US hogs surge again on export talk and lower dollar

Reuters: [2008-05-06 22:29:00]

By Jerry Bieszk

CHICAGO, May 6 (Reuters) - U.S. hog futures continued their strong advance on Tuesday as higher pork prices in the cash market strengthened talk of strong exports.

"The export business is still good and I think that's one of the contributing factors. There sure has been terrific demand in there," said Bruce Johnson, independent livestock trader. "The hog market keeps coming in higher so is must be good demand."

A slipping U.S. dollar added to ideas of increased exports, especially after the record pace of pork exports for the past nine months. The calculated pork carcass cutout value for Monday was put at $76.21 per cwt by the USDA, the highest level since late July.

June lean hogs <2LHM8> closed up 1.550 cents at 74.750 cents per lb and July <2LHN8> was up 0.675 cent at 76.025 cents. June moved above the 100-day moving average to post a one-week high and rose above all its averages to also set a one-week high.

Although strong pork product prices provided support to cash hogs, part of the strength in live markets was coming from a slow down in hog marketings due to farmers planting corn.

But some traders felt the cash pork product market may be starting to top out. Cash loins were called weak by the USDA early on Tuesday and pork trade was very slow.

Any downturn in the pork cutout value after reaching a nine month high could bring in fresh selling pressure, they said.

"It's my opinion that we are real close to a turn in this pork cutout value," said Dennis Smith, broker with Archer Financial. "Every time you take the cutout up another notch, trade slows down a little bit more."

Pork belly futures also sped higher in reaction to the higher hog futures and to talk that there may be a strong stopper for deliveries. CME reported 26 deliveries against the May contract on Tuesday.

USDA put Monday's average cash belly price unchanged at $84.98 per cwt, while on Tuesday USDA's carlot report quoted some pork bellies $2 higher.

May pork bellies <2PBK8> finished up 1.950 cent at 75.800 cents per lb and July <2PBN8> was up 1.650 at 76.500 cents.

Live cattle futures closed higher as firm beef prices and a sharply higher hog market fueled active short covering. The market lacked follow-through selling on the early break despite some traders looking for the cash beef market to top out soon.

June live cattle <2LCM8> ended up 0.625 cent at 91.825 cents per lb and August <2LCQ8> was up 0.350 cent at 97.825. June posted a three-week low early but held the 40-day moving average and rallied to close above the 20-day average.

Traders had been expecting beef prices to trend lower after recent strong gains, especially with rising oil prices cutting into spendable income. But beef has not lost much value.

Early on Tuesday, USDA quoted choice beef down 28 cents from Monday at $155.18 per cwt, but Monday's quote was the highest since May 25, 2007. The select cutout on Tuesday was up 74 cents at $152.71.

Back months held sharp premiums on speculation for much higher cash cattle prices later.

"We will have a goodly amount of cattle for the next six to eight weeks and as long as the packer is making money and he keeps killing the cattle I think we will get through them and probably have a pretty robust fall and first quarter of next year," said Johnson.

Feeder cattle futures closed mostly higher as higher live cattle futures prompted local short covering. Firm cash feeder prices this week were also supportive.

May feeder cattle <2FCK8> closed up 0.300 at 105.550 cents per lb and August <2FCQ8> was off 0.050 at 108.200. (Reporting by Jerry Bieszk; Editing by Marguerita Choy)

((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) Keywords: MARKETS LIVESTOCK/

PRESS DIGEST-Australian Business News - May 7

Reuters: [2008-05-06 22:26:00]

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Gavin O'Reilly has taken over as the new chairman of media group APN News & Media <APN.AX>. Mr O'Reilly is chief operating officer of Irish media group Independent News & Media <INWS.I> which is 26.7 percent owned by his father, Sir Anthony O'Reilly. Independent News has a 40.7 percent stake in APN. 'We are long-term, strategic shareholders [in APN],' Mr O’Reilly said yesterday at APN's annual meeting, where he formally took the reins from outgoing chairman James Parkinson. Page 60.

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Wine and beer group Foster's <FGL.AX> saw profit at its North American business drop 32 percent to A$98 million in the first half of 2007-08, according to data compiled by marketing information firm ACNielsen. Among the company's worst-performing brands in the United States were Rosemount and the California-made Beringer. Foster's blamed slackening consumer spending in the US, which caused a 1.1 percent fall in broader wine market growth in that country in the four weeks ended April 19. Page 61.

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Fine paper merchant PaperlinX <PPX.AX> yesterday shut down a key pulp mill in Victoria for six weeks for maintenance and development work. The Maryvale mill is due for a planned A$310 million upgrade early next year. According to a PaperlinX spokesman, the outcome of the shutdown will determine if the upgrade will be completed on time, and whether projected savings will be achieved. Broker JPMorgan says successful completion of the Maryvale project will 'create a powerful step change in earnings for PaperlinX.' Page 61.

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Diversified industrial group Futuris Corp <FCL.AX> has abandoned its plans to offload its 43 percent stake in Australian Agricultural Company (AACo) <AAC.AX>. 'None of the proposals arising from the sale process have certainty of execution or timing,' said Futuris chief executive Les Wozniczka. It is understood that potential private buyers of AACo were held back by the rising cost of debt in the wake of the global credit crunch. Futuris shares fell 5 cents to A$2.11 yesterday, while AACo shares dropped 6 cents to A$3.13. Page 61.

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THE AUSTRALIAN (www.theaustralian.news.com.au)

Banking and insurance group Suncorp Metway <SUN.AX> has announced a A$400 million raising in a convertible preference share (CPS) offer. Suncorp chairman John Story said yesterday the raising would help finance asset growth and reduce existing debt. The CPS securities, priced at A$100 each, will pay investors floating rate, quarterly, non-cumulative dividends. Suncorp expects the securities to receive investment-grade credit ratings of A- from Standard & Poor’s and A2 from Moody’s. Page 37.

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IBM Australia <IBM.N> yesterday announced a 222 percent rise in profit for calendar 2007 to A$196.7 million on revenue of A$3.96 billion. IBM said a new executive team and strong performances by its services and software divisions helped pull the company out of a lacklustre patch in the previous two years. 'With the [new] leadership team in 2006, we came together and said if we represent ourselves to clients as one IBM, all the internal stuff will work itself out,' managing director Glenn Boreham said. Page 37.

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The ACP Magazines division of PBL Media will launch an Australian version of the successful British title Good Food in partnership with BBC Magazines. 'This will be a unique addition to the Australian food magazine market, fusing the strength of an internationally respected UK brand with Australian flair, expertise and individuality,' said ACP senior publishing executive Phil Scott said yesterday. The magazine will be launched next month at the Sydney Good Food Show. Page 37.

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Former Formula One Minardi team owner Paul Stoddart has sold his stake in charter airline OzJet to airfreight operator HeavyLift Cargo Airlines. OzJet chief executive Willie O’Neill said the 'multimillion-dollar deal' would help improve the carrier's financial situation and enable it to boost investment. OzJet operates services to Norfolk Island, between Perth and Derby and between Perth and Bali in Indonesia. Page 37.

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THE SYDNEY MORNING HERALD (www.smh.com.au)

Troubled shopping centre group Centro Properties <CNP.AX> is today expected to seek what could be the last extension to its A$4.2 billion debt deadline. Chief executive Glenn Rufrano was last night understood to be in talks with bankers to secure a deal. One of the lenders, St George Bank <SGB.AX>, said it was confident Centro would get an extension despite the reluctance of problem-hit German bank WestLB to give Centro more time. Centro's main lenders include ANZ Bank <ANZ.AX>, Commonwealth Bank <CBA.AX>, National Australia Bank <NAB.AX> and JPMorgan <JPM.N>. Page 22.

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Insurer QBE <QBE.AX> extended for the second time its A$8 billion takeover offer for troubled rival Insurance Australia Group (IAG). The new deadline was set at 5 pm on May 19. QBE is offering IAG shareholders 0.142 of its shares in addition to 70 cents cash for every IAG share. 'The proposal has been extended to allow stakeholders more time to consider the impact of IAG's profit downgrade last week and the value of [QBE's] shares,' said QBE chief executive Frank O'Halloran. Page 23.

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One of the Commonwealth Bank’s listed office and retail trusts, Commonwealth Property Office Fund <CPA.AX>, announced a 4.6 percent rise in overall asset values for the three months to March 31. 'Although we expect to see a softening in demand, supply generally remains well in check to at least 2010,' said fund manager Charles Moore. He said the rising cost of debt finance and stricter lending policies being adopted by lenders may cause several development projects to be postponed. Page 23.

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A veteran Singapore Airlines executive, Chin Sak Hin, has been appointed chief financial officer of Singapore-based Tiger Airways, which launched domestic services in Australia in November. Tiger rejected speculation that the appointment signals greater control by Singapore Airlines <SIAL.SI>, which has a 49 percent stake in the low-cost carrier. '[Mr Chin] will no longer have a position with Singapore Airlines Group,' said a Tiger spokesman. Mr Chin is considered a close confidant of Singapore Airlines chief executive Chew Choon Seng. Page 23.

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THE AGE (www.theage.com.au)

Monash University management expert Peter Gahan warned that the skills shortage meant Australian companies could lose their competitive edge if they failed to invest in staff training. Professor Gahan said yesterday that some companies 'see the skills shortage as endemic and at a critical point [but] if it is so important…why is it so costly for them to invest in this kind of thing?' His comments came in the wake of an Australian Industry Group report, which showed 60 percent of chief executives thought the skills shortage was serious. Page B2.

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Australia’s trade deficit narrowed in March with a 4 percent rise in exports to A$19.2 billion, Australian Bureau of Statistics figures show. The trade gap shrank to A$2.91 billion from a record A$3.46 billion in February as more iron ore, coal and wheat was shipped overseas. Exports make up about 20 percent of the nation’s gross domestic product. Page B2.

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The National Australia Bank May farm outlook report has predicted a 69 percent jump in Victoria's wheat production in 2008-09 to 3.1 million tonnes, despite continuing water shortages in some regions. NAB agribusiness economist Frank Drum forecast a 72 percent increase in winter crop output to 38.8 million tonnes, with wheat output expected to touch 25 million tonnes. Page B3.

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BHP Billiton <BHP.AX><BLT.L> said yesterday that structural problems at its A$1.16 billion Neptune oil project in the Gulf of Mexico would cause further delays and cost increases. The company has a 35 percent stake in the project, which it operates for a consortium including Woodside Petroleum <WPL.AX> and Marathon Oil Company <MRO.N>. BHP said it hoped to bring Neptune on-stream by the second quarter of the year, but the platform would require 'remediation to reinforce certain structural components in the hull's pontoons.' Page B7. -- ((Sydney Newsroom +61-2 9373 1800; sydney.newsroom@reuters.com)) Keywords: DIGEST AUSTRALIA BUSINESS

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ANALYSIS-Candy merger could sate China's chocolate craving

Reuters: [2008-05-06 18:56:00]

By Marcy Nicholson

NEW YORK, May 6 (Reuters) - The merger of two famous U.S. candy companies should make it easier to distribute venerable brands like M&Ms and Snickers in China, where the craving for chocolate has grown with the country's wealth.

Last week, privately held Mars Inc. teamed up with billionaire Warren Buffett to buy the top chewing gum manufacturer Wm Wrigley Jr Co <WWY.N> for $23 billion.

The merger creates the No. 1 confectionary company in the world and increases M&Ms candy maker Mars' geographic base.

Chocolate confectionary retail sales in China reached $813 million in 2007 and were projected to climb 50 percent to $1.23 billion in 2012, Euromonitor International data showed.

With China's sweet tooth and Mars' increased marketing clout, world cocoa supplies could tighten temporarily and elevate chocolate prices, analysts said.

As Wrigley has a bigger presence in the world's most populated country China, the merger was expected to give Mars a marketing boost, analysts said.

"That should provide a very good growth vehicle for both of those companies as both being very mature companies, well-established industries," said Sterling Smith, vice-president with Futuresone in Chicago.

Smith said the merger could lead to a 5 percent increase in Chinese cocoa demand by the end of 2009.

"With China's population being so huge, a 5 percent or 7 percent increase in demand is enormous. If we see two years of 5 percent increases in a row, we could be looking at disturbing prices, potentially," Smith said.

Sterling projected the new cocoa plantations that would be required to meet any increase in demand from China would take years to establish and become productive, causing large price increases.

Wrigley is the top confectionary company in China, which had an estimated population of 1.3 billion in 2007. Wrigley had a 9.7 percent company share in Chinese confectionary retail sales in 2006, according to Euromonitor.

Mars is No. 5 for confectionary sales, at a 2.2 percent company share but it is the top chocolate company, accounting for 13.2 percent of chocolate retail sale value in China. This was a steady decline from 14.4 percent in 2001, Euromonitor data showed.

Western brands like M&Ms have done well in part by promoting their cartoon-like mascots as toys, said Matthew Crabbe, managing director of consumer research firm Access Asia.

The merged company could create scale and added presence, using strength in one brand to promote others. But Crabbe warned that any consumer backlash against one brand also could hurt the others, although currently there are no negative associations with any of the brands.

Chinese cocoa products suffered a public relations blow last year, when many cocoa domestic grinders were reported to have been using cocoa shells rather than beans to make powder for coating in chocolate making, beverages and ice cream. [ID:nSP151678]

COCOA DEMAND SEEN INCREASING, BUT SLOWLY

New York-based commodities analyst Judy Ganes-Chase of J Ganes Consulting said it was too early for the market to bid up the price of cocoa in response to a possible increase in cocoa demand in China as a result of the merger.

"It will increase but it's not a rapid-fire pace. Given the size of the population, even small percentages can add up to a lot of beans," Ganes-Chase said.

China's economy is rapidly growing and the standard of living for many has quickly improved.

"Once you get a chance to enjoy the finer things in life, why should the U.S. have the monopoly on zits," said Jack Scoville, a vice-president for Price Group in Chicago.

"Overall, demand for commodities in general, I expect to stay strong ... a lot of that is based on Far East demand and especially Chinese demand," Scoville said.

If chocolate continues to increase its popularity in Asia, there will be off-and-on shortages of cocoa over the next few years, he said. (Additional reporting by Lucy Hornby in Beijing; Editing by David Gregorio) ((marcy.nicholson@thomsonreuters.com; +1 646 223 6043; Reuters Messaging: marcy.nicholson.reuters.com@reuters.net)) Keywords: COCOA CHINA/MARS WRIGLEY

UPDATE 2-Toronto stocks boosted by record oil prices

Reuters: [2008-05-06 18:00:00]

(Updates to midday)

TORONTO, May 6 (Reuters) - The Toronto Stock Exchange pushed higher on Tuesday as its resource-heavy index benefited from surging resource shares as oil prices scaled new heights.

Resource companies led the upside, with Canadian Natural Resources <CNQ.TO> gaining C$2.45, or 2.8 percent, to C$90.40, and Suncor Energy <SU.TO> rising C$2.02, or 1.7 percent, to C$118.52, as the price of crude vaulted the $122 mark. Toronto's energy sector climbed 1.9 percent.

Oil shot up to a record high amid supply disruptions in Nigeria and continuing tension between Iran and the West over Iran's nuclear program.

The S&P/TSX composite index <.GSPTSE> was up 61.89 points, or 0.43 percent, at 14,336.23, but off of its session high of 14,382.67. Four of its 10 main sectors were higher.

The materials sector, home to resource shares, added 1.7 percent, helped by a 1.6-percent rise in gold producers as bullion prices took their cue from oil's direction.

Shares of Barrick Gold <ABX.TO> rose 52 Canadian cents, or 1.3 percent, to C$39.93 after the world's biggest gold miner reported strong first-quarter earnings.

Fertilizer companies Potash Corp of Saskatchewan <POT.TO> and Agrium <AGU.TO> also rose. Potash was up C$4.75, or 2.4 percent, at C$201.11, and Agrium climbed C$2.67, or 3.2 percent, to C$86.90.

Shares of food processor and distributor George Weston <WN.TO> added C$1.57, or 3.2 percent, to C$50.57 after its quarterly profit rose as it took steps to mitigate cost pressures.

Sun Life <SLF.TO> was among the biggest losers by weight, falling C$2.33, or 4.7 percent, to C$46.87, after operating earnings were hurt by global credit problems and a strong Canadian dollar.

The financial sector as a whole fell 1.1 percent, caught up in resurgent worries over the health of U.S. housing and credit markets after Fannie Mae <FNM.N>, the largest provider of U.S. home financing, posted a hefty loss and cut its dividend.

Bank of Nova Scotia <BNS.TO> was down 88 Canadian cents, or 1.8 percent, at C$47.95, and Royal Bank of Canada <RY.TO> was off 47 Canadian cents, or 1 percent, at C$48.23. ($1=$1.00 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)

((leah.schnurr@thomsonreuters.com; +1 416 941 8056; Reuters Messaging: leah.schnurr.reuters.net@reuters.com))

Keywords: MARKETS CANADA STOCKS

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PRESS DIGEST - Canada - May 6

Reuters: [2008-05-06 13:30:00]

TORONTO, May 6 (Reuters) - These are some of the top stories from selected Canadian newspapers. Reuters has not verified these stories and does not vouch for their accuracy.

THE GLOBE AND MAIL:

-Tamil Tigers using electoral list, Canadian police say, in secret profiling strategy that helped the outlawed group raise C$50,000 a month for terror campaign in Sri Lanka

-Cyclone toll tops 15,000 as Myanmar junta lifts veil and accepts outside assistance in rare move; 3,000 said missing

-Not getting your whole loonie's worth? Try harder, Bank of Canada deputy says, encouraging cross-border comparison shopping

Report on Business Section:

-Canada's broadcasters scramble to appeal federal court ruling that may cost the industry more than C$100 million a year if decision isn't overturned

-Quebec spurs rush in wind power, aims for dominance in alternative electricity generation with approval of C$5.5 billion in new projects

-Royal Bank of Canada <RBC.TO> faces writedown, with some analysts expecting charges of C$200 million to C$300 million on its holdings of obscure product called auction-rate securities

NATIONAL POST:

-Cyclone toll in Myanmar, formerly known as Burma, at 10,000; junta seeks foreign aid but delays its delivery

-Tamil Tigers sought C$3 million from Canada, terror financing revealed in court documents

-Trial opens for theatre company Livent for large-scale accounting fraud

Financial Post Section:

-Livent <LVNTF.PK> employed a production controller full time to cook books, court told

-For investors looking to cash in after Microsoft's <MSFT.O> failed bid for Yahoo <YHOO.O>, some analysts say buying Microsoft shares, shunning Yahoo may be best bet

-GLG LifeTech's <GLG.TO> stock climbs after deal to supply Cargill Inc [CARG.UL] with natural sweetener, stevia

Looking for more information from local sources? Factiva.com has 35 Canadian sources including Financial Post and The Globe and Mail.

((Reuters Toronto Newsroom, 416 941-8100, Fax 416 869-3436, toronto.newsroom@reuters.com))