Commodities Drop 10th Day; Europe Stock Futures Rise on Germany
2012-05-15 06:19:58.954 GMT By Glenys Sim
May 15 (Bloomberg) -- Commodities headed for their longest slump in 14 years, Asian stocks fell, and bond risk in the region climbed to a four-month high on evidence of slowing growth in China before a report that may show Europe’s economy shrank. European equity futures rose as Germany’s economy expanded five times faster than economists forecast.
The MSCI Asia Pacific Index slid 0.6 percent by 7:15 a.m. in London as the Hang Seng China Enterprises Index earlier erased the year’s gains. The Standard & Poor’s GSCI gauge of commodities dropped for a 10th day, the longest period of decline since 1998. Standard & Poor’s 500 Index futures rose 0.5 percent and the Euro Stoxx 50 Index futures advanced 0.4 percent.
Foreign direct investment in China fell for a sixth month in April, underscoring risks of a deeper slowdown in Asia’s biggest economy. Greece, without a government for more than a week, must decide today whether to pay 436 million euros ($562 million) to bondholders who shunned last month’s debt swap. Moody’s Investors Service downgraded 26 Italian banks yesterday.
“Nobody quite knows what would happen in the event of a Greek departure from the eurozone,” Russell Jones, global head of fixed-income strategy at Westpac Banking Corp., said in a Bloomberg Television interview. “ All we know is it would be damaging, it’s just a question of how damaging.”
German gross domestic product in Europe’s largest economy rose 0.5 percent from the fourth quarter, when it fell 0.2 percent, the Federal Statistics Office said in Wiesbaden today. Economists predicted a 0.1 percent gain, according to the median of 40 estimates in a Bloomberg News survey. French GDP stagnated.
The 17-nation European economy probably shrank 0.2 percent in the three months to the end of March, putting it into recession after a 0.3 percent contraction at the end of last year, the median of 38 forecasts in a Bloomberg survey shows.
Tuesday, May 15, 2012
20120515 1822 FCPO EOD Daily Chart Study.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward, seller lock in profit.
Support : 3200, 3150, 3100, 3070 level.
Resistance : 3250, 3270, 3300, 3350 level.
Comment :
FCPO closed recorded gains having technical rebound with decline volume distributed. Soy oil price also rebounding higher after yesterday falls while crude oil price trading range bound registering small loss.
Price recovering upwards as seller book profit after recent sharp dive plus export figures released today showing some improvement.
Chart study adjusted to calling a pullback correction downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
20120515 1737 FKLI EOD Daily Chart Study.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : falling lower, seller taking position.
Support : 1550, 1540, 1530, 1515 level.
Resistance : 1565, 1570, 1580, 1590 level.
Comment :
FKLI closed weaker with surging volume particiaption doing 11.5 points discount compare to cash market that closed recorded loss of nearly 1%. Overnight U.S. markets closed weaker and today Asia markets ended mixed while European markets currently registering little gains.
Overall market sentiment remained weak with some exchanged having technical rebound after news on China foreign investment dropped, PIMCO statement on China economy slowdown may deepen, Moody downgraded Italian banks while Germany recorded higher than estimate GDP.
Daily chart remained recommending a downside biased market development with possible pullback correction.
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.
20120515 1707 Regional Markets EOD Daily Chart Study.
DJIA chart reading : downside biased with possible pullback.
Hang Seng chart reading : pullback correction downside biased.
KLCI chart reading : pullback correction downside biased.
20120515 1555 Global Market & Commodities Related News.
Asian Stocks Fall for Fifth Day on Greece Concern, Italy Risks
2012-05-15 04:54:48.453 GMT By Kana Nishizawa and Yoshiaki Nohara
May 15 (Bloomberg) -- Asian stocks fell as the political impasse in Greece added to speculation the nation will leave the euro union and Moody’s Investors Service downgraded Italian banks ahead of a report that may show Europe’s economy shrank.
Nippon Sheet Glass Co., a glassmaker that counts Europe as its No. 1 market, slumped 1 percent in Tokyo after saying it may continue to suspend some production in Europe this year on slumping demand. BHP Billiton Ltd., the world’s largest mining company, declined 2.2 percent in Sydney after metal prices fell. China Overseas Land & Investment Ltd., the mainland’s biggest developer by market value, fell 1 percent in Hong Kong after a report Shanghai tightened home-purchase restrictions.
“Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It would further erode confidence in Europe. While it might be positive news, I think we may go through a period of fairly intense uncertainty if they end up leaving.”
The MSCI Asia Pacific Index slid 0.8 percent to 117.04 as of 1:45 p.m. in Tokyo. Almost three stocks declined for each that rose on the measure, which is headed for its fifth successive day of losses and lowest close since Jan. 16. The gauge is less than 1 percent away from closing 10 percent below this year’s high on Feb. 29, a level some investors call a correction.
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average fell 0.9 percent and Australia’s S&P/ASX 200 Index slid 0.7 percent. South Korea’s Kospi Index retreated 1 percent. Hong Kong’s Hang Seng Index added 0.1 percent and China’s Shanghai Composite Index fell 0.8 percent.
The Asian gauge gained 3.7 percent this year through yesterday, compared with a 6.4 percent increase by the S&P 500 and a 1.2 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12.1 times estimated earnings on average yesterday, compared with 12.7 times for the S&P 500 and 10.2 times for the Stoxx 600.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The gauge fell 1.1 percent in New York yesterday after Greek President Karolos Papoulias failed to form a unity government, extending the nation’s post-election political gridlock. German Finance Minister Wolfgang Schaeuble said Europe has done its “utmost” to rescue the financially stricken country, limiting any further room for leniency after about 240 billion euros ($308 billion) of aid pledges.
Italian Banks
UniCredit SpA and Intesa Sanpaolo SpA were among 26 Italian banks whose credit ratings were cut by Moody’s, citing weakened earnings and the country’s economic outlook. The downgrade followed Moody’s decision on Feb. 13 to cut the credit rating of Italy and five other nations, including Spain, on concern over the euro region’s ability to deal with the debt crisis.
Nippon Sheet Glass dropped 1 percent to 95 yen in Tokyo. The company said one of two furnaces at a German float plant will remain out of operation until at least the end of this year. Further cuts in float-glass capacity in Europe is under review, the company said.
BHP fell 2.2 percent to A$33.70 in Sydney, while Korea Zinc Co., a non-ferrous metal smelter, retreated 1.9 percent to 330,500 won in Seoul after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.9 percent yesterday.
China Overseas Land fell 1 percent to HK$15.90 in Hong Kong, while Soho China Ltd., a developer in central Beijing and Shanghai, declined 2.6 percent to HK$5.55 after the China Securities Journal said single residents with Shanghai registration are no longer allowed to buy a second home, citing city’s real-estate trading centers.
-------------------------------------------
Shares fell to multi-month lows as investors sought refuge from the political turmoil that is fuelling fears of Greece's exit from the euro and threatening to undo progress made so far to solve the euro zone's debt crisis. U.S. stocks fell on Monday as investors dealt with the one-two punch of worsening political upheaval in the euro zone and the possibility that China's economy may be softening more than previously thought.
The euro slipped to a four-month low against the dollar as a political stalemate in Greece stoked fear the country may renege on bailout pledges made to international creditors and exit the currency bloc.
FOREX-Euro dips to 4-month low as Greek impasse fans exit worry
TOKYO, May 15 (Reuters) - The euro slipped to a four-month low against the dollar on Tuesday as political impasse in Greece raised worry the country may renege on bailout pledges and exit the currency bloc.
"At the moment, I think that Greece's exit from the euro zone is a risk scenario rather than my main scenario. But what you have to consider is, whether Greece is going to stay or not, it is only the euro zone economy that is expected to hit recession this year," said Daisuke Karakama, market economist at Mizuho Corporate Bank.
U.S. soybean futures rose after two straight days of losses, driven by fund liquidation of long positions and a risk-off phase that propelled the July oilseed contract to the lowest level in six weeks on Monday.
Corn, soy planting pace ahead of analysts view
U.S. farmers seeded corn and soybeans faster than analysts were expecting last week and their momentum was expected to continue amid calls for good weather around the Midwest.
Farms in main Argentina grains province to strike
Farmers in Argentina's main agricultural province will call a strike this week against a proposed tax increase, but the planned five-day halt in crop sales should have little impact on exports.
China May soy imports seen at 6-mth high - Mofcom
China, the world's top soy buyer, is likely to import 5.63 million tonnes of the oilseed in May, the commerce ministry estimated on Monday, up 15 percent from actual arrivals of 4.88 million tonnes in April.
Rains hold back Argentine soy harvest pace
Argentina's 2011/12 soybean harvest slowed down in the last week because of rain in some areas, the Agriculture Ministry said on Friday in its latest weekly crop progress report.
POLL-US crude stocks seen higher, Cushing stocks up
U.S. crude oil stockpiles were forecast higher for the eighth straight week last week as stockpiles at Cushing, Oklahoma, likely climbed to a new record, a preliminary Reuters poll ahead of weekly inventory reports showed on Monday.
Obama administration not opposed to LNG exports
The Obama administration is not opposed to exporting liquefied natural gas but will depend on an official analysis to guide its decision on whether to allow more gas export projects to proceed, a White House official said on Monday.
Brent crude futures fell towards $111 a barrel as Greece's political and economic turmoil deepened and worries that the debt-laden country could leave the euro zone sparked a sell-off in dollar-denominated commodities.
Peru's Volcan sees 2012 silver production rising
Volcan, Peru's top silver producer, expects its silver output to rise to 22.5 million ounces from 21 million ounces in 2011, the company said at the International Gold Symposium on Monday.
London copper hit fresh four-month lows as investors steered clear of riskier assets, put off by a slowing Chinese economy and Greece's increasingly complicated political woes.
Gold dropped to its lowest since late December as the euro sank against the U.S. dollar on worries that a worsening debt crisis in Greece could spill over into its neighbours and threaten the existence of the single currency.
METALS-LME copper hits 4-month low on Greece fears
SINGAPORE, May 15 (Reuters) - London copper hit fresh four-month lows on Tuesday as investors steered clear of riskier assets, put off by a slowing Chinese economy and Greece's increasingly complicated political woes.
"There will be continued uncertainty until there's a resolution in Greece, but so much of this hinges upon the political cycle which is very hard to pick from a market perspective," said Matt Fusarelli, analyst at Australia-based consultancy AME Group.
PRECIOUS-Gold falls to 4-1/2 month low on Greece risks
SINGAPORE, May 15 (Reuters) - Gold dropped to its lowest since late December as the euro sank against the U.S. dollar on worries that a worsening debt crisis in Greece could spill over into its neighbours and threaten the existence of the single currency.
"Jewellers have been buying a lot. At the moment supply is a bit tight for immediate delivery, although it's not that the market is short of physical gold bars right now," said a physical dealer in Singapore.
2012-05-15 04:54:48.453 GMT By Kana Nishizawa and Yoshiaki Nohara
May 15 (Bloomberg) -- Asian stocks fell as the political impasse in Greece added to speculation the nation will leave the euro union and Moody’s Investors Service downgraded Italian banks ahead of a report that may show Europe’s economy shrank.
Nippon Sheet Glass Co., a glassmaker that counts Europe as its No. 1 market, slumped 1 percent in Tokyo after saying it may continue to suspend some production in Europe this year on slumping demand. BHP Billiton Ltd., the world’s largest mining company, declined 2.2 percent in Sydney after metal prices fell. China Overseas Land & Investment Ltd., the mainland’s biggest developer by market value, fell 1 percent in Hong Kong after a report Shanghai tightened home-purchase restrictions.
“Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It would further erode confidence in Europe. While it might be positive news, I think we may go through a period of fairly intense uncertainty if they end up leaving.”
The MSCI Asia Pacific Index slid 0.8 percent to 117.04 as of 1:45 p.m. in Tokyo. Almost three stocks declined for each that rose on the measure, which is headed for its fifth successive day of losses and lowest close since Jan. 16. The gauge is less than 1 percent away from closing 10 percent below this year’s high on Feb. 29, a level some investors call a correction.
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average fell 0.9 percent and Australia’s S&P/ASX 200 Index slid 0.7 percent. South Korea’s Kospi Index retreated 1 percent. Hong Kong’s Hang Seng Index added 0.1 percent and China’s Shanghai Composite Index fell 0.8 percent.
The Asian gauge gained 3.7 percent this year through yesterday, compared with a 6.4 percent increase by the S&P 500 and a 1.2 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12.1 times estimated earnings on average yesterday, compared with 12.7 times for the S&P 500 and 10.2 times for the Stoxx 600.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The gauge fell 1.1 percent in New York yesterday after Greek President Karolos Papoulias failed to form a unity government, extending the nation’s post-election political gridlock. German Finance Minister Wolfgang Schaeuble said Europe has done its “utmost” to rescue the financially stricken country, limiting any further room for leniency after about 240 billion euros ($308 billion) of aid pledges.
Italian Banks
UniCredit SpA and Intesa Sanpaolo SpA were among 26 Italian banks whose credit ratings were cut by Moody’s, citing weakened earnings and the country’s economic outlook. The downgrade followed Moody’s decision on Feb. 13 to cut the credit rating of Italy and five other nations, including Spain, on concern over the euro region’s ability to deal with the debt crisis.
Nippon Sheet Glass dropped 1 percent to 95 yen in Tokyo. The company said one of two furnaces at a German float plant will remain out of operation until at least the end of this year. Further cuts in float-glass capacity in Europe is under review, the company said.
BHP fell 2.2 percent to A$33.70 in Sydney, while Korea Zinc Co., a non-ferrous metal smelter, retreated 1.9 percent to 330,500 won in Seoul after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.9 percent yesterday.
China Overseas Land fell 1 percent to HK$15.90 in Hong Kong, while Soho China Ltd., a developer in central Beijing and Shanghai, declined 2.6 percent to HK$5.55 after the China Securities Journal said single residents with Shanghai registration are no longer allowed to buy a second home, citing city’s real-estate trading centers.
-------------------------------------------
Shares fell to multi-month lows as investors sought refuge from the political turmoil that is fuelling fears of Greece's exit from the euro and threatening to undo progress made so far to solve the euro zone's debt crisis. U.S. stocks fell on Monday as investors dealt with the one-two punch of worsening political upheaval in the euro zone and the possibility that China's economy may be softening more than previously thought.
The euro slipped to a four-month low against the dollar as a political stalemate in Greece stoked fear the country may renege on bailout pledges made to international creditors and exit the currency bloc.
FOREX-Euro dips to 4-month low as Greek impasse fans exit worry
TOKYO, May 15 (Reuters) - The euro slipped to a four-month low against the dollar on Tuesday as political impasse in Greece raised worry the country may renege on bailout pledges and exit the currency bloc.
"At the moment, I think that Greece's exit from the euro zone is a risk scenario rather than my main scenario. But what you have to consider is, whether Greece is going to stay or not, it is only the euro zone economy that is expected to hit recession this year," said Daisuke Karakama, market economist at Mizuho Corporate Bank.
U.S. soybean futures rose after two straight days of losses, driven by fund liquidation of long positions and a risk-off phase that propelled the July oilseed contract to the lowest level in six weeks on Monday.
Corn, soy planting pace ahead of analysts view
U.S. farmers seeded corn and soybeans faster than analysts were expecting last week and their momentum was expected to continue amid calls for good weather around the Midwest.
Farms in main Argentina grains province to strike
Farmers in Argentina's main agricultural province will call a strike this week against a proposed tax increase, but the planned five-day halt in crop sales should have little impact on exports.
China May soy imports seen at 6-mth high - Mofcom
China, the world's top soy buyer, is likely to import 5.63 million tonnes of the oilseed in May, the commerce ministry estimated on Monday, up 15 percent from actual arrivals of 4.88 million tonnes in April.
Rains hold back Argentine soy harvest pace
Argentina's 2011/12 soybean harvest slowed down in the last week because of rain in some areas, the Agriculture Ministry said on Friday in its latest weekly crop progress report.
POLL-US crude stocks seen higher, Cushing stocks up
U.S. crude oil stockpiles were forecast higher for the eighth straight week last week as stockpiles at Cushing, Oklahoma, likely climbed to a new record, a preliminary Reuters poll ahead of weekly inventory reports showed on Monday.
Obama administration not opposed to LNG exports
The Obama administration is not opposed to exporting liquefied natural gas but will depend on an official analysis to guide its decision on whether to allow more gas export projects to proceed, a White House official said on Monday.
Brent crude futures fell towards $111 a barrel as Greece's political and economic turmoil deepened and worries that the debt-laden country could leave the euro zone sparked a sell-off in dollar-denominated commodities.
Peru's Volcan sees 2012 silver production rising
Volcan, Peru's top silver producer, expects its silver output to rise to 22.5 million ounces from 21 million ounces in 2011, the company said at the International Gold Symposium on Monday.
London copper hit fresh four-month lows as investors steered clear of riskier assets, put off by a slowing Chinese economy and Greece's increasingly complicated political woes.
Gold dropped to its lowest since late December as the euro sank against the U.S. dollar on worries that a worsening debt crisis in Greece could spill over into its neighbours and threaten the existence of the single currency.
METALS-LME copper hits 4-month low on Greece fears
SINGAPORE, May 15 (Reuters) - London copper hit fresh four-month lows on Tuesday as investors steered clear of riskier assets, put off by a slowing Chinese economy and Greece's increasingly complicated political woes.
"There will be continued uncertainty until there's a resolution in Greece, but so much of this hinges upon the political cycle which is very hard to pick from a market perspective," said Matt Fusarelli, analyst at Australia-based consultancy AME Group.
PRECIOUS-Gold falls to 4-1/2 month low on Greece risks
SINGAPORE, May 15 (Reuters) - Gold dropped to its lowest since late December as the euro sank against the U.S. dollar on worries that a worsening debt crisis in Greece could spill over into its neighbours and threaten the existence of the single currency.
"Jewellers have been buying a lot. At the moment supply is a bit tight for immediate delivery, although it's not that the market is short of physical gold bars right now," said a physical dealer in Singapore.
20120515 1119 Global Market & Commodities Related News.
GLOBAL MARKETS-Shares slide as Greece risks dominate
TOKYO, May 15 (Reuters) - Shares fell on Tuesday as investors liquidated riskier assets and sought refuge from the political turmoil fuelling fears of Greece's exit from the euro and threatening to ruin any progress made so far to solve the euro zone debt crisis.
"Risk has primarily traded with European headlines, which we suspect will continue to put a damper on prospects until a more sustainable solution can be found to Greece's political imbroglio," said Morgan Stanley in a research note.
COMMODITIES-Mounting Greece fears slam CRB to 19-month low
NEW YORK, May 14 (Reuters) - The selloff in commodities deepened o n Monday, with U.S. crude oil sinking below $95 and a benchmark index for resource markets touching a 19-month bottom, as Greece's political woes exacerbated fears that trouble in Europe would drag down demand for raw materials.
"Risk-on assets in general are falling due to the fact that investors are starting to understand the reality of the fact that the global economy is going to slow, not grow, in the near future," said Adam Sarhan, chief executive at New York's Sarhan Capital.
Oil bulls face severe test of faith (and pockets)
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, May 14 (Reuters) - The collapse in oil prices since the start of May is posing a severe test for oil market bulls who must meet big margin calls to maintain their positions -- or close them out and accept their losses.
On February 22, the highly respected research team at Goldman Sachs recommended a long position in September 2012 WTI futures , then valued at $107.55 but now down more than $12 per barrel to a low of just $94.70 in trading earlier on Monday.
OIL -Oil falls as Greece, China feed economic worry
NEW YORK, May 14 (Reuters) - Oil prices fell on Monday as Greece's inability to form a coalition government and concerns about a slowing Chinese economy fed worries about the outlook for petroleum demand.
"The situation in Greece, hitting the euro, comes after last week's China data showing growth is slowing and the trading losses by JPMorgan have hurt confidence," said Phil Flynn, analyst at PFGBest Research in Chicago.
NATURAL GAS-US natgas futures end down, 1st loss in 6 sessions
NEW YORK, May 14 (Reuters) - U.S. natural gas futures ended lower on Monday for the first time in six sessions, with prices sliding 3 percent on technical selling and some profit-taking as fairly mild Northeast and Midwest weather this week slowed overall demand.
"RSI and other technical indicators pointed at an overbought contract. No surprise today that there would be some easing," Gelber & Associates analyst Pax Saunders said in a report.
EURO COAL-Prices stable, S.African supply tight
LONDON, May 11 (Reuters) - European prompt physical coal prices were little changed on Friday with no fresh trades reported.
"The market in Europe is miserable, it is a disaster, there are very few niches in which we can do some small spot business," one European trader said.
TOKYO, May 15 (Reuters) - Shares fell on Tuesday as investors liquidated riskier assets and sought refuge from the political turmoil fuelling fears of Greece's exit from the euro and threatening to ruin any progress made so far to solve the euro zone debt crisis.
"Risk has primarily traded with European headlines, which we suspect will continue to put a damper on prospects until a more sustainable solution can be found to Greece's political imbroglio," said Morgan Stanley in a research note.
COMMODITIES-Mounting Greece fears slam CRB to 19-month low
NEW YORK, May 14 (Reuters) - The selloff in commodities deepened o n Monday, with U.S. crude oil sinking below $95 and a benchmark index for resource markets touching a 19-month bottom, as Greece's political woes exacerbated fears that trouble in Europe would drag down demand for raw materials.
"Risk-on assets in general are falling due to the fact that investors are starting to understand the reality of the fact that the global economy is going to slow, not grow, in the near future," said Adam Sarhan, chief executive at New York's Sarhan Capital.
Oil bulls face severe test of faith (and pockets)
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, May 14 (Reuters) - The collapse in oil prices since the start of May is posing a severe test for oil market bulls who must meet big margin calls to maintain their positions -- or close them out and accept their losses.
On February 22, the highly respected research team at Goldman Sachs recommended a long position in September 2012 WTI futures , then valued at $107.55 but now down more than $12 per barrel to a low of just $94.70 in trading earlier on Monday.
OIL -Oil falls as Greece, China feed economic worry
NEW YORK, May 14 (Reuters) - Oil prices fell on Monday as Greece's inability to form a coalition government and concerns about a slowing Chinese economy fed worries about the outlook for petroleum demand.
"The situation in Greece, hitting the euro, comes after last week's China data showing growth is slowing and the trading losses by JPMorgan have hurt confidence," said Phil Flynn, analyst at PFGBest Research in Chicago.
NATURAL GAS-US natgas futures end down, 1st loss in 6 sessions
NEW YORK, May 14 (Reuters) - U.S. natural gas futures ended lower on Monday for the first time in six sessions, with prices sliding 3 percent on technical selling and some profit-taking as fairly mild Northeast and Midwest weather this week slowed overall demand.
"RSI and other technical indicators pointed at an overbought contract. No surprise today that there would be some easing," Gelber & Associates analyst Pax Saunders said in a report.
EURO COAL-Prices stable, S.African supply tight
LONDON, May 11 (Reuters) - European prompt physical coal prices were little changed on Friday with no fresh trades reported.
"The market in Europe is miserable, it is a disaster, there are very few niches in which we can do some small spot business," one European trader said.
20120515 1025 Global Economy Related News.
Asian economies are better shielded from Europe's financial woes than other regions and China is unlikely to undergo a "hard landing" despite recent gloomy data, credit watchdog Fitch Ratings said. (AFP)
Car sales in China rose 12.5% yoy in Apr, more than double the pace in Mar as consumers trickled back to the showrooms ahead of the Labour Day holiday. (Reuters)
Japan: To experience power shortages this summer, panel says
Kansai Electric Power Co. and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9%, the independent committee said in a draft report published 12 May. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2% and 1.9%, the report said. (Bloomberg)
Japan’s machine tool orders rose 0.5% yoy in Apr (1.6% in Mar), whilst on a mom basis, the measure fell 6.8% (+11.9% in Mar). (Bloomberg)
Japanese bank loans outstanding rose 0.56% yoy in Mar (0.82% in Feb). (Bloomberg)
Japan’s corporate goods prices fell 0.2% yoy in Apr (+0.5% in Mar), whilst on a mom basis, the measure grew 0.3% (0.5% in Mar). (Bloomberg)
India’s wholesale price index rose 7.23% yoy in Apr (6.89% in Mar), well above the 6.67% median estimate of economists as prices of most commodities rose. (WSJ)
India: Inflation quickens, curbing room for cutting rates
Indian inflation unexpectedly accelerated in April, crimping the central bank‟s scope to bolster economic growth by extending interest-rate cuts. Stocks fell, reversing earlier gains. The benchmark wholesale-price index rose 7.23% from a year earlier, after climbing 6.89% in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67% gain. Reserve Bank of India Governor Duvvuri Subbarao signaled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee. (Bloomberg)
Indonesia’s domestic auto sales improved to 87,080 units in Apr from 87,918 units in Mar (Bloomberg)
EU: Germany's Merkel suffers loss in state election
German Chancellor Angela Merkel suffered a big defeat in an election in the state of North Rhine-Westphalia on Sunday. The center-left Social Democrats won 38.9% of the vote, allowing the party to form a majority with the Greens, in elections in the country's most populous state, according to exit polls. Merkel's Christian Democrats, however, saw their support drop to 26.3% from nearly 35% in 2010, which according to Reuters was the worst result since World War II. The elections are considered by many to an indicator of voters' broader intentions ahead of next year's general elections. (Marketwatch)
EU: Greece president proposes technocrat govt
Greece's president Karolos Papoulias late Monday proposed a technocrat government for the country, according to reports. Elections just over a week ago left the country without a government, placing the aid arrangements it has made with international creditors in doubt and once again bringing into focus the possibility of a Greek exit from the currency bloc. Still, The Wall Street Journal reported that the proposal drew weak support from Greece's fragmented and squabbling political parties. Italy recently replaced its government with technocratic leadership -- made up of technical experts rather than politicians. The assumption is that experts - who are in power for a brief period - will be more successful in implementing the necessary reforms as they will not have to worry about their long-term political ambitions. (Marketwatch)
US: Spark in sales of cars and trucks drives US economy
Car sales that are running at the fastest pace in four years are poised to reverberate through the world‟s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14m annual rate in each month this year, the strongest performance since early 2008, according to Ward‟s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter‟s 2.2% economic growth. (Bloomberg)
Dow falls to lowest level since January amid Greece exit concern
US stocks declined, sending the Dow Jones Industrial Average to the lowest level since Jan, as Greece struggled to form a new government amid growing speculation the nation may leave the European currency. Financial and energy shares fell the most among 10 groups in the Standard & Poor‟s 500 Index. JPMorgan Chase & Co. and Bank of America Corp. sank at least 2.6% as European lenders slumped. The Dow fell 125.25 points, or 1%, to 12,695.35. (Bloomberg)
Possible Greece exit causes uncertainty in world markets
Stocks and commodities slumped across the globe on fears that Greece would exit the eurozone as investors sold down their shares ahead of a Europe Finance Ministers‟ meeting in Brussels yesterday. The ministers were plotting a solution for Athens, but there are strong indications that no conclusion would be reached. With the failure to form a united government in Greece following the inconclusive elections on 6 May, European central bankers are once again bringing up the sensitive topic of Greece exiting the euro. (StarBiz)
Car sales in China rose 12.5% yoy in Apr, more than double the pace in Mar as consumers trickled back to the showrooms ahead of the Labour Day holiday. (Reuters)
Japan: To experience power shortages this summer, panel says
Kansai Electric Power Co. and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9%, the independent committee said in a draft report published 12 May. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2% and 1.9%, the report said. (Bloomberg)
Japan’s machine tool orders rose 0.5% yoy in Apr (1.6% in Mar), whilst on a mom basis, the measure fell 6.8% (+11.9% in Mar). (Bloomberg)
Japanese bank loans outstanding rose 0.56% yoy in Mar (0.82% in Feb). (Bloomberg)
Japan’s corporate goods prices fell 0.2% yoy in Apr (+0.5% in Mar), whilst on a mom basis, the measure grew 0.3% (0.5% in Mar). (Bloomberg)
India’s wholesale price index rose 7.23% yoy in Apr (6.89% in Mar), well above the 6.67% median estimate of economists as prices of most commodities rose. (WSJ)
India: Inflation quickens, curbing room for cutting rates
Indian inflation unexpectedly accelerated in April, crimping the central bank‟s scope to bolster economic growth by extending interest-rate cuts. Stocks fell, reversing earlier gains. The benchmark wholesale-price index rose 7.23% from a year earlier, after climbing 6.89% in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67% gain. Reserve Bank of India Governor Duvvuri Subbarao signaled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee. (Bloomberg)
Indonesia’s domestic auto sales improved to 87,080 units in Apr from 87,918 units in Mar (Bloomberg)
EU: Germany's Merkel suffers loss in state election
German Chancellor Angela Merkel suffered a big defeat in an election in the state of North Rhine-Westphalia on Sunday. The center-left Social Democrats won 38.9% of the vote, allowing the party to form a majority with the Greens, in elections in the country's most populous state, according to exit polls. Merkel's Christian Democrats, however, saw their support drop to 26.3% from nearly 35% in 2010, which according to Reuters was the worst result since World War II. The elections are considered by many to an indicator of voters' broader intentions ahead of next year's general elections. (Marketwatch)
EU: Greece president proposes technocrat govt
Greece's president Karolos Papoulias late Monday proposed a technocrat government for the country, according to reports. Elections just over a week ago left the country without a government, placing the aid arrangements it has made with international creditors in doubt and once again bringing into focus the possibility of a Greek exit from the currency bloc. Still, The Wall Street Journal reported that the proposal drew weak support from Greece's fragmented and squabbling political parties. Italy recently replaced its government with technocratic leadership -- made up of technical experts rather than politicians. The assumption is that experts - who are in power for a brief period - will be more successful in implementing the necessary reforms as they will not have to worry about their long-term political ambitions. (Marketwatch)
US: Spark in sales of cars and trucks drives US economy
Car sales that are running at the fastest pace in four years are poised to reverberate through the world‟s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14m annual rate in each month this year, the strongest performance since early 2008, according to Ward‟s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter‟s 2.2% economic growth. (Bloomberg)
Dow falls to lowest level since January amid Greece exit concern
US stocks declined, sending the Dow Jones Industrial Average to the lowest level since Jan, as Greece struggled to form a new government amid growing speculation the nation may leave the European currency. Financial and energy shares fell the most among 10 groups in the Standard & Poor‟s 500 Index. JPMorgan Chase & Co. and Bank of America Corp. sank at least 2.6% as European lenders slumped. The Dow fell 125.25 points, or 1%, to 12,695.35. (Bloomberg)
Possible Greece exit causes uncertainty in world markets
Stocks and commodities slumped across the globe on fears that Greece would exit the eurozone as investors sold down their shares ahead of a Europe Finance Ministers‟ meeting in Brussels yesterday. The ministers were plotting a solution for Athens, but there are strong indications that no conclusion would be reached. With the failure to form a united government in Greece following the inconclusive elections on 6 May, European central bankers are once again bringing up the sensitive topic of Greece exiting the euro. (StarBiz)
20120515 1024 Malaysia Corporate Related News.
Gas Malaysia’s IPO prospectus gets registration nod
MMC Corp Bhd‟s 42%-owned subsidiary, Gas Malaysia Bhd, has been granted approval in-principle for the registration of its listing prospectus. In a statement yesterday, MMC said Securities Commission Malaysia had given its nod via a letter dated 11 May. According to the statement, the Shariah Compliant Classification for Gas Malaysia‟s securities has also been reaffirmed and will remain valid until the next Shariah-compliance review in the company‟s next financial year. (Financial Daily)
QSR, KFC buyout looms as JCorp chief quits boards
Johor Corp (JCorp) president and chief executive officer (CEO) Kamaruzzaman Abu Kassim has resigned from his post as chairman and director of both QSR Brands Bhd and KFC Holdings (M) Bhd, paving the way for the buyout of the two listed entities. JCorp, which is Johor‟s investment arm, owns 55.9% of Kulim (Malaysia) Bhd. Kulim in turn has a 53.9% stake in QSR. KFC is a 51% unit of QSR. (BT)
CSR Zhuzhou faces 5 rivals for RM1.8bn MRT job
China‟s CSR Zhuzhou Electric Locomotive Co Ltd will have to face competition from 5 contenders to win a RM1.85bn job to supply electric trains for the Klang Valley – MY Rapid Transit (MRT) project. CSR Zhuzhou is currently the sole party to have submitted a bid to supply 58 four-car electric train sets for the MRT. MRT Co had shortlisted 6 groups for the job. (BT)
Bumi Armada gets 2 AHTS vessels
Bumi Armada Bhd has taken delivery of 2 anchor handling towing supply (AHTS) vessels from Beauty Offshore Ltd and Bay Offshore Ltd, both subsidiaries of Sanko Steamship, one of Japan‟s largest ship owners. In a statement yesterday, Bumi Armada executive director/chief executive officer Hassan Basma said offshore support vessel fleet expansion, either through acquisition or a newbuild programme, is important for the company‟s growth. (Malaysian Reserve)
Robi Axiata to pay RM55m in unpaid taxes
Axiata Group Bhd‟s Bangladesh unit, Robi Axiata Ltd, has to pay the government nearly 1.5bn Bangladeshi taka (RM55.16m) in unpaid taxes after the mobile operator lost a legal battle against the country‟s telecommunications regulator. After a hearing, which stretched almost 4 months, the High Court last Sunday decided that Robi had no authority to deduct any amount from any account. These included such taxes as the value added tax, late fees and other taxes from the Spectrum Assignment Fee or the Licence Renewal Fee, as these exclusively belong to the Bangladesh Telecommunications Regulatory Commission. (Malaysian Reserve)
Sapura, Kencana to delist this Thursday
Sapura Crest Petroleum Bhd and Kencana Petroleum Bhd will delist this Thursday, according to their respective announcements to Bursa Malaysia yesterday. The two companies are set to merge into a single entity known as Sapura-Kencana Petroleum Bhd that is set to be listed. (Malaysian Reserve)
The government will discuss with the new stakeholders of Plus Expressways Bhd (Plus) to find ways to reduce or abolish toll in some parts of the highway. Works Minister Datuk Seri Shaziman Mansor said the government would hold a discussion with UEM Group and the Employees Provident Fund (EPF) for the purpose. (The Star)
MRT Corp has confirmed that none of the six pre-qualified companies shortlisted for the supply of rolling stocks for the country's biggest infrastructure project has submitted their bids. "This is because we have extended the tendering period by four weeks to June 11. Originally, the tendering period was supposed to close yesterday, but as the pre-qualified companies for the supply of trains had sent a lot of clarification questions on the bidding requirements, we have on Apr 26 issued a letter of extension," MRT CEO Datuk Azhar Abdul Hamid said. According to MRT Corp, the lack of any submission at this juncture was due to the extension as four out of the six companies including CSR Zhuzhou had submitted requests for an extension for time. The other five pre-qualified bidders for the rolling stocks are Kawasaki Heavy Industries, Bombardier, Changchun Railway Vehicles Co, Siemens AG, and Hyundai Rotem Co. (Starbiz)
IOI Corp Bhd is hiring Citigroup Inc, HSBC Holdings Plc, Mitsubishi UFJ Securities Holdings Co and Morgan Stanley to arrange meetings with bond investors, Reuters reported. This bond meeting in Singapore confirms a report in StarBiz in February that IOI Corp was in talks with banks to raise more funds. The funds raised should give IOI Corp sufficient money to not only pay for its Singapore land acquisition but some extra in the event it chooses to buy more assets such as plantation land. These negotiations suggest that IOI is intent on continuing to tap liquidity from overseas bond investors and prefers to borrow in overseas denominated debt. (StarBiz)
Telekom Malaysia's HSBB network is comfortably outpacing other national broadband networks being deployed in the region, such as Singapore's NGNBN as well as those being rolled out in Australia and New Zealand. According to Informa Telecoms & Media, the HSBB had 310,000 subscribers by end-April and exceeded over 1.2m premises in the country. The HSBB is way ahead of Singapore's NGNBN which has only around 130k subscribers and although deployed to nearly 90% of buildings in the city-state, is still not available to the majority of households because of delays in completing the in-building wiring. Australia's NBN has only 7,000 users while New Zealand's Ultra Fast Broadband deployment has only around 500 users. (Bernama)
Just two years after edging Tan Sri Lim Kok Thay's Genting Group to be the single largest shareholder of Rank Group plc, Quek is now the UK's top casino mogul. The £205m (RM1.24bn) acquisition of Gala Coral's casinos by Rank makes Quek the owner of UK's biggest casino operator. Including Gala Coral's 23 casinos in the UK, plus three non-operating licences, Rank now has a total of 58 casinos and 13 non-operating licences in the UK, ahead of Genting's 46 casinos in the UK. (Financial Daily)
Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said that the government expected some announcements from vehicle manufacturers or assemblers, including big car makers to produce energy-efficient vehicles (EEVs) in Malaysia soon. "We hope to see some announcements being made by some of the big car makers in the near future based on the incentives we offered and I'm quite confident that they will be taking advantage of some of these special incentives that we are providing, he said. Asked how the government wanted to boost the EEV production while still subsidising the fuel price, Mukhriz said the government could not cut the subsidies drastically as the usage of more EEVs was still at the early stage in this country and very few people were using them. (BT)
AMMB Holdings Bhd has obtained the Securities Commission's approval for its proposed issuance of up to RM2b nominal value of senior medium term notes (MTN) and/or subordinated MTNs. The MTN programme has a tenor of up to 30 years from the date of the first issuance of MTNs. The proceeds would be used by AMMB for capital expenditure, investments, working capital, payment of fees and expenses in relation to the MTN Programme and other general funding requirements of AMMB and/or its subsidiaries. (StarBiz)
The construction of a proposed low-cost carrier terminal (LCCT) in Perak will be a holistic development for the state and it will not compete with other states, said Menteri Besar Datuk Seri Dr Zambry Abdul Kadir. "The federal government is carrying out a detailed study as the proposed project will invite different perspectives from state governments especially from Kedah and Penang, which also have airports. I am looking for cooperation as a new approach to the proposed project. If we have a new low-cost carrier airport, it will have spin-off effects on other states, especially Kedah and Penang which are nearer to Perak," he said. (Bernama, Financial Daily)
MASkargo is expanding its network along the Intra-Asia routes. The A332 freighter is scheduled to fly twice weekly into Ho Chi Minh City. The introduction of this network offers connectivity from the hub to other stations around the world. Ho Chi Minh City has registered steady cargo business growth and has a large market share. MASkargo plans to provide speedy and better logistics solutions as well as to continuously support the city’s trade and economy by increasing capacity and routes along the Intra-Asia network destinations. (Bernama)
Exim Bank Malaysia has set a target to disburse loans totaling RM1.5b this year. Managing Director/Chief Executive Officer Datuk Adissadikin Ali said the bank had approved loans amounting to RM800m as of April. "This shows a lot of Malaysian companies are going overseas. Construction companies are bidding for big projects overseas," he said at the signing of a facility agreement between Malakoff, Exim Bank and Mizuho Corporate Bank. Adissadikin said Exim Bank would normally partner with foreign banks in providing financing facilities. (Bernama)
The government has given a two-year extension for Malaysian Green Technology Corporation (GreenTech Malaysia) to fulfil the RM1.5bn loan quota it is supposed to achieve by the end of this year. GreenTech Malaysia, which promotes green technology to the masses and businesses, is managing loans for Malaysian companies venturing into the green technology businesses. Ministry of Energy, Green Technolgy and Water deputy secretary general Nor Aini Abdul Wahab said the extension is given because not many banks are willing to lend money to companies in green businesses as their risks appetite towards these businesses is extremely low. Nor Aini said currently, there are 178 projects awarded with the green certificates, of which 46 projects have been approved for funding amounting to RM676.4m. "Out of this, only RM188.2m has been disbursed," she said. (BT)
EPF increased its shareholding in Oriental Holdings (OHB) to 9.26% as at May 11 from its lowest holding level of 6.29% on March 14, according to filings with Bursa Malaysia. The retirement fund is currently the second largest shareholder in OHB after the Loh family, which owns over 55.28% equity interest. (Financial Daily)
TA Enterprise: No acquisition plans for now
TA Enterprise said it has no plans to buy another stockbroker amid the current spate of merger and acquisition (M&A) activities in the industry. While the group cannot rule out M&A activities entirely, the MD Datin Alicia Tiah said the company would prefer to grow on its own. Its stockbroking unit, TA Securities Holdings became the first broker in the country to migrate to an advanced electronic trading platform. Stock exchange operator Bursa Malaysia Bhd requires all brokers to migrate to that platform by end September. The platform makes it possible for the group to open up branches at a cheaper cost than before. She said it's more worthwhile to open up branches now with the lower cost as with everything now centralised, the company can save about RM500,000 per branch. She added that the company is looking at opening more branches. However, she declined to say how many it planned to open. It currently has seven branches in the country. (Business Times)
Axis REIT: Selling Kayangan depot
Axis REIT Managers, the manager for Axis Real Estate Investment Trust, is calling a public tender for Kayangan Depot, a 3-storey office, warehouse and showroom with 173,582 sq ft total gross built-up area in Seksyen 15, Shah Alam. The former said the property has reached its optimal value and it is timely to realize the gain for the benefits of the shareholders. However, the manager can still decide not to proceed with the proposed sale should the bids be unsatisfactory. (Financial Daily)
Permaju Industries: Denies disposing land in Sabah for RM100m
Permaju Industries has denied a news article that it was disposing of 30 acres of land in Sabah for RM100m. In a filing on Monday, the company in response to an article in Nanyang Siang Pau on May 13 said its directors, after having made due inquiries, wished to advise that to the best of their knowledge and believe, they were not aware of such dealing. Permaju was among the most actively traded stocks on Monday with 151.14m shares done. (Financial Daily)
Naim Indah Corp: Still in talks for LPG business
Naim Indah Corp (Nicorp) said it could still be party in the acquisition of Shell’s liquid petroleum gas (LPG) assets in Malaysia. Nicorp said a special purpose vehicle, NGC Energy Sdn Bhd had on May 9 entered into an agreement with Shell Malaysia Trading Sdn Bhd (SMTSB) to acquire its LPG business. It added that NGC Energy is 40% owned by Aspire Rich Sdn Bhd and 60% owned by Oman-based Natural gas Co SAOG (NGC) respectively. Nicorp reiterated that the invitation from Aspire Rich for the company to participate in the acquisition of the said LPG assets, through Aspire Rich remains unchanged. (Financial Daily)
Construction: CSR Zhuzhou faces 5 rivals for RM1.8bn MRT job
China’s CSR Zhuzhou Electric Locomotive Co Ltd will have to face competition from five contenders to win a RM1.85bn job to supply electric trains for the Klang Valley – MY Rapid Transit (MRT) project. CSR Zhuzhou is currently the sole party to have submitted a bid to supply 58 four-car electric train sets for the MRT. MRT Co had shortlisted 6 groups for the job. They include Kawasaki Heavy Industries Ltd, a consortium comprising Bombardier (Malaysia) Sdn Bhd, Bombardier Sifang (Qingdao) Transportation Ltd and Scomi Rail Bhd; Changchun Railways Vehicles Co Ltd, Germany’s Siemens AG and South Korea’s Hyundai Rotem Co/CMC Engineering. Tender offer closes this week but MRT Co is expected to extend it to Jun 14. (Business Times)
Oil & Gas: Malaysian oil & gas firms secure US$7.2bn in new business opportunities
Malaysia's oil and gas firms that participated at the recently concluded Offshore Technology Conference (OTC) Houston 2012 have secured new business opportunities worth US$7.2bn. The 4-day mission was led by the Malaysia External Trade Development Corporation (Matrade) beginning Apr 30. Over 145 meetings were arranged for Malaysian companies participating under the Malaysian Pavilion coordinated by Matrade in collaboration with the Malaysia Petroleum Resources Corporation and Malaysian Investment Development Authority. Two memorandums of understanding were signed between Muhibbah Engineering and Ford, Bacon & Davis USA for engineering and project management services for oil and gas, energy and process services; and Innovative Fluid Process Sdn Bhd with Americas Energy Company for the provision of facilities, system design and engineering.(Bernama)
Plantation: CPO prices hits 3-month low
Crude palm oil (CPO) futures hit a 3-month low to RM3,173 on Bursa Malaysia Derivatives as concerns on the global economic slowdown and weak palm oil demand continue to worry investors. The benchmark futures CPO July contract tumbled RM102 to close at RM3,173 per tonne on Monday from RM3,275 per tonne last Friday. This is its 3-month low since Feb 14, 2012. (StarBiz)
MMC Corp Bhd‟s 42%-owned subsidiary, Gas Malaysia Bhd, has been granted approval in-principle for the registration of its listing prospectus. In a statement yesterday, MMC said Securities Commission Malaysia had given its nod via a letter dated 11 May. According to the statement, the Shariah Compliant Classification for Gas Malaysia‟s securities has also been reaffirmed and will remain valid until the next Shariah-compliance review in the company‟s next financial year. (Financial Daily)
QSR, KFC buyout looms as JCorp chief quits boards
Johor Corp (JCorp) president and chief executive officer (CEO) Kamaruzzaman Abu Kassim has resigned from his post as chairman and director of both QSR Brands Bhd and KFC Holdings (M) Bhd, paving the way for the buyout of the two listed entities. JCorp, which is Johor‟s investment arm, owns 55.9% of Kulim (Malaysia) Bhd. Kulim in turn has a 53.9% stake in QSR. KFC is a 51% unit of QSR. (BT)
CSR Zhuzhou faces 5 rivals for RM1.8bn MRT job
China‟s CSR Zhuzhou Electric Locomotive Co Ltd will have to face competition from 5 contenders to win a RM1.85bn job to supply electric trains for the Klang Valley – MY Rapid Transit (MRT) project. CSR Zhuzhou is currently the sole party to have submitted a bid to supply 58 four-car electric train sets for the MRT. MRT Co had shortlisted 6 groups for the job. (BT)
Bumi Armada gets 2 AHTS vessels
Bumi Armada Bhd has taken delivery of 2 anchor handling towing supply (AHTS) vessels from Beauty Offshore Ltd and Bay Offshore Ltd, both subsidiaries of Sanko Steamship, one of Japan‟s largest ship owners. In a statement yesterday, Bumi Armada executive director/chief executive officer Hassan Basma said offshore support vessel fleet expansion, either through acquisition or a newbuild programme, is important for the company‟s growth. (Malaysian Reserve)
Robi Axiata to pay RM55m in unpaid taxes
Axiata Group Bhd‟s Bangladesh unit, Robi Axiata Ltd, has to pay the government nearly 1.5bn Bangladeshi taka (RM55.16m) in unpaid taxes after the mobile operator lost a legal battle against the country‟s telecommunications regulator. After a hearing, which stretched almost 4 months, the High Court last Sunday decided that Robi had no authority to deduct any amount from any account. These included such taxes as the value added tax, late fees and other taxes from the Spectrum Assignment Fee or the Licence Renewal Fee, as these exclusively belong to the Bangladesh Telecommunications Regulatory Commission. (Malaysian Reserve)
Sapura, Kencana to delist this Thursday
Sapura Crest Petroleum Bhd and Kencana Petroleum Bhd will delist this Thursday, according to their respective announcements to Bursa Malaysia yesterday. The two companies are set to merge into a single entity known as Sapura-Kencana Petroleum Bhd that is set to be listed. (Malaysian Reserve)
The government will discuss with the new stakeholders of Plus Expressways Bhd (Plus) to find ways to reduce or abolish toll in some parts of the highway. Works Minister Datuk Seri Shaziman Mansor said the government would hold a discussion with UEM Group and the Employees Provident Fund (EPF) for the purpose. (The Star)
MRT Corp has confirmed that none of the six pre-qualified companies shortlisted for the supply of rolling stocks for the country's biggest infrastructure project has submitted their bids. "This is because we have extended the tendering period by four weeks to June 11. Originally, the tendering period was supposed to close yesterday, but as the pre-qualified companies for the supply of trains had sent a lot of clarification questions on the bidding requirements, we have on Apr 26 issued a letter of extension," MRT CEO Datuk Azhar Abdul Hamid said. According to MRT Corp, the lack of any submission at this juncture was due to the extension as four out of the six companies including CSR Zhuzhou had submitted requests for an extension for time. The other five pre-qualified bidders for the rolling stocks are Kawasaki Heavy Industries, Bombardier, Changchun Railway Vehicles Co, Siemens AG, and Hyundai Rotem Co. (Starbiz)
IOI Corp Bhd is hiring Citigroup Inc, HSBC Holdings Plc, Mitsubishi UFJ Securities Holdings Co and Morgan Stanley to arrange meetings with bond investors, Reuters reported. This bond meeting in Singapore confirms a report in StarBiz in February that IOI Corp was in talks with banks to raise more funds. The funds raised should give IOI Corp sufficient money to not only pay for its Singapore land acquisition but some extra in the event it chooses to buy more assets such as plantation land. These negotiations suggest that IOI is intent on continuing to tap liquidity from overseas bond investors and prefers to borrow in overseas denominated debt. (StarBiz)
Telekom Malaysia's HSBB network is comfortably outpacing other national broadband networks being deployed in the region, such as Singapore's NGNBN as well as those being rolled out in Australia and New Zealand. According to Informa Telecoms & Media, the HSBB had 310,000 subscribers by end-April and exceeded over 1.2m premises in the country. The HSBB is way ahead of Singapore's NGNBN which has only around 130k subscribers and although deployed to nearly 90% of buildings in the city-state, is still not available to the majority of households because of delays in completing the in-building wiring. Australia's NBN has only 7,000 users while New Zealand's Ultra Fast Broadband deployment has only around 500 users. (Bernama)
Just two years after edging Tan Sri Lim Kok Thay's Genting Group to be the single largest shareholder of Rank Group plc, Quek is now the UK's top casino mogul. The £205m (RM1.24bn) acquisition of Gala Coral's casinos by Rank makes Quek the owner of UK's biggest casino operator. Including Gala Coral's 23 casinos in the UK, plus three non-operating licences, Rank now has a total of 58 casinos and 13 non-operating licences in the UK, ahead of Genting's 46 casinos in the UK. (Financial Daily)
Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said that the government expected some announcements from vehicle manufacturers or assemblers, including big car makers to produce energy-efficient vehicles (EEVs) in Malaysia soon. "We hope to see some announcements being made by some of the big car makers in the near future based on the incentives we offered and I'm quite confident that they will be taking advantage of some of these special incentives that we are providing, he said. Asked how the government wanted to boost the EEV production while still subsidising the fuel price, Mukhriz said the government could not cut the subsidies drastically as the usage of more EEVs was still at the early stage in this country and very few people were using them. (BT)
AMMB Holdings Bhd has obtained the Securities Commission's approval for its proposed issuance of up to RM2b nominal value of senior medium term notes (MTN) and/or subordinated MTNs. The MTN programme has a tenor of up to 30 years from the date of the first issuance of MTNs. The proceeds would be used by AMMB for capital expenditure, investments, working capital, payment of fees and expenses in relation to the MTN Programme and other general funding requirements of AMMB and/or its subsidiaries. (StarBiz)
The construction of a proposed low-cost carrier terminal (LCCT) in Perak will be a holistic development for the state and it will not compete with other states, said Menteri Besar Datuk Seri Dr Zambry Abdul Kadir. "The federal government is carrying out a detailed study as the proposed project will invite different perspectives from state governments especially from Kedah and Penang, which also have airports. I am looking for cooperation as a new approach to the proposed project. If we have a new low-cost carrier airport, it will have spin-off effects on other states, especially Kedah and Penang which are nearer to Perak," he said. (Bernama, Financial Daily)
MASkargo is expanding its network along the Intra-Asia routes. The A332 freighter is scheduled to fly twice weekly into Ho Chi Minh City. The introduction of this network offers connectivity from the hub to other stations around the world. Ho Chi Minh City has registered steady cargo business growth and has a large market share. MASkargo plans to provide speedy and better logistics solutions as well as to continuously support the city’s trade and economy by increasing capacity and routes along the Intra-Asia network destinations. (Bernama)
Exim Bank Malaysia has set a target to disburse loans totaling RM1.5b this year. Managing Director/Chief Executive Officer Datuk Adissadikin Ali said the bank had approved loans amounting to RM800m as of April. "This shows a lot of Malaysian companies are going overseas. Construction companies are bidding for big projects overseas," he said at the signing of a facility agreement between Malakoff, Exim Bank and Mizuho Corporate Bank. Adissadikin said Exim Bank would normally partner with foreign banks in providing financing facilities. (Bernama)
The government has given a two-year extension for Malaysian Green Technology Corporation (GreenTech Malaysia) to fulfil the RM1.5bn loan quota it is supposed to achieve by the end of this year. GreenTech Malaysia, which promotes green technology to the masses and businesses, is managing loans for Malaysian companies venturing into the green technology businesses. Ministry of Energy, Green Technolgy and Water deputy secretary general Nor Aini Abdul Wahab said the extension is given because not many banks are willing to lend money to companies in green businesses as their risks appetite towards these businesses is extremely low. Nor Aini said currently, there are 178 projects awarded with the green certificates, of which 46 projects have been approved for funding amounting to RM676.4m. "Out of this, only RM188.2m has been disbursed," she said. (BT)
EPF increased its shareholding in Oriental Holdings (OHB) to 9.26% as at May 11 from its lowest holding level of 6.29% on March 14, according to filings with Bursa Malaysia. The retirement fund is currently the second largest shareholder in OHB after the Loh family, which owns over 55.28% equity interest. (Financial Daily)
TA Enterprise: No acquisition plans for now
TA Enterprise said it has no plans to buy another stockbroker amid the current spate of merger and acquisition (M&A) activities in the industry. While the group cannot rule out M&A activities entirely, the MD Datin Alicia Tiah said the company would prefer to grow on its own. Its stockbroking unit, TA Securities Holdings became the first broker in the country to migrate to an advanced electronic trading platform. Stock exchange operator Bursa Malaysia Bhd requires all brokers to migrate to that platform by end September. The platform makes it possible for the group to open up branches at a cheaper cost than before. She said it's more worthwhile to open up branches now with the lower cost as with everything now centralised, the company can save about RM500,000 per branch. She added that the company is looking at opening more branches. However, she declined to say how many it planned to open. It currently has seven branches in the country. (Business Times)
Axis REIT: Selling Kayangan depot
Axis REIT Managers, the manager for Axis Real Estate Investment Trust, is calling a public tender for Kayangan Depot, a 3-storey office, warehouse and showroom with 173,582 sq ft total gross built-up area in Seksyen 15, Shah Alam. The former said the property has reached its optimal value and it is timely to realize the gain for the benefits of the shareholders. However, the manager can still decide not to proceed with the proposed sale should the bids be unsatisfactory. (Financial Daily)
Permaju Industries: Denies disposing land in Sabah for RM100m
Permaju Industries has denied a news article that it was disposing of 30 acres of land in Sabah for RM100m. In a filing on Monday, the company in response to an article in Nanyang Siang Pau on May 13 said its directors, after having made due inquiries, wished to advise that to the best of their knowledge and believe, they were not aware of such dealing. Permaju was among the most actively traded stocks on Monday with 151.14m shares done. (Financial Daily)
Naim Indah Corp: Still in talks for LPG business
Naim Indah Corp (Nicorp) said it could still be party in the acquisition of Shell’s liquid petroleum gas (LPG) assets in Malaysia. Nicorp said a special purpose vehicle, NGC Energy Sdn Bhd had on May 9 entered into an agreement with Shell Malaysia Trading Sdn Bhd (SMTSB) to acquire its LPG business. It added that NGC Energy is 40% owned by Aspire Rich Sdn Bhd and 60% owned by Oman-based Natural gas Co SAOG (NGC) respectively. Nicorp reiterated that the invitation from Aspire Rich for the company to participate in the acquisition of the said LPG assets, through Aspire Rich remains unchanged. (Financial Daily)
Construction: CSR Zhuzhou faces 5 rivals for RM1.8bn MRT job
China’s CSR Zhuzhou Electric Locomotive Co Ltd will have to face competition from five contenders to win a RM1.85bn job to supply electric trains for the Klang Valley – MY Rapid Transit (MRT) project. CSR Zhuzhou is currently the sole party to have submitted a bid to supply 58 four-car electric train sets for the MRT. MRT Co had shortlisted 6 groups for the job. They include Kawasaki Heavy Industries Ltd, a consortium comprising Bombardier (Malaysia) Sdn Bhd, Bombardier Sifang (Qingdao) Transportation Ltd and Scomi Rail Bhd; Changchun Railways Vehicles Co Ltd, Germany’s Siemens AG and South Korea’s Hyundai Rotem Co/CMC Engineering. Tender offer closes this week but MRT Co is expected to extend it to Jun 14. (Business Times)
Oil & Gas: Malaysian oil & gas firms secure US$7.2bn in new business opportunities
Malaysia's oil and gas firms that participated at the recently concluded Offshore Technology Conference (OTC) Houston 2012 have secured new business opportunities worth US$7.2bn. The 4-day mission was led by the Malaysia External Trade Development Corporation (Matrade) beginning Apr 30. Over 145 meetings were arranged for Malaysian companies participating under the Malaysian Pavilion coordinated by Matrade in collaboration with the Malaysia Petroleum Resources Corporation and Malaysian Investment Development Authority. Two memorandums of understanding were signed between Muhibbah Engineering and Ford, Bacon & Davis USA for engineering and project management services for oil and gas, energy and process services; and Innovative Fluid Process Sdn Bhd with Americas Energy Company for the provision of facilities, system design and engineering.(Bernama)
Plantation: CPO prices hits 3-month low
Crude palm oil (CPO) futures hit a 3-month low to RM3,173 on Bursa Malaysia Derivatives as concerns on the global economic slowdown and weak palm oil demand continue to worry investors. The benchmark futures CPO July contract tumbled RM102 to close at RM3,173 per tonne on Monday from RM3,275 per tonne last Friday. This is its 3-month low since Feb 14, 2012. (StarBiz)
20120515 1005 Global Market Related News.
Stocks, Commodities Drop as Euro Weakens on Greek Crisis (Source: Bloomberg)
Stocks fell, commodities slid to the cheapest level this year and the euro weakened to a three-month low amid growing concern Greece will exit the European currency. The MSCI All-Country World Index (MXWD) slid 1.6 percent at 4 p.m. in New York and the Standard & Poor’s 500 Index sank 1.1 percent to 1,338.35, with both slipping to the lowest levels in more than three months. The euro slid to less than $1.29 for the first time since January. Yields on U.S. seven-year debt and 10- year U.K. and German bonds fell to records, while costs to insure against a Spanish default jumped to an all-time high. The S&P GSCI gauge of commodities dropped 1.1 percent.
European finance ministers grappled with the costs of keeping Greece in the euro area or letting it go, as a post- election political feud prevents the nation from forming a new government following the May 6 election. President Karolos Papoulias told Greek political leaders that banks face the threat of collapse if deposits continue to dwindle amid the instability. In the U.S., JPMorgan Chase & Co. (JPM) fell for a second day after reporting a $2 billion trading loss. “The markets are going to play hard ball and the European governments are going to play hard ball too,” John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. His firm oversees $207 billion. “The odds of Greece leaving the euro are higher. It’s an enormous game of chicken that they are playing with each other. To the degree it does represent the democratic process in Greece, it makes it more likely they default and the Europeans have to do something.”
GLOBAL MARKETS-Riskier assets hit as Euro zone worries grow
LONDON, May 14 (Reuters) - The euro hit four month lows and shares fell as the increasing likelihood of a new election in Greece worsened the sense of crisis in the euro zone and China's latest move to loosen monetary policy only added to investor risk aversion.
"Selling rallies in risk assets seems the best way to make money in most asset classes given the event risk is still very real this week." said Chris Weston, an institutional dealer at IG Markets.
Investors Missing Rally Dump Bearish Bets Most Since 2008 (Source: Bloomberg)
As individuals bail out of U.S. stocks at the fastest rate in three decades, professional speculators have cut bearish bets by the most since 2008. Money managers are net short 19,375 contracts on the Standard & Poor’s 500 Index, down 82 percent from a four-year high in September even after the figure jumped from 3,584 last week, data compiled by Bloomberg and the Commodity Futures Trading Commission show. U.S. equity mutual funds recorded $18 billion of outflows in April, the most since at least 1984, according to preliminary data from the Investment Company Institute. Hedge funds and other institutions are speculating the index will extend its 23 percent rally since October after 69 percent of S&P 500 companies beat first-quarter earnings estimates and economists projected accelerating U.S. growth this year. Bears say last week’s addition to bets on declines show short sellers have completed almost all of the buying they are likely to do, depleting demand for equities.
“For the professional side, stocks look pretty compelling,” David Goerz, chief investment officer at Highmark Capital Management Inc., said in a telephone interview from San Francisco on May 9. His firm oversees about $17 billion. “Underlying economic strength is much more resilient than anybody expected it to be this year.”
Asia Stocks Fall for Fifth Day on Greece, Italy Concerns (Source: Bloomberg)
Asian stocks fell as the political impasse in Greece added to speculation the nation will leave the euro union and Moody’s Investors Service cut the credit ratings of 26 Italian banks, damping demand for riskier assets. Nippon Sheet Glass Co. (5202), a glassmaker that counts Europe as its No. 1 market, slumped 4.2 percent in Tokyo after saying it may continue to suspend some production in Europe this year on slumping demand. BHP Billiton Ltd., Australia’s biggest oil producer and the world’s largest mining company, fell 2.4 percent after metal prices declined. Mainland Chinese developers may be active today in Hong Kong after a report that Shanghai tightened home-purchase restrictions. “Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It would further erode confidence in Europe.
While it might be positive news, I think we may go through a period of fairly intense uncertainty if they end up leaving.” The MSCI Asia Pacific Index slid 0.8 percent to 117.10 as of 9:29 a.m. in Tokyo. More than four stocks declined for each that rose on the measure, which is headed for its fifth successive day of losses and lowest close since Jan. 16. The Asian gauge declined before markets in Hong Kong and China open.
Japan’s Topix Falls to Four-Month Low on European Risks (Source: Bloomberg)
May 15 (Bloomberg) -- Japanese stocks fell, with the Topix Index dropping to a four-month low, as the political impasse in Greece added to speculation the nation will leave the euro and the ratings of 26 Italian banks were cut by Moody’s Investors Service, damping demand for riskier assets. Nippon Sheet Glass Co. (5202), which gets 39 percent of its sales in Europe, slumped 5.2 percent to its lowest level on record. Kawasaki Kisen Kaisha Ltd. (9107) led shipping companies lower after a gauge of cargo rates slid. Hokuetsu Kishu Paper Co. dropped 5.8 percent after saying profit will fall 41 percent. The Topix lost 0.7 percent to 751.60 as of 9:18 a.m. in Tokyo, heading for the lowest close since Jan. 19. More than four shares fell for each that rose. The Nikkei 225 Stock Average (NKY) dropped 0.5 percent to 8,929.29, with trading volume 22 percent above the 30-day average.
“Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “I think we may go through a period of fairly intense uncertainty if they end up leaving.”
Dow Falls to Lowest Level Since January on Greece Concern (Source: Bloomberg)
U.S. stocks declined, sending the Dow Jones Industrial Average to the lowest level since January, as Greece struggled to form a new government amid growing speculation the nation may leave the European currency. Financial and energy shares fell the most among 10 groups in the Standard & Poor’s 500 Index. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) sank at least 2.6 percent as European lenders slumped. Alcoa Inc. (AA) and Schlumberger Ltd. (SLB) slid more than 1.5 percent to pace declines in commodity producers. Symantec Corp. (SYMC), the biggest seller of security software, retreated 1.4 percent after Goldman Sachs Group Inc. cut its recommendation.
The S&P 500 slid 1.1 percent to 1,338.35 at 4 p.m. New York time, the lowest since Feb. 2. The Dow fell 125.25 points, or 1 percent, to 12,695.35. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, rose 10 percent to an almost four-month high of 21.87. About 6.6 billion shares changed hands on U.S. exchanges, in line with the three-month average. “The fear factor is definitely higher,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. “The whole European (SX7P) political situation is really the focus at this point. Nobody really knows what’s going to happen next and the market hates uncertainty.”
European Stocks Drop on Greek Deadlock, Merkel’s Setback (Source: Bloomberg)
European stocks retreated, snapping two days of gains, as Greece moved closer to a possible exit from the euro currency union and German Chancellor Angela Merkel’s party lost a state election. Banks paced losses, with HSBC Holdings Plc (HSBA) dropping 1.5 percent. Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, retreated after Chief Executive Officer Peter Bauer decided to step down. ING Groep NV (INGA) tumbled 6 percent as European Union regulators will reexamine its rescue by the Dutch government. The Stoxx Europe 600 Index lost 1.8 percent to 247.43 at the close of trading. All 19 industry groups on the gauge fell. The Stoxx 600 has pared this year’s gains to 1.2 percent as an inconclusive election in Greece left political parties struggling to form a government, risking the collapse of proposed austerity measures.
“With no new Greek government in sight, I think that we will see continued insecurity and volatility in financial markets this week,” said Alessandro Fezzi, senior market analyst at LGT Capital Management AG in Pfaeffikon, Switzerland. The impasse “will lead us to new elections in June, which will prolong investors’ insecurity as they worry about possible contagion risks, especially regarding Spain.”
Emerging Stocks Fall as Commodities Push Russia to Bear Market (Source: Bloomberg)
Emerging-market stocks fell as a plunge in commodities sent Russian and Brazilian equities tumbling and investors speculated China’s cut in banks’ reserve ratios won’t be enough to stem the economic slowdown. The MSCI Emerging Markets Index dropped 2 percent to 952 by 4:31 p.m. in New York, the lowest since Jan. 16. Russia’s dollar-denominated RTS Index (RTSI$) declined, pushing the gauge into a bear market, while the Micex index fell to a seven-month low. Brazil’s Bovespa retreated 3.2 percent, the most since Sept. 22. Brookfield Incorporacoes SA (BISA3), the nation’s fourth-largest homebuilder by revenue, was the leading decliner in Brazil and on the emerging nations’ gauge. Commodities dropped for a ninth day, extending their longest losing streak since 2008, as oil slumped to $94.78, the lowest level in almost five months.
The announcement by the People’s Bank of China on May 12 that it’s cutting the amount of cash banks must set aside as reserves was deemed insufficient to support lending and stop an economic slowdown by Lars Christensen, chief emerging-market analyst at Danske Bank A/S. “It’s a pretty bad day and the main problem is China,” Christensen said by phone from Copenhagen today. “China’s slowing down impacts commodity prices so commodities are now taking a beating. That’s certainly not good news for some of the major emerging markets like Russia and Brazil.”
Euro Weakens to Four-Month Low on Greek Turmoil (Source: Bloomberg)
The euro fell to an almost four-month low amid mounting doubts that Greece can avoid an exit from the currency union as the region’s finance ministers meet for a second day in Brussels. Greece’s President will call a meeting of leaders of all parliamentary parties except for an ultra-nationalist party today to make the case for a government of prominent non- politicians. The 17-nation currency traded 0.1 percent from a three-month low against the yen before a report forecast to show Europe’s economy contracted. Demand for the Australian dollar was limited before the central bank releases minutes of its last meeting, when it cut interest rates by 50 basis points. “The intense uncertainty in Greece is hard to see coming out well for risk appetite at this point,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “Looking at the fundamentals and at the developments in Europe, it’s all very bearish for the euro.”
The euro traded at $1.2833 as of 8:39 a.m. in Tokyo from $1.2823 yesterday, after earlier sliding to $1.2816, the weakest level since Jan. 18. The currency was little changed at 102.48 yen from 102.39 yesterday, when it reached 102.23, the lowest since Feb. 16. The yen was at 79.87 per dollar from 79.85.
FOREX-Euro hits 4-mth low on Greece jitters; Aussie dips
SINGAPORE, May 14 (Reuters) - The euro hit its lowest level in nearly four months after Greek political leaders failed in their latest efforts to form a ruling coalition, keeping investors on edge over the risk of the country exiting the euro zone.
"I think they will steer the rudder that way, even if that leads to costs on the inflation front. If that is the case, the direction would be toward weakness in the currency," he said.
Workers Lacking Skills Hinder More Factory Gains: Economy (Source: Bloomberg)
Paul Bonin has no problem getting enough orders to keep his South Bend, Indiana, factory busy. What he can’t find are enough qualified employees to work on the assembly lines. “The biggest challenge we face is a skilled labor force,” said Bonin, president of Bertrand Products Inc., which makes transmission parts for helicopters. He said he sees opportunities to fill more orders, “but I can’t take the work because I can’t find the workforce.” The inability to locate employees with the right abilities is holding back manufacturing, the industry that led the U.S. out of the worst recession since the 1930s, just as the economy shows signs of cooling. The number of factory jobs waiting to be filled climbed to 326,000 in March, the most since November 2007, according to data from the Labor Department. “The manufacturing sector is clearly showing signs of a skills mismatch,” said Dean Maki, chief U.S. economist at Barclays in New York. “It is likely to weigh on manufacturing growth.”
Spark in Sales of Cars and Trucks Drives U.S. Economy (Source: Bloomberg)
Car sales that are running at the fastest pace in four years are poised to reverberate through the world’s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14 million annual rate in each month this year, the strongest performance since early 2008, according to Ward’s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter’s 2.2 percent economic growth. General Motors Co. (GM), the world’s largest automaker last year, boosted its 2012 industry-sales forecast, Ford Motor Co. (F) will add factory shifts and Chrysler Group LLC is stepping up hiring as demand rises. The resurgence -- from assembly lines and dealerships to steelmakers, freight lines and loan providers -- signals the U.S. is headed for lasting, robust growth, says Joseph Carson, director of global economic research at AllianceBernstein LP in New York.
“We’re starting to see the spark in the auto sector that was missing initially” during the recovery from the recession, said Carson, a former GM economist. “It tells you there’s a certain momentum. A whole host of areas could see the multiplier effect. We’re at the beginning of a very long and durable cycle.”
JPMorgan’s Trades Probed by U.S. National Bank Agency After Loss (Source: Bloomberg)
The Office of Comptroller of the Currency said yesterday that it is examining JPMorgan Chase & Co. (JPM)’s activities and evaluating their transactions following a $2 billion loss that shook up bank leadership. “The OCC is examining the bank’s activities and is in continuous dialogue with bank personnel and other regulatory colleagues as we evaluate details related to the specific transactions as well as the surrounding risk management processes that resulted in this unexpected loss,” Bryan Hubbard, an OCC spokesman, said in an e-mail. The regulator, which oversees national banks including JPMorgan Chase Bank N.A., also is evaluating risk management strategies and practices at other large banks to validate their understanding of risk levels and controls. The OCC said JPMorgan’s losses affect its earnings while not presenting a threat to the safety and soundness of the bank.
The “vast majority” of the bank’s chief investment office that suffered the loss was part of the national bank, Hubbard said. JPMorgan Chase Bank N.A.’s deposits are insured by the Federal Deposit Insurance Corp. The bank used a new model for calculating its trading risk in the first quarter that Chief Executive Officer Jamie Dimon, 56, said was inadequate. Former FDIC Chairman Sheila Bair said yesterday that the change to the so-called value-at-risk calculation “is something I can only assume the regulators were aware of and briefed on.”
Facebook Said Set to Finish Taking IPO Orders Tomorrow (Source: Bloomberg)
Facebook Inc. (FB) plans to stop taking orders tomorrow for its initial public offering, two days ahead of schedule, according to a person with knowledge of the transaction. Facebook will likely finish taking orders for the IPO after U.S. markets close May 15, said the person, who declined to be identified as the plans are private. The offer of 337.4 million shares at $28 to $35 each has been oversubscribed, according to people with knowledge of the matter, who declined to say by how much orders exceeded the amount of stock on offer. Jonathan Thaw, a spokesman for Facebook, declined to comment. “They’re swamped with the orders that are in,” said Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. (MERR) in San Francisco. “They just need time to determine the price. They can send the message -- the books are closing, send in your orders now.”
The world’s most popular social-networking site, led by CEO Mark Zuckerberg, is seeking a market value of as much as $96 billion. At that level, Facebook would surpass United Parcel Service Inc. (UPS) as the most valuable company in history to go public in the U.S., based on market capitalization, data compiled by Bloomberg and Dealogic show.
China Growth Seen at 13-Year Low by Pimco (Source: Bloomberg)
China’s slowdown may deepen as policy makers unwind the excesses of a record credit boom while only gradually increasing stimulus, leaving 2012 growth at the weakest in 13 years, Pacific Investment Management Co. says. “The economy is unlikely to bottom until the third quarter,” Ramin Toloui, Pimco’s global co-head of emerging markets portfolio management in Singapore, said in e-mailed comments May 13. “Policy makers will progressively turn the dial toward more stimulus, but not in the aggressive manner of 2009,” restrained by the goal of tempering the credit-fueled property market, he said. Pimco, which oversees the world’s largest bond fund, sees Chinese growth this year in the “mid-7 percent range,” a pace unseen since 1999. Its call is still lower than that of banks from Citigroup Inc. and JPMorgan Chase & Co. to Bank of America Corp. and UBS AG, which all pared their forecasts after April economic data were released last week.
A more measured pace of stimulus now than the record fiscal package and lending boom of 2009 may help reduce the risk of an eventual credit bust. China’s central bank has so far held off on lowering interest rates, opting May 12 to execute the third reduction in banks’ reserve requirements since November. The reserve-ratio cuts are “meant to control the risk of a hard landing, not to avoid a soft landing,” said Stephen Jen, managing partner at SLJ Macro Partners LLP in London and former head of currency research at Morgan Stanley. “These monetary policies are reactive, very different from what some analysts had been expecting -- something much more aggressive and pre- emptive.”
Largest S. Korea Fund to Seek More Investment Quota in China (Source: Bloomberg)
South Korea’s National Pension Service, the country’s biggest investor, plans to seek approval to buy more yuan-denominated Chinese stocks after using up the initial quota of $100 million it received in March. The $316 billion pension fund plans to use that allotment by September and will pick two managers “soon” to handle the investments, Chairman Jun Kwang Woo said in an interview in Seoul yesterday. The fund also aims to expand investments to Chinese bonds and so-called alternative investments later, he said, without being more specific. “Given the size of our portfolio and the size of the first tranche, I think it’s natural to increase the quota down the road,” Jun, 63, said, without detailing how much more quota the fund plans to apply for. “I do expect some bumps in the road to further growth. But that doesn’t give an excuse to understate the true potential of the economy.”
Jun’s comments come as data show China’s economy, the world’s second largest, is slowing and as the nation’s stocks get cheaper. The benchmark Shanghai Composite Index has fallen 61 percent from its October 2007 record and traded for 12.7 times reported earnings as of yesterday, or 61 percent below the average level of 32.4 since 1997. China said on May 12 it will cut the amount of cash that banks must set aside as reserves for the third time in six months after data showed that industrial production grew the least since 2009 in April and new yuan loans missed estimates. International interest in yuan-denominated assets is rising as China’s economy expands and its government accelerates the opening of its capital markets.
Japan to Experience Power Shortages This Summer, Panel Says (Source: Bloomberg)
Kansai Electric Power Co. (9503) and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9 percent, the independent committee said in a draft report published May 12. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2 percent and 1.9 percent, the report said. Japan is reviewing its electricity outlook as it heads toward a nuclear-free summer while debating the first restart of atomic reactors idled for regular safety checks since the Fukushima disaster in March last year. Based on the conclusion of the panel, the government will decide on power-saving measures, which may include rolling blackouts.
Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report. In addition to the Kansai region, power supply and demand are expected to be tight in Hokkaido, Shikoku and Kyushu. Utilities should have at least 3 percent surplus capacity to deal with potential demand spikes or accidents at power plants, the report said. Tokyo Electric Power Co. and four other utilities were estimated to meet the target, it said.
India Inflation Quickens, Curbing Room for Cutting Rates (Source: Bloomberg)
Indian inflation unexpectedly accelerated in April, crimping the central bank’s scope to bolster economic growth by extending interest-rate cuts. Stocks fell, reversing earlier gains. The benchmark wholesale-price index rose 7.23 percent from a year earlier, after climbing 6.89 percent in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67 percent gain. Reserve Bank of India Governor Duvvuri Subbarao signaled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee. Greece’s political turmoil and a deepening debt crisis in Europe are increasing pressure on Asian nations to support growth as exports falter from Taiwan to Malaysia. China cut banks’ reserve requirements on May 12 to revive demand.
“The Reserve Bank of India faces somewhat of a dilemma,” Robert Prior-Wandesforde, Singapore-based director of Asian economics at Credit Suisse Group AG, said in a note after the report. “Our guess is that the chance of a June rate move has diminished.”
Euro Chiefs May Offer Leniency to Greece (Source: Bloomberg)
European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity. Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. “The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday. “If there are dramatic changes in circumstances, we wouldn’t close ourselves off to a debate over extending the deadlines.”
Greece’s post-election impasse multiplied the signs of stress in European markets yesterday. The euro fell for the 10th time in 11 days and stocks surrendered a two-day gain. Bond yields in recession-wracked Spain, the next potential candidate for financial support, touched a five-month high. “The euro breakup story is gathering steam again,” Marchel Alexandrovich, a senior European economist at Jefferies International in London, said in a research note. “If Greece were to ever exit the euro, no amount of reassuring comments will convince investors that other countries won’t soon follow.”
Greek President Pitches New Government Plan (Source: Bloomberg)
Greek President Karolos Papoulias proposed a government of prominent non-politicians to steer the country and avert new elections as doubts mount that Greece can avoid an exit from the euro area. Papoulias will call a meeting of all leaders of parties represented in parliament except for an ultra-nationalist party for 2 p.m. in Athens tomorrow to discuss the proposal, said Evangelos Venizelos, the leader of Pasok, the third-biggest party. Venizelos spoke after meeting with Papoulias and the leaders of two other parties. “Pasok is taking a responsible stance,” Venizelos said in comments televised live on state-run NET TV. “We support a government of prominent figures as a necessary solution.”
The new plan threatens to extend the political gridlock that has left the country without a government for more than a week since the inconclusive May 6 elections. Democratic Left leader Fotis Kouvelis, who attended today’s meeting, said he was opposed to the plan and will attend tomorrow to press for his unity government proposal, which has already been rejected by the second-biggest party, Syriza. Papoulias spent yesterday trying to coax the country’s three biggest parties into a coalition. If his efforts fail, new elections will need to be called.
Greece Euro-Exit Debate Goes Public (Source: Bloomberg)
European finance ministers grappled with the costs of keeping Greece in the euro area or letting it go, as Greece’s post-election political feud dragged on with little progress toward forming a government. German Finance Minister Wolfgang Schaeuble said Europe has done the “utmost” to prop up the financially stricken country, limiting any further room for leniency after about 240 billion euros ($308 billion) of aid pledges. “There’s no easy way for Greece, whatever the outcome will be,” Schaeuble told reporters before a meeting of euro-area finance ministers in Brussels today. “It’s not about the question of being more or less generous toward Greece. It’s simply about what is still economically justifiable, what can be done that’s still convincing in economic terms, that still has credibility.” Signs of stress abounded in European markets today. The euro fell for the 10th time in 11 days and bond yields in recession-wracked Spain, the next potential candidate for financial aid, touched a five-month high.
Euro Officials Begin to Weigh Greek Exit as Euro Weakens (Source: Bloomberg)
Greece’s possible exit from the euro moved to the center of Europe’s financial-crisis debate, rattling markets as authorities in Athens struggled to form a government. Meetings brokered by Greek President Karolos Papoulias were set to continue today after Syriza, the leading anti-bailout party, rejected a unity government following inconclusive elections May 6. That moved the country closer to a new vote, with at least five European central bankers broaching the once- taboo topic of its exit from the euro. “We’re really getting to a denouement,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking, said today in a Bloomberg Television interview. “We’re getting to the part where a decision has to be made” on whether Greece leaves the 17-nation currency union, he said.
Euro finance ministers meeting today in Brussels may discuss the bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up banks. Getting German Chancellor Angela Merkel to weaken her demand that debt cutting be the core of the crisis response will be a key objective of new French President Francois Hollande when the two meet tomorrow in Berlin.
Greek President to Meet Four Party Leaders Tomorrow (Source: Bloomberg)
Greek President Karolos Papoulias will meet with political party leaders at 7:30 p.m. tomorrow as discussions on forming a national unity government continue, state-run NET TV said, without citing anyone. New Democracy leader Antonis Samaras, Pasok leader Evangelos Venizelos and the head of the Democratic Left party Fotis Kouvelis will attend the meeting, NET reported. NET initially said that Syriza party head Alexis Tsipras was also expected to attend the meeting, but later reported he would not be taking part. Syriza is the second-largest party in Parliament and the biggest party opposed to the terms of the country’s international bailout. Greece may face new national elections unless a government is formed following the inconclusive voting on May 6. Kouvelis said he regretted that his proposal to form a unity government had failed.
Papoulias said that there is no unity government at this time due to the refusal of the Syriza party to back such a proposal, Kouvelis told reporters in Athens today, after meeting with the president. He spoke in comments televised live on state-run NET TV.
Greece Turns Balkan, Serbia Joins Europe in Key Votes (Source: Bloomberg)
Two elections took place in the Balkans on May 6, and when historians look back, I think they’ll see a tipping point: The day Serbia ceded to Greece its place as the region’s most troublesome country. In the late 1800s, Otto von Bismarck, famously said that the next war in Europe would begin because of some “damned foolish thing in the Balkans.” Of course, he was right. This year marks the centenary of the start of the Balkan Wars in 1912, pitting Serbia, Greece, Bulgaria and Montenegro against the Ottoman Empire. The conflict served as a prelude to World War I, triggered two years later when a Serb assassinated Archduke Franz Ferdinand, in Sarajevo.
In a few years’ time, it may be conventional wisdom to say that the demise of the euro, or whatever else now lies ahead of Europe, was again sparked by some damned foolish thing in the Balkans. Only this time, war is unlikely and Serbia won’t be the culprit. That honor would go to mendacious Greek leaders, their statisticians and an election in which Greek voters put their country’s position in Europe at risk.
Stocks fell, commodities slid to the cheapest level this year and the euro weakened to a three-month low amid growing concern Greece will exit the European currency. The MSCI All-Country World Index (MXWD) slid 1.6 percent at 4 p.m. in New York and the Standard & Poor’s 500 Index sank 1.1 percent to 1,338.35, with both slipping to the lowest levels in more than three months. The euro slid to less than $1.29 for the first time since January. Yields on U.S. seven-year debt and 10- year U.K. and German bonds fell to records, while costs to insure against a Spanish default jumped to an all-time high. The S&P GSCI gauge of commodities dropped 1.1 percent.
European finance ministers grappled with the costs of keeping Greece in the euro area or letting it go, as a post- election political feud prevents the nation from forming a new government following the May 6 election. President Karolos Papoulias told Greek political leaders that banks face the threat of collapse if deposits continue to dwindle amid the instability. In the U.S., JPMorgan Chase & Co. (JPM) fell for a second day after reporting a $2 billion trading loss. “The markets are going to play hard ball and the European governments are going to play hard ball too,” John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. His firm oversees $207 billion. “The odds of Greece leaving the euro are higher. It’s an enormous game of chicken that they are playing with each other. To the degree it does represent the democratic process in Greece, it makes it more likely they default and the Europeans have to do something.”
GLOBAL MARKETS-Riskier assets hit as Euro zone worries grow
LONDON, May 14 (Reuters) - The euro hit four month lows and shares fell as the increasing likelihood of a new election in Greece worsened the sense of crisis in the euro zone and China's latest move to loosen monetary policy only added to investor risk aversion.
"Selling rallies in risk assets seems the best way to make money in most asset classes given the event risk is still very real this week." said Chris Weston, an institutional dealer at IG Markets.
Investors Missing Rally Dump Bearish Bets Most Since 2008 (Source: Bloomberg)
As individuals bail out of U.S. stocks at the fastest rate in three decades, professional speculators have cut bearish bets by the most since 2008. Money managers are net short 19,375 contracts on the Standard & Poor’s 500 Index, down 82 percent from a four-year high in September even after the figure jumped from 3,584 last week, data compiled by Bloomberg and the Commodity Futures Trading Commission show. U.S. equity mutual funds recorded $18 billion of outflows in April, the most since at least 1984, according to preliminary data from the Investment Company Institute. Hedge funds and other institutions are speculating the index will extend its 23 percent rally since October after 69 percent of S&P 500 companies beat first-quarter earnings estimates and economists projected accelerating U.S. growth this year. Bears say last week’s addition to bets on declines show short sellers have completed almost all of the buying they are likely to do, depleting demand for equities.
“For the professional side, stocks look pretty compelling,” David Goerz, chief investment officer at Highmark Capital Management Inc., said in a telephone interview from San Francisco on May 9. His firm oversees about $17 billion. “Underlying economic strength is much more resilient than anybody expected it to be this year.”
Asia Stocks Fall for Fifth Day on Greece, Italy Concerns (Source: Bloomberg)
Asian stocks fell as the political impasse in Greece added to speculation the nation will leave the euro union and Moody’s Investors Service cut the credit ratings of 26 Italian banks, damping demand for riskier assets. Nippon Sheet Glass Co. (5202), a glassmaker that counts Europe as its No. 1 market, slumped 4.2 percent in Tokyo after saying it may continue to suspend some production in Europe this year on slumping demand. BHP Billiton Ltd., Australia’s biggest oil producer and the world’s largest mining company, fell 2.4 percent after metal prices declined. Mainland Chinese developers may be active today in Hong Kong after a report that Shanghai tightened home-purchase restrictions. “Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It would further erode confidence in Europe.
While it might be positive news, I think we may go through a period of fairly intense uncertainty if they end up leaving.” The MSCI Asia Pacific Index slid 0.8 percent to 117.10 as of 9:29 a.m. in Tokyo. More than four stocks declined for each that rose on the measure, which is headed for its fifth successive day of losses and lowest close since Jan. 16. The Asian gauge declined before markets in Hong Kong and China open.
Japan’s Topix Falls to Four-Month Low on European Risks (Source: Bloomberg)
May 15 (Bloomberg) -- Japanese stocks fell, with the Topix Index dropping to a four-month low, as the political impasse in Greece added to speculation the nation will leave the euro and the ratings of 26 Italian banks were cut by Moody’s Investors Service, damping demand for riskier assets. Nippon Sheet Glass Co. (5202), which gets 39 percent of its sales in Europe, slumped 5.2 percent to its lowest level on record. Kawasaki Kisen Kaisha Ltd. (9107) led shipping companies lower after a gauge of cargo rates slid. Hokuetsu Kishu Paper Co. dropped 5.8 percent after saying profit will fall 41 percent. The Topix lost 0.7 percent to 751.60 as of 9:18 a.m. in Tokyo, heading for the lowest close since Jan. 19. More than four shares fell for each that rose. The Nikkei 225 Stock Average (NKY) dropped 0.5 percent to 8,929.29, with trading volume 22 percent above the 30-day average.
“Investors would think if Greece goes, maybe Portugal, Spain and Italy go,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “I think we may go through a period of fairly intense uncertainty if they end up leaving.”
Dow Falls to Lowest Level Since January on Greece Concern (Source: Bloomberg)
U.S. stocks declined, sending the Dow Jones Industrial Average to the lowest level since January, as Greece struggled to form a new government amid growing speculation the nation may leave the European currency. Financial and energy shares fell the most among 10 groups in the Standard & Poor’s 500 Index. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) sank at least 2.6 percent as European lenders slumped. Alcoa Inc. (AA) and Schlumberger Ltd. (SLB) slid more than 1.5 percent to pace declines in commodity producers. Symantec Corp. (SYMC), the biggest seller of security software, retreated 1.4 percent after Goldman Sachs Group Inc. cut its recommendation.
The S&P 500 slid 1.1 percent to 1,338.35 at 4 p.m. New York time, the lowest since Feb. 2. The Dow fell 125.25 points, or 1 percent, to 12,695.35. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, rose 10 percent to an almost four-month high of 21.87. About 6.6 billion shares changed hands on U.S. exchanges, in line with the three-month average. “The fear factor is definitely higher,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. “The whole European (SX7P) political situation is really the focus at this point. Nobody really knows what’s going to happen next and the market hates uncertainty.”
European Stocks Drop on Greek Deadlock, Merkel’s Setback (Source: Bloomberg)
European stocks retreated, snapping two days of gains, as Greece moved closer to a possible exit from the euro currency union and German Chancellor Angela Merkel’s party lost a state election. Banks paced losses, with HSBC Holdings Plc (HSBA) dropping 1.5 percent. Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, retreated after Chief Executive Officer Peter Bauer decided to step down. ING Groep NV (INGA) tumbled 6 percent as European Union regulators will reexamine its rescue by the Dutch government. The Stoxx Europe 600 Index lost 1.8 percent to 247.43 at the close of trading. All 19 industry groups on the gauge fell. The Stoxx 600 has pared this year’s gains to 1.2 percent as an inconclusive election in Greece left political parties struggling to form a government, risking the collapse of proposed austerity measures.
“With no new Greek government in sight, I think that we will see continued insecurity and volatility in financial markets this week,” said Alessandro Fezzi, senior market analyst at LGT Capital Management AG in Pfaeffikon, Switzerland. The impasse “will lead us to new elections in June, which will prolong investors’ insecurity as they worry about possible contagion risks, especially regarding Spain.”
Emerging Stocks Fall as Commodities Push Russia to Bear Market (Source: Bloomberg)
Emerging-market stocks fell as a plunge in commodities sent Russian and Brazilian equities tumbling and investors speculated China’s cut in banks’ reserve ratios won’t be enough to stem the economic slowdown. The MSCI Emerging Markets Index dropped 2 percent to 952 by 4:31 p.m. in New York, the lowest since Jan. 16. Russia’s dollar-denominated RTS Index (RTSI$) declined, pushing the gauge into a bear market, while the Micex index fell to a seven-month low. Brazil’s Bovespa retreated 3.2 percent, the most since Sept. 22. Brookfield Incorporacoes SA (BISA3), the nation’s fourth-largest homebuilder by revenue, was the leading decliner in Brazil and on the emerging nations’ gauge. Commodities dropped for a ninth day, extending their longest losing streak since 2008, as oil slumped to $94.78, the lowest level in almost five months.
The announcement by the People’s Bank of China on May 12 that it’s cutting the amount of cash banks must set aside as reserves was deemed insufficient to support lending and stop an economic slowdown by Lars Christensen, chief emerging-market analyst at Danske Bank A/S. “It’s a pretty bad day and the main problem is China,” Christensen said by phone from Copenhagen today. “China’s slowing down impacts commodity prices so commodities are now taking a beating. That’s certainly not good news for some of the major emerging markets like Russia and Brazil.”
Euro Weakens to Four-Month Low on Greek Turmoil (Source: Bloomberg)
The euro fell to an almost four-month low amid mounting doubts that Greece can avoid an exit from the currency union as the region’s finance ministers meet for a second day in Brussels. Greece’s President will call a meeting of leaders of all parliamentary parties except for an ultra-nationalist party today to make the case for a government of prominent non- politicians. The 17-nation currency traded 0.1 percent from a three-month low against the yen before a report forecast to show Europe’s economy contracted. Demand for the Australian dollar was limited before the central bank releases minutes of its last meeting, when it cut interest rates by 50 basis points. “The intense uncertainty in Greece is hard to see coming out well for risk appetite at this point,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “Looking at the fundamentals and at the developments in Europe, it’s all very bearish for the euro.”
The euro traded at $1.2833 as of 8:39 a.m. in Tokyo from $1.2823 yesterday, after earlier sliding to $1.2816, the weakest level since Jan. 18. The currency was little changed at 102.48 yen from 102.39 yesterday, when it reached 102.23, the lowest since Feb. 16. The yen was at 79.87 per dollar from 79.85.
FOREX-Euro hits 4-mth low on Greece jitters; Aussie dips
SINGAPORE, May 14 (Reuters) - The euro hit its lowest level in nearly four months after Greek political leaders failed in their latest efforts to form a ruling coalition, keeping investors on edge over the risk of the country exiting the euro zone.
"I think they will steer the rudder that way, even if that leads to costs on the inflation front. If that is the case, the direction would be toward weakness in the currency," he said.
Workers Lacking Skills Hinder More Factory Gains: Economy (Source: Bloomberg)
Paul Bonin has no problem getting enough orders to keep his South Bend, Indiana, factory busy. What he can’t find are enough qualified employees to work on the assembly lines. “The biggest challenge we face is a skilled labor force,” said Bonin, president of Bertrand Products Inc., which makes transmission parts for helicopters. He said he sees opportunities to fill more orders, “but I can’t take the work because I can’t find the workforce.” The inability to locate employees with the right abilities is holding back manufacturing, the industry that led the U.S. out of the worst recession since the 1930s, just as the economy shows signs of cooling. The number of factory jobs waiting to be filled climbed to 326,000 in March, the most since November 2007, according to data from the Labor Department. “The manufacturing sector is clearly showing signs of a skills mismatch,” said Dean Maki, chief U.S. economist at Barclays in New York. “It is likely to weigh on manufacturing growth.”
Spark in Sales of Cars and Trucks Drives U.S. Economy (Source: Bloomberg)
Car sales that are running at the fastest pace in four years are poised to reverberate through the world’s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14 million annual rate in each month this year, the strongest performance since early 2008, according to Ward’s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter’s 2.2 percent economic growth. General Motors Co. (GM), the world’s largest automaker last year, boosted its 2012 industry-sales forecast, Ford Motor Co. (F) will add factory shifts and Chrysler Group LLC is stepping up hiring as demand rises. The resurgence -- from assembly lines and dealerships to steelmakers, freight lines and loan providers -- signals the U.S. is headed for lasting, robust growth, says Joseph Carson, director of global economic research at AllianceBernstein LP in New York.
“We’re starting to see the spark in the auto sector that was missing initially” during the recovery from the recession, said Carson, a former GM economist. “It tells you there’s a certain momentum. A whole host of areas could see the multiplier effect. We’re at the beginning of a very long and durable cycle.”
JPMorgan’s Trades Probed by U.S. National Bank Agency After Loss (Source: Bloomberg)
The Office of Comptroller of the Currency said yesterday that it is examining JPMorgan Chase & Co. (JPM)’s activities and evaluating their transactions following a $2 billion loss that shook up bank leadership. “The OCC is examining the bank’s activities and is in continuous dialogue with bank personnel and other regulatory colleagues as we evaluate details related to the specific transactions as well as the surrounding risk management processes that resulted in this unexpected loss,” Bryan Hubbard, an OCC spokesman, said in an e-mail. The regulator, which oversees national banks including JPMorgan Chase Bank N.A., also is evaluating risk management strategies and practices at other large banks to validate their understanding of risk levels and controls. The OCC said JPMorgan’s losses affect its earnings while not presenting a threat to the safety and soundness of the bank.
The “vast majority” of the bank’s chief investment office that suffered the loss was part of the national bank, Hubbard said. JPMorgan Chase Bank N.A.’s deposits are insured by the Federal Deposit Insurance Corp. The bank used a new model for calculating its trading risk in the first quarter that Chief Executive Officer Jamie Dimon, 56, said was inadequate. Former FDIC Chairman Sheila Bair said yesterday that the change to the so-called value-at-risk calculation “is something I can only assume the regulators were aware of and briefed on.”
Facebook Said Set to Finish Taking IPO Orders Tomorrow (Source: Bloomberg)
Facebook Inc. (FB) plans to stop taking orders tomorrow for its initial public offering, two days ahead of schedule, according to a person with knowledge of the transaction. Facebook will likely finish taking orders for the IPO after U.S. markets close May 15, said the person, who declined to be identified as the plans are private. The offer of 337.4 million shares at $28 to $35 each has been oversubscribed, according to people with knowledge of the matter, who declined to say by how much orders exceeded the amount of stock on offer. Jonathan Thaw, a spokesman for Facebook, declined to comment. “They’re swamped with the orders that are in,” said Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. (MERR) in San Francisco. “They just need time to determine the price. They can send the message -- the books are closing, send in your orders now.”
The world’s most popular social-networking site, led by CEO Mark Zuckerberg, is seeking a market value of as much as $96 billion. At that level, Facebook would surpass United Parcel Service Inc. (UPS) as the most valuable company in history to go public in the U.S., based on market capitalization, data compiled by Bloomberg and Dealogic show.
China Growth Seen at 13-Year Low by Pimco (Source: Bloomberg)
China’s slowdown may deepen as policy makers unwind the excesses of a record credit boom while only gradually increasing stimulus, leaving 2012 growth at the weakest in 13 years, Pacific Investment Management Co. says. “The economy is unlikely to bottom until the third quarter,” Ramin Toloui, Pimco’s global co-head of emerging markets portfolio management in Singapore, said in e-mailed comments May 13. “Policy makers will progressively turn the dial toward more stimulus, but not in the aggressive manner of 2009,” restrained by the goal of tempering the credit-fueled property market, he said. Pimco, which oversees the world’s largest bond fund, sees Chinese growth this year in the “mid-7 percent range,” a pace unseen since 1999. Its call is still lower than that of banks from Citigroup Inc. and JPMorgan Chase & Co. to Bank of America Corp. and UBS AG, which all pared their forecasts after April economic data were released last week.
A more measured pace of stimulus now than the record fiscal package and lending boom of 2009 may help reduce the risk of an eventual credit bust. China’s central bank has so far held off on lowering interest rates, opting May 12 to execute the third reduction in banks’ reserve requirements since November. The reserve-ratio cuts are “meant to control the risk of a hard landing, not to avoid a soft landing,” said Stephen Jen, managing partner at SLJ Macro Partners LLP in London and former head of currency research at Morgan Stanley. “These monetary policies are reactive, very different from what some analysts had been expecting -- something much more aggressive and pre- emptive.”
Largest S. Korea Fund to Seek More Investment Quota in China (Source: Bloomberg)
South Korea’s National Pension Service, the country’s biggest investor, plans to seek approval to buy more yuan-denominated Chinese stocks after using up the initial quota of $100 million it received in March. The $316 billion pension fund plans to use that allotment by September and will pick two managers “soon” to handle the investments, Chairman Jun Kwang Woo said in an interview in Seoul yesterday. The fund also aims to expand investments to Chinese bonds and so-called alternative investments later, he said, without being more specific. “Given the size of our portfolio and the size of the first tranche, I think it’s natural to increase the quota down the road,” Jun, 63, said, without detailing how much more quota the fund plans to apply for. “I do expect some bumps in the road to further growth. But that doesn’t give an excuse to understate the true potential of the economy.”
Jun’s comments come as data show China’s economy, the world’s second largest, is slowing and as the nation’s stocks get cheaper. The benchmark Shanghai Composite Index has fallen 61 percent from its October 2007 record and traded for 12.7 times reported earnings as of yesterday, or 61 percent below the average level of 32.4 since 1997. China said on May 12 it will cut the amount of cash that banks must set aside as reserves for the third time in six months after data showed that industrial production grew the least since 2009 in April and new yuan loans missed estimates. International interest in yuan-denominated assets is rising as China’s economy expands and its government accelerates the opening of its capital markets.
Japan to Experience Power Shortages This Summer, Panel Says (Source: Bloomberg)
Kansai Electric Power Co. (9503) and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9 percent, the independent committee said in a draft report published May 12. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2 percent and 1.9 percent, the report said. Japan is reviewing its electricity outlook as it heads toward a nuclear-free summer while debating the first restart of atomic reactors idled for regular safety checks since the Fukushima disaster in March last year. Based on the conclusion of the panel, the government will decide on power-saving measures, which may include rolling blackouts.
Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report. In addition to the Kansai region, power supply and demand are expected to be tight in Hokkaido, Shikoku and Kyushu. Utilities should have at least 3 percent surplus capacity to deal with potential demand spikes or accidents at power plants, the report said. Tokyo Electric Power Co. and four other utilities were estimated to meet the target, it said.
India Inflation Quickens, Curbing Room for Cutting Rates (Source: Bloomberg)
Indian inflation unexpectedly accelerated in April, crimping the central bank’s scope to bolster economic growth by extending interest-rate cuts. Stocks fell, reversing earlier gains. The benchmark wholesale-price index rose 7.23 percent from a year earlier, after climbing 6.89 percent in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67 percent gain. Reserve Bank of India Governor Duvvuri Subbarao signaled last month that inflation might limit the room for further cuts after he slashed the benchmark rate by half a percentage point, flagging price risks from the fiscal deficit, energy costs and a weaker rupee. Greece’s political turmoil and a deepening debt crisis in Europe are increasing pressure on Asian nations to support growth as exports falter from Taiwan to Malaysia. China cut banks’ reserve requirements on May 12 to revive demand.
“The Reserve Bank of India faces somewhat of a dilemma,” Robert Prior-Wandesforde, Singapore-based director of Asian economics at Credit Suisse Group AG, said in a note after the report. “Our guess is that the chance of a June rate move has diminished.”
Euro Chiefs May Offer Leniency to Greece (Source: Bloomberg)
European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity. Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. “The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday. “If there are dramatic changes in circumstances, we wouldn’t close ourselves off to a debate over extending the deadlines.”
Greece’s post-election impasse multiplied the signs of stress in European markets yesterday. The euro fell for the 10th time in 11 days and stocks surrendered a two-day gain. Bond yields in recession-wracked Spain, the next potential candidate for financial support, touched a five-month high. “The euro breakup story is gathering steam again,” Marchel Alexandrovich, a senior European economist at Jefferies International in London, said in a research note. “If Greece were to ever exit the euro, no amount of reassuring comments will convince investors that other countries won’t soon follow.”
Greek President Pitches New Government Plan (Source: Bloomberg)
Greek President Karolos Papoulias proposed a government of prominent non-politicians to steer the country and avert new elections as doubts mount that Greece can avoid an exit from the euro area. Papoulias will call a meeting of all leaders of parties represented in parliament except for an ultra-nationalist party for 2 p.m. in Athens tomorrow to discuss the proposal, said Evangelos Venizelos, the leader of Pasok, the third-biggest party. Venizelos spoke after meeting with Papoulias and the leaders of two other parties. “Pasok is taking a responsible stance,” Venizelos said in comments televised live on state-run NET TV. “We support a government of prominent figures as a necessary solution.”
The new plan threatens to extend the political gridlock that has left the country without a government for more than a week since the inconclusive May 6 elections. Democratic Left leader Fotis Kouvelis, who attended today’s meeting, said he was opposed to the plan and will attend tomorrow to press for his unity government proposal, which has already been rejected by the second-biggest party, Syriza. Papoulias spent yesterday trying to coax the country’s three biggest parties into a coalition. If his efforts fail, new elections will need to be called.
Greece Euro-Exit Debate Goes Public (Source: Bloomberg)
European finance ministers grappled with the costs of keeping Greece in the euro area or letting it go, as Greece’s post-election political feud dragged on with little progress toward forming a government. German Finance Minister Wolfgang Schaeuble said Europe has done the “utmost” to prop up the financially stricken country, limiting any further room for leniency after about 240 billion euros ($308 billion) of aid pledges. “There’s no easy way for Greece, whatever the outcome will be,” Schaeuble told reporters before a meeting of euro-area finance ministers in Brussels today. “It’s not about the question of being more or less generous toward Greece. It’s simply about what is still economically justifiable, what can be done that’s still convincing in economic terms, that still has credibility.” Signs of stress abounded in European markets today. The euro fell for the 10th time in 11 days and bond yields in recession-wracked Spain, the next potential candidate for financial aid, touched a five-month high.
Euro Officials Begin to Weigh Greek Exit as Euro Weakens (Source: Bloomberg)
Greece’s possible exit from the euro moved to the center of Europe’s financial-crisis debate, rattling markets as authorities in Athens struggled to form a government. Meetings brokered by Greek President Karolos Papoulias were set to continue today after Syriza, the leading anti-bailout party, rejected a unity government following inconclusive elections May 6. That moved the country closer to a new vote, with at least five European central bankers broaching the once- taboo topic of its exit from the euro. “We’re really getting to a denouement,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking, said today in a Bloomberg Television interview. “We’re getting to the part where a decision has to be made” on whether Greece leaves the 17-nation currency union, he said.
Euro finance ministers meeting today in Brussels may discuss the bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up banks. Getting German Chancellor Angela Merkel to weaken her demand that debt cutting be the core of the crisis response will be a key objective of new French President Francois Hollande when the two meet tomorrow in Berlin.
Greek President to Meet Four Party Leaders Tomorrow (Source: Bloomberg)
Greek President Karolos Papoulias will meet with political party leaders at 7:30 p.m. tomorrow as discussions on forming a national unity government continue, state-run NET TV said, without citing anyone. New Democracy leader Antonis Samaras, Pasok leader Evangelos Venizelos and the head of the Democratic Left party Fotis Kouvelis will attend the meeting, NET reported. NET initially said that Syriza party head Alexis Tsipras was also expected to attend the meeting, but later reported he would not be taking part. Syriza is the second-largest party in Parliament and the biggest party opposed to the terms of the country’s international bailout. Greece may face new national elections unless a government is formed following the inconclusive voting on May 6. Kouvelis said he regretted that his proposal to form a unity government had failed.
Papoulias said that there is no unity government at this time due to the refusal of the Syriza party to back such a proposal, Kouvelis told reporters in Athens today, after meeting with the president. He spoke in comments televised live on state-run NET TV.
Greece Turns Balkan, Serbia Joins Europe in Key Votes (Source: Bloomberg)
Two elections took place in the Balkans on May 6, and when historians look back, I think they’ll see a tipping point: The day Serbia ceded to Greece its place as the region’s most troublesome country. In the late 1800s, Otto von Bismarck, famously said that the next war in Europe would begin because of some “damned foolish thing in the Balkans.” Of course, he was right. This year marks the centenary of the start of the Balkan Wars in 1912, pitting Serbia, Greece, Bulgaria and Montenegro against the Ottoman Empire. The conflict served as a prelude to World War I, triggered two years later when a Serb assassinated Archduke Franz Ferdinand, in Sarajevo.
In a few years’ time, it may be conventional wisdom to say that the demise of the euro, or whatever else now lies ahead of Europe, was again sparked by some damned foolish thing in the Balkans. Only this time, war is unlikely and Serbia won’t be the culprit. That honor would go to mendacious Greek leaders, their statisticians and an election in which Greek voters put their country’s position in Europe at risk.
20120515 1005 Global Commodities Related News.
Wheat Market Recap Report (Source: CME)
July Wheat finished up 1 1/4 at 598 1/4, 3 3/4 off the high and 6 up from the low. December Wheat closed down 1/4 at 635 1/4. This was 5 3/4 up from the low and 4 off the high. July wheat closed slightly higher with an inside trading session. Bearish outside market forces clashed with talk of the oversold condition and talk that the recent set-back in prices could attract increased demand. A bearish tilt to outside market forces with financial problems in Europe and political issues in Greece and Germany helping to drive the US dollar higher and other commodity markets lower early in the day helped to spark the lower opening. Ideas that the market is oversold and talk that the market has already priced-in a large crop ahead helped to support the bounce to higher on the day. Weekly export inspections came in at 28 million bushels which was well above trade expectations and compares with 20.7 million bushels per week to reach the USDA projection. May 1st stocks of wheat in India reached 38.2 million tonnes which is more than 9 times higher than the official June 30th target of 4 million tonnes as compared with 19.9 million tonnes last month. July Oats closed down 3 1/2 at 328 1/2. This was 2 1/2 up from the low and 3 3/4 off the high
Market Recap: Wheat Futures (Source: CME)
Wheat futures were choppy today, with buying limited by negative outside markets. Chicago and Minneapolis wheat ended narrowly mixed, with Kansas City wheat mostly around 4 cents higher. Early pressure was tied to strength in the U.S. dollar index, which moved to its highest level in nearly a month on concerns political unrest in Greece will impact debt issues and worsen the economic crisis across the euro-zone.
Corn Market Recap for 5/14/2012 (Source: CME)
July Corn finished up 2 at 583, 3 3/4 off the high and 6 3/4 up from the low. December Corn closed up 1/4 at 505 1/2. This was 2 1/4 up from the low and 7 1/4 off the high. July corn closed slightly higher on the day and stayed inside of the early range for the reset of the session and today's range is inside of Friday's range. Weakness in soybeans and a bearish tilt to outside market forces helped to pressure the market early. Good weather in the forecast and the outlook for a record yield were seen as negative forces but talk of the oversold condition of the market after the sharp break last week helped to provide some underlying support. Traders see corn plantings near 86% complete for tonight's weekly update and a good start for the crops already emerged. Weekly export inspections came in at 26.8 million bushels which was slightly below trade expectations and compares with 34.6 million bushels per week to reach the USDA projection. While none of the Midwest needs rain right now, traders see the southern Midwest as too dry in the two week outlook and if this forecast is correct, this region may be in need of wetter weather ahead and the dry outlook may have helped slow the selling. December corn closed slightly higher on the session but down 7 1/4 cents from the early peak. July Rice finished down 0.105 at 15.6, 0.08 off the high and 0.08 up from the low.
Market Recap: Corn Futures (Source: CME)
May corn futures expired steady at $6.08; July through May 2013 futures were steady to 3 1/4 cents higher; and farther deferred months were pennies lower. This was a low-range close for most contracts. Corn futures initially benefitted from some spread unwinding amid concern about tight old-crop supplies.
GRAINS-U.S. soybean futures hit 6-wk low as funds sell long positions
SYDNEY, May 14 (Reuters) - U.S. soybean futures fell to six-week lows, dragged down by continued selling of long positions by funds and on concerns over the strength of the global economy.
"There has been a lot of talk about funds being very long on beans, and this is more liquidation after the U.S. Department of Agriculture report last week," said Brett Cooper, senior manager, markets at FC Stone Australia.
Thailand pushes regional rice pact again as exports slump
BANGKOK, May 14 (Reuters) - Thailand, the world's biggest rice exporter, is trying to reach a deal on rice cooperation with Vietnam and Cambodia as Thai government stocks are at record highs, but similar efforts have failed in the past and traders expect little success this time.
"We are to hold a meeting in Bangkok by the end of May and there will be senior officials from those countries at the meeting," said Manat Soiploy, who oversees the rice trade at the Commerce Ministry. He had no precise date for the meeting.
Argentine grains workers end strike, agree to talk
BUENOS AIRES, May 11 (Reuters) - Workers at one of Argentina's biggest grains ports have lifted a strike and agreed to respect a Labor Ministry order for talks to resolve the pay dispute, union and industry sources said on Friday.
High inflation is fueling labor unrest in the South American country -- one of the world's biggest suppliers of soy, corn and wheat. But the government has been intervening swiftly to avert disruption to the nation's key agriculture exports.
Ag Growth profit rises on strong equipment demand
May 8 (Reuters) - Ag Growth International Inc , a portable grain handling equipment maker, reported a 13 percent rise in quarterly profit on strong demand.
The company, which makes grain handling equipment, storage bins and belt conveyors, said it expects a strong corn planting season in the United States to drive demand for its portable grain handling equipment.
DJ Arabica-Robusta Price Gap Narrows; Blends Unlikely To Change
-Difference in prices ends day at 81.419 cents a pound
--Roasters likely to keep current blends as long as customers buy
--Arabica prices down more than 23% this year, while robusta is up 20%
By Leslie Josephs and Neena Rai Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The price gap between arabica and robusta coffee is near its narrowest in almost two years, as arabica prices slip while robusta perks up. The front-month spread settled Monday at 81.419 cents a pound. Robusta for May delivery on London's Liffe exchange settled up 0.8% at $2,116 a ton, while arabica for May delivery gained 0.5% to settle at $1.7740 a pound on the ICE Futures U.S. exchange. The difference in prices is closely watched by coffee roasters, who often substitute some less-expensive robusta for arabica in their beverages when arabica prices are high. This time, however, it is unlikely that roasters will change their blends. "If they maximized the number of robustas, if it was accepted by the customers, there's really no reason to go back," said an executive at a major U.S. coffee roaster. "In the end, it's the customer who dictates what they buy."
Substitution was in earnest last year, when arabica prices soared to a 14-year high. This year, arabica futures have dropped more than 23% as a larger on-cycle harvest from top grower Brazil has weighed on prices. At the same time, robusta futures have gained close to 20%, in part due to farmers in Vietnam, the world's largest producer of the coffee variety, holding on to their crops while waiting for higher prices. Brazilian farmers are expected to use that same strategy later this year, which could support prices for arabica. "The expectation is that the roaster buying should materialize in the coming months and that Brazilian [farmers] selling as soon as they have the beans might be overly optimistic," said Keith Flury, a senior commodities analyst at Rabobank. Roberio Oliveira Silva, head of the London-based International Coffee Organization, recently said arabica prices will likely rise in the second half of 2012.
"There is strong demand, but actually, we're not seeing much coffee on the market. And I don't think the Brazil crop will bring loads of coffee. So, the future is definitely brighter," he said in an interview.
Ivory Coast's Sifca looks to central Africa
ADDIS ABABA, May 11 (Reuters) - Ivory Coast agro-industry group Sifca is looking to set up rubber and palm oil plantations in central Africa to boost output and is also eyeing rice production at home, the company's chairman said on Friday
Sifca, one of the biggest companies in the West African country, is part-owned by Singapore's Olam International and Wilmar International .
India issues formal order freeing up sugar exports
NEW DELHI, May 14 (Reuters) - India has issued a formal order freeing up sugar exports, a government statement said, after ministers agreed to permit shipments without any cap on May 2 to help mills clear some dues they owe to cane growers.
Exporters would not need permission for shipments from the food ministry but they must disclose the quantities sold overseas, said the statement issued late on Friday.
Brazil's 2012/13 coffee crop 55.3 mln bags-Neumann
HAMBURG, May 11 (Reuters) - Brazil's 2012/13 coffee harvest now starting will reach 55.3 million 60-kg bags, giant German coffee trader Neumann Kaffee Gruppe (NKG) said in a report seen by Reuters on Friday.
This will comprise 36.5 million bags of arabica and 18.8 million bags of conillon robusta, Neumann forecast.
ISO sees global sugar surplus halving to 3 mln t 2012/13
LONDON, May 11 (Reuters) - The global sugar surplus is forecast to halve to around 3 million tonnes in 2012/13 (October-September) from a surplus of 6.5 million tonnes in 2011/12, the International Sugar Organization (ISO) said on Friday.
The London-based ISO said in its latest quarterly report that key producers were unlikely to increase their output to keep pace with a 2 percent rise in annual demand.
Maintenance neglect to hurt Ivorian cocoa output
SOUBRE, Ivory Coast, May 11 (Reuters) - Cocoa farmers in Ivory Coast's south and southwestern regions expect a drop in output this year due to a lack of maintenance on plantations and poor weather, though quality is improving as the mid-crop harvest gains momentum.
Farmers in Duekoue, Soubre, Gagnoa and Divo said they have lacked the funds to invest in fertilisers and chemical treatments on plantations in the regions, which count for around half of production in the world's top cocoa producer.
Australia says shale could double its gas resources
ADELAIDE, May 14 (Reuters) - Australia, the world's fourth-largest exporter of liquefied natural gas (LNG), could have enough shale gas resources to double its gas resource base and expand its growing export industry, a government report said on Monday.
Australia has around 390 trillion cubic feet in gas resources, excluding shale gas, ranking third behind coal and uranium as the country's largest energy resource, according to the report conducted by Geoscience Australia and the Australian Bureau of Resources and Energy Economics.
Saudi wish for $100 oil may be hard to grant
--Clyde Russell is a Reuters market analyst. The views expressed are his own--
ADELAIDE, Australia, May 14 (Reuters) - It's all very well for Saudi Arabia to say Brent crude should drop to $100 a barrel, but it's another matter entirely as to whether the world's biggest oil exporter can actually make that happen.
The problem is that when producers wish to raise prices by reducing supply, they are generally successful.
But when they want to lower prices, mainly by boosting supply, they are less successful as more oil in the market doesn't necessarily remove the reasons prices are high in the first place.
OIL-Brent drops below $112 as Greece clouds demand outlook
SINGAPORE, May 14 (Reuters) - Brent crude slipped below $112 on a worsening oil demand outlook after talks to form a new government in Greece failed, and as signs of a slowing Chinese economy outweighed the country's latest move to ease monetary conditions.
"The path of least resistance for oil is down, on sentiment on the euro zone and weak data from China on Friday," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
Oil Falls for Third Day as U.S. Stockpiles Seen Rising in Survey (Source: Bloomberg)
Oil fell for a third day in New York before a report that may show U.S. crude stockpiles rose to the highest level in almost 22 years. Futures dropped as much as 0.9 percent, after closing yesterday at the lowest price in almost five months. U.S. crude stockpiles probably climbed 1.5 million barrels last week to 381 million, the most since August 1990, according to the median estimate in a Bloomberg News survey before a government report this week. Oil also declined with stocks and the euro as Greece struggled to form a government, raising concern that Europe’s debt crisis will worsen. Crude for June delivery fell as much as 87 cents to $93.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.28 at 7:49 a.m. Singapore time. Prices dropped 1.4 percent to $94.78 yesterday, the lowest close since Dec. 19, and are down 4.6 percent this year.
Brent for June settlement slid 69 cents, or 0.6 percent, to $111.57 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $16.79, the highest since April 13. Talks between Greece’s main parties following elections on May 6 have failed to reach agreement on forming a coalition. The nation, whose 10-year debt yields more than 25 percent, decides today whether to pay 436 million euros ($559 million) to bondholders who shunned a debt swap last month.
Biggest Ship Hedge Fund Turns Bullish on Supertankers: Freight (Source: Bloomberg)
The biggest hedge fund in shipping is turning bullish on the largest oil tankers for the first time in four years as the U.S. push toward energy independence provides China with a greater share of global crude supply. The U.S. is importing the least in 13 years as China buys more than ever, lengthening voyages for tankers and effectively reducing the fleet’s capacity, government data show. Very large crude carriers, each hauling 2 million barrels, will earn $40,000 a day this year, 81 percent more than in 2011, said Andreas Vergottis, the Hong Kong-based research director of Tufton Oceanic Ltd., which manages about $1.3 billion of assets.
Chinese demand for tankers jumped 39 percent in the past three years to fuel an economy expanding at more than three times the pace of the U.S. The buying extends from Angola to Venezuela, changing trade patterns and boosting demand for the largest vessels. The rate projected by Vergottis is almost twice the $20,946 anticipated by forward freight agreements, traded by brokers and used to bet on future costs. “No one has yet woken up to this new regime,” he said. “The reduction in U.S. oil imports is actually good, because VLCCs will take that oil to Asia long-haul from the Atlantic.”
July Wheat finished up 1 1/4 at 598 1/4, 3 3/4 off the high and 6 up from the low. December Wheat closed down 1/4 at 635 1/4. This was 5 3/4 up from the low and 4 off the high. July wheat closed slightly higher with an inside trading session. Bearish outside market forces clashed with talk of the oversold condition and talk that the recent set-back in prices could attract increased demand. A bearish tilt to outside market forces with financial problems in Europe and political issues in Greece and Germany helping to drive the US dollar higher and other commodity markets lower early in the day helped to spark the lower opening. Ideas that the market is oversold and talk that the market has already priced-in a large crop ahead helped to support the bounce to higher on the day. Weekly export inspections came in at 28 million bushels which was well above trade expectations and compares with 20.7 million bushels per week to reach the USDA projection. May 1st stocks of wheat in India reached 38.2 million tonnes which is more than 9 times higher than the official June 30th target of 4 million tonnes as compared with 19.9 million tonnes last month. July Oats closed down 3 1/2 at 328 1/2. This was 2 1/2 up from the low and 3 3/4 off the high
Market Recap: Wheat Futures (Source: CME)
Wheat futures were choppy today, with buying limited by negative outside markets. Chicago and Minneapolis wheat ended narrowly mixed, with Kansas City wheat mostly around 4 cents higher. Early pressure was tied to strength in the U.S. dollar index, which moved to its highest level in nearly a month on concerns political unrest in Greece will impact debt issues and worsen the economic crisis across the euro-zone.
Corn Market Recap for 5/14/2012 (Source: CME)
July Corn finished up 2 at 583, 3 3/4 off the high and 6 3/4 up from the low. December Corn closed up 1/4 at 505 1/2. This was 2 1/4 up from the low and 7 1/4 off the high. July corn closed slightly higher on the day and stayed inside of the early range for the reset of the session and today's range is inside of Friday's range. Weakness in soybeans and a bearish tilt to outside market forces helped to pressure the market early. Good weather in the forecast and the outlook for a record yield were seen as negative forces but talk of the oversold condition of the market after the sharp break last week helped to provide some underlying support. Traders see corn plantings near 86% complete for tonight's weekly update and a good start for the crops already emerged. Weekly export inspections came in at 26.8 million bushels which was slightly below trade expectations and compares with 34.6 million bushels per week to reach the USDA projection. While none of the Midwest needs rain right now, traders see the southern Midwest as too dry in the two week outlook and if this forecast is correct, this region may be in need of wetter weather ahead and the dry outlook may have helped slow the selling. December corn closed slightly higher on the session but down 7 1/4 cents from the early peak. July Rice finished down 0.105 at 15.6, 0.08 off the high and 0.08 up from the low.
Market Recap: Corn Futures (Source: CME)
May corn futures expired steady at $6.08; July through May 2013 futures were steady to 3 1/4 cents higher; and farther deferred months were pennies lower. This was a low-range close for most contracts. Corn futures initially benefitted from some spread unwinding amid concern about tight old-crop supplies.
GRAINS-U.S. soybean futures hit 6-wk low as funds sell long positions
SYDNEY, May 14 (Reuters) - U.S. soybean futures fell to six-week lows, dragged down by continued selling of long positions by funds and on concerns over the strength of the global economy.
"There has been a lot of talk about funds being very long on beans, and this is more liquidation after the U.S. Department of Agriculture report last week," said Brett Cooper, senior manager, markets at FC Stone Australia.
Thailand pushes regional rice pact again as exports slump
BANGKOK, May 14 (Reuters) - Thailand, the world's biggest rice exporter, is trying to reach a deal on rice cooperation with Vietnam and Cambodia as Thai government stocks are at record highs, but similar efforts have failed in the past and traders expect little success this time.
"We are to hold a meeting in Bangkok by the end of May and there will be senior officials from those countries at the meeting," said Manat Soiploy, who oversees the rice trade at the Commerce Ministry. He had no precise date for the meeting.
Argentine grains workers end strike, agree to talk
BUENOS AIRES, May 11 (Reuters) - Workers at one of Argentina's biggest grains ports have lifted a strike and agreed to respect a Labor Ministry order for talks to resolve the pay dispute, union and industry sources said on Friday.
High inflation is fueling labor unrest in the South American country -- one of the world's biggest suppliers of soy, corn and wheat. But the government has been intervening swiftly to avert disruption to the nation's key agriculture exports.
Ag Growth profit rises on strong equipment demand
May 8 (Reuters) - Ag Growth International Inc , a portable grain handling equipment maker, reported a 13 percent rise in quarterly profit on strong demand.
The company, which makes grain handling equipment, storage bins and belt conveyors, said it expects a strong corn planting season in the United States to drive demand for its portable grain handling equipment.
DJ Arabica-Robusta Price Gap Narrows; Blends Unlikely To Change
-Difference in prices ends day at 81.419 cents a pound
--Roasters likely to keep current blends as long as customers buy
--Arabica prices down more than 23% this year, while robusta is up 20%
By Leslie Josephs and Neena Rai Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The price gap between arabica and robusta coffee is near its narrowest in almost two years, as arabica prices slip while robusta perks up. The front-month spread settled Monday at 81.419 cents a pound. Robusta for May delivery on London's Liffe exchange settled up 0.8% at $2,116 a ton, while arabica for May delivery gained 0.5% to settle at $1.7740 a pound on the ICE Futures U.S. exchange. The difference in prices is closely watched by coffee roasters, who often substitute some less-expensive robusta for arabica in their beverages when arabica prices are high. This time, however, it is unlikely that roasters will change their blends. "If they maximized the number of robustas, if it was accepted by the customers, there's really no reason to go back," said an executive at a major U.S. coffee roaster. "In the end, it's the customer who dictates what they buy."
Substitution was in earnest last year, when arabica prices soared to a 14-year high. This year, arabica futures have dropped more than 23% as a larger on-cycle harvest from top grower Brazil has weighed on prices. At the same time, robusta futures have gained close to 20%, in part due to farmers in Vietnam, the world's largest producer of the coffee variety, holding on to their crops while waiting for higher prices. Brazilian farmers are expected to use that same strategy later this year, which could support prices for arabica. "The expectation is that the roaster buying should materialize in the coming months and that Brazilian [farmers] selling as soon as they have the beans might be overly optimistic," said Keith Flury, a senior commodities analyst at Rabobank. Roberio Oliveira Silva, head of the London-based International Coffee Organization, recently said arabica prices will likely rise in the second half of 2012.
"There is strong demand, but actually, we're not seeing much coffee on the market. And I don't think the Brazil crop will bring loads of coffee. So, the future is definitely brighter," he said in an interview.
Ivory Coast's Sifca looks to central Africa
ADDIS ABABA, May 11 (Reuters) - Ivory Coast agro-industry group Sifca is looking to set up rubber and palm oil plantations in central Africa to boost output and is also eyeing rice production at home, the company's chairman said on Friday
Sifca, one of the biggest companies in the West African country, is part-owned by Singapore's Olam International and Wilmar International .
India issues formal order freeing up sugar exports
NEW DELHI, May 14 (Reuters) - India has issued a formal order freeing up sugar exports, a government statement said, after ministers agreed to permit shipments without any cap on May 2 to help mills clear some dues they owe to cane growers.
Exporters would not need permission for shipments from the food ministry but they must disclose the quantities sold overseas, said the statement issued late on Friday.
Brazil's 2012/13 coffee crop 55.3 mln bags-Neumann
HAMBURG, May 11 (Reuters) - Brazil's 2012/13 coffee harvest now starting will reach 55.3 million 60-kg bags, giant German coffee trader Neumann Kaffee Gruppe (NKG) said in a report seen by Reuters on Friday.
This will comprise 36.5 million bags of arabica and 18.8 million bags of conillon robusta, Neumann forecast.
ISO sees global sugar surplus halving to 3 mln t 2012/13
LONDON, May 11 (Reuters) - The global sugar surplus is forecast to halve to around 3 million tonnes in 2012/13 (October-September) from a surplus of 6.5 million tonnes in 2011/12, the International Sugar Organization (ISO) said on Friday.
The London-based ISO said in its latest quarterly report that key producers were unlikely to increase their output to keep pace with a 2 percent rise in annual demand.
Maintenance neglect to hurt Ivorian cocoa output
SOUBRE, Ivory Coast, May 11 (Reuters) - Cocoa farmers in Ivory Coast's south and southwestern regions expect a drop in output this year due to a lack of maintenance on plantations and poor weather, though quality is improving as the mid-crop harvest gains momentum.
Farmers in Duekoue, Soubre, Gagnoa and Divo said they have lacked the funds to invest in fertilisers and chemical treatments on plantations in the regions, which count for around half of production in the world's top cocoa producer.
Australia says shale could double its gas resources
ADELAIDE, May 14 (Reuters) - Australia, the world's fourth-largest exporter of liquefied natural gas (LNG), could have enough shale gas resources to double its gas resource base and expand its growing export industry, a government report said on Monday.
Australia has around 390 trillion cubic feet in gas resources, excluding shale gas, ranking third behind coal and uranium as the country's largest energy resource, according to the report conducted by Geoscience Australia and the Australian Bureau of Resources and Energy Economics.
Saudi wish for $100 oil may be hard to grant
--Clyde Russell is a Reuters market analyst. The views expressed are his own--
ADELAIDE, Australia, May 14 (Reuters) - It's all very well for Saudi Arabia to say Brent crude should drop to $100 a barrel, but it's another matter entirely as to whether the world's biggest oil exporter can actually make that happen.
The problem is that when producers wish to raise prices by reducing supply, they are generally successful.
But when they want to lower prices, mainly by boosting supply, they are less successful as more oil in the market doesn't necessarily remove the reasons prices are high in the first place.
OIL-Brent drops below $112 as Greece clouds demand outlook
SINGAPORE, May 14 (Reuters) - Brent crude slipped below $112 on a worsening oil demand outlook after talks to form a new government in Greece failed, and as signs of a slowing Chinese economy outweighed the country's latest move to ease monetary conditions.
"The path of least resistance for oil is down, on sentiment on the euro zone and weak data from China on Friday," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
Oil Falls for Third Day as U.S. Stockpiles Seen Rising in Survey (Source: Bloomberg)
Oil fell for a third day in New York before a report that may show U.S. crude stockpiles rose to the highest level in almost 22 years. Futures dropped as much as 0.9 percent, after closing yesterday at the lowest price in almost five months. U.S. crude stockpiles probably climbed 1.5 million barrels last week to 381 million, the most since August 1990, according to the median estimate in a Bloomberg News survey before a government report this week. Oil also declined with stocks and the euro as Greece struggled to form a government, raising concern that Europe’s debt crisis will worsen. Crude for June delivery fell as much as 87 cents to $93.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.28 at 7:49 a.m. Singapore time. Prices dropped 1.4 percent to $94.78 yesterday, the lowest close since Dec. 19, and are down 4.6 percent this year.
Brent for June settlement slid 69 cents, or 0.6 percent, to $111.57 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $16.79, the highest since April 13. Talks between Greece’s main parties following elections on May 6 have failed to reach agreement on forming a coalition. The nation, whose 10-year debt yields more than 25 percent, decides today whether to pay 436 million euros ($559 million) to bondholders who shunned a debt swap last month.
Biggest Ship Hedge Fund Turns Bullish on Supertankers: Freight (Source: Bloomberg)
The biggest hedge fund in shipping is turning bullish on the largest oil tankers for the first time in four years as the U.S. push toward energy independence provides China with a greater share of global crude supply. The U.S. is importing the least in 13 years as China buys more than ever, lengthening voyages for tankers and effectively reducing the fleet’s capacity, government data show. Very large crude carriers, each hauling 2 million barrels, will earn $40,000 a day this year, 81 percent more than in 2011, said Andreas Vergottis, the Hong Kong-based research director of Tufton Oceanic Ltd., which manages about $1.3 billion of assets.
Chinese demand for tankers jumped 39 percent in the past three years to fuel an economy expanding at more than three times the pace of the U.S. The buying extends from Angola to Venezuela, changing trade patterns and boosting demand for the largest vessels. The rate projected by Vergottis is almost twice the $20,946 anticipated by forward freight agreements, traded by brokers and used to bet on future costs. “No one has yet woken up to this new regime,” he said. “The reduction in U.S. oil imports is actually good, because VLCCs will take that oil to Asia long-haul from the Atlantic.”
20120515 1004 Soy Oil & Palm Oil Related News.
ITS CPO export up 0.7% to 599,044 tonnes for the period of 1~15 May 2012.
SGS CPO export down 7% to 564,477 tonnes for the period of 1~15 May 2012.
DJ Asian Crude Palm Oil Falls To 3-Month Low On Europe Worries
(2012/05/14 19:10PM)
KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange slipped to a three-month low Monday, after sharp losses in European markets spurred selling across most asset classes amid worries about Greece and global growth. The benchmark July contract on the Bursa Malaysia Derivatives fell sharply during afternoon trade after Greece's latest attempt to form a coalition government failed, raising fears that the country may exit the euro zone.
The contract ended 3.8% lower at MYR3,150 a metric ton after falling as much as 4% to MYR3,145/ton, the lowest level since Feb. 10. July soyoil on the Chicago Board of Trade was trading 2.1% lower at 51.15 cents a pound by the end of trade on the BMD.
Palm oil prices also eased despite a move by China's central bank to cut its reserve requirement ratio, as "investors are taking [the cut] as a sign that things are not going well in China and its economy is weakening, raising concerns that its appetite for commodities may ease," an analyst at a Singapore-based bank said.
With further worries over Europe, palm oil prices remain vulnerable to further selling in coming sessions, with analysts tipping CPO to slip to MYR3,100/ton, even as export demand for the commodity remains firm. Palm oil exports during the first 15 days of May probably reached 599,000 tons, three trading executives said separately.
The May 1-15 export estimate is up 0.8% compared with the April 1-15 estimate of 594,798 tons by cargo surveyor Intertek Agri Services but down 1.1% when compared with SGS (Malaysia) Bhd.'s estimate of 606,804 tons. Both surveyors are expected to issue May 1-15 export estimates Tuesday.
Separately, Malaysia may find it hard to reach its 2012 palm oil production forecast of 19.3 million tons this year due to a dearth of plantation workers to harvest oil palm fruits in plantation estates, a government official said on the sidelines of an industry seminar.
Any palm production weakness in Southeast Asia may tighten further global vegoil supplies and may limit further price declines.
In the cash market, refined palm olein for May/June shipment was offered $35 lower at $1,060/ton, while cash CPO for prompt shipment was also offered MYR90 lower at MYR3,220/ton.
Open interest on the BMD was 122,887 lots, versus 123,267 lots Friday. One lot is equivalent to 25 tons. A total of 40,345 lots of CPO were traded versus 27,297 lots Friday.
Soybeans Fall to Six-Week Low on Slowing Global Growth (Source: Bloomberg)
Soybeans fell to the lowest in more than six weeks on speculation that Europe’s worsening debt crisis and slowing Chinese economy will curb demand for food, feed and fuel made from the oilseed. Corn rose. The dollar climbed to a three-month high versus the euro, increasing costs for overseas buyers of U.S. grains and reducing investor demand for commodities as a hedge against inflation. JPMorgan Chase & Co. and Citigroup Inc. cut Chinese growth forecasts after government reports last week showed industrial production grew at the slowest pace since 2009 in April. “Soybeans are trading lower on forecasts for slowing global growth,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview. “Speculators are dumping long positions in soybeans.”
Soybean futures for July delivery declined 1.4 percent to close at $13.87 a bushel at 1:15 p.m. on the Chicago Board of Trade, the fifth drop in six sessions. Earlier, the most-active contract touched $13.76, the lowest since March 30. Corn futures for July delivery rose 0.3 percent to $5.83 a bushel in Chicago. On May 11, the grain touched $5.7225, the lowest since Oct. 3. Prices have fallen 9.8 percent this year as U.S. farmers told the government in March they intend to plant the most acres since 1937.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 19 at 1387, 19 3/4 off the high and 11 up from the low. November Soybeans closed down 26 1/2 at 1294 3/4. This was 1 1/4 up from the low and 29 1/2 off the high. July Soymeal closed down 5 at 403.5. This was 5.1 up from the low and 6.4 off the high. July Soybean Oil finished down 0.94 at 51.3, 1.13 off the high and 0.33 up from the low. July soybeans closed moderately lower on the session and pushed to the lowest level since March 30th but the low was early in the day and the market closed well up from these early lows. Talk that there will be more planted acres than the March 30th USDA intentions report plus ideas that the winter wheat crop will be harvested earlier than normal which could benefit double-cropped soybeans helped to pressure. Long liquidation selling from fund traders appears to be the key bearish force today. The market saw bearish news from outside markets, good weather and a lack of new export news as reasons for the continued long liquidation selling trend early today. A sharp break in the stock market, a jump in the US dollar and weakness in metal and energy markets helped to pressure early. European financial concerns and a lack of a reaction to news of further easing in China added to the negative tone early today. Traders see planting progress near 42% complete for this afternoon's weekly update and a dry forecast for the week suggests a very active planting week ahead. The NOPA crush report this morning was considered bearish on demand as the April crush came in at just 131.7 million bushels which was about 3 million below trade expectations. Oil stocks were higher than expected at 2.385 billion pounds. Weekly export inspections came in at 20.3 million bushels which was well above trade expectations and compares with 11.9 million bushels per week to reach the USDA projection.
Market Recap: Soybean Futures (Source: CME)
Soybean futures finished 19 to 26 3/4 cents lower in the July through March 2013 contracts. Far-deferred futures finished with slightly lesser losses. May soybean futures expired 14 cents lower at $13.90. New-crop futures led losses and closed near session lows. Soybean futures were pressured by outside markets as investors took a broad, risk-off stance amid building concerns in the euro-zone.
VEGOILS-Palm oil drops to 3-month low, Greek turmoil weighs
SINGAPORE, May 14 (Reuters) - Malaysian palm oil futures extended losses to a near 3-month low, as failed talks to form a new Greek government heightened fears over the euro zone debt crisis.
"Political uncertainty in euro zone and a gloomy global economic outlook weighed on the market. Weakness in Malaysian palm overnight is also a factor," said a trader with a local commodities brokerage in Malaysia, referring to palm oil futures that slipped to a 9-week low on Friday.
China May soy imports seen at 6-mth high - Mofcom
BEIJING, May 14 (Reuters) - China, the world's top soy buyer, is likely to import 5.63 million tonnes of the oilseed in May, the commerce ministry estimated on Monday, up 15 percent from actual arrivals of 4.88 million tonnes in April.
The figure, the highest since last November, is in line with analyst estimates of 5.7-6.0 million tonnes. Chinese crushers have increased imports on encouraging crushing margins.
Rains hold back Argentine soy harvest pace
BUENOS AIRES, May 11 (Reuters) - Argentina's 2011/12 soybean harvest slowed down in the last week because of rain in some areas, the Agriculture Ministry said on Friday in its latest weekly crop progress report.
The South American country is the world's top supplier of soyoil and soymeal. The government predicts soy output of 42.9 million tonnes this season after a drought in December and early January slashed initial expectations for a bumper crop.
On verge of 22-hour grain trading, an era passes
CHICAGO, May 10 (Reuters) - The ka-chunk, ka-chunk of punch clocks echoed across the silent trading floor at the Chicago Board of Trade, as a tiny group of traders gathered at the soybean oil pit for a ritual as routine as the seasons -- the U.S. government's monthly crop report.
But now, for one last time, these traders were allowed a luxury that some had taken for granted: time.
India's April vegoil imports rise; refined palm down
MUMBAI, May 11 (Reuters) - India's vegetable oils imports in April rose 27 percent from a month earlier largely on a surge in crude palm oil and soyoil purchases, but imports of refined palm oil dropped as buyers feared they could face fresh import duties, a trade body said.
India, the world's largest vegetable oil importer, buys mainly palm oils from Indonesia and Malaysia, and a small quantity of soyoil from Brazil and Argentina.
Louis Dreyfus Said to Invest $150 Million in Malaysia’s Felda (Source: Bloomberg)
Louis Dreyfus Holding BV agreed to pay about $150 million for a stake in Felda Global Ventures Holdings Bhd. ahead of the Malaysian company’s initial public offering, said two people with knowledge of the matter. Louis Dreyfus will hold about 2.5 percent of Felda Global after its share sale, the people said, declining to be identified as the details are private. The commodities company will buy shares at the same price as global institutional investors in the IPO, they said. Felda Global may raise as much as $3.3 billion in Asia’s biggest initial public offering since February 2011, people with knowledge of the matter said last month. The palm oil, rubber and cocoa producer may list as early as this month or in June to take advantage of strong palm oil prices, Chairman Mohd Isa Abdul Samad told reporters on April 25.
Louis Dreyfus Chairman told French daily Les Echos in an interview that the firm may take a stake in Felda Global as part of an industrial partnership the two companies have agreed on. Sabri Ahmad, Felda’s group managing director, is traveling overseas and not immediately available for comment, a spokesman said. Felda Global manages oil palm and some rubber estates for the Federal Land Development Authority, a Malaysian government agency. It has about 355,864 hectares (878,984 acres) of plantations in Malaysia in addition to land in Indonesia. The company also has palm oil refining businesses in China, Indonesia, Turkey and South Africa, according to a draft prospectus for the IPO.
Counter-measures for palm oil
A proposal to set up a Consortium of Independent Producers and Refiners of Malaysia (CIPROM) is being deliberated as one of the strategies under the Government‟s palm oil policy reforms, said a source close to the plantation industry. The source said CIPROM could be one way for the Government to counter the Indonesian low palm oil export duty regime which made the Malaysian independent palm oil refiners‟ business uncompetitive following the supply of „cheaper incoming‟ crude palm oil (CPO) and „competitive outgoing‟ refined palm products such as R&D (refined, bleached and deodorized) palm olein from Indonesia. (StarBiz)
Hamzah Zainudin, Malaysia’s deputy plantation industries and commodities minister, said the country needs to attract locals to replace overseas workers in the palm-oil industry, which is facing an “acute” labor shortage. “The acute shortage of skilled and unskilled workers in oil-palm plantations is due, in part, to the demanding nature of the work in estates and the growing number of attractive alternative job opportunities in other industries. These workers are needed for all key activities, such as land preparation, nurseries, planting, fertilizer application, field upkeep and maintenance, harvesting, collection and transportation. According to a survey conducted by the Malaysian Palm Oil Board, there is a shortage of about 35,473 workers for various job categories in oil-palm plantations throughout the country in 2011.” (Bloomberg)
SGS CPO export down 7% to 564,477 tonnes for the period of 1~15 May 2012.
DJ Asian Crude Palm Oil Falls To 3-Month Low On Europe Worries
(2012/05/14 19:10PM)
KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange slipped to a three-month low Monday, after sharp losses in European markets spurred selling across most asset classes amid worries about Greece and global growth. The benchmark July contract on the Bursa Malaysia Derivatives fell sharply during afternoon trade after Greece's latest attempt to form a coalition government failed, raising fears that the country may exit the euro zone.
The contract ended 3.8% lower at MYR3,150 a metric ton after falling as much as 4% to MYR3,145/ton, the lowest level since Feb. 10. July soyoil on the Chicago Board of Trade was trading 2.1% lower at 51.15 cents a pound by the end of trade on the BMD.
Palm oil prices also eased despite a move by China's central bank to cut its reserve requirement ratio, as "investors are taking [the cut] as a sign that things are not going well in China and its economy is weakening, raising concerns that its appetite for commodities may ease," an analyst at a Singapore-based bank said.
With further worries over Europe, palm oil prices remain vulnerable to further selling in coming sessions, with analysts tipping CPO to slip to MYR3,100/ton, even as export demand for the commodity remains firm. Palm oil exports during the first 15 days of May probably reached 599,000 tons, three trading executives said separately.
The May 1-15 export estimate is up 0.8% compared with the April 1-15 estimate of 594,798 tons by cargo surveyor Intertek Agri Services but down 1.1% when compared with SGS (Malaysia) Bhd.'s estimate of 606,804 tons. Both surveyors are expected to issue May 1-15 export estimates Tuesday.
Separately, Malaysia may find it hard to reach its 2012 palm oil production forecast of 19.3 million tons this year due to a dearth of plantation workers to harvest oil palm fruits in plantation estates, a government official said on the sidelines of an industry seminar.
Any palm production weakness in Southeast Asia may tighten further global vegoil supplies and may limit further price declines.
In the cash market, refined palm olein for May/June shipment was offered $35 lower at $1,060/ton, while cash CPO for prompt shipment was also offered MYR90 lower at MYR3,220/ton.
Open interest on the BMD was 122,887 lots, versus 123,267 lots Friday. One lot is equivalent to 25 tons. A total of 40,345 lots of CPO were traded versus 27,297 lots Friday.
Soybeans Fall to Six-Week Low on Slowing Global Growth (Source: Bloomberg)
Soybeans fell to the lowest in more than six weeks on speculation that Europe’s worsening debt crisis and slowing Chinese economy will curb demand for food, feed and fuel made from the oilseed. Corn rose. The dollar climbed to a three-month high versus the euro, increasing costs for overseas buyers of U.S. grains and reducing investor demand for commodities as a hedge against inflation. JPMorgan Chase & Co. and Citigroup Inc. cut Chinese growth forecasts after government reports last week showed industrial production grew at the slowest pace since 2009 in April. “Soybeans are trading lower on forecasts for slowing global growth,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview. “Speculators are dumping long positions in soybeans.”
Soybean futures for July delivery declined 1.4 percent to close at $13.87 a bushel at 1:15 p.m. on the Chicago Board of Trade, the fifth drop in six sessions. Earlier, the most-active contract touched $13.76, the lowest since March 30. Corn futures for July delivery rose 0.3 percent to $5.83 a bushel in Chicago. On May 11, the grain touched $5.7225, the lowest since Oct. 3. Prices have fallen 9.8 percent this year as U.S. farmers told the government in March they intend to plant the most acres since 1937.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 19 at 1387, 19 3/4 off the high and 11 up from the low. November Soybeans closed down 26 1/2 at 1294 3/4. This was 1 1/4 up from the low and 29 1/2 off the high. July Soymeal closed down 5 at 403.5. This was 5.1 up from the low and 6.4 off the high. July Soybean Oil finished down 0.94 at 51.3, 1.13 off the high and 0.33 up from the low. July soybeans closed moderately lower on the session and pushed to the lowest level since March 30th but the low was early in the day and the market closed well up from these early lows. Talk that there will be more planted acres than the March 30th USDA intentions report plus ideas that the winter wheat crop will be harvested earlier than normal which could benefit double-cropped soybeans helped to pressure. Long liquidation selling from fund traders appears to be the key bearish force today. The market saw bearish news from outside markets, good weather and a lack of new export news as reasons for the continued long liquidation selling trend early today. A sharp break in the stock market, a jump in the US dollar and weakness in metal and energy markets helped to pressure early. European financial concerns and a lack of a reaction to news of further easing in China added to the negative tone early today. Traders see planting progress near 42% complete for this afternoon's weekly update and a dry forecast for the week suggests a very active planting week ahead. The NOPA crush report this morning was considered bearish on demand as the April crush came in at just 131.7 million bushels which was about 3 million below trade expectations. Oil stocks were higher than expected at 2.385 billion pounds. Weekly export inspections came in at 20.3 million bushels which was well above trade expectations and compares with 11.9 million bushels per week to reach the USDA projection.
Market Recap: Soybean Futures (Source: CME)
Soybean futures finished 19 to 26 3/4 cents lower in the July through March 2013 contracts. Far-deferred futures finished with slightly lesser losses. May soybean futures expired 14 cents lower at $13.90. New-crop futures led losses and closed near session lows. Soybean futures were pressured by outside markets as investors took a broad, risk-off stance amid building concerns in the euro-zone.
VEGOILS-Palm oil drops to 3-month low, Greek turmoil weighs
SINGAPORE, May 14 (Reuters) - Malaysian palm oil futures extended losses to a near 3-month low, as failed talks to form a new Greek government heightened fears over the euro zone debt crisis.
"Political uncertainty in euro zone and a gloomy global economic outlook weighed on the market. Weakness in Malaysian palm overnight is also a factor," said a trader with a local commodities brokerage in Malaysia, referring to palm oil futures that slipped to a 9-week low on Friday.
China May soy imports seen at 6-mth high - Mofcom
BEIJING, May 14 (Reuters) - China, the world's top soy buyer, is likely to import 5.63 million tonnes of the oilseed in May, the commerce ministry estimated on Monday, up 15 percent from actual arrivals of 4.88 million tonnes in April.
The figure, the highest since last November, is in line with analyst estimates of 5.7-6.0 million tonnes. Chinese crushers have increased imports on encouraging crushing margins.
Rains hold back Argentine soy harvest pace
BUENOS AIRES, May 11 (Reuters) - Argentina's 2011/12 soybean harvest slowed down in the last week because of rain in some areas, the Agriculture Ministry said on Friday in its latest weekly crop progress report.
The South American country is the world's top supplier of soyoil and soymeal. The government predicts soy output of 42.9 million tonnes this season after a drought in December and early January slashed initial expectations for a bumper crop.
On verge of 22-hour grain trading, an era passes
CHICAGO, May 10 (Reuters) - The ka-chunk, ka-chunk of punch clocks echoed across the silent trading floor at the Chicago Board of Trade, as a tiny group of traders gathered at the soybean oil pit for a ritual as routine as the seasons -- the U.S. government's monthly crop report.
But now, for one last time, these traders were allowed a luxury that some had taken for granted: time.
India's April vegoil imports rise; refined palm down
MUMBAI, May 11 (Reuters) - India's vegetable oils imports in April rose 27 percent from a month earlier largely on a surge in crude palm oil and soyoil purchases, but imports of refined palm oil dropped as buyers feared they could face fresh import duties, a trade body said.
India, the world's largest vegetable oil importer, buys mainly palm oils from Indonesia and Malaysia, and a small quantity of soyoil from Brazil and Argentina.
Louis Dreyfus Said to Invest $150 Million in Malaysia’s Felda (Source: Bloomberg)
Louis Dreyfus Holding BV agreed to pay about $150 million for a stake in Felda Global Ventures Holdings Bhd. ahead of the Malaysian company’s initial public offering, said two people with knowledge of the matter. Louis Dreyfus will hold about 2.5 percent of Felda Global after its share sale, the people said, declining to be identified as the details are private. The commodities company will buy shares at the same price as global institutional investors in the IPO, they said. Felda Global may raise as much as $3.3 billion in Asia’s biggest initial public offering since February 2011, people with knowledge of the matter said last month. The palm oil, rubber and cocoa producer may list as early as this month or in June to take advantage of strong palm oil prices, Chairman Mohd Isa Abdul Samad told reporters on April 25.
Louis Dreyfus Chairman told French daily Les Echos in an interview that the firm may take a stake in Felda Global as part of an industrial partnership the two companies have agreed on. Sabri Ahmad, Felda’s group managing director, is traveling overseas and not immediately available for comment, a spokesman said. Felda Global manages oil palm and some rubber estates for the Federal Land Development Authority, a Malaysian government agency. It has about 355,864 hectares (878,984 acres) of plantations in Malaysia in addition to land in Indonesia. The company also has palm oil refining businesses in China, Indonesia, Turkey and South Africa, according to a draft prospectus for the IPO.
Counter-measures for palm oil
A proposal to set up a Consortium of Independent Producers and Refiners of Malaysia (CIPROM) is being deliberated as one of the strategies under the Government‟s palm oil policy reforms, said a source close to the plantation industry. The source said CIPROM could be one way for the Government to counter the Indonesian low palm oil export duty regime which made the Malaysian independent palm oil refiners‟ business uncompetitive following the supply of „cheaper incoming‟ crude palm oil (CPO) and „competitive outgoing‟ refined palm products such as R&D (refined, bleached and deodorized) palm olein from Indonesia. (StarBiz)
Hamzah Zainudin, Malaysia’s deputy plantation industries and commodities minister, said the country needs to attract locals to replace overseas workers in the palm-oil industry, which is facing an “acute” labor shortage. “The acute shortage of skilled and unskilled workers in oil-palm plantations is due, in part, to the demanding nature of the work in estates and the growing number of attractive alternative job opportunities in other industries. These workers are needed for all key activities, such as land preparation, nurseries, planting, fertilizer application, field upkeep and maintenance, harvesting, collection and transportation. According to a survey conducted by the Malaysian Palm Oil Board, there is a shortage of about 35,473 workers for various job categories in oil-palm plantations throughout the country in 2011.” (Bloomberg)
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