Brent hovers below $98 on U.S. economy, stimulus
SINGAPORE, Jan 27 (Reuters) - Brent crude hovered at below $98 after better-than-expected U.S. home sales data and a pledge by the Federal Reserve to keep monetary policy steady drummed up market sentiment.
"Any good economic data out coming out of America is good for oil," said Ben LeBrun, a Sydney-based markets analyst at CMC Markets.
China's Tianjin eyes big crude storage, refining base -paper
BEIJING, Jan 27 (Reuters) - China's northern city of Tianjin aims to have 30 million cubic metres, or 189 million barrels, of crude oil storage capacity within 10 years, the China Daily reported on Thursday.
By itself, the storage would be 85 percent more than the 102 million barrels of capacity in China's first phase of state strategic oil reserves and 10 percent higher than the second phase.
Wheat rises for 8th day; corn, soy near 2-1/2 year top
SINGAPORE, Jan 27 (Reuters) - U.S. wheat futures rose 0.6 percent, the eighth straight gain, to a new 29-month top as buyers scrambled for supplies amid fears of food inflation causing unrest in top importing nations.
"I think there is heightened attention to food inflation as we don't know what is going to happen to crops in Argentina and we don't know whether La Nina is going to wipe out more crops," said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.
Argentine grains port strike affects top exporters
BUENOS AIRES, Jan 26 (Reuters) - Argentine workers at some of the country's biggest grains export ports started an indefinite pay strike on Wednesday, threatening shipments in one of the world's biggest food suppliers.
The strike in the area north of Rosario paralyzed export facilities and crushing plants operated by Cargill, Bunge , Molinos Rio de la Plata , Vicentin and ACA, trade union and company sources said.
Gold steady; physical buying seen to slow
SINGAPORE, Jan 27 (Reuters) - Spot gold prices held steady on slowing physical and fund demand, though cautious economic views on the economy offered by the U.S. Federal Reserve lent support.
"Physical buying has started to slow down, after prices have gone up a bit," said a Singapore-based dealer, adding there was also some profit-taking trades.
Dollar slips to 11-week low after Fed, stocks rise
SYDNEY, Jan 27 (Reuters) - The U.S. dollar slipped to 11-week lows, while commodity prices and Asian stocks rose after U.S. Federal Reserve policymakers voted unanimously to maintain a $600 billion bond-buying plan to fuel an economic recovery.
"In this sort of environment, you look for growth assets. So investors are looking to park their money in investments that will provide good returns over time. As a result, equities and commodities are high up on the list," said Craig James, chief economist at CommSec in Sydney.
OIL: Crude extends gains on Wall St, demand hopes
TOKYO, Jan 27 (Reuters) - U.S. crude futures extended gains on Thursday, gaining support from a rise in Wall Street stocks after President Barack Obama's call for lower corporate taxes spurred hopes for higher profits and stronger energy demand.
The market also got a boost after U.S. Federal Reserve policymakers, at the end of a two-day meeting, said they would press on with a plan to buy $600 billion in government debt to further stimulate the economy.
COMMODITIES: Biggest loss in 3 weeks after India rate hike
NEW YORK, Jan 25 (Reuters) - Commodities fell their most in three weeks on Tuesday after major consumer India indicated it will tighten its economy as much as needed to fight inflation, just like China.
"There is increasing concern about rising interest rates in Asia. It's raising the fear that liquidity in the global markets will continue to shrink," said Stephen Briggs, commodities analyst at BNP Paribas in London.
GLOBAL MARKETS: Wall St ends flat, euro up on euro-zone hopes
World stocks and crude oil gained on Wednesday, shrugging off a lukewarm outlook from the Federal Reserve, as investors latched onto the growth prospects of U.S. President Barack Obama's pledge to trim spending.
"The market is not willing to buy into the Fed's vision," said Jim Vogel, interest rate strategist at FTN Financial in Memphis.
Japan 2010 crude import volume up 0.8 pct
TOKYO, Jan 27 (Reuters) - The volume of Japan's customs-cleared crude oil imports fell slightly in December from a year earlier, but imports for the whole of 2010 rose for the first time in two years helped by unexpectedly high oil demand due to the hottest summer on record.
Japan, the world's third-biggest oil consumer, imported 20.406 million kilolitres (4.14 million barrels per day) of crude oil last month, down 1.7 percent from a year earlier, the first decline in three months, preliminary data from the Ministry of Finance showed on Thursday.
EU Report Undermines Sarkozy's G20 Commodity Regulation Plans (Source: CME)
A European Union study questioning the link between speculation in commodities markets and rising prices has thrown a spanner in the works of French plans to increase trading regulation. The long-awaited report was due to be released Wednesday but has been delayed until next week, or definitely by March 31, after French President Nicolas Sarkozy lambasted its findings. "I will recommend a date for the publication of a study showing that speculation does not result in global price rises of raw materials: 1 April," he told reporters Monday, referring to April fool's day. Sarkozy has put the regulation of commodity markets at the top of his agenda during France's upcoming presidency of the Group of 20 nations this year. The report in its current form would mark a home-ground defeat ahead of his push to create a global system to improve transparency in commodity markets ahead of elections in May 2012.
A draft of the report seen by Dow Jones Newswires said that it has found no evidence of "a correlation between the substantial increase in index fund positions and commodity futures prices." "Similarly, while there is a strong correlation between positions on derivative markets and spot prices, there is no conclusive evidence on the causality between speculation in derivatives markets and increased volatility and price increases in the underlying physical markets," the report added. Volatility in agricultural commodity markets has risen up the global agenda after data from the United Nation's food agency showed prices reached a record high at the end of 2010, above even the peaks of the 2007-08 food crisis. A wave of deadly riots against unemployment and food prices spreading across North Africa has also caused unease among leaders of the developing world, who fear a repeat of the widespread unrest of three years ago.
A spokesman for the European Commission said the bloc's government "remains serious about the issue," despite delays to the report's publication. "We have started technical work on the link between commodities prices, volatility and financial markets," he said. "We are confident that the Commission will adopt a solid contribution probably next week and certainly well before April 1." France's stance on commodity-market regulation comes amid evidence of surging speculative investment in resources. In the run up to commodities boom, institutional investors boosted inflows into commodities markets from $15 billion in 2003 to between $250 and $300 billion in 2008. Secretary-general of the Organization for Economic Co-operation and Development Angel Gurria Tuesday welcomed Sarkozy's push to make the regulation of volatility in commodity markets a priority. "Commodity markets need to function better and more transparently," Gurria said in a statement.
Other institutions have been more cautious in ascribing blame to speculators, with one study by the IMF earlier this month suggesting rising demand from emerging nations such as China and India was the driving factor for commodity prices.
Speculative Rally In Food Prices May Fuel Regulatory Backlash (Source: CME)
Global commodity prices are rising, fueled in part by speculative trading that could mark commodities as the latest asset class bubble and spur a regulatory backlash from governments keen to control the price of basic foodstuffs. The prices of many commodities undoubtedly would have risen anyway in response to recent supply disruptions and rising demand; but it's the outsized impact of investors leveraging on low interest rates to speculate on commodities which could prompt un-sustainable bubbles in some markets, anger consumers, and draw yet more fire from politicians on the dangers of derivatives trading. That commodity prices are spiking so soon after a similar run-up in 2008 could indicate that some markets are sufficiently untethered from their supply-demand fundamentals so as to jeopardize wider economic growth. Already, many developing nations are instigating price controls on foodstuffs to combat inflation and ward off the kind of discontent that led to riots in 2008.
France, which holds the presidency of the Group of 20, is pushing for tighter regulation and transparency in the trading of commodities, including derivatives trading. "We share the view that commodity price fluctuations have been, from time to time, excessive, and destabilize the growth of the economy," Rintaro Tamaki, Japan's vice minister of finance for international affairs said last week. On futures exchanges in the US, the world's biggest grains exporter, aggregate net long speculative positions in 14 major agricultural derivative contracts hit a record high of 104 million tons in November, well above the previous peak of 78 million tons in March 2008, an ANZ Banking Group report said. That's a big swing from earlier last year, when speculators were net short in U.S. agricultural futures, and the Commodity Futures Trading Commission is considering imposing limits on speculation, including restrictions on the number of contracts a company can hold.
Excess speculation from "investment tourists" aggravates instability, sending signals that aren't substantiated by fundamentals, said Abdolreza Abbassian, secretary for the Intergovernmental Group on Foodgrains at the United Nations Food and Agriculture Organization. According to Nobuyuki Chino, president of Unipac Grain, a Tokyo-based commodities trading company, US wheat prices would be closer to $6 a bushel compared with current prices of around $8/bushel, had there been no speculative interest in wheat. Corn should be trading around $5/bushel versus $6.5/bu now, and soybeans around $13.20, compared with $14/bu, he said. Others say it's difficult to quantify the speculation premium. "I've seen some sort of studies (suggesting) speculation has added 20%-30% to market prices but they are never substantiated. What you can say is the futures markets at times trade at substantial premia to the underlying cash market," said Ann Berg, a consultant to the FAO.
That's great news for investors who have bet on rising food prices. But for consumers, particularly in poorer countries, it could be disastrous and the spur for governments to either attempt to rein in food prices or act against speculators. With Asian derivatives exchanges gaining market share in recent years, there has been a surge in interest from global investors who want to park their funds in derivative products in the region, without the hassle of owning or storing physical commodities. In India, for example, the cumulative value of futures trading in commodities in the nine months to December rose 50% to INR82.7 trillion, according to data from the Forward Markets Commission, regulator of the country's futures exchanges.
US consumer morale at 8-mth high; home prices sag
WASHINGTON, Jan 25 (Reuters) - U.S. consumer confidence rose in January to its highest level in eight months, underscoring the brightening economic outlook, although declining housing prices still cast a cloud on the recovery.
The Conference Board, an industry group, said on Tuesday its index of consumer sentiment jumped to 60.6 from 53.3 in December. The rise topped economists' expectations for a reading of 54.3 and reflected gains in stock market prices and some labor market strength, which offset sustained drops in home values and high gasoline costs.
China banks ratchet up lending rates to ration credit
BEIJING, Jan 26 (Reuters) - Some Chinese banks have drastically raised interest rates on loans to comply with government orders to rein in credit growth after another lending surge at the start of the year, state media reported on Wednesday.
Instructions have come down from head offices to some bank branches, saying they must strictly abide by credit quotas this month, the China Securities Journal reported, with regulators keeping a closer eye than normal on lending activity as part of their campaign against inflation.
EU considers tough stance on raw materials - draft
BRUSSELS, Jan 25 (Reuters) - The European Union will consider stockpiling raw materials and will confront any country that restricts supplies, according to a European Commission strategy document.
"The EU will continue to pursue barriers hampering the sustainable supply of raw materials to the EU economy," said a draft paper seen by Reuters on Tuesday, which will feed into a strategy review to be launched before April.
OECD backs French push for commodity transparency
PARIS, Jan 25 (Reuters) - The Organisation for Economic Development and Cooperation (OECD) on Tuesday welcomed France's move to put commodity price volatility and food security at the top of its G20 presidency agenda, echoing the need for more transparency.
"Agriculture markets have always been volatile, but if governments act together then extreme price swings can be mitigated and vulnerable consumers and producers better protected," OECD Secretary-General Angel Gurria said in a statement.
Strong investment flows create commodity bubbles
LONDON, Jan 25 (Reuters) - High fund allocations into commodities have caused price bubbles in parts of the metals market that are likely to deflate once fundamentals begin to reassert themselves, according to a senior fund manager.
While active investment strategies are on the increase, analysts say a significant portion of the likely half a trillion dollars going into the asset class in 2011 will go via indexes, which offer exposure to the entire commodities block.
PRECIOUS-Gold edges up ahead of Fed as buyers hunt bargains
LONDON, Jan 26 (Reuters) - Gold edged up in Europe on Monday as the metal's fall to a near three-month low attracted physical buyers back to the market, though moves were muted ahead of an announcement on U.S. monetary policy later in the day.
Pressure is likely to remain on gold, however, after a run of positive economic data undermined the metal's safe-haven appeal. The main gold exchange-traded fund, the SPDR Gold Trust, recorded its biggest ever one-day outflow on Tuesday.
FOREX-Euro boosted on rate view; nears key resistance
LONDON, Jan 26 (Reuters) - The euro hit a two-month high versus the dollar on Wednesday on perceptions that interest rates will rise sooner in the euro zone than in the U.S., taking out option barriers on the way and approaching key resistance.
The dollar hit a 10-week low against a basket of currencies with the market looking for confirmation from the Federal Reserve later in the day that its focus remains on supporting growth.
U.S. wheat climbs to 29-month top as supply worries mount
SINGAPORE, Jan 26 (Reuters) - Chicago wheat jumped around 1 percent to its highest since August 2008 in anticipation of increased demand for high-quality U.S. wheat from key importers nervous about food security amid shrinking world supplies.
"This is telling us that demand for U.S. wheat is likely to increase for the coming weeks and even months," said Ker Chung Yang, investment analyst at Phillip Futures.
Dollar down on Obama cuts, benign Fed view
LONDON, Jan 26 (Reuters) - World stocks rose and the dollar hit a two-month low against the euro after a promise of spending cuts from U.S. President Barack Obama cemented expectations the Fed will retain faith in its ultra-loose policy.
"The stock market should be fine with the spending freeze," said Christopher Low, chief economist at FTN Financial in New York. "People don't want additional stimulus here. This will allow investors to focus on the Fed."
Argentine pay talks loom over grains shipments
BUENOS AIRES, Jan 25 (Reuters) - Double-digit inflation in Argentina is spurring demands for hefty wage hikes, raising the risk of strikes among soy crushers, port workers and truckers that could hit grains exports and contribute to rising global food prices.
With President Cristina Fernandez urging moderation in an election year, pro-government unions could lower their demands.
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