Tuesday, December 6, 2011

20111206 1804 FCPO EOD Daily Chart Study.

FCPO closed : 3085, changed : -37 points, volume : lower.
Bollinger band reading : little upside biased.
MACD Histrogram : recovering, buyer seller battling.
Support : 3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250, 3270 level.
Comment :
FCPO closed recorded loss with slower volume changed hand. Overnight soy oil closed recorded marginal gain and currently trading lower while crude oil price also trading lower.
Weak economic sentiment and higher U.S. dollar pressured FCPO to retrace lower today after yesterday rallied.
Daily chart formed a small down bar candle positioned below middle Bollinger band level after market opened lower and traded side way within tight 27 points range bound market and closed right at the low of the day.
Chart study suggesting a little upside biased market development testing resistance near middle Bollinger band level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20111206 1734 FKLI EOD Daily Chart Study.

FKLI closed : 1475, changed : -20.50 points, volume : higher.
Bollinger band reading : side way range bound.
MACD Histrogram : turned downward, buyer seller battling.
Support : 1470, 1458, 1445, 1440 level.
Resistance : 1477, 1485, 1491, 1500 level.
Comment :
FKLI closed recorded loss with improved but relatively low volume transacted doing about 6 points discount compare to cash market that also closed lower. Overnight U.S. market closed recorded higher and today Asia markets ended mostly lower while European markets currently trading mix.
Asia markets traded mostly lower after Standard & Poor’s said it may cut credit ratings on Germany, France and 13 other members of the euro amid the worsening debt crisis.
Daily chart formed a down bar candle closed in between middle and upper Bollinger band level after market opened lower, slide swing downwards gradually to closed near the low of the day.
Technical study switch to recommending a side day range bound market development testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20111206 1707 Regional Markets EOD Daily Chart Study.

 DJIA chart reading :  side way range bound.
 Hang Seng chart reading : side way range bound.
KLCI chart reading : side way range bound.

20111206 1550 Global Market & Commodities Related News.

Asian shares, euro dip after S&P downgrade warning
SINGAPORE, Dec 6 (Reuters) - Asian stocks and the euro fell after ratings agency Standard & Poor's warned it might downgrade euro zone countries en masse if European leaders fail to produce a credible plan to solve the region's debt crisis at a summit later this week.
"We are entering a critical stage," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

Euro stutters on S&P threat; Aussie dips on RBA
TOKYO, Dec 6 (Reuters) - The euro dipped on Tuesday after Standard & Poor's said it may carry out a mass credit downgrade of euro zone countries if their leaders fail to move decisively on solving the region's debt woes at a summit later this week.
"You can see that the EU leaders are trying to get their act together, but even if their plans are realised, it's not going to improve their dire finances overnight. This is going to be a drawn-out process," said Koji Fukaya, chief FX strategist at Credit Suisse, adding that the euro will not easily get any serious respite.

U.S. grains slip as S&P warning erodes confidence
KUALA LUMPUR, Dec 6 (Reuters) - U.S. grain futures slipped, extending declines seen in the previous session after Standard & Poor's warned it may cut the credit ratings of euro zone countries as the region's leaders struggle to stem the spread of the debt crisis.
An abundance of rain-soaked Australian wheat is set to further dampen U.S. and South American corn prices in 2012, as key corn importers switch to the cheaper, damaged grain for animal feed.

Vietnam Dec coffee exports may triple to 150,000T-trade
HANOI, Dec 6 (Reuters) - Vietnam's coffee shipment this month could rise to between 110,000 tonnes and 150,000 tonnes, from 50,000 tonnes exported in November, due to ample supply at the harvest peak and higher demand for robusta beans, traders said on Tuesday.
"The shipment this month will contain newly harvested beans, with the volume from bonded warehouses accounting for a large part," a trader in Ho Chi Minh City said.

Demand, price outlook in focus at Vietnam coffee meet
HANOI/SINGAPORE, Dec 5 (Reuters) - Ample robusta supply, uncertainties over a plan by major producer Vietnam to stockpile to prevent another price fall and demand outlook at a time of global economic slowdown will take centre stage at an industry conference this week.
London robusta  has bounced from an 11-month low reached in November, but gains were mostly driven by rallies in New York arabica futures as heavy rains drenched plantations in  Colombia, the world's top producer of the high-quality variety.

Philippines says plans 2012 rice imports at 500,000 T
MANILA, Dec 6 (Reuters) - The Philippines will import 500,000 tonnes rice for next year's needs as originally planned, with the purchases to be done as early as January and solely by the private sector, the Agriculture secretary said on Tuesday.
Proceso Alcala told reporters the volume may be sourced from Vietnam, and the government may review in March whether more rice purchases were needed for 2012.

Australia sees record wheat crop, rains to cut quality
SYDNEY, Dec 6 (Reuters) - Australia is heading for a record wheat crop and exports in 2011/12, the government's chief commodities forecaster said on Tuesday, although a deluge of rain affecting some areas as the harvest unfolds is set to reduce the quality of the crop.
More shipments from Australia, typically among the world's top four wheat exporters, will put pressure on international grains prices as farmers buy the cheap feed wheat to substitute for more expensive corn.

India soybean output seen at 11 mln tonnes-attache
Dec 5 (Reuters) - Following are selected highlights from a  report issued by a U.S. Department of Agriculture attache in  India:
"Favorable monsoon rains encouraged kharif planting of  oilseeds. Soybean production is forecast to reach a record 11  million tonnes in marketing year 2011/12. While increased  availability of oilseeds should push oil meal exports to 5.7  million tonnes, India's demand for edible oils continues to  outpace supply.

Argentina set to approve more old-crop corn exports
BUENOS AIRES, Dec 5 (Reuters) - Argentina's government is expected to approve the export of an additional 2-3 million tonnes of 2010/11 corn on Wednesday, a senior agriculture official said.
The government controls wheat and corn exports through a quota system designed to guarantee affordable local food supplies and help tame high inflation, a policy that irks farmers in one of the world's top grains suppliers.

Brent dips towards $109 on euro zone downgrade risk
SINGAPORE, Dec 6 (Reuters) - Brent crude fell towards $109, as a warning by ratings agency Standard & Poor's that it might downgrade euro zone countries.
"Prices had run up earlier because traders have been positioning themselves for a possible resolution to the euro zone crisis, and they've arrived at a level where any negative news like the S&P report will result in some tweaking of positions," said Ric Spooner, chief market analyst with CMC Markets in Sydney.

OPEC heading for oil target deal at near 30 mln bpd
DOHA/LONDON, Dec 5 (Reuters) - OPEC oil producers, at odds over supply policy since June, look set at a mid-December meeting to agree a new production target that legitimises current cartel output around 30 million barrels a day. 
OPEC's leading price hawk Iran, appears to have given up its campaign to have Gulf Arab nations including top producer Saudi Arabia cut back supply.

EU thinks twice about Iran oil ban
NEW DELHI/LONDON Dec 5 (Reuters) - The European Union is becoming sceptical about slapping sanctions on imports of Iranian oil, diplomats and traders say, as awareness grows that the embargo could damage its own economy without doing much to undercut to Iran's oil revenues.
Oil accounts for 50 percent of Iranian budget revenues, and those arguing for sanctions say they can deprive Tehran of billions of dollars and derail what the West sees as Iran's attempts to build a nuclear bomb.

LME copper falls first time in 3 days after S&P warning
SINGAPORE, Dec 6 (Reuters) - London copper fell for the first time in three days after Standard & Poor's said it may downgrade euro zone countries and the Asian Development Bank warned that Asia faces "much greater" downside risks compared with a few months ago.   
"In the next two months, things don't look too rosy," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.

LME copper falls first time in 3 days after S&P warning
SINGAPORE, Dec 6 (Reuters) - London copper fell on Tuesday for the first time in three days after Standard & Poor's said it may downgrade euro zone countries and the Asian Development Bank warned that Asia faces "much greater" downside risks compared with a few months ago.
"In the next two months, things don't look too rosy," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.

Gold steady after S&P downgrade warning
SINGAPORE, Dec 6 (Reuters) - Spot gold traded steady on Tuesday, after posting its biggest daily loss in two weeks in the previous session on fears of a possible mass credit rating downgrade for euro zone nations by Standard & Poor's.
"The two far-reaching events later this week combined with the year-end factor -- it's a recipe for thin trade and potentially volatile trade," said Nick Trevethan, senior commodities strategist at ANZ in Singapore.

Gold steady after S&P downgrade warning
SINGAPORE, Dec 6 (Reuters) - Spot gold traded steady, after posting its biggest daily loss in two weeks in the previous session on fears of a possible mass credit rating downgrade for euro zone nations by Standard & Poor's.
"The two far-reaching events later this week combined with the year-end factor -- it's a recipe for thin trade and potentially volatile trade," said Nick Trevethan, senior commodities strategist at ANZ in Singapore.

20111206 1123 Global Market & Commodities Related News.

Asian Stocks Drop as S&P Puts Euro Nations on Downgrade Watch (Bloomberg)
Asian stocks fell, with a benchmark gauge headed for its first loss in seven days, after Standard & Poor’s said it may cut credit ratings on Germany, France and 13 other members of the euro amid the worsening debt crisis. STX Pan Ocean Co., a South Korean shipping line, dropped 4.8 percent in Seoul after saying a leak was found in its vessel. Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, slid 1.4 percent in Tokyo. Tosoh Corp., a maker of chemical products, slid 4.4 percent after Mizuho Securities Co. cut its rating on the stock to “neutral” from “buy.” Newcrest Mining Ltd. (NCM), an Australian gold producer, declined 2.7 percent after Deutsche Bank AG cut its rating to “hold” from “buy.”
“People want to move away from risk assets,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $20 billion. “The market is unstable and has been moving up and down like a seesaw. Investors buy stocks (MXAPJ) on good news after a plunge and are selling unless the news moves in the right direction. The downgrade news is a bad story in the middle of such movements.”

GLOBAL MARKETS: Asian stocks and the euro dipped on Tuesday after ratings agency Standard & Poor's warned it might downgrade euro zone countries en masse, piling pressure on European leaders ahead of a summit later this week. "The plan is so wide-ranging that after the initial reaction, investors lost some enthusiasm as reality set in once again," said Phil Flynn, analyst at PFGBest Research in Chicago. (Reuters)

COMMODITIES: Oil settled almost flat on Monday as fears about Europe's credit ratings wiped out early gains built on tensions involving Iran, and copper edged up on bets China would have a soft economic landing. "The price decline late in the session appeared driven by reports that S&P may be downgrading some European nations including Germany," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.  (Reuters)

Ecuador oil exports down nearly a third in October QUITO, Dec 5 (Reuters) - Ecuador's oil exports fell 30.5 percent in October to an average of 251,741 barrels per day (bpd) compared with the same month last year, the country's Central Bank said on Monday. The bank did not give a reason for the decrease. It said export revenue fell 5.5 percent to $791.5 million in October. Average prices for Napo and Oriente, the two types of crude exported by the South American country, increased to $101.4 per barrel, up from $74.6 during the same month last year.

OPEC heading for oil target deal at near 30 mln bpd By Amena Bakr and Richard Mably DOHA/LONDON, Dec 5 (Reuters) - OPEC oil producers, at odds over supply policy since June, look set at a mid- December meeting to agree a new production target that legitimises current cartel output around 30 million barrels a day. OPEC's leading price hawk Iran, appears to have given up its campaign to have Gulf Arab nations including top producer Saudi Arabia cut back supply. Iranian Oil Minister Rostam Qasemi told Reuters on Monday that Tehran would be guided by the recommendations of the cartel's Vienna-based secretariat. "All OPEC members should really follow those OPEC recommendations because the secretariat is expert," said Qasemi in an interview in Doha. "This meeting there will be an agreement, I think. We don't have big differences, really." Qasemi met with UAE Oil Minister Mohamed al-Hamli at an industry conference in Qatar on Wednesday in a bid to try to mend fences with one of the three Gulf Arab producers, a close ally of Saudi. No numbers were discussed. But delegates say OPEC's Vienna-based secretariat will recommend to a meeting of OPEC national experts, its Economic Commission Board, ahead of the Dec. 14 ministerial meeting that 30 million barrels daily is required from the group in the first half of 2012. The secretariat is forecasting demand for OPEC crude at 29.9 million bpd in the first quarter and 28.7 million bpd in the second quarter, the annual period of slowest global fuel demand. While the second quarter figure is well short of OPEC's current output, the secretariat will argue that inventories, having fallen sharply this year, will need replenishing in the second quarter. Gulf producers, including Saudi Arabia, are also expected to line up behind the secretariat's forecasts. "Normally the secretariat's numbers, if they are in line with the other leading forecasters, are the proposal that it makes sense to follow," said a Gulf OPEC delegate. OPEC sees average 2012 demand for OPEC crude at 30 million bpd compared to 29.8 million bpd from the U.S. Energy Information Administration and 30.4 million bpd from the Paris-based International Energy Agency.

OIL: Oil prices gave up early gains on Monday after the euro slipped  against the dollar on a report that several major European countries may be put on "creditwatch negative" by ratings agency Standard & Poor's. "The price decline late in the session appeared driven by reports that S&P may be downgrading some European nations including Germany," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.  (Reuters)

NATURAL GAS: U.S. natural gas futures ended down sharply on Monday, as record-high supplies and fairly mild early-week weather in the Northeast and Midwest pressured the complex despite a chilly outlook later this week. "It is going to have to get a lot colder over a much broader portion of the U.S. for demand to start to have an impact on the current oversupply situation ... including the all-time record high amount of (natural gas) already sitting in inventory," the Energy Management Institute's Dominick Chirichella said in a report.  (Reuters)

EUROCOAL: Physical prompt coal prices moved up by around 25-50 cents on Monday in line with oil's gains. "Oil's been the driver again, fundamentals are taking a back seat but the gap between API4 swaps and Richards Bay prices is too wide again and that's putting off buyers," one exporter said.  (Reuters)

20111206 1011 Malaysia Corporate Related News.

New twist to KLIA2 feud
The feud between Malaysia Airports (MAHB) and AirAsia continued as both parties showed documents to prove their case over the upgrade of KLIA2. AirAsia refuted claims by MAHB that it had asked for a bigger airport and said it should not be blamed for the near doubling of cost to construct KLIA2 to RM3.9bn. AirAsia produced a letter dated November 2009 warning MAHB that the current KLIA2 site was cause of the cost getting more expensive than the planned RM2bn. MAHB said last Tuesday it was building a bigger airport to cater for AirAsia’s bullish passenger growth projections, raising passenger capacity to 45m from 30m. The completion deadline was also delayed by six months to April 2013 because AirAsia wanted a fully-automated baggage handling system (BHS), with the request only made in June. AirAsia denied the BHS claim but MAHB posted a letter to prove otherwise. (StarBiz)

Malaysia Airports (MAHB) has set its headline KPI for 2012. Its targets include achieving EBITDA of RM822m, a ROE of 10.42% and top 5 worldwide ranking for KLIA. The airport operator said it expects to achieve an overall growth of 6.6% in passenger movements in FY12 based on the expected growth of GDP of 5% to 6% and assuming the world economic environment remains reasonably stable. (Bernama)

All nine telecoms players given smaller blocks of 4G spectrum
All the nine telecoms players have again been allocated blocks of the 2.6 Ghz spectrum although in smaller blocks than originally announced. The big winner is newcomer Puncak Semangat SB, controlled by Tan Sri Syed Mokhtar Al-Bukhary, as it got 30 Mhz of the 4G spectrum. 20 Mhz blocks were given to each of the four cellular players (Celcom Axiata, DiGi.Com, Maxis and U Mobile SB) and the three WiMAX players (Packet One SB, REDtone International and YTL Communications). Asiaspace SB still received a 10Mhz block despite having stopped offering WiMAX services. Each of the nine players have until 15 Dec to submit their business plans and will have to raise an irrevocable and irrecoverable bank guarantee of RM2.5m for each 5Mhz of spectrum. (StarBiz)

Proton shares soar on talk of Khazanah divesting stake
It was reported that Khazanah was likely to ask for business proposals from parties interested in its 42.7% stake in Proton, prompting Proton’s share price to rise 24.6%. Sources said Khazanah had approached Sime Darby Motors, the Naza Group, Hyundai-Berjaya SB, DRB-Hicom and UMW Holdings. So far, only DRB-Hicom had expressed some interest in Khazanah’s proposal. Khazanah did not confirm or deny the report, stating it doesn’t comment on market or media speculation, but said it would announce any corporate developments as and when necessary. (StarBiz)

Hiap Teck gets iron ore mining rights in Terengganu
Hiap Teck’s 55% owned Eastern Steel SB has been granted a licence by the Terengganu government to mine iron ore on a 243ha site near Bukit Besi. The mining concession will allow Eastern Steel to mine the area, which has estimated reserves of 40m to 50m tonnes of iron ore, until the end of its mining life. The mining concession will help Eastern Steel secure the supply of iron ore for the integrated steel complex it is building in Kemaman to produce steel slab. (Financial Daily)

Deepak Jaikishan acquires equity interest in Envair
Carpet Raya SB director Deepak Jaikishan has emerged as a substantial shareholder in Envair by acquiring a 5.06% equity interest on 2 Dec. He forked out RM1.32m for the 6m Envair shares at RM0.22 apiece. His stake makes him the group’s seventh largest shareholder. The RM0.22 transacted price is a 24% discount to the share’s RM0.29 closing price on 2 Dec. Envair’s core business activities include air filtration systems, manufacturing and liquid filtration systems. (Financial Daily)

Bangkok Bank to move HQ for RM110m
Bangkok Bank has bought property units worth RM110m from Berjaya Corp in its development at Jalan Ampang. The bank purchased 8 levels of corporate suites and commercial spaces on the ground and mezzanine floors of the Berjaya Central Park development. The 8 levels of corporate suites with a total of 99,950 sq ft will house Bangkok Bank’s new headquarters, while the ground and mezzanine floors covering 6,000 sq ft will house the banking halls. (Financial Daily)

Bangkok Bank is mulling the sale of its present headquarters at Jalan Tun H.S. Lee here once it moves to new premises in Berjaya Central Park, at the junction of Jalan Sultan Ismail and Jalan Ampang, by 2014. Executive director and chief executive officer Robert Loke did not rule out the possibility of selling the building, which it has occupied since it came to Malaysia 52 years ago. He said the bank had invested over RM100m to become the anchor owner of Berjaya Central Park, located next to Concorde Hotel. The building is expected to be completed by the first quarter of 2014. (BT)

PNB may be paying out lucrative bonuses and stock options to SP Setia's top management staff in order to persuade them to stay on with the company following an offer by PNB to increase its stake in the property developer. A source with knowledge of the proposed arrangement said that this would involve the payout of hefty bonuses and attractive stock options aimed at ensuring the management team stay put. There had been fears expressed earlier that PNB's move to take control of SP Setia might lead to an exodus of the company's management staff. (Starbiz)

Seeburger, a US-based business integration solutions provider, has appointed Time Engineering as its first reseller and implementation partner in Malaysia. "Malaysia plays a pivotal role in the Southeast Asian economy, and we have been aggressively searching for local partners with the right mix of offerings to pair with our technologies." (BT)

Hua Yang's biggest lakeside township development in Perak, Bandar Universiti Seri Iskandar, will be offering more affordable houses by building 137 units of the Tropika and Casa Series, which are essentially double-storey terrace houses. "There will also be the Seri Idaman and Seri Andaman series, priced from RM130,000 with each unit spanning 74.4 sq m. Overall, a total of 909 units will be built," said chief executive Ho Wen Yan said. (BT)

Toshiba Corp has allocated RM268m for a five- year investment in its new subsidiary Toshiba Transmission & Distribution Systems Asia Sdn Bhd (TTDA). TTDA is positioned as a global supply hub, responsible for research and development and manufacture of medium-voltage T&D products, with capabilities in engineering, procurement and construction of T&D systems that it can deploy across the region. TTDA would also expand in two areas now attracting considerable attention, namely photovoltaic solar power generation and smart grids. (Bernama)

Bursa Malaysia yesterday issued an unusual market activity (UMA) query to Sanichi Technology following a sharp increase in the price and high trading volume in the company‟s shares. The company said it was not aware of any corporate developments in the company and its subsidiaries. (Bernama)

TRC Synergy has won a RM38.08m contract from Putrajaya Holdings to develop a total of 100 houses in Precinct 14, Putrajaya. (Malaysian Reserve)

Aberdeen Asset Management has been slowly nibbling at shares of conglomerate Oriental Holdings and controls about 7.19% equity interest in the company. At end March this year, the fund had about 6.14% of Oriental shares. At the same time, the EPF has been paring down its stake in the company. In July 2012, EPF‟s holdings stood at 9.46% but down to 7.13% as at November 30. (Financial Daily)

20111206 1012 Global Economic Related News.

Malaysia and Qatar will set up a RM6.2bn joint investment fund to boost investment in both countries and in the region. Prime Minister Datuk Seri Najib Tun Razak said each country would contribute RM3.1bn to the fund with details on investments to be worked out later. (The Star)

The Securities Commission (SC) has finalised the eligible requirements for private retirement scheme (PRS) providers. In a statement, the SC said the eligible firms can now submit their applications for approval by 15 Feb 2012. The eligible guidelines for PRS firms include having relevant experience in fund management and RM1bn in assets, pension fund management or life insurance management. This also covers the operation and administration of retail or pension funds or life insurance business. (Business Times)

Singapore's purchasing managers' index fell to 48.7 in Nov from 49.5 in Oct, the Singapore Institute of Purchasing & Materials Management said. The PMI for electronics, a major export item for Singapore, expanded for a second straight month in Nov but the pace slowed to 50.9, compared to 52.1 in Oct. (Dow Jones)


South Korea: Economy expands more-than-estimated 0.8% on car, metal exports
South Korea’s economy expanded more than the central bank initially estimated in the third quarter as exports of cars and metal products increased. Gross domestic product grew 0.8% over the three months through September from the second quarter, compared with an October estimate of 0.7%, the Bank of Korea said in Seoul today. The economy expanded 3.5% from a year earlier, beating the bank’s October estimate of 3.4%. Europe’s debt crisis has weighed on Asia’s growth, with China recording the weakest manufacturing since 2009 for last month. (Bloomberg)

Japan has consistently emerged as one of the top five sources of foreign investments in Malaysia in recent years, according to Malaysian International Trade and Industry (MITI) Minister Datuk Seri Mustapa Mohamed. Last year, 13.8% of FDIs that flowed into Malaysia were from Japan. Approved Japanese investments in 2010 totalled RM4.02bn, and total investment for the first eight months of this year was RM2.46bn. (Malaysian Reserve)

China’s HSBC purchasing managers' index for the service sector fell to 52.5 in Nov (54.1 in Oct). (Reuters)

India’s HSBC services PMI fell to 53.2 in Nov from 49.1 in Oct. (Reuters)

The Bangko Sentral ng Pilipinas said it might consider cutting key policy rates next year as growth-dampening factors from abroad were expected to persist and harm the domestic economy. The current BSP policy rates, which influence commercial interest rates, stand at 4.5 percent for overnight borrowing and 6.5 for overnight lending. (Philippine Daily Inquirer)

Bangko Sentral ng Pilipinas expects remittances sent by migrant Filipinos to grow 5% in 2012 to hit at least PP21.105bn in 2012 from the estimated PP20bn in 2011 as demand for Filipino labor by employers in various parts of the globe remains robust. (Philippine Daily Inquirer)
 


Italy: Main parties hold fire on Monti’s plan
Italy’s main political parties are holding their fire on the government’s EUR30bn (USD40bn) austerity and growth plan, suggesting they won’t derail measures Prime Minister Mario Monti says are needed to save the nation and the euro. Monti appealed to lawmakers for support yesterday when he presented the plan to Parliament in Rome. Investors gave their backing, with Italian bonds gaining the most in almost four months and the yield difference with German bunds falling below 400 basis points for the first time since 31 Oct. (Bloomberg)

Italian prime minister Mario Monti unveiled a €30bn austerity package of tax rises, pension reforms and growth-boosting incentives, aims to raise more than €10bn from a property tax, impose a new levy on luxury items like yachts, raise value added tax, crack down on tax evasion and increase the pension age. Deputy Economy Minister Vittorio Grilli said the measures would allow the goal of a balanced budget by 2013 to be met despite a forecast that GDP would contract by 0.4-0.5% in 2012. (Bloomberg, Reuters)
Standard & Poor‟s said Germany and France may be stripped of their AAA credit ratings as the debt crisis prompts 15 euro nations to be put on review for possible downgrade, depending on the result of a summit of European Union leaders on 9 Dec. (Bloomberg)

France and Germany have agreed on a series of reforms to address the euro zone sovereign debt crisis that will be presented to EU President Herman Van Rompuy on Wednesday, including: a treaty among the EU27 members, so that nobody feels excluded, but (they) are open to a treaty among the EA17 (euro members), with an option to opt-in for other members automatic sanctions in the event of a breach of the rule on deficits below 3% of GDP (Reuters)

Euro: Treaty rewrite sought by Merkel, Sarkozy
German Chancellor Angela Merkel and French President Nicolas Sarkozy pushed for a rewrite of the European Union’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis. Stocks and the euro rose after Merkel and Sarkozy said that Europe’s two biggest economies were aligned on backing automatic penalties for deficit violators and locking limits on debt into euro states’ constitutions. The French leader said they aimed to reach consensus on the changes required by March. “We don’t have time -- we are conscious of the gravity of the situation,” Sarkozy said after the two met over lunch at the Elysee palace in Paris. “We want to go as fast as possible based on this agreement between France and Germany, which is open to others.” (Bloomberg)

Euro: S&P places 15 Euro nations on warning for downgrade
Standard & Poor’s said Germany and France may be stripped of their AAA credit ratings as the debt crisis prompts 15 euro nations to be put on review for possible downgrade. The euro area’s six AAA rated countries are among the nations to be placed on a negative outlook, and their credit ratings may be cut depending on the result of a summit of European Union leaders on 9 Dec, S&P said in a statement yesterday. “Systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted,” S&P said in a statement. (Bloomberg)

Eurozone‟s composite purchasing manager index rose slightly to 47.0 in Nov from 46.5 in Oct. The PMI was still far below the 50 mark that divides growth from contraction. (Reuters)

Eurozone services purchasing managers' index registered a level of 47 in Nov, only slightly up from Oct. Levels below 50 imply falling activity. (BBC)

Eurozone investor sentiment dropped for the fifth month in a row in Dec as fears about the bloc's debt crisis weighs on the real economy, the sentix research group said. The index tracking eurozone investor sentiment shed 2.8pts to -24.0 in Dec. Economists expected a reading of -19.7. (Reuters, Bloomberg)

Eurozone retail sales rose 0.4% mom in Oct (-0.6% in Sep). On a yoy basis, retail sales declined 0.4% (-1.4% in Sep). Economists expected a 0.1% mom rise and a 0.8% yoy fall. (CNBC)

US: Services grow at slowest pace since 2010
Service industries in the US expanded in November at the slowest pace since January 2010 as employment cooled, a sign improvement in the biggest part of the economy will be uneven. The Institute for Supply Management’s non-manufacturing index unexpectedly fell to 52 last month from 52.9 in October, the Tempe, Arizona based-group said yesterday. The median forecast in a Bloomberg News survey called for a gain to 53.9. Falling home prices, slow wage growth and limited job gains may make it difficult for households to sustain the pace of spending after the holiday shopping season. (Bloomberg)

The US Institute for Supply Management‟s non-manufacturing index unexpectedly fell to 52 in Nov (52.9 in Oct), the group said. Economists called for an increase to 53.9. (Bloomberg)

US factory orders fell 0.4% in Oct (-0.1% in Sep), according to data from the Commerce Department. Economists forecast factory orders would fall 0.3%. (Bloomberg)

A measure of job prospects in the US climbed in Nov to a three-year high, helped by growth in the world‟s largest economy. The Conference Board‟s Employment Trends Index jumped 1.2% to 103.7 in Nov (102.4 in Oct), the highest level since Sep 08, figures from the group showed. On a yoy basis, the measure rose 6.4%. (Bloomberg)

20111206 0954 Global Market Related News.

Asian Stocks Drop as S&P Puts Euro Nations on Downgrade Watch (Source: Bloomberg)
Asian stocks (MXAPJ) fell, with a benchmark gauge headed for its first loss in seven days, after Standard & Poor’s said it may cut credit ratings on Germany, France and 13 other members of the euro amid the worsening debt crisis. Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, slid 0.7 percent in Tokyo. Tosoh Corp., a maker of chemical products, slid 3.5 percent after Mizuho Securities Co. cut its rating on the stock to “neutral” from “buy.” Newcrest Mining Ltd. (NCM), an Australian gold producer, declined 2.5 percent after Deutsche Bank AG cut its rating to “hold” from “buy.” The MSCI Asia Pacific Index fell 0.2 percent to 118.01 as of 9:33 a.m. in Tokyo, set to end its longest winning streak since Oct. 13. All but two of 10 industry groups on the measure declined, with about twice as many stocks retreating as gaining.

U.S. Stocks Advance as Banks Gain on Europe’s Moves to Tame Debt Crisis (Source: Bloomberg)
U.S. stocks rose, following the best weekly rally since 2009, as optimism that Europe will tame its debt crisis helped the market weather a late-day selloff on reports that euro-area nations' credit outlooks may be cut. All 10 groups in the Standard & Poor’s 500 Index gained, with a gauge of financial shares (S5FINL) adding 2.1 percent. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) advanced at least 2.6 percent. MetLife Inc., the largest U.S. life insurer, increased 3.7 percent after saying earnings will probably rise in 2012. Gannett (GCI) Co., the owner of newspapers including USA Today, surged 10 percent as Lazard Capital Markets raised its recommendation. The S&P 500 rose 1 percent to 1,257.08 at 4 p.m. New York time, extending last week’s 7.4 percent rally. The benchmark measure briefly traded above its average price (SPX) of the past 200 days of about 1,265 today. The Dow Jones Industrial Average climbed 78.41 points, or 0.7 percent, to 12,097.83.

No Lost Decade for S&P 500 as Market Value Bias Masks Rally (Source: Bloomberg)
Even with the Standard & Poor’s 500 Index down 19 percent since the bursting of the technology bubble in 2000, it’s been no lost decade for stocks. The benchmark gauge for American common equity climbed 66 percent from March 24, 2000, through Dec. 2, after stripping out adjustments for market value, which gives equal credit to Exxon Mobil Corp. (XOM), whose shares are worth $382.5 billion, and Monster Worldwide Inc. (MWW), at $945.6 million. That’s little help for most investors, whose returns reflect the capitalization-weighted index, says Cliff Asness at AQR Capital Management LLC.
Gains in the S&P 500 Equal Weighted Index through the dot- com tumble, the Sept. 11 attacks, the real-estate collapse and the worst financial crisis since the Great Depression show the resilience of U.S. companies that are forecast to report record earnings this year even as Europe’s debt crisis threatens growth again. Declines in the S&P 500’s biggest members have left them cheaper (OEX) compared with the full index than 89 percent of the time since 2000, according to data compiled by Bloomberg.

Paulson Fund Loses 46% in 2011 Through November (Source: Bloomberg)
John Paulson, the billionaire money manager having his worst year, has lost 46 percent in 2011 through November in one of his largest hedge funds, according to an investor update obtained by Bloomberg News. Paulson’s Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, declined 3.6 percent last month. The fund’s gold share class dropped 2.7 percent in November and 29 percent this year. Paulson & Co., which is based in New York and manages $28 billion, has lost money this year on investments including Citigroup Inc., Bank of America Corp. and Sino-Forest Corp., the Chinese forestry company accused by short-seller Carson Block of overstating timberland holdings. Paulson, 55, cut the so-called net exposure in his main hedge funds to 30 percent last month and reduced bullish bets across all his funds.

Japanese Stocks Decline After S&P Warns Germany, France of Downgrade (Source: Bloomberg)
Japanese stocks fell for the first time in four days after Standard & Poor’s said it may strip Europe’s biggest economies of their AAA ratings amid the region’s worsening debt crisis. Toyota Motor Corp. (7203), Asia’s biggest carmaker, slid 1.5 percent. Kyocera Corp., a maker of electronic parts that earns about a third of its sales in the U.S. and Europe, lost 1.8 percent after the yen strengthened, cutting the outlook of the exporter’s outlook. Seiko Epson Corp. (6724) sank 3.2 percent after Goldman Sachs Group Inc. lowered the rating on the electronics device maker. “The downgrade news isn’t good because that may cause problems such as a hike in interest rates and other lingering financial issues,” Naoteru Teraoka, general manager at Tokyo- based Chuo Mitsui Asset Management Co., which oversees about $20 billion. The market has to take it negatively. Psychologically, it’s not good.”

Credit Squeeze Hits Asia Trade Finance (Source: Bloomberg)
The Asian Development Bank is preparing for a surge in demand for its trade financing, with a pull-back in lending by European banks risking a greater credit squeeze for some Asian nations than seen in 2008. “The trade-finance program is filling persistent market gaps, but it will become even more important,” Steve Beck, who heads the Manila-based ADB’s unit that provides credit and guarantees for imports and exports, said in an interview. “With some major European banks retrenching from the trade-finance business, we see that the gaps are increasing,” he said, without naming the lenders. Beck sees growth in his $3 billion operation accelerating from a pace already in excess of 25 percent this year, with a credit crunch having the biggest impact on poorer emerging markets including Sri Lanka, Bangladesh and Vietnam. At stake is averting a 2008-style collapse in trade that impairs growth in the continent that led the world out of the global recession.

Economy Avoiding ‘Death Spiral’ Increases Bullish Fund Wagers: Commodities (Source: Bloomberg)
Hedge funds boosted wagers on higher commodity prices for the first time in three weeks as the outlook for the U.S. economy improved. Money managers increased combined bullish positions across 18 U.S. futures and options by 0.7 percent to 566,494 contracts in the week ended Nov. 29, Commodity Futures Trading Commission data show. Investors trimmed their bearish holdings in copper for the first time in four weeks, and pared bets on lower wheat and soybean prices. The value of world equities rose more than $2.2 trillion last week as the MSCI All-Country World Index climbed for five consecutive days, the longest rally since October. The Federal Reserve and five other central banks made it easier and cheaper for banks to obtain dollars in emergencies and China, the biggest consumer of everything from energy to copper to soybeans, lowered banks’ reserve requirements for the first time since 2008. The U.S. jobless rate fell to a two-year low in November.

U.S. Services Grow at Slowest Pace Since 2010 (Source: Bloomberg)
Service industries in the U.S. expanded in November at the slowest pace since January 2010 as employment cooled, a sign improvement in the biggest part of the economy will be uneven. The Institute for Supply Management’s non-manufacturing index unexpectedly fell to 52 last month from 52.9 in October, the Tempe, Arizona based-group said today. The median forecast in a Bloomberg News survey called for a gain to 53.9. Fifty is the dividing line between expansion and contraction. Falling home prices, slow wage growth and limited job gains may make it difficult for households to sustain the pace of spending after the holiday shopping season. For companies, Europe’s debt crisis and a lack of clarity on the U.S. budget deficit and taxes remain obstacles to investment and hiring.

Chicago’s Evans Says Its ‘Imperative’ for FOMC to Escape Liquidity Trap (Source: Bloomberg)
Federal Reserve Bank of Chicago President Charles Evans said further monetary stimulus is needed now to help the U.S. economy escape from a “liquidity trap.” “There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape,” Evans said in a speech today in Muncie, Indiana. “It is imperative to undertake action now.” Evans, 53, voted against the Federal Open Market Committee’s November decision to maintain its level of stimulus, casting the U.S. central bank’s first dissent in favor of further easing since December 2007. His vote contrasted with those by three of his colleagues, Dallas Fed President Richard Fisher, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis, who dissented against further easing in August and September.

S&P Places 15 Euro Nations on Warning for Downgrade (Source: Bloomberg)
Standard & Poor’s said Germany and France may be stripped of their AAA credit ratings as the debt crisis prompts 15 euro nations to be put on review for possible downgrade. The euro area’s six AAA rated countries are among the nations to be placed on a negative outlook, and their credit ratings may be cut depending on the result of a summit of European Union leaders on Dec. 9, S&P said today in a statement. The euro reversed its gains and U.S. Treasuries rose earlier today after the Financial Times reported that the credit-ranking firm planned to reduce six AAA outlooks. “Systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted,” S&P said in a statement.

Tax Cuts Seen Undermining Social Security (Source: Bloomberg)
Some Democratic lawmakers say that, while President Barack Obama’s plan to cut payroll taxes may strengthen the U.S. economy, it may have some unintended fallout: weakening Social Security. The lawmakers and advocacy groups say they are concerned the tax cuts may undermine political support for the retirement program, which provides benefits to almost 55 million Americans and is funded by the payroll levies. “I don’t object to putting more money in people’s pockets, and there are lots of ways to do that, but not with Social Security,” said Representative Rush Holt of New Jersey, who said he will have a hard time supporting the White House plan.

Singapore Lending Surges 91% to Record $38B (Source: Bloomberg)
Syndicated lending in Singapore has almost doubled to a record this year, driven by demand from property developers and a surge in commodity trading. Loans surged 91 percent to $38.3 billion this year from the same period of 2010, beating the previous record of $30.7 billion in all of 2008, according to data compiled by Bloomberg. The total doesn’t include a S$5 billion ($3.9 billion) loan sought by Temasek Holdings Pte and Khazanah Nasional Bhd., the state-owned investment companies of Singapore and Malaysia, to fund S$11 billion of hotels, apartments, offices and shops. “Growth for the Singapore market has been boosted by a huge increase in financings for commodity sector,” said Boey Yin Chong, managing director of syndicated finance at DBS Bank Ltd. (DBS), Singapore’s biggest arranger of syndicated loans. “From a $500 million base in 2007 we’ll probably hit $9 billion plus by the end of 2011.”

South Korea Economy Expands More-Than-Estimated 0.8% on Car, Metal Exports (Source: Bloomberg)
South Korea’s economy expanded more than the central bank initially estimated in the third quarter as exports of cars and metal products increased. Gross domestic product grew 0.8 percent over the three months through September from the second quarter, compared with an October estimate of 0.7 percent, the Bank of Korea said in Seoul today. The economy expanded 3.5 percent from a year earlier, beating the bank’s October estimate of 3.4 percent. Europe’s debt crisis has weighed on Asia’s growth, with China recording the weakest manufacturing since 2009 for last month. All nine economists surveyed by Bloomberg News expect the Bank of Korea to keep interest rates unchanged for a sixth straight month on Dec. 8, the longest pause since tightening began in July 2010.

Merkel, Sarkozy Push for EU Revamp as S&P Issues Warning (Source: Bloomberg)
German Chancellor Angela Merkel and French President Nicolas Sarkozy strengthened their push for new rules to tighten euro area economic cooperation after Standard & Poor’s said it may downgrade credit ratings across the region. The leaders of Europe’s two biggest economies responded in a joint statement late yesterday that they “took note” of the move by S&P, while both countries “reinforce their conviction” that common proposals for closer fiscal union in the European Union will “strengthen coordination of budget and economic policy,” and promote stability and growth. “The actions of the last three years have shown that the euro zone governments are not prepared to act collectively in a way that convinces markets,” said Paul Donovan, deputy head of global economics at UBS AG in London. The S&P move “may perhaps heighten the desirability of coming out with a compelling solution for the French and the Germans.”

Europe Must Move Quickly to Head Off Bank Losses, Weinberg Says: Tom Keene (Source: Bloomberg)
European policy makers must quickly take more coordinated fiscal and monetary action to head off major losses by banks amid the region’s sovereign-debt crisis, according to Carl Weinberg of High Frequency Economics. Officials “have to find a way to stabilize the banking system fast,” Weinberg said today in a radio interview on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “It’s the only way out of this.” Leaders in Europe should move quickly to head off bank losses and to stimulate economic growth, said Weinberg, founder and chief economist of Valhalla, New York-based High Frequency.

LDK Taps Shanghai After Singapore Plunge (Source: Bloomberg)
LDK Solar Co., the Chinese solar- panel maker with bonds trading at half their face value in Singapore, is seeking to refinance by selling debt in Shanghai, where its notes trade at a premium. The 500 million-yuan ($79 million) sale of three-year notes tomorrow is part of a 3 billion-yuan program by the company to replace shorter-term liabilities. Traders are quoting Xinyu, south-central China-based LDK’s three-year debt at 5,000 yuan per 10,000 yuan bond in Singapore, yielding 49.5 percent, data compiled by Bloomberg show. The company’s 2012 yuan-denominated debt sold in China in October yields 7.08 percent.
While slowing orders from Europe and a Moody’s Investors Service report raising “red flags” about corporate governance at 61 Chinese companies have driven up offshore borrowing costs for LDK and its peers, government support for the industry has ensured demand for their Chinese debt from local banks. The yield on 6.5 percent convertible bonds of Renewable Energy Corp., an Oslo-based solar-energy materials producer, is 36 percent. St. Peters, Missouri-based MEMC Electronic Material Inc.’S 2019 bond yields 12.2 percent.

20111206 0953 Global Commodities Related News.

Corn (Source: CME)
US corn futures ended lower, retreating from early gains as sentiment on Europe's fiscal health shifts. A drop in the euro during the session helped drive commodity prices lower, serving as a reminder that the optimism about Europe ahead of a Friday debt summit was purely speculative. "We only have hopes going into the summit," Allendale's Rich Nelson says. "We don't have facts yet." Traders add that early gains had more to do with short-covering than any shift in supply and demand fundamentals, which are considered weak due to poor exports. Dec. CBOT corn ends down 6 1/4c to $5.80 1/4.

Wheat (Source: CME)
US wheat futures closed lower, sinking on poor demand and pressure from Europe. Optimism about Europe supported wheat and other commodities early, but after the euro fell in afternoon trading amid the potential for credit-rating downgrades, most commodities slipped. Meanwhile, disappointing weekly export inspections highlighted poor demand and ample world supplies. And traders noted a lack of fundamental news, waiting for the week-end USDA supply-and-demand report. CBOT December wheat ends down 13 1/2c at $5.98 3/4 while KCBT December falls 9 1/2c to $6.66 1/2 and MGEX December drops 7 3/4c to $8.48 1/4.

Rice (Source: CME)
US rice futures ended slightly lower amid lackluster demand. Poor demand sent the market down sharply all autumn, but prices have rebounded recently, building ideas that a market bottom is in place. World supplies are considered ample. Rice among several commodities that fell amid worries about Europe's debt. Jan. CBOT rice ends down 7c to $14.38 1/2 per hundredweight, down 3% since Wednesday.

Rain-soaked Australian wheat to corner Asia's corn market
SINGAPORE/SYDNEY, Dec 5 (Reuters) - An abundance of rain-soaked Australian wheat is set to further dampen U.S. and South American corn prices in 2012, as key corn importers switch to the cheaper, damaged grain for animal feed.
Japan, the world's biggest corn buyer, and corn-hungry South Korea and China are scooping up Australian wheat, as they seek to reduce costs -- and food inflation -- in the face of the global economic uncertainty.

Canada canola, wheat swelled in good weather
Canada's canola harvest jumped 6 percent from the government's last projection, as favorable late-summer and autumn weather boosted yields on the Prairies, grain traders and analysts say.
A Reuters trade survey ahead of Statistics Canada's final crop production report of 2011, due on Tuesday, estimated on average that the canola crop jumped to 13.7 million tonnes, nearly 1 million tonnes greater than last year's harvest.

U.S. soybeans rise on dry weather, European summit hopes
KUALA LUMPUR, Dec 5 (Reuters) - U.S. soybeans rose for a second day  as dry weather fuelled supply concerns and this week's summit of European leaders buoyed expectations that the region will find new steps to stem the debt crisis, halting a global economic slowdown.
"There's been a drying trend in South America and we have seen that in the last couple of weeks in Brazil but it's not expected to be sustained," said Luke Mathews, an agricultural commodity strategist at Commonwealth Bank of Australia in Sydney.

Vietnam rice export prices need to be cut-top exporter
HANOI, Dec 5 (Reuters) - Vietnam's rice industry should cut export prices to attract buyers and avoid a fall in domestic prices when the largest rice crop is harvested early next year, a senior official at the country's top rice export firm said on Monday.
Exporters have signed contracts to load a record low 220,000 tonnes of rice in early 2012, following competition from cheaper Indian and Pakistani rice, Deputy General Director Cao Thi Ngoc Hoa of Vinafood 2 said.

Ukraine may import wheat as winter sowings suffer
KIEV, Dec 2 (Reuters) - A fall in the 2012 winter wheat harvest after large exports in the 2011/12 season, could force Ukraine to import wheat in 2012/13, about 1.3 million tonnes, for the first time since 2004, according to the Farm Ministry data, published on Friday.
The data, published on the web site of Ukraine's grain traders union UZA www.uga-port.org.ua showed the former Soviet republic and net-exporter of wheat was likely to harvest 8.5 million tonnes of wheat in 2012 compared to 22.2 million in 2011.

Japan Moves Into Argentina's 2012 Corn Crop (Source: CME)
Japan, the world's biggest corn importer, has made its first purchases of the grain from Argentina's next crop, to be harvested early next year, and is also simultaneously buying sorghum to cut costs, trading executives said. Japan has bought at least three split or combination cargoes from Argentina, they said. All cargoes contain around 27,500 metric tons each of corn and sorghum for shipment between March 15 and April 15, they said on the sidelines of an agriculture conference. A total of 82,500 tons each of corn and sorghum were purchased. More purchase deals are likely for Argentina's corn because it is up to $5/ton cheaper than U.S. corn, said an executive with a global commodities trading company. U.S. corn is currently offered around $315/ton, cost and freight, for shipment to Japanese ports in March. Traders said costs can be cut while importing corn by also buying sorghum for shipment in the same cargo. Both are ingredients for making animal feed.

Western Australia Grain Harvest Reaches 60% (Source: CME)
An annual harvest of winter grains, including wheat, in Western Australia state is more than 60% complete, with Cooperative Bulk Handling Ltd. reporting mostly favorably on grain quality in a weekly harvest report issued. Receivals of winter grains into CBH's network of 200 upcountry storage sites and four coastal export terminals total 8.2 million metric tons of an expected 12.5 million-13.0 million tons in the crop year ending March 31, CBH said. If realized, this will be the second-largest volume after the 14.7 million-ton record delivered in 2003-04 and about double last year's total drought-reduced intake of 6.5 million tons, the company said. CBH dominates storage and handling in the state. CBH's Geraldton Zone manager, Duncan Gray, said receivals have reached 2.5 million tons, making an expected 3.2 million-ton total in the zone "very achievable" given 30% of the crop in the zone remains to be harvested.
"The grain quality has again held very firm across the zone, which is very pleasing and hopefully this trend can continue until the end of harvest," Gray said. CBH previously reported some grain quality issues as a result of high moisture levels earlier in the harvest. Central Kwinana zone manager Brett Jeffrey said wheat yields and quality are generally holding up well, with most sites achieving high percentages of milling grades. Southeast Esperance zone manager Mick Daw said that while CBH sites are receiving grain across all grades, the quality has generally been improving. Industry estimates suggest deliveries to CBH account for about 90% of state grain production, with the rest stored on farm or sold directly to users. WA delivered mostly milling grade in last year's drought-reduced crop. Earlier this year, there was some concern that increased moisture late in the season may lead to the downgrading of some of the crop to feed grade.

Faulty Forecasts Roil Corn Market (Source: CME)
Government reports about the U.S. corn crop have become increasingly unreliable of late, contributing to wild swings in corn prices, a Wall Street Journal analysis shows. Over the past two years, the Department of Agriculture's monthly forecasts of how much farmers will harvest have been off the mark to a greater degree than any other two consecutive years in the last 15, according to a Journal analysis of government data. This year's early-season forecasts also appear to have been way off. The next monthly report is due on Friday. At the same time, periodic stockpile reports -- government estimates of how much corn is stored in farm silos and other storage facilities -- have generated big surprises. The average monthly swings in stockpile estimates between May and October, the heart of the growing season, have been greater this year than in any year since 1996, according to the Journal analysis. The stockpile reports have had a big effect on markets.
On Sept. 30, the USDA said a quarterly survey showed corn  stockpiles were 23% higher than it had estimated earlier that month. Corn prices fell 6.3% in the futures market that day, shaving $5 billion off the value of corn in the fields. "There is very much a lack of confidence right now among farmers" in the government data, says Bill Christ, who harvests roughly 100,000 bushels of corn a year in Metamora, Ill. "Can't they get it right?" USDA officials blame unpredictable weather for recent errant production forecasts. They say the figures are snapshots that change based on fresh information, such as damage caused by heat waves or changes in consumption patterns. "If somebody's going to be in these commodity markets, they better understand these things are subject to change," says Gerald Bange, chairman of the USDA's World Agricultural Outlook Board, which is involved in producing the data. The U.S. grew 38% of the world's corn in 2010, when the domestic crop was worth $67 billion.
Strong demand from foreign  buyers, and from the growing ethanol industry, has added to market volatility. Jerry Norton, who tracks corn for the USDA, says because corn supplies are tight, "the market is much more sensitive" to changes in the department's reports. The Chicago Board of Trade has long had limits on single-day price moves on corn and other commodities in the futures market. Corn prices have hit the basic limit 20 times since the start of 2009, with eight of those instances, or 40% of them, coming on the day of a USDA report, according to a Journal analysis of price data. Between 1996 and 2008, only 20% of such limit moves came on reports days. Like many farmers, Mike Yost, a former USDA official who is now a partner in a Murdock, Minn., dairy farm, pays close attention to the reports. In January 2010, the USDA forecast a record crop, causing corn prices to plummet. Mr. Yost figured a record crop would keep corn prices low, so he didn't lock in his feed prices.
Six months later, the department said corn stockpiles were smaller than he and many others had expected, despite the bountiful crop. Prices shot up, and Mr. Yost's dairy operation had to pay an extra $200,000 to buy feed. "We just got too comfortable going on the government numbers," he says. "There's something not quite right in their formula." Critics of the reports contend that weather alone doesn't explain the erratic numbers, especially in the stockpile reports. Darrel Good, a professor at the University of Illinois who has written extensively about USDA data, says that a number of recent quarterly stockpile reports have been simply incorrect -- the numbers have been higher or lower than the actual amounts in storage. "Things went haywire in June and September," he says. "The cumulative numbers just don't make sense." A USDA spokesman says the agency stands by the numbers.
The USDA data drive all sorts of decisions in the agricultural economy and beyond. Farmers use the information to help decide how much their corn is worth and when they should try to sell it. Ranchers, ethanol producers and food companies all pay attention when making their own corn purchases. Many other nations rely on U.S. corn for feed, and some foreign buyers key on the reports. China, for example, swooped in to buy U.S. corn when prices fell after this year's June 30 stockpile report. For all their shortcomings, USDA production figures are considered the best domestic agricultural estimates available. Corn buyers and sellers say the department's task has gotten harder in recent years. With global demand for corn on the rise and prices soaring, U.S. farmers have been planting more. Production has grown by 30% over the past decade. The growth of the ethanol fuel industry, which has become a massive consumer of corn, has further complicated matters.
Accurate information about agriculture has been a national priority since the Civil War. Today, two measures of the corn harvest that the USDA focuses on are how big the next one will be and how much is in storage. In eight of the 11 years from 1998 to 2008, the difference between monthly production estimates made between May to October -- when the size of the crop is less certain than late in the year -- and final U.S. production totals averaged less than 3%, according to the Journal analysis. Last year, the USDA overestimated the size of the harvest in its monthly forecasts by an average of 6%, the widest average overestimation since 1995. That means the final harvest was about 750 million bushels smaller than what was forecast -- equal to about 20 days of consumption. In 2009, the department underestimated the crop by an average of 4.5%, the biggest underestimation since 2004. Current USDA figures for this year suggest that the department overestimated the total crop by nearly 10% early in the season.
The USDA is trying to improve its production estimates, which it provides each month starting in May. In May, June and July, the estimates are produced by Mr. Bange's Outlook Board, and typically are based on recent yield trends, weather conditions and surveys of farmers by the department's National Agricultural Statistics Service, which asks them how many acres they plan to fill with corn. The USDA's statistics service takes over each August. As the crop begins to take shape, it asks tens of thousands of farmers how many bushels per acre they expect to produce. To fill out the picture, the statistics service sends corn counters into hundreds of fields in corn-growing states. They stake out 15-foot sections, then count stalks and measure the length and diameter of cobs. Their goal is to extrapolate total production. Joseph Prusacki, a top official at the USDA's statistics service, says the department is trying to figure out a more reliable guide to what developing corn will weigh when it is mature.
The stockpile reports pose different challenges. The statistics service produces the quarterly reports, using surveys of farmers and commercial grain facilities to determine how much corn the nation has in storage. The Outlook Board issues monthly estimates of the stockpile size at the beginning and end of the marketing year, which starts with the fall harvest. Quarterly surveys can lead to changes in monthly estimates. Frustration over the data has mounted in recent years. After the June 2010 stockpile report that caught Mr. Yost off guard, the statistics service that August increased the Outlook Board's July production forecast by 1%, even as analysts were raising concerns about the threat from a heat wave. The service then slashed its production estimates in September and October. By the time the harvest was in, the August forecast turned out to be more than 900 million bushels too high. This year, the stockpile figures released June 30 were higher than analysts expected.
Corn prices, which had been nearly $7 a bushel, plunged to $6.29 in a single day. "The USDA overstated the crop, and we believe that's why we've seen a correction since then," Bill Lovette, chief executive officer of Pilgrim's Pride, one of the nation's largest poultry firms and a major feed buyer, told investors in late July, after prices bounced back. Mr. Yost, the Minnesota farmer, who headed the USDA's Foreign Agricultural Service from 2006 to 2009, says if the USDA numbers were more reliable, "it would serve the whole food chain better."

India issues formal order for 1 mln T sugar exports
NEW DELHI, Dec 5 (Reuters) - India has issued a formal order for 1 million tonnes of sugar exports under open general licence (OGL), a government statement showed on Monday, nearly a fortnight after the world's top sugar consumer allowed such sales as output was seen exceeding demand.
India, the world's top sugar producer after Brazil, is seen producing 25-26 million tonnes of sugar in the current sugar year that began on Oct. 1, and after meeting domestic demand, about 4 million tonnes could be available for staggered exports.

ASEAN rubber group blacklists defaulters
SINGAPORE, Dec 5 (Reuters) - The ASEAN Rubber Business Council has blacklisted buyers who defaulted on shipments and urged members to ignore requests for discounts following a plunge in prices, the group said in a statement seen on Monday.
The ARBC decided in a meeting in Hanoi at the weekend that it would act against defaulters and asked members to stop dealing with them, according to the statement.

No forms halt commodities exports at Indonesia port
BANDAR LAMPUNG, Indonesia  Dec 3 (Reuters) - Coffee, rubber and cocoa exports from Indonesia's Lampung port have stopped since Wednesday due to a lack of official forms needed for shipments, traders said on Saturday.
The trade office in the key southern Sumatran port has run out of certificate of origin (COO) forms, part of the documentation required for traders to export commodities.

China state cotton purchase capacity at 4.1 mln T -govt
BEIJING, Dec 5 (Reuters) - China's capacity for state cotton purchases this year is 4.1 million tonnes, 55 percent of the estimated 2011 cotton output, the China National Cotton Reserves Corp said in a statement on Monday.
Selling cotton to the government has been farmers' top priority because processors have refrained from active buying while profit margins are so slim, according to the statement published on the State-owned Assets Supervision and Administration Commission of the State Council's web site.

Brazil 11/12 cotton output seen up 8 pct-attache
Dec 2 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Brazil:
"Brazil's 2011/12 cotton production is now forecast at a record 9.5 million bales, up 8 percent from 2010/11 production now estimated at 8.7 million bales. Favorable potential returns and significant future committed sales mainly destined for export contribute to an expected increase in planted area by 6 percent to 1.5 million hectares. Post now estimates Brazil's 2011/12 cotton exports at 4.1 million bales, based on significant demand from China, more than double the 2 million bales exported in 2010/11.

Ivorian cocoa arrivals hit 368,956 tonnes by Nov 27-BCC
ABIDJAN, Dec 2 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast reached 368,956 tonnes by Nov. 27, up from 348,131  tonnes  in the same period a year ago, according to data from the Coffee and Cocoa Bourse (BCC) obtained by Reuters on Friday.
The figures included 21,200 tonnes of late declarations from previous weeks, it said.

Demand, price outlook in focus at Vietnam coffee meet
HANOI/SINGAPORE, Dec 5 (Reuters) - Ample robusta supply, uncertainties over a plan by major producer Vietnam to stockpile to prevent another price fall and demand outlook at a time of global economic slowdown will take centre stage at an industry conference this week.
London robusta  has bounced from an 11-month low reached in November, but gains were mostly driven by rallies in New York arabica futures as heavy rains drenched plantations in  Colombia, the world's top producer of the high-quality variety.

Euro Coal-Prices rise 50c with oil, stocks, euro
LONDON, Dec 2 (Reuters) - Physical prompt coal prices crept higher by around 50 cents a tonne on Thursday in line with gains made in world stocks, the euro and oil although coal trade was minimal with no fixed price deals reported.
Coal fundamentals have been sidelined by volatility across the markets in response to the euro zone crisis and gloomy economic outlooks.

US coal consumption fell 1 pct last week - Genscape
Dec 2, HOUSTON - U.S. coal consumption fell 1 percent last week and was down 15 percent from the same week a year ago, according to power industry data monitor Genscape.
Coal use swings up and down seasonally, and varies from week to week and region to region, depending on electricity demand to run air-conditioners or power heaters.

India aims to award new oil and gas blocks by March-oil min exec
NEW DELHI, Dec 5 (Reuters) - India hopes to award new oil and gas blocks for exploration  under its New Exploration and Licensing Policy (NELP) by March, a senior oil ministry official said on Monday.
The blocks will be offered under NELP which was launched in 1999 offering more attractive terms to boost investment in the oil and gas sector of Asia's third-largest oil consumer.

Oman oil minister: market well supplied
DOHA, Dec 5 (Reuters) - Oman's oil minister said on Monday that the oil market was well supplied and that current prices near $100 per barrel were appropriate.
Asked at the World Petroleum Congress whether the market was supplied and whether prices were appropriate near $100 per barrel, Omani Oil Minister Mohamed Bin Hamad Al Rumhi said, "yes".

India's fuel exports likely to touch 70 mln T by 2014
NEW DELHI, Dec 5 (Reuters) - India's fuel exports are likely to touch about 70 million tonnes by 2014, a government statement said on Monday, compared to 50 million tonnes in the financial year ending March 2011.
India's fuel exports will rise as the country has been expanding its refining capacity which is expected to rise 20 percent to about 4.65 million barrels per day at the end of the current fiscal year in March.  

OPEC sec gen sees Libya oil supply 950,000 bpd yr-end
DOHA, Dec 4 (Reuters) - Libyan oil production should reach about 950,000 barrels per day by the end of this year and 1.3 million bpd by the first quarter of 2012, OPEC Secretary-General Abdullah al-Badri said on Sunday.
"Libya's coming back very strongly ... I think their production will be around 950 (thousand) by the end of December," he told reporters on the sidelines of the World Petroleum Congress.

Europe fuel oil boosted by Japan, supply cuts
LONDON, Dec 2 (Reuters) - A rise in demand for fuel oil from Japan to replace lost nuclear power post-earthquake and a fall in Russian exports due to tariff changes will give European fuel oil profitability a sustained boost, as improving refinery technology cuts output.
The fuel oil crack or refining margin has narrowed over 2011, buoyed by Asian buying and tighter supplies.
 
Crude Oil Declines First Day in Three on Possible S&P Credit Downgrades (Source: Bloomberg)
Oil declined from the highest in almost three weeks in New York as investors speculated that fuel demand will falter amid signs Europe is struggling to tame its sovereign debt crisis. Futures slipped as much as 0.6 percent after Standard & Poor’s said it may strip Germany and France of their AAA credit ratings as it put 15 euro nations on review for possible downgrades. A U.S. Energy Department report tomorrow may show gasoline and distillate inventories rose, while crude stockpiles fell, according to a Bloomberg News survey of analysts. Crude for January delivery fell as much as 58 cents to $100.41 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.57 at 10:44 a.m. Sydney time. The contract yesterday gained 3 cents to $100.99, the highest close since Nov. 16. Prices are 13 percent higher the past year.

Iron Ore - Spot seen stabilising this week, steady demand
SINGAPORE, Dec 5 (Reuters) - Iron ore may stabilise this week after rising sharply in the past two sessions with steady steel prices in top market China unlikely to encourage more aggressive restocking by steel producers.
Iron ore with 62 percent iron content jumped nearly 4 percent to $138.80 a tonne on Friday, cost and freight delivered to China, according to Steel Index.  

Baltic index stays firm, iron ore trades support
LONDON, Dec 2 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose for a fifth straight session on Friday as firm iron ore activity and rising port congestion supported earnings on the larger capesize vessels.
Nevertheless, the shipping sector was set to see more turmoil in the coming months as a supply glut and growing economic gloom would keep earnings under pressure.  

20111206 0952 Soy Oil & Palm Oil Related News.

Soybeans (Source: CME)
US soybean futures finished lower, retreating from early gains on poor export demand and outside pressure. Early gains fueled by optimism about Europe's debt, but enthusiasm waned and commodities fell on reports S&P is putting Europe's triple-A countries on downgrade watch. Weekly soybean export inspections were disappointing, and traders say South American weather, while dry, is not yet a major problem for the crop. CBOT Jan soybeans end down 9 1/2c to $11.26 1/4 a bushel, down 20c off day's highs

Soybean Meal/Oil (Source: CME)
Dec soymeal ended down $5.30 to $281.10 per short ton while Dec soyoil holds steady amid flat crude oil prices, ending up 0.02 cents to 50.07 cents/lb.

Palm Oil Output in Malaysia Likely Declined in November From Two-Year High (Source: Bloomberg)
Palm oil output in Malaysia, the world’s second-biggest producer, probably fell from a two-year high last month after the peak harvest season ended, according to a Bloomberg News survey. Output fell 11 percent to 1.7 million metric tons in November from 1.91 million tons in October, according to the median estimate in the survey of four analysts and two plantation companies last week. Production was 1.46 million tons a year earlier, according to the Malaysian Palm Oil Board, which is scheduled to publish the official estimates on Dec. 13. Declining output may pare stockpiles and stem a 18 percent slide in palm oil prices this year. Futures may rally to a four- year high of 4,000 ringgit ($1,277) a ton in the next seven months as growth in output decelerates in Indonesia and Malaysia, the biggest growers, Dorab Mistry, director of Godrej International Ltd. said Dec. 2.

Palm oil up on flood reports, euro zone meeting eyed
KUALA LUMPUR, Dec 5 (Reuters) - Palm oil futures rose 1.2 percent  as weekend floods in No.2 producer Malaysia raised concerns about supply disruptions and hopes grew that a crucial euro zone summit this week may reveal a plan to solve the region's debt crisis.
"It will be an interesting week for palm oil," said a trader with a foreign commodities brokerage. "The short term focus is the supply disruption arising from floods and the long term view will be coloured by the success of this euro zone meeting."

Lull before the storm for India's cooking oil refiners?
NEW DELHI/JAKARTA, Dec 2 (Reuters) - Strong global demand for palm oil appears to have won India's refiners a temporary reprieve from a potentially devastating deluge of cheap Indonesian cooking oil, but imports of products could double from 2013  as extra supplies hit the market.
Indonesia altered taxes on exports to make its refined palm oils more attractive than crude palm oil (CPO) from October, prompting warnings from refiners in India, the world's top cooking oil buyer, that they would be dealt a "death blow."

Argentine soy planting advances quickly-gov't
BUENOS AIRES, Dec 2 (Reuters) - The planting of Argentine 2011/12 soy advanced quickly over the last week thanks to ample rains, although several pockets of excessive moisture caused concerns among growers, the Agriculture Ministry said in its weekly crop report on Friday.
As of Thursday, which ended the week covered by the report, farmers had planted 66 percent of the 19 million hectares planned for soy this season, advancing by 10 percentage points during the seven-day period, 6 points faster than the last year's tempo.