Thursday, November 29, 2012
FCPO closed : 2386, changed : -8 points, volume : lower.
Bollinger band reading : correction range bound downside biased.
MACD Histogram : weakening, buyer seller battling.
Support : 2400, 2350, 2300, 2250, 2230 level.
Resistance : 2400, 2450, 2490, 2520, 2550 level.
FCPO closed recorded loss with thinner volume exchanged. Soy oil price currently trading little higher after overnight closed flat while crude oil price currently trading higher.
Price swing between gains and losses ahead of Indonesia conference key industry outlook, news on Indonesia projected higher production for 2013 by 7% and Malaysia will announce details of crue palm oil exports tax cut by end of December.
Nevertheless daily chart study remained calling a correction range bound downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
Posted by MW Chong at 6:11 PM
FKLI closed : 1611 changed : +2 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller taking profit.
Support : 1610, 1600, 1595, 1590 level.
Resistance : 1615, 1623, 1627, 1635 level.
FKLI closed little firmer with slower volume traded doing 4 points premium compare to cash market that closed marginally higher. Overnight U.S markets traded lower and today Asia markets ended positively and European markets also trading higher currently.
Global markets sentiment improved as U.S. lawmakers are optimistic that they are able to reach an agreement to avoid budget spending buts and tax hike.
FKLI daily chart reading continue to suggesting a pullback correction down side 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 5:35 PM
STOCKS: Asian shares touched their highest levels in more than three weeks and European stock index futures opened higher as sentiment improved after a senior U.S. lawmaker said he was "optimistic" on reaching a budget deal before the end of the year to avoid a fiscal crisis. U.S. stocks rose in volatile trade on Wednesday. (Reuters)
FOREX-Euro eases but supported by U.S. fiscal hopes
SINGAPORE, Nov 29 (Reuters) - The euro eased versus the dollar but its losses were limited after comments from U.S. policymakers rekindled hopes for a deal to avoid a sharp fiscal tightening that could hurt the global economy.
"For the moment, the U.S. fiscal cliff seems to be a dominant theme in the market," said Katsunori Kitakura, associate general manager of market-making at Sumitomo Mitsui Trust Bank.
Obama says hopes for deficit deal by Christmas (Reuters)
President Barack Obama said on Wednesday he hoped to reach an agreement with Congress before Christmas to avoid the looming "fiscal cliff" and shrink the budget deficit, and ramped up efforts to rally the public to press Republicans for action.
GRAINS: U.S. wheat futures eased, snapping a seven-day rally that was their longest stretch of gains since July, as a sharp rise in prices temporarily hit export demand. (Reuters)
U.S. cuts crop insurance rates for soybeans, rice despite drought (Reuters)
The U.S. government has ordered crop insurers to charge lower premiums to soybean growers for the second year in a row as part of rate revisions for six major crops, even as many farmers collect on claims following this year's severe drought.
U.S. bans BP from new govt contracts after oil spill deal (Reuters)
The U.S. government banned BP Plc on Wednesday from new federal contracts over its "lack of business integrity" in the 2010 Deepwater Horizon oil spill, possibly imperilling the company's role as a top U.S. offshore oil and gas producer and the No. 1 military fuel supplier.
OIL: Brent crude rose towards $110 a barrel, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened, although investors remained wary of the outlook for oil demand next year. (Reuters)
Rio Tinto to slash costs, steps up iron ore output (Reuters)
Rio Tinto aims to axe $7 billion in costs over the next two years as it faces weaker commodity prices, and despite cutting costs the global miner had managed to beef up production at its lucrative Australian iron ore operations.
BASE METALS: London copper inched up after a prominent U.S. lawmaker expressed confidence the world's top economy would avert a looming fiscal crisis, but worries China's return to growth will be sluggish weighed on sentiment. (Reuters)
PRECIOUS METALS: Gold ticked higher, after suffering its biggest daily decline in nearly four weeks in the previous session, as the looming deadline of the U.S. fiscal crisis kept investors on their toes. (Reuters)
METALS-LME copper edges up, US fiscal hopes support
SINGAPORE, Nov 29 (Reuters) - London copper inched up after a prominent U.S. lawmaker expressed confidence the world's top economy would avert a looming fiscal crisis, but worries China's return to growth will be sluggish weighed on sentiment.
"We expect some degree of resolution to the U.S. cliff but there will still be some drag on the U.S. economy. We are expecting growth of around 2 percent next year," said Thomas Lam, chief economist at DMG & Partners Securities.
PRECIOUS-Gold steady after sell-off, US fiscal talks eyed
SINGAPORE, Nov 29 (Reuters) - Gold steadied to trade in a narrow range, after suffering its biggest daily decline in nearly four weeks in the previous session, as investors nervously eyed a looming deadline for averting a U.S. fiscal crisis.
"Generally people are still pretty bullish on gold and last night was just a one-off correction, nothing extraordinary," said a Singapore-based trader, adding that $1,650-$1,700 would be a good buying level.
Posted by MW Chong at 4:34 PM
Malaysia to detail crude palm oil tax cut in Dec-official
NUSA DUA, Indonesia, Nov 29 (Reuters) - Malaysia, the world's second largest palm oil producer, will announce details of its proposed cut to crude palm oil export taxes by the end of December, a government official said on Thursday.
"We will make an announcement on the exact pricing in the last few days of December," said the official who declined to be named due to sensitivity of the issue.
The tax, due to take effect on Jan. 1, is aimed at making crude exports more competitive in the face of a tax cut for refined grades by top producer Indonesia last year.
The Malaysian government has proposed pegging the tax at between 4.5 and 8.5 percent depending on the market prices, a cut from the current 23 percent.
VEGOILS-Palm oil falls to 2-week low on stocks concerns - RTRS
Palm oil to test support at 2,353 ringgit -technicals Traders eye 2013 price forecasts at Bali conference on Thurs, Fri Indonesia palm oil output to climb 7 pct to 27 mln tonnes in 2013 India oilseed industry pushes for hike in import taxes -sources
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Nov 29 (Reuters) - Malaysian palm oil futures fell to a 2-week low on Thursday, extending losses for a third straight session as weak sentiment continued to dominate the market with investors worrying over record high stocks.
Traders are looking out for Malaysia's palm products export figures for November due Friday, with expectations of a slight decline compared to a month ago. The latest data for first 25 days of the month showed a drop of less than 2 percent. PALM/ITS PALM/SGS
A lower export demand may push Malaysian inventory levels slightly higher in November despite slowing production.
"The market is still under pressure. Exports should be down by more than 1.5 percent for the month," said a trader with a foreign commodities brokerage in Malaysia.
"People are asking whether production can neutralise exports, and I think it's unlikely that stocks will go up sharply," he added.
By the midday break, the benchmark February contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to 2,372 ringgit ($777) per tonne. Prices earlier touched a low of 2,367 ringgit, a level last seen on Nov. 14.
Technicals suggested palm oil is expected to test a support at 2,353 ringgit, a break below which will lead to a further drop to 2,288 ringgit. (Full Story)
Total traded volumes stood at 9,955 lots of 25 tonnes each, thinner than the usual 12,500 lots, as some traders remained on the sidelines ahead of top analysts presenting their price forecasts for 2013 at the Indonesian Palm Oil Association's two-day conference in Bali on Thursday and Friday. (Full Story)
Palm oil output in the world's biggest producer Indonesia is expected to climb 7 percent next year to 27 million tonnes, a top industry association official said on the sidelines of the conference, as three years of acreage expansion efforts bear fruit. (Full Story)
Two trading sources also told Reuters at the conference that India's oilseed industry has submitted a proposal to the government to raise import taxes on palm oil and other edible oils, arguing demand for local output is being hurt after a sharp fall in prices. (Full Story)
In related markets, Brent crude rose on Thursday, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened. (Full Story)
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 fell 0.3 percent in early trade. The most-active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange lost 0.7 percent by the midday break.
Posted by MW Chong at 2:12 PM
INTERVIEW-Indonesia 2013 palm output set to rise 7 pct -assoc - RTRS
By Michael Taylor
NUSA DUA, Indonesia, Nov 29 (Reuters) - Palm oil output in the world's biggest producer Indonesia is expected to climb 7 percent next year to 27 million tonnes, a top industry association official said on Thursday, as three years of acreage expansion efforts bear fruit.
Output of the edible oil is also forecast to end 2012 at 25.2 million tonnes, up from 23.5 million tonnes in 2011, Fadhil Hasan, executive director at the Indonesian Palm Oil Association (GAPKI), told Reuters.
"If 2013 is going to be like 2012 in terms of weather and climate, and there are no shocks in the supply, maybe output will be about 27 million tonnes," said Hasan, speaking on the sidelines at the 8th Annual Indonesian Palm Oil Conference on the island of Bali.
"A lot of expansion has happened in the last three years or so, so now the trees are mature."
Palm estates sprawl across 8.2 million hectares in Indonesia, and that number is expected to rise by about 200,000 hectares a year for the next decade.
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or as a biofuel. Indonesia and Malaysia account for about 90 percent of global production.
Demand for the edible oil has fallen this year due to the global economic slowdown, which has led to record-high inventories. Benchmark palm oil futures FCPOc3 have also lost a quarter of their value so far this year. POI/
Indonesian palm oil stocks are currently between 2.5 million and 2.8 million tonnes, said Hasan. "We used to have one month of production as stock but maybe more than that now," he added
Palm producers are seeking new ways to generate demand, but their efforts may be hampered by renewed attacks by Western governments on the oil's green credentials.
Environmental groups have been critical of the expansion in the palm sector, which they blame for deforestation, speeding up climate change, ruining watersheds and destroying wildlife.
"The perception, especially from European countries, towards palm oil is worse than two or three years because of the intensity and scale of campaigns by NGOs," Hasan said.
The U.S. Environmental Protection Agency recently visited Indonesia to review the environmental aspects of its palm oil industry, while France has proposed a hike in duties on foods using palm oil, which has been dubbed the "Nutella tax". (Full Story) (Full Story)
To improve its green credentials, Indonesia signed a two-year forest moratorium in May last year, although critics say breaches still occur.
Hasan urged the government not to extend the ban, which is due to end in 2013, saying it would damage the economy. The palm oil industry is one of the biggest in Indonesia.
"We don't know exactly what is going to happen, but in the interests of the Indonesian economy we hope that the moratorium is not going to be extended," Hasan said.
Posted by MW Chong at 12:38 PM
GLOBAL MARKETS-Asian shares up on hopes of U.S. budget deal
TOKYO, Nov 29 (Reuters) - Asian shares edged higher, mirroring U.S. and European stock rises overnight, as sentiment improved after a senior U.S. lawmaker said he was "optimistic" on reaching a budget deal before the end of the year to avoid a fiscal crisis.
"Global stocks have recently tended to focus on one issue, which is the U.S. fiscal cliff," said Cho Byung-hyun, an analyst at Tong Yang Securities.
FOREX-Yen off 1-week high, euro firm on renewed U.S. fiscal hopes
TOKYO, Nov 29 (Reuters) - The yen slipped from a one-week high hit overnight and the euro regained some footing after comments from U.S. policy makers rekindled hopes of a deal to avert a sharp fiscal tightening.
"For the moment, the U.S. fiscal cliff seems to be a dominant theme for the market," said Katsunori Kitakura, associate general manager of market-making at Sumitomo Mitsui Trust Bank.
Obama says hopes for deficit deal by Christmas
WASHINGTON, Nov 28 (Reuters) - President Barack Obama said on Wednesday he hoped to reach an agreement with Congress before Christmas to avoid the looming "fiscal cliff" and shrink the budget deficit, and ramped up efforts to rally the public to press Republicans for action.
Obama encouraged Americans to use Twitter - with the hashtag #My2K - and other social media to swamp their lawmakers with requests to act quickly to keep their tax rates low.
OIL - Brent rises towards $110, on improved U.S. budget talks, MEast
SINGAPORE, Nov 29 (Reuters) - Brent crude rose towards $110 a barrel, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened, although investors remained wary of the outlook for oil demand next year.
"Right now it's all on the U.S., if they can get a deal on the fiscal cliff, they will be on their way to a sustained economic recovery," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
US crude stocks fall slightly, gasoline stocks rise-EIA
NEW YORK, Nov 28 (Reuters) - U.S. crude oil inventories dropped slightly last week and gasoline stocks rose sharply as refineries increased processing rates, data from the U.S. Energy Information Administration showed on Wednesday.
U.S. crude oil inventories fell 347,000 barrels in the week to Nov. 23, to 374.12 million barrels, after analysts polled by Reuters had forecast a build of about 300,000 barrels.
US bans BP from new govt contracts after oil spill deal
WASHINGTON, Nov 28 (Reuters) - The U.S. government banned BP Plc on Wednesday from new federal contracts over its "lack of business integrity" in the 2010 Deepwater Horizon oil spill, possibly imperiling the company's role as a top U.S. offshore oil and gas producer and the No. 1 military fuel supplier.
The suspension, announced by the Environmental Protection Agency, comes on the heels of BP's Nov. 15 agreement with the U.S. government to plead guilty to criminal misconduct in the Gulf of Mexico disaster, the worst offshore oil spill in U.S. history. The British energy giant agreed to pay $4.5 billion in penalties, including a record $1.256 billion criminal fine.
U.S. shale oil won't flood global market-EOG CEO
Nov 28 (Reuters) - Crude oil extracted from the United States shale formations is not likely to flood the global market because only the Eagle Ford and Bakken formations are driving significant growth, EOG Resources Inc's chief executive Mark Papa said on Wednesday.
From 2011 to 2015, EOG expects U.S. oil production will grow only 2 million barrels per day to 7.7 million barrels, driven mostly by higher output from the Eagle Ford in South Texas and the Bakken in North Dakota, Papa told the Jefferies Global Energy Conference in Houston.
Argentina says wellhead natural gas prices to rise
BUENOS AIRES, Nov 28 (Reuters) - Argentina will allow wellhead natural gas prices to rise substantially from current levels as the energy-hungry South American country seeks to attract foreign investment into new fields, President Cristina Fernandez said on Wednesday.
Fernandez, who is keen to lure private investment to bring hefty shale energy resources on stream, said wellhead prices would rise to $7.50 per million British Thermal Units.
Posted by MW Chong at 12:12 PM
Asia FX By Cornelius Luca - Wed 28 Nov 2012 16:44:41 CT (Source:CME/www.lucafxta.com)
The foreign currencies ended either flat or higher after recovering early losses; the yen extended its recovery from last week's 7-1/2-month low. The US stock markets closed up. Gold, oil and silver ended 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 all European currencies. Good luck!
US: New home sales edged down 0.3% to an annual rate of 368,000 in October from the revised September rate of 369,000 (originally 389,000).
Today's economic calendar
Japan: Retail trade for October
Australia: HIA New Home Sales for October
Australia: Private capital expenditure for the third quarter
World Economy in Best Shape Since 2011 Investors (Bloomberg)
The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the so-called fiscal cliff, according to the latest Bloomberg Global Poll of investors. Two-thirds of the 862 surveyed described the global economy as either stable or improving. That’s up from just over half who said that in September and is the most since May 2011. The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year. China ranked second, reversing a decline to fourth in the September poll of investors, analysts and traders who are Bloomberg subscribers. The European Union, beset by a debt crisis, was seen offering the worst returns.
“The global economy is improving, recovering and healing, thanks to the U.S. and the emerging markets,” said Andrea Guzzi, a poll respondent and vice president of IST Investmentstiftung fuer Personalvorsorge, which manages money for Swiss pension funds. “More people are becoming wealthy, less and less are poor.” Stocks were seen as the asset of choice, with more than one in three of those surveyed on Nov. 27 forecasting equities would have the best returns in the coming year. Real estate came in second: Just less than one in five investors singled it out favorably, the best showing since the quarterly poll began in July 2009. Bonds were seen as offering the worst returns. The Federal Reserve is expected to provide continued support to the bond market after its Operation Twist program ends next month, according to the poll. About three in four said the U.S. central bank will begin outright purchases of Treasury securities after its plan for swapping short-dated securities for longer-dated ones expires.
Asian Stocks Rise on U.S. Budget Remarks, Japan Stimulus (Bloomberg)
Asian stocks rose as U.S. lawmakers said they’re optimistic for an agreement to avoid automatic spending cuts and tax increases and as Japan’s main opposition leader called for unlimited monetary policy easing. Toyota Motor Corp. Asia’s biggest carmaker, gained 1 percent. Sky Network Television Ltd., New Zealand’s largest pay TV operator, jumped the most in more than a year in Wellington after the company announced payment of a special dividend. Starpharma Holdings Ltd. (SPL) tumbled 34 percent in Sydney as the biotechnology company said it won’t file a drug application in the U.S. following a disappointing clinical trial for a new treatment. The MSCI Asia Pacific (MXAP) Index gained 0.5 percent to 123.62 as of 10 a.m. in Tokyo, before markets opened in China and Hong Kong. The gauge rose 13 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be ending.
“Market expectations are that the U.S. cutbacks will be watered down and spread over several years,” said Matthew Sherwood, Perpetual Investment’s head of markets research in Sydney. Perpetual manages about $25 billion. “If the cliff is successfully flattened out over several years, the U.S. recession feared by markets is unlikely to occur.” Japan’s Nikkei 225 Stock Average (NKY) gained 0.4 percent, with trading volume 10 percent below its 30-day average for the time of day, according to data compiled by Bloomberg. The broader Topix Index rose 0.8 percent. The Topix may surge 19 percent in 2013 on compelling valuations and earnings, Goldman Sachs Group Inc. strategist Kathy Matsui wrote in a report today.
Japan Stocks Rose After Goldman Says Election May Help Shares (Bloomberg)
Japan stocks rose, with the Nikkei 225 (NKY) Stock Average poised to rebound from yesterday’s loss, after Goldman Sachs Group Inc. said shares will benefit from policy changes if the opposition wins next month’s election. Shikoku Electric Power Co. paced gains among utilities on expectations it will seek a 10 percent rate increase. Toyota Motor Corp. (7203), which gets a quarter of its sales in North America, rose 0.9 percent on optimism a budget agreement can be reached in the U.S. to avoid the so-called fiscal cliff. Nakayama Steel Works Ltd. fell 7.5 percent on a Nikkei newspaper report it’s seeking creditor-led restructuring. The Nikkei 225 gained 0.6 percent to 9,366.44 as of 10:09 a.m. in Tokyo after yesterday falling 1.2 percent, the biggest decline in three weeks. The broader Topix Index climbed 0.8 percent to 777.47, with more than three stocks advancing for each that fell.
“Investors are hoping the election will diminish frustration with politics following confusion in the wake of the earthquake,” said Koji Toda, chief fund manager at Tokyo-based Resona Bank Ltd., which oversees about 15 trillion yen ($183 billion). “People are buying Japanese shares because prices are too low, even with the economy in a rut.” The Topix advanced 6.8 percent through yesterday from Nov. 14, when Prime Minister Yoshihiko Noda called for a Dec. 16 election, causing the yen to drop on speculation the opposition Liberal Democratic Party may win and call for more monetary easing by the Bank of Japan.
U.S. Stocks Rise as Boehner, Obama Fuel Optimism on Talks (Bloomberg)
U.S. stocks rose, erasing an earlier loss for the Standard & Poor’s 500 Index, after comments by Speaker of the House John Boehner and President Barack Obama fueled optimism an agreement can be reached in budget talks. Costco Wholesale Corp. (COST) advanced 6.3 percent after saying it plans to pay a special dividend. J.C. Penney Co. rallied 4.6 percent as consumer staples and discretionary stocks posted gains among 10 groups in the S&P 500. Knight Capital Group Inc. (KCG) jumped 15 percent after receiving takeover offers from Getco LLC and Virtu Financial LLC. Cliffs Natural Resources Inc. (CLF) dropped 1.3 percent as commodities declined. The S&P 500 climbed 0.8 percent to 1,409.93 in New York, after erasing a decline of as much as 1 percent. The Dow Jones Industrial Average added 106.98 points, or 0.8 percent, to 12,985.11 today. About 6.1 billion shares traded hands on U.S. exchanges today, in line with the three-month average, according to data compiled by Bloomberg.
Obama “was confident of something being done by the end of the year,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in an e-mail. His firm oversees about $80 billion. “This is something that the market is worried about not getting done by year-end, so if they can get it done, it would provide some relief. The market doesn’t like uncertainty.” Equities reversed declines as Boehner, an Ohio Republican, said he is optimistic lawmakers engaged in budget talks can “avert this crisis sooner rather than later.” He made his remarks to reporters, while saying he continues to oppose the expiration of tax cuts for top earners and Democrats need to get “serious” on budget cuts. Obama said separately at the White House, “My hope is to get this done before Christmas.”
Recap Stock Index Market Report (CME)
The December S&P 500 grinded lower during the early morning hours, weighed down by concerns that lawmakers would be unable to reach a deal on budget negotiations. Weakness in the market was compounded by US New Home Sales data for October that came in below expectations. The morning weakness pushed the December S&P 500 to a new four day low and below 1385.00. Sentiment in the market took a positive turn in the wake of optimistic comments from US House Speaker John Boehner in averting the fiscal cliff. The positive remarks buoyed equity markets, inspiring a drive back toward unchanged levels at mid day. That tone gained more momentum following comments from President Obama that a resolution to the fiscal cliff could be reached by Christmas. There was also a measure of support coming into retail-related shares, driven by gains in Costco and favorable earnings from American Eagle Outfitters.
German Stocks Advance as Boehner ‘Optimistic’ on Budget (Bloomberg)
German stocks advanced for a second day, extending a three-week high, as U.S. Speaker of the House John Boehner said he is “optimistic” budget talks with President Barack Obama will continue. Bayer AG (BAYN), the maker of drugs and chemicals, gained 1 percent. Continental AG added 1.4 percent. ThyssenKrupp AG (TKA) slid 2.5 percent after a report that it may get as little as 1 billion euros ($1.29 billion) from the sale of its Steel Americas unit. The DAX Index (DAX) added 0.2 percent to 7,343.41 at the close of trading in Frankfurt, erasing an earlier decline. The equity benchmark has rallied 23 percent from this year’s low on June 5 as the European Central Bank approved an unlimited bond-buying program and euro-region finance ministers eased the terms of aid for Greece. The broader HDAX Index gained 0.1 percent today.
“Now that the Greek headlines are moving to the back burner, the U.S. fiscal-cliff debate is taking center stage,” Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Markets will remain hostage to a decision, with volatility rising for the next few weeks.” The DAX earlier fell as much as 0.9 percent as Erskine Bowles, the co-chairman of Obama’s 2010 fiscal commission, said it’s unlikely the president and Congress will reach a deal by the end of this year.
Emerging Stocks Tumble on Outlook as Crude Sinks Russia (Bloomberg)
Emerging-market equities declined the most in two weeks, led by industrial and consumer stocks. Falling oil spurred declines in Russia’s benchmark index. Orascom Construction Industries (OCIC) plunged in Cairo after reporting a 31 percent drop in third-quarter net income, while Hankook Tire Worldwide Co. (000240) slid to a four-week low in Seoul. Citic Securities Co. (6030), China’s biggest-listed brokerage, sank for the first time in six days as equity trading shrank in China and the Shanghai Composite Index declined to its lowest level since January 2009. Russia’s Micex Index (VTBMICX) dropped the most in two weeks as crude tumbled in New York.
The MSCI Emerging Markets Index (MXEF) fell 0.5 percent to 991.27 in New York, its biggest one-day decline since Nov. 15. The global economic recovery will be “hesitant and uneven” over the next two years as a recession in Europe crimps demand, the Organization for Economic Cooperation and Development said in a report issued yesterday. The gauge pared losses as U.S. President Barack Obama floated a resolution to the country’s budget impasse by Christmas. “The OECD report focused on the deteriorating growth backdrop, and that certainly is going to weigh on emerging markets,” Nick Chamie, global head of emerging-markets and currency strategy at Royal Bank of Canada, said in a phone interview from Toronto. “This lingering concern over the fiscal cliff as well as the overhang of the downgraded growth prospects focused in on a number of risks that lie ahead.”
Dollar Trades Near November Low Before Geithner Discusses Cliff (Bloomberg)
The dollar was 0.5 percent from a four-week low against the euro before Treasury Secretary Timothy F. Geithner meets congressional leaders to discuss the so-called fiscal cliff. The Dollar Index (DXY) fell yesterday for the first time this week after comments from U.S. lawmakers fueled optimism the $607 billion combination of tax increases and spending cuts due to take effect in January will be avoided. The yen weakened against the majority of its counterparts as Asian stocks gained before U.S. data forecast to show that gross domestic product expanded faster than previously estimated. “The fiscal cliff can be a selling catalyst for the dollar regardless of whether risk is on or off,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The U.S. GDP figure will be positive for risk sentiment, spurring yen selling.”
The dollar traded at $1.2946 per euro as of 10:02 a.m. in Tokyo from $1.2953 in New York yesterday. It touched $1.3009 on Nov. 27, the weakest since Oct. 31. The yen was little changed at 106.22 per euro and 82.06 per greenback. It was at 85.88 per Australia’s currency following a 0.2 percent drop to 85.99. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, was little changed at 80.304 after falling 0.1 percent to 80.336 yesterday. The MSCI Asia Pacific Index (MXAP) of shares rose 0.5 percent, sapping demand for lower-yielding, haven assets. Geithner will meet separately with each of the four top leaders in Congress today, accompanied by Rob Nabors, the administration’s director of legislative affairs. House Speaker John Boehner said yesterday he is “optimistic” lawmakers engaged in budget talks can avert the crisis.
The U.S. economy probably grew at an annualized 2.8 percent in the third quarter, according to the median estimate of economists surveyed by Bloomberg News. The initial reading from the Commerce Department last month showed a 2 percent increase.
Aussie Near 2-Month High on Stock Gains, U.S. Budget Optimism (Bloomberg)
Australia’s dollar traded 0.2 percent from a two-month high after global equities rebounded on speculation the U.S. will avoid the so-called fiscal cliff, boosting demand for higher-yielding assets. The New Zealand dollar remained higher after U.S. Republican House Speaker John Boehner said he is optimistic officials can “avert this crisis sooner rather than later.” Demand for the so-called Aussie was limited after a report showed Australia’s business investment grew at a slower pace in the third quarter, supporting expectations that the Reserve Bank of Australia will cut interest rates next week. “Everybody expects some resolution to the fiscal cliff,” said Hans Kunnen, the chief economist at St. George Bank Ltd. in Sydney. “The better the solution, the smoother it is, the easier it will be for the economies to grow, which is good for Australia’s dollar.”
The Australian currency was little changed at $1.0466 as of 11:39 a.m. in Sydney from yesterday, when it gained 0.3 percent. It touched $1.0490 on Nov. 27, the highest since Sept. 21. The Aussie fetched 85.97 yen after rising 0.2 percent yesterday to 85.99. New Zealand’s currency traded at 82.41 U.S. cents from 82.37 yesterday, when it advanced 0.4 percent. The so-called kiwi dollar added 0.1 percent to 67.69 yen. U.S. Treasury Secretary Timothy F. Geithner will meet today with congressional leaders amid negotiations to lower the nation’s budget deficit. If lawmakers fail to reach agreement, more than $600 billion in automatic spending cuts and tax increases are set to begin Jan. 1. The MSCI World Index (MXWO) of stocks rose 0.4 percent yesterday, rallying from a 0.4 percent decline over the previous two days.
Fiscal Cliff Avoided in Poll Seeing Market Gain on Limited Deal (Bloomberg)
Three out of four global investors expect President Barack Obama and congressional leaders to reach a short-term agreement to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1. Only 6 percent of investors anticipate a political impasse that would send the U.S. economy over the so-called fiscal cliff and into a recession, according to a Bloomberg Global Poll conducted on Nov. 27. “Both sides understand the importance of striking a deal, increasing taxes and cutting entitlements,” says Richard Salerno, director of fixed income for Kovitz Management Corp. in Chicago, in a follow-up interview. “The market just wants to know the rules going forward so they can move on and begin to lift us out of our fiscal mess.”
The survey of 862 Bloomberg customers who are investors, traders or analysts found that 40 percent expect financial markets to rise after a short-term tax-and-spending deal. An additional 28 percent forecast no significant market reaction while 26 percent say markets would fall, seeing a short-term deal as delaying an unavoidable day of reckoning with the country’s finances. On Nov. 20, Federal Reserve Board Chairman Ben S. Bernanke, who enjoys a 65 percent approval rating in the Bloomberg poll, warned that failure to reach an agreement before the end of the year “would pose a substantial threat to the recovery.”
Narrowing Trade Gaps Makes Bullish Case for Global Growth (Bloomberg)
In October 2010, the world’s top finance ministers and central bankers flew to the South Korean resort town of Gyeongju to discuss how to protect a fragile economic recovery. Treasury Secretary Timothy F. Geithner arrived from the U.S. with a goal in mind. He wanted an agreement to even out the imbalances in global trade -- reducing the surpluses of exporters such as China and Germany and cutting the deficits of the U.S. and other countries that are net buyers of the world’s goods. These so-called current-account imbalances grew before the financial crisis in 2008 and helped trigger the global recession. When trade gets far enough out of whack, something has to give, Bloomberg Markets magazine reports in its January issue. Those with the consumer demand that helps drive economic activity go deeper and deeper in debt, while exporters accumulate their IOUs and worry about getting paid. Look no further than China’s holdings of more than $1 trillion in U.S. Treasury securities to understand what can happen.
Geithner argued at the summit that addressing the imbalances would strengthen global growth and make it more likely to last. The U.S. pushed to commit each Group of 20 nation to keeping its surplus or deficit to less than 4 percent of gross domestic product. The agreement wasn’t to be, shot down by China, Japan and other countries with export might. Rainer Bruederle, then Germany’s economy minister, opposed the idea. “We should lean toward a market economy process and not a command economy,” he told his counterparts at the meeting. The Gyeongju talks ended with a tepid accord to pursue policies conducive to reducing excessive imbalances.
Sales of New U.S. Homes Fell 0.3% in October (Bloomberg)
Builders in the U.S. sold fewer new homes than forecast in October and purchases were revised down for the prior month, highlighting the hurdles facing a rebound in the industry at the heart of the financial crisis. Sales dropped 0.3 percent to a 368,000 annual pace following a 369,000 rate in September that was 20,000 lower than initially reported, figures from the Commerce Department showed today in Washington. The median estimate of 74 economists surveyed by Bloomberg projected a 390,000 pace. The report runs counter to recent data showing gains in residential construction, builder confidence and mortgage applications that indicate housing is on the verge of contributing more to economic growth. Easier access to credit and more employment are still needed to ensure the real-estate rebound is sustained -- one reason why Federal Reserve Chairman Ben S. Bernanke has pledged to maintain record stimulus.
“Better job growth is the key factor,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who projected a 365,000 rate of sales. “We really have a lot of ground to make up from the recession.” Stocks rose, erasing early losses, as lawmakers said they are optimistic a budget agreement can be reached to avoid automatic spending cuts and tax increases in 2013. The Standard & Poor’s 500 Index climbed 0.8 percent to 1,409.93 at the 4 p.m. close of trading in New York. The yield on the benchmark 10-year Treasury note decreased to 1.63 percent from 1.64 percent late yesterday.
Brazil Ends Streak of 10 Straight Rate Cuts on Inflation (Bloomberg)
Brazil left its benchmark interest rate unchanged today at a record low, ending its second-longest streak of borrowing-cost reductions in an effort to prevent inflation from accelerating. Policy makers led by central bank President Alexandre Tombini held the Selic rate at 7.25 percent, after reducing it by 525 basis points in the previous 10 meetings. The decision, which was unanimous, was forecast by all 75 economists surveyed by Bloomberg. “Considering the balance of risks for inflation, the recovery of domestic activity and the complexity surrounding the global environment, the committee understands that the stability of monetary conditions for a sufficiently prolonged period of time is the most adequate strategy to guarantee the convergence of inflation to target,” policy makers said in their statement, which was almost-identical to their October announcement.
Inflation, which accelerated to its fastest pace in nine months in mid-November, has remained above the central bank’s 4.5 percent target for more than two years even as Europe’s debt crisis and a slowdown in China ensnare Latin America’s biggest economy. Economists surveyed by the central bank expect the growth rate to more than double next year, to 3.94 percent, further stoking price increases. “A recovery in economic activity with inflation already at a fast pace creates more inflationary risk,” Roberto Padovani, chief economist at brokerage Votorantim CTVM, said before today’s decision.
Thailand Holds Policy Rate as Economic Data Signal Recovery (Bloomberg)
Thailand kept its policy interest rate unchanged today after an unexpected cut last month, and signaled it may be done with easing as data show the economy is improving after last year’s floods. The Bank of Thailand held its one-day bond repurchase rate at 2.75 percent, it said in Bangkok today. The outcome was predicted by 16 of 19 economists in a Bloomberg survey, while the rest called for a quarter-point reduction. The monetary policy committee’s decision was unanimous, the central bank said. Thai manufacturing and exports increased in October, adding to signs from the U.S. and China of a recovery in the global economy. While the central bank last month lowered its growth forecast for 2013, it said today risks to expansion have subsided, and that it doesn’t see much need for more rate cuts.
“Although the recovery seems to be slowing, the economy continued to expand,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. “There’s no pressing reason for them to cut, especially when the economy has started to expand again. I think they are probably already done with the easing cycle.” The Thai baht fell 0.1 percent to 30.71 per dollar as of 3:41 p.m. in Bangkok today. The benchmark Stock Exchange of Thailand index gained 0.3 percent.
U.S. Heads for Warmest Year Recorded in Lower 48 States (Bloomberg)
The U.S. is about to register the warmest year on record in the lower 48 states, and the world its ninth-hottest, a United Nations agency said in a report, adding new urgency to the quest to control global warming. Two-thirds of the U.S. states suffered drought this year, while heat waves hit across Europe and in Morocco, Jordan, China and Russia, the World Meteorological Organization said in a report released in Doha, where UN climate talks began this week. It noted Arctic sea ice shrank to its smallest on record. “The alarming rate of its melt this year highlighted the far reaching changes taking place on Earth’s oceans and biosphere,” WMO Secretary-General Michel Jarraud said in a statement. “Climate change is taking place before our eyes and will continue to do so as a result of the concentrations of greenhouse gases in the atmosphere, which have risen constantly and again reached new records.”
Envoys from 194 nations are working on setting the framework for negotiations on a treaty that would be agreed to in 2015 and come into force in 2020. It would limit fossil fuel emissions, which the WMO earlier this month said reached their highest ever. As delegates met for their third day of discussions scheduled to conclude on Dec. 7, environmental groups joined China, Brazil and 48 of the least developing countries in the world saying industrial nations must make good on their promises for $100 billion a year in aid for developing nations.
Obama Urged to Declare Emergency for Mississippi River (Bloomberg)
Shippers and lawmakers are pressuring President Barack Obama to declare a federal emergency along the Mississippi River, citing potential “catastrophic consequences” in the Midwest if barge traffic is curtailed by low water on the nation’s busiest waterway. Lawmakers, including Senator Tom Harkin of Iowa, and the National Association of Manufacturers, the U.S. Chamber of Commerce and the American Petroleum Institute urged Obama to tell the U.S. Army Corps of Engineers to hasten the planned removal of submerged rocks near Cairo, Illinois, that may impede barge traffic at low water levels. The Corps also should stop its seasonal restriction on the flow of Missouri River water into the Mississippi, which it began last week, the groups said. “We still got a lot of stuff to move down that Mississippi before winter totally sets in,” Harkin said in an interview. “They can release more water, sure they can.”
Mississippi River barge traffic is slowing as the worst drought in five decades combines with a seasonal dry period to push water levels to a near-record low, prompting shippers including Archer-Daniels-Midland Co. (ADM) to seek alternatives. Computer models suggest that without more rain, navigating the Mississippi will start to be affected Dec. 11 and the river will reach a record low Dec. 22, Corps spokesman Bob Anderson, based in Vicksburg, Mississippi, said.
Wheat Market Recap Report (CME)
December Wheat finished up 3 at 876, 4 off the high and 11 1/4 up from the low. March Wheat closed up 2 3/4 at 891 1/4. This was 11 1/2 up from the low and 4 1/4 off the high.
Chicago, KC, and Minneapolis wheat ended the day with marginal gains but traded in positive territory throughout the day. Strong cash markets and the terrible weather conditions in the western plains continue to support the US wheat markets this week. The sluggish demand fundamentals have been set aside as traders instead focus on the potential for deteriorating supply of winter wheat next year. No significant precipitation is expected in the next two weeks and temperatures are expected to be above normal which will keep some wheat from entering dormancy in the south. Conditions in the east remain mostly favorable. Very poor soil moisture conditions have improve since September which should promote good root and stand establishment for much of the Soft Red Winter wheat growing region. US Soft Red Winter wheat has become competitive in the global market so some traders expect the US wheat export sales pace to pick up in 2013 which could add additional support to the trade going forward.
December Oats closed down 2 1/4 at 370 3/4. This was 1 up from the low and 5 1/2 off the high.
Corn Market Recap for 11/28/2012 (CME)
December Corn finished up 1/4 at 760 1/4, 3 off the high and 5 1/2 up from the low. March Corn closed unchanged at 764. This was 5 1/4 up from the low and 3 1/2 off the high.
March corn ended the day slightly lower but traded both sides of the unchanged. Basis in the Gulf of Mexico was steady on light demand but low water levels on the Mississippi River south of St. Louis continues to help support. The stronger trade in the wheat market helped to lift corn to new highs this morning but the action settled down as soybeans trended lower off early highs. This morning's ethanol stocks report was considered mixed against trade expectations. Ethanol production for the week ending November 23rd averaged 803,000 barrels per day, down from 811,000 last week and down 13.7% vs. last year. Total ethanol production for the week was 5.62 million barrels. Corn used in last week's production is estimated at 84.3 million bushels vs. 85.16 last week. This crop year's cumulative corn used for ethanol production for this crop year is 1.02 billion bushels. Corn use needs to average 86.64 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of November 23rd were 18.35 million barrels. This is down 3.06% vs. last week and up 7.63% vs. last year. January Rice finished up 0.105 at 15.19, equal to the high and 0.14 up from the low.
Recap Energy Market Report (CME)
January crude oil prices traded sharply lower during the early US trading session, falling to their lowest level since November 15th. Early pressure in the market came from a definitive risk-off vibe coming from uncertainty surrounding the Greek debt deal and US budget negotiations. This morning's EIA data showed an unexpected draw in crude oil stocks last week of 347,000 barrels. Crude oil imports for the week stood at 8.118 million barrels per day compared to 7.768 million barrels the previous week. The refinery operating rate was up 1.1% to 88.6%. January crude oil prices rallied on the inventory data, as well as a positive reversal in outside markets. Optimistic comments over the US fiscal cliff debate from US House Speaker John Boehner provided an added lift.
Natural Gas Falls as Moderating Weather Cuts Heating Demand (Bloomberg)
Natural gas futures declined for the third time in four days as forecasts for mild weather next week signaled reduced demand for the heating fuel. Gas dropped as much as 3.8 percent as forecasters including MDA Weather Services predicted above-normal temperatures for most of the lower 48 states over the next 10 days. Unusually cold weather helped reduce a supply glut this month. The December contract expires today. “The weather is moderating so it’s wearing a little bit on the market,” said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures LLC in Miami. “We’ve got an expiring contract today, that could be part of it.” Natural gas for December delivery fell 12.7 cents, or 3.4 percent, to $3.642 per million British thermal units at 1:34 p.m. on the New York Mercantile Exchange. Prices are up 8.3 percent from a year ago. The January futures contract dropped 12.6 cents to $3.766 per million Btu.
Volume was 175,317 contracts at 12:32 p.m. in electronic trading, up 36 percent from about 129,000 at the same time yesterday. Gas has slumped 7.4 percent since rising to 13-month intraday high of $3.933 on Nov. 23 as revised forecasts showed a warmer start to December. Warm weather building up over the next five days in the western two-thirds of the U.S. will spread to the East Coast next week, according to MDA in Gaithersburg, Maryland.
Oil Snaps Three-Day Drop on Falling Supplies, U.S. Budget Talks (Bloomberg)
Oil snapped a three-day decline in New York after U.S. stockpiles unexpectedly fell and political leaders said they’re optimistic a budget agreement can be reached in the world’s biggest crude consumer. Futures rose as much as 0.3 percent after sliding 0.8 percent yesterday to a two-week low. Republican House Speaker John Boehner is optimistic that budget talks on the so-called fiscal cliff can “avert this crisis sooner rather than later,” he told reporters. President Barack Obama said he hopes to reach a deal before Christmas. U.S. crude supplies slid 347,000 barrels last week, an Energy Department report showed. They were forecast to climb 350,000 barrels, according to a Bloomberg News survey of analysts. “The fiscal cliff is a very significant thing for world economies and therefore oil demand,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The consensus view is that a reasonable compromise will be reached.”
Crude for January delivery climbed as much as 26 cents to $86.75 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.65 at 12:04 p.m. Sydney time. The contract pared a decline of as much as $1.82 yesterday to close down 69 cents at $86.49, the lowest since Nov. 15. Prices have fallen 12 percent this year. Brent for January settlement rose 21 cents to $109.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.07 to West Texas Intermediate futures, compared with $23.02 yesterday.
Rio Tinto Targets $5 Billion Spending Cuts, Production Boost (Bloomberg)
Rio Tinto Group, the world’s second- largest mining company, said it’s targeting savings of $5 billion by the end of 2014, while simultaneously boosting production at its iron ore, copper and alumina units. “We are taking further tough action to roll back the unsustainable cost increases of the past few years,” Tom Albanese, chief executive officer of the London-based company, said today in a statement. “Our two most challenged businesses are aluminum and coal, and in particular Australian coal,” he later told reporters in Sydney. Rio Tinto plans to cut the $5 billion in operating and support costs compared with expected costs this year, joining mining companies including BHP Billiton Ltd. (BHP) in seeking cost savings as well as curbing investment on new projects as metal demand wanes. Rio last month said it’s delaying investment decisions in commodities such as coal while continuing spending on its Australian iron ore expansion.
“Those two businesses are potentially loss-making where commodity prices currently are, which is clearly not sustainable,” Prasad Patkar, who helps manage about A$1.1 billion at Sydney-based Platypus Asset Management Ltd., said by phone. “Banking on a sharp recovery would be foolish at this stage so the only thing managements can do is to aggressively take costs out.” Rio rose 0.6 percent to A$57.06 as of 10:56 a.m. in Sydney trading while the key S&P/ASX 200 gained 0.2 percent.
Copper Shortage Seen Extending as China Accelerates: Commodities (Bloomberg)
Copper supply shortages will extend into the first half of next year as an accelerating Chinese economy more than doubles the pace of growth in global consumption even as mines extract a record amount of metal. Demand will outpace supply by 316,000 metric tons in the first six months, more than all copper in London Metal Exchange warehouses, before a surplus emerges in the second half, Barclays Plc estimates. Production has lagged behind consumption since 2010, according to the International Copper Study Group. The metal may average $8,300 a ton in the second quarter, 6.9 percent more than now and the most in a year, according to the median of 21 analyst and trader estimates compiled by Bloomberg.
China, which uses 41 percent of the world’s copper, is rebounding from seven quarters of slowing growth after the government approved a $161 billion subways-to-roads construction plan in September. It’s being joined by central banks from the U.S. to Europe to Japan, who also pledged more stimulus. Housing starts in the U.S., the second-largest consumer, reached a four- year high last month and business confidence unexpectedly strengthened in Germany, Europe’s biggest economy. “U.S. growth will be moderate and Europe is stabilizing, so that drag might reverse partially, and then it all falls back to China,” said Dominic Schnider, Singapore-based global head of non-traditional assets at UBS AG’s wealth-management unit. “Economic activity doesn’t have to be that strong in China for inventories to get drawn down and you could see a rally in the first half, but then you come into the second half where mine supply comes in on the strong side.”
Gold Tumbles Most in Three Weeks on Fiscal-Cliff Concerns (Bloomberg)
Gold futures fell the most in three weeks as pessimism on a U.S. budget resolution eroded demand for commodities. On the Comex in New York, gold futures for February delivery tumbled 1.5 percent to settle at $1,718.80 an ounce at 1:38 p.m., the biggest drop for a most-active contract since Nov. 2. In the first 30 seconds of floor trading, 7,700 contracts traded, according to PVM Futures Inc. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell as much as 1.4 percent, erasing this year’s gain. Erskine Bowles, the co-chairman of President Barack Obama’s 2010 fiscal commission, said that a deal with Congress to avert the so- called fiscal cliff is unlikely by the end of this year. “There’s ‘risk-off’ trading, and behind that is talk of the fiscal cliff becoming more of a reality than people had thought,” Harry Denny, a broker at Hoboken, New Jersey-based PVM, said in a telephone interview. “The fiscal-cliff resolution has everyone a little cautious.”
An estimated 437,259 futures contracts traded as of 2:26 p.m. Total volume rose to a record 484,721 on May 29. Through yesterday, the daily average was 176,000 this year. Floor trading starts at 8:20 a.m. The most-traded gold options yesterday were bets on further price drops. Exchange data show 9,573 put options traded, giving owners the right to sell at $1,700 on the Comex by January. That compares with 461 contracts a day earlier. Each contract is for 100 ounces. The next-most-traded contracts were January puts giving owners the right to sell at $1,690 and at $1,695.
Silver Market Recap Report (CME)
December silver also started out waffling around both sides of unchanged with the bear camp appearing to have only moderate control. However, in the wake of a sharp downside breakout in gold prices, silver and a host of physical commodity markets came under pressure and the press was quick to blame the slide on ideas that certain members of Congress felt that going off the fiscal cliff was probably in the cards. However, the president was hopeful that a deal could be seen before Christmas and that might have stemmed the slide in silver today.
Gold Market Recap Report (CME)
The gold market waffled around both sides of unchanged early in the session before a wave of selling entered gold and then seemingly spilled over into other physical commodity markets. Some players blamed the lack of fiscal cliff progress undermined gold and other commodities but if that was the focus of the trade one might have expected gold to have bounced more significantly into the President's White House Press conference. In fact, equities rallied off a wave of fiscal cliff hopes but yet gold remained within striking distance of its lows. At times today, adverse currency market action undermined gold, but currency action didn't seem to be the primary catalyst for the gold dive today.
Soybean Complex Market Recap (CME)
January Soybeans finished down 3 at 1446 1/4, 10 1/2 off the high and 6 1/4 up from the low. March Soybeans closed down 2 1/2 at 1435. This was 7 up from the low and 10 1/2 off the high. December Soymeal closed up 0.6 at 439.9. This was 1.6 up from the low and 3.0 off the high. December Soybean Oil finished down 0.01 at 50.11, 0.09 off the high and 0.45 up from the low.
January soybeans traded slightly lower to finish the day. Oil saw modest losses while meal finished lower on market on close sell pressure. The soybean market traded mostly negative throughout the day after failing to see follow through momentum overnight to the upside. Losses were limited due to strength in the corn and wheat market and also after the USDA reported that US exporters sold 290,000 tonnes of soybeans to China for the current marketing year. The demand picture continues to be robust but the overall weather outlook for South America remains mostly favorable which is adding resistance. Central and northern Brazil continue to see steady precipitation which has improved conditions while Southern Brazil is trending drier but is expected to see an uptick in rainfall. Argentina will see another shot of precipitation at the end of this week followed by a drier weather pattern. Basis in the Gulf of Mexico was steady to slightly weaker nearby but still well above historical levels. Concern that low water levels on the Mississippi River south of St. Louis may slow supply to the Gulf of Mexico is adding support to cash markets.
EDIBLE OIL: Malaysian palm oil futures eased dropping for a second straight session on concerns that U.S. fiscal woes could hamper global economic growth and commodity demand. (Reuters)
European vegoils: Palm oil easier on follow-through selling - RTRS
ROTTERDAM, Nov 28 (Reuters) - Palm oil on the European vegetable oil market slipped further on Wednesday because of follow-through technical selling on worries over the global economy and prospects for further growth of palm oil stocks. OILS/E
* “The worries over the U.S. economy and therefore the growth of the global economy pressured prices in various markets. Markets closed a touch off the lows on some bargain hunting,” one broker said.
Palm oil was offered between $5 and $12.50 a tonne down from Tuesday after Malaysian palm oil futures closed between 15 and 29 ringgit per tonne down on concerns over the U.S. budget woes that could hamper global economic growth and therefore demand for commodities. 0#FCPO: Jan/March RBD palm olein traded $10 down from Tuesday between $825 and $817.50 a tonne fob Malaysia, April/June changed hands between $850 and $845, also down $10 also. At 1700 GMT CBOT soyoil futures were 0.05 and 0.43 cents per lb down in a technical correction on Tuesday’s gains of more than half a cent. Liquid oils – soyoil, rapeoil and sunoil, were offered between two euros down and seven euros per tonne up from Tuesday following Wednesday’s strong close in CBOT soyoil futures and stronger rapeseed futures. EU rapeoil traded three euros up from Tuesday at 925 euros per tonne fob exmill for Feb/April, May/July fetched between 927 euros, up two euros, Aug/Oct changed hands at 914 and 912 euros and 920 euros was paid for Nov/Jan 2013. Lauric oils were offered between $5 per tonne down and $25 up from Tuesday after Feb/March coconut oil changed hands at $840 a tonne per tonne cif Rotterdam. No deals were reported in palmkernel oil.
Indonesia Poised to Top India as World’s Largest Palm Oil User (Bloomberg)
Indonesia, the world’s biggest producer of palm oil, is set to surpass India as the largest user next year as economic growth boosts demand. Consumption may climb 13 percent to 8.5 million metric tons from 7.5 million tons this year, Indonesia’s Deputy Trade Minister Bayu Krisnamurthi said by text message. That exceeds U.S. government estimates of 7.95 million tons for India and 7.87 million tons for Indonesia in the 2012-2013 year. Rising demand for palm used in everything from instant noodles to candy and fuel may curb exports that rose 2.9 percent in October from a month earlier. The economy expanded at more than 6 percent in the past eight quarters as President Susilo Bambang Yudhoyono raised spending, luring investors such as Unilever (UNA) and L’Oreal SA. Palm use in the world’s fourth most populous country jumped 51 percent in the past four years as wheat climbed about 21 percent and sugar rose about 15 percent, U.S. Department of Agriculture estimates show.
“We’ve seen very strong demand growth from Indonesia,” said Erin Fitzpatrick, a London-based analyst at Rabobank International. “You certainly can see that story continuing,” she said by phone Nov. 27. The country may surpass Germany and the U.K. by 2030 to be the world’s seventh-largest economy, generating $1.8 trillion in sales for agriculture, consumer and energy companies by that year, McKinsey & Co. said in September. McKinsey estimates consumer spending in urban areas will rise 7.7 percent a year to $1.1 trillion by 2030, according to the report.
L’Oreal (OR), the world’s largest cosmetic maker, expects to boost sales in Indonesia by as much as 35 percent in the next five years, Vismay Sharma, the company’s country head, said Oct. 29. The Paris-based company is investing $128 million to build its largest factory globally in West Java province. Unilever plans to spend $150 million building a factory in Sei Mangkei, North Sumatra, that will produce ingredients for soaps and shampoos, said Sancoyo Antarikso, a Jakarta-based director at the unit of the second-largest consumer-goods maker. Consumer-product companies like Unilever and noodle-maker PT Indofood CBP Sukses Makmur (ICBP) will benefit from a government plan to raise minimum wages, according to John Rachmat, an analyst at PT Mandiri Sekuritas, in a Nov. 22 report.
The Jakarta province will increase the minimum by 44 percent to 2.2 million rupiah ($229) a month in 2013 from this year, said Mandiri Sekuritas. East Kalimantan will boost the wage by 49 percent to 1.75 million rupiah, while Papua, the eastern most province, will raise it by 8 percent to 1.71 million rupiah, according to the report.
Consumption will increase as Indonesia raises the blending rate of palm-based biofuel in petroleum diesel to 7.5 percent from 5 percent, said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association, said by phone Nov. 27. Demand from oleochemicals is also increasing, he said. Palm-oil refining capacity may climb to more than 30 million tons next year, exceeding output, as companies step up investments following tax changes, Andreas Bokkenheuser, a Singapore-based analyst at UBS AG said last month. Investors are planning $1 billion of investments following the duty reduction, Sinaga said then. Capacity has gained “significantly” this year, said Krisnamurthi on Nov. 27, without specifying the increase.
The government cut taxes in October last year to boost processed exports as it seeks to raise the value of commodity shipments to spur growth and create jobs. Indonesia, which is rich in minerals such as nickel, bauxite and copper, also started a ban on ore exports by some miners in May, with exemption for companies planning smelters. Those shipments are subject to a 20 percent tax.
Posted by MW Chong at 10:10 AM