ITS CPO export up 20% to 716,322 tonnes for the period of 1~15 Jun 2012.
SGS CPO export up 28%% to 722,455 tonnes for the period of 1~15 Jun 2012.
Soybeans Extend Losses (Source: CME)
The soybean market tried to rally but changed direction and closed sharply lower. Corn and wheat were able to hold to the plus side with July corn continuing to lead the way. By John Sanow DTN Analyst
Pro Farmer: After the Bell Soybean Recap (Source: CME)
The July and August soybean contracts closed 14 and 22 1/4 cents lower, respectively, while deferred months posted losses of 8 to 11 1/4 cents. Aside from the front-month July contract, futures extended losses in after-hours trade. Soybean futures weakened in the midst of bullish fundamental news today as speculators liquidated long positions.
Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 21 at 1387 1/4, 28 1/2 off the high and 3 1/4 up from the low. November Soybeans closed down 11 3/4 at 1308. This was 5 3/4 up from the low and 16 3/4 off the high. July Soymeal closed down 4.1 at 417.9. This was 2.3 up from the low and 8.0 off the high. July Soybean Oil finished down 1.04 at 48.06, 1.23 off the high and 0.08 up from the low. July soybeans were trading near 21 cents lower on the day late in the session with significant weakness and new lows posted late in the day. A strong recovery in outside market forces plus a surge higher in corn and wheat helped to support the market bounce well off of the overnight lows. However, even very strong short-term demand news failed to support follow-through buying and the market experienced a steady flow of fund trader selling for much of the day. Higher than expected weekly export sales news and higher than expected monthly crush news failed to provide much support after a minor bounce. The NOPA crush for May came in at 138.3 million bushels which is up about 3 million from trade expectations. In addition, weekly export sales came in at 425,100 tonnes for the current marketing year and 580,000 for the next marketing year for a total of 1.005 million tonnes which was about twice expectations. Cumulative old crop sales stand at 101.3% of the USDA forecast for the marketing year versus a 5 year average of 98.9% for this time of the year. Meal sales came in at 116,800 metric tonnes for the current marketing year and 24,500 for the next marketing year for a total of 141,300. Sales of 83,000 metric tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 6,800 metric tonnes for the current marketing year and 500 for the next marketing year for a total of 7,300. Continued talk of fund trader liquidation of July bean/July corn spreads added to the bearish tone today.
VEGOILS-Palm oil hits new 2012 low on global economic woes
SINGAPORE, June 14 (Reuters) - Malaysian palm oil futures slumped to the lowest in 2012 as the euro zone debt crisis and sluggish U.S. growth triggered a flight of capital from riskier assets.
"On the weekend ahead we are going to see the Greek election and market participants are staying away from the market for the time being," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.
India's May vegoil imports fell 3.1 pct m/m -trade
NEW DELHI, June 14 (Reuters) - India's vegetable oil imports in May fell 3.1 percent to 896,921 tonnes as soyoil purchases declined, a leading trade body said on Thursday, while there was a jump of 70 percent in refined palm oil imports as worries over a duty hike dissipated.
The monthly imports were slightly higher than the average forecast in a Reuters survey.
Argentine soy crushing down 6.5 percent in April
BUENOS AIRES, June 13 (Reuters) - Argentina crushed 3.5 million tonnes of soybeans in April, down 6.5 percent from a year ago and marking the second straight month of decline, the Agriculture Ministry said in its latest crushing report.
The South American country is the world's top exporter of soyoil and soymeal, as well at its No. 3 supplier of soybeans. This season's yields have suffered from a six-week drought that parched the Pampas grains belt in December and January.
Friday, June 15, 2012
20120615 1137 Global Commodities Related News.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Chicago wheat ended with gains of 3 1/2 to 7 1/2 cents. Kansas City ended 2 1/4 to 5 3/4 cents higher. July Minneapolis wheat was the upside leader, closing 17 3/4 cents higher, while deferred months saw gains of 3 to 8 1/4 cents. Futures trimmed gains slightly in after-hours trade. Futures benefited from spillover from corn, stronger-than-expected weekly export sales of 432,900 metric tons (MT) for 2012-13 and a daily sale to China for 110,000 MT of SRW wheat.
Wheat Market Recap Report (Source: CME)
July Wheat finished up 6 1/2 at 622 1/2, 6 1/2 off the high and 7 1/2 up from the low. December Wheat closed up 6 at 665 1/2. This was 6 3/4 up from the low and 4 3/4 off the high. July wheat closed moderately higher on the session but down off of the early highs. Firm export demand and continued talk of tightening world supply for the coming season compared with the past few years helped to support. In addition, improved demand news and China import demand helped to support. Private exporters reported a sale of 110,000 tonnes of US soft red winter wheat which was the highest to China in 8 1/2 years. Net weekly export sales for wheat came in at 432,900 metric tonnes which was about as expected. As of June 7th, cumulative wheat sales stand at 17.7% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 18.1%. Sales of 502,000 metric tonnes are needed each week to reach the USDA forecast. The European Union granted export licenses for 117,000 tonnes of wheat this week which pushed cumulative sales for the marketing year to 12.3 million tonnes as compared with 18 million last year at this time. European milling wheat futures closed slightly higher and uncertainty for euro zone debt issues remains a source of uncertainty for commodity traders. July Oats closed down 1/4 at 305 1/2. This was 1 1/2 up from the low and 7 1/4 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures ended with gains of 4 1/4 to 9 cents through the September 2013 contract, with front-month July leading gains. Futures were little changed in after-hours trade. Support for corn futures was largely twofold today: 1) Strong basis levels sparked rumors China was buying corn, and 2) the forecast is looking less favorable than it initially did for widespread rains for the Midwest over the near-term.
Corn Market Recap for 6/14/2012 (Source: CME)
July Corn finished up 8 1/4 at 600 3/4, 7 3/4 off the high and 9 up from the low. December Corn closed up 6 1/2 at 517. This was 7 3/4 up from the low and 4 1/4 off the high. July corn was trading about 8 1/2 cents higher on the session late in the day which was well off of the mid-session highs while December was up near 6 1/2 cents late. Ideas that the rain into next week will benefit the western Corn Belt but areas in the east which receive 1/2 inch or less may not be enough to alleviate threatening crop conditions into the pollination period helped to support. Ideas that the weakness yesterday was overdone and some short-covering due to very strong domestic cash markets added to the positive tone. Weekly export sales came in well below trade expectations at just 92,100 metric tonnes for the current marketing year and 77,700 for the next marketing year for a total of 169,800. As of June 7th, cumulative corn sales stand at 92.0% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 91.6%. Sales of 273,000 metric tonnes are needed each week to reach the USDA forecast. Traders continue to see uncertainty over euro zone debt issues and this was seen as a limiting factor on the upside. July Rice finished up 0.075 at 13.97, equal to the high and 0.08 up from the low.
Soy at 1-week low on risk aversion, corn up for 2nd day
SINGAPORE, June 14 (Reuters) - Chicago soybeans slid around half a percent, falling to a one-week low as concerns over global rowth weighed on the market, while spot-month corn rose for a second straight session on tight old-crop supplies.
"What we are seeing is that macro factors are driving the market right now," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "The crisis in Europe and concerns over global growth are clouding the outlook, forcing people to come out of risky assets."
Algeria sees 2012 grain harvest exceeding 5.8 mln t
ALGIERS, June 14 (Reuters) - Algeria expects its grain harvest for this year to reach 5.8 million tonnes or even exceed that level due to better weather conditions and incentives for farmers, its agriculture minister said on Thursday.
"We will reach around 58 million quintals (5.8 million tonnes). The figure may exceed 58 million quintals if there are no problems including fire usually caused by high temperatures," the minister, Rachid Benaissa, told state radio.
Rains aid China's corn, may limit yield losses
BEIJING, June 14 (Reuters) - Heavy rains have improved growing conditions in China's top corn producing provinces, which could limit the damage inflicted by a prolonged period of dryness with forecasts of more crop-friendly weather in the coming days.
A higher-than-expected corn output in China, the world's second largest consumer and producer of the grain, may cap its imports and weigh on the U.S. new-crop December corn - which has already been hit by forecasts for more rains in the Midwest and is on track to record its steepest weekly fall in seven months.
Thai exporter turns to Cambodia for cheaper rice
BANGKOK, June 14 (Reuters) - Asia Golden Rice Co.Ltd, Thailand's second-biggest rice exporter, is investing in neighbouring Cambodia to secure cheaper rice as costs rise at home and is confident of finding a market in the European Union, the company's president said on Thursday.
"We see an opportunity to develop milling technology to produce quality milled rice varieties and export from there," Sombat Chalermwutinan told Reuters in an interview.
Strategie Grains lifts EU wheat view on good weather
PARIS, June 14 (Reuters) - Analyst Strategie Grains on Thursday raised its forecast for this year's soft wheat harvest in the European Union after favourable growing weather in the past month.
The analyst had slashed its EU wheat crop outlook by 8.5 million tonnes over the previous two months as it factored in damage from frost and dryness, but it now said rain across much of Europe in May had improved crop conditions.
Cooperatives cut German 2012 wheat crop forecast
HAMBURG, June 13 (Reuters) - The German Farm Cooperatives Association said on Wednesday it has cut its forecast of the country's 2012 wheat harvest, as damage from the cold winter was worse than thought and dryness threatens part of the German crop.
It now expects a 2012 wheat crop of 21.3 million tonnes compared with the 22 million tonnes estimated in May. This will be 6.2 percent down on the weather-reduced 22.7 million tonnes of wheat Germany harvested in 2011.
FranceAgriMer ups wheat stocks, cuts exports again
PARIS, June 13 (Reuters) - Farm office FranceAgriMer on Wednesday raised its forecast of French soft wheat stocks at the end of this season for the second straight month as it lowered again its outlook for exports, data released on the office's website showed.
The office increased its forecast of soft wheat stocks at the end of the 2011/12 season on June 30 to 2.51 million tonnes against 2.36 million seen last month, although this was still down 14 percent on ending stocks in 2010/11.
ICE coffee hits two-year low, sugar slips
LONDON, June 14 (Reuters) - Arabica coffee futures on ICE touched a two-year low in early trade, as Brazil selling weighed, with the harvest in the top producer underway.
Raw sugar and cocoa futures on ICE also eased, as European markets dipped after Spain's credit rating was cut to one notch above "junk", and nervousness grew ahead of a Greek election on the weekend.
Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Vietnam 2011/2012 coffee output, exports seen up
HANOI, June 14 (Reuters) - Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Following the revision for Vietnam, the world's second-largest producer after Brazil, the world production estimate in the current crop year was also lifted to 131.9 million 60-kg bags, from 131.4 million bags, the London-based ICO said in its May report.
Brazil mid crop cocoa deliveries speed up
BRASILIA, June 13 (Reuters) - Deliveries of cocoa from Brazil's main producing regions quickened again in the last week with the May-September mid crop now at peak flow, data from Bahia Commercial Association showed, while the return of rain boded well for the next crop.
The main cocoa-growing state of Bahia churned out 97,693 60-kg bags in the last week, up from 93,267 bags in the week prior. Smaller producing states saw a similar increase to 47,371 bags, up from 42,970 bags.
Cotton Futures Jump on ’Monster’ Export Sales From U.S. (Source: Bloomberg)
Cotton futures rose to a two-week high as exports soared fivefold from the U.S., the world’s biggest shipper. Orange-juice prices fell to a three-week low. Net sales of upland cotton jumped to 1.02 million running bales in the week ended June 7 from 199,233 a week earlier, the U.S. Department of Agriculture said in a report. A running bale weighs 500 pounds, or 227 kilograms. “We’re up because of the absolutely monster sales that were reported,” Mike Stevens, an independent trader in Mandeville, Louisiana, said in a telephone interview. “This shows a tremendous amount of business.” Cotton for December delivery rose 0.3 percent to settle at 70.6 cents a pound at 2:51 p.m. on ICE Futures U.S. in New York. Earlier, the price reached 73.08 cents, the highest for a most- active contract since May 30.
Orange-juice futures for July delivery fell 0.8 percent to $1.0975 a pound in New York. Earlier, the price touched $1.071, the lowest since May 24. The commodity has dropped tumbled 52 percent from a record $2.2695 on Jan. 23. A “double whammy between weak demand and ample supplies” drove prices lower, Fain Shaffer, the president of Infinity Trading in Medford, Oregon, said in a telephone interview.
Coffee Price Drop Endangers Recovery of Colombian 2013 Crop (Source: Bloomberg)
Colombia, the second-largest supplier of Arabica coffee beans, said a slump in prices is putting at risk next year’s recovery in its harvest. A prolonged drop poses a “serious danger” because some farmers are losing money at current prices, Mario Gomez, a member of the board of Colombia’s National Federation of Coffee Growers for about three decades, said in a telephone interview from the city of Manizales in the nation’s central coffee- farming region. “That’s the death of coffee production,” Gomez said. “Losses lead to crops being neglected and then abandoned.” Coffee has declined 16 percent in a month on speculation supplies will increase from Brazil, the top producer of Arabica coffee favored by brewers such as Starbucks Corp. (SBUX) The Colombian federation’s Chief Executive Officer Luis Munoz forecast last month that 2013 output may rebound to a five-year high of 9 million bags as disease-resistant crops aid production.
Arabica-coffee futures for September delivery, slid 2 percent to close at $1.5105 a pound on ICE Futures U.S. in New York. The crop this year, which is being harvested, will be similar to 2011, Munoz said in May. Last year, the nation’s production of 7.81 million bags slid to a 35-year low after above-average rainfall damaged crops. Each bag weighs 60 kilograms (132 pounds).
Oil Gains a Second Day on Stimulus Speculation, OPEC Output Call (Source: Bloomberg)
Oil rose for a second day in New York on speculation that the Federal Reserve may take more steps to stimulate the economy and on OPEC’s call on members to cut production in excess of quotas. Futures advanced as much as 0.7 percent, heading for a second week of gains. Reports showing U.S. jobless claims unexpectedly climbed and the cost of living fell by the most in more than three years fueled speculation that Fed policy makers will discuss stimulus measures when they meet June 19. The Organization of Petroleum Exporting Countries would need to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary-General Abdalla El-Badri said.
“There are more supportive factors now for oil than there are negative,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “The whole purpose of the cartel is to provide guidelines to production. Compliance is just a word. If the price slips below $80 a barrel then quotas will change and give prices a big bump.” Oil for July delivery advanced as much as 58 cents to $84.49 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.25 at 11:19 a.m. Sydney time. The contract increased 1.6 percent yesterday to $83.91, the highest close since June 8. Prices are 0.1 percent higher this week and down 15 percent this year. Brent oil for August settlement rose 57 cents, or 0.6 percent, to $97.74 a barrel on the London-based ICE Futures Europe exchange. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $13.15, up from $13.12 yesterday.
OPEC Decision Puts Onus on Saudi Arabian Cuts Should Prices Fall (Source: Bloomberg)
OPEC’s decision to keep its output quota unchanged yesterday puts the onus on the group’s biggest producer, Saudi Arabia, to cut supply should crude prices extend their drop below $100 a barrel. The Organization of Petroleum Exporting Countries would need to reduce output by 1.6 million barrels a day to comply with its targeted ceiling of 30 million barrel a day, OPEC Secretary-General Abdalla El-Badri said yesterday. Increased production from Saudi Arabia has been blamed for plunging prices by members including Iran, whose own exports are likely to be curbed by a European Union embargo starting July 1.
“It puts some of the onus on the Saudis, but at the end of the day, they’re going to remain very responsive to what happens in the world market,” Jason Schenker, president of Prestige Economics LLC, a commodity researcher in Austin, Texas, said in an interview in Vienna yesterday. Iranian supply will “come off the market with the full implementation of the embargo and that could push the number down toward 30 million,” he said Saudi Arabia has led the surge in OPEC’s output above its official limit this year, as Brent crude prices rose in March to their highest since July 2008 on concern sanctions against Iran will disrupt Middle East supply. Since then, signs that Europe’s debt crisis will erode fuel demand have driven the price back below $100, a level favored by Saudi Arabian Oil Minister Ali al-Naimi.
OPEC's new ground rule? Don't mention Iran
(Robert Campbell is a Reuters market analyst. The views expressed are his own)
VIENNA, June 13 (Reuters) - It is no exaggeration to say the impact of the pending U.S. and European sanctions against Iran are one of the most taboo subjects at an OPEC meeting in years.
A visitor from Mars could well walk away from the day to day events in Vienna under the impression that the impending U.S. and European sanctions regimes has nothing to do with Iranian oil exports.
OIL-Oil steady ahead of OPEC meeting, Greek polls
LONDON, June 14 (Reuters) - Oil prices held just under $97, with investors and traders reluctant to add to positions ahead of a meeting of oil producer group OPEC and Greek elections at the weekend.
"No one is expecting any fireworks," agreed Hansen. "Any disagreements tend to be kept behind closed doors and it will probably result in an unchanged ceiling this afternoon."
Oil steady ahead of OPEC meeting, Greek polls
LONDON, June 14 (Reuters) - Oil prices held just under $97, with investors and traders reluctant to add to positions ahead of a meeting on Thursday of oil producer group OPEC and Greek elections at the weekend.
Traders are looking for any change in OPEC's output policy given that some view the market as over-supplied, while the Greek election result should deliver some clarity as to whether Greece will stay in the euro.
Saudi under OPEC pressure to prevent oil collapse
VIENNA, June 13 (Reuters) - Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
Price hawks in the Organization of the Petroleum Exporting Countries are fretting that slowing economic growth will send crude, already off $30 since March, plummeting further.
Sliding oil price rebalances Middle East economy
DUBAI, June 13 (Reuters) - Ziad Makhzoumi, chief financial officer of Arabtec , the United Arab Emirates' biggest construction firm by stock market value, thinks the region's economy will probably ride out weak oil prices comfortably. But he sees a risk.
If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets - a scenario which he thinks unlikely - infrastructure and other building projects will slow down or in some cases halt.
Gold Traders Bullish as Hedge Funds Increase Wagers (Source: Bloomberg)
Gold traders are bullish for a fourth consecutive week after hedge funds added to bets that prices will rally, exchange-traded products backed by the metal expanded and Europe’s debt crisis roiled markets. Twenty-four analysts surveyed by Bloomberg said they expect gold to gain next week and six were bearish. A further three were neutral. Speculators boosted net-long positions by 27 percent in the week ended June 5, the latest Commodity Futures Trading Commission data show. ETP holdings rose 18 metric tons valued at $938 million since the start of June, halting a three- month retreat, according to data compiled by Bloomberg. Greek voters return to the polls June 17 after last month’s elections failed to produce a government, increasing concern the 17-nation euro would fracture. Almost $5.7 trillion was wiped off the value of global equities since the end of March on signs of slowing growth, spurring speculation that policymakers will do more to shore up economies.
Gold rose about 70 percent as the Federal Reserve bought $2.3 trillion of debt in two rounds of quantitative easing, or QE, ending in June 2011. “Whatever the outcome in Europe, it will likely be supportive for gold,” said Neil Gregson, who manages about $6.9 billion of natural-resources equities at JPMorgan Asset Management in London. “We’ve still got the possibility of QE3 in the U.S., which would be good for gold.”
Chicago wheat ended with gains of 3 1/2 to 7 1/2 cents. Kansas City ended 2 1/4 to 5 3/4 cents higher. July Minneapolis wheat was the upside leader, closing 17 3/4 cents higher, while deferred months saw gains of 3 to 8 1/4 cents. Futures trimmed gains slightly in after-hours trade. Futures benefited from spillover from corn, stronger-than-expected weekly export sales of 432,900 metric tons (MT) for 2012-13 and a daily sale to China for 110,000 MT of SRW wheat.
Wheat Market Recap Report (Source: CME)
July Wheat finished up 6 1/2 at 622 1/2, 6 1/2 off the high and 7 1/2 up from the low. December Wheat closed up 6 at 665 1/2. This was 6 3/4 up from the low and 4 3/4 off the high. July wheat closed moderately higher on the session but down off of the early highs. Firm export demand and continued talk of tightening world supply for the coming season compared with the past few years helped to support. In addition, improved demand news and China import demand helped to support. Private exporters reported a sale of 110,000 tonnes of US soft red winter wheat which was the highest to China in 8 1/2 years. Net weekly export sales for wheat came in at 432,900 metric tonnes which was about as expected. As of June 7th, cumulative wheat sales stand at 17.7% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 18.1%. Sales of 502,000 metric tonnes are needed each week to reach the USDA forecast. The European Union granted export licenses for 117,000 tonnes of wheat this week which pushed cumulative sales for the marketing year to 12.3 million tonnes as compared with 18 million last year at this time. European milling wheat futures closed slightly higher and uncertainty for euro zone debt issues remains a source of uncertainty for commodity traders. July Oats closed down 1/4 at 305 1/2. This was 1 1/2 up from the low and 7 1/4 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures ended with gains of 4 1/4 to 9 cents through the September 2013 contract, with front-month July leading gains. Futures were little changed in after-hours trade. Support for corn futures was largely twofold today: 1) Strong basis levels sparked rumors China was buying corn, and 2) the forecast is looking less favorable than it initially did for widespread rains for the Midwest over the near-term.
Corn Market Recap for 6/14/2012 (Source: CME)
July Corn finished up 8 1/4 at 600 3/4, 7 3/4 off the high and 9 up from the low. December Corn closed up 6 1/2 at 517. This was 7 3/4 up from the low and 4 1/4 off the high. July corn was trading about 8 1/2 cents higher on the session late in the day which was well off of the mid-session highs while December was up near 6 1/2 cents late. Ideas that the rain into next week will benefit the western Corn Belt but areas in the east which receive 1/2 inch or less may not be enough to alleviate threatening crop conditions into the pollination period helped to support. Ideas that the weakness yesterday was overdone and some short-covering due to very strong domestic cash markets added to the positive tone. Weekly export sales came in well below trade expectations at just 92,100 metric tonnes for the current marketing year and 77,700 for the next marketing year for a total of 169,800. As of June 7th, cumulative corn sales stand at 92.0% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 91.6%. Sales of 273,000 metric tonnes are needed each week to reach the USDA forecast. Traders continue to see uncertainty over euro zone debt issues and this was seen as a limiting factor on the upside. July Rice finished up 0.075 at 13.97, equal to the high and 0.08 up from the low.
Soy at 1-week low on risk aversion, corn up for 2nd day
SINGAPORE, June 14 (Reuters) - Chicago soybeans slid around half a percent, falling to a one-week low as concerns over global rowth weighed on the market, while spot-month corn rose for a second straight session on tight old-crop supplies.
"What we are seeing is that macro factors are driving the market right now," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "The crisis in Europe and concerns over global growth are clouding the outlook, forcing people to come out of risky assets."
Algeria sees 2012 grain harvest exceeding 5.8 mln t
ALGIERS, June 14 (Reuters) - Algeria expects its grain harvest for this year to reach 5.8 million tonnes or even exceed that level due to better weather conditions and incentives for farmers, its agriculture minister said on Thursday.
"We will reach around 58 million quintals (5.8 million tonnes). The figure may exceed 58 million quintals if there are no problems including fire usually caused by high temperatures," the minister, Rachid Benaissa, told state radio.
Rains aid China's corn, may limit yield losses
BEIJING, June 14 (Reuters) - Heavy rains have improved growing conditions in China's top corn producing provinces, which could limit the damage inflicted by a prolonged period of dryness with forecasts of more crop-friendly weather in the coming days.
A higher-than-expected corn output in China, the world's second largest consumer and producer of the grain, may cap its imports and weigh on the U.S. new-crop December corn - which has already been hit by forecasts for more rains in the Midwest and is on track to record its steepest weekly fall in seven months.
Thai exporter turns to Cambodia for cheaper rice
BANGKOK, June 14 (Reuters) - Asia Golden Rice Co.Ltd, Thailand's second-biggest rice exporter, is investing in neighbouring Cambodia to secure cheaper rice as costs rise at home and is confident of finding a market in the European Union, the company's president said on Thursday.
"We see an opportunity to develop milling technology to produce quality milled rice varieties and export from there," Sombat Chalermwutinan told Reuters in an interview.
Strategie Grains lifts EU wheat view on good weather
PARIS, June 14 (Reuters) - Analyst Strategie Grains on Thursday raised its forecast for this year's soft wheat harvest in the European Union after favourable growing weather in the past month.
The analyst had slashed its EU wheat crop outlook by 8.5 million tonnes over the previous two months as it factored in damage from frost and dryness, but it now said rain across much of Europe in May had improved crop conditions.
Cooperatives cut German 2012 wheat crop forecast
HAMBURG, June 13 (Reuters) - The German Farm Cooperatives Association said on Wednesday it has cut its forecast of the country's 2012 wheat harvest, as damage from the cold winter was worse than thought and dryness threatens part of the German crop.
It now expects a 2012 wheat crop of 21.3 million tonnes compared with the 22 million tonnes estimated in May. This will be 6.2 percent down on the weather-reduced 22.7 million tonnes of wheat Germany harvested in 2011.
FranceAgriMer ups wheat stocks, cuts exports again
PARIS, June 13 (Reuters) - Farm office FranceAgriMer on Wednesday raised its forecast of French soft wheat stocks at the end of this season for the second straight month as it lowered again its outlook for exports, data released on the office's website showed.
The office increased its forecast of soft wheat stocks at the end of the 2011/12 season on June 30 to 2.51 million tonnes against 2.36 million seen last month, although this was still down 14 percent on ending stocks in 2010/11.
ICE coffee hits two-year low, sugar slips
LONDON, June 14 (Reuters) - Arabica coffee futures on ICE touched a two-year low in early trade, as Brazil selling weighed, with the harvest in the top producer underway.
Raw sugar and cocoa futures on ICE also eased, as European markets dipped after Spain's credit rating was cut to one notch above "junk", and nervousness grew ahead of a Greek election on the weekend.
Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Vietnam 2011/2012 coffee output, exports seen up
HANOI, June 14 (Reuters) - Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Following the revision for Vietnam, the world's second-largest producer after Brazil, the world production estimate in the current crop year was also lifted to 131.9 million 60-kg bags, from 131.4 million bags, the London-based ICO said in its May report.
Brazil mid crop cocoa deliveries speed up
BRASILIA, June 13 (Reuters) - Deliveries of cocoa from Brazil's main producing regions quickened again in the last week with the May-September mid crop now at peak flow, data from Bahia Commercial Association showed, while the return of rain boded well for the next crop.
The main cocoa-growing state of Bahia churned out 97,693 60-kg bags in the last week, up from 93,267 bags in the week prior. Smaller producing states saw a similar increase to 47,371 bags, up from 42,970 bags.
Cotton Futures Jump on ’Monster’ Export Sales From U.S. (Source: Bloomberg)
Cotton futures rose to a two-week high as exports soared fivefold from the U.S., the world’s biggest shipper. Orange-juice prices fell to a three-week low. Net sales of upland cotton jumped to 1.02 million running bales in the week ended June 7 from 199,233 a week earlier, the U.S. Department of Agriculture said in a report. A running bale weighs 500 pounds, or 227 kilograms. “We’re up because of the absolutely monster sales that were reported,” Mike Stevens, an independent trader in Mandeville, Louisiana, said in a telephone interview. “This shows a tremendous amount of business.” Cotton for December delivery rose 0.3 percent to settle at 70.6 cents a pound at 2:51 p.m. on ICE Futures U.S. in New York. Earlier, the price reached 73.08 cents, the highest for a most- active contract since May 30.
Orange-juice futures for July delivery fell 0.8 percent to $1.0975 a pound in New York. Earlier, the price touched $1.071, the lowest since May 24. The commodity has dropped tumbled 52 percent from a record $2.2695 on Jan. 23. A “double whammy between weak demand and ample supplies” drove prices lower, Fain Shaffer, the president of Infinity Trading in Medford, Oregon, said in a telephone interview.
Coffee Price Drop Endangers Recovery of Colombian 2013 Crop (Source: Bloomberg)
Colombia, the second-largest supplier of Arabica coffee beans, said a slump in prices is putting at risk next year’s recovery in its harvest. A prolonged drop poses a “serious danger” because some farmers are losing money at current prices, Mario Gomez, a member of the board of Colombia’s National Federation of Coffee Growers for about three decades, said in a telephone interview from the city of Manizales in the nation’s central coffee- farming region. “That’s the death of coffee production,” Gomez said. “Losses lead to crops being neglected and then abandoned.” Coffee has declined 16 percent in a month on speculation supplies will increase from Brazil, the top producer of Arabica coffee favored by brewers such as Starbucks Corp. (SBUX) The Colombian federation’s Chief Executive Officer Luis Munoz forecast last month that 2013 output may rebound to a five-year high of 9 million bags as disease-resistant crops aid production.
Arabica-coffee futures for September delivery, slid 2 percent to close at $1.5105 a pound on ICE Futures U.S. in New York. The crop this year, which is being harvested, will be similar to 2011, Munoz said in May. Last year, the nation’s production of 7.81 million bags slid to a 35-year low after above-average rainfall damaged crops. Each bag weighs 60 kilograms (132 pounds).
Oil Gains a Second Day on Stimulus Speculation, OPEC Output Call (Source: Bloomberg)
Oil rose for a second day in New York on speculation that the Federal Reserve may take more steps to stimulate the economy and on OPEC’s call on members to cut production in excess of quotas. Futures advanced as much as 0.7 percent, heading for a second week of gains. Reports showing U.S. jobless claims unexpectedly climbed and the cost of living fell by the most in more than three years fueled speculation that Fed policy makers will discuss stimulus measures when they meet June 19. The Organization of Petroleum Exporting Countries would need to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary-General Abdalla El-Badri said.
“There are more supportive factors now for oil than there are negative,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “The whole purpose of the cartel is to provide guidelines to production. Compliance is just a word. If the price slips below $80 a barrel then quotas will change and give prices a big bump.” Oil for July delivery advanced as much as 58 cents to $84.49 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.25 at 11:19 a.m. Sydney time. The contract increased 1.6 percent yesterday to $83.91, the highest close since June 8. Prices are 0.1 percent higher this week and down 15 percent this year. Brent oil for August settlement rose 57 cents, or 0.6 percent, to $97.74 a barrel on the London-based ICE Futures Europe exchange. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $13.15, up from $13.12 yesterday.
OPEC Decision Puts Onus on Saudi Arabian Cuts Should Prices Fall (Source: Bloomberg)
OPEC’s decision to keep its output quota unchanged yesterday puts the onus on the group’s biggest producer, Saudi Arabia, to cut supply should crude prices extend their drop below $100 a barrel. The Organization of Petroleum Exporting Countries would need to reduce output by 1.6 million barrels a day to comply with its targeted ceiling of 30 million barrel a day, OPEC Secretary-General Abdalla El-Badri said yesterday. Increased production from Saudi Arabia has been blamed for plunging prices by members including Iran, whose own exports are likely to be curbed by a European Union embargo starting July 1.
“It puts some of the onus on the Saudis, but at the end of the day, they’re going to remain very responsive to what happens in the world market,” Jason Schenker, president of Prestige Economics LLC, a commodity researcher in Austin, Texas, said in an interview in Vienna yesterday. Iranian supply will “come off the market with the full implementation of the embargo and that could push the number down toward 30 million,” he said Saudi Arabia has led the surge in OPEC’s output above its official limit this year, as Brent crude prices rose in March to their highest since July 2008 on concern sanctions against Iran will disrupt Middle East supply. Since then, signs that Europe’s debt crisis will erode fuel demand have driven the price back below $100, a level favored by Saudi Arabian Oil Minister Ali al-Naimi.
OPEC's new ground rule? Don't mention Iran
(Robert Campbell is a Reuters market analyst. The views expressed are his own)
VIENNA, June 13 (Reuters) - It is no exaggeration to say the impact of the pending U.S. and European sanctions against Iran are one of the most taboo subjects at an OPEC meeting in years.
A visitor from Mars could well walk away from the day to day events in Vienna under the impression that the impending U.S. and European sanctions regimes has nothing to do with Iranian oil exports.
OIL-Oil steady ahead of OPEC meeting, Greek polls
LONDON, June 14 (Reuters) - Oil prices held just under $97, with investors and traders reluctant to add to positions ahead of a meeting of oil producer group OPEC and Greek elections at the weekend.
"No one is expecting any fireworks," agreed Hansen. "Any disagreements tend to be kept behind closed doors and it will probably result in an unchanged ceiling this afternoon."
Oil steady ahead of OPEC meeting, Greek polls
LONDON, June 14 (Reuters) - Oil prices held just under $97, with investors and traders reluctant to add to positions ahead of a meeting on Thursday of oil producer group OPEC and Greek elections at the weekend.
Traders are looking for any change in OPEC's output policy given that some view the market as over-supplied, while the Greek election result should deliver some clarity as to whether Greece will stay in the euro.
Saudi under OPEC pressure to prevent oil collapse
VIENNA, June 13 (Reuters) - Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
Price hawks in the Organization of the Petroleum Exporting Countries are fretting that slowing economic growth will send crude, already off $30 since March, plummeting further.
Sliding oil price rebalances Middle East economy
DUBAI, June 13 (Reuters) - Ziad Makhzoumi, chief financial officer of Arabtec , the United Arab Emirates' biggest construction firm by stock market value, thinks the region's economy will probably ride out weak oil prices comfortably. But he sees a risk.
If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets - a scenario which he thinks unlikely - infrastructure and other building projects will slow down or in some cases halt.
Gold Traders Bullish as Hedge Funds Increase Wagers (Source: Bloomberg)
Gold traders are bullish for a fourth consecutive week after hedge funds added to bets that prices will rally, exchange-traded products backed by the metal expanded and Europe’s debt crisis roiled markets. Twenty-four analysts surveyed by Bloomberg said they expect gold to gain next week and six were bearish. A further three were neutral. Speculators boosted net-long positions by 27 percent in the week ended June 5, the latest Commodity Futures Trading Commission data show. ETP holdings rose 18 metric tons valued at $938 million since the start of June, halting a three- month retreat, according to data compiled by Bloomberg. Greek voters return to the polls June 17 after last month’s elections failed to produce a government, increasing concern the 17-nation euro would fracture. Almost $5.7 trillion was wiped off the value of global equities since the end of March on signs of slowing growth, spurring speculation that policymakers will do more to shore up economies.
Gold rose about 70 percent as the Federal Reserve bought $2.3 trillion of debt in two rounds of quantitative easing, or QE, ending in June 2011. “Whatever the outcome in Europe, it will likely be supportive for gold,” said Neil Gregson, who manages about $6.9 billion of natural-resources equities at JPMorgan Asset Management in London. “We’ve still got the possibility of QE3 in the U.S., which would be good for gold.”
Thursday, June 14, 2012
20120614 1806 FCPO EOD Daily Chart Study.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : turned downward, seller in advantage.
Support : 2850, 2800, 2770, 2750 level.
Resistance : 2900, 2920, 2950, 2970 level.
Comment :
FCPO closed plunge substantially lower with better volume changed hand. Soy oil price currently trading weaker after overnight closed recorded more than 1% loss while crude oil price currently trading weaker after overnight fall.
Fear on slowing down global economy and current Europe debt crisis will lead to weaker CPO demand in the future triggered traders to press the sell button hardly while awaits tomorrow cargo surveyor export data.
Daily chart analysis adjusted to suggesting a downside biased market development with possible pullback correction and MACD indicator turned crossed down.
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.
20120614 1734 FKLI EOD Daily Chart Study.
Bollinger band reading : correction range bound little upside biased.
MACD Histogram : weakening, buyer seller battling.
Support : 1570, 1565, 1550, 1530, 1515 level.
Resistance : 1570, 1580, 1590, 1600, 1610 level.
Comment :
FKLI closed weaker with dying volume changed hand doing about 2 points discount compare to cash market that closed lower. Overnight U.S. markets retreat lower and today Asia markets ended in negative zone while European markets currently falling lower.
World markets slide lower after sentiment turned negative on Spain credit rating downgrade by Moody's, Credit Suisse and Deutsche Bank lower China growth forecast plus overnight U.S. reported lower retail sales.
FKLI daily chart reading recommending a correction range bound little upside biased market development possibly testing support level near middle Bollinger band.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.
20120614 1700 Regional Markets EOD Daily Chart Study.
DJIA chart reading : side way range bound.
Hang Seng chart reading : side way range bound .
KLCI chart reading : correction range bound little upside biased testing resistance level.
20120614 1558 Global Market & Commodities Related News.
Asian shares slipped as weak U.S. retail sales data raised fresh concerns about sluggish economic growth, while an Italian debt auction later in the day will test market confidence in whether Rome can avoid becoming the next victim of the euro zone crisis. Wall Street ended lower on Wednesday as fears ahead of the weekend elections in Greece finally drove down a market that had been treading water through most of the day.
The euro was capped in Asia after two days of gains on short covering as market players looked to Italy's bond auction later in the day amid concerns external support may become necessary for the euro zone's third-largest economy.
FOREX-Euro capped ahead of Italian bond auction
TOKYO, June 14 (Reuters) - The euro was capped in Asia after two days of gains on short covering as market players looked to Italy's bond auction later in the day amid concerns external support may become necessary for the euro zone's third-largest economy.
The euro rose in the past two days as traders pared extremely bearish positions ahead of Sunday's crucial Greek election and after disappointing U.S. retail sales data weighed on the dollar.
Chicago soybeans slid around half a percent falling to a one-week low as concerns over global growth weighed on the market, while spot-month corn rose for a second straight session on tight old-crop supplies.
Vietnam 2011/2012 coffee output, exports seen up
Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Argentina challenges Spain's biofuel rules at WTO
Argentina said on Wednesday it was challenging Spain to explain a new biodiesel law that it says breaks World Trade Organization rules and could cost the South American country $1 billion in lost export earnings.
Scramble for corn lifts US Gulf basis to 1-mth peak
The scramble for scarce stocks of U.S. corn heated up on Wednesday, as exporters at the Gulf Coast bought corn barges at the highest price in a month, suggesting renewed competition for domestic users whose basis bids were already near record-high levels.
U.S. corn yield seen down 3 pct from USDA forecast
The U.S. corn crop is wilting after a stretch of hot and dry weather in the Midwestern grain belt, with 15 analysts polled by Reuters on average expecting the yield to drop nearly 3 percent from that projected by the U.S. Department of Agriculture.
Argentine soy crushing down 6.5 percent in April
Argentina crushed 3.5 million tonnes of soybeans in April, down 6.5 percent from a year ago and marking the second straight month of decline, the Agriculture Ministry said in its latest crushing report.
Brent crude held above $97 trading in a narrow range with investors reluctant to take positions ahead of the outcome of a meeting of producer group OPEC and Greek elections.
Japan to pass bill to insure Iran oil imports -report
Japan's lower house is set to pass a special bill on Friday to allow it to provide insurance for continuing Iranian crude imports, making it the first country to attempt to initiate sovereign cover once EU sanctions on Iran are expected to start in July, the Yomiuri newspaper said on Thursday.
World oil reserves up 8 pct, supply fears persist
The world's store of oil jumped 8.3 percent last year, as exploration rose and record crude prices made marginal projects commercially viable, yet supplies will struggle to meet demand due to political factors, oil giant BP said on Wednesday.
Saudi under OPEC pressure to prevent oil collapse
Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
BNP Paribas cuts 2012 base metals price forecast
June 13 (Reuters) - BNP Paribas slashed its base metals price forecasts for this year and next, and said risks to its forecasts are tilted heavily to the downside due to the economic uncertainty in Europe.
The bank lowered its 2012 price forecast for aluminium to $2,085 per tonne from $2,270, and its 2013 forecast to $2,450 a tonne from $2,575.
China nickel ore imports seen at record on Indonesia curbs
HONG KONG, June 13 (Reuters) - China's nickel ore imports are expected to have hit a record high in May after a rush to purchase laterite ore ahead of a curb on shipments by top supplier Indonesia, although high inventories could put pressure on nickel prices
Imports of nickel ore and concentrates likely surged about 40 percent to more than 6.8 million tonnes in May from the previous month, a sales manager at a major Chinese nickel pig iron producer said.
Aluminum car doors, frames: Industry's "next frontier"-Alcoa
NEW YORK, June 13 (Reuters) - The global push to improve fuel efficiency in vehicle fleets will more than double the demand for aluminum in the auto market by 2025, Alcoa's director of automotive marketing said Wednesday.
Car makers from BMW to Audi have already started to react to the so-called Corporate Average Fuel Economy (CAFE) standards and are beginning to move away from heavier steel body frames to lighter-weight material in what should be the "next frontier" for the aluminum industry, Randall Scheps told delegates at the American Metal Market's Aluminum Summit in New York.
LME copper players turn up heat on warehouse queues
LONDON, June 13 (Reuters) - Global copper market heavyweights are drafting proposals to stop metal from getting stuck in queues leaving storage facilities, as such delays would threaten the credibility of the London Metal Exchange's (LME) flagship product, industry sources said.
The issue has arisen at a delicate moment, as the LME lines up a potential $2 billion sale to another exchange.
Copper prices edged up with hopes of improved demand from recent stimulus programmes introduced by top metals consumer China outweighing concerns about euro zone debt and sluggish U.S. growth.
Gold traded steady after posting a fourth straight session of gains in the previous session when weak U.S. data fuelled expectations for monetary stimulus, and investors remain nervous before a make-or-break Greek election.
METALS-Copper up on hopes for China demand, but global econ woes weigh
SHANGHAI, June 14 (Reuters) - Copper prices edged up, with hopes of improved demand from recent stimulus programmes introduced by top metals consumer China outweighing concerns about euro zone debt and sluggish U.S. growth.
But gains were capped as investors awaited the results of an Italian debt auction and U.S. jobs data later on Thursday, while Greece goes to the polls on Sunday in a vote that could determine whether the country stays in the euro zone.
PRECIOUS-Gold steady after 4 days of gains; Greece in focus
SINGAPORE, June 14 (Reuters) - Gold traded steady after posting a fourth straight session of gains in the previous session when weak U.S. data fuelled expectations for monetary stimulus, and investors remain nervous before a make-or-break Greek election.
Cash gold has gained more than 1 percent this week, breaking ranks with the euro, which has fallen 0.8 percent as mounting worries about the euro zone's ability to contain the debt crisis drew some safehaven flows into gold.
The euro was capped in Asia after two days of gains on short covering as market players looked to Italy's bond auction later in the day amid concerns external support may become necessary for the euro zone's third-largest economy.
FOREX-Euro capped ahead of Italian bond auction
TOKYO, June 14 (Reuters) - The euro was capped in Asia after two days of gains on short covering as market players looked to Italy's bond auction later in the day amid concerns external support may become necessary for the euro zone's third-largest economy.
The euro rose in the past two days as traders pared extremely bearish positions ahead of Sunday's crucial Greek election and after disappointing U.S. retail sales data weighed on the dollar.
Chicago soybeans slid around half a percent falling to a one-week low as concerns over global growth weighed on the market, while spot-month corn rose for a second straight session on tight old-crop supplies.
Vietnam 2011/2012 coffee output, exports seen up
Coffee output from Vietnam's current 2011/2012 crop would reach 20 million bags, up 2.7 percent from the previous season, the International Coffee Organization said, raising its estimate by around 9 percent from 18.3 million bags previously.
Argentina challenges Spain's biofuel rules at WTO
Argentina said on Wednesday it was challenging Spain to explain a new biodiesel law that it says breaks World Trade Organization rules and could cost the South American country $1 billion in lost export earnings.
Scramble for corn lifts US Gulf basis to 1-mth peak
The scramble for scarce stocks of U.S. corn heated up on Wednesday, as exporters at the Gulf Coast bought corn barges at the highest price in a month, suggesting renewed competition for domestic users whose basis bids were already near record-high levels.
U.S. corn yield seen down 3 pct from USDA forecast
The U.S. corn crop is wilting after a stretch of hot and dry weather in the Midwestern grain belt, with 15 analysts polled by Reuters on average expecting the yield to drop nearly 3 percent from that projected by the U.S. Department of Agriculture.
Argentine soy crushing down 6.5 percent in April
Argentina crushed 3.5 million tonnes of soybeans in April, down 6.5 percent from a year ago and marking the second straight month of decline, the Agriculture Ministry said in its latest crushing report.
Brent crude held above $97 trading in a narrow range with investors reluctant to take positions ahead of the outcome of a meeting of producer group OPEC and Greek elections.
Japan to pass bill to insure Iran oil imports -report
Japan's lower house is set to pass a special bill on Friday to allow it to provide insurance for continuing Iranian crude imports, making it the first country to attempt to initiate sovereign cover once EU sanctions on Iran are expected to start in July, the Yomiuri newspaper said on Thursday.
World oil reserves up 8 pct, supply fears persist
The world's store of oil jumped 8.3 percent last year, as exploration rose and record crude prices made marginal projects commercially viable, yet supplies will struggle to meet demand due to political factors, oil giant BP said on Wednesday.
Saudi under OPEC pressure to prevent oil collapse
Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
BNP Paribas cuts 2012 base metals price forecast
June 13 (Reuters) - BNP Paribas slashed its base metals price forecasts for this year and next, and said risks to its forecasts are tilted heavily to the downside due to the economic uncertainty in Europe.
The bank lowered its 2012 price forecast for aluminium to $2,085 per tonne from $2,270, and its 2013 forecast to $2,450 a tonne from $2,575.
China nickel ore imports seen at record on Indonesia curbs
HONG KONG, June 13 (Reuters) - China's nickel ore imports are expected to have hit a record high in May after a rush to purchase laterite ore ahead of a curb on shipments by top supplier Indonesia, although high inventories could put pressure on nickel prices
Imports of nickel ore and concentrates likely surged about 40 percent to more than 6.8 million tonnes in May from the previous month, a sales manager at a major Chinese nickel pig iron producer said.
Aluminum car doors, frames: Industry's "next frontier"-Alcoa
NEW YORK, June 13 (Reuters) - The global push to improve fuel efficiency in vehicle fleets will more than double the demand for aluminum in the auto market by 2025, Alcoa's director of automotive marketing said Wednesday.
Car makers from BMW to Audi have already started to react to the so-called Corporate Average Fuel Economy (CAFE) standards and are beginning to move away from heavier steel body frames to lighter-weight material in what should be the "next frontier" for the aluminum industry, Randall Scheps told delegates at the American Metal Market's Aluminum Summit in New York.
LME copper players turn up heat on warehouse queues
LONDON, June 13 (Reuters) - Global copper market heavyweights are drafting proposals to stop metal from getting stuck in queues leaving storage facilities, as such delays would threaten the credibility of the London Metal Exchange's (LME) flagship product, industry sources said.
The issue has arisen at a delicate moment, as the LME lines up a potential $2 billion sale to another exchange.
Copper prices edged up with hopes of improved demand from recent stimulus programmes introduced by top metals consumer China outweighing concerns about euro zone debt and sluggish U.S. growth.
Gold traded steady after posting a fourth straight session of gains in the previous session when weak U.S. data fuelled expectations for monetary stimulus, and investors remain nervous before a make-or-break Greek election.
METALS-Copper up on hopes for China demand, but global econ woes weigh
SHANGHAI, June 14 (Reuters) - Copper prices edged up, with hopes of improved demand from recent stimulus programmes introduced by top metals consumer China outweighing concerns about euro zone debt and sluggish U.S. growth.
But gains were capped as investors awaited the results of an Italian debt auction and U.S. jobs data later on Thursday, while Greece goes to the polls on Sunday in a vote that could determine whether the country stays in the euro zone.
PRECIOUS-Gold steady after 4 days of gains; Greece in focus
SINGAPORE, June 14 (Reuters) - Gold traded steady after posting a fourth straight session of gains in the previous session when weak U.S. data fuelled expectations for monetary stimulus, and investors remain nervous before a make-or-break Greek election.
Cash gold has gained more than 1 percent this week, breaking ranks with the euro, which has fallen 0.8 percent as mounting worries about the euro zone's ability to contain the debt crisis drew some safehaven flows into gold.
20120614 1553 Crude Palm Oil Related News. (Source: Reuters)
VEGOILS: Palm oil hits 2012 low on global economic woes DBYU2 FCPOc3 - RTRS
By Chew Yee Kiat
SINGAPORE, June 14 (Reuters) - Malaysian palm oil futures slumped to the lowest in 2012 on Thursday as the euro zone debt crisis and sluggish U.S. growth triggered a flight of capital from riskier assets.
Investors were keeping an eye on the results of an Italian debt auction and U.S. jobs data later in the day, as well as Greek polls this weekend that could precipitate the country's exit from the bloc for fresh trading cues. Uncertainty about the global economy pushed Asian shares down on Thursday. MKTS/GLOB
"On the weekend ahead we are going to see the Greek election and market participants are staying away from the market for the time being," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.
"Fundamentals remain quite encouraging, we have a higher demand and lower stocks. But fundamentals are not taking the front seat as macroeconomic factors are still domineering at the moment."
By the midday break, benchmark August palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 1.7 percent to 2,898 ringgit ($911) per tonne.
Prices dropped below the 2,900-ringgit mark for the first time this year to hit a low of 2,896 ringgit earlier in the session, a level unseen since Oct. 25, 2011.
Traded volumes stood at 15,239 lots of 25 tonnes each, higher than the usual 12,500 lots as investors rushed in to liquidate their positions.
Fundamentals were supportive with Malaysian palm oil stocks hitting a 13-month low in May, a sign that strong demand was eating into stocks. (Full Story)
Malaysian palm oil exports were lacklustre for June 1-10, but traders expect shipments to pick up as India and Pakistan restock ahead of the Muslim fasting month starting in mid-July.
Cargo surveyors will report export numbers for the first half of the month on Friday. PALM/ITS PALM/SGS
Lower soybean ending stocks reported by the U.S. Department of Agriculture on Wednesday also suggested tighter supply and provided support for palm oil prices.
Brent crude held above $97, trading in a narrow range with investors reluctant to take positions ahead of the outcome of a meeting of producer group OPEC and Greek elections. O/R
In other vegetable oil markets, U.S. soyoil for July BOc1 delivery gained 0.1 percent in Asian trade. The most active Jan 2013 soyoil contract DBYF3 on the Dalian commodity exchange lost 1.5 percent, tracking uncertainty in the global markets.
India's May vegoil imports fell 3.1 pct m/m -trade - RTRS
14-Jun-2012 15:16
NEW DELHI, June 14 (Reuters) - India's vegetable oil imports in May fell 3.1 percent to 896,921 tonnes as soyoil purchases declined, a leading trade body said on Thursday, while there was a jump of 70 percent in refined palm oil imports as worries over a duty hike dissipated.
The monthly imports were slightly higher than the average forecast in a Reuters survey.
India, the world's No. 1 importer of cooking oils, buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.
A Reuters survey had forecast average imports of 884,625 tonnes in May, with a high of 941,000 tonnes. (Full Story)
The imports in May were higher than 664,133 tonnes imported during the same month a year ago.
By Chew Yee Kiat
SINGAPORE, June 14 (Reuters) - Malaysian palm oil futures slumped to the lowest in 2012 on Thursday as the euro zone debt crisis and sluggish U.S. growth triggered a flight of capital from riskier assets.
Investors were keeping an eye on the results of an Italian debt auction and U.S. jobs data later in the day, as well as Greek polls this weekend that could precipitate the country's exit from the bloc for fresh trading cues. Uncertainty about the global economy pushed Asian shares down on Thursday. MKTS/GLOB
"On the weekend ahead we are going to see the Greek election and market participants are staying away from the market for the time being," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.
"Fundamentals remain quite encouraging, we have a higher demand and lower stocks. But fundamentals are not taking the front seat as macroeconomic factors are still domineering at the moment."
By the midday break, benchmark August palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 1.7 percent to 2,898 ringgit ($911) per tonne.
Prices dropped below the 2,900-ringgit mark for the first time this year to hit a low of 2,896 ringgit earlier in the session, a level unseen since Oct. 25, 2011.
Traded volumes stood at 15,239 lots of 25 tonnes each, higher than the usual 12,500 lots as investors rushed in to liquidate their positions.
Fundamentals were supportive with Malaysian palm oil stocks hitting a 13-month low in May, a sign that strong demand was eating into stocks. (Full Story)
Malaysian palm oil exports were lacklustre for June 1-10, but traders expect shipments to pick up as India and Pakistan restock ahead of the Muslim fasting month starting in mid-July.
Cargo surveyors will report export numbers for the first half of the month on Friday. PALM/ITS PALM/SGS
Lower soybean ending stocks reported by the U.S. Department of Agriculture on Wednesday also suggested tighter supply and provided support for palm oil prices.
Brent crude held above $97, trading in a narrow range with investors reluctant to take positions ahead of the outcome of a meeting of producer group OPEC and Greek elections. O/R
In other vegetable oil markets, U.S. soyoil for July BOc1 delivery gained 0.1 percent in Asian trade. The most active Jan 2013 soyoil contract DBYF3 on the Dalian commodity exchange lost 1.5 percent, tracking uncertainty in the global markets.
India's May vegoil imports fell 3.1 pct m/m -trade - RTRS
14-Jun-2012 15:16
NEW DELHI, June 14 (Reuters) - India's vegetable oil imports in May fell 3.1 percent to 896,921 tonnes as soyoil purchases declined, a leading trade body said on Thursday, while there was a jump of 70 percent in refined palm oil imports as worries over a duty hike dissipated.
The monthly imports were slightly higher than the average forecast in a Reuters survey.
India, the world's No. 1 importer of cooking oils, buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.
A Reuters survey had forecast average imports of 884,625 tonnes in May, with a high of 941,000 tonnes. (Full Story)
The imports in May were higher than 664,133 tonnes imported during the same month a year ago.
20120614 1113 Global Market & Commodities Related News.
GLOBAL MARKETS-Shares ease on weak US data, wary before Italy debt sale
TOKYO, June 14 (Reuters) - Asian shares eased as weak U.S. retail sales raised concerns about sluggish economic growth, while an Italian debt auction later will test market confidence in whether it can avoid becoming the next victim in the euro zone crisis.
"It tells you much about how bearish market expectations are when a 3 notch downgrade of Spain pushes EUR/USD 15 pips lower," said Sebastian Galy, strategist at Societe General.
COMMODITIES-Mostly down despite weaker dollar; soybeans tumble
NEW YORK, June 13 (Reuters) - Commodities were mostly lower with soybeans dropping the most in two weeks in reaction to favorable weather for the U.S. crop while crude oil was pressured by plentiful global supplies.
"Macroeconomic nervousness has a grip on the markets right now", off-setting the benefits from a weaker dollar, said Sterling Smith, agricultural analyst for Citigroup in Chicago.
OIL-Brent flat, U.S. crude down; OPEC meeting eyed
NEW YORK, June 13 (Reuters) - Brent crude oil futures closed near flat and U.S. crude fell about 1 percent in choppy trading as weak U.S. economic data and worries about the euro zone's finances outweighed a drawdown in U.S. crude inventories.
"Oil futures remain in an oversold condition, but the downtrend is persisting because of weaker demand," said Rich Alexander, senior broker at the Zaner Group in Chicago.
Japan to pass bill to insure Iran oil imports -report
TOKYO, June 14 (Reuters) - Japan's lower house is set to pass a special bill on Friday to allow it to provide insurance for continuing Iranian crude imports, making it the first country to attempt to initiate sovereign cover once EU sanctions on Iran are expected to start in July, the Yomiuri newspaper said on Thursday.
The bill is expected to be passed during the current session of the parliament that ends on June 21, as the secretary generals of the biggest opposition Liberal Democratic Party and its former partner, the New Komeito, have backed the bill, the report said.
World oil reserves up 8 pct, supply fears persist
LONDON, June 13 (Reuters) - The world's store of oil jumped 8.3 percent last year, as exploration rose and record crude prices made marginal projects commercially viable, yet supplies will struggle to meet demand due to political factors, oil giant BP said on Wednesday.
BP said in its annual calculation of global oil and gas reserves, considered the industry's most comprehensive, that oil reserves totalled 1,653 billion barrels at the end of 2011.
POLL-US natgas storage seen up 74 bcf in weekly EIAs
NEW YORK, June 13 (Reuters) - U.S. natural gas inventories were forecast to have gained 74 billion cubic feet last week, according to a Reuters poll of industry traders and analysts on Wednesday.
The U.S. Energy Information Administration will release gas storage data for the week ended June 8 on Thursday at 10:30 a.m. EDT (1430 GMT).
Saudi under OPEC pressure to prevent oil collapse
VIENNA, June 13 (Reuters) - Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
Price hawks in the Organization of the Petroleum Exporting Countries are fretting that slowing economic growth will send crude, already off $30 since March, plummeting further.
Sliding oil price rebalances Middle East economy
DUBAI, June 13 (Reuters) - Ziad Makhzoumi, chief financial officer of Arabtec , the United Arab Emirates' biggest construction firm by stock market value, thinks the region's economy will probably ride out weak oil prices comfortably. But he sees a risk.
If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets - a scenario which he thinks unlikely - infrastructure and other building projects will slow down or in some cases halt.
NATURAL GAS-Mild weather sends US natural gas futures down 2 pct
NEW YORK, June 13 (Reuters) - U.S. natural gas futures, pressured by milder weather this week, ended lower, but the warmer outlook for later this week and next week helped limit the downside.
"There's not a lot of (hot) weather around to generate electric power demand, and the (EIA storage) build tomorrow could be a little bearish," said Tom Saal, senior vice president at INTL Hencorp Futures in Miami.
EURO-COAL-Bid/offer spreads narrow, trade quiet
LONDON, June 13 (Reuters) - European delivered coal prices held steady at around $82-85 a tonne but the bid/offer spreads narrowed, although few trades were reported.
"The Indians aren't really looking for replacements for Indonesian coal because they don't believe anything radical will happen this year beyond some incremental tax rises," one supplier said.
TOKYO, June 14 (Reuters) - Asian shares eased as weak U.S. retail sales raised concerns about sluggish economic growth, while an Italian debt auction later will test market confidence in whether it can avoid becoming the next victim in the euro zone crisis.
"It tells you much about how bearish market expectations are when a 3 notch downgrade of Spain pushes EUR/USD 15 pips lower," said Sebastian Galy, strategist at Societe General.
COMMODITIES-Mostly down despite weaker dollar; soybeans tumble
NEW YORK, June 13 (Reuters) - Commodities were mostly lower with soybeans dropping the most in two weeks in reaction to favorable weather for the U.S. crop while crude oil was pressured by plentiful global supplies.
"Macroeconomic nervousness has a grip on the markets right now", off-setting the benefits from a weaker dollar, said Sterling Smith, agricultural analyst for Citigroup in Chicago.
OIL-Brent flat, U.S. crude down; OPEC meeting eyed
NEW YORK, June 13 (Reuters) - Brent crude oil futures closed near flat and U.S. crude fell about 1 percent in choppy trading as weak U.S. economic data and worries about the euro zone's finances outweighed a drawdown in U.S. crude inventories.
"Oil futures remain in an oversold condition, but the downtrend is persisting because of weaker demand," said Rich Alexander, senior broker at the Zaner Group in Chicago.
Japan to pass bill to insure Iran oil imports -report
TOKYO, June 14 (Reuters) - Japan's lower house is set to pass a special bill on Friday to allow it to provide insurance for continuing Iranian crude imports, making it the first country to attempt to initiate sovereign cover once EU sanctions on Iran are expected to start in July, the Yomiuri newspaper said on Thursday.
The bill is expected to be passed during the current session of the parliament that ends on June 21, as the secretary generals of the biggest opposition Liberal Democratic Party and its former partner, the New Komeito, have backed the bill, the report said.
World oil reserves up 8 pct, supply fears persist
LONDON, June 13 (Reuters) - The world's store of oil jumped 8.3 percent last year, as exploration rose and record crude prices made marginal projects commercially viable, yet supplies will struggle to meet demand due to political factors, oil giant BP said on Wednesday.
BP said in its annual calculation of global oil and gas reserves, considered the industry's most comprehensive, that oil reserves totalled 1,653 billion barrels at the end of 2011.
POLL-US natgas storage seen up 74 bcf in weekly EIAs
NEW YORK, June 13 (Reuters) - U.S. natural gas inventories were forecast to have gained 74 billion cubic feet last week, according to a Reuters poll of industry traders and analysts on Wednesday.
The U.S. Energy Information Administration will release gas storage data for the week ended June 8 on Thursday at 10:30 a.m. EDT (1430 GMT).
Saudi under OPEC pressure to prevent oil collapse
VIENNA, June 13 (Reuters) - Saudi Arabia came under pressure on Wednesday from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
Price hawks in the Organization of the Petroleum Exporting Countries are fretting that slowing economic growth will send crude, already off $30 since March, plummeting further.
Sliding oil price rebalances Middle East economy
DUBAI, June 13 (Reuters) - Ziad Makhzoumi, chief financial officer of Arabtec , the United Arab Emirates' biggest construction firm by stock market value, thinks the region's economy will probably ride out weak oil prices comfortably. But he sees a risk.
If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets - a scenario which he thinks unlikely - infrastructure and other building projects will slow down or in some cases halt.
NATURAL GAS-Mild weather sends US natural gas futures down 2 pct
NEW YORK, June 13 (Reuters) - U.S. natural gas futures, pressured by milder weather this week, ended lower, but the warmer outlook for later this week and next week helped limit the downside.
"There's not a lot of (hot) weather around to generate electric power demand, and the (EIA storage) build tomorrow could be a little bearish," said Tom Saal, senior vice president at INTL Hencorp Futures in Miami.
EURO-COAL-Bid/offer spreads narrow, trade quiet
LONDON, June 13 (Reuters) - European delivered coal prices held steady at around $82-85 a tonne but the bid/offer spreads narrowed, although few trades were reported.
"The Indians aren't really looking for replacements for Indonesian coal because they don't believe anything radical will happen this year beyond some incremental tax rises," one supplier said.
20120614 1006 Malaysia Corporate Related News.
Starhill REIT buys Aussie hotels
YTL Corp’s Starhill REIT is expanding its international footprint with the acquisition of three Marriott hotels in Australia for RM1.31bn (AUD415m). The purchase of the Marriott hotels in Sydney, Brisbane and Melbourne will give Starhill REIT the largest portfolio overseas property assets of any Malaysian REIT. “This acquisition will enlarge the trust’s portfolio to approximately RM3bn from RM1.58bn,” said Tan Sri Francis Yeoh, chief executive of Projek Pintar SB, the manager of Starhill REIT. Yeoh is also the largest shareholder of Starhill REIT through YTL Corp, which owns 56.4% of the trust. (Financial Daily)
TRC gets RM194m contract from Bintulu Port
TRC Synergy’s wholly-owned subsidiary, Trans Resources Corp SB, has accepted a RM194.0m contract from Bintulu Port Holdings to develop the Samalaju Port in Bintulu. In a filing with Bursa Malaysia, TRC said the project was expected to strengthen the group’s operations in Sabah and Sarawak. However, the project would not have any effect on the issued and paid-up share capital, substantial shareholders’ shareholdings, net assets per share, and gearing of the company and its subsidiaries. (Financial Daily)
MSM has RM100m to buy sugar plantations in Southeast Asia
Malaysia’s largest sugar refiner MSM Malaysia Holdings (MSM) has set aside about RM100m to acquire sugarcane plantations in South-East Asia as part of its plans to expand its upstream business, its executive director Datuk Sabri Ahmad said. The company says it’s looking at Indonesia and Myanmar to acquire these sugarcane plantations. In another development, MSM is in the process of converting its 5,000ha of sugar cane plantations in Perlis to rubber estate. Executive director Datuk Sabri Ahmad said the land is no longer suitable for sugar cane due to climatic conditions. (Malaysian Reserve) (Financial Daily)
MSM Malaysia: To invest RM85m to upgrade refineries
MSM Malaysia Holdings is investing RM85m to upgrade its sugar refineries. Its CEO Chua Say Sin said on Wednesday the funding for the upgrading would be financed from its initial public offer proceeds. Chua said as sugar consumption is expected to increase in Malaysia and globally, MSM is to grow a strong and sustainable business for all its stakeholders. The immediate focus is to upgrade production facilities, expand export sales and pursue strategic investments in new markets. (StarBiz)
AirAsia eyes 5 more regional tie-ups
AirAsia will work on five more joint ventures with regional airlines over the next two years to position itself as a global brand on top of the one that was signed with Japan's All Nippon Airways.”We need to pivot to a wider, regional lens from the first decade's focus, which was largely domestic,” chief executive officer Tan Sri Tony Fernandes said. “Shifting AirAsia's emphasis to a regional strategy is not just good business, but also a move that will keep up ahead of the inevitable competition that is heading our way,” Fernandes said at a press conference yesterday. He also said that the company was considering to add a fleet of 50 planes to meet its operations' needs. The 75 aircraft that were ordered are expected to be delivered by 2016. (StarBiz)
Fajarbaru eyes MRT deals
Fajarbaru Builder Group is understood to have submitted bids to build stations for the RM40bn MyRapid Transit (MRT) project. Business Times understands that Fajarbaru is eyeing contracts to build MRT stations under packages S4 and S5, which closed on 28 May and 11 June, respectively. The combined value of the two packages to build the seven stations is about RM650m. Fajarbaru executive director Teo Sock Cheng confirmed that it had submitted the bids to MRT Corp, but declined to reveal the value. (BT)
KPJ Healthcare plans to conclude two acquisitions by year-end
KPJ Healthcare Bhd, which is on an aggressive expansion plan, hopes to conclude two acquisitions by year-end, said managing director Datin Paduka Siti Sa'diah Sheikh Bakir. “There are offers which we are assessing both locally and internationally. We hope to conclude at least one local acquisition and one overseas by year-end,” Siti Sa'diah told StarBiz in an interview. However, she did not reveal the size of the acquisitions. She said KPJ had been looking for potential acquisitions continuously. ”We're ready for two acquisitions a year and also to build two hospitals a year.” (StarBiz)
Felda Global: Set to price IPO at top end
Felda Global Ventures Holdings is set to price up to US$3.2bn IPO on Wednesday at the top of an indicative range, as strong demand from domestic investors helps it counter a recent global trend of failed listings. Three sources with direct knowledge of the deal said the company priced the IPO at RM4.55 a share, near the top of a RM4.00-RM4.65 indicative range. The deal, the world’s second biggest IPO this year behind Facebook Inc’s US$16bn offering, will put Kuala Lumpur neck and neck with China’s Shenzhen as the main IPO destination in the Asia Pacific region, leaving behind Hong Kong, which grossed the highest IPO proceeds in the world in 2010 and 2011. The IPO also underscores how Malaysia’s equity market has been partially insulated from global volatility because it is dominated by local investors and a large domestic pension fund system. (Business Times)
Maybank: Acquires stake in Luster Industries
Maybank has emerged as a substantial shareholder in Luster Industries with a 5.95% stake in the latter. The bank announced that it had acquired 64.2m shares of 10 sen each in Luster. It said the subscription was made pursuant to the exercise of debt to equity conversion in accordance with a debt settlement agreement dated Nov 25, 2011 involving Luster. A PN17 company, Luster is an integrated manufacturer of high precision and precision plastic parts and components. As part of its proposed regularisation plan, Luster is looking to settle RM64.4m in debt via the issuance of RM17.9m in loan stocks, 25.4m new ordinary shares of 10 sen each, and 263.8m new shares with 131.9m free detachable warrants. The shares and warrants were part of an exercise that saw the company issue a total of 834.1m new shares alongside 441.6m free detachable warrants. (StarBiz)
MMC Corp: May be looking at RM3bn IPO of Malakoff
According to two people with knowledge of the matter said, Malakoff is planning an IPO that may raise about US$1bn (RM3.2bn). The company, 51% owned by MMC Corp, had invited at least 6 banks to submit proposals for the IPO by June 18, said the people, who spoke on the condition of anonymity because the process is private. They said the share sale might take place by the end of this year. Malakoff was publicly traded until it was acquired by MMC in 2007 for RM9.3bn, according to data compiled by Bloomberg. A source even said the IPO might value Malakoff at as much as US$3.5bn (RM11.4bn). (Bloomberg)
Dutch Lady: MD says company on track to achieve RM1bn sales target in 2013
Dutch Lady’s MD Rahul Colaco says the group is on track to reach its RM1bn sales target for 2013, driven by the strength of its brand and market position, despite the slowdown in the local dairy industry. He said that the growth of the local dairy industry was expected to reach between 6% and 7% this year, compared with last year's 8% to 9%. Colaco also said that the group is always striving to increase its products' prices only moderately and aimed to minimize the effects on consumers. (Bernama)
MAS: More changes in management
More management changes are under way at MAS with CFO Razman Omar tipped to leave the national carrier. Sources said Rozman has tendered his resignation and plans to re-join his previous company AirAsia as regional head of finance effective July. According to a source, Rozman is leaving despite attempts by the major shareholders of MAS and his key officials to get him to stay on at the national carrier. The departure of Rozman follows the announcement of deputy group CEO Mohammed Rashdan Yusof’s resignation effective end of this month. (Financial Daily)
DRB-Hicom: Proton Prevé exceeds 11,000 bookings
In just two months after launch, Proton Prevé has commanded a total booking of 11,310 units, making it the most popular 1.6-litre sedan in the market. Proton Holdings Executive Chairman Datuk Seri Mohd Khamil Jamil said a total of almost 1,000 units were booked by eager customers as early as March, a month before the launch while another 4,893 units were booked in the month of April. (Business Times)
Dialog Group: Saudi Arabia supply base starts operations
Dialog Group's supply base in Saudi Arabia, which saw the company invested about RM93.5m, has started operations. It said on Wednesday its 60%-owned Dialog Jubail Supply Base Company Ltd (DJSB), had secured a long-term contract from Snamprogetti Saudi Arabia Co Ltd to provide logistic services. Dialog's intention to set up the Jubail supply base was to be a one-stop integrated offshore logistic hub and resources centre for oilfield services, equipment and supplies, supporting the active and growing offshore oil and gas activities in the Arabian Gulf. It said DJSB, had on June 11, secured the RM17m contract from Snamprogetti where its base services would be used to move project cargo from land to offshore work site for the Saudi Aramco Wasit gas development Hasbah offshore facility in Saudi Arabia. (StarBiz)
Wah Seong: Eying strategic stake in Petra Energy
Wah Seong Corp and little-known Pan Sarawak Holdings Sdn Bhd have emerged as the frontrunners to acquire a strategic 26.9% equity interest in oil services company Petra Energy. Perdana Petroleum, formerly known as Petra Perdana is the current owner of the strategic block of shares in Petra Energy. The marine services company has given CIMB the mandate to sell the block of shares in April this year, under a bidding exercise that closes tomorrow. Based on Petra Energy’s closing price of RM1.25 Wednesday, the block has a market value of RM72.1m. When contacted, Wah Seong deputy MD Giancarlo Maccagno acknowledged that the company was interested in the block. Pan Sarawak executives could not be reached for comment. (Financial Daily)
Naim Indah Corp: LPG venture hits a snag
Naim Indah Corp’s (Ninorp) diversification into the liquefied petroleum gas (LPG) business has hit a snag. Nicorp said Aspire Rich Sdn Bhd had received a letter from Oman-based Natural Gas Co (NGC) stating that the agreement between the two parties to acquire the LPG assets from Shell Malaysia Trading Sdn Bhd had been terminated. Nicorp added that it was also informed that Aspire Rich was disputing the termination of the agreement and was seeking legal advice on the matter. (Financial Daily)
Tebrau Teguh: Iskandar Waterfront serves conditional mandatory takeover
Iskandar Waterfront Holdings Sdn Bhd (IWHSB) has served a notice of conditional mandatory takeover offer on Tebrau Teguh. Tebrau Teguh said the Feb 13 conditional share sale agreement where IWHSB would acquire 222m Tebrau Teguh shares or 33.15% from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) had become unconditional on Wednesday. As such, it said IWHSB is obliged to extend a mandatory take-over offer to acquire all the remaining 447.7m Tebrau Teguh shares (66.85%)" for 76 sen per share. IWHSB had received an irrevocable undertaking from KPRJ that it would not accept their remaining shareholding of 53.6m shares representing 8% of the Tebrau Teguh's paid-up capital. (StarBiz)
Scomi Engineering: Mumbai monorail project to commence operations in January
Maharashtra Chief Minister Prithviraj Chavan announced that the first phase of the 9km Mumbai Monorail project is scheduled to commence operations in January 2013. Scomi Engineering Country President, Kanesan Velupillai said that Scomi's India unit, Urban Transit Pte Ltd, would also be in charge of the operations and management of the full completion of the 19.km project for a duration of 6 years. He said they have a team of 60 personnel already trained in all aspects from operations control, depot, rolling stock maintenance and they have the monorail drivers to run the system. Kanesan said the project was now undergoing testing prior to trial runs begins before the lead up to the commissioning. (Bernama)
Bina Puri: Subsidiary gets US$10m mini hydro plant contract
Bina Puri Holdings’ subsidiary will build and operate a mini hydro power plant in Sulawesi, Indonesia costing US$10m (RM31.80m). It said on Wednesday its 80% owned PT. Megapower Makmur had signed an agreement with PT PLN (Persero) to undertake the project, which is the sixth in the region. It said the annual output of electricity produced is approximately 23,915 GWH. It added that the tenure of power purchase agreement is 15 years effective from the date of commercial run of the power plant. Bina Puri said construction would take 24 months. It expected the project to contribute positively to the group's earnings from FY 2014 onwards. (StarBiz)
Banking: Bank Mandiri delays plan to open branch in Malaysia
Bank Mandiri, has delayed a plan to open its first branch in Malaysia by year-end as it is waiting for the country's Financial Services Act (FSA) to be in place. The state-owned bank, which has long sought to expand into Malaysia and Singapore, in line with its ambition to be an Asean bank, currently has only a remittance business in Malaysia. In Singapore, it has a limited operating branch. Its CFO Pahala Mansury said from what they understand, there is going to be a new Act in banking that will allow foreign-owned banks to establish more branches and other forms of outlets. He said the bank wants to know, for example, what kind of flexibility it will have in terms of the number of branches it can establish and the kind of businesses it can offer. He said if it is feasible, Bank Mandiri expects to open a branch here, the first ever by an Indonesian bank, in as soon as six to nine months after the FSA takes effect, or at least once there is greater clarity on what it will entail and when it will take effect. (Business Times)
Construction: MRT’s RM1.6bn tender gets disappointing response
Three of the six pre-qualified companies have walked away from the RM1.6bn MRT train supply tender for the 51km Sungai Buloh-Kajang line without submitting a bid. Although an extension of one month had been given, South Korea’s Hyundai Rotem Company had pulled out, while Japan’s Kawasaki Heavy Industries Rolling Stock Co and Canada’s Bombadier Transportation decided not to submit bids. MRT Corp CEO Datuk Azhar Abdul Hamid said he was disappointed with the pullout and the failure by several of the shortlisted groups to make submission to participate in the tender. The agency had hoped for all six bids to come in. The 3 remaining bidders are Siemens SMH Rail Consortium from Germany and Chinese train-makers, Changchun Railways Vehicle Co Ltd and CSR Zhuzhou Electric Locomotive Co Ltd. The 3 groups will be subjected to a four-stage evaluation process and an award is expected in late July. (Financial Daily)
Oil & Gas: Terengganu home for refinery
Malaysia will house Asia's largest biorefinery complex in Terengganu. The complex, which the government has allocated RM170m for its infrastructure, is expected to generate a cumulative gross national income of RM20.4bn by 2020 and produce 2,500 green-jobs. The East Coast Economic Region Development Council (ECERDC) has teamed up with the Terengganu government and Malaysian Biotechnology Corp Sdn Bhd (BiotechCorp) to facilitate the project. ECERDC CEODatuk Jebasingam Issace John said with the biorefinery project, ECER now had secured more than RM10bn in investments. From the total, RM2.1bn investments were from Pahang, RM5bn from Johor and RM500m from Kelantan. Terengganu makes up the balance. ECERDC expects total investments to hit RM15bn this year. Jebasingam said the complex would be the first in Malaysia to use cellulosic feedstock to produce bioderivatives such as advanced carbohydrates, biochemicals, biomaterials, biofertilisers and active feed ingredient. (Business Times)
Steel: Government imposes import licence on alloy steel products
The International Trade and Industry Ministry announced that the importation of eight tariff lines of alloy steel products (HS 7225) will be subject to licensing requirements from June 15. In a statement, it said the imposition of import licence on these products was gazetted under the Customs (Prohibition of Imports) (Amendment) (No.2) Order 2012 on Tuesday. It said the imposition of import licensing requirements on these products will serve to ensure that imported alloy steel products meet established quality and safety requirements, and minimise the importation of sub-standards products. It is also to facilitate the monitoring of trade in these products. (Bernama)
YTL Corp’s Starhill REIT is expanding its international footprint with the acquisition of three Marriott hotels in Australia for RM1.31bn (AUD415m). The purchase of the Marriott hotels in Sydney, Brisbane and Melbourne will give Starhill REIT the largest portfolio overseas property assets of any Malaysian REIT. “This acquisition will enlarge the trust’s portfolio to approximately RM3bn from RM1.58bn,” said Tan Sri Francis Yeoh, chief executive of Projek Pintar SB, the manager of Starhill REIT. Yeoh is also the largest shareholder of Starhill REIT through YTL Corp, which owns 56.4% of the trust. (Financial Daily)
TRC gets RM194m contract from Bintulu Port
TRC Synergy’s wholly-owned subsidiary, Trans Resources Corp SB, has accepted a RM194.0m contract from Bintulu Port Holdings to develop the Samalaju Port in Bintulu. In a filing with Bursa Malaysia, TRC said the project was expected to strengthen the group’s operations in Sabah and Sarawak. However, the project would not have any effect on the issued and paid-up share capital, substantial shareholders’ shareholdings, net assets per share, and gearing of the company and its subsidiaries. (Financial Daily)
MSM has RM100m to buy sugar plantations in Southeast Asia
Malaysia’s largest sugar refiner MSM Malaysia Holdings (MSM) has set aside about RM100m to acquire sugarcane plantations in South-East Asia as part of its plans to expand its upstream business, its executive director Datuk Sabri Ahmad said. The company says it’s looking at Indonesia and Myanmar to acquire these sugarcane plantations. In another development, MSM is in the process of converting its 5,000ha of sugar cane plantations in Perlis to rubber estate. Executive director Datuk Sabri Ahmad said the land is no longer suitable for sugar cane due to climatic conditions. (Malaysian Reserve) (Financial Daily)
MSM Malaysia: To invest RM85m to upgrade refineries
MSM Malaysia Holdings is investing RM85m to upgrade its sugar refineries. Its CEO Chua Say Sin said on Wednesday the funding for the upgrading would be financed from its initial public offer proceeds. Chua said as sugar consumption is expected to increase in Malaysia and globally, MSM is to grow a strong and sustainable business for all its stakeholders. The immediate focus is to upgrade production facilities, expand export sales and pursue strategic investments in new markets. (StarBiz)
AirAsia eyes 5 more regional tie-ups
AirAsia will work on five more joint ventures with regional airlines over the next two years to position itself as a global brand on top of the one that was signed with Japan's All Nippon Airways.”We need to pivot to a wider, regional lens from the first decade's focus, which was largely domestic,” chief executive officer Tan Sri Tony Fernandes said. “Shifting AirAsia's emphasis to a regional strategy is not just good business, but also a move that will keep up ahead of the inevitable competition that is heading our way,” Fernandes said at a press conference yesterday. He also said that the company was considering to add a fleet of 50 planes to meet its operations' needs. The 75 aircraft that were ordered are expected to be delivered by 2016. (StarBiz)
Fajarbaru eyes MRT deals
Fajarbaru Builder Group is understood to have submitted bids to build stations for the RM40bn MyRapid Transit (MRT) project. Business Times understands that Fajarbaru is eyeing contracts to build MRT stations under packages S4 and S5, which closed on 28 May and 11 June, respectively. The combined value of the two packages to build the seven stations is about RM650m. Fajarbaru executive director Teo Sock Cheng confirmed that it had submitted the bids to MRT Corp, but declined to reveal the value. (BT)
KPJ Healthcare plans to conclude two acquisitions by year-end
KPJ Healthcare Bhd, which is on an aggressive expansion plan, hopes to conclude two acquisitions by year-end, said managing director Datin Paduka Siti Sa'diah Sheikh Bakir. “There are offers which we are assessing both locally and internationally. We hope to conclude at least one local acquisition and one overseas by year-end,” Siti Sa'diah told StarBiz in an interview. However, she did not reveal the size of the acquisitions. She said KPJ had been looking for potential acquisitions continuously. ”We're ready for two acquisitions a year and also to build two hospitals a year.” (StarBiz)
Felda Global: Set to price IPO at top end
Felda Global Ventures Holdings is set to price up to US$3.2bn IPO on Wednesday at the top of an indicative range, as strong demand from domestic investors helps it counter a recent global trend of failed listings. Three sources with direct knowledge of the deal said the company priced the IPO at RM4.55 a share, near the top of a RM4.00-RM4.65 indicative range. The deal, the world’s second biggest IPO this year behind Facebook Inc’s US$16bn offering, will put Kuala Lumpur neck and neck with China’s Shenzhen as the main IPO destination in the Asia Pacific region, leaving behind Hong Kong, which grossed the highest IPO proceeds in the world in 2010 and 2011. The IPO also underscores how Malaysia’s equity market has been partially insulated from global volatility because it is dominated by local investors and a large domestic pension fund system. (Business Times)
Maybank: Acquires stake in Luster Industries
Maybank has emerged as a substantial shareholder in Luster Industries with a 5.95% stake in the latter. The bank announced that it had acquired 64.2m shares of 10 sen each in Luster. It said the subscription was made pursuant to the exercise of debt to equity conversion in accordance with a debt settlement agreement dated Nov 25, 2011 involving Luster. A PN17 company, Luster is an integrated manufacturer of high precision and precision plastic parts and components. As part of its proposed regularisation plan, Luster is looking to settle RM64.4m in debt via the issuance of RM17.9m in loan stocks, 25.4m new ordinary shares of 10 sen each, and 263.8m new shares with 131.9m free detachable warrants. The shares and warrants were part of an exercise that saw the company issue a total of 834.1m new shares alongside 441.6m free detachable warrants. (StarBiz)
MMC Corp: May be looking at RM3bn IPO of Malakoff
According to two people with knowledge of the matter said, Malakoff is planning an IPO that may raise about US$1bn (RM3.2bn). The company, 51% owned by MMC Corp, had invited at least 6 banks to submit proposals for the IPO by June 18, said the people, who spoke on the condition of anonymity because the process is private. They said the share sale might take place by the end of this year. Malakoff was publicly traded until it was acquired by MMC in 2007 for RM9.3bn, according to data compiled by Bloomberg. A source even said the IPO might value Malakoff at as much as US$3.5bn (RM11.4bn). (Bloomberg)
Dutch Lady: MD says company on track to achieve RM1bn sales target in 2013
Dutch Lady’s MD Rahul Colaco says the group is on track to reach its RM1bn sales target for 2013, driven by the strength of its brand and market position, despite the slowdown in the local dairy industry. He said that the growth of the local dairy industry was expected to reach between 6% and 7% this year, compared with last year's 8% to 9%. Colaco also said that the group is always striving to increase its products' prices only moderately and aimed to minimize the effects on consumers. (Bernama)
MAS: More changes in management
More management changes are under way at MAS with CFO Razman Omar tipped to leave the national carrier. Sources said Rozman has tendered his resignation and plans to re-join his previous company AirAsia as regional head of finance effective July. According to a source, Rozman is leaving despite attempts by the major shareholders of MAS and his key officials to get him to stay on at the national carrier. The departure of Rozman follows the announcement of deputy group CEO Mohammed Rashdan Yusof’s resignation effective end of this month. (Financial Daily)
DRB-Hicom: Proton Prevé exceeds 11,000 bookings
In just two months after launch, Proton Prevé has commanded a total booking of 11,310 units, making it the most popular 1.6-litre sedan in the market. Proton Holdings Executive Chairman Datuk Seri Mohd Khamil Jamil said a total of almost 1,000 units were booked by eager customers as early as March, a month before the launch while another 4,893 units were booked in the month of April. (Business Times)
Dialog Group: Saudi Arabia supply base starts operations
Dialog Group's supply base in Saudi Arabia, which saw the company invested about RM93.5m, has started operations. It said on Wednesday its 60%-owned Dialog Jubail Supply Base Company Ltd (DJSB), had secured a long-term contract from Snamprogetti Saudi Arabia Co Ltd to provide logistic services. Dialog's intention to set up the Jubail supply base was to be a one-stop integrated offshore logistic hub and resources centre for oilfield services, equipment and supplies, supporting the active and growing offshore oil and gas activities in the Arabian Gulf. It said DJSB, had on June 11, secured the RM17m contract from Snamprogetti where its base services would be used to move project cargo from land to offshore work site for the Saudi Aramco Wasit gas development Hasbah offshore facility in Saudi Arabia. (StarBiz)
Wah Seong: Eying strategic stake in Petra Energy
Wah Seong Corp and little-known Pan Sarawak Holdings Sdn Bhd have emerged as the frontrunners to acquire a strategic 26.9% equity interest in oil services company Petra Energy. Perdana Petroleum, formerly known as Petra Perdana is the current owner of the strategic block of shares in Petra Energy. The marine services company has given CIMB the mandate to sell the block of shares in April this year, under a bidding exercise that closes tomorrow. Based on Petra Energy’s closing price of RM1.25 Wednesday, the block has a market value of RM72.1m. When contacted, Wah Seong deputy MD Giancarlo Maccagno acknowledged that the company was interested in the block. Pan Sarawak executives could not be reached for comment. (Financial Daily)
Naim Indah Corp: LPG venture hits a snag
Naim Indah Corp’s (Ninorp) diversification into the liquefied petroleum gas (LPG) business has hit a snag. Nicorp said Aspire Rich Sdn Bhd had received a letter from Oman-based Natural Gas Co (NGC) stating that the agreement between the two parties to acquire the LPG assets from Shell Malaysia Trading Sdn Bhd had been terminated. Nicorp added that it was also informed that Aspire Rich was disputing the termination of the agreement and was seeking legal advice on the matter. (Financial Daily)
Tebrau Teguh: Iskandar Waterfront serves conditional mandatory takeover
Iskandar Waterfront Holdings Sdn Bhd (IWHSB) has served a notice of conditional mandatory takeover offer on Tebrau Teguh. Tebrau Teguh said the Feb 13 conditional share sale agreement where IWHSB would acquire 222m Tebrau Teguh shares or 33.15% from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) had become unconditional on Wednesday. As such, it said IWHSB is obliged to extend a mandatory take-over offer to acquire all the remaining 447.7m Tebrau Teguh shares (66.85%)" for 76 sen per share. IWHSB had received an irrevocable undertaking from KPRJ that it would not accept their remaining shareholding of 53.6m shares representing 8% of the Tebrau Teguh's paid-up capital. (StarBiz)
Scomi Engineering: Mumbai monorail project to commence operations in January
Maharashtra Chief Minister Prithviraj Chavan announced that the first phase of the 9km Mumbai Monorail project is scheduled to commence operations in January 2013. Scomi Engineering Country President, Kanesan Velupillai said that Scomi's India unit, Urban Transit Pte Ltd, would also be in charge of the operations and management of the full completion of the 19.km project for a duration of 6 years. He said they have a team of 60 personnel already trained in all aspects from operations control, depot, rolling stock maintenance and they have the monorail drivers to run the system. Kanesan said the project was now undergoing testing prior to trial runs begins before the lead up to the commissioning. (Bernama)
Bina Puri: Subsidiary gets US$10m mini hydro plant contract
Bina Puri Holdings’ subsidiary will build and operate a mini hydro power plant in Sulawesi, Indonesia costing US$10m (RM31.80m). It said on Wednesday its 80% owned PT. Megapower Makmur had signed an agreement with PT PLN (Persero) to undertake the project, which is the sixth in the region. It said the annual output of electricity produced is approximately 23,915 GWH. It added that the tenure of power purchase agreement is 15 years effective from the date of commercial run of the power plant. Bina Puri said construction would take 24 months. It expected the project to contribute positively to the group's earnings from FY 2014 onwards. (StarBiz)
Banking: Bank Mandiri delays plan to open branch in Malaysia
Bank Mandiri, has delayed a plan to open its first branch in Malaysia by year-end as it is waiting for the country's Financial Services Act (FSA) to be in place. The state-owned bank, which has long sought to expand into Malaysia and Singapore, in line with its ambition to be an Asean bank, currently has only a remittance business in Malaysia. In Singapore, it has a limited operating branch. Its CFO Pahala Mansury said from what they understand, there is going to be a new Act in banking that will allow foreign-owned banks to establish more branches and other forms of outlets. He said the bank wants to know, for example, what kind of flexibility it will have in terms of the number of branches it can establish and the kind of businesses it can offer. He said if it is feasible, Bank Mandiri expects to open a branch here, the first ever by an Indonesian bank, in as soon as six to nine months after the FSA takes effect, or at least once there is greater clarity on what it will entail and when it will take effect. (Business Times)
Construction: MRT’s RM1.6bn tender gets disappointing response
Three of the six pre-qualified companies have walked away from the RM1.6bn MRT train supply tender for the 51km Sungai Buloh-Kajang line without submitting a bid. Although an extension of one month had been given, South Korea’s Hyundai Rotem Company had pulled out, while Japan’s Kawasaki Heavy Industries Rolling Stock Co and Canada’s Bombadier Transportation decided not to submit bids. MRT Corp CEO Datuk Azhar Abdul Hamid said he was disappointed with the pullout and the failure by several of the shortlisted groups to make submission to participate in the tender. The agency had hoped for all six bids to come in. The 3 remaining bidders are Siemens SMH Rail Consortium from Germany and Chinese train-makers, Changchun Railways Vehicle Co Ltd and CSR Zhuzhou Electric Locomotive Co Ltd. The 3 groups will be subjected to a four-stage evaluation process and an award is expected in late July. (Financial Daily)
Oil & Gas: Terengganu home for refinery
Malaysia will house Asia's largest biorefinery complex in Terengganu. The complex, which the government has allocated RM170m for its infrastructure, is expected to generate a cumulative gross national income of RM20.4bn by 2020 and produce 2,500 green-jobs. The East Coast Economic Region Development Council (ECERDC) has teamed up with the Terengganu government and Malaysian Biotechnology Corp Sdn Bhd (BiotechCorp) to facilitate the project. ECERDC CEODatuk Jebasingam Issace John said with the biorefinery project, ECER now had secured more than RM10bn in investments. From the total, RM2.1bn investments were from Pahang, RM5bn from Johor and RM500m from Kelantan. Terengganu makes up the balance. ECERDC expects total investments to hit RM15bn this year. Jebasingam said the complex would be the first in Malaysia to use cellulosic feedstock to produce bioderivatives such as advanced carbohydrates, biochemicals, biomaterials, biofertilisers and active feed ingredient. (Business Times)
Steel: Government imposes import licence on alloy steel products
The International Trade and Industry Ministry announced that the importation of eight tariff lines of alloy steel products (HS 7225) will be subject to licensing requirements from June 15. In a statement, it said the imposition of import licence on these products was gazetted under the Customs (Prohibition of Imports) (Amendment) (No.2) Order 2012 on Tuesday. It said the imposition of import licensing requirements on these products will serve to ensure that imported alloy steel products meet established quality and safety requirements, and minimise the importation of sub-standards products. It is also to facilitate the monitoring of trade in these products. (Bernama)
20120614 1006 Local & Global Economy Related News.
Malaysia: Minimum Retirement Age Bill 2012 tabled today
The compulsory retirement age of private sector employees will be raised to 60 under the Minimum Retirement Age Bill 2012, which was tabled for first reading at the Dewan Rakyat today. (BT)
Thailand: Central bank holds rates
Thailand’s central bank left benchmark interest rate unchanged at 3.0% for a third straight meeting yesterday and warned about risks to the global economy. “The balance of risks for the Thai economy was skewed towards growth rather than inflation,” its Monetary Policy Committee said. (BT)
Indonesia: Plans stimulus to boost consumption amid slowdown
Indonesia will implement stimulus measures to boost consumption and infrastructure spending as a global slowdown limits exports and an imminent election in Greece threatens to deepen Europe’s debt turmoil. The government will tap last year’s IDR24trn budget surplus to fund building projects, and lift the tax-free annual income level to IDR24m from IDR16m. Indonesia currently targets a 2012 budget deficit of IDR190.1trn, on capital spending of IDR168.8trn. (Bloomberg)
Italy: Holds first bond sale after Spain rescue as yields surge
Italy holds its first bond auction since Spain’s EUR100bn bank rescue request drove up yields, as the government seeks to convince investors the country won’t be the next to need aid. Its Treasury sells as much as EUR4.5bn of three-, seven- and eight-year bonds today, one day after it was forced to pay 3.97% to sell one-year bills, 163bps more than at the previous sale a month ago. (Bloomberg)
EU: Industrial output falls second month on Germany
Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. Output in the 17-nation euro area slipped 0.8% from March, when it decreased a revised 0.1%. From a year earlier, production fell 2.3%. (Bloomberg)
US: Presses EU to clarify future of euro zone
US Treasury Secretary Timothy Geithner kept the pressure on European leaders to lay out their plans for the future of the euro zone sooner rather than later to keep the debt crisis from escalating. Speaking ahead of next week's meeting of the G-20 nations, Geithner said other European countries had to move closer to Germany, which has shown a willingness to consider a financial union. European leaders are meeting 28-29 June to negotiate a new set of reforms that is supposed to map out the future of the euro zone. (MarketWatch)
US: Posts USD125bn deficit in May
The US government ran a budget deficit of USD125bn in May, pushing the deficit to USD844bn for the first eight months of fiscal 2012. The government spent USD305bn in May, up 31% y-o-y. Adjusted for the timing of payments for certain benefits, and for re-estimates related to the Troubled Asset Relief Program, May spending would be less than 1% above a year ago. (MarketWatch)
US: May retail sales fall as gas purchases tumble
US retail sales fell in May for the second month in a row as consumers spent less to fill up their gas tanks. Retail sales declined by 0.2% last month on a seasonally adjusted basis. Lower sales over the past two months marked the first back-to-back drop since May and June 2010. If gas purchases are omitted, however, retail spending actually rose a slight 0.1% last month. (MarketWatch)
US: Producer prices plummet 1% in May
Lower energy and food costs pulled US Producer Price Index (PPI) down 1.0% in May. Core producer prices, excluding volatile food and energy, rose 0.2%. The May decline in the PPI was the largest since a drop of 1.2% in July 2009, just when the recession was ending. It also marks the second straight monthly decline in wholesale prices. In April, the headline PPI rate had fallen 0.2%, while the core rate had risen 0.2%. (MarketWatch)
The compulsory retirement age of private sector employees will be raised to 60 under the Minimum Retirement Age Bill 2012, which was tabled for first reading at the Dewan Rakyat today. (BT)
Thailand: Central bank holds rates
Thailand’s central bank left benchmark interest rate unchanged at 3.0% for a third straight meeting yesterday and warned about risks to the global economy. “The balance of risks for the Thai economy was skewed towards growth rather than inflation,” its Monetary Policy Committee said. (BT)
Indonesia: Plans stimulus to boost consumption amid slowdown
Indonesia will implement stimulus measures to boost consumption and infrastructure spending as a global slowdown limits exports and an imminent election in Greece threatens to deepen Europe’s debt turmoil. The government will tap last year’s IDR24trn budget surplus to fund building projects, and lift the tax-free annual income level to IDR24m from IDR16m. Indonesia currently targets a 2012 budget deficit of IDR190.1trn, on capital spending of IDR168.8trn. (Bloomberg)
Italy: Holds first bond sale after Spain rescue as yields surge
Italy holds its first bond auction since Spain’s EUR100bn bank rescue request drove up yields, as the government seeks to convince investors the country won’t be the next to need aid. Its Treasury sells as much as EUR4.5bn of three-, seven- and eight-year bonds today, one day after it was forced to pay 3.97% to sell one-year bills, 163bps more than at the previous sale a month ago. (Bloomberg)
EU: Industrial output falls second month on Germany
Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. Output in the 17-nation euro area slipped 0.8% from March, when it decreased a revised 0.1%. From a year earlier, production fell 2.3%. (Bloomberg)
US: Presses EU to clarify future of euro zone
US Treasury Secretary Timothy Geithner kept the pressure on European leaders to lay out their plans for the future of the euro zone sooner rather than later to keep the debt crisis from escalating. Speaking ahead of next week's meeting of the G-20 nations, Geithner said other European countries had to move closer to Germany, which has shown a willingness to consider a financial union. European leaders are meeting 28-29 June to negotiate a new set of reforms that is supposed to map out the future of the euro zone. (MarketWatch)
US: Posts USD125bn deficit in May
The US government ran a budget deficit of USD125bn in May, pushing the deficit to USD844bn for the first eight months of fiscal 2012. The government spent USD305bn in May, up 31% y-o-y. Adjusted for the timing of payments for certain benefits, and for re-estimates related to the Troubled Asset Relief Program, May spending would be less than 1% above a year ago. (MarketWatch)
US: May retail sales fall as gas purchases tumble
US retail sales fell in May for the second month in a row as consumers spent less to fill up their gas tanks. Retail sales declined by 0.2% last month on a seasonally adjusted basis. Lower sales over the past two months marked the first back-to-back drop since May and June 2010. If gas purchases are omitted, however, retail spending actually rose a slight 0.1% last month. (MarketWatch)
US: Producer prices plummet 1% in May
Lower energy and food costs pulled US Producer Price Index (PPI) down 1.0% in May. Core producer prices, excluding volatile food and energy, rose 0.2%. The May decline in the PPI was the largest since a drop of 1.2% in July 2009, just when the recession was ending. It also marks the second straight monthly decline in wholesale prices. In April, the headline PPI rate had fallen 0.2%, while the core rate had risen 0.2%. (MarketWatch)
20120614 1004 Global Market Related News.
Data (Source: Reuters)
• US May Retail Sales -0.2% vs. -0.2% (revised from +0.1%), as expected
• US May Retail Sales Ex-Autos -0.4% vs. -0.3% (revised from +0.1%), expected 0.0%
• US May PPI -1.0% vs. -0.2%, expected -0.6%; Core +0.2% vs. +0.2%, as expected
• US Apr Business Inventories +0.4% vs. +0.3%, expected +0.3%
• US Apr Business Sales +0.2% vs. +0.2%
• Canada may need to raise rates this year (OECD)* Canada’s Flaherty: If need to do more to cool housing market, “We’ll do more”
• US EIA Weekly Crude Stocks -191k bbls, expected +1.4mln bbls; Gasoline -1.72mln bbls, expected +1.1mln bbls
Asian Stocks Drop on Spain Downgrade, Growth Concern (Source: Bloomberg)
Asian stocks declined as Spain’s credit rating was cut and economic reports in the U.S and Europe added to concern the global economy is slowing. Canon Inc., a camera maker that gets 31 percent of sales from Europe, lost 0.8 percent in Tokyo. Mitsui & Co Ltd., which gets about 44 percent of its revenue from commodities, slipped 1.2 percent as copper futures fell. James Hardie Industries SE (JHX), a building-materials supplier that counts the U.S. as its biggest market, decreased 2.2 percent in Sydney as retail sales in the world’s largest economy dropped. The MSCI Asia Pacific Index (MXAP) lost 0.3 percent to 113.08 as of 9:28 a.m. in Tokyo, with more than two shares falling for each that rose. The gauge dropped 12 percent from this year’s peak on Feb. 29 through yesterday amid concern growth in the U.S. and China is slowing and as Europe’s debt crisis intensified.
“Obviously, the Spanish bank bailout on the weekend didn’t help matters and probably increased the focus on Italy, and also made investors worry about investing in Spanish bonds,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Europe is sliding further into a recession and the global economy is still slowing in the U.S., and so I think this is a soft patch.”
Japan Stocks Fall on Global Slowdown Signs, Italian Bonds (Source: Bloomberg)
June 14 (Bloomberg) -- Japanese stocks fell as U.S. and European data added to concern the global economy is slowing and after borrowing costs climbed in Italy. Honda Motor Co. (7267), an auto manufacturer that gets 44 percent of its sales in North America, fell 1.3 percent. Nintendo Co., a maker of gaming consoles that depends on Europe for a third of its sales in the U.S. and Europe, lost 1.4 percent. Otsuka Holdings KK gained 1.5 percent after the pharmaceutical company announced a share buyback plan. The Nikkei 225 Stock Average (NKY) dropped 0.6 percent to 8,534.37 as of 9:18 a.m. in Tokyo. Trading volume was 16 percent below the 30-day average ahead of a Greek election on June 17 that may signal whether the nation exits the euro. The broader Topix Index lost 0.5 percent to 722.99, fluctuating between gains and losses over the past five trading days.
“Europe is sliding further into a recession and the global and U.S. economies are still slowing down, and so I think this is a soft patch,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s still the time for caution on the short-term view. There’s a lot of event risk around.”
U.S. Stocks Drop Amid Lower Retail Sales, Europe Concern (Source: Bloomberg)
U.S. stocks slid, after yesterday’s gain, as retail sales fell and concern about Europe’s debt crisis grew amid higher borrowing costs in Italy and Germany. Nine out of 10 groups in the Standard & Poor’s 500 Index retreated as consumer discretionary, commodity and industrial shares had the biggest losses. Home Depot Inc. (HD), Caterpillar (CAT) Inc. and DuPont (DD) Co. dropped at least 1.5 percent. JPMorgan Chase & Co. (JPM) rose 1.6 percent as Chief Executive Officer Jamie Dimon testified about his bank’s practices to lawmakers. Dell Inc. (DELL) advanced 2.6 percent after saying it will pay a dividend. The S&P 500 fell 0.7 percent to 1,314.88 at 4 p.m. New York time. It rose 1.2 percent yesterday. The Dow Jones Industrial Average declined 77.42 points, or 0.6 percent, to 12,496.38. Trading volume for exchange-listed stocks in the U.S. was about 6.1 billion shares, 10 percent below the three-month average.
Bovespa Rises a Second Day as Homebuilders Rally on Rate Outlook (Source: Bloomberg)
The Bovespa (IBOV) advanced, posting the only gain among major equity indexes in the Americas, as homebuilders and consumer stocks jumped on speculation policy makers will further reduce interest rates to shield Brazil’s economy from the global slowdown. Brookfield Incorporacoes SA, Brazil’s fourth-largest homebuilder by revenue, advanced the most on the benchmark. PDG Realty SA Empreendimentos e Participacoes rose to the highest in almost three weeks. Online retailer B2W Cia. Global do Varejo gained for a fifth day, the longest winning streak in nine months. The Bovespa rose 1.1 percent to 55,650.51 at the close in Sao Paulo. Fifty-four stocks gained on the gauge while 12 fell. The real weakened 0.2 percent to 2.0724 per U.S. dollar at 5:45 p.m. local time.
“The Brazilian government has been very clear in saying that, amid the slowdown in the global economy, its number one priority is to boost growth,” Henrique Kleine, the chief analyst at Magliano SA brokerage, said by phone from Sao Paulo. “That’s why you see stocks linked to domestic consumption performing better than the market’s average.” Brookfield gained 6.4 percent to 3.65 reais. PDG Realty rose 4.2 percent to 3.50 reais. The BM&F Bovespa Real Estate Index (IMOBBV) advanced 1.8 percent.
European Stocks Fall as Borrowing Costs Rise at Debt Sale (Source: Bloomberg)
European stocks declined as borrowing costs increased at debt auctions in Germany and Italy and as Sweden’s SKF (SKFB) AB reported weakening demand for its products in the second quarter. SKF, the world’s largest maker of ball bearings, dropped 7.3 percent. Renault SA (RNO) led a selloff by carmakers, sliding 4.2 percent. Etablissements Maurel & Prom SA surged the most since 2003 amid takeover speculation. The Stoxx Europe 600 Index (SXXP) dropped 0.4 percent to 242.56 in London. The gauge yesterday climbed 0.6 percent as investors shrugged off a surge in Spanish borrowing costs. The Stoxx 600 has still fallen 11 percent from its high this year on March 16. “The most interesting development for me has been the move higher in bund yields,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “Investors are clearly becoming concerned about Germany’s growing liabilities associated with the euro zone and suggests there is an element of tail risk being priced in.”
Germany sold 4.04 billion euros ($5.08 billion) of 10-year bunds today at an average yield of 1.52 percent, up from a rate of 1.47 percent at the last auction on May 16. Investors bid for 5.81 billion euros of the bunds, above the 5 billion-euro maximum sales target for the auction, the Bundesbank said.
Melco Discount Grows as Euro Woes Spur ADR Drop: China Overnight (Source: Bloomberg)
Chinese stocks traded in the U.S. slid from a two-week high and Melco Crown Entertainment Ltd. (MPEL) slumped as concern Europe’s debt crisis will spread outweighed prospects of more stimulus for Asia’s biggest economy. The Bloomberg China-US Equity Index (SHCOMP) of the most-traded Chinese companies in the U.S. dropped 0.9 percent to 90.50 yesterday. Melco Crown, a Macau casino operator, traded at the biggest discount to Hong Kong shares since June 1 after the city’s gaming revenue outlook was cut. LDK Solar Co. (LDK) led peers lower as Jefferies Group Inc. said European demand for panels slowed. E-Commerce China Dangdang Inc. jumped after the National Business Daily reported a deal with Tencent Holdings Ltd. China cut its benchmark interest rates last week for the first time since 2008 as May economic data showed inflation slowed more than economists’ forecasts and industrial production grew less than projected.
Borrowing costs increased at debt auctions yesterday in Germany and Italy, and European Union da ta showed Euro-area industrial production declined for a second month in April, adding to signs of a deepening economic slump.
Emerging Stocks Rise to 2-Week High on China Subsidies (Source: Bloomberg)
Emerging-market stocks climbed to a two-week high as signs of a pick-up in technology demand and speculation China will take more steps to bolster economic growth overshadowed concern Europe’s debt crisis will spread. The MSCI Emerging Markets Index (MXEF) rose 0.7 percent to 919.47 at the close in New York, the highest level this month. Cyrela Brazil Realty SA Empreendimentos e Participacoes surged 5.1 percent, while United Spirits Ltd. rose to lead the advance in the index. Russia’s Micex Index (INDEXCF) rallied 0.6 percent on gains for OAO Gazprom Neft. Brazil’s Bovespa advanced, led by Brookfield Incorporacoes SA, a real estate developer. A gauge of technology stocks rose 0.7 percent after Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest maker of custom chips, said demand for leading-edge chip technology is still strong.
China ZhengTong Auto Services Holdings Ltd. (1728) jumped the most since October 2011 in Hong Kong after China said it will give trade-in subsidies of as much as 18,000 yuan ($2,826) for the replacement of some commercial vehicles. “The market is being held up by perceived corporate catalysts and optimism of more subsidies at a time when Europe is still struggling with its debt crisis,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO), said by phone. “This rally won’t last until Europe takes more concrete steps.”
Emerging Offshore Chinese Renminbi Market : China Pursues Internationalization of their Currency (Source: CME)
The People’s Republic of China (PRC) has aggressively been pursuing the internationalization of the Chinese Yuan or Renminbi (CNY or RMB) since the financial crisis of 2008. The ultimate goal is to achieve full currency convertibility, thereby promoting use of the Renminbi as a reserve currency and international trade currency of choice. Thus, the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) jointly announced on July 19, 2010 that RMB may be deliverable in Hong Kong. This created a new offshore market in RMB, dubbed the “CNH” market. Since its introduction, this market has grown at a rapid pace, attracting widespread interest and activity. This development is changing the character of the RMB markets and of the FX markets in general. Note, of course, that CME Group currently offers RMB futures and options. Thus, we seek to examine this development in greater detail.
FOREX-Euro steady, but vulnerable to Italian and Greek woes
LONDON, June 13 (Reuters) - The euro was steady, w ith bearish investors selling at higher levels as concerns mounted that debt contagion would ensnare Italy and as general unease prevailed about the euro zone before crucial Greek elections.
"There is a risk that the Spanish problems could spread to Italy and investors are mindful of that," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
Dollar Remains Lower Against Euro Before U.S. CPI Data (Source: Bloomberg)
The dollar remained lower against the euro following a two-day slide before U.S. data that may show consumer prices fell, rekindling expectations the Federal Reserve will take more steps to bolster the economic recovery. The euro maintained a rally from an 11-year low versus the yen amid speculation traders are paring their bearish bets on the European currency before Greek elections on June 17. The Fed is scheduled to hold a two-day policy meeting starting June 19. New Zealand’s dollar strengthened against all of its 16 major counterparts after the central bank left the benchmark interest rate unchanged. “The dollar is susceptible to weakening because expectations for additional easing are rising ahead of the policy meeting next week,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company. “A decline in employment and the economy is the biggest concern for the Fed.”
The dollar traded at $1.2564 per euro as of 9:34 a.m. in Tokyo after falling 0.4 percent to $1.2557 in New York yesterday. It lost 0.2 percent to 79.36 yen. The 17-nation euro was at 99.72 yen following a 0.7 percent advance in the previous two days to 99.80. The common currency touched 95.60 on June 1, the lowest since November 2000. The U.S. consumer-price index probably fell 0.2 percent in May from a month earlier, the most since December 2008, the median estimate of economists showed in a Bloomberg News survey. The Labor Department will release the figures today.
Treasuries Drop Before U.S. Sells $13 Billion of 30-Year Notes (Source: Bloomberg)
Treasury 30-year notes declined as the U.S. prepared to auction $13 billion of the securities today following sales of three- and 10-year debt earlier this week. Losses in U.S. government securities were limited before data forecast to show U.S. consumer prices fell, providing the Federal Reserve room to take further steps to spur the economy. The gap in yields between 10-year notes and Treasury Inflation Protected Securities, which represents traders’ expectations for inflation over the life of the debt, was 2.1 percentage points, down from 2012 high of 2.45 percentage points in March. “Investors may be taking a little breather from buying Treasuries,” said Masaru Hamasaki, chief strategist in Tokyo at Toyota Asset Management Co., which oversees the equivalent of $24 billion. “The flight-to-quality amid concern over the European debt crisis and U.S. slowdown has already sent bond prices to an expensive level.”
The 30-year yield rose two basis points, or 0.02 percentage point, to 2.72 percent at 9:50 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 3 percent bond due May 2042 fell 9/32, or $2.81 per $1,000 face amount, to 105 21/32. Benchmark 10-year yields gained one basis point to 1.61 percent after dropping to a record 1.4387 percent on June 1.
Euro Crisis Deeper With Moody’s Downgrading Spain, Cyprus (Source: Bloomberg)
The European debt crisis deepened as the credit ratings of Spain and Cyprus were downgraded by Moody’s Investors Service. Moody’s yesterday cut Spain’s rating three steps to Baa3 from A3, citing the nation’s increased debt burden, weakening economy and limited access to capital markets. Moody’s also lowered Cyprus’s bond rating to Ba3 from Ba1, attributing the downgrade to the material increase in the likelihood of a Greek exit from the euro area, and the resulting increase in the probable amount of support that the government may have to extend to Cypriot banks. Moody’s is following the sentiment of financial markets that weren’t calmed by Europe’s 100 billion-euro ($126 billion) weekend bailout of Spanish banks, said Clay Lowery, a vice president at Washington-based Rock Creek Global Advisors LLC and former assistant Treasury secretary for international affairs.
For Moody’s, “it’s not whether you’re going to make money off your investment, it’s what is the creditworthiness of the borrower,” Lowery said. “Spain’s debt load has gotten larger with much more senior debt, so at least the potential for them to default has now gone up.”
Retail Sales in U.S. Declined for a Second Month in May (Source: Bloomberg)
Retail sales in the U.S. fell in May for a second month, prompting economists to cut forecasts for economic growth as limited job and income gains hold back consumers. The 0.2 percent decrease matched April’s drop that was previously reported as a gain, Commerce Department figures showed today in Washington. Sales excluding car dealerships slumped by the most in two years. The smallest wage gains in a year and unemployment exceeding 8 percent are taking a toll on the consumer spending that accounts for about 70 percent of the economy, leaving it more vulnerable to shocks from the European crisis. Federal Reserve policy makers gather next week to decide whether further stimulus is needed to fuel the three-year-old expansion. “The consumer is pulling back,” said Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who correctly forecast the drop in sales. “There isn’t a lot of job creation. We will continue to see softer numbers.”
Stocks fell after the report and as higher borrowing costs in Italy and Germany fueled concern about the global economy. The Standard & Poor’s 500 Index declined 0.7 percent to 1,314.88 at the close in New York. Last month’s drop in retail sales matched the median forecast of 79 economists surveyed by Bloomberg News. Estimates ranged from a drop of 0.7 percent to a gain of 0.5 percent. April and May marked the first back-to-back declines in two years.
Wholesale Prices in U.S. Fell 1% in May on Cheaper Energy (Source: Bloomberg)
Wholesale prices in the U.S. dropped in May by the most since July 2009 as costs of energy and food decreased, easing pressure on companies to pass expenses to customers. The producer price index fell 1 percent, more than forecast, following a 0.2 percent decrease the prior month, Labor Department figures showed today in Washington. Economists projected a 0.6 percent decline, according to the median estimate in a Bloomberg News survey. The core measure, which excludes volatile food and energy prices, climbed 0.2 percent for a second month. Slower global growth that’s tempering demand for raw materials may allow producers to hold down costs and preserve margins, a benefit to consumers facing weaker income gains. Limited inflation also provides Federal Reserve officials with more room to stimulate the U.S. expansion.
“The signs are that inflation pressures are dissipating fairly quickly,” said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. “From a producer perspective, it means import costs are low so they can maintain relatively healthy margins. For consumers, it provides some relief, adds to purchasing power, at a time where their incomes are being constrained by very weak wage growth.”
Dimon Says Fiscal Cliff May Be Reached Before Year-End (Source: Bloomberg)
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon, testifying to a U.S. Senate panel, said the government is risking an earlier-than-expected fiscal crisis as policy makers stay deadlocked on taxes and the budget. “The one thing to keep in mind about the fiscal cliff is it may not wait until Dec. 31,” Dimon, 56, said today before the Senate Banking Committee, which called him to answer questions about a $2 billion trading loss. “Markets and businesses may start taking actions before that, that create a slowdown in the economy.” A so-called fiscal cliff may be reached at year-end when tax-and-spending changes are scheduled to take effect unless Congress acts. Tax cuts enacted under then-President George W. Bush will expire as will a temporary reduction in the Social Security payroll tax. About $1 trillion in automatic spending cuts would begin, expanded jobless benefits will expire and the government will approach the legal limit on federal borrowing.
Dimon said lawmakers’ inability to reach an agreement on budget issues “helped cause a little downturn last year.” He urged approval of a compromise similar to the Simpson-Bowles plan, issued by President Barack Obama’s fiscal commission, which includes spending cuts and tax increases to balance the budget.
Geithner Says European Leaders Know They Must Do More (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said European leaders “recognize they’re going to have to do a bunch more” to stem the region’s debt crisis. “This is a very challenging crisis for them still,” Geithner said today during a talk at the Council on Foreign Relations in Washington. Spain and Italy appealed today to European policy makers to step up their response to the crisis after a 100 billion-euro ($125 billion) lifeline for Spanish banks failed to calm markets. Yields on Spanish debt due in 10-years climbed to 6.75 percent today, compared with 5.1 percent at the end of last year. As Geithner spoke, Spain’s credit rating was downgraded three steps by Moody’s Investors Service, citing the nation’s increased debt burden, weakening economy and limited access to capital markets.
Clinton Calls on Russia to End Arms Sales to Syria (Source: Bloomberg)
Syria is “spiraling toward civil war,” with Russia supporting the violence by continuing to arm President Bashar al-Assad’s regime, U.S. Secretary of State Hillary Clinton said. “We have repeatedly urged the Russian government to cut these military ties completely and to suspend all further support and deliveries,” Clinton said yesterday at the State Department. “We know -- because they confirm -- that they continue to deliver.” The remarks were the latest in an exchange of critical comments by U.S. and Russian officials, putting on display their deepening rift over how to deal with the conflict in Syria, a nation that has been Russia’s main Mideast ally. Earlier in the day, Russian Foreign Minister Sergei Lavrov rejected U.S. accusations that it’s sending arms for use against Syrian civilians and said his country is simply fulfilling its contractual obligations.
“We are completing previously signed and paid-for contracts,” Lavrov said during a press conference in Tehran with his Iranian counterpart Ali Akbar Salehi. “All these contracts have to do exclusively with air-defense systems.”
Felda Said to Raise $3.3 Billion in Malaysian Share Sale (Source: Bloomberg)
Felda Global Ventures Holdings Bhd., the world’s third-largest operator of palm oil plantations, raised about 10.4 billion ringgit ($3.3 billion) in the biggest initial public offering since Facebook Inc. (FB), said three people with knowledge of the matter. The Kuala Lumpur-based company sold shares to institutional investors at 4.55 ringgit each, said the people, asking not to be identified as the information is confidential. Felda Global had marketed the shares at 4 ringgit to 4.65 ringgit. Demand for stock from fund managers exceeded supply by more than 29 times at that price, two people said. Malaysian IPOs are defying the market turmoil brought on by Europe’s debt crisis, which caused companies to scrap at least $4.2 billion of first-time sales in the past month. Hospital operator IHH Healthcare Bhd. and power company Malakoff Bhd. are pursuing IPOs that may help Kuala Lumpur’s bourse widen its lead in Asian deals this year.
“Felda is in a sweet spot because it is a large offering in a Malaysian context with a very cash-rich base of investors,” Abdul Jalil Abdul Rasheed, who helps manage $3 billion as chief executive officer of Aberdeen Islamic Asset Management Sdn. in Kuala Lumpur., said yesterday. “We see other IPO markets being weak, but Malaysia has pulled through.” Graff Diamonds Corp. and Formula One are among companies whose plans to go public in Asia were undone in the past month by stock-market volatility. Powerica Ltd., an Indian company backed by Standard Chartered Plc’s private equity unit, shelved plans for an IPO, people familiar with the deal said yesterday.
Indonesia Plans Stimulus to Boost Consumption Amid Slowdown (Source: Bloomberg)
Indonesia will implement stimulus measures to boost consumption and infrastructure spending as a global slowdown limits exports and an imminent election in Greece threatens to deepen Europe’s debt turmoil. The government will tap last year’s 24 trillion-rupiah ($2.5 billion) budget surplus to fund building projects, and lift the tax-free annual income level to 24 million rupiah from 15.8 million rupiah, Bambang Brodjonegoro, head of fiscal policy at the Ministry of Finance, said in Jakarta today. Indonesia currently targets a 2012 budget deficit of 190.1 trillion rupiah, on capital spending of 168.8 trillion rupiah. “During this time, exports aren’t the main driver to support our growth,” Brodjonegoro said. “As exports have fallen, we’ll boost consumption and investment.”
Policy makers are diverging in their responses to growth risks, with South Korea this month eschewing fiscal stimulus and keeping interest rates unchanged while countries from China to Brazil have lowered borrowing costs. Bank Indonesia has held off from adding to a February rate cut, seeking to support a currency that has fallen about 4 percent in 2012 as the European crisis hurt exports and spurred outflows from emerging markets.
Thailand Holds Rate a Third Time as Risks to Growth Increase (Source: Bloomberg)
Thailand’s central bank kept its key interest rate unchanged for a third straight meeting amid rising risks from the European debt crisis and slowing growth in China. The Bank of Thailand held its benchmark one-day bond repurchase rate at 3 percent, it said in Bangkok today, a decision predicted by all 18 economists in a Bloomberg News survey. The monetary authority cut a combined 50 basis points in November and January to spur growth after last year’s floods. Policy makers across the globe are grappling with the challenges posed by Europe and slowing expansion, with China, Brazil and Australia opting for rate cuts in recent weeks. Thai exports unexpectedly declined in April while inflation is still at a “manageable level,” the central bank said last month, adding on May 30 that there is still room for monetary easing.
“The Thai economy is not that weak as to require an immediate rate cut,” said Satoshi Ushijima, the Bangkok-based vice president of the treasury division at Mizuho Corporate Bank Ltd. “A cut is an option for them in the future if the situation deteriorates, and as inflation is not a major issue now.” The Thai baht rose 0.3 percent to 31.58 per dollar as of 2:47 p.m. in Bangkok. The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, declined one basis point, or 0.01 percentage point, to 2.72 percent. Southeast Asia’s second-largest economy unexpectedly expanded in the first quarter as factories, including Honda Motor Co., resumed production and local demand revived after the nation’s worst floods in almost 70 years. Manufacturing output rose for the first time in eight months in April.
Rajoy Battles ECB for Loans; Monti Appeals for EU Action (Source: Bloomberg)
Tensions among European leaders are breaking into the open as bond investors reject their fixes for a debt crisis that threatens to overwhelm the euro region’s financial firewalls. German Finance Minister Wolfgang Schaeuble sniped at Greek yacht owners in comments published yesterday while Spanish Prime Minister Mariano Rajoy declared “battle” on the European Central Bank. Austrian Finance Minister Maria Fekter retracted a forecast that Italy would need aid, and Spain pushed back against Finnish advice on how to use its 100 billion-euro ($126 billion) bank bailout. Rifts are deepening with Greek elections on June 17 risking the first exit from the single currency as voters buckle under the continent’s most severe austerity program. Spanish bond yields reached a record after the nation’s request for aid for its banks fueled speculation the world’s 12th biggest economy may need a full rescue.
“What we’re seeing now says much about the deepening cracks in Europe’s political financial and economic edifice,” Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, said in a telephone interview.
Euro-Area Industrial Output Falls Second Month on Germany (Source: Bloomberg)
Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. Output in the 17-nation euro area slipped 0.8 percent from March, when it decreased a revised 0.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 1.2 percent, the median of 28 estimates in a Bloomberg News survey showed. From a year earlier, production fell 2.3 percent. European manufacturers are cutting spending and jobs as global growth weakens. China led a slowdown in manufacturing across Asia last month and European economic confidence slumped to the lowest in 2 1/2 years. European Central Bank President Mario Draghi said on June 6 that risks to the economic outlook had increased and “a few” Governing Council members had called for an interest rate cut.
“The latest data clearly show that the euro-land economy is in free fall,” Jan Amrit Poser, chief economist at Bank Sarasin in Zurich, said in an e-mailed note before today’s report. “If measures to counter this development are not put in hand soon, the euro land will slip into a deep recession.”
Spain’s Record Yields Show Italy Bailout Risk (Source: Bloomberg)
Spain’s benchmark borrowing costs rose for a fourth day after touching a record yesterday, raising the specter of sovereign bailouts for the government in Madrid and then Italy that would stretch European Union finances to their limit. The yield on Spanish 10-year government debt rose 2 basis points to 6.73 percent at 9:55 a.m. in Madrid. Yesterday it touched 6.83 percent, the highest since 1997, after Fitch Ratings predicted that Prime Minister Mariano Rajoy will miss budget-deficit targets he’s made the foundation of his economic policy. Italian 10-year yields posted their highest close in six months yesterday and rose for a sixth session today. The bond rout wiped out the effects of 1.1 trillion euros ($1.4 trillion) in official funding for euro-region banks that has held yields in check since December. Spain’s 10-year yield is close to the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts.
Italy, the second-biggest sovereign borrower in the euro area, may need to seek a rescue with in months, said James Nixon, chief European economist at Societe Generale SA (GLE) in London. “The crisis will inevitably roll on to the next domino, and that’s Italy,” Nixon said in a telephone interview. “The southern European economies are effectively in free-fall and market appetite for southern European debt is rapidly drying up. I can’t see anything to turn that dynamic around.”
Down-Under Greeks Send Money as Crisis Stirs Homeland Ties (Source: Bloomberg)
Half a century after leaving Greece and more than 12,000 kilometers (7,500 miles) from Athens, Paul Afkos says there’s no escaping the calling of his motherland. With Greek unemployment four times higher than in his adopted Australia, the 59-year-old head of Afkos Industries, a maker of mining components based near Perth, has plowed A$18 million ($17.9 million) into a 109-bed hotel in northern Greece that opened in April. “I see it as a duty,” Afkos says, after bringing forward by eight months the opening of the Afkos Grammos Hotel Resort in Kastoria. “I can’t be seen as a hypocrite, not helping my fellow Greeks. I wanted to open early to provide some assistance to these people who are in need of a job.”
Australia’s Greek population has grown from seven pirates dispatched by Britain in 1829 to a diaspora of about half a million, making Melbourne the third-largest Greek city behind Athens and Thessaloniki. Armed with patriotism and the best- performing currency against the euro since late-2008, Australia’s Greeks are deploying wealth amassed in the fastest growing major developed economy to a nation that’s needed 240 billion euros ($300 billion) in bailouts. Greece votes June 17 in an election set to decide its future in the euro zone.
N.Z. Signals Rates May Stay at Record Low to 2013 Amid EU Risks (Source: Bloomberg)
New Zealand’s central bank signaled it may keep interest rates at a record low for another year, extending a 15-month pause as weaker growth eases inflation and Europe’s fiscal crisis clouds the outlook. “It remains appropriate for monetary policy to remain stimulatory, with the official cash rate being held at 2.5 percent,” Reserve Bank of New Zealand Governor Alan Bollard said in a statement in Wellington today. The central bank lowered its forecasts for economic growth in the next three years, citing falling commodity prices and spending restraint. The RBNZ’s next step may depend on what happens in Europe, where a Greek election June 17 will influence whether it exits the euro, causing greater financial-market turmoil. The New Zealand dollar rose after today’s language lacked any specific signal Bollard will reduce borrowing costs, even as interest- rate swaps reflect a 69 percent chance of a cut by September.
“If you were to see a real euro-zone meltdown, that’s going to be reflected through in our forecasts,” Bollard said at a news conference. “Absolutely that would be a core issue we would be thinking about in terms of monetary policy.”
Australian Retail Gloom May Lift on Rate Cuts, Deloitte Says (Source: Bloomberg)
Australia’s retail “gloom” may be starting to recede after the central bank slashed the benchmark interest rate by 1.25 percentage points over the past eight months, a Deloitte Access Economics report showed. “Those cuts will free up a substantial chunk of disposable income,” the Canberra-based research company said in a report released today. Government spending measures including payments for school-age children and extra welfare spending may also provide a “sugar hit” to the retail industry, it said. Ebbing consumer confidence and declining prices prompted Myer Holdings Ltd. (MYR), the country’s largest listed department store company, to forecast a 15 percent decline in net income in the year through July. Australian households are saving money at more than twice the rate of their U.S. counterparts. In nine of the past 12 months, pessimists have outnumbered optimists in Westpac Banking Corp. (WBC) surveys.
“Overall, we expect that interest-rate cuts and budget handouts will help the retail sector continue some upward momentum in the coming months,” the report showed. “Real wages growth is picking up, which may also help sustain retail growth at a reasonable level over 2012 and into 2013.” Deloitte said risks to its forecast remain high, as threats to the global economy keep business and consumer confidence fragile and because of wealth losses due to weaker share markets and house prices.
• US May Retail Sales -0.2% vs. -0.2% (revised from +0.1%), as expected
• US May Retail Sales Ex-Autos -0.4% vs. -0.3% (revised from +0.1%), expected 0.0%
• US May PPI -1.0% vs. -0.2%, expected -0.6%; Core +0.2% vs. +0.2%, as expected
• US Apr Business Inventories +0.4% vs. +0.3%, expected +0.3%
• US Apr Business Sales +0.2% vs. +0.2%
• Canada may need to raise rates this year (OECD)* Canada’s Flaherty: If need to do more to cool housing market, “We’ll do more”
• US EIA Weekly Crude Stocks -191k bbls, expected +1.4mln bbls; Gasoline -1.72mln bbls, expected +1.1mln bbls
Asian Stocks Drop on Spain Downgrade, Growth Concern (Source: Bloomberg)
Asian stocks declined as Spain’s credit rating was cut and economic reports in the U.S and Europe added to concern the global economy is slowing. Canon Inc., a camera maker that gets 31 percent of sales from Europe, lost 0.8 percent in Tokyo. Mitsui & Co Ltd., which gets about 44 percent of its revenue from commodities, slipped 1.2 percent as copper futures fell. James Hardie Industries SE (JHX), a building-materials supplier that counts the U.S. as its biggest market, decreased 2.2 percent in Sydney as retail sales in the world’s largest economy dropped. The MSCI Asia Pacific Index (MXAP) lost 0.3 percent to 113.08 as of 9:28 a.m. in Tokyo, with more than two shares falling for each that rose. The gauge dropped 12 percent from this year’s peak on Feb. 29 through yesterday amid concern growth in the U.S. and China is slowing and as Europe’s debt crisis intensified.
“Obviously, the Spanish bank bailout on the weekend didn’t help matters and probably increased the focus on Italy, and also made investors worry about investing in Spanish bonds,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Europe is sliding further into a recession and the global economy is still slowing in the U.S., and so I think this is a soft patch.”
Japan Stocks Fall on Global Slowdown Signs, Italian Bonds (Source: Bloomberg)
June 14 (Bloomberg) -- Japanese stocks fell as U.S. and European data added to concern the global economy is slowing and after borrowing costs climbed in Italy. Honda Motor Co. (7267), an auto manufacturer that gets 44 percent of its sales in North America, fell 1.3 percent. Nintendo Co., a maker of gaming consoles that depends on Europe for a third of its sales in the U.S. and Europe, lost 1.4 percent. Otsuka Holdings KK gained 1.5 percent after the pharmaceutical company announced a share buyback plan. The Nikkei 225 Stock Average (NKY) dropped 0.6 percent to 8,534.37 as of 9:18 a.m. in Tokyo. Trading volume was 16 percent below the 30-day average ahead of a Greek election on June 17 that may signal whether the nation exits the euro. The broader Topix Index lost 0.5 percent to 722.99, fluctuating between gains and losses over the past five trading days.
“Europe is sliding further into a recession and the global and U.S. economies are still slowing down, and so I think this is a soft patch,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s still the time for caution on the short-term view. There’s a lot of event risk around.”
U.S. Stocks Drop Amid Lower Retail Sales, Europe Concern (Source: Bloomberg)
U.S. stocks slid, after yesterday’s gain, as retail sales fell and concern about Europe’s debt crisis grew amid higher borrowing costs in Italy and Germany. Nine out of 10 groups in the Standard & Poor’s 500 Index retreated as consumer discretionary, commodity and industrial shares had the biggest losses. Home Depot Inc. (HD), Caterpillar (CAT) Inc. and DuPont (DD) Co. dropped at least 1.5 percent. JPMorgan Chase & Co. (JPM) rose 1.6 percent as Chief Executive Officer Jamie Dimon testified about his bank’s practices to lawmakers. Dell Inc. (DELL) advanced 2.6 percent after saying it will pay a dividend. The S&P 500 fell 0.7 percent to 1,314.88 at 4 p.m. New York time. It rose 1.2 percent yesterday. The Dow Jones Industrial Average declined 77.42 points, or 0.6 percent, to 12,496.38. Trading volume for exchange-listed stocks in the U.S. was about 6.1 billion shares, 10 percent below the three-month average.
Bovespa Rises a Second Day as Homebuilders Rally on Rate Outlook (Source: Bloomberg)
The Bovespa (IBOV) advanced, posting the only gain among major equity indexes in the Americas, as homebuilders and consumer stocks jumped on speculation policy makers will further reduce interest rates to shield Brazil’s economy from the global slowdown. Brookfield Incorporacoes SA, Brazil’s fourth-largest homebuilder by revenue, advanced the most on the benchmark. PDG Realty SA Empreendimentos e Participacoes rose to the highest in almost three weeks. Online retailer B2W Cia. Global do Varejo gained for a fifth day, the longest winning streak in nine months. The Bovespa rose 1.1 percent to 55,650.51 at the close in Sao Paulo. Fifty-four stocks gained on the gauge while 12 fell. The real weakened 0.2 percent to 2.0724 per U.S. dollar at 5:45 p.m. local time.
“The Brazilian government has been very clear in saying that, amid the slowdown in the global economy, its number one priority is to boost growth,” Henrique Kleine, the chief analyst at Magliano SA brokerage, said by phone from Sao Paulo. “That’s why you see stocks linked to domestic consumption performing better than the market’s average.” Brookfield gained 6.4 percent to 3.65 reais. PDG Realty rose 4.2 percent to 3.50 reais. The BM&F Bovespa Real Estate Index (IMOBBV) advanced 1.8 percent.
European Stocks Fall as Borrowing Costs Rise at Debt Sale (Source: Bloomberg)
European stocks declined as borrowing costs increased at debt auctions in Germany and Italy and as Sweden’s SKF (SKFB) AB reported weakening demand for its products in the second quarter. SKF, the world’s largest maker of ball bearings, dropped 7.3 percent. Renault SA (RNO) led a selloff by carmakers, sliding 4.2 percent. Etablissements Maurel & Prom SA surged the most since 2003 amid takeover speculation. The Stoxx Europe 600 Index (SXXP) dropped 0.4 percent to 242.56 in London. The gauge yesterday climbed 0.6 percent as investors shrugged off a surge in Spanish borrowing costs. The Stoxx 600 has still fallen 11 percent from its high this year on March 16. “The most interesting development for me has been the move higher in bund yields,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “Investors are clearly becoming concerned about Germany’s growing liabilities associated with the euro zone and suggests there is an element of tail risk being priced in.”
Germany sold 4.04 billion euros ($5.08 billion) of 10-year bunds today at an average yield of 1.52 percent, up from a rate of 1.47 percent at the last auction on May 16. Investors bid for 5.81 billion euros of the bunds, above the 5 billion-euro maximum sales target for the auction, the Bundesbank said.
Melco Discount Grows as Euro Woes Spur ADR Drop: China Overnight (Source: Bloomberg)
Chinese stocks traded in the U.S. slid from a two-week high and Melco Crown Entertainment Ltd. (MPEL) slumped as concern Europe’s debt crisis will spread outweighed prospects of more stimulus for Asia’s biggest economy. The Bloomberg China-US Equity Index (SHCOMP) of the most-traded Chinese companies in the U.S. dropped 0.9 percent to 90.50 yesterday. Melco Crown, a Macau casino operator, traded at the biggest discount to Hong Kong shares since June 1 after the city’s gaming revenue outlook was cut. LDK Solar Co. (LDK) led peers lower as Jefferies Group Inc. said European demand for panels slowed. E-Commerce China Dangdang Inc. jumped after the National Business Daily reported a deal with Tencent Holdings Ltd. China cut its benchmark interest rates last week for the first time since 2008 as May economic data showed inflation slowed more than economists’ forecasts and industrial production grew less than projected.
Borrowing costs increased at debt auctions yesterday in Germany and Italy, and European Union da ta showed Euro-area industrial production declined for a second month in April, adding to signs of a deepening economic slump.
Emerging Stocks Rise to 2-Week High on China Subsidies (Source: Bloomberg)
Emerging-market stocks climbed to a two-week high as signs of a pick-up in technology demand and speculation China will take more steps to bolster economic growth overshadowed concern Europe’s debt crisis will spread. The MSCI Emerging Markets Index (MXEF) rose 0.7 percent to 919.47 at the close in New York, the highest level this month. Cyrela Brazil Realty SA Empreendimentos e Participacoes surged 5.1 percent, while United Spirits Ltd. rose to lead the advance in the index. Russia’s Micex Index (INDEXCF) rallied 0.6 percent on gains for OAO Gazprom Neft. Brazil’s Bovespa advanced, led by Brookfield Incorporacoes SA, a real estate developer. A gauge of technology stocks rose 0.7 percent after Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest maker of custom chips, said demand for leading-edge chip technology is still strong.
China ZhengTong Auto Services Holdings Ltd. (1728) jumped the most since October 2011 in Hong Kong after China said it will give trade-in subsidies of as much as 18,000 yuan ($2,826) for the replacement of some commercial vehicles. “The market is being held up by perceived corporate catalysts and optimism of more subsidies at a time when Europe is still struggling with its debt crisis,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO), said by phone. “This rally won’t last until Europe takes more concrete steps.”
Emerging Offshore Chinese Renminbi Market : China Pursues Internationalization of their Currency (Source: CME)
The People’s Republic of China (PRC) has aggressively been pursuing the internationalization of the Chinese Yuan or Renminbi (CNY or RMB) since the financial crisis of 2008. The ultimate goal is to achieve full currency convertibility, thereby promoting use of the Renminbi as a reserve currency and international trade currency of choice. Thus, the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) jointly announced on July 19, 2010 that RMB may be deliverable in Hong Kong. This created a new offshore market in RMB, dubbed the “CNH” market. Since its introduction, this market has grown at a rapid pace, attracting widespread interest and activity. This development is changing the character of the RMB markets and of the FX markets in general. Note, of course, that CME Group currently offers RMB futures and options. Thus, we seek to examine this development in greater detail.
FOREX-Euro steady, but vulnerable to Italian and Greek woes
LONDON, June 13 (Reuters) - The euro was steady, w ith bearish investors selling at higher levels as concerns mounted that debt contagion would ensnare Italy and as general unease prevailed about the euro zone before crucial Greek elections.
"There is a risk that the Spanish problems could spread to Italy and investors are mindful of that," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
Dollar Remains Lower Against Euro Before U.S. CPI Data (Source: Bloomberg)
The dollar remained lower against the euro following a two-day slide before U.S. data that may show consumer prices fell, rekindling expectations the Federal Reserve will take more steps to bolster the economic recovery. The euro maintained a rally from an 11-year low versus the yen amid speculation traders are paring their bearish bets on the European currency before Greek elections on June 17. The Fed is scheduled to hold a two-day policy meeting starting June 19. New Zealand’s dollar strengthened against all of its 16 major counterparts after the central bank left the benchmark interest rate unchanged. “The dollar is susceptible to weakening because expectations for additional easing are rising ahead of the policy meeting next week,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company. “A decline in employment and the economy is the biggest concern for the Fed.”
The dollar traded at $1.2564 per euro as of 9:34 a.m. in Tokyo after falling 0.4 percent to $1.2557 in New York yesterday. It lost 0.2 percent to 79.36 yen. The 17-nation euro was at 99.72 yen following a 0.7 percent advance in the previous two days to 99.80. The common currency touched 95.60 on June 1, the lowest since November 2000. The U.S. consumer-price index probably fell 0.2 percent in May from a month earlier, the most since December 2008, the median estimate of economists showed in a Bloomberg News survey. The Labor Department will release the figures today.
Treasuries Drop Before U.S. Sells $13 Billion of 30-Year Notes (Source: Bloomberg)
Treasury 30-year notes declined as the U.S. prepared to auction $13 billion of the securities today following sales of three- and 10-year debt earlier this week. Losses in U.S. government securities were limited before data forecast to show U.S. consumer prices fell, providing the Federal Reserve room to take further steps to spur the economy. The gap in yields between 10-year notes and Treasury Inflation Protected Securities, which represents traders’ expectations for inflation over the life of the debt, was 2.1 percentage points, down from 2012 high of 2.45 percentage points in March. “Investors may be taking a little breather from buying Treasuries,” said Masaru Hamasaki, chief strategist in Tokyo at Toyota Asset Management Co., which oversees the equivalent of $24 billion. “The flight-to-quality amid concern over the European debt crisis and U.S. slowdown has already sent bond prices to an expensive level.”
The 30-year yield rose two basis points, or 0.02 percentage point, to 2.72 percent at 9:50 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 3 percent bond due May 2042 fell 9/32, or $2.81 per $1,000 face amount, to 105 21/32. Benchmark 10-year yields gained one basis point to 1.61 percent after dropping to a record 1.4387 percent on June 1.
Euro Crisis Deeper With Moody’s Downgrading Spain, Cyprus (Source: Bloomberg)
The European debt crisis deepened as the credit ratings of Spain and Cyprus were downgraded by Moody’s Investors Service. Moody’s yesterday cut Spain’s rating three steps to Baa3 from A3, citing the nation’s increased debt burden, weakening economy and limited access to capital markets. Moody’s also lowered Cyprus’s bond rating to Ba3 from Ba1, attributing the downgrade to the material increase in the likelihood of a Greek exit from the euro area, and the resulting increase in the probable amount of support that the government may have to extend to Cypriot banks. Moody’s is following the sentiment of financial markets that weren’t calmed by Europe’s 100 billion-euro ($126 billion) weekend bailout of Spanish banks, said Clay Lowery, a vice president at Washington-based Rock Creek Global Advisors LLC and former assistant Treasury secretary for international affairs.
For Moody’s, “it’s not whether you’re going to make money off your investment, it’s what is the creditworthiness of the borrower,” Lowery said. “Spain’s debt load has gotten larger with much more senior debt, so at least the potential for them to default has now gone up.”
Retail Sales in U.S. Declined for a Second Month in May (Source: Bloomberg)
Retail sales in the U.S. fell in May for a second month, prompting economists to cut forecasts for economic growth as limited job and income gains hold back consumers. The 0.2 percent decrease matched April’s drop that was previously reported as a gain, Commerce Department figures showed today in Washington. Sales excluding car dealerships slumped by the most in two years. The smallest wage gains in a year and unemployment exceeding 8 percent are taking a toll on the consumer spending that accounts for about 70 percent of the economy, leaving it more vulnerable to shocks from the European crisis. Federal Reserve policy makers gather next week to decide whether further stimulus is needed to fuel the three-year-old expansion. “The consumer is pulling back,” said Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who correctly forecast the drop in sales. “There isn’t a lot of job creation. We will continue to see softer numbers.”
Stocks fell after the report and as higher borrowing costs in Italy and Germany fueled concern about the global economy. The Standard & Poor’s 500 Index declined 0.7 percent to 1,314.88 at the close in New York. Last month’s drop in retail sales matched the median forecast of 79 economists surveyed by Bloomberg News. Estimates ranged from a drop of 0.7 percent to a gain of 0.5 percent. April and May marked the first back-to-back declines in two years.
Wholesale Prices in U.S. Fell 1% in May on Cheaper Energy (Source: Bloomberg)
Wholesale prices in the U.S. dropped in May by the most since July 2009 as costs of energy and food decreased, easing pressure on companies to pass expenses to customers. The producer price index fell 1 percent, more than forecast, following a 0.2 percent decrease the prior month, Labor Department figures showed today in Washington. Economists projected a 0.6 percent decline, according to the median estimate in a Bloomberg News survey. The core measure, which excludes volatile food and energy prices, climbed 0.2 percent for a second month. Slower global growth that’s tempering demand for raw materials may allow producers to hold down costs and preserve margins, a benefit to consumers facing weaker income gains. Limited inflation also provides Federal Reserve officials with more room to stimulate the U.S. expansion.
“The signs are that inflation pressures are dissipating fairly quickly,” said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. “From a producer perspective, it means import costs are low so they can maintain relatively healthy margins. For consumers, it provides some relief, adds to purchasing power, at a time where their incomes are being constrained by very weak wage growth.”
Dimon Says Fiscal Cliff May Be Reached Before Year-End (Source: Bloomberg)
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon, testifying to a U.S. Senate panel, said the government is risking an earlier-than-expected fiscal crisis as policy makers stay deadlocked on taxes and the budget. “The one thing to keep in mind about the fiscal cliff is it may not wait until Dec. 31,” Dimon, 56, said today before the Senate Banking Committee, which called him to answer questions about a $2 billion trading loss. “Markets and businesses may start taking actions before that, that create a slowdown in the economy.” A so-called fiscal cliff may be reached at year-end when tax-and-spending changes are scheduled to take effect unless Congress acts. Tax cuts enacted under then-President George W. Bush will expire as will a temporary reduction in the Social Security payroll tax. About $1 trillion in automatic spending cuts would begin, expanded jobless benefits will expire and the government will approach the legal limit on federal borrowing.
Dimon said lawmakers’ inability to reach an agreement on budget issues “helped cause a little downturn last year.” He urged approval of a compromise similar to the Simpson-Bowles plan, issued by President Barack Obama’s fiscal commission, which includes spending cuts and tax increases to balance the budget.
Geithner Says European Leaders Know They Must Do More (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said European leaders “recognize they’re going to have to do a bunch more” to stem the region’s debt crisis. “This is a very challenging crisis for them still,” Geithner said today during a talk at the Council on Foreign Relations in Washington. Spain and Italy appealed today to European policy makers to step up their response to the crisis after a 100 billion-euro ($125 billion) lifeline for Spanish banks failed to calm markets. Yields on Spanish debt due in 10-years climbed to 6.75 percent today, compared with 5.1 percent at the end of last year. As Geithner spoke, Spain’s credit rating was downgraded three steps by Moody’s Investors Service, citing the nation’s increased debt burden, weakening economy and limited access to capital markets.
Clinton Calls on Russia to End Arms Sales to Syria (Source: Bloomberg)
Syria is “spiraling toward civil war,” with Russia supporting the violence by continuing to arm President Bashar al-Assad’s regime, U.S. Secretary of State Hillary Clinton said. “We have repeatedly urged the Russian government to cut these military ties completely and to suspend all further support and deliveries,” Clinton said yesterday at the State Department. “We know -- because they confirm -- that they continue to deliver.” The remarks were the latest in an exchange of critical comments by U.S. and Russian officials, putting on display their deepening rift over how to deal with the conflict in Syria, a nation that has been Russia’s main Mideast ally. Earlier in the day, Russian Foreign Minister Sergei Lavrov rejected U.S. accusations that it’s sending arms for use against Syrian civilians and said his country is simply fulfilling its contractual obligations.
“We are completing previously signed and paid-for contracts,” Lavrov said during a press conference in Tehran with his Iranian counterpart Ali Akbar Salehi. “All these contracts have to do exclusively with air-defense systems.”
Felda Said to Raise $3.3 Billion in Malaysian Share Sale (Source: Bloomberg)
Felda Global Ventures Holdings Bhd., the world’s third-largest operator of palm oil plantations, raised about 10.4 billion ringgit ($3.3 billion) in the biggest initial public offering since Facebook Inc. (FB), said three people with knowledge of the matter. The Kuala Lumpur-based company sold shares to institutional investors at 4.55 ringgit each, said the people, asking not to be identified as the information is confidential. Felda Global had marketed the shares at 4 ringgit to 4.65 ringgit. Demand for stock from fund managers exceeded supply by more than 29 times at that price, two people said. Malaysian IPOs are defying the market turmoil brought on by Europe’s debt crisis, which caused companies to scrap at least $4.2 billion of first-time sales in the past month. Hospital operator IHH Healthcare Bhd. and power company Malakoff Bhd. are pursuing IPOs that may help Kuala Lumpur’s bourse widen its lead in Asian deals this year.
“Felda is in a sweet spot because it is a large offering in a Malaysian context with a very cash-rich base of investors,” Abdul Jalil Abdul Rasheed, who helps manage $3 billion as chief executive officer of Aberdeen Islamic Asset Management Sdn. in Kuala Lumpur., said yesterday. “We see other IPO markets being weak, but Malaysia has pulled through.” Graff Diamonds Corp. and Formula One are among companies whose plans to go public in Asia were undone in the past month by stock-market volatility. Powerica Ltd., an Indian company backed by Standard Chartered Plc’s private equity unit, shelved plans for an IPO, people familiar with the deal said yesterday.
Indonesia Plans Stimulus to Boost Consumption Amid Slowdown (Source: Bloomberg)
Indonesia will implement stimulus measures to boost consumption and infrastructure spending as a global slowdown limits exports and an imminent election in Greece threatens to deepen Europe’s debt turmoil. The government will tap last year’s 24 trillion-rupiah ($2.5 billion) budget surplus to fund building projects, and lift the tax-free annual income level to 24 million rupiah from 15.8 million rupiah, Bambang Brodjonegoro, head of fiscal policy at the Ministry of Finance, said in Jakarta today. Indonesia currently targets a 2012 budget deficit of 190.1 trillion rupiah, on capital spending of 168.8 trillion rupiah. “During this time, exports aren’t the main driver to support our growth,” Brodjonegoro said. “As exports have fallen, we’ll boost consumption and investment.”
Policy makers are diverging in their responses to growth risks, with South Korea this month eschewing fiscal stimulus and keeping interest rates unchanged while countries from China to Brazil have lowered borrowing costs. Bank Indonesia has held off from adding to a February rate cut, seeking to support a currency that has fallen about 4 percent in 2012 as the European crisis hurt exports and spurred outflows from emerging markets.
Thailand Holds Rate a Third Time as Risks to Growth Increase (Source: Bloomberg)
Thailand’s central bank kept its key interest rate unchanged for a third straight meeting amid rising risks from the European debt crisis and slowing growth in China. The Bank of Thailand held its benchmark one-day bond repurchase rate at 3 percent, it said in Bangkok today, a decision predicted by all 18 economists in a Bloomberg News survey. The monetary authority cut a combined 50 basis points in November and January to spur growth after last year’s floods. Policy makers across the globe are grappling with the challenges posed by Europe and slowing expansion, with China, Brazil and Australia opting for rate cuts in recent weeks. Thai exports unexpectedly declined in April while inflation is still at a “manageable level,” the central bank said last month, adding on May 30 that there is still room for monetary easing.
“The Thai economy is not that weak as to require an immediate rate cut,” said Satoshi Ushijima, the Bangkok-based vice president of the treasury division at Mizuho Corporate Bank Ltd. “A cut is an option for them in the future if the situation deteriorates, and as inflation is not a major issue now.” The Thai baht rose 0.3 percent to 31.58 per dollar as of 2:47 p.m. in Bangkok. The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, declined one basis point, or 0.01 percentage point, to 2.72 percent. Southeast Asia’s second-largest economy unexpectedly expanded in the first quarter as factories, including Honda Motor Co., resumed production and local demand revived after the nation’s worst floods in almost 70 years. Manufacturing output rose for the first time in eight months in April.
Rajoy Battles ECB for Loans; Monti Appeals for EU Action (Source: Bloomberg)
Tensions among European leaders are breaking into the open as bond investors reject their fixes for a debt crisis that threatens to overwhelm the euro region’s financial firewalls. German Finance Minister Wolfgang Schaeuble sniped at Greek yacht owners in comments published yesterday while Spanish Prime Minister Mariano Rajoy declared “battle” on the European Central Bank. Austrian Finance Minister Maria Fekter retracted a forecast that Italy would need aid, and Spain pushed back against Finnish advice on how to use its 100 billion-euro ($126 billion) bank bailout. Rifts are deepening with Greek elections on June 17 risking the first exit from the single currency as voters buckle under the continent’s most severe austerity program. Spanish bond yields reached a record after the nation’s request for aid for its banks fueled speculation the world’s 12th biggest economy may need a full rescue.
“What we’re seeing now says much about the deepening cracks in Europe’s political financial and economic edifice,” Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, said in a telephone interview.
Euro-Area Industrial Output Falls Second Month on Germany (Source: Bloomberg)
Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. Output in the 17-nation euro area slipped 0.8 percent from March, when it decreased a revised 0.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 1.2 percent, the median of 28 estimates in a Bloomberg News survey showed. From a year earlier, production fell 2.3 percent. European manufacturers are cutting spending and jobs as global growth weakens. China led a slowdown in manufacturing across Asia last month and European economic confidence slumped to the lowest in 2 1/2 years. European Central Bank President Mario Draghi said on June 6 that risks to the economic outlook had increased and “a few” Governing Council members had called for an interest rate cut.
“The latest data clearly show that the euro-land economy is in free fall,” Jan Amrit Poser, chief economist at Bank Sarasin in Zurich, said in an e-mailed note before today’s report. “If measures to counter this development are not put in hand soon, the euro land will slip into a deep recession.”
Spain’s Record Yields Show Italy Bailout Risk (Source: Bloomberg)
Spain’s benchmark borrowing costs rose for a fourth day after touching a record yesterday, raising the specter of sovereign bailouts for the government in Madrid and then Italy that would stretch European Union finances to their limit. The yield on Spanish 10-year government debt rose 2 basis points to 6.73 percent at 9:55 a.m. in Madrid. Yesterday it touched 6.83 percent, the highest since 1997, after Fitch Ratings predicted that Prime Minister Mariano Rajoy will miss budget-deficit targets he’s made the foundation of his economic policy. Italian 10-year yields posted their highest close in six months yesterday and rose for a sixth session today. The bond rout wiped out the effects of 1.1 trillion euros ($1.4 trillion) in official funding for euro-region banks that has held yields in check since December. Spain’s 10-year yield is close to the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts.
Italy, the second-biggest sovereign borrower in the euro area, may need to seek a rescue with in months, said James Nixon, chief European economist at Societe Generale SA (GLE) in London. “The crisis will inevitably roll on to the next domino, and that’s Italy,” Nixon said in a telephone interview. “The southern European economies are effectively in free-fall and market appetite for southern European debt is rapidly drying up. I can’t see anything to turn that dynamic around.”
Down-Under Greeks Send Money as Crisis Stirs Homeland Ties (Source: Bloomberg)
Half a century after leaving Greece and more than 12,000 kilometers (7,500 miles) from Athens, Paul Afkos says there’s no escaping the calling of his motherland. With Greek unemployment four times higher than in his adopted Australia, the 59-year-old head of Afkos Industries, a maker of mining components based near Perth, has plowed A$18 million ($17.9 million) into a 109-bed hotel in northern Greece that opened in April. “I see it as a duty,” Afkos says, after bringing forward by eight months the opening of the Afkos Grammos Hotel Resort in Kastoria. “I can’t be seen as a hypocrite, not helping my fellow Greeks. I wanted to open early to provide some assistance to these people who are in need of a job.”
Australia’s Greek population has grown from seven pirates dispatched by Britain in 1829 to a diaspora of about half a million, making Melbourne the third-largest Greek city behind Athens and Thessaloniki. Armed with patriotism and the best- performing currency against the euro since late-2008, Australia’s Greeks are deploying wealth amassed in the fastest growing major developed economy to a nation that’s needed 240 billion euros ($300 billion) in bailouts. Greece votes June 17 in an election set to decide its future in the euro zone.
N.Z. Signals Rates May Stay at Record Low to 2013 Amid EU Risks (Source: Bloomberg)
New Zealand’s central bank signaled it may keep interest rates at a record low for another year, extending a 15-month pause as weaker growth eases inflation and Europe’s fiscal crisis clouds the outlook. “It remains appropriate for monetary policy to remain stimulatory, with the official cash rate being held at 2.5 percent,” Reserve Bank of New Zealand Governor Alan Bollard said in a statement in Wellington today. The central bank lowered its forecasts for economic growth in the next three years, citing falling commodity prices and spending restraint. The RBNZ’s next step may depend on what happens in Europe, where a Greek election June 17 will influence whether it exits the euro, causing greater financial-market turmoil. The New Zealand dollar rose after today’s language lacked any specific signal Bollard will reduce borrowing costs, even as interest- rate swaps reflect a 69 percent chance of a cut by September.
“If you were to see a real euro-zone meltdown, that’s going to be reflected through in our forecasts,” Bollard said at a news conference. “Absolutely that would be a core issue we would be thinking about in terms of monetary policy.”
Australian Retail Gloom May Lift on Rate Cuts, Deloitte Says (Source: Bloomberg)
Australia’s retail “gloom” may be starting to recede after the central bank slashed the benchmark interest rate by 1.25 percentage points over the past eight months, a Deloitte Access Economics report showed. “Those cuts will free up a substantial chunk of disposable income,” the Canberra-based research company said in a report released today. Government spending measures including payments for school-age children and extra welfare spending may also provide a “sugar hit” to the retail industry, it said. Ebbing consumer confidence and declining prices prompted Myer Holdings Ltd. (MYR), the country’s largest listed department store company, to forecast a 15 percent decline in net income in the year through July. Australian households are saving money at more than twice the rate of their U.S. counterparts. In nine of the past 12 months, pessimists have outnumbered optimists in Westpac Banking Corp. (WBC) surveys.
“Overall, we expect that interest-rate cuts and budget handouts will help the retail sector continue some upward momentum in the coming months,” the report showed. “Real wages growth is picking up, which may also help sustain retail growth at a reasonable level over 2012 and into 2013.” Deloitte said risks to its forecast remain high, as threats to the global economy keep business and consumer confidence fragile and because of wealth losses due to weaker share markets and house prices.
Subscribe to:
Posts (Atom)