Friday, November 9, 2012

20121109 1821 FCPO EOD Daily Chart Study.

FCPO closed : 2316, changed : -20 points, volume : lower.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : falling lower, seller in control.
Support : 2300, 2250, 2230, 2200 level.
Resistance : 2350, 2400, 2450, 2490 level.
Comment :
FCPO closed recorded loss again with slowing down volume distributed. Soy oil price currently trading lower after overnight closed little higher while crude oil price trading side ways.
Price continue to trade weaker ahead of MPOB official October data and cargo surveyor export figures concerning higher inventory levels.
Daily chart reading continue to suggesting a downside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with larger cut loss and profit target.

20121109 1732 FKLI EOD Daily Chart Study.

FKLI closed : 1634.5 changed : -2.5 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward, seller taking profit.
Support :  1635, 1627, 1623, 1615, 1600 level.
Resistance : 1640, 1645, 1651, 1657 level.
Comment :
FKLI closed recorded loss for the 8th straigth days with declined volume transacted doing 6 points discount compare to cash market that closed flat. Overnight U.S markets continue to trade weaker and today Asia markets closed weaker while European markets currently trading in nagative zone.
Negative sentiment persisted today on U.S. fiscal cliff concern and China commerce minister statement on "very difficult" to maintain hit 10% trade growth.
FKLI daily chart reading continue to suggest a pullback correction downside 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.

20121109 1703 Palm Oil Related News.

VEGOILS-Palm oil inches up ahead of data, on track for weekly loss
Fri Nov 9, 2012 1:09am EST
* Prices set for worst weekly loss since September
    * Traders cautious ahead of data from USDA, MPOB
    * Palm oil to consolidate in 2,321-2,377 ringgit range
    * Wilmar Q3 profit jumps 26 pct, oilseeds and grains rebound

 (Updates prices, adds details)
    By Chew Yee Kiat
    SINGAPORE, Nov 9 (Reuters) - Malaysian palm oil futures
inched up on Friday, pulling off a one-month low, but remained
on track for their steepest weekly loss since September, as
traders stayed cautious ahead of key industry reports.
    Bearish sentiment dominated ahead of Malaysian Palm Oil
Board (MPOB) stocks data on Monday, which could show October
inventory at a record-high 2.67 million tonnes, according to a
Reuters survey.      
    Traders will also be expecting higher forecasts for U.S.
soybean crops from a U.S. Department of Agriculture report later
in the day, which could lead to a higher supply of rival soybean
oil and weigh on palm oil prices.  
    "Positioning ahead of the MPOB report will continue. Effects
of weather vagaries will become clearer in the weeks and months
ahead," a trader with a commodities brokerage in Malaysia said,
referring to year-end floods that could hurt output and lift
    "But a hangover from high supply will certainly send any
price recovery into a tailspin," the trader added.
    By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange gained 0.2 percent to
2,341 ringgit ($765) per tonne. Prices had earlier fallen to
2,317 ringgit, the lowest since Oct. 3.
    Total traded volumes stood at 13,326 lots of 25 tonnes each,
slightly higher than the usual 12,500 lots.  
    Malaysian palm oil futures have lost more than 26 percent so
far this year, weighed down by record high stocks and global
economic uncertainty. For the week, prices looked set to post a
6.2 percent loss, their worst since the end of September.
    Technicals showed palm oil has support at 2,321 ringgit and
may consolidate above this level and below 2,377 ringgit per
tonne for one trading session, Reuters market analyst Wang Tao
    Singapore palm oil firm Wilmar International Ltd
beat forecasts with a rise of 26 percent in third-quarter net
profit, helped by its sugar business and a rebound in its
oilseeds and grains unit after two quarters of losses.
    In related markets, Brent crude futures steadied above $107
on Friday and were poised to end the week with a marginal gain,
but prices are likely to remain under pressure as the outlook
for the global economy, and fuel demand, remains weak.
    In other vegetable oil markets, U.S. soyoil for December
delivery edged down 0.6 percent in early Asian trade. The
most active May 2013 soybean oil contract on the Dalian
Commodity Exchange lost 1.1 percent.

20121109 1658 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a higher open, halting a two-day slide, as China's better-than-expected macro data reassured investors on the outlook for the world's second biggest economy. Asian shares extended losses tracking U.S. markets which fretted over the U.S. fiscal cliff and the risk of it tipping the economy into recession, as well as ongoing doubts about a workable bailout for Greece. (Reuters)

FOREX-Euro near 2-month low on deepening economic gloom
TOKYO, Nov 9 (Reuters) - The euro buckled near a two-month low against the dollar, dogged by a bleak economic outlook in the euro zone, uncertainty on Greece's aid deal and lack of hints from policymakers on when Spain will ask for financial aid.
Risk sentiment was also hurt as U.S. shares fell to fresh three-month lows as investors grew concerned that Washington may not deal quickly with the "fiscal cliff" - automatic spending cuts and tax hikes due next year that threaten to push the U.S. into recession.

China inflation cools, leaving scope for policy easing (Reuters)
China's annual consumer inflation eased to its slowest pace in nearly three years in October, official data showed on Friday, giving policymakers scope to further loosen monetary policy if needed to support growth in the world's second-biggest economy.

Draghi open to ECB rate cut, done helping Greece (Reuters)
The euro zone economy shows little sign of recovering before the year-end despite easing financial market conditions, European Central Bank President Mario Draghi said on Thursday, leaving open the possiblity of an interest rate cut in the months ahead.

FAO slashes grain f'casts, world food prices stay high (Reuters)
Global supply of key cereal staples including wheat is to tighten sharply in the 2012/13 crop season as wheat and maize output feels the pinch of the worst U.S. drought in more than half a century, data from the United Nations food agency showed.

GRAINS: U.S. wheat was largely unchanged, holding gains from the last four sessions and remaining on track for its biggest weekly climb since late July, with harsh weather threatening crops in top exporters. Soybeans edged higher and corn was almost flat ahead of a key U.S. Department of Agriculture report, which is expected to boost forecasts for U.S. corn and soybean crops despite a devastating drought this year across the nation's grain belt. (Reuters)

OPEC admits significant impact of shale oil on supply (Reuters)
OPEC acknowledged for the first time on Thursday that technology for extracting oil and gas from shale is changing the global supply picture significantly, and said demand for crude would rise more slowly than it had previously expected.

OIL: Brent crude futures steadied above $107 and were poised to end the week with a marginal gain, their first in four, but prices are likely to remain under pressure as the outlook for the global economy, and fuel demand, remains weak. (Reuters)

BASE METALS: London copper edged up for a second session, after a dip this week to its lowest levels in two months enticed some Chinese bargain-hunters to restock the metal, but a looming U.S. fiscal crisis and lingering euro zone worries will curb prices. (Reuters)

PRECIOUS METALS: Gold rose to a three-week top, on track for its first weekly gain in four, as hopes U.S. monetary policy would remain loose after President Barack Obama's re-election and worries about looming fiscal woes boosted bullion's appeal. (Reuters)

China gold demand seen at record high in 2012
LONDON, Nov 8 (Reuters) - China's gold demand is expected to grow 1 percent this year to a record of around 860 tonnes, the global head of metals at consultancy Thomson Reuters GFMS said on Thursday, with both jewellery and investment sales rising.
That increase means China will overtake India as the world's biggest consumer of gold for the first time on a yearly basis, Philip Klapwijk told the online Reuters Global Gold Forum.

METALS-LME copper edges up, but U.S. fiscal worries drag
SHANGHAI, Nov 9 (Reuters) - London copper edged up for a second session, after a dip this week to its lowest levels in two months enticed some Chinese bargain-hunters to restock the metal, but a looming U.S. fiscal crisis and lingering euro zone worries will curb prices.
Three-month copper on the London Metal Exchange  rose 0.8 percent to $7,690 per tonne by 0352 GMT, after having gained 0.3 percent in the previous session. It is on track for a weekly rise of 0.3 percent.

PRECIOUS-Gold hits 3-week high on US fiscal concern
SINGAPORE, Nov 9 (Reuters) - Gold rose to a three-week top, on track for its first weekly gain in four, as hopes U.S. monetary policy would remain loose after President Barack Obama's re-election and worries about looming fiscal woes boosted bullion's appeal.
The market is now worrying about the U.S. "fiscal cliff", automatic tax hike and spending cuts amounting to $600 billion due to take effect early next year that could send the U.S. economy back to recession. This is boosting investor appetite for safe-haven assets like gold.

Baltic index flat, capesize rates recover
Nov 8 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, remained flat on Thursday as capesize rates recovered and panamax rates slipped further.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, remained at 916 points from Wednesday.

20121109 1458 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares fall on US fiscal worries, European uncertainty
TOKYO, Nov 9 (Reuters) - Asian shares fell further, weighed down by worries over the risk of a recession in the world's largest economy as the United States faces a looming fiscal crisis, while Europe still awaits a bailout for Greece, keeping investor risk appetite subdued.
"Since the (U.S.) election, investor attention has turned to the U.S. fiscal cliff and the ongoing European financial situation," said Kim Soo-young, an analyst at KB Investment & Securities.

OIL - Oil rebounds after plunge, economy concerns limit rise
NEW YORK, Nov 8 (Reuters) - Crude oil ended higher on Thursday, recovering from a steep plunge in the previous session, but gains were only modest as trepidation over Europe's economy and looming negotiations over the U.S. "fiscal cliff" weighed on the market.
"The fears about Europe's economy remain and we still are worrying about the 'fiscal cliff' facing the United States," said Phil Flynn, analyst at Price Futures Group.

NATURAL GAS  - U.S. natgas futures end higher on weak inventory build
NEW YORK, Nov 8 (Reuters) - U.S. natural gas futures ended higher on Thursday, backed by a government report showing a lower-than-expected weekly inventory build and cooler forecasts for next week that should underpin demand.
"It was a positive number based on what people were expecting, and it looks like we're going to get another cold shot next week," a Chicago-based trader said.

EURO COAL-Firm on tight winter power outlook
LONDON, Nov 8 (Reuters) -European coal prices remained firm on Thursday as utilities in its biggest power markets prepared for a tight winter electricity market that would require increased burn of coal stocks, analysts said.
"There were a couple of reports today that Europe's winter power outlook could be tight even if the weather remains mild, and because gas-fired electricity production is not profitable in Europe that means that utilities will have to burn more coal, lifting demand," one utility analyst said.

20121109 1014 Local & Global Economy Related News.

Bank Negara Malaysia (BNM) yesterday left its benchmark interest rate unchanged at 3%, as expected by all economists. The Monetary Policy Committee considers the current stance of monetary policy to be accommodative and supportive of the economy.  In addition to domestic conditions, the MPC will continue to carefully assess the global economic and financial developments and their implications on the overall outlook for inflation and growth of the Malaysian economy. (BNM)

Industrial output expanded by 4.9% yoy in Sep (-0.2% in Aug) across all sub sectors. Manufacturing output rose 5.2% (-1.1% in Aug), mining (+3.6% vs. +1.6% in Aug) and electricity (+5.9% vs. +2.7%). On a mom basis, factory output rose 3.5% (+0.2% in Aug). 9M12 industrial production increased by 3.6%. Economists had projected for a 0.3% yoy gain in Sep. (BT)

The manufacturing sales increased by 3.3% yoy to RM52.6bn in Sep (+1% to RM50.6bn in Aug). On a mom basis, it rose 3.9% (-3.7% in Aug). 9M12 manufacturing sales up 5.5% to RM466.2bn. Total employees engaged in the sector increased 1.1% to 1.023m persons in Sep (+0.8% to 1.023m persons in Aug). Salaries and wages paid in Sep increased by 6.3% to RM2.5bn (+5.7% to RM2.5bn in Aug). Average salaries and wages per employee rose 5.1% to RM2,460 (+4.9% to RM2,397 in Aug). Productivity up by 2.2% from 0.2% in Aug. (Department of Statistics)

Global food prices, based on the FAO food price index, dipped by 1.0%  mom in Oct after rising 1.4% in Sep, due to a drop in the price of cereals and oils.  (AFP)

The  US trade deficit narrowed in Sep to US$41.5bn, down from a revised US$43.8bn in Aug, on a surge in exports led by industrial supplies. Exports jumped 3.1% mom, to US$$187bn, eclipsing a 1.4% mom rise in  imports to US$228.5bn. (AFP)

US initial claims fell to 355,000 in the week to 2 Nov from 363,000 the prior week, despite the massive storm which shut down much of New Jersey and the New York City area for the period. (AFP)

The ECB kept its main refinancing rate on hold at 0.75%, shrugging off fears that the slowdown across the eurozone warranted a cut. One justification for holding off from any further rate cuts is that the ECB wants to give its as yet untested bond-buying programme more time to work. (FT)

Euro-area finance ministers may not make a decision to release €31.5bn (US$40.1bn) of aid for Greece until late Nov as they await a full report on the country’s compliance with the terms of its bailout. (Bloomberg)

Japan’s machinery orders declined 4.3% mom in Oct (-3.3% in Sep). The median estimates was for a 2.1% drop. (Bloomberg)

Japan’s trade deficit on a balance of payments basis narrowed to ¥471.3bn in Sep (¥644.5bn in Aug). The  current account surplus in Sep was ¥503.6bn (¥454.7bn in Aug), compared with a median estimate of ¥761.8bn. (Bloomberg)

Bank lending in  Japan rose 1.1% yoy in Oct (1.2% in Aug), in line with forecasts. (Bloomberg)

Bank Indonesia kept the reference rate at a record-low 5.75%, a decision was predicted by economists surveyed. The central bank revised its inflation forecast for 2013 higher by 0.5% pts to 5% +/- 1%. (Bloomberg, Bank Indonesia)

Bank Indonesia’s consumer confidence index rose to record high of 119.5 in Oct, from 117.7 in Sep. (Jakarta Globe)

Australia's unemployment rate remained steady at a two-and-a-half-year high of 5.4% in Oct, against expectations of an increase to 5.5%. The number of those in full-time work grew by 18,900 to 8.13m, although that was offset by an 8,000 decline in part-time jobs to 3.393m. (AFP, Bloomberg)

20121109 1014 Malaysia Corporate Related News.

Tun Musa Hitam is stepping down as chairman of Sime Darby after he announced he will not be seeking re-election. A Sime Darby spokesperson confirmed that Tan Sri Samsuddin Osman will be interim chairman. Musa was previously urged by critics to resign after Sime Darby’s energy and utilities division posted massive cost overruns in 2010 and dragged down its bottom line. The former deputy prime minister told reporters in May 2010 that he would be willing to step down if the board was found to be accountable for the losses pending the outcome of an investigation. Musa ended up staying on. Later that November, six board members decided not to seek re-election and one resigned. The GLC later went through a shake-up and restructured the group into six flagship divisions each with their own board of directors. (Malaysian Insider)

Sime Darby Auto Connexion Sdn Bhd, a subsidiary of Sime Darby Motors and the country's sole dealer for American carmaker Ford Motor Co, is targeting 30% growth next year, driven by sales of its latest models. Sime Darby Auto Connexion managing director  Lee Eu San said there has been encouraging demand for its new Ford Focus and Ford Fiesta. "Since the all-new Ford Focus was launched two months ago, some 200 units have been sold nationwide. (BT)

Felda Global Ventures Holdings Bhd (FGV) is confident that the current low price trend of crude palm oil (CPO) may very soon see a reversal. CPO prices can reach RM2,800 per tonne within the first quarter of 2013, said head of FGV, Datuk Sabri Ahmad. The outlook of various market sources at between RM2,500 and RM2,800 per tonne is a good margin, he said.     “The prices should not be too high or too low as this is not good for the plantation players,” he said. The high stock level has led vegetable oil traders to forecast the prices to dip to below RM2,250 a tonne before rising to RM2,700 by year-end. (BT)

Palm oil price must decline 8% in the next few weeks to attract buyers and clear record inventories, according to  Dorab Mistry,  director at  Godrej International Ltd. "In the last fortnight, palm oil has completely priced itself out of any meaningful energy demand," said Mistry. "I believe a period of two months of low prices is required to stimulate extra demand and clear away stocks," he added. (Malaysian Reserve)

Laxey Partners Ltd co-founder Andrew Pegge has no intention of replacing Capital Dynamics Asset Management Sdn Bhd, the fund manager for Bhd, if he succeeds in obtaining a board seat on Malaysia's only closed-end fund.“We seek to be constructive, not disruptive,” he told journalists on Thursday in a conference call from London where his hedge fund is based. Pegge also said he would not sell his 6.9% stake in should things not go his way at its AGM scheduled for this Saturday, where he and two others have been nominated for board representation by a shareholder named Evelyn Ho Lai Ming. “We are the largest shareholder in and want to work with the other shareholders,” said Pegge, who would not be attending the shareholder's meet for “personal reasons”. He will be represented by Laxey co-founder Colin Kingsnorth. Pegge, often described as a “shareholder activist”, has been embroiled in bitter shareholder disputes in the past, while Laxey has a track record of targeting listed funds that trade below their net asset values (NAV). He said two of Laxey's funds, the Terra Catalyst Fund and Value Catalyst Fund, were in the process of being wound down and the cash returned to shareholders. (Starbiz)

The  Finance Ministry paid a 50 basis-point premium for a 20-year sukuk over non-Islamic sovereign debt, the biggest spread this year for government-guaranteed syariah-compliant notes. Turus Pesawat, a company set up to sell the securities that will  fund aircraft purchases on behalf of Malaysia Airlines (MAS), sold RM3.4bn of debt in total. The RM1.65bn portion of 2032 notes yielded 4.36%. The company also sold RM500m each of 10- and 12-year syariah debt at yields of 3.74% and 3.93%. It issued RM750m of 15-year notes at 4.12%. MAS sold RM1bn of Islamic bonds with no fixed maturity in June via a private placement at a yield of 6.9%. It also issued RM500m in September at the same rate. (Bloomberg)

Encorp Bhd wholly-owned subsidiary Encorp Construct Sdn Bhd received a letter of acceptance from Paramount Promenade Sdn Bhd for the construction and completion of substructure works consisting of pile-cap and six storeys of car park under phase two of a commercial development in Kuala Lumpur for RM63.9m. It said the contract is for 25 months and is expected to be completed by Dec-2014.(BT)

Berjaya Corp Bhd has proposed an acquisition of 40m shares in  Atlan Holdings Bhd (AHB), representing a 15.8% stake for a purchase consideration of RM170m or RM4.25/AHB share. (BT)

The Malaysian Communications and Multimedia Commission (MCMC) has shortlisted three of eight bidders for the  digital terrestrial television broadcast (DTTB) infrastructure contract. They are  i-Media Broadcasting Solutions, Puncak Semangat and REDtone Network. DTTB will enable free to air broadcasters to migrate from the current analogue system to a digital broadcasting format and allow more broadcasters to come on-stream to provide more channels. The winner will be announced in July 2013 and the first roll-out of DTTB services is expected in early 2014 with nationwide coverage by end 2015. (Bernama)

Engtex Group wholly-owned subsidiary, Ivory Progression Sdn Bhd, has bought 7,455-sq-m freehold land for RM19.3m in Aman Puri, Kepong, from Potensi Cekap Sdn Bhd. Engtex said Ivory Progression intended to build a 23-storey office with basement parking on the land. (StarBiz)

Retail investors in Singapore and Thailand will soon be able to take part in Malaysia's largest infrastructure project, as the country's stock exchange prepares to issue the first tranche of  a RM1.5bn retail Islamic bond or sukuk. DanaInfra Nasional Bhd is scheduled to issue the tranche, a RM300m sukuk, by the end of the month. It will be the first retail bond to rely on the Asean Trading Link, which connects the stock exchanges in Malaysia, Singapore and Thailand. Indonesia, the Philippines, and Vietnam. Funds raised by DanaInfra will go towards financing Malaysia's MRT project. The project is estimated to cost RM37bn. (BT)

20121109 1106 Global Markets Related News.

Asia Stocks Decline Second Day on Greece, Australia Forecast Cut (Bloomberg)
Asian stocks fell, with the regional benchmark index headed for the biggest two-day loss in more than three months, amid concern Greece’s bailout may be delayed and as Australia’s central bank cut its growth forecast. Electronics maker Samsung Electronics Co. (005930), which gets 19 percent of its sales in Europe, dropped 1.3 percent. Fanuc Corp. (6954), a maker of factory robots that depends on Asia for half of its revenue, lost 2 percent before China reports data on inflation, industrial production and retail sales today. Nexon Co., a developer of online games, slumped 16 percent after cutting its profit forecast. The MSCI Asia Pacific Index fell 0.7 percent to 120.97 as of 10:14 a.m. in Tokyo before markets in Hong Kong and China opened. About five stocks dropped for each that gained on the measure, which has declined 1.3 percent this week.
“Investors have just gotten nervous,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The data until now looks like China’s economy is bottoming, so today’s numbers will be important in saying whether that remains the correct interpretation.” The MSCI Asia Pacific gauge gained 12 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur growth and China’s economic data showed a slowdown in the world’s second-largest economy may be bottoming. The index traded at 13.3 times estimated earnings as of today, compared with 13.2 for the Standard & Poor’s 500 Index and 12.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan Stocks Fall Fifth Day on Stronger Yen, Greek Rescue (Bloomberg)
Japanese stocks fell, with the Nikkei 225 (NKY) Stock Average heading for its longest losing streak in nine weeks, after exporters declined on a stronger yen and amid concern Greece’s bailout will be delayed. Sony Corp. (6758), Japan’s biggest consumer-electronics exporter, lost 1.8 percent. Sumitomo Rubber Industries Ltd. fell 5.9 percent after missing estimates for full-year profit. Nexon Co. plunged 15 percent after the online-gaming company trimmed its forecast and was cut to underperform at CLSA. The Nikkei 225 fell 1.1 percent to 8,736.34 as of 9:45 a.m. in Tokyo, declining a fifth day. The price of the gauge’s November options, also known as the “special quotation,” settled at 8,745.24. The broader Topix (TPX) Index lost 1 percent to 727.91, heading for a 3.2 percent weekly decline.
“Investors have just gotten nervous,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “You’ve got residual concern about the U.S. fiscal cliff and this delay in payments to Greece. The worries were there before. It sounds a bit irrational, but that’s the way markets often work. Once they start going down, the falling momentum triggers more selling.” The Topix rose 2.3 percent through yesterday from Sept. 6 after the European Central Bank started a global wave of stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the equity gauge traded at 0.6 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index.

U.S. Stocks Decline Amid Greece, Fiscal Cliff Concerns (Bloomberg)
The Standard & Poor’s 500 Index had the biggest two-day decline in a year as investors speculated Greece’s bailout will be delayed and that President Barack Obama’s re-election endangers tax breaks for investors. Apple Inc. (AAPL), the world’s most valuable company, retreated 3.6 percent, extending its plunge since its September high to 23 percent. McDonald’s Corp. (MCD), the world’s largest restaurant chain, dropped 2 percent after its monthly store sales declined for the first time in nine years. Prudential Financial Inc. (PRU), the second- largest U.S. life insurer, decreased 4.8 percent after lowering its assumptions for equity and bond returns.
The S&P 500 declined 1.2 percent to 1,377.51 at 4 p.m. New York time, dropping 3.6 percent in two days. The benchmark gauge for American equities retreated below its average price of the last 200 days of 1,380.71. The Dow Jones Industrial Average decreased 121.41 points, or 0.9 percent, to 12,811.32. Volume for exchange-listed stocks in the U.S. was 6.9 billion shares, or 15 percent above the three-month average. “It’s hard bargaining for Greece,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “The risk of a recession is still out there. Apple might be a victim of its own success because it’s risen so much. With its huge market cap, as Apple goes, so goes the broader market.”
Equities extended yesterday’s tumble as investors turned to the budget debate and Europe’s crisis following President Obama’s re-election. Energy, financial and technology shares had the biggest losses in the S&P 500 in two days, falling at least 4.2 percent. The Dow dropped 3.3 percent in the period.

Recap Stock Index Market Report (CME)
The December S&P 500 traded choppy to higher during the early morning hours, helped by technical buying following yesterday's slide and better than expected US economic readings. US futures prices rallied to their high of the session in the wake of the Wall Street open. Meanwhile, disappointing October sales figures from McDonalds and a more than 2.5% slide in the shares of Apple soured the tone. Late morning headlines suggesting that the European Union might delay further aid to Greece pressured the major indices back down toward yesterday's low. Further uncertainty surrounding the US fiscal cliff and potential impact on economic growth seemed to pressure the December S&P 500 into new low territory for the decline. The market will get the latest earnings results from Walt Disney after the close, and a round of Chinese economic readings Thursday evening.

European Stocks Drop as Carmakers Slide (Bloomberg)
European (SXXP) stocks fell, extending yesterday’s biggest decline in two weeks, as a selloff in auto manufacturers overshadowed results from Swiss Re Ltd. and Hermes International (RMS) SCA that beat analysts’ estimates. PSA Peugeot Citroen SA (UG) and Valeo SA (FR) both lost more than 4 percent as analysts downgraded their shares. Swiss Re gained 1.9 percent after saying smaller losses from natural disasters helped net income surge in the third quarter. Hermes advanced 2 percent as sales rose because of increased demand in Asia. The Stoxx Europe 600 Index fell 0.2 percent to 270.58 at the close in London, after earlier climbing as much as 0.6 percent. The gauge has rallied 16 percent from this year’s low on June 4 as European Central Bank President Mario Draghi said he would do everything to protect the single currency and the Federal Reserve opted for a third round of asset purchases.
“I have trouble being very optimistic,” said Matthieu Giuliani, a fund manager at Banque Palatine SA in Paris, which oversees $5.1 billion. “The general tone of company outlooks is cautious. The situation hasn’t changed fundamentally.” Of the 229 Stoxx 600 companies that have reported earnings this season, about 53 percent have exceeded analysts projections, according to data compiled by Bloomberg. Some 39 companies in the equity benchmark were scheduled to report their results today, data compiled by Bloomberg show. National benchmark indexes fell in every western-European market except Portugal and Switzerland. France’s CAC 40 retreated 0.1 percent. The U.K.’s FTSE 100 slid 0.3 percent and Germany’s DAX lost 0.4 percent.

Emerging Stocks Decline Most in Three Months as GS Slumps (Bloomberg)
Emerging-market stocks slid the most in three months, led by industrial companies, after GS Engineering & Construction Corp. (006360) said profit tumbled and U.S. elections paved the way for a showdown over the nation’s budget deficit. GS Engineering slumped to the lowest level in more than three years in Seoul and set a gauge of industrial stocks for its biggest drop since July. Brazilian homebuilder MRV Engenharia & Participacoes SA fell the most since Aug. 2 while Russia’s Micex Index (INDEXCF) sank to a three-month low, led by OAO Sberbank, the country’s biggest lender. The MSCI Emerging Markets Index (MXEF) of 818 developing-nation stocks declined 1.2 percent to 995.31 at the close of trading in New York, its biggest drop since July 23. Re-elected for a second term on Nov. 6, President Barack Obama now faces negotiations to avoid the so-called fiscal cliff, more than $600 billion of tax increases and spending cuts that are set to kick in automatically in January.
“Most negativity in emerging markets is coming from developed markets,” Lars Christensen, chief emerging-markets analyst at Danske Bank A/S said by phone from Copenhagen. “There are concerns about the fiscal cliff situation in the U.S.” The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, slid 1.3 percent to the lowest level since Sept. 12. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 5.9 percent.

Aussie Drops Versus Peers After RBA Cuts Growth Forecast (Bloomberg)
Australia’s dollar slid versus most of its 16 major counterparts after the Reserve Bank reduced its 2013 growth forecast in its quarterly monetary policy statement. The so-called Aussie weakened for a third day against its U.S. peer, paring a weekly advance, amid rising expectations the central bank will lower borrowing costs at a meeting next month to bolster the economy. New Zealand’s currency fell as a drop in Asian stocks outweighed figures that indicated an increase in house prices and card spending. “The risks are that we see 2013 as a year of potentially below-trend growth,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “This will nudge up the odds that we see a December rate cut. Some of the headlines are certainly going to take the shine off the currency as well.” Westpac predicts the RBA will cut the overnight cash-rate target by 25 basis points on Dec. 4 and lower it by an additional quarter-percentage point to 2.75 percent by March 31, Cavenagh said.
The Australian dollar fell 0.2 percent to $1.0387 as of 11:50 a.m. in Sydney, poised for a 0.5 percent weekly advance. New Zealand’s currency lost 0.2 percent today to 81.37 U.S. cents. It has dropped 1.4 percent since Nov. 2, the biggest decline among the U.S. dollar’s major peers. The MSCI Asia Pacific Index of shares declined 0.6 percent. The RBA predicted year-average gross domestic product growth of 2.25 percent to 3.25 percent in 2013, lower than its August estimate of 2.75 percent to 3.25 percent, according to a statement today.

Euro Trades Near Two-Month Low on Greece Bailout Concern (Bloomberg)
The euro traded 0.2 percent from the lowest level in two months before Greece’s lawmakers vote on next year’s budget amid concern the nation the nation may fail to meet bailout requirements. The yen headed for its biggest weekly gain since July against the 17-nation euro after a European Union official said a decision on unlocking funds for Greece may not be made until late November, prompting investors to seek safer assets. Australia’s dollar declined for a third day after the nation’s Reserve Bank cut its 2013 growth forecast and before China reports on October inflation today. Reports on Greece “cast new doubts on an already troubled area,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. “The Greek economy is in a dire state, with or without aid, and that is making everybody continually nervous. The euro will stay under pressure.”
The euro traded at $1.2739 as of 9:39 a.m. in Tokyo from $1.2747 at the close in New York yesterday, when it touched $1.2717, the weakest since Sept. 7. It has dropped 0.8 percent since Nov. 2. The yen fetched 101.25 per euro from 101.30, set for a 2 percent gain this week, the sharpest advance since the five days ended July 6. The Japanese currency was little changed at 79.50 per dollar. Euro-area finance ministers may not make a decision on unlocking funds for Greece until late this month as they await a full report on the country’s compliance with the terms of its bailout, according to the EU official.

Record Overseas Sales Boost U.S. Growth: Economy (Bloomberg)
Exports from the U.S. climbed to a record in September, contributing to an unexpected decline in the trade deficit that gave the world’s largest economy a boost at the end of the third quarter. The gap shrank 5.1 percent to $41.5 billion, the smallest since December 2010 and lower than any estimate in a Bloomberg survey of economists, Commerce Department figures showed today in Washington. The gain in sales to overseas buyers was broad- based, with improvement in everything from soybeans to fuel and civilian aircraft. Growing demand from emerging markets in South and Central America may be helping to overcome a slowdown in Europe and China that is hurting companies such as Emerson Electric Co. (EMR) At the same time, U.S. consumers are spending more as the job market stabilizes, boosting the inflow of goods made abroad as retailers restock in advance of the year-end holidays.
“The outlook in emerging markets is stronger than in Europe, and that’s where we would expect to see export growth,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York, who projected the gap would decline to $42 billion, matching the lowest among economists surveyed. “Consumer goods imports were strong. Some of that may be in preparation for holiday shopping. The picture is getting better there.” The improvement in trade may boost third-quarter growth by 0.4 percentage point, according to economists at JPMorgan Chase & Co. in New York. Combined with prior data showing a pickup in construction and in inventories, the JPMorgan analysts now project the economy expanded at a 2.8 percent annual rate in July through September, up from an initial Commerce Department estimate of 2 percent.

U.S. Jobless Claims Fall as Storm Starts to Affect Data (Bloomberg)
Fewer Americans than forecast filed claims for unemployment insurance last week as the effects of Hurricane Sandy started to show up. Applications for jobless benefits fell by 8,000 to 355,000 in the week ended Nov. 3, the Labor Department said today in Washington. One state said the loss of electricity due to the storm suppressed filings, while others said workers who lost their jobs as a result of the weather were starting to apply, a Labor Department spokesman said as the data were released to the press. The spokesman declined to identify the state affected by the power loss, saying it was department policy not to name individual states.
It may take three to four weeks to see the full impact, the spokesman said, which indicates claims may jump back in coming weeks as more storm-related applications begin to be processed. A Labor Department report last week showed the economy added more jobs than projected in October and the unemployment rate rose as hundreds of thousands of Americans rejoined the job search as prospects improved. “When you see bad weather, there’s usually a drop in claims, and then you typically see a rebound in the next few weeks,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who correctly forecast the number of initial filings. “Underneath the surface, job destruction has been trending very low. Layoffs aren’t the problem -- it’s the relatively weak pace of job creation.”
Economists forecast claims would be little changed from the prior week at 365,000, according to the median estimate in a Bloomberg survey. Projections ranged from 335,000 to 450,000 in the survey of 51 economists. The prior week’s reading was unrevised at 363,000.

U.S. Consumer Comfort Climbs to Highest Level Since April (Bloomberg)
Consumer confidence climbed last week as Americans’ ratings of the economy reached the highest level in more than four years.
The Bloomberg Consumer Comfort Index rose to minus 34.4 in the period ended Nov. 4, the best reading since April, from minus 34.7 the previous week. Twenty percent of those surveyed had a positive view of the world’s largest economy, the most since March 2008.
The gains may further invigorate household spending and propel retailers like Macy’s Inc. ahead of the year-end holidays. The end of the contentious presidential race, combined with an improving job market, may continue to boost sentiment even as the lingering effects of superstorm Sandy limit any short-run rebound, according to economist Joseph Brusuelas.
“With the election now in the rear-view mirror and the holidays ahead, the underlying improvement in the trend across all major consumer confidence readings will reassert itself in coming weeks,” said Brusuelas, a senior economist at Bloomberg LP in New York. “That being said, given the damage from the storm, a transitory downdraft in consumer comfort should be expected.”
In a separate report today, Labor Department figures showed the number of Americans filing first-time applications for unemployment benefits declined last week as the effects of Hurricane Sandy started to show up. Jobless claims dropped by 8,000 to 355,000 in the week ended Nov. 3.
Stocks rose as JPMorgan Chase & Co. paced a rally in financial shares. The Standard & Poor’s 500 Index gained 0.1 percent to 1,396.42 at 9:33 a.m. in New York.

Obama Asia Trip to Mark First Myanmar Stop by U.S. President (Bloomberg)
President Barack Obama will become the first sitting U.S. president to visit Myanmar, one of three stops on a Southeast Asia trip this month. Obama will meet with President Thein Sein and opposition leader and former political prisoner Aung San Suu Kyi in Rangoon, Myanmar, as part of U.S. efforts to encourage the transition to democracy in the country, formerly known as Burma. Rangoon is the middle stop on the Nov. 17-20 trip that is built around the East Asia Summit in Phnom Penh, Cambodia, where Obama will meet with leaders of the Association of Southeast Asian Nations. The White House announced plans for the trip yesterday. The president’s first foreign trip following his Nov. 6 re- election also includes a stop in Thailand, where he will meet with Prime Minister Yingluck Shinawatra in Bangkok.
With the conflict in Iraq over and the war in Afghanistan winding down, Obama has been moving to reassert U.S. power in Asia. The region is a key part of Obama’s strategy to expand U.S. imports in competition with China, the world’s second largest economy. The U.S. has been seeking to build influence in Myanmar. Thein Sein took power there last year when his party won an election that ended about five decades of direct military rule. He has dismantled a fixed exchange rate, eased media censorship and held talks with opponents.

PBOC’s Zhou Says China’s Economy Improving as Data Due (Bloomberg)
China’s central bank governor and statistics chief signaled October data to be published from today will show growth improving this quarter in the world’s second-largest economy. Some indicators are rebounding and the economy is stabilizing, Zhou Xiaochuan, head of the People’s Bank of China, said yesterday in Beijing at a briefing during the Communist Party’s 18th Congress. Ma Jiantang, head of the National Bureau of Statistics, said separately that people will be “more confident” about the fourth-quarter expansion. The ruling party yesterday started a weeklong meeting to choose its fifth generation of leaders amid signs that the economy is recovering from a seven-quarter slowdown. Service industries rebounded from the weakest expansion in at least 19 months, an official purchasing managers’ survey showed Nov. 3 and two separate reports showed a pickup in manufacturing.
“The new leadership will see to it that the economy will not deteriorate further,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, said in a research note this week. “We expect slightly better growth from the data, amid infrastructure spending from the fiscal boost, and a more resilient consumption sector, but maintain that a recovery will be mild.” Yi Gang, deputy governor of the central bank, said separately yesterday that fourth-quarter economic performance will be “relatively good.”

Russia Set to Skip Rate Increase on Inflation Surprise (Bloomberg)
Russia, the largest emerging economy to raise interest rates this year, will probably refrain from increasing borrowing costs today after inflation unexpectedly slowed in October for the first time in six months. Bank Rossii will leave the refinancing rate at 8.25 percent at a meeting in Moscow, half a percentage point above the record low, according to 21 of 23 economists in a Bloomberg survey. Two predict a quarter-point increase. Policy makers will hold their main short-term lending and deposit rates at 5.5 percent and 4.25 percent, two separate surveys showed. Russia raised its refinancing rate for the first time in 16 months in September as a surge in price growth pushed inflation beyond the 6 percent upper limit of the regulator’s target range. Chairman Sergei Ignatiev, whose third and final term at the helm of Bank Rossii ends in 2013, needs to check price gains next year as the economy slows and his counterparts from Poland to the Philippines reduce borrowing costs.
“October showed that inflation expectations are easing, and that inflation is slowing after the earlier surge,” Oleg Vyugin, chairman of MDM Bank and a former Bank Rossii first deputy chairman, said in a telephone interview. “There’s no reason to touch rates.” Three-month borrowing costs may fall 2 basis points, or 0.02 percentage point, in the next three months, according to forward-rate agreements tracked by Bloomberg. That compares with a jump of 21 basis points forecast on Oct. 4, the day before Bank Rossii’s last rate meeting. The cost to fix floating interest payments in rubles for a year using rate swaps was 7.53 percent yesterday.

RBA Lowers 2013 Growth Forecast on Weaker Mining, Budget Cut (Bloomberg)
The Reserve Bank of Australia reduced its 2013 growth forecast as lower investment in iron ore, coal and natural-gas projects and the government’s pledge to deliver an election-year budget surplus restrain the economy. “Most of this revision to the outlook is accounted for by a change in the profile for mining investment,” the RBA said today in its quarterly monetary policy statement, predicting a peak in resource spending at about 8 percent of gross domestic product from a prior 9 percent. The central bank said “a slightly weaker” domestic economy and labor market should help contain inflation. The government’s bid for a A$44 billion ($46 billion) budget swing back to the black “appears to be weighing on growth over the second half” of this year, the report showed. “The current level of the exchange rate could also have a more contractionary effect on output than anticipated,” it showed.
The RBA cited the currency’s strength -- even as commodity prices dropped last quarter -- as a factor in decisions by mining companies to put off some projects. The central bank has cut the overnight cash rate target by 1.5 percentage points since Nov. 1, 2011, as it aims to help industries such as construction rebound in an economy where resource investment is predicted to peak at a lower level next year. “While the impact of monetary policy changes takes some time to work through the economy, there are signs that easier conditions have been having some of the expected effects, and further effects can be expected over time,” the central bank said. “Lower interest rates, rising rental yields and an improvement in conditions in the established housing market are expected to support rising dwelling investment.”

Malaysia Clears Path for IPOs of Business Trusts: Southeast Asia (Bloomberg)
Malaysia will introduce rules governing initial public offerings of business trusts by next month as it seeks to extend a wave of share sales that saw the country surpass Hong Kong and Singapore in IPOs this year. Companies including toll road operators and power producers are ideal candidates for setting up business trusts as investors roiled by Europe’s debt crisis seek stable returns, said Eugene Wong, executive director of corporate finance and investments at Malaysia’s Securities Commission. Kuala Lumpur has been home to three of Asia’s four biggest IPOs this year as proceeds more than tripled from 2011 to 21.1 billion ringgit ($6.9 billion), data compiled by Bloomberg show. Business trusts, a structure through which companies have raised more than $9 billion in Singapore since 2004, may help Malaysia draw more offerings, according to Wong. “There is an actual need and we have to keep the market current,” Wong said in an interview. “We have to provide more avenues of capital raising.”
Business trusts pool cash-generating assets and typically distribute a large portion of profits as payouts, making them similar to real estate investment trusts. They also comply with Islamic laws, Wong said. Shariah-compliant trusts prohibit income from investments in gambling, financial services based on interest payments, hotels and bars. Wong declined to say when he expects Malaysia’s first business trust IPO to take place.

Greek Aid Payment Call Won’t Be Made Next Week, EU Official Says (Bloomberg)
Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November as they await a full report on the country’s compliance with the terms of its bailout, a European Union official said. Finance chiefs won’t make the call to release 31.5 billion euros ($40.1 billion) of aid for Greece that has been frozen since June when they meet in Brussels on Nov. 12, the official said yesterday on condition of anonymity because the deliberations are private. Ministers will await a final report from the so-called troika that oversees euro-area bailouts on Greece’s efforts to meet the conditions of its second bailout since 2010 before taking action, the official said. While a preliminary version may be available for the Nov. 12 meeting, it won’t be enough for ministers to base their decision on, the official said.
Greece is under pressure to make more efforts to rein in its budget deficit and deregulate the economy. While German Chancellor Angela Merkel last month traveled to Athens to signal her willingness to keep the Greece in the euro, the country is still struggling to reach its debt-reduction targets amid a combination of Greek political resistance to more cuts and recession that has brought record unemployment. “We’re not out of the woods yet,” German Finance Minister Wolfgang Schaeuble said in Hamburg yesterday. “I don’t see how we can take the decision already next week.”

IMF Adds to Pressure on Spain to Seek Bailout, ECB Help (Bloomberg)
The International Monetary Fund urged euro-region countries facing high borrowing rates to seek a bailout that will activate the European Central Bank’s bond- purchase program, adding to pressure on Spain, which has been resisting the move. In a note prepared for finance officials of the Group of 20 nations who met in Mexico Nov. 4-5 and released today, the IMF said countries “under stress” should turn to the region’s rescue mechanisms if needed while continuing to shore up their public finances. “Access to funding at reasonable costs is essential to allow economies to adjust successfully,” the IMF wrote. “While economies in the periphery must continue to adjust their fiscal balances at a pace they can bear, in the current fragile environment, putting in place the right policies may not be sufficient to fully restore the confidence of markets, not least because of implementation risks.”
Spanish Prime Minister Mariano Rajoy is keeping investors guessing as to whether he will request a bailout that would trigger the ECB’s Outright Monetary Transaction. He said on Nov. 6 that he needs to know how much the central bank would push down Spain’s bond yields before his government applies for aid and signs up to the conditions attached. “Lower interest rates and easier financial conditions are key factors to facilitate balance sheet repair and support growth in the periphery,” said the IMF, which co-finances bailouts in Greece, Portugal and Ireland. The Washington-based IMF also said the threat of automatic tax increases and spending cuts in the U.S. set to take effect next year is a “major source of risk” on global growth.

ECB Stands Ready to Buy Bonds as Economy Weakens (Bloomberg)
European Central Bank President Mario Draghi said the economic outlook is worsening and the bank stands ready to activate its bond-purchase program if governments fulfil the necessary conditions. “We are ready to undertake” Outright Monetary Transactions, “which will help to avoid extreme scenarios,” Draghi said at a press conference in Frankfurt today after policy makers left the benchmark interest rate at a historic low of 0.75 percent. “The risks surrounding the economic outlook remain on the downside” and underlying inflation pressures “should remain moderate,” he said. Draghi indicated the ECB is likely to lower its economic forecasts next month as the sovereign debt crisis curbs growth in Germany, the region’s largest economy. He stopped short of signalling a further rate cut, saying the ECB’s monetary policy is already “very accommodative” and the announcement of its bond program has led to “a series of improvements” on financial markets.
Still, “the chances are high that the ECB will need to come up with additional measures to support the euro-zone economy,” said Carsten Brzeski, an economist at ING Group in Brussels. “A rate cut, even if it will not come next month, could be part of the measures.”

ECB Holds Rates as Economy Worsens, Spain Resists Aid Request (Bloomberg)
The European Central Bank kept interest rates on hold today as the economic outlook worsens and Spain resists asking for a bailout that would open the door to ECB bond purchases. Policy makers meeting in Frankfurt left the benchmark rate at its historic low of 0.75 percent, as predicted by 62 of 63 economists in a Bloomberg News survey. One forecast a cut to 0.5 percent. ECB President Mario Draghi will brief reporters on the decision at 2:30 p.m. Draghi yesterday fueled speculation that the ECB might put rate reductions back on the agenda, saying the debt crisis is starting to hurt Germany -- the pillar of economic strength in the euro area -- and inflation risks are “very low.” Still, Draghi has acknowledged in the past that rate moves are less effective than they should be because distorted financial markets are interrupting the transmission of ECB policy.
“In normal times, with the economic outlook in Europe, a rate cut would probably be justified,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “But we’re not in normal times and a rate cut won’t achieve anything.” The Bank of England today left its key interest rate at a record low of 0.5 percent and refrained from expanding its quantitative-easing program.

BOE Halts Bond Purchases as Officials Focus on Lending: Economy (Bloomberg)
The Bank of England halted expansion of its bond-buying program as officials shifted focus to stimulating bank lending to support a recovery that remains lackluster. The nine-member Monetary Policy Committee led by Governor Mervyn King said that it doesn’t plan to buy any more bonds beyond the 375 billion pounds ($600 billion) already purchased, concluding a third round of quantitative easing. The decision was forecast by 35 of 45 economists in a Bloomberg News survey. The rest predicted an increase of as much as 50 billion pounds. Today’s move suggests the London-based central bank may focus on credit-boosting initiatives such as the Funding for Lending Scheme to ignite growth. Increased inflationary pressures may also have prompted policy makers to hold fire even as surveys point to renewed weakness after the U.K. economy surged 1 percent in the third quarter.
“The outlook for the U.K. economy is still uncertain,” Roger Bootle, founder of Capital Economics Ltd. and a former U.K. Treasury adviser, said in an interview on Bloomberg Television’s “City Central” in London. “I suspect the fourth quarter is going to be weak, and if that’s the case, the discussion will come back to QE. I think we’re on course for more QE in the new year.” The Bank of England also kept its benchmark interest rate a record low of 0.5 percent. The pound erased its decline against the dollar after the announcements and traded at $1.5996 as of 12:45 p.m. in London. U.K. 10-year gilts erased an advance, pushing the yield up 3 basis points to 1.786 percent.

20121109 1006 Global Commodities Related News.

FAO slashes grain f'casts, world food prices stay high
Thu Nov 8, 2012 7:45am EST
* Wheat production seen falling 5.5 pct to 661 mln T
* World cereals production seen down 2.7 pct 2.284 bln T
* World food prices eased slightly in October (Adds comments from FAO economist, details)
By James Mackenzie
ROME, Nov 8 (Reuters) - Global supply of key cereal staples including wheat is to tighten sharply in the 2012/13 crop season as wheat and maize output feels the pinch of the worst U.S. drought in more than half a century, data from the United Nations food agency showed.
Separate figures indicated a slight easing of pressure on overall food prices on Thursday, but the Food and Agriculture Organisation's (FAO) global index stayed close to levels seen in the 2008 crisis when food riots broke out in some countries.
The FAO's November Food Outlook report pointed to continuing pressure on grains output in the current season following this year's droughts in key producer regions from the Black Sea to the U.S. cornbelt.
Wheat production, which has also suffered heavily in the droughts in eastern Europe and central Asia, was seen falling 5.5 percent to 661 million tonnes, the agency said.
World cereals production is expected to fall 2.7 percent to 2.284 billion tonnes in the 2012/13 season, it said, trimming slightly its previous output forecast of 2.286 billion tonnes.
"This season's world cereal supply and demand balance is proving much tighter than in 2011/12 with global production falling short of the projected demand and cereal stocks declining sharply," the FAO said.
The Black Sea drought is set to cut wheat output in Russia and Ukraine by some 30 percent, while Kazakhstan will see its crop down by more than half.
Wheat production is set to rise in the United States but U.S. maize output was decimated by a drought which caught farmers by surprise and slashed the corn crop.
On wheat, FAO noted that levels were close to the average of the past five years and it said plantings in major producing regions next year would match or even increase over levels seen in 2012, pointing to a rise in production next season.
However senior FAO economist Abdolreza Abbassian said the forecast was still very tentative and it would require a strong rise in production next year to ease pressure on prices.
"Anything short of a significant increase would mean a further need to draw down stocks, which means getting to critically low levels and therefore higher prices," he said.
"We need very strong production for wheat, corn and soybeans, certainly these three important crops," he said.

FAO's monthly reading of world food prices showed some easing in October, largely because of a dip in cereals and oils prices in the month but the wider outlook remains volatile and uncertain, Abbassian said.
"It's a very mixed picture," he said. "The uncertainty we are dealing with is not just limited to supply, it's also to do with demand," he said.
The Rome-based agency said its monthly Food Price Index, fell to 213.5 points from 215.5 points the previous month, but stayed near 2008 levels.
It said reduced wheat trade activity and slowing demand for maize by livestock and industrial consumers during the month had cut grains prices, while higher palm oil output in Southeast Asia and weak import demand had reduced edible oil prices.
The FAO lifted its estimate of rice production but cut its forecast for coarse grains output and slightly lowered its estimate of global grains stocks at the end of the 2012/13 season to 497.4 million tonnes.
It said global cereal utilization in 2012/13 would decline slightly from the previous season but would still exceed production.
Declines in animal feed use and industrial maize for ethanol production in the United States would cut utilization of wheat and coarse grains but would be balanced by a 1.5 percent increase in rice consumption. (Reporting By James Mackenzie; editing by Veronica Brown and Keiron Henderson)

DTN Closing Grain Comments 11/08 14:27 Quiet Day Ahead of USDA Report, End of Week (CME)
It was a quiet day in the grain complex ahead of Friday morning's USDA reports. However, wheat had another solid day while corn and beans drifted lower, the latter inching closer to initial support.

Wheat Market Recap Report (CME)
December Wheat finished up 8 1/2 at 902 1/2, 2 1/2 off the high and 16 up from the low. March Wheat closed up 8 3/4 at 916 1/2. This was 15 1/2 up from the low and 2 1/4 off the high. December Chicago wheat closed higher for its 4th straight session and finally broke above the $9.00 level. Positive technical signals along with surging European wheat markets continue to offer support to the bull camp. Additional support was linked to a sharp increase in open interest after yesterday's move higher which suggests a bullish tilt to the market. Export sales continue to disappoint and this week's sales came in below market estimates. Net weekly export sales, came in at 209,400 tonnes for the current marketing year and 11,500 for the next marketing year for a total of 220,900. As of November 1st, cumulative wheat sales stand at 48% of the USDA forecast for the current marketing year vs. 5 year average of 63%. Sales of 541,000 tonnes are needed each week to reach the USDA forecast. Traders remain hopeful that export interest will begin to pick up in 2013 due to a tightening global supply outlook. Some in the market believe tomorrows USDA report will have a bullish tilt to it and expect cuts to the global ending stocks near 168-170 million tonnes vs. current estimates of 173. Argentina could see current production of 11.5 million tonnes trimmed to 10.5 and Australia from 23 million tonnes to 20.5. The EU cleared 421,000 tonnes of wheat for export this week bringing the season total to 5.75 million tonnes vs. 5.5 million tonnes for the same period last year. December Oats closed down 1 1/2 at 363 3/4. This was 6 up from the low and 1 1/4 off the high.

Corn Market Recap for 11/8/2012 (CME)
December Corn finished down 3 at 741 1/4, 6 3/4 off the high and 3/4 up from the low. March Corn closed down 2 3/4 at 743 1/4. This was 1 up from the low and 6 3/4 off the high. December corn traded lower into the closing bell but traded in positive territory early in the session on positive action out of the Chicago wheat market. The market continues debate how much corn production Argentina may lose due to the heavy rainfall in October that has delayed planting. Some suggest 1-2 million tonnes may be lost and the USDA currently expects the country to produce 28 million tonnes. A reduction to 26 would still mean a record crop. The weather outlook is more favorable this week but rainfall is expected to return next week. The government of Brazil expects their corn production to fall to between 71.55 and 72.85 million tonnes which is down from its previous forecast of 71.9 to 73.2. The USDA is currently projecting 70.00 million tonnes. Export sales were in line with market estimates this morning with sales reported at 157,600 tonnes for the current marketing year and 51,800 for the next marketing year for a total of 209,400. The USDA announced this morning that US exporters sold 152,400 tonnes of corn to Japan for 2013/14 delivery. Some in the market expect corn exports to pick up in 2013 as South American prices rise. November Rice finished down 0.165 at 14.77, equal to the high and equal to the low.

Corn Top Commodity Pick at Morgan Stanley on Dwindling Supplies (Bloomberg)
Corn may beat all other commodities in the first half of next year, surging as much as 34 percent to a record as shrinking supply from the U.S. stokes competition among meat and ethanol producers, according to Morgan Stanley. “There’s a growing probability that you see corn trade up to the $9 to $10 level,” Hussein Allidina, the New York-based head of commodities research, said in an interview. “Demand needs to decrease in order to preserve what we have.” Corn rose to an all-time high in August as drought killed crops in the U.S., driving output in the biggest supplier to a six-year low and cutting world reserves as a share of demand to the smallest since 1974, according to the U.S. Department of Agriculture. Higher prices may stoke global food inflation as policy makers from Washington to Beijing seek to bolster growth. A rally in corn may help lift soybeans and wheat, Allidina said.
“The market has gotten a little bit relaxed about the supply-demand balance because U.S. exports have been weak,” Allidina said in an interview in Singapore yesterday, selecting natural gas as his second pick for the period. “I worry about being complacent, given how tight things are.” Corn for delivery in December traded at $7.465 a bushel on the Chicago Board of Trade at 4:49 p.m. in Singapore yesterday, 12 percent below the $8.49 peak on Aug. 10. Soybeans, which surged to a record $17.89 a bushel in Chicago in September, traded at $15.0975. Allidina didn’t give forecasts for soybeans and wheat in the first half of next year.

Recap Energy Market Report (CME)
December crude oil prices grinded higher throughout the US trading session and registered an inside day trading range. Some traders indicated that early support for the market came from technical buying after yesterday's rout and a somewhat upbeat outside market tone. A round of better than expected US economic data this morning kept the complex supported. However, ongoing concerns over slowing economic growth in Europe, debt woes in Greece and uncertainty surrounding the US fiscal cliff seemed to limit the upside action.

Oil Fluctuates After Rebounding From Lowest Level in Four Months (Bloomberg)
Oil fluctuated in New York after rebounding from the lowest level in four months before reports that may signal an economic recovery in China, the world’s second-biggest crude consumer. Futures were little changed after increasing 0.8 percent yesterday. China’s industrial production and retail sales probably extended gains last month, according to separate Bloomberg surveys before government data today. Oil is set to snap three weeks of losses even after slumping 4.8 percent, the most this year, on Nov. 7. West Texas Intermediate crude for December delivery was at $84.96 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 9:34 a.m. in Tokyo. Futures rose 65 cents to $85.09 a barrel yesterday, rebounding from the lowest close since July 10. Prices are up 0.1 percent this week and down 14 percent this year.
Brent oil for December settlement increased 43 cents to $107.25 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade closed at a premium of $22.16 to New York crude. Crude in New York has technical support along the lower Bollinger Band on the daily chart, according to data compiled by Bloomberg. Futures have pared losses after reaching this indicator, around $82.20 a barrel today, for the past two weeks. Buy orders tend to be clustered near chart-support levels.

Silver Market Recap Report (CME)
Silver prices were strengthened today by a moderate inflow of safe-haven support but the market was unable to reach up into new high ground by the close of trading. Weak earnings from a major North American silver producer may have dampened silver market sentiment enough so that silver futures ended up lagging behind gold prices later on during the trading session.

Gold Market Recap Report (CME)
The gold market found strong support late in Thursday's session to finish the day with sizable gains and with a new high for November. Positively received US economic data earlier in the morning did not have that great an impact on the gold market, which may have set the stage for gold's rally later on in the session. With extensive weakness in global equity markets, December gold was strengthened by a considerable amount of safe-haven support. EU debt problems and the impending US "fiscal cliff" are also factors which were seen as supporting gold prices during today's session.

Copper Rebounds From Two-Month Low on U.S, China Demand Outlook (Bloomberg)
Copper rebounded from a two-month low as better-than-expected U.S. jobs and trade data and signs that China’s economy may be on the mend signaled improving demand in the world’s biggest metals users. The U.S. trade deficit unexpectedly narrowed in September on record exports, and fewer Americans filed claims for jobless benefits, government reports showed today. China’s central bank governor and statistics chief signaled that October data to be published from tomorrow will show growth improving this quarter. “Jobless claims were better, and the trade data show that while the economy still has a long way to go, the positive numbers we have seen are probably going to hold,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. Copper futures for delivery in December rose 0.8 percent to settle at $3.4695 a pound at 1:18 p.m. on the Comex in New York. Prices fell to $3.431 yesterday, the lowest for a most-active contract since Aug. 31.
Reports tomorrow may show industrial production and retail sales strengthened last month in China, according to economists surveyed by Bloomberg. On the London Metal Exchange, copper for delivery in three months advanced 0.3 percent to $7,630 a metric ton ($3.46 a pound). Aluminum, tin, nickel, lead and zinc also climbed.

Gold Traders More Bullish After Obama’s Re-Election: Commodities (Bloomberg)
Gold traders are the most bullish in 11 weeks and investors accumulated record bullion holdings on speculation U.S. policy makers will add to stimulus following President Barack Obama’s re-election. Twenty-five of 33 analysts surveyed by Bloomberg expect prices to rise next week and three were bearish. A further five were neutral, making the proportion of bulls the highest since Aug. 24. Investors boosted assets in gold-backed exchange-traded products to an all-time high of 2,592 metric tons on Nov. 7, valued at $143.1 billion, data compiled by Bloomberg show.
Obama won the Nov. 6 election against Mitt Romney, who had criticized the Federal Reserve’s policies and said he’d replace Chairman Ben S. Bernanke, whose second term expires in January 2014. The European Central Bank kept interest rates at a record low yesterday and nations from the U.S. to China have pledged more action to boost economies. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “Obama is a supporter of Bernanke and his re-election means that the ultra-loose monetary and fiscal policies by the Fed will continue,” said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt. “More and more liquidity will be put into the system and therefore there’ll be inflation fears and concern about currency devaluation.”

20121109 1005 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
November Soybeans finished down 9 1/2 at 1499 1/4, 13 3/4 off the high and 1/4 up from the low. January Soybeans closed down 11 1/4 at 1495 3/4. This was 3/4 up from the low and 17 3/4 off the high. December Soymeal closed down 6.6 at 462.9. This was 0.8 up from the low and 8.7 off the high. December Soybean Oil finished up 0.15 at 48.77, 0.43 off the high and 0.32 up from the low. January soybeans traded lower on the day and settled below $15.00 for the first time since October 16th. The soybean market continues to be caught up in outside market volatility caused by fears of the US Fiscal Cliff and uncertainly in Europe. Brazil's government estimated soybean production near 80.1 to 83 million tonnes in 2012/13 which is down from prior estimates of 80 to 82.8. The USDA is currently projecting production at 81 million tonnes. Overall demand for soybeans remain strong but this week's exports sales were a huge disappointment and were reported at 186,400 tonnes for the current marketing year and 5,500 for the next marketing year for a total of 191,900. The trade was expecting sales between 500-700,000 tonnes and an unknown destination canceled 545,000 tonnes. As of November 1st, cumulative soybean sales stand at 75% of the USDA forecast for the current marketing year vs. a 5 year average of 54%. Sales of 195,000 tonnes are needed each week to reach the USDA forecast. Net meal sales totaled 194,600 tonnes and net oil sales came in at 36,700 tonnes. The USDA will release an updated supply and demand report tomorrow morning. Most in the market feel the USDA will increase the yield which is currently estimated at 37.8 bushels per acre.

Soybeans Drop as Slowing World Economy Curbs Demand; Corn Falls (Bloomberg)
Soybeans fell to a three-week low after a government report showed a drop in overseas demand for supplies from the U.S., the world’s biggest exporter. Corn declined. Sales of soybeans in the week ended Nov. 1 plunged 75 percent from a week earlier and corn sales dropped 6.1 percent, the U.S. Department of Agriculture said today. The dollar rose to a two-month high against a basket of six currencies after European Central Bank President Mario Draghi said growth will stay weak. A stronger dollar erodes the appeal of commodities. “U.S. exports are slowing,” Jacquie Voeks, a senior market adviser for West Bend, Wisconsin-based Stewart Peterson Group, said in a telephone interview. “The economic environment in not conducive for grain market investors.”
Soybean futures for January delivery dropped 0.7 percent to close at $14.9575 a bushel at 2 p.m. on the Chicago Board of Trade, after touching $14.93, the lowest for a most-active contract since Oct. 17. The oilseed has fallen 16 percent since reaching a record $17.89 in September after rains pared yield losses in the U.S. caused by the worst drought since 1956. Corn futures for December delivery declined 0.4 percent to $7.4125 a bushel on the CBOT, after gaining 1.2 percent during the prior two sessions. Prices have dropped 13 percent since touching a record $8.49 on Aug. 10 as demand slowed from meat and fuel producers. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

EDIBLE OIL: Malaysian palm oil futures fell to their lowest in more than a month tracking losses in global markets caused by renewed worries that economic woes in the United States and Europe could hurt commodity demand. (Reuters)

Palm-Oil Shipments From Indonesia Seen Jumping to 10-Month High (Bloomberg)
Palm-oil exports from Indonesia, the world’s largest producer, will probably climb 13 percent this month to the highest level since January as lower prices and taxes spur importers to boost purchases. Shipments are set to increase to 1.6 million metric tons from an estimated 1.41 million tons in October, according to the median of estimates from three plantation executives, an analyst and a refiner compiled by Bloomberg. Output will decline to 2.4 million tons from 2.43 million tons, the survey showed. Stockpiles may drop to 2.5 million tons from 2.6 million tons, three respondents said. Palm oil, used in everything from soap to biofuels, has lost 26 percent this year as the global economic slowdown hurt demand while increased production in Indonesia and Malaysia, the two biggest growers, boosted reserves. Prices need to drop further in the next few weeks to attract buyers and clear inventories, which are at a record in Malaysia, according to Dorab Mistry, director at Godrej International Ltd.
“Some traders will boost purchases, hoping that prices rebound,” said Teguh Patriawan, president director at Jakarta- based planter PT Nusantara Sawit Persada. He expects shipments to total at least 1.5 million tons this month. Palm oil for January delivery tumbled 2.5 percent to 2,336 ringgit ($762) a ton on the Malaysia Derivatives Exchange yesterday, the lowest close since Oct. 2. Most-active prices dropped to 2,230 ringgit on Oct. 3, the lowest since November 2009. Futures need to fall to 2,200 ringgit, Mistry said yesterday, reiterating a forecast.

Lower Taxes
Shipments from Indonesia may rise after the government cut the tax on exports of the crude variety to 9 percent this month from 13.5 percent in October, said Susanto, head of marketing at the Indonesian Palm Oil Association, known as Gapki. The tax on crude palm oil this month is the lowest since October 2010, when it was 7.5 percent, according to data compiled by Bloomberg. The duty on refined, bleached and deodorized, or RBD, palm olein was halved to 3 percent, while that on RBD palm oil was reduced to zero from 4 percent. Exports from Indonesia dropped 2.1 percent to 1.38 million tons in September as India and China reduced purchases, Gapki said on Oct. 29. Shipments to India, the biggest buyer, declined 9.5 percent to 507,460 tons and purchases by China fell 8 percent to 205,730 tons, association data showed.
Figures for exports last month have not been issued. The estimate of 1.41 million tons was the median from a Bloomberg survey of four plantation executives, a refiner and an analyst published on Oct. 8. Projected exports in November would be the highest since January, when they were 1.64 million tons, according to Gapki data.

Record Reserves
Global vegetable-oil reserves are at a record and palm and lauric oil stockpiles will keep expanding until December, Mistry said at a conference in China yesterday. Indonesian exporters may be shipping “substantial” cargoes to Malaysia to benefit from higher prices there, said Mistry, who’s worked in the industry for 35 years. Stockpiles in Malaysia reached a record 2.48 million tons in September after surging 46 percent from June, according to data from the Malaysian Palm Oil Board, which is set to release figures for October on Nov. 12. A Bloomberg survey published on Nov. 6 showed that stockpiles in Malaysia may have expanded further last month, reaching 2.7 million tons.

French food makers decry palm oil tax proposal
Thu Nov 8, 2012 12:51pm EST
* French Senator proposes to quadruple palm oil tax
* Food makers say proposal scandalous
* Health minister dubious on need for tax
By Sybille de La Hamaide
PARIS, Nov 8 (Reuters) - French food makers on Thursday denounced a proposed fourfold tax increase on palm oil in food, saying that if it was damaging to health it should be banned, not taxed.
The social commission of France's upper house adopted a proposal on Wednesday for a tax of 300 euros per tonne of palm, coconut and palm kernel oil used in human food on top of existing taxes of around 100 euros. It would also apply to imported food products.
The use of palm oil has been met with an increasing public outcry in France and other parts of the world due to links to deforestation and ill health with several key French retailers promising to ban or cut the vegetable oil, or switch to sustainable sources.
But food manufacturers strongly disagree.
"Palm oil as such is not bad for health," Jean-Rene Buisson, head of France's Ania food industry association said.
"Punitive acts such as raising a tax by 300 percent to push industrials to use something else is absolutely scandalous," he said.
The proposed tax, dubbed "Nutella tax" in France because the chocolate and nut spread contains a significant amount of palm oil, still needs to be approved by the Senate before being sent to the lower house for approval.
But given French Health Minister Marisol Tourraine's lukewarm reaction to the proposal, it is unlikely to pass, at least without some amendment.
"It is normal to deal with the health impact of palm oil but I'm not sure that we should engage the debate in the framework of a purely financial amendment," Tourraine told Canal+ television.
"I wish to take the time for a discussion on public health, the risk for obesity in particular," she said.
The left-wing Senator behind the proposal said he was motivated by concerns the high level of saturated fat in palm oil could increase risks of obesity and cause heart disease.
"This tax would be a price signal, not to consumers but to food makers so that they replace these oils by new recipes, more respectful of human health," the amendment says.
But Buisson said palm oil, which is solid at ambient temperatures, was irreplaceable in products such as Nutella or some cookies.
French people consume an average of 2 kg of palm oil a year and the country as a whole 126,000 tonnes. If adopted the tax would add 40 million euros to France's state health insurance pot.
France adopted a 160 percent rise on beer taxes in October and last year introduced a levy on drinks containing added sugar or artificial sweeteners to help combat obesity.
The proposed additional palm oil tax of 300 euros currently accounts for a rise of 45 percent on European palm oil prices, quoted at $845 or 663 euros in Rotterdam. ($1 = 0.7840 euros)

UPDATE 1-Wilmar Q3 profit jumps 26 pct, oilseeds and grains rebound
Thu Nov 8, 2012 7:27pm EST
(Adds detail on earnings, comments on outlook)
* Q3 net profit $405.8 mln vs $321 mln a year ago
* Oilseeds and grains post pre-tax profit of $60.3 mln
* Positive contribution from sugar business
By Eveline Danubrata
SINGAPORE, Nov 9 (Reuters) - Singapore palm oil firm Wilmar International Ltd beat forecasts with a 26 percent rise in third-quarter net profit, helped by its sugar business and a rebound at its oilseeds and grains unit after two quarters of losses.
Wilmar, whose stock has slumped 38 percent this year mainly due to losses at its China business, said it remained positive on its long-term prospects due to economic growth in China, India and Indonesia, as well as increased palm oil production in Indonesia.
July-September net profit rose to $405.8 million, up from $321 million a year earlier, and well ahead of forecasts for an average $335 million, based on a Reuters poll of five analysts.
The company's oilseeds and grains segment posted a pre-tax profit of $60.3 million, mainly due to improved crushing margins and better timing for its purchase of raw materials. The unit lost $92.5 million in the first half of 2012 as overcapacity in China put pressure on margins.
Its sugar business also posted better results as the sugar crushing season went into full swing in the quarter.
Wilmar joined agribusiness giants Archer Daniels Midland Co and Cargill Inc in posting improved quarterly earnings.
Wilmar shares closed at S$3.12 on Thursday. The stock's 38 percent decline this year lags a 14 percent gain in the broader Straits Times Index.
In the large and midcap food products industry, Wilmar is among the worst performers out of nearly 200 stocks worldwide, Thomson Reuters StarMine data shows.
Out of 26 analysts tracking Wilmar, 13 had a 'hold' rating, eight had 'sell' or 'strong sell', while five had 'strong buy' or 'buy', according to Thomson Reuters data. (Reporting by Eveline Danubrata; Editing by Richard Pullin)