High port stocks damp Chinese demand for palm oil

29 Oct 09

China, the world’s second largest vegetable oil buyer, has slowed palm oil purchases by 20 to 25 percent this month amid swelling stocks at its ports, which may weaken exports and put pressure on prices.

Traders say China’s palm oil stocks are up 25 percent to half a million tonnes, a marked contrast to its port soybean stocks, which have fallen by as much as half in the past three months to 2-3 million tonnes.

Soy imports are expected to surge as China’s food processors try to keep up with soyoil demand but on the palm oil front, China just bought 340,000 tonnes of mostly refined palm olein from Malaysia compared to the monthly 400,000-450,000 tonnes.

“Chinese buyers are not even price sensitive about palm oil these days,” said a Singapore-based trader who deals regularly with the China market. “They usually run away when refined palm oil prices are $650 a tonne but now that equation does not work. They are just buying hand-to-mouth, very small cargoes, as stocks are large.”

Refined palm olein prices now stand at $670 a tonne and traders expect the cash market to weaken on the lack of strong demand. Malaysia’s exports, which had a strong performance in the first half of October, have started to soften.

INDIA BUYS

India has been buying more. Cargo surveyor data for Malaysia’s Oct. 1-25 showed that the world’s top buyer of vegetable oils snapped up 38 percent more palm oil at 86,010 tonnes compared to the same period a month ago.

This week, India bought 20,000 tonnes of crude palm oil from Malaysia and Indonesia at $650 and $680 a tonne based on cost, insurance and freight (CIF), traders said. There may be new orders if crude palm oil prices fall to $625-$630 a tonne.

Cargoes would be smaller though, due to the incoming soybean harvest in India, traders say. Prices of the oilseed have fallen to 21,500 rupees ($452) a ton this week compared to 22,500 rupees a week ago as more soybeans entered the market.

“The new crushing season started this month and soybean arrivals have been gaining pace. Soyoil imports from the U.S. are non-existent for now,” said a leading trader from the Indian port city of Mumbai.

But India is on the lookout for soyoil cargoes for Dec. and Jan. delivery once the soybean crop gets processed, other dealers say.

They say orders will be directed mostly at Brazil and Argentina, which are expected to produce a bumper soybean crop after suffering from drought this year.
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Auto Sales ~ Sep 09 : 46,069

Motor Vehicle Sales Down 5 Per Cent In September 2009

KUALA LUMPUR, Oct 15 (Bernama) -- Motor vehicle sales volume in September 2009 was 2,469 units or five per cent lower than the previous month, the Malaysian Automotive Association (MAA) said Thursday.

The lower sales was attributed by the association to the short working month due to the Hari Raya festive holidays."Sales volume for October 2009 is expected to be maintained," MAA said in a statement Thursday.

Motor vehicle sales for September 2009 decreased by nine per cent to 46,069 units from 50,729 units in the same period last year, the association said.

Year-to-date September 2009 motor vehicle sales declined by seven per cent to 397,619 units from 429,913 units previously.
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26 Oct 09 BNM ~ OPR unchanged at 2.00%

Monetary Policy StatementAt the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to leave the Overnight Policy Rate (OPR) unchanged at 2.00 percent.

Since the MPC in August, the international economic and financial conditions have improved further. Economic activity in the advanced economies has shown broader signs of stabilisation, supported by the impact of policy measures implemented and an improvement in consumer sentiment and business confidence.

Several regional economies have reported positive growth in the third quarter, indicating that recovery in the region is ongoing. Notwithstanding these improvements, the outlook for the global economy continues to be uncertain, with recovery likely to be slow and uneven in view of the ongoing adjustments.

In the domestic economy, stronger evidence has emerged to suggest that conditions are improving and a recovery in economic activity is gaining some strength. These improvements are more broad-based and are reflected in stronger labour market conditions, consumer and business sentiments, industrial production, financing activity and external trade. These positive developments are expected to continue into 2010, with growth in the domestic economy expected to continue to be supported by existing policy measures and the growing confidence in the private sector.

Consumer prices declined at a slower rate in September. The decline in prices largely reflects the cumulative fall in fuel prices since June 2008 and the easing pressure on food prices. The decline in consumer prices, however, is expected to be temporary.

Excluding further unanticipated price adjustments and external influences, inflation in 2010 is projected to be positive but remain subdued.With improving domestic economic conditions, and as price pressures and inflationary expectations are expected to remain contained going forward, the assessment is that the current monetary policy stance is appropriate and will continue to provide support to economic activity.

Bank Negara Malaysia28 October 2009

BNM Reserves ~ 15 Oct 09 : RM 334.2 b

The international reserves of Bank Negara Malaysia amounted to RM334.2 billion
(equivalent to USD95.9 billion) as at 15 October 2009.

The reserves position is sufficient to finance 9.5 months of retained imports
and is 3.9 times the short-term external debt.
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New Portfolio ~ 2009 Oct ...

Aaaaa ..... good time to start a new portfolio.

22 Oct 2009
Injected new Capital of RM 34,5oo into new portfolio
I buy 6,000 Analabs at RM 1.14

23 Oct 2009
I buy 4,300 Analabs at average price of RM 1.1414

26 Oct 2009
I buy 9,100 Analabs at RM 1.13

29 Oct 2009
I buy 15,000 Leader at RM 0.78
I injected another RM 5,000 capital

Analabs (RM 1.09) ~ 10 Q1 report

Review of the Performance

For the quarter under review, the Group recorded a revenue of RM10.27 million, 26% below the revenue of the corresponding quarter of the preceding year as there was no contribution from the aquaculture operating unit which was undergoing upgrading and maintenance of its site during the current quarter. The other operating units have also registered a decline in revenue due to the weak prevailing operating environment.

As there was no revenue from the aquaculture operating unit, the Group’s profit before tax was lower by 25% when compared to the corresponding quarter of the preceding year. The corresponding reduction in the cost of procuring recycled products and the cost savings measures undertaken by the Group was effective in enabling certain operating units to register a higher profit despite lower turnover.


Prospects

On the backdrop of improving general economic climate, the Group’s prospects for the current financial year 2010 is expected to be satisfactory.

**********************************************************************************

The details of investments in quoted securities as at the end of the current financial quarter are set out below :-

Total investments at cost RM 17,036 m
Total investments at carrying value RM 15,836 m
Total investments at market value RM 15,516 m

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Sept 23 ~ Crude Oil Supplies 335.6 m , Inventories 9.1% above 5yr average

Oil Set for Biggest Weekly Drop Since July on Recovery Concern
By Ben Sharples

Sept. 25 (Bloomberg) -- Oil in New York is poised for its biggest weekly drop since July after U.S. sales of existing homes unexpectedly slumped, bolstering skepticism about the pace of recovery in the biggest energy consuming nation.

Oil has dropped 9 percent this week as an Energy Information Administration report showed a gain in U.S. fuel stockpiles, boosting speculation of a supply glut. Prices are also under pressure from a stronger dollar, which reduces the appeal of commodities as an inflation hedge.

“The home sales data in the U.S. was a trigger that contributed to a tumble in the oil price,” said David Moore, a commodity strategist with Commonwealth Bank of Australia. “The oil data from the EIA is relatively bearish, and on top of that the U.S. dollar recovered a little bit of ground.”

Crude oil for November delivery traded at $65.87 a barrel, down 2 cents, on the New York Mercantile Exchange at 9:56 a.m. in Sydney. Futures, which dropped 4.5 percent yesterday, are headed for the biggest decline since the week ended July 10. Prices have advanced 48 percent since the start of the year.

U.S. equities fell for a second day yesterday as sales of existing homes slumped and the Federal Reserve said it will cut the size of two programs meant to bolster credit markets. The Standard & Poor’s 500 Index lost 1 percent in New York and the Dow Jones Industrial Average slipped 0.4 percent.

The dollar gained 0.1 percent to $1.4649 per euro at 9:57 in Sydney, from $1.4666 yesterday.

Supplies Increase

“We expect a hesitant recovery in the U.S. and in that context we’re going to get bits of data that disappoint, and that’s what we saw last night,” Moore said.

Supplies of crude oil rose 2.86 million barrels, to 335.6 million, the biggest increase since the week ended July 24, according to the Energy Department report released Sept. 23. Analysts had expected a 1.4 million-barrel decrease. The gain left stockpiles 9.1 percent above the five-year average.

U.S. gasoline stockpiles surged 5.41 million barrels last week, more than 10 times the gain forecast by analysts in a Bloomberg News survey, according to the report. Demand for the fuel slipped 2.3 percent to 8.79 million barrels a day, the lowest since January.

Inventories of distillate fuel, a category that includes heating oil and diesel, rose 2.96 million barrels, almost double analyst estimates.

“There has been a lot of talk about green shoots, but we are still shedding jobs and oil demand is still going to drop by 2 million barrels this year,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “There comes a point when you have to pay attention to the fundamentals.”

Brent crude for November settlement rose 1 cent to $64.83 a barrel on the London-based ICE Futures Europe exchange at 10:06 a.m. Sydney time. Yesterday, the contract dropped $3.17, or 4.7 percent, to $64.82.
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Zeti: Domestic demand shows signs of economic recovery

Central bank governor sees better external demand in third quarter

KUALA LUMPUR:
The country’s domestic demand is showing clear signs of recovery from the fiscal stimulus and an accommodative monetary policy, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. “We have seen the worst,” she told reporters after delivering a keynote address at the 5th Banking and Financial Law School 2009 conference yesterday.

Zeti expects an improvement in external demand in the third quarter and an expansion in gross domestic product (GDP) in the next three months. “We expect growth to be modest at the initial stage and improve more significantly next year,” she said, adding that there would be a revision in the country’s growth forecast in Budget 2010, to be tabled in parliament next month.

The Government expects the economy to shrink as much as 5% in 2009. The country’s economic contraction eased to 3.9% in the second quarter from a 6.2% decline in the first quarter.

Zeti said interest rates were also “appropriate” as government stimulus and improving overseas demand had helped boost economic recovery. The current interest rate level was supporting the demand for access to financing, she added. Bank Negara has cut its key rate from 3.5% in mid-November to 2% to spur growth.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng said the economic recovery momentum had been rising since the first quarter. “The pace of recovery should be sustainable based on the economic indicators we have seen so far, with steady improvements in industrial production index and exports, especially in the second quarter,” he said. Yeah expects the country’s export level to turn positive in December and GDP to achieve positive growth in the fourth quarter. RAM’s GDP forecast is a contraction of 3.3% this year.

AmResearch Sdn Bhd senior economist Manokaran Mottain believes the country’s economy is currently in a recovery phase, backed by an upturn in global trade. “We are maintaining our GDP growth forecast of minus 3% this year, with a growth of 1% to 2% in the fourth quarter. Our GDP growth forecast in 2010 is 3% to 4%. “The Government’s stimulus package would be disbursed and help boost the economy into 2010,” he said.

On interest rates, he expects a review only upon a firmer recovery in the domestic economy.
“If economic growth is modest, then a revision in interest rates will only happen in the second half of 2010. It may even be flat for the whole year,” he said.

Yeah foresees interest rates remaining at 2% for the rest of the year, as any increase may derail economic recovery.

The central bank has kept interest rates unchanged for a fourth straight meeting last month.

On whether the country was experiencing a W-shaped recovery, Zeti said there was no credit crunch as financial institutions remained strong and continued to provide financing for domestic businesses. Only over-leveraged countries needed to reduce their indebtness, she said, adding: “Only if they restructure their financial system would they be able to see any sign of increase in consumption activity. “There could be a second round of impact on their financial system given the economic slowdown but, in Malaysia’s case, we never had that situation to begin with and our banks are financially very solid.”
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BNM Reserves ~ 15 Sep 09 : RM 329.9 b

The international reserves of Bank Negara Malaysia amounted to RM329.9 billion (equivalent to USD93.5 billion) as at 15 September 2009.

The reserves position is sufficient to finance 9.4 months of retained imports and is 3.8 times the short-term external debt.
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UPDATE ON LEADER'S 100MW COAL-FIRED POWER PROJECT

UPDATE ON LEADER'S 100MW COAL-FIRED POWER PROJECT IN CAMBODIA
- SIGNING OF THE POWER PURCHASE AGREEMENT AND IMPLEMENTATION AGREEMENT


We refer to our announcement dated 11 June 2009
on the signing of a Joint Venture and Shareholders Agreement
with Cambodia International Investment Development Group Co. Ltd ("CIIDG")
to build, own and operate the 100 MW coal-fired power plant project in Sihanoukville, Cambodia ("the Power Project") via Cambodia Energy Ltd ("CEL"),
a joint venture company between Leader Universal Holdings Berhad ("LEADER") and CIIDG,
with a percentage shareholding of 80% and 20% respectively.

LEADER is pleased to announce that the Company had on 17 September 2009 signed the following agreements in relation to the Power Project.

Announcement Details :

Power Purchase Agreement (“PPA”):

PPA was entered with the Electricite du Cambodge ("EDC"), a wholly state-owned limited liability enterprise incorporated by Royal Decree of the Kingdom of Cambodia. Under the PPA, EDC undertakes to purchase from LEADER on a minimum take basis of eighty-six percent of dependable capacity per annum and other terms and conditions as set out in the PPA.

Salient terms of PPA inter alia are as follows:
(a) Duration and validity of the PPA shall commence on the date of the PPA and shall continue for a period of thirty (30) years from the Commercial Operation Date of the Power Project, unless earlier terminated in accordance with the PPA and the Implementation Agreement.
(b) The Power Project shall consists of two(2) units of 50MW coal-fired electric power generating facility and a double circuit 230 kV transmission line;
(c) The base tariff for the electricity payments shall be USD 0.07212 per kilowatt hours with indexation. Any fluctuation in the fuel price shall be a pass-through and the base tariff shall be adjusted accordingly; and
(d) LEADER may novate the PPA to a project company to undertake and to perform all of the obligations of LEADER.

Implementation Agreement (“IA”)

IA was entered on even date with The Royal Government of Cambodia (“RGC”) represented by The Minister, Ministry of Industry, Mines and Energy (“MIME”), and The Minister of Economy and Finance ("MEF") for the implementation of the Power Project.

The salient terms inter alia of the IA are as follows:
(a) Duration of the IA shall commence with effect from the date of the IA and shall continue for the duration of the PPA unless it is terminated earlier pursuant to the provisions of the IA;
(b) MIME has granted LEADER the exclusive rights to design, finance, insure, construct and maintain and manage the Power Project on Build-Own-Operate ("BOO") basis;
(c) LEADER shall sell to EDC all the electricity generated from the Power Project pursuant to the PPA;
(d) RGC shall grant incentives according to the Investment and Taxation and other laws and related sub-decrees of the Kingdom of Cambodia for the purpose of development and operation of the Power Project; and
(e) LEADER may novate all its rights and obligations under the IA to a project company incorporated in Cambodia within 6 months from the date of the IA.

Pursuant to the provisions in the PPA and IA, LEADER will novate all its rights and obligations, subject to terms and conditions of the PPA and IA, to CEL to implement the Power Project.

Government Guarantee of Payment

MEF acting on behalf of RGC had provided a Government Guarantee of Payment dated 31 March 2008 ("RGC Guarantee") to Power Synergy Corporation Co. Ltd. ("PSC"), the original developer of the 200MW size power project ("200MW Power Project"), before the split into 2 power projects of 100MW size each, to guarantee the repayment of any sums due under the PPA.

The RGC Guarantee has been assigned by PSC with the consent of MEF acting on behalf of RGC to and in favour of LEADER in respect of the Power Project.

The salient terms inter alia of the RGC Guarantee are as follows :
(a) The RGC guarantee shall continue to be binding and shall be applicable to LEADER and its permitted successors and assigns for the duration of the PPA and IA;
(b) RGC agrees to provide
.....(i) guarantee on power purchase in the event of non-payment by EDC and
.....(ii) guarantee on the payment on the termination in accordance to the relevant conditions described in the PPA and IA;
(c) LEADER is entitled to assign or grant security over its rights under the RGC Guarantee to the project lenders.

These new PPA and IA shall supersede the PPA dated 27 March 2008 signed between EDC and PSC and the IA dated 27 March 2008 signed between RGC represented by The Minister of MIME and MEF and PSC respectively which were announced on 27 March 2008.
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