Thursday, December 23, 2010

20101223 0916 Global Market Related News.

OIL: Oil up towards $91 on tighter U.S. crude stocks, cold snap
SINGAPORE, Dec 23 (Reuters) - U.S. crude futures edged up towards $91 a barrel on Thursday on tightening U.S. crude stocks and frigid temperatures in Europe and the U.S. Northeast.
U.S. crude oil inventories fell 5.33 million barrels last week, a third straight weekly decline, the U.S. Energy Information Administration said.

COMMODITY MARKETS: Oil pierces $90, grains rally; volumes thin
NEW YORK, Dec 22 (Reuters) - Oil broke $90 a barrel, grains hit multi-month highs and metals retreated slightly as supply woes and other positive fundamentals kept investor sentiment in commodities intact on Wednesday despite thin trading volumes.
"Call it the Santa Claus rally, the end of the year rally or whatever you want, but you're definitely seeing markets being bid higher, though on very light volume," said Adam Sarhan at New York-based financial advisory Sarhan Capital.

GLOBAL MARETS: Stocks rise on optimism; EU debt hurts euro
NEW YORK, Dec 22 (Reuters) - World stocks climbed on Wednesday to two-year highs on growing optimism about U.S. economic growth while the euro slumped to lifetime lows versus the Swiss franc after a new round of credit rating warnings reminded traders euro-zone debt problems can still flare. "The more recent data suggests we're seeing reasonably healthy retail sales growth, pretty healthy investment spending, and some growth in employment. So maybe the core growth or final sales growth is starting to accelerate in the fourth quarter," said Zach Pandl, an economist at Nomura Securities International in New York.

Global Farm Commodity Outlook In 2011 Mostly Upbeat - Rabobank (Source: CME)
Precariously balanced global fundamentals for agricultural commodities will set the stage for higher prices going into 2011, but bearish macro headwinds will spur further price uncertainty and volatility, Rabobank, a major agricultural lender, forecast.  Global inventory levels for a number of agricultural commodities are at or nearing record-lw levels, and with robust demand growth from emerging economies, particularly China, farm product prices will remain sensitive to any further weather or policy-induced supply shocks, as seen in 2010, the bank's commodity markets research unit said in an outlook statement. With one of the strongest La Nina weather patterns in the past 50 years in the Pacific Basin and increasing concern over supply shortages in some regions, the risks of tightening world inventories and higher prices remain skewed to the upside in the year ahead, it reported.
Converging pressures in multiple agricultural markets will likely cause friction and strain available resources--including for lan d, farm inputs and credit--and prevent commodities from an optimal supply response to higher prices, it said. Rabobank identified seven key themes that will drive and shape farm commodity markets in 2011, including tightening inventories, supply limitations and commodity demand growth remaining strongest in developing economies. It also identified China as "commodity short" in 2011, a year when political risk will be heightened amid tightening food supplies. Yet, market fundamentals will only be part of the story. With agriculture and agricultural futures increasingly viewed as an attractive asset class by investors, the role of outside market macro drivers, including currencies, energy correlations and speculative money, are becoming more important in shaping agricultural price movements, it reported.
All of these factors will contribute to sustained volatility next year, the bank said. Rabobank's initial price forecasts for 2011 suggest further price gains are expected in several markets, despite many of the commodities entering the year at already elevated price levels.

China State Grain Firms Buy Less For State Reserves (Source: CME)
Official grain purchases for stockpiles by Chinese state-owned enterprises in the January-November period fell 66% from a year earlier due to sharply higher grain prices, even as state-owned grain enterprises' profit and revenue grew, a senior government grain official said. The remarks by State Administration of Grain Deputy Director Ren Zhengxiao underscore a dilemma for the government as an agricultural price rally threatens the country's food reserves even as it boosts the corporate bottom line. The government has sought to roll back sharply higher agricultural commodity prices as market pressures contributed to the highest inflation levels in 28 months, risking mounting public concern ahead of the consumption-heavy Lunar New Year in February. State-owned grain enterprises earned a combined profit of CNY4 billion ($600 million) in the first 11 months of this year, Ren said, according to a transcript of a speech published Tuesday on the agency's website.
Of these companies, state grain trading firms made a  combined profit of CNY3.6 billion. "We can see this year's operating situation for state-owned grain enterprises is more stable," he said. "Due to the domestic economy's recovery, a good grain harvest and the government's grain floor price and other policies, there won't be large changes in the grain-trading situation." Still, inflationary pressure and unfavorable weather have impacted grain trading, he said. As grain prices rose, state-owned grain enterprises made far fewer market-supportive policy purchases for official stockpiles, Ren said. Policy purchases accounted for less than a third of total purchases from January to November, he said.

Japan auto lobby sees 2011 US market at 13 mln cars
TOKYO, Dec 22 (Reuters) - The U.S. auto market will likely recover further to around 13 million vehicles next year from less than 12 million units in 2010, the head of Japan's auto lobby said on Wednesday.
Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, noted that the seasonally adjusted annual sales rate for light vehicles in the United States had been growing at a pace of about 1 million units in recent months, indicating a steady recovery in demand.

U.S. regulators eye pay limits, but will they work?
WASHINGTON/NEW YORK, Dec 21 (Reuters) - U.S. financial regulators are looking at forcing big banks and other large financial firms to defer some of their executives' compensation as part of an effort to limit risk taking but some analysts are raising questions about the effectiveness of this approach.
Regulators are considering a rule that would require large financial institutions to pay some percentage of executives' total compensation in the form of deferred stock or other forms that they collect over multiple years, according to two sources briefed in the matter. They were not authorized to speak on the record on the matter.

China aims to improve trade balance in 2011
BEIJING, Dec 22 (Reuters) - China will try to  import more in 2011 while keeping exports steady, Commerce  Minister Chen Deming said on Wednesday, in a sign that the  world's second-largest economy is keen to pull more weight as  a consumer.
In a statement on the ministry's website  www.mofcom.gov.cn, Chen said China wants to better balance its  trade account, and will step up purchases of high-tech goods  and commodities such as grains and cotton next year.

S&P 500 earnings look rosy on 2011 overseas sales
NEW YORK, Dec 21 (Reuters) - The U.S. economy may sleepwalk its way to recovery next year, but corporate earnings are set for a record 2011 thanks to strengthening overseas demand.
Overseas sales, particularly in emerging markets, will be key for profits for many U.S. companies in 2011, and sectors that have outperformed this year are expected to remain top bets, based on strong demand from emerging economies.

PRECIOUS-Gold firms as dollar retreats, debt fears simmer
LONDON, Dec 22 (Reuters) - Gold firmed in Europe on Wednesday, building on three straight sessions of gains, as the dollar retreated and as warnings from credit rating agencies on some euro zone economies boosted haven demand for the metal.
Prices took further support from the International Monetary Fund's announcement of the completion of the massive gold reserve sale it began a year ago, which analysts say removes a significant overhang to the market.

FOREX-Euro helped by report China will buy Portugal's debt
LONDON, Dec 22 (Reuters) - The euro gained against the dollar and recovered from all-time lows against the Swiss franc on Wednesday, boosted by a news report that China was ready to buy significant amounts of Portuguese sovereign debt.
The Jornal de Negocios daily reported China is looking to buy between 4 billion euros ($5.26 billion) and 5 billion euros of Portuguese sovereign debt to help the country ward off pressure in debt markets, though it gave no details of its sources.

U.S. corn ticks up, soy steady on Argentine weather
SINGAPORE, Dec 22 (Reuters) - U.S. corn futures ticked  higher rising for sixth straight session, while  soybeans were little changed at 5-1/2 week top as hot weather  and lack of rains in Argentina continued to raise supply  concerns."There have been some concerns over the past few sessions  on Argentine dryness. That is not a new concern and it is  certainly on our watch list," said Luke Matthews, a commodity  strategist at the Commonwealth Bank of Australia.

China says will import to refill agricultural stocks
BEIJING, Dec 22 (Reuters) - China's Commerce Ministry said the country will increase imports of key agricultural commodities which are in tight supply in 2011 to replenish central government reserves.
Minister Chen Deming told an internal meeting of the ministry that the government will increase reserves of sugar and meat among other daily-needed products, a statement on the ministry website said, without giving details.

Euro hit by ratings warnings; stocks buoyant
LONDON, Dec 22 (Reuters) - The euro hit an all-time low against the Swiss franc following credit ratings warnings on Portugal and Greece, while European shares traded near 27-month highs on hopes for global economic growth next year. "There's been no clarity on what European Union leaders will do to deal with the debt crisis," said Investec economist Philip Shaw.

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