Tuesday, October 23, 2012

20121023 1805 FCPO EOD Daily Chart Study.

FCPO closed : 2540, changed : -37 points, volume : lower.
Bollinger band reading : correction range bound little downside biased.
MACD Histogram : turned downward, buyer taking profit.
Support : 2520, 2490, 2450, 2400 level.
Resistance : 2550, 2570, 2600, 2620 level.
Comment :
FCPO closed recorded loss with lesser volume participation  Soy oil currently falling lower after overnight closed recorded small gain while crude oil price trading weaker.
Buyer profit taking activities after 5 consecutive days of advance followed by afternoon news on Indonesia may lower November palm oil export tax to 10.5% from Oct 13.5% send FCPO price lower today.
Daily chart reading continue to calling a correction range bound little downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20121023 1723 FKLI EOD Daily Chart Study.

FKLI closed : 1669.5 changed : +5.5 points, volume : lower.
Bollinger band reading : correction range bound upside biased.
MACD Histogram : turned upward, buyer seller battling.
Support : 1660, 1657, 1651, 1645 level.
Resistance : 1670, 1680, 1690, 1700 level.
Comment :
FKLI closed recorded gain with slower volume changed hand doing 4.5 points premium compare to cash market closed little higher. Overnight U.S. markets closed flat and today Asia markets ended mixed while European markets currently trading lower.
Missed forecast corporate earnings reports, 5 Spanish's region downgrade by Moody's and yesterday Japanese exports slump still having negative impact to today's world markets performance. Back home, KLCI closed little higher on selected blue chip counters gain and positive news on Bank Negara international reserves recorded slightly increase.
FKLI daily chart study remained suggesting a correction range bound upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20121023 1642 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a higher open, with shares set to reverse the previous session's dip and track a late-session bounce on Wall Street. Asian shares were lacklustre with the corporate reporting season getting underway in the region, as investors stayed cautious after global shares faltered overnight on weak earning reports and outlook. (Reuters)

FOREX: The yen hit a three-month low against the dollar and a five-month trough versus the euro, pressured by expectations that the Bank of Japan will further loosen monetary conditions to help the export-reliant economy face a global slowdown. (Reuters)

FOREX-Yen hits 3-month low vs dollar, BOJ easing eyed
SINGAPORE, Oct 23 (Reuters) - The yen hit a three-month low against the dollar and a five-month trough versus the euro, pressured by  expectations that the Bank of Japan will further loosen monetary conditions to help the export-reliant economy face a global slowdown.
"Yen-selling versus the dollar will probably continue ahead of the BOJ (meeting) and while the dollar might see a slight pullback afterwards, I think this trend will persist," Maeba said, adding that the dollar may rise toward 82 yen by year-end.

Euro zone cut fiscal deficit in 2011, debt up
The euro zone's fiscal deficit fell sharply last year as governments slashed expenses and raised taxes to regain market confidence in their public finances, but public debt still climbed, data from the European Union's statistics office showed on Monday. (Reuters)

GRAINS: Chicago wheat edged lower as the market took a breather after rising for four consecutive sessions on concerns over shrinking supplies in the Black Sea region and dryness hurting crops in top exporters the United States and Australia. Soybeans eased as investors shifted their focus to Brazil and Argentina, where farmers are boosting plantings to produce record-large crops early next year. (Reuters)

U.S. corn harvest 87 pct done, soybeans 80 pct
U.S. corn harvest was a record 87 percent complete and farmers had finished 80 percent of soybean harvest as of Sunday, according to a U.S. Agriculture Department report issued on Monday, but the tail end of their combining efforts was expected to be slow due to rain. (Reuters)

As unconventional U.S. oil, gas boom, so do jobs - report
The U.S. oil and gas rush is cutting into jobless numbers, supporting a total of 1.7 million jobs this year, a number that will swell to almost 3 million by 2020, a leading consultant said in a study released on Tuesday. (Reuters)

OIL: Brent futures held steady above $109 as investors judged the previous session's fall in prices to their lowest in nearly three weeks as an opportunity to buy, with simmering tensions in the Middle East providing additional support.  (Reuters)

POLL-US crude stocks projected up for third straight week (Reuters)
U.S. crude oil inventories likely rose for the third straight week on recovered imports, a preliminary Reuters poll of analysts showed on Monday.

BASE METALS: London copper fell and prices remained near the six-week low hit the previous day, as investors played safe ahead of a U.S. Federal Reserve policy meeting, while awaiting China's next policy moves. (Reuters)

PRECIOUS METALS: Gold held above $1,720 an ounce after demand from jewellers helped prices rebound from their lowest in more than a month, but investors were likely to stay on the sidelines ahead of a U.S. Federal Reserve meeting. (Reuters)

Daily aluminium output rises in September- IAI
LONDON, Oct 22 (Reuters) - Daily average aluminium output for September rose slightly to 67,000 tonnes from 66,900 tonnes in August, figures from the International Aluminium Institute (IAI) showed on Monday, after falling recent months.
Production has been on a falling trend between October 2011 and August this year, the figures showed, as aluminium prices come under pressure due to a slowing global economy hitting demand for the metal used in packaging and transport.

Global crude steel output flat in Sept, China edges up
LONDON, Oct 22 (Reuters) - Global crude steel production in September was little changed from a year earlier, World Steel Association (Worldsteel) data showed on Monday, with China raising production slightly while western producers held back output in the face of weak demand.  
Output of steel, used in automaking and construction, was 123.63 million tonnes in September versus 123.62 million a year earlier, Worldsteel figures showed.

METALS-Copper hits fresh 6-wk low; Fed, China eyed
SHANGHAI, Oct 23 (Reuters) - Copper fell to fresh six-week lows as investors played safe ahead of a U.S. Federal Reserve policy meeting, while awaiting China's next policy moves.
"The market is clearly still looking to China as the real driver and the rest of the world is only providing a bit of short-term noise," RBC Capital Markets said in a note.

PRECIOUS-Gold ticks lower on equities, Fed in focus
SINGAPORE, Oct 23 (Reuters) - Gold edged lower after  equities gave up early gains, although demand from  jewellers helped prices rebound from their lowest in more than a month as investors waited on the results of a U.S. Federal  Reserve meeting.
"We are not expecting much, unless there are surprises from the Fed. So I believe gold will still be trading within this  band. A lot of investors are also eyeing the outcome of the  presidential election in the U.S.," said Brian Lan, managing  director of GoldSilver Central Pte Ltd in Singapore.

20121023 1447 Palm Oil Related News.

Indonesia may cut palm export tax to 10.5 pct in Nov -industry SMAR.JK WLIL.SI - RTRS
23-Oct-2012 14:44
JAKARTA, Oct 23 (Reuters) - Indonesia, the world's top palm oil producer, may cut its export tax for crude palm oil to 10.5 percent for November, from 13.5 percent for October, an industry group said on Tuesday.
Lower benchmark prices over the last month will prompt the government move, Fadhil Hasan, executive director of the Indonesian Palm Oil Association (GAPKI), told Reuters.
From late August, benchmark Malaysian palm oil futures FCPOc3 have fallen by as much as 29 percent due to a slowing economic outlook and a rise in stocks, but have partly recovered to trade at about 2,541 ringgit ($833) per tonne on Tuesday.
Southeast Asia's largest economy has a palm export tax system that aims to boost downstream industries, secure domestic supplies and reduce volatility in cooking oil prices.
The tax rate for the subsequent month is calculated by government officials based on CIF Rotterdam prices, the Malaysian benchmark and Jakarta futures prices.

VEGOILS-Palm oil down on profit-taking, high stocks concerns
Tue Oct 23, 2012 1:06am EDT
* Futures market down on profit-taking from Monday's 3-week
    * Investors worry about high stocks despite strong exports
    * Palm oil to rebound more to 2,676 ringgit -technicals

    By Anuradha Raghu
    KUALA LUMPUR, Oct 23 (Reuters) - Malaysian palm oil futures
fell on Tuesday as investors booked profits after the previous
session's three-week high and on worries that October's
stronger-than-expected exports were not enough to ease record
high stocks in the world's No.2 producer.
    Prices shot up to 2,580 ringgit on Monday, a level unseen
since Sept. 28, after data from cargo surveyors showed that
exports in the first twenty days of the month surged as much as
16.7 percent.
    "Yesterday prices went up too fast, way above market
expectations," said a trader with a local commodities brokerage
in Malaysia.
    "Those who went long yesterday are now liquidating their
positions and taking some profit because of the uncertainty over
this export number," he added.
    By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange fell 1.4 percent to
2,541 ringgit ($833) per tonne.
    Total traded volumes stood at 13,547 lots of 25 tonnes each,
slightly higher than the usual 12,500 lots as investors hedged
positions after the positive export data.
    Technical analysis showed palm oil may rebound further to
2,676 ringgit per tonne, with a support level of 2,492 ringgit,
said Reuters market analyst Wang Tao.
    Seasonally high production amid commodity demand weakened by
a tepid global economy lifted palm oil stocks in Malaysia to a
record high 2.5 million tonnes in September, hurting prices
which has dropped one-fifth so far this year.
    Despite the positive export numbers signalling improving
demand from the European Union and Pakistan, investors remain
wary about the future.
    "I'm quite positive about it but as of now, that's the only
hope that we have," the trader added.
    "Whether the number is sufficient enough to bring the stock
level lower or not for the coming report in November -- that is
still a big question."
    In related markets, Brent futures held steady above $109 as
investors judged the previous session's fall in prices to their
lowest in nearly three weeks as an opportunity to buy, with
simmering tensions in the Middle East providing additional
    In other vegetable oil markets, U.S. soyoil for December
delivery inched up 0.1 percent in early Asian trade. The
most-active May 2013 soybean oil contract on the Dalian
Commodity Exchange fell 0.2 percent by the midday break.

20121023 1058 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares edge higher, earnings caution caps
TOKYO, Oct 23 (Reuters) - Asian shares edged higher but sentiment was cautious, after global shares faltered overnight on weak corporate results and outlook, and with Asia's corporate reporting season underway.
"Local earnings will disappoint as Chinese growth did not pick up in third quarter as originally thought," said Kim Young-joon, an analyst at SK Securities, as Korean earnings season began.

Oil dips on economy worry, but supply fears support
NEW YORK, Oct 22 (Reuters) - Oil prices fell on Monday as economic concerns and expected production and pipeline restarts weighed on crude futures and offset support from fears the turmoil in the Middle East may threaten the region's supply.
"I think the outlook from Cat is weighing on the overall demand outlook for oil, helping to push prices lower," said John Kilduff, partner at Again Capital LLC in New York.

POLL-US crude stocks projected up for third straight week
Oct 22 (Reuters) - U.S. crude oil inventories likely rose for the third straight week on recovered imports, a preliminary Reuters poll of analysts showed on Monday.
Crude inventories were expected to have risen 1.7 million barrels for the week ended Oct. 19. All seven analysts saw a build in crude stockpiles.

NATURAL GAS - US natgas futures down 5 pct, first loss in 4 sessions
NEW YORK, Oct 22 (Reuters) - U.S. natural gas futures ended lower on Monday f or the first time in four sessions, p ressured by profit-taking after an early front-month run to a new 2012 high and by reports extended  forecasts for cold weather had  been revised to s lig htly milder.
" We saw a little profit taking after we hit the new high, then selling accelerated around noon," said Jonathan Lee at Ecova Inc., adding the slightly milder turn in computer weather projections at midday may have triggered the sharp sell-off.

Euro Coal-Creeps higher but no trades
LONDON, Oct 22 (Reuters) - Prompt physical coal prices moved marginally higher by 25-75 cents a tonne although no fresh trades were reported and demand remained tepid in Europe and Asia.
"Trading the DES ARA or Richards Bay markets via brokers or on screen offers very little in terms of profits, direct and bilateral deals are more attractive to us now," one European trader said.

20121023 1009 Malaysia Corporate Related News.

Astro bucks IPO trend
Astro Malaysia Holdings Bhd saw its share price fall as much as 9% in intraday trading on its second day on Bursa Malaysia, bucking the trend of successful mega-listings seen on the bourse this year. The pay TV operator fell to a low of RM2.73 yesterday before ending the day at RM2.77, compared with its offer price of RM3. About 120m shares changed hands yesterday. (Financial Daily)

Canada says to continue talks with Petronas
Canada could still approve the CND5.17bn (RM16bn) acquisition of Progress Energy Resources Corp by state oil company Petronas Nasional Bhd (Petronas), the country’s finance minister said on Sunday, despite blocking the bid late last week. While observers predict a chaotic market reaction following the federal government’s statement last Friday, the deal did not provide the “net benefit” required from foreign buyers under the Investment Canada Act. Finance Minister Jim Flaherty said on Canadian television negotiations would continue. (Financial Daily)

JTI and Philip Morris maintain cigarette prices
Tobaco players JT International (JTI) and Philip Morris (PMI) have yet to raise the prices of their cigarettes, following British American Tobacco (BAT) hike in the prices of its cigarettes starting yesterday. When asked about the government’s move to raise ex-factory pricing of cigarettes, a JTI spokesman said that they are not in the position to comment on the matter and pricing decisions remain the prerogative of individual companies. (Financial Daily)

China Stationery to acquire 9.8% in Pelikan
China Stationery (CSL) has proposed to acquire 50m shares in Pelikan International Corp, representing a 9.8% equity interest, from Mahir Agresif and Persada Bina for RM50m. CSL, in a filing to Bursa Malaysia yesterday, said the proposed acquisition will be satisfied by the new issuance of up to 47.2m new shares at RM1.06 per share and an additional three million new shares as payment for the professional fees. (Financial Daily)

FPSO demand to pick up
Although the demand for floating production storage and offloading (FPSO) has been weak year to date, the sector is expected to flex its muscle going forward, and it will happen most likely next year, according to industry players and analysts. A Malaysia Marine and Heavy Engineering Holdings (MMHE) spokesperson said that the demand for FPSOs was good but due to various reasons, the awards were not forthcoming this year. (StarBiz)

KLIA2 gets AirAsia nod
AirAsia group chief executive officer Tan Sri Tony Fernandes has given the green light for AirAsia, Asia’s largest low-fare, no-frills airline, to move to the KLIA2 low-cost carrier terminal upon its completion next year. The KLIA2, which is being built at a cost of almost RM4bn, is designed to cater for 30m passengers a year and with the provision to expand it to 45m passenger. Scheduled to open in April next year, the low-cost terminal has a retail space of 32,000 sq m and can accommodate 225 retail outlets. (BT)

MRT Corp awards RM1.2bn jobs to Mitsubishi, Apex
Mass Rapid Transit Corp (MRT Corp) has awarded Mitsubishi Heavy Industries and Apex Communication-LG CNS Consortium the trackworks and telecommunications packages respectively, valued at RM855m (trackworks) and RM319.9m (telecommunications). Both packages will be for a duration of 82 months each. (Malaysian Reserve)

Axis-REIT 9 months net profit up 22%
AXIS Real Estate Investment Trust (Axis-REIT) reported a 21.7% increase in net profit to RM59.7m for the first nine months of its financial year ending 31 Dec 2012, compared to RM49.1m it registered in the same period a year ago. Revenue for the period ended 30 Sep 2012, also showed a gain, of 15.4% or RM13m, to RM97.9m from RM84.9m recorded in the previous corresponding period. (Malaysian Reserve)

20121023 1009 Global Economy Related News.

Vietnam: Struggle to meet 2012 growth target
Vietnam will struggle to meet its 2012 growth target without pumping money into the economy, according to economists including an adviser to Prime Minister Nguyen Tan Dung. Vietnam’s economy needs to grow 6.5% in the fourth quarter in order to meet the government’s full-year growth target of 5.2%, the prime minister told lawmakers at the National Assembly. Vietnam’s 2012 economic growth may reach 5% to 5.2%, Nguyen Van Giau, chairman of the assembly’s economic committee, told lawmakers. (Bloomberg)

Japan: Exports tumble 10% as Maehara presses BOJ to ease
Japan’s exports fell the most since the aftermath of last year’s earthquake as a global slowdown, the yen’s strength and a dispute with China increase the odds of a contraction in the world’s third-largest economy. Shipments slid 10.3% in September from a year earlier, leaving a trade deficit of JPY558.6bn (USD7bn), the Finance Ministry said. The median forecast in a Bloomberg News survey of analysts was for a 9.9% export decline. Imports rose 4.1%. (Bloomberg)

Australia: Linkers drop most since June as inflation ebbs
Australian inflation-linked bonds are falling by the most in four months before a report that will probably show slowing economic growth is containing consumer-price gains. The bonds have lost 1.2% since 30 Sept, almost double the 0.7% slide for notes that aren’t tied to living costs, Bank of America Merrill Lynch indexes show. Annual inflation reached 1.6% in the 12 months ended 30 Sept, below the bottom of the Reserve Bank of Australia’s target range of 2% to 3%, according to economists surveyed by Bloomberg News. (Bloomberg)

EU: Seeks go-ahead to devise transaction tax for willing nations
The European Union is officially asking all 27 EU nations to allow development of a financial transaction tax for a subset of willing countries, according to documents obtained by Bloomberg News. EU Tax Commissioner Algirdas Semeta plans to move the process forward by announcing that the European Commission, the EU executive in Brussels, has the backing needed to use the so-called enhanced cooperation procedures. A weighted majority of the 27 EU countries must approve the start of the talks, and details of the tax will then be negotiated among participants. (Bloomberg)

EU: Cut fiscal deficit in 2011, debt up
The eurozone’s fiscal deficit fell sharply last year as governments slashed expenses and raised taxes to regain market confidence in their public finances, but public debt still climbed, data from the European Union’s statistics office showed. Eurostat said the aggregate budget deficit in the 17 countries using the euro fell to 4.1% of GDP in 2011 from 6.2% in 2010- the first year of the sovereign debt crisis.(Reuters)

20121023 1007 Global Markets Related News.

Asia FX By Cornelius Luca - Mon 22 Oct 2012 16:59:41 CT (Cource:CME/www.lucafxta.com)
The appetite for risk recovered on Monday, as a win for Spanish Prime Minister Mariano Rajoy in elections in his home region of Galicia was seen as removing one obstacle to Madrid seeking international aid. The foreign currencies European and commodity currencies advanced after falling for two days amid concern about earnings and the stubborn Eurozone debt crisis. Conversely, the yen extended losses to a 3 1/2-month low on rising speculation of more monetary easing by the Bank of Japan following an over 10% contraction of Japanese exports in September. The US stock markets edged up on Monday after plunging on Friday, the 25th anniversary of Black Monday. Gold, and silver advanced as well, but oil fell. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is still slightly bullish. The LGR short-term model is short on yen, sterling and Canadian dollar, and long euro, franc and Australian dollar. Good luck!

Asian Stocks Swing Between Gains, Losses on Earnings (Bloomberg)
Asian stocks swung between gains and losses amid concern over slowing corporate earnings growth and as Europe struggles to contain its debt crisis. Acer Inc. slid 3.3 percent in Taipei after Asia’s second- largest computer maker posted third-quarter profit that missed estimates. Kansai Electric Power Co. (9503) sank 7 percent after the Nikkei newspaper reported the Japanese utility won’t pay a dividend. LG Display Co., the world’s No. 2 maker of liquid- crystal displays, climbed 2.2 percent in Seoul after a U.S. court ruled that it didn’t violate a patent owned by Industrial Technology Research Institute.
The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 123.03 as of 10:18 a.m. in Tokyo, erasing gains of as much as 0.3 percent. About five shares dropped for every three that rose on the measure. The gauge rebounded 13 percent from this year’s low on June 4 through yesterday as stimulus measures in the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis. Moody’s Investors Service lowered it credit ratings on Catalonia and four other Spanish regions. “External factors such as the European debt crisis and the U.S. elections are still the biggest risks for the market,” said Angus Gluskie, managing director at White Funds Management in Sydney, which manages more than $350 million. “Earnings are hostage to these macroeconomic factors.”

Japan Stocks Head for Longest Win Streak Since July 2011 (Bloomberg)
Japanese stocks rose, with the Nikkei 225 (NKY) Stock Average heading for the longest winning streak since July 2011, as exporters climbed after the yen touched the weakest level in more than three months. Sony Corp. (6758), Japan’s biggest consumer-electronics exporter, gained 0.8 percent. Komatsu Ltd. advanced 1.2 percent after the construction machinery maker said it will acquire Swedish harvester maker Log Max AB. GS Yuasa Corp. slumped 11 percent, the biggest drop on the Nikkei 225, after the battery maker cut its earnings forecast. Kansai Electric Power Co., Japan’s second-biggest generation company by revenue, lost 6.2 percent on a report the utility won’t pay a year-end dividend for the first time in 61 years.
The Nikkei 225 rose 0.1 percent to 9,015.42 as of 10:12 a.m. in Tokyo, with volume more than 10 percent above the 30-day average. The broader Topix (TPX) Index, which includes smaller companies less affected by currency fluctuations, slid 0.2 percent to 752.06, after rising as much as 0.5 percent earlier today. “The yen is getting weaker, supporting stock markets,” said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which oversees about 5 trillion yen ($63 billion). “The risk to companies earnings are being eased by the currency as many assumed about 80 yen per dollar for their earnings estimates. The markets’ views toward the Bank of Japan are changing that the central bank may take action to weaken the yen.”

U.S. Stocks Erase Losses as Apple Offsets Earnings (Bloomberg)
U.S. stocks erased earlier losses, sending the benchmark Standard & Poor’s 500 Index higher for the first time in three days, as an advance in Apple (AAPL) Inc. shares overshadowed disappointing corporate results. Apple, the world’s most valuable company, jumped 4 percent and paced gains in technology companies. Peabody Energy Corp. (BTU), the largest U.S. coal producer by volume, surged 12 percent after earnings beat projections. Freeport-McMoRan Copper & Gold Inc. (FCX), the world’s biggest publicly traded copper producer, and SunTrust Banks Inc. (STI) retreated at least 1.4 percent after reporting earnings that missed analysts’ estimates. The S&P 500 rose less than 0.1 percent to 1,433.81 at 4 p.m. New York time, after falling 0.8 percent earlier. The Dow Jones Industrial Average added 2.38 points, or less than 0.1 percent, to 13,345.89. The Nasdaq-100 Index rose 0.6 percent to 2,694.56. Volume for exchange-listed stocks in the U.S. was 5.8 billion shares, or 3.4 percent below the three-month average.
“It really comes down to earnings at this point,” said Peter Jankovskis, co-chief investment officer for Oakbrook Investments in Lisle, Illinois, which manages more than $3 billion. He spoke in a telephone interview. “We’ve seen many companies beating earnings estimates. Yet investors are keeping an eye on their ability to grow revenue.” Third-quarter results at about 69 percent of S&P 500 companies beat analysts’ estimates, according to data compiled by Bloomberg. Sales missed forecasts at 59 percent of companies, the data showed.

U.S. Stocks Top All Other Assets for First Time Since ’95 (Bloomberg)
U.S. stocks are beating every major asset class for the first time in 17 years even as economic growth weakens and profits rise at the slowest rate since 2009. The Standard & Poor’s 500 Index has rallied 14 percent in 2012, beating Treasuries, corporate bonds, commodities, the dollar and equities in Asia and Europe, data compiled by Bloomberg show. The last time that happened, in 1995, the S&P 500 was posting the biggest annual advance of the last five decades. With a price-earnings ratio close to today’s level, the index gained another 93 percent in the next 2 1/2 years. For all the concern about unemployment and manufacturing growth, the best assets this year remain American companies after unprecedented steps by the Federal Reserve to support growth. Forecasts for a rebound in the U.S. economy and the central bank’s pledge to keep interest rates near zero for years convinced bulls the S&P 500 will extend gains. Bears say political gridlock will drag down prices after monetary stimulus wears off.
“We see good earnings growth and improving economic outlook, we see good equity valuations and easy monetary policy, we see skeptical investors and low positioning in equity assets,” said Max King, a multi-asset strategist at Investec Asset Management in London, which oversees $100 billion. “This is a major green light for equities and the fact that people don’t see it, is great.”

European Stocks Drop for Second Day; Veolia, Nexans Fall (Bloomberg)
European stocks fell for a second day as Japanese exports tumbled and investors speculated that victory in regional elections for Spain’s Prime Minister Mariano Rajoy reduces pressure for him to seek a bailout. Veolia Environnement SA retreated 5 percent after denying it’s working on a merger with Suez Environnement. Nexans SA (NEX) slid 6.6 percent after cutting its forecasts. Royal Philips Electronics NV climbed the most in more than a year after the world’s largest lighting company reported profit that beat estimates. Scania AB advanced 3.2 percent as the truckmaker’s orders declined at a slower pace. The Stoxx Europe 600 Index (SXXP) slipped 0.4 percent to 272.95 at the close, having earlier risen as much as 0.3 percent. The measure lost 0.8 percent on Oct. 19 as European Union leaders failed to discuss additional assistance for Spain at a summit in Brussels. The gauge has still rallied 17 percent from the June 4 low as the European Central Bank unveiled a bond-purchase program to support the economy.
“There remains plenty of uncertainty surrounding Spain and its next move, together with the fact that we still don’t have a firm date for when Greece will be injected with the second round of bailout funds,” Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in an e-mail. “Both issues will surely come back to haunt investors in the sessions ahead.”

Most Emerging Stocks Fall as Slowdown Weighs on Earnings (Bloomberg)
Most emerging-market stocks fell after the benchmark index delivered the biggest weekly gain in a month on concern the global economic slowdown is eroding corporate earnings. The MSCI Emerging Markets Index (MXEF) gained 0.1 percent to 1,007.31 at the close of trading in New York as 393 of the 818 shares in the measure declined. Brazil’s Bovespa Index retreated for a third day and South Korea’s Kospi gauge dropped to the lowest in a week. The Shanghai Composite Index (SHCOMP) advanced to the highest level in a month as shipbuilder China Rongsheng Heavy Industries Group Holdings Ltd. (1101) jumped the most in a year in Hong Kong.
Banco Bradesco SA (BBDC4), Latin America’s second-largest bank, fell the most in more than a week after its profit missed estimates. South Korea’s Kumho Petro Chemical Co. (011780) slid the most in two weeks, leading materials stocks lower, after saying that third-quarter operating profit dropped 76 percent. A report showed Japan’s exports slid 10.3 percent in September from a year earlier, the biggest drop since the aftermath of last year’s earthquake. “We’re seeing volatile trades as some corporate earnings and economic data disappoint,” Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $30 billion, said by phone. The 21 nations in MSCI’s developing-nations gauge send about 13 percent of their exports to the U.S. and 30 percent to the European Union on average, according to data compiled by the World Trade Organization.
Brazil’s Bovespa index fell 0.4 percent, while Mexico’s IPC benchmark lost 0.6 percent. Russia’s Micex Index increased 1 percent and India’s BSE India Sensitive Index gained 0.6 percent. The Kospi Index retreated 0.1 percent.

Australian, New Zealand Dollars Touch One-Month Highs Versus Yen (Bloomberg)
The Australian and New Zealand dollars touched one-month highs against the yen on speculation the Bank of Japan (8301) will ease monetary policy as early as this month, boosting demand for higher-yielding currencies. Australia’s dollar gained versus most peers as Asian shares opened higher. The so-called kiwi held gains against the greenback before the Reserve Bank of New Zealand holds a policy meeting on Oct. 25. Australia’s currency remained lower versus the kiwi ahead of data tomorrow that may show inflation held near the slowest since 1999 in the larger country, providing scope for its central bank to cut interest rates. “Because of higher yields, Australia’s dollar is still preferred over the yen,” said Takuya Kawabata, a researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company. Gains in the Australian and New Zealand currencies can be largely attributed to “speculation about additional monetary easing by the BOJ.”
The Australian dollar rose 0.2 percent to 82.63 yen, the strongest since Sept. 19, as of 11:08 a.m. in Sydney. The kiwi reached 65.47 yen, also the highest since Sept. 19, before trading at 65.39. The so-called Aussie rose 0.1 percent to $1.0335, while the New Zealand dollar was little changed at 81.77 U.S. cents after gaining 0.3 percent yesterday. Australia’s currency traded at NZ$1.2636 following a 0.3 percent decline to NZ$1.2621 yesterday. Government data due Oct. 26 will probably show that Japan’s consumer prices excluding fresh food declined in September for a fifth-straight month, according the median estimate of economists in a Bloomberg News survey. That’s far short of the central bank’s goal for inflation of 1 percent. The BOJ will hold a policy meeting on Oct. 30.

Yen Weakens Past 80 Per Dollar on Bets BOJ to Ease More (Bloomberg)
The yen weakened past 80 against the dollar as signs that the world’s third-largest economy is moving closer to contraction fanned speculation that the Bank of Japan (8301) will add further stimulus. The greenback maintained an eight-day gain versus the yen, the longest winning streak in seven years, after yields on U.S. two-year notes rose to the most since June versus their Japanese peers, attracting money to dollar-based assets. The Australian dollar held onto three days of losses before data forecast to show inflation held near the slowest in 13 years, providing scope for the Reserve Bank to cut borrowing costs. Lawmakers are “applying pressure to the BOJ to further loosen monetary policy,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “It can only result in more monetization of debt which will weaken the yen. A widening of U.S.-Japan yield gaps won’t help the yen.”
The yen touched 80.01 per dollar, the weakest since July 6, before trading little changed at 79.97 as of 8:55 a.m. in Tokyo from the close yesterday. The Japanese currency fetched 104.54 per euro from 104.41, after reaching 104.59, the least since May 4. The euro was little changed at $1.3070 after adding 0.3 percent yesterday. Australia’s currency added 0.2 percent to $1.0337, after falling 0.6 percent over the previous three days. A government report on Oct. 26 will probably show that so- called core consumer prices in Japan declined in September for a fifth-straight month, according the economists surveyed by Bloomberg News. That compares with the central bank’s goal for inflation of 1 percent.

Won Undervalued 20%, Korean Bonds Appeal, Eaton Vance Say (Bloomberg)
Eaton Vance Management, which oversees $198 billion, estimates South Korea’s won is 15 to 20 percent undervalued, making the nation’s bonds attractive on prospects the currency will appreciate. The won has strengthened 4.4 percent this year, the third- best performance among Asia’s 11 most-used currencies, and reached an 11-month high of 1,102.50 per dollar last week. South Korea’s improving trade surplus and better economic growth prospects than developed countries suggest the currency is weaker than it should be, according to Eric Stein, a portfolio manager for Boston-based Eaton Vance. The central bank this month raised its 2012 projection for the excess on the current account to $34 billion, having forecast $20 billion in July.
“The Korean won is so structurally undervalued considering the strong current-account surplus, and that keeps me wanting to invest,” Stein said in an Oct. 18 phone interview. “Officials still seem to be somewhat concerned about inflation. For a country that imports so much oil, the central bank may let the currency appreciate to keep imported inflation in check.” Won-denominated assets accounted for 3.99 percent of the $6.5 billion Eaton Vance Global Macro Absolute Return Fund as of Sept. 30, according to a statement on its website. The fund returned 4.8 percent this year, outperforming 62 percent of its peers, data compiled by Bloomberg show. India’s rupee had the largest share at 7.69 percent. The firm’s Korean investments mainly consist of short-term central bank notes, Stein said. He declined to say whether he is adding to those holdings.
South Korea’s one-year central bank bonds yield 2.82 percent, compared with 0.12 percent for similar-maturity government debt in Japan and 0.18 percent for U.S. Treasuries, according to data compiled by Bloomberg. India’s notes due in a year yield 7.97 percent.

Hong Kong Dollar Forwards Rise Most Since March After Peg Tested (Bloomberg)
Traders increased bets Hong Kong will end a 29-year-old peg to the dollar after the currency reached the upper limit of its permitted range and triggered intervention by the city’s monetary authority. Two-year forwards strengthened 0.11 percent to HK$7.74 per dollar as of 4:46 p.m. local time, the biggest gain since March 9, according to data compiled by Bloomberg. The Hong Kong dollar’s value is kept at HK$7.75 to HK$7.85. Hedge-fund investor William Ackman, the founder of New York-based Pershing Square Capital Management LP, said Oct. 20 he is keeping a wager that would profit if Hong Kong allows its currency to appreciate.
Even with today’s advance, the forwards are only near their average level of the past three years and analysts surveyed by Bloomberg predict an end-2013 exchange rate of HK$7.76. The linked exchange rate has given Hong Kong companies stability in commercial contracts while tethering monetary policy to that of the U.S., where borrowing costs are being held down to spur hiring and prop up the housing market. Hong Kong’s jobless rate is near a four-year low and home prices are at all-time highs. “Any change in the peg would have certain costs but highly uncertain benefits,” Robert Minikin, senior foreign-exchange strategist at Standard Chartered Plc in Hong Kong, said yesterday. A shift “is likely to be long-delayed and perhaps come in the context of full yuan convertibility,” he said, adding that China’s currency is unlikely to trade freely for another 10 years or more.

Obama-Romney U.S. Auto Spat Turns on Saving U.S. Economy (Bloomberg)
President Barack Obama and Mitt Romney’s debate exchange over auto bailouts reignited a long- running dispute over whether the government’s financial-crisis rescue plan was a good deal for taxpayers. The answer: It depends. There’s little doubt the government won’t recoup the full $417 billion spent on the program. Proponents reply that whatever the loss, it was worth it to pull the world’s largest economy back from the brink of collapse and prevent the disappearance of whole sectors, like domestic carmakers. “We saved an auto industry that was on the brink of collapse,” Obama said in the Oct. 16 presidential debate at Hofstra University in Hempstead, New York. Republican challenger Romney wanted to put General Motors Co. (GM) and Chrysler Group LLC into bankruptcy “without providing them any way to stay open. And we would have lost a million jobs,” Obama said. Romney countered that bankruptcy was necessary “to get those companies back on their feet,” though at the time he opposed using taxpayer dollars.
Obama’s Treasury Department is seeking to wind down the Troubled Asset Relief Program that includes the auto bailouts, rescues for banks and insurer American International Group Inc. (AIG), and programs to stem home foreclosures. How much money the rescues end up costing taxpayers will depend largely on the government’s ability to sell its 32 percent stake in GM and 74 percent ownership of auto lender Ally Financial Inc. (ALLY)

Caterpillar Sees Sales Growth Slowing Next Year on Economy (Bloomberg)
Caterpillar Inc. (CAT), the world’s largest maker of construction and mining equipment, forecast sales growth for 2013 that would be slower than in the previous three years as the global economy decelerates. Sales next year will be from 5 percent below to 5 percent more than 2012 results, the Peoria, Illinois-based company said today in a statement. That compared with an average projection for an increase of 5.1 percent based on 17 analysts’ estimates compiled by Bloomberg. Revenue year-over-year grew 31 percent in 2010, 41 percent in 2011, and was estimated to increase 13 percent this year.
“The biggest concern is the declining backlog, which would imply a more challenging year next year, especially for mining, and whether or not North American construction will re- accelerate,” Larry De Maria, a New York-based analyst for William Blair & Co. who has a buy rating on the shares, said today by phone. “Caterpillar’s business is very economically sensitive. Due to the softening of the global economy and increasing uncertainty, order rates have declined.” The order backlog fell 18 percent to $23.1 billion at the end of the third quarter from three months earlier with the most significant decrease in the resource-industries segment, the company said. Production across much of the company has been reduced with temporary shutdowns and layoffs as it works through excess inventory, Caterpillar said in the statement.

POLL-China economy in feeble Q4 recovery, 25 bps RRR cut eyed (Reuters)
China could stage a tepid economic rebound in the fourth quarter as higher public infrastructure spending nudges the world's growth engine out of seven consecutive quarters of cooldown, but growth will remain lethargic through 2013 a Reuters poll showed.

China’s Factories Losing Pricing Power in Earnings Threat (Bloomberg)
Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling corporate earnings may deteriorate further and putting a damper on global inflation pressures. Steelmaker China Oriental Group Co. (581) says falling prices are wiping out profits, while Yunnan Copper Industry Co. (000878) cited the declines for a third-quarter loss. The producer price index (SHCOMP) fell 3.6 percent in September from a year earlier and may stay negative until the second half of 2013 without large stimulus, according to Mizuho Securities Asia Ltd. With the U.S. reporting the longest stretch in three years that Chinese imports have gone without a price increase, the trend also gives policy makers around the world more room for easing to support faltering global growth. Sluggish earnings growth may prompt the government to reduce corporate taxes to aid earnings and help boost spending after China’s expansion slowed for a seventh quarter.
“Reduced inflation pressure should expand the space for policy makers to take pro-growth actions in their countries,” said Shen Jianguang, chief Asia economist at Mizuho in Hong Kong. Chinese officials are likely to reduce banks’ reserve requirements ahead of a Communist Party congress next month, said Shen, who formerly worked at the International Monetary Fund and European Central Bank.

Japan Exports Tumble 10% as Maehara Presses BOJ to Ease: Economy (Bloomberg)
Japan’s exports fell the most since the aftermath of last year’s earthquake as a global slowdown, the yen’s strength and a dispute with China increase the odds of a contraction in the world’s third-largest economy. Shipments slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of analysts was for a 9.9 percent export decline. Imports rose 4.1 percent. Economy Minister Seiji Maehara pressed the Bank of Japan for more action yesterday, saying the nation is “falling behind” in monetary stimulus and is at risk of another credit- rating downgrade. The BOJ today cut its view of eight out of nine regional economies while Taiwanese unemployment rose to a one-year high, underscoring weakness across Asia after China’s third-quarter growth was the slowest since 2009.
“There’s a high chance that Japan’s economy will have two consecutive quarters of contraction through December,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “The slump in advanced nations is spreading to emerging economies.” The yen weakened 0.6 percent to 79.78 per dollar as of 5:57 p.m. in Tokyo on speculation that the central bank will expand monetary stimulus. The currency’s decline pushed the Nikkei 225 Stock Average to a 0.1 percent gain, reversing losses of as much as 1.5 percent, by improving the outlook for exporters.

Indonesia Investments Rose Last Quarter on Mining, Transport (Bloomberg)
Indonesian investment rose last quarter as mining, transportation and food companies started new operations or expanded existing ones. Investment climbed 25.1 percent to 81.8 trillion rupiah ($8.5 billion) in the three months ended Sept. 30 from a year earlier, M. Chatib Basri, chairman of the Investment Coordinating Board, said in Jakarta today. In the first nine months of 2012, investments rose 27 percent to 229.9 trillion rupiah from a year earlier, the board said. President Susilo Bambang Yudhoyono is increasing spending and wooing overseas funds to spur growth in Southeast Asia’s largest economy and create new jobs as more people enter the labor force. Companies such as Toyota Motor Corp. (7203) and Taiwan’s Foxconn (2038) Technology Group are mulling investment opportunities in Indonesia, and L’Oreal (OR) SA will expand a cosmetics factory this month, Basri said in September.
“Strong foreign direct investment will offset a slowdown in exports,” Basri said today. The agency forecasts total investments may be more than 300 trillion rupiah this year, exceeding its previous target of 290 trillion rupiah, he said. Foreign direct investment climbed 22 percent to 56.6 trillion rupiah last quarter from a year earlier, mainly supported by companies in mining, chemical, pharmaceutical, transportation and telecommunication industries, the board said. Domestic investments during the July-to-September period rose 32.6 percent to 25.2 trillion rupiah, supported by mineral non- metals, food and textile industries, the agency said. Singapore was the biggest contributor to third-quarter foreign investment, accounting for $1.5 billion. Indonesia is targeting foreign and local investment of about 500 trillion rupiah in 2014.

Australia to Tighten Spending to Meet Budget Surplus Pledge (Bloomberg)
Australia’s government will tighten health-care spending and scale back family support payments to help deliver an election-year budget surplus, giving the central bank scope to further reduce interest rates. The underlying cash surplus will be A$1.08 billion ($1.11 billion) in the 12 months ending June 30, compared with a A$1.54 billion surplus seen in May, the government said in a midyear review released in Canberra today. Spending is forecast to be A$363.2 billion compared with a May projection of A$364.2 billion, while the revenue estimate was cut to A$367 billion from $A368.8 billion. “While global headwinds, a high dollar and changing consumer behavior are weighing on some sectors, the Australian economy is expected to outperform every major advanced economy this year and next, with growth underpinned by strong investment, strong growth in export volumes and solid growth in consumption,” Treasurer Wayne Swan said in a statement in Canberra today.
Prime Minister Julia Gillard is bidding to end four years of deficits heading into an election year with polls showing she will lose to the opposition Liberal-National coalition. As the government reins in spending, she’s putting the onus on the central bank to further reduce the highest benchmark rate among major developed nations to bolster a slowing economy.

Moody’s Cuts Ratings on Catalonia, Four Other Spanish Regions (Bloomberg)
Moody’s Investors Service, a week after deciding against cutting Spain’s credit-rating to below investment grade, lowered Catalonia and four other Spanish regions. Catalonia, which will hold an early election on Nov. 25 focused on whether to seek independence for the region that accounts for a fifth of Spain’s economy, was reduced two steps to Ba3 from Ba1, the ratings firm said in a statement dated yesterday. Extremadura was lowered to Ba1 from Baa3, Andalucia was slashed to Ba2 from Baa3, and Castilla-La Mancha was cut to Ba3 from Ba2 and Murcia dropped to Ba3 from Ba1. Moody’s decision to cut the regions was “driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs,” the ratings firm said. Moody’s also said that Catalonia, Andalucia and Murcia “face large debt redemptions” this quarter when retail bonds issued in 2011 are due to mature.
The ratings of Basque Country, Diputacion Foral de Bizkaia, Madrid, Castilla y Leon, Galicia, Valencia and four government-related entities in Valencia were all left unchanged. A week ago, Moody’s kept Spain’s sovereign rating at Baa3, the lowest level of investment grade, citing a reduction in the risk of losing market access because of the European Central Bank’s willingness to buy the nation’s debt. Spain avoided joining euro-region peers Cyprus, Portugal, Ireland and Greece as below investment grade. Standard and Poor’s has a negative outlook on its BBB- rating, one step above junk, and Fitch Ratings has Spain at BBB, two levels higher. Creditworthiness concerns have grown since Prime Minister Mariano Rajoy requested as much as 100 billion euros ($130 billion) in European Union aid to shore up Spanish lenders amid signals the nation may miss its budget deficit goals. S&P downgraded Spain on Oct. 10, saying it doubted the loans will be mutualized among euro-region nations.
EU Parliament Panel Opposes Mersch Move to ECB Executive Board (Bloomberg)
A European Parliament committee opposed the appointment of Luxembourg’s Yves Mersch to the European Central Bank’s Executive Board because of unhappiness about a lack of female candidates for the job. The non-binding opinion by the European Union assembly’s economic and monetary affairs committee today in Strasbourg, France, is a political appeal to euro-area government leaders to put forward women for top ECB posts. The recommendation on Mersch, Luxembourg’s central bank governor, now goes to the full EU Parliament for a vote on Oct. 25. Two women, Sirkka Haemaelaeinen of Finland and Gertrude Tumpel-Gugerell of Austria, previously sat on the ECB’s six- member Executive Board. If the five men currently there serve their full terms, another position won’t become available until June 2018 when Vice President Vitor Constancio retires.
“We are objecting to the EU’s most powerful institution being run by only men for the next six years,” Sharon Bowles, who chairs the 27-nation Parliament’s economic and monetary affairs committee, said in an e-mailed statement. “At a time when we are doing all that we can to change the culture of financial services and to avoid a repeat of the financial crisis, it is baffling that member states are not pushing for more women in key finance positions.” The ECB seat has been vacant since Jose Manuel Gonzalez- Paramo of Spain ended his eight-year term on May 31. Euro-region finance ministers then wrangled over his replacement until July. As Luxembourg’s representative on the ECB’s wider policy-setting Governing Council, Mersch is the 17-nation euro area’s longest serving central bank chief and has earned a reputation as an inflation hawk.
Bowles praised Mersch’s qualifications and held out the possibility that she would urge the full 754-seat Parliament to ignore the committee’s recommendation and endorse his candidacy should EU President Herman Van Rompuy pledge action to promote women in top European jobs. Van Rompuy is due to speak to the Parliament tomorrow about an EU summit last week. “Van Rompuy now has the last opportunity tomorrow, when he addresses the plenary, to show us that member states are ready to commit seriously to encouraging women into top positions,’ Bowles said. ECB President Mario Draghi has said that, while the gender imbalance calls for action, Mersch’s appointment to the Executive Board should go through to help the central bank tackle Europe’s three-year-old sovereign-debt crisis. The workload of the Frankfurt-based ECB has multiplied as it embarks on unprecedented unconventional monetary policy measures and takes on additional supervisory roles.

Greece Austerity Diet Risks 1930s-Style Depression: Euro Credit (Bloomberg)
Greece is spiraling into the kind of decline the U.S. and Germany endured during the Great Depression, showing the scale of the challenge involved in attempting to regain competitiveness through austerity. The economy shrank 18.4 percent in the past four years and the International Monetary Fund forecasts it will contract another 4 percent in 2013 as Greece struggles to reduce debt in exchange for its $300 billion rescue programs. That’s the biggest cumulative loss of output of a developed-country economy in at least three decades, coming within spitting distance of the 27 percent drop in the U.S. economy between 1929 and 1933, according to the Bureau of Economic Analysis in Washington. “Austerity has been destroying tax revenue and therefore thwarting the intended effect,” said Charles Dumas, chairman of Lombard Street Research, a London-based consulting firm. “There’s no avoiding austerity, though, because these people have no borrowing power. The deficits are there.”
Greece’s restructured bonds have benefited amid speculation that creditors are poised to release more bailout funds. Greek bonds maturing in 2023, which yielded more than 30 percent at the end of May, now yield about 16.4 percent. The next block of aid is slated to total 31 billion euros ($40.5 billion), mostly to recapitalize the nation’s banks.

20121023 1006 Global Commodities Related News.

DTN Closing Grain Comments 10/22 14:43 Grains Start Week Mostly Higher (CME)
Grain contracts started the week mostly higher following a quietly traded session. Soybeans had a solid day rallying double digits in nearby contracts on robust demand and possible concerns brewing over a less-than-ideal weather situation in South America. Corn drifted to a fractionally lower close, while wheat contracts finished with modest gains.

Pro Farmer: Wheat futures end higher  (CME)
Wheat futures ended mostly 5 to 8 cents higher across the board at all three exchanges, which was good for a mid- to high-range close. Wheat was supported by spillover from the soybean market, as well as tightening supplies in the Black Sea region. As reported last week, starting Nov. 15, Ukraine will stop exporting wheat and traders suspect Russia's exportable supplies will soon dry up as well.

Wheat Market Recap Report (CME)
December Wheat finished up 5 3/4 at 878 1/4, 6 1/4 off the high and 6 3/4 up from the low. March Wheat closed up 6 1/2 at 890 1/4. This was 7 1/4 up from the low and 5 1/2 off the high. December Chicago wheat traded marginally higher on the day seeing support from a weaker US Dollar but resistance continues to come from US wheat's uncompetitive price structure in the global market. Kansas City and Minneapolis wheat traded higher on the session as well. The higher trade overnight carried over to this afternoon but a weaker Crude Oil market and along with softer trade in other commodity markets weighed on price gains. Initial support continues to come from a more positive outlook for US exports after Ukraine announced it would ban wheat exports by November 15th. Export Inspections for the week ending October 18th were pegged at 16.4 million bushels which was up from last week's 7 million bushels but well behind the 25 million needed each week to reach this crop years USDA forecast. The current export pace is just 33% of the USDA export estimate vs. the 5 year average of 42%. The report was considered slightly supportive since most in the trade expected a number near 13 million bushels. It was announced this morning that Syria bought 100,000 tonnes of Black Sea wheat in their tender and it's being reported that Romania and Hungary were the cheapest offers for the 50,000 tonne Iraq tender. This added to the short term resistance in price action today. Taiwan Flour Mills issued a tender to buy 104,000 tonnes of milling wheat that can be sourced from the US or Europe so the trade will wait for results tomorrow. December Oats closed up 1 1/4 at 395 1/2. This was 1 3/4 up from the low and 4 1/2 off the high.

Pro Farmer: Corn futures chopped sideways  (CME)
Corn futures traded in a narrowly mixed range today but market bears wrestled control from the bulls ahead of the close. Futures ended fractionally to 1 3/4 cents lower. Corn futures chopped sideways today as traders are uncertain whether to place more emphasis on tight supplies or lackluster demand. With harvest winding down and farmer selling slowing, cash corn basis is historically high.

Corn Market Recap for 10/22/2012 (CME)
December Corn finished down 1/4 at 761 1/4, 5 3/4 off the high and 2 1/2 up from the low. March Corn closed down 1/4 at 759 1/4. This was 2 3/4 up from the low and 5 3/4 off the high. December corn traded both sides of the unchanged today and saw support from a lower US Dollar and surging soybean prices. Outside markets deteriorated throughout the day however which limited gains. The demand influences continue to be mixed for the corn market as the US export pace continues to add momentum to the bear camp. Export inspections for the week ending October 18th were reported at 9.6 million bushels which was down from 17.2 last week. Cumulative export inspections are only 9.8% of the USDA export estimate vs. the 5 year average of 13%. Export inspections need to average 26 million bushels in order to reach this year's USDA estimate. Traders are beginning to become a bit more optimistic towards US exports after the EU approved a GMO corn variety that will allow Brazil corn to be imported. The approval by the EU is a signal that corn and wheat supply is tightening in Europe. Rising cash prices in South America along with the potential for a demand shift from Asian importers to the US could be supportive to corn over the next 3-6 months. South American corn continues to trade at a discount to US but Ukraine's recent ban on wheat exports could limit additional sales of corn. The tightening global grain balance sheet may suggest that US corn exports will be needed long term which could be supportive to prices if realized. November Rice finished down 0.12 at 14.9, equal to the high and equal to the low.

Australia Wheat Harvest Seen Slumping 28% to Five-Year Low (Bloomberg)
Wheat production in Australia, the world’s second-biggest shipper, will probably decline 28 percent to the lowest level in five years, missing a government estimate, after dry weather reduced yields. The harvest (ALHVS) will total 21.2 million metric tons in the 2012-2013 marketing year, according to the median of estimates from four analysts and two traders compiled by Bloomberg. That compares with 23.25 million tons in a survey last month and an official forecast of 22.5 million tons. The crop was a record 29.5 million tons last year. Wheat climbed 34 percent this year as dry weather in parts of the European Union and Russia cut global stockpiles to the lowest in four years, helping boost food costs 7.7 percent the past three months. The U.S. Department of Agriculture cut its estimate for Australian output 12 percent to 23 million tons on Oct. 11. That may be lowered a further 2 million tons in coming reports because of dry conditions, said Rabobank International.
“Western Australia had a very prolonged dry stretch through the cropping year,” said David Johnson, general manager of risk and pricing at Emerald Group Australia Pty in Melbourne. Eastern Australia “hasn’t been getting convincing rain to be able to fulfill crop potential, so the crop has just been slowly declining.” The Australian Bureau of Agricultural and Resource Economics and Sciences, or Abares, will revise its estimate in December.

Oil Rebounds From Lowest in Two Weeks; Keystone Supply Curtailed (Bloomberg)
Oil rose for the first time in four days in New York amid signs its slide to the lowest level in more than two weeks was excessive. The Keystone pipeline won’t resume full deliveries until next month after a shutdown. Front-month futures gained as much as 0.7 percent, snapping a three-day, 3.7 percent loss. Prices rebounded after nearing technical support along the lower Bollinger band. Buy orders tend to be clustered near chart-support levels. The band is at about $87.08 today. Prices also advanced before a report tomorrow that may show new home sales in the U.S. in September rose to the highest in more than two years. “The markets said that given where we are, it could just be a little bit over done,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “It’s been quite a dramatic decline.”
Crude for December delivery rose as much as 64 cents to $89.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.94 at 10:09 a.m. in Tokyo. The November contract fell 1.5 percent yesterday to $88.73, the lowest close since Oct. 3. Brent for December settlement gained 14 cents, or 0.1 percent, to $109.58 a barrel on the London-based ICE Futures Europe exchange after losing 70 cents to settle at $109.44 yesterday. The European benchmark crude was at a premium of $20.65 to New York-traded West Texas Intermediate grade, compared with $20.79 yesterday

Recap Energy Market Report  (CME)
December crude oil prices trended lower during the US trading session, falling to their lowest level since October 4th in the process. The market was higher during the initial morning hours, supported by weakness in the US dollar and a rally in global equity markets. That seemed to change following earnings announcements from Caterpillar that showed higher than expected profit but lowered FY 2012 forecasts. This seemed to reignite slowing economic growth concerns. Meanwhile, the restart of TransCanada's Keystone pipeline served to calm supply disruption concerns in the mid-US, and that seemed to overshadow festering Middle East tensions.

Silver Market Recap Report  (CME)
Like the December gold contract, the December silver contract also forged a fresh new low for the move overnight in the face of soft Japanese export data and weakness in some global equity markets. However, silver was able to throw off the initial weakness a return to positive ground well ahead of mid session and therefore technical considerations might have fueled part of the bounce in silver prices today. The bull camp might point to a tailing off of open interest on the declines at the end of last week as a possible technical bottoming signal but the presence of a lower low this morning hurts that argument somewhat.

Gold Market Recap Report  (CME)
Gold was under early pressure but managed to recover despite seeing adverse equity and currency market action into the mid day trade. There were some reports of physical buying of gold today and perhaps some would-be buyers were moving back into gold ahead of the upcoming FOMC meeting as the Fed has consistently talked up its capacity to support the US economy. Some players also suggested that the inability to sustain the new low for the move early in the trading session fostered short covering and for some that might make the $1,725 level in the December gold contract a critical pivot point in the days ahead. A lack of scheduled data from the US ahead might leave US equities and currency market action as a major influence on gold prices.

20121023 1006 Soy Oil & Palm Oil Related News.

ITS CPO export up 14.1% to 1,058,844 tonnes for the period of 1~20 Oct 2012.

SGS CPO export up 16.7% to 1,050,548 tonnes for the period of 1~20 Oct 2012.

Pro Farmer: Soybeans close higher  (CME)
Soybean futures closed roughly 8 to 12 cents higher in the November through July contracts, which was mostly mid-range. Far-deferred contracts closed mixed. Soybean futures were supported by short-covering today as traders continue to transition from the "better-than-expected" yield results to demand.

Soybean Complex Market Recap (CME)
November Soybeans finished up 12 1/4 at 1546 1/2, 12 off the high and 20 up from the low. January Soybeans closed up 12 3/4 at 1549 1/4. This was 20 1/4 up from the low and 12 off the high. December Soymeal closed up 7.2 at 471.0. This was 9.7 up from the low and 1.2 off the high. December Soybean Oil finished up 0.08 at 51.66, 0.57 off the high and 0.42 up from the low. November soybeans traded higher on the day but settled off the session highs made overnight. Soybeans spent the day in a choppy range as markets were pushed around by strong demand fundamentals mixed with negative outside markets. This afternoons Harvest Progress report is expected to show that harvest is 82% complete vs. the 5 year average of 71%. The strong harvest, firm cash markets, and explosive export demand continues to add underlying support to prices. Export inspections for the week ending October 18th were reported at 61.4 million bushels vs. 57.8 last week. Total inspections are now 22% of the current USDA export estimate vs. the 5 year average of 11.5%. Even more impressive is that only 19 million bushels are needed each week to reach this crop years USDA export estimate. The South American weather outlook is providing a mixed influence to futures. Heavy rain in Argentina over the weekend is causing concern that planting will be delayed but better rainfall for dry areas of Brazil should help moisture deficits. Physical traders noted that soybean movement was quiet to start the week but farmer sales have stalled as they await higher cash prices.

EDIBLE OIL: Malaysian palm oil futures inched up on rising exports, although gains were capped by growing stockpiles and as investors waited for further trading cues in a choppy market. (Reuters)

VEGOILS-Palm oil futures rise to 3-week high on strong exports
Mon Oct 22, 2012 6:22am EDT
* Prices rise to 2,580 ringgit, level unseen since Sept. 28
    * Malaysia palm oil exports for Oct. 1-20 up 14.1 pct -ITS
    * Exports up 16.7 pct for same period -SGS

 (Updates throughout)
    By Chew Yee Kiat
    SINGAPORE, Oct 22 (Reuters) - Malaysian palm oil futures
rose to their highest in more than three weeks on Monday,
boosted by rising exports which investors said may help ease
record stocks in the world's No.2 palm oil producer.
    Latest data from cargo surveyor Societe Generale de
Surveillance showed Malaysia's palm exports rose 16.7 percent
for the first twenty days of October from a month ago, lending
support to futures that have lost almost one-fifth so far this
    Another cargo surveyor Intertek Testing Services reported on
Saturday a 14.1 percent increase in exports to 1.06 million
tonnes for the same period, signalling buoyant demand for the
tropical oil.
    "The export numbers improved market sentiment. It's good to
see positive signs after seeing so many negative signs lately,"
said a Singapore-based trader with a global commodities house.
    "Prices are very likely to go to the 2,700-2,800 ringgit
range but there may be dips in between."
    At the close, the benchmark January contract on the
Bursa Malaysia Derivatives Exchange rose 3 percent to 2,577
ringgit ($845) per tonne, just off an intraday high at 2,580
ringgit, a level unseen since Sept. 28.
    Total traded volumes stood at 37,259 lots of 25 tonnes each,
much higher than the usual 25,000 lots.  
    Palm oil prices fell to a near 3-year low earlier this month
on fears over rising stocks and concerns that a sluggish global
economic growth could hurt commodity demand.  
    But traders said low prices could lure buyers back to the
market and also make the tropical oil an attractive choice to be
used as biodiesel.
    In related markets, Brent crude oil steadied above $110 per
barrel on Monday as fighting in Beirut and Gaza raised fears for
the security of fuel supplies from the Middle East, helping stem
a four-day decline in prices.
    In other vegetable oil markets, U.S. soyoil for December
delivery increase 1.1 percent in late Asian trade,
drawing support from the Chicago soybeans market, which bounced
back from a three-and-half month low last week.
    The most-active May 2013 soybean oil contract on
the Dalian Commodity Exchange also closed 0.4 percent higher.