China: Existing home market cools in May amid government curbs
China’s effort to cool home prices is damping the market for existing homes, with prices in May falling from the previous month in 23 of 70 cities measured. That’s more than the 16 cities that posted declines in April, data from the National Bureau of Statistics posted to its website June 18 showed. Existing home prices in Beijing fell 0.2% from April while those in Shanghai increased 0.2%. The price of new homes, typically sold by developers, rose last month in 67 of the 70 cities monitored. (Bloomberg)
India: Signals slower pace of rate increases on global risks
India’s central bank signaled it may slow the most aggressive monetary tightening among Asia’s major economies as risks to global growth threaten to undermine consumer demand. Asian nations such as China and the Philippines refrained from boosting interest rates this week, pausing to gauge the strength of the global economy. The Reserve Bank of India said lead indicators suggest growth moderated in advanced and emerging countries, and uncertainty about the resolution of Europe’s sovereign debt crisis has “increased.” (Bloomberg)
Japan: Yen heading to new high on no intervention as fed rates on hold
As the Yen rallies to levels that prompted the Group of Seven to weaken the currency in March, traders are forecasting more gains, even as Japan falls into its third recession in a decade. Three months ago, the Yen soared as much as 8.5% in less than a week on speculation insurance companies would repatriate assets to pay for damages from the record earthquake and tsunami in northeastern Japan that triggered the worst nuclear disaster in 25 years. Now, politicians and central bankers are focused more on the slowdown in US growth, Europe’s sovereign-debt crisis and uprisings in the Middle East. (Bloomberg)
Singapore: Exports rebounded in May as pharmaceutical companies shipped more goods to customers, offsetting a slump in electronic sales. Non-oil domestic exports gained 7.8% YoY, after a revised 2% YoY decline in April, the island's trade promotion agency said in a statement. (Source: Bloomberg)
E.U: Exports rose in April on greater demand from the U.S. and China, shrugging off the effects of a stronger euro. Exports from the economy of the 17 nations that use the euro rose a seasonally adjusted 0.6 % MoM from March, when they increased by the same amount. Euro-region construction output rose 0.7% MoM from the previous month, when it declined 0.1% MoM, a separate report showed. (Source: Bloomberg)
UK: Facing larger deficit because of weak economy
The Office for Budget Responsibility, Britain’s independent fiscal watchdog, said in March the government’s fiscal shortfall will be GBP368bn (USD596bn) between 2011 and 2016, GBP46bn more than Osborne predicted in October, as it lowered its 2011 growth estimate. The economy stagnated in the six months through March, while consumer spending slumped the most in almost two years in the first quarter. Surveys of manufacturing and services growth published earlier this month by Markit Economics Ltd. indicate economic growth this quarter may not exceed 0.3%. (Bloomberg)
US: Leading indicators rise in sign of growth rebound
The index of US leading indicators rose more than forecast in May after declining for the first time in almost a year, a sign economic growth may pick up by the end of 2011. The Conference Board’s gauge of the outlook for the next three to six months rose 0.8% after a revised 0.4% drop in April, the New York-based research group said. Another report showed consumer sentiment dropped more than forecast in June. (Bloomberg)
U.S: Consumer sentiment declines more than forecast in June as households contended with higher prices that are eating into incomes amid slowing job growth. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 71.8 from 74.3 in May. (Source: Bloomberg)
Global: IMF cuts U.S. growth forecast, sees European contagion risk. The U.S. economy will grow 2.5% this year, down from 2.8% projected in April, the IMF said, citing higher commodity prices and bad weather in the first quarter and a weak housing market. The IMF forecasts 2.7% growth in 2012, slower than the previous estimate of 2.9%. The Washington-based IMF sees the world economy expanding 4.3% this year, down from 4.4% two months ago. It left a 4.5% forecast for next year unchanged. (Source: Bloomberg)
Monday, June 20, 2011
20110620 1019 Malaysia Corporate Related News.
KLCI chart reading :
correction range bound upside biased.
Iskandar Malaysia enters second phase of development
The Iskandar Regional Development Authority (IRDA) is seeking higher allocation of funds from the Government in the upcoming Budget 2012, compared with 2011. For 2011, the Government had allocated RM945m to the economic growth corridor in Johor. IRDA CEO Ismail Ibrahim said the allocation of funds for 2012 is presently being discussed with the Government’s Economic Planning Unit.(Starbiz)
Sarawak Plantation to expand planted land
Sarawak Plantation (SP) is in advanced negotiations to acquire a 3,000ha matured oil palm plantation from a private company in northern Sarawak. Group MD Datuk Hamden Ahmad said SP was now carrying out a survey on the land, particularly on the conditions of the oil palm trees, which were between seven and eight years old. (StarBiz)
ADCB sells RHB shares at RM10.80 each
Abu Dhabi Commercial Bank PJSC (ADCB) has signed an agreement with its sister company Aabar Investments PJS to sell its 24.9% stake in RHB Capital to the latter for RM10.80 per share. ADCB CEO Ala'a Eraiqat said the sale was expected to enhance the company's first-half year profitability and would result in the release of capital. Upon completion of the transaction, ADCB's tier-1 ratio would increase to 14.43% from 12.39% while capital-adequacy ratio would rise to 21.11% from 17.03%. Ala'a said while ADCB had benefited tremendously from its ownership in RHB Cap, the management and board were now clearly focused on executing its strategy of being a UAE-centric bank. (Starbiz)
EPF in SGD3.2bn Singapore project
The Employees' Provident Fund (EPF) has entered into a joint-venture agreement with Singapore's GuocoLand group to develop a piece of land for mixed-used development above Singapore's Tanjong Pagar MRT station.A statement from GuocoLand Ltd said the agreement was for the development of a piece of land at Peck Seah Street and Chon Guan site, known as the Tanjong Pagar White Site. The EPF purchase and 20% joint-venture involvement in the upcoming SGD3.2bn mixed-use development marks another milestone for the pension fund, which has been on an acquisition trail since unveiling its interest in acquiring property assets since August 2010. (Starbiz)
No capital outlay from Naim
Naim Holdings (Naim) will not have to come up with any capital outlay in implementing the RM2.5bn Sabah oil and gas terminal project. MD Datuk Hasmi Hasnan said the project, a JV between South Korea's Samsung Engineering and Naim, was implemented under an alliance concept whereby the JV partners were not allowed to carry out any construction works. (StarBiz)
Vehicle sales down in May
Total vehicle sales fell 9.5% in May to 46,045 units from 50,883 a year earlier due to a shortfall in production for the month of April. This was a result of insufficient supply to cater to deliveries stemming from the impact of the earthquake and tsunami that hit Japan in March. The drop in sales marked the biggest decline of the year since February when local vehicle sales fell to 40,387 units from 40,654 in January. However, for the five-month period ended May 2011, cumulative sales were still higher at 255,413 units from 247,110 in the previous corresponding period, said the Malaysian Automotive Association. (StarBiz)
Talam reprimanded for rules breach
Talam Corp has been reprimanded by Bursa Malaysia for a breach of the Main Market listing requirements. The regulator said due mainly to Talam's oversight and errors, there was a difference of RM1.2m (or a 17.2% deviation) in profit after taxation and minority interest between the unaudited and audited results of the company for FYE 31 Jan 2010. (StarBiz)
Sunway terminates deal in Sri Lanka
SunwayMas SB and textile and garment manufacturer Dasa Tourist Complex Ltd, based in Sri Lanka, have mutually terminated a joint-venture agreement. Property developer SunwayMas is a wholly-owned subsidiary of Sunway Holdings. The termination was due to both companies being unable to fulfill their obligations in accordance with the terms and conditions of the agreement, said Sunway Holdings. (StarBiz)
F&N Holdings: Aims for regional expansion. Fraser & Neave Holdings Bhd is keen to buy another food company to expand and become a regional food and beverage group. Last year, it spent some RM55m for 23% stake in Cocoaland Holdings Bhd. It also aims to double its dairy business in Thailand over the next five years. (Source: Business Times)
Genting: Hires architect for USD3b Resorts World Miami. In just three weeks from Genting Malaysia Bhd's successful USD236m (RM717m) bid for a 13.9-acre (5.6ha) waterfront land in northern downtown Miami, Genting Group chieftain Tan Sri Lim Kok Thay announced the hiring of Miami-based Arquitectonica to create the master plan for its USSD3b Resorts World Miami mixed development, though a casino licence is not yet within reach.
SPB: To expand planted land. Sarawak Plantation Bhd (SPB) is in advanced negotiations to acquire a 3,000ha matured oil palm plantation from a private company in northern Sarawak. Group MD Datuik Hamden Ahmad said SPB's target is to expand its plantation by at least 5,000ha a year while the group's capital expenditure is between RM30m and Rm40m a year. (Source: The Star)
TSH: Young plantations start ielding returns. TSH Resources is entering harvest time. So far, only 36% of its Indonesian palms are currently in the mature phase. TSH plans to acquire more land in Kalimantan and if all goes well, chairman Datuk Kelvin Tan Aik Pen expects two acquisitions in the current financial year. (Source: The Edge Daily)
20110620 1010 Global Market Related News.
DJIA chart reading : correction range bound downside biased.
Hang Seng chart reading : downside biased with possible pullback correction
Asia Stocks Gain, Snapping Seven Weeks of Losses, as Australian Banks Rise (Source: Bloomberg)
Asian stocks rose, snapping seven straight weeks of decline, as Australian banks, seen by some investors as a refuge amid Europe’s sovereign debt crisis, advanced, and Japanese automakers rallied.
Asian Stocks Rise on Optimism Europe to Force Greek Austerity (Source: Bloomberg)
Asian stocks rose, snapping seven straight weeks of decline, on optimism the European Union will force Greece to deliver on debt-reduction commitments. Australian banks, seen by some investors as a refuge amid Europe’s sovereign debt crisis, advanced.
U.S. Leading Indicators Rise in Sign Growth May Pick Up by End of the Year (Source: Bloomberg)
The index of U.S. leading indicators rose more than forecast in May after declining for the first time in almost a year, a sign economic growth may pick up by the end of 2011. The Conference Board’s gauge of the outlook for the next three to six months rose 0.8 percent after a revised 0.4 percent drop in April, the New York-based research group said today. Another report showed consumer sentiment dropped more than forecast in June.
U.S. Stocks Rise, Averting Longest S&P 500 Index Losing Streak Since 2001 (Source: Bloomberg)
U.S. stocks rose for the first time in seven weeks, preventing the longest losing streaks for the Standard & Poor’s 500 Index and Dow Jones Industrial Average since 2001, as concern about the American economy ebbed even as the Greek debt crisis deepened. Home Depot Inc. (HD), McDonald’s Corp. and Microsoft Corp. advanced more than 2.4 percent this week to lead gains in the Dow after reports on jobless claims, retail sales and housing beat economist estimates. VF Corp. (VFC) jumped 12 percent after agreeing to buy Timberland Co. (TBL), while J.C. Penney Co. surged 15 percent after hiring an Apple Inc. vice president as its chief executive officer. Owens-Illinois Inc. (OI) fell 13 percent, the most in the S&P 500, after cutting its profit-margin forecast.
Home Sales Probably Dropped to Year’s Low: U.S. Economy Preview (Source: Bloomberg)
Home sales probably dropped in May to the lowest level of the year, while orders placed with factories climbed, showing housing remains a soft spot as other parts of the U.S. economy recover, economists said before reports this week. Purchases of new and existing houses decreased 4.8 percent to a 5.11 million annual rate last month, the weakest since November, according to the median forecast of economists surveyed by Bloomberg News. Another report may show bookings for goods made to last at least three years increased after falling in April by the most in six months.
China Home Prices Cool on Government Curbs (Source: Bloomberg)
China’s effort to cool home prices is damping the market for existing homes, with prices in May falling from the previous month in 23 of 70 cities measured.
Japanese Stocks Advance on Optimism Greece Will Meet EU Budget Cut Demands (Source: Bloomberg)
Japanese stocks rose for the first time in three days on expectation Greece will meet demands by European governments to cut its debt and after a report signaled U.S. economic growth may pick up by the end of this year.
Banks Holding Record $1.45 Trillion to Buy Treasuries as Savings Top Loans (Source: Bloomberg)
Japan’s biggest bond investors see increasing parallels between the nation’s government debt market and Treasuries, indicating that historically low yields in the U.S. have room to fall.
Europe Fails to Agree on Greek Aid Payout (Source: Bloomberg)
European governments failed to agree on releasing a loan payout to spare Greece from default, ramping up pressure on Prime Minister George Papandreou to first deliver budget cuts in the face of domestic opposition.
EU Finance Ministers May Approve Only Half of Next Greek Aid Installment (Source: Bloomberg)
Belgian Finance Minister Didier Reynders raised the prospect of finance ministers reaching a deal on payment of only half of the 12 billion-euro ($17.2 billion) next installment to Greece. “I’m only saying that financing has to be released by the International Monetary Fund and the European Union,” Reynders told reporters in Luxembourg today. “That’s the short-term. We will in any case try to release the necessary funds for the short-term, which should happen with a financing of a bit less than 6 billion euros in the beginning of July.’’
Europe May Withhold Half of Greek Payment (Source: Bloomberg)
European governments weighed withholding half of Greece’s next 12 billion-euro ($17.2 billion) aid payment, seeking to keep the country solvent while maintaining pressure on the government to slash the debt that pitched the euro area into crisis. Euro-area finance ministers may authorize only a 6 billion- euro loan to tide Greece through bond redemptions in July, while further aid hinges on Greek budget cuts, Belgian Finance Minister Didier Reynders said.
Greek Default Would Spell ‘Havoc’ for Banks (Source: Bloomberg)
A year after European officials bailed out Greece, investors say the region’s banks haven’t raised sufficient capital or cut loans enough to withstand the contagion that may follow a default. While European lenders reduced their risk tied to Greece by 30 percent to $136.3 billion last year by not renewing loans, writing down the value of debt and shifting it off their books, they still have almost $2 trillion linked to Portugal, Ireland, Spain and Italy, figures from the Bank for International Settlements show, leaving them vulnerable if the crisis spreads.
20110620 1006 Global Commodities Related News.
Corn (Source: CME)
US corn futures end slightly lower, capping a week straight of declines and dropping 11% from last Friday's record high near $8/bushel. "The bears won this week," says Dave Marshall, an independent commodities broker in Illinois. Prices traded higher and lower during the session, eventually succumbing to continued selling pressure. CBOT July corn slipped 1 1/4c to $7.00 1/4 a bushel.
Wheat (Source: CME)
US wheat futures finish mixed as the markets stabilize after dropping sharply earlier in the week. Traders were assessing the ongoing harvest, which has pressured prices by bringing in fresh supplies. The harvest is revealing "outstanding protein levels" in the southern Plains, making the crop desirable to grain users, according to US Wheat Associates, a trade group. Harvest is quickly winding down in Oklahoma but expected to slow down in as it moves north into Nebraska. CBOT July wheat slips 1c to $6.72 1/4 a bushel; KCBT July rises 6 1/2c to $8.04 1/2; MGE May stumbles 3c to $8.97 1/4.
Rice (Source: CME)
US rice futures finish at a 1-month low as expectations for favorable weather pressure prices. Crops should benefit from rains in dry areas of the Mississippi Delta next week, analysts note. Conditions have already improved in producing state like Arkansas and Louisiana, according to federal data issued this week. The USDA will update its crop ratings Monday. CBOT July rice sheds 4c to $13.96 1/2 per hundredweight.
Brazil's Winter Corn Crop May Miss Output Forecast - Analyst (Source: CME)
Dry weather and late-season planting could cause Brazil's winter corn harvest to miss official output estimates, though the shortfall should be partially offset by a larger crop area, according to Rabobank. Conab, as the crop-forecasting agency of the Agricultural Ministry is known, estimated that Brazil's 2010-11 corn crop will reach 56.7 million metric tons, up 1.3% from a year earlier. The second crop, which was planted in March and will be harvested in the coming weeks, is expected to account for 21.7 million tons of corn, according to Conab's latest forecasts. Renato Rasmussen, Rabobank's grain and oilseed analyst in Brazil, said in an interview that scarce rainfall during much of April and May will likely hurt crop yields. He expects the winter harvest to yield around 17 million tons of corn, bringing the total for the 2010-11 crop year to 52 million tons. Corn growers took a gamble by planting corn late in the season, after a delayed soy harvest, when dry weather typically prevails, Rasmussen said.
"Although it was very risky to plant in such a late harvest, they decided to do it anyway because of the prices," he said. Until last week's rains in southern Brazil, the situation was looking even worse. Central-western Mato Grosso state, which didn't get a break from a drought, could still suffer a 30% to 35% drop in overall corn output, Rasmussen said. Likely helping to balance out some of the lost productivity is an 8.8% year-over-year increase in the planted area of corn, which Conab estimates at 5.71 million hectares for the second harvest.
Crusting Hurts Ontario's Corn Emergence -Report (Source: CME)
The development of corn planted in some of Ontario's heavier soils was being hampered by crusting soils, according to the Ontario Ministry of Agriculture, Food and Rural Affairs' field crop update for the week ended June 15. The crusting has resulted in emergence problems in those areas, the report said. Soybean development in the province ranges from the vegetative emergence stage to the trifoliate leaf stage, the report said. In dry areas plant emergence was seen as poor on fields that were not planted into moisture. Flea beetle pressure was described as high in select areas of the canola growing regions. The report also indicated that Swede Midge damage was also evident in certain canola fields. Most of the winter wheat crop in southern Ontario was now at or past the 75% heading stage and well into full flowering stage, the report said. The advanced fields were now past the window for fusarium control products.
There is a significant amount of white or bleached wheat heads reported in fields in areas of south-western Ontario. Advanced spring cereal crops were at the flag leaf stage of development and about 7 to 10 days before heading, the report said. First cut forage maturity was advanced.
China Adds Argentina's Farmlands To Its Commodities Shopping List (Source: CME)
Chinese investment is flooding into Argentina as the Asian giant expands its global commodity hunt from the raw materials used in industry to the foodstuffs needed to feed its 1.3 billion citizens. China's investment in Latin America hit $15.6 billion during the 12-month period through the end of May, nearly three times greater than the year-ago period, consulting firm Deloitte said in a report. Of that amount, Brazil received about 60% and Argentina close to 40%. During the last three years, more than 70% of China's investment in the region went to energy and minerals, but farming is attracting more attention as the country seeks to fill its bowls from foreign fields. China already buys the bulk of Argentina's soybean exports, its top crop and largest source of export revenue. Soybeans are mainly used as livestock feed in China, where meat consumption is rising along with personal incomes. At the same time, urbanization is shrinking the amount of arable land available in China.
Last week, China's largest farming company, Heilongjiang Beidahuang Nongken Group, inked a joint venture with Argentina's Cresud SA to buy land and farm soybeans. Cresud is one of Argentina's top agriculture firms with control over more than 1 million hectares (2.47 million acres) of farmland that produce grain, cattle and milk. Heilongjiang Beidahuang's chairman, Sui Fengfu, told Dow Jones Newswires in March that the company plans to buy 200,000 hectares of overseas farmland this year, and that Latin America is a key target. The company is already farming 2 million hectares of land outside China. Heilongjiang Beidahuang is also spending $1.5 billion to lease and develop farms on 300,000 hectares in Argentina's Rio Negro Province. Over a five- to 10-year period, the company plans to grow wheat, corn, soybeans, fruits, vegetables and wine grapes for export to China. The Cresud and Rio Negro deals appear aimed at avoiding a backlash against foreign ownership of farmland in Argentina.
President Cristina Fernandez has introduced legislation limiting land purchases by foreign individuals and companies to 1,000 hectares in rural areas. Heilongjiang Beidahuang's incursion in agriculture comes hot on the heels of heavy Chinese investment in Argentina's oil sector. In February, Occidental Petroleum Corp. sold its local assets to China Petroleum & Chemical Corp. for $2.5 billion. Last year, China's Cnooc Ltd., in partnership with Argentina's Bridas Corp., agreed to buy a 60% stake in Pan American Energy from BP PLC for $7.1 billion. China's hunger for raw materials has also led it into mining, with MCC Minera Sierra Grande SA, a unit of state-run China Metallurgical Group, buying the Sierra Grande iron mine in Rio Negro Province in 2006. The mine, which had been shuttered since 1991, made its first shipment of iron-ore concentrate to China in February.
Deloitte predicts that Chinese investment will continue pouring into Latin America, but expects a diversification in the future into other industries such as manufacturing, infrastructure and finance. Though its growing exponentially, China's investment still makes up a relatively small share of total foreign direct investment flows to the region. Foreign direct investment in Latin America grew 40% on the year to $113 billion in 2010, and is expected to rise 15% to 20% this year, according to the U.N.'s Economic Commission for Latin America and the Caribbean.
OECD Sees A Decade Of High, Volatile Food Prices (Source: CME)
Food prices will be up to 30% higher on average over the next decade as slowing grains production fails to keep pace with rising demand, the Organization for Economic Cooperation and Development said, but it said financial speculation has no long-term effect on food prices. Price volatility, which has plagued agricultural markets in recent years, is also set to become commonplace as lower output gradually erodes world stocks, the OECD said in a joint report with the United Nations' Food and Agriculture Organization. And with climate change expected to make yields vary far more wildly from year to year and world stocks expected to fall, the report said that feeding the world's almost 1 billion hungry people will become harder. "A slow-growing supply set against expected high demand underlines the projection of high and more volatile agricultural commodity prices," said the report.
Ministers from the Group of 20 industrialized nations are expected to announce next week plans to create a global database on food production and stocks, to mirror existing schemes in oil markets. The OECD and the FAO backed the need for improving transparency through better forecasting, but stopped short of arguing that financial investors were responsible for driving up food prices in the long term. "High levels of speculative activity in futures markets may amplify price movements in the short term although there is no conclusive evidence of longer term systemic effects on volatility," they said. Instead, they argue that the rise in prices is likely to be driven by an increasing imbalance in fundamentals. A forecast 30% increase in the price of poultry and 20% increase in pigmeat, for example, is down to growing consumption by developing world's rapidly-expanding middle class, they said.
Rising demand from biofuels and the increased use of grains for feed are also expected to push up cereals prices by a fifth as production growth slows to 1.7% a year due to stagnating yields in the developed world, down from 2.6% over the previous decade. Wheat yields are predicted to increase only 0.8% a year, leaving production and consumption on an even keel at 746 million metric tons. Production of rice, the staple grain consumed in Asia, is expected to increase to 528 million tons by 2020, a rate of only 1.3% a year. "Weather-related crop yield variations are expected to become an even more critical driver of price volatility in the future," the report said. Yet the bodies shied away from predicting any shortfall in output of major grains, forecasting that global coarse grain production will rise 18% by 2020 to 1.321 billion tons by 2020, the same pace as consumption.
They said that any slowdown in output in the developed world is likely to be made up for by rising production in emerging countries, particularly in Latin America and Eastern Europe. "The projections confirm the continuation of the gradual shift in agricultural market share from developed to developing countries," they said. Still, they noted that external influences, such as oil and the movement of currencies, will have a growing influence on food prices and are likely to drive volatility in the markets in the years ahead. By 2020 biofuels are projected to absorb 13% of global production of coarse grains, primarily corn, 15% of vegetable oil and some 30% of sugar.
Funds Reduce Long Positions in Commodities in Bet Global Growth to Decline (Source: Bloomberg)
Funds reduced bullish bets on commodity prices for the first time in four weeks as Greek’s debt crisis spurred speculation that global growth will decline, curbing demand for raw materials.
World Faces Century of Hunger Without Farm Deal, France’s Le Maire Says (Source: Bloomberg)
The Group of 20 countries must reach an agreement at a meeting of farm ministers in Paris next week to avoid the 21st century from becoming “the century of hunger,” French Agriculture Minister Bruno Le Maire said. France, as president of the G-20 this year, is proposing a shared database on food stocks and harvests, a forum on export restrictions, emergency stocks in food-deficient countries and regulation to reduce commodity-price swings, Le Maire said.
Corn Stocks Plunging to 1974 Low as China Adds Brazil-Sized Crop to Demand (Source: Bloomberg)
Even a fifth consecutive year of record global corn harvests will fail to meet demand for food, fuel and livestock feed, reducing world stockpiles to the lowest in two generations. Consumption will rise 3 percent in the next marketing year, a 16th consecutive annual gain that saw demand jump 66 percent, according to U.S. Department of Agriculture estimates. Inventory will drop to 47 days of use, the fewest since 1974, the data show. Waterlogged fields in the U.S., the largest exporter, will curb yields, Goldman Sachs Group Inc. says. Corn may jump 36 percent to a record $9 a bushel if conditions worsen, Morgan Stanley says.
Oil Declines for Second Day on Concerns Over European Debt, Global Economy (Source: Bloomberg)
Oil declined a second day in New York on speculation a slowing global economy and Greece’s debt crisis will lead to lower fuel demand. Futures fell as much as 0.4 percent today after the biggest weekly decline in six weeks. European governments weighed withholding half of Greece’s next 12 billion-euro ($17.2 billion) aid payment to maintain pressure on the government to slash its debt. Japan’s exports fell 10.3 percent in May from a year earlier. Economists surveyed by Bloomberg News forecast an 8.4 percent drop. A report tomorrow may show U.S. home sales last month slid to the lowest this year.
Crude Oil Falls to Near a Four-Month Low on European Debt Crisis, Economy (Source: Bloomberg)
Crude oil dropped to the lowest price in four months in New York on doubts European efforts to resolve the Greek debt crisis will succeed, and on concern of reduced economic growth and fuel demand. Futures fell 2 percent as Greek Prime Minister George Papandreou attempted to get the country’s parliament to pass austerity measures needed for a bailout. The International Monetary Fund cut its forecast for U.S. growth in 2011. Oil tumbled 6.3 percent this week as U.S. manufacturers turned pessimistic and fuel consumption dropped.
Gold May Drop as Growth Risk Hurts Commodities (Source: Bloomberg)
Gold is poised for a second weekly decline as growing evidence of an economic slowdown and the dollar’s strength curb demand for commodities. Immediate-delivery gold dropped as much as 0.3 percent to $1,525.73 an ounce before trading at $1,526 at 2:35 p.m. in Singapore. The metal lost 0.3 percent this week after a 0.7 percent drop the previous week. The August-delivery contract decreased 0.2 percent to $1,527.60. Cash silver lost 2.4 percent this week and was set for a third weekly decline.
US corn futures end slightly lower, capping a week straight of declines and dropping 11% from last Friday's record high near $8/bushel. "The bears won this week," says Dave Marshall, an independent commodities broker in Illinois. Prices traded higher and lower during the session, eventually succumbing to continued selling pressure. CBOT July corn slipped 1 1/4c to $7.00 1/4 a bushel.
Wheat (Source: CME)
US wheat futures finish mixed as the markets stabilize after dropping sharply earlier in the week. Traders were assessing the ongoing harvest, which has pressured prices by bringing in fresh supplies. The harvest is revealing "outstanding protein levels" in the southern Plains, making the crop desirable to grain users, according to US Wheat Associates, a trade group. Harvest is quickly winding down in Oklahoma but expected to slow down in as it moves north into Nebraska. CBOT July wheat slips 1c to $6.72 1/4 a bushel; KCBT July rises 6 1/2c to $8.04 1/2; MGE May stumbles 3c to $8.97 1/4.
Rice (Source: CME)
US rice futures finish at a 1-month low as expectations for favorable weather pressure prices. Crops should benefit from rains in dry areas of the Mississippi Delta next week, analysts note. Conditions have already improved in producing state like Arkansas and Louisiana, according to federal data issued this week. The USDA will update its crop ratings Monday. CBOT July rice sheds 4c to $13.96 1/2 per hundredweight.
Brazil's Winter Corn Crop May Miss Output Forecast - Analyst (Source: CME)
Dry weather and late-season planting could cause Brazil's winter corn harvest to miss official output estimates, though the shortfall should be partially offset by a larger crop area, according to Rabobank. Conab, as the crop-forecasting agency of the Agricultural Ministry is known, estimated that Brazil's 2010-11 corn crop will reach 56.7 million metric tons, up 1.3% from a year earlier. The second crop, which was planted in March and will be harvested in the coming weeks, is expected to account for 21.7 million tons of corn, according to Conab's latest forecasts. Renato Rasmussen, Rabobank's grain and oilseed analyst in Brazil, said in an interview that scarce rainfall during much of April and May will likely hurt crop yields. He expects the winter harvest to yield around 17 million tons of corn, bringing the total for the 2010-11 crop year to 52 million tons. Corn growers took a gamble by planting corn late in the season, after a delayed soy harvest, when dry weather typically prevails, Rasmussen said.
"Although it was very risky to plant in such a late harvest, they decided to do it anyway because of the prices," he said. Until last week's rains in southern Brazil, the situation was looking even worse. Central-western Mato Grosso state, which didn't get a break from a drought, could still suffer a 30% to 35% drop in overall corn output, Rasmussen said. Likely helping to balance out some of the lost productivity is an 8.8% year-over-year increase in the planted area of corn, which Conab estimates at 5.71 million hectares for the second harvest.
Crusting Hurts Ontario's Corn Emergence -Report (Source: CME)
The development of corn planted in some of Ontario's heavier soils was being hampered by crusting soils, according to the Ontario Ministry of Agriculture, Food and Rural Affairs' field crop update for the week ended June 15. The crusting has resulted in emergence problems in those areas, the report said. Soybean development in the province ranges from the vegetative emergence stage to the trifoliate leaf stage, the report said. In dry areas plant emergence was seen as poor on fields that were not planted into moisture. Flea beetle pressure was described as high in select areas of the canola growing regions. The report also indicated that Swede Midge damage was also evident in certain canola fields. Most of the winter wheat crop in southern Ontario was now at or past the 75% heading stage and well into full flowering stage, the report said. The advanced fields were now past the window for fusarium control products.
There is a significant amount of white or bleached wheat heads reported in fields in areas of south-western Ontario. Advanced spring cereal crops were at the flag leaf stage of development and about 7 to 10 days before heading, the report said. First cut forage maturity was advanced.
China Adds Argentina's Farmlands To Its Commodities Shopping List (Source: CME)
Chinese investment is flooding into Argentina as the Asian giant expands its global commodity hunt from the raw materials used in industry to the foodstuffs needed to feed its 1.3 billion citizens. China's investment in Latin America hit $15.6 billion during the 12-month period through the end of May, nearly three times greater than the year-ago period, consulting firm Deloitte said in a report. Of that amount, Brazil received about 60% and Argentina close to 40%. During the last three years, more than 70% of China's investment in the region went to energy and minerals, but farming is attracting more attention as the country seeks to fill its bowls from foreign fields. China already buys the bulk of Argentina's soybean exports, its top crop and largest source of export revenue. Soybeans are mainly used as livestock feed in China, where meat consumption is rising along with personal incomes. At the same time, urbanization is shrinking the amount of arable land available in China.
Last week, China's largest farming company, Heilongjiang Beidahuang Nongken Group, inked a joint venture with Argentina's Cresud SA to buy land and farm soybeans. Cresud is one of Argentina's top agriculture firms with control over more than 1 million hectares (2.47 million acres) of farmland that produce grain, cattle and milk. Heilongjiang Beidahuang's chairman, Sui Fengfu, told Dow Jones Newswires in March that the company plans to buy 200,000 hectares of overseas farmland this year, and that Latin America is a key target. The company is already farming 2 million hectares of land outside China. Heilongjiang Beidahuang is also spending $1.5 billion to lease and develop farms on 300,000 hectares in Argentina's Rio Negro Province. Over a five- to 10-year period, the company plans to grow wheat, corn, soybeans, fruits, vegetables and wine grapes for export to China. The Cresud and Rio Negro deals appear aimed at avoiding a backlash against foreign ownership of farmland in Argentina.
President Cristina Fernandez has introduced legislation limiting land purchases by foreign individuals and companies to 1,000 hectares in rural areas. Heilongjiang Beidahuang's incursion in agriculture comes hot on the heels of heavy Chinese investment in Argentina's oil sector. In February, Occidental Petroleum Corp. sold its local assets to China Petroleum & Chemical Corp. for $2.5 billion. Last year, China's Cnooc Ltd., in partnership with Argentina's Bridas Corp., agreed to buy a 60% stake in Pan American Energy from BP PLC for $7.1 billion. China's hunger for raw materials has also led it into mining, with MCC Minera Sierra Grande SA, a unit of state-run China Metallurgical Group, buying the Sierra Grande iron mine in Rio Negro Province in 2006. The mine, which had been shuttered since 1991, made its first shipment of iron-ore concentrate to China in February.
Deloitte predicts that Chinese investment will continue pouring into Latin America, but expects a diversification in the future into other industries such as manufacturing, infrastructure and finance. Though its growing exponentially, China's investment still makes up a relatively small share of total foreign direct investment flows to the region. Foreign direct investment in Latin America grew 40% on the year to $113 billion in 2010, and is expected to rise 15% to 20% this year, according to the U.N.'s Economic Commission for Latin America and the Caribbean.
OECD Sees A Decade Of High, Volatile Food Prices (Source: CME)
Food prices will be up to 30% higher on average over the next decade as slowing grains production fails to keep pace with rising demand, the Organization for Economic Cooperation and Development said, but it said financial speculation has no long-term effect on food prices. Price volatility, which has plagued agricultural markets in recent years, is also set to become commonplace as lower output gradually erodes world stocks, the OECD said in a joint report with the United Nations' Food and Agriculture Organization. And with climate change expected to make yields vary far more wildly from year to year and world stocks expected to fall, the report said that feeding the world's almost 1 billion hungry people will become harder. "A slow-growing supply set against expected high demand underlines the projection of high and more volatile agricultural commodity prices," said the report.
Ministers from the Group of 20 industrialized nations are expected to announce next week plans to create a global database on food production and stocks, to mirror existing schemes in oil markets. The OECD and the FAO backed the need for improving transparency through better forecasting, but stopped short of arguing that financial investors were responsible for driving up food prices in the long term. "High levels of speculative activity in futures markets may amplify price movements in the short term although there is no conclusive evidence of longer term systemic effects on volatility," they said. Instead, they argue that the rise in prices is likely to be driven by an increasing imbalance in fundamentals. A forecast 30% increase in the price of poultry and 20% increase in pigmeat, for example, is down to growing consumption by developing world's rapidly-expanding middle class, they said.
Rising demand from biofuels and the increased use of grains for feed are also expected to push up cereals prices by a fifth as production growth slows to 1.7% a year due to stagnating yields in the developed world, down from 2.6% over the previous decade. Wheat yields are predicted to increase only 0.8% a year, leaving production and consumption on an even keel at 746 million metric tons. Production of rice, the staple grain consumed in Asia, is expected to increase to 528 million tons by 2020, a rate of only 1.3% a year. "Weather-related crop yield variations are expected to become an even more critical driver of price volatility in the future," the report said. Yet the bodies shied away from predicting any shortfall in output of major grains, forecasting that global coarse grain production will rise 18% by 2020 to 1.321 billion tons by 2020, the same pace as consumption.
They said that any slowdown in output in the developed world is likely to be made up for by rising production in emerging countries, particularly in Latin America and Eastern Europe. "The projections confirm the continuation of the gradual shift in agricultural market share from developed to developing countries," they said. Still, they noted that external influences, such as oil and the movement of currencies, will have a growing influence on food prices and are likely to drive volatility in the markets in the years ahead. By 2020 biofuels are projected to absorb 13% of global production of coarse grains, primarily corn, 15% of vegetable oil and some 30% of sugar.
Funds Reduce Long Positions in Commodities in Bet Global Growth to Decline (Source: Bloomberg)
Funds reduced bullish bets on commodity prices for the first time in four weeks as Greek’s debt crisis spurred speculation that global growth will decline, curbing demand for raw materials.
World Faces Century of Hunger Without Farm Deal, France’s Le Maire Says (Source: Bloomberg)
The Group of 20 countries must reach an agreement at a meeting of farm ministers in Paris next week to avoid the 21st century from becoming “the century of hunger,” French Agriculture Minister Bruno Le Maire said. France, as president of the G-20 this year, is proposing a shared database on food stocks and harvests, a forum on export restrictions, emergency stocks in food-deficient countries and regulation to reduce commodity-price swings, Le Maire said.
Corn Stocks Plunging to 1974 Low as China Adds Brazil-Sized Crop to Demand (Source: Bloomberg)
Even a fifth consecutive year of record global corn harvests will fail to meet demand for food, fuel and livestock feed, reducing world stockpiles to the lowest in two generations. Consumption will rise 3 percent in the next marketing year, a 16th consecutive annual gain that saw demand jump 66 percent, according to U.S. Department of Agriculture estimates. Inventory will drop to 47 days of use, the fewest since 1974, the data show. Waterlogged fields in the U.S., the largest exporter, will curb yields, Goldman Sachs Group Inc. says. Corn may jump 36 percent to a record $9 a bushel if conditions worsen, Morgan Stanley says.
Oil Declines for Second Day on Concerns Over European Debt, Global Economy (Source: Bloomberg)
Oil declined a second day in New York on speculation a slowing global economy and Greece’s debt crisis will lead to lower fuel demand. Futures fell as much as 0.4 percent today after the biggest weekly decline in six weeks. European governments weighed withholding half of Greece’s next 12 billion-euro ($17.2 billion) aid payment to maintain pressure on the government to slash its debt. Japan’s exports fell 10.3 percent in May from a year earlier. Economists surveyed by Bloomberg News forecast an 8.4 percent drop. A report tomorrow may show U.S. home sales last month slid to the lowest this year.
Crude Oil Falls to Near a Four-Month Low on European Debt Crisis, Economy (Source: Bloomberg)
Crude oil dropped to the lowest price in four months in New York on doubts European efforts to resolve the Greek debt crisis will succeed, and on concern of reduced economic growth and fuel demand. Futures fell 2 percent as Greek Prime Minister George Papandreou attempted to get the country’s parliament to pass austerity measures needed for a bailout. The International Monetary Fund cut its forecast for U.S. growth in 2011. Oil tumbled 6.3 percent this week as U.S. manufacturers turned pessimistic and fuel consumption dropped.
Gold May Drop as Growth Risk Hurts Commodities (Source: Bloomberg)
Gold is poised for a second weekly decline as growing evidence of an economic slowdown and the dollar’s strength curb demand for commodities. Immediate-delivery gold dropped as much as 0.3 percent to $1,525.73 an ounce before trading at $1,526 at 2:35 p.m. in Singapore. The metal lost 0.3 percent this week after a 0.7 percent drop the previous week. The August-delivery contract decreased 0.2 percent to $1,527.60. Cash silver lost 2.4 percent this week and was set for a third weekly decline.
20110620 1004 Soy Oil Related News.
Soy Oil chart reading : downside biased with possible pullback correction.
ITS CPO export up 22% to 969,804 tonnes for the period of 1~20 Jun 2011.
SGS CPO export up 18.8% to 973,211 tonnes for the period of 1~20 Jun 2011.
Soybeans (Source: CME)
US soybean futures stumble, with improved crop outlooks, falling crude oil futures and sagging demand spuring salling. Ongoing concerns about the global economy kept traders in a cautious mood, with the absence of fresh supportive news providing little incentive for buyers to step into the market, analysts say. Traders buying corn and selling soybeans on spreads as well as forecasts calling for rains to reach drought stricken areas of the south provided further incentives for buyers to head to the sidelines, analysts add. CBOT July soy down 17 1/2c at $13.33/bushel.
Soybean Meal/Oil (Source: CME)
Soy product futures end lower, consistent with the lower theme in soybeans. Soyoil futures dropped to a one month low, falling in unison with falling crude oil and soybean futures, analysts said. Soymeal futures stumble, moving in step with the lower theme filtering through soy complex futures. CBOT July soyoil settled down 0.7% at 55.92 cents/pound, and July soymeal ended down 1.3% at $349.00/short ton.
Friday, June 17, 2011
20110617 1843 FCPO EOD Daily Chart Study.
FCPO closed : 3198, changed : +5 points, volume : higher.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histrogram : fall lower, seller still in control.
Support : 3150, 3100, 3070, 3050 level.
Resistance : 3200, 3250, 3270, 3300 level.
Comment :
FCPO market closed recorded marginal gain with much better volume participation while overnight soy oil closed recorded loss and currently trading weaker.
Fear of growing inventory above 2 million tonnes market triggered market to fall lower hitting 5 week low level before recovered upward as traders decided to reduce position ahead of the weekend and next Tuesday World Oilseed Conference in Turkey event.
Daily chart formed a down doji bar hammer candle (a possible reversal candle signal but confirmation needed) closed little above lower Bollinger band level after market opened higher, slide downward slowly followed by second session sell down activities touched lower Bolllinger band and recovered upward salvaged all intraday loss to closed recorded small gain.
Technical reading suggesting a downside biased market development with possible pullback correction testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
20110617 1821 FKLI EOD Daily Chart Study.
Bollinger band reading : correction range bound little upside biased.
MACD Histrogram : turned upward again, buyer seller battling.
Support : 1550, 1540, 1530, 1515 level.
Resistance : 1565, 1580, 1590, 1600 level.
Comment :
FKLI closed recorded gain with higher volume transacted doing about 9.5 points discount compare to cash market that closed higher while Asia and Europe trading lower despite overnight U.S. market closed rebounded higher.
Asia region markets continue to registered loss as fear arise on potential Greece may default on its sovereign debt.
Daily chart formed an up bar candle with upper shadow closed above middle Bollinger band level after market opened 1 point higher, move upwards slowly tested near resistance level and eased lower slightly to closed off the high of the day.
Still, market is likely to have correction range bound little upside biased development testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
20110617 0953 Global Economic Related News.
Asia: Housing boom stalls as tightening puts brakes on prices
From Mumbai to Melbourne, Asia’s property boom is stalling as the world’s highest interest rates and government efforts to curb prices take hold. In China’s biggest cities, growth slowed in April after the government stepped up property measures. In India and Australia, prices are falling after the steepest interest rate increases. In the financial hubs of Hong Kong and Singapore, price growth is moderating after increased deposit requirements and land releases. (Financial Daily)
India: Raises rates for 10th time since 2010 to tame prices
India’s central bank raised interest rates for the 10th time since the start of 2010, extending the longest streak of monetary tightening in a decade after inflation accelerated. The Reserve Bank of India increased the repurchase rate to 7.5% from 7.25%. (Bloomberg)
UK: Retail sales drop more than forecast on fuel, job fears
UK retail sales dropped more than economists forecast in May as higher fuel costs and concern about employment prospects restrained consumer spending. Sales fell 1.4% from April, when they rose 1.1%, boosted by warm weather and an extra public holiday. (Bloomberg)
Philippines: Central bank ordered lenders to set aside more money as reserves for the first time since 2005, joining China and India in tightening monetary policy as the region fights inflation amid easing growth. Bangko Sentral ng Pilipinas increased the reserve requirement to 20% from 19% effective June 24, it said in a statement in Manila. (Source: Bloomberg)
US: Housing starts increased more than forecast in May
Housing starts in the US increased more than forecast in May, led by a jump in the West as other parts of the country languished. Work began on 560,000 houses at an annual pace, up 3.5% from the prior month. Building permits, a sign of future construction, also increased. (Bloomberg)
US: Confidence eroding among factories, consumers
Manufacturing in the Philadelphia region unexpectedly contracted in June and Americans’ views on the economy’s outlook soured, signaling an erosion of confidence in the expansion. The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7, the lowest since July 2009, from 3.9 the prior month. (Bloomberg)
From Mumbai to Melbourne, Asia’s property boom is stalling as the world’s highest interest rates and government efforts to curb prices take hold. In China’s biggest cities, growth slowed in April after the government stepped up property measures. In India and Australia, prices are falling after the steepest interest rate increases. In the financial hubs of Hong Kong and Singapore, price growth is moderating after increased deposit requirements and land releases. (Financial Daily)
India: Raises rates for 10th time since 2010 to tame prices
India’s central bank raised interest rates for the 10th time since the start of 2010, extending the longest streak of monetary tightening in a decade after inflation accelerated. The Reserve Bank of India increased the repurchase rate to 7.5% from 7.25%. (Bloomberg)
UK: Retail sales drop more than forecast on fuel, job fears
UK retail sales dropped more than economists forecast in May as higher fuel costs and concern about employment prospects restrained consumer spending. Sales fell 1.4% from April, when they rose 1.1%, boosted by warm weather and an extra public holiday. (Bloomberg)
Philippines: Central bank ordered lenders to set aside more money as reserves for the first time since 2005, joining China and India in tightening monetary policy as the region fights inflation amid easing growth. Bangko Sentral ng Pilipinas increased the reserve requirement to 20% from 19% effective June 24, it said in a statement in Manila. (Source: Bloomberg)
US: Housing starts increased more than forecast in May
Housing starts in the US increased more than forecast in May, led by a jump in the West as other parts of the country languished. Work began on 560,000 houses at an annual pace, up 3.5% from the prior month. Building permits, a sign of future construction, also increased. (Bloomberg)
US: Confidence eroding among factories, consumers
Manufacturing in the Philadelphia region unexpectedly contracted in June and Americans’ views on the economy’s outlook soured, signaling an erosion of confidence in the expansion. The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7, the lowest since July 2009, from 3.9 the prior month. (Bloomberg)
20110617 0952 Malaysia Corporate Related News.
KLCI chart reading :
correction range bound upside biased.
Alstom team tipped to bag RM5bn power plant job
A consortium led by Alstom Asia, the world's third largest power-equipment maker, is poised to win a contract worth as much as RM5bn to help build a power plant in Johor, according to people familiar with the matter. The contract is for engineering, procurement and construction (EPC) works for the 1,000 MW Tanjung Bin coal-fired power plant. It is understood that the consortium, which also includes Mudajaya and Eversendai, beat Toshiba and a South Korean-led consortium to be the frontrunner. The consortium is set to start work in March next year and complete the project in four years. (BT)
10,000 orders for new Myvi so far, to make Indonesian debut
The new version the Perodua Myvi made its appearance across the country yesterday. Managing director Datuk Aminar Rashid Salleh said Perodua has received about 10,000 orders since booking opened on 4 June and the carmaker expects between 8,000 and 8,500 units to be sold monthly. The car will soon make its debut in the Indonesian market, marking Perodua's first foray there. He added that 500 units of the new Myvi will be shipped to Indonesia this month, while the official launch there will take place next month. (BT)
MAS and AirAsia to announce aircraft orders at Paris Air Show
MAS is set to announce new aircraft orders at the Paris Air Show next week, but rival AirAsia is aiming to conclude negotiations so that it can make a landmark aircraft order to double its fleet at the same show, sources said. Sources claim that MAS will likely exercise its option to buy up to 20 B737-800s. At catalogue prices of USD80.0m, the 20 aircraft will cost USD1.6bn. Whether MAS will exercise its option buy 10 more A330-300s is not clear. MAS also plans to order 30 aircraft for Firefly. Reports say AirAsia is likely to order as many as 200 Airbus jets which would be worth USD14bn to USD18bn at list prices. (StarBiz)
MAS: May boost fleet to tap Oneworld network. Malaysia Airlines' entry into the Oneworld airline alliance may see it ordering more planes. MAS will be attending the Paris Air Show next week, and an announcement on new orders is largely expected. (Source: Business Times)
AirAsia: To announce aircraft orders at Paris Air Show. AirAsia is aiming to conclude negotiations soon so that it can make a landmark aircraft order to double its fleet at the Paris Air Show. (Source: The Star)
Plantation: Malaysia wins case against Aussie palm oil labeling Bill, Malaysia is largest producer of certified, sustainable palm oil. Malaysia has won its case against Australia's proposed Truth in Labelling - Palm Oil Bill. The Community Affairs Legislative Committee of the Australian Senate in Canberra has recommended that the Bill not be passed. Separately, Malaysia is now the world's largest producer of certified and sustainable palm oil, accounting for half of the 4.2m tonnes of globally certified and sustainable palm oil to date carried out by the Roundtable on Sustainable Palm Oil (RSPO). (Source: Business Times)
UEM Land targets RM5bn GDV in 2011
UEM Land is planning to launch projects with a total GDV of RM5bn this year as it aspires to see its revenue grow by 50%. With the acquisition of Sunrise, UEM Land is hoping to build its portfolio and surpass its competitors’ revenue in the near future. The company has set an internal target of 50% revenue growth for FY11 and a 10% ROI. UEM Land is currently undertaking the development of Nusajaya in Iskandar and several projects in Bangi, Cyberjaya, Kajang and Mont’ Kiara. (Financial Daily)
KPJ to build specialist centre in Iskandar
KPJ will collaborate with Johor Land to build a new specialist hospital on a 500,000 sq ft of land in Bandar Dato' Onn in the Iskandar Malaysia development region in Johor Baru. The project will be undertaken in two phases and the hospital will have the capacity of 400 beds, encompassing 280,000 sq ft. The first phase of the construction with 150 beds is expected to start by the end of 2012. Its total investment has yet to be determined, but an average of RM1,000 is budgeted for a bed. (BT)
20110617 0945 Global Market Related News.
DJIA chart reading : correction range bound downside biased.
Hang Seng chart reading : downside biased with possible pullback correction
Asia Housing Boom Stalls on Tightening (Source: Bloomberg)
From Mumbai to Melbourne, Asia’s property boom is stalling as the world’s highest interest rates and government efforts to curb prices take hold. In China’s biggest cities, growth slowed in April after the government stepped up property measures. In India and Australia, prices are falling after the steepest interest rate increases among major economies. In the financial hubs of Hong Kong and Singapore, price growth is moderating after increased deposit requirements and land releases. In Japan, the worst earthquake on record snuffed out signs of a recovery, while South Korean banks remain weighed by soured property loans.
Asia Stocks Rise on U.S. Job Data (Source: Bloomberg)
Asian stocks rose, driving up the region’s key index for the first day in three after a drop in U.S. jobless claims tempered concern that a recovery in the world’s biggest economy is faltering, and amid speculation Greece may avoid a default on its debt. James Hardie Industries SE (JHX), the largest seller of home siding in the U.S., gained 1.1 percent in Sydney on optimism that a slowdown in the American economy is easing. Toyota Motor Corp., the world’s biggest carmaker, climbed 0.5 percent in Tokyo. DeNA Co., an online social-media-site operator, surged 5.4 percent after raising its profit forecast by 21 percent.
U.S. Stocks Advance Amid Better-Than-Estimated Employment, Housing Reports (Source: Bloomberg)
U.S. stocks rebounded, a day after the Standard & Poor’s 500 Index declined to a three-month low, as better-than-estimated housing starts and jobless claims reports tempered concern about a slowdown in the economy. A gauge of 12 homebuilders in S&P indexes rallied 1.6 percent. Kroger Co. (KR) advanced 4.5 percent after the largest U.S. grocery chain raised its full-year profit forecast. Southern Union Co. (SUG) soared 18 percent as Energy Transfer Equity LP agreed to buy it for $4.2 billion in the largest purchase of a pipeline company this year. Benchmark indexes erased gains earlier today amid concern big banks will face larger capital increases to comply with proposed international regulations.
US consumers battle weaker growth, higher prices
WASHINGTON, June 15 (Reuters) - The U.S. economy is facing a troubling mix of higher prices and weak growth.
Underlying U.S. inflation rose to its highest level in nearly three years in May while a regional factory gauge posted a surprise contraction this month.
Initial Jobless Claims in U.S. Decline More Than Forecast as Firings Abate (Source: Bloomberg)
Fewer Americans than forecast filed applications for unemployment benefits last week, indicating the pickup in firings that began in April is abating. Jobless claims declined by 16,000 to 414,000 in the week ended June 11, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected 420,000 filings, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments decreased.
Consumers’ Expectations Decline to Lowest in Two Years in Bloomberg Index (Source: Bloomberg)
Americans’ views on the economy’s outlook soured in June, showing that unemployment, inflation and the slump in housing are concerning consumers. The Bloomberg gauge of economic expectations dropped to minus 31 this month, the lowest level since March 2009, from minus 16 in May. The Consumer Comfort Index, issued weekly, improved to minus 44 in the period to June 12, the highest level since mid April, from minus 45.9 as fuel prices kept falling.
Consumer Spending Fades in China Economy (Source: Bloomberg)
At the Haiyang Zhuangshi Co. hardware store in Beijing, sales of paint and aluminum window frames are slowing, one sign of a diminished role for consumer spending in China that’s foiling government objectives. “It seems the peak days are gone,” said owner Hu Mengbin, 42, whose daily revenue has dropped to about 3,000 yuan ($463) from as much as 4,000 yuan last year after China stepped up efforts to rein in home prices. “Between 2006 and 2008 when the property market was red hot, we could make quick money.”
India Signals Slower Pace of Rate Rises (Source: Bloomberg)
India’s central bank signaled it may slow the most aggressive monetary tightening among Asia’s major economies as risks to global growth threaten to undermine consumer demand.
Euro Poised for Second Weekly Decline Before EU Leaders Meet on Greece (Source: Bloomberg)
The euro headed for a second weekly decline before European leaders meet to discuss the Greek debt crisis today amid concern the situation is worsening. The single currency was near a one-month low versus the yen as Greek Prime Minister George Papandreou prepares to announce changes to his cabinet today after failing to garner opposition support for austerity measures. The yen rose against most of its major counterparts before a U.S. report forecast to show consumers grew less confident this month as the world’s largest economy slows.
Euro Weakens Third Day Versus Yen on Concern Greece Debt Crisis Worsening (Source: Bloomberg)
The euro fell for a third day against the yen as speculation the Greece debt crisis will worsen damped demand for the region’s currency. The euro dropped to 114.27 yen as of 9:15 a.m. in Tokyo from 114.56 yesterday in New York. The single currency was at $1.4193 from $1.4204.
Greek debt, political turmoil hit stocks, euro
LONDON, June 16 (Reuters) - World stocks hit a three-month low on Thursday, the euro slumped to a one-month trough and top-rated government bonds rose as concerns intensified the lack of a deal on Greek debt might trigger disorderly market moves.
Euro zone officials are struggling to agree on how to involve the private sector in a second Greek bailout without triggering a default that would likely destabilise other euro zone weaklings.
FOREX-Euro slumps vs Swissie, Greece concerns intensify
LONDON, June 16 (Reuters) - The euro hit a lifetime low against the Swiss franc and fell against other major currencies on Thursday as investors rushed into safe-haven assets on concerns that Greece's debt problems were spiralling out of control.
Selling in the euro accelerated, sending it to a three-week low versus the dollar as yields on weaker euro zone bond surged, expanding their spreads against German Bunds to their widest ever.
20110617 0937 Global Commodities Related News.
Corn (Source: CME)
US corn futures finish sharply lower as heavy selling by commodity funds extends into a third day. Commodity funds sold an estimated 21,000 contracts, pushing prices down 12% from Friday's record high. "Right now, it's, 'Get me out,'" says Sid Love, analyst for Kropf & Love Consulting. The Senate's vote to repeal an ethanol subsidy "helps explain continued fund-liquidation," according to Global Commodity Analytics & Consulting. Market participants fear demand for the grain will drop. CBOT July corn falls 24 1/4c to $7.01 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end at a three-month low on spillover pressure from the steep slide in corn prices. The sell-off drags down wheat as both grains are used for livestock feed. Producers will increasingly feed wheat to their animals following today?s slide as they seek alternatives to pricey corn, predicts Alan Brugler of Brugler Marketing & Management. The drop in wheat prices "creates the seed for the next rally," he says. CBOT July wheat drops 35 1/4c to $6.73 1/4 a bushel; KCBT July loses 21 1/4c to $7.98; MGE July sinks 36 3/4c to $9.00 1/4.
Rice (Source: CME)
US rice futures drop to a 1-month low amid spillover pressure from a 5% drop in wheat. That weighs on rice as both grains are global food staples. The grain markets came under broad pressure from selling by commodity funds and jitters about demand, analysts note. Meanwhile, weekly export sales of US rice for delivery before August dropped to 13,200 metric tons, a marketing-year low and an 81% tumble from the prior four-week average. CBOT July rice drops 1.4% to $14.00 1/2 per hundredweight.
U.S. corn steady after slide to 1-mth low, wheat ticks up
SINGAPORE, June 16 (Reuters) - U.S. corn futures were steady on Thursday, after being hammered down nearly 8 percent this week to a 1-month low on improved crop weather in the United States and concern that less grain will be used as a feedstock for ethanol production.
"For the time being, the weather looks okay, this is going to be the focus as corn and soybean crops progress in the United States," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne. "The rains of course caused delays in planting but ultimately the moisture will be beneficial for crop yields as we go forward."
German farmers see 7.9 pct fall in 2011 grain crop
HAMBURG, June 16 (Reuters) - Germany's 2011 grain crop of all types is likely to fall 7.9 percent on the year as dry spring weather has damaged crops, the German Farm Cooperatives Association said on Thursday in its new harvest forecast.It forecast the crop to fall to 40.8 million tonnes from 44.3 million tonnes in 2010.
This is slightly up on its previous estimate of 40.7 million tonnes in May following recent rain which provided limited relief to parched crops.
French analyst cuts EU grain crop views due drought
PARIS, June 16 (Reuters) - French analyst Strategie Grains on Thursday sharply cut its forecast for this year's grains crops in the European Union due to renewed dry conditions in the Western part of the bloc in May and despite recent rainfall.
Soft wheat saw the largest reduction, at 6 million tonnes, with the estimate of the 2011 crop lowered to 125.6 million tonnes, now 1 percent below last year's 126.6 million tonnes.
Caucasus farmers optimistic ahead of wheat harvest
MOZDOKSKY DISTRICT, June 15 (Reuters) - Farmers in the North Caucasus are cautiously upbeat as they prepare for next month's harvest that will determine whether Russia can reprise its role as a key player on world markets after last year's export ban.
The region, and neighbouring southern districts, accounted for 45 percent of Russia's wheat crop last year, and milder weather near the Black Sea means they are traditionally the first to hit the market.
Showers for US Midwest raise farmland flood risk
CHICAGO, June 15 (Reuters) - Daily showers were forecast for the U.S. Midwest through the weekend, raising the risk of more farmland to flood along the Missouri River, a forecaster said on Wednesday.
"It's going to keep pressure on the Missouri River -- the Missouri, mid-Mississippi, Illinois river basins are continuing to be affected by the heavy to moderate rainfall," said Mike Palmerino, forecaster with Telvent DTN weather service.
'Cheap' wheat may find feed demand lacking: Gavin Maguire
-- Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, June 15 (Reuters) - The recent surge in corn prices to above the price of Chicago wheat for the first time since 1996 has spurred expectations of a wave of demand
switching away from corn to wheat, specifically in the livestock feeding industry which has the capability to accommodate varying levels of both grains in animal diets.
But traders hoping for a surge in wheat demand from feeders may be disappointed, as limited wheat supplies in livestock-feeding regions, increased DDG supplies and ample pasture availability across the northern U.S. Plains may all serve to limit overall wheat use regardless of how 'cheap' it may get relative to corn.
UK rejects crackdown on commodity speculation
BOOTHBY GRAFFOE, June 15 (Reuters) - Britain does not believe speculators have played a central role in creating volatility in food commodity markets and sees little value in more regulation, farming minister Jim Paice told Reuters in an interview on Wednesday.
Nicolas Sarkozy, president of France which currently chairs the G20 group of developed nations, on Tuesday called for tighter controls on the speculators he blames for spiralling food and energy prices, spelling out reforms to put more trading under the thumb of regulators.
US House Approves Agriculture Spending Bill (Source: CME)
The U.S. House of Representatives voted to approve a $125.5 billion agriculture spending bill that includes controversial provisions to halt millions of dollars of payments to Brazil and bar the U.S. government from investing in new ethanol blender pumps. The bill that would fund the U.S. Department of Agriculture, Food and Drug Administration and Commodity Futures Trading Commission in fiscal year 2012 sparked Democrat outrage over cuts for a nutrition program that helps needy women and children. The Obama administration has sharply criticized the bill for underfunding efforts to beef up food safety initiatives and complained that it doesn't contain enough funds for the government to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. Spending on the USDA's Women Infants and Children program was lowered by $685 million in the bill, an action that Democrats warned would leave hundreds of thousands of people without needed assistance.
Republicans argued that there are contingency funds that would make sure no one would be left without needed aid. The bill contains a budget of $172 million for the CFTC in the 12-month period beginning Oct. 1, substantially less than the $308 million sought by President Barack Obama, and also less than the agency's current budget of $202 million. Rep. Scott Garrett (R., N.J.) added an amendment that would require regulators to delay certain new requirements for the over-the-counter derivatives trades for at least 12 months, while they collect data on those markets. House members also approved an amendment to the bill that halts U.S. payments to Brazil as part of a complex scheme that keeps Brazil from placing heavy duties on U.S. exports there. The U.S. government is now paying Brazil $12.275 million per month. Brazil won the right to impose the tariffs on U.S. goods during a World Trade Organization battle. Opponents of the amendment argued that cutting off the payments could start a trade war with Brazil.
Another amendment approved as part of the spending bill prohibits the USDA from funding the installation of new gas station pumps that can dispense fuel with higher ethanol content. The USDA is set to soon begin offering grants and loan guarantees for the installation of costly new "blender pumps" so drivers can purchase fuel with a higher ratio of corn-based ethanol. Most gasoline sold in the U.S. is 10% ethanol, but a growing fleet of flexible-fuel vehicles can run on an 85%-ethanol blend, or E85.
Global Farm Commodity Prices To Ease Through 2H - Rabobank (Source: CME)
Agricultural lender Rabobank expects global farm commodity prices to ease through the calendar second half, but they won't collapse as historical trends suggest is possible. Following every significant grains market rally since 1980 there has been a sharp and significant slump in prices with most corrections starting in July or August, the bank reported in a monthly outlook issued. The major coffee rallies in the past three decades have also turned sharply lower through the northern summer while cotton typically comes under pressure during this time of year, it said. "We don't expect a collapse in prices this time but we are forecasting an easing in prices" with the bank's modelling suggesting some bearish seasonality impact on markets will emerge in the calendar second half on a quarterly average basis, it said.
Macro uncertainties remain and fears of a slowdown in global and particularly Chinese economic growth are likely to weaken demand and moderate speculative interest in agricultural markets, the report said. But prices will be supported this year by ongoing production uncertainty and "incredibly tight" U.S. and global fundamentals, particularly for corn, cotton and sugar, though prices will slip from second quarter levels, it said. "There remains too many risks this time around for prices to collapse quickly back to long-run average levels," the bank forecast. With fundamental projections tight into 2011-12, favorable seasonal conditions will be needed through to harvest just to maintain current low stock to use levels, it said.
Agriculture Players Skeptical On G20 Food Transparency Plans (Source: CME)
Plans by the Group of 20 industrialized and emerging nations to create a global database on food production and stocks are unlikely to reduce price volatility, market analysts and traders said. Agriculture ministers are expected to announce next week the creation of the Agriculture Market Information System--or AMIS--an initiative designed to bring the same transparency to world agricultural markets as already exists in oil. But experts argue that even collating accurate data on inventories in major agricultural players like China and Russia will be virtually impossible, while few countries are likely to agree to share such data willingly. "It would not be in any of these countries' interest to let it be known in public how vulnerable that particular country is," said Bratin Sanyal, head of Asian equity investments for global bank ING based in Hong Kong.
"Asian countries are sitting on huge foreign exchange reserves and no-one ever makes it public what the composition of those reserves are. It's a good policy objective but whether it will ever be achieved I doubt it." Nicolas Sarkozy, president of France, has put improving food security at the top of his agenda for his leadership of the G20. World food prices surged to a record high in February, according to the United Nations, and the rising cost of staple foodstuffs was blamed for sparking the unrest in Arab countries this spring. Bruno Le Maire, the French agriculture minister, told a conference this month that he is confident that ministers will reach a consensus at the meeting on June 22-23 in Paris. And Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the U.N.'s Food and Agriculture Organization, which will have the mandate to create a secretariat for AMIS, said it is "realistic" to expect an agreement.
"The ministers are not coming with pledges of billions of dollars, they're coming with recommendations," he said. "This initiative is strikingly more positive than anything [agreed by the G20] in the recent past." Yet farmers and traders active in Europe's grain markets were much more sceptical about whether such a system would actually be transparent or do anything to reduce market volatility. Jon Duffy, trading director of Frontier Agriculture, which is part owned by grain giant Cargill Inc, told a grain conference that it was "a lovely aim but I just don't think it's going to happen" due to the difficulty of procuring reliable information. Getting reliable data out of China, for example, is deemed nigh on impossible by many due to the size and disparate location of its stocks. Even the most accurate estimates are considered to have a 3.5% margin of error--equivalent to around 10 million metric tons of corn, for example.
Peter Kendall, president of the National Farmers' Union, however, said that large players like Russia, whose ban on grain exports last summer sparked the rally in prices, would have no interest in sharing information. "The big planned economies have a big self interest in not being as transparent as we would like," he said.
Agriculture Needs Global Regulation After Damaging Economies, Sarkozy Says (Source: CME)
Agricultural futures markets need global regulation because price swings are damaging producers and consumers, French President Nicolas Sarkozy said, a week before G-20 ministers meet to discuss global food supply. France, which heads the Group of 20 nations this year, will propose a market-information system similar to what already exists in oil, Sarkozy told a conference of farm groups in Paris today. The G-20 members account for 70 percent of agricultural land and 80 percent of world food trade, he said. Their farm ministers meet in Paris on June 22.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Coffee firms, stronger dollar caps upside; sugar dips
LONDON, June 16 (Reuters) - ICE coffee futures firmed in light early trade on Thursday under pressure from a stronger dollar, while raw sugar dipped consolidating below two-month highs underpinned by delays in Brazilian and Thai ports.
ICE cocoa futures eased under pressure from the firmer dollar, with upside limited by a steady flow of supplies from West Africa.
Brazil's crimson coffee crop to yield more milds
BRASILIA, June 15 (Reuters) - The lack of rain last year that seemed on track to harm Brazil's coffee crop has proven a blessing in disguise, as the evenly ripe crop that resulted helps raise output of sought-after wet-processed mild beans.
Importers will welcome any increase in mild coffee output after searching hard for it in Brazil in the months prior to the harvest as stocks ran low, while growers also benefit by pocketing a premium for milds of up to 70 reais ($44) a bag.
Oil Near Two-Day High After U.S. Economic Reports; Heads for Weekly Drop (Source: CME)
Oil traded near a two-day high in New York after reports showed U.S. housing starts rose more than forecast in May and fewer Americans filed applications for unemployment benefit, signaling fuel demand may increase. Futures were little changed after climbing 0.2 percent yesterday as the Labor Department said jobless claims fell by 16,000 to 414,000 in the week ended June 11. Work began on 560,000 houses at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, Commerce Department figures showed. Oil prices are down 4.3 percent this week.
Senate Votes to End Tax Break for Ethanol (Source: CME)
The U.S. Senate voted to eliminate a tax credit and a tariff that subsidize ethanol production, providing the strongest signal yet that Congress will curtail subsidies for corn-based biofuel. The 73-27 vote exceeded the 60-vote threshold needed to advance the measure as part of an economic development bill. The underlying legislation isn’t likely to become law, so the vote mostly indicated that it will be difficult for ethanol supporters to extend the 45-cent-a-gallon tax break and the 54- cent-a-gallon tariff beyond their scheduled Dec. 31 expiration.
ALUMINIUM-Major market developments in May
LONDON, June 15 (Reuters) - Aluminium lost ground in May after initial strength but will draw support near term from tight physical supplies and the fact that prices are close to the break-even costs of Chinese aluminium smelters.
"We're not bullish on aluminium, but the physical market is quite tight and the downside will be supported by the marginal costs of Chinese producers," said Macquarie Bank's Jim Lennon.
NICKEL-Major market developments in May
LONDON, June 15 (Reuters) - Nickel prices were under pressure for much of May and still look vulnerable to further weakness as near-term demand worries dominate.
Demand from the key stainless steel industry is easing for seasonal reasons, but more than would normally be expected.
"Stainless producers have announced cuts and maintenance closures in Europe and Asia. The third-quarter seasonal dip looks like it's coming a bit early," said Macquarie Bank's Jim Lennon.
Copper in London Climbs by 0.5%, Heads for First Weekly Advance in Three (Source: CME)
Copper climbed for the first time in three days on optimism that China’s demand is improving, tempering concern about Europe’s fiscal crisis. The metal for three-month delivery on the London Metal Exchange rose as much as 0.5 percent to $9,105.50 a metric ton, and last traded at $9,105 by 8:04 a.m. Singapore time. It is up 1.9 percent this week, set for its first weekly advance in three weeks.
Premiums for spot copper to China seen up
HONG KONG, June 16 (Reuters) - Premiums for spot copper may jump by a quarter once the third-month arbitrage window opens between the London Metal Exchange and Shanghai, which could hasten deliveries of LME stocks in Asia to China, industry sources said on Thursday.
The arbitrage window between the benchmark three-month LME copper and the third month in Shanghai closed in the fourth quarter of 2010, cutting imports to the world's top copper consumer this year.
S.Korea to import 12,000 t/y copper from Mexico Boleo
SEOUL, June 16 (Reuters) - Korea Resources Corp (KORES) said that it would import 12,000 tonnes of copper a year from Mexico's Boleo mining project from 2013 for 23 years, as ground was broken on the project three years after an investment deal on it was signed.
The company said in a statement that a total of 1.4 trillion won ($1.29 billion) would be invested through the first half of 2013 to produce the metals from the second half of the year.
METALS-Copper slides on higher dlr, demand fears
LONDON, June 16 (Reuters) - Copper prices slid on Wednesday as the dollar rose and fears of weak growth and demand prospects from the United States, the world's largest economy, hit investor sentiment.
Aluminium touched a two and a half week low of $2,545 a tonne and nickel tumbled to $21,780 a tonne, its lowest since last November. Both metals came under pressure on concerns about an oversupplied market.
PRECIOUS-Gold falls as dollar gains from Greek crisis
LONDON, June 16 (Reuters) - Gold fell on Thursday after the U.S. dollar hit a three-week high against the euro as concern escalated over the impact of the Greek debt crisis on the euro zone, knocking commodities.
The Greek prime minister said he would form a new government, while euro zone finance ministers conceded that an agreement over a second international bailout for Athens would take longer than expected.
Gold Climbs for Third Day on Demand for Haven From Beleaguered Currencies (Source: CME)
Gold rose for the third straight day as volatility in the currency markets boosted demand for the precious metal as an alternative investment. The euro fell to a three-week low against the dollar on speculation that Greece’s sovereign-debt crisis will worsen as talks over another aid package stalled. The greenback has dropped 12 percent in the past year against a basket of major currencies. Gold priced in British pounds rose to a record today.
US corn futures finish sharply lower as heavy selling by commodity funds extends into a third day. Commodity funds sold an estimated 21,000 contracts, pushing prices down 12% from Friday's record high. "Right now, it's, 'Get me out,'" says Sid Love, analyst for Kropf & Love Consulting. The Senate's vote to repeal an ethanol subsidy "helps explain continued fund-liquidation," according to Global Commodity Analytics & Consulting. Market participants fear demand for the grain will drop. CBOT July corn falls 24 1/4c to $7.01 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end at a three-month low on spillover pressure from the steep slide in corn prices. The sell-off drags down wheat as both grains are used for livestock feed. Producers will increasingly feed wheat to their animals following today?s slide as they seek alternatives to pricey corn, predicts Alan Brugler of Brugler Marketing & Management. The drop in wheat prices "creates the seed for the next rally," he says. CBOT July wheat drops 35 1/4c to $6.73 1/4 a bushel; KCBT July loses 21 1/4c to $7.98; MGE July sinks 36 3/4c to $9.00 1/4.
Rice (Source: CME)
US rice futures drop to a 1-month low amid spillover pressure from a 5% drop in wheat. That weighs on rice as both grains are global food staples. The grain markets came under broad pressure from selling by commodity funds and jitters about demand, analysts note. Meanwhile, weekly export sales of US rice for delivery before August dropped to 13,200 metric tons, a marketing-year low and an 81% tumble from the prior four-week average. CBOT July rice drops 1.4% to $14.00 1/2 per hundredweight.
U.S. corn steady after slide to 1-mth low, wheat ticks up
SINGAPORE, June 16 (Reuters) - U.S. corn futures were steady on Thursday, after being hammered down nearly 8 percent this week to a 1-month low on improved crop weather in the United States and concern that less grain will be used as a feedstock for ethanol production.
"For the time being, the weather looks okay, this is going to be the focus as corn and soybean crops progress in the United States," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne. "The rains of course caused delays in planting but ultimately the moisture will be beneficial for crop yields as we go forward."
German farmers see 7.9 pct fall in 2011 grain crop
HAMBURG, June 16 (Reuters) - Germany's 2011 grain crop of all types is likely to fall 7.9 percent on the year as dry spring weather has damaged crops, the German Farm Cooperatives Association said on Thursday in its new harvest forecast.It forecast the crop to fall to 40.8 million tonnes from 44.3 million tonnes in 2010.
This is slightly up on its previous estimate of 40.7 million tonnes in May following recent rain which provided limited relief to parched crops.
French analyst cuts EU grain crop views due drought
PARIS, June 16 (Reuters) - French analyst Strategie Grains on Thursday sharply cut its forecast for this year's grains crops in the European Union due to renewed dry conditions in the Western part of the bloc in May and despite recent rainfall.
Soft wheat saw the largest reduction, at 6 million tonnes, with the estimate of the 2011 crop lowered to 125.6 million tonnes, now 1 percent below last year's 126.6 million tonnes.
Caucasus farmers optimistic ahead of wheat harvest
MOZDOKSKY DISTRICT, June 15 (Reuters) - Farmers in the North Caucasus are cautiously upbeat as they prepare for next month's harvest that will determine whether Russia can reprise its role as a key player on world markets after last year's export ban.
The region, and neighbouring southern districts, accounted for 45 percent of Russia's wheat crop last year, and milder weather near the Black Sea means they are traditionally the first to hit the market.
Showers for US Midwest raise farmland flood risk
CHICAGO, June 15 (Reuters) - Daily showers were forecast for the U.S. Midwest through the weekend, raising the risk of more farmland to flood along the Missouri River, a forecaster said on Wednesday.
"It's going to keep pressure on the Missouri River -- the Missouri, mid-Mississippi, Illinois river basins are continuing to be affected by the heavy to moderate rainfall," said Mike Palmerino, forecaster with Telvent DTN weather service.
'Cheap' wheat may find feed demand lacking: Gavin Maguire
-- Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, June 15 (Reuters) - The recent surge in corn prices to above the price of Chicago wheat for the first time since 1996 has spurred expectations of a wave of demand
switching away from corn to wheat, specifically in the livestock feeding industry which has the capability to accommodate varying levels of both grains in animal diets.
But traders hoping for a surge in wheat demand from feeders may be disappointed, as limited wheat supplies in livestock-feeding regions, increased DDG supplies and ample pasture availability across the northern U.S. Plains may all serve to limit overall wheat use regardless of how 'cheap' it may get relative to corn.
UK rejects crackdown on commodity speculation
BOOTHBY GRAFFOE, June 15 (Reuters) - Britain does not believe speculators have played a central role in creating volatility in food commodity markets and sees little value in more regulation, farming minister Jim Paice told Reuters in an interview on Wednesday.
Nicolas Sarkozy, president of France which currently chairs the G20 group of developed nations, on Tuesday called for tighter controls on the speculators he blames for spiralling food and energy prices, spelling out reforms to put more trading under the thumb of regulators.
US House Approves Agriculture Spending Bill (Source: CME)
The U.S. House of Representatives voted to approve a $125.5 billion agriculture spending bill that includes controversial provisions to halt millions of dollars of payments to Brazil and bar the U.S. government from investing in new ethanol blender pumps. The bill that would fund the U.S. Department of Agriculture, Food and Drug Administration and Commodity Futures Trading Commission in fiscal year 2012 sparked Democrat outrage over cuts for a nutrition program that helps needy women and children. The Obama administration has sharply criticized the bill for underfunding efforts to beef up food safety initiatives and complained that it doesn't contain enough funds for the government to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. Spending on the USDA's Women Infants and Children program was lowered by $685 million in the bill, an action that Democrats warned would leave hundreds of thousands of people without needed assistance.
Republicans argued that there are contingency funds that would make sure no one would be left without needed aid. The bill contains a budget of $172 million for the CFTC in the 12-month period beginning Oct. 1, substantially less than the $308 million sought by President Barack Obama, and also less than the agency's current budget of $202 million. Rep. Scott Garrett (R., N.J.) added an amendment that would require regulators to delay certain new requirements for the over-the-counter derivatives trades for at least 12 months, while they collect data on those markets. House members also approved an amendment to the bill that halts U.S. payments to Brazil as part of a complex scheme that keeps Brazil from placing heavy duties on U.S. exports there. The U.S. government is now paying Brazil $12.275 million per month. Brazil won the right to impose the tariffs on U.S. goods during a World Trade Organization battle. Opponents of the amendment argued that cutting off the payments could start a trade war with Brazil.
Another amendment approved as part of the spending bill prohibits the USDA from funding the installation of new gas station pumps that can dispense fuel with higher ethanol content. The USDA is set to soon begin offering grants and loan guarantees for the installation of costly new "blender pumps" so drivers can purchase fuel with a higher ratio of corn-based ethanol. Most gasoline sold in the U.S. is 10% ethanol, but a growing fleet of flexible-fuel vehicles can run on an 85%-ethanol blend, or E85.
Global Farm Commodity Prices To Ease Through 2H - Rabobank (Source: CME)
Agricultural lender Rabobank expects global farm commodity prices to ease through the calendar second half, but they won't collapse as historical trends suggest is possible. Following every significant grains market rally since 1980 there has been a sharp and significant slump in prices with most corrections starting in July or August, the bank reported in a monthly outlook issued. The major coffee rallies in the past three decades have also turned sharply lower through the northern summer while cotton typically comes under pressure during this time of year, it said. "We don't expect a collapse in prices this time but we are forecasting an easing in prices" with the bank's modelling suggesting some bearish seasonality impact on markets will emerge in the calendar second half on a quarterly average basis, it said.
Macro uncertainties remain and fears of a slowdown in global and particularly Chinese economic growth are likely to weaken demand and moderate speculative interest in agricultural markets, the report said. But prices will be supported this year by ongoing production uncertainty and "incredibly tight" U.S. and global fundamentals, particularly for corn, cotton and sugar, though prices will slip from second quarter levels, it said. "There remains too many risks this time around for prices to collapse quickly back to long-run average levels," the bank forecast. With fundamental projections tight into 2011-12, favorable seasonal conditions will be needed through to harvest just to maintain current low stock to use levels, it said.
Agriculture Players Skeptical On G20 Food Transparency Plans (Source: CME)
Plans by the Group of 20 industrialized and emerging nations to create a global database on food production and stocks are unlikely to reduce price volatility, market analysts and traders said. Agriculture ministers are expected to announce next week the creation of the Agriculture Market Information System--or AMIS--an initiative designed to bring the same transparency to world agricultural markets as already exists in oil. But experts argue that even collating accurate data on inventories in major agricultural players like China and Russia will be virtually impossible, while few countries are likely to agree to share such data willingly. "It would not be in any of these countries' interest to let it be known in public how vulnerable that particular country is," said Bratin Sanyal, head of Asian equity investments for global bank ING based in Hong Kong.
"Asian countries are sitting on huge foreign exchange reserves and no-one ever makes it public what the composition of those reserves are. It's a good policy objective but whether it will ever be achieved I doubt it." Nicolas Sarkozy, president of France, has put improving food security at the top of his agenda for his leadership of the G20. World food prices surged to a record high in February, according to the United Nations, and the rising cost of staple foodstuffs was blamed for sparking the unrest in Arab countries this spring. Bruno Le Maire, the French agriculture minister, told a conference this month that he is confident that ministers will reach a consensus at the meeting on June 22-23 in Paris. And Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the U.N.'s Food and Agriculture Organization, which will have the mandate to create a secretariat for AMIS, said it is "realistic" to expect an agreement.
"The ministers are not coming with pledges of billions of dollars, they're coming with recommendations," he said. "This initiative is strikingly more positive than anything [agreed by the G20] in the recent past." Yet farmers and traders active in Europe's grain markets were much more sceptical about whether such a system would actually be transparent or do anything to reduce market volatility. Jon Duffy, trading director of Frontier Agriculture, which is part owned by grain giant Cargill Inc, told a grain conference that it was "a lovely aim but I just don't think it's going to happen" due to the difficulty of procuring reliable information. Getting reliable data out of China, for example, is deemed nigh on impossible by many due to the size and disparate location of its stocks. Even the most accurate estimates are considered to have a 3.5% margin of error--equivalent to around 10 million metric tons of corn, for example.
Peter Kendall, president of the National Farmers' Union, however, said that large players like Russia, whose ban on grain exports last summer sparked the rally in prices, would have no interest in sharing information. "The big planned economies have a big self interest in not being as transparent as we would like," he said.
Agriculture Needs Global Regulation After Damaging Economies, Sarkozy Says (Source: CME)
Agricultural futures markets need global regulation because price swings are damaging producers and consumers, French President Nicolas Sarkozy said, a week before G-20 ministers meet to discuss global food supply. France, which heads the Group of 20 nations this year, will propose a market-information system similar to what already exists in oil, Sarkozy told a conference of farm groups in Paris today. The G-20 members account for 70 percent of agricultural land and 80 percent of world food trade, he said. Their farm ministers meet in Paris on June 22.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Coffee firms, stronger dollar caps upside; sugar dips
LONDON, June 16 (Reuters) - ICE coffee futures firmed in light early trade on Thursday under pressure from a stronger dollar, while raw sugar dipped consolidating below two-month highs underpinned by delays in Brazilian and Thai ports.
ICE cocoa futures eased under pressure from the firmer dollar, with upside limited by a steady flow of supplies from West Africa.
Brazil's crimson coffee crop to yield more milds
BRASILIA, June 15 (Reuters) - The lack of rain last year that seemed on track to harm Brazil's coffee crop has proven a blessing in disguise, as the evenly ripe crop that resulted helps raise output of sought-after wet-processed mild beans.
Importers will welcome any increase in mild coffee output after searching hard for it in Brazil in the months prior to the harvest as stocks ran low, while growers also benefit by pocketing a premium for milds of up to 70 reais ($44) a bag.
Oil Near Two-Day High After U.S. Economic Reports; Heads for Weekly Drop (Source: CME)
Oil traded near a two-day high in New York after reports showed U.S. housing starts rose more than forecast in May and fewer Americans filed applications for unemployment benefit, signaling fuel demand may increase. Futures were little changed after climbing 0.2 percent yesterday as the Labor Department said jobless claims fell by 16,000 to 414,000 in the week ended June 11. Work began on 560,000 houses at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, Commerce Department figures showed. Oil prices are down 4.3 percent this week.
Senate Votes to End Tax Break for Ethanol (Source: CME)
The U.S. Senate voted to eliminate a tax credit and a tariff that subsidize ethanol production, providing the strongest signal yet that Congress will curtail subsidies for corn-based biofuel. The 73-27 vote exceeded the 60-vote threshold needed to advance the measure as part of an economic development bill. The underlying legislation isn’t likely to become law, so the vote mostly indicated that it will be difficult for ethanol supporters to extend the 45-cent-a-gallon tax break and the 54- cent-a-gallon tariff beyond their scheduled Dec. 31 expiration.
ALUMINIUM-Major market developments in May
LONDON, June 15 (Reuters) - Aluminium lost ground in May after initial strength but will draw support near term from tight physical supplies and the fact that prices are close to the break-even costs of Chinese aluminium smelters.
"We're not bullish on aluminium, but the physical market is quite tight and the downside will be supported by the marginal costs of Chinese producers," said Macquarie Bank's Jim Lennon.
NICKEL-Major market developments in May
LONDON, June 15 (Reuters) - Nickel prices were under pressure for much of May and still look vulnerable to further weakness as near-term demand worries dominate.
Demand from the key stainless steel industry is easing for seasonal reasons, but more than would normally be expected.
"Stainless producers have announced cuts and maintenance closures in Europe and Asia. The third-quarter seasonal dip looks like it's coming a bit early," said Macquarie Bank's Jim Lennon.
Copper in London Climbs by 0.5%, Heads for First Weekly Advance in Three (Source: CME)
Copper climbed for the first time in three days on optimism that China’s demand is improving, tempering concern about Europe’s fiscal crisis. The metal for three-month delivery on the London Metal Exchange rose as much as 0.5 percent to $9,105.50 a metric ton, and last traded at $9,105 by 8:04 a.m. Singapore time. It is up 1.9 percent this week, set for its first weekly advance in three weeks.
Premiums for spot copper to China seen up
HONG KONG, June 16 (Reuters) - Premiums for spot copper may jump by a quarter once the third-month arbitrage window opens between the London Metal Exchange and Shanghai, which could hasten deliveries of LME stocks in Asia to China, industry sources said on Thursday.
The arbitrage window between the benchmark three-month LME copper and the third month in Shanghai closed in the fourth quarter of 2010, cutting imports to the world's top copper consumer this year.
S.Korea to import 12,000 t/y copper from Mexico Boleo
SEOUL, June 16 (Reuters) - Korea Resources Corp (KORES) said that it would import 12,000 tonnes of copper a year from Mexico's Boleo mining project from 2013 for 23 years, as ground was broken on the project three years after an investment deal on it was signed.
The company said in a statement that a total of 1.4 trillion won ($1.29 billion) would be invested through the first half of 2013 to produce the metals from the second half of the year.
METALS-Copper slides on higher dlr, demand fears
LONDON, June 16 (Reuters) - Copper prices slid on Wednesday as the dollar rose and fears of weak growth and demand prospects from the United States, the world's largest economy, hit investor sentiment.
Aluminium touched a two and a half week low of $2,545 a tonne and nickel tumbled to $21,780 a tonne, its lowest since last November. Both metals came under pressure on concerns about an oversupplied market.
PRECIOUS-Gold falls as dollar gains from Greek crisis
LONDON, June 16 (Reuters) - Gold fell on Thursday after the U.S. dollar hit a three-week high against the euro as concern escalated over the impact of the Greek debt crisis on the euro zone, knocking commodities.
The Greek prime minister said he would form a new government, while euro zone finance ministers conceded that an agreement over a second international bailout for Athens would take longer than expected.
Gold Climbs for Third Day on Demand for Haven From Beleaguered Currencies (Source: CME)
Gold rose for the third straight day as volatility in the currency markets boosted demand for the precious metal as an alternative investment. The euro fell to a three-week low against the dollar on speculation that Greece’s sovereign-debt crisis will worsen as talks over another aid package stalled. The greenback has dropped 12 percent in the past year against a basket of major currencies. Gold priced in British pounds rose to a record today.
20110617 0936 Soy Oil & Palm Oil Related News.
Soy Oil chart reading : downside biased.
Soybeans (Source: CME)
US soybean futures slide to a four-week low as widespread jitters surrounding the global economy encouraged traders to reduce risk exposure in the market. Spillover weakness from a sharp sell-off in corn futures for the third consecutive day, lagging demand and favorable weather form crop development weighed on prices as well, analysts say. However, prices continued to hold within recent ranges, as concerns about potential acres losses in the face of tight supply outlooks, limited declines, analysts add. CBOT July soy down 17 1/2c at $13.50 1/2/bushel.
Soybean Meal/Oil (Source: CME)
Soy product futures tumbled in unison with soybeans, succumbing to widespread selling across commodity markets, analysts said. Debt issues in Europe raised enough concerns to entice traders to reduce risk exposure in riskier asset classes, analysts said. CBOT July soyoil ended down 0.73c at 56.32 cents/pound, and July soymeal finished down $6.30 at $353.70 short ton.
Argentina Government Trims Soy Forecast, Raises Corn Forecast (Source: CME)
Argentina raised its corn forecast and slightly trimmed its soybean forecast in its monthly crop report, as the harvests near completion and the amount of final output becomes clearer. Final production from the 2010-11 corn crop was raised to 21.6 million metric tons, up from 20.9 million tons forecast by the agriculture ministry a month earlier. Argentina is the world's second-largest corn exporter after the U.S. About 84% of the corn crop has been harvested so far. The ministry trimmed its forecast for soybean production to 49.6 million tons, down from 50.4 million tons. Argentina leads soymeal and soyoil exports and ranks third globally for soybean exports. So far, about 97% of the soybean crop has been harvested.
Meanwhile, winter wheat planting is in full swing and the ministry trimmed its forecast for fields planted with the cereal to 4.7 million hectares from five million. Argentina is a leading global wheat exporter, with the bulk of shipments going to neighboring Brazil.
Focus on Australia canola crop as supplies tighten
SYDNEY, June 16 (Reuters) - Australia's official 2011/12 canola crop estimate may be too optimistic as a mice plague is threatening production in the world's second-largest exporter of the oilseed, an industry official said on Thursday.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) on Wednesday projected the 2011/12 crop could rise 6 percent to 2.3 million tonnes but farmers saw risks.
Palm oil at 5-wk lows as stocks seen hitting 2 mln T
KUALA LUMPUR, June 16 (Reuters) - Malaysian palm oil futures dropped to more than five-week lows on Thursday as traders cut back on worries that stocks could grow beyond 2 million tonnes this month.
"I think 3,000 ringgit needs to come, sooner or later. We are on track for declines and that is helped by weaker crude oil and soyoil as well," said a trader with a foreign commodities brokerage.
Dry weather a threat to US corn, soy - forecaster
CHICAGO, June 15 (Reuters) - U.S. corn and soybean production could be hampered by drier-than-usual weather this summer at a time when global food supplies already are tight due to crop failures around the world, a top private forecaster said on Wednesday.
"There will be dryness out there," said Drew Lerner, president and senior agricultural meteorologist of World Weather Inc. "There will be some yields that are cut down."
Subscribe to:
Posts (Atom)