to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the financial crisis. Gross domestic product in the U.S. rose at a 2.5 percent annual rate in the three months through September, according to the Commerce Department.
“We are not out of the woods, and the U.S. economy is not completely recovered, but the European debt deal and the U.S. GDP number have restored some confidence,” said Jason Schenker, an Austin, Texas-based energy consultant.
Corn (Source: CME)
US corn futures end higher on broad-based strength in commodities and equities on optimism about Europe's debt problems. An EU plan to address the crisis cheered investors and eased worries about a global crisis that would hurt commodity demand. A weaker dollar and surging equities added to the positive environment for commodities, traders say. Speculation that China, a key grain buyer, may take steps to stimulate its economy also supportive, traders add. Longer-term, analysts say corn supplies are going to remain uncomfortably tight, regardless of what happens with the economy. CBOT Dec. corn ends down 14 1/4c, or 2.2%, to $6.51 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end higher as plan to resolve Europe's debt crisis fuels investor optimism. Wheat joined other commodities and equities in the rally, which for the moment eases worries about a global economic slump. Weaker US dollar added to the support. Wheat's own supply/demand fundamentals took a back seat, but traders say worries about US winter wheat crop provide underlying support. However, export demand for US wheat remains lackluster and global supplies are comfortable, traders add. CBOT Dec wheat ends up 24 1/2c, or 4.0%, to $6.44 a bushel; KCBT wheat up 22c to $7.38; MGEX wheat up 12 3/4c to $9.23.
Rice (Source: CME)
US rice futures close higher as broad buying lifts commodities in general. Traders increased risk exposure as Europe's latest plan to address the euro zone's debt crisis eases concerns about a global economic slowdown. Yet, rice futures have a muted reaction to the news following strong gains earlier this week, analysts say. Prices had been rising on crop-damaging floods in Thailand. CBOT January rice gains 7c to $17.24/hundredweight.
Wheat jumps 1.7 pct, corn rebounds on EU rescue plan
SINGAPORE, Oct 27 (Reuters) - U.S. wheat rose 1.7 percent , while corn firmed following its biggest drop in a month as a move by European leaders to boost the region's rescue fund sparked a broad-based rally in the commodity markets.
"We are seeing a strong session across all risk assets, including agricultural commodities, and it appears to be linked to the optimism that the markets have displayed following the European summit," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
Zimbabwe secures $300 mln Brazil farm loan - paper
HARARE, Oct 27 (Reuters) - Zimbabwe has secured a $300 million loan from Brazil to finance agriculture and boost crop production after successive years of food deficits, state media reported on Thursday.
The loan is part of Brazil's aid programme for Africa, the state-controlled Herald newspaper said.
Philippines sees 2012 rice imports around 500,000T
MANILA, Oct 27 (Reuters) - The Philippines' rice purchases next year may still be around an earlier estimate of 500,000 tonnes despite damages from recent typhoons and will unlikely match imports of the grain in 2011, the Agriculture secretary said on Thursday.
Manila, one of the world's biggest rice buyers, bought a total 860,000 tonnes of the grain this year.
Indonesia says Thai, Vietnam rice deals unaffected by floods
JAKARTA, Oct 27 (Reuters) - Flooding in top rice producers Thailand and Vietnam has not led to the cancellation of export deals to Indonesia for 1.05 million tonnes, state procurement agency Bulog said on Thursday.
The agency, which has an official permit to import 1.6 million tonnes in 2011, currently has a 900,000-tonne government-to-government deal with Vietnam, and a 150,000-tonne commercial pact with Thailand, said Bulog official, Sentot Hariwibowo.
Argentine trucking companies say will expand strike
BUENOS AIRES, Oct 26 (Reuters) - Trucking companies that haul grains to Argentina's key dispatch point, Rosario, said they will go on strike on Thursday if Buenos Aires province does not establish a minimal hauling rate.
The FETRA group of trucking companies started a strike earlier this week in Buenos Aires province and on Wednesday vowed to increase the area covered by the work stoppage to the key port of Rosario in the neighboring province of Santa Fe.
French maize crop close to 16 mln tonnes - growers
PARIS, Oct 26 (Reuters) - France is expected to produce some 16 million tonnes of maize grain this year on the back of an estimated record yield of between 10.4 and 10.5 tonnes per hectare, maize growers group AGPM said on Wednesday.
The expected average yield would pass a previous record of 9.7 tonnes a hectare in 2007/08 as estimated by French farm office FranceAgriMer.
S.Africa maize deliveries rise to 9.404 mln T- SAGIS
JOHANNESBURG, Oct 26 (Reuters) - Maize deliveries to South African silos rose to 9.404 million tonnes in the week to Oct. 21, up from a revised 9.371 million tonnes in the week before, data showed on Wednesday.
White maize deliveries rose to 5.705 million tonnes from a revised 5.684 million tonnes, while yellow maize submissions increased to 3.699 million tonnes from a revised 3.687 million tonnes, the South African Grain Information Service (SAGIS) said.
Bullish bets build again in corn: Gavin Maguire
--Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, Oct 27 (Reuters) - December corn futures are trading around $6.50 a bushel, in the lower third of their trading range for the year, as harvest pressure and broad concerns about the global economy keep buying interest in check.
But a growing number of traders appear to be betting on a strong rebound in corn values within the coming weeks. Open interest in $7 December corn calls is up nearly 40 percent from mid-September levels, and is now close to all-time highs at more than 66,000 contracts -- representing more than 330 million bushels of potential buying interest should corn prices climb by a further 10 percent or so.
IGC Raises World 11-12 Corn Output View 10M Tons To 855M Tons (Source: CME)
World corn production is expected to rise 3.5% from last season to a record 855 million metric tons in 2011-12, the International Grains Council said, raising its previous estimate by 10 million tons. Output from Europe is pegged at an unprecedented 63.8 million tons, above its previous record of three years ago and up 8 million tons from 2010-11, the London-based body said. China is expected to produce 183 million tons--3 million tons more than predicted in September--while crops in South American producers Brazil and Argentina are both seen higher at 27 million and 60 million tons, respectively. "World maize production prospects have improved during the past month, with crops forecast to be at, or close to, record highs in many leading growers," said the IGC. Although more grain is available than previously expected, usage is also expected to rise, so ending stocks are seen only 5 million tons higher at 123 million tons.
China's corn imports are revised up by 1 million tons to 4 million tons--still well below industry forecasts--while Europe is also expected to use more of the grain for feed. "Improved availabilities are expected to encourage additional feeding in some countries," said the body. Prospects for the world's wheat crop are improving too, with output now expected to hit 684 million tons, up 5 million tons from the IGC's previous forecast, and boosting carryover stocks to a 10-year high of 202 million tons. Total grain output is seen at 1.819 billion tons, up 13 million tons from the previous forecast, the IGC said.
Ukraine Harvests 48.9 Mln Tons Grain To October 26 (Source: CME)
Ukraine harvested 48.9 million metric tons of grain to Oct. 26 on 14 million hectares, 92% of the total area to be harvested, the Agriculture Ministry reported. The average yield to date was 3.48 tons a hectare, compared with 2.77 tons a hectare a year ago. The government expects this year's grain harvest at 52 million-53 million tons. Ukraine's grain harvest in 2010 fell by 14.8% on the year to 39.23 million tons in clean weight because of drought.
China 2011-12 Corn Imports May Surge To 4.0 Mln Tons -Morgan Stanley (Source: CME)
China's corn imports may increase fourfold to 4.0 million metric tons this marketing year, due to increasing demand to feed industry and livestock that can't be met by domestic production, Morgan Stanley said. In September and October, China has imported around 1.4 million tons of corn from the U.S., the investment bank said in a recent report, 40% more than the U.S. Department of Agriculture's estimate of 1.0 million tons for all of China's imports in the U.S. marketing year that ended Aug. 31. Most of China's corn imports are from the U.S., though some is also imported from Southeast Asian neighbors. China, which in theory aims for self-sufficiency in grains, started to import large quantities of U.S. corn last year. Industrial use of corn has surged to 43 million tons in China, accounting for around 20% of projected consumption in 2011 from around 10 million tons a year a decade ago, Morgan Stanley said, noting that this makes it the second-largest industrial user of the grain after the U.S.
With a growing livestock population--mostly hogs, reflecting the Chinese preference for pork--and continued consolidation of the livestock industry, demand for corn as animal feed has increased 2.1% a year over the past decade, it said. Corn as livestock feed accounts for 70% of domestic consumption of the grain. China's corn production has grown at a slightly slower average annual rate of 2% over the past decade, to 177 million tons in 2010-11 and forecast at almost 180 million tons this year, Morgan Stanley said. Area under corn has increased by 2% during the last 10 years, mostly at the expense of soybeans, it said. While annual soybean production has held mostly steady over the past decade at 14 million-15 million tons, increasing demand has pushed up imports. China's soybean imports are forecast at 57 million tons this year, up from 52 million tons in 2010-11, it said. China is world's largest importer of soybeans.
Soybean, Corn Futures Advance on European Debt Deal, U.S. Economic Growth (Source: Bloomberg)
Soybeans and corn rose the most in more than two weeks as European leaders agreed to boost the region’s rescue fund in a bid to stem the debt crisis, bolstering prospects for commodity demand. The MSCI All-Country World Index jumped as much as 4.8 percent, and the euro rose to a seven-week high against the dollar, after European leaders agreed to expand a bailout fund to about 1 trillion euros ($1.4 billion). The U.S. economy grew at a 2.5 percent annual rate in the third quarter as household spending gained 2.4 percent, more than forecast, the government reported today. “Europe has avoided a default disaster for now, and the short-term trend is to buy riskier assets including the grains,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “Improved consumer spending and a weaker dollar may help to boost overseas buying. Export demand needs to improve to sustain the rally.”
Soybean futures for January delivery rose 2 percent to close at $12.44 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain since Oct. 11.
Wheat Rises as EU Debt Plan Weakens Dollar, Boosts U.S. Export Prospects (Source: Bloomberg)
Wheat futures rose the most in two weeks as Europe’s plan to ease the region’s debt crisis eroded the value of the dollar and bolstered prospects for U.S. grain exports. The dollar tumbled to a seven-week low against a basket of six major currencies, and global equities rallied, after European leaders agreed to expand a bailout. The Standard & Poor’s GSCI Index of 24 commodities climbed to the highest in almost six weeks. Yesterday, commodities including wheat fell on concern that failure to reach an agreement on a debt plan in Europe would limit economic growth. “Today, our dollar is plummeting, and that’s giving our grain markets some strength,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said in a telephone interview. “We’re going to recover from yesterday’s losses, thanks to the European situation and the dollar being down hard.”
Sugar, coffee rise, lifted by euro zone deal
LONDON, Oct 27 (Reuters) - ICE sugar, coffee and cocoa futures rose in early trade, after European leaders struck a deal to resolve a two-year-old sovereign debt crisis.
Raw sugar futures firmed, supported by stronger outside financial markets, bolstered by the euro zone debt deal.
Egypt imposes temporary cotton import ban - paper
CAIRO, Oct 27 (Reuters) - Egypt has imposed a temporary ban on cotton imports until the local crop has been sold, a financial newspaper reported on Thursday, saying there were problems marketing the domestic harvest.
"This procedure will help solve the marketing problem for local cotton which is currently facing difficulties," Salah Moawad, president of the agricultural services sector at the Agriculture Ministry, told newspaper al-Mal.
Pakistan cuts cotton output estimate to 12.22 mln bales
ISLAMABAD, Oct 27 (Reuters) - Pakistan has cut its forecast for cotton output to 12.22 million bales for the 2011/12 fiscal year, down nearly 800,000 bales, or about 6 percent, from earlier projections, hit by losses from heavy monsoon rains, a government textile body said.
The world's fourth-larget cotton producer was hoping for record cotton production of 15 million bales before monsoon floods lashed the second-largest cotton-growing province of Sindh in August and September.
Ivory Coast expects record 1.6 mln T cocoa this season
ACCRA, Oct 26 (Reuters) - Ivory Coast authorities are expecting to set a new record of 1.6 million tonnes of cocoa output for the 2011/12 season, a senior government cocoa adviser said on Wednesday.
"Our new season ... is going well. The forecast is 1.6 million (tonnes) after the preliminary assessment -- that is what we are working towards," Malick Tohe, special adviser on cocoa to Prime Minister Guillaume Soro, told Reuters on the sidelines of the World Cocoa Foundation conference in neighbouring Ghana.
Brazil CS sugar output trails last season by 3 pct
BRASILIA, Oct 26 (Reuters) - Sugar output from Brazil's center south cane crop totaled 27.7 million tonnes from the start of the season through Oct. 16, down 3 percent from a year ago helped by an unexpected rise in yields late in the season, cane industry association Unica said on Wednesday.
Cane crushing in the region totaled 436.5 million tonnes, down 7 percent from the same period last year. Ethanol production fell 16 percent to 18.2 billion liters.
Brazil coffee crop seen around 55 mln bags - Illy CEO
SAO PAULO, Oct 26 (Reuters) - The chief executive of Illycaffe said on Wednesday he expected Brazil's new 2012/13 coffee crop to reach 55 million 60-kg bags.
Illycaffe is inaugurating its first coffee shop in Sao Paulo, Brazil, the world's largest producer and exporter of coffee.
Crude Oil Drops in New York, Heads for Biggest Weekly Gain in Eight Months (Source: Bloomberg)
Oil fell in New York, trimming its biggest weekly gain since February, as a drop in Japanese industrial output countered speculation U.S. economic growth and a deal to tame Europe’s debt crisis will boost fuel demand. Futures slipped as much as 0.5 percent after Japanese factory production declined 4 percent in September from the previous month, almost twice as much as the median economist estimate in a Bloomberg News survey. Prices surged yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year and European leaders agreed a deal to curb the region’s debt crisis. Crude oil for December delivery decreased as much as 43 cents to $93.53 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.66 at 11:47 a.m. Sydney time. The contract yesterday advanced $3.76 to $93.96, the highest close since Aug. 1. Prices are 7.2 percent higher this week, the biggest gain since the period ended Feb. 25. Futures have gained 2.5 percent this year.
Copper Traders See End to Record Rally as China Demand Slows: Commodities (Source: Bloomberg)
Copper traders and analysts are forecasting an end to the biggest weekly rally since at least 1986 on concern demand will slow in China while Europe’s lingering financial crisis limits growth. Eleven of 23 people surveyed by Bloomberg say copper will drop next week, eight predicted a gain, and four said prices will be little changed. The last time respondents were mostly bearish, on Sept. 23, the metal slumped 4.6 percent in the following week. Traders also predicted lower sugar prices next week, and gains in gold, corn and soybeans.
While copper surged 14 percent this week as European leaders agreed to expand the region’s bailout fund, the metal is down 20 percent from a record on Feb. 15, the common definition of a bear market. Global output exceeded demand in the eight months through August, the World Bureau of Metal Statistics said on Oct. 19. Goldman Sachs Group Inc. and UBS AG cut their copper forecasts for 2012 this month, and economists surveyed by Bloomberg predict slower growth next year in Europe and China, the world’s largest metal user.
Commodities advanced to a six-week high, led by metals and gasoline, after European leaders agreed to expand a rescue fund designed to stem the region’s sovereign debt crisis and as the U.S. economy grew in the third quarter at the fastest pace in a year. The Standard & Poor’s GSCI Index rose 3 percent to 657.14, the highest level since Sept. 15, as 20 of the 24 commodities tracked by the gauge climbed. Copper, which was poised for a weekly record rally, led the gains. Lead, silver, zinc and crude oil rounded out the top five movers. European leaders persuaded bondholders to take 50 percent losses on Greek debt and boosted the firepower of the bailout fund to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the financial crisis. Gross domestic product in the U.S. rose at a 2.5 percent annual rate in the three months through September, according to the Commerce Department.
“We are not out of the woods, and the U.S. economy is not completely recovered, but the European debt deal and the U.S. GDP number have restored some confidence,” said Jason Schenker, an Austin, Texas-based energy consultant.
Corn (Source: CME)
US corn futures end higher on broad-based strength in commodities and equities on optimism about Europe's debt problems. An EU plan to address the crisis cheered investors and eased worries about a global crisis that would hurt commodity demand. A weaker dollar and surging equities added to the positive environment for commodities, traders say. Speculation that China, a key grain buyer, may take steps to stimulate its economy also supportive, traders add. Longer-term, analysts say corn supplies are going to remain uncomfortably tight, regardless of what happens with the economy. CBOT Dec. corn ends down 14 1/4c, or 2.2%, to $6.51 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end higher as plan to resolve Europe's debt crisis fuels investor optimism. Wheat joined other commodities and equities in the rally, which for the moment eases worries about a global economic slump. Weaker US dollar added to the support. Wheat's own supply/demand fundamentals took a back seat, but traders say worries about US winter wheat crop provide underlying support. However, export demand for US wheat remains lackluster and global supplies are comfortable, traders add. CBOT Dec wheat ends up 24 1/2c, or 4.0%, to $6.44 a bushel; KCBT wheat up 22c to $7.38; MGEX wheat up 12 3/4c to $9.23.
Rice (Source: CME)
US rice futures close higher as broad buying lifts commodities in general. Traders increased risk exposure as Europe's latest plan to address the euro zone's debt crisis eases concerns about a global economic slowdown. Yet, rice futures have a muted reaction to the news following strong gains earlier this week, analysts say. Prices had been rising on crop-damaging floods in Thailand. CBOT January rice gains 7c to $17.24/hundredweight.
Wheat jumps 1.7 pct, corn rebounds on EU rescue plan
SINGAPORE, Oct 27 (Reuters) - U.S. wheat rose 1.7 percent , while corn firmed following its biggest drop in a month as a move by European leaders to boost the region's rescue fund sparked a broad-based rally in the commodity markets.
"We are seeing a strong session across all risk assets, including agricultural commodities, and it appears to be linked to the optimism that the markets have displayed following the European summit," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
Zimbabwe secures $300 mln Brazil farm loan - paper
HARARE, Oct 27 (Reuters) - Zimbabwe has secured a $300 million loan from Brazil to finance agriculture and boost crop production after successive years of food deficits, state media reported on Thursday.
The loan is part of Brazil's aid programme for Africa, the state-controlled Herald newspaper said.
Philippines sees 2012 rice imports around 500,000T
MANILA, Oct 27 (Reuters) - The Philippines' rice purchases next year may still be around an earlier estimate of 500,000 tonnes despite damages from recent typhoons and will unlikely match imports of the grain in 2011, the Agriculture secretary said on Thursday.
Manila, one of the world's biggest rice buyers, bought a total 860,000 tonnes of the grain this year.
Indonesia says Thai, Vietnam rice deals unaffected by floods
JAKARTA, Oct 27 (Reuters) - Flooding in top rice producers Thailand and Vietnam has not led to the cancellation of export deals to Indonesia for 1.05 million tonnes, state procurement agency Bulog said on Thursday.
The agency, which has an official permit to import 1.6 million tonnes in 2011, currently has a 900,000-tonne government-to-government deal with Vietnam, and a 150,000-tonne commercial pact with Thailand, said Bulog official, Sentot Hariwibowo.
Argentine trucking companies say will expand strike
BUENOS AIRES, Oct 26 (Reuters) - Trucking companies that haul grains to Argentina's key dispatch point, Rosario, said they will go on strike on Thursday if Buenos Aires province does not establish a minimal hauling rate.
The FETRA group of trucking companies started a strike earlier this week in Buenos Aires province and on Wednesday vowed to increase the area covered by the work stoppage to the key port of Rosario in the neighboring province of Santa Fe.
French maize crop close to 16 mln tonnes - growers
PARIS, Oct 26 (Reuters) - France is expected to produce some 16 million tonnes of maize grain this year on the back of an estimated record yield of between 10.4 and 10.5 tonnes per hectare, maize growers group AGPM said on Wednesday.
The expected average yield would pass a previous record of 9.7 tonnes a hectare in 2007/08 as estimated by French farm office FranceAgriMer.
S.Africa maize deliveries rise to 9.404 mln T- SAGIS
JOHANNESBURG, Oct 26 (Reuters) - Maize deliveries to South African silos rose to 9.404 million tonnes in the week to Oct. 21, up from a revised 9.371 million tonnes in the week before, data showed on Wednesday.
White maize deliveries rose to 5.705 million tonnes from a revised 5.684 million tonnes, while yellow maize submissions increased to 3.699 million tonnes from a revised 3.687 million tonnes, the South African Grain Information Service (SAGIS) said.
Bullish bets build again in corn: Gavin Maguire
--Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, Oct 27 (Reuters) - December corn futures are trading around $6.50 a bushel, in the lower third of their trading range for the year, as harvest pressure and broad concerns about the global economy keep buying interest in check.
But a growing number of traders appear to be betting on a strong rebound in corn values within the coming weeks. Open interest in $7 December corn calls is up nearly 40 percent from mid-September levels, and is now close to all-time highs at more than 66,000 contracts -- representing more than 330 million bushels of potential buying interest should corn prices climb by a further 10 percent or so.
IGC Raises World 11-12 Corn Output View 10M Tons To 855M Tons (Source: CME)
World corn production is expected to rise 3.5% from last season to a record 855 million metric tons in 2011-12, the International Grains Council said, raising its previous estimate by 10 million tons. Output from Europe is pegged at an unprecedented 63.8 million tons, above its previous record of three years ago and up 8 million tons from 2010-11, the London-based body said. China is expected to produce 183 million tons--3 million tons more than predicted in September--while crops in South American producers Brazil and Argentina are both seen higher at 27 million and 60 million tons, respectively. "World maize production prospects have improved during the past month, with crops forecast to be at, or close to, record highs in many leading growers," said the IGC. Although more grain is available than previously expected, usage is also expected to rise, so ending stocks are seen only 5 million tons higher at 123 million tons.
China's corn imports are revised up by 1 million tons to 4 million tons--still well below industry forecasts--while Europe is also expected to use more of the grain for feed. "Improved availabilities are expected to encourage additional feeding in some countries," said the body. Prospects for the world's wheat crop are improving too, with output now expected to hit 684 million tons, up 5 million tons from the IGC's previous forecast, and boosting carryover stocks to a 10-year high of 202 million tons. Total grain output is seen at 1.819 billion tons, up 13 million tons from the previous forecast, the IGC said.
Ukraine Harvests 48.9 Mln Tons Grain To October 26 (Source: CME)
Ukraine harvested 48.9 million metric tons of grain to Oct. 26 on 14 million hectares, 92% of the total area to be harvested, the Agriculture Ministry reported. The average yield to date was 3.48 tons a hectare, compared with 2.77 tons a hectare a year ago. The government expects this year's grain harvest at 52 million-53 million tons. Ukraine's grain harvest in 2010 fell by 14.8% on the year to 39.23 million tons in clean weight because of drought.
China 2011-12 Corn Imports May Surge To 4.0 Mln Tons -Morgan Stanley (Source: CME)
China's corn imports may increase fourfold to 4.0 million metric tons this marketing year, due to increasing demand to feed industry and livestock that can't be met by domestic production, Morgan Stanley said. In September and October, China has imported around 1.4 million tons of corn from the U.S., the investment bank said in a recent report, 40% more than the U.S. Department of Agriculture's estimate of 1.0 million tons for all of China's imports in the U.S. marketing year that ended Aug. 31. Most of China's corn imports are from the U.S., though some is also imported from Southeast Asian neighbors. China, which in theory aims for self-sufficiency in grains, started to import large quantities of U.S. corn last year. Industrial use of corn has surged to 43 million tons in China, accounting for around 20% of projected consumption in 2011 from around 10 million tons a year a decade ago, Morgan Stanley said, noting that this makes it the second-largest industrial user of the grain after the U.S.
With a growing livestock population--mostly hogs, reflecting the Chinese preference for pork--and continued consolidation of the livestock industry, demand for corn as animal feed has increased 2.1% a year over the past decade, it said. Corn as livestock feed accounts for 70% of domestic consumption of the grain. China's corn production has grown at a slightly slower average annual rate of 2% over the past decade, to 177 million tons in 2010-11 and forecast at almost 180 million tons this year, Morgan Stanley said. Area under corn has increased by 2% during the last 10 years, mostly at the expense of soybeans, it said. While annual soybean production has held mostly steady over the past decade at 14 million-15 million tons, increasing demand has pushed up imports. China's soybean imports are forecast at 57 million tons this year, up from 52 million tons in 2010-11, it said. China is world's largest importer of soybeans.
Soybean, Corn Futures Advance on European Debt Deal, U.S. Economic Growth (Source: Bloomberg)
Soybeans and corn rose the most in more than two weeks as European leaders agreed to boost the region’s rescue fund in a bid to stem the debt crisis, bolstering prospects for commodity demand. The MSCI All-Country World Index jumped as much as 4.8 percent, and the euro rose to a seven-week high against the dollar, after European leaders agreed to expand a bailout fund to about 1 trillion euros ($1.4 billion). The U.S. economy grew at a 2.5 percent annual rate in the third quarter as household spending gained 2.4 percent, more than forecast, the government reported today. “Europe has avoided a default disaster for now, and the short-term trend is to buy riskier assets including the grains,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “Improved consumer spending and a weaker dollar may help to boost overseas buying. Export demand needs to improve to sustain the rally.”
Soybean futures for January delivery rose 2 percent to close at $12.44 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain since Oct. 11.
Wheat Rises as EU Debt Plan Weakens Dollar, Boosts U.S. Export Prospects (Source: Bloomberg)
Wheat futures rose the most in two weeks as Europe’s plan to ease the region’s debt crisis eroded the value of the dollar and bolstered prospects for U.S. grain exports. The dollar tumbled to a seven-week low against a basket of six major currencies, and global equities rallied, after European leaders agreed to expand a bailout. The Standard & Poor’s GSCI Index of 24 commodities climbed to the highest in almost six weeks. Yesterday, commodities including wheat fell on concern that failure to reach an agreement on a debt plan in Europe would limit economic growth. “Today, our dollar is plummeting, and that’s giving our grain markets some strength,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said in a telephone interview. “We’re going to recover from yesterday’s losses, thanks to the European situation and the dollar being down hard.”
Sugar, coffee rise, lifted by euro zone deal
LONDON, Oct 27 (Reuters) - ICE sugar, coffee and cocoa futures rose in early trade, after European leaders struck a deal to resolve a two-year-old sovereign debt crisis.
Raw sugar futures firmed, supported by stronger outside financial markets, bolstered by the euro zone debt deal.
Egypt imposes temporary cotton import ban - paper
CAIRO, Oct 27 (Reuters) - Egypt has imposed a temporary ban on cotton imports until the local crop has been sold, a financial newspaper reported on Thursday, saying there were problems marketing the domestic harvest.
"This procedure will help solve the marketing problem for local cotton which is currently facing difficulties," Salah Moawad, president of the agricultural services sector at the Agriculture Ministry, told newspaper al-Mal.
Pakistan cuts cotton output estimate to 12.22 mln bales
ISLAMABAD, Oct 27 (Reuters) - Pakistan has cut its forecast for cotton output to 12.22 million bales for the 2011/12 fiscal year, down nearly 800,000 bales, or about 6 percent, from earlier projections, hit by losses from heavy monsoon rains, a government textile body said.
The world's fourth-larget cotton producer was hoping for record cotton production of 15 million bales before monsoon floods lashed the second-largest cotton-growing province of Sindh in August and September.
Ivory Coast expects record 1.6 mln T cocoa this season
ACCRA, Oct 26 (Reuters) - Ivory Coast authorities are expecting to set a new record of 1.6 million tonnes of cocoa output for the 2011/12 season, a senior government cocoa adviser said on Wednesday.
"Our new season ... is going well. The forecast is 1.6 million (tonnes) after the preliminary assessment -- that is what we are working towards," Malick Tohe, special adviser on cocoa to Prime Minister Guillaume Soro, told Reuters on the sidelines of the World Cocoa Foundation conference in neighbouring Ghana.
Brazil CS sugar output trails last season by 3 pct
BRASILIA, Oct 26 (Reuters) - Sugar output from Brazil's center south cane crop totaled 27.7 million tonnes from the start of the season through Oct. 16, down 3 percent from a year ago helped by an unexpected rise in yields late in the season, cane industry association Unica said on Wednesday.
Cane crushing in the region totaled 436.5 million tonnes, down 7 percent from the same period last year. Ethanol production fell 16 percent to 18.2 billion liters.
Brazil coffee crop seen around 55 mln bags - Illy CEO
SAO PAULO, Oct 26 (Reuters) - The chief executive of Illycaffe said on Wednesday he expected Brazil's new 2012/13 coffee crop to reach 55 million 60-kg bags.
Illycaffe is inaugurating its first coffee shop in Sao Paulo, Brazil, the world's largest producer and exporter of coffee.
Crude Oil Drops in New York, Heads for Biggest Weekly Gain in Eight Months (Source: Bloomberg)
Oil fell in New York, trimming its biggest weekly gain since February, as a drop in Japanese industrial output countered speculation U.S. economic growth and a deal to tame Europe’s debt crisis will boost fuel demand. Futures slipped as much as 0.5 percent after Japanese factory production declined 4 percent in September from the previous month, almost twice as much as the median economist estimate in a Bloomberg News survey. Prices surged yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year and European leaders agreed a deal to curb the region’s debt crisis. Crude oil for December delivery decreased as much as 43 cents to $93.53 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.66 at 11:47 a.m. Sydney time. The contract yesterday advanced $3.76 to $93.96, the highest close since Aug. 1. Prices are 7.2 percent higher this week, the biggest gain since the period ended Feb. 25. Futures have gained 2.5 percent this year.
Copper Traders See End to Record Rally as China Demand Slows: Commodities (Source: Bloomberg)
Copper traders and analysts are forecasting an end to the biggest weekly rally since at least 1986 on concern demand will slow in China while Europe’s lingering financial crisis limits growth. Eleven of 23 people surveyed by Bloomberg say copper will drop next week, eight predicted a gain, and four said prices will be little changed. The last time respondents were mostly bearish, on Sept. 23, the metal slumped 4.6 percent in the following week. Traders also predicted lower sugar prices next week, and gains in gold, corn and soybeans.
While copper surged 14 percent this week as European leaders agreed to expand the region’s bailout fund, the metal is down 20 percent from a record on Feb. 15, the common definition of a bear market. Global output exceeded demand in the eight months through August, the World Bureau of Metal Statistics said on Oct. 19. Goldman Sachs Group Inc. and UBS AG cut their copper forecasts for 2012 this month, and economists surveyed by Bloomberg predict slower growth next year in Europe and China, the world’s largest metal user.
20111028 0937 Soy Oil & Palm Oil Related News.
Soybeans
US soybean futures close higher as a plan to solve Europe's debt crisis inspires broad buying of commodities and equities. "The dollar was breaking and everybody was excited about throwing a trillion dollars at" Europe's debt crisis, says Chad Henderson of Prime Agricultural Consultants. He notes soy prices probably would have dropped without the EU accord and support from external markets because US soy export sales were well below expectations. CBOT January soybeans jump 24 1/4c to $12.44/bushel.
Soybean Meal/Oil
US soy product futures finish firmer as commodities rally on news of Europe's plan to tackle its debt crisis. Gains in crude oil gave strength to the products, as biodiesel is made from soyoil, traders say. Weakness in the US dollar added support because it makes US farm products more attractive to foreign buyers. Weekly export sales of soyoil and soymeal, issued today, were below expectations. CBOT December soymeal soars $6.50 to $323.50/short ton; December soyoil jumps 1.22c to 52.11c/pound.
Palm at one-month high on euro zone agreement
JAKARTA, Oct 27 (Reuters) - Malaysian palm oil futures rose to a one-month high, as a euro zone debt deal boosted sentiment, with higher crude prices and lower output expectations offering additional support.
"3,000 is not far from here," said a Kuala Lumpur-based trader. "The monsoon weather (season) is in play, and a supportive external market and higher crude oil."
US soybean futures close higher as a plan to solve Europe's debt crisis inspires broad buying of commodities and equities. "The dollar was breaking and everybody was excited about throwing a trillion dollars at" Europe's debt crisis, says Chad Henderson of Prime Agricultural Consultants. He notes soy prices probably would have dropped without the EU accord and support from external markets because US soy export sales were well below expectations. CBOT January soybeans jump 24 1/4c to $12.44/bushel.
Soybean Meal/Oil
US soy product futures finish firmer as commodities rally on news of Europe's plan to tackle its debt crisis. Gains in crude oil gave strength to the products, as biodiesel is made from soyoil, traders say. Weakness in the US dollar added support because it makes US farm products more attractive to foreign buyers. Weekly export sales of soyoil and soymeal, issued today, were below expectations. CBOT December soymeal soars $6.50 to $323.50/short ton; December soyoil jumps 1.22c to 52.11c/pound.
Palm at one-month high on euro zone agreement
JAKARTA, Oct 27 (Reuters) - Malaysian palm oil futures rose to a one-month high, as a euro zone debt deal boosted sentiment, with higher crude prices and lower output expectations offering additional support.
"3,000 is not far from here," said a Kuala Lumpur-based trader. "The monsoon weather (season) is in play, and a supportive external market and higher crude oil."
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