May 14 (Bloomberg) -- U.S. stocks advanced, snapping a three-day losing streak for the Standard & Poor’s 500 Index, amid a decrease in bank borrowing and better-than-estimated earnings at CA Inc. Treasuries rose and the dollar slumped.
Fifth Third Bancorp, Huntington Bancshares Inc. and State Street Corp. rallied more than 6.5 percent as all but one of the 24 companies in the KBW Bank Index advanced following the biggest drop in three-month Libor in two months. CA Inc., the world’s second-largest maker of software for mainframe computers, climbed 5.5 percent. Intel Corp. and Apple Corp. added more than 2.7 percent.
The S&P 500 has fallen 3.9 percent this week after a rally of as much as 37 percent since March 9, the steepest nine-week gain since the 1930s, pushed the benchmark for American equity to the most expensive price relative to earnings in seven months. The loss wiped out most of the rally last week that was driven by speculation the banking industry is improving following the government’s stress tests.
“The last few weeks, expectations got a little ahead of themselves,” said Dean Gulis, part of a group that manages about $2.5 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. “We’re just in a period of consolidation at least, given the extraordinary move we’ve had since early March off the bottom.”
The S&P 500 climbed 1 percent to 893.07 at 5:07 p.m. in New York. The Dow Jones Industrial Average added 46.43 points, or 0.6 percent, to 8,331.32. Europe’s Dow Jones Stoxx 600 Index increased 0.5 percent. The dollar fell against most major currencies as the gain in stocks encouraged investors to buy higher-yielding assets, lessening the refuge appeal of the greenback.
Fed Purchases
Treasuries rose for a second day after the Federal Reserve bought U.S. debt maturing between one and two years amid a two- week hiatus in the Treasury’s auction schedule as the government borrows record amounts to revive economic growth.
Ten-year note yields touched the lowest level since April 29 as more Americans than forecast filed for unemployment benefits last week. The central bank bought $2.975 billion of Treasuries maturing from October 2010 to February 2011 as part of an effort to lower consumer borrowing costs.
“The digestion of the supply from last week and renewed concerns about the economy, with the employment data, has helped to resuscitate the bid for Treasuries,” said David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors. more...
Jumat, 15 Mei 2009
Bloomberg Soybeans, Corn Rise on Signs U.S. Exports Are Eroding Supplies
May 14 (Bloomberg) -- Soybean prices rose to seven-month highs, and corn resumed its rally on signs that increased global demand is eroding inventories in the U.S., the world’s biggest grower and exporter of both crops.
Soybean-export sales in the four weeks ended May 7 were more than double the year-earlier period, the U.S. Department of Agriculture said today. Sales of soybean meal, an animal feed, jumped 92 percent from a week earlier. The USDA also reported 120,000 metric tons of new soybean sales to China. Corn sales last week jumped 59 percent, the agency said.
“The export sales were better than expected last week, and China added to their purchases overnight,” said Roy Huckabay, an executive vice president at the Linn Group in Chicago. “Overseas traders are much more concerned about declining U.S. supplies than U.S. traders.”
Soybean futures for July delivery gained 19.5 cents, or 1.7 percent, to $11.475 a bushel on the Chicago Board of Trade, the biggest gain since May 1. The price earlier touched $11.48, the highest since Sept. 29.
Corn futures for July delivery rose 1.75 cents, or 0.4 percent, to $4.2825 a bushel in Chicago, the fifth gain in six sessions. Yesterday, the price reached $4.34, the highest for a most-active contract since Oct. 9.
Planting delays
Prices also rose as rain delays planting in the Midwest, Huckabay said.
Some fields from Kansas to Ohio may get more than 4 inches (10 centimeters) of rain in the next five days after getting more than 2.5 inches in the past 24 hours, said Mike Tannura, a meteorologist for T-Storm Weather in Chicago. Some fields will receive a month’s worth of rain in the next five days, he said.
Corn planting in the top 18 growing states, which seeded 92 percent of last year’s crop, rose to around 48 percent complete this week, up from 33 percent a week earlier, USDA said May 11. The average was 71 percent at this time from 2004 to 2008. more...
Soybean-export sales in the four weeks ended May 7 were more than double the year-earlier period, the U.S. Department of Agriculture said today. Sales of soybean meal, an animal feed, jumped 92 percent from a week earlier. The USDA also reported 120,000 metric tons of new soybean sales to China. Corn sales last week jumped 59 percent, the agency said.
“The export sales were better than expected last week, and China added to their purchases overnight,” said Roy Huckabay, an executive vice president at the Linn Group in Chicago. “Overseas traders are much more concerned about declining U.S. supplies than U.S. traders.”
Soybean futures for July delivery gained 19.5 cents, or 1.7 percent, to $11.475 a bushel on the Chicago Board of Trade, the biggest gain since May 1. The price earlier touched $11.48, the highest since Sept. 29.
Corn futures for July delivery rose 1.75 cents, or 0.4 percent, to $4.2825 a bushel in Chicago, the fifth gain in six sessions. Yesterday, the price reached $4.34, the highest for a most-active contract since Oct. 9.
Planting delays
Prices also rose as rain delays planting in the Midwest, Huckabay said.
Some fields from Kansas to Ohio may get more than 4 inches (10 centimeters) of rain in the next five days after getting more than 2.5 inches in the past 24 hours, said Mike Tannura, a meteorologist for T-Storm Weather in Chicago. Some fields will receive a month’s worth of rain in the next five days, he said.
Corn planting in the top 18 growing states, which seeded 92 percent of last year’s crop, rose to around 48 percent complete this week, up from 33 percent a week earlier, USDA said May 11. The average was 71 percent at this time from 2004 to 2008. more...
Bloomberg Crude Oil Rises as U.S. Equities Advance, Dollar Declines
May 14 (Bloomberg) -- Crude oil rose after U.S. equities increased and the dollar dropped against the euro, bolstering the appeal of energy futures as an alternative investment.
Oil advanced after the Standard & Poor’s 500 Index ended a three-day losing streak. The dollar declined as rising stock prices reduced the need for a refuge. Energy prices fell earlier when the International Energy Agency said world oil consumption will retreat this year by the most since 1981.
“The stock market rally is inspiring buying of energy futures,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “The market is more focused on inflation pressures and a possible economic rebound than on weak energy demand and plentiful supply.”
Crude oil for June delivery rose 60 cents, or 1 percent, to settle at $58.62 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Futures declined as much as $1.47, or 2.5 percent, to $56.55. Prices are up 31 percent this year.
U.S. stocks advanced on a decrease in bank borrowing and better-than-estimated earnings at CA Inc. The S&P 500 Index increased 1 percent to 893.07 and the Dow Jones Industrial Average climbed 0.6 percent to 8,331.32.
The dollar declined 0.4 percent to $1.3654 per euro from $1.36 yesterday, after appreciating to $1.3526 early today, the strongest level since May 8.
U.S. Inventories
U.S. crude-oil supplies fell 4.63 million barrels to 370.6 million in the week ended May 8, the first drop since February, the Energy Department said yesterday in a weekly report. The decline left inventories 18 percent higher than the five-year average for the week. They were the highest since 1990 in the week ended May 1.
Gasoline stockpiles dropped 4.15 million barrels last week. Inventories have dropped 9.02 million barrels in the past three weeks.
Gasoline for June delivery rose 3.49 cents, or 2.1 percent, to end the session at $1.7237 a gallon in New York, the highest settlement since Oct. 15.
The crude-oil market often follows gasoline during the second quarter as U.S. refineries prepare for the summer driving season. U.S. gasoline demand peaks between the Memorial Day holiday in late May and Labor Day in early September.
“Gasoline is leading the way going into the critical driving season,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock & Co. in Chicago, a division of MF Global Ltd. more...
Oil advanced after the Standard & Poor’s 500 Index ended a three-day losing streak. The dollar declined as rising stock prices reduced the need for a refuge. Energy prices fell earlier when the International Energy Agency said world oil consumption will retreat this year by the most since 1981.
“The stock market rally is inspiring buying of energy futures,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “The market is more focused on inflation pressures and a possible economic rebound than on weak energy demand and plentiful supply.”
Crude oil for June delivery rose 60 cents, or 1 percent, to settle at $58.62 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Futures declined as much as $1.47, or 2.5 percent, to $56.55. Prices are up 31 percent this year.
U.S. stocks advanced on a decrease in bank borrowing and better-than-estimated earnings at CA Inc. The S&P 500 Index increased 1 percent to 893.07 and the Dow Jones Industrial Average climbed 0.6 percent to 8,331.32.
The dollar declined 0.4 percent to $1.3654 per euro from $1.36 yesterday, after appreciating to $1.3526 early today, the strongest level since May 8.
U.S. Inventories
U.S. crude-oil supplies fell 4.63 million barrels to 370.6 million in the week ended May 8, the first drop since February, the Energy Department said yesterday in a weekly report. The decline left inventories 18 percent higher than the five-year average for the week. They were the highest since 1990 in the week ended May 1.
Gasoline stockpiles dropped 4.15 million barrels last week. Inventories have dropped 9.02 million barrels in the past three weeks.
Gasoline for June delivery rose 3.49 cents, or 2.1 percent, to end the session at $1.7237 a gallon in New York, the highest settlement since Oct. 15.
The crude-oil market often follows gasoline during the second quarter as U.S. refineries prepare for the summer driving season. U.S. gasoline demand peaks between the Memorial Day holiday in late May and Labor Day in early September.
“Gasoline is leading the way going into the critical driving season,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock & Co. in Chicago, a division of MF Global Ltd. more...
Business Times Dry spell may curb palm oil yields: IOI
Prices may hit RM3,000 in the near term if there is a strong uptick in demand, says IOI executive chairmanIOI Corp,(1961) Malaysia's number two planter, said palm oil yields would fall by 5 per cent due to a current warm spell and that may push prices to RM3,000 in the near term if there was an uptick in overseas demand.
Planters struggled to boost output in Malaysia last month and may continue to do so as oil palms also suffered biological stress after last year's strong harvests and low fertiliser use, IOI executive chairman Tan Sri Lee Shin Cheng said.
Malaysia, the world's second largest palm oil supplier, achieved yields at between 4 and 5 tonnes per hectare in 2008, government data showed. IOI, regarded as one of the most efficient plantations in Malaysia, achieved a yield of 6.1 tonnes, company data showed.
Hot weather leads to higher oil extraction rates as there is less water contamination but yields dry up as fresh fruit bunches are smaller and do not fully develop, plantation officials and traders have said.
"Weather will be a crucial factor. Already people are talking about a possible El Nino. The market will be very explosive if poor weather sets in during the second half of 2009," Lee said in an e-mail interview late yesterday.
"Prices may go higher if there is a strong uptick in demand. We will not discount that RM3,000 is achievable in the near term."
The benchmark July contract on Bursa Malaysia's Derivatives Exchange settled up RM64 at RM2,789 per tonne on rising hot weather fears in Malaysia and rival soyaoil producing South America.
Palm oil output in Malaysia and top supplier Indonesia generally registers double-digit growth in the second half of the year, building up stocks for the Asian festival season when top buyers India and China lock in supplies from June or July onwards.
But China appears to have kicked off its buying spree much earlier this year, with a 41.3 per cent rise in May 1-10 palm oil purchases compared to a month ago, cargo surveyor data showed early this week.
"Barring weather, it is likely that crude palm oil prices could be lower in the second half (due to higher production)," Lee said. But we still do not expect prices to decline a lot and they should remain comfortably above RM2,500." - Reuters
BNP Paribas - Jababeka (KIJA IJ) - Major overhang removed; new power plant to boost earnings in 2010 onward
Jababeka (Not Rated) held an analyst meeting earlier today to clarify issues surrounding the financing and licensing issues on its new power plant project. The share price was pummelled in the past year due to the uncertainties over the company's USD financing for a construction of its new 130 MW gas-fired power plant.
The key takeaways from the meeting:
1. The major overhang, namely the securing of operational area license, has been removed after the Ministry of Energy and Mineral issued an approval letter in mid March 2009. The prolonged process (seven months) to obtain the license was caused by the issuance of new ministry regulation in August 2008 which required new power plants to obtain such license. Hence, Jababeka has finally met all conditions for the disbursement of its USD135m syndicated loans. The first drawdown was made in April 2009.
2. Jababeka expects its revenue to surge 150% y-y and EBIT to triple y-y in 2010 to IDR370b (assuming 80% utilization rate of the power plant) post the commercial operation of the full 130MW project in 1Q10. The first gas turbine (40MW) is slated to be operational in September 2009, followed by the second turbine of the same capacity in December 2009.
3. The company has secured 5-year contracts with Perusahaan Gas Negara and Petrogas for the supply of its gas. The average purchase price is USD0.057/mmbtu. Jababeka expects to sell its electricity at USD0.08 to USD0.085/kwh vs. USD0.09/kwh price charged by Cikarang Listrindo (an IPP) and USD0.11/kwh price of PLN (state-owned electricity company). EBITDA margin for the new power plant is expected at 35-40%.
4. The operational area license requires coordination with the existing power providers in the vicinity. Jababeka needs to co-ordinate with Cikarang Listrindo (CL) and PLN to set its distribution area so as not to overlap with the two providers'. As CL already operating at 100% utilization and PLN facing deficit, Jababeka expects no difficulty in getting the agreement from these two providers.
Jababeka is a major laggard amongst property stocks in Indonesia, rising 'only' 72% YTD compared to more than 150% for other stocks as
the market is still fixated by the huge losses that Jababeka incurred in 1Q09. However, if we dig deeper, the IDR60b net losses were caused largely by the interest expense (IDR35b) and forex translation loss (IDR44b) arising from the bridging loan. Starting in 2Q09, these two expense items will be capitalized as per accounting rules, the loans will be transferred to the subsidiary level post the drawdown of the syndicated loans.
Assuming conservatively that the stock could re-rate to 1.0x 2010 P/B (for comparison, 2008 peak P/B was 1.7x), the share price could rise to IDR140 (63% upside potential).
The key takeaways from the meeting:
1. The major overhang, namely the securing of operational area license, has been removed after the Ministry of Energy and Mineral issued an approval letter in mid March 2009. The prolonged process (seven months) to obtain the license was caused by the issuance of new ministry regulation in August 2008 which required new power plants to obtain such license. Hence, Jababeka has finally met all conditions for the disbursement of its USD135m syndicated loans. The first drawdown was made in April 2009.
2. Jababeka expects its revenue to surge 150% y-y and EBIT to triple y-y in 2010 to IDR370b (assuming 80% utilization rate of the power plant) post the commercial operation of the full 130MW project in 1Q10. The first gas turbine (40MW) is slated to be operational in September 2009, followed by the second turbine of the same capacity in December 2009.
3. The company has secured 5-year contracts with Perusahaan Gas Negara and Petrogas for the supply of its gas. The average purchase price is USD0.057/mmbtu. Jababeka expects to sell its electricity at USD0.08 to USD0.085/kwh vs. USD0.09/kwh price charged by Cikarang Listrindo (an IPP) and USD0.11/kwh price of PLN (state-owned electricity company). EBITDA margin for the new power plant is expected at 35-40%.
4. The operational area license requires coordination with the existing power providers in the vicinity. Jababeka needs to co-ordinate with Cikarang Listrindo (CL) and PLN to set its distribution area so as not to overlap with the two providers'. As CL already operating at 100% utilization and PLN facing deficit, Jababeka expects no difficulty in getting the agreement from these two providers.
Jababeka is a major laggard amongst property stocks in Indonesia, rising 'only' 72% YTD compared to more than 150% for other stocks as
the market is still fixated by the huge losses that Jababeka incurred in 1Q09. However, if we dig deeper, the IDR60b net losses were caused largely by the interest expense (IDR35b) and forex translation loss (IDR44b) arising from the bridging loan. Starting in 2Q09, these two expense items will be capitalized as per accounting rules, the loans will be transferred to the subsidiary level post the drawdown of the syndicated loans.
Assuming conservatively that the stock could re-rate to 1.0x 2010 P/B (for comparison, 2008 peak P/B was 1.7x), the share price could rise to IDR140 (63% upside potential).
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