Dear All,
Will be in oversea trip from tomorrow until 6-June-2012 thus no update between this time frame.
Thursday, May 24, 2012
20120524 1809 FCPO EOD Daily Chart Study.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward again, seller taking profit.
Support : 3050, 3020, 2970, 2950 level.
Resistance : 3070, 3100, 3150, 3200 level.
Comment :
FCPO closed recorded gains with slower volume exchanged. Soy oil price currently trading higher by 1% after overnight closed recorded loss of 3% while crude oil price currently rebounding higher after over closed substantially lower.
Market opened and traded lower during morning session on weak market sentiment due to European development triggered sell down in broad commodities but managed to recover higher on afternoon session on seller profit taking activities covering position ahead of tomorrow export data.
Daily chart analysis revised back to suggesting 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.
20120524 1746 FKLI EOD Daily Chart Study.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller taking profit and reducing position.
Support : 1540, 1530, 1515, 1500 level.
Resistance : 1550, 1565, 1570, 1580 level.
Comment :
FKLI closed recorded gains with decreased volume changed hand doing about 7 points discount compare to cash market that closed higher. Overnight U.S. markets closed mixed recorded small changes and today Asia markets also ended mixed while European markets currently trading little higher.
World market traded mixed on EU summit meeting latest development where leaders having different opinions on how to fight the regions debt crisis and a survey conducted shows that China manufacturing may drop to 7 month low.
Daily chart reading still suggesting a pullback correction phase within a downside biased market development.
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.
20120524 1717 Regional Markets EOD Daily Chart Study.
DJIA chart reading : pullback correction downside biased.
Hang Seng chart reading : pullback correction downside biased
KLCI chart reading : pullback correction downside biased.
20120524 1634 Global Market & Commodities Related News.
Asian shares steadied but remained vulnerable amid signs that European leaders were unable to deliver meaningful measures to resolve the region's deepening debt crisis, heightening the risk of Greece leaving the currency bloc.
U.S. stocks staged a late-day reversal rallying into the close in another volatile session as a sharp rise in materials shares boosted the S&P 500 and gains in Apple helped lift the Nasdaq.
The euro hovered just above its 22-month low against the dollar and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks.
FOREX-Euro shaky on Greece exit fear, near 22-month low
SINGAPORE/SYDNEY, May 24 (Reuters) - The euro hovered just above its 22-month low against the dollar on Thursday and emained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks.
"It's still hard to see what the endgame will be like," a trader at a Japanese bank in Tokyo said.
U.S. wheat and soybean futures rose recovering some losses after two sessions of declines on the back of continued uncertainty surrounding Greece's possible exit from the euro zone.
CME set to extend hours for pit grain trading - traders
Exchange operator CME Group plans to apply for federal approval on Thursday to extend its open-outcry grain trading session, ensuring its raucous Chicago pits will be in full swing before the next major U.S. agricultural report in June, grain traders said after a private meeting with CME officials.
Black Sea wheat crop hit; damage worse without rain
A spring drought in wheat growing regions on the Black Sea has already reduced the outlook for this year's harvest but forecast rains could halt the damage in the coming days and weeks, a crucial period for crop development.
China may hold off on big corn imports until Sept-traders
Feed mills in China, the world's No.2 corn consumer, may hold off on importing large volumes of U.S. corn until September when the Chinese harvest becomes clear, as feed demand may slow and domestic corn output is seen at a record high this year, traders said on Wednesday.
Brent crude climbed above $106 per barrel as traders covered short positions after prices hit their lowest in more than five months the session before on euro zone worries and signs of progress in talks with Iran on its nuclear programme.
About 300,000 bpd Iranian oil lost to market - IEA
PARIS, May 23 (Reuters) - The oil market has lost about 300,000 barrels per day (bpd) of Iranian crude since the announcement of sanctions and an embargo against the Islamic Republic over its nuclear programme, the head of the International Energy Agency (IEA) said on Wednesday.
China's top aluminium province idles plants as demand slows
China's top aluminium-producing province has idled about 700,000 tonnes of capacity in recent months, a senior industry official said, further evidence that slower growth in the world's No. 2 economy is denting the country's appetite for commodities.
China's top aluminium province idles plants as demand slows
HONG KONG, May 24 (Reuters) - China's top aluminium-producing province has idled about 700,000 tonnes of capacity in recent months, a senior industry official said, further evidence that slower growth in the world's No. 2 economy is denting the country's appetite for commodities.
The total reduction could rise to 1.2 million tonnes by the end of the year, Henan Nonferrous Metals Industry Association deputy chairman Liu Libin said, more than a quarter of the province's total capacity.
China iron ore market "steady as it goes" - Rio
SYDNEY, May 24 (Reuters) - Rio Tinto , the world's No.2 producer of iron ore, sees no signs of a slowdown in demand from top consumer China and still plans to almost double its output of the steel-making ingredient by 2016.
Slowing growth in China has rattled commodity markets in recent weeks, prompting sharp falls in some raw materials prices on fears demand will slump.
China nerves delay $1.3 bln Australian iron ore bid
MELBOURNE/SYDNEY, May 24 (Reuters) - China's Hanlong Mining has put back by six months a target date to seal a A$1.34 billion ($1.3 billion) takeover of Australian iron ore group Sundance Resources , as Chinese investment in Australian resource
projects cools this year.
The firms said they had agreed to delay the takeover until November after Hanlong struggled to line up funding from China.
COLUMN-Steel output up but price pressures build
(Andy Home is a Reuters columnist. The opinions expressed are his own)
LONDON, May 23 (Reuters) - Global steel production edged up to a new all-time high of 1.562 billion tonnes annualised in April, according to the latest estimate from the World Steel Association (WSA).
But momentum is fading.
U.S. copper user, trader attack JP Morgan ETF plan
NEW YORK, May 23 (Reuters) - A major U.S. copper consumer and a trader have lodged the first public opposition to JPMorgan Chase & Co's plan to launch a exchange-traded fund (EFT) physically backed by copper, comparing its impact to the Sumitomo scandal in the 1990s.
Lawyers representing Southwire, one of the largest copper users in the United States, and Red Kite, a major metals hedge fund and physical trader, argued in a letter to the U.S. Securities and Exchange Commission (SEC) this month that such a fund would inflate prices and squeeze supply by removing as much as a third of the London Metal Exchange's copper stocks.
London copper rose 0.8 percent as the market took a breather after sinking to a 4-1/2 month low in the previous session on risk aversion triggered by worries over Greece's possible exit from the euro zone.
Gold hovered near $1,560 an ounce remaining on shaky ground as worries about Greece and the euro zone continued to dominate market sentiment after a European Union summit yielded few practical steps to manage the debt crisis.
METALS-Copper rises from 4-1/2 month low, EU crisis weighs
SINGAPORE, May 24 (Reuters) - London copper rose 0.8 percent on Thursday as the market took a breather after sinking to a 4-1/2 month low in the previous session on risk aversion triggered by worries over Greece's possible exit from the euro zone.
"Prices of copper have come off quite heavily in recent weeks so there might be some sense that maybe it was an overreaction," said Alexandra Knight, an economist with National Australia Bank. "From my perspective Greece will ultimately stay in the euro zone as there will be a lot of resistance to letting it exit."
PRECIOUS-Gold hovers near $1,560/oz; Greece woes feed caution
SINGAPORE, May 24 (Reuters) - Gold hovered near $1,560 an ounce on Thursday, remaining on shaky ground as worries about Greece and the euro zone continued to dominate market sentiment after a European Union summit yielded few practical steps to manage the debt crisis.
"Clients are not too interested in entering the market right now," said a Singapore-based dealer. "They are worried that if Greece eventually pulls out of the euro zone, the euro will fall and drag gold down with it."
U.S. stocks staged a late-day reversal rallying into the close in another volatile session as a sharp rise in materials shares boosted the S&P 500 and gains in Apple helped lift the Nasdaq.
The euro hovered just above its 22-month low against the dollar and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks.
FOREX-Euro shaky on Greece exit fear, near 22-month low
SINGAPORE/SYDNEY, May 24 (Reuters) - The euro hovered just above its 22-month low against the dollar on Thursday and emained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks.
"It's still hard to see what the endgame will be like," a trader at a Japanese bank in Tokyo said.
U.S. wheat and soybean futures rose recovering some losses after two sessions of declines on the back of continued uncertainty surrounding Greece's possible exit from the euro zone.
CME set to extend hours for pit grain trading - traders
Exchange operator CME Group plans to apply for federal approval on Thursday to extend its open-outcry grain trading session, ensuring its raucous Chicago pits will be in full swing before the next major U.S. agricultural report in June, grain traders said after a private meeting with CME officials.
Black Sea wheat crop hit; damage worse without rain
A spring drought in wheat growing regions on the Black Sea has already reduced the outlook for this year's harvest but forecast rains could halt the damage in the coming days and weeks, a crucial period for crop development.
China may hold off on big corn imports until Sept-traders
Feed mills in China, the world's No.2 corn consumer, may hold off on importing large volumes of U.S. corn until September when the Chinese harvest becomes clear, as feed demand may slow and domestic corn output is seen at a record high this year, traders said on Wednesday.
Brent crude climbed above $106 per barrel as traders covered short positions after prices hit their lowest in more than five months the session before on euro zone worries and signs of progress in talks with Iran on its nuclear programme.
About 300,000 bpd Iranian oil lost to market - IEA
PARIS, May 23 (Reuters) - The oil market has lost about 300,000 barrels per day (bpd) of Iranian crude since the announcement of sanctions and an embargo against the Islamic Republic over its nuclear programme, the head of the International Energy Agency (IEA) said on Wednesday.
China's top aluminium province idles plants as demand slows
China's top aluminium-producing province has idled about 700,000 tonnes of capacity in recent months, a senior industry official said, further evidence that slower growth in the world's No. 2 economy is denting the country's appetite for commodities.
China's top aluminium province idles plants as demand slows
HONG KONG, May 24 (Reuters) - China's top aluminium-producing province has idled about 700,000 tonnes of capacity in recent months, a senior industry official said, further evidence that slower growth in the world's No. 2 economy is denting the country's appetite for commodities.
The total reduction could rise to 1.2 million tonnes by the end of the year, Henan Nonferrous Metals Industry Association deputy chairman Liu Libin said, more than a quarter of the province's total capacity.
China iron ore market "steady as it goes" - Rio
SYDNEY, May 24 (Reuters) - Rio Tinto , the world's No.2 producer of iron ore, sees no signs of a slowdown in demand from top consumer China and still plans to almost double its output of the steel-making ingredient by 2016.
Slowing growth in China has rattled commodity markets in recent weeks, prompting sharp falls in some raw materials prices on fears demand will slump.
China nerves delay $1.3 bln Australian iron ore bid
MELBOURNE/SYDNEY, May 24 (Reuters) - China's Hanlong Mining has put back by six months a target date to seal a A$1.34 billion ($1.3 billion) takeover of Australian iron ore group Sundance Resources , as Chinese investment in Australian resource
projects cools this year.
The firms said they had agreed to delay the takeover until November after Hanlong struggled to line up funding from China.
COLUMN-Steel output up but price pressures build
(Andy Home is a Reuters columnist. The opinions expressed are his own)
LONDON, May 23 (Reuters) - Global steel production edged up to a new all-time high of 1.562 billion tonnes annualised in April, according to the latest estimate from the World Steel Association (WSA).
But momentum is fading.
U.S. copper user, trader attack JP Morgan ETF plan
NEW YORK, May 23 (Reuters) - A major U.S. copper consumer and a trader have lodged the first public opposition to JPMorgan Chase & Co's plan to launch a exchange-traded fund (EFT) physically backed by copper, comparing its impact to the Sumitomo scandal in the 1990s.
Lawyers representing Southwire, one of the largest copper users in the United States, and Red Kite, a major metals hedge fund and physical trader, argued in a letter to the U.S. Securities and Exchange Commission (SEC) this month that such a fund would inflate prices and squeeze supply by removing as much as a third of the London Metal Exchange's copper stocks.
London copper rose 0.8 percent as the market took a breather after sinking to a 4-1/2 month low in the previous session on risk aversion triggered by worries over Greece's possible exit from the euro zone.
Gold hovered near $1,560 an ounce remaining on shaky ground as worries about Greece and the euro zone continued to dominate market sentiment after a European Union summit yielded few practical steps to manage the debt crisis.
METALS-Copper rises from 4-1/2 month low, EU crisis weighs
SINGAPORE, May 24 (Reuters) - London copper rose 0.8 percent on Thursday as the market took a breather after sinking to a 4-1/2 month low in the previous session on risk aversion triggered by worries over Greece's possible exit from the euro zone.
"Prices of copper have come off quite heavily in recent weeks so there might be some sense that maybe it was an overreaction," said Alexandra Knight, an economist with National Australia Bank. "From my perspective Greece will ultimately stay in the euro zone as there will be a lot of resistance to letting it exit."
PRECIOUS-Gold hovers near $1,560/oz; Greece woes feed caution
SINGAPORE, May 24 (Reuters) - Gold hovered near $1,560 an ounce on Thursday, remaining on shaky ground as worries about Greece and the euro zone continued to dominate market sentiment after a European Union summit yielded few practical steps to manage the debt crisis.
"Clients are not too interested in entering the market right now," said a Singapore-based dealer. "They are worried that if Greece eventually pulls out of the euro zone, the euro will fall and drag gold down with it."
20120524 1140 Global Market & Commodities Related News.
GLOBAL MARKETS-Asia shares edge up but vulnerable on Greece risks
TOKYO, May 24 (Reuters) - Asian shares were steady but remained vulnerable on Thursday amid signs European leaders were unable to deliver meaningful measures to resolve the region's deepening debt crisis.
"Uncertainty is back and little sign of eased selling by foreign investors does not bode well for the market," Ham Sung-sik, an analyst at Daishin Securities said of Korean shares.
COMMODITIES-Markets plummet; CRB down 2 pct to near 20-mth low
NEW YORK, May 23 (Reuters) - A selloff across commodity markets accelerated o n W ednesday, as mounting fears that Greece will exit the euro zone drove investors to buy U.S. dollars, pushing a benchmark raw materials index to its lowest since September, 2010.
"This is panic selling," Matthew Zeman, head of trading at Kingsview Financial in Chicago, said as the 19-commodity CRB index, a global benchmark, extended the 20-month lows of the previous session. "Everyone is just dumping risk assets right and left."
OIL-Brent crude gains more than $1
SINGAPORE, May 24 (Reuters) - Brent crude oil gained more than $1 per barrel on Thursday, as traders covered short positions after recent falls on worries over the health of the euro zone and signs of progress in talks with Iran on its nuclear programme.
Brent crude futures for July rose $1.10 to $106.66 a barrel by 0137 GMT. U.S. crude was up 84 cents to $90.74 a barrel.
US crude stocks seen rising for 9th straight week
May 22 (Reuters) - U.S. commercial crude oil supplies likely rose for a ninth straight time last week on higher imports, an expanded Reuters poll of analysts showed on Tuesday.
On average, domestic crude oil inventories were forecast up 1 million barrels in the week to May 18, with 10 out of 14 projecting a build in inventories.
NATURAL GAS-US natural gas futures end up for second day
NEW YORK, May 23 (Reuters) - U.S. natural gas futures ended higher on Wednesday for a second straight day, as tighter supply-demand fundamentals and forecasts for warm weather offset early selling on the milder outlook for late next week.
"We're in an uptrend, but the market seems hesitant to break above $2.75 until we see the storage report tomorrow. I think we need another supportive number (light weekly build) to go any higher," said Steve Mosley at SMC Advisory Services in Arkansas.
EURO COAL-Sentiment bearish despite higher ARA trade
LONDON, May 23 (Reuters) - Prices for European delivered coal traded 50 cents higher late on Tuesday after earlier falling by $1.00 on growing bearish sentiment and uncertainty over the real extent of China's rejection of cargoes bought at higher levels.
"Whether they're outright defaulting and refusing to take cargoes or they want a price cut to take them, that's still non-performance," one European trader said.
"But we haven't been offered distressed or heavily-discounted cargoes by anybody yet, so where are they?" he added.
TOKYO, May 24 (Reuters) - Asian shares were steady but remained vulnerable on Thursday amid signs European leaders were unable to deliver meaningful measures to resolve the region's deepening debt crisis.
"Uncertainty is back and little sign of eased selling by foreign investors does not bode well for the market," Ham Sung-sik, an analyst at Daishin Securities said of Korean shares.
COMMODITIES-Markets plummet; CRB down 2 pct to near 20-mth low
NEW YORK, May 23 (Reuters) - A selloff across commodity markets accelerated o n W ednesday, as mounting fears that Greece will exit the euro zone drove investors to buy U.S. dollars, pushing a benchmark raw materials index to its lowest since September, 2010.
"This is panic selling," Matthew Zeman, head of trading at Kingsview Financial in Chicago, said as the 19-commodity CRB index, a global benchmark, extended the 20-month lows of the previous session. "Everyone is just dumping risk assets right and left."
OIL-Brent crude gains more than $1
SINGAPORE, May 24 (Reuters) - Brent crude oil gained more than $1 per barrel on Thursday, as traders covered short positions after recent falls on worries over the health of the euro zone and signs of progress in talks with Iran on its nuclear programme.
Brent crude futures for July rose $1.10 to $106.66 a barrel by 0137 GMT. U.S. crude was up 84 cents to $90.74 a barrel.
US crude stocks seen rising for 9th straight week
May 22 (Reuters) - U.S. commercial crude oil supplies likely rose for a ninth straight time last week on higher imports, an expanded Reuters poll of analysts showed on Tuesday.
On average, domestic crude oil inventories were forecast up 1 million barrels in the week to May 18, with 10 out of 14 projecting a build in inventories.
NATURAL GAS-US natural gas futures end up for second day
NEW YORK, May 23 (Reuters) - U.S. natural gas futures ended higher on Wednesday for a second straight day, as tighter supply-demand fundamentals and forecasts for warm weather offset early selling on the milder outlook for late next week.
"We're in an uptrend, but the market seems hesitant to break above $2.75 until we see the storage report tomorrow. I think we need another supportive number (light weekly build) to go any higher," said Steve Mosley at SMC Advisory Services in Arkansas.
EURO COAL-Sentiment bearish despite higher ARA trade
LONDON, May 23 (Reuters) - Prices for European delivered coal traded 50 cents higher late on Tuesday after earlier falling by $1.00 on growing bearish sentiment and uncertainty over the real extent of China's rejection of cargoes bought at higher levels.
"Whether they're outright defaulting and refusing to take cargoes or they want a price cut to take them, that's still non-performance," one European trader said.
"But we haven't been offered distressed or heavily-discounted cargoes by anybody yet, so where are they?" he added.
20120524 1108 Local & Global Economy Related News.
Malaysia: Economic growth slows as exports slide
Malaysia’s economy grew at a slower pace of 4.7% in the first quarter as compared with 5.2% in the previous quarter as global economic conditions continued to be challenging. Growth was sustained by firm domestic demand even as exports suffered from weak external demand. First quarter exports contracted the most in nine months, slumping 20.8% y-o-y. Construction sector growth, however, surged 15.5% in the first quarter, double the rate of the previous quarter. (Malaysian Insider)
Malaysia: April inflation rate up 1.9% y-o-y as food, non-food costs rise
Malaysia's inflation rate, measured by the consumer price index (CPI), rose 1.9% in April from a year ago due to increases in food and non-food. The increase in CPI from 102.6 to 104.5 is mainly due to the indices of the food and non-alcoholic and non-food, which increased 2.3% and 1.6% from a year ago. (Bloomberg)
China: Pledges more ‘fine-tuning’ in support for growth
China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates. “We must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” the government said. (Bloomberg)
Taiwan: April industrial output falls
Taiwan's industrial output fell for the second straight month in April from a year earlier, due to falling demand for electronic, mechanical and petrochemical products amid the rising global uncertainty associated with the European debt crisis. The industrial output index slid 2.3% y-o-y in April to 129.74. The decline was worse than the median 1.2% drop forecast by 10 economists polled by Dow Jones Newswires, but better than March's revised 3.4% fall. From a month earlier, industrial output decreased 4.0%. (Bloomberg)
UK: Retail sales fall most in 2 years as rain hits demand
UK retail sales fell the most in more than two years in April as record rainfall reduced demand for clothing and fuel sales plunged. Sales including auto fuel declined 2.3% from March, when warm weather helped lift sales by an upwardly revised 2%. Sales excluding fuel dropped 1%, the most for almost a year. (Bloomberg)
Spain: To inject EUR9bn into Bankia
The Spanish government will inject at least EUR9bn into Bankia SA to recapitalize the ailing bank, Spanish Finance Minister Luis de Guindos said. The government will provide funds to cover the bank's provisioning needs, as the bank otherwise is unable to comply with two banking reforms presented this year. Bankia is the third-largest bank in Spain by assets and controls about 10% of the country's loans and deposits. (MarketWatch)
UK: BOE's 'finely balanced' decision keeps QE options open
Bank of England policy makers kept open the possibility that they may resume stimulus again, saying a decision to halt bond purchases this month was "finely balanced" because of risks from the euro area. The central bank said in the minutes of the meeting published today that there was a case for injecting more and it could do so if needed. (Bloomberg)
US: New home sales climb 3.3% in April
Sales of new US houses rose 3.3% in April as the real-estate market continued a slow ascent back to good health. The Commerce Department said new homes in the US were sold at an annual rate of 343,000 last month. In March, the sales rate was revised up to 332,000 from an original reading of 328,000. Over the past three months, sales have averaged 344,000 compared to just 301,000 in the same period one year earlier — a 14% increase. (MarketWatch)
Malaysia’s economy grew at a slower pace of 4.7% in the first quarter as compared with 5.2% in the previous quarter as global economic conditions continued to be challenging. Growth was sustained by firm domestic demand even as exports suffered from weak external demand. First quarter exports contracted the most in nine months, slumping 20.8% y-o-y. Construction sector growth, however, surged 15.5% in the first quarter, double the rate of the previous quarter. (Malaysian Insider)
Malaysia: April inflation rate up 1.9% y-o-y as food, non-food costs rise
Malaysia's inflation rate, measured by the consumer price index (CPI), rose 1.9% in April from a year ago due to increases in food and non-food. The increase in CPI from 102.6 to 104.5 is mainly due to the indices of the food and non-alcoholic and non-food, which increased 2.3% and 1.6% from a year ago. (Bloomberg)
China: Pledges more ‘fine-tuning’ in support for growth
China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates. “We must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” the government said. (Bloomberg)
Taiwan: April industrial output falls
Taiwan's industrial output fell for the second straight month in April from a year earlier, due to falling demand for electronic, mechanical and petrochemical products amid the rising global uncertainty associated with the European debt crisis. The industrial output index slid 2.3% y-o-y in April to 129.74. The decline was worse than the median 1.2% drop forecast by 10 economists polled by Dow Jones Newswires, but better than March's revised 3.4% fall. From a month earlier, industrial output decreased 4.0%. (Bloomberg)
UK: Retail sales fall most in 2 years as rain hits demand
UK retail sales fell the most in more than two years in April as record rainfall reduced demand for clothing and fuel sales plunged. Sales including auto fuel declined 2.3% from March, when warm weather helped lift sales by an upwardly revised 2%. Sales excluding fuel dropped 1%, the most for almost a year. (Bloomberg)
Spain: To inject EUR9bn into Bankia
The Spanish government will inject at least EUR9bn into Bankia SA to recapitalize the ailing bank, Spanish Finance Minister Luis de Guindos said. The government will provide funds to cover the bank's provisioning needs, as the bank otherwise is unable to comply with two banking reforms presented this year. Bankia is the third-largest bank in Spain by assets and controls about 10% of the country's loans and deposits. (MarketWatch)
UK: BOE's 'finely balanced' decision keeps QE options open
Bank of England policy makers kept open the possibility that they may resume stimulus again, saying a decision to halt bond purchases this month was "finely balanced" because of risks from the euro area. The central bank said in the minutes of the meeting published today that there was a case for injecting more and it could do so if needed. (Bloomberg)
US: New home sales climb 3.3% in April
Sales of new US houses rose 3.3% in April as the real-estate market continued a slow ascent back to good health. The Commerce Department said new homes in the US were sold at an annual rate of 343,000 last month. In March, the sales rate was revised up to 332,000 from an original reading of 328,000. Over the past three months, sales have averaged 344,000 compared to just 301,000 in the same period one year earlier — a 14% increase. (MarketWatch)
20120524 1107 Malaysia Corporate Related News.
Petronas Chemicals to spend RM2bn in capex this year
Petronas Chemicals Group will invest close to RM2bn in capex this year for its Sabah Ammonia-Urea (Samur) plant in Sipitang, Sabah, as well as for maintenance of its other plants. The company will also soon expand downstream capabilities at its Gebeng Integrated Petrochemical Complex together with its JV partner BASF SA, its chairman Datuk Wan Zulkiflee Wan Ariffin said. (Malaysian Reserve)
TSH to spend RM1bn capex in next 5 years
TSH Resources is looking to spend about RM1bn over the next 5 years to expand its business, which includes buying plantation land in Indonesia and Sabah. Its chairman Datuk Kelvin Tan Aik Pen said the company has the necessary planted areas and matured trees to generate increasing fresh fruit bunch (FFB) production and cash inflow to fund the expansion, hinting that it would likely not involve any borrowings. (Malaysian Reserve)
UOA Development sells building to DKLS for RM94m
UOA Development will dispose of a 14-storey office building to DKLS Industries for RM93.8m. It said its units, Nasib Unggul and Paramount Properties SB, entered into an agreement with DKLS Equity SB, DKLS’s subsidiary for the transaction. (Malaysian Reserves)
Star Publications appoints Tony Fernandes as a director
Star Publications (M) has appointed Tan Sri Tony Fernandes as an independent non-executive director, effective 23 May, according to the publisher. Fernandes succeeds Datuk Wira Syed Abdul Jaabar Syed Hassan, who did not seek re-appointment after the end of his 15-year tenure as a non-executive director. (Malaysian Reserve)
Thai AirAsia IPO set at RM0.37 per share
The offer price for Thai AirAsia’s IPO has been set at THB3.7 (RM0.37) a share, said its major shareholder Asia Aviation Pcl, as the Thai affiliate of AirAsia prepares for a listing at the end of this month. A total of 1.2bn shares would be offered to investors during the subscription period from 23 to 25 May for trading on the Stock Exchange of Thailand soon. (StarBiz)
Ramunia set to exit PN17 status
Ramunia Holdings will complete its financial regularization plan by end-July, said CEO Nor Badli Mohd Alias. After completing its regularization plan, the company intends to apply to Bursa Malaysia to lift its PN17 status. Yesterday also saw the departure of founder, Datuk Azizul Rahman Abdul Samad, from the company’s board, he said after the company AGM yesterday. (StarBiz)
MAS: No plans to revive Firefly jet ops. Malaysian Airline System Bhd (MAS) will not be reviving its subsidiary FlyFirefly Sdn Bhd's jet operations to Sabah and Sarawak anytime soon. MAS took over the jet services of former low-cost unit Firefly between the KL International Airport in Sepang and Sabah and Sarawak last December as part of its wider network rationalisation, leaving Firefly with an all-turboprop fleet. (Source: The Sun)
Federal Land Development Authority (Felda) has teamed up with fellow plantation giant Sime Darby Bhd to make industrial sugar from oil palm biomass. Felda Global Ventures Holdings Bhd president Datuk Sabri Ahmad said returns from the venture would be big if the total costs including logistics to convert the biomass is below US$100 (RM314) per tonne. Oil palm biomass is agriculture wastes such as tree trunks, empty fresh fruit bunches and fronds. Felda and Sime Darby have a formed a special purpose vehicle (SPV) with Malaysia Industry Government High Technology (Might) to undertake the venture. Sabri said the groups are doing a feasibility study. "The three parties are evaluating whether we can convert biomass into non-edible sugar. We are studying all aspects from logistics and systems in the field to transporting the biomass to a central collection centre and processing factory in Pasir Gudang, Johor."If all can be done under US$100 per tonne, then it is commercially viable and the returns are big," Sabri told BT in an interview yesterday. If feasible, MyBiomass will set up a plant that is expected to require 60,000 tonnes of feedstock a day to produce 1.2 million tonnes of sugar a day.(BT)
Khazanah Nasional said its commitment to Malaysia Airlines’ (MAS) recapitalisation exercise is contingent upon the national carrier’s performance. “We can put in the money but we also need to see results because this is public money that we are talking about. It cannot be a bailout.” Khazanah director Tan Sri Azman Mokhtar said. Azman also added, “We need to see results coming through; we need to see Malaysia Airlines’ union, management, board and all stakeholders to work together to advance the company.” The national carrier recently announced a RM9bn fund-raising exercise to pay for aircraft purchases and to finance its working capital. Among the plans is the issuance of up to RM2.5bn in Islamic bonds by June this year. MAS also had said that if its plans fall short, it would rely on parent company Khazanah Nasional to step in to provide financial support in the form of capital equity injections to finance any unfunded aircraft capital expenditure and also working capital needs. (Bernama)
Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such as KWAP, EPF, LTAT and PNB. Other takers may include unit trust and insurance companies," one banking source said. (StarBiz)
AirAsia Group CEO Tan Sri Tony Fernandes has joined the Board of Star Publications (Malaysia) Bhd as Independent Non-Executive Director. In a statement, Star Chairman Tan Sri Dr Fong Chan Onn said: "Fernandes is a farsighted entrepreneur who has built a global brand in AirAsia, and we hope to tap on his insights and exposure in the global stage to grow in Malaysia beyond." Fernandes replaces Datuk Wira Syed Abdul Jaabar Syed Hassan who did not seek re-appointment after serving nearly 15 years as Non-Executive Director. "It is an honour and I look forward to contributing in whatever way I can, as The Star seeks to expand from print to become a multi-channel media company," Fernandes said. (Bernama)
Multi-Purpose Holdings (MPHB) has proposed a demerger that will make it a dividend play with a sustainable payout policy of 80%. The exercise principally involves the separation of MPHB's gaming and non-gaming businesses, which will later be listed on the Main Market of Bursa Malaysia through a special purpose vehicle (SPV). MPHB managing director and major shareholder Datuk Surin Upatkoon said it is the group's vision to become a dividend yielding stock comparable to its rival NFO Berjaya Sports Toto (BToto) and mobile player DiGi.Com. Surin said MPHB will continue to divest some of its non-core assets, which include stockbroking firm AA Anthony. However, it will not dispose of its general insurance business under MPHB Insurans. (Financial Daily)
In a first-of-its-kind lawsuit, a state-sponsored cattle firm is suing Malaysia's third largest lender for reputational loss over an alleged security breach. The National Feedlot Corporation (NFC) issued a statement alleging that Public Bank had allowed the confidential banking information of the firm's chairman and related companies to be "exposed to the world at large". "The security breach by Public Bank had allowed Parti Keadilan Rakyat strategy director Rafizi Ramli to dramatise and sow the seeds of distortions and misrepresentations to defame and damage the reputation and credibility of NFC, its related companies and its chairman with the government and general public as well as with the business and financial communities," NFC said, alleging a breach of the Banking and Financial Institutions Act 1989. The opposition party was the first to blow the whistle on NFC after the Auditor-General in his report last year noted that the firm's accounts were "in a mess". Over the space of several months, Mr Rafizi had held press conferences to detail accounts of how and where the cattle firm had spent a RM250m (S$101.3m) loan that it had received from the government. (Singapore Business Times)
Maxis Bhd's latest fibre internet package is offering new customers high Internet speeds of 10Mbps at RM118 per month with free installation for a limited time only. The new package comes with a 24-month contract. Maxis said more value for money is in store as customers will also have access to unlimited download quotas, allocated free minutes to Maxis mobile numbers and selected IDD destinations, as well as unlimited calls to Maxis fixed lines. Customers will also enjoy free value-added services such as unlimited music downloads through Onemusic, Internet security, as well as free devices. Maxis postpaid customers will get extra 150 minutes on their Maxis mobile every month, at no extra cost. Existing Maxis Home Fibre Internet customers who have completed a minimum of 12 months on their contract are also eligible to migrate to the new package at no extra cost by renewing their contract for 24 months. The Maxis fibre Internet service is built on fibre-to-the-home (FTTH) technology and is available across 1.2m homes and offices in Klang Valley and selected areas in Penang, Johor Bahru, Ipoh and Malacca. (Business Times)
Axiata Group Bhd said there is no need for the company to make further impairment charges on Idea Cellular Ltd for now, even though its investment's market value has shrunk by about one-third. However, it does not discount the possibility of a further impairment in the future, depending on how the India telecommunications industry progresses. "For now, there's no need for further impairments, but we will continue to evaluate periodically. When we evaluate, it's not over a short-term basis, it's a long-term basis where we look at the whole prospect of the company and industry," said president and chief executive officer Datuk Seri Jamaludin Ibrahim after the company's annual general meeting yesterday. On how Axiata plan to utilise its cash pile, the company said it is expected to use part of the cash to reduce borrowings that are incurring higher interest rates, and will continue to be prudent on how it spends the money. (Business Times)
Green Packet Bhd aims to hit RM1bn in revenue by 2015, partly helped by the expansion of its wireless broadband business. "The growth potential in the wireless broadband is huge," said group managing director Puan Chan Cheong in an interview recently. The company - which saw red in its earnings before interest, tax, depreciation and amortisation (EBITDA) for the past four financial years - registered a "positive EBITDA" during the first quarter this year. For the first quarter ended March 31 2012, the company posted a net loss of RM29.74m, compared to RM37.89m net loss in the same quarter last year. Revenue rose by 5% to RM128.17m. The group recorded an EBITDA of RM3.9m for the quarter, a 153% jump yoy. Its P1 pillar contributed about 85% (or RM3.3m) to the group's total EBITDA . "We have invested a total of about RM1bn in capital expenditure. These investments would need to be amortised over a 10-year period. So, this means we are looking at depreciation of about RM100m a year," he said. The company is evaluating a few proposals from investment bankers on the possibility of listing P1 on the stock exchange. He added that the company, as well as P1, remained open to the possibility of merger or partnership with its rivals. "I think the industry is set for a consolidation. I think, eventually, there will be four to five players. We are currently the fourth largest broadband provider, after Telekom Malaysia Bhd, Maxis Bhd, Celcom (Axiata) Bhd," said Puan. (Business Times)
Tan Chong Motor Holdings (TCMB) is confident of recuperating from its first-quarter drop in net profit with the introduction of several models in the 2H of 2012, and positive boost of its quarterly financial results could be realised as early as end-May or early-June. According to Edaran Tan Chong Motor (ETCM) executive director Datuk Dr Ang Bon Beng and TCMH group financial controller Jacylyn Loy, this year's total sales volume, however, is not expected to reach the 2011 level. TCMH said the anticipation of the lower full-year revenue and net profit is in line with the Malaysian Automotive Association's projection of a 12.6% reduction in total industry volume (TIV) from the forecast of 615,000. (Malaysian Reserve)
The US$20bn Petronas’ RAPID project in Pengerang will potentially require 10 to 12 partners, said group COO Datuk Wan Zulkiflee Wan Ariffin. He added that Petronas prefers to finalise the choice of its partners in RAPID before the national oil & gas giant declares its final investment sanctioning, slated to take place in the middle of next year. The project, which was introduced in May 2011 and officially launched a year later, has so far secured the partnership of three corporations. (Star)
SP Setia is said to be one of the bidders that have ended up in an informal shortlist for the Battersea Power Station site in London. Besides SP Setia, a number of other Malaysian developers were among the international bidders for the redevelopment of the 15.8ha site. A good number of the bid "are quite strong" and a decision on the successful bidder is expected soon. (Starbiz)
After recently acquiring 21.3 acres in Tanjung Bungah for RM185.6m, SP Setia is now looking at an adjacent 14-acre site in Penang. "We expect to ink the deal soon. The two properties are an integral part of the group's business plan to launch about RM2.5bn worth of properties on the island this year and 2013," said Datuk S. Rajoo, divisional general manager of SP Setia. SP Setia's plans for Penang include the launch of residential and commercial properties worth over RM638m in the second half of 2012. In 2013, besides the RM1.1bn project in Tanjung Bungah, SP Setia will also launch a RM175m condominium project in Sungai Nibong, and the Wave and Breeze condominium projects for Setia Pearl Island with a GDV of RM350m and RM300m respectively. (StarBiz)
CMS Cement Sdn Bhd, a subsidiary of Cahya Mata Sarawak Bhd (CMS) and the state's sole cement manufacturer, is embarking on an expansion programme with an initial investment of RM150m in its effort to meet the growing demand for the material. "We are still doing the actual costing but when the programme is done, we are optimistic of coping with the increasing demand from the state and particularly from construction activities in its regional development corridor which is the Sarawak Corridor of Renewable Energy (Score). "The state's annual need is 1.66m tonnes and in the last five years, it has registered increases of 10-15%," CMS Group managing director Datuk Richard Curtis told reporters after declaring open the company's RM22m Sibu Bulk Cement Terminal at Upper Lanang Road here yesterday.(BT)
British American Tobacco (BAT) appears to have bucked the trend as the only tobacco company in the country to have increased its market share last year amid an environment fraught with challenges. Its managing director William Toh attributes this to a robust strategy that was put in place two years ago - its strong portfolio of brands and business processes. On the outlook for the current year, Toh said BAT was well positioned to sustain its market share growth momentum although it anticipates challenges such as unlawful activities of certain local brands selling at below the government mandated minimum cigarette price and increasing operating cost pressure. (Malaysian Reserve)
Petronas Chemicals Group will invest close to RM2bn in capex this year for its Sabah Ammonia-Urea (Samur) plant in Sipitang, Sabah, as well as for maintenance of its other plants. The company will also soon expand downstream capabilities at its Gebeng Integrated Petrochemical Complex together with its JV partner BASF SA, its chairman Datuk Wan Zulkiflee Wan Ariffin said. (Malaysian Reserve)
TSH to spend RM1bn capex in next 5 years
TSH Resources is looking to spend about RM1bn over the next 5 years to expand its business, which includes buying plantation land in Indonesia and Sabah. Its chairman Datuk Kelvin Tan Aik Pen said the company has the necessary planted areas and matured trees to generate increasing fresh fruit bunch (FFB) production and cash inflow to fund the expansion, hinting that it would likely not involve any borrowings. (Malaysian Reserve)
UOA Development sells building to DKLS for RM94m
UOA Development will dispose of a 14-storey office building to DKLS Industries for RM93.8m. It said its units, Nasib Unggul and Paramount Properties SB, entered into an agreement with DKLS Equity SB, DKLS’s subsidiary for the transaction. (Malaysian Reserves)
Star Publications appoints Tony Fernandes as a director
Star Publications (M) has appointed Tan Sri Tony Fernandes as an independent non-executive director, effective 23 May, according to the publisher. Fernandes succeeds Datuk Wira Syed Abdul Jaabar Syed Hassan, who did not seek re-appointment after the end of his 15-year tenure as a non-executive director. (Malaysian Reserve)
Thai AirAsia IPO set at RM0.37 per share
The offer price for Thai AirAsia’s IPO has been set at THB3.7 (RM0.37) a share, said its major shareholder Asia Aviation Pcl, as the Thai affiliate of AirAsia prepares for a listing at the end of this month. A total of 1.2bn shares would be offered to investors during the subscription period from 23 to 25 May for trading on the Stock Exchange of Thailand soon. (StarBiz)
Ramunia set to exit PN17 status
Ramunia Holdings will complete its financial regularization plan by end-July, said CEO Nor Badli Mohd Alias. After completing its regularization plan, the company intends to apply to Bursa Malaysia to lift its PN17 status. Yesterday also saw the departure of founder, Datuk Azizul Rahman Abdul Samad, from the company’s board, he said after the company AGM yesterday. (StarBiz)
MAS: No plans to revive Firefly jet ops. Malaysian Airline System Bhd (MAS) will not be reviving its subsidiary FlyFirefly Sdn Bhd's jet operations to Sabah and Sarawak anytime soon. MAS took over the jet services of former low-cost unit Firefly between the KL International Airport in Sepang and Sabah and Sarawak last December as part of its wider network rationalisation, leaving Firefly with an all-turboprop fleet. (Source: The Sun)
Federal Land Development Authority (Felda) has teamed up with fellow plantation giant Sime Darby Bhd to make industrial sugar from oil palm biomass. Felda Global Ventures Holdings Bhd president Datuk Sabri Ahmad said returns from the venture would be big if the total costs including logistics to convert the biomass is below US$100 (RM314) per tonne. Oil palm biomass is agriculture wastes such as tree trunks, empty fresh fruit bunches and fronds. Felda and Sime Darby have a formed a special purpose vehicle (SPV) with Malaysia Industry Government High Technology (Might) to undertake the venture. Sabri said the groups are doing a feasibility study. "The three parties are evaluating whether we can convert biomass into non-edible sugar. We are studying all aspects from logistics and systems in the field to transporting the biomass to a central collection centre and processing factory in Pasir Gudang, Johor."If all can be done under US$100 per tonne, then it is commercially viable and the returns are big," Sabri told BT in an interview yesterday. If feasible, MyBiomass will set up a plant that is expected to require 60,000 tonnes of feedstock a day to produce 1.2 million tonnes of sugar a day.(BT)
Khazanah Nasional said its commitment to Malaysia Airlines’ (MAS) recapitalisation exercise is contingent upon the national carrier’s performance. “We can put in the money but we also need to see results because this is public money that we are talking about. It cannot be a bailout.” Khazanah director Tan Sri Azman Mokhtar said. Azman also added, “We need to see results coming through; we need to see Malaysia Airlines’ union, management, board and all stakeholders to work together to advance the company.” The national carrier recently announced a RM9bn fund-raising exercise to pay for aircraft purchases and to finance its working capital. Among the plans is the issuance of up to RM2.5bn in Islamic bonds by June this year. MAS also had said that if its plans fall short, it would rely on parent company Khazanah Nasional to step in to provide financial support in the form of capital equity injections to finance any unfunded aircraft capital expenditure and also working capital needs. (Bernama)
Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such Malaysia Airlines (MAS) has secured investors, mostly in the form of government-linked investment companies (GLICs) to take up the bonds it will be issuing. "Those that will subscribe to most of the bonds, especially the government guaranteed RM5.3bn bonds, are likely to be institutions such as KWAP, EPF, LTAT and PNB. Other takers may include unit trust and insurance companies," one banking source said. (StarBiz)
AirAsia Group CEO Tan Sri Tony Fernandes has joined the Board of Star Publications (Malaysia) Bhd as Independent Non-Executive Director. In a statement, Star Chairman Tan Sri Dr Fong Chan Onn said: "Fernandes is a farsighted entrepreneur who has built a global brand in AirAsia, and we hope to tap on his insights and exposure in the global stage to grow in Malaysia beyond." Fernandes replaces Datuk Wira Syed Abdul Jaabar Syed Hassan who did not seek re-appointment after serving nearly 15 years as Non-Executive Director. "It is an honour and I look forward to contributing in whatever way I can, as The Star seeks to expand from print to become a multi-channel media company," Fernandes said. (Bernama)
Multi-Purpose Holdings (MPHB) has proposed a demerger that will make it a dividend play with a sustainable payout policy of 80%. The exercise principally involves the separation of MPHB's gaming and non-gaming businesses, which will later be listed on the Main Market of Bursa Malaysia through a special purpose vehicle (SPV). MPHB managing director and major shareholder Datuk Surin Upatkoon said it is the group's vision to become a dividend yielding stock comparable to its rival NFO Berjaya Sports Toto (BToto) and mobile player DiGi.Com. Surin said MPHB will continue to divest some of its non-core assets, which include stockbroking firm AA Anthony. However, it will not dispose of its general insurance business under MPHB Insurans. (Financial Daily)
In a first-of-its-kind lawsuit, a state-sponsored cattle firm is suing Malaysia's third largest lender for reputational loss over an alleged security breach. The National Feedlot Corporation (NFC) issued a statement alleging that Public Bank had allowed the confidential banking information of the firm's chairman and related companies to be "exposed to the world at large". "The security breach by Public Bank had allowed Parti Keadilan Rakyat strategy director Rafizi Ramli to dramatise and sow the seeds of distortions and misrepresentations to defame and damage the reputation and credibility of NFC, its related companies and its chairman with the government and general public as well as with the business and financial communities," NFC said, alleging a breach of the Banking and Financial Institutions Act 1989. The opposition party was the first to blow the whistle on NFC after the Auditor-General in his report last year noted that the firm's accounts were "in a mess". Over the space of several months, Mr Rafizi had held press conferences to detail accounts of how and where the cattle firm had spent a RM250m (S$101.3m) loan that it had received from the government. (Singapore Business Times)
Maxis Bhd's latest fibre internet package is offering new customers high Internet speeds of 10Mbps at RM118 per month with free installation for a limited time only. The new package comes with a 24-month contract. Maxis said more value for money is in store as customers will also have access to unlimited download quotas, allocated free minutes to Maxis mobile numbers and selected IDD destinations, as well as unlimited calls to Maxis fixed lines. Customers will also enjoy free value-added services such as unlimited music downloads through Onemusic, Internet security, as well as free devices. Maxis postpaid customers will get extra 150 minutes on their Maxis mobile every month, at no extra cost. Existing Maxis Home Fibre Internet customers who have completed a minimum of 12 months on their contract are also eligible to migrate to the new package at no extra cost by renewing their contract for 24 months. The Maxis fibre Internet service is built on fibre-to-the-home (FTTH) technology and is available across 1.2m homes and offices in Klang Valley and selected areas in Penang, Johor Bahru, Ipoh and Malacca. (Business Times)
Axiata Group Bhd said there is no need for the company to make further impairment charges on Idea Cellular Ltd for now, even though its investment's market value has shrunk by about one-third. However, it does not discount the possibility of a further impairment in the future, depending on how the India telecommunications industry progresses. "For now, there's no need for further impairments, but we will continue to evaluate periodically. When we evaluate, it's not over a short-term basis, it's a long-term basis where we look at the whole prospect of the company and industry," said president and chief executive officer Datuk Seri Jamaludin Ibrahim after the company's annual general meeting yesterday. On how Axiata plan to utilise its cash pile, the company said it is expected to use part of the cash to reduce borrowings that are incurring higher interest rates, and will continue to be prudent on how it spends the money. (Business Times)
Green Packet Bhd aims to hit RM1bn in revenue by 2015, partly helped by the expansion of its wireless broadband business. "The growth potential in the wireless broadband is huge," said group managing director Puan Chan Cheong in an interview recently. The company - which saw red in its earnings before interest, tax, depreciation and amortisation (EBITDA) for the past four financial years - registered a "positive EBITDA" during the first quarter this year. For the first quarter ended March 31 2012, the company posted a net loss of RM29.74m, compared to RM37.89m net loss in the same quarter last year. Revenue rose by 5% to RM128.17m. The group recorded an EBITDA of RM3.9m for the quarter, a 153% jump yoy. Its P1 pillar contributed about 85% (or RM3.3m) to the group's total EBITDA . "We have invested a total of about RM1bn in capital expenditure. These investments would need to be amortised over a 10-year period. So, this means we are looking at depreciation of about RM100m a year," he said. The company is evaluating a few proposals from investment bankers on the possibility of listing P1 on the stock exchange. He added that the company, as well as P1, remained open to the possibility of merger or partnership with its rivals. "I think the industry is set for a consolidation. I think, eventually, there will be four to five players. We are currently the fourth largest broadband provider, after Telekom Malaysia Bhd, Maxis Bhd, Celcom (Axiata) Bhd," said Puan. (Business Times)
Tan Chong Motor Holdings (TCMB) is confident of recuperating from its first-quarter drop in net profit with the introduction of several models in the 2H of 2012, and positive boost of its quarterly financial results could be realised as early as end-May or early-June. According to Edaran Tan Chong Motor (ETCM) executive director Datuk Dr Ang Bon Beng and TCMH group financial controller Jacylyn Loy, this year's total sales volume, however, is not expected to reach the 2011 level. TCMH said the anticipation of the lower full-year revenue and net profit is in line with the Malaysian Automotive Association's projection of a 12.6% reduction in total industry volume (TIV) from the forecast of 615,000. (Malaysian Reserve)
The US$20bn Petronas’ RAPID project in Pengerang will potentially require 10 to 12 partners, said group COO Datuk Wan Zulkiflee Wan Ariffin. He added that Petronas prefers to finalise the choice of its partners in RAPID before the national oil & gas giant declares its final investment sanctioning, slated to take place in the middle of next year. The project, which was introduced in May 2011 and officially launched a year later, has so far secured the partnership of three corporations. (Star)
SP Setia is said to be one of the bidders that have ended up in an informal shortlist for the Battersea Power Station site in London. Besides SP Setia, a number of other Malaysian developers were among the international bidders for the redevelopment of the 15.8ha site. A good number of the bid "are quite strong" and a decision on the successful bidder is expected soon. (Starbiz)
After recently acquiring 21.3 acres in Tanjung Bungah for RM185.6m, SP Setia is now looking at an adjacent 14-acre site in Penang. "We expect to ink the deal soon. The two properties are an integral part of the group's business plan to launch about RM2.5bn worth of properties on the island this year and 2013," said Datuk S. Rajoo, divisional general manager of SP Setia. SP Setia's plans for Penang include the launch of residential and commercial properties worth over RM638m in the second half of 2012. In 2013, besides the RM1.1bn project in Tanjung Bungah, SP Setia will also launch a RM175m condominium project in Sungai Nibong, and the Wave and Breeze condominium projects for Setia Pearl Island with a GDV of RM350m and RM300m respectively. (StarBiz)
CMS Cement Sdn Bhd, a subsidiary of Cahya Mata Sarawak Bhd (CMS) and the state's sole cement manufacturer, is embarking on an expansion programme with an initial investment of RM150m in its effort to meet the growing demand for the material. "We are still doing the actual costing but when the programme is done, we are optimistic of coping with the increasing demand from the state and particularly from construction activities in its regional development corridor which is the Sarawak Corridor of Renewable Energy (Score). "The state's annual need is 1.66m tonnes and in the last five years, it has registered increases of 10-15%," CMS Group managing director Datuk Richard Curtis told reporters after declaring open the company's RM22m Sibu Bulk Cement Terminal at Upper Lanang Road here yesterday.(BT)
British American Tobacco (BAT) appears to have bucked the trend as the only tobacco company in the country to have increased its market share last year amid an environment fraught with challenges. Its managing director William Toh attributes this to a robust strategy that was put in place two years ago - its strong portfolio of brands and business processes. On the outlook for the current year, Toh said BAT was well positioned to sustain its market share growth momentum although it anticipates challenges such as unlawful activities of certain local brands selling at below the government mandated minimum cigarette price and increasing operating cost pressure. (Malaysian Reserve)
20120524 1105 Global Market Related News.
Asian Stocks Swing Between Gains, Losses on Europe Talks (Source: Bloomberg)
Asian stocks swung between gains and losses as investors await the outcome of a summit in Brussels at which European leaders have clashed over how to fight the region’s debt crisis. Nintendo Co., a maker of video-game players that depends on Europe for a third of its sales, fell 3.6 percent in Tokyo. Hitachi Construction Machinery Co (6305), a Japanese machinery maker that gets 17 percent of its sales in China, gained 0.6 percent ahead a report today on Chinese manufacturing. Hanwha Corp., a trader of petrochemicals and machinery, gained 4.8 percent in Seoul after its construction unit won an $8 billion deal to build housing units in Iraq. The MSCI Asia Pacific Index fell 0.1 percent to 111.90 as of 10:20 a.m. in Tokyo before the Hong Kong market opened. It swung between gains and losses at least four times. “The market is right now confused and obviously worried about whether Greece will end up leaving the euro or not,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is pretty convinced Greece will leave at some stage, but the big difference is if their exit will be orderly or disorderly, and an orderly exit has already been priced into the market.” The Asian Pacific gauge has dropped 13 percent from this year’s high on Feb. 29 as amid investor concerns that Greece may abandon the euro and put other debt-stricken nations such as Italy and Spain at risk. Greece is scheduled to have a second election on June 17 following an inconclusive ballot this month.
China Stock Futures Rise on Government Pledges to Favor Growth (Source: Bloomberg)
China’s stock-index futures rose, signaling gains for the benchmark index, after the nation’s leaders pledged to intensify “fine-tuning” of policies to support growth. Anhui Conch Cement Co. (600585) and China Railway Construction Corp. may gain after the government said it will start a series of infrastructure projects and will speed up construction of railways. China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, may pace losses by shipping lines on concern Europe’s debt crisis will stifle demand for foreign trade. “We may see a new round of stimulus centered on infrastructure construction,” Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. said by phone today. “That’ll help reduce market pessimism.”
Futures on the CSI 300 Index (SHSZ300) expiring in June, the most active contract, gained 0.4 percent to 2,597.6 as of 9:15 a.m. local time. The Shanghai Composite Index (SHCOMP) dropped 9.87 points, or 0.4 percent, to 2,363.44 yesterday. The CSI 300 Index declined 0.4 percent to 2,616.87. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 0.1 percent in New York.
Japan Stocks Swing Between Gain, Loss on Europe Meeting (Source: Bloomberg)
Japanese stocks swung between gains and losses as European leaders debate ways to tackle the debt crisis. Canon Inc. (7751), the camera maker that counts Europe as its biggest market, dropped 3.1 percent. Fanuc Corp., a maker of factory automation systems, and Komatsu Ltd., a heavy equipment exporter, advanced as China said it would undertake more “fine tuning” to boost its economic growth. Inpex Corp., the nation’s largest oil explorer by market value, lost 0.5 percent after crude prices dropped overnight. The Nikkei 225 Stock Average (NKY) was little changed at 8,555.57 as of 10:33 a.m. after swinging between gains and losses in Tokyo, with volume equal to the 30-day average. The broader Topix Index was little changed at 720.72, with about about the same number of shares rising as falling.
Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge rose 0.2 percent in New York yesterday, reversing a decline of as much as 1.5 percent, after Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Federal Reserve has the tools to insulate the U.S. economy should Europe’s debt crisis worsen.
U.S. Stocks Erase Loss Amid Optimism on Europe Efforts (Source: Bloomberg)
U.S. stocks erased early losses amid optimism that European leaders will do more to halt contagion from the region’s debt crisis, helping the market reverse a plunge triggered by growing concern Greece will leave the euro. Bank of America Corp. (BAC), Alcoa Inc. (AA) and FedEx Corp. (FDX) advanced at least 1.4 percent to pace gains among the biggest companies. Facebook Inc. (FB) increased 3.2 percent after losing 19 percent in the previous two days. Dell Inc. (DELL) tumbled 17 percent, the most since 2000, amid a disappointing revenue forecast. Hewlett- Packard Co. rallied 10 percent at 5:02 p.m. New York time after reporting quarterly results and saying it will cut 27,000 jobs.
The S&P 500 rose 0.2 percent to 1,318.86 at 4 p.m. New York time, reversing a decline of as much as 1.5 percent. Earlier today, it approached the average price from the last 200 days of about 1,280. The Dow Jones Industrial Average decreased 6.66 points, or 0.1 percent, to 12,496.15, trimming this year’s gain to 2.3 percent. About 7.6 billion shares changed hands on U.S. exchanges today, or 12 percent above the three-month average. “Huge turnaround,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “There’s speculation that European leaders will take action to stabilize the situation with Greece. In addition, there’s a lot of cash on the sidelines looking to get into the equity market. Certainly, the decline we’ve had recently might provide an opportunity.”
Stocks Reverse Loss as Euro Pares Drop on Summit Optimism (Source: Bloomberg)
U.S. stocks erased losses amid optimism European leaders will do more to halt contagion from the region’s debt crisis. The euro pared its drop after sinking to an almost two-year low and U.S. Treasuries trimmed gains. Oil closed below $90 a barrel for the first time since October. The Standard & Poor’s 500 Index rose 0.2 percent to close at 1,318.86, reversing a 1.5 percent tumble. The Dow Jones Industrial Average ended down 6.66 points at 12,496.15 after plunging as much as 191 points. The euro was down 0.7 percent at $1.2592 after dropping to as low as $1.2545. Ten-year Treasury yields lost 3.6 basis points to 1.73 percent, trimming a drop of 6 basis points. Demand for assets considered safe earlier sent German 30-year yields below 2 percent for the first time.
European leaders were meeting today to discuss the region’s debt crisis after deepening concern Greece will exit the euro wiped about $4 trillion from equity markets worldwide this month. Spain will recapitalize BFA-Bankia with as much public money as necessary, as the nationalized group needs at least 9 billion euros ($11 billion) to comply with banking rules, Economy Minister Luis de Guindos said after markets closed in Europe. “Huge turnaround,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “There’s speculation that European leaders will take action to stabilize the situation with Greece. In addition, there’s a lot of cash on the sidelines looking to get into the equity market. Certainly the decline we’ve had recently might provide an opportunity.”
Emerging Stocks Fall Most in Six Months on European Debt Concern (Source: Bloomberg)
Emerging-market stocks slid the most in six months as concern deepened that Europe’s debt crisis will reduce developing-nation exports and curb demand for riskier assets. The MSCI Emerging Markets Index (MXEF) fell 2.4 percent to 896.96 by 4:31 p.m. in New York, the biggest drop since Nov. 23. A gauge of materials producers slid to the lowest since September 2009 as metals retreated and Posco (005490), South Korea’s biggest steelmaker, slumped to a seven-month low. Russia’s Micex Index (INDEXCF) tumbled to the lowest since 2010 on declines for power utility companies. Brazil’s Bovespa slipped 0.8 percent as Oi SA fell to the lowest level since 2004.
European leaders are meeting in Brussels today to discuss the region’s debt crisis that has wiped more than $4 trillion from equity markets worldwide this month. The Standard & Poor’s GSCI Spot Index, which tracks 24 raw materials, lost 1.9 percent to the lowest level since Oct. 7. Silver, platinum and palladium declined, along with base metals including copper, zinc and lead, on concern Europe’s debt crisis may hurt global growth and sap demand. “There are already signs of exports slowing in Asia and Europe,” Neil Shearing, a senior emerging-market analyst at Capital Economics Ltd., said by phone from London today. “Risk appetite is hurt by the possibility of a messy break up of the euro that could lead to a broader financial crisis. Investors go to safe haven assets at the expense of emerging-market assets.”
Stocks Decline in Europe Amid Greek Concern; LSE Plunges (Source: Bloomberg)
European stocks slid the most in a month amid growing concern that Greece may leave the euro as the region’s leaders prepared to meet in Brussels. London Stock Exchange Group Plc tumbled the most in 2 1/2 years after UniCredit SpA and Intesa Sanpaolo SpA sold a combined 11.5 percent stake. Vedanta Resources Plc (VED) and Petropavlovsk Plc led a drop in basic-resources shares as copper and gold sank. Michelin & Cie. paced tiremakers lower, falling 4.5 percent. The Stoxx Europe 600 Index (SXXP) slid 2.1 percent to 239.51 at the close of trading after surging 2.5 percent over the previous two days. That’s the biggest drop since April 23. The gauge has retreated 12 percent from this year’s high on March 16 amid mounting speculation that Greece will be unable to form a government willing to implement pledged austerity measures.
Concern about Greece “is a big weight on the market and makes things uncertain,” said Emmanuel Soupre, who helps oversee $5.5 billion at Neuflize Private Assets in Paris. “Companies are functioning well but the macro economy is complicated. It’s best to remain cautious.”
German Stocks Fall; Snapping Two-Day Rally; Banks Decline (Source: Bloomberg)
German stocks fell, snapping a two- day rally, as concern mounted that Greece will leave the euro area and Japan’s exports grew at a slower pace than estimated. Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s biggest lenders, both slid 2.8 percent. Deutsche Boerse AG (DB1) fell 4 percent. ThyssenKrupp AG (TKA) slumped after Fitch Ratings downgraded its outlook on the shares to negative from stable. The DAX Index (DAX) retreated 2.3 percent to 6,285.75 at the 5:30 p.m. close in Frankfurt, paring its 2.6 percent over the previous two days. The broader HDAX Index also decreased 2.3 percent today. “Banks do not have a positive sentiment because of euro- zone fears,” said Christian Schmidt, a market analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt. “Banks are under pressure because it is unclear what the future will bring in terms of Greece, Spain and Italy.”
FOREX-Euro hits 21-month low vs dollar before EU summit
LONDON, May 23 (Reuters) - The euro hit a 21-month low against the dollar ahead of an EU meeting later, with investors doubtful that leaders would come up with measures to stem the euro zone debt crisis.
"The risk for the euro is on the downside short-term, but I do think there's a potential for a short-covering rally back towards $1.30," said Carl Hammer, chief currency strategist at SEB in Stockholm.
Euro Is Near 22-Month Low After European Summit (Source: Bloomberg)
The euro was 0.2 percent from the lowest level since July 2010 after German Chancellor Angela Merkel said following a European Union summit that her nation stands by its opposition to jointly issued common bonds. The 17-nation currency maintained a drop versus the yen before data forecast to show Europe’s services and manufacturing industries shrank for a fourth month. The Japanese and U.S. currencies remained higher after gaining yesterday against most major counterparts on increasing demand for haven assets amid Europe’s deepening debt crisis. New Zealand’s dollar halted a two-day slide as the nation reported an increased trade surplus. “The euro remains in a bearish trend,” said Callum Henderson, global head of currency research in Singapore at Standard Chartered Plc. “There needs to be a greater focus on growth, but at the same time, there also has to be a credible long-term plan for fiscal and debt consolidation throughout the region. At the moment, you have neither” for Europe, he said.
The euro was at $1.2576 as of 10:45 a.m. in Tokyo from $1.2582 at the close in New York yesterday, when it touched $1.2545, the least since July 13, 2010. The common currency traded at 99.93 yen after losing 1.4 percent to 100 yen yesterday. The dollar was little changed at 79.46 yen.
Sales of New Homes in U.S. Climb More Than Forecast: Economy (Source: Bloomberg)
Demand for new U.S. homes rose more than forecast in April, indicating residential real estate may contribute to economic growth for the first time in seven years. Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 72 economists was 335,000. Data yesterday showed April sales of previously owned homes rose in every region. “It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston, who projected sales would increase to a 339,000 pace. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.”
Job growth, improving affordability and record-low interest rates are helping propel sales at builders such as Toll Brothers Inc. At the same time, some banks remain reluctant to lend and foreclosures continue to move through the system, signaling a sustained housing recovery will take time to take hold.
Kocherlakota Says Fed Likely Can’t Totally Revive Jobs (Source: Bloomberg)
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed probably can’t repair all the damage to U.S. employment from the credit crisis and fiscal policy could help to revive the job market. The Federal Open Market Committee “faces an especially large amount of uncertainty about the level of maximum employment that it can hope to achieve,” Kocherlakota said today in a speech in Rapid City, South Dakota. In addition, “the FOMC has no control over” factors that influence the jobless rate like tax policy. U.S. policy makers believe non-monetary factors such as demographics and regulatory policy limit their ability to meet their congressional mandate to achieve maximum employment with price stability. Kocherlakota has said that, even with an 8.1 percent jobless rate, the central bank may be nearing the maximum employment level attainable without spurring inflation.
“Even if employment is close to the maximum level that is achievable using monetary policy, there may well be nonmonetary policy levers that could be used to raise employment still higher,” Kocherlakota said. One tool would be a cut in the payroll tax paid by employers.
Unemployed Burn as Fed Fiddles in Debate Over Natural Rate: Jobs (Source: Bloomberg)
Federal Reserve officials and economic advisers are debating far-reaching differences on whether to accept a jobless rate that doesn’t fall much below 6.5 percent or act more aggressively to reduce it to 5 percent or less. David Horowitz says he’s “not enough of an economist” to know who’s right. He just wants a full-time job again. Horowitz, 47, says he lost his health policy analyst job in Washington a month before the U.S. recession began in December 2007. He has met his expenses with temporary jobs in his field and work as a swim teacher, along with loans and savings. As for the policy makers’ debate on joblessness, “if they’re declaring that it’s a permanent situation, then that does make me angry,” he said. An approach that doesn’t put job creation first “puts a lot of people out of work and makes our educations worthless, and doesn’t give much optimism about working hard and moving up.”
U.S. 7-Year Yield Is 3 Basis Points From Low After Summit (Source: Bloomberg)
Treasury 10-year yields, the benchmark for borrowing costs around the world, were seven basis points from the record low as European officials argued over how to keep the 17-nation currency bloc together. Yields tumbled to their least-ever levels in Germany and the U.K. yesterday as investors sought the relative safety of the highest-rated debt. A $29 billion seven-year Treasury auction today is poised to draw a record-low rate. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he sees deflation. Fidelity Investments, which oversees $1.62 trillion, said Treasuries offer value. “There’s a fear in the market from Europe,” said Hajime Nagata, who invests in Treasuries in Tokyo at Diam Co., which manages the equivalent of $124.7 billion and is an arm of Dai- ichi Life Insurance Co., Japan’s second-biggest life insurer. “I don’t expect yields to go higher. I’m still relatively bullish on the Treasury market.” Nagata said he added to his holdings this week.
U.S. 10-year yields held at 1.74 percent as of 10:35 a.m. in Tokyo, Bloomberg Bond Trader data show. The record low was 1.67 percent set Sept. 23. The 1.75 percent security due in May 2022 changed hands at 100 2/32.
China’s New Leaders May Back More Reform, Huntsman Says (Source: Bloomberg)
The new leaders that will take over China in the next year may find themselves forced to open the country’s economy and political life as they try to maintain its economic growth, said Jon Huntsman Jr., a former U.S. ambassador to China and Republican presidential hopeful. “Their opening to the rest of the world will require a certain standardizing of the way business is done,” Huntsman said yesterday at an event in New York organized by the National Committee on United States-China Relations. “You just can’t make decisions behind the velvet curtain.” China is in the midst of a once-in-a-decade political transition to its fifth generation of leaders since its People’s Republic was established in 1949, with Vice President Xi Jinping set to succeed President Hu Jintao, who has served in that role since 2003. “The Deng Xiaoping dynasty pretty much comes to an end,” at the Congress, Huntsman said, referring to the Chinese leader who began the country’s market-oriented reforms in 1978.
China Pledges More ‘Fine-Tuning’ in Support for Growth (Source: Bloomberg)
China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates. “We must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” the government said on its website yesterday, summarizing a meeting of the State Council, or Cabinet. The statement builds on Premier Wen Jiabao’s comments published May 20 showing a bigger focus on bolstering growth, which spurred speculation the government will step up efforts to combat a slowdown after April trade and industrial output were below forecasts. Authorities this month cut banks’ required reserves for the third time since November.
“The State Council meeting confirms stimulus will come,” Zhang Zhiwei, Nomura Holdings Inc.’s chief economist for China, said in a note to clients yesterday. China’s government is going through a standard procedure in reaction to bad economic conditions, which will probably be completed with stimulus policies being implemented in June, said Zhang, who is based in Hong Kong.
Azumi Calls for Appropriate Step as BOJ Refrains From Easing (Source: Bloomberg)
Japanese Finance Minister Jun Azumi called on the central bank to further ease policy moments before the Bank of Japan (8301) refrained from adding monetary stimulus. “The BOJ must firmly pursue monetary easing to achieve its 1 percent inflation goal,” Azumi told lawmakers in parliament in Tokyo today. The central bank left its asset-purchase and credit-loan programs unchanged, as anticipated by all 14 economists surveyed by Bloomberg News. Azumi told reporters after the decision that the BOJ had already taken “drastic” steps last month when they pledged to increase their purchases of government bonds and reiterated that he hopes they will take “appropriate” policy measures. Half of the economists surveyed anticipate the central bank will add stimulus by July, when its price forecasts will indicate any progress in countering decade-long deflation.
The finance chief’s call for more easing “is a reflection of most market participants and maybe even the public in Japan, in that they want the BOJ to do something to stimulate the economy,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo and a former BOJ official. “One of the BOJ’s important roles is to prevent the strengthening of the yen with further easing.”
Japan April Trade Gap Widens as Exports Below Forecast (Source: Bloomberg)
Japan reported lower-than-estimated exports and a wider trade deficit for April, underscoring risks to the economy’s recovery a day after Fitch Ratings cut the nation’s debt rating. Outbound shipments rose 7.9 percent from a year earlier, less than the 11.8 percent median forecast in a Bloomberg News survey of 27 analysts. The deficit of 520.3 billion yen ($6.5 billion) exceeded a 84.5 billion yen shortfall in March, the finance ministry said in Tokyo today. Constraints on exports show the challenge for the government of sustaining growth without worsening the nation’s finances as a boost from earthquake rebuilding fades. Finance Minister Jun Azumi called today for the Bank of Japan to “take appropriate steps in a timely manner” and Citigroup Global Markets Japan Inc. said the central bank may boost asset purchases in coming months after holding off today.
“If exports stay flat when the effect of the post-quake reconstruction is likely to peak out in the latter half of the year, there’s a possibility Japan’s economy will fall into a lull,” said Kiichi Murashima, an economist at the Citigroup unit said in Tokyo. “There’s a chance for a further monetary easing in July.”
Korean Won Falls on Doubts Europe Can Solve Debt Crisis (Source: Bloomberg)
South Korea’s won fell to a five- month low amid doubts that Europe will succeed in containing its debt crisis. Government bonds were steady. Chancellor Angela Merkel said Germany stood by its opposition to jointly issued euro bonds at a European Union summit at which leaders aired contrasting views on how to overcome the debt crisis. The Kospi (KOSPI) Index advanced even after overseas funds cut holdings of the nation’s shares by $3.2 billion this month through yesterday, exchange data shows. “Speculation that the summit may disappoint is putting downward pressure on the won,” said Jeon Seung Ji, a Seoul- based currency analyst at Samsung Futures Inc. “Currency movements may change depending on the summit results to be announced, and also players shorting the euro and buying the won may limit the won’s losses.” A short position is a bet that a currency may decline.
The won slid 0.4 percent to 1,177.00 per dollar as of 9:21 a.m. in Seoul, taking this month’s loss to 4 percent, according to data compiled by Bloomberg. The currency touched 1,179.70 earlier, the weakest level since Dec. 19. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, rose three basis points, or 0.03 percentage point, to 11.95 percent.
EU Chiefs Clash on Bonds Amid Call Greece Keep Cutting (Source: Bloomberg)
European leaders clashed over joint debt sales as they called on Greece to stick with the budget cuts needed to stay in the euro and offered no immediate relief for recession-wracked Spain. The 18th summit in more than two years of crisis fighting was marked by new French President Francois Hollande’s challenge to the German-dominated deficit-cutting orthodoxy that has failed to stabilize the euro area and led to speculation that Greece might be forced out. “We had a not unheated discussion on euro bonds,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels early today after six hours of talks. Joint borrowing “didn’t find much support, particularly in the German speaking area but found a certain enthusiasm in the French speaking area.”
Futures on the Standard & Poor’s 500 Index declined 0.2 percent at 10:15 a.m. in Tokyo. The euro fell after reaching a 22-month low against the dollar yesterday amid concern that divisions between France and Germany will frustrate the search for answers. Yields on German five-, 10- and 30-year bonds dropped to records, as investors sought a haven.
Hollande-Merkel Gulf Opens as 18th Euro Summit Tackles Crisis (Source: Bloomberg)
French President Francois Hollande challenged Germany’s handling of the financial crisis as he headed to his first European Union summit with calls for joint borrowing and cash injections to struggling banks. Hollande teamed with Spanish Prime Minister Mariano Rajoy to press for tonight’s meeting of EU leaders to break with German-dominated budget-cutting policies that have failed to stabilize the 17-nation euro area and led to speculation that Greece might be forced out. France will “put all the ideas for growth and liquidity on the table,” Hollande told reporters in Paris before going to Brussels. “Europeans have to know where Europe is heading. There has to be political direction. Milestones have to be established and goals set.”
The summit, the 18th since Greece was convulsed by debt, takes place with market indicators showing mounting stress. The euro tumbled to a 22-month low against the dollar amid concern that divisions between France and Germany will frustrate the search for answers. European stocks fell by the most in a month. Yields on German five-, 10- and 30-year bonds dropped to records, as investors sought a haven.
BOE’s ‘Finely Balanced’ Decision Keeps QE Options Open: Economy (Source: Bloomberg)
Bank of England policy makers kept open the possibility that they may resume stimulus again, saying a decision to halt bond purchases this month was “finely balanced” because of risks from the euro area. While just one of the nine-member Monetary Policy Committee voted to add to quantitative easing on May 10, the central bank said in the minutes of the meeting published today that there was a case for injecting more and it could do so if needed. Separately, Deputy Governor Charlie Bean said more bond purchases may be needed if conditions “deteriorate significantly.” The central bank is keeping the option of more QE alive as a resurgence of the euro-area debt crisis puts the U.K. into what Governor Mervyn King says is “turbulent waters.” European leaders meet today to discuss the turmoil and grapple with a political impasse in Greece that’s raised speculation the nation may leave the 17-nation currency bloc.
“The Bank of England is clearly maintaining an open mind and a flexible approach,” said Howard Archer, chief European economist at IHS Global Insight in London. “Any deterioration in the underlying growth outlook and it will pull the QE trigger again.”
U.K. Retail Sales Fall Most in Two Years on Rain Effects (Source: Bloomberg)
May 23 (Bloomberg) -- U.K. retail sales fell the most in more than two years in April as record rainfall reduced demand for clothing and fuel sales plunged. Sales including auto fuel declined 2.3 percent from March, when warm weather helped lift sales by an upwardly revised 2 percent, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg survey was for a 0.8 percent decline. Sales excluding fuel dropped 1 percent, the most for almost a year. Consumer spending is being curtailed as inflation outpaces wages and unemployment remains close to a 16-year high. Marks & Spencer Group Plc (MKS), the largest U.K. clothing retailer, cut its sales forecast yesterday and said the economic environment is “challenging.” Stripping out the impact of fuel and wet weather, retail sales were still down on the month, the statistics office said.
“The underlying picture is sluggish,” said Ross Walker, chief U.K. economist at Royal Bank of Scotland Group in London. “Employment remains fragile and wage growth weak.”
Italian Consumer Confidence Falls to Lowest Since 1996 (Source: Bloomberg)
Italian consumer confidence plunged to the lowest in more than 15 years in May as Prime Minister Mario Monti’s austerity drive deepens the recession in Europe’s fourth-biggest economy. The confidence index fell to 86.5, the lowest since the data series began in 1996, from a revised 88.8 in April, national statistics office Istat said in Rome today. Economists forecast a reading of 89.5, according to the median of 12 estimates in a Bloomberg News survey. Monti is implementing 20 billion euros ($25.5 billion) of spending cuts and tax increases to fight the debt crisis, measures that have brought record gasoline prices and helped push the economy into its fourth recession since 2001. Italy’s economy will shrink 1.5 percent this year as corporate investment and domestic demand decline, Istat said yesterday in its annual report. That compares with the government’s forecast for a 1.2 percent contraction.
Household consumption and corporate investment will this year decline 2.1 percent and 5.7 percent respectively, Istat Chairman Enrico Giovannini said in Rome yesterday. Italian business confidence declined to a two-year low in April amid concern that the recession may worsen.
Asian stocks swung between gains and losses as investors await the outcome of a summit in Brussels at which European leaders have clashed over how to fight the region’s debt crisis. Nintendo Co., a maker of video-game players that depends on Europe for a third of its sales, fell 3.6 percent in Tokyo. Hitachi Construction Machinery Co (6305), a Japanese machinery maker that gets 17 percent of its sales in China, gained 0.6 percent ahead a report today on Chinese manufacturing. Hanwha Corp., a trader of petrochemicals and machinery, gained 4.8 percent in Seoul after its construction unit won an $8 billion deal to build housing units in Iraq. The MSCI Asia Pacific Index fell 0.1 percent to 111.90 as of 10:20 a.m. in Tokyo before the Hong Kong market opened. It swung between gains and losses at least four times. “The market is right now confused and obviously worried about whether Greece will end up leaving the euro or not,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is pretty convinced Greece will leave at some stage, but the big difference is if their exit will be orderly or disorderly, and an orderly exit has already been priced into the market.” The Asian Pacific gauge has dropped 13 percent from this year’s high on Feb. 29 as amid investor concerns that Greece may abandon the euro and put other debt-stricken nations such as Italy and Spain at risk. Greece is scheduled to have a second election on June 17 following an inconclusive ballot this month.
China Stock Futures Rise on Government Pledges to Favor Growth (Source: Bloomberg)
China’s stock-index futures rose, signaling gains for the benchmark index, after the nation’s leaders pledged to intensify “fine-tuning” of policies to support growth. Anhui Conch Cement Co. (600585) and China Railway Construction Corp. may gain after the government said it will start a series of infrastructure projects and will speed up construction of railways. China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, may pace losses by shipping lines on concern Europe’s debt crisis will stifle demand for foreign trade. “We may see a new round of stimulus centered on infrastructure construction,” Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. said by phone today. “That’ll help reduce market pessimism.”
Futures on the CSI 300 Index (SHSZ300) expiring in June, the most active contract, gained 0.4 percent to 2,597.6 as of 9:15 a.m. local time. The Shanghai Composite Index (SHCOMP) dropped 9.87 points, or 0.4 percent, to 2,363.44 yesterday. The CSI 300 Index declined 0.4 percent to 2,616.87. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 0.1 percent in New York.
Japan Stocks Swing Between Gain, Loss on Europe Meeting (Source: Bloomberg)
Japanese stocks swung between gains and losses as European leaders debate ways to tackle the debt crisis. Canon Inc. (7751), the camera maker that counts Europe as its biggest market, dropped 3.1 percent. Fanuc Corp., a maker of factory automation systems, and Komatsu Ltd., a heavy equipment exporter, advanced as China said it would undertake more “fine tuning” to boost its economic growth. Inpex Corp., the nation’s largest oil explorer by market value, lost 0.5 percent after crude prices dropped overnight. The Nikkei 225 Stock Average (NKY) was little changed at 8,555.57 as of 10:33 a.m. after swinging between gains and losses in Tokyo, with volume equal to the 30-day average. The broader Topix Index was little changed at 720.72, with about about the same number of shares rising as falling.
Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge rose 0.2 percent in New York yesterday, reversing a decline of as much as 1.5 percent, after Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Federal Reserve has the tools to insulate the U.S. economy should Europe’s debt crisis worsen.
U.S. Stocks Erase Loss Amid Optimism on Europe Efforts (Source: Bloomberg)
U.S. stocks erased early losses amid optimism that European leaders will do more to halt contagion from the region’s debt crisis, helping the market reverse a plunge triggered by growing concern Greece will leave the euro. Bank of America Corp. (BAC), Alcoa Inc. (AA) and FedEx Corp. (FDX) advanced at least 1.4 percent to pace gains among the biggest companies. Facebook Inc. (FB) increased 3.2 percent after losing 19 percent in the previous two days. Dell Inc. (DELL) tumbled 17 percent, the most since 2000, amid a disappointing revenue forecast. Hewlett- Packard Co. rallied 10 percent at 5:02 p.m. New York time after reporting quarterly results and saying it will cut 27,000 jobs.
The S&P 500 rose 0.2 percent to 1,318.86 at 4 p.m. New York time, reversing a decline of as much as 1.5 percent. Earlier today, it approached the average price from the last 200 days of about 1,280. The Dow Jones Industrial Average decreased 6.66 points, or 0.1 percent, to 12,496.15, trimming this year’s gain to 2.3 percent. About 7.6 billion shares changed hands on U.S. exchanges today, or 12 percent above the three-month average. “Huge turnaround,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “There’s speculation that European leaders will take action to stabilize the situation with Greece. In addition, there’s a lot of cash on the sidelines looking to get into the equity market. Certainly, the decline we’ve had recently might provide an opportunity.”
Stocks Reverse Loss as Euro Pares Drop on Summit Optimism (Source: Bloomberg)
U.S. stocks erased losses amid optimism European leaders will do more to halt contagion from the region’s debt crisis. The euro pared its drop after sinking to an almost two-year low and U.S. Treasuries trimmed gains. Oil closed below $90 a barrel for the first time since October. The Standard & Poor’s 500 Index rose 0.2 percent to close at 1,318.86, reversing a 1.5 percent tumble. The Dow Jones Industrial Average ended down 6.66 points at 12,496.15 after plunging as much as 191 points. The euro was down 0.7 percent at $1.2592 after dropping to as low as $1.2545. Ten-year Treasury yields lost 3.6 basis points to 1.73 percent, trimming a drop of 6 basis points. Demand for assets considered safe earlier sent German 30-year yields below 2 percent for the first time.
European leaders were meeting today to discuss the region’s debt crisis after deepening concern Greece will exit the euro wiped about $4 trillion from equity markets worldwide this month. Spain will recapitalize BFA-Bankia with as much public money as necessary, as the nationalized group needs at least 9 billion euros ($11 billion) to comply with banking rules, Economy Minister Luis de Guindos said after markets closed in Europe. “Huge turnaround,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. “There’s speculation that European leaders will take action to stabilize the situation with Greece. In addition, there’s a lot of cash on the sidelines looking to get into the equity market. Certainly the decline we’ve had recently might provide an opportunity.”
Emerging Stocks Fall Most in Six Months on European Debt Concern (Source: Bloomberg)
Emerging-market stocks slid the most in six months as concern deepened that Europe’s debt crisis will reduce developing-nation exports and curb demand for riskier assets. The MSCI Emerging Markets Index (MXEF) fell 2.4 percent to 896.96 by 4:31 p.m. in New York, the biggest drop since Nov. 23. A gauge of materials producers slid to the lowest since September 2009 as metals retreated and Posco (005490), South Korea’s biggest steelmaker, slumped to a seven-month low. Russia’s Micex Index (INDEXCF) tumbled to the lowest since 2010 on declines for power utility companies. Brazil’s Bovespa slipped 0.8 percent as Oi SA fell to the lowest level since 2004.
European leaders are meeting in Brussels today to discuss the region’s debt crisis that has wiped more than $4 trillion from equity markets worldwide this month. The Standard & Poor’s GSCI Spot Index, which tracks 24 raw materials, lost 1.9 percent to the lowest level since Oct. 7. Silver, platinum and palladium declined, along with base metals including copper, zinc and lead, on concern Europe’s debt crisis may hurt global growth and sap demand. “There are already signs of exports slowing in Asia and Europe,” Neil Shearing, a senior emerging-market analyst at Capital Economics Ltd., said by phone from London today. “Risk appetite is hurt by the possibility of a messy break up of the euro that could lead to a broader financial crisis. Investors go to safe haven assets at the expense of emerging-market assets.”
Stocks Decline in Europe Amid Greek Concern; LSE Plunges (Source: Bloomberg)
European stocks slid the most in a month amid growing concern that Greece may leave the euro as the region’s leaders prepared to meet in Brussels. London Stock Exchange Group Plc tumbled the most in 2 1/2 years after UniCredit SpA and Intesa Sanpaolo SpA sold a combined 11.5 percent stake. Vedanta Resources Plc (VED) and Petropavlovsk Plc led a drop in basic-resources shares as copper and gold sank. Michelin & Cie. paced tiremakers lower, falling 4.5 percent. The Stoxx Europe 600 Index (SXXP) slid 2.1 percent to 239.51 at the close of trading after surging 2.5 percent over the previous two days. That’s the biggest drop since April 23. The gauge has retreated 12 percent from this year’s high on March 16 amid mounting speculation that Greece will be unable to form a government willing to implement pledged austerity measures.
Concern about Greece “is a big weight on the market and makes things uncertain,” said Emmanuel Soupre, who helps oversee $5.5 billion at Neuflize Private Assets in Paris. “Companies are functioning well but the macro economy is complicated. It’s best to remain cautious.”
German Stocks Fall; Snapping Two-Day Rally; Banks Decline (Source: Bloomberg)
German stocks fell, snapping a two- day rally, as concern mounted that Greece will leave the euro area and Japan’s exports grew at a slower pace than estimated. Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s biggest lenders, both slid 2.8 percent. Deutsche Boerse AG (DB1) fell 4 percent. ThyssenKrupp AG (TKA) slumped after Fitch Ratings downgraded its outlook on the shares to negative from stable. The DAX Index (DAX) retreated 2.3 percent to 6,285.75 at the 5:30 p.m. close in Frankfurt, paring its 2.6 percent over the previous two days. The broader HDAX Index also decreased 2.3 percent today. “Banks do not have a positive sentiment because of euro- zone fears,” said Christian Schmidt, a market analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt. “Banks are under pressure because it is unclear what the future will bring in terms of Greece, Spain and Italy.”
FOREX-Euro hits 21-month low vs dollar before EU summit
LONDON, May 23 (Reuters) - The euro hit a 21-month low against the dollar ahead of an EU meeting later, with investors doubtful that leaders would come up with measures to stem the euro zone debt crisis.
"The risk for the euro is on the downside short-term, but I do think there's a potential for a short-covering rally back towards $1.30," said Carl Hammer, chief currency strategist at SEB in Stockholm.
Euro Is Near 22-Month Low After European Summit (Source: Bloomberg)
The euro was 0.2 percent from the lowest level since July 2010 after German Chancellor Angela Merkel said following a European Union summit that her nation stands by its opposition to jointly issued common bonds. The 17-nation currency maintained a drop versus the yen before data forecast to show Europe’s services and manufacturing industries shrank for a fourth month. The Japanese and U.S. currencies remained higher after gaining yesterday against most major counterparts on increasing demand for haven assets amid Europe’s deepening debt crisis. New Zealand’s dollar halted a two-day slide as the nation reported an increased trade surplus. “The euro remains in a bearish trend,” said Callum Henderson, global head of currency research in Singapore at Standard Chartered Plc. “There needs to be a greater focus on growth, but at the same time, there also has to be a credible long-term plan for fiscal and debt consolidation throughout the region. At the moment, you have neither” for Europe, he said.
The euro was at $1.2576 as of 10:45 a.m. in Tokyo from $1.2582 at the close in New York yesterday, when it touched $1.2545, the least since July 13, 2010. The common currency traded at 99.93 yen after losing 1.4 percent to 100 yen yesterday. The dollar was little changed at 79.46 yen.
Sales of New Homes in U.S. Climb More Than Forecast: Economy (Source: Bloomberg)
Demand for new U.S. homes rose more than forecast in April, indicating residential real estate may contribute to economic growth for the first time in seven years. Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 72 economists was 335,000. Data yesterday showed April sales of previously owned homes rose in every region. “It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston, who projected sales would increase to a 339,000 pace. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.”
Job growth, improving affordability and record-low interest rates are helping propel sales at builders such as Toll Brothers Inc. At the same time, some banks remain reluctant to lend and foreclosures continue to move through the system, signaling a sustained housing recovery will take time to take hold.
Kocherlakota Says Fed Likely Can’t Totally Revive Jobs (Source: Bloomberg)
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed probably can’t repair all the damage to U.S. employment from the credit crisis and fiscal policy could help to revive the job market. The Federal Open Market Committee “faces an especially large amount of uncertainty about the level of maximum employment that it can hope to achieve,” Kocherlakota said today in a speech in Rapid City, South Dakota. In addition, “the FOMC has no control over” factors that influence the jobless rate like tax policy. U.S. policy makers believe non-monetary factors such as demographics and regulatory policy limit their ability to meet their congressional mandate to achieve maximum employment with price stability. Kocherlakota has said that, even with an 8.1 percent jobless rate, the central bank may be nearing the maximum employment level attainable without spurring inflation.
“Even if employment is close to the maximum level that is achievable using monetary policy, there may well be nonmonetary policy levers that could be used to raise employment still higher,” Kocherlakota said. One tool would be a cut in the payroll tax paid by employers.
Unemployed Burn as Fed Fiddles in Debate Over Natural Rate: Jobs (Source: Bloomberg)
Federal Reserve officials and economic advisers are debating far-reaching differences on whether to accept a jobless rate that doesn’t fall much below 6.5 percent or act more aggressively to reduce it to 5 percent or less. David Horowitz says he’s “not enough of an economist” to know who’s right. He just wants a full-time job again. Horowitz, 47, says he lost his health policy analyst job in Washington a month before the U.S. recession began in December 2007. He has met his expenses with temporary jobs in his field and work as a swim teacher, along with loans and savings. As for the policy makers’ debate on joblessness, “if they’re declaring that it’s a permanent situation, then that does make me angry,” he said. An approach that doesn’t put job creation first “puts a lot of people out of work and makes our educations worthless, and doesn’t give much optimism about working hard and moving up.”
U.S. 7-Year Yield Is 3 Basis Points From Low After Summit (Source: Bloomberg)
Treasury 10-year yields, the benchmark for borrowing costs around the world, were seven basis points from the record low as European officials argued over how to keep the 17-nation currency bloc together. Yields tumbled to their least-ever levels in Germany and the U.K. yesterday as investors sought the relative safety of the highest-rated debt. A $29 billion seven-year Treasury auction today is poised to draw a record-low rate. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he sees deflation. Fidelity Investments, which oversees $1.62 trillion, said Treasuries offer value. “There’s a fear in the market from Europe,” said Hajime Nagata, who invests in Treasuries in Tokyo at Diam Co., which manages the equivalent of $124.7 billion and is an arm of Dai- ichi Life Insurance Co., Japan’s second-biggest life insurer. “I don’t expect yields to go higher. I’m still relatively bullish on the Treasury market.” Nagata said he added to his holdings this week.
U.S. 10-year yields held at 1.74 percent as of 10:35 a.m. in Tokyo, Bloomberg Bond Trader data show. The record low was 1.67 percent set Sept. 23. The 1.75 percent security due in May 2022 changed hands at 100 2/32.
China’s New Leaders May Back More Reform, Huntsman Says (Source: Bloomberg)
The new leaders that will take over China in the next year may find themselves forced to open the country’s economy and political life as they try to maintain its economic growth, said Jon Huntsman Jr., a former U.S. ambassador to China and Republican presidential hopeful. “Their opening to the rest of the world will require a certain standardizing of the way business is done,” Huntsman said yesterday at an event in New York organized by the National Committee on United States-China Relations. “You just can’t make decisions behind the velvet curtain.” China is in the midst of a once-in-a-decade political transition to its fifth generation of leaders since its People’s Republic was established in 1949, with Vice President Xi Jinping set to succeed President Hu Jintao, who has served in that role since 2003. “The Deng Xiaoping dynasty pretty much comes to an end,” at the Congress, Huntsman said, referring to the Chinese leader who began the country’s market-oriented reforms in 1978.
China Pledges More ‘Fine-Tuning’ in Support for Growth (Source: Bloomberg)
China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates. “We must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” the government said on its website yesterday, summarizing a meeting of the State Council, or Cabinet. The statement builds on Premier Wen Jiabao’s comments published May 20 showing a bigger focus on bolstering growth, which spurred speculation the government will step up efforts to combat a slowdown after April trade and industrial output were below forecasts. Authorities this month cut banks’ required reserves for the third time since November.
“The State Council meeting confirms stimulus will come,” Zhang Zhiwei, Nomura Holdings Inc.’s chief economist for China, said in a note to clients yesterday. China’s government is going through a standard procedure in reaction to bad economic conditions, which will probably be completed with stimulus policies being implemented in June, said Zhang, who is based in Hong Kong.
Azumi Calls for Appropriate Step as BOJ Refrains From Easing (Source: Bloomberg)
Japanese Finance Minister Jun Azumi called on the central bank to further ease policy moments before the Bank of Japan (8301) refrained from adding monetary stimulus. “The BOJ must firmly pursue monetary easing to achieve its 1 percent inflation goal,” Azumi told lawmakers in parliament in Tokyo today. The central bank left its asset-purchase and credit-loan programs unchanged, as anticipated by all 14 economists surveyed by Bloomberg News. Azumi told reporters after the decision that the BOJ had already taken “drastic” steps last month when they pledged to increase their purchases of government bonds and reiterated that he hopes they will take “appropriate” policy measures. Half of the economists surveyed anticipate the central bank will add stimulus by July, when its price forecasts will indicate any progress in countering decade-long deflation.
The finance chief’s call for more easing “is a reflection of most market participants and maybe even the public in Japan, in that they want the BOJ to do something to stimulate the economy,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo and a former BOJ official. “One of the BOJ’s important roles is to prevent the strengthening of the yen with further easing.”
Japan April Trade Gap Widens as Exports Below Forecast (Source: Bloomberg)
Japan reported lower-than-estimated exports and a wider trade deficit for April, underscoring risks to the economy’s recovery a day after Fitch Ratings cut the nation’s debt rating. Outbound shipments rose 7.9 percent from a year earlier, less than the 11.8 percent median forecast in a Bloomberg News survey of 27 analysts. The deficit of 520.3 billion yen ($6.5 billion) exceeded a 84.5 billion yen shortfall in March, the finance ministry said in Tokyo today. Constraints on exports show the challenge for the government of sustaining growth without worsening the nation’s finances as a boost from earthquake rebuilding fades. Finance Minister Jun Azumi called today for the Bank of Japan to “take appropriate steps in a timely manner” and Citigroup Global Markets Japan Inc. said the central bank may boost asset purchases in coming months after holding off today.
“If exports stay flat when the effect of the post-quake reconstruction is likely to peak out in the latter half of the year, there’s a possibility Japan’s economy will fall into a lull,” said Kiichi Murashima, an economist at the Citigroup unit said in Tokyo. “There’s a chance for a further monetary easing in July.”
Korean Won Falls on Doubts Europe Can Solve Debt Crisis (Source: Bloomberg)
South Korea’s won fell to a five- month low amid doubts that Europe will succeed in containing its debt crisis. Government bonds were steady. Chancellor Angela Merkel said Germany stood by its opposition to jointly issued euro bonds at a European Union summit at which leaders aired contrasting views on how to overcome the debt crisis. The Kospi (KOSPI) Index advanced even after overseas funds cut holdings of the nation’s shares by $3.2 billion this month through yesterday, exchange data shows. “Speculation that the summit may disappoint is putting downward pressure on the won,” said Jeon Seung Ji, a Seoul- based currency analyst at Samsung Futures Inc. “Currency movements may change depending on the summit results to be announced, and also players shorting the euro and buying the won may limit the won’s losses.” A short position is a bet that a currency may decline.
The won slid 0.4 percent to 1,177.00 per dollar as of 9:21 a.m. in Seoul, taking this month’s loss to 4 percent, according to data compiled by Bloomberg. The currency touched 1,179.70 earlier, the weakest level since Dec. 19. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, rose three basis points, or 0.03 percentage point, to 11.95 percent.
EU Chiefs Clash on Bonds Amid Call Greece Keep Cutting (Source: Bloomberg)
European leaders clashed over joint debt sales as they called on Greece to stick with the budget cuts needed to stay in the euro and offered no immediate relief for recession-wracked Spain. The 18th summit in more than two years of crisis fighting was marked by new French President Francois Hollande’s challenge to the German-dominated deficit-cutting orthodoxy that has failed to stabilize the euro area and led to speculation that Greece might be forced out. “We had a not unheated discussion on euro bonds,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels early today after six hours of talks. Joint borrowing “didn’t find much support, particularly in the German speaking area but found a certain enthusiasm in the French speaking area.”
Futures on the Standard & Poor’s 500 Index declined 0.2 percent at 10:15 a.m. in Tokyo. The euro fell after reaching a 22-month low against the dollar yesterday amid concern that divisions between France and Germany will frustrate the search for answers. Yields on German five-, 10- and 30-year bonds dropped to records, as investors sought a haven.
Hollande-Merkel Gulf Opens as 18th Euro Summit Tackles Crisis (Source: Bloomberg)
French President Francois Hollande challenged Germany’s handling of the financial crisis as he headed to his first European Union summit with calls for joint borrowing and cash injections to struggling banks. Hollande teamed with Spanish Prime Minister Mariano Rajoy to press for tonight’s meeting of EU leaders to break with German-dominated budget-cutting policies that have failed to stabilize the 17-nation euro area and led to speculation that Greece might be forced out. France will “put all the ideas for growth and liquidity on the table,” Hollande told reporters in Paris before going to Brussels. “Europeans have to know where Europe is heading. There has to be political direction. Milestones have to be established and goals set.”
The summit, the 18th since Greece was convulsed by debt, takes place with market indicators showing mounting stress. The euro tumbled to a 22-month low against the dollar amid concern that divisions between France and Germany will frustrate the search for answers. European stocks fell by the most in a month. Yields on German five-, 10- and 30-year bonds dropped to records, as investors sought a haven.
BOE’s ‘Finely Balanced’ Decision Keeps QE Options Open: Economy (Source: Bloomberg)
Bank of England policy makers kept open the possibility that they may resume stimulus again, saying a decision to halt bond purchases this month was “finely balanced” because of risks from the euro area. While just one of the nine-member Monetary Policy Committee voted to add to quantitative easing on May 10, the central bank said in the minutes of the meeting published today that there was a case for injecting more and it could do so if needed. Separately, Deputy Governor Charlie Bean said more bond purchases may be needed if conditions “deteriorate significantly.” The central bank is keeping the option of more QE alive as a resurgence of the euro-area debt crisis puts the U.K. into what Governor Mervyn King says is “turbulent waters.” European leaders meet today to discuss the turmoil and grapple with a political impasse in Greece that’s raised speculation the nation may leave the 17-nation currency bloc.
“The Bank of England is clearly maintaining an open mind and a flexible approach,” said Howard Archer, chief European economist at IHS Global Insight in London. “Any deterioration in the underlying growth outlook and it will pull the QE trigger again.”
U.K. Retail Sales Fall Most in Two Years on Rain Effects (Source: Bloomberg)
May 23 (Bloomberg) -- U.K. retail sales fell the most in more than two years in April as record rainfall reduced demand for clothing and fuel sales plunged. Sales including auto fuel declined 2.3 percent from March, when warm weather helped lift sales by an upwardly revised 2 percent, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg survey was for a 0.8 percent decline. Sales excluding fuel dropped 1 percent, the most for almost a year. Consumer spending is being curtailed as inflation outpaces wages and unemployment remains close to a 16-year high. Marks & Spencer Group Plc (MKS), the largest U.K. clothing retailer, cut its sales forecast yesterday and said the economic environment is “challenging.” Stripping out the impact of fuel and wet weather, retail sales were still down on the month, the statistics office said.
“The underlying picture is sluggish,” said Ross Walker, chief U.K. economist at Royal Bank of Scotland Group in London. “Employment remains fragile and wage growth weak.”
Italian Consumer Confidence Falls to Lowest Since 1996 (Source: Bloomberg)
Italian consumer confidence plunged to the lowest in more than 15 years in May as Prime Minister Mario Monti’s austerity drive deepens the recession in Europe’s fourth-biggest economy. The confidence index fell to 86.5, the lowest since the data series began in 1996, from a revised 88.8 in April, national statistics office Istat said in Rome today. Economists forecast a reading of 89.5, according to the median of 12 estimates in a Bloomberg News survey. Monti is implementing 20 billion euros ($25.5 billion) of spending cuts and tax increases to fight the debt crisis, measures that have brought record gasoline prices and helped push the economy into its fourth recession since 2001. Italy’s economy will shrink 1.5 percent this year as corporate investment and domestic demand decline, Istat said yesterday in its annual report. That compares with the government’s forecast for a 1.2 percent contraction.
Household consumption and corporate investment will this year decline 2.1 percent and 5.7 percent respectively, Istat Chairman Enrico Giovannini said in Rome yesterday. Italian business confidence declined to a two-year low in April amid concern that the recession may worsen.
20120524 1104 Global Commodities Related News.
Heat Wave Forecast From Midwest to East for Memorial Day Weekend (Source: Bloomberg)
Heat will spread from the U.S. Midwest to the Northeast in time for the Memorial Day holiday weekend, sending temperatures into the 90s in Chicago, St. Louis and Washington and boosting electricity demand. The high in St. Louis is expected to reach 97 degrees Fahrenheit (36 Celsius) this weekend, according to the National Weather Service. The normal high is 80 degrees, according to AccuWeather Inc. Highs may reach 92 in Chicago and Washington. “It looks like we’re going to have some building heat across the middle of the country,” said Paul Walker, senior meteorologist at AccuWeather in State College, Pennsylvania. Low natural gas prices, brought about by record production and low demand during the past winter, have led many utilities to use switch to the fuel from coal to produce electricity. Hot weather increases power demand to meet air conditioning needs.
Natural gas for June delivery rose 2.6 cents, or 1 percent, to $2.733 per million British thermal units at 11:33 a.m. on the New York Mercantile Exchange. The futures have rebounded 44 percent from a 10-year intraday low of $1.902 on April 19. Four of seven peaking power plants operated by Wisconsin Public Service, a unit of Chicago-based Integrys Energy Group Inc. (TEG), are set to run on natural gas, according to the company’s website. The plants are used during hot weather, when electricity demand is highest, according to the company.
Commodities Drop to Five-Month Low on Greece Concern (Source: Bloomberg)
Commodities dropped to a five-month low, extending this year’s decline, on mounting concern that Greece will leave the euro, roiling financial markets and eroding the outlook for raw-material demand. The Standard & Poor’s GSCI gauge of 24 raw materials fell 1.6 percent to 617.96 at 3:15 p.m. in New York, after touching 613.95, the lowest since Dec. 19. The index is down 4.2 percent this year, heading for the first annual decline since the recession of 2008. Equity markets fell from Asia to the Americas and the euro dropped to its weakest level against the dollar since July 2010 on speculation that European Union leaders meeting today will provide no new measures to stem the sovereign-debt crisis. Greece is preparing for elections on June 17, after winners in a vote this month failed to create a government.
“The market is being driven by a lot of fear right now,” Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $300 million, said in a telephone interview. The commodity selloff “has the potential to go further if this uncertainty remains, and that depends on what European leaders are willing to do,” he said. “The Greek issue needs to be resolved.”
World wheat bounty at risk as dry spell spooks market
May 23 (Reuters) - A damaging global dry spell is wilting wheat crops in Kansas, threatening exports from Russia and slowing sowing in Australia, serving a timely reminder to hedge funds that a new era of surplus grain is far from assured.
In their biggest surge since 1996, Chicago wheat prices jumped by more than 17 percent last week and reached a nearly 9-month high of more than $7 a bushel on Monday, a rally stoked by short-covering among big speculators -- a group that had amassed a near-record short position betting on falling prices.
Wheat Fields Parched by Drought From U.S. to Russia: Commodities (Source: Bloomberg)
Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year. Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg. Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month in which world food costs tracked by the United Nations reached a record.
Analysts surveyed by Bloomberg expect futures to rise 13 percent to $7.51 by mid- July.
Market Recap: Wheat Futures (Source: CME)
Chicago and Kansas City wheat futures posted double-digit loses today in most contracts, with Minneapolis seeing lighter losses. Most contracts trimmed losses in "after-hours" trade. Focus in the market was on profit-taking, as strength in the U.S. dollar index led to a "risk-off" atmosphere in the commodity markets. The U.S. dollar index moved to its highest level since September 2010 on concerns Greece was working on a plan to leave the euro-zone.
Wheat Market Recap Report (Source: CME)
July Wheat finished down 17 1/4 at 668 1/4, 16 3/4 off the high and 4 3/4 up from the low. December Wheat closed down 12 3/4 at 703 3/4. This was 7 1/2 up from the low and 12 1/4 off the high. July wheat traded moderately lower on the session early and stayed in the early range for much of the day. Ideas that the rally in the past week was too aggressive, weakness in outside markets and further talk of at least some rain in Russia to ease drought concerns helped to pressure. New highs for the move for the US dollar and a sharp break in most other commodity markets helped to pressure. Traders see good weather for the spring wheat crops as an offset to hot and dry weather for western Nebraska/eastern Colorado hard red winter wheat areas for this weekend. The heat could further reduce crop condition ratings. More talk of adequate world supply and the overbought short-term condition of the market helped to pressure. For weekly export sales in the morning, traders see wheat sales near 450,000 tonnes as compared with 711,400 tonnes last week. July Oats closed down 8 1/2 at 325. This was 2 up from the low and 9 3/4 off the high.
Nervous shorts fueling U.S. wheat rally
(Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum.)
CHICAGO, May 22 (Reuters) - Wheat prices have surged nearly 20 percent over the past week, with buying attributed to market chatter about how dry field conditions across global growing areas could curb 2012 production totals.
But the urgent tone of the market action more closely resembles short covering rather than long accumulation. This suggests that this market has considerable additional upside potential given that large speculators continue to sit on record-large short exposure to the wheat market.
Market Recap: Corn Futures (Source: CME)
Corn futures settled fractionally to 6 1/2 cents higher, with the July contract leading gains following a very choppy session. Futures slightly built on those gains in "after- hours" trade. Funds were buyers of an estimated 9,000 contracts (45 million bu.) of corn. Corn futures were pressured at times by strong gains in the U.S. dollar index that triggered widespread selling across the commodity sector.
Corn Market Recap for 5/23/2012 (Source: CME)
July Corn finished up 7 3/4 at 604 3/4, 6 1/4 off the high and 16 1/4 up from the low. December Corn closed up 2 3/4 at 524 3/4. This was 11 up from the low and 2 1/4 off the high. Mixed views on the extended weather outlook and firm cash markets helped provide some support for corn on a day when most commodity markets were under heavy selling pressure. July corn traded moderately higher on the day and gained on December. Talk that the bull spread liquidation trend from yesterday was overdone and ideas that the cash market remains very tight helped to support the market. Corn is one of the few commodity markets higher on the day today as outside market forces remain negative. Traders see rains for the Midwest for next week but there are some concerns for too much dryness in May; especially for areas which miss out on rains next week after a hot and dry trend into early next week. Ethanol production for the week ending May 18th averaged 919,000 barrels per day. This is up 1.66% vs. last week and up 1.88% vs. last year. Total Ethanol production for the week was 6.433 million barrels which is the highest since February 17th. Corn used in last week's production is estimated at 97.89 million bushels. Corn use needs to average 93.7 million bushels per week to meet the USDA production. Stocks were 21.4 million barrels, up 3.7% vs. last week and up 2.89% vs. last year. For weekly export sales in the morning, traders see corn sales near 1.125 million tonnes as compared with 865,100 tonnes last week. July Rice finished down 0.175 at 15.07, 0.21 off the high and equal to the low.
GRAINS-US soy at 1-1/2 month low, wheat falls for 2nd day
SINGAPORE, May 23 (Reuters) - Chicago soy lost more ground , sliding to its lowest since March 30, while wheat dropped for a second straight session on forecasts of rain in parts of Russian and U.S. grain producing regions.
"There are concerns over slowing growth in China, which is putting pressure across the commodities complex, including soybeans, and there are forecasts of rains in some dry areas of the United States and Russia," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Australia farmers hope rain to help wheat yields
SYDNEY, May 23 (Reuters) - Australia, one of the world's top four exporters of wheat, is forecast to receive much needed rain in eastern areas this week, helping planting conditions after concerns that dry conditions could damage crop yields.
The east coast has seen less than 20 percent of average rainfall in May, but Australia's weather bureau is forecasting Queensland and New South Wales -- leading wheat growing states - will see 25-50 mm of rain on both Thursday and Friday, with light showers expected on Saturday.
Kazakhstan to subsidise record grain exports
ASTANA, May 23 (Reuters) - Kazakhstan will pay nearly $30 toward the cost of every tonne of grain delivered to the Black Sea for the rest of this season to help push exports toward a record 13 million tonnes, the country's agriculture minister told Reuters in an interview.
Wary of limited export capacity, Kazakhstan is investing in new elevators, ports and railroads to supply Iran and its Central Asian neighbours, but will also encourage farmers to cultivate more feed grains, maize and oilseeds to avoid an oversupply of wheat in future, Asylzhan Mamytbekov said.
EU considers ordering France to lift GMO maize ban
BRUSSELS, May 22 (Reuters) - The European Union's executive said on Tuesday it was considering ordering France to lift its ban on growing a strain of genetically modified maize, after EU science experts said there was no justification for it.
In March France reimposed a ban on Monsanto's MON810 maize, an insect-resistant variety to protect chiefly against the European corn borer, after a previous prohibition was annulled by the country's top court late last year.
Russia wheat exports to fall to 14 mln t in 12/13-analyst
MOSCOW, May 22 (Reuters) - Russia is expected to harvest 53 million tonnes of wheat in the 2012/2013 agricultural year, down from 56 million tonnes in the current year, but exports will decline even more because stocks have been decimated, top Russian grain analysts said on Tuesday.
In the year to June 30, 2012, a period of record grain exports, SovEcon analysts said Russia would export a total of 20.5 million tonnes of wheat, but exports could be only 14 million tonnes in the coming year because of lower overall availability.
SOFTS-Raw sugar hits 21-month low, coffee eases
LONDON, May 23 (Reuters) - Raw sugar futures on ICE hit a fresh 21-month low , after breaking below key support level of 20 cents the previous session, with dealers noting weak demand on the physical market. Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.
Indonesia group downgrades 2012 rubber output forecast on rains
SINGAPORE, May 23 (Reuters) - Rubber output this year in Indonesia, the world's second-biggest producer, is likely to be around 5 percent below a forecast in January to stand flat with 2011 after heavy rains, a senior official at the Indonesian Rubber Association said on Wednesday.
In January, the group forecast Indonesia's rubber output would rise 6 percent this year to 3.27 million tonnes as production kicked in from areas replanted around five years ago.
Global rubber demand seen up 5 pct to 28.2 mln T in 2013-IRSG
SINGAPORE, May 23 (Reuters) - Global demand for natural and synthetic rubber is forecast to rise just over 5 percent year-on-year in 2013 to 28.2 million tonnes, the International Rubber Study Group (IRSG) said on Wednesday.
The IRSG had forecast rubber demand at 26.8 million tonnes for 2012.
Rubber industry hopes China demand will offset Europe woes
SINGAPORE, May 22 (Reuters) - China's strong appetite for rubber could help the market stave off pressure from a worsening debt crisis in Europe that threatens commodities demand while Thailand's move to prop up prices will aid the tyre industry, industry officials said.
Policymakers, traders and industry officials gathering at the World Rubber Summit 2012 in Singapore this week will focus on global demand outlook and key issues such as weather-related supply disruptions and macroeconomic changes.
Brazil's coffee crop seen 52.2 mln bags -Reuters poll
SAO PAULO, May 22 (Reuters) - World top coffee grower Brazil will produce 52.2 million bags in the 2012/13 crop, a Thomson Reuters survey of participants at a Sao Paulo coffee seminar showed on Tuesday, below most analyst estimates but higher than the government's official estimate.
The 2012/13 crop is now ripening and most producers should start harvesting in the next few weeks. This year's crop will be a larger 'on year' harvest in the coffee trees' biennial cycle of higher output one year followed by less the next.
Rain slows start of new Brazil coffee harvest
SAO PAULO, May 22 (Reuters) - Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.
An abundant but sub-record coffee crop is now ripening in Brazil's undulating southeastern coffee region, promising a boost in supply for a market whose price has been comparatively high since mid-2010 as consumption grows and supply struggles to keep up.
Ivorian cotton forecast lowered ahead of new season
May 22 (Reuters) - Ivory Coast has slightly lowered its cotton production forecast for the 2012/13 season to 300,000-315,000 tonnes, the executive secretary of the Ivorian ginners association said on Tuesday.
The forecast is down from the 334,500 tonnes forecast last month but up from about 260,000 tonnes reached in the 2011/12 harvest, Christophe N'Dri told Reuters.
Coffee Falls to 21-Month Low in N.Y.; Sugar, Cocoa Drop (Source: Bloomberg)
Coffee futures sank to a 21-month low on mounting concern that Europe’s debt crisis is eroding demand prospects as exporters boost sales in Brazil, the world’s largest grower. Sugar and cocoa also slid. Global coffee output may outpace demand by 5.3 million bags in the year that starts in October, Rabobank International said May 21. The crop in Colombia, the largest producer of arabica beans after Brazil, will improve in the second half of the year and will rise in 2013 from this season, the head of the National Federation of Coffee Growers said yesterday. The Brazilian real extended losses to a three-year low. Global equities fell on signs the European crisis is worsening. “There’s too much coffee,” Maria Lopez-Calleja, a broker with INTL FCStone in Miami, said in a telephone interview. “There’s also much uncertainty surrounding Greece’s possible exit from the euro and who would follow after that.”
Arabica coffee for July delivery plunged 4.4 percent to settle at $1.669 a pound at 2 p.m. on ICE Futures U.S. in New York, after reaching $1.651, the lowest for a most-active contract since July 28, 2010.
Oil Advances From Seven-Month Low as Drop May Be Overdone (Source: Bloomberg)
Oil rebounded after closing below $90 a barrel for the first time in seven months, amid speculation the drop was exaggerated and signs China will accelerate efforts to spur economic growth. Futures rose as much as 1 percent in New York after reaching long-term technical support. China, the world’s second- biggest oil consumer, will intensify “fine-tuning” of policies, according to the second government statement in four days signaling a commitment to growth as domestic demand slows. Talks with Iran aimed at averting military action against OPEC’s second-biggest crude producer will resume today, according to a Western official. “Fundamentally, the market is not so strong, but still the world economy is growing,” said Ken Hasegawa, a commodity- derivative sales manager at Newedge Group in Tokyo who forecasts prices will trade as low as $90 a barrel through June. “The downside might be limited.”
Crude for July delivery gained as much as 91 cents to $90.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.63 at 12:21 p.m. Sydney time. The contract yesterday slid 2.1 percent to $89.90, the lowest close since Oct. 21. Prices are 8.3 percent lower this year.
OIL-Oil falls on potential Iran deal, economy concerns
LONDON, May 23 (Reuters) - Oil fell on growing hopes of a deal between Iran and the U.N. nuclear watchdog, which eased fears of oil supply disruption, while concerns over the debt crisis in the euro zone and a slowing Chinese economy weighed on demand.
"The Iranians seem to be softening their position and that could lead to an easing of sanctions," said Christopher Bellew at Jefferies Bache.
Japan April LNG imports climb over year after Fukushima
TOKYO, May 23 (Reuters) - Japan, the world's top importer of liquefied natural gas, imported 6.9 million tonnes of LNG in April, up 14.9 p e rcent from the previous year, reflecting a rise in gas-fired power generation after the Fukushima nuclear crisis.
Customs-cleared crude oil imports rose 12.9 percent from the same month a year earlier to 19.2 million kilolitres (4.0 million bpd), preliminary data from the Ministry of Finance showed on Wednesday.
UK North Sea oil, gas exploration interest sets record
LONDON, May 23 (Reuters) - Britain has seen unprecedented interest in developing North Sea oil and gas fields, with companies applying for a record 224 licences covering 418 blocks in its latest exploration round, the government said on Wednesday.
Britain's 27th licensing round was launched in February and breaks the record for applications set in the previous round by 37.
U.S. refining capacity offline set to fall-IIR
May 23 (Reuters) - U.S. oil refiners expect to have 697,000 barrels per day (bpd) of capacity offline in the week ending May 25, down from 769,000 bpd the week before, data from research company IIR showed on Wednesday.
The firm expects offline capacity to fall to 489,000 bpd in the week ending June 1.
Iran Nuclear Talks to Resume Tomorrrow, Official Says (Source: Bloomberg)
Western powers and Iran will resume nuclear talks today in Baghdad after a first day of discussions yielded no agreement, according to a Western official. Chinese, French, German, Russian, British and U.S. negotiators -- the so-called P5+1 group -- and Iran’s representatives didn’t issue a public statement as daylong talks recessed yesterday at almost midnight. Talks will resume at 8 a.m. Baghdad time, according to the Western official, who spoke on condition of anonymity because the deliberations are being conducted privately. The meeting was convened in an effort to forestall a military strike against Iran, a prospect Israel hasn’t ruled out. While the Persian Gulf nation, target of a probe by the United Nations International Atomic Energy Agency since 2003, denies it wants to make nuclear weapons, it has refused to cooperate with inspectors and is under multiple international sanctions.
The negotiators met a day after IAEA inspectors bridged an impasse with Iranian authorities over wider access to suspected nuclear sites, including the Parchin military complex. IAEA Director General Yukiya Amano said he expected the accord to be signed “quite soon.”
JPMorgan Copper ETF Plan Seen Creating Havoc by Merchant Groups (Source: Bloomberg)
JPMorgan Chase & Co. (JPM)’s plan to introduce an exchange-traded fund linked to copper will “severely disrupt” the market, a group of industrial copper users told the Securities and Exchange Commission. Funds backed by copper would leave less of the metal available for manufacturers, creating shortages and driving up prices, according to a letter filed to securities regulator by Vandenberg & Feliu, a New York-based law firm representing a major copper-merchant company and several copper fabricators. ETFs trade like stocks, giving investors access to commodities such as copper without taking physical delivery. NYSE Arca Inc., the electronic platform of NYSE Euronext, filed with the SEC to list and trade JPM XF Physical Copper Trust, according to an April 2 document.
JPMorgan’s offering initially calls for the removal from the market of as much as 61,800 metric tons of copper, or the withdrawal of more than 30 percent of the supplies available for immediate delivery worldwide, the merchants group said in its letter. “JPM’s offering will therefore result in a substantial artificially-induced rise in near-term copper prices on the London Metal Exchange, which will severely disrupt the world market for the trading of such copper,” the group said in the letter, dated May 9.
Copper Falls to Four-Month Low on Europe, China Growth Concerns (Source: Bloomberg)
Copper dropped to a four-month low in New York on concern that slowing growth in China and the risk of Greece leaving the euro signal weaker demand for the metal. European leaders meeting in Brussels are seeking to keep Greece within the 17-nation monetary union, a day after the Organization for Economic Cooperation and Development said the crisis could spiral and damage the world economy. Growth in China, the world biggest copper user, will slow to 8.2 percent this year from 9.2 percent in 2011, the World Bank said. “Given this gloomy backdrop, we expect that markets will continue to be on the defensive for much of this week, at least until we see more specifics coming out from the EU policy meeting,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. Copper futures for July delivery slid 2.6 percent to settle at $3.396 a pound at 1:19 p.m. on the Comex in New York. Earlier, the metal touched $3.3865, the lowest since Jan. 9.
The Chinese economy may have the worst growth in more than two decades if Greece abandons the euro, economists at investment bank China International Capital Corp. said in an e- mailed report today.
Heat will spread from the U.S. Midwest to the Northeast in time for the Memorial Day holiday weekend, sending temperatures into the 90s in Chicago, St. Louis and Washington and boosting electricity demand. The high in St. Louis is expected to reach 97 degrees Fahrenheit (36 Celsius) this weekend, according to the National Weather Service. The normal high is 80 degrees, according to AccuWeather Inc. Highs may reach 92 in Chicago and Washington. “It looks like we’re going to have some building heat across the middle of the country,” said Paul Walker, senior meteorologist at AccuWeather in State College, Pennsylvania. Low natural gas prices, brought about by record production and low demand during the past winter, have led many utilities to use switch to the fuel from coal to produce electricity. Hot weather increases power demand to meet air conditioning needs.
Natural gas for June delivery rose 2.6 cents, or 1 percent, to $2.733 per million British thermal units at 11:33 a.m. on the New York Mercantile Exchange. The futures have rebounded 44 percent from a 10-year intraday low of $1.902 on April 19. Four of seven peaking power plants operated by Wisconsin Public Service, a unit of Chicago-based Integrys Energy Group Inc. (TEG), are set to run on natural gas, according to the company’s website. The plants are used during hot weather, when electricity demand is highest, according to the company.
Commodities Drop to Five-Month Low on Greece Concern (Source: Bloomberg)
Commodities dropped to a five-month low, extending this year’s decline, on mounting concern that Greece will leave the euro, roiling financial markets and eroding the outlook for raw-material demand. The Standard & Poor’s GSCI gauge of 24 raw materials fell 1.6 percent to 617.96 at 3:15 p.m. in New York, after touching 613.95, the lowest since Dec. 19. The index is down 4.2 percent this year, heading for the first annual decline since the recession of 2008. Equity markets fell from Asia to the Americas and the euro dropped to its weakest level against the dollar since July 2010 on speculation that European Union leaders meeting today will provide no new measures to stem the sovereign-debt crisis. Greece is preparing for elections on June 17, after winners in a vote this month failed to create a government.
“The market is being driven by a lot of fear right now,” Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $300 million, said in a telephone interview. The commodity selloff “has the potential to go further if this uncertainty remains, and that depends on what European leaders are willing to do,” he said. “The Greek issue needs to be resolved.”
World wheat bounty at risk as dry spell spooks market
May 23 (Reuters) - A damaging global dry spell is wilting wheat crops in Kansas, threatening exports from Russia and slowing sowing in Australia, serving a timely reminder to hedge funds that a new era of surplus grain is far from assured.
In their biggest surge since 1996, Chicago wheat prices jumped by more than 17 percent last week and reached a nearly 9-month high of more than $7 a bushel on Monday, a rally stoked by short-covering among big speculators -- a group that had amassed a near-record short position betting on falling prices.
Wheat Fields Parched by Drought From U.S. to Russia: Commodities (Source: Bloomberg)
Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year. Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg. Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month in which world food costs tracked by the United Nations reached a record.
Analysts surveyed by Bloomberg expect futures to rise 13 percent to $7.51 by mid- July.
Market Recap: Wheat Futures (Source: CME)
Chicago and Kansas City wheat futures posted double-digit loses today in most contracts, with Minneapolis seeing lighter losses. Most contracts trimmed losses in "after-hours" trade. Focus in the market was on profit-taking, as strength in the U.S. dollar index led to a "risk-off" atmosphere in the commodity markets. The U.S. dollar index moved to its highest level since September 2010 on concerns Greece was working on a plan to leave the euro-zone.
Wheat Market Recap Report (Source: CME)
July Wheat finished down 17 1/4 at 668 1/4, 16 3/4 off the high and 4 3/4 up from the low. December Wheat closed down 12 3/4 at 703 3/4. This was 7 1/2 up from the low and 12 1/4 off the high. July wheat traded moderately lower on the session early and stayed in the early range for much of the day. Ideas that the rally in the past week was too aggressive, weakness in outside markets and further talk of at least some rain in Russia to ease drought concerns helped to pressure. New highs for the move for the US dollar and a sharp break in most other commodity markets helped to pressure. Traders see good weather for the spring wheat crops as an offset to hot and dry weather for western Nebraska/eastern Colorado hard red winter wheat areas for this weekend. The heat could further reduce crop condition ratings. More talk of adequate world supply and the overbought short-term condition of the market helped to pressure. For weekly export sales in the morning, traders see wheat sales near 450,000 tonnes as compared with 711,400 tonnes last week. July Oats closed down 8 1/2 at 325. This was 2 up from the low and 9 3/4 off the high.
Nervous shorts fueling U.S. wheat rally
(Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum.)
CHICAGO, May 22 (Reuters) - Wheat prices have surged nearly 20 percent over the past week, with buying attributed to market chatter about how dry field conditions across global growing areas could curb 2012 production totals.
But the urgent tone of the market action more closely resembles short covering rather than long accumulation. This suggests that this market has considerable additional upside potential given that large speculators continue to sit on record-large short exposure to the wheat market.
Market Recap: Corn Futures (Source: CME)
Corn futures settled fractionally to 6 1/2 cents higher, with the July contract leading gains following a very choppy session. Futures slightly built on those gains in "after- hours" trade. Funds were buyers of an estimated 9,000 contracts (45 million bu.) of corn. Corn futures were pressured at times by strong gains in the U.S. dollar index that triggered widespread selling across the commodity sector.
Corn Market Recap for 5/23/2012 (Source: CME)
July Corn finished up 7 3/4 at 604 3/4, 6 1/4 off the high and 16 1/4 up from the low. December Corn closed up 2 3/4 at 524 3/4. This was 11 up from the low and 2 1/4 off the high. Mixed views on the extended weather outlook and firm cash markets helped provide some support for corn on a day when most commodity markets were under heavy selling pressure. July corn traded moderately higher on the day and gained on December. Talk that the bull spread liquidation trend from yesterday was overdone and ideas that the cash market remains very tight helped to support the market. Corn is one of the few commodity markets higher on the day today as outside market forces remain negative. Traders see rains for the Midwest for next week but there are some concerns for too much dryness in May; especially for areas which miss out on rains next week after a hot and dry trend into early next week. Ethanol production for the week ending May 18th averaged 919,000 barrels per day. This is up 1.66% vs. last week and up 1.88% vs. last year. Total Ethanol production for the week was 6.433 million barrels which is the highest since February 17th. Corn used in last week's production is estimated at 97.89 million bushels. Corn use needs to average 93.7 million bushels per week to meet the USDA production. Stocks were 21.4 million barrels, up 3.7% vs. last week and up 2.89% vs. last year. For weekly export sales in the morning, traders see corn sales near 1.125 million tonnes as compared with 865,100 tonnes last week. July Rice finished down 0.175 at 15.07, 0.21 off the high and equal to the low.
GRAINS-US soy at 1-1/2 month low, wheat falls for 2nd day
SINGAPORE, May 23 (Reuters) - Chicago soy lost more ground , sliding to its lowest since March 30, while wheat dropped for a second straight session on forecasts of rain in parts of Russian and U.S. grain producing regions.
"There are concerns over slowing growth in China, which is putting pressure across the commodities complex, including soybeans, and there are forecasts of rains in some dry areas of the United States and Russia," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Australia farmers hope rain to help wheat yields
SYDNEY, May 23 (Reuters) - Australia, one of the world's top four exporters of wheat, is forecast to receive much needed rain in eastern areas this week, helping planting conditions after concerns that dry conditions could damage crop yields.
The east coast has seen less than 20 percent of average rainfall in May, but Australia's weather bureau is forecasting Queensland and New South Wales -- leading wheat growing states - will see 25-50 mm of rain on both Thursday and Friday, with light showers expected on Saturday.
Kazakhstan to subsidise record grain exports
ASTANA, May 23 (Reuters) - Kazakhstan will pay nearly $30 toward the cost of every tonne of grain delivered to the Black Sea for the rest of this season to help push exports toward a record 13 million tonnes, the country's agriculture minister told Reuters in an interview.
Wary of limited export capacity, Kazakhstan is investing in new elevators, ports and railroads to supply Iran and its Central Asian neighbours, but will also encourage farmers to cultivate more feed grains, maize and oilseeds to avoid an oversupply of wheat in future, Asylzhan Mamytbekov said.
EU considers ordering France to lift GMO maize ban
BRUSSELS, May 22 (Reuters) - The European Union's executive said on Tuesday it was considering ordering France to lift its ban on growing a strain of genetically modified maize, after EU science experts said there was no justification for it.
In March France reimposed a ban on Monsanto's MON810 maize, an insect-resistant variety to protect chiefly against the European corn borer, after a previous prohibition was annulled by the country's top court late last year.
Russia wheat exports to fall to 14 mln t in 12/13-analyst
MOSCOW, May 22 (Reuters) - Russia is expected to harvest 53 million tonnes of wheat in the 2012/2013 agricultural year, down from 56 million tonnes in the current year, but exports will decline even more because stocks have been decimated, top Russian grain analysts said on Tuesday.
In the year to June 30, 2012, a period of record grain exports, SovEcon analysts said Russia would export a total of 20.5 million tonnes of wheat, but exports could be only 14 million tonnes in the coming year because of lower overall availability.
SOFTS-Raw sugar hits 21-month low, coffee eases
LONDON, May 23 (Reuters) - Raw sugar futures on ICE hit a fresh 21-month low , after breaking below key support level of 20 cents the previous session, with dealers noting weak demand on the physical market. Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.
Indonesia group downgrades 2012 rubber output forecast on rains
SINGAPORE, May 23 (Reuters) - Rubber output this year in Indonesia, the world's second-biggest producer, is likely to be around 5 percent below a forecast in January to stand flat with 2011 after heavy rains, a senior official at the Indonesian Rubber Association said on Wednesday.
In January, the group forecast Indonesia's rubber output would rise 6 percent this year to 3.27 million tonnes as production kicked in from areas replanted around five years ago.
Global rubber demand seen up 5 pct to 28.2 mln T in 2013-IRSG
SINGAPORE, May 23 (Reuters) - Global demand for natural and synthetic rubber is forecast to rise just over 5 percent year-on-year in 2013 to 28.2 million tonnes, the International Rubber Study Group (IRSG) said on Wednesday.
The IRSG had forecast rubber demand at 26.8 million tonnes for 2012.
Rubber industry hopes China demand will offset Europe woes
SINGAPORE, May 22 (Reuters) - China's strong appetite for rubber could help the market stave off pressure from a worsening debt crisis in Europe that threatens commodities demand while Thailand's move to prop up prices will aid the tyre industry, industry officials said.
Policymakers, traders and industry officials gathering at the World Rubber Summit 2012 in Singapore this week will focus on global demand outlook and key issues such as weather-related supply disruptions and macroeconomic changes.
Brazil's coffee crop seen 52.2 mln bags -Reuters poll
SAO PAULO, May 22 (Reuters) - World top coffee grower Brazil will produce 52.2 million bags in the 2012/13 crop, a Thomson Reuters survey of participants at a Sao Paulo coffee seminar showed on Tuesday, below most analyst estimates but higher than the government's official estimate.
The 2012/13 crop is now ripening and most producers should start harvesting in the next few weeks. This year's crop will be a larger 'on year' harvest in the coffee trees' biennial cycle of higher output one year followed by less the next.
Rain slows start of new Brazil coffee harvest
SAO PAULO, May 22 (Reuters) - Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.
An abundant but sub-record coffee crop is now ripening in Brazil's undulating southeastern coffee region, promising a boost in supply for a market whose price has been comparatively high since mid-2010 as consumption grows and supply struggles to keep up.
Ivorian cotton forecast lowered ahead of new season
May 22 (Reuters) - Ivory Coast has slightly lowered its cotton production forecast for the 2012/13 season to 300,000-315,000 tonnes, the executive secretary of the Ivorian ginners association said on Tuesday.
The forecast is down from the 334,500 tonnes forecast last month but up from about 260,000 tonnes reached in the 2011/12 harvest, Christophe N'Dri told Reuters.
Coffee Falls to 21-Month Low in N.Y.; Sugar, Cocoa Drop (Source: Bloomberg)
Coffee futures sank to a 21-month low on mounting concern that Europe’s debt crisis is eroding demand prospects as exporters boost sales in Brazil, the world’s largest grower. Sugar and cocoa also slid. Global coffee output may outpace demand by 5.3 million bags in the year that starts in October, Rabobank International said May 21. The crop in Colombia, the largest producer of arabica beans after Brazil, will improve in the second half of the year and will rise in 2013 from this season, the head of the National Federation of Coffee Growers said yesterday. The Brazilian real extended losses to a three-year low. Global equities fell on signs the European crisis is worsening. “There’s too much coffee,” Maria Lopez-Calleja, a broker with INTL FCStone in Miami, said in a telephone interview. “There’s also much uncertainty surrounding Greece’s possible exit from the euro and who would follow after that.”
Arabica coffee for July delivery plunged 4.4 percent to settle at $1.669 a pound at 2 p.m. on ICE Futures U.S. in New York, after reaching $1.651, the lowest for a most-active contract since July 28, 2010.
Oil Advances From Seven-Month Low as Drop May Be Overdone (Source: Bloomberg)
Oil rebounded after closing below $90 a barrel for the first time in seven months, amid speculation the drop was exaggerated and signs China will accelerate efforts to spur economic growth. Futures rose as much as 1 percent in New York after reaching long-term technical support. China, the world’s second- biggest oil consumer, will intensify “fine-tuning” of policies, according to the second government statement in four days signaling a commitment to growth as domestic demand slows. Talks with Iran aimed at averting military action against OPEC’s second-biggest crude producer will resume today, according to a Western official. “Fundamentally, the market is not so strong, but still the world economy is growing,” said Ken Hasegawa, a commodity- derivative sales manager at Newedge Group in Tokyo who forecasts prices will trade as low as $90 a barrel through June. “The downside might be limited.”
Crude for July delivery gained as much as 91 cents to $90.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.63 at 12:21 p.m. Sydney time. The contract yesterday slid 2.1 percent to $89.90, the lowest close since Oct. 21. Prices are 8.3 percent lower this year.
OIL-Oil falls on potential Iran deal, economy concerns
LONDON, May 23 (Reuters) - Oil fell on growing hopes of a deal between Iran and the U.N. nuclear watchdog, which eased fears of oil supply disruption, while concerns over the debt crisis in the euro zone and a slowing Chinese economy weighed on demand.
"The Iranians seem to be softening their position and that could lead to an easing of sanctions," said Christopher Bellew at Jefferies Bache.
Japan April LNG imports climb over year after Fukushima
TOKYO, May 23 (Reuters) - Japan, the world's top importer of liquefied natural gas, imported 6.9 million tonnes of LNG in April, up 14.9 p e rcent from the previous year, reflecting a rise in gas-fired power generation after the Fukushima nuclear crisis.
Customs-cleared crude oil imports rose 12.9 percent from the same month a year earlier to 19.2 million kilolitres (4.0 million bpd), preliminary data from the Ministry of Finance showed on Wednesday.
UK North Sea oil, gas exploration interest sets record
LONDON, May 23 (Reuters) - Britain has seen unprecedented interest in developing North Sea oil and gas fields, with companies applying for a record 224 licences covering 418 blocks in its latest exploration round, the government said on Wednesday.
Britain's 27th licensing round was launched in February and breaks the record for applications set in the previous round by 37.
U.S. refining capacity offline set to fall-IIR
May 23 (Reuters) - U.S. oil refiners expect to have 697,000 barrels per day (bpd) of capacity offline in the week ending May 25, down from 769,000 bpd the week before, data from research company IIR showed on Wednesday.
The firm expects offline capacity to fall to 489,000 bpd in the week ending June 1.
Iran Nuclear Talks to Resume Tomorrrow, Official Says (Source: Bloomberg)
Western powers and Iran will resume nuclear talks today in Baghdad after a first day of discussions yielded no agreement, according to a Western official. Chinese, French, German, Russian, British and U.S. negotiators -- the so-called P5+1 group -- and Iran’s representatives didn’t issue a public statement as daylong talks recessed yesterday at almost midnight. Talks will resume at 8 a.m. Baghdad time, according to the Western official, who spoke on condition of anonymity because the deliberations are being conducted privately. The meeting was convened in an effort to forestall a military strike against Iran, a prospect Israel hasn’t ruled out. While the Persian Gulf nation, target of a probe by the United Nations International Atomic Energy Agency since 2003, denies it wants to make nuclear weapons, it has refused to cooperate with inspectors and is under multiple international sanctions.
The negotiators met a day after IAEA inspectors bridged an impasse with Iranian authorities over wider access to suspected nuclear sites, including the Parchin military complex. IAEA Director General Yukiya Amano said he expected the accord to be signed “quite soon.”
JPMorgan Copper ETF Plan Seen Creating Havoc by Merchant Groups (Source: Bloomberg)
JPMorgan Chase & Co. (JPM)’s plan to introduce an exchange-traded fund linked to copper will “severely disrupt” the market, a group of industrial copper users told the Securities and Exchange Commission. Funds backed by copper would leave less of the metal available for manufacturers, creating shortages and driving up prices, according to a letter filed to securities regulator by Vandenberg & Feliu, a New York-based law firm representing a major copper-merchant company and several copper fabricators. ETFs trade like stocks, giving investors access to commodities such as copper without taking physical delivery. NYSE Arca Inc., the electronic platform of NYSE Euronext, filed with the SEC to list and trade JPM XF Physical Copper Trust, according to an April 2 document.
JPMorgan’s offering initially calls for the removal from the market of as much as 61,800 metric tons of copper, or the withdrawal of more than 30 percent of the supplies available for immediate delivery worldwide, the merchants group said in its letter. “JPM’s offering will therefore result in a substantial artificially-induced rise in near-term copper prices on the London Metal Exchange, which will severely disrupt the world market for the trading of such copper,” the group said in the letter, dated May 9.
Copper Falls to Four-Month Low on Europe, China Growth Concerns (Source: Bloomberg)
Copper dropped to a four-month low in New York on concern that slowing growth in China and the risk of Greece leaving the euro signal weaker demand for the metal. European leaders meeting in Brussels are seeking to keep Greece within the 17-nation monetary union, a day after the Organization for Economic Cooperation and Development said the crisis could spiral and damage the world economy. Growth in China, the world biggest copper user, will slow to 8.2 percent this year from 9.2 percent in 2011, the World Bank said. “Given this gloomy backdrop, we expect that markets will continue to be on the defensive for much of this week, at least until we see more specifics coming out from the EU policy meeting,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. Copper futures for July delivery slid 2.6 percent to settle at $3.396 a pound at 1:19 p.m. on the Comex in New York. Earlier, the metal touched $3.3865, the lowest since Jan. 9.
The Chinese economy may have the worst growth in more than two decades if Greece abandons the euro, economists at investment bank China International Capital Corp. said in an e- mailed report today.
20120524 1104 Soy Oil & Palm Oil Related News.
Market Recap: Soybean Futures (Source: CME)
Soybean futures posted a downside day of trade and ultimately closed 18 1/2 to 24 1/2 cents lower. This was a mid-range close for most contracts. In "after hours" trade, the market trimmed losses by a few cents. Soymeal ended mixed while soyoil posted losses. Yesterday, rumors hit that Chinese importers were canceling or delaying some soybean cargo deliveries because soy crush margins had turned negative.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 16 3/4 at 1365 1/2, 17 1/4 off the high and 14 1/2 up from the low. November Soybeans closed down 23 at 1259 1/4. This was 8 up from the low and 22 3/4 off the high. July Soymeal closed up 0.8 at 405.8. This was 8.5 up from the low and 1.2 off the high. July Soybean Oil finished down 1.44 at 49.02, 1.53 off the high and 0.47 up from the low. July soybeans pushed sharply lower on the session as talk of the hefty net long position of fund traders in soybeans and an aggressive long liquidation selling trend helped to pressure. Futures fell as much as 31 1/4 cents this morning as the outlook for some rains next week along with deteriorating economic views on the global economy helped to spark increased fund trader long liquidation selling. A jump in the US dollar, a sharp break in gold and energy markets and a collapse in equity markets helped to pressure. The market saw a near 15 cent recovery bounce off of the early lows into the mid-session as some strength in corn and only minor losses for meal helped to slow the aggressive selling from fund traders. Palm oil was down 2.9% overnight and is already at a significant discount to soybean oil on the world market so this helped drive soybean oil sharply lower today with July down to the lowest level since October of 2010. For weekly export sales in the morning, traders see soybean sales near 1.15 million tonnes.
VEGOILS-Palm oil slides to five-month low on Europe concerns
SINGAPORE, May 23 (Reuters) - Malaysian palm oil futures slipped to their lowest in more than five months , tracking a downward trend in broader commodities markets as investor caution over the euro zone debt crisis resurfaced.
"The palm oil market was under pressure today from the beginning. External oilseed markets were down so palm oil fell in line with market sentiment," said a trader with a foreign commodities brokerage in Malaysia.
Brazil 12/13 soy seen at 73.6 mln T - Reuters poll
SAO PAULO, May 22 (Reuters) - Brazil's 2012/13 soy harvest should produce 73.6 million tonnes, a Thomson Reuters survey of panelists at a Sao Paulo soy seminar showed on Tuesday, which if achieved would mark a strong rebound from this year's drought-hit crop but fall shy of a record.
The Latin American country is the world's No. 2 producer of the protein-rich oilseed after the United States but output fell sharply in the now-ending 2011/12 harvest due to drought that extended into neighboring No. 3 soy producer Argentina.
Soybean futures posted a downside day of trade and ultimately closed 18 1/2 to 24 1/2 cents lower. This was a mid-range close for most contracts. In "after hours" trade, the market trimmed losses by a few cents. Soymeal ended mixed while soyoil posted losses. Yesterday, rumors hit that Chinese importers were canceling or delaying some soybean cargo deliveries because soy crush margins had turned negative.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 16 3/4 at 1365 1/2, 17 1/4 off the high and 14 1/2 up from the low. November Soybeans closed down 23 at 1259 1/4. This was 8 up from the low and 22 3/4 off the high. July Soymeal closed up 0.8 at 405.8. This was 8.5 up from the low and 1.2 off the high. July Soybean Oil finished down 1.44 at 49.02, 1.53 off the high and 0.47 up from the low. July soybeans pushed sharply lower on the session as talk of the hefty net long position of fund traders in soybeans and an aggressive long liquidation selling trend helped to pressure. Futures fell as much as 31 1/4 cents this morning as the outlook for some rains next week along with deteriorating economic views on the global economy helped to spark increased fund trader long liquidation selling. A jump in the US dollar, a sharp break in gold and energy markets and a collapse in equity markets helped to pressure. The market saw a near 15 cent recovery bounce off of the early lows into the mid-session as some strength in corn and only minor losses for meal helped to slow the aggressive selling from fund traders. Palm oil was down 2.9% overnight and is already at a significant discount to soybean oil on the world market so this helped drive soybean oil sharply lower today with July down to the lowest level since October of 2010. For weekly export sales in the morning, traders see soybean sales near 1.15 million tonnes.
VEGOILS-Palm oil slides to five-month low on Europe concerns
SINGAPORE, May 23 (Reuters) - Malaysian palm oil futures slipped to their lowest in more than five months , tracking a downward trend in broader commodities markets as investor caution over the euro zone debt crisis resurfaced.
"The palm oil market was under pressure today from the beginning. External oilseed markets were down so palm oil fell in line with market sentiment," said a trader with a foreign commodities brokerage in Malaysia.
Brazil 12/13 soy seen at 73.6 mln T - Reuters poll
SAO PAULO, May 22 (Reuters) - Brazil's 2012/13 soy harvest should produce 73.6 million tonnes, a Thomson Reuters survey of panelists at a Sao Paulo soy seminar showed on Tuesday, which if achieved would mark a strong rebound from this year's drought-hit crop but fall shy of a record.
The Latin American country is the world's No. 2 producer of the protein-rich oilseed after the United States but output fell sharply in the now-ending 2011/12 harvest due to drought that extended into neighboring No. 3 soy producer Argentina.
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