Author Topic: Farm Futures  (Read 11655 times)

Offline zuolun

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Farm Futures
« on: January 27, 2015, 09:24:24 AM »
Morning Market Review by Bryce Knorr - 26 Jan 2015

http://farmfutures.com/story-morning-market-review-bryce-knorr-22-30780

Offline zuolun

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Re: Farm Futures
« Reply #1 on: January 27, 2015, 09:36:29 AM »
Soft outlook for commodities in 2015: Analysts

2015 looks to be a somewhat lacklustre year for commodities - global demand remains weak while an appreciating US dollar makes them more expensive. Palm oil prices are being supported by a supply shock, but analysts said they expect prices to follow in trend with other commodities.

By Patrick John Lim
9 Jan 2015

SINGAPORE: With China's growth on a moderating trend, global demand for commodities appears to be softening. Analysts said this, coupled with a supply glut - particularly in crude oil - would keep commodity prices low in the near-to-mid term.

Mr Manpreet Gill, senior investment strategist of wealth management at Standard Chartered, said: "I think on the demand side, relatively little has changed. But it is really on the supply side, that for many commodities, supply or levels of inventory have been quite high. I think that will maintain some downward pressure on commodity prices.

"But equally so on the US dollar, we expect the dollar to continue to strengthen through 2015 much as it has in the second half of last year. That by itself imposes quite a drag on most commodity prices."

Meanwhile, palm oil, a key agri-commodity for the region is actually seeing some price support as the flooding in Malaysia affected supply. However, analysts said that prices are likely to retreat if crude oil prices remain weak. Palm oil is a key component in biofuel, which in turn is often seen as a substitute for crude oil. And as oil prices continue to come down, the price of its substitutes will also be affected.

Mr Barnabas Gan, economist for treasury research and strategy at OCBC, said: "From November to about February, during this time of the year, really is the seasonally low production from poor weather. It has already happened and it actually came surprisingly from the floods - because of that production is likely to take a hit and prices will bottom at around 2,300 ringgit per metric tonne.

"We are not really bullish on palm oil, however despite the supported price right now, we are actually looking at on average about 2,300 ringgit per metric tonne for the entire year. That is because palm oil is likely to be less rosy, given the fact that oil prices are looking pretty weak at this juncture. And palm oil really is related to the biofuel industry."

On the flip side, analysts said the soft commodity outlook could be beneficial if it stimulates global growth. Low prices for major industrial inputs such as metal ore and crude oil could keep inflation low and ultimately support consumption demand.

Offline zuolun

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Re: Farm Futures
« Reply #2 on: January 27, 2015, 09:43:16 AM »
The weekend is over and crude oil is getting smoked again - 26 Jan 2015

Is oil's big capitulation sell-off still ahead?  - 25 Jan 2015
http://www.forbes.com/sites/jessecolombo/2015/01/25/is-oils-big-capitulation-sell-off-still-ahead/

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Re: Farm Futures
« Reply #3 on: January 27, 2015, 09:52:04 AM »
Nymex Crude Settles Down 44 Cents, or 1%, at $45.15/Barrel

By Christian Berthelsen
26 Jan 2015

Oil prices drifted down Monday despite bullish comments from an OPEC leader, instability in the Middle East and the election of a new government in Greece that could revive worries about sovereign debt there.

Not long ago, geopolitical risks, even when they didn’t pose immediate threat to oil supply flows, were the kind of thing that could send crude price soaring. But with a large and growing global surplus of oil — said to be mounting at a rate of 1.5 million barrels a day — the market has so much crude that such worries no longer reverberate.

The benchmark U.S. oil contract fell 44 cents, or 1%, to settle at $45.15 a barrel on the New York Mercantile Exchange. The global Brent benchmark ended 63 cents, or 1.3%, lower at $48.16 a barrel on the ICE Futures Europe exchange. Both contracts have fallen more than 55% since last summer as global supplies have mounted in the face of weak demand.

Futures came into the session in the red but gained after a report quoted the secretary-general of the Organization of the Petroleum Exporting Countries, Abdalla Salem el-Badri, as saying that oil prices appear to have bottomed out and could be poised for a rebound. OPEC decided in November not to lower its output quota, sending prices tumbling lower on the expectation that without intervention from the cartel, it could take months or years for the global glut of oil to shrink.

But the market flipped back into negative territory over the course of the session in the absence of other bullish drivers for supply and demand fundamentals.

“People are starting to take anything coming out of OPEC with a big grain of salt,” said Carl Larry, an analyst with research consultancy Oil Outlooks & Opinions.

Earlier Monday, prices fell to fresh lows on concerns that the outcome of the Greek election would increase uncertainty for Europe’s economy. Saudi Arabia, OPEC’s top producer, also reaffirmed that its new king won’t alter the country’s policy on maintaining its oil output, weighing on prices. And in Yemen, a volatile neighbor to Saudi Arabia, the collapsing government threatened to give way to outright factionalism.

In refined petroleum markets, February diesel futures fell 0.69 cent, or 0.4%, to $1.6398 a gallon. February gasoline futures lost 3.12 cents, or 2.3%, to settle at $1.3167 a gallon.

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Re: Farm Futures
« Reply #4 on: January 27, 2015, 09:56:19 AM »
There’s More to the Gold Rally than European Market Fears - January 23, 2015

http://www.usfunds.com/investor-library/investor-alert/theres-more-to-the-gold-rally-than-european-market-fears/#.VMbvl_58hpE







Offline zuolun

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Re: Farm Futures
« Reply #5 on: January 27, 2015, 10:08:30 AM »
Hedge Funds Bet Oil Will Fall Further

By Mark Shenk
Jan 27, 2015

Hedge funds boosted bearish wagers on oil to a four-year high as U.S. supplies grew the most since 2001.

Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks.

U.S. crude supplies rose by 10.1 million barrels to 397.9 million in the week ended Jan. 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June.

“There’s been a rush to call a bottom,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone Jan. 23. “The fundamentals are still stacked against a rebound.”

WTI rose 50 cents, or 1.1 percent, to $46.39 a barrel on the New York Mercantile Exchange during the CFTC report period. The U.S. benchmark fell 44 cents, or 1 percent, to $45.15, the lowest settlement since March 11, 2009. Brent slipped 63 cents, or 1.3 percent, to end the session at $48.16.

Salman Bin Abdulaziz Al Saud ascended to the throne after King Abdullah died last week. The kingdom pumped 9.5 million barrels a day in December as members of the Organization of Petroleum Exporting Countries exceeded their 30 million-barrel daily target for a seventh month.

U.S. Production

“I don’t see any major catalyst from either the supply or demand side that will send prices higher this year,” Stewart Glickman, an equity analyst at S&P Capital IQ in New York, said by phone Jan 23. “It looks like $50 crude is the new reality that we’ll have to get used to.”

Production in the U.S. will be slow to decline as improvements in drilling technology boost well output even as companies drill less. Oil production per rig from new wells in the Bakken in February will be double what it was three years ago, the EIA said Jan. 12.

The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota.

Drillers idled 49 U.S. oil rigs last week, bringing the total to 1,317, the lowest level in two years, Baker Hughes Inc. (BHI) said on its website Jan. 23. It was the seventh weekly decline.

Short Options

“The fundamentals are terrible,” Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone Jan. 23. “The drop in the rig count will have a limited impact. We’re going to see huge builds during the first quarter worldwide.”

Short positions in WTI increased by 6,262 contracts to 94,203 futures and options in the week ended Jan. 20, CFTC data show. Long positions dropped 0.3 percent. Net-long positions fell 3.3 percent to 216,704. Producers increased net-short positions by 7,623 to 132,143 contracts, the most since December 2011.

In other markets, bullish bets on gasoline advanced 5.8 percent to 39,418 contracts, the first gain in five weeks. Futures increased 3.5 percent to $1.3128 a gallon on Nymex in the reporting period.

Pump Prices

Retail gasoline, averaged nationwide, slid to $2.033 a gallon Jan. 25, the lowest since March 2009, according to Heathrow, Florida-based AAA, the largest U.S. motoring group.

Bearish wagers on U.S. ultra low sulfur diesel increased 2.3 percent to 29,943 contracts, the most since the period ended Nov. 4. The fuel slipped 0.4 percent to $1.6266 a gallon in the report week.

Net-short wagers on U.S. natural gas decreased 32 percent to 11,967 lots. The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract.

Nymex natural gas dropped 3.8 percent to $2.831 per million British thermal units during the report week.

“We’ve been here before,” said Wittner. “There have been points when it looked like it was stabilizing only to then take another leg lower.”

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Re: Farm Futures
« Reply #6 on: January 27, 2015, 10:18:22 AM »
Hedge Funds’ Bets Against Oil Reach A Four-Year High

As oil futures trade below $50 a barrel, short positions in oil futures and options are touching multi-year highs

By Tabinda Hussain
January 26, 2015

Hedge Funds are going all out against oil, as short positions in crude markets reach a four-year high. Data from CFTC shows that short positions in West Texas Intermediate crude increased to 92,403 futures and options in the week ending  January 20th.

Oil below $50 will be the new normal

The current wager on the fall in oil prices is the largest since September 2010, reports Mark Shenk for Bloomberg. Stewart Glickman, an equity analyst at S&P Capital, was quoted as saying that $50/barrel could be the new standard that markets will eventually have to accept. Meanwhile, oil supply continues to exceed targets as OPEC countries produce more than current demand.

As the list of hedge funds burnt by the oil decline either directly or indirectly grows, there are also those who were betting on the winning side of this trade. A notable name among the winners is Stan Druckenmiller’s alum, Zach Schreiber, who runs PointState Capital. The hedge fund generated a 27% gain in last year as it raked in $1 billion in profits from its bets against oil.

Hedge funds make money from shorting energy companies

Hedge funds have also been profitable in their bets against energy companies in Europe. France-based provider of geophysical services to oil explorers, CGG SA, has been a profitable short in the past year. The company, formerly known as Compagnie Generale de Geophysique-Veritas, suffered an over 60% decline in share price last year. Hedge funds who are currently short CGG are Amber Capital and AQR Capital.

Short interest in Petrofac peaked in the second week of January, according to disclosures made to the U.K’s Financial Conduct Authority. Petrofac provides construction and engineering solutions to the oil and gas industry. The company is being shorted by Marshall Wace, Adelphi Capital, AKO Capital and AQR Capital. Petrofac was down 40% last year.

Other popular shorts among the oil and gas engineering and servicing companies are SBM Offshore and Amec Foster Wheeler plc. Jim Chanos, Marshall Wace, Discovery Capital and BlueCrest Capital have made money from shorting SBM Offshore, which is a Dutch company that provides services to energy companies.

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Re: Farm Futures
« Reply #7 on: January 27, 2015, 10:40:01 AM »
Palm oil drops to weakest in 5 weeks as demand wanes

  • Prices fall to 2,170 ringgit, lowest since Dec. 23
  • Malaysia's Jan 1-25 palm oil exports fall nearly 20 pct
  • Malaysian palm output seen down 24 pct in Jan. 1-20
  • Palm oil to hover above 2,211 ringgit - technicals

By Anuradha Raghu
26 Jan 2015

Malaysian palm oil futures fell for a third session on Monday, dropping to their lowest in nearly five weeks as poor demand from major buyers sparked concern that palm's use in food and fuel industries may continue to slump in coming months.

Palm prices ran up 14 percent from December to a six-month high of 2,394 ringgit by Jan. 15 after monsoon flooding wreaked havoc in parts of Malaysia, the second-biggest grower, inundating estates and destroying infrastructure.

But market players say worries about the devastation have cooled, and even if growers expect another big drop in output this month, waning export demand from India, China and Europe plus the rout in crude oil could offset that.

"Production is down temporarily, but soon it will rise again, and people are worried about how demand will be, with the poor economic growth," said a trader with a foreign commodities firm in Kuala Lumpur.

"We don't know whether China will buy equal or less amounts of edible oil from last year. Biofuel demand is bad, biodiesel operators can't do anything," the trader added. "These are the two main concerns keeping prices under pressure."

The benchmark April contract had dropped 2.5 percent to 2,175 ringgit ($601) per tonne by Monday's close, after touching 2,170 ringgit in late trade, the lowest since Dec. 23.

Malaysian exports of palm oil products fell 17.7 percent to 886,189 tonnes between Jan. 1-25 from the same period a month before, according to cargo surveyor Intertek Testing Services.

Another cargo surveyor, Societe Generale de Surveillance, reported that exports for the same period slid 19 percent.

The Malaysian Palm Oil Association, a growers' group, estimates crude palm oil production fell 24.3 percent between Jan. 1 and 20. Output from Sarawak alone, Malaysia's second-largest palm-growing state, was forecast to have dropped more than 28 percent in the same period.

Oil prices declined on Monday, with U.S. crude falling close to a nearly six-year low, as Saudi Arabia's new King Salman moved to assuage fears of an unstable transition and any policy change in the world's largest oil exporter.

In other vegetable oil markets, the U.S. soyoil contract for March fell 1.1 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange lost 1.0 percent.

Palm, soy and crude oil prices at 1026 GMT

Contract Month Last Change Low High Volume

MY PALM OIL FEB5 2200 -64.00 2200 2254 574

MY PALM OIL MAR5 2187 -60.00 2186 2249 2860

MY PALM OIL APR5 2175 -55.00 2170 2222 26233

CHINA PALM OLEIN MAY5 4838 -30.00 4836 4874 247708

CHINA SOYOIL MAY5 5510 -56.00 5506 5562 315804

CBOT SOY OIL MAR5 31.26 -3.50 31.26 31.57 7278

INDIA PALM OIL JAN5 434.90 -3.50 434.00 439.50 488

INDIA SOYOIL FEB5 616.00 -9.00 615.70 624.80 50145

NYMEX CRUDE MAR5 45.04 -0.55 44.35 45.35 47107

Palm oil prices in Malaysian ringgit per tonne

CBOT soy oil in U.S. cents per pound

Dalian soy oil and RBD palm olein in Chinese yuan per tonne

India soy oil in Indian rupee per 10 kg

Crude in U.S. dollars per barrel

(US$1 = 3.6170 Malaysian ringgit)

(US$1 = 6.2542 Chinese yuan)

(US$1 = 61.42 Indian rupee)

Offline zuolun

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Re: Farm Futures
« Reply #8 on: January 27, 2015, 10:46:26 AM »
Cocoa Posts Longest Slump in Two Years as Asian Cravings Wane

By Marvin G. Perez
Jan 24, 2015

Asian consumers are finally starting to balk at higher chocolate prices, sending cocoa futures to the longest rout in more than two years.

Processing of the beans in Asia fell 17 percent in the fourth quarter from a year earlier, a sign of waning demand for the chocolate ingredient, the Singapore-based Cocoa Association of Asia said Friday. Grinding also declined in Europe, North America and Brazil, separate industry reports showed this month.

Slowing global economies are crimping demand as consumers look for ways to cut disposable spending after chocolate costs increased. Cocoa futures touched a three-year high in September amid concern that the deadly Ebola disease would disrupt shipments from West Africa, which produces 70 percent of global supply. Prices have since fallen 19 percent as exports continued to flow from Ivory Coast and Ghana, the top growers.

“The market is reacting to the grinding figures,” Bill Pearce, a vice president at McKeany-Flavell Co. in Oakland, California, said in telephone interview. “The demand for chocolate is down because prices are quite high. If you look at the world economy, the U.S. is still doing pretty good, but we have seen struggles in Europe and Asia.”

Cocoa for March delivery dropped 1.6 percent to settle at $2,755 a metric ton at 12:03 p.m. on ICE Futures U.S. in New York. Earlier, the price touched $2,754, the lowest for a most-active contract since Jan. 23, 2014. The price fell for sixth session, the longest slide since December 2012.

‘Sweet Tooth’

Futures surged 38 percent in the previous three years as Asian consumers led global demand growth, eroding inventories. The gains prompted chocolate makers including Hershey Co. to boost prices in 2014 to cover ingredient costs.

“Falling cocoa grindings in Europe, North America and Asia suggest that the world has lost some of its sweet tooth,” Hamish Smith, a commodity economist at Capital Economics in London, said in a report Friday. Smith said prices will fall to $2,650 by the end of the year, lowering his outlook from a previous estimate of $2,750.

Cocoa butter, a byproduct of the beans used to make chocolate bars, has surged 38 percent since the end of 2010. The higher prices may prompt some confection makers to use more substitutes, including alternative fats, Pearce of McKeany-Flavell said.

“It will be quite some time before we see prices at reasonable levels to stimulate consumption again,” he said.

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Re: Farmfutures
« Reply #9 on: January 27, 2015, 11:10:15 AM »
Copper rebounds off new low

26 Jan 2015

Copper futures have closed significantly higher on the London Metal Exchange after bargain hunters spurred a rebound from severe losses earlier in the session that at one stage took the commodity to a new five-and-a-half-year low.

The LME's three-month copper contract was up 1.3 per cent at $US5,580.00 a metric tonne at Monday's PM kerb close.

"History repeated herself," Richard Fu, head of Asian commodities trading at Newedge, said.

"The copper price collapsed this morning resembling the previous fall. (Then'there's a) copper price bounce in the afternoon."

Bargain hunters helped the red metal to claw back some gains after it fell roughly two per cent in early London trading, as traders sold off on the back of negative market sentiment surrounding China's economic future.

"The shorting activity seems to (have been) driven by Chinese hedge funds (and) high-frequency traders based in Shanghai," James Sutton, a fund manager in JP Morgan Asset Management's global natural resources equities team, said.

"The most popular macro-trade right now is to short commodities."

On the back of China's flagging economy and the advent of the 'new normal' approach to its growth, the market has grown bearish about the base metal's prospects.

China is the No 1 consumer of the red metal, so its economic trajectory strongly dictates prices. When the Asian country's economy is seen to be ailing, demand falls and so do prices.

While demand is a concern, from a supply point of view the market is moving in the right direction and increasing in tightness, Mr Sutton said.

However, copper remains "under renewed pressure and looks like challenging the multi-year lows formed on January 14," according to Jasper Lawler, a market analyst at CMC Markets.

All the metals ended the day higher as the week kicked off.

Aluminium closed up 2.7 per cent at $US1,880.00 a tonne, zinc closed 1.9 per cent higher at $US2,134.00 a tonne, nickel ended the session up 2.4 per cent at $US14,750.00 a tonne, lead rose 1.3 per cent at $US1,870.00, and tin was higher, closing up 0.6 per cent at $US19,600.00 a tonne.

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Chinese hedge funds drive copper plunge

By Henry Sanderson and Neil Hume
15 Jan 2015

What caused copper to plunge precipitously on Wednesday?

Market participants say aggressive selling by Chinese hedge funds that are virtually unknown in the west played a powerful part in pushing the metal down more than 7 per cent to its lowest level since 2009.

Similar to a sudden drop in March 2014, the fall signals the growing importance of Chinese funds in commodities. Groups said to be active in metals markets include Zhejiang Dunhe Investment and Shanghai Chaos Investment. They declined to comment for this article.

Dealing during illiquid hours, their aggressive tactics can have speedy ramifications given the increasing presence of high-frequency traders and black-box funds, that sell or buy based on preset instructions and feed off their moves.

“We should not underestimate the power of Chinese fund money to roil the markets,” futures broker INTL FCStone said.

Wednesday’s sell-off started at 1am in the morning UK time, 8pm in the US, as all but the most assiduous metals traders in the west had gone home. Copper traded on the London Metal Exchange’s electronic trading platform “LMEselect” fell more than $400 in an hour to $5,378.25 per tonne.

The movement on the LME pushed copper contracts on the Shanghai Futures Exchange down by the exchange's limit of 5 per cent, with more than 400,000 contracts changing hands in the most active contract.

Traders said the bear assault was “beautifully” timed, with the Chinese funds launching their attack at a moment when the market was on edge because of the collapse in the oil price and physical demand in China weak because of the looming lunar new year holiday.

On top of that, sentiment toward commodities was poor with many large investors selling down index-linked investments. Typically, institutions such as pension funds that buy a basket of commodities have to sell copper every time they want to exit the sector or reduce their exposure. This has been one factor behind the metal’s 12 per cent slide since the start of the year.

“These guys know how to time it,” one veteran trader said.

The Chinese funds were seemingly also aware of growing open-interest in copper options — including put contracts, which give the buyer the right to sell at a fixed price — and the impact a sell-off would have on the delta-hedging programmes of big investment banks. Option writers hedge their exposure by selling futures contracts at ratios determined by the underlying price. According to LME data, there is currently large open-interest in June $5,500 puts.

“People have to change the way they think about markets. Twenty years ago if copper was down it would be really a reflection of the supply and demand because we didn’t have this speculative or financial activity,” said one senior trader.

Adding to Wednesday’s selling was the news that a copper smelter in Shandong called Yantai Penghui Copper had shut down production, due to cash problems. The smelter was left with a large long position in copper futures they had to sell in the market, according to market participants.

There was also talk that an investment bank had closed an in-house commodities fund and was liquidating positions, some of which may have been in copper.

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Re: Farm Futures
« Reply #10 on: January 27, 2015, 11:30:30 AM »
Mongolia’s Bonds Slump With Copper as Rio Spat Stalls Mine

By Michael Kohn
27 Jan 2015

Mongolia’s dollar bonds and currency sank to record lows this month as a slide in commodity prices and a dispute with Rio Tinto Group (RIO) over developing one of the world’s largest copper and gold mines kept foreign investors away.

The yield on sovereign notes due January 2018 surged 190 basis points, or 1.90 percentage points, from Dec. 31 to an unprecedented 9.79 percent on Jan. 21 and was at 8.78 percent as of 9:54 a.m. in Hong Kong Tuesday, data compiled by Bloomberg show. The tugrik has weakened 2.8 percent to 1,942 a dollar in January and reached an all-time low of 1,944 on Jan. 22.

The drop in commodity prices is adding to the woes of the resource-dependent economy, where growth has slowed to about 7 percent from 17.5 percent in 2011 and overseas investment plunged 71 percent in the first 11 months of 2014. The lack of progress in talks between the government and Rio, Mongolia’s top investor, has held up funding for the Oyu Tolgoi mine’s underground phase, where most of the copper and gold is.

“Policy indecision around Oyu Tolgoi phase two is likely weighing on Mongolian bond prices,” Nick Cousyn, Chief Operating Officer of Mongolian brokerage BDSec in Ulaanbaatar, said in an e-mail. “The collapse in commodity prices, particularly oil, has created a perfect storm in emerging and frontier credit markets, and Mongolian credit is also caught in this storm.”

Three-month copper futures fell 3.4 percent last week and are down 11 percent this month amid concern that China’s economy is slowing. The metal’s price has dropped 22 percent in a year, while crude oil has slumped more than 50 percent. China’s economy grew 7.4 percent in 2014, the least since 1990.

Foreign Reserves

Mongolia’s foreign reserves stood at $1.35 billion at the end of November, down 42 percent from a year earlier, according to the central bank’s website.

The price of Mongolia’s 2018 bonds slid to a record low 85.82 cents on the dollar on Jan. 21 from 92.64 at the end of 2014. Dollar notes due December 2022 fell to 78.51 the same day, from 86.47 on Dec. 31, pushing the yield to an unprecedented 9 percent.

The Bank of Mongolia raised its policy rate this month to 13 percent from 12 percent, citing high inflation and low foreign investment. In December, the World Bank encouraged the nation to tighten policy and start preparations to repay $1.08 billion of debt due in 2017 and 2018.

‘Fragile Outlook’

“The central bank’s decision to raise rates also underscores the fragile outlook for Mongolia’s balance of payments,” Ben Shatil, an analyst at JPMorgan Chase & Co. in Singapore, said by e-mail. “There’s recognition that Mongolia’s fundamentals are being seriously challenged by the decline in commodity prices, as well as the expectation for slower, and less investment-intensive growth in China this year.”

JPMorgan recommends holding less Mongolian bonds than the benchmark it uses to gauge performance, according to Shatil.

A $4.2 billion project financing package for the underground mine at Oyu Tolgoi, involving 15 global banks, has been delayed as the government and Rio wrangle over costs and taxes. Commercial production from the open pit, which began in mid-2013, is helping to plug a shortfall in foreign investment.

An offer from Rio to Mongolia’s government aimed at spurring an agreement includes a proposal to forgo a 2 percent net smelter return, which may be worth as much as $1.6 billion over the mine’s life, The Australian newspaper reported Jan 27, citing extracts of a document posted online by a Mongolian Twitter user it didn’t identify.

Rio Offer

“There is an offer on the table, which we believe is beneficial for all parties,” Rio said in an e-mailed statement. “We will continue to work with the government to progress these issues.”

Melbourne-based Rio spokesman Ben Mitchell declined to comment on the content of the offer.

Mongolia’s total copper concentrate exports more than doubled to 1.4 million tons in 2014 from 650,000 tons a year earlier, data from the National Statistical Office show. Revenue from coal fell to $849 million last year from $1.1 billion in 2013 even as the country increased shipments to 19.5 million tons from 18.3 million tons a year.

Agreements on Oyu Tolgoi and the Tavan Tolgoi coal deposit could help Mongolia’s bonds turnaround, according to Cousyn from BDSec. He estimates the two projects account for $10 billion of capital expenditures in the medium term, or 85 percent of Mongolia’s gross domestic product.

Mongolia’s sovereign dollar bonds have lost 5.2 percent this month compared with a 3.7 percent drop in Nigeria’s, according to indexes compiled by Bloomberg.

“Unlike countries such as Nigeria or Iraq, Mongolia has ready projects that can quickly shift the entire economy,” Cousyn said.

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http://www.euromoney.com/Article/3135680/Mongolias-sovereign-bond-has-teething-problems.html

Mongolia’s sovereign bond has teething problems

Debut bond rebounded after political scuffle; Investment opportunities limited elsewhere

By Kanika Saigal
Jan 2013

When Mongolia issued its debut sovereign bond in late November, international investors showed immediate and keen interest. But a spat within the coalition government resulted in the bond’s price plummeting dramatically, threatening to completely undermine the initial positive reaction.

In the face of this setback, Mongolia has gone into overdrive in its efforts to paint the bond issue in a positive light.

"The first sovereign issue by the Mongolian government was clearly a major success," says Alisher Ali, chairman of Silk Road Finance, a frontier markets investment group. "The sovereign bond was the largest-ever issue among all frontier markets for a debut – the issue broke a number of records."

Mongolia issued $1.5 billion in debt in five-year and 10-year tranches. The landmark transaction attracted an order book in excess of $15 billion. Both tranches priced at the tight end of final price guidance, at 4.125% to 4.25% for the five-year tranche and 5.125% to 5.25% for the 10-year tranche.

Bank of America Merrill Lynch, Deutsche Bank, HSBC and JPMorgan were the joint bookrunners for the sale.

The bond’s sudden slump in value by $7 to $8 came after members of Mongolia’s fragile government, the Mongolian People’s Revolutionary Party, announced that the party would quit the ruling coalition, led by the Democratic Party, in protest at MPRP leader Nambar Enkhbayar’s arrest following corruption charges.

"Here in Mongolia, people were actually quite surprised that the international community paid so much attention to what was going on in local politics," says Randolph Koppa, president of the Trade and Development Bank of Mongolia. "[They have] never really cared before, but since the bond, all eyes are on Mongolia. Political activities and the related rhetoric meant mainly for local consumption are being misjudged. Most people in the west do not have any idea how Mongolian politics work as yet."

According to Ali, investors panicked as a result of greater political tension. "The bond issue was so widely distributed and inevitably, some investors – those not fully aware of the political fundamentals in Mongolia – panicked and wanted out," he says.

"The fact is that there has been political volatility in Mongolia since April, and this was priced in."

Indeed, the likelihood that the coalition government in Mongolia would fall apart even if the MPRP decided to withdraw was minimal. A report by Origo Partners, a private equity investment company based in China, highlights that the threat was only meant as a high-profile warning to the authorities by the MPRP.

"The fact that MPRP ministers have not actually submitted their resignations indicates to us that this political action was aimed primarily at influencing the outcome of the court ruling," says the report. "Following the finalization of Enkhbayar’s case we expect the usual condemnation and possibly other political actions of protest from the MPRP, but not the actual exit from... the coalition government."

Moreover, according to the report, the fact that the bonds soon rebounded shows that the market has largely ignored the potential for further political controversy from the MPRP leading to government collapse.

The latest tussle could even be beneficial for Mongolia and bring the frontier market to the fore. "The political [tensions]... brought attention to Mongolia. People are new to the Mongolian story, but the bond issue and the momentary [political] hiccup that followed will demand investor interest," says Ali.

Koppa says: "The week that Mongolia went on the road to drum up interest for their bond, there was no bad news. Talks surrounding the fiscal cliff were just about to start and the Greek crisis looked as if it was cooling down. Investors saw this as a good opportunity, especially for diversification of their portfolios by including a new country from a more dynamic region of the world."

Indeed, the Mongolian bond was popular because investor opportunities elsewhere are limited. Low interest rates in developed economies amid the eurozone crisis and the fiscal cliff have also spurred investors to seek more exotic, high-yielding bonds, while at the same time mainstream emerging market names including Mexico, South Africa and Indonesia have yields at record lows.

"Frontier markets like Mongolia offer yield and diversification and so are a good buy," says Ali.

The size of Mongolia’s debut bond is approximately equal to 43% of the country’s debt to GDP ratio, and is about 15% of GDP in absolute terms. Moreover, the deal, the biggest in Asia for more than a decade, is so large that the country does not have the net international foreign exchange reserves to cover it.

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Re: Farm Futures
« Reply #11 on: January 27, 2015, 11:40:23 AM »
Iron ore plunges 4.3% to new five-year low

27 Jan 2015

Iron ore retreated to the lowest level in more than five years as a slowdown in China hurt the outlook for demand in the world's biggest user while the largest mining companies add to supply, boosting a surplus.

Ore with 62 per cent content delivered to Qingdao, China, tumbled 4.3 per cent to $US63.54 a dry metric ton, according to data by Metal Bulletin Ltd. That's the lowest price on record going back to May 2009, and was the biggest one-day fall since November 18. The commodity is 11 per cent lower this year.

The raw material has been in a bear market since March after Rio Tinto Group, BHP Billiton and Vale spent billions of dollars to boost low-cost output even as China slowed.

Goldman Sachs Group joined global banks on Friday in cutting price forecasts for 2015, predicting a return to a bull market is probably more than a decade away. The love affair between China and iron ore is cooling, the bank said.

The decline in prices is mainly due to "slower demand growth for steel in China, together with the expected new iron ore supply," Vanessa Lau, a Hong Kong-based analyst at Sanford C. Bernstein, said before the figure was released.

Steel mills in China are also cutting output before the Lunar New Year, putting further pressure on prices, she said, referring to the national holiday next month when industrial activity slows.

The commodity may average $US66 a ton this year from an earlier prediction of $US80, Goldman Sachs said in the January 23 report. The New York-based bank is at least the fifth lender this month to lower price estimates after Citigroup and UBS Group were among those cutting forecasts.

Gripped by a property downturn and excess capacity, China's economy expanded 7.4 per cent last year, the slowest pace since 1990, data on Tuesday showed. Crude-steel production rose 0.9 per cent in 2014 compared with 7.5 per cent the previous year, according to China's National Bureau of Statistics. That was the weakest growth in steel output in data going back 24 years.

The world's biggest miners are still expanding iron ore output, betting that higher-cost suppliers and including sites in China will be forced to close. BHP produced 56.4 million tons in the three months to December 31, 16 per cent more than a year earlier, the Melbourne-based company said on Wednesday. Rio plans to boost output to 330 million tons this year after an 11 per cent rise to 295 million tons in 2014.

The expansions will probably continue as the major producers are still mining at a profit, Goldman said. That will expand the global surplus from 47 million tons this year to 260 million tons by 2018, the bank estimated.

Shippers from Australia are gaining market share in China, accounting for 59 per cent of imports last year from 51 per cent in 2013, according to customs data on Friday. Brazil's share was 18 per cent from 19 per cent, while exports from the rest of the world fell to 23 per cent from 30 per cent.

Cliffs Natural Resources, the largest US producer, will stop paying a dividend as it tries to cut borrowings amid the slump in iron ore prices, according to a statement on Monday in the US. The elimination will give the Cleveland-based company $US92 million a year of extra free cash to pay down debt, it said.

----------------------------------------------------------------------------------------------------------------------------

Iron ore in retreat as Citi slashes forecast to $US58

By Paul Garvey
15 Jan 2015

IRON ore prices are tipped to push to new lows in the weeks ahead, with cost savings from falling oil prices tipped to translate into more iron ore price falls.

Citi analysts yesterday slashed their iron ore price forecast for 2015 from $US65 a tonne to just $US58, signalling more pain on the horizon for Australian iron ore miners battling for profitability.

Citi’s bleak diagnosis came as the benchmark iron ore price continued to fall, dropping almost 1 per cent to $US68.50. After starting 2015 with a rally, iron ore is now within a whisker of the five-and-a-half-year low of $US65.70 posted before Christmas.

The shakiness took its toll on iron ore stocks, with Andrew Forrest’s Fortescue Metals falling to its lowest closing price since May 2009 when it shed more than 8 per cent to $2.345.

Australia’s biggest iron ore miners, BHP Billiton and Rio Tinto, fell 2.9 per cent and 3.6 per cent respectively while smaller miners were also hit hard. BC Iron was down 6.6 per cent and Arrium was down 5.6 per cent.

The latest fall in iron ore prices came as data showed that iron ore imports into China had hit an all-time high in December, suggesting that falling prices had boosted demand for overseas supplies. In addition, iron ore stockpiles at Chinese ports fell for a seventh straight week to their lowest levels since February.

Citi commodities strategist Ivan Szpakowski told The Australian that the lower oil price, along with the weakening Australian dollar, was helping Australian iron ore miners squeeze out Chinese iron ore producers by reducing fuel and freight costs.

“The major exporters including Australia have benefited vis a vis the Chinese domestic producers, who have not been able to take advantage of, for example, the [currency] movements and they also have not been able to benefit from the freight changes,” Mr Szpakowski said.

“The geographic advantage that Chinese producers had enjoyed is now eroding.”

While falling oil prices were expected to reduce costs for Australian producers by about $6 a tonne, the cut to Citi’s price forecast suggests those savings will pass through to consumers.

Speaking to The Australian from Beijing, CLSA head of resources research Andrew Driscoll said he expected to see more Chinese iron ore miners lose market share to Australian producers over the rest of the year.

He said the latest import data out of China was a positive surprise for the iron ore sector.

“I think there’s increased expectation of more stimulus in China, as we’re seen by the acceleration of infrastructure project approvals, and I think there are some encouraging signs in terms of improving property sales,” Mr Driscoll said.

“From a fundamental perspective there are some key signs of encouragement here, but that’s taking a back seat to action in oil prices and investor sentiment at the moment.”

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Re: Farm Futures
« Reply #12 on: January 27, 2015, 11:44:30 AM »

COMMODITIES BEAR CYCLE ??

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Re: Farm Futures
« Reply #13 on: January 27, 2015, 11:49:06 AM »
Why Oil Prices May Not Recover Anytime Soon

By Adam Levine-Weinberg
25 Jan 2015

Oil prices have collapsed in stunning fashion in the past few months. The spot price of Brent crude reached $115 a barrel in June, and was above $100 a barrel as recently as September. Since then, it has plummeted to less than $50 a barrel.

There is a sharp split among energy experts about the future direction of oil prices. Saudi Prince Alwaleed bin Talal recently stated that oil prices could keep falling for quite a while and opined that $100 a barrel oil will never come back. Earlier this month, investment bank Goldman Sachs weighed in by slashing its short-term oil price target from $80 a barrel all the way to $42 a barrel.

But there are still plenty of optimists like billionaire T. Boone Pickens, who has vocally argued that oil will bounce back to $100 a barrel within 12 months-18 months. Pickens thinks that Saudi Arabia will eventually give in and cut production. However, this may be wishful thinking. Supply and demand fundamentals point to more lean times ahead for oil producers.

Oil supply is comfortably ahead of demand

The International Energy Agency assesses the state of the global oil market each month. Lately, it has been sounding the alarm about the continuing supply demand imbalance.

The IEA currently projects that supply will outstrip demand by more than 1 million barrels per day, or bpd, this quarter, and by nearly 1.5 million bpd in Q2 before falling in line with demand in the second half of the year, when oil demand is seasonally stronger.

That said, these projections are built on the assumption that OPEC production will total 30 million bpd: its official quota. However, OPEC production was 480,000 bpd above the quota in December. At that rate, the supply-and-demand gap could reach nearly 2 million bpd in Q2.

Theoretically, this gap between supply and demand could be closed either through reduced supply or increased demand. However, at the moment economic growth is slowing across much of the world. For oil demand to grow significantly, global GDP growth will have to speed up.

It would take several years for the process of lower energy prices helping economic growth and thereby stimulating higher oil demand to play out. Thus, supply cuts will be necessary if oil prices are to rebound in the next two years-three years.

Will OPEC cut production?

There are two potential ways that global oil production can be reduced. One possibility is that OPEC will cut production to prop up oil prices. The other possibility is that supply will fall into line with demand through market forces, with lower oil prices driving reductions in drilling activity in high-cost areas, leading to lower production.

OPEC is a wild card. A few individuals effectively control OPEC's production activity, particularly because Saudi Arabia has historically borne the brunt of OPEC production cuts. Right now, the powers that be favor letting market forces work.

There's always a chance that they will reconsider in the future. However, the strategic argument for Saudi Arabia maintaining its production level is fairly compelling. In fact, Saudi Arabia has already tried the opposite approach.

In the 1980s, as a surge in oil prices drove a similar uptick in non-OPEC drilling and a decline in oil consumption, Saudi Arabia tried to prop up oil prices. The results were disastrous. Saudi Arabia cut its production from more than 10 million bpd in 1980 to less than 2.5 million bpd by 1985 and still couldn't keep prices up.

Other countries in OPEC could try to chip in with their own production cuts to take the burden off Saudi Arabia. However, the other members of OPEC have historically been unreliable when it comes to following production quotas. It's unlikely that they would be more successful today.

The problem is that these countries face a "prisoner's dilemma" situation. Collectively, it might be in their interest to cut production. But each individual country is better off cheating on the agreement in order to sell more oil at the prevailing price, no matter what the other countries do. With no good enforcement mechanisms, these agreements regularly break down.

Market forces: moving slowly

The other way that supply can be brought back into balance with demand is through market forces. Indeed, at least some shale oil production has a breakeven price of $70 a barrel-$80 a barrel or more.

This might make it seem that balance will be reasserted within a short time. However, there's an important difference between accounting profit and cash earnings. Oil projects take time to execute, involving a significant amount of up-front capital spending. Only a portion of the total cost of a project is incurred at the time that a well is producing oil.

Capital spending that has already been incurred is a "sunk cost." The cost of producing crude at a particular well might be $60 a barrel, but if the company spent half that money upfront, it might as well spend the other $30 a barrel to recover the oil if it can sell it for $45 a barrel-$50 a barrel.

Thus, investment in new projects drops off quickly when oil prices fall, but there is a significant lag before production starts to fall. Indeed, many drillers are desperate for cash flow and want to squeeze every ounce of oil out of their existing fields. Rail operator CSX recently confirmed that it expects crude-by-rail shipments from North Dakota to remain steady or even rise in 2015.

Indeed, during the week ending Jan. 9, U.S. oil production hit a new multi-decade high of 9.19 million bpd. By contrast, last June -- when the price of crude was more than twice as high -- U.S. oil production was less than 8.5 million bpd.

One final collapse?

In the long run -- barring an unexpected intervention by OPEC -- oil prices will stabilize around the marginal long-run cost of production (including the cost of capital spending). This level is almost certainly higher than the current price, but well below the $100 a barrel level that's been common since 2011.

However, things could get worse for the oil industry before they get better. U.S. inventories of oil and refined products have been rising by about 10 million barrels a week recently. The global supply demand balance isn't expected to improve until Q3, and it could worsen again in the first half of 2016 due to the typical seasonal drop in demand.

As a result, global oil storage capacity could become tight. Last month, the IEA found that U.S. petroleum storage capacity was only 60% full, but commercial crude oil inventory was at 75% of storage capacity.

This percentage could rise quickly when refiners begin to cut output in Q2 for the seasonal switch to summer gasoline blends. Traders have even begun booking supertankers as floating oil storage facilities, aiming to buy crude on the cheap today and sell it at a higher price this summer or next year.

If oil storage capacity becomes scarce later this year, oil prices will have to fall even further so that some existing oil fields become cash flow negative. That's the only way to ensure an immediate drop in production (as opposed to a reduction in investment, which gradually impacts production).

Any such drop in oil prices will be a short-term phenomenon. At today's prices, oil investment will not be sufficient to keep output up in 2016. Thus, T. Boone Pickens is probably right that oil prices will recover in the next 12 months-18 months, even if his prediction of $100 oil is too aggressive. But with oil storage capacity becoming scarcer by the day, it's still too early to call a bottom for oil.

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Re: Farm Futures
« Reply #14 on: January 27, 2015, 11:57:00 AM »


CHEERS TO RON 95 BELOW 2 TILL 2020 ??

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Re: Farm Futures
« Reply #15 on: January 27, 2015, 12:20:30 PM »
http://news.goldseek.com/GoldSeek/1421335101.php

Complete Collapse -  15 Jan 2015










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Re: Farm Futures
« Reply #16 on: January 27, 2015, 01:50:38 PM »


FR T OIL CHART, CRUDE REBOUNDED IMMEDIATELY UPON HELICOPTER BEN'S QE ANNOUNCEMENT, N CONTINUE REBOUNDING UNTIL 80$, THEN ONLY TOOK A BREATHER.

THIS ROUND, T REBOUND FR ABE QE N EURO QE LOOKS WEAK.

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Re: Farm Futures
« Reply #17 on: January 27, 2015, 02:20:51 PM »

FR T OIL CHART, CRUDE REBOUNDED IMMEDIATELY UPON HELICOPTER BEN'S QE ANNOUNCEMENT, N CONTINUE REBOUNDING UNTIL 80$, THEN ONLY TOOK A BREATHER.

THIS ROUND, T REBOUND FR ABE QE N EURO QE LOOKS WEAK.

CURRENT OIL PLUNGE JUST GOT MANY MORE VARIABLES COMPARED WIF 2008.

 :think: :think: :think: :think: :think: :think: :think: :think: :think: :think: :think: :think:

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Re: Farm Futures
« Reply #18 on: January 27, 2015, 05:36:49 PM »
Goldman Sachs’s Cohn Says Oil Prices May Hit $30 in Extended Slump

By Elizabeth Dexheimer
27 Jan 2015

Oil prices will probably continue to decline and could reach as low as $30 a barrel, according to Gary Cohn, president of Goldman Sachs Group Inc.

“We’re probably in the lower, longer view,” Cohn, a former oil trader, said Monday in an interview with CNBC.

West Texas Intermediate for March delivery fell 44 cents to close at $45.15 a barrel on the New York Mercantile Exchange, the lowest settlement since March 11, 2009.

Crude oil has slumped almost 60 percent since June as the Organization of Petroleum Exporting Countries resisted calls to cut output and the U.S. pumped at the fastest pace in more than three decades. Drillers in the U.S. have begun to idle rigs as falling prices make wells aiming to tap shale reserves unprofitable.

Cohn, 54, said the commodity business is “very, very strong” because consumers and oil-producing nations are in different positions than they have been in the past few years.

“If you’re a consumer today and you can lock in these prices, you’re a lot more aggressive in the markets in hedging than you ever have been,” Cohn said. “The flip side is if you’re an oil-exporting country today and you’re looking at these oil prices and you see a fairly steep forward curve and you see 10 or 15 dollars of price higher a year forward then you do in the spot market, you have to consider trying to lock into that forward price.”

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Re: Farm Futures
« Reply #19 on: January 27, 2015, 05:52:08 PM »
http://www.sifferkoll.se/sifferkoll/?p=555

Big Banks and Big Oil Increasing their already Massive Short Position in WTI Crude Oil - 30 Dec 2014


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Re: Farm Futures
« Reply #20 on: January 27, 2015, 06:03:56 PM »
Tumbling oil prices could mean $30b hit for Australia's LNG exports

By Angela Macdonald-Smith
January 26, 2015

The dive in global oil prices could wipe more than $30 billion from Australia's export bounty from liquefied natural gas in 2017-18, gouging a huge hole in revenue compared to the projections of just a year ago, according to Westpac economists.

New modelling by the bank on the hit to be taken on LNG revenue from the tumbling oil price has found that if oil prices follow the "forward curve", Australia's export earnings from LNG will total just $36 billion in 2017-18, rather than the $67 billion that could have been expected if prices had stayed at 2013-14 levels.

Commonly used in energy markets, the "forward curve" provides an estimate of future "spot" prices for energy sources such LNG or oil based on existing contracts for delivery of that energy in the future. LNG prices in Asia are tightly linked to crude oil prices via an indexing mechanism based on Japanese prices.

Concerns about pricing come at a crucial time for the local LNG sector, as gas delivered from huge investments in production in recent years begins to hit global markets. But analysts' consensus forecasts for Brent oil prices, which are more optimistic than the forward curve, suggest the impact on LNG export earnings might not be as great as the forward curve suggests, with 2017-18 revenue put at $51.6 billion.

The figures still represent a huge increase from the $16 billion of LNG export revenue in 2013-14 thanks to the start-up over the next few years of the $200 billion of projects currently under construction around the country, which will more than treble Australia's production capacity.

"If current economists are correct in their forecasts and all these projects come to market on the timetable that the key producers are giving us, we're still talking about a material increase in both volumes and values over coming years," said Rob Rennie, global head of foreign exchange and commodities strategy at Westpac Institutional Bank.

According to the modelling, LNG export value for Australia is now likely to treble over the next four years, if the Brent consensus estimates are correct, instead of quadrupling under the 2013-14 pricing scenario. But if the forward curve is correct, LNG export values would little more than double.

LNG prices in Japan, Australia's biggest market for gas exports, closely track the Japanese crude import price, with a lag of four to seven months. Crude oil prices have plummeted over recent months and are now trading near lows not seen since March 2009. The dive in prices accelerated in November and December, meaning the worst of the hit to LNG prices has yet to flow through.

Westpac calculates that the recent slump in prices to lows not seen for almost six years implies that LNG prices in Japan should be less than $US9 per million British thermal units (MMBTU) in May of this year, close to levels last seen in mid-2010 and down about 50 per cent from the highs of mid-2012.

"LNG prices have gone further and faster than I think pretty much anybody would have been out there forecasting," Mr Rennie said.

Regardless, the bank labels recent media reporting suggesting that Australia's new LNG projects may be at risk from the collapse in prices as "sensationalistic", noting that LNG prices would still be about 30 per cent above the average price seen over the last decade.

Crude oil prices are also expected to recover, while lower prices will also boost demand.

Using the consensus of forecasts for Brent crude oil quoted on Bloomberg, LNG prices in Japan will recover to about $US12 per MMBTU by July 2016 from a low of $US8.70 in May this year. But Westpac has a more optimistic view of crude oil, and is forecasting LNG prices in Japan will be above $US12.50 per MMTBU by June 2016, up from a low of $US10.20 this year.

Mr Rennie said that by the time the bulk of Australia's new LNG capacity came on stream, prices should be on the up.

The first of Australia's seven new LNG projects, BG's $US20.4 billion Queensland Curtis project in Gladstone, shipped its first cargo earlier this month. Origin Energy's $24.7 billion Australia Pacific LNG project in Queensland is due to start up about mid-year, while both Santos's $US18.5 billion GLNG venture in Queensland and Chevron's huge $US54 billion Gorgon venture in Western Australia are due to begin production in the December half.

They will be followed by Chevron's $US29 billion Wheatstone venture in WA, which is due to start up in 2016, Inpex's $US34 billion Ichthys venture in Darwin, and Shell's Prelude floating LNG project far off the Kimberley coast.

"We don't know the exact timing of GLNG, APLNG and Gorgon but we're assuming that at some point in the second half of this year we will start to see those projects being commissioned and exports beginning to leave," Mr Rennie said.

"That should be past that trough in terms of prices and we should be beginning – depending on how crude oil prices evolve – to see some signs of stabilisation and improvement."

But Westpac senior economist Justin Smirk said some federal and state budgets could still take a hit as they could assume higher prices for oil and LNG.

"There's probably a bit of a downgrade coming in terms of revenue estimates," Mr Smirk said, noting that the fall in oil prices is also hitting Australia's terms of trade, which hits national incomes seen through profits, wages and taxation revenues.

"Is this potentially likely to be another near-term hit for budgetary conditions? Yes, how much it's hard to say," Mr Smirk said. "The size of the magnitude of the fall in oil prices and the responsive fall in gas prices would have taken most forecasters by surprise."

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Re: Farm Futures
« Reply #21 on: January 27, 2015, 06:28:26 PM »
India eyes releasing cotton stocks in Feb amid global glut - source

By Meenakshi Sharma
23 Jan 2015

India may start releasing cotton from government reserves in the first week of February, a source with knowledge of the matter told Reuters, as warehouses in parts of the world's second-largest producer bulge with the fibre.

Traders are worried India may come out to sell its stockpiles, further pressuring prices just after top consumer China's decision to cut imports added to an oversupplied market.

ICE cotton fell to its lowest level in nearly 5-1/2 years on Thursday pressured by a strong U.S. dollar and declines in other commodities markets.

Spot cotton prices in India have fallen 10 percent to about 30,200 rupees ($491) per candy of 356 kg since the beginning of the crop season that started in October, hit by China's higher output and cuts in purchases. (caionline.in/spot_rates.asp)

State-owned Cotton Corp of India (CCI) has bought about 5 million bales (170 kg each) of cotton so far from the current crop and is expected to release the stockpiles in phases through electronic auctions.

It is likely to first use stocks from southern states, where CCI has fewer warehouses and storage space is tighter than in other parts of the country, traders said.

CCI is waiting to see if prices recover before opening any auction, said the source, who did not want to be named as he is not authorised to talk to media.

CCI's Chairman and Managing Director B.K. Mishra did not respond to phone calls or messages seeking comment.

A trader said CCI could be looking for falling domestic supplies to support or lift local prices.

Daily arrivals across India have dropped to 175,000-185,000 bales (of 170 kg each) a day, from 200,000-252,000 bales a day about a week ago.

"A drop in local supply should give some support to prices now," said Arun Dalal, a trader in the city of Ahmedabad in India's top cotton producing state of Gujarat.

India is expected to buy 8 million to 10 million bales in the 2014/15 crop season from farmers, compared with a record of 9 million bales in the 2008/09 season.

India's output could hit a record 40 million bales this season, according to the country's Cotton Advisory Board.

That threatens to add to the global glut that China helped to create by scaling back its stockpiling scheme, which had earlier soaked up much of the excess in international markets.

($1 = 61.5200 Indian rupees)

--------------------------------------------------------------------------------------------------------------------------------------------------

Slowdown in China, cotton glut may deal Indian farmers a hard knock

By Zia Haq and Gaurav Choudhury
12 Jan 2015

India is likely to face a cotton glut this year. The surplus, however, will be of little comfort to suicide-prone and highly indebted farmers, who stare at a sharp drop in earnings - prices are already down 14% compared with last year.

The crisis has to do with a slowdown in China, which is forecast to slash by half the amount of cotton it will import this year, most of it from India.
 
“Exports could see a remarkable fall. Although prices currently show some improvement on a month-on-month basis, average prices of cotton are already about 14% lower than a year ago,” said VN Saroja, CEO of Agriwatch, a commodities firm.
 
The United States department of agriculture (USDA), in a global report, said it expected up to 47% fall in Indian cotton exports.

The glut is expected despite a projected drop in India’s output due to a bad monsoon. A partial drought could result in a crop of about 40.2 million bales (of 170 kg each) in 2014-15, lower than the previous year’s 40.7 million bales, according to the Cotton Association of India. Even Gujarat, a major producer with better irrigation facilities, could see a dip in output.

Without sufficient exports, a domestic market with too much supply could push prices below profitable levels. Since cotton farmers mostly depend on loans to meet costs, lower profits could aggravate the crisis in suicide-prone cotton belts such as Maharashtra’s Vidarbha region.

Moreover, this year’s minimum support price is unlikely to cover export costs. So traders will look to offset it by paying farmers less.

Battling a slowdown in its textile sector, China is likely to slash imports by half this year, scaring major producers such as the US, Brazil and Uzbekistan. But these countries are less dependent on China than India, which exports heavily to the Communist neighbour since it started a programme to build a national cotton reserve.

To make it easier for traders to tap alternative markets, the government has relaxed rules by temporarily doing away with the need for exporters to register with the Directorate General of Foreign Trade.

A newer problem could be looming for growers. Indian lint - considered to be of high quality - is mostly handpicked. But, importers now prefer machine-harvested fibre due to changing standards. “As a result, India will struggle to maintain its share in shrinking Chinese imports,” the USDA said.

Though genetically modified BT cotton has helped India become the world’s second biggest cotton producer, suicide among debt-ridden cotton farmers is often seen as a hidden “agrarian crisis”.

The government could come under pressure if the situation worsens in the vulnerable cotton-growing areas. The agriculture ministry last month sent a team to probe the farm crisis in Maharashtra, where persistent dry conditions from this summer’s drought are said to have pushed up the number of suicides.

The western state recorded 204 farmer suicides in 2014, deaths that are directly attributable to “agrarian causes”, such as financial losses from farming or crop failures.


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Re: Farm Futures
« Reply #22 on: January 27, 2015, 06:36:27 PM »

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Re: Farm Futures
« Reply #23 on: January 27, 2015, 06:41:31 PM »
http://www.smh.com.au/business/mining-and-resources/fortescue-shares-dive-by-10-per-cent-as-iron-ore-price-plunges-to-fiveyear-low-20150127-12yvp5.html

Fortescue shares dive by 10 per cent as iron ore price plunges to five-year low - 27 Jan 2015



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Re: Farm Futures
« Reply #24 on: January 27, 2015, 06:47:49 PM »
Copper Falls, Near 5-Year Low as China’s Industrial Profits Slow

By Laura Clarke and Alex Davis
27 Jan 2015

Copper fell, approaching a five-year low, as data showed China’s industrial profits grew at the slowest pace on record.

Earnings in 2014 grew at 3.3 percent, the weakest in records going back to 2000, according to the National Bureau of Statistics in Beijing. The figure contracted for a third month in December, falling 8 percent. China accounts for around 40 percent of global copper demand.

“The copper supply and demand equation is completely out of whack,” Naeem Aslam, the chief market analyst at Dublin-based Avatrade Ltd., said in an e-mail. “When it comes to demand, the Chinese data keeps on printing dramatically bad readings. As long as we do not see the demand picking up, I am afraid the upside is very limited for the metal.”

Copper futures for March delivery on the Comex fell 1.1 percent to $2.515 a pound by 10:05 a.m. in London. The metal for delivery in three months on the LME slipped 0.3 percent to $5,565 a metric ton.

Copper is piling up in London Metal Exchange warehouses, highlighting an oversupply that’s deepening an almost two-year bear market. Inventories monitored by the bourse have risen for the past 11 days, reaching 238,225 tons, the highest level since April.


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Re: Farm Futures
« Reply #25 on: January 27, 2015, 06:57:31 PM »
India 2014/15 soymeal exports seen at 26-year low as Iran buys less

  • Japan switches to cheaper supply from China, Brazil
  • Indian soybean prices plunge on bleak soymeal exports
  • Tight soyoil supply forces India to raise palm oil imports

By Rajendra Jadhav
27 Jan 2015

MUMBAI - India's soymeal exports are set to hit a 26-year low in the year ending March as easing of sanctions against Iran allows the key buyer to opt for cheaper South American supplies, industry officials said.

Lower Indian sales could underpin Chicago soymeal futures , which fell almost 17 percent in 2014, while weak export demand could drag on domestic soybean prices. The oilseed is crushed to produce soyoil and the animal feed.

India's 2014/15 soymeal exports could hit 800,000 tonnes, lowest since 1988/89, Ruchi Soya Industries Ltd, the country's biggest soybean processor, told Reuters in an email.

Davish Jain, chairman of the Soybean Processors Association of India, also expects shipments to drop to around 800,000, from 2.8 million tonnes a year ago, due to higher prices.

Even after a 25 percent drop in Indian soybean futures since sowing began in June, soymeal from the country, according to Jain, costs 5-10 percent more than supplies from Argentina and Brazil.

As a result top buyers of Indian soymeal, such as Iran and Japan, are turning away.

Taking advantage of curbs on dollar trade with Tehran amid sanctions over its disputed nuclear programme, India had built a monopoly in soymeal trade with Iran and commanded higher prices.

India used to settle part of its oil debt in rupees that Iran then used to buy other goods from India.

But a deal between Iran and western powers in November 2013 that eased some of the trade sanctions broke India's hold on soymeal sales to Iran.

"Now since sanctions have eased, Iran is not ready to pay a premium over global prices," said Jain. "It has been buying soymeal from South American countries at lower prices."

India exported 140,400 tonnes of soymeal to Iran over April to December last year, versus record shipments of 1.23 million tonnes in 2013/14.

Japan is buying soymeal from China and Brazil, an official at Japan Feed Trade Association said.

India's exports to Japan were at 15,337 tonnes over April to December, versus a total 245,991 tonnes in 2013/14.

Weak demand and low oilseed prices have prompted farmers to hold back soybean supplies, forcing refiners to increase edible oil imports, said B.V. Mehta, executive director of the Solvent Extractors' Association of India.

Palm oil imports by India rose 5 percent to 836,447 tonnes in December from a month ago.

"Soybean crushing is not picking up as farmers are postponing sales. Refiners have to import cheaper palm oil to meet the demand," Mehta said.

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Re: Farm Futures
« Reply #26 on: January 28, 2015, 08:36:52 AM »
He called $50 oil, now he says it’s going lower

By Howard Gold
27 Jan 2015

Last November, when I was trying to figure out where oil prices were going, I spoke with Shawn Driscoll, manager of the T. Rowe Price New Era Fund, a mutual fund that focuses on natural resource stocks.

Brent crude was trading at $80 a barrel, and there was speculation that the Organization of Petroleum Exporting Countries would halt its slide by cutting production at its upcoming meeting, scheduled for Thanksgiving Day.

Driscoll was having none of it. Oil, gold, and other commodities, he told me, were in a secular bear market that could last another decade. He said oil would bottom out around $50 over the next 10 years.

Actually it took less than 10 weeks, as Brent traded under $48 a barrel on Monday. I usually don’t revisit columns or sources that quickly, but events have moved so fast I decided to catch up with Driscoll again.

Right off the bat, he acknowledged being surprised by the suddenness of oil’s price drop.

“We expected Saudi Arabia to cut, frankly,” he told me in a phone interview. “Once Saudi Arabia didn’t cut production, it became clear to us there was a problem.”

Both supply and demand were heading in opposite directions more drastically than he expected.

“Underlying demand got a lot weaker, Libya came back, Iraqi volumes have been pretty good,” he explained.

We spoke last Friday, the day after the pro-U.S. Yemeni government had fallen and King Abdullah of Saudi Arabia died and was succeeded by his 79-year-old half-brother Salman bin Abdulaziz al-Saud.

Yet despite these new uncertainties in the world’s most volatile, energy-rich region, Driscoll’s view remains unchanged: look out below.

He explained that $40 a barrel is the top of the industry’s operating cost curve — the price at which individual wells break even after they’ve been drilled and are producing and below which operators shut in existing wells.

So, does he think Brent will fall below that $40 magic number? “I do,” he told me.

Why? Whatever political or competitive motives may be behind Saudi Arabia’s refusal to cut production, the world is awash in oil.

“There’s still an overwhelming glut of supply in global markets,” Stephen Schork, president of Schork Group in Villanova, Pa., told Bloomberg News.

No wonder Wall Street firms have been falling all over each other to predict ever-lower crude prices: Goldman Sachs is looking for $40 Brent and Bank of America Merrill Lynch says crude futures could fall to $31 a barrel in the first quarter, lower than they were during the financial crisis.

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http://www.forbes.com/sites/jessecolombo/2014/06/09/9-reasons-why-oil-prices-may-be-headed-for-a-bust/

9 reasons why oil prices may be headed for a bust - 9 Jun 2014



WTI Light Crude Oil - 26 Jan 2015


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Re: Farm Futures
« Reply #27 on: January 28, 2015, 08:39:10 AM »


SECULAR BEAR ??

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Re: Farm Futures
« Reply #28 on: January 28, 2015, 09:15:29 AM »

SECULAR BEAR ??

Crude Oil - Double bottom support  @ US$33.40, the last line of defense.

http://www.kitco.com/ind/Vermeulen/2014-12-01-Crude-Oil-Slides-to-Multi-Year-Lows-and-What-to-Expect.html

Crude Oil slides to multi year lows and what to expect - 1 Dec 2014


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Re: Farm Futures
« Reply #29 on: January 28, 2015, 09:32:10 AM »


WHAT IS T PROBABILITY OF V SHAPE RECOVERY LIKE 2009 ??

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Re: Farm Futures
« Reply #30 on: January 28, 2015, 10:18:36 AM »


DO U BELIEVE THAT T OIL GLUT IS SO BAD THAT MANY TRADERS R ENGAGING OIL TANKERS TO STORE OIL IN T DEEP SEA ??

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Re: Farm Futures
« Reply #31 on: January 28, 2015, 11:12:57 AM »

WHAT IS T PROBABILITY OF V SHAPE RECOVERY LIKE 2009 ??

Expect the longterm horizontal support at US$40 to be broken b4 a V-shaped technical rebound to US$75 forming a higher low, prior to the formation of a lower low at US$20.



http://www.vox.com/2014/12/16/7401705/oil-prices-falling

Why oil prices keep falling — and throwing the world into turmoil - 23 Jan 2015


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Re: Farm Futures
« Reply #32 on: January 28, 2015, 11:25:55 AM »

DO U BELIEVE THAT T OIL GLUT IS SO BAD THAT MANY TRADERS R ENGAGING OIL TANKERS TO STORE OIL IN T DEEP SEA ??

http://www.investopedia.com/terms/c/contango.asp

Contango  — A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation where the future spot price is below the current price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity. This may be due to people's desire to pay a premium to have the commodity in the future rather than paying the costs of storage and carry costs of buying the commodity today.

http://www.vox.com/2014/12/25/7443569/contango-oil-storage
Why speculators are stashing vast quantities of crude oil on tanker ships - 25 Dec 2014

http://www.bloomberg.com/news/articles/2015-01-05/oil-glut-seen-setting-sail-as-contango-widens-chart-of-the-day
Oil Glut Seen Setting Sail as Contango Widens: Chart of the Day - 5 Jan 2015




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Re: Farm Futures
« Reply #33 on: January 28, 2015, 11:32:20 AM »


LOOKS LIKE SECULAR BEAR WLD DRAG ON A LONG TIME.

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Re: Farm Futures
« Reply #34 on: January 28, 2015, 12:28:23 PM »
https://www.tradingview.com/v/AFiS9841/
$EURUSD - EURUSD weekly - Jan. 28 at 10:30 AM


Expect the longterm horizontal support at US$40 to be broken b4 a V-shaped technical rebound to US$75 forming a higher low, prior to the formation of a lower low at US$20.



http://www.vox.com/2014/12/16/7401705/oil-prices-falling

Why oil prices keep falling — and throwing the world into turmoil - 23 Jan 2015



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Re: Farm Futures
« Reply #35 on: January 28, 2015, 12:58:03 PM »
Macquarie Equity Research (MER) downgrades DBS

28 Jan 2015

Yesterday, Macquarie Equity Research (MER) published a research report that downgraded DBS from “Outperform” to “Neutral”. The downgrade comes on the back of am MER analysis of the impact of falling commodity prices on Asia’s multinational bank. MER believes the commodity finance exposure of DBS accounts for 9% of total loans and that S$1.8bn of commodity-related losses are possible based on MER’s stress test…

Quantifying the commodity finance exposure – DBS has commodity finance exposure (including off balance sheet and derivatives) of S$28bn, which is about 0.9x of tangible book value, based on MER estimates.
 
Stressing the commodity finance exposure – Based on MER’s assumptions of (i) 10% defaults in the commodity finance related exposure and 60% specific impairments and (ii) S$112m revenue losses on these defaults, MER estimates S$1.8bn total pre-tax losses in their stress test. This compares to 34% of pre-tax profit estimate for 2015.
 
Lower probability of stress test losses occurring – In MER’s valuation, they discounted for a 50% probability that these losses will occur. A large proportion of DBS’s Commodity Finance exposure relates to trade finance, which is of relatively low risk in MER’s view. At the moment MER is more worried about revenue headwinds (in trade finance) from falling commodity prices for DBS.
 
Earnings and target price revision
Yesterday, MER changed their earnings per share estimates marginally. DBS’ target price is now reduced to S$21.00 from S$22.00 by discounting for potential commodity finance related losses.

Action and Recommendation
MER downgraded their recommendation on DBS to Neutral and cut their Target Price to S$21.00.
 
MER still believes DBS is in a good strategic position to take market share from the struggling multinational banks. However, after the relative share price outperformance over the past six months, MER thinks it is time to take a break.
 
DBS is a consensus buy (85% buy and no sell rating on Bloomberg) and MER believes the market is too optimistic on the impact of rising US rates for DBS.
 
Revenue growth headwinds from falling commodity prices, renewed margin pressure in trade finance, a more uncertain outlook for financial market-related income and moderating loan demand will make it challenging for DBS to meet the 10% YoY top-line growth expectation by the market in 2015.

The commodity finance exposure of DBS is more of a risk for revenue growth outlook for DBS and MER is less worried about immediate asset quality deterioration at this stage.

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Re: Farm Futures
« Reply #36 on: January 28, 2015, 01:03:45 PM »
Commodity financing exposure in Asia-Pacific hits banks hard

ANZ and StanChart among the hardest hit as slump in crude oil and copper prices impacts Asia banks with loans backed by commodities

By Chim Sau-wai
25 Jan 2015

Sinking commodity prices have cast a shadow over asset quality in banks as at least US$23 billion of loan commitments in eight banks were backed by commodity plays in the Asia-Pacific region, data showed.

Commodity prices have taken a beating, with crude values dropping to a 51/2 year low due to a glut in supply and copper diving more than 20 per cent over the same period, as a slowing economy in top commodity consumer China affected prices of iron and base metals among others.

Banks with the biggest exposure to commodities financing are ANZ, Bank of Tokyo-Mitsubishi UFJ, Bank of China, Standard Chartered, Sumitomo Mitsui Banking Corp, HSBC, State Bank of India and DBS, according to the data from Thomson Reuters. The commodity plays are up from the US$21 billion seen in 2013.

Among the eight banks, ANZ had the biggest exposure of US$3.38 billion in loans to commodity plays. Bank of China's was US$2.8 billion, DBS had US$2.77 billion while Standard Chartered had US$2.1 billion in exposure last year.

Standard Chartered is a glaring example, with analysts growing increasingly concerned about the asset quality of the lender's loan exposure to commodity-related firms. Credit Suisse said in a recent report that Standard Chartered's US$61 billion global commodities exposure may require additional provisioning.

"In an adverse scenario, Standard Chartered would need US$2.6 billion of provisions and US$24 billion of risk-weighted asset increases as the riskiest of the commodities portfolio is re-assessed, resulting in an additional capital demand of US$4.4 billion in financial year 2015, just to maintain the base-case capital ratio," said Carla Antunes-Silva, one of the analysts who wrote the report.

According to Credit Suisse, among Standard Chartered's US$61 billion commodity exposure, US$32.6 billion is direct exposure to commodity traders with a further US$28.1 billion of exposure to energy, agriculture, metals and mining firms. This is in comparison to the bank's total assets of US$690 billion and shareholder funds of US$48.3 billion in the first half of 2014.

"We believe the last two years of de-rating have been driven largely by weaker revenue, and that the asset quality deteriorating leg is now setting in," said Antunes-Silva.

Standard Chartered stunned investors in August last year with a 20 per cent tumble in first half pre-tax profits. Ratings agency Standard & Poor's cut its credit rating on the bank for the first time in 20 years in response and said the resulting A-rating had a negative outlook - a signal that another downgrade could come.

Chief executive Peter Sands promised a better performance in the second half of the year.

Analysts expect full year earnings per share - due to be revealed in early March - to fall 17.3 per cent versus 2013, according to Bloomberg consensus estimates. Some 25 of the 38 analysts who cover the bank rate it a hold or a sell, with 13 ranking it as a buy.

Standard Chartered was exposed to a commodities financing fraud uncovered in Qingdao last year. It sued the owner of the metals trading firm at the centre of the case.

The bank had US$175 million in impairments from China commodities in the first half of last year, and its total loan impairments stood at US$846 million, which was 16 per cent higher than the same period a year ago. Falling commodity prices have already triggered debt repayment woes for the banking industry.

China Nickel Resources, a speciality steel producer in China, defaulted on HK$580 million worth of bonds in December. It failed to pay bank loan interest charges this month and faces demands from Citic Bank and Shanghai Commercial Bank to settle HK$320 million in loans, according to company filings to the Hong Kong stock exchange.

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Re: Farm Futures
« Reply #37 on: January 28, 2015, 01:38:43 PM »

Luckily local banks no kena.

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Re: Farm Futures
« Reply #38 on: January 28, 2015, 02:36:54 PM »
Chart of the Day: Are Singapore banks dangerously exposed to the fallout from cascading oil prices?

12 Dec 2014

The banks could be affected in an industry shakeout.

Challenging times are here for oil and gas, after having done well in recent years on strong global E&P spending.

However, the outlook on the sector is dimming, with oil prices plummeting below a sustainable investment threshold of USD80/bbl.

According to a report by Maybank Kim Eng, as oil prices may stay low in the medium term, some oil companies are considering spending cuts. Order cancellations have also been making the news.

Maybank KE reveals that none of the banks under its coverage discloses its loan exposure to oil & gas. UOB’s exposure to this sector is not significant enough to warrant separate disclosure. Such loans are classified as “others”, which amounted to SGD9.1b or 4.7% of its loans as of end-September.

Here’s more from Maybank KE:

  • Based on broad definitions, we gather that DBS’s exposure is less than 10% of its loans. Assuming OCBC’s oil & gas loans are also lumped under others, its maximum exposure should be 5.6%.

    MAS data fail to throw up further light. Its “others” loan category was SGD33.1b or 5.5% of system loans as of Oct 2014. This is inadequate as a yardstick for system exposure to oil & gas, in our view, as some oil-&-gas-related loans could have been subsumed under sectors such as transport, storage & communication (3.1% of total as of end-October) and possibly building & construction (16.7%).

-------------------------------------------------------------------------------------------------------------------------------------------------

http://tradehaven.net/market/safest-banks-and-strongest-banks-what-happened-to-stanchart-can-happen-anywhere/
Safest banks and strongest banks what happened to stanchart can happen anywhere - 5 Nov 2014


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Re: Farm Futures
« Reply #39 on: January 28, 2015, 02:43:27 PM »


So t time bomb lurking in t banking sector is t exposusure to coomodities !!!!

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Re: Farm Futures
« Reply #40 on: January 28, 2015, 02:43:35 PM »
http://www.businessinsider.com/the-oil-crash-could-trigger-billions-in-uk-bank-losses-2015-1?IR=T&
The Oil Crash Could Trigger Billions In UK Bank Losses - 26 Jan 2015

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Re: Farm Futures
« Reply #41 on: January 28, 2015, 02:48:30 PM »

So t time bomb lurking in t banking sector is t exposusure to coomodities !!!!

To b precise, its t imminent time bomb.

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Re: Farm Futures
« Reply #42 on: January 28, 2015, 03:07:20 PM »
Luckily local banks no kena.

Local bank, Maybank kena 1MDB loan exposure at RM5.5bil

http://www.thestar.com.my/Business/Investing/2015/01/07/Maybank-remains-Add-despite-exposure-to-1MDB/?style=biz

MayBank - Bearish Gartley Pattern



MayBank (weekly) - Double Top


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Re: Farm Futures
« Reply #43 on: January 28, 2015, 03:11:30 PM »
Local bank, Maybank kena 1MDB loan exposure at RM5.5bil

http://www.thestar.com.my/Business/Investing/2015/01/07/Maybank-remains-Add-despite-exposure-to-1MDB/?style=biz

MayBank - Bearish Gartley Pattern



MayBank (weekly) - Double Top



5.5b, how come ?

Tot due isnt it 2b, shared by mayb n rhb ?

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Re: Farm Futures
« Reply #44 on: January 28, 2015, 03:40:42 PM »
5.5b, how come ?

Tot due isnt it 2b, shared by mayb n rhb ?

Maybank's loan exposure at RM5.5bil is negative news, its share price is likely to retest the last low at RM8.25 and hit lower low to RM7.90, after the bearish gartley pattern is done.

Local bank, CIMB is worse then Maybank. :(

CIMB - Head and Shoulder pattern; should a bearish breakout materialise, target price at RM 4.12 


 

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Re: Farm Futures
« Reply #45 on: January 28, 2015, 03:55:40 PM »
Hounded by Evil Dollar & Collapsed Commodity Prices, Corporate America Clamors for Total Currency War

By Wolf Richter
28 Jan 2015

Consumers are feeling practically euphoric. The Conference Board index jumped almost ten points to 102.9, the highest since August 2007, just before the whole construct came apart. Not that reality has suddenly improved that much. But hey, we’re born survivors. Sooner or later, we adjust to lower real incomes and reduced standards of living and start feeling good again.

This exuberance came just as our largest corporate citizens were hit by a tornado of problems that sank the stock market for the day: currency volatility, crashing commodities prices, disappearing XP computers, farmers switching from corn to wheat…. It was all there.

Freeport-McMoRan, one of the largest copper producers in the world, reported an 11% drop in revenues for the fourth quarter and a salty $2.85 billion loss, which included $3.4 billion in losses for its oil and gas business that it got into via two impeccably-timed acquisitions in 2013. The depressed price of copper isn’t helping. It cut its 2015 budget by $2 billion and might cut it some more. Shares dropped 6%.

Long-suffering Peabody Energy, the largest coal producer in the US, reported a net loss for the quarter of $566 million on revenues that declined 3.3%. It projected a much wider loss than expected for the first quarter and cut its dividends to nearly nothing. It’s all about preserving cash and hanging on in a desperately tough pricing environment for coal producers. Shares dropped 6.5% to $6.24, down from $72 during the glory days in early 2011.

The plunge in commodity prices is spreading far and wide. Caterpillar, the world’s largest maker of construction and mining equipment, saw net profits in the fourth quarter plunge nearly 25%, on a slight decline in revenue. It slashed its earnings-per-share outlook for 2015 to $4.60. Wall Street had been set on $6.67. The lower prices for copper, coal, and iron ore have been hitting orders for mining equipment. Now the plunge in oil prices! And to top it off, the strong dollar would eat into its overseas revenues and profits! CAT is “without a doubt, facing a tough year in 2015,” explained CEO Doug Oberhelman.

DuPont, one of the largest chemical companies in the world, saw revenues in Q4 drop 4.8% from a year earlier. For 2015, it projected that revenues would be flat, instead of up. Since it’s doing 60% of its business outside the US, it blamed the strong dollar that would cut its full-year profit by $0.60 a share.

But there was another problem: Growers in North and South America have shifted to soybeans, and away from corn, whose price has collapsed. But corn is DuPont’s most important source of seed profits. So it projected that agriculture income would decline “by a high-single digits percent” in 2015. And despite another $300 million in cost cuts, earnings would drop to $4 to $4.20 a share for 2015, instead of $4.46, as analysts had expected.

To prop up its stock price, DuPont would spin off its performance chemicals unit, which would pay a $4 billion special dividend back to DuPont. For how well this sort of spinoff worked in the energy sector, and just how quickly these new shareholders lost their shirts, read…  Money Dries Up for Oil & Gas, Layoffs Spread, Write-Offs Start

DuPont will use that special dividend to buy back its own shares. It already bought back $2 billion worth in 2014, out of a $5 billion repurchase plan. A “source close to DuPont” told Reuters that the company hasn’t decided yet whether the $4 billion will be in addition to or in lieu of the remaining $3 billion in buybacks. Financial engineering, instead of chemical engineering.

Procter & Gamble, the world’s largest household products maker, reported a 4.4% drop in revenues. Particularly hit was its beauty and personal care business. Net profit plunged 31%. It projected that revenues would decline another 3% to 4% this year. About two-thirds of its revenues originate outside the US, and business is crummy overseas. It too blamed the strong dollar, which would eat up 5% of its sales and 12% of its profits this year. Its shares dropped 3.4%

Then there’s Microsoft, the world’s largest software maker. Revenue rose 8% from a year earlier. But stripping out the Nokia purchase, they fell 1%. Net income for the quarter fell 10.7%. To crank up business, it had cut prices in its Xbox and Windows businesses. The temporary boost it had obtained when businesses were dumping their XP-based computers for Windows 7 computers, well, that party was over.

Microsoft offered other plans that didn’t sit well: its new operating system Windows 10 would be a free upgrade from Windows 7 or 8. Windows tablet makers would also get it for free. And it’s trying to switch enterprises to its cloud version of Office which, like everything that happens in the cloud, costs companies less up front but more down the line. So upfront revenues would take a hit. Sales are struggling in China and in Japan. And it too blamed the strong dollar, which would knock 4% out of its revenues.

After so much good news, its shares had their “most active 1st minute since at least 2007,” reported Eric Scott Hunsader (chart) of Nanex. By the end of the day, shares had dropped 9.25%. It’s been a great first year on the job for CEO Satya Nadella. Until today.

These aren’t small companies that are exposed to whims and vagaries of minor events. They’re the largest elephants in their sectors. Suddenly they’re seeing trouble. It was that kind of day. So everyone was praying for a blockbuster report by Apple. A bad surprise would cause such a swoon in the markets on Wednesday that a member of the FOMC would have to be trotted out and evoke QE-4 on TV, to get things to rally again.

But suddenly Yahoo made positive headlines. Not with revenues, which dropped 1%, or profits which plunged by over half, or its guidance that it slashed across the board, which would normally have crushed its shares.

But with its financial engineering. It would spin off its 384 million Alibaba shares, valued at $40 billion, into a separate company to dodge a $16-billion tax liability. These shares will be distributed to Yahoo shareholders. “SpinCo” – and Yahoo’s Alibaba shares – would thus become a separate publicly traded company. Go figure. But its shares jumped 6.7% after hours.

Then Apple rode to the rescue. Revenues in the quarter jumped 30% to $74.6 billion. Sales of iPhones made up 69% of that. They were hot in China too. Gross margins rose to 39.9%. Net income soared 37% to $18 billion. Mac sales rose, iPad sales plunged. But no one cared. The iPhone is all that matters. The results crushed expectations. Shares, which had dropped 3.5% during the day, jumped 5.7% after hours.

But Apple also complained about “growing foreign exchange headwinds from the continued strengthening of the U.S. dollar” and “unprecedented movements in currencies.” The biggest culprits during the quarter were the yen and the ruble, said CFO Luca Maestri, followed by the euro, the Australian dollar, and the Canadian dollar. On a constant currency basis, revenue growth would have been four percentage points higher. She went on:

"On a profitability standpoint, our hedging program partially mitigated the impact from the volatility in currencies. As we look forward, and we look into particularly the March quarter, the foreign exchange headwinds will be stronger in Q2 than they were in Q1 for two main reasons. The first one is the fact that the US dollar has continued to appreciate against foreign currencies during the last few weeks. And the other one is the fact that our existing hedges expire."

Apple’s glorious numbers allowed everyone to relax: Wednesday morning would not turn into a predetermined stock-market fiasco. Consumers around the world were buying lots of iPhones, and that’s what mattered. But our corporate heroes, with one eye firmly planted on the Fed, are whining about collapsed commodity prices and/or the suddenly evil dollar. Their message is clear: regardless of what it would do to consumers and how it would clean out their wallets, they want the Fed to jump with both feet back into total currency war.

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Re: Farm Futures
« Reply #46 on: January 28, 2015, 04:09:07 PM »
5.5b, how come ?

Tot due isnt it 2b, shared by mayb n rhb ?

mayb heavy BASHING

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Re: Farm Futures
« Reply #47 on: January 28, 2015, 05:28:53 PM »

Isnt 1mdb got letter of support fr gov ??

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Re: Farm Futures
« Reply #48 on: January 28, 2015, 08:44:41 PM »
Oil price plunge: Winners and losers

By Grace Leong
28 Jan 2015

Losers: Oil, gas analysts warn of industry shake-out

But on the flip side, the collapse in oil prices could signal trouble for rigbuilders and marine and offshore players who are already facing cancelled contracts and the prospect of layoffs. In the second of a two-part series, The Straits Times looks at the impact of oil prices on companies and workers here.

Listed energy firms here are seeing project cancellations or delays put pressure on revenue as the plunging oil price starts to bite.

Prices began sliding six months ago but the pace has quickened in recent weeks. The pain in the corporate sector is starting to show, with analysts warning that cheaper oil could lead to an industry- wide shake-out.

Shipbuilder ASL Marine disclosed last month that a client had backed out of taking delivery of two offshore support vessels it is building. Cosco Corp (Singapore) halted production of an Octabuoy offshore production platform last year, which will lead to a one-off charge of about $90 million.

It also issued a profit warning ahead of releasing its financial results next month, alerting investors that it expects earnings to have taken a significant hit.

The shares of offshore support services companies, which make up the bulk of the oil and gas sector here, fell by an average of 13.4 per cent from Jan 1 to Dec 16 last year. The 32 companies had a combined market capitalisation of $8 billion.

All of this could well be just the tip of the iceberg, said analysts, as firms in the sector will have to contend with further cuts in capital spending across the world.

"It's still early. What we're seeing now is the order flow from previous years," said Mr Scott Darling, head of oil and gas research at JPMorgan.

"The key focus should be on new contracts, which are likely to slow down as companies everywhere look to cut back on costs, while banks are less keen on backing oil-related projects financially."

Credit Suisse equity research analyst Gerald Wong expects total capital expenditure for oil and gas companies in the Asia-Pacific this year to fall 14 per cent from 2014.

The oil and gas majors are already pulling back spending in certain areas such as exploration, noted Mr Chalermchai Mahagitsiri, chief executive of subsea and offshore drilling services firm Mermaid Maritime Public Company.

"However, our 'safe haven' positioning should enable us to be the last man standing," he told The Straits Times, referring to Mermaid's focus on shallow-water oil production, which is "fairly insulated".

But an international client terminated a drilling rig contract with Mermaid last month as it had been unable to obtain permits from the Indonesian authorities for the rig to continue operating.

Companies servicing firms operating in deep water are likely to be hit harder as their exploration campaigns have higher break- even rates and so are more likely to be shelved, said Ms Low Pei Han, an investment analyst at OCBC Investment Research.

But some companies are going full steam ahead with their plans.

Exploration and production firm KrisEnergy intends to double production this year, with a capital expenditure budget set between US$200 million (S$269 million) and US$250 million.

Loyz Energy "remains focused on adding producing assets in Asia- Pacific to (its) portfolio", said managing director Adrian Lee, adding that there may be opportunities to build longer-term growth "through acquisitions or other collaborations" too.

Still, local firms could be challenged by other issues such as the oversupply of new offshore equipment as industry players cut back on capital spending, said Mr Wong.

A total of 22 drillships, for example, have been scheduled for delivery this year - the highest number in history. Drillships are vessels used to drill deepwater wells. A record 72 jack-up rigs - mobile platforms used in shallow water drilling - are also due for delivery, even though only six have been contracted for work.

But, said Mr Wong, one bright spot amid the gloomy outlook could be the scheduled delivery of Sembcorp Marine's first drillship.

"If they do this well, it will be a significant breakthrough because the move will boost the company's track record in the drillship market, which is typically dominated by Korean yards, and open up new opportunities for Singapore yards."

Losers: Smaller firms' profit margins hit hard

The plunging oil price has hit sales and squeezed margins at smaller companies in the energy sector, company bosses say.

Mr Lim Yu Jey, the general manager of Lintech Engineering, said orders for its oil rig components have plummeted 15 per cent in the past six months.

Mr Lim fears a repeat of the situation during the financial crisis when his firm, which makes and repairs equipment for rigs, saw earnings fall by 50 per cent when the price of oil nosedived from US$147 per barrel to US$32 per barrel.

Mr John Pan, the managing director of Safety Systems Engineering, has the same concerns, saying that customers in the oil and gas and marine industries have been cancelling existing contracts and delaying new orders.

As a result, "competition has intensified for the remaining projects in the pipeline and profits have declined between 5 and 15 per cent", he noted.

The challenges come amid a tight labour market, where rising business costs and falling sales are squeezing profit margins.

Mr Lim said the curbs on foreign workers have sent staff costs soaring by 35 per cent over the past two years, to the point where salaries now comprise 40 per cent of total business expenses.

Losers: Companies could be forced to slash staff bonuses

The plunge in the oil price could force some firms in the local oil and gas sector to slash staff bonuses by as much as 50 per cent, according to recruitment experts.

Revenue of companies in the industry is being hit as projects get delayed or cancelled and exploration activity comes under review.

The downturn is particularly severe for firms in what is called the upstream energy sector - those involved in oil exploration and production and offshore construction, as well as oil majors like ExxonMobil and Royal Dutch Shell.

"In previous years, with oil priced above US$100 (a barrel), it was a heated market with high competition for staff, and many firms went all out with aggressive retention strategies in the form of lucrative bonuses," noted Mr Kevin Gibson, Asia-Pacific managing director at EarthStream, a recruiting firm specialising in the energy sector.

A chemical engineer with eight years of experience, for example, would typically earn an annual salary of $120,000, coupled with a bonus of about three months. In some cases, that could go up to six months.

"But that is less likely to happen today, given the current oil price situation," said Mr Gibson.

Smaller companies and those with few long-term contracts signed before the oil price collapse are expected to give out "very low" bonuses, if any at all, he added.

An ExxonMobil Singapore spokesman said that the company provides "a competitive total remuneration package that is not dependent upon prevailing oil prices".

Companies in the non-technical downstream energy sector - including financial institutions such as investment banks and brokerages - are likely to be similarly hit, said Mr Tom Reid, country manager of Spencer Ogden Singapore, a global energy recruitment company.

Such firms facilitate trading and transactions between energy producers and consumers.

"They are facing operational issues as well as headcount freezes at the moment, and this indicates that bonuses could be down to zero, or targeted at retaining only the top performers," said Mr Reid.

It is a similar story for trading firms dealing in hard commodities like coal and iron ore, with some of them retrenching support staff this year, noted Mr Reid.

On the flip side, companies such as manufacturers, airlines and energy providers are expected to benefit from cheaper oil, the price of which has fallen more than 55 per cent since June.

"But bonus increments will probably not happen in the short term," said Mr Reid, noting that the higher margins may instead go towards maximising profitability.

He added: "Rather than a decline in the size of bonuses and compensation, we expect to see further redundancies (across oil companies as a whole) as a way of cutting costs."

British oil major BP, for one, is expected to cut hundreds of jobs in its global energy business by the end of this year in a US$1 billion (S$1.3 billion) restructuring programme.

BP has around 700 employees here, at an office in HarbourFront and a marine lubricants blending plant in Jurong. It declined to comment on whether its operations in Singapore would be affected.

Mr Mike Wilkshire, business director of Hays' oil and gas staffing division, expects a "drop off in new hires" until prices start to recover.

Contractors are likely to bear the immediate brunt with pay cuts, as employers look to lower costs in projects.

However, Mr Wilkshire said he was optimistic that bonuses will remain "a key part of companies' remuneration packages", especially in difficult market conditions, as they are a way of recognising success without increasing baseline costs. "The main question is where they should set targets.

"Each company should make their own revenue forecasts and predictions on how the year will pan out, and give out bonuses accordingly from there."

Winner: Airlines, shipping, transport firms to gain

Local airlines, shipping, transport and logistics companies are expecting a significant earnings boost this year on the back of lower oil prices.

The improved prospects have prompted analysts to issue "buy" calls on a number of listed companies, including Singapore Airlines (SIA), Neptune Orient Lines (NOL), ComfortDelGro, SMRT and logistics firm CWT.

TAILWINDS FOR AIRLINES AND SHIPPING

DBS Group Research maintained a "buy" call on SIA, citing substantial cost savings from lower fuel prices. But it cautioned that this may be dampened by a stronger US dollar, while noting that SIA has hedged over 60 per cent of its fuel requirements until March this year at US$116 a barrel.

Still, if jet fuel prices remain well below US$95 a barrel, most of the cost savings will be passed on to consumers in the form of cheaper fares, DBS said.

Maybank Kim Eng went "overweight" on the airlines sector in Asia-Pacific. It said many carriers are expected to raise their estimates for passenger numbers as cheaper oil has lowered the break-even load factor - the number of seats an airline has to sell to cover operating expenses.

Many previously unfeasible routes are expected to become strong money makers, so carriers will push to maximise aircraft use to churn more profit, it added.

ST Engineering finds itself in a sweet spot as well. The improved outlook for earnings at US and Asian airlines - key customers for its aerospace business - should help sustain demand and margins in the near to medium term, analysts said.

The engineering group will also benefit from a stronger greenback with its healthy order book, they added.

Lower bunker fuel prices could swing shipping giant NOL into profitability this year, while customers could enjoy lower fuel surcharges and hedges in long-term contracts, said DBS, which upgraded its call on NOL to a "buy" from a "hold".

Bunker fuel prices have fallen to below US$250 a tonne as of Jan 16, from about US$570 a tonne four months ago.

NOL's container liner business consumes about three million tonnes of bunker fuel a year, so this implies significant savings.

LITTLE IMPACT FOR LOGISTICS FIRMS

Analysts say the logistics segment is expected to show steady growth in core earnings, but cheaper fuel is unlikely to have much near-term impact due to hedging. The main costs for SingPost, which contracts with third parties like airlines to ship items, are labour and related expenses, said a spokesman.

Haulage rates are typically fixed in the contract period so customers are cushioned from the effects of rising costs and fluctuations.But if fuel prices continue to drop, costs for airlines, ground transport and utilities should fall in tandem, she added.

Logistics firm DHL said changes in fuel costs could affect each of its divisions differently, but the "overall impact on its group results is minor".

Still, it said that in the long term, lower oil prices could "act as an impetus for trade, therefore resulting in higher volumes for the logistics industry".

Pacific Integrated Logistics said operational costs have not changed by much, but any change will be passed on to customers directly. "This is because of a mechanism built into our contracts with the customers, based on certain formulas," said executive director Choong Cheng Leong.

A spokesman for logistics firm Vibrant Group said it has not reduced fuel surcharges for air or container shipments yet.

"For trucking, there has been some revision in the price of diesel, from $2 a litre to $1.80 a litre," he said. "Changes in pump prices here started only in the past one or two months. If costs continue to go down, we will likely decrease pricing for our trucking according to formula."

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http://www.bloomberg.com/news/articles/2015-01-28/singapore-joins-global-wave-of-monetary-easing-after-prices-fall

Singapore Dollar Is Weakest Since 2010

By Sharon Chen
January 28, 2015

Singapore unexpectedly eased monetary policy, sending the currency to the weakest since 2010 against the U.S. dollar as the country joined global central banks in shoring up growth amid dwindling inflation.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said in an unscheduled statement Wednesday it will seek a slower pace of appreciation against a basket of currencies. It cut the inflation forecast for 2015, predicting prices may fall as much as 0.5 percent.

The move was the first emergency policy change since one following the Sept. 11, 2001 attacks for the MAS -- which only has two scheduled policy announcements a year -- reflecting how the plunge in oil has changed the outlook in recent months. Singapore becomes at least the ninth nation to ease policy this month, as officials from Europe to Canada and India contend with escalating disinflation and faltering global growth.

“They’re essentially trying to stay ahead” by moving before the scheduled April policy review, said Song Seng Wun, an economist at CIMB Research in Singapore. “We’ve already seen so many central banks cut. For Singapore to do such an unscheduled move, it has to be against the backdrop of enormous uncertainty.”

ECB Action

The European Central Bank announced quantitative easing plans this month while Canada, Denmark and India cut interest rates. More may come -- the Bank of Japan chief said the country may need to get creative in any further monetary stimulus and Thai policy makers face growing pressure to lower borrowing costs.

Countries seeking cheaper currencies are running up against a limited number of major economies where policy makers are at ease with appreciation. The exceptions include the U.S. and Switzerland, which abandoned its exchange-rate cap this month. In Australia, where an acceleration in core inflation sent the local currency higher Wednesday, the central bank has signaled it would prefer a weaker exchange rate.

Singapore’s dollar fell 0.9 percent to S$1.3512 per U.S. dollar as of 2:11 p.m. local time, the weakest since September 2010. The currency has fallen almost 6 percent against the U.S. dollar in the past three months, the third-biggest loser among 11 most-traded Asian currencies tracked by Bloomberg.

Significant Shift

The MAS will probably weaken the Singapore dollar “quite solidly” and the currency may drop to about S$1.4 against the U.S. dollar by the end of March, said Tsutomu Soma, department manager of the fixed-income business unit at Rakuten Securities.

While the exchange rate has weakened aginst the U.S. dollar, it has gained against the ringgit, euro and yen in the last three months, the central bank said.

“Since the last Monetary Policy Statement in October, developments in the global and domestic inflation environment have led to a significant shift in Singapore’s CPI inflation outlook for 2015,” the MAS said. “The global economy continues to grow at an uneven pace” and falling oil prices have curbed inflation, it said.

Singapore’s consumer prices fell for a second month in December for the first time since 2009, according to data compiled by Bloomberg. The central bank cut its 2015 inflation forecast to a range of negative 0.5 percent to 0.5 percent, from the October prediction of 0.5-to-1.5 percent.

Follows India

Today’s decision follows an unscheduled rate cut by India this month and was Singapore’s first unplanned monetary policy change since one in the aftermath of the Sept. 11, 2001 terrorist attacks in the U.S. The central bank last eased policy in October 2011.

Singapore guides the local dollar against a basket of currencies within an undisclosed band and adjusts the pace of appreciation or depreciation by changing the slope, width and center of the band.

The central bank will reduce the slope of the policy band for the island’s dollar, with no change to its width and the level at which it is centered, it said. Singapore will keep a “modest and gradual appreciation” in its currency policy band, the authority said.

“Singapore is experiencing a profound disinflation dynamic that in the absence of recovering domestic or external demand could morph into more problematic deflation,” said Glenn Maguire, a Singapore-based economist at Australia & New Zealand Banking Group Ltd. “We continue to assess Singapore as a growth underperformer in 2015.”

Policy Cycle

The MAS is sticking to its main policy cycle of scheduled statements in April and October, even as it is always prepared to conduct policy reviews in between, it said in a separate statement.

“I don’t expect a huge boost to growth from this move,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “Whether it arrests disinflation, I think a bit, but the bigger drivers are still what happens in the global commodity markets and especially oil.”

The Singapore economy remains on track to grow 2 percent to 4 percent in 2015, the central bank said. Gross domestic product expanded an annualized 1.6 percent in the three months to Dec. 31 from the previous quarter, less than analysts estimated, after its manufacturing industry weakened with slowing growth in China and an uneven global recovery.