Wednesday, November 21, 2012
FCPO closed : 2443, changed : -14 points, volume : lower.
Bollinger band reading : pullback correction little downside biased.
MACD Histogram : turned downward, buyer seller battling.
Support : 2400, 2350, 2300, 2250, 2230 level.
Resistance : 2450, 2490, 2520, 2550 level.
FCPO closed little weaker with decreasing volume participation. Soy oil price currently trading little lower after overnight recorded gains while crude oil price currently rising higher.
Slowing down demand concern sent palm oil price little lower as China buying activities still taking place due restocking for Lunar Chinese New Year.
Daily chart reading continue calling a pullback correction little downside biased market development testing resistance near 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 6:11 PM
FKLI closed : 1619 changed : +2 point, volume : higher.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller taking partial profit.
Support : 1615, 1600, 1595, 1590 level.
Resistance : 1623, 1627, 1635, 1640 level.
FKLI closed little firmer with slightly better volume transacted doing about 4 points discount compare to cash market that closed declined marginally. Overnight U.S markets closed mixed and today Asia markets ended mostly higher while European markets currently trading mixed.
News on overnight rise on U.S. home sales to a 4 year high, U.S. budget discussion and European leader failed to reach decision on Greece debt development resulted regional markets to react differently.
FKLI daily chart continue to calling 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.
Posted by MW Chong at 5:25 PM
STOCKS: European stock index futures pointed to a dip and Asian shares fell on fresh worries over Greece after international lenders failed to reach a deal for the payment of a new tranche of aid to the debt-stricken country. Wall Street halted its two-day rally on Tuesday, after Federal Reserve Chairman Ben Bernanke said the central bank lacks tools to cushion the U.S. economy from the impact of the "fiscal cliff." (Reuters)
FOREX:-Dollar rises to 7-1/2 month high vs the yen
The dollar extended gains against the Japanese yen to hit a 7-1/2 month high after Japan exports fell for a fifth month running in October, adding to recession worries and speculation of more monetary easing.
The dollar rose to 82.12 yen its highest since early April and breaking past a reported option barrier at 82 yen. Traders cited more stop-loss buy orders above 82.15 yen.
Euro zone, IMF fail to strike Greek debt deal (Reuters)
Greece's international lenders failed for the second week running to agree how to get the country's debt down to a sustainable level and will have a third go at resolving their most intractable problem in six days' time.
Bernanke sees good 2013 if U.S. 'fiscal cliff' avoided (Reuters)
Federal Reserve Chairman Ben Bernanke said on Tuesday that 2013 could be a "very good year" for the U.S. economy if politicians can strike a quick deal to avoid the so-called fiscal cliff.
GRAINS: U.S. soybeans eased, inching down after two consecutive sessions of gains fuelled by forecasts of lower production in South American and a rebound in Chinese demand. Wheat was little changed, holding gains made in the last two sessions as dry weather in the U.S. Plains continued to hurt the winter crop, while corn was largely unchanged after rising for three days. (Reuters)
POLL-US crude, gasoline inventories seen higher, distillates off (Reuters)
U.S. crude oil and gasoline inventories were forecast to have increased last week while distillate stockpiles were seen down on higher heating oil demand, an expanded Reuters poll of seven analysts showed on Tuesday.
OIL: Brent crude traded slightly below $110 per barrel after an early rise spurred by fears of supply disruption from the Middle East, as clashes raged between Palestinians and Israelis despite overnight truce talks. (Reuters)
Ivory Coast to tax exported cocoa products based on bean weight (Reuters)
Ivory Coast has decided to levy an export tax on semi-finished cocoa products based on their equivalent weight in beans, according to a government decree seen by Reuters on Tuesday.
World copper market in 522,000 T deficit Jan-August -ICSG (Reuters)
The world refined copper market was in a 522,000 tonne deficit from January to August, the International Copper Study Group (ICSG) said on Wednesday.
BASE METALS: London copper slipped for a second day as comments by the Federal Reserve Chairman renewed U.S. "fiscal cliff" worries, while traders moved to the sidelines ahead of global manufacturing figures later this week. (Reuters)
PRECIOUS METALS: Gold traded steady, lacking conviction to move out of its recent trading range as investors eye truce talks over Gaza and discussions on how to avert a fiscal crisis in the world's top economy. (Reuters)
LME aluminium stocks hit record 5.17 mln tonnes
LONDON, Nov 20 (Reuters) - Inventories of aluminium registered by the London Metal Exchange (LME) rose on Tuesday to an all-time record of 5.17 million tonnes in a market with a structural surplus.
Stocks have surged since the 2008 financial crisis as banks spotted money making opportunities from financing deals that effectively locked material in warehouses and as top producer China kept churning out metal as it subsidised loss-making plants to save jobs.
China leads global steel output rise in October
LONDON, Nov 20 (Reuters) - Global crude steel output rose year-on-year in October, as a sharp increase in China's production outweighed a drop in output in Europe and the United States where demand remains weak, data from the World Steel Association (Worldsteel) showed on Tuesday.
Output of steel, used in automaking and construction, was 126.15 million tonnes in October versus 124.55 million a year earlier, representing a rise of 1.3 percent, Worldsteel figures showed.
China daily crude steel output rises 1.6 pct in early Nov -industry data
SHANGHAI, Nov 20 (Reuters) - China's average daily crude steel output rose 1.6 percent to 1.957 million tonnes for the first ten days of November from the preceding period, industry data showed on Tuesday, as large mills lifted output on a recent rally in steel prices.
Large steelmakers in the world's top steel producer boosted output in the period to 1.638 million tonnes per day, up by around 8 percent from Oct. 21-31, data from the China Iron & Steel Association (CISA) seen by Reuters showed.
Iron ore hits 2-week low on softer China steel market
SINGAPORE, Nov 21 (Reuters) - Iron ore hit two-week lows as softer Chinese steel prices trimmed demand for the raw material, although further losses in spot iron ore rates may be limited with Beijing's steel production still in full swing.
Buying interest for iron ore has slowed after weeks of restocking by Chinese mills, but a further drop may also draw some buyers back into the market.
METALS-Copper slips on U.S. fiscal cliff fears
SINGAPORE, Nov 21 (Reuters) - London copper slipped for a second day after a warning by Federal Reserve Chairman Ben Bernanke renewed worries about the U.S. budget crisis, and as traders moved to the sidelines ahead of global manufacturing data due out this week.
"Over the next four months China's economy is looking better than it was four months ago," said Matt Fusarelli, an analyst at Australia-based consultancy AME Group.
PRECIOUS-Gold steady; eyes on US fiscal woes, Mideast tension
SINGAPORE, Nov 21 (Reuters) - Gold traded steady lacking conviction to move out of its recent trading range as investors eye truce talks over Gaza and discussions on how to avert a fiscal crisis in the world's top economy.
"Gold seems well supported towards the $1,700 level, and the longer-term story hasn't changed much," said Nick Trevethan, senior commodity strategist at ANZ in Singapore, adding that continuously robust demand from China and official sector buying will help support bullion prices.
Higher panamax rates perk up Baltic sea index
Nov 20 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Tuesday primarily driven up by the higher panamax rates.
The overall index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, rose 12 points or 1.14 percent to 1,066 points.
Posted by MW Chong at 4:25 PM
VEGOILS-Palm oil edges down on demand concerns
Tue Nov 20, 2012 11:56pm EST
* Malaysia Nov. 1-20 exports down 3.8 pct m/m to 1.01 mln T
* Chinese demand rises, but exports to India, Europe drop
* Muddy Waters publishes Olam letter, shares rebound
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Nov 21 (Reuters) - Malaysian palm oil futures
eased on Wednesday, inching down for a second straight session
as lacklustre export data fuelled traders' concerns over a
slowdown in demand.
Malaysian palm exports for Nov. 1-20 fell 3.3 percent to
1.02 million tonnes from a month ago, cargo surveyor Intertek
Testing Services said on Tuesday. Another surveyor, Societe
Generale de Surveillance, reported a similar drop of 3.8 percent
in shipments for the same period.
Although Chinese demand continued to grow on festival buying
for Lunar New Year and stocking up ahead of stricter regulation
in 2013, the gain was offset by much weaker shipments to Europe
"The market is fundamentally bearish and prices will further
correct before positive sentiment enters the market," said a
trader with a Malaysian commodities brokerage.
"A correction towards 2,350 to 2,400 ringgit per tonne
should be healthy for both consumers and packers."
By the midday break, the benchmark February contract
on the Bursa Malaysia Derivatives Exchange was down 1.1
percent at 2,430 ringgit ($792) per tonne. Prices on Tuesday had
risen to 2,485 ringgit, the highest since Nov. 2.
Total traded volumes were thin, at 10,414 lots of 25 tonnes
each, compared to the usual 12,500 lots.
Shares of Olam International Limited rebounded on
Wednesday, in a sign that investors were relieved that research
firm Muddy Waters had yet to publish a long, detailed report on
the company as it has with other targets.
The short-seller published its first official material on
the company on Wednesday, taking closer aim at the Singapore
commodities trader's debt load and its cash burn rate.
European demand for palm oil could take a further hit after
international lenders failed for a second week running to agree
on how to get Greece's debt down to a sustainable level,
suggesting the debt crisis could still drag on.
In a bullish sign for palm oil, Brent crude rose above $110
per barrel on Wednesday, boosted by fears of supply disruption
from the Middle East as clashes raged between Palestinians and
Israelis, despite overnight truce talks.
In other vegetable oil markets, U.S. soyoil for December
delivery fell 0.8 percent in early Asian trade. The most
active May 2013 soybean oil contract on the Dalian
Commodity Exchange edged up 0.6 percent by the midday break.
Posted by MW Chong at 3:03 PM
GLOBAL MARKETS-Asian shares steady, refocusing on US fiscal cliff
TOKYO, Nov 21 (Reuters) - Asian shares steadied, after a two days of gains, as investors refocused on the risk of a U.S. fiscal crisis following Federal Reserve Chairman Ben Bernanke's remarks that the budget impasse was already damaging growth.
"We remain wary of the fiscal cliff," Barclays Capital said in a research note. "We think the uncertainty associated with the current range of fiscal outcomes during the tax cliff negotiations and beyond is under appreciated by investors."
FOREX-Yen hits 7-month low, euro helped by Greece hopes
TOKYO, Nov 21 (Reuters) - The yen slumped to seven-month lows against the dollar and fell nearly as far against the euro on views Japan's central bank will be pushed into implementing more radical monetary expansion policies.
"Abe now has few other things left to say about monetary policy. It's about the time the power of his magic to run out," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, adding that the yen's slide will likely have run its course by the U.S. Thanksgiving on Thursday.
OIL - Oil drops as Gaza truce seen; losses pared on API data
NEW YORK, Nov 20 (Reuters) - Oil fell from a one-month high on Tuesday amid signs of a ceasefire that would end a week of rocket attacks and air strikes between Palestinians and Israelis.
"Yesterday's big rally was all about fears of a wider conflict stemming from Israel and Gaza, so when the truce was announced it's not surprising we've seen prices come right off," said Andy Lebow, vice president at Jefferies Bache in New York.
POLL-US crude, gasoline inventories seen higher, distillates off
Nov 20 (Reuters) - U.S. crude oil and gasoline inventories were forecast to have increased last week while distillate stockpiles were seen down on higher heating oil demand, an expanded Reuters poll of seven analysts showed on Tuesday.
Crude inventories were seen up 900,000 barrels for the week that ended Nov. 16, extending builds of 1.1 million barrels seen in the previous week.
Chevron accuses NY State comptroller of ethics breach
LOS ANGELES, Nov 20 (Reuters) - Chevron Corp sought to open an investigation on Tuesday into New York State Comptroller Thomas DiNapoli, claiming he pressured the oil company to settle environmental litigation in Ecuador in exchange for campaign contributions from supporters of the lawsuit's plaintiffs.
Chevron said it filed a complaint before the New York State Joint Commission on Public Ethics, seeking a probe of DiNapoli and current and past members of his staff.
Important issues remain on CNOOC bid for Nexen -source
OTTAWA, Nov 20 (Reuters) - China's CNOOC is still discussing Canadian demands on jobs and investment as it negotiates terms for its $15 billion bid for oil and gas producer Nexen Inc , a source familiar with the negotiations said on Tuesday.
Differences center on commercial aspects of the deal, particularly commitments that the Chinese state-owned energy company will make on employment and capital expenditure, said the source, who declined to be identified due to the sensitivity of the issue.
South Sudan says new demands from Sudan delay oil restart
MELUT, South Sudan, Nov 20 (Reuters) - South Sudan's President Salva Kiir said resumption of the country's oil output had been delayed after Sudan made new demands related to rebel fighting in Sudanese territory, in new signs of tension between the African neighbours.
Landlocked South Sudan, which seceded from Sudan in July last year, shut down its roughly 350,000 barrels per day of oil output in January in a dispute with Khartoum over how much it should pay to export oil through Sudan to the Red Sea.
Phillips 66 Bayway refinery begins restart -sources
Nov 20 (Reuters) - Phillips 66's 238,000 barrel-per-day Bayway refinery in Linden, New Jersey, is in the early stages of restarting for the first time after being shut on Oct. 28 ahead of Superstorm Sandy's landfall, sources familiar with operations at the refinery said on Tuesday.
The refinery is raising steam pressure and heating up units to operating temperatures and plans to resume production "as soon as possible," one of the sources said.
Malaysia's Dialog, Halliburton in $1.2 bln oil services deal
KUALA LUMPUR, Nov 20 (Reuters) - Malaysia's Dialog Group Bhd said it has signed an agreement with Halliburton International Inc for a contract worth $1.2 billion aimed at boosting oil output from a mature field in East Malaysia.
The agreement aims to boost recoverable reserves in the Bayan Field, located offshore Sarawak, as Malaysia tries to boost flagging production from its existing oil fields.
Venezuela's Amuay refinery halts flexicoker production
PARAGUANA, Venezuela, Nov 20 (Reuters) - Venezuela's Amuay refinery, the OPEC nation's largest, halted production at its flexicoker unit following a leak, state oil company PDVSA said on Tuesday.
The 645,000 barrel per day (bpd) facility has been operating at half capacity since an explosion and subsequent fire in August that killed more than 40 people.
TransCanada to acquire BP's stake in gas storage site
CALGARY, Alberta, Nov 20 (Reuters) - TransCanada Corp said on Tuesday it would pay C$210 million ($210 million) for BP Plc's 40 percent stake in the Crossfield Gas Storage facility, 50 kilometers (31 miles) north of Calgary, Alberta, to consolidate ownership of the operation.
TransCanada, the country's largest pipeline company, said the acquisition would give it full control of the site it has operated since last year and adds 27 billion cubic feet of natural-gas storage.
Posted by MW Chong at 11:07 AM
CIMB posts record net profit
CIMB Group Holdings yesterday reported a record net profit of RM3.3bn for the nine months ended 30 Sept of financial year 2012 (9MFY12), after posting a good third quarter (3QFY12) net profit of RM1.1bn. “We had a good 3QFY12 and 9MFY12 underpinned by strong performances at CIMB Niaga, CIMB Bank Singapore, corporate banking and treasury markets,” said CIMB group chief executive Datuk Seri Nazir Razak yesterday. (Financial Daily)
Ekuinas to list its unit Icon Offshore in 2014
Ekuiti Nasional (Ekuinas) has set a 2014 target to list its freshly-merged offshore supply vessel (OSV) unit Icon Offshore even thought the company is “already eligible” to be on the market. Ekuinas chief executive officer Datuk Abdul Rahman Ahmad said that although the growth of Icon Offshore, coupled with its track record, made it eligible for listing, Ekuinas wanted to grow it privately to maximise value.(StarBiz)
Takaful Malaysia posts stronger 3Q results
Syarikat Takaful Malaysia posted a net profit after taxation and zakat of RM67.4m for the third-quarter ended 30 Sept, compared to RM43.6m during the same period last year. The group’s operating revenue increased by 24% to RM1.3bn compared to the corresponding period last year. In a statement yesterday in regards to the results, Syarikat Takaful said the company expects its performance to achieve another record breaking year barring any unforeseen circumstances. (Malaysian Reserve)
MAS lands RM5.3bn financing
Malaysian Airline System (MAS) has secured a RM5.3bn fund mainly to pay for aircraft purchases, including its new super jumbos. MAS yesterday said it had sealed a master facility agreement with Turus Pesawat SB for the RM5.3bn Islamic loan. Turus Pesawat is a special purpose company fully owned by government-owned Minister of Finance Inc. The fund will be used by MAS to buy eight Airbus aircraft comprising six A380-800 super jumbos, one A330-200F and A330-300. (BT)
Scomi eyes Penang monorail deal
Scomi Engineering says it is keen to participate in the RM2bn Penang monorail project and will bid for the job when the government calls for tenders next year. "We won the bid before and are keen to tender again. We are very well prepared to execute the project," its group chief operating officer of transport solutions Kanesan Veluppillai told Business Times. The Penang monorail was proposed under the Ninth Malaysia Plan (9MP) and Northern Corridor Economic Region. Tenders were called by the Federal government in November 2007. (BT)
MMHE negatively impacted by costs
Malaysia Marine and Heavy Engineering Holdings (MMHE), a marine and heavy engineering services provider, saw its net profit for the third-quarter drop by 89% to RM8.1m from RM80.2m in spite of an increase in revenue, following a share of losses from its offshore division. Net profit for the year-to-date stood at RM141.6m, down 50% from RM287.9m previously. The Petroliam Nasional group unit said the offshore division’s ongoing conversion project incurred higher than expected costs, and it is currently pursuing negotiation with its clients.. (Malaysian Reserve)
South Korea: Department store sales weaken after economy slows
Sales at major South Korean department stores declined for a fifth month in October as the slowest economic growth in three years damped sentiment. Outlays at the three biggest chains declined 0.4% from a year earlier in October after a 0.8% drop in September, the Ministry of Knowledge Economy said. Discount-store sales declined 6.6% last month, the report showed. (Bloomberg)
China: Foreign investment falls for 11th time in 12 months
Foreign direct investment in China fell for the 11th time in 12 months as labor costs rose, an economic slowdown threatened to drag growth to a 13-year low and a territorial dispute with Japan weighed on trade. Investment dropped 0.2% in October from a year earlier to USD8.31bn, the Ministry of Commerce said in. FDI inflows in the first 10 months of the year declined 3.5% to USD91.7bn, while non-financial outbound investment rose 25.8% to USD58.2bn. (Bloomberg)
France: French downgrade no bar to Hollande as investors weigh cut
French President Francois Hollande’s government will probably be able to keep borrowing at record-low interest rates even after Moody’s Investors Service’s decision to downgrade the nation’s debt. The drop in French bonds put only a small dent in the 9.4% rally since S&P’s stripped the country of its AAA status in January. The gains are more than double the rest of the global government bond market, according to Bank of America Merrill Lynch indexes, surpassing those of the US and top-rated Germany, the UK and Australia. (Bloomberg)
EU: Ministers seek near-term Greek fix, fight on debt path
European governments will try to plug an immediate hole in Greece’s finances and prevent new ones from opening in the latest installment of the debt-crisis brinkmanship rattling the euro economy. Finance ministers will battle among themselves and with the International Monetary Fund to find EUR15bn (USD19bn) through 2014 for Greece and seek an elusive formula for putting its debt on a sustainable path. (Bloomberg)
US: Home starts at four-year high boost US expansion
New-home construction unexpectedly climbed to a four-year high in October, more evidence of a revival in the industry that’s helping propel the US economy. Housing starts rose 3.6% to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years. (Bloomberg)
Asia FX By Cornelius Luca - Tue 20 Nov 2012 16:47:35 CT (Source:CME/www.lucafxta.com)
The appetite for risk paused on Tuesday after a nice recovery on Monday, as Moody's cut of France's triple-A credit rating triggered fears of a downgrade for other top-rated nations. Moreover, Fed Chairman offered no hints of additional easing despite a disappointing economic recovery; of course, there was no surprise there. Following Thanksgiving, the markets will focus on the negotiations between President Barack Obama and congressional leaders to avoid the "fiscal cliff." These hopes are over optimistic. The European currencies ended up and the commodity currencies and yen down after most of the European and commodity currencies surged and the yen fell on Monday. The US stock indexes ended little changed. Gold, oil and silver closed down. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies. Good luck!
US: housing starts climbed 3.6% to a seasonally adjusted annual rate of 894,000 in October from the revised September estimate of 863,000. Meanwhile, building permits fell 2.7% to a seasonally adjusted annual rate of 866,000 in October from a revised 890,000 in September.
Today's economic calendar
Japan: Merchandise trade balance total for October
China: Leading economic index for October
Asia Stocks Advance as U.S. Housing Boosts Export Outlook (Bloomberg)
Asian stocks gained as U.S. home building rose to a four-year high, adding to signs the world’s biggest economy is recovering and boosting the outlook for the region’s exporters. Toyota Motor Corp. (7203), the world’s biggest carmaker, climbed 2.1 percent in Tokyo. WestSide Corp. jumped 5.2 percent in Sydney after the developer of coal seam gas said it received a takeover proposal. Harvey Norman Holdings Ltd. fell 1.4 percent after the Australian Competition and Consumer Commission initiated legal proceedings against 11 franchisees of the nation’s largest electrical-goods retailer.
The MSCI Asia Pacific Index (MXAP) rose 0.3 percent to 121.29 as of 9:39 a.m. Tokyo time before markets in China and Hong Kong open. The gauge is heading for its first advance in three weeks after President Barack Obama started talks with Republicans and Democrats on a U.S. budget agreement to avert the so-called fiscal cliff. Failure to strike a deal will trigger more than $600 billion in automatic tax increases and spending cuts that may throw the country into a recession. “Underlying economic data in the U.S. has been pretty good,” said Angus Gluskie, managing director at Sydney-based White Funds Management, which oversees more than $350 million. “We’re going to have to see much more compromise before the fiscal cliff is resolved before this rally can continue.”
Asian Stocks Rise on U.S. Data as Yen Slides to Seven-Month low (Bloomberg)
Asian stocks rose as an increase in U.S. housing starts added to signs the world’s largest economy is recovering. The yen weakened to a seven-month low as Japan’s exports fell more than expected, while oil advanced. The MSCI Asia Pacific Index (MXAP) added 0.3 percent as of 9:34 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average climbed 0.9 percent, heading for a two-month high. Standard & Poor’s 500 Index futures were little changed. The yen slid against all 16 major peers. Oil rallied 0.7 percent in New York after slumping 2.8 percent yesterday. U.S. new-home construction climbed to a four-year high in October, exceeding all estimates in a Bloomberg survey. Japan’s exports dropped for a fifth month, pushing the world’s third- largest economy closer to recession. European finance ministers continued to meet to try and plug a hole in Greece’s budget.
Oil for January delivery rose to $87.32 in New York as the American Petroleum Institute said crude inventories slid 1.9 million barrels last week. Secretary of State Hillary Clinton will shuttle today through Jerusalem, the West Bank and Cairo in a bid to salvage a proposed cease-fire intended to halt a weeklong torrent of Palestinian rockets and Israel air strikes. A gauge tracking consumer discretionary companies advanced the most among 10 industry groups on the Asia-Pacific equities gauge, while health-care companies declined. South Korea’s Kospi index added 0.4 percent, while Australia’s S&P/ASX 200 Index retreated 0.1 percent. In the U.S., the S&P 500 closed little changed. Hewlett- Packard Co. (HPQ) fell 12 percent as it announced a charge of $8.8 billion linked to its Autonomy Corp. business, saying there were “accounting improprieties” before its takeover of the company.
Topix Heads for Highest Since July on U.S. Housing, Yen (Bloomberg)
Japanese stocks gained, with the Topix (TPX) Index heading for its highest close since July, as new U.S. home construction rose to a four-year high and the yen weakened after Japan posted a trade deficit for a fourth month. Canon Inc., a camera maker that gets 80 percent of its revenue overseas, rose 1.4 percent. Kansai Electric Power Co. gained 1.3 percent after the Nikkei newspaper reported the utility plans to raise power rates. Japan Steel Works Ltd. sank 2.8 percent after SMBC Nikko Securities Inc. cut its equity rating on the machinery maker to underperform. The Topix gained 0.8 percent to 767.75 as of 9:22 a.m. in Tokyo, with more than three shares advancing for each that fell. The Nikkei 225 Stock Average (NKY) rose 0.9 percent to 9,224.01, with volume almost 10 percent below the 30-day intraday average.
“The foundations have been laid for a significant recovery in the U.S.,” said Peter Esho, chief market strategist at City Index Ltd., a provider of equities, bonds and currency trading in Sydney. “There is cause for some optimism. The housing market is finally starting to improve.” The Topix has risen 6.4 percent since Nov. 14 when Prime Minister Yoshihiko Noda called for elections that polls show the opposition party is likely to win. The price of shares on the gauge stood at 0.9 times book value, compared with 2.1 times for the Standard & Poor’s 500 Index and 1.5 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.
S&P 500 Erases Earlier Loss as Housing Report Tempers HP (Bloomberg)
The Standard & Poor’s 500 Index advanced, erasing earlier losses, as an increase in housing starts tempered a tumble in Hewlett-Packard Co. (HPQ) shares. Bank of America Corp. and American Express Co. added at least 1.1 percent to pace gains in the biggest companies. HP (HP) fell 12 percent as it announced a charge of $8.8 billion linked to its Autonomy Corp. business, saying there were “accounting improprieties” before its takeover of the company. Best Buy Co. (BBY) sank 13 percent as the largest consumer-electronics retailer reported a $10 million loss on weaker-than-expected sales. The S&P 500 (SPX) rose 0.1 percent to 1,387.82 at 4 p.m. New York time, after falling 0.7 percent earlier. It had rallied 2.5 percent over the previous two days. The Dow Jones Industrial Average slid 7.45 points, or 0.1 percent, to 12,788.51. Volume for exchange-listed stocks in the U.S. was 5.6 billion shares, or 7.8 percent below the three-month daily average.
“There will be this back and forth,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., said in a phone interview. His firm oversees $646 billion. “People are coming to the realization that earnings growth is not going to be as robust as analysts had expected. That’s starting to creep in. On the other hand, housing is strengthening. As for Europe, ultimately, they will do what it takes to support Greece.” New-home construction unexpectedly climbed to a four-year high in October, more evidence of a revival in the industry that’s helping propel the U.S. economy. The euro traded at almost a two-week high against its U.S. counterpart as the region’s finance ministers met in Brussels to discuss ways to plug a 15-billion euro ($19 billion) hole in Greece’s finances.
Recap Stock Index Market Report (CME)
The December S&P 500 experienced a choppy trading session that spent most of in close proximity to unchanged levels. The market came under modest pressure in early morning action in the wake of a downgrade to France's credit rating and disappointing earnings. Meanwhile, a much better than expected reading on October US housing starts helped turn sentiment and fueled a turnaround in the December S&P 500 to a higher high on the session. Some traders indicated that the upside in US equities was being held back by a more than 10% slide in the shares of Hewlett-Packard after the company reported an unexpected charge from its purchase of Autonomy. Shares of Best Buy were down an equivalent amount during the session after posting quarterly results that fell short of street estimates. The market took an early afternoon slide to a fresh low on the session in response to comments from Fed Chairman Bernanke indicating that the bank lacked the tools to fully offset damages if a deal on the fiscal cliff was not reached.
European Stocks Gain Amid Speculation of Greek Aid Deal (Bloomberg)
European stocks rose for a second day amid speculation the region’s finance ministers will agree on a Greek financing deal and optimism Israelis and Palestinians will sign up to a cease-fire in Gaza. EasyJet Plc (EZJ) jumped to the highest level in five years, leading travel shares higher, after the budget airline doubled its dividend. Xstrata Plc (XTA) and Glencore International Plc (GLEN) advanced as investors approved their $31 billion merger. Credit Suisse Group AG (CSGN) paced a decline in financial shares, dropping 1.7 percent on plans to reorganize its investment bank. The Stoxx Europe 600 Index (SXXP) added 0.3 percent to 269.49 at the close of trading, extending yesterday’s 2.2 percent jump to reach a one-week high. The gauge, which fluctuated between gains and losses at least 10 times today, has rallied 15 percent from a June 4 low as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“The market has rebounded on talk that there will be a cease-fire in Israel,” said Stephane Ekolo, chief European strategist at Market Securities, in London. “There also is the possibility of a resolution regarding Greek debt in tonight’s meeting and that is helping stocks.” European finance ministers are discussing ways to fill a 15 billion-euro ($19.2 billion) gap in Greece’s public accounts at a meeting in Brussels today. The options under consideration include recycling ECB profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines.
Yen Sinks to 7-Month Low Against Dollar on Posting Trade Deficit (Bloomberg)
The yen slid to a seven-month low after Japan posted a trade deficit for a fourth-straight month, pushing the nation closer to a recession and eroding the currency’s safe-haven status. The euro was near a two-week high against the dollar as European finance ministers continued to work toward an agreement on extra financing for Greece. New Zealand’s dollar remained lower against most of its major peers after whole milk powder prices fell, diminishing revenue from a key export. “The trade numbers have added to the case for yen weakness,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. (WBC) “The struggles of the Japanese exporters are becoming increasingly clear.” The yen touched 81.84 per dollar, the weakest since April 10, before trading at 81.82 as of 9:17 a.m. in Tokyo, 0.2 percent lower from yesterday’s close. It lost 0.2 percent to 104.85 per euro. Europe’s shared currency traded at $1.2814 from $1.2817 yesterday, when it touched $1.2830, the highest since Nov. 7.
Japanese exports fell 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen ($6.7 billion), the Ministry of Finance said in Tokyo today. The median estimate of economists surveyed by Bloomberg News was for a 360 billion yen deficit.
Asia’s Top Economies Aim for Trade Deal as Sea Dispute Set Aside (Bloomberg)
China, Japan and South Korea started talks on a free-trade agreement vital to an Asia-wide deal in a move to forge closer economic ties even as they spar over disputed islands. The countries, representing three of Asia’s four biggest economies, will hold the first round of talks early next year, according to Xinhua, China’s official news agency. Those negotiations are key to the Regional Comprehensive Economic Partnership, a 16-nation accord also announced yesterday that Southeast Asian countries called “the world’s biggest regional free trade deal.” “The missing piece of the jigsaw puzzle as far as Asia is concerned is the agreement among the three Northeast Asian countries,” said John Ravenhill, a professor at Canberra-based Australian National University. “The negotiations that were supposed to have started between those three countries have been put on hold because of the disputes over the South China Sea and other islands.”
Competing visions for an Asia-Pacific trade bloc reflect the struggle for dominance by economic powers over a region that is increasingly a driver of global growth. U.S. President Barack Obama is seeking to expand trade ties with Asian nations and regain economic influence among countries that are growing more reliant on China in an area that contains sea lanes vital to world commerce
Bernanke Says Fiscal Cliff Fix May Bring ‘Very Good’ Year (Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the recovery. “There’s important potential for the economy to strengthen significantly if there’s a greater level of security and confidence about where we’re going,” he said today to the Economic Club of New York. “A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy.” Bernanke, 58, identified the threat of $607 billion in automatic tax increases and spending cuts set to take effect next year as one of the impediments to a faster expansion as companies hold back on hiring and investment. The Fed chief repeated his warning a failure to reach an agreement could send the economy “toppling back into recession.”
The central bank is buying $40 billion in housing debt each month and has pledged to keep its benchmark interest rate near zero through mid-2015 as it seeks to spur growth and reduce a 7.9 percent jobless rate. “We’re going to do what we can to support ongoing recovery in growth and jobs and create the demand for output, the demand for firms’ products that will remove that uncertainty about the future sustainability of the recovery,” Bernanke said.
Housing Starts in U.S. Increase to Four-Year High (Bloomberg)
New-home construction unexpectedly climbed to a four-year high in October, more evidence of a revival in the industry that’s helping propel the U.S. economy. Housing starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed today in Washington. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years. “The housing industry is in a recovery,” said Larry Sorsby, chief financial officer of Red Bank, New Jersey-based Hovnanian Enterprises Inc. (HOV) “Those builders that survived the unprecedented downturn of the last six years are in a good position not only to survive but to thrive.”
Record-low mortgage rates and a lower risk that property values will keep falling may continue to attract buyers, giving the economy a lift and benefiting companies such as Hovnanian, New Jersey’s largest builder. The Federal Reserve is buying $40 billion a month in housing debt to keep down borrowing costs, and Chairman Ben S. Bernanke said today the industry will be a “source of economic growth.” Today’s figures indicate that “we’ll have bigger support from housing” for the economy, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York, who projected 870,000 starts at an annual rate. “Excess supply has been wound down and there’s a steady increase in demand. That’s good for construction.”
Feldstein Says U.S. Fixing Cliff May Not Avoid Recession (Bloomberg)
Harvard University economics professor Martin Feldstein said the U.S. economy may fall into a recession next year even if Congress and President Barack Obama avert the full brunt of the so-called fiscal cliff. “You are perilously close to the edge of another recession even if we don’t go over the fiscal cliff,” Feldstein said in a Bloomberg Television interview from New York. The end of payroll tax cuts will reduce gross domestic product by about 1 percentage point in 2013, and other tax increases and spending cuts may bring “over 2 percent of GDP tightening,” he said. Feldstein was less optimistic than Federal Reserve Chairman Ben S. Bernanke, who said a fiscal agreement “could help make the new year a very good one.” Feldstein was one of two economists to question the central bank’s leader after his prepared remarks today to the Economic Club of New York.
The fiscal cliff refers to the $607 billion of tax increases and spending cuts that will kick in automatically next year unless Congress acts. The Congressional Budget Office said in an Aug. 22 economic report that fiscal tightening of that magnitude could cause a recession. With the economy growing at less than a 2 percent rate, that may be too small of a cushion to withstand fiscal tightening resulting from a budget agreement, Feldstein said. In response to Feldstein’s questioning about the impact of a budget agreement, Bernanke said “there’s a range of possibilities” for outcomes of the fiscal negotiations, though “some plausible scenarios” would result in “relatively contractionary fiscal policy overall.” The Fed chief said “what I’m particularly concerned about is that we avoid the full force of the cliff.”
Japan’s Fifth-Straight Export Decline Add to Recession Risk (Bloomberg)
Japan’s exports fell for a fifth month, hampered by trade tensions with China and weak demand in Europe, pushing the world’s third-largest economy closer to recession ahead of December elections. Shipments fell 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen ($6.7 billion), the Finance Ministry said in Tokyo today. That compared with the median forecast of 25 economists for a 4.9 percent decline in exports. Imports were down 1.6 percent. Japan will probably slide into recession this quarter on weakness in domestic consumption and falling exports, which account for about 15 percent of the economy. While the yen touched a seven-month low this week on speculation that opposition leader Shinzo Abe will be elected and force more central bank easing, the currency is still more than 30 percent higher than five years ago, hurting exporters’ profits.
“There’s no doubt that Japan’s economy is already in a recession,” said Kiichi Murashima, chief economist at Citigroup Inc. in Tokyo. “Exports will probably continue to take a toll on the economy this quarter.” The yen dropped to 81.84 per dollar as of 9:53 a.m. in Tokyo from 81.67 right before the data was released. The Nikkei 225 Stock Average was 0.9 percent higher, on course for its fifth advance in six trading days.
BOJ in the Balance as Next Government Picks Top Posts: Economy (Bloomberg)
The government taking office after Japan’s Dec. 16 election will pick the central bank’s top three jobs, a chance to reshape policy in the third-largest economy that the opposition aims to seize for unlimited stimulus. BOJ Governor Masaaki Shirakawa, criticized by politicians for his perceived failure to reverse more than a decade of deflation, ends a five-year term on April 8. His deputies Hirohide Yamaguchi and Kiyohiko Nishimura exit in March. Shirakawa pushed back at a press briefing in Tokyo today, saying that he wants “respect for the BOJ’s independence” and that a 3 percent inflation target, advocated by opposition leader Shinzo Abe is “unrealistic.” Unrestrained money- printing would worsen the national debt, he said.
Abe, leading in polls before next month’s vote, helped drive the yen to a seven-month low yesterday by calling for unlimited easing and restrictions on central bank independence. An economy at risk of a second straight contraction this quarter may spur an Abe-led government to install a pro-easing majority at the BOJ, with two former private-sector economists on the nine-member board showing signs of favoring more stimulus. “It looks like we’ll have a clear five majority votes for more BOJ action and that’s a change we haven’t seen in years,” said Kazuhiko Ogata, chief economist at Credit Agricole SA. (ACA) “BOJ policy will become more Bernanke-like in that it will be more aggressive and less focused on side-effects.”
Japan Government to Spend 1 Trillion Yen on Next Stimulus (Bloomberg)
The Japanese government will spend 1 trillion yen ($12.3 billion) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession. The government will tap reserve funds from this fiscal year’s budget, Chief Cabinet Secretary Osamu Fujimura told reporters in Tokyo today. The latest measures follow the announcement of 750 billion yen of stimulus last month. Economy Minister Seiji Maehara said last week that using reserve funds won’t be enough to support the economy and the government should compile a supplementary budget. The Bank of Japan (8301) refrained today from adding to monetary stimulus, with most analysts in a Bloomberg News survey forecasting more easing in December. The dissolution of the Diet prior to the election on Dec. 16 may restrict the government’s ability to stimulate an economy that risks its third technical recession since 2008.
The economy will contract an annualized 0.4 percent in the September-to-December period according the median forecast in a survey of economists by Bloomberg News after shrinking 3.5 percent in the third quarter. A textbook recession means two straight quarters of contraction. Japanese recessions are officially defined by a government- charged panel that considers data beyond GDP figures.
Weale Says More BOE Stimulus Would Add to Inflation Pressures (Bloomberg)
Bank of England policy maker Martin Weale said the rate of U.K. inflation remains a concern and more stimulus may add to pressure at a time when consumer-price growth exceeds the central bank’s goal. “I think it is more likely than not that inflation will remain above target for much of the next two years,” Weale said in prepared remarks for a speech to be delivered later today in Manchester, England. “My analysis suggests that additional stimulus would, without any corresponding improvement in productivity, add to inflation.” Weale’s comments contrast with those of his colleague David Miles, who said three days ago that there is more the central bank can do if recessionary conditions persist, and indicate continued divisions among the Monetary Policy Committee on stimulus. The BOE will publish the minutes of its Nov. 7-8 meeting at 9:30 a.m., showing how officials voted when they halted expansion of their bond-purchase program.
Separately today, the BOE’s Financial Policy Committee, which is led by Governor Mervyn King, holds its quarterly meeting. After its last meeting in September, the panel maintained its recommendations for banks to raise capital to stave off threats to the financial system. The central bank will publish its next FPC statement, along with the twice-yearly Financial Stability Report, on Nov. 29.
French Downgrade No Bar to Hollande as Investors Weigh Cut (Bloomberg)
French President Francois Hollande’s government will probably be able to keep borrowing at record-low interest rates even after Moody’s Investors Service’s decision to downgrade the nation’s debt. The drop in French bonds today put only a small dent in the 9.4 percent rally since Standard & Poor’s stripped the country of its AAA status in January. The gains are more than double the rest of the global government bond market, according to Bank of America Merrill Lynch indexes, surpassing those of the U.S. and top-rated Germany, the U.K. and Australia.
The gains underscore how downgrades by credit-ratings companies, far from being a signal that prices will fall, may offer investors buying opportunities. The U.S. has been deemed more creditworthy by investors since S&P removed the nation’s AAA grade in 2011, with 10-year note yields dropping to a record this year. For France, Europe’s second-biggest economy, further declines in borrowing costs would provide a spur to Hollande’s socialist government as it struggles with a record trade deficit and an unemployment rate at the highest in 13 years. “When ratings moves are announced there is often something of a headline shock but I don’t think the Moody’s downgrade is telling investors something they don’t already know,” said Mark Dowding, a senior fixed-income manager at BlueBay Asset Management in London, which oversees $47 billion. “I don’t think French bonds are going to be sold off considerably in the short term.”
EU Leaders Face Greek Aid Gap in Brinkmanship With IMF (Bloomberg)
European governments will try to plug an immediate hole in Greece’s finances and prevent new ones from opening in the latest installment of the debt-crisis brinkmanship rattling the euro economy. Finance ministers will battle among themselves and with the International Monetary Fund to find 15 billion euros ($19 billion) through 2014 for Greece and seek an elusive formula for putting its debt on a sustainable path. Today’s crisis meeting in Brussels, the second in eight days, was shadowed by concerns that a two-year fix will leave Greece needing more money and possibly more debt relief to emerge from the spiral of deficits and recession.
“It’s essential now that we take a decision on a set of credible measures to introduce debt sustainability,” European Economic and Monetary Commissioner Olli Rehn told reporters as he entered the meeting. “At the same time, we have to be ready to take further decisions in the light of future developments and of course conditional and dependent of full implementation of reforms of the program by Greece over the coming years.” Officials said the negotiations, which started at 5 p.m. and may run into the night, won’t make a final decision to release the next 44 billion-euro tranche of aid to Greece, partly because parliaments in Germany, the Netherlands and Finland have yet to weigh in.
French Downgrade Widens Gulf With Germany as Talks Loom: Economy (Bloomberg)
France’s loss of the top credit rating at Moody’s Investors Service may weaken President Francois Hollande’s leverage in European budget talks and deepen concern in Germany over its neighbor’s lagging competitiveness. The downgrade late yesterday of Europe’s second-biggest economy underscores the concern expressed by allies of German Chancellor Angela Merkel that the Socialist Hollande’s failure to recognize the urgency of France’s woes risks a deepening of Europe’s slump. “This downgrade will certainly increase pressure on France big-time,” Jan Techau, director of the Carnegie Endowment for International Peace office in Brussels, said today in a phone interview. “It gives Germany more of an edge over France.”
With French bonds rallying since Standard & Poor’s stripped the country of its AAA credit rating in January, the impact of the Moody’s downgrade may be more political than financial. Just last week, German Finance Minister Wolfgang Schaeuble spoke out against his countrymen calling France the “sick man” of Europe. The day before, France’s Liberation newspaper ran a front-page article highlighting German anxiety about Hollande’s policies. “Our most important partner has received a little bit of an admonishing assessment from a rating agency -- but France’s rating is still very stable,” Schaeuble said in speech to parliament in Berlin today. French debt fell today, with 10-year yields rising 5 basis points to 2.12 percent, though that’s still close to the record low of 2.002 percent reached Aug. 3, showing investors don’t share German concerns.
Euro Finance Chiefs Seek Near-Term Greek Fix, Fight on Debt Path (Bloomberg)
European governments are trying to plug an immediate hole in Greece’s finances and prevent new ones from opening in the latest installment of the debt-crisis brinkmanship rattling the euro economy. Finance ministers are battling among themselves and with the International Monetary Fund to find 15 billion euros ($19.2 billion) through 2014 for Greece and seek an elusive formula for putting its debt on a sustainable path. A crisis meeting in Brussels that began at 5 p.m. yesterday is shadowed by concerns that a two-year fix will leave Greece needing more money and possibly more debt relief to emerge from the spiral of deficits and recession.
“It’s essential now that we take a decision on a set of credible measures to introduce debt sustainability,” European Economic and Monetary Commissioner Olli Rehn told reporters as he entered the meeting. “At the same time, we have to be ready to take further decisions in the light of future developments and of course conditional and dependent of full implementation of reforms of the program by Greece over the coming years.” Officials said the negotiations won’t make a final decision to release the next 44 billion-euro tranche of aid to Greece, partly because parliaments in Germany, the Netherlands and Finland have yet to weigh in.
DTN Closing Grain Comments 11/20 14:22 (CME)
Soybeans Charge Higher Tuesday
Renewed commercial buying in the soy complex, soybeans and especially meal, supported the other grains for much of the session, holding at bay possible pressure from outside markets.
Wheat Market Recap Report (CME)
December Wheat finished up 3 1/4 at 845, 4 3/4 off the high and 7 1/2 up from the low. March Wheat closed up 2 3/4 at 860 1/2. This was 7 1/2 up from the low and 5 off the high. December Chicago wheat traded slightly higher on the day and gained on KC and Minneapolis wheat contracts. The worse than expected winter wheat crop condition ratings released yesterday added a bullish bias to the market this morning and the strong corn and soybean market fueled additional buying support. KC lost to Chicago wheat on the day as traders took profits in long KC vs. short Chicago wheat spreads. The weekly Winter Wheat Conditions report showed 34% of the crop was rated good/excellent compared to 36% last week and 50% last year. This was below market expectations and the 3rd straight week of declines. US wheat exports remain very sluggish but Japan is seeking 134,000 tonnes of feed wheat for January through February shipment. Japan also reported that corn usage in animal feed fell for the 9th straight month as buyers continue to use more wheat in rations. Wheat usage was pegged at 4.4% in September vs. 4.3% in August and against year ago levels of 1.5%. Some traders believe exports could pick up in 2013 if Argentina and Australia have less wheat to sell. This could be supportive to the wheat market in the 1st quarter. Very little moisture is expected in the western plains to finish out this month which could leave a third to a half of the Hard Red Winter wheat crop entering dormancy with poor establishment. This added to the bullish sentiment throughout the day. December Oats closed up 1 at 376 1/2. This was 4 1/4 up from the low and 1/4 off the high.
Corn Market Recap for 11/20/2012 (CME)
December Corn finished up 4 1/2 at 743 1/4, 4 off the high and 9 up from the low. March Corn closed up 4 3/4 at 747 1/4. This was 9 1/4 up from the low and 3 3/4 off the high. December corn traded sharply higher on the day and support was linked to a stronger wheat market and prospects for better export demand going forward. Many traders believe a revival in export growth is just around the corner which could spur on considerable price appreciation long term due to tight domestic supplies. Too offset, importers like Japan have increased their use of feed wheat this year and corn used in feed fell for the 9th month in a row in September. The ratio of corn in animal feed production fell to 42.5% in September vs. 42.7% in August and this is against 44.5% for the same month last year. Basis for corn in the Gulf of Mexico was steady on the day but basis has firmed over the last week as traders attempt to drum up cash grain movement in the country. Fears that a portion of the Mississippi River may shut down in early December has also added to the stronger cash market tone. Additional support was found as some private analysts are beginning to slash Argentina's corn production estimate near 22.50 to 23 million tonnes vs. the current USDA estimate of 28 million tonnes. Excessive rainfall has delayed corn planting in Argentina this year and the forecast calls for additional rainfall tonight and Wednesday. January Rice finished up 0.08 at 14.925, equal to the high and equal to the low.
Drought No Obstacle to Record Income for U.S. Farms: Comm (Bloomberg)
Even after the worst drought in a half century shriveled crops from Ohio to Nebraska, U.S. farmers are having their most-profitable year ever because of record- high prices and insurance claims. Farmer income probably will jump 6.9 percent to $144 billion, exceeding the government’s August estimate of $139.3 billion, said Neil Harl, an economist at Iowa State University. Parched fields that drove corn, soybean and wheat futures as much as 68 percent higher since mid-June mean insurance payouts may more than double to $28 billion, according to Doane Advisory Services Co., a farm and food-company researcher in St. Louis. “Crop insurance was a savior this year,” said Kyle Wendland, 29, whose corn yields plunged 36 percent and soybean output dropped 11 percent on the 1,030 acres he farms near Fredericksburg, Iowa. “It was the difference between making a profit or sustaining a loss.”
Farming accounted for 0.9 percent of the U.S. economy last year, Bureau of Economic Analysis data show. Midwest farmland values rose by 13 percent to a record in the third quarter, and spurred sales of Monsanto Co. seeds, Deere & Co. (DE) tractors and CF Industries Holdings Inc. fertilizer. Costlier grain eroded profit for pork producer Smithfield Foods Inc. and restaurant owners including Texas Roadhouse Inc. The government is predicting food inflation will accelerate next year, led by meat, dairy and baked goods.
Recap Energy Market Report (CME)
January crude oil prices trended lower throughout the session and more than erased yesterday's gains. The crude oil market came under a measure of pressure during the initial morning hours following a downgrade of France's credit rating and ideas that Monday's rally might have been over exaggerated. January crude oil showed little reaction to this morning's better than expected US housing data and modest gain in equity markets. The market broke down sharply in response to headlines that a ceasefire between Israel and Hamas was reached. Expectations for this week's EIA inventory data are for another build in crude oil supplies in the range of 750,000 to 1.0 million barrels.
Oil Rebounds After Biggest Drop in Two Weeks as Stockpiles Fall (Bloomberg)
Oil advanced in New York after the biggest drop in almost two weeks as a report showed stockpiles declined in the U.S., the world’s biggest crude user. Futures climbed as much as 0.8 percent after the American Petroleum Institute said crude inventories slid 1.9 million barrels last week. An Energy Department report today may show supplies rose 1 million barrels, according to a Bloomberg News survey of analysts. The Israeli army renewed its bombardment of Gaza yesterday as talks to end fighting continued. Crude for January delivery gained as much as 65 cents to $87.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.29 at 11:06 a.m. Sydney time. The contract slipped 2.8 percent yesterday to $86.75, the most since Nov. 7. Prices are down 12 percent this year.
Brent for January settlement declined $1.87, or 1.7 percent, to $109.83 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $23.08 to West Texas Intermediate. Israeli Prime Minister Benjamin Netanyahu told U.S. Secretary of State Hillary Clinton that he would “prefer” a diplomatic solution that stops Hamas’ rocket attacks against Israel. “But if not, I’m sure you’ll understand Israel will have to take whatever action is necessary to defend its people,” he said as the two spoke to reporters.
Gold Drops From One-Week High on Signs Israeli Fighting May End (Bloomberg)
Gold declined from a one-week high as a Hamas official said a draft accord with Israel that would end fighting in the Gaza Strip is almost ready, crimping demand for the metal as an investment haven. An announcement was likely at 9 p.m. Cairo time, and the cease-fire will take effect at midnight, Osama Hamdan, a Hamas official, said by telephone from Beirut. His comments came as U.S. Secretary of State Hillary Clinton flew to the region to join truce talks that also include United Nations Secretary- General Ban Ki-moon. “Signs of a cease-fire seems to have taken some blush off gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. Gold futures for December delivery fell 0.6 percent to settle at $1,723.60 an ounce at 1:39 p.m. on the Comex in New York, after reaching $1,736, the highest since Nov. 12. The price has gained 10 percent this year.
Silver futures for December delivery dropped 0.8 percent to $32.93 an ounce in New York, after touching $33.26, the highest since Oct. 18. On the New York Mercantile Exchange, platinum futures for January delivery slid 0.7 percent to $1,573 an ounce. Palladium futures for December delivery retreated 1.1 percent to $638.35 an ounce, the third drop in four sessions.
Silver Market Recap Report (CME)
The silver market actually managed a fresh new high for the move today and that would seem to leave the silver bulls with a slight technical edge. However, silver was unable to translate hope for a fiscal deal and improved US housing starts into a positive Tuesday trade. With weakness throughout the metals complex and a failed rally in US equities, the risk on vibe today just didn't have the same pedigree as the track of thinking on Monday. In fact, silver and other metals markets might need to see fresh assurances of a fiscal cliff deal before consistently higher pricing on the charts is sustained. Silver was clearly undermined by comments from the Fed Chairman who suggested that the Fed doesn't have the tools to offset the US fiscal cliff on its own.
Gold Market Recap Report (CME)
The gold market mostly waffled around both sides of unchanged today but the bull camp wasn't able to exert much in the way of dominance. However, seeing December gold prices hang up within striking distance of the recent highs might have been seen as a positive technical development by some traders, especially after the partially overbought condition on Monday's close. Gold didn't seem to get much of a lift off news of a Middle East cease fire and that might be the result of some confusion on the safe haven focus of gold and other financial markets. However, with decent US economic data, generally higher equities and rising grain prices, the bull camp in gold might have expected more upside action than was seen at times today. Gold was clearly undermined by comments from the Fed Chairman who suggested that the Fed doesn't have the tools to offset the US fiscal cliff on its own.
SGS CPO export down 3.8% to 1,010,417 tonnes for the period of 1~20 Nov 2012.
Soybean Complex Market Recap (CME)
January Soybeans finished up 18 at 1412 3/4, 3 1/4 off the high and 32 up from the low. March Soybeans closed up 14 1/4 at 1396 1/4. This was 30 1/4 up from the low and 2 3/4 off the high. December Soymeal closed up 5 at 429.6. This was 9.5 up from the low and 1.6 off the high. December Soybean Oil finished up 0.43 at 48.32, 0.11 off the high and 0.69 up from the low. January soybeans saw double digit gains today on thoughts that the complex was slightly oversold which triggered a round of short covering shortly after pit trading began. Firm cash markets and strong export demand helped to support the sharp move higher. Argentina and Brazil soybean production was cut by a well-known market analyst overnight which added momentum to the positive trade throughout the day. Farmer sales of soybeans in Brazil were reported at 49% last week which was unchanged from the week prior vs. the 5 year average of 25%. Higher prices early on prompted a wave of new sales by Brazilian farmers but the recent decline in prices has slowed additional sales. Weather conditions in South America have been mostly favorable so far this crop year. Drier than normal conditions in central and northern Brazil early in year were a concern but rainfall over the last couple weeks have helped soil conditions. Concern is beginning to form around southern Brazil which has been trending drier than normal this month. Argentina has heavy rainfall in the forecast for the middle of this week followed by another period of dry weather thereafter. The wetter forecast for Argentina has delayed corn planting in areas which could mean some acreage is actually shifted over to soybeans which could be considered a long term negative to the price trend. The USDA "corrected" yesterday's 20,000 soybean oil sale to an unknown destination from US origin, to optional origin.
Argentine soy planting helped by recent sunshine (Reuters)
Argentina's main farm areas benefited from good weather last week and over the weekend, helping growers advance soy planting that has been delayed by months of heavy rain and flooding, a meteorologist said on Monday.
EDIBLES: Malaysian palm oil futures edged lower as investors booked profits after the contract hit a more than two week high earlier in the day and as export demand continued to show signs of slowing. (Reuters)
Posted by MW Chong at 9:37 AM