Thursday, November 1, 2012
FCPO closed : 2537, changed : +41 points, volume : higher.
Bollinger band reading : side way range bound.
MACD Histogram : weakening, buyer closing position.
Support : 2520, 2490, 2450, 2400 level.
Resistance : 2550, 2570, 2600, 2620 level.
FCPO closed recorded gains with better volume exchanged. Soy oil price currently trading higher after overnight closed recorded small gain while crude oil price currently trading little higher.
FCPO price soar higher after China reported better manufacturing data and news on strong Chinese demand for soybeans fueled expectations for more edible oil orders.
Daily chart wise, FCPO reading still suggesting a side way range bound market development with immediate support at middle Bollinger band level.
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.
Posted by MW Chong at 6:06 PM
FKLI closed : 1672 changed : -1.5 point, volume : lower.
Bollinger band reading : correction range bound upside biased.
MACD Histogram : falling lower, buyer reducing exposure.
Support : 1670, 1660, 1657, 1651 level.
Resistance : 1680, 1690, 1700, 1710 level.
FKLI closed recorded marginal loss with quiet volume changed hand doing 3.5 points discount compare to cash market that closed little higher. Overnight U.S. markets closed recorded small loss and today Asia markets ended mostly higher while European markets currently having mixed development.
Most regional markets traded higher after news on China manufacturing data recorded expansion for the 1st time in 3 months and investors awaits a report that may show U.S. consumer confidence rose.
FKLI daily chart study remained calling a correction range bound upside biased market development with MACD indicator having negative crossed down.
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.
Posted by MW Chong at 5:19 PM
STOCKS: European stocks are expected to open flat or slightly higher, in what is expected to be a light session due to national holidays in part of mainland Europe. Most Asian shares fell, but losses were curbed as the region's factory activity surveys mostly improved, with China's official and private sector manufacturing PMIs confirming a recovery in the growth trend even if it lacked punch. U.S. stocks ended flat on Wednesday. (Reuters)
FOREX-Yen crawls toward 4-month low vs dollar, euro on hold
TOKYO, Nov 1 (Reuters) - The yen dipped edging closer to a four-month low on Japanese importers' selling the currency and as the market viewed the Bank of Japan's latest easing steps more positively.
"Those who just trade on news headlines sold dollar/yen after the BOJ. But the BOJ's latest stance is quite aggressive as it plans to keep easy policy until deflation ends, thus likely to keep the dollar supported," said Minori Uchida, chief FX strategist at the Bank of Tokyo-Mitsubishi UFJ.
Twin China PMI surveys show economy perking up
BEIJING, Nov 1 (Reuters) - China's economy is finally regaining some traction, official and private sector factory surveys showed on Thursday, although they pointed to a sluggish recovery with the latter recording its 12th straight month of slowing growth.
The surveys add to other signs of economic revival in October after domestic credit curbs and weak demand from overseas markets pushed down third-quarter growth to its lowest rate since the depths of the global financial crisis.
France, Britain set stage for EU budget wrangling (Reuters)
British Prime Minister David Cameron came under pressure to act tough on the European Union budget and France threatened to use its veto, signalling a divisive start to bargaining over the 1 trillion euro long-term spending plan.
U.S. corn harvest 91 percent complete, soy 87 percent (Reuters)
The world's largest corn harvest limped along toward the finish line last week amid rain delays in the Midwest farm belt, but it remained tied with 2010 as the fastest ever, U.S. government data showed on Wednesday.
GRAINS: U.S. soybeans rose, extending gains from the previous session on talk of renewed demand from China, while concerns a bumper South American crop might not materialize added strength to beans and pushed corn to a one-week high. Wheat rose, extending gains into a second session, on concerns over global tightening. . (Reuters)
U.S. E Coast fuel supply relief days away despite efforts (Reuters)
East Coast fuel supplies seemed set to remain tight into next week, as spotty electrical power and flooding damage stymied the recovery of two New Jersey refineries after Hurricane Sandy.
OIL: Brent crude hovered around $108 a barrel as investors focused on concerns that storm Sandy's rampage across the U.S. East Coast could reduce fuel demand and shrugged off data pointing to a recovery in China. (Reuters)
Global copper market seen at 281,000 T surplus in 2013 -IWCC
SINGAPORE, Nov 1 (Reuters) - The global market for refined copper is expected to swing into a 281,000 tonne surplus in 2013 from a deficit this year, the International Wrought Copper Council (IWCC) said, with mine supply growing against a backdrop of tepid demand.
The industry group estimated global refined copper production would climb 4.9 percent from 2012 to 21.06 million tonnes, helped by a recovery in international mine supply.
Global copper market seen at 281,000 T surplus in 2013 –IWCC (Reuters)
The global market for refined copper is expected to swing into a 281,000 tonne surplus in 2013 from a deficit this year, the International Wrought Copper Council said, with mine supply growing against a backdrop of tepid demand.
BASE METALS: London copper extended gains into a third session, inching up on encouraging economic data from China, although lingering concerns about downstream demand in the world's top metals consumer kept gains in check. (Reuters)
PRECIOUS METALS: Gold traded flat, shrugging off data showing China's economy was perking up, as investors waited on the sidelines of the market for U.S. employment data due on Friday. (Reuters)
METALS-LME copper inches up on China data, set to climb for 3rd day
SHANGHAI, Nov 1 (Reuters) - London copper extended gains into a third session inching up on encouraging economic data from China, although lingering concerns about downstream demand in the world's top metals consumer kept gains in check.
"Copper prices hardly moved today despite China's official PMI (results) ... and a surge in Shanghai equities, as Chinese downstream demand is still weak," said Orient Futures Derivatives director Andy Du.
PRECIOUS-Gold steady as investors await US data, election
SINGAPORE, Nov 1 (Reuters) - Gold traded flat shrugging off data showing China's economy was perking up, as investors looking for more clarity on the global economy focused instead on U.S. employment data due on Friday.
"The reason for gold to rise is uncertainty. If PMI numbers rise, that adds to confidence in the market, which is probably negative to gold," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.
Posted by MW Chong at 4:06 PM
VEGOILS-China demand hope lifts palm oil futures, stocks weigh
Thu Nov 1, 2012 1:43am EDT
* Futures market rangebound between 2,508 - 2,528 ringgit
* October end-stocks could rise to 2.6 million tonnes
* Palm oil's target at 2,468 ringgit unchanged -technicals
By Anuradha Raghu
KUALA LUMPUR, Nov 1 (Reuters) - Malaysian palm oil futures
climbed on Thursday as strong Chinese demand for soybeans
fuelled expectations for more edible oil orders in the weeks to
Signs of strong China demand have been growing with economic
data showing Chinese private sector factories were at their
busies in eight months in October. Malaysia's palm oil exports
last month were at their highest in a year, driven by a steady
flow of Chinese orders as well as strong European demand.
Prices of palm oil have dropped 20 percent so far this year
thanks mainly to record stocks. Although cheaper palm oil
cargoes has spurred demand, production has risen at a faster
pace and could lead to record stocks again in October.
"The question is whether exports can override the burden of
the production. If demand is sustained or rises higher, at least
the stocks won't be so bad. People are very worried," said a
trader with a foreign commodities brokerage.
By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange rose 1.2 percent to
2,525 ringgit ($827) per tonne.
Total traded volumes stood at 11,366 lots of 25 tonnes each,
a tad lower than the usual 12,500 lots.
Technicals showed palm oil still targets 2,468 ringgit per
tonne, as the current fall from 2,615 ringgit is expected to
reverse the rebound from the Oct. 3 low of 2,230 ringgit, said
Reuters market analyst Wang Tao.
Surging palm oil output from Southeast Asia has led to
inventory levels in Malaysia, the world's No.2 producer, hitting
a record 2.48 million tonnes in September.
Traders expected October end stocks to reach about 2.6-2.7
million tonnes given that production last month would have been
a seasonal peak.
Brent crude edged down toward $108 a barrel on Thursday as
investors focused on concerns that storm Sandy's rampage across
the U.S. East Coast could reduce fuel demand and shrugged off
data pointing to a recovery in China.
In other vegetable oil markets, U.S. soyoil for December
delivery inched up 0.8 percent in early Asian trade on
China demand hopes.
The most-active May 2013 soybean oil contract on
the Dalian Commodity Exchange rose 0.8 percent by the midday
Posted by MW Chong at 3:23 PM
The annual growth of broad money (M3) moderated to 12.5% in Sep (13.9% in Aug). Net financing to the private sector grew 12.8% in Sep (12.6% in Aug), driven by higher issuances of private debt securities (PDS). Total outstanding loan growth slowed to 12% yoy in Sep (12.3% in Aug). (BT)
Please refer to our Economic Update for further details Producer price index (PPI) declined 1.2% mom in Sep (+0.1% mom in Aug). This was due to the decrease in the PPI for local production by 1.7% mom (+0.2% in Aug) and the import price index by 0.1% mom (-0.4% in Aug). On yoy comparison, PPI for domestic economy declined by 1.3% (+0.5% in Aug) and the local production index dropped by 2% (-0.9% in Aug) while the import price index rose by 0.4% (+0.9% in Aug). (BT)
South Korea: Inflation accelerates to highest in four months
South Korea’s inflation accelerated to a four-month high in October before the central bank’s decision on borrowing costs next week. Consumer prices increased 2.1% from a year earlier after a 2.0% gain in September, Statistics Korea said. The median estimate in a Bloomberg News survey of 17 economists was for a 2.1%. (Bloomberg)
UK: October consumer sentiment falls to six-month low
UK consumer confidence fell to a six-month low in October as Britons become more pessimistic about their finances and spending, said GfK NOP Ltd. An index of sentiment declined to minus 30 from minus 28 in September, the London-based research group said. A gauge of how consumers see their personal financial situation over the next year dropped 5 points to minus 13, also the lowest in six months. (Bloomberg)
Euro: Greece urged by Europe to overcome last hurdles to aid pact
Euro-area governments pressed Greece to make deeper spending cuts to keep aid flowing, in the latest test of wills during the three-year battle to prevent the single currency’s breakup. With Greece pleading for a EUR31bn (USD40bn) aid payout in November and facing a sixth year of recession in 2013, euro finance ministers said unfreezing loans for the country required more efforts in Athens to rein in the budget deficit and deregulate the economy. (Bloomberg)
US: Storm disrupting work for millions may slow economic growth
Atlantic superstorm Sandy may cut US economic growth as it keeps millions of employees away from work and shuts businesses from restaurants to refineries in one of the nation’s most populated and productive regions. The storm may cut output in the world’s largest economy by USD25bn in the fourth quarter, according to Gregory Daco, a US economist. (Bloomberg)
US: Wage hikes cool as US employers hold line
Employment costs rose at a slower pace in the third quarter compared with the prior three months, indicating workers have limited scope to bargain for higher wages as the US economy struggles to pick up. The employment cost index increased 0.4% following a 0.5% gain in the prior quarter, the Labour Department said. Business activity unexpectedly contracted for a second month in October, another report showed. (Bloomberg)
Posted by MW Chong at 10:17 AM
TNB sees higher profits on stronger demand
Tenaga Nasional Bhd (TNB) recorded a net profit of RM2.9bn for the financial year ended 31 Aug (FY12), 34% higher than last year’s profit, due to stronger demand for electricity, the strengthening of ringgit and lower average cost of coal. TNB chairman Tan Sri Leo Moggie said the higher fuel cost incurred by the company, resulting from the higher usage of oil and distillate, was addressed following the implementation of the fuel cost sharing mechanism. In a related development, Bernama reported that TNB is confident of managing the power supply despite a delay in the starting up of Petronas’ liquefied natural gas (LNG) regassification facility in Melaka, which was supposed to have come onstream in September. (Financial Daily, Bernama)
Emkay sees rising demand in Cyberjaya, to invest RM3.7bn
Property developer Emkay Group believes there will be a higher middle-income population in Cyberjaya as the population in the area is expected to reach 100,000 over the next five years. Chief executive officer Ahmad Khalif Mustapha Kamal said there will be 16 developers who will build about RM20 billion worth of property projects which include commercial property, landed property, high-rise and office blocks. (BT)
IGB ‘frontrunner’ for Taipei MRT job
IGB Corp, in an exchange filing yesterday, stepped forward to clarify several media reports regarding a RM8bn contract to construct the Taipei Twin Towers. According to the reports, a consortium led by IGB had been awarded the contract to construct the two high-rise buildings by the Taipei City government. However, IGB has since clarified that it had on 16 May 2012, submitted a tender for the proposed joint land development investment on the airport mass rapid transit (MRT) system. (Malaysian Reserve)
Dijaya makes RM38m on land sale
Dijaya Corp’s wholly-owned subsidiary, Dijaya Property SB, has sold 27ha of freehold land in Balakong to Kuala Lumpur Metro (M) SB for RM106.4m. In a press statement yesterday, Dijaya said it will realise a net gain of approximately RM38m by the first-quarter of 2013 and the sales proceeds will be utilised as working capital for the group’s upcoming development projects.(Malaysian Reserve)
PLB Eng wins sanitary landfill concession
PLB Engineering’s subsidiary PLB Terang SB has clinched a 20-year concession agreement with Majlis Perbandaran Seberang Perai (MPSP) and Majlis Perbandaran Pulau Pinang (MPPP) to operate and maintain a sanitary landfill and materials recovery facility at Pulau Burung, Seberang Perai Selatan, Penang. MPSP and MPPP have agreed to pay PLB Terang a tipping fee, from RM20.20 per tonne to RM26.89 per tonne depending on the number of years in operation for each billing month. (StarBiz)
XL Axiata posts RM717m 9-month profit
Axiata Group’s Indonesian 66%-owned unit PT XL Axiata Tbk posted a net profit of IDR2.2trn (RM717m) for the nine-month period of the financial year ending 31 Dec 2012. In a statement issued, Axiata Group said XL Axiata’s key offering for data remained the pay-per-use or volume-based packages and Hot Rod 3G+. To align its focus on using the 3G network for data, XL Axiata had started to offer additional quota for its data volume packages, if used on the 3G network. (StarBiz)
C I Holdings Bhd (CIH) is still eyeing opportunities in the power sector, despite its failed bid for a Prai power plant, and hopes to firm up a new business direction within a year, a top executive said. "I'm passionate about the power sector and there are still opportunities, but we don't want to limit ourselves to just power or consumer. Hopefully by the next AGM, we will see something firmed up," group managing director Datuk Johari Abdul Ghani said after the company's AGM. "I would like to buy problematic companies and turn them into successful ones. No point paying 20-30x P/E for assets. I'll not be fair to shareholders if we pay unrealistic prices," Johari said, conceding that pricing had been a key hurdle in CIH's search for a new unpolished gem. While the company only has about RM88m cash currently, Johari said the company can always borrow or propose a rights issue to raise cash from shareholders should the need arise.According to Johari, CIH does not face a timeline to find a new business
as it is not a Practise Note 17 (PN17) distressed company or cash company without a core business under Practise Note 16(PN16). Shareholders would likely not get any dividends in the coming financial year, though. On opportunities in the power sector, Johari said it would be easier to go abroad once it has a good track record in Malaysia. While small relative to many players in the power sector, Johari said the CIH has necessary expertise and capability to compete with the bigger boys. "Our bid was the second lowest after Tenaga [Nasional Bhd], beating others like Malakoff and YTL Power," he said. CIH is no longer considering acquiring poultry player D.B.E. Gurney Resources Bhd. "I've not looked at that for awhile now," Johari said. (The Edge)
Felda Global Ventures Holdings (FGV) has again clarified that Genting Bhd is not a shareholder of FGV, and that it has not granted any shares to Genting during and after the initial public offering (IPO) exercise. In a statement, FGV president and chief executive officer Datuk Sabri Ahmad said it is imperative for FGV to provide such clarification so that the public as well as Felda settlers are not misled by ambiguous reports. (BT)
Brahmal Vasudevan has emerged as a substantial shareholder with a 5% acquired stake in MyEG Services Bhd yesterday. Vasudevan, who has a direct and indirect shareholdings totalling 30 million shares in MyEG, is believed to be a close business acquaintance of billionaire T Ananda Krishnan. (Starbiz)
The widening of certain stretches of the North-South Expressway (NSE) is to be completed by end of 2014. The plan is to add a fourth lane along the NSE from Shah Alam to Rawang, Bukit Lanjan to Jalan Duta and Nilai Utara to Seremban in both directions. "The initial preparations for the construction of the fourth lane from Shah Alam to Rawang and Bukit Lanjan to Jalan Duta are almost complete and land works will start soon," PLUS Malaysia Bhd managing director Datuk Noorizah Abd Hamid said. The project consists of four packages - the 16.1km Shah Alam junction to Sungai Buloh, Bukit Lanjan to Jalan Duta Toll Plaza (7km), Sungai Buloh to Rawang junction (13.1km) and Nilai Utara to Seremban (27km). Noorizah added that the construction cost for the project is about RM1.4bn to RM1.6bn. (BT)
Ethiopian Airlines, the national flag carrier of Ethiopia, plans to work with Malaysia Airlines (MAS) in a big way as soon as early next year. Ethiopian Airlines planned to work on code sharing and special pro-rate agreement with its Malaysian counterpart. "This arrangement would see the traffic from 44 countries in Africa to be transported into Kuala Lumpur and would be supply to MAS. MAS will then take it from KL to add to its network that includes the rest of South-East Asia, Japan, South Korea, Australia and New Zealand. (Star Biz)
Competition in the mass market, 1.5-litre car segment has heated up, with Tan Chong Motor pricing its latest model below market expectation. The 1.5l Nissan Almera is priced at between RM66,800 and RM79,800. The Proton Preve, a 1.6-litre model, ranges from RM59,990 to RM72,540, which is not far away from Nissan's Almera. Tan Chong is targeting 1,000 to 1,250 units in monthly sales. (Financial Daily)
Samalaju Industrial Port expects construction of phase one of the RM1.8bn Samalaju Port to be completed by the first quarter of 2016. It will have an annual handling capacity of 18m tonnes of cargo. In the interim, the port plans to provide facilities starting in the second quarter of next year with an annual handling capacity of 4m tonnes of cargo. (Bernama)
Tune Hotels Group, which is building a new Tune Hotels at KLIA2 in Sepang, has yet to decide whether to maintain its existing budget hotel at the current low-cost carrier terminal (LCCT) once the new one is up. But for now it is business as usual, said its CEO Mark Lankester. Mudajaya Group Bhd on Monday announced it won a RM65m contract from TP Sepang Sdn Bhd, a member of Tune Group Co, to build the new Tune Hotels, which is expected to be completed by Nov 22, 2013. "We are developing a brand new 400-room Tune Hotels at the new KLIA2. Mudajaya has been selected as the main contractor," Lankester told SunBiz via email. He said while no firm decision has been made on the hotel at the current LCCT, the group is aware that KLIA2 is designed to cater to 30m passengers, expandable to 45m passengers. "With that substantial number, we may require both hotels to cater to overall passenger needs. "We will continue to operate the Tune Hotels at LCCT to look after our guests up until the time that the new KLIA2 hotel is up and operating," Lankester added.The budget hotel chain now has 25 hotels in five countries, namely Malaysia, Indonesia, the Philippines, Thailand and the UK. (Sun)
Carrefour SA, France’s biggest grocer, agreed to sell its Malaysian operations to Aeon Co., Japan’s largest retailer, for 250m euros ($324m). The sale was effective immediately, Boulogne-Billancourt, France-based Carrefour said. “The transaction is part of Carrefour’s strategy of refocusing on its core activities and allocating its resources to mature countries where it occupies strong and established positions and emerging markets where it has strong growth potential,” the company said in the statement. (Bloomberg)
Premier Nalfin Bhd could soon be taken over by the privately-held Emrail Sdn Bhd, people with direct knowledge of the matter said yesterday. It is further understood that the two parties could sign a heads of agreement by as early as this week to help facilitate the reserve takeover. Premier Nalfin is a Practice Note 16 company, which means that it has cash but no core business. The company has a cash backing of RM0.33/share. In Oct-2011, Premier Nalfin sold its downstream palm oil business and has since been a cash shell. (BT)
Boon Siew Honda Sdn Bhd, the distributor and assembler of Honda motorbikes, believes it is on track to grow its sales by 12% to 262,700 units this year, helped by the introduction of new models. The company, which has a 47% share in the sales of new motorbikes, is also planning to launch a few more new models over the next two months. Besides the launches, Okada said that its rising dealership network has also played a key role in boosting company's sales number. (BT)
Posted by MW Chong at 10:15 AM
Asian Stocks Drop as Panasonic Plunges on Loss Forecast (Bloomberg)
Asian stocks fell as Panasonic Corp. led declines among Japanese makers of electronics after forecasting a loss that was 30 times bigger than analysts estimated, overshadowing the first expansion in China’s manufacturing output in three months. Panasonic plunged by 17 percent in Tokyo. Sharp Corp. (6753) and Sony Corp. dropped at least 2.3 percent ahead of earnings reports today. Arrium Ltd. tumbled 11 percent in Sydney after a consortium led by Noble Group Ltd. dropped a takeover attempt. The MSCI Asia Pacific Index (MXAP) fell 0.4 percent to 121.48 as of 10:12 a.m. in Tokyo, with about three shares falling for each that rose. The benchmark index slid 0.4 percent last month as more than half the gauge’s companies reported earnings that missed analyst estimates.
Japan’s Nikkei 225 Stock Average (NKY) slipped 0.2 percent, while South Korea’s Kospi Index dropped 0.9 percent. Taiwan’s Taiex Index decreased 1.1 percent. Australia’s S&P/ASX 200 declined 0.7 percent after the nation’s manufacturing output contracted for an eighth month. China’s manufacturing output expanded in October for the first time in three months, in line with economist estimates. Markets in China and Hong Kong have yet to open. Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. Most U.S. stocks rose yesterday as equity markets reopened after Hurricane Sandy caused the longest weather- related shutdown since 1888. Stocks on the MSCI Asia Pacific Index traded yesterday at an average of 12.9 times estimated earnings, compared with 13.5 for the S&P 500 Index and 12.1 for the Stoxx Europe 600 Index.
Japan Stocks Swing From Gains, Losses on China, Panasonic (Bloomberg)
Japanese stocks swung between gains and losses ahead of the release of China manufacturing data and as electronics makers slid after Panasonic Corp. projected a full-year loss that was about 30 times bigger than expected. Panasonic was poised to drop after saying it will lose 765 billion yen ($9.6 billion) due to restructuring and falling demand. Unitika Ltd. fell 5 percent after the fiber manufacturer cut its earnings forecast. Nippon Meat Packers Inc. jumped 8.7 percent after saying it will spend as much as 15 billion yen buying back shares. The Nikkei 225 Stock Average (NKY) was little changed at 8,926.60 as of 9:19 a.m. in Tokyo after falling as much as 0.3 percent. Volume on the gauge was 7.4 percent above the 30-day average. The broader Topix (TPX) Index fell less than 0.1 percent to 742.14.
The Topix rose 3.2 percent through yesterday from Sept. 6 after the European Central Bank started a global wave of monetary policy easing to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the stock gauge traded at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.
European Stocks Decline as ArcelorMittal, BG Group Fall (Bloomberg)
European stocks fell, paring the Stoxx Europe 600 Index’s fifth straight monthly gain, as ArcelorMittal and BG Group Plc (BG/) reported disappointing results and euro-area governments pressured Greece to increase spending cuts in return for aid. ArcelorMittal dropped 6.4 percent after the world’s biggest steelmaker posted its smallest quarterly profit in almost three years. BG Group Plc sank a record 14 percent as its energy company’s production forecast disappointed investors. Air France-KLM (AF) Group and Deutsche Lufthansa AG (LHA) both rose at least 7 percent after Europe’s largest airlines reported earnings that beat estimates. The Stoxx 600 lost 0.5 percent to 270.30 at the close of trading after earlier rallying as much as 0.5 percent. The index erased gains after euro-area finance ministers called on Greece to instigate deeper budget cuts during a conference call. The gauge rose 0.7 percent in October, completing its longest monthly winning streak in six years.
“Given the lack of progress we have seen with summits, once again, there has been a lot of words and not much action,” Chris Beauchamp, a market analyst at IG in London, said in a telephone interview. “We are seeing disillusionment with European markets. Lufthansa has kept markets from slipping down too much.” Trading volumes across Europe were lower for the past two days amid the longest weather-related shutdown of U.S. equity markets in more than a century. The number of shares changing hands in companies listed on the Stoxx 600 (SXXP) today was 2.7 percent less than the 30-day average, according to data compiled by Bloomberg. Volume had been down by more than 35 percent the previous two days.
Most U.S. Stocks Rise as Markets Reopen After Hurricane (Bloomberg)
Most U.S. stocks rose, with the Standard & Poor’s 500 Index reversing an earlier loss, as equity markets in the world’s largest economy reopened after Hurricane Sandy caused the longest weather-related shutdown since 1888. Home Depot Inc. (HD) and Lowe’s Cos. added at least 2.2 percent amid speculation the home-improvement retailers would be helped by spending related to the storm. General Motors Co. rallied 9.5 percent after reporting third-quarter profit that surpassed analysts’ estimates. Apple Inc. (AAPL) dropped 1.4 percent after Chief Executive Officer Tim Cook embarked on a sweeping management overhaul at the world’s most valuable company.
The S&P 500 rose less than 0.1 percent from Friday’s close to 1,412.16 at 4 p.m. in New York, after falling as much as 0.4 percent. The gauge declined 2 percent in October after four straight months of gains. The Dow Jones Industrial Average lost 10.75 points, or 0.1 percent, to 13,096.46 today. Almost three stocks rose for every two that fell on U.S. exchanges, as volume was about 6.31 billion shares, or 5.7 percent above the three- month average. “Today, traders are more heightened to a flash crash more than any day prior,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in a phone interview. His firm oversees $8 billion in assets. “Nobody cares about if the market goes up or down. You just want to make sure the market is functioning properly.”
American equity markets were closed Oct. 29 and yesterday, the first consecutive shutdowns because of weather in more than a century. The decision to open U.S. markets was announced in statements by NYSE Euronext, Nasdaq OMX Group Inc. and Bats Global Markets Inc.
Recap Stock Index Market Report (CME)
The December S&P 500 broke out above recent congestion during the initial morning, supported by gains in global equities and an improvement in risk-taking attitudes. Stocks pared their losses into this morning's US economic data on Chicago PMI, which came in weaker than expected. An added downside force for US equities this morning was weakness in the shares of Apple after its shares had a chance to react to recent management changes. Shares of Apple were down more than 2% in late-morning trade, and that weighed on tech-related shares. Meanwhile, positive earnings from General Motors this morning and a strong showing in Home Depot were seen limiting the downside. The market will get the latest earnings from Allstate and Visa after the close.
Emerging Stocks Cut Monthly Drop as Korea Boosts Outlook (Bloomberg)
Emerging-market stocks advanced for a second day, paring the biggest monthly decline since May, as commodities gained and improving data from South Korea to the U.S. bolstered the global economic outlook. Industrial & Commercial Bank of China (601398) Ltd., the world’s largest bank by market value, jumped the most in three weeks, and LS Industrial Systems Co. (010120), a Korean maker of power transmission and distribution equipment, surged the most in 11 months after reporting earnings that beat analysts’ estimates. OAO Novatek, Russia’s second-largest natural gas producer, snapped a six-day slump as oil rose. Brazilian retailer Lojas Renner SA rallied after third-quarter net income beat estimates.
The benchmark gauge for developing-nation equities added 0.2 percent to 995.33 at the close of trading in New York, cutting its drop in October to 0.7 percent, the most since the index lost 12 percent in May. South Korean factory output rose for the first time in four months in September, boosted by stronger sales of cars and electronics. A report yesterday showed home prices rose by the most in two years in the U.S., where equity markets resumed after a two-day shutdown during Hurriance Sandy. “Economic indicators from South Korea and the U.S. combined with higher-than-expected earnings are helping keep equities afloat,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. The biggest Atlantic storm in history, which caused at least 50 U.S. deaths, “will spur reconstruction that would encourage consumer spending and demand that may find its way into the emerging markets.”
Yen Remains Weaker Versus Peers After China PMI Improves (Bloomberg)
The yen remained lower against all of its 16 major peers following a drop yesterday after Chinese data showed manufacturing improved in the world’s second-largest economy. The euro rose for a third day versus Japan’s currency as European governments pressed Greece to make deeper spending cuts to keep aid flowing and after the Swiss central bank released data on its foreign-exchange reserves. Implied volatility among Group-of-Seven currencies slid to a five-year low. “We’re starting to see signs of China’s economy picking up,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “Improved sentiment toward China will lead to a risk-on environment, spurring selling of the yen and dollar.”
The yen fell 0.2 percent to 103.55 per euro as of 10:09 a.m. in Tokyo after losing 0.4 percent in the past two days. The Japanese currency slipped 0.1 percent to 79.88 per dollar following a 0.2 percent slide. The 17-nation euro was little changed at $1.2964. The JPMorgan G7 Volatility Index sank to 7.46 percent yesterday, the lowest since October 2007. Decreased volatility typically makes investments more attractive in currencies with higher lending rates. Official figures today showed that a Chinese manufacturing gauge based on a survey of purchasing managers climbed to 50.2 in October from 49.8 in September. That matched the median estimate of economists surveyed by Bloomberg News.
Treasuries Fall as Market Opens After Sandy, Home Prices (Bloomberg)
Treasuries fell, snapping a three-day gain, before Chinese data economists said will show manufacturing improved in the world’s second-largest economy. U.S. 10-year rates rose two basis points, or 0.02 percentage point, to 1.71 percent as of 9:57 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent note due in August 2022 declined 1/8, or $1.25 per $1,000 face amount, to 99 1/4. Official figures may show that a Chinese manufacturing gauge based on a survey of purchasing managers climbed to 50.2 in October from 49.8 in September, according to the median estimate of economists surveyed by Bloomberg News. A separate measure by HSBC Holdings Plc and Markit Economics probably rose to 49.1 in October from 47.9 from the prior month, economists said in a separate poll before today’s reports. That would confirm a preliminary reading released Oct. 24. For both indexes, 50 is the dividing line between contraction and expansion.
U.S. to Issue Jobs Report on Nov. 2, Spokesman Says (Bloomberg)
The U.S. Department of Labor will issue its monthly employment report for October, the last to be published before the presidential election, as scheduled on Nov. 2, a spokesman said today. The report “will be released as scheduled on Friday,” the spokesman, Gary Steinberg, said from Washington. The statement clears up uncertainty surrounding the publication of the report after Hurricane Sandy closed government offices for two days this week. Yesterday, another spokesman, Carl Fillichio, said the employees at the Bureau of Labor Statistics are “working hard to ensure the timely release of employment data.” The jobs report may help sway voters trying to decide between giving President Barack Obama another four years in office or to change course with Republican challenger Mitt Romney. The Obama administration has pointed to 24 straight months of job growth as evidence the economy is improving, while the Romney campaign has said progress is too slow.
Payrolls probably rose by 125,000 workers in October, and the jobless rate increased to 7.9 percent from a three-year low of 7.8 percent reached in September, according to the median forecast of economists surveyed by Bloomberg. Jack Welch, the former chief executive officer of General Electric Co., suggested the Obama administration had manipulated the jobs data for political advantage after the September unemployment rate unexpectedly dropped to the lowest level since the president took office in January 2009. Alan Krueger, chairman of the White House Council of Economic Advisers, called Welch’s comments “irresponsible.” Prior to September, joblessness had exceeded 8 percent for 43 straight months, the longest such stretch since at least 1948. Ronald Reagan is the only president to have been re-elected since World War II with unemployment above 6 percent. On Election Day 1984, the rate was at 7.2 percent, having dropped almost three percentage points in the previous 18 months.
Fed Sees Rising Demand for Auto and Mortgage Loans (Bloomberg)
Banks in the U.S. reported stronger demand for auto loans and commercial and residential mortgages during the third quarter, according to a Federal Reserve survey. The central bank described the share of banks reporting increased demand as “significant.” Demand for most other loan types was “about unchanged,” the Fed said today in Washington in its quarterly survey of senior loan officers. The report provides further evidence that sales of cars and homes, bolstered by record-low interest rates from the central bank, are helping to fuel the U.S. economic recovery. The gains are helping to shield the world’s largest economy from a decline in exports and cooling business investment. Cars and light trucks sold at a 14.9 million annual pace in September, the most since March 2008, according to Ward’s Automotive Group. New homes sold at a 389,000 annual pace in September, the most in more than two years, according to a Commerce Department report last week.
The Federal Open Market Committee reviewed the bank survey on Oct. 23-24 during a meeting in Washington in which it decided to continue purchasing $40 billion a month in mortgage-backed securities until the labor market improves “substantially.” Central bankers will know more about the job market on Nov. 2, when the Labor Department issues employment data for October, the last monthly report before the Nov. 6 presidential election. The median estimate of economists in a Bloomberg survey calls for 125,000 jobs to be added in October and for the unemployment rate to rise to 7.9 percent from 7.8 percent. The Standard & Poor’s 500 Index rose 0.1 percent at 1,413.76 at 3:19 p.m. in New York. The yield on 10-year Treasury notes fell 0.04 percentage points to 1.68 percent.
Wage Costs Rise More Slowly as U.S. Employers Hold Line (Bloomberg)
Employment costs rose at a slower pace in the third quarter compared with the prior three months, indicating workers have limited scope to bargain for higher wages as the U.S. economy struggles to pick up. The employment cost index increased 0.4 percent following a 0.5 percent gain in the prior quarter, the Labor Department said today. Business activity unexpectedly contracted for a second month in October, another report showed. A global economic slowdown and the prospect of more than $600 billion in automatic tax increases and government spending cuts -- the so-called fiscal cliff -- is encouraging some employers to hold the line on worker pay and other costs, according to economist Ryan Sweet. Limited wage growth makes it harder for households to step up purchases, which account for about 70 percent of the economy.
“There’s a lot of concerns for businesses,” said Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who correctly forecast October employment costs. “Not until we get beyond the fiscal cliff will we start to see manufacturing find its rhythm again.” Most stocks rose as the market resumed trading for the first time this week after Hurricane Sandy. The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,412.16 at the close in New York. In a sign of more weakness in the global economy, a report from the European Union’s statistics office showed joblessness in the euro area climbed to a record in September. Unemployment in the 17-nation region rose to 11.6 percent from 11.5 percent in August.
Storm Keeping Millions From Work May Slow Economic Growth (Bloomberg)
Atlantic superstorm Sandy may cut U.S. economic growth as it keeps millions of employees away from work and shuts businesses from restaurants to refineries in one of the nation’s most populated and productive regions. The storm may cut output in the world’s largest economy by $25 billion in the fourth quarter, according to Gregory Daco, a U.S. economist at IHS Global Insight. He said that could reduce the fourth quarter pace of growth to a range of 1 percent to 1.5 percent, from the firm’s earlier estimate of 1.6 percent. Sandy lashed a region with 60 million people -- about as many as Italy -- that accounts for about a quarter of the $13.6 trillion U.S. economy, estimated Eric Lascelles, the Toronto- based chief economist at RBC Global Asset Management Inc. It forced the temporary closings of U.S. financial markets, halted air and rail service and idled workers for the federal and state governments from Virginia to Massachusetts.
“If people aren’t going to Broadway shows and restaurants and hotels, all those businesses that rely on people spending money are going to take a hit for sure,” said Stephen Bronars, a senior economist at Welch Consulting in Washington and an adjunct professor at Georgetown University. “People are still going to go out and buy a car or other durable goods they need, they’re just not going to do it this week. There will be winners and losers.”
China Manufacturing Expands for First Time in Three Months (Bloomberg)
China’s manufacturing expanded for the first time in three months in October, adding to signs growth in the world’s second-biggest economy is rebounding after a seven-quarter slowdown. The Purchasing Managers’ Index rose to 50.2 in October from 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That matched the median forecast in a Bloomberg News survey of 30 economists. A reading above 50 indicates expansion. Today’s report bolsters hopes for a pickup in expansion this quarter after industrial production, exports and retail sales accelerated in September. The data may also reduce pressure on outgoing Premier Wen Jiabao to roll out more stimulus measures during a once-a-decade power handover that begins with a Communist Party congress next week.
“The growth stabilization is on track on the back of improving domestic and external demand, more accommodative monetary and financing conditions,” Chang Jian, a Hong Kong- based economist at Barclays Plc who formerly worked for the World Bank, said before the release. “Industrial activity and growth momentum are likely to pick up further this quarter.” Chances of a cut in interest rates or reserve requirements are diminishing, and the government is likely to maintain the current level of monetary and fiscal support to sustain the growth recovery, Chang said.
South Korea’s Exports Rise for First Time in Four Months (Bloomberg)
South Korea’s exports unexpectedly rose for the first time in four months as resilience from the country’s largest companies helped offset the effects of a global slowdown. Overseas shipments rose 1.2 percent in October from a year earlier, after a revised 2 percent decline in September, the Ministry of Knowledge Economy said in a statement today. The median estimate in a Bloomberg News survey of 16 economists was for a 0.7 percent decline. Consumer prices rose 2.1 percent last month from a year ago. South Korea’s industrial production also rose for the first time in four months in September, adding to evidence that a slowdown in Asia’s fourth-largest economy has hit bottom. Still, data has been mixed, with manufacturers’ confidence for November falling for a second-straight month and the Bank of Korea saying in a report to parliament yesterday that growth momentum is weakening.
“Things have started to move up in Korea, even if not at full steam yet,” Ronald Man, a Hong Kong-based analyst at HSBC Holdings Plc, said before the release. “This momentum would need to be sustained for economic growth to pick up.” South Korea’s won was little changed at the 9 a.m. opening in Seoul, after reaching a 13-month high yesterday, according to data compiled by Bloomberg. The Kospi (KOSPI) stock index fell 0.4 percent.
Greece’s Botched Rescue Is Frustrating to Behold, Lipsky Says (Bloomberg)
Efforts to rescue Greece have failed to provide the basic structural reforms needed to help bring competitiveness to its economy, said John Lipsky, the International Monetary Fund’s former first deputy managing director. “It has been frustrating because some of these have been clear from the outset in so many ways,” Lipsky said in an interview in Copenhagen yesterday. “I feel this process could have been handled so much better.” Europe is pressuring Greece to step up efforts to rein in its deficit and deregulate the economy. The austerity measures are exacerbating the nation’s economic pain and won’t lay the foundation for a lasting recovery, Lipsky said. Greece is complying with the terms set by euro-zone leaders in the hope of getting a 31 billion-euro ($40 billion) aid payment this month to help recapitalize its ailing banks.
“It has been so frustrating to see how little the discussion has centered around what are in fact the underlying issues, the truly seminal issues, for Greece, which have been its progressive loss of competitiveness in the euro zone,” Lipsky said. “If that can’t be remedied, there will be no successful solution for the Greek economy, one way or another.” Greece, which faces a sixth year of recession, needs to remove trade barriers and become more export-oriented to have any hope of returning to growth, according to Lipsky.
Greece Urged by Europe to Overcome Last Hurdles to Aid (Bloomberg)
Euro-area governments pressed Greece to make deeper spending cuts to keep aid flowing, in the latest test of wills during the three-year battle to prevent the single currency’s breakup. With Greece pleading for a 31 billion-euro ($40 billion) aid payout in November and facing a sixth year of recession in 2013, euro finance ministers said unfreezing loans for the country required more efforts in Athens to rein in the budget deficit and deregulate the economy. “We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations,” Luxembourg Prime Minister Jean-Claude Juncker said in an e-mailed statement today after leading a two-and-a-half-hour conference call with the finance chiefs. He said a scheduled Nov. 12 meeting of the ministers in Brussels would “seek to conclude on the program.”
Greece remains in intensive care after being rescued in 2010 in return for a prescription of budget cuts that Greeks increasingly resist. Failure to resuscitate Greece could threaten Europe’s effort to stem the crisis, which has also led Ireland, Portugal, Spain and Cyprus to seek emergency aid. Greece, the epicenter of Europe’s debt crisis since revealing a bloated spending gap in late 2009, has faced regular demands to get a firmer grip on the budget or risk being forced out of the euro.
Commodities Post Biggest Loss in 5 Months to Trail Stocks (Bloomberg)
Slumping energy and metal prices sent commodities to their biggest monthly loss since May, lagging behind stocks, bonds and the dollar, as the global economy grew at the slowest pace since the 2009 recession. The Standard & Poor’s GSCI Total Return Index of 24 raw materials fell 4.1 percent, erasing gains for the year. The MSCI All-Country World Index of stocks slid 0.6 percent, including dividends, while the U.S. Dollar Index slid 0.02 percent. While bonds of all types gave positive returns, prices dropped on average, according to Bank of America Merrill Lynch’s Global Broad Market Index. (MXAP) Investor optimism dimmed as the International Monetary Fund cut its global growth forecast and the Federal Reserve said strains on the world economy present “significant downside risks.” China reported the seventh straight quarter of slowing growth, while services and manufacturing in the 17-nation euro area last month contracted more than economists forecast.
“Europe is a complete and total disaster and doesn’t appear to be solved,” John Stephenson, who helps manage $2.7 billion at First Asset Investment Management Inc. in Toronto, said in a telephone interview. “China clearly seems to be slowing. You essentially have a situation where investors just have very little optimism.” The S&P GSCI Total Return Index slumped for a second month, leaving the gauge down 0.7 percent for 2012. Commodities are headed for a second consecutive annual loss. The last time that happened was 1998.
DTN Closing Grain Comments 10/31 14:32 Grains Pick Up Pace (CME)
The grain complex shot higher Wednesday with double-digit gains posted in row-crop contracts as investors returned after a slow couple of days early in the week. Wheat rallied less enthusiastically, though most contracts were able to post a solid showing.
Wheat Market Recap Report (CME)
December Wheat finished up 8 1/2 at 865 1/4, 9 3/4 off the high and 7 up from the low. March Wheat closed up 7 1/4 at 879. This was 5 1/2 up from the low and 10 1/4 off the high. December Chicago wheat surged 15 cents higher midday but gains eroded in the second half of the trading day as traders took profits and markets struggled with the lack of export demand. The US Stock market re-opened for the week and month end positioning added to the underlying support in commodities, along with short covering. It was announced midday that Egypt bought 300,000 tonnes of Romanian, Russian, and French wheat for December 21-31 shipment. US prices levels have narrowed their premium to France but cheap offers out of the Black Sea continue to be bought by Middle East customers. Tunisia also bought 125,000 tonnes of optional origin wheat in there tender overnight. The wheat supply situation in Ukraine is adding tension to the market after their Ag Minister announced that wheat exports would not be banned. The minister went on to say that they planned to increase their prior export estimate from 5 million tonnes to 5.5 million tonnes. Additional support was linked to concerns that the Argentina and Australia wheat crops could see additional cuts to production in next week's USDA report and as a result shift demand to the US border. December Oats closed up 1/4 at 389. This was 1 up from the low and 3 1/4 off the high.
Corn Market Recap for 10/31/2012 (CME)
December Corn finished up 14 at 755 3/4, 2 off the high and 14 up from the low. March Corn closed up 12 1/2 at 757. This was 12 3/4 up from the low and 2 1/4 off the high. December corn traded higher on the day and into the close after traders noted that Southern Brazil and Argentina were seeing less than ideal planting conditions. Financial markets reopened in New York today and some suggested that the stronger trade was also linked to short covering and positioning for month end. Concern that heavy rainfall in areas of Argentina may remove nearly 20% of its projected corn crop forced bears to the sideline today. The recent hail, rain, and flooding in Argentina could mean that some corn fields are completely lost which could result in drastic cuts to production. The USDA is projecting Argentina corn production at 28 million tonnes and a 20% reduction would reduce the crop down to 22.4 million tonnes vs. year ago levels of 21 million tonnes. The tight global balance sheet in corn is a supportive factor long term and a production problem in South America could intensify the situation. Additional support was linked to thoughts that the US may see an uptick in corn export demand from Asian buyers. November Rice finished up 0.065 at 14.83, equal to the high and equal to the low.
U.S. Winter-Wheat Condition Worst in 27 Years as Drought Lingers (Bloomberg)
The condition of winter-wheat crops in the U.S. are the worst for this time of year since the government began monitoring in 1985, as drought damage spread from Midwest corn and soybean fields to the Great Plains. An estimated 40 percent of winter wheat, the most-common domestic variety, was rated good or excellent as of Oct. 28, with 15 percent poor or very poor, the U.S. Department of Agriculture said today in its first assessment of the season. A year earlier, 46 percent got the top ratings. The worst U.S. drought since 1956 already has cut output of the nation’s two biggest crops, corn and soybeans, and sent prices to record highs. Wheat futures are up 32 percent this year. About 79 percent of Kansas, the biggest grower of winter grain, was in extreme or exceptional drought as of Oct. 23. Warm, dry weather the next two weeks will delay plant emergence and root growth before crops begin to go dormant for the winter. The U.S. is the world’s largest exporter of wheat.
“The low crop ratings will increase concern about the yield potential of this year’s crop,” Shawn McCambridge, the senior grain analyst for Jefferies Bache LLC in Chicago, said in a telephone interview. “The weather doesn’t look promising for much improvement and may increase overseas demand for supplies left from last year’s U.S. harvest.” Wheat planting was 88 percent complete in the top 18 producing states, compared with 81 percent a week earlier and 86 percent a year earlier, the USDA said today in a weekly report that was delayed two days because of Hurricane Sandy. About 63 percent of the plants had emerged from the ground, down from the previous five-year average of 67 percent because of dry soil.
Grains, Soybeans Rise on Weather Concerns in Argentina, Brazil (Bloomberg)
Corn and soybeans rose for a second day as adverse weather threatened South American yields, tightening global supplies and boosting overseas demand for U.S. crops. Wheat advanced. About 45 percent of the grain and soybean fields in Argentina are excessively wet after getting as much as three times the normal rain the past two months, David Streit, the senior forecaster for Commodity Weather Group LLC in Bethesda, Maryland, said in a telephone interview. About 30 percent of Brazil is too dry for planting and germination with some showers expected during the next week, he said. “It’s very soggy in Argentina, delaying corn and soybean planting and reducing yields for maturing wheat,” Brian Grete, the senior market analyst for the Professional Farmers of America newsletter in Cedar Falls, Iowa, said in a telephone interview. “Rains the next week in Brazil are more critical for corn, because it needs to get planted earlier than soybeans.”
Corn futures for December delivery rose 1.9 percent to close at $7.5575 a bushel at 2 p.m. on the Chicago Board of Trade, capping the first two-day gain since Oct. 19. Prices fell 0.1 percent this month. Soybean futures for January delivery climbed 0.8 percent to $15.4875 a bushel in Chicago, paring this month’s decline to 3.3 percent. Wheat futures for December delivery advanced 0.9 percent to $8.645 a bushel on the CBOT. The grain lost 4.2 percent in October, the first monthly drop since May. Prices extended gains after Egypt announced buying 300,000 tons in a tender today from supplies in Russia, France and Romania, Grete said. Combined wheat harvests in Ukraine, Russia and Kazakhstan fell by 37 percent this year, helping send global stockpiles to four-year low, data from the U.S. Department of Agriculture show. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show. Wheat is the fourth-largest at $14.4 billion, behind hay.
Oil Trades Near Three-Day High as Refineries Resume After Sandy (Bloomberg)
Oil traded near the highest level in three days as refineries resumed operations after Atlantic superstorm Sandy, increasing demand for crude. Futures were little changed after rising 0.7 percent yesterday. Philadelphia Energy Solutions’ 355,000-barrel-a-day Pennsylvania refinery restored operations, while PBF Energy Inc. said its Paulsboro, New Jersey, and Delaware City, Delaware, plants were running normally. Price gains stalled ahead of an Energy Department report today that may show U.S. crude stockpiles rose to the highest level in three months before Sandy struck the east coast. Oil for December delivery was at $86.09 a barrel, down 15 cents, in electronic trading on the New York Mercantile Exchange at 7:41 a.m. Singapore time. Prices gained 56 cents yesterday to $86.24, the highest close since Oct. 26. Futures are down 13 percent this year.
Brent crude for December settlement fell 38 cents to $108.70 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to the West Texas Intermediate contract was at $22.46. Phillips 66 and Hess Corp. (HES)’s New Jersey refineries remained shut. Restarts at Phillips’s 238,000-barrel-a-day Bayway plant in Linden and Hess’s 70,000-barrel-a-day Port Reading facility are contingent on post-storm assessments, the companies said Oct. 30. Phillips reported flooding in low-lying areas at Linden and said yesterday the refinery regained power. U.S. crude inventories increased by 1.8 million barrels, or 0.5 percent, last week to 376.9 million, the most since July 20, according to the median of 11 analyst estimates before the Energy Department report. The weekly data on inventories and output will be published at 11 a.m. Washington time, the department said in an e-mailed statement. It postponed the report by a day because of disruptions caused by Sandy.
Recap Energy Market Report (CME)
December crude oil trended higher during the morning hours, breaking out to its highest level since October 24th in the process. Early support in the crude oil market came from a rally in global equity markets and weakness in the US dollar. December crude oil prices traded into new highs on the session following reports that a number of key Northeastern refineries were back in operation after Hurricane Sandy, which was seen bolstering near term demand for crude oil. RBOB prices were also higher, partially in the wake of the November contract expiration and fears over tight supply in the Northeast region.
Silver Market Recap Report (CME)
Eventually December silver managed to forge an upside breakout and in the process, the market managed to reach the highest level since October 23rd. Some buyers were motivated by broad based gains in a host of physical commodity markets, while others might have taken most of their direction from the upside action in gold prices. In order to climb today, silver had to discount a reversal in US equities and talk that the US economy might suffer a noted setback in the wake of a prolonged power outage in parts of the Northeastern US.
Gold Market Recap Report (CME)
At times today gold was the stellar performer in the commodities space. While the gains in silver and platinum measured up to the gains in gold today, the precious metals managed the gains in the face of potentially adverse action in US equities and in the face of limiting currency market action. Some traders continued to suggest that gold was seeing a wave of month end short covering but in the face of significant gains in grains and energies, there seemed to be a favorable macro-economic vibe behind today's action. Perhaps traders were anticipating renewed Indian buying, as today's US gains and expectation of improving seasonal demand ahead could force Indian importers to pay up for gold as some of the highest prices in 6 days.
Ships at Eight-Year Low Seen Falling in Hyundai Price War (Bloomberg)
Prices for new ships have fallen to an eight-year low as shipyards sacrifice margins to win orders. Hyundai Heavy (009540) Industries Co., the world’s largest shipbuilder, may be about to make the price war worse. The company could push prices down as much as 15 percent industrywide as it tries to replenish an order backlog that is near a five-year-low, according to E*Trade Securities Co. analyst Park Moo Hyun. The Ulsan, South Korea-based shipbuilder, which has as much capacity as the next two biggest yards combined, has so far largely resisted price cuts even as global orders drop to the slowest since 1999. “Hyundai Heavy will have to aggressively go out there and win orders to fill up its docks,” said Seoul-based Park. “That means it has to cut prices.”
The company only has about 18 months of work in hand for its shipyards because of the order slowdown and Chinese competition, and it has started its first early-retirement program. The shipbuilder has also had less success than Daewoo Shipbuilding & Marine Engineering Co. (042660) and Samsung Heavy Industries Co. in offsetting the slump with contracts to build offshore-energy equipment because of its larger facilities and later push into the sector. “Hyundai Heavy is now paying for focusing on ships and not building up its skills in the offshore business,” said Um Kyung A, a Shinyoung Securities Co. analyst in Seoul, who cut the stock to hold on Oct. 26. “They’ve been late to realize that they had to change tactics.” The shipbuilder declined to comment on prices and its retirement program in an e-mailed reply to Bloomberg News questions. The company, including unit Hyundai Samho, employs about 28,500 people, mainly in Ulsan.
Its shares fell as much as 3.5 percent, the biggest decline since July 18. They were down 3.1 percent at 222,000 won at 10:07 a.m. The stock has dropped 14 percent this year, compared with a 17 percent gain for Samsung Heavy (010140) and a 4.5 percent decline for Daewoo.
Soybean Complex Market Recap (CME)
November Soybeans finished up 13 1/4 at 1547, 8 off the high and 15 1/2 up from the low. January Soybeans closed up 12 1/4 at 1548 3/4. This was 13 3/4 up from the low and 10 off the high. December Soymeal closed up 6.2 at 482.2. This was 6.9 up from the low and 5.3 off the high. December Soybean Oil finished up 0.07 at 50.16, 0.43 off the high and 0.32 up from the low. November soybeans traded sharply higher on the day after a weaker trade in the morning session due to 500 deliveries overnight. Financial markets re-opened today and this, along with some month end short covering added to the positive tilt of the market. Basis in the Gulf of Mexico was steady to firm midday and US exporters reportedly sold 25,000 tonnes of US soybean oil to China for 2012/13 delivery. Heavy rainfall in Southern Brazil and Argentina have some analysts suggesting that delays to corn planting could shift more acreage to soybeans while others claim the rain is so severe that soybean acreage losses should already be factored in. The Rosario Grain Exchange estimates that farmers are expected to plant 19.5 million hectares of soybeans this season which is up 3.7% from last season. A report overnight from a South American analyst stated that Argentina could lose up to 10% of their overall soybean production due to the violent storms. A substantial cut in South American soybean production could be a supportive factor long term.
EDIBLE OIL: Malaysian palm oil futures inched down as the strongest exports recorded for this year may do little to cut into high stocks at a time when output is surging in the world's second largest producer of the edible oil. (Reuters)
VEGOILS-Palm slips as high exports may do little to cut stocks
Wed Oct 31, 2012 6:25am EDT
* Palm oil prices capped by high production and growing
* October exports up 9.3 pct -SGS
* Indonesia will not change its policy tax structure
* Palm oil's target adjusted to 2,468 ringgit -technicals
(Updates prices, adds SGS exports data)
By Anuradha Raghu
KUALA LUMPUR, Oct 31 (Reuters) - Malaysian palm oil futures
inched down on Wednesday as the strongest exports recorded for
this year may do little to cut into high stocks at a time when
output is surging in the world's second largest producer of the
Cargo surveyor data showed that Malaysian palm oil shipments
in October climbed to about 1.6 million tonnes -- the highest
this year, although stocks are set to hit another record beyond
2.48 million tonnes.
"Based on the shipment number, we will still end up with a
higher stockpile because October's production is still very
high," said OSK Research analyst Alvin Tai. "Exports rising
higher month-on-month is not surprising, but the quantum still
needs to be stronger."
The benchmark January contract on the Bursa
Malaysia Derivatives Exchange closed 0.2 percent lower at 2,496
ringgit ($819) per tonne. Total traded volumes stood at 28,495
lots of 25 tonnes each, slightly higher to the usual 25,000
Technicals showed that the bearish target of 2,379 ringgit
per tonne for Malaysian palm oil has been adjusted to 2,468
ringgit based on its falling speed, said Reuters market analyst
Palm oil dropped to a two-week low earlier this week after
its biggest rival and top producer Indonesia planned to lower
monthly export taxes in November after international prices fell
The lower taxes will lift margins for Indonesians and shift
demand away from competing Malaysian products. Officials in
Jakarta said they will not alter their tax structure which is
aimed at driving its domestic palm oil downstream industry.
"The export tax structure is progressive and it has been
adjusted to fluctuated palm oil prices in the international
market," director general of agriculture-based industry Benny
Wachjudi said at an industry meeting.
"It is very different from the Malaysian government's export
tax policy. I am sure Malaysian export tax policy will not last
long because it is not adjusted to the development on palm oil
prices in the international market."
Brent crude held steady near $109 a barrel on Wednesday
after the huge storm Sandy whiplashed the U.S. East Coast,
reducing fuel demand even as refineries in the region gradually
U.S. soyoil for December delivery inched up 0.7
percent in late Asian trade. The most-active May 2013 soybean
oil contract on the Dalian Commodity Exchange rose 0.7
Posted by MW Chong at 10:07 AM