Commentary by Ann Woolner
Aug. 22 (Bloomberg) -- Say it's your job to quash protest in your country's capital city, even as the whole world is watching. You don't want to look repressive, but you don't want malcontents embarrassing your nation, either.
You've got plenty of work to do, so why not publicly invite any troublemakers out there to turn themselves in?
That way, you don't have to run about the country looking for them. Nor would you have to roll tanks over them if they show up en masse, say, at the central square.
Ah, but how to get them to come?
In the run-up to the Olympics, Chinese officials invited people wanting to protest to come into government offices and fill out forms identifying themselves and listing their complaints against the government, the slogans they intend to use and any other people wishing to join them in dissent.
China lured them by saying it would happily allow peaceful demonstrations during the Olympic Games for those who register ahead of time and confine their protests to certain parks.
True, those sites are far away from Olympic venues, but the plan was sufficiently accommodating of free speech to win approval of the International Olympic Committee.
Another example of the democratizing effect of the Olympics? Not so much.
Of 77 people who signed up, none got permits.
Worse, at least seven people who registered were detained, interrogated, charged, arrested or threatened with a year in a labor camp if they didn't keep quiet, according to human rights groups.
Applying Five Times
Two women in their late 70s applied five times to protest the 2001 demolition of their homes near Tiananmen Square. Like hundreds of thousands of other Chinese, their neighborhoods were razed to make way for modernization or the Olympics. Promises of new housing proved empty as the displaced were shoved into dilapidated flats, often far away from their neighborhoods.
Complaints like those of the two former neighbors, Wu Dianyuan and Wang Xiuying, are common. Perhaps because of that, instead of permits, they were given one-year sentences to ``re- education through labor'' for ``disturbing the public order,'' according to New York-based Human Rights in China and to an account in yesterday's New York Times.
To avoid serving their sentences in a labor camp, they would have to stay away from certain places and, presumably, keep their mouths shut.
That's one way to keep the designated protest zones empty.
Requests Withdrawn
As for the would-be protesters, 74 applicants withdrew their requests after police forwarded them to government agencies, China's official news service, Xianhua, reported this week.
The number sounds suspiciously high. And it would be lovely if the government is working to resolve all those people's problems as it says it is.
But it also sounds like a centuries-old practice at work.
In imperial days, it was called ``capital appeals,'' because people from the countryside unable to get a wrong righted locally would go to the capital. There they hoped to get the emperor's ear, according to Jonathan Ocko, a scholar on imperial China and chairman of North Carolina State University's history department.
``The popular notion was that if injustice was done, you could go to Beijing'' for relief, Ocko says.
There, they could bang on a special drum and announce they had a grievance. They might drop to their knees at the imperial palace gates, or throw themselves in front of an imperial procession and hand the emperor a letter.
No Satisfaction
Most grievances were referred back down the hierarchy to officials who had already offered no satisfaction, Ocko says. But it was a way for the people to let off steam and for authorities to take the pulse of the public.
As time wore on, this system of ``letters and visits,'' as it is called, became so institutionalized that most government agencies on all levels established an office to handle petitions.
In modern times, officials often send the petitioner on an endless treadmill from one office to the next, eventually referring the cases back to local officials. Sometimes, those local officials were the very ones who wronged the petitioner in the first place, perhaps the very police officers whose beatings prompted the petitioner to go to Beijing.
Nonetheless, millions of petitions are filed each year, with rural Chinese streaming into Beijing in hopes they can find someone, somewhere who will do right by them.
They live in squalid settlements for years while pursuing this usually futile hope, according to human rights groups.
Of 2,000 petitioners surveyed in a 2004 study, only three had their cases resolved, according to Human Rights Watch, citing a study by Chinese professor Yu Jianrong of the Chinese Academy of Social Sciences.
Subjected to Beatings
Worse, half the petitioners Yu questioned reported having been beaten by government agents.
Local officials who want to prevent people from complaining to the central government often use force to make sure they never leave their homes, or use ``retrievers'' to kidnap them from Beijing, beat them and force them to return home, Human Rights Watch found.
``Over the years I've been in China, I've never once seen someone win justice through petitioning,'' Susan Jakes, longtime Time correspondent in Beijing, wrote in the magazine's China Blog last year.
``Instead, I've seen it give people unreasonable hope, turn them into vagabonds, get them beaten up and make them homeless,'' she wrote.
Ah, but what an effective way to keep people from protesting in public.
(Ann Woolner is a Bloomberg news columnist. The opinions expressed are her own.)
To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net.
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Friday, August 22, 2008
Eskom Shuts Generator at Koeberg Nuclear Plant for Maintenance
By Garth Theunissen
Aug. 22 (Bloomberg) -- Eskom Holdings Ltd., South Africa's state-owned power utility, will shut down a generator at its Koeberg nuclear-power plant to conduct maintenance work over the next three days.
The Unit-1 generator at the facility near Cape Town will cease operations at 10 a.m. today to allow technicians to repair valves on steam lines that drive its turbines, Tony Stott, Eskom's spokesman for nuclear operations, said in a telephone interview from Johannesburg.
No power cuts are expected as a result of the shutdown and the generator is expected to resume full operations late on Aug. 24, Stott said.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Aug. 22 (Bloomberg) -- Eskom Holdings Ltd., South Africa's state-owned power utility, will shut down a generator at its Koeberg nuclear-power plant to conduct maintenance work over the next three days.
The Unit-1 generator at the facility near Cape Town will cease operations at 10 a.m. today to allow technicians to repair valves on steam lines that drive its turbines, Tony Stott, Eskom's spokesman for nuclear operations, said in a telephone interview from Johannesburg.
No power cuts are expected as a result of the shutdown and the generator is expected to resume full operations late on Aug. 24, Stott said.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Total to Start Unit at Port Arthur Oil Refinery Later Today
By Nidaa Bakhsh
Aug. 22 (Bloomberg) -- Total SA, Europe's third-largest oil company, will start a unit at its Port Arthur refinery in Texas later today following an ``economic'' shutdown.
The unit will restart around 8 a.m. local time today, resulting in flaring, or burning of chemicals into the air, according to a filing with the Texas Commission on Environmental Quality. The emissions event is expected to last until 2 p.m. tomorrow.
Total may flare up to 8,500 pounds of carbon monoxide from three different stacks, the Paris-based company said in the filing. The Port Arthur plant can process 240,000 barrels of oil a day, according to the U.S. Energy department.
Flares are safety devices that prevent pressure from building up within refinery processing units.
To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net
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Aug. 22 (Bloomberg) -- Total SA, Europe's third-largest oil company, will start a unit at its Port Arthur refinery in Texas later today following an ``economic'' shutdown.
The unit will restart around 8 a.m. local time today, resulting in flaring, or burning of chemicals into the air, according to a filing with the Texas Commission on Environmental Quality. The emissions event is expected to last until 2 p.m. tomorrow.
Total may flare up to 8,500 pounds of carbon monoxide from three different stacks, the Paris-based company said in the filing. The Port Arthur plant can process 240,000 barrels of oil a day, according to the U.S. Energy department.
Flares are safety devices that prevent pressure from building up within refinery processing units.
To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net
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Oil Little Changed on Stable Dollar, Caspian Pipeline Restart
By Grant Smith
Aug. 22 (Bloomberg) -- Crude oil traded little changed, after gaining nearly 5 percent yesterday, as the U.S. dollar stabilized and Turkey restored flows through a Caspian Sea pipeline closed by fire.
The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, resumed normal flows today after a fire halted exports earlier this month, officials said. Oil is still poised for its first weekly gain in two weeks and its biggest increase since the week ended June 6.
``Recently you've seen a tick-for-tick for move in the oil price and the U.S. dollar,'' Hakan Kocayusufpasaoglu, director of commodity derivatives at Credit Suisse Group in London, said in a Bloomberg Television interview. ``Now that the conflict is pretty much over'' in Georgia, ``you would assume that it would have less of an impact.''
Crude oil for October delivery was at $120.89 a barrel, 29 cents lower at 9:59 a.m. London time on the New York Mercantile Exchange. The contract is set for a weekly gain of 6.3 percent. Yesterday, the contract surged $5.62, or 4.9 percent, to settle at $121.18 a barrel, the biggest increase since June 6.
All Russian military units in Georgia, belonging to peace- keeping contingents in the zone of the South Ossetian conflict, will complete their withdrawal tomorrow, Defense Minister Anatoly Serdyukov said.
Poland signed an agreement on Aug. 20 with the U.S. to host an American anti-missile base in exchange for aid to bolster the country's air defenses. Russia has warned the move will lead to a new arms race in Europe and is reconsidering its ties with the North Atlantic Treaty Organization.
The dollar rose 0.2 percent to $1.4846 per euro by 9:56 a.m. in London, from $1.4899 yesterday. The U.S. currency climbed 0.7 percent to 109.17 yen from 108.43.
Brent crude oil for October settlement fell as much as 71 cents, or 0.6 percent, to $119.45 a barrel on London's ICE Futures Europe exchange. It was at $119.81 a barrel at 9:58 a.m. London time. The contract rose yesterday by $5.80, or 5.1 percent.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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Aug. 22 (Bloomberg) -- Crude oil traded little changed, after gaining nearly 5 percent yesterday, as the U.S. dollar stabilized and Turkey restored flows through a Caspian Sea pipeline closed by fire.
The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, resumed normal flows today after a fire halted exports earlier this month, officials said. Oil is still poised for its first weekly gain in two weeks and its biggest increase since the week ended June 6.
``Recently you've seen a tick-for-tick for move in the oil price and the U.S. dollar,'' Hakan Kocayusufpasaoglu, director of commodity derivatives at Credit Suisse Group in London, said in a Bloomberg Television interview. ``Now that the conflict is pretty much over'' in Georgia, ``you would assume that it would have less of an impact.''
Crude oil for October delivery was at $120.89 a barrel, 29 cents lower at 9:59 a.m. London time on the New York Mercantile Exchange. The contract is set for a weekly gain of 6.3 percent. Yesterday, the contract surged $5.62, or 4.9 percent, to settle at $121.18 a barrel, the biggest increase since June 6.
All Russian military units in Georgia, belonging to peace- keeping contingents in the zone of the South Ossetian conflict, will complete their withdrawal tomorrow, Defense Minister Anatoly Serdyukov said.
Poland signed an agreement on Aug. 20 with the U.S. to host an American anti-missile base in exchange for aid to bolster the country's air defenses. Russia has warned the move will lead to a new arms race in Europe and is reconsidering its ties with the North Atlantic Treaty Organization.
The dollar rose 0.2 percent to $1.4846 per euro by 9:56 a.m. in London, from $1.4899 yesterday. The U.S. currency climbed 0.7 percent to 109.17 yen from 108.43.
Brent crude oil for October settlement fell as much as 71 cents, or 0.6 percent, to $119.45 a barrel on London's ICE Futures Europe exchange. It was at $119.81 a barrel at 9:58 a.m. London time. The contract rose yesterday by $5.80, or 5.1 percent.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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Dragon Oil First-Half Net Rises 34% on Record Crude
By Maren Naess Olsen
Aug. 22 (Bloomberg) -- Dragon Oil Plc, the Dubai-based petroleum producer with operations in Turkmenistan, said first- half profit gained 34 percent as crude prices rose to a record.
Net income advanced to $167 million, or 32.3 cents a share, from $124 million, or 24.3 cents, a year earlier, Dragon said today in a statement distributed by the Regulatory News Service. That missed analyst estimates of $182 million at Goodbody Stockbrokers and beat estimates of $165 million at Renaissance Capital.
Oil producers have benefited from rising prices for crude, which climbed above $140 a barrel for the first time in June after almost doubling from a year earlier.
``Dragon Oil has performed strongly both operationally and financially,'' Executive Chairman Hussain M. Sultan said in the statement. ``Dragon Oil will achieve both its drilling and its production targets.''
Dragon rose as much as 25.5 pence, or 8.2 percent, to 337.5 pence in London trading, which would be its highest close since July 18, and traded 6.7 percent up at 333 pence at 8:43 a.m. local time. It has a market value of 1.70 billion pounds ($3.2 billion).
The company, which aims to produce 40,000 barrels a day by the end of the year, said it achieved a peak production rate of 43,227 barrels a day in June.
Sales rose 63 percent to $373.5 million, while average gross production advanced 36 percent to 38,482 barrels of oil a day, according to the statement. Dragon booked a one-time expense of $91 million on a hedge, which capped its oil sale price at $102 a barrel.
Turkmen Production
The company is developing the Cheleken Contract Area in the Caspian Sea off Turkmenistan, a Central Asian nation that's gradually opening up to foreign investment. Dragon signed a production-sharing contract with the Turkmen government in 2000.
At the end of December, Dragon bought stakes in several fields in Yemen from Virgin Resources Ltd. to expand its production base.
Emirates National Oil Co., wholly owned by the government of Dubai, has a 52 percent stake in Dragon Oil.
To contact the reporter on this story: Maren Naess Olsen in London molsen10@bloomberg.net
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Aug. 22 (Bloomberg) -- Dragon Oil Plc, the Dubai-based petroleum producer with operations in Turkmenistan, said first- half profit gained 34 percent as crude prices rose to a record.
Net income advanced to $167 million, or 32.3 cents a share, from $124 million, or 24.3 cents, a year earlier, Dragon said today in a statement distributed by the Regulatory News Service. That missed analyst estimates of $182 million at Goodbody Stockbrokers and beat estimates of $165 million at Renaissance Capital.
Oil producers have benefited from rising prices for crude, which climbed above $140 a barrel for the first time in June after almost doubling from a year earlier.
``Dragon Oil has performed strongly both operationally and financially,'' Executive Chairman Hussain M. Sultan said in the statement. ``Dragon Oil will achieve both its drilling and its production targets.''
Dragon rose as much as 25.5 pence, or 8.2 percent, to 337.5 pence in London trading, which would be its highest close since July 18, and traded 6.7 percent up at 333 pence at 8:43 a.m. local time. It has a market value of 1.70 billion pounds ($3.2 billion).
The company, which aims to produce 40,000 barrels a day by the end of the year, said it achieved a peak production rate of 43,227 barrels a day in June.
Sales rose 63 percent to $373.5 million, while average gross production advanced 36 percent to 38,482 barrels of oil a day, according to the statement. Dragon booked a one-time expense of $91 million on a hedge, which capped its oil sale price at $102 a barrel.
Turkmen Production
The company is developing the Cheleken Contract Area in the Caspian Sea off Turkmenistan, a Central Asian nation that's gradually opening up to foreign investment. Dragon signed a production-sharing contract with the Turkmen government in 2000.
At the end of December, Dragon bought stakes in several fields in Yemen from Virgin Resources Ltd. to expand its production base.
Emirates National Oil Co., wholly owned by the government of Dubai, has a 52 percent stake in Dragon Oil.
To contact the reporter on this story: Maren Naess Olsen in London molsen10@bloomberg.net
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Crude Oil Futures May Rise as Dollar Weakens, Survey Shows
By Mark Shenk
Aug. 22 (Bloomberg) -- Crude oil may rise next week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week 63 percent expected prices to increase.
Energy and metals futures climbed yesterday as the U.S. currency fell the most against the euro in 11 weeks. A falling dollar prompts investors to by hard assets as an inflation hedge. Russia reacted angrily after Poland agreed to host a U.S. anti- missile base two weeks after Russia invaded Georgia.
``The dollar is correcting, and there are tensions in various parts of the world,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``We fell more than $30 from last month's record so it's normal for prices to bounce back.''
U.S. gasoline supplies declined 6.2 million barrels to 196.6 million barrels last week, a U.S. Energy Department report on Aug. 20 showed. Inventories have dropped 9.4 percent in the past four weeks as refineries cut operating rates.
Crude oil for October delivery fell $7.24, or 6.4 percent, to $121.18 a barrel so far this week on the New York Mercantile Exchange. Futures have dropped 18 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:
RISE NEUTRAL FALL
16 7 6
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Aug. 22 (Bloomberg) -- Crude oil may rise next week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week 63 percent expected prices to increase.
Energy and metals futures climbed yesterday as the U.S. currency fell the most against the euro in 11 weeks. A falling dollar prompts investors to by hard assets as an inflation hedge. Russia reacted angrily after Poland agreed to host a U.S. anti- missile base two weeks after Russia invaded Georgia.
``The dollar is correcting, and there are tensions in various parts of the world,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``We fell more than $30 from last month's record so it's normal for prices to bounce back.''
U.S. gasoline supplies declined 6.2 million barrels to 196.6 million barrels last week, a U.S. Energy Department report on Aug. 20 showed. Inventories have dropped 9.4 percent in the past four weeks as refineries cut operating rates.
Crude oil for October delivery fell $7.24, or 6.4 percent, to $121.18 a barrel so far this week on the New York Mercantile Exchange. Futures have dropped 18 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:
RISE NEUTRAL FALL
16 7 6
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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New South Wales Premier to Recall Parliament for Power Reforms
By Angela Macdonald-Smith
Aug. 22 (Bloomberg) -- New South Wales Premier Morris Iemma said he will recall the parliament of the Australian state next week to vote on laws allowing the divestment of electricity generating and retailing assets.
The decision to recall parliament on Aug. 28 and Aug. 29 follows yesterday's report from the auditor-general, which said the asset-sale plan shouldn't be further delayed, Iemma said today in an e-mailed statement.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Aug. 22 (Bloomberg) -- New South Wales Premier Morris Iemma said he will recall the parliament of the Australian state next week to vote on laws allowing the divestment of electricity generating and retailing assets.
The decision to recall parliament on Aug. 28 and Aug. 29 follows yesterday's report from the auditor-general, which said the asset-sale plan shouldn't be further delayed, Iemma said today in an e-mailed statement.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Nordic Commodity, ECM Post Top Power Hedge-Fund Gains
By Lars Paulsson
Aug. 22 (Bloomberg) -- Energy Capital Management and Nordic Commodity Funds AB's hedge funds are outperforming the competition in European energy markets, where power prices fell as much as 17 percent last month from a record.
Energy Capital's MMT fund returned 19.2 percent through July, according to a letter to investors, the best result in a Bloomberg survey of 11 funds in Europe's electricity, coal, natural-gas and emissions markets. Alfakraft AB's Alfa Energy Fund posted the biggest drop, at 17.9 percent, according to its Web site.
The plunge in power prices and related commodities since early July ended a four-year surge in electricity costs that enabled funds to provide better returns than stocks and bonds. Coal costs, which affect European power markets, more than doubled in the first half, before sliding 13 percent in July.
``It was difficult to predict the market, with big swings in coal prices and weather patterns,'' said Fredrik Bodecker, managing director of Nordic Commodity Funds in Stockholm, whose Nordic Power Fund rose 16.6 percent through the first seven months of 2008.
German power for delivery in 2009, the benchmark contract, had its biggest price fluctuations in two years in July and was down 6.5 percent yesterday from its record. On July 23, 10-day volatility was as high as 42.8 percent, according to data compiled by Bloomberg. Volatility is a gauge of price swings during a specific period, expressed as an annual percentage.
Nordic Market
In the Nordic market, the most actively traded quarterly power contract slid 8.1 percent on July 2, its biggest one-day decline. The price reached a record a day earlier.
Alfakraft, Nordic Commodity Funds and Norden Absolute Energy Management ASA all target annual returns of 15 percent to 25 percent, while Shepherd Energy aims for 15 percent to 20 percent, according to the funds.
The MMT Energy Fund ``is capable of 30 percent plus returns in a good year,'' according to Energy Capital Management's Web site. Chief Executive Officer Marcel Melis declined to comment.
``It's possible if you've had a lucky streak, but funds with returns of 15 to 20 percent this year will be few and far between,'' said Gary Vasey, general manager for Europe at Utilipoint International Inc., an energy market consultant. Vasey is also founder of New York-based Energy Hedge Fund Center LLC.
Power Funds Beat Others
Gardner Finance AG's PowerMacroIndex, which pools the performance of eight electricity hedge funds, was up 6.55 percent through June, compared with 21.2 percent for all of 2007. Data for the year through July wasn't available.
Power funds are beating the average hedge fund. The typical global hedge fund dropped 3.5 percent this year through July, according to Chicago-based Hedge Fund Research Inc. Last year they gained 10.2 percent. An investment tracking the Standard & Poor's 500 Index declined 13 percent this year through Aug. 20.
Power and utility funds are part of the $70 billion managed by commodity hedge funds, according to Cole Partners Asset Management LLC in Chicago, an investor in the industry.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.
Nordic Commodity's Bodecker plans to increase the Nordic Power Fund at least 10-fold to 200 million to 300 million euros ($446 million) by the end of next year. He may start a second fund for German power, gas, coal and emissions this year, targeting 25 million euros to 30 million euros.
Increased Risks
The Nordic Power Fund posted its biggest gains of 10.38 percent in February and 6.28 percent in June.
``We increased the risks when we started to make money,'' Bodecker said.
Climbing coal costs caused by rising demand in Asia and production bottlenecks in Australia were among the main drivers of European power prices this spring, fund managers said.
``The market has generally been very choppy and difficult,'' Peter Brewer, chief investment officer at PCI Investors Ltd. in London, said in an interview. The company's Cumulus Weather Fund lost 8.8 percent in the six months through June, according to a letter to investors. Brewer declined to comment on the performance.
Coal prices in northwest Europe have tumbled 12 percent since a July 1 record and are up about 80 percent this year.
``They've added a new dimension to the Nordic power market that traders need to take into account,'' said Bengt Lindblad, managing director at Alfakraft in Stockholm. ``Coal and oil prices will continue to be volatile.''
Oil Volatility
Oil prices influence power because of their link to natural gas, the fuel used to generate 20 percent of the European Union's electricity. Crude oil futures on the New York Mercantile Exchange have declined about 17 percent since trading at a record $147.27 a barrel on July 11.
``We expect continued high volatility in the power markets due to the instability of oil,'' Energy Capital Management said in an investor letter detailing July's return of 5.9 percent, its 12th consecutive monthly gain.
To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net
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Aug. 22 (Bloomberg) -- Energy Capital Management and Nordic Commodity Funds AB's hedge funds are outperforming the competition in European energy markets, where power prices fell as much as 17 percent last month from a record.
Energy Capital's MMT fund returned 19.2 percent through July, according to a letter to investors, the best result in a Bloomberg survey of 11 funds in Europe's electricity, coal, natural-gas and emissions markets. Alfakraft AB's Alfa Energy Fund posted the biggest drop, at 17.9 percent, according to its Web site.
The plunge in power prices and related commodities since early July ended a four-year surge in electricity costs that enabled funds to provide better returns than stocks and bonds. Coal costs, which affect European power markets, more than doubled in the first half, before sliding 13 percent in July.
``It was difficult to predict the market, with big swings in coal prices and weather patterns,'' said Fredrik Bodecker, managing director of Nordic Commodity Funds in Stockholm, whose Nordic Power Fund rose 16.6 percent through the first seven months of 2008.
German power for delivery in 2009, the benchmark contract, had its biggest price fluctuations in two years in July and was down 6.5 percent yesterday from its record. On July 23, 10-day volatility was as high as 42.8 percent, according to data compiled by Bloomberg. Volatility is a gauge of price swings during a specific period, expressed as an annual percentage.
Nordic Market
In the Nordic market, the most actively traded quarterly power contract slid 8.1 percent on July 2, its biggest one-day decline. The price reached a record a day earlier.
Alfakraft, Nordic Commodity Funds and Norden Absolute Energy Management ASA all target annual returns of 15 percent to 25 percent, while Shepherd Energy aims for 15 percent to 20 percent, according to the funds.
The MMT Energy Fund ``is capable of 30 percent plus returns in a good year,'' according to Energy Capital Management's Web site. Chief Executive Officer Marcel Melis declined to comment.
``It's possible if you've had a lucky streak, but funds with returns of 15 to 20 percent this year will be few and far between,'' said Gary Vasey, general manager for Europe at Utilipoint International Inc., an energy market consultant. Vasey is also founder of New York-based Energy Hedge Fund Center LLC.
Power Funds Beat Others
Gardner Finance AG's PowerMacroIndex, which pools the performance of eight electricity hedge funds, was up 6.55 percent through June, compared with 21.2 percent for all of 2007. Data for the year through July wasn't available.
Power funds are beating the average hedge fund. The typical global hedge fund dropped 3.5 percent this year through July, according to Chicago-based Hedge Fund Research Inc. Last year they gained 10.2 percent. An investment tracking the Standard & Poor's 500 Index declined 13 percent this year through Aug. 20.
Power and utility funds are part of the $70 billion managed by commodity hedge funds, according to Cole Partners Asset Management LLC in Chicago, an investor in the industry.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.
Nordic Commodity's Bodecker plans to increase the Nordic Power Fund at least 10-fold to 200 million to 300 million euros ($446 million) by the end of next year. He may start a second fund for German power, gas, coal and emissions this year, targeting 25 million euros to 30 million euros.
Increased Risks
The Nordic Power Fund posted its biggest gains of 10.38 percent in February and 6.28 percent in June.
``We increased the risks when we started to make money,'' Bodecker said.
Climbing coal costs caused by rising demand in Asia and production bottlenecks in Australia were among the main drivers of European power prices this spring, fund managers said.
``The market has generally been very choppy and difficult,'' Peter Brewer, chief investment officer at PCI Investors Ltd. in London, said in an interview. The company's Cumulus Weather Fund lost 8.8 percent in the six months through June, according to a letter to investors. Brewer declined to comment on the performance.
Coal prices in northwest Europe have tumbled 12 percent since a July 1 record and are up about 80 percent this year.
``They've added a new dimension to the Nordic power market that traders need to take into account,'' said Bengt Lindblad, managing director at Alfakraft in Stockholm. ``Coal and oil prices will continue to be volatile.''
Oil Volatility
Oil prices influence power because of their link to natural gas, the fuel used to generate 20 percent of the European Union's electricity. Crude oil futures on the New York Mercantile Exchange have declined about 17 percent since trading at a record $147.27 a barrel on July 11.
``We expect continued high volatility in the power markets due to the instability of oil,'' Energy Capital Management said in an investor letter detailing July's return of 5.9 percent, its 12th consecutive monthly gain.
Fund Name Net Return Through July
MMT Energy Fund 19.18%
Nordic Power Fund 16.6%
Plenum Power Fund 13.36%
Shepherd Energy Fund 6.34%
Norden Absolute Energy Fund 5.93%
Electris Energy Fund 1.76% THROUGH JUNE
Interkraft Energy Fund 2.24%
Valartis European Energy Fund 0.66%
Markedskraft Elexir 0.04%
Cumulus Weather Fund -8.8% THROUGH JUNE
Alfa Energy Fund -17.9%
To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net
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Caltex Australia Plant Work to Limit Output in 2009
By Angela Macdonald-Smith
Aug. 22 (Bloomberg) -- Caltex Australia Ltd., the nation's biggest oil refiner, said ``major'' work at a plant accounting for almost half its capacity will limit 2009 output, after unplanned shutdowns cut production and profit in the first half.
Maintenance at the Lytton plant near Brisbane will prevent output of transport fuels reaching a target of 1 billion liters a month until 2010, Managing Director Des King said today. First-half profit excluding the effect of oil prices on the value of stockpiles fell 33 percent, beating the slump of as much as 40 percent forecast in June.
Unplanned closures at Caltex's two refineries contributed to a 13 percent drop in first-half output of gasoline, diesel and jet fuel and pared average operating rates. Caltex expects to complete a A$320 million ($281 million) diesel project at Lytton by the end of March, boosting capacity for the fuel by 40 percent and helping it toward its monthly production target.
``At least the maintenance at Lytton is planned, so they can store and refine and build inventories so you won't have the impact of having to import at short notice,'' said Stuart Baker, an energy analyst at Morgan Stanley in Melbourne. ``It shouldn't be a big impact, but it does delay the impact of bringing that new hydro-treater on'' line to expand production of cleaner fuel.
Caltex Australia, half-owned by Chevron Corp., gained 20 cents, or 1.7 percent, to A$11.95 in Sydney trading, beating a 1.2 percent advance in the Australian stock exchange's benchmark index.
Diesel Jumps
The maintenance at Lytton is work that occurs every four to five years, King said in a Web cast on first-half earnings, reported today in a statement to the Australian stock exchange. It will last ``several weeks'' and will reduce full-year output by ``much less than 5 percent,'' he said later in an interview.
``Production could well be a little bit lower next year overall,'' King said.
First-half production of transport fuels fell to 4.7 billion liters and full-year output may be below an earlier forecast of 10.4 billion to 10.6 billion liters, depending on the profitability of converting crude-oil into gasoline, King said.
``Should gasoline margins remain weak, we may emphasize gasoline imports at the expense of gasoline production,'' he said. ``We anticipate robust refiner margins overall, with diesel and jet fuel likely to remain strong, while we expect continued weakness in gasoline.''
Gas Shutdown
Caltex's diesel sales jumped 13 percent in the half, outpacing market growth of 8.3 percent, driven by demand from mining companies and the shutdown of an Apache Corp. natural gas plant in Western Australia which prompted buyers to seek alternative fuels. Australian diesel sales overtook gasoline sales for the first time in May.
Net income dropped 4 percent to A$354 million in the six months ended June 30, from A$368 million, a year earlier because of the shutdowns and a gain in the Australian dollar, Caltex said in the statement.
Operating profit excluding the effect of changes in oil prices on the value of stockpiles fell to A$196 million from A$294 million. In June the company forecast a drop in net income of as much as 18 percent and in operating profit of as much as 40 percent.
``The result was probably better than we had expected,'' Morgan Stanley's Baker said. ``There were strong contributions from downstream businesses, while there had been headwinds in the first half in the unexpected outages and some of those should abate in the second half.''
Shell, Exxon
Marketing activities accounted for more than three-quarters of operating profit, which would have been as much as A$260 million were it not for the unplanned shutdowns, King said.
The company wants to expand its retail outlets and win market share from rivals including the local units of Royal Dutch Shell Plc and Exxon Mobil Corp., he said.
While refining margins in the first half slid to $10.40 a barrel from $10.74, the gain in the Australian dollar cut margins in local currency terms by 16 percent.
Sales gained 34 percent to A$12.1 billion. Net debt rose to A$645 million at June 30, from A$582 million at Dec. 31. Caltex declared an interim dividend of 36 cents a share.
Caltex's refineries have a combined capacity of more than 35 million liters a day, according to its Web site. The Kurnell plant in Sydney's southeast is the largest in New South Wales state, based on daily capacity of more than 20 million liters. Lytton, in Queensland, can process about 17 million liters a day.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Aug. 22 (Bloomberg) -- Caltex Australia Ltd., the nation's biggest oil refiner, said ``major'' work at a plant accounting for almost half its capacity will limit 2009 output, after unplanned shutdowns cut production and profit in the first half.
Maintenance at the Lytton plant near Brisbane will prevent output of transport fuels reaching a target of 1 billion liters a month until 2010, Managing Director Des King said today. First-half profit excluding the effect of oil prices on the value of stockpiles fell 33 percent, beating the slump of as much as 40 percent forecast in June.
Unplanned closures at Caltex's two refineries contributed to a 13 percent drop in first-half output of gasoline, diesel and jet fuel and pared average operating rates. Caltex expects to complete a A$320 million ($281 million) diesel project at Lytton by the end of March, boosting capacity for the fuel by 40 percent and helping it toward its monthly production target.
``At least the maintenance at Lytton is planned, so they can store and refine and build inventories so you won't have the impact of having to import at short notice,'' said Stuart Baker, an energy analyst at Morgan Stanley in Melbourne. ``It shouldn't be a big impact, but it does delay the impact of bringing that new hydro-treater on'' line to expand production of cleaner fuel.
Caltex Australia, half-owned by Chevron Corp., gained 20 cents, or 1.7 percent, to A$11.95 in Sydney trading, beating a 1.2 percent advance in the Australian stock exchange's benchmark index.
Diesel Jumps
The maintenance at Lytton is work that occurs every four to five years, King said in a Web cast on first-half earnings, reported today in a statement to the Australian stock exchange. It will last ``several weeks'' and will reduce full-year output by ``much less than 5 percent,'' he said later in an interview.
``Production could well be a little bit lower next year overall,'' King said.
First-half production of transport fuels fell to 4.7 billion liters and full-year output may be below an earlier forecast of 10.4 billion to 10.6 billion liters, depending on the profitability of converting crude-oil into gasoline, King said.
``Should gasoline margins remain weak, we may emphasize gasoline imports at the expense of gasoline production,'' he said. ``We anticipate robust refiner margins overall, with diesel and jet fuel likely to remain strong, while we expect continued weakness in gasoline.''
Gas Shutdown
Caltex's diesel sales jumped 13 percent in the half, outpacing market growth of 8.3 percent, driven by demand from mining companies and the shutdown of an Apache Corp. natural gas plant in Western Australia which prompted buyers to seek alternative fuels. Australian diesel sales overtook gasoline sales for the first time in May.
Net income dropped 4 percent to A$354 million in the six months ended June 30, from A$368 million, a year earlier because of the shutdowns and a gain in the Australian dollar, Caltex said in the statement.
Operating profit excluding the effect of changes in oil prices on the value of stockpiles fell to A$196 million from A$294 million. In June the company forecast a drop in net income of as much as 18 percent and in operating profit of as much as 40 percent.
``The result was probably better than we had expected,'' Morgan Stanley's Baker said. ``There were strong contributions from downstream businesses, while there had been headwinds in the first half in the unexpected outages and some of those should abate in the second half.''
Shell, Exxon
Marketing activities accounted for more than three-quarters of operating profit, which would have been as much as A$260 million were it not for the unplanned shutdowns, King said.
The company wants to expand its retail outlets and win market share from rivals including the local units of Royal Dutch Shell Plc and Exxon Mobil Corp., he said.
While refining margins in the first half slid to $10.40 a barrel from $10.74, the gain in the Australian dollar cut margins in local currency terms by 16 percent.
Sales gained 34 percent to A$12.1 billion. Net debt rose to A$645 million at June 30, from A$582 million at Dec. 31. Caltex declared an interim dividend of 36 cents a share.
Caltex's refineries have a combined capacity of more than 35 million liters a day, according to its Web site. The Kurnell plant in Sydney's southeast is the largest in New South Wales state, based on daily capacity of more than 20 million liters. Lytton, in Queensland, can process about 17 million liters a day.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Asian Currencies: Korean Won, Philippine Peso Decline This Week
By Lilian Karunungan and Judy Chen
Aug. 22 (Bloomberg) -- South Korea's won slumped to a four- year low on speculation government intervention won't halt the currency's slide. The Philippine peso fell this week after the government lowered its economic growth forecast.
The won fell as much as 0.8 percent to 1,063 against the dollar, the weakest since December 2004, as refiners bought the U.S. currency to import oil and overseas investors sold local stocks. The won rallied as much as 0.6 percent earlier today after the central bank bought the local currency, according to Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group.
``The government's action is not strong enough to stop the won's slide,'' said Lee Yoon Jin, a currency dealer at state-run Korea Development Bank in Seoul. ``There have been a lot of purchases of the dollar from the local energy companies.''
The won slid 0.7 percent to 1,062.5 per dollar as of 3 p.m. in Seoul, having earlier climbed as high as 1,048, according to Seoul Money Brokerage Services Ltd. It's dropped 4.7 percent this month, the biggest decline among Asia's 10 most-active currencies excluding the yen. The peso fell 0.4 percent to 45.64 per dollar in Manila, according to Tullett Prebon Plc, declining 0.7 percent this week.
Korea's government continues to ``closely'' monitor the currency for ``drastic'' fluctuations, Vice Finance Minister Kim Dong Soo said on Aug. 20.
The nation's foreign-currency reserves dropped $10.58 billion in July to $247.52 billion, a fourth straight monthly decline, as policy makers tried to halt a slide in the won. Central banks intervene in the currency market by selling or buying foreign exchange.
Stock Sales
The won slid 2.2 percent this week, sliding for a fourth consecutive time, the longest stretch in a year. Demand for the currency slumped as overseas investors sold 1,226 billion won ($1.15 billion) more shares than they bought, trimming their holdings on all but one of the five trading days, according to stock exchange data.
The Kospi index fell every day this week, sliding 4.8 percent to close at 1,496.91. That's the first time it's been below 1,500 since April 2007.
The peso fell for a fourth week and reached the lowest level in more than a month on concern that demand for the nation's exports from its biggest market in the U.S. will decrease.
Rate Meeting
Slowing economies are ``a global concern of central banks,'' said Roland Avante, treasurer at Chinatrust (Philippines) Commercial Bank in Manila. ``There's a need for currencies to weaken against the dollar. We're still very much reliant on the U.S., they're still one of our major trading partners.''
Philippine central bank Governor Amando Tetangco said today that foreign-exchange inflows will increase in the fourth quarter, boosting the peso. The currency is weaker because ``we are in import season,'' he said in an e-mail. ``There's demand for dollars.''
Economic Planning Undersecretary Augusto Santos this week said gross domestic product would expand 5.5 percent to 6.4 percent this year, instead of a previously forecast 5.7 percent to 6.6 percent. The U.S. accounts for 16 percent of overseas sales.
Six of the seven economists surveyed by Bloomberg News predict the Philippine central bank will increase borrowing costs next week by a quarter-percentage point to 6 percent. One economist forecast a half-percentage-point increase.
Rupiah Gains
The Indonesian rupiah posted its first weekly gain in three weeks on speculation overseas investors are buying the nation's assets as stocks rise and the government issues Islamic bonds.
The currency made its biggest weekly advance in more than a month on speculation the central bank is seeking a stronger currency to help temper inflation. Foreign investors bought more Indonesian stocks than they sold in two of the past three trading days. The government yesterday closed an offering of 5 trillion rupiah ($546.4 million) of seven- and 10-year sukuk Islamic notes.
``Funds overall are really positive on the rupiah,'' said Catherine Tan, head of foreign exchange at Thomson Financial Asia in Singapore. ``The central bank has been very pro-active in hiking interest rates to counter inflation. There's also been quite a lot of inflows into the sukuk.''
The currency rose 0.2 percent to 9,146 in Jakarta, according to data compiled by Bloomberg. The rupiah, which gained 0.5 percent this week, will strengthen to 9,000 by the end of the year, Tan forecast.
Singapore Dollar Strength
The central bank raised its benchmark interest rate four times this year to 9 percent after inflation accelerated to 11.9 percent in July, the most in 22 months.
Singapore's dollar had its best week in two months as the U.S. currency weakened against the euro and the yen, which are part of the trade-weighted basket managed by the Southeast Asian nation's central bank.
The local dollar was the best performer today among Asia's 10 most-traded currencies outside Japan, rising to a one-week high. The U.S. currency declined this week on concern that widening credit-market losses and a deepening housing recession will prevent the Federal Reserve from raising interest rates.
``The Singapore dollar's strength'' is because of a drop in the U.S. dollar, said Han Sia Yeo, a currency strategist at Bank of America Corp. in Singapore. ``There is a pullback in the broader U.S. dollar environment.''
The Singapore dollar rose 0.6 percent this week, the most since the five days through June 20, to S$1.4076 against the U.S. dollar. It touched S$1.4028, the strongest level since Aug. 14.
Elsewhere, the Malaysian ringgit advanced 0.1 percent to 3.3460 compared with 3.3480 last week. The Thai baht fell 0.3 percent to 33.93. Taiwan's dollar declined 0.1 percent to NT$31.370 and Vietnam's dong was at 16,595 per dollar.
To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
Read more...
Aug. 22 (Bloomberg) -- South Korea's won slumped to a four- year low on speculation government intervention won't halt the currency's slide. The Philippine peso fell this week after the government lowered its economic growth forecast.
The won fell as much as 0.8 percent to 1,063 against the dollar, the weakest since December 2004, as refiners bought the U.S. currency to import oil and overseas investors sold local stocks. The won rallied as much as 0.6 percent earlier today after the central bank bought the local currency, according to Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group.
``The government's action is not strong enough to stop the won's slide,'' said Lee Yoon Jin, a currency dealer at state-run Korea Development Bank in Seoul. ``There have been a lot of purchases of the dollar from the local energy companies.''
The won slid 0.7 percent to 1,062.5 per dollar as of 3 p.m. in Seoul, having earlier climbed as high as 1,048, according to Seoul Money Brokerage Services Ltd. It's dropped 4.7 percent this month, the biggest decline among Asia's 10 most-active currencies excluding the yen. The peso fell 0.4 percent to 45.64 per dollar in Manila, according to Tullett Prebon Plc, declining 0.7 percent this week.
Korea's government continues to ``closely'' monitor the currency for ``drastic'' fluctuations, Vice Finance Minister Kim Dong Soo said on Aug. 20.
The nation's foreign-currency reserves dropped $10.58 billion in July to $247.52 billion, a fourth straight monthly decline, as policy makers tried to halt a slide in the won. Central banks intervene in the currency market by selling or buying foreign exchange.
Stock Sales
The won slid 2.2 percent this week, sliding for a fourth consecutive time, the longest stretch in a year. Demand for the currency slumped as overseas investors sold 1,226 billion won ($1.15 billion) more shares than they bought, trimming their holdings on all but one of the five trading days, according to stock exchange data.
The Kospi index fell every day this week, sliding 4.8 percent to close at 1,496.91. That's the first time it's been below 1,500 since April 2007.
The peso fell for a fourth week and reached the lowest level in more than a month on concern that demand for the nation's exports from its biggest market in the U.S. will decrease.
Rate Meeting
Slowing economies are ``a global concern of central banks,'' said Roland Avante, treasurer at Chinatrust (Philippines) Commercial Bank in Manila. ``There's a need for currencies to weaken against the dollar. We're still very much reliant on the U.S., they're still one of our major trading partners.''
Philippine central bank Governor Amando Tetangco said today that foreign-exchange inflows will increase in the fourth quarter, boosting the peso. The currency is weaker because ``we are in import season,'' he said in an e-mail. ``There's demand for dollars.''
Economic Planning Undersecretary Augusto Santos this week said gross domestic product would expand 5.5 percent to 6.4 percent this year, instead of a previously forecast 5.7 percent to 6.6 percent. The U.S. accounts for 16 percent of overseas sales.
Six of the seven economists surveyed by Bloomberg News predict the Philippine central bank will increase borrowing costs next week by a quarter-percentage point to 6 percent. One economist forecast a half-percentage-point increase.
Rupiah Gains
The Indonesian rupiah posted its first weekly gain in three weeks on speculation overseas investors are buying the nation's assets as stocks rise and the government issues Islamic bonds.
The currency made its biggest weekly advance in more than a month on speculation the central bank is seeking a stronger currency to help temper inflation. Foreign investors bought more Indonesian stocks than they sold in two of the past three trading days. The government yesterday closed an offering of 5 trillion rupiah ($546.4 million) of seven- and 10-year sukuk Islamic notes.
``Funds overall are really positive on the rupiah,'' said Catherine Tan, head of foreign exchange at Thomson Financial Asia in Singapore. ``The central bank has been very pro-active in hiking interest rates to counter inflation. There's also been quite a lot of inflows into the sukuk.''
The currency rose 0.2 percent to 9,146 in Jakarta, according to data compiled by Bloomberg. The rupiah, which gained 0.5 percent this week, will strengthen to 9,000 by the end of the year, Tan forecast.
Singapore Dollar Strength
The central bank raised its benchmark interest rate four times this year to 9 percent after inflation accelerated to 11.9 percent in July, the most in 22 months.
Singapore's dollar had its best week in two months as the U.S. currency weakened against the euro and the yen, which are part of the trade-weighted basket managed by the Southeast Asian nation's central bank.
The local dollar was the best performer today among Asia's 10 most-traded currencies outside Japan, rising to a one-week high. The U.S. currency declined this week on concern that widening credit-market losses and a deepening housing recession will prevent the Federal Reserve from raising interest rates.
``The Singapore dollar's strength'' is because of a drop in the U.S. dollar, said Han Sia Yeo, a currency strategist at Bank of America Corp. in Singapore. ``There is a pullback in the broader U.S. dollar environment.''
The Singapore dollar rose 0.6 percent this week, the most since the five days through June 20, to S$1.4076 against the U.S. dollar. It touched S$1.4028, the strongest level since Aug. 14.
Elsewhere, the Malaysian ringgit advanced 0.1 percent to 3.3460 compared with 3.3480 last week. The Thai baht fell 0.3 percent to 33.93. Taiwan's dollar declined 0.1 percent to NT$31.370 and Vietnam's dong was at 16,595 per dollar.
To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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Korean Won Slides to Four-Year Low as Refiners, Foreigners Sell
By Kim Kyoungwha and Judy Chen
Aug. 22 (Bloomberg) -- South Korea's won slumped to the weakest level in almost four years on speculation government intervention won't halt the currency's slide as refiners buy dollars to import oil and overseas investors sell local stocks.
The won fell as much as 0.8 percent to 1,063 against the dollar, the weakest since December 2004. It rallied as much as 0.7 percent earlier today after the central bank bought the local currency, according to Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group.
``The government's action is not strong enough to stop the won's slide,'' said Lee Yoon Jin, a currency dealer at state-run Korea Development Bank in Seoul. ``There have been a lot of purchases of the dollar from the local energy companies.''
The won slid 0.72 percent to 1,062.5 per dollar as of 3 p.m. in Seoul, having earlier climbed as high as 1,048, according to Seoul Money Brokerage Services Ltd. It's dropped 4.8 percent this month, the biggest decline among Asia's 10 most-active currencies excluding the yen.
Korea's government continues to ``closely'' monitor the currency for ``drastic'' fluctuations, Vice Finance Minister Kim Dong Soo said on Aug. 20. The nation's foreign-currency reserves dropped $10.58 billion in July to $247.52 billion, a fourth straight monthly decline, as policy makers tried to halt a slide in the won. Central banks intervene in currency markets by selling or buying foreign exchange.
Stock Losses
The won slid 2.1 percent this week, declining for a fourth consecutive time. Demand for the currency slumped as overseas investors sold 1,226 billion won ($1.15 billion) more shares than they bought, trimming their holdings on all but one of the five trading days, according to stock exchange data.
The Kospi index fell every day this week, sliding 4.8 percent to close at 1,496.91. That's the first time it's been below 1,500 since April 2007.
Crude oil climbed for a fourth straight day to $121.52 a barrel in New York, heading for its biggest weekly increase in more than two months. Higher import costs fueled demand for dollars from refiners. South Korea imports all of the fuel it uses and is the world's fifth-largest buyer of oil. The commodity has rebounded almost 10 percent from a 15-week low of $111.34 it touched on Aug. 15.
Government bonds fell, ending a three-day gain, after the surge in crude prices spurred concern inflation will quicken.
The yield on the 5.25 percent note due March 2013 rose 9.4 basis points to 5.85 percent, according to Korea Exchange. The price fell 0.32, or 32 won per 10,000 won face amount, to 100.01. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net
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Aug. 22 (Bloomberg) -- South Korea's won slumped to the weakest level in almost four years on speculation government intervention won't halt the currency's slide as refiners buy dollars to import oil and overseas investors sell local stocks.
The won fell as much as 0.8 percent to 1,063 against the dollar, the weakest since December 2004. It rallied as much as 0.7 percent earlier today after the central bank bought the local currency, according to Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group.
``The government's action is not strong enough to stop the won's slide,'' said Lee Yoon Jin, a currency dealer at state-run Korea Development Bank in Seoul. ``There have been a lot of purchases of the dollar from the local energy companies.''
The won slid 0.72 percent to 1,062.5 per dollar as of 3 p.m. in Seoul, having earlier climbed as high as 1,048, according to Seoul Money Brokerage Services Ltd. It's dropped 4.8 percent this month, the biggest decline among Asia's 10 most-active currencies excluding the yen.
Korea's government continues to ``closely'' monitor the currency for ``drastic'' fluctuations, Vice Finance Minister Kim Dong Soo said on Aug. 20. The nation's foreign-currency reserves dropped $10.58 billion in July to $247.52 billion, a fourth straight monthly decline, as policy makers tried to halt a slide in the won. Central banks intervene in currency markets by selling or buying foreign exchange.
Stock Losses
The won slid 2.1 percent this week, declining for a fourth consecutive time. Demand for the currency slumped as overseas investors sold 1,226 billion won ($1.15 billion) more shares than they bought, trimming their holdings on all but one of the five trading days, according to stock exchange data.
The Kospi index fell every day this week, sliding 4.8 percent to close at 1,496.91. That's the first time it's been below 1,500 since April 2007.
Crude oil climbed for a fourth straight day to $121.52 a barrel in New York, heading for its biggest weekly increase in more than two months. Higher import costs fueled demand for dollars from refiners. South Korea imports all of the fuel it uses and is the world's fifth-largest buyer of oil. The commodity has rebounded almost 10 percent from a 15-week low of $111.34 it touched on Aug. 15.
Government bonds fell, ending a three-day gain, after the surge in crude prices spurred concern inflation will quicken.
The yield on the 5.25 percent note due March 2013 rose 9.4 basis points to 5.85 percent, according to Korea Exchange. The price fell 0.32, or 32 won per 10,000 won face amount, to 100.01. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net
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Yuan Set for Biggest Gain Since May, Helping Address Trade Gap
By Judy Chen and Belinda Cao
Aug. 22 (Bloomberg) -- China's yuan was headed for the biggest weekly gain in three months on speculation officials will seek a stronger currency to curb the trade surplus and deter the U.S. from imposing penalties. Bonds rose.
China needs ``more flexibility'' in the exchange rate to manage its economy amid a global slowdown, John Lipsky, the International Monetary Fund's first deputy managing director, said yesterday in Jackson Hole, Wyoming. This week's advance ends a run of four straight losses and extends the currency's gain this year to 7 percent, more than it rose for all of 2007.
``The yuan will probably regain appreciation after the Olympics,'' said Li Huiyong, an economist at Shenyin Wanguo Research & Consulting Co., part of China's third-largest brokerage firm, in Shanghai. ``The huge trade surplus is the biggest reason for the medium and long-term appreciation.''
The yuan rose 0.6 percent this week to 6.8296 a dollar as of 3 p.m. in Shanghai, from 6.8700 late last week, according to the China Foreign Exchange Trade System. That's the biggest weekly advance since May 23. It climbed 0.21 percent today, the largest one-day gain since July 29.
China's central bank has managed the yuan's exchange rate against a basket of currencies, including the yen and the euro, since a peg to the dollar was scrapped in 2005. Both currencies rallied more than 1 percent against the dollar yesterday.
Stronger Rate
The People's Bank of China set a stronger reference rate for yuan trading for a fourth straight day. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of the daily rate, which was fixed at 6.8357 today.
China's trade surplus expanded 4 percent from a year earlier to $25.3 billion in July, the first increase in four months, according to customs bureau figures released last week. U.S. Treasury Secretary Henry Paulson said this week that U.S. proposals to punish China for depressing the value of the currency might spark an unproductive ``trade war.''
The local currency touched a two-month low of 6.8808 a dollar on Aug. 18 on speculation policy makers would prefer to bolster growth rather than fight inflation on signs a global slowdown crimped demand for the nation's exports. The yuan has declined about 0.1 percent in the past month.
China's economy expanded 10.1 percent in the second quarter from a year earlier, the slowest pace since 2005. Export growth cooled to 17.2 percent in June from a 28.1 percent gain in May, government data show. It accelerated to a 26.9 percent pace last month.
Growth Scare
``A post-Olympics growth scare in China is now more probable than we had thought six months ago,'' Stephen Jen, London-based head of research at Morgan Stanley, wrote in a research report yesterday. ``Such a regional growth scare will provide further support to our call'' for Asian currencies to weaken versus the dollar.
Traders in the forward market have pared bets on how far the yuan will advance. Forward contracts show the yuan will rise 3.2 percent to 6.6175 in a year, compared with around 11 percent appreciation predicted earlier this year.
Standard Bank in London recommended buying the Chinese currency, playing down chances policy makers will shift focus to supporting the economy and citing global calls for appreciation.
``We are skeptical that they will see slower appreciation, or even depreciation, as a way to stimulate growth,'' Steve Barrow, a currency strategist with Standard Bank in London, wrote in a report yesterday. ``The renminbi is a buy.''
Corrected Too Far
Even as the dollar strengthens against major currencies, like the euro, the U.S. Treasury will ``want to keep pressure on China for renminbi appreciation,'' Barrow said. ``It seems so clear to us it has corrected too far in the other direction.''
The Chinese currency has gained 6.5 percent versus the euro and 4 percent against the yen this quarter, compared with a 0.3 percent appreciation versus the dollar.
Barrow said the yuan's annual appreciation of 5 to 10 percent is ``much more appropriate.'' The U.S. is the biggest buyer of China's exports and its trade deficit with the Asian nation ballooned to a record $256 billion last year.
Government bonds gained for a second week after China said inflation slowed in July, spurring speculation consumer prices will continue to fall and the central bank won't raise interest rates later this year.
Consumer price increases slowed to 6.3 percent in July, from 7.1 percent a month earlier, the statistics bureau said Aug. 12. The yield on benchmark 10-year bonds dropped 4.4 basis points this week, according to data compiled by the country's biggest debt clearing house. A basis point is 0.01 percentage point.
``The inflation rate may continue to fall later this year,'' said Dong Dezhi, a bond analyst with Bank of China Trading Center in Shanghai. ``Market sentiment is still optimistic.''
The yield on the 4.41 percent bond due June 2018 dropped 1 basis points to 4.35 percent in Shanghai as of 3:22 p.m., according to the China Interbank Bond Market. The price of the security rose 0.08 per 100 yuan face amount to 100.47.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Aug. 22 (Bloomberg) -- China's yuan was headed for the biggest weekly gain in three months on speculation officials will seek a stronger currency to curb the trade surplus and deter the U.S. from imposing penalties. Bonds rose.
China needs ``more flexibility'' in the exchange rate to manage its economy amid a global slowdown, John Lipsky, the International Monetary Fund's first deputy managing director, said yesterday in Jackson Hole, Wyoming. This week's advance ends a run of four straight losses and extends the currency's gain this year to 7 percent, more than it rose for all of 2007.
``The yuan will probably regain appreciation after the Olympics,'' said Li Huiyong, an economist at Shenyin Wanguo Research & Consulting Co., part of China's third-largest brokerage firm, in Shanghai. ``The huge trade surplus is the biggest reason for the medium and long-term appreciation.''
The yuan rose 0.6 percent this week to 6.8296 a dollar as of 3 p.m. in Shanghai, from 6.8700 late last week, according to the China Foreign Exchange Trade System. That's the biggest weekly advance since May 23. It climbed 0.21 percent today, the largest one-day gain since July 29.
China's central bank has managed the yuan's exchange rate against a basket of currencies, including the yen and the euro, since a peg to the dollar was scrapped in 2005. Both currencies rallied more than 1 percent against the dollar yesterday.
Stronger Rate
The People's Bank of China set a stronger reference rate for yuan trading for a fourth straight day. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of the daily rate, which was fixed at 6.8357 today.
China's trade surplus expanded 4 percent from a year earlier to $25.3 billion in July, the first increase in four months, according to customs bureau figures released last week. U.S. Treasury Secretary Henry Paulson said this week that U.S. proposals to punish China for depressing the value of the currency might spark an unproductive ``trade war.''
The local currency touched a two-month low of 6.8808 a dollar on Aug. 18 on speculation policy makers would prefer to bolster growth rather than fight inflation on signs a global slowdown crimped demand for the nation's exports. The yuan has declined about 0.1 percent in the past month.
China's economy expanded 10.1 percent in the second quarter from a year earlier, the slowest pace since 2005. Export growth cooled to 17.2 percent in June from a 28.1 percent gain in May, government data show. It accelerated to a 26.9 percent pace last month.
Growth Scare
``A post-Olympics growth scare in China is now more probable than we had thought six months ago,'' Stephen Jen, London-based head of research at Morgan Stanley, wrote in a research report yesterday. ``Such a regional growth scare will provide further support to our call'' for Asian currencies to weaken versus the dollar.
Traders in the forward market have pared bets on how far the yuan will advance. Forward contracts show the yuan will rise 3.2 percent to 6.6175 in a year, compared with around 11 percent appreciation predicted earlier this year.
Standard Bank in London recommended buying the Chinese currency, playing down chances policy makers will shift focus to supporting the economy and citing global calls for appreciation.
``We are skeptical that they will see slower appreciation, or even depreciation, as a way to stimulate growth,'' Steve Barrow, a currency strategist with Standard Bank in London, wrote in a report yesterday. ``The renminbi is a buy.''
Corrected Too Far
Even as the dollar strengthens against major currencies, like the euro, the U.S. Treasury will ``want to keep pressure on China for renminbi appreciation,'' Barrow said. ``It seems so clear to us it has corrected too far in the other direction.''
The Chinese currency has gained 6.5 percent versus the euro and 4 percent against the yen this quarter, compared with a 0.3 percent appreciation versus the dollar.
Barrow said the yuan's annual appreciation of 5 to 10 percent is ``much more appropriate.'' The U.S. is the biggest buyer of China's exports and its trade deficit with the Asian nation ballooned to a record $256 billion last year.
Government bonds gained for a second week after China said inflation slowed in July, spurring speculation consumer prices will continue to fall and the central bank won't raise interest rates later this year.
Consumer price increases slowed to 6.3 percent in July, from 7.1 percent a month earlier, the statistics bureau said Aug. 12. The yield on benchmark 10-year bonds dropped 4.4 basis points this week, according to data compiled by the country's biggest debt clearing house. A basis point is 0.01 percentage point.
``The inflation rate may continue to fall later this year,'' said Dong Dezhi, a bond analyst with Bank of China Trading Center in Shanghai. ``Market sentiment is still optimistic.''
The yield on the 4.41 percent bond due June 2018 dropped 1 basis points to 4.35 percent in Shanghai as of 3:22 p.m., according to the China Interbank Bond Market. The price of the security rose 0.08 per 100 yuan face amount to 100.47.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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South African Rand Heads for Weekly Gain as Commodities Rally
By Garth Theunissen
Aug. 22 (Bloomberg) -- South Africa's rand was poised to snap two weeks of losses against the dollar as gains in gold and platinum improved revenue prospects for world's biggest producer of precious metals.
The rand was the best performer of the 16 most-actively traded currencies monitored by Bloomberg this week as gold headed for its biggest weekly advance in seven years and platinum surged for a third day. The metals rose with other commodities as a weaker dollar and higher crude oil prices boosted demand for alternative investments and hedges against inflation.
``Commodities are a strong theme for the rand at the moment,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Strong gains in oil and a weaker dollar are fuelling gold and platinum, which is positive for the rand.''
The rand was little changed at 7.6585 per dollar by 9:39 a.m. in Johannesburg, leaving it 2.7 percent stronger than its Aug. 15 level of 7.8707. It climbed 1.4 percent versus the euro on the week, to 11.3969.
Commodities headed for their biggest weekly advance in 33 years as the dollar traded near the lowest level in more than two weeks against the yen and headed for a weekly loss versus the euro.
Gold climbed 6.4 percent in the week to $834.08 an ounce, the biggest weekly gain since May 2001 and the first in six weeks. Platinum surged 7.4 percent from its Aug. 8 close to $1,472.25 an ounce. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals' prices.
Crude oil rose 6.8 percent this week to $121.52 a barrel, headed for its biggest weekly increase in more than two months.
Government bonds fell this week, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 11 basis points to 9.25 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Aug. 22 (Bloomberg) -- South Africa's rand was poised to snap two weeks of losses against the dollar as gains in gold and platinum improved revenue prospects for world's biggest producer of precious metals.
The rand was the best performer of the 16 most-actively traded currencies monitored by Bloomberg this week as gold headed for its biggest weekly advance in seven years and platinum surged for a third day. The metals rose with other commodities as a weaker dollar and higher crude oil prices boosted demand for alternative investments and hedges against inflation.
``Commodities are a strong theme for the rand at the moment,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Strong gains in oil and a weaker dollar are fuelling gold and platinum, which is positive for the rand.''
The rand was little changed at 7.6585 per dollar by 9:39 a.m. in Johannesburg, leaving it 2.7 percent stronger than its Aug. 15 level of 7.8707. It climbed 1.4 percent versus the euro on the week, to 11.3969.
Commodities headed for their biggest weekly advance in 33 years as the dollar traded near the lowest level in more than two weeks against the yen and headed for a weekly loss versus the euro.
Gold climbed 6.4 percent in the week to $834.08 an ounce, the biggest weekly gain since May 2001 and the first in six weeks. Platinum surged 7.4 percent from its Aug. 8 close to $1,472.25 an ounce. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals' prices.
Crude oil rose 6.8 percent this week to $121.52 a barrel, headed for its biggest weekly increase in more than two months.
Government bonds fell this week, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 11 basis points to 9.25 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Copper Heads for First Weekly Gain in Eight on Dollar Weakness
By Glenys Sim
Aug. 22 (Bloomberg) -- Copper headed for its first weekly gain in eight after declines by the U.S. dollar increased investor demand for raw materials.
The metal, used in plumbing and electrical wiring, also advanced on speculation demand in China, the world's largest consumer, will recover after the Olympic Games. Copper has fallen 3.2 percent the past month, partly on weak seasonal demand.
``Factories and building projects that were shut during the Olympics will soon resume and this will support prices,'' said Lin Yuhui, research manager at China International Futures Co. in Shenzhen. ``Expectations are for overall demand to slow compared to last year, however it's unlikely to be by much looking at all the construction going on.''
Copper for delivery in three months on the London Metal Exchange has risen 6.9 percent this week, the biggest gain since March. The metal gained 0.2 percent to $7,870 a metric ton at 9:30 a.m. in Singapore, after rising 4.5 percent yesterday, the largest advance since January.
Copper for November delivery rose as much as 1,340 yuan, or 2.3 percent, to 60,690 yuan ($8,867) a ton on the Shanghai Futures Exchange. The most-active contract last traded at 60,570 yuan.
The dollar traded near the lowest level in more than two weeks against the yen, and headed for its first weekly loss versus the euro ahead of a speech on financial stability by Federal Reserve Chairman Ben S. Bernanke at Jackson Hole, Wyoming.
The currency was at 108.60 yen from 108.43 in New York last yesterday. It also declined to $1.4880 per euro from $1.4899.
Among other LME-traded metals, aluminum was down 0.3 percent at $2,842 a ton, zinc dropped 3 percent to $1,823 and nickel fell 1.6 percent to $21,150. Lead was unchanged at $1,905 a ton and tin had not traded.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
Read more...
Aug. 22 (Bloomberg) -- Copper headed for its first weekly gain in eight after declines by the U.S. dollar increased investor demand for raw materials.
The metal, used in plumbing and electrical wiring, also advanced on speculation demand in China, the world's largest consumer, will recover after the Olympic Games. Copper has fallen 3.2 percent the past month, partly on weak seasonal demand.
``Factories and building projects that were shut during the Olympics will soon resume and this will support prices,'' said Lin Yuhui, research manager at China International Futures Co. in Shenzhen. ``Expectations are for overall demand to slow compared to last year, however it's unlikely to be by much looking at all the construction going on.''
Copper for delivery in three months on the London Metal Exchange has risen 6.9 percent this week, the biggest gain since March. The metal gained 0.2 percent to $7,870 a metric ton at 9:30 a.m. in Singapore, after rising 4.5 percent yesterday, the largest advance since January.
Copper for November delivery rose as much as 1,340 yuan, or 2.3 percent, to 60,690 yuan ($8,867) a ton on the Shanghai Futures Exchange. The most-active contract last traded at 60,570 yuan.
The dollar traded near the lowest level in more than two weeks against the yen, and headed for its first weekly loss versus the euro ahead of a speech on financial stability by Federal Reserve Chairman Ben S. Bernanke at Jackson Hole, Wyoming.
The currency was at 108.60 yen from 108.43 in New York last yesterday. It also declined to $1.4880 per euro from $1.4899.
Among other LME-traded metals, aluminum was down 0.3 percent at $2,842 a ton, zinc dropped 3 percent to $1,823 and nickel fell 1.6 percent to $21,150. Lead was unchanged at $1,905 a ton and tin had not traded.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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U.K. Pound Extends Losses Against Euro, Dollar on Slower Growth
By Lukanyo Mnyanda
Aug. 22 (Bloomberg) -- The U.K. pound extended losses against the euro and dollar after a government report showed economic growth stagnated in the second-quarter.
The U.K. currency dropped 0.6 percent to 79.77 pence per euro by 9:43 a.m. in London, from 79.32 yesterday and 78.70 on Aug. 15. It was at $1.8597, from $1.8661 on Aug. 15, when it slipped to $1.8512, the lowest level since July 2006. The pound should fall to $1.83 by the end of the month, Derrick predicted.
Gross domestic product was unchanged from the previous quarter, the Office for National Statistics said today, compared with a previous estimate for growth of 0.2 percent. Economists had expected a 0.1 percent expansion, according to the median estimate of 34 economists. Growth was 1.4 percent from a year earlier, the weakest since 1992.
To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
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Aug. 22 (Bloomberg) -- The U.K. pound extended losses against the euro and dollar after a government report showed economic growth stagnated in the second-quarter.
The U.K. currency dropped 0.6 percent to 79.77 pence per euro by 9:43 a.m. in London, from 79.32 yesterday and 78.70 on Aug. 15. It was at $1.8597, from $1.8661 on Aug. 15, when it slipped to $1.8512, the lowest level since July 2006. The pound should fall to $1.83 by the end of the month, Derrick predicted.
Gross domestic product was unchanged from the previous quarter, the Office for National Statistics said today, compared with a previous estimate for growth of 0.2 percent. Economists had expected a 0.1 percent expansion, according to the median estimate of 34 economists. Growth was 1.4 percent from a year earlier, the weakest since 1992.
To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
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Brazil, Mexico, Peru: Latin America Bond, Currency Preview
By Jamie McGee
Aug. 22 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Inflation, as measured by the government's IPCA-15 index, slowed to 0.38 percent in the 30-day period through Aug. 15 from 0.63 in the previous 30-day period, according to the median estimate of 35 economists in a Bloomberg survey.
The government's statistics agency is scheduled to release the data at 8 a.m. New York time.
The real rose 0.6 percent to 1.6090 per dollar.
The yield on the country's zero-coupon bonds due January 2010 rose 4 basis points, or 0.04 percentage point, to 14.74 percent, according to Banco Votorantim SA.
Mexico: Consumer prices rose 0.26 percent in the first half of August, compared with a 0.38 increase in the first half of July, according to the median estimate of 18 economists in a Bloomberg survey.
The central bank is scheduled to release the data at 10 a.m. New York time.
The peso rose 0.5 percent to 10.0931 per dollar.
The yield on Mexico's benchmark 10 percent bonds due December 2024 was unchanged at 8.56 percent, according to Banco Santander SA.
Peru: Inflation will slow over the next 18 months as international commodity prices fall and the government curbs spending, Finance Minister Luis Valdivieso said.
The government won't take ``traumatic'' anti-inflation measures so as not to hurt economic growth, Valdivieso said yesterday in a presentation to Congress. Inflation will slow to 3.5 percent in 2008 from about 5.8 percent this year, he said.
``With moderation in public works, inflation should converge within the central bank's target,'' Valdivieso said in his first presentation since taking office on July 14.
The sol rose 0.3 percent to 2.9100 per U.S. dollar.
The yield on the nation's 8.6 percent sol-denominated bonds due in August 2017 rose 5 basis points to 7.98 percent, according to Citigroup Inc.'s unit in Peru.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
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Aug. 22 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Inflation, as measured by the government's IPCA-15 index, slowed to 0.38 percent in the 30-day period through Aug. 15 from 0.63 in the previous 30-day period, according to the median estimate of 35 economists in a Bloomberg survey.
The government's statistics agency is scheduled to release the data at 8 a.m. New York time.
The real rose 0.6 percent to 1.6090 per dollar.
The yield on the country's zero-coupon bonds due January 2010 rose 4 basis points, or 0.04 percentage point, to 14.74 percent, according to Banco Votorantim SA.
Mexico: Consumer prices rose 0.26 percent in the first half of August, compared with a 0.38 increase in the first half of July, according to the median estimate of 18 economists in a Bloomberg survey.
The central bank is scheduled to release the data at 10 a.m. New York time.
The peso rose 0.5 percent to 10.0931 per dollar.
The yield on Mexico's benchmark 10 percent bonds due December 2024 was unchanged at 8.56 percent, according to Banco Santander SA.
Peru: Inflation will slow over the next 18 months as international commodity prices fall and the government curbs spending, Finance Minister Luis Valdivieso said.
The government won't take ``traumatic'' anti-inflation measures so as not to hurt economic growth, Valdivieso said yesterday in a presentation to Congress. Inflation will slow to 3.5 percent in 2008 from about 5.8 percent this year, he said.
``With moderation in public works, inflation should converge within the central bank's target,'' Valdivieso said in his first presentation since taking office on July 14.
The sol rose 0.3 percent to 2.9100 per U.S. dollar.
The yield on the nation's 8.6 percent sol-denominated bonds due in August 2017 rose 5 basis points to 7.98 percent, according to Citigroup Inc.'s unit in Peru.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
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Dollar May Extend Decline to 107.22 Against Yen, Forecast Says
By Ron Harui
Aug. 22 (Bloomberg) -- The dollar may extend its decline to 107.22 yen next week, said Pak Lai Ng, a technical analyst at Forecast Pte Ltd. in Singapore, citing charts used to predict price movements.
Support at 107.22 yen is a 50 percent retracement of the U.S. currency's rise from the July 16 low of 103.77 yen to the Aug. 15 high of 110.66 yen, based on a series of numbers known as the Fibonacci sequence. The dollar is likely to weaken as its daily momentum indicators such as the moving average convergence- divergence chart are showing sell signals, Ng said. Support is where buy orders may be clustered.
``Dollar-yen is on the way down,'' Ng said. ``All of the indicators have turned down. We are targeting 107.22 yen.''
The dollar rose to 108.90 yen as of 3:36 p.m. in Tokyo from 108.43 yen late in New York yesterday, when it reached 108.14, the lowest since Aug. 5. The currency has fallen 1.6 percent since touching 110.66 yen on Aug. 15, the strongest since Jan. 2.
Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of one indicates a currency may move to the next. A failure suggests a trend may stall. Other Fibonacci points include 61.8 percent and 76.4 percent.
MACD charts indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages over different periods.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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Aug. 22 (Bloomberg) -- The dollar may extend its decline to 107.22 yen next week, said Pak Lai Ng, a technical analyst at Forecast Pte Ltd. in Singapore, citing charts used to predict price movements.
Support at 107.22 yen is a 50 percent retracement of the U.S. currency's rise from the July 16 low of 103.77 yen to the Aug. 15 high of 110.66 yen, based on a series of numbers known as the Fibonacci sequence. The dollar is likely to weaken as its daily momentum indicators such as the moving average convergence- divergence chart are showing sell signals, Ng said. Support is where buy orders may be clustered.
``Dollar-yen is on the way down,'' Ng said. ``All of the indicators have turned down. We are targeting 107.22 yen.''
The dollar rose to 108.90 yen as of 3:36 p.m. in Tokyo from 108.43 yen late in New York yesterday, when it reached 108.14, the lowest since Aug. 5. The currency has fallen 1.6 percent since touching 110.66 yen on Aug. 15, the strongest since Jan. 2.
Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of one indicates a currency may move to the next. A failure suggests a trend may stall. Other Fibonacci points include 61.8 percent and 76.4 percent.
MACD charts indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages over different periods.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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U.S. Dollar Extends Advance Against Euro, Trading at $1.4861
By Gavin Finch
Aug. 22 (Bloomberg) -- The dollar extended its advance against the euro, yen and U.K. pound.
The dollar rose 0.2 percent to $1.4860 per euro by 9:08 a.m. in London, from $1.4899 yesterday. The U.S. currency climbed 0.6 percent to 109.08 yen from 108.43. It was up 0.6 percent against the pound at $1.8672.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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Aug. 22 (Bloomberg) -- The dollar extended its advance against the euro, yen and U.K. pound.
The dollar rose 0.2 percent to $1.4860 per euro by 9:08 a.m. in London, from $1.4899 yesterday. The U.S. currency climbed 0.6 percent to 109.08 yen from 108.43. It was up 0.6 percent against the pound at $1.8672.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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Central Bankers at Retreat May See Few Options to Fix Economy
By Scott Lanman and John Fraher
Aug. 22 (Bloomberg) -- The world's top central bankers gather at their annual U.S. mountainside symposium today with a sense there's not much more they can do to repair credit markets and rescue the global economy.
Reports in the last week showing a surge in inflation reinforce expectations that Federal Reserve Chairman Ben S. Bernanke will have to keep U.S. interest rates on hold. Similar conditions in Europe are paralyzing his counterparts at the Bank of England and the European Central Bank.
``All the central banks can provide now is time for the banking system to heal,'' Myron Scholes, chairman of Rye Brook, New York-based Platinum Grove Asset Management LP and a Nobel laureate in economics, said in an interview. ``What more they have to offer is now very limited.''
Bernanke may discuss his strategy when he opens the conference in Jackson Hole, Wyoming, with a speech on financial stability at 10 a.m. New York time. His audience comprises a who's who of central banking, including ECB President Jean- Claude Trichet, Bank of Japan Deputy Governor Kiyohiko Nishimura and central bank officials from about 40 other countries.
The event, ending tomorrow, has been hosted by the Kansas City Fed in Grand Teton National Park since 1982.
In the U.S., borrowing premiums for banks and corporations are at their highest in months, prolonging the drag on growth. That's after Fed policy makers cut the main interest rate this year at the fastest pace in two decades, introduced three emergency-lending programs and helped Bear Stearns Cos. avert bankruptcy.
`Hope and Pray'
``There isn't a lot they can do'' now, said former Fed Governor Lyle Gramley, senior economic adviser at Stanford Group Co. in Washington. ``The Fed really has to hope and pray that credit markets begin to heal by themselves.''
Europe's biggest central banks have refused to jeopardize their price stability mandates by lowering rates and have warned about the danger of bailing out investors.
Trichet's ECB raised its benchmark rate in July by a quarter point to 4.25 percent and the Bank of England is refusing to ease credit even with the U.K. near a recession.
``Many central banks around the world have been in a position where they have been focused on inflation, and they didn't have the same intensity of the slowdown that we saw in the U.S.,'' said former Fed governor Laurence Meyer, vice chairman at Macroeconomic Advisers LLC in Washington, in an interview at Jackson Hole.
`Considerable Stress'
The Fed, while leaving the benchmark interest rate unchanged for its last two meetings, says financial markets ``remain under considerable stress.'' One gauge watched by the Fed, the premium for banks to borrow for three months over a measure of the future overnight lending rate, averaged 0.77 percentage point last week, the highest since April.
The Fed's rate cuts also have failed to pass through to the housing market. The average rate on a 30-year fixed mortgage was 6.47 percent last week, about where it was a year ago.
``Higher mortgage rates and sharply tightening credit standards in mortgages have gummed up a key channel through which monetary easing is supposed to stimulate aggregate demand,'' said Mickey Levy, New York-based chief economist at Bank of America Corp., who is attending the symposium.
Pushed the Limits
Apart from lowering rates, Bernanke has pushed the limits of the Fed's powers to ease the crisis in credit markets. In December, he started auctioning 28-day loans to commercial banks. He followed that in March with a $200 billion program to auction Treasuries to investment banks in exchange for mortgage-backed securities and other debt. Bernanke also offered cash loans to other bond dealers that trade with the Fed.
With all these programs in place, Fed officials may be reluctant to do more without assurance that it will ease the credit crisis and not do more harm.
``They have done a lot, and at some point they simply have to give the markets the time needed to heal,'' said former Fed researcher Brian Sack, senior economist at Macroeconomic Advisers.
At the same time, investors are looking to the Treasury Department, not the Fed, to bail out mortgage-finance companies Fannie Mae and Freddie Mac using newly granted authority.
European policy makers, meantime, have refused to be as activist as their U.S. counterparts, arguing that they can't be seen to bail out investors who made risky bets. Trichet says the ECB's ``collateral framework has served us pretty well.''
While the Bank of England in April followed the Fed in agreeing to swap damaged mortgage-backed securities for government bonds, Governor Mervyn King has resisted calls from lenders for it to buy securities outright.
Some, such as former Bank of England policy maker Willem Buiter, who will address the meeting tomorrow, argue that the Fed's actions to date store up trouble for the future.
``There will have to be a lot of soul searching about whether central banks, in their rush to forestall a financial disaster, have created moral hazard and perverse incentives on an unprecedented scale,'' Buiter said.
To contact the reporters on this story: Scott Lanman in Jackson Hole at slanman@bloomberg.net; John Fraher in Jackson Hole at jfraher@bloomberg.net.
Read more...
Aug. 22 (Bloomberg) -- The world's top central bankers gather at their annual U.S. mountainside symposium today with a sense there's not much more they can do to repair credit markets and rescue the global economy.
Reports in the last week showing a surge in inflation reinforce expectations that Federal Reserve Chairman Ben S. Bernanke will have to keep U.S. interest rates on hold. Similar conditions in Europe are paralyzing his counterparts at the Bank of England and the European Central Bank.
``All the central banks can provide now is time for the banking system to heal,'' Myron Scholes, chairman of Rye Brook, New York-based Platinum Grove Asset Management LP and a Nobel laureate in economics, said in an interview. ``What more they have to offer is now very limited.''
Bernanke may discuss his strategy when he opens the conference in Jackson Hole, Wyoming, with a speech on financial stability at 10 a.m. New York time. His audience comprises a who's who of central banking, including ECB President Jean- Claude Trichet, Bank of Japan Deputy Governor Kiyohiko Nishimura and central bank officials from about 40 other countries.
The event, ending tomorrow, has been hosted by the Kansas City Fed in Grand Teton National Park since 1982.
In the U.S., borrowing premiums for banks and corporations are at their highest in months, prolonging the drag on growth. That's after Fed policy makers cut the main interest rate this year at the fastest pace in two decades, introduced three emergency-lending programs and helped Bear Stearns Cos. avert bankruptcy.
`Hope and Pray'
``There isn't a lot they can do'' now, said former Fed Governor Lyle Gramley, senior economic adviser at Stanford Group Co. in Washington. ``The Fed really has to hope and pray that credit markets begin to heal by themselves.''
Europe's biggest central banks have refused to jeopardize their price stability mandates by lowering rates and have warned about the danger of bailing out investors.
Trichet's ECB raised its benchmark rate in July by a quarter point to 4.25 percent and the Bank of England is refusing to ease credit even with the U.K. near a recession.
``Many central banks around the world have been in a position where they have been focused on inflation, and they didn't have the same intensity of the slowdown that we saw in the U.S.,'' said former Fed governor Laurence Meyer, vice chairman at Macroeconomic Advisers LLC in Washington, in an interview at Jackson Hole.
`Considerable Stress'
The Fed, while leaving the benchmark interest rate unchanged for its last two meetings, says financial markets ``remain under considerable stress.'' One gauge watched by the Fed, the premium for banks to borrow for three months over a measure of the future overnight lending rate, averaged 0.77 percentage point last week, the highest since April.
The Fed's rate cuts also have failed to pass through to the housing market. The average rate on a 30-year fixed mortgage was 6.47 percent last week, about where it was a year ago.
``Higher mortgage rates and sharply tightening credit standards in mortgages have gummed up a key channel through which monetary easing is supposed to stimulate aggregate demand,'' said Mickey Levy, New York-based chief economist at Bank of America Corp., who is attending the symposium.
Pushed the Limits
Apart from lowering rates, Bernanke has pushed the limits of the Fed's powers to ease the crisis in credit markets. In December, he started auctioning 28-day loans to commercial banks. He followed that in March with a $200 billion program to auction Treasuries to investment banks in exchange for mortgage-backed securities and other debt. Bernanke also offered cash loans to other bond dealers that trade with the Fed.
With all these programs in place, Fed officials may be reluctant to do more without assurance that it will ease the credit crisis and not do more harm.
``They have done a lot, and at some point they simply have to give the markets the time needed to heal,'' said former Fed researcher Brian Sack, senior economist at Macroeconomic Advisers.
At the same time, investors are looking to the Treasury Department, not the Fed, to bail out mortgage-finance companies Fannie Mae and Freddie Mac using newly granted authority.
European policy makers, meantime, have refused to be as activist as their U.S. counterparts, arguing that they can't be seen to bail out investors who made risky bets. Trichet says the ECB's ``collateral framework has served us pretty well.''
While the Bank of England in April followed the Fed in agreeing to swap damaged mortgage-backed securities for government bonds, Governor Mervyn King has resisted calls from lenders for it to buy securities outright.
Some, such as former Bank of England policy maker Willem Buiter, who will address the meeting tomorrow, argue that the Fed's actions to date store up trouble for the future.
``There will have to be a lot of soul searching about whether central banks, in their rush to forestall a financial disaster, have created moral hazard and perverse incentives on an unprecedented scale,'' Buiter said.
To contact the reporters on this story: Scott Lanman in Jackson Hole at slanman@bloomberg.net; John Fraher in Jackson Hole at jfraher@bloomberg.net.
Read more...
Rubber Futures Gain Most in Six Weeks as Decline Lures Buyers
By Rattaphol Onsanit
Aug. 22 (Bloomberg) -- Natural rubber futures gained the most in six weeks in Tokyo after the recent decline made it an attractive substitute to the rival synthetic product.
Rubber is headed for a first weekly advance in a month as a recovery in crude oil and a weakening dollar revived demand for commodities as alternative assets. Rubber has risen 2.6 percent this week, having slid 10 percent in the previous three.
Oil surged 4.9 percent yesterday to $121.18 a barrel, the most since June 6. Synthetic rubber is produced from naphtha, distilled from petroleum.
``People believe the Tokyo prices can't fall much further,'' said Rewat Yenchai, an analyst at a Bangkok-based brokerage AGROW Enterprise Ltd.
Rubber for January delivery climbed as much as 3.1 percent, the most since July 11, to 310.6 yen a kilogram ($2,856 a metric ton) on the Tokyo Commodity Exchange. It traded at 308.4 at the 11 a.m. local time break.
In Thailand, the world's biggest rubber exporter, tire maker Michilin & Cie bid for the RSS3 grade at $281 a kilogram on Aug. 18, the latest data on the Thai Rubber Association's Web site.
November-delivery rubber on the Shanghai Futures Exchange, the most-active contract, gained 2.3 percent to 23,045 yuan ($3,374.6) a ton at 10:50 a.m. local time.
To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net
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Aug. 22 (Bloomberg) -- Natural rubber futures gained the most in six weeks in Tokyo after the recent decline made it an attractive substitute to the rival synthetic product.
Rubber is headed for a first weekly advance in a month as a recovery in crude oil and a weakening dollar revived demand for commodities as alternative assets. Rubber has risen 2.6 percent this week, having slid 10 percent in the previous three.
Oil surged 4.9 percent yesterday to $121.18 a barrel, the most since June 6. Synthetic rubber is produced from naphtha, distilled from petroleum.
``People believe the Tokyo prices can't fall much further,'' said Rewat Yenchai, an analyst at a Bangkok-based brokerage AGROW Enterprise Ltd.
Rubber for January delivery climbed as much as 3.1 percent, the most since July 11, to 310.6 yen a kilogram ($2,856 a metric ton) on the Tokyo Commodity Exchange. It traded at 308.4 at the 11 a.m. local time break.
In Thailand, the world's biggest rubber exporter, tire maker Michilin & Cie bid for the RSS3 grade at $281 a kilogram on Aug. 18, the latest data on the Thai Rubber Association's Web site.
November-delivery rubber on the Shanghai Futures Exchange, the most-active contract, gained 2.3 percent to 23,045 yuan ($3,374.6) a ton at 10:50 a.m. local time.
To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net
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Corn, Soybeans Fall as Gains Seen Excessive, U.S. Exports Drop
By Jae Hur
Aug. 22 (Bloomberg) -- Corn declined for the first day in five and soybeans fell as investors bet their gains early this week were excessive and as U.S. weekly export sales dropped. Wheat also slid.
Corn had advanced 12.4 percent this week before today and soybeans gained almost 11 percent, heading for a second straight weekly gain on concern the crops were seeded late. Flooding in Iowa and Illinois, the biggest U.S. producers of both crops, delayed spring seeding in May and June, and some fields had to be replanted.
``It's purely a technical adjustment,'' Kazuhiko Saito, a commodity strategist at Interes Capital Management, said today in Tokyo by telephone. A decline in weekly export sales of U.S. corn and soybeans also put pressure on the market, he said.
Corn for December delivery fell as much as 1.1 percent to $6.1075 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $6.1275 as of 2:53 p.m. in Singapore.
The contract rose 3.8 percent yesterday after touching $6.25, the highest since July 21. The price has soared 69 percent in the past year, reaching a record $7.9925 on June 27.
Soybeans for November delivery dropped as much as 11.75 cents, or 0.9 percent, to $13.3625 a bushel and last traded at $13.415. Futures gained 3.7 percent yesterday after touching $13.70, the highest since Aug. 1. The most-active contract has surged 59 percent in the past 12 months, reaching a record $16.3675 on July 3.
Late Plantings
Corn and soybeans rose yesterday on speculation that late plantings of U.S. crops have increased the risk of damage from early frosts before the harvests start next month. Frost damage before the harvest would curb yields by damaging corn kernels and soybean pods.
U.S. export sales of corn almost halved to 196,602 tons for the week ended Aug. 14 from the previous week, the Department of Agriculture said yesterday. The sales were less than the 250,000 tons to 400,000 tons expected by Citigroup.
Soybean sales experienced net cancellations of 81,131 tons, the second straight week of negative sales, as the crop approaches the end of its marketing year on Aug. 31. Citigroup had expected sales of 100,000 tons to 300,000 tons.
Commodities headed for their biggest weekly gain in 33 years as oil traded near a three-week high and a weakening dollar revived demand for raw materials as alternative assets.
The Reuters/Jefferies CRB Index of 19 commodities added 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975. The dollar headed for its first weekly decline against the euro since July 11, while oil traded near $121 a barrel after jumping more than $5 yesterday.
Bull Market
``Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,'' according to investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel.
Wheat for December delivery lost as much as 1.7 percent to $9.0625 a bushel and stood at $9.08 as of 3:00 p.m. Singapore time. The contract, which added 2.5 percent yesterday, has gained 26 percent in the past year, touching a record $13.495 on Feb. 27.
Before today, wheat gained 8.6 percent this week, extending gains for the second week.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Aug. 22 (Bloomberg) -- Corn declined for the first day in five and soybeans fell as investors bet their gains early this week were excessive and as U.S. weekly export sales dropped. Wheat also slid.
Corn had advanced 12.4 percent this week before today and soybeans gained almost 11 percent, heading for a second straight weekly gain on concern the crops were seeded late. Flooding in Iowa and Illinois, the biggest U.S. producers of both crops, delayed spring seeding in May and June, and some fields had to be replanted.
``It's purely a technical adjustment,'' Kazuhiko Saito, a commodity strategist at Interes Capital Management, said today in Tokyo by telephone. A decline in weekly export sales of U.S. corn and soybeans also put pressure on the market, he said.
Corn for December delivery fell as much as 1.1 percent to $6.1075 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $6.1275 as of 2:53 p.m. in Singapore.
The contract rose 3.8 percent yesterday after touching $6.25, the highest since July 21. The price has soared 69 percent in the past year, reaching a record $7.9925 on June 27.
Soybeans for November delivery dropped as much as 11.75 cents, or 0.9 percent, to $13.3625 a bushel and last traded at $13.415. Futures gained 3.7 percent yesterday after touching $13.70, the highest since Aug. 1. The most-active contract has surged 59 percent in the past 12 months, reaching a record $16.3675 on July 3.
Late Plantings
Corn and soybeans rose yesterday on speculation that late plantings of U.S. crops have increased the risk of damage from early frosts before the harvests start next month. Frost damage before the harvest would curb yields by damaging corn kernels and soybean pods.
U.S. export sales of corn almost halved to 196,602 tons for the week ended Aug. 14 from the previous week, the Department of Agriculture said yesterday. The sales were less than the 250,000 tons to 400,000 tons expected by Citigroup.
Soybean sales experienced net cancellations of 81,131 tons, the second straight week of negative sales, as the crop approaches the end of its marketing year on Aug. 31. Citigroup had expected sales of 100,000 tons to 300,000 tons.
Commodities headed for their biggest weekly gain in 33 years as oil traded near a three-week high and a weakening dollar revived demand for raw materials as alternative assets.
The Reuters/Jefferies CRB Index of 19 commodities added 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975. The dollar headed for its first weekly decline against the euro since July 11, while oil traded near $121 a barrel after jumping more than $5 yesterday.
Bull Market
``Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,'' according to investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel.
Wheat for December delivery lost as much as 1.7 percent to $9.0625 a bushel and stood at $9.08 as of 3:00 p.m. Singapore time. The contract, which added 2.5 percent yesterday, has gained 26 percent in the past year, touching a record $13.495 on Feb. 27.
Before today, wheat gained 8.6 percent this week, extending gains for the second week.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
Read more...
Iowa Corn Yields Rise, Minnesota Gains Smaller, Crop Tour Says
By Jeff Wilson and Ron Day
Aug. 22 (Bloomberg) -- Corn yields in Iowa improved more than the government said earlier this month after cool, dry weather in July and August helped plants recover from June flooding, according to the Pro Farmer Midwest Crop Tour.
Yields may average 168.3 bushels an acre, up 0.4 percent from a similar tour last year, based on 325 fields sampled, the farm group said. The U.S. Department of Agriculture had forecast Iowa corn yields would match last year's average of 171 bushels.
Higher yields could pressure corn prices, which have reached records this year amid a surge in demand for their use in animal feed and biofuel. The USDA on Aug. 12 predicted a U.S. corn crop of 12.288 billion bushels, the second largest to last year's 13.074 billion bushels.
``Disease and insect pressures are extremely low this year,'' improving the yield potential, said Gary Wietgrefe, area account manager for Syngenta Seeds Inc. in Sioux Falls, South Dakota. ``It's just a healthier crop that usual.''
Corn yields in Minnesota, the fourth-biggest U.S. grower, averaged 178.4 bushels an acre from 133 samples, up 5.5 percent from last year's tour result of 169.1 bushels. Minnesota corn yields may rise 13 percent to 165 bushels from 146 bushels a year earlier, the government said earlier this month.
Corn for December delivery fell as much as 1.1 percent to $6.1075 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $6.125 as of 12:49 p.m. in Singapore.
The contract touched $6.25 yesterday, the highest since July 21. The price reached a record $7.9925 on June 27.
`Juiced Up'
Corn crops in Minnesota and Iowa increased because farmers planted more genetically modified seeds on each acre because varieties fight pests and are resistant to some herbicides, allowing increased populations.
``The big thing is the ear count,'' said Chip Flory, editor of Pro Farmer. ``When a farmer decided to put the crop in the ground, he figured `let's go ahead and juice up the population.'''
The numbers of ears found in 60 linear feet of corn rose 1.7 percent to 95.7, up from 94.1 ears a year earlier and above the three-year average of 93.6, the tour results show. Ear counts in Minnesota rose 2.4 percent 97.9 compared with a year earlier.
The tour sample of soybean fields found fewer pods that may fill with beans than the government forecast for Iowa, the top U.S. producer. Soybean pod counts in Minnesota almost matched the same percentage drop in yields forecast by the USDA this month. The worst Midwest flooding in 15 years delayed planting of the U.S. crop, reducing the yield potential.
Pods Fall
Tour participants measured pod counts at 1,091 in a 3-foot- square sample in Iowa, down 10 percent from the tour average of 1,218 pods last year, when the state produced 51.5 bushels per acre, participants found. The USDA forecast on Aug. 12 that the yields would fall 8.7 percent.
Minnesota pod counts fell 2.3 percent to an average of 1,007 pods. The government earlier this month forecast soybean yields may fall 2.4 percent to 40 bushels per acre, based on conditions on Aug. 1. That compares with 41 bushels in 2007. Minnesota is the fourth-largest soybean-producing state.
The crop tour has been managed since 1993 by Professional Farmers of America, a marketing company based in Cedar Falls, Iowa, and attempts to gauge corn and soybean yield potential in seven of the top producing states in the Midwest. Participants sample crops about every 20 miles throughout the selected states. The Midwest grows about 70 percent of the two-biggest U.S. crops.
Midwest Floods
``Variability is the story this year,'' because the flooding delayed planting beyond optimal seeding dates, said Roger Bernard, senior editor for Pro Farmer, an agricultural marketing newsletter. ``The planting window in Iowa was not very big before the flooding rains in June,'' reducing the yield potential of the crops, Bernard said.
Soybeans for November delivery fell as much as 0.9 percent to $13.3625 a bushel and last traded at $13.4175. Futures touched $13.70 yesterday, the highest since Aug. 1. The price has surged 61 percent in the past year, reaching a record $16.3675 on July 3.
The U.S. corn crop was worth $52.1 billion last year. Soybeans were valued at $26.8 billion.
To contact the reporters on this story: Jeff Wilson in Austin, Minnesota at jwilson29@bloomberg.net; Ron Day in Austin, Minnesota at
Read more...
Aug. 22 (Bloomberg) -- Corn yields in Iowa improved more than the government said earlier this month after cool, dry weather in July and August helped plants recover from June flooding, according to the Pro Farmer Midwest Crop Tour.
Yields may average 168.3 bushels an acre, up 0.4 percent from a similar tour last year, based on 325 fields sampled, the farm group said. The U.S. Department of Agriculture had forecast Iowa corn yields would match last year's average of 171 bushels.
Higher yields could pressure corn prices, which have reached records this year amid a surge in demand for their use in animal feed and biofuel. The USDA on Aug. 12 predicted a U.S. corn crop of 12.288 billion bushels, the second largest to last year's 13.074 billion bushels.
``Disease and insect pressures are extremely low this year,'' improving the yield potential, said Gary Wietgrefe, area account manager for Syngenta Seeds Inc. in Sioux Falls, South Dakota. ``It's just a healthier crop that usual.''
Corn yields in Minnesota, the fourth-biggest U.S. grower, averaged 178.4 bushels an acre from 133 samples, up 5.5 percent from last year's tour result of 169.1 bushels. Minnesota corn yields may rise 13 percent to 165 bushels from 146 bushels a year earlier, the government said earlier this month.
Corn for December delivery fell as much as 1.1 percent to $6.1075 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $6.125 as of 12:49 p.m. in Singapore.
The contract touched $6.25 yesterday, the highest since July 21. The price reached a record $7.9925 on June 27.
`Juiced Up'
Corn crops in Minnesota and Iowa increased because farmers planted more genetically modified seeds on each acre because varieties fight pests and are resistant to some herbicides, allowing increased populations.
``The big thing is the ear count,'' said Chip Flory, editor of Pro Farmer. ``When a farmer decided to put the crop in the ground, he figured `let's go ahead and juice up the population.'''
The numbers of ears found in 60 linear feet of corn rose 1.7 percent to 95.7, up from 94.1 ears a year earlier and above the three-year average of 93.6, the tour results show. Ear counts in Minnesota rose 2.4 percent 97.9 compared with a year earlier.
The tour sample of soybean fields found fewer pods that may fill with beans than the government forecast for Iowa, the top U.S. producer. Soybean pod counts in Minnesota almost matched the same percentage drop in yields forecast by the USDA this month. The worst Midwest flooding in 15 years delayed planting of the U.S. crop, reducing the yield potential.
Pods Fall
Tour participants measured pod counts at 1,091 in a 3-foot- square sample in Iowa, down 10 percent from the tour average of 1,218 pods last year, when the state produced 51.5 bushels per acre, participants found. The USDA forecast on Aug. 12 that the yields would fall 8.7 percent.
Minnesota pod counts fell 2.3 percent to an average of 1,007 pods. The government earlier this month forecast soybean yields may fall 2.4 percent to 40 bushels per acre, based on conditions on Aug. 1. That compares with 41 bushels in 2007. Minnesota is the fourth-largest soybean-producing state.
The crop tour has been managed since 1993 by Professional Farmers of America, a marketing company based in Cedar Falls, Iowa, and attempts to gauge corn and soybean yield potential in seven of the top producing states in the Midwest. Participants sample crops about every 20 miles throughout the selected states. The Midwest grows about 70 percent of the two-biggest U.S. crops.
Midwest Floods
``Variability is the story this year,'' because the flooding delayed planting beyond optimal seeding dates, said Roger Bernard, senior editor for Pro Farmer, an agricultural marketing newsletter. ``The planting window in Iowa was not very big before the flooding rains in June,'' reducing the yield potential of the crops, Bernard said.
Soybeans for November delivery fell as much as 0.9 percent to $13.3625 a bushel and last traded at $13.4175. Futures touched $13.70 yesterday, the highest since Aug. 1. The price has surged 61 percent in the past year, reaching a record $16.3675 on July 3.
The U.S. corn crop was worth $52.1 billion last year. Soybeans were valued at $26.8 billion.
To contact the reporters on this story: Jeff Wilson in Austin, Minnesota at jwilson29@bloomberg.net; Ron Day in Austin, Minnesota at
Read more...
Gold Heads for Biggest Weekly Gain in Six Years on Higher Crude
By Rachel Graham
Aug. 22 (Bloomberg) -- Gold headed for its biggest weekly gain in more than six years as rising crude-oil prices and political tension between Russia and the West buoy demand for the metal as a hedge against inflation and as a haven.
Russia's Foreign Ministry said yesterday it was reviewing its relations with the North Atlantic Treaty Organization after western condemnation of its actions in Georgia. Crude added more than $6 a barrel yesterday, heading for its biggest weekly gain in more than two months.
``You must look at the oil,'' Tariq Mahmood, a Dubai-based technical analyst at online trader Global Tradewaves Ltd., said by phone. ``When the news came out about Russia and NATO, that's when we saw the rally with crude and gold.''
Gold for immediate delivery traded down $4, or 0.5 percent, to $832.99 an ounce as of 9:20 a.m. in London. A close at that level would make for a weekly advance of 5.7 percent, the biggest increase since the five days ended Feb. 8, 2002.
Gold futures for December fell 60 cents, or 0.1 percent, to $838.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
``If we close over $850 we might see $920 in the next couple of weeks,'' Mahmood said. ``If it fails to close about this level, we could easily see $790 again.''
Among other metals for immediate delivery, silver dropped 10.5 cents, or 0.8 percent, to $13.74 an ounce. Platinum added $6.50, or 0.5 percent, to $1,466 an ounce and palladium gained $2.25, or 0.8 percent, to $292.25 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
Read more...
Aug. 22 (Bloomberg) -- Gold headed for its biggest weekly gain in more than six years as rising crude-oil prices and political tension between Russia and the West buoy demand for the metal as a hedge against inflation and as a haven.
Russia's Foreign Ministry said yesterday it was reviewing its relations with the North Atlantic Treaty Organization after western condemnation of its actions in Georgia. Crude added more than $6 a barrel yesterday, heading for its biggest weekly gain in more than two months.
``You must look at the oil,'' Tariq Mahmood, a Dubai-based technical analyst at online trader Global Tradewaves Ltd., said by phone. ``When the news came out about Russia and NATO, that's when we saw the rally with crude and gold.''
Gold for immediate delivery traded down $4, or 0.5 percent, to $832.99 an ounce as of 9:20 a.m. in London. A close at that level would make for a weekly advance of 5.7 percent, the biggest increase since the five days ended Feb. 8, 2002.
Gold futures for December fell 60 cents, or 0.1 percent, to $838.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
``If we close over $850 we might see $920 in the next couple of weeks,'' Mahmood said. ``If it fails to close about this level, we could easily see $790 again.''
Among other metals for immediate delivery, silver dropped 10.5 cents, or 0.8 percent, to $13.74 an ounce. Platinum added $6.50, or 0.5 percent, to $1,466 an ounce and palladium gained $2.25, or 0.8 percent, to $292.25 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Oil Heads for Biggest Weekly Gain in Two Months on Dollar Drop
By Christian Schmollinger
Aug. 22 (Bloomberg) -- Crude oil is headed for its biggest weekly increase in more than two months after rising almost 5 percent yesterday as the dollar slumped, prompting investors to buy commodities.
Oil is poised for its first weekly gain in two weeks and its largest increase since June 6. Energy and metals futures climbed as the U.S. currency fell the most against the euro in more than a month. An Aug. 20 missile-shield agreement between the U.S. and Poland has ``real anti-Russian potential,'' the Foreign Ministry said in Russia, the second-biggest oil producer.
``Gains were pretty broad based across the commodity space,'' said Gerard Burg, an energy and minerals economist with National Australia Bank Ltd. in Melbourne. ``The U.S. dollar fell which magnified the upward trend. It's a big move but we've seen this level of volatility and it's once again a symptom of how tight the market remains at this time.''
Crude oil for October delivery was at $121.67 a barrel, up 49 cents, at 1:49 p.m. Singapore time on the New York Mercantile Exchange. Yesterday, the contract surged $5.62, or 4.9 percent, to settle at $121.18 a barrel, the biggest increase since June 6. Futures are down 18 percent from a record $147.27 reached on July 11. Prices are up 75 percent from a year ago.
The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 3.9 percent to 1508.967 yesterday, the highest since Aug. 1. Gold for December delivery rose $22.70, or 2.8 percent, to $839 an ounce on the Comex division of Nymex.
The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975.
Dollar, Russia
Brent crude oil for October settlement rose as much as 75 cents, or 0.6 percent, to $120.91 a barrel on London's ICE Futures Europe exchange. It was at $120.75 a barrel at 2:49 p.m. Singapore time. The contract yesterday gained $5.80, or 5.1 percent, to settle at $120.16 a barrel.
The dollar traded at $1.4866 per euro at 11:24 a.m. in Singapore. It dropped 1 percent yesterday and touched $1.4903, the weakest level since Aug. 14 and the biggest fall since June. The dollar has risen 4.8 percent versus the euro in August, which would be the biggest monthly gain since May 2001.
Poland signed an agreement on Aug. 20 with the U.S. to host an American anti-missile base and to provide aid to bolster the country's air defenses. Russia has warned the move will lead to a new arms race in Europe and is reconsidering its ties with the North Atlantic Treaty Organization.
Russia has defied calls by U.S. President George W. Bush and other Western leaders for an immediate withdrawal from Georgia since a cease-fire agreement last week ended five days of fighting.
Pipeline Closed
The Baku-Supsa pipeline, which pumps more than 100,000 barrels of oil a day from Azerbaijan to the Georgian port of Supsa on the Black Sea coast, is still shut on security concerns following fighting between Georgian and Russian troops, Toby Odone, a London-based spokesman for BP, said yesterday by telephone. Railway transportation to Georgia's Black Sea ports has also been suspended because of a damaged bridge.
The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will be fully operational this week and tanker loading will resume next week, officials said. The pipeline has a capacity of 1 million barrels a day.
``There's been no or very little oil coming out of there and that shortage has been eclipsing the amount of oil that Saudi Arabia and OPEC has been adding to the market,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``Now that it's more than just what's happening in the Caucuses and Russia may shut off the pipes a little bit, the world seems to be paying more attention.''
Price May Rise
Crude oil may rise next week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week, 63 percent expected prices to increase.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
Read more...
Aug. 22 (Bloomberg) -- Crude oil is headed for its biggest weekly increase in more than two months after rising almost 5 percent yesterday as the dollar slumped, prompting investors to buy commodities.
Oil is poised for its first weekly gain in two weeks and its largest increase since June 6. Energy and metals futures climbed as the U.S. currency fell the most against the euro in more than a month. An Aug. 20 missile-shield agreement between the U.S. and Poland has ``real anti-Russian potential,'' the Foreign Ministry said in Russia, the second-biggest oil producer.
``Gains were pretty broad based across the commodity space,'' said Gerard Burg, an energy and minerals economist with National Australia Bank Ltd. in Melbourne. ``The U.S. dollar fell which magnified the upward trend. It's a big move but we've seen this level of volatility and it's once again a symptom of how tight the market remains at this time.''
Crude oil for October delivery was at $121.67 a barrel, up 49 cents, at 1:49 p.m. Singapore time on the New York Mercantile Exchange. Yesterday, the contract surged $5.62, or 4.9 percent, to settle at $121.18 a barrel, the biggest increase since June 6. Futures are down 18 percent from a record $147.27 reached on July 11. Prices are up 75 percent from a year ago.
The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 3.9 percent to 1508.967 yesterday, the highest since Aug. 1. Gold for December delivery rose $22.70, or 2.8 percent, to $839 an ounce on the Comex division of Nymex.
The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975.
Dollar, Russia
Brent crude oil for October settlement rose as much as 75 cents, or 0.6 percent, to $120.91 a barrel on London's ICE Futures Europe exchange. It was at $120.75 a barrel at 2:49 p.m. Singapore time. The contract yesterday gained $5.80, or 5.1 percent, to settle at $120.16 a barrel.
The dollar traded at $1.4866 per euro at 11:24 a.m. in Singapore. It dropped 1 percent yesterday and touched $1.4903, the weakest level since Aug. 14 and the biggest fall since June. The dollar has risen 4.8 percent versus the euro in August, which would be the biggest monthly gain since May 2001.
Poland signed an agreement on Aug. 20 with the U.S. to host an American anti-missile base and to provide aid to bolster the country's air defenses. Russia has warned the move will lead to a new arms race in Europe and is reconsidering its ties with the North Atlantic Treaty Organization.
Russia has defied calls by U.S. President George W. Bush and other Western leaders for an immediate withdrawal from Georgia since a cease-fire agreement last week ended five days of fighting.
Pipeline Closed
The Baku-Supsa pipeline, which pumps more than 100,000 barrels of oil a day from Azerbaijan to the Georgian port of Supsa on the Black Sea coast, is still shut on security concerns following fighting between Georgian and Russian troops, Toby Odone, a London-based spokesman for BP, said yesterday by telephone. Railway transportation to Georgia's Black Sea ports has also been suspended because of a damaged bridge.
The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will be fully operational this week and tanker loading will resume next week, officials said. The pipeline has a capacity of 1 million barrels a day.
``There's been no or very little oil coming out of there and that shortage has been eclipsing the amount of oil that Saudi Arabia and OPEC has been adding to the market,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``Now that it's more than just what's happening in the Caucuses and Russia may shut off the pipes a little bit, the world seems to be paying more attention.''
Price May Rise
Crude oil may rise next week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week, 63 percent expected prices to increase.
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
Read more...
Investors Ignore Malaysia Politics, See Value, Macquarie Says
By Chan Tien Hin
Aug. 22 (Bloomberg) -- Digi.Com Bhd. and TM International Bhd. are among Malaysian stocks recommended by Macquarie Group Ltd. as cheap valuations outweighing political concerns to lure investors, the investment bank said.
``Investors are finally beginning to look past politics and shifting their focus back to fundamentals and finding value in Malaysia,'' Macquarie said in a report dated Aug. 21. Based on investor feedback, ``politics has declined as a concern,'' it said.
The Kuala Lumpur Composite Index has slumped 17 percent since opposition parties won almost half the states in the March 8 election and denied the ruling coalition a two-thirds majority in parliament for the first time since 1969. Prime Minister Abdullah Ahmad Badawi, facing a weakened government, has said he'll transfer power to his deputy Najib Razak after the party's annual meeting in December.
The benchmark stock index is valued at 12 times reported earnings and traded at 16 times at the start of the year, according to data compiled by Bloomberg.
``As politics in Malaysia stabilizes, the KLCI will have a modest re-rating,'' the report said. Clients from Hong Kong recently ``asked about high beta sectors such as construction and bombed-out value stocks'' such as Genting Bhd., it said. Beta is an indicator of volatility.
Macquarie said investors should buy Public Bank Bhd., Malaysia's third-largest bank, Genting, Asia's biggest listed casino operator, lottery rival Berjaya Sports Toto Bhd., KNM Group Bhd. and banking group AMMB Holdings Bhd.
The Kuala Lumpur Composite Index rose 0.9 percent at 11:36 a.m. local time, set for its biggest advance since July 28.
To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net
Read more...
Aug. 22 (Bloomberg) -- Digi.Com Bhd. and TM International Bhd. are among Malaysian stocks recommended by Macquarie Group Ltd. as cheap valuations outweighing political concerns to lure investors, the investment bank said.
``Investors are finally beginning to look past politics and shifting their focus back to fundamentals and finding value in Malaysia,'' Macquarie said in a report dated Aug. 21. Based on investor feedback, ``politics has declined as a concern,'' it said.
The Kuala Lumpur Composite Index has slumped 17 percent since opposition parties won almost half the states in the March 8 election and denied the ruling coalition a two-thirds majority in parliament for the first time since 1969. Prime Minister Abdullah Ahmad Badawi, facing a weakened government, has said he'll transfer power to his deputy Najib Razak after the party's annual meeting in December.
The benchmark stock index is valued at 12 times reported earnings and traded at 16 times at the start of the year, according to data compiled by Bloomberg.
``As politics in Malaysia stabilizes, the KLCI will have a modest re-rating,'' the report said. Clients from Hong Kong recently ``asked about high beta sectors such as construction and bombed-out value stocks'' such as Genting Bhd., it said. Beta is an indicator of volatility.
Macquarie said investors should buy Public Bank Bhd., Malaysia's third-largest bank, Genting, Asia's biggest listed casino operator, lottery rival Berjaya Sports Toto Bhd., KNM Group Bhd. and banking group AMMB Holdings Bhd.
The Kuala Lumpur Composite Index rose 0.9 percent at 11:36 a.m. local time, set for its biggest advance since July 28.
To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net
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