Wednesday, December 5, 2012
FCPO closed : 2287, changed : -7 points, volume : lower.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : falling lower, seller in control.
Support : 2250, 2230, 2200, 2130 level.
Resistance : 2300, 2350, 2400, 2450 level.
FCPO closed weaker with decreasing volume exchanged. Soy oil price currently trading higher after overnight closed recorded small loss while crude oil price edging upward.
Price swung between gains and losses after Reuters survey result shows higher stock level but weaker production level.
Daily chart study continue suggesting a downside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
Posted by MW Chong at 6:08 PM
FKLI closed : 1612 changed : +8.5 points, volume : lower.
Bollinger band reading : correction range bound downside biased.
MACD Histogram : rising higher, buyer testing market.
Support : 1600, 1595, 1590, 1580 level.
Resistance : 1610, 1615, 1623, 1627, 1635 level.
FKLI closed firmer with slower volume transacted doing 2 points discount compare to cash market that closed advanced higher. Overnight U.S markets closed recorded small loss and today Asia markets ended in positive zone while European markets currently trading higher.
China and Hong Kong market rallied after policy limiting insurance company investment on commercial lender was abolished.
FKLI daily chart study continue to calling a correction range bound down side 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 resistance or strength with quick cut loss and profit target.
Posted by MW Chong at 5:26 PM
STOCKS: European stock index futures pointed to a higher open, with stocks set to resume their recent rally and track gains in Asia after comments from China's new leader fuelled hopes for a recovery. U.S. stocks finished slightly lower in a quiet session on Tuesday. (Reuters)
FOREX-Euro rises to 1-1/2 month high versus dollar
LONDON, Dec 5 (Reuters) - The euro rose to a 1-1/2 month high against the U.S dollar extending recent gains as worries over Greece and Spain subsided and investors cut previous short positions against the single currency.
The euro hit $1.3127, its highest level since Oct. 18, according to trading platform EBS. Traders cited an options barrier at $1.3150 with Asian central banks also seen buying the euro in recent sessions.
Obama firm on 'fiscal cliff' amid Republican disarray (Reuters)
President Barack Obama held his ground on the "fiscal cliff" on Tuesday, insisting on higher tax rates for the wealthiest Americans, while Republicans showed increasing disarray over how far they should go to compromise with Obama's demands.
GRAINS: U.S. soybeans climbed to their highest in nearly a month and wheat snapped out of a four-day slide as traders continued to worry that unfriendly crop weather in key producing regions would whittle down global supplies. (Reuters)
China HSBC Nov services PMI eases on soft new orders (Reuters)
Growth in China's services sector slowed in November as lacklustre growth in new orders and a surge of recent hires reduced work backlogs.
Oil supply comfortable, Badri says ahead of OPEC (Reuters)
Global oil supplies are comfortable, OPEC secretary general Abdullah al-Badri said on Tuesday ahead of the oil exporting group's meeting in Vienna next week.
Petrobras struggling to sell Gulf of Mexico assets -sources (Reuters)
Brazil's state-controlled oil company Petrobras is having trouble selling more than $4 billion of offshore oil exploration and production assets in the U.S. Gulf of Mexico, sources familiar with the matter said.
Nebraska decision on Keystone pipeline on horizon-U.S. oil lobby (Reuters)
Nebraska's state government will soon announce a decision on the Keystone XL pipeline from Canada, a milestone in a long approval process, but it is unclear when the Obama administration will decide, a U.S. oil industry lobby group said Tuesday.
OIL: Brent crude was steady around $110 a barrel, nursing losses from the previous two sessions, as investors fretted over prospects for the U.S. fiscal crisis to hurt oil demand, despite supply fears fanned by Middle East tension. (Reuters)
BASE METALS: London and Shanghai copper prices hit their highest in nearly seven weeks, cheered by news that China is seeking more effective policies to ensure stable economic growth. (Reuters)
PRECIOUS METALS: Gold edged up on bargain hunting, but still hovered near its weakest in a month as talks between the White House and Congress to avoid year-end tax hikes and spending cuts showed little progress and kept most investors at bay. (Reuters)
METALS-Copper hits near 7-week high on China recovery hopes
SINGAPORE, Dec 5 (Reuters) - London and Shanghai copper prices hit their highest in nearly seven weeks cheered by news that China is seeking more effective policies to ensure stable economic growth.
"Risk appetite is back," said a Singapore-based trader, adding that some stop-loss buying helped fuel the rise in copper.
PRECIOUS-Gold bounces from 1-month low, US budget talks drag
SINGAPORE, Dec 5 (Reuters) - Gold edged up on bargain hunting but still hovered near its weakest in a month as talks between the White House and Congress to avoid year-end tax hikes and spending cuts showed little progress and kept most investors at bay.
"I think there are a few scenarios that we could look at. They may not come to a real, long-term deal. So we are expecting that there will be delays, which mean they will extend the deadline until they come to an agreement," said Lynette Tan, senior investment analyst at Phillip Futures in Singapore.
Baltic Index down on lower capesize, panamax rates
Dec 3 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Monday as rates for capesize, panamax vessels fell on lower demand.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 0.83 percent to 1,077 points.
Posted by MW Chong at 4:24 PM
Reuters Survey :
Malaysia Oct 2012 Crude Palm Oil
- Exports seen down 3.3% at 1.70 million tonnes from Oct 2012
- Stocks seen up 2.8% at 2.58 million tonnes from Oct 2012
- Output seen down 5% at 1.84 million tonnes from Oct 2012
PREVIEW-Malaysia Nov palm oil stocks likely hit record high 0#FCPO: - RTRS
WHAT: Malaysia's November palm oil stocks, output and exports data WHEN: Dec 10, after 0430 GMT Stocks may fall from record in December
By Niluksi Koswanage
KUALA LUMPUR, Dec 5 (Reuters) - Malaysian palm oil stocks likely hit another record high in November as exports failed to keep pace with output, a Reuters survey of five plantation firms showed on Wednesday, potentially weighing on prices.
Inventory in the world's No.2 palm oil producer may have grown 2.8 percent to 2.58 million tonnes from a previous record of 2.51 million tonnes seen in October as output stayed high despite a slight weakening in yields, according to the poll.
Malaysia's palm oil output in November may have dropped 5 percent to 1.84 million tonnes from a month ago as heavy rains disrupted some harvesting and yields tapered off after months of strong growth.
But that was still enough to offset exports at 1.70 million tonnes, down 3.3 percent from a month ago as there was a lack of vessels to transport the tropical oil to big consumers in India, China and Europe.
Imports of crude palm oil from top producer Indonesia likely surged more than two fold to 50,000 tonnes in November, from 19,102 tonnes the month before, as Malaysian refiners took advantage of lower Indonesian prices to stock up.
FACTORS TO WATCH:
In December, Malaysian palm oil firms holding tax free export quota for the crude grade will be rushing to push out shipments before the allocations expire in end-December.
That means Malaysian stocks are unlikely to hit 3 million tonnes by end-2012 as forecast by industry analyst Dorab Mistry. (Full Story)
It also means there could be a stock drawdown in December, the first monthly drop since June this year, giving much needed support to palm oil futures 0#FCPO: that are set to post their weakest yearly performance since the financial crisis in 2008.
The benchmark February contract FCPOc3 on the Bursa Malaysia Derivatives Exchange has shed about 27 percent so far this year, while in 2008 it dropped 44 percent. POI/
Malaysia this month is also set to announce its crude palm oil export tax for January 2013, expected to be lower than the current 23 percent duty. Lower export taxes for the grade are likely to boost shipments, further eating into stocks.
Another factor to watch would be Chinese buying.
Buyers from China, the world's second largest importer of palm oil, are likely to snap up refined palm oil cargoes before stricter quality measures set by Beijing take effect on Jan. 1. (Full Story)
Malaysian output is expected to decline further as seasonally heavy rains towards the end of the year disrupt harvesting and trigger floods that complicate logistics.
Breakdown of November estimates (in tonnes):
Production 1,822,124 - 1,870,000 1,841,509
Exports 1,600,000 - 1,705,310 1,700,000
Imports 22,922 - 100,000 50,000
Closing stocks 2,528,000 - 2,625,000 2,580,000
* Median for closing stocks based on estimated exports of
1,686,000 tonnes and domestic consumption of 120,153 tonnes
subtracted from 4,400,153 tonnes, the total of November's
estimated production, imports and official opening stocks.
Posted by MW Chong at 4:23 PM
VEGOILS-Palm oil futures off 3-week low on exports, output data
Wed Dec 5, 2012 12:49am EST
* Traders looking more at Dec palm oil export trend
* Output set to seasonally decline
* Palm oil firms looking to finish crude palm oil export
(adds details, comments)
By Niluksi Koswanage
KUALA LUMPUR, Dec 5 (Reuters) - Malaysian palm oil futures
rebounded slightly on Wednesday after hitting a three-week low
the previous day as traders expected higher exports this month
and slowing output to eat into stocks that likely hit a record
high last month.
Traders are counting on demand to kick in as forward palm
oil futures are at a discount to the 3-month benchmark. Palm oil
is also trading at a $350 discount to competing soyoil.
More orders are expected come in from China, the world's
No.2 edible oil buyer, before the government imposes stricter
quality rules on palm oil cargoes from Jan. 2013.
Higher exports could support palm oil futures that have lost
nearly 28 percent this year -- their worst annual performance
since the 2008 financial crisis.
"Record stocks are a given, so I prefer to look at the
export trend in December and production in Malaysia seasonally
slowing down. I think the market is close to bottoming out,"
said the trader with a foreign commodities brokerage in Kuala
By the midday close, benchmark February contract on
the Bursa Malaysia Derivatives Exchange rose 0.3 percent to
2,301 ringgit ($760) per tonne. The previous day, the contract
fell to 2,279, the lowest since Nov. 12.
Total traded volumes rose to 13,590 lots of 25 tonnes each,
a tad higher compared to the usual 12,500 lots.
Reuters market analyst Wang Tao kept a bearish target of
2,200 ringgit per tonne as there was no indication on a possible
bullish reversal on this trend.
Malaysian crude palm oil shipments are expected to rise in
the next few weeks as planters rush to finish their annual tax
free export quota allocation totalling 3.5 million tonnes and
which is set to expire end-December.
Palm oil futures got a little support from buoyant Asian
financial markets on Wednesday, after China's new Communist
Party chief Xi Jinping said the government aimed to make its
policies more targeted and effective.
These comments just about offset concerns over whether U.S.
lawmakers can break a budget impasse before year-end to avert a
possible economic slump.
The U.S. fiscal crisis weighed on Brent crude despite supply
fears fanned by brewing Middle East tension. The front-month
contract was steady around $110 a barrel.
In palm oil's competing markets, U.S. soyoil for December
delivery edged up 0.6 percent as traders grew concerned
that unfriendly crop weather would cut global soy supplies. The
most active May 2013 soybean oil contract on the Dalian
Commodity Exchange also rose 0.6 percent.
Posted by MW Chong at 2:37 PM
GLOBAL MARKETS-Asian shares lacklustre, capped by U.S. budget worries
TOKYO, Dec 5 (Reuters) - Asian shares were little changed, with prices capped by continuing concerns over whether the United States can avert an economic slump as lawmakers struggle to break a budget impasse by year end.
"The market lacks news that could add to the momentum seen in late November. Investors' focus will remain on whether U.S. politicians will unravel the fiscal cliff problem," said Kim Hyeong-ryeol, an analyst at Kyobo Securities.
FOREX-Euro firm vs USD; AUD bulls give RBA the brush off
SYDNEY, Dec 5 (Reuters) - The euro hovered at seven-week highs against the greenback struggled against the Australian dollar, which gained broadly as investors brushed aside a cut in interest rates to focus on its still relatively high yield.
"We caution against expecting a further rally in EUR/CHF from here," Subbarao said, adding safe-haven flows underpinning the franc have not fully disappeared and negative interest rates in the 1970s were largely unsuccessful.
U.S. Republican unity frays amid 'fiscal cliff' tension
WASHINGTON, Dec 4 (Reuters) - U.S. congressional Republicans had wanted to show a united front against President Barack Obama's demand for tax hikes, but their tenuous coalition showed signs of strain on Tuesday.
Just a day after House Speaker John Boehner unveiled a "fiscal cliff" counteroffer with some concessions on revenues, he faced a criticism from some conservatives and what appeared to be a wait-and-see approach from others.
POLL-US crude stocks seen lower on higher refinery runs
Dec 4 (Reuters) - U.S. commercial crude oil stockpiles likely fell last week while gasoline and distillate were seen higher as refiners hiked runs, an expanded Reuters poll of 11 analysts showed on Tuesday.
The survey ahead of weekly inventory reports from industry group American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA) forecast that crude stocks would slip 300,000 barrels, on average, for the week ended Nov. 30.
UK oil output seen rising in next few years -study
LONDON, Dec 5 (Reuters) - Britain's North Sea oil output, long in decline, is likely to increase in the next few years, according to research published on Wednesday, reflecting the impact of rising investment, high prices and tax breaks.
Oil output will reach 1.4 million barrels per day (bpd) in 2017 based on an oil price of $90 a barrel, the University of Aberdeen study predicted. Last year, production fell more than 17 percent to average 1.04 million bpd.
Oil supply comfortable, Badri says ahead of OPEC
DOHA, Dec 4 (Reuters) - Global oil supplies are comfortable, OPEC secretary general Abdullah al-Badri said on Tuesday ahead of the oil exporting group's meeting in Vienna next week.
"The market is comfortable as I see it at this time," he told Reuters on sidelines of United Nations climate talks in Doha.
OIL - Oil falls on U.S. budget, fuel demand concerns
NEW YORK, Dec 4 (Reuters) - Oil prices fell on Tuesday, as concerns about the U.S. budget crisis and global fuel demand outweighed ongoing worries about instability in the Middle East.
"The reality is that we're going to get through the fiscal cliff," said Richard Ilczyszyn, chief market strategist of iitrader.com LLC in Chicago, noting that worries about the impact of instability in the Middle East on oil supplies was on the back burner for the moment.
Posted by MW Chong at 12:53 PM
Malaysia: MIER raises 2012 GDP forecast to 5.1%
Leading think-tank Malaysian Institute of Economic Research (MIER) has revised upwards its growth forecast for Malaysia this year to 5.1% from 4.9%. It is also optimistic about next year's growth and has revised its outlook from 5.4% to 5.6%. (BT)
Australia: RBA cuts key rate to match half-century low as currency holds up
The Reserve Bank of Australia cut its benchmark interest rate to the half-century low set during the 2009 global recession as hiring falters and an elevated currency hurts industries such as manufacturing and tourism. Governor Glenn Stevens and his board reduced the overnight cash-rate target by a quarter percentage point to 3%, the central bank said. The sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg. (Bloomberg)
UK: Osborne urged to boost growth as BCC cuts UK outlook
Britain’s recovery will be slower than previously forecast and the economy needs more support from the government through a program of business investment, according to the British Chambers of Commerce. The BCC cut its 2013 growth forecast to 1% from 1.2% in September and its 2014 projection to 1.8% from 2.2%, the London-based group said, citing a weaker global backdrop and the likelihood of further fiscal tightening by the government. (Bloomberg)
EU: Finance chiefs confident of Greek buyback to succeed
European finance ministers voiced confidence that Greece will pull off a successful bond buyback, the key element in a revamped effort to stem the debt crisis in the country where it started. Greece began the EUR10bn (USD13bn) repurchase of bonds maturing from 2023 to 2042, offering a higher-than-planned price in order to increase demand for the debt-reduction measure. (Bloomberg)
EU: Euro zone factory prices nearly flatline in October
Euro zone factory prices barely rose in October, echoing the slowing pace in consumer inflation, although the European Central Bank is expected to wait a little longer before cutting interest rates to help the slumping economy. Prices at factory gates in the 17 countries using the euro rose 0.1% in October from September, the EU's statistics office Eurostat said, just above the 0.0% level expected by economists polled by Reuters. (StarBiz)
TM signs pacts to transform, develop Nusajaya
Telekom Malaysia (TM) has signed two agreements with several companies to transform and develop Nusajaya into a smart and connected city. The first agreement with UEM Land and Iskandar Investment is to provide information and communications services. (StarBiz)
Sunway buys land in Iskandar
Sunway has acquired two parcels of freehold land totaling 779 acres in Iskandar Malaysia for RM412.7m through a joint venture (JV) with Iskandar Asset, a wholly-owned subsidiary of Iskandar Investment. In a statement, Sunway said the new acquisition would increase its total landbank by 29% to 3,580 acres, while the proposed development would boost its total gross development value to RM43bn. (StarBiz)
Shapadu emerges as Jetson’s new shareholder
The Shapadu Group has emerged as an 8.6% shareholder of construction company Kumpulan Jetson after buying placement shares. Shapadu Capital had 6.5m Kumpulan Jetson shares after buying 4.5m placement shares on 27 Nov this year, a Bursa Malaysia filing dated 4 Dec showed. Privately-held Shapadu was looking to beef up its property and infrastructure divisions with its investment in Kumpulan Jetson. (Financial Daily)
RM28bn worth of tie-ups
The 8th World Islamic Economic Forum (WIEF), which was officiated by Prime Minister Datuk Seri Najib Razak yesterday, witnessed the exchange of documents for six partnerships with an estimated value of RM28bn. The collaborations are in nano-technology, property development, information communication technology services as well as a proposed exhibition centre, innovation centre and a motorsport city. (BT)
Two new faces on MAHB board
Malaysia Airports Holdings yesterday announced the appointments of Datuk Syed Faisal Albar and Tunku Datuk Mahmood Fawzy Tunku Muhiyiddin as its non-executive directors. The airport operator also announced the resignation of non-executive director Jamilah Hashim. (BT)
Progress-Petronas LNG facility enters design phase
Progress Energy Resources, whose USD5.2bn (RM15.9bn) takeover by Malaysia’s Petroliam Nasional (Petronas) is being reviewed by the Canadian government, said its LNG export facility on the country’s Pacific coast is moving into the design phase. The venture, Pacific Northwest LNG, in which Petronas is a partner, has the capacity to export about 3.8m tonnes of natural gas a year per plant, Progress said. (BT)
Islamic finance to grow significantly in 10-15 years
Islamic finance is set to offer significant opportunities for growth and diversification in the next 10 to 15 years, said Singapore Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam. Shanmugaratnam added he is optimistic about its prospects because Islamic financial institutions have mainly escaped significant damage in the global financial crisis. (Malaysian Reserve)
Konsortium Transnasional defaults on credit facilities
Konsortium Transnasional (KTB) has defaulted on two Bai Bithaman Ajil facilities granted by Bank Kerjasama Rakyat Malaysia due to lack of cashflow as a result of operational losses suffered over the past three years. The transportation company’s total outstanding in defaults amounted to RM22.5m according to its exchange filing yesterday. (Malaysian Reserve)
Asia FX By Cornelius Luca - Tue 04 Dec 2012 17:07:08 CT (CME/www.lucafxta.com)
The appetite for risk was selectively higher on Tuesday. The markets remained vulnerable to leaks, rumors and personal guesses about the success of the "fiscal cliff" negotiations. Once again, partisan politics dominate at the expense of the large public. Most major foreign currencies advanced, but the franc declined amid increasing talk about negative interest rates in Switzerland. The euro extended gains to a 1 ½-month high on optimism over Greece's plan to buy back debt. The US stock markets, gold, oil and silver fell. The short-term outlook for most 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!
Canada: The BoC left interest rates at 1%, as expected.
Today's economic calendar
Australia: AiG Performance of Services Index for November
UK: BRC Shop Price Index for November
Australia: Gross Domestic Product for the third quarter
China: HSBC Services PMI for November
Asian Stocks Decline as U.S. Budget Talks Reach Impasse (Bloomberg)
Asian stocks fell as President Barack Obama held his ground on raising tax rates for the highest- income Americans, with lawmakers at an impasse less than a month before more than $600 billion in tax increases and spending cuts start taking effect. Honda Motor Co. (7267), a Japanese carmaker that gets about 44 percent of sales from North America, declined 1.4 percent. Western Areas NL sank 4.4 percent in Sydney after the nickel sulphide producer raised A$50 million ($52.4 million) selling shares at a discount. Santos Ltd., Australia’s third-biggest oil producer, slid 0.7 percent as crude futures fell. The MSCI Asia Pacific Index (MXAP) lost 0.2 percent to 124.64 as of 9:27 a.m. in Tokyo. Markets in Hong Kong and China have yet to open. The gauge advanced last month amid signs China’s economic slowdown may be ending and optimism U.S. lawmakers would agree on a budget deal to avert the so-called fiscal cliff.
“The fiscal cliff has the potential to frighten the market until the end of the year, but I don’t think it’ll be substantially surprising,” said Peter Esho, chief market strategist at City Index Ltd., a provider of equities, bonds and currency trading in Sydney. “The market’s consolidating after a good run.”
U.S. Stocks Fall as Obama Holds Ground on Income Taxes (Bloomberg)
U.S. stocks fell, sending the benchmark Standard & Poor’s 500 Index lower for a second straight day, after President Barack Obama held his ground about raising tax rates for the highest-income Americans. Las Vegas Sands Corp. and Wynn Resorts Ltd. (WYNN) dropped at least 2.7 percent, joining a slump in Macau casinos, on speculation China may increase scrutiny of junket operators, who provide credit to high-stake gamblers. Intel Corp. (INTC) advanced 2.2 percent on plans to sell bonds in a four-part offering to repurchase stock that’s trading at the lowest in 16 months. The S&P 500 retreated 0.2 percent to 1,407.05 at 4 p.m. New York time. The Dow Jones Industrial Average fell 13.82 points, or 0.1 percent, to 12,951.78. More than 5.9 billion shares traded hands on U.S. exchanges, or 4.7 percent below the three- month average, according to data compiled by Bloomberg.
“The clock is ticking,” said Quincy Krosby, market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than 1 trillion. She spoke in a phone interview. “The focus is on what goes on in Washington. The market will be volatile. You’ve got to be very well hedged given that the market is so much headline-driven.” U.S. President Obama’s administration rejected a Republican plan for tackling the fiscal cliff that omitted higher tax rates for top-earning Americans, leaving the issue unresolved with about four weeks left before more than $600 billion in tax increases and federal spending cuts start taking effect. European (SXXP) stocks rose as finance ministers met to discuss moves to stem the debt crisis.
Recap Stock Index Market Report (CME)
The December S&P 500 spent most of the session carving out a tight trading range. The market rallied during the initial morning hours, supported by gains in Europe and a further decline in Italian bond yields. Meanwhile, the upside appeared limited in the wake of back and forth negotiations over the US budget. Disappointing Q2 earnings guidance from Darden Restaurants, which warned of sluggish consumer spending, helped send the index to its low of the session. Some traders were encouraged by the markets' ability to bounce from the 1400.00 area. However, most of the major S&P sector indices finished in negative territory, led by weakness in consumer discretionary names. Meanwhile, the CBOE Volatility Index jumped to a new 11-day high, perhaps from growing uncertainty that US leaders will reach a near term agreement on the fiscal cliff.
European Stocks Rise for Second Day; Oerlikon Climbs (Bloomberg)
European stocks climbed for a second day, erasing an earlier drop, as American lawmakers continued to debate plans to address the so-called fiscal cliff. U.S. index futures and Asian shares were little changed. OC Oerlikon (OERL) Corp. rallied 4.5 percent as the world’s largest maker of textile machinery raised its earnings forecast and sold units. TUI Travel Plc gained 2.7 percent after Europe’s largest tour operator reported earnings that topped analyst estimates. United Internet AG (UTDI) tumbled 7.5 as Warburg Pincus LLC offered its 5.5 percent stake for sale. The Stoxx Europe 600 Index (SXXP) increased 0.3 percent to 276.9 at 9:42 a.m. in London. The gauge has climbed 18 percent from this year’s low on June 4, boosted by central-bank measures to support growth. The Reserve Bank of Australia today cut its benchmark interest rate for the sixth time in 14 months.
“We still anticipate a deal will be done to avoid the cliff,” Daniel Morris, global market strategist at JPMorgan Asset Management in London, said on Bloomberg Television. “We may go a bit over the fiscal cliff and scramble back up again but ultimately the impact, especially on the real economy, will not be significant. If you see equities sell off because of worries about the cliff, you should see that as a buying opportunity.” Standard & Poor’s 500 Index futures rose less than 0.1 percent after the benchmark gauge for U.S. equities fell 0.5 percent yesterday. The MSCI Asia Pacific Index was almost unchanged for a second day.
Trafigura Predicts China Rebound on Emerging Markets (Bloomberg)
The economy in China, the world’s biggest user of energy and copper, is expected to improve in the first half of next year, according to Trafigura Group, the third-largest independent oil trader. “The news flows about China are starting to look more positive and we are looking for that to translate into the real economy,” Chief Financial Officer Pierre Lorinet said in an interview in Singapore yesterday. “Especially in the emerging world, we have come out of the cyclical downturn and will be back on the upswing.” A recovery in the second-largest economy may lift commodity prices and trading, aiding companies such as Amsterdam-based Trafigura, which Lorinet said posted a drop in sales and “slightly” lower net income last financial year, and rival Glencore (GLEN) International Plc. Goldman Sachs Group Inc. has forecast a 7 percent return from commodities over the next 12 months, with energy leading the way.
“We have seen some volumes down in some of our activities,” said Lorinet, describing 2012 as a challenging and complicated year with uncertainties generated by Europe’s debt crisis, unrest in the Middle East, the U.S. presidential election and the shift to new leadership in China. Sales at the privately held company, which doesn’t publicly disclose financial data, dropped 1.6 percent to $120 billion in the 12 months to September, after gaining 53 percent the year before, he said. Crude trading decl
Obama Says He Would ‘Love’ a Business Leader on Economic Team (Bloomberg)
President Barack Obama said he would “love” to pick a business leader for his economic team in a second term, though talented executives may be discouraged from serving by the U.S. Senate confirmation process. “Not only is it something I’m considering, I’d love to do it,” the president said on Bloomberg Television in his first interview since winning re-election. “It’s something I would have loved to have done in the first term.” “One of the biggest problems we’ve got in terms of recruiting business leaders into the administration is the confirmation process has become so miserable, so drawn out, that for successful folks to want to put themselves through that process, you know, a lot of folks are just shying away,” he said. Obama’s advisers have considered Chief Executive Officer Mohamed El-Erian of Pacific Investment Management Co., which manages the world’s biggest bond fund, for a role in the administration, said a person familiar with the matter.
Obama also sounded optimistic about the economy if the administration and Congress can avoid a repeat of what he called the “crisis” that preceded raising the nation’s debt ceiling last year. “America is poised to take off,” he said. “Let’s make sure that we don’t have a self-inflicted wound, because there are a lot of silly games played up on Capitol Hill.”
China, S. Korea to Boost Use of Local Currencies in Trade (Bloomberg)
South Korea said it agreed with China to allow banks in both countries to borrow funds from an existing swap arrangement to encourage trade settlement in local currencies. A 64 trillion won ($59 billion) swap line will be made available for loans to allow companies in both countries to settle deals in the won and yuan, according to a statement today from the Finance Ministry and the Bank of Korea. The system is scheduled to start later this month, it said. The agreement is part of a push among emerging countries to internationalize local currencies after the global financial crisis, according to the South Korea statement. Both China and South Korea acknowledge that the use of the won and yuan is “very low” even as trade between the two countries is increasing, it said. “We expect several benefits, such as reduced foreign- exchange risk and transaction costs for companies,” according to the statement.
Alleviating “external vulnerabilities due to decreased dependence on the major reserve currencies” is also a reason for pursuing the deal, it said. The won was little changed at 1,083.45 per dollar at the close today in Seoul, according to data compiled by Bloomberg. The Kospi index of stocks fell 0.3 percent
RBA Cuts Key Rate to Match Half-Century Low as Currency Holds Up (Bloomberg)
The Reserve Bank of Australia cut its benchmark interest rate to the half-century low set during the 2009 global recession as hiring falters and an elevated currency hurts industries such as manufacturing and tourism. Governor Glenn Stevens and his board reduced the overnight cash-rate target by a quarter percentage point to 3 percent, the central bank said in a statement in Sydney today. The sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg. The rate matches the level reached from April-October 2009 that was the lowest since 1960. In his statement, Stevens said the local dollar remains “higher than might have been expected” given lower export prices and a weaker global outlook. His decision to ease the highest policy rate among major developed economies reflects Australia’s contained wage pressure, lower projected mining spending and an unemployment rate at a 2 1/2-year high.
“The cut is an attempt to smooth the transition from resources to the broader sectors of the economy that are currency and interest-rate sensitive,” said Martin Whetton, interest-rate strategist for Australia at Nomura Holdings Inc. in Sydney. “There feels like there’s a level of frustration in the statement about the currency.” The so-called Aussie advanced after the decision, buying $1.0437 at 4:56 p.m. in Sydney compared with $1.0426 before the decision. The yield on three-year government debt advanced to 2.62 percent, up four basis points from yesterday. Australian financial stocks declined, with the S&P/ASX 200 Finance Index falling 0.5 percent.
Euro Finance Chiefs Confident Greek Buyback to Succeed (Bloomberg)
European finance ministers voiced confidence that Greece will pull off a successful bond buyback, the key element in a revamped effort to stem the debt crisis in the country where it started. Greece began the 10 billion-euro ($13 billion) repurchase of bonds maturing from 2023 to 2042 yesterday, offering a higher-than-planned price in order to increase demand for the debt-reduction measure. “I’m confident it will go well,” French Finance Minister Pierre Moscovici told reporters after euro-area finance chiefs met in Brussels. “It seems to be happening under satisfactory conditions.” European governments are counting on the buyback as a market-based way of cutting Greece’s debt, paving the way for continued aid payouts. Finance ministers set a Dec. 13 meeting to release the next 34.4 billion euros for Greece and possibly wrap up bailout talks with Cyprus, which would become the fifth country to tap international aid since the crisis erupted in late 2009.
Once dismissed by European officials as a high-risk, low- reward method of debt reduction, the buyback became part of the Greek package after Germany rejected the writeoff of official loans as a way of easing the country’s financial plight. The euro fetched $1.3070 as of 7:47 a.m. in London from $1.3054 yesterday, when it touched $1.3076, the most since Oct. 23.
Osborne Urged to Boost Growth as BCC Cuts U.K. Outlook: Economy (Bloomberg)
Britain’s recovery will be slower than previously forecast and the economy needs more support from the government through a program of business investment, according to the British Chambers of Commerce. The BCC cut its 2013 growth forecast to 1 percent from 1.2 percent in September and its 2014 projection to 1.8 percent from 2.2 percent, the London-based group said in a report today, citing a weaker global backdrop and the likelihood of further fiscal tightening by the government. A separate release from Markit Economics showed construction output unexpectedly shrank in November as orders and confidence plunged. Chancellor of the Exchequer George Osborne will deliver his autumn economic statement to Parliament tomorrow and must manage a commitment to his fiscal squeeze alongside a risk that excessive tightening will prevent a recovery. Acknowledging this, the BCC called for measures to boost company investment while protecting Britain’s top credit rating.
“Growth is still too weak,” said BCC Director General John Longworth. “We have always been behind the chancellor’s aim of reducing the deficit, but this has to be supported with the right conditions that allow businesses to thrive, or we will fail to see the growth the economy so desperately needs.” Britain’s double-dip recession ended with 1 percent growth in the third quarter, though the BOE has forecast a “zig-zag” pattern for gross domestic product and sees a possible contraction this quarter. King said on Nov. 14 that the recovery will be “long and winding.”
DTN Closing Grain Comments 12/04 14:41 Soy Complex Storms Back Late (CME)
The last half hour of Tuesday's session saw the soy complex erase most of its early loss, storming higher in both beans and meal. Following along behind, the other grains were able to cut deeply into daily losses.
Wheat Market Recap Report (CME)
March Wheat finished down 4 1/4 at 856 1/2, 8 1/2 off the high and 5 up from the low. May Wheat closed down 4 at 865 1/4. This was 5 1/4 up from the low and 7 3/4 off the high.
March Chicago and KC wheat traded slightly lower the day. Bear spreading was seen in both markets and thoughts that the USDA may revise all wheat export demand lower in next week's Supply and Demand report favored the bear camp. The weather conditions in the western plains remain very poor with very little to no relief in sight for the next 7-10 days. There is a chance for a quarter inch of rainfall in areas of eastern Colorado, southern Nebraska, and northwestern Kansas later this week but the accumulation will bring almost no relief. The eastern Midwest and delta should see scattered showers this week which should help soil conditions. ABARES cut their Australian wheat production estimate to 22.03 million tonnes vs. prior estimates 22.54 million tonnes. The cut was not as extreme as many analysts expected and is above the current USDA estimate of 21 million tonnes. Short term the market is focused on demand which is not impressive at the moment but long term support may come from the worsening conditions in the western plains.
March Oats closed up 1/2 at 385. This was 3 3/4 up from the low and 1 1/2 off the high.
Corn Market Recap for 12/4/2012 (CME)
March Corn finished down 2 3/4 at 752, 5 off the high and 5 1/4 up from the low. May Corn closed down 1 1/4 at 753. This was 6 1/4 up from the low and 3 off the high.
March corn traded lower into the closing bell on active bear spreading and a weaker wheat market. Domestic supply concerns and very wet conditions in Argentina continue to add support to the market but export demand remains very weak and Brazil continues to sell corn at nearly a $30 per tonne discount to the US. Ukraine officials stated they hoped commercial grain traders would slow the pace of wheat sales and instead switch to other commodities such as corn. Ukraine has exported 4.5 million tonnes of corn so far this crop year vs. 2.4 for the same period last year. Some reports suggest Ukraine may begin exporting larger quantities of corn to China after signing a deal in which they will receive a credit line for supplying corn. Outside market instability continues to keep the trade choppy as politicians negotiate the fiscal dilemma at year end.
January Rice finished up 0.035 at 15.41, 0.09 off the high and 0.035 up from the low.
CFTC Says Broker Tried to Manipulate Wheat Futures Prices (Bloomberg)
Trader Eric Moncada and firms BES Capital LLC and Serdika LLC were accused by U.S. regulators in a lawsuit of attempting to manipulate wheat futures contract prices. While trading for the companies, Moncada placed and immediately canceled orders in December 2009 wheat futures with the intent of raising or lowering prices, the U.S. Commodity Futures Trading Commission alleged in a complaint filed today in federal court in Manhattan. The transactions occurred between Oct. 6 and Oct. 30, 2009, and involved futures traded on the Chicago Board of Trade, the CFTC said. Moncada is a CFTC-registered floor broker with trading privileges at the New York Mercantile Exchange, according to the regulator’s website. “The illegal scheme alleged in the complaint, entering and quickly canceling large-lot future orders without any intent to consummate a trade, undermines the integrity of the market,” David Meister, director of the CFTC’s division of enforcement, said in a statement.
Contact information for the defendants couldn’t immediately be found. The agency is seeking disgorgement, financial penalties and injunctions preventing Moncada and the companies from engaging in further commodities trading. The case is U.S. Commodity Futures Trading Commission v. Moncada, 12-cv-8791, U.S. District Court, District of New York (Manhattan).
European Corn Imports Seen Expanding to Second-Highest on Record (Bloomberg)
European Union corn imports may be the second-highest on record this season after drought parched crops and a surge in wheat exports curbed domestic grain supply. The EU issued licenses to import 3.6 million metric tons of corn since the marketing year began July 2, more than twice the amount a year ago, data from the 27-nation bloc show. Purchases will rise 59 percent to 10 million tons, the second highest for data to 1999, the International Grains Council says. Shipments may reach 12 million tons, said Dan Basse, president of AgResource Co., a research company in Chicago. EU buyers are competing in a market roiled by dry weather from Australia to Europe to the U.S. Futures traded in Chicago, a global benchmark, reached a record in August. Prices for wheat, an alternative livestock feed, also surged because of concern that grain from the Black Sea region will run out, boosting demand for EU supply. Licenses to export wheat rose 34 percent in the past four weeks, European Commission data show.
“There were problems in the southern areas, especially Romania, where crops looked very poor, and in Italy and Hungary as well,” said Nathan Kemp, an economist with the London-based IGC. “There’s a shortfall this year, plus with the wheat market price differential, it makes sense to export wheat, so that takes it away from feed channels.” Corn surged 28 percent this year on NYSE Liffe in Paris, outpacing the 17 percent increase on the Chicago Board of Trade. U.S. futures reached a record $8.49 on Aug. 10 and averaged $6.86 since the start of January, exceeding last year’s all-time high. The Standard & Poor’s GSCI Agriculture gauge of eight commodities rose 11 percent this year.
Record Brazil Coffee Crop Cuts Costs for Starbucks: Commodities (Bloomberg)
Record coffee harvests in Brazil, the biggest grower, are compounding a global glut of arabica used by Starbucks Corp. (SBUX) and Dunkin’ Donuts Inc. Brazilian farmers will reap 50.8 million bags in 2013, a record for a so-called low-crop season, according to the median of nine analyst estimates compiled by Bloomberg. The harvest reached 55.9 million 60-kilogram (132-pound) bags in 2012, an all-time high for a peak year. Output usually drops in alternate years because of growing cycles. Prices may fall 12 percent to $1.311 a pound by June 30, the average of 14 predictions shows.
Futures slumped about 50 percent since May 2011, as the highest prices in 14 years spurred Brazilian farmers to boost supply. Their exports jumped 54 percent to $8.7 billion in 2011. The flood of beans has continued and stockpiles tracked by the ICE Futures U.S. exchange are headed for the biggest annual gain in more than a decade. Rising costs and concern that economies are slowing encouraged roasters and consumers to favor cheaper robusta beans. “There’s a significant crop coming from Brazil if the weather continues to be favorable,” said Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $500 million of assets. “Abundant supply is the driving force in the market.”
Recap Energy Market Report (CME)
January crude oil prices trended lower during the US morning hours, registering a lower low in the process. The crude oil market appeared to come under pressure from renewed concerns over the US budget battle, especially what demand might look like if the economy fell back into a recession. Comments from OPEC's secretary General this morning indicated that global oil supplies are at comfortable levels, and that seemed to put added pressure on the market. January crude oil prices managed to pare a good portion of the morning losses and closed the session in the middle of the day's range. Some traders indicated that rising tensions in Egypt might have caused some of the mid-day lift. Expectations for this week's EIA crude oil report are for a draw of around 750,000 barrels.
U.S. Crude Output Near 15-Year High on Shale Boom (CME)
By U.S. Energy Information Administration - Tue 04 Dec 2012 14:08:00 CT
North Dakota, Texas Account for Bulk of Surge
U.S. crude oil production reached the highest level in nearly 15 years during September, driven by a shale-drilling boom in North Dakota and Texas, the Energy Information Administration said.
Crude output, including drilling byproducts known as lease condensates, averaged about 6.5 million barrels a day in September, the highest monthly production since January 1998, according to an Energy Information Administration update released December 4. September’s production was up 900,000 barrels, or 16% from the same month in 2011.
“Most of that increase is due to production from oil-bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing,” the administration said.
The states with the largest increases were North Dakota and Texas, the respective homes to much of the Eagle Ford and Bakken shale formations. Oklahoma, New Mexico, Wyoming, Colorado, and Utah also contributed to rising domestic crude oil production.
Copper Drops From Six-Week High as Metals Fall on Budget Impasse (Bloomberg)
Copper declined for the first time in four days after touching the highest level in more than six weeks as U.S. manufacturing unexpectedly shrank and a budget standoff intensified. Aluminum, zinc and lead retreated. Copper for delivery in three months fell as much as 0.5 percent to $7,963.50 a metric ton on the London Metal Exchange and was at $7,977 at 4:30 p.m. in Tokyo. The industrial metal touched $8,045 yesterday, the highest level since Oct. 19. U.S. manufacturing contracted last month amid concern about the potential economic fallout from the so-called fiscal cliff. Budget talks became more confrontational as House Republicans rejected President Barack Obama’s demand for higher tax rates, countering with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security. “The U.S. manufacturing data and concern over the fiscal cliff weighed down the metals market,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul.
The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction. “A sustained improvement in prices looks unlikely until there is evidence of draws in Chinese inventories,” Barclays Plc analysts wrote in a report today. Stockpiles in the main Waigaoqiao bonded area in Shanghai have risen to 600,000 to 700,000 tons, the analysts wrote, citing warehouse executives. The contract for March delivery fell 0.5 percent to $3.639 a pound on the Comex in New York. March futures closed 0.5 percent lower at 57,280 yuan ($9,201) a ton on the Shanghai Futures Exchange.
Gold Slumps to Four-Week Low on U.S. Budget Impasse (Bloomberg)
Gold futures slumped to a four-week low, closing under $1,700 an ounce, as a stalemate in U.S. budget talks drove commodities down. Silver, platinum and palladium also dropped. Twenty-one of 24 raw materials in the Standard & Poor’s GSCI Spot Index fell. Democrats and Republicans have four weeks left before more than $600 billion in tax increases and federal spending cuts are triggered. Gold slid about $12 an ounce in about a minute during Asian trading, data compiled by Bloomberg show. “Gold is being sold along with just about everything else in commodities with the worries on the fiscal cliff,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. The metal “is usually said to be a safe haven, but the threat to economies globally from the fiscal cliff is having knock-on effects.”
On the Comex in New York, gold futures for February delivery dropped 1.5 percent to settle at $1,695.80 at 1:37 p.m. Earlier, the price touched $1,692.60, the lowest for a most- active contract since Nov. 6. If the so-called fiscal cliff isn’t averted, the U.S. may face a recession, according to the Congressional Budget Office. The slump in Asia amid low volume probably was spurred by “frustration” that prices remain below $1,750, UBS AG said in a report. Silver futures for March delivery fell 2.8 percent to $32.808 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for January delivery declined 1.9 percent to $1,582.90 an ounce, the biggest drop since Oct. 23. Palladium futures for March delivery fell 1.2 percent to $682.70 an ounce.
Silver Market Recap Report (CME)
March silver prices came under renewed liquidation pressure today and in the process prices fell below the 50 day moving average. At times silver was attempting to draft some support off strength in copper prices but ultimately a pattern of weakness in physical commodity markets prevailed and silver slumped to the lowest level since November 19th. It probably goes without saying that a noted portion of the decline in silver prices today was the result of technical knock on selling pressure.
Gold Market Recap Report (CME)
February gold fell sharply through a series of potentially critical chart support levels and at times today, gold seemed to be dominated by technical pressure. Some traders suggested that gold was under pressure off ideas that the US fiscal cliff debate was at least going to go the distance to the end of the lame duck Congress on December 14th. Others suggested that Weakness in a host of commodities and declines in equities simply fostered a risk off vibe. In the end, February gold prices fell down to the lowest level since November 6th and they also fell below the 100 day moving average.
Soybean Complex Market Recap (CME)
January Soybeans finished up 1 3/4 at 1455 1/2, 5 1/2 off the high and 19 1/2 up from the low. March Soybeans closed up 2 at 1450 1/4. This was 20 1/4 up from the low and 5 off the high. January Soymeal closed up 1.7 at 440.3. This was 4.8 up from the low and 0.7 off the high. January Soybean Oil finished down 0.15 at 50.06, 0.41 off the high and 1 up from the low.
January soybeans finished the day near the unchanged after staging an impressive recovery off the lows in the last hour of trading. Soybean oil finished the day lower while meal ended higher on the day. Rumors that China may have bought soybean cargos off the PNW yesterday firmed the basis in the west and provided a bullish tilt to calendar spreads. The strong pace of soybean, oil, and meal exports for the US continues to provide the market with a bullish foundation. South American weather remains mostly favorable which is helping to offset the demand influences. Argentina will trend wetter this week which could delay corn planting and possibly shift more acres to soybeans. Central and Northern Brazil will see steady showers and Southern Brazil has a better chance for rainfall it the short term forecast. The US Dollar traded lower throughout the day which is generally supportive to commodities.
EDIBLE OIL: Malaysian palm oil futures fell to its lowest in more than three weeks as investors fret over the prospects of another month of record stocks in the world's No.2 producer. (Reuters)