Friday, December 7, 2012
Bollinger band reading : pullback correction little downside biased.
MACD Histogram : recovering, buyer seller battling.
Support : 2300, 2250, 2230, 2200, 2130 level.
Resistance : 2300, 2350, 2400, 2450, 2490 level.
FCPO closed 1 tick higher with slowing down volume traded. Soy oil price currently trading flat after overnight closed firmer while crude oil recording small gain after fall.
Price traded range bound again ahead on next Monday MPOB official November data and 2 cargo surveyors export figures while soy oil price remained pressure upward due to weather factor.
Daily chart study revised to suggesting a pullback correction little 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 6:21 PM
FKLI closed : 1615.5 changed : +0.5 point, volume : lower.
Bollinger band reading : correction range bound downside biased.
MACD Histogram : rising higher, buyer in advantage.
Support : 1615, 1610, 1600, 1595 level.
Resistance : 1623, 1627, 1635, 1640 level.
FKLI closed 1 tick higher with decreasing volume traded doing 2 points discount compare to cash market that closed marginally higher. Overnight U.S markets closed firmer and today Asia markets ended mixed again while European markets moving side ways between gains and losses.
Global markets traded mixed ahead of U.S. payroll data, news on Bundesbank slash Germany 2013 growth forecast to 0.4& and 7.4 magnitude earthquake on east coast of Japan affecting Tokyo buildings and issue 1 meter tsunami alert.
Daily chart reading still calling a correction range bound 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 5:38 PM
STOCKS: European stocks looked set to open slightly higher and Asian shares touched fresh 16-month highs with hints of renewed efforts to avert the U.S. "fiscal cliff" ahead of jobs data. Signs that China's economy was stabilising also lent support. U.S. stocks closed modestly higher on Thursday. (Reuters)
FOREX-ECB knocks wind out of euro bulls, focus on US jobs
The euro languished near one-week lows against the dollar, having suffered a major setback the previous day when the European Central Bank divulged its bleak outlook for the euro zone and spoke of turning interest rates negative.
"The main trigger for the sharply negative euro reaction was the mention of a 'wide' discussion over rate cuts, while Mr. Draghi also said the ECB was 'operationally ready' for negative rates," said BNP Paribas strategist Vassili Serebriakov.
ECB discusses rate cut, depicts bleak 2013
The European Central Bank pondered an interest rate cut on Thursday and predicted the euro zone economy would shrink again in 2013, leaving the door open to a possible reduction in borrowing costs early next year. (Reuters)
U.S. likely to extend Iran sanction waivers-sources
The United States will likely give India, South Korea, Turkey and others another six-month reprieve on Friday from financial sanctions because they have reduced their purchases of crude oil from Iran, two U.S. government sources said on Thursday. (Reuters)
GRAINS: U.S. soybeans edged down, coming off a near one-month top hit in the previous session, but worries about unfriendly crop weather curbing South American supply set up prices for their strongest weekly showing in more than three months. Corn rebounded slightly from losses in the previous session, when it was hurt by weak U.S. exports, while wheat also firmed, amid concern over winter crops in the United States. (Reuters)
U.S. winter wheat abandonment may top 25 pct-experts
U.S. winter wheat farmers could abandon more than a quarter of the new wheat crop due to devastating weather, though decisions on abandonment will not be made until spring, experts said this week. (Reuters)
ArcelorMittal pulls French bid for EU steel project
A politically charged deal between the French government and ArcelorMittal to preserve jobs at an ailing steelworks looked at risk of unravelling on Thursday after the global steel giant ditched a bid to run an EU-funded project there. (Reuters)
Enbridge expands oil pipeline plan to C$6.2 bln
Enbridge Inc on Thursday proposed a C$6.2 billion expansion of its oil pipeline system, aimed at moving surging volumes of light crude from Western Canada and the North Dakota Bakken to refineries in the eastern part of the continent and U.S. Midwest. (Reuters)
OIL: Brent crude steadied above $107 per barrel, but prices were headed for their biggest weekly loss since October on worries about the euro zone economy and a looming fiscal crisis in the United States. (Reuters)
BASE METAS: London copper was steady and was set to close the week little changed as traders focused on the progress of talks in the United States to avert a looming fiscal crisis, as well as the November jobs report. (Reuters)
PRECIOUS METALS: Gold nudged higher, extending gains from the previous session when bullion was boosted by prospects of future interest cuts by the European Central Bank, but the precious metal was headed for its second straight week of decline. (Reuters)
PREVIEW-China iron ore, crude imports seen up in Nov on restocking
BEIJING, Dec 7 (Reuters) - China's imports of crude oil and iron are expected to rise in November as refineries raise runs and steel mills restock, but an uncertain economic outlook continues to hold back purchases of a range of commodities.
The pace of activity in China's vast manufacturing sector quickened for the first time in 13 months in November, a survey of private factory managers found, adding to evidence that the economy is reviving after seven quarters of slowing growth.
China daily steel output rises 0.4 pct in late Nov -CISA
SHANGHAI/BEIJING, Dec 7 (Reuters) - China's steel mills produced an average of 1.9599 million tonnes of steel a day over the Nov. 21-30 period, an increase of 0.42 percent over the previous 10 days, data from the China Iron and Steel Association showed on Friday.
Chinese steel output normally tails off as winter approaches and construction activity in northern regions slows, but it has remained at relatively high levels throughout November.
METALS-LME copper holds above $8,000 ahead of US jobs data
London copper was steady, and was set to close the week little changed, as traders focused on the progress in U.S. talks to avert a looming fiscal crisis while also waiting for a crucial jobs report from the world's largest economy.
"China data of late has been looking relatively positive. The wild card is the FOMC. We think that they may talk about extending the QE (quantitative easing) program ... that could be a little positive for commodities in general," said Nick Trevethan, senior commodity strategist at ANZ in Singapore.
"That said, fiscal cliff worries are likely to keep a lid on things for the most part. We are looking to see a small pull back by the end of the year," he added.
PRECIOUS-Gold inches up; headed for 2nd week of losses
Gold nudged higher, extending gains from the previous session when bullion was boosted by prospects of future interest cuts by the European Central Bank, but the precious metal was headed for its second straight week of decline.
"Gold's fundamentals are intact," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
"Investors seem to regard $1,690 as an attractive level to buy gold."
Baltic index down on weak capesize rates
Dec 6 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Thursday for a sixth straight session as rates for capesizes and panamaxes continued to remain weak.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 3.13 percent to 990 points.
Posted by MW Chong at 4:40 PM
GLOBAL MARKETS-Asia shares edge higher, focus on U.S. jobs
TOKYO, Dec 7 (Reuters) - Asian shares ticked up to a 16-month high following modest overnight gains in global equities as investors watched progress in U.S. budget talks and awaited U.S. nonfarm payrolls data later in the day.
"The main board is expected to rise on Friday, but gains will be limited in the absence of game-changing events since the last session as we await U.S. employment data," Cho Byung-hyun, an analyst at Tong Yang Securities, said of Seoul shares.
FOREX-Downbeat ECB knocks wind out of euro bulls
SYDNEY, Dec 7 (Reuters) - The euro languished at one-week lows against the greenback, having suffered a major setback after the European Central Bank painted a bleak outlook for the euro zone and discussed cutting interest rates.
"The main trigger for the sharply negative euro reaction was the mention of a 'wide' discussion over rate cuts, while Mr. Draghi also said the ECB was 'operationally ready' for negative rates," said BNP Paribas strategist Vassili Serebriakov.
ECB discusses rate cut, depicts bleak 2013
FRANKFURT, Dec 6 (Reuters) - The European Central Bank pondered an interest rate cut on Thursday and predicted the euro zone economy would shrink again in 2013, leaving the door open rrowing costs early next year.
ECB President Mario Draghi said the policymaking Governing Council held a wide discussion on interest rates before opting to leave them on hold. The euro fell against the dollar and the yen in response.
US seen extending Iran sanction waivers to India,others-sources
WASHINGTON, Dec 6 (Reuters) - The United States is likely to announce on Friday that it will give at least seven economies including India, South Korea and Turkey another six-month reprieve from financial sanctions against Iran, two U.S. government sources said.
As Washington works with the economies to rein in Tehran's nuclear ambitions, the State Department will likely extend the waivers, known as "exceptions," because they reduced their purchases of Iran's crude.
Argentina's LNG imports seen at record in 2013
BUENOS AIRES, Dec 6 (Reuters) - Argentina will buy as many as 83 cargoes of liquefied natural gas (LNG) in 2013, rising to a record on expectations for brisker economic growth, a source at state energy company Enarsa said on Thursday.
The South American country originally planned to import 80 cargoes this year, but slower economic growth and increased supplies of piped natural gas from Bolivia reduced the original forecast to 56 cargoes.
Indonesia 2013 LNG exports to drop 13.8 pct
JAKARTA, Dec 6 (Reuters) - Indonesia's liquefied natural gas (LNG) exports are expected to drop 13.8 percent in 2013 to 274 cargoes as its production declines and it sets aside more gas for domestic use, a source at its new interim oil and gas regulator (SKMigas) said.
Indonesia, the world's third-largest LNG exporter, is increasing the use of natural gas at home to avoid costly imports and to feed rising demand. Supplies have also declined from its ageing fields.
Oil falls on euro zone concerns, dollar strength
NEW YORK, Dec 6 (Reuters) - Oil prices fell on Thursday after the head of the European Central Bank said the euro zone's economic outlook faces "downside risk" and a recovery may not happen until later in 2013.
"Oil prices dropped on economic uncertainty in both Washington and Europe, with the ECB comments indicating it could take a year to start recovery there," said Gene McGillian of Tradition Energy in Connecticut.
Posted by MW Chong at 11:21 AM
Australia: Jobless rate unexpectedly falls
Australia’s unemployment rate unexpectedly dropped in November as a labour market driven by mining-industry hiring weathers a weaker global economy. The jobless rate fell to 5.2% from 5.4% in October. That compares with the median estimate for unemployment of 5.5% in a Bloomberg News survey. The number of people employed advanced by 13,900, compared with the consensus forecast for no change. (Bloomberg)
UK: BOE keeps stimulus on hold as Osborne extends fiscal squeeze
BOE officials left their bond-buying programme on hold as they assessed the need for more stimulus a day after Chancellor of the Exchequer George Osborne committed the country to five more years of austerity. Governor Mervyn King and the Monetary Policy Committee kept their quantitative-easing target at GBP375bn, a move predicted by all 36 economists in a Bloomberg News survey. (Bloomberg)
Germany: Manufacturing orders surge in sign of resilience
German factory orders surged almost four times as much as economists forecast in October, driven by foreign demand. Orders, adjusted for seasonal swings and inflation, jumped 3.9% from September’s revised growth of 2.4%. The increase is the biggest since January 2011 and exceeds the median forecast for a 1% gain in a Bloomberg News survey. From a year earlier, orders fell 2.4% when adjusted for work days. (Bloomberg)
EU: Draghi leaves rate-cut door ajar as ECB reduces forecasts
The ECB cut its growth and inflation forecasts and President Draghi said the euro area won’t start to shake off its slump until 2H2013, leaving the door ajar for further interest-rate reductions. “Weak activity is expected to extend into next year,” Draghi said after policy makers left the benchmark rate at 0.75%. (Bloomberg)
US: Households back to slashing debt
Households went back to shedding debt in the third quarter, with Americans repaying mortgages even as student and car loans piled up. The Federal Reserve, in its voluminous flow-of-funds report, reported household debt fell an annualised 2% in the third quarter to USD12.87tn, marking the 16th period out of 18 that has seen a decline. The 2% drop was the largest since the second quarter of 2011. (MarketWatch)
US: Jobless claims drop 25,000 to 370,000
New applications for US unemployment benefits fell for the third straight week, but they still haven’t fallen to quite the same level that prevailed before the superstorm Sandy smashed into the Northeast in late October. Initial jobless claims sank by 25,000 to a seasonally adjusted 370,000 in the week ended 1 Dec. Claims from two weeks ago were revised upward to 395,000 from an initial read of 393,000. (MarketWatch)
US: Consumer comfort holds near highest since April
Consumer confidence held close to a seven-month high last week as the holiday-shopping season put more Americans in the mood to spend, and claims for unemployment benefits declined. The Bloomberg Consumer Comfort Index eased to minus 33.8 in the period ended 2 Dec from minus 33. This marks the 11th straight above minus 40, a point associated with recessions and their aftermath. (Bloomberg)
Posted by MW Chong at 9:55 AM
Karambunai to pay off RM812m debts
Karambunai has proposed a capital reconstruction by cancelling RM0.40 of its RM0.50 sen par value shares to pay off its total accumulated losses of RM812m. The corporate exercise also includes a fundraising via proposed renounceable rights issue of 507.5m new shares on the basis of one rights for every four existing shares, together with 1.02bn free detachable warrants on the basis of two warrants for every one rights subscribed. The price and entitlement date will be determined later, with the company intending to raise at least RM22.3m. (Malaysian Reserve)
Maxis to invest up to RM500m in 4G, rollout in 1Q2013
Maxis is expected to invest RM400m–RM500m over the next three years in long-term evolution (LTE) or 4G services, which it will roll out in Klang Valley in 1Q2013. Services will be extended to Penang, Johor Bahru, Sabah and Sarawak in four to six months after the Klang Valley launch. (StarBiz)
Scomi extends cut-off date for proposed bond issue
Scomi and IJM Corp have agreed to extend the cut-off date for the fulfillment of conditions precedent for the completion of a proposed RM110m convertible bond issue to 11 Feb 2013, from 24 Dec 2012. Among the conditions still required include approvals from the Securities Commission. The company will then likely call for an EGM to vote on the proposed issue to IJM. There are two factions in the company, one which is against the entry of IJM and the other which welcomes the company. (Financial Daily)
Gamuda bidding for several infrastructure projects next year
Gamuda is looking forward to participate in upcoming infrastructure projects including the Kuala Lumpur–Singapore high speed railway link and the MRT second line. The progress of the MRT South Buloh-Kajang line is on track to be completed by July 2017, with some 95% of the RM19.8bn contract value already awarded. Meanwhile, Group MD Datuk Lim Yun Ling is planning to renew his contract for another five years. He has been with the company for 35 years. (StarBiz)
MMHE wins RM165m gas project
Malaysia Marine and Heavy Engineering (MMHE) has won a contract worth RM165m from ExxonMobil Exploration and Production Malaysia Inc to build the facilities for the Damar gas development project. Damar is one of several investments that would enable ExxonMobil and Petronas Carigali SB to develop natural gas assets. The project is about 200km off the east coast of Peninsular Malaysia in 55m of water. (BT)
Posted by MW Chong at 9:54 AM
Asia FX By Cornelius Luca - Thu 06 Dec 2012 15:55:01 CT (CME/www.lucafxta.com)
The appetite for risk shrank selectively on Thursday ahead of the US non-far payrolls and despite the lack of progress in the "fiscal cliff" negotiations. The European currencies sank after the ECB said that its regional GDP will likely decline next year. The commodity currencies ended off their highs and the yen consolidated. The US stock markets made little progress, while the gold/oil spread surged. The short-term outlook for most foreign currencies is sideways, but the European currencies have a bearish bias. 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: The jobless claims fell to 370,000 in the week ended December 1 from the previous week's revised figure of 395,000.
Canada: The Ivey Purchasing Managers Index fell to 46.4 in November from 58.3 in October.
Canada: Building permits rose 15% on a monthly basis during October after contracting 12.7% in September.
Today's economic calendar
Australia: AiG Performance of Construction Index for November
UK: RICS housing price balance for November
Japan: Coincident index /leading economic index for October
Asian Stocks Rise as Fewer American File Jobless Claims (Bloomberg)
Asian stocks gained, with the regional benchmark index extending an eight-month high, as fewer Americans filed applications for unemployment benefits and Australia’s building industry shrank at a slower pace. James Hardie Industries SE (JHX), the building materials suppliers that gets about 67 percent of sales from the U.S., climbed 1.6 percent in Sydney. Commonwealth Bank of Australia, the country’s biggest lender, climbed 1 percent. Renesas Electronics Corp. gained 1 percent in Tokyo on a report NEC Corp., Mitsubishi Electric Corp. and Hitachi Ltd. have agreed on a bailout for the ailing chipmaker. The MSCI Asia Pacific Index (MXAP) rose 0.1 percent to 125.91 as of 9:43 a.m. Tokyo time, headed for its highest close since April 3. Markets in China and Hong Kong have yet to open. The measure is heading for its third week of advance amid signs of recovery in the world’s two largest economies and optimism U.S. lawmakers will agree on a budget deal to avert the so-called fiscal cliff.
“We could see a short-term rally, driven by exporters amid signs of improving U.S. economy,” said Masahiko Ejiri, a Tokyo- based fund manager for Mizuho Asset Management Co., which oversees about $45 billion. “This rally may not be sustained. Europe’s problems are likely to persist.”
Japanese Stocks Hold Gains Ahead of U.S. Payroll Report (Bloomberg)
Japanese shares swung between gains the losses ahead of a U.S. payrolls report and as a technical indicator showed the market may be overbought after the Nikkei 225 (NKY) Stock Average rose to a seven-month high yesterday. Kansai Electric Power Co. (9503) paced gains among utilities on a Kyodo News report that the government may allow the restart of some nuclear reactors this summer. Softbank Corp. fell 1.1 percent after Nikkei newspaper reported NTT DoCoMo Inc. may start selling Apple Inc.’s iPhone to remain competitive. Sharp Corp. gained 6 percent, soaring 24 percent since announcing a capital alliance with Qualcomm Inc. on Dec. 4. The Nikkei 225 was little changed at 9543.71 as of 9:38 a.m. after rising as much as 0.2 percent. The equity gauge capped the biggest monthly gain since February last month on speculation Japan’s opposition will win the Dec. 16 election and call for more stimulus. The Topix Index rose 0.1 percent to 789.15, with about seven stocks falling for every six that gained.
“Investors are waiting for the U.S. employment data and so are finding it hard to pick a direction,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “We don’t think the U.S. is going to go off the fiscal cliff. We expect there to be some compromise in the end, but it’s too early for unguarded optimism.” The Relative Strength Index (NKY) on the Nikkei 225 was 70.5 today, with some traders seeing a reading above 70 as a sign the measure is overbought.
U.S. Stocks Rise as Apple Rebounds Amid Budget Talks (Bloomberg)
U.S. stocks rose for a second day as Apple Inc. rebounded from its biggest drop in four years and investors weighed prospects for a budget deal in Washington. Apple advanced 1.6 percent, reversing an earlier loss. Akamai (AKAM) Technologies Inc. increased 10 percent after agreeing to sell services with AT&T Inc. H&R Block Inc. (HRB), the biggest U.S. tax preparer, advanced 5.1 percent after reporting a loss that was smaller than analysts estimated. Freeport-McMoRan Copper & Gold Inc. (FCX), the world’s largest publicly traded copper producer, and MetLife Inc. (MET), the biggest U.S. life insurer, declined at least 1.2 percent following analysts’ rating downgrades. The Standard & Poor’s 500 Index increased 0.3 percent to 1,413.94 at 4 p.m. New York time. The Dow Jones Industrial Average advanced 39.55 points, or 0.3 percent, to 13,074.04. More than 5.7 billion shares changed hands on U.S. exchanges, or 8.9 percent below the three-month average.
“Apple stock is taking a breather after a sharp selloff and that’s helping the overall market,” said Alan Gayle, senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “Most analysts continue to like their story. We’re seeing some validation of that. In addition, the jobless claims were better than expected. The data suggest the U.S. economy continues to heal and that will be the case as long as we don’t fall off the fiscal cliff.” A few dozen Republicans joined a bipartisan push to break an impasse between President Barack Obama and House Speaker John Boehner over taxes for the highest-earning Americans, signing a letter calling for openness to “all options.” Fewer Americans than projected filed applications for unemployment benefits last week as disruptions caused by superstorm Sandy waned.
European Stocks Advance to 18-Month High on U.S. Optimism (Bloomberg)
European (SXXP) stocks advanced to an 18- month high amid optimism U.S. lawmakers will agree on a new budget and avoid the so-called fiscal cliff. European Aeronautic, Defence & Space Co. jumped 8 percent after announcing a new shareholder structure and saying it will buy back shares. Daimler AG (DAI) rose 1.2 percent after selling half its remaining holding in EADS. (EAD) GDF Suez SA slid to its lowest ever after saying earnings will decline next year. The Stoxx Europe 600 Index added 0.7 percent to 278.82 at the close of trading, its highest since May 31, 2011. The gauge has surged 19 percent from this year’s low on June 4 as the European Central Bank announced a bond-buying plan, the Federal Reserve boosted stimulus measures and optimism rose that U.S. lawmakers will agree on a budget.
“Markets are moving on the expectation that however difficult things may be, there will be a U.S. budget deal,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “It’s almost inconceivable at this stage that the Congress will allow the fiscal cliff to happen, especially when we don’t really know the severity of the recession.” About 80 members of Congress, comprising Republicans and Democrats, signed a letter calling for an exploration of “all options” in to end a deadlock between President Barack Obama and House Speaker John Boehner over taxes for the highest- earning Americans. Congress must strike a budget deal by the end of the year to prevent more than $600 billion of automatic tax increases and spending cuts from coming into effect.
Emerging Stocks Rise Second Day as Consumer Shares Gain (Bloomberg)
Emerging-market stocks rose to a seven-month high as speculation U.S. politicians will reach a budget deal spurred risk appetite and support widened for policies allowing foreign investment in India’s retail market. Hyundai Mobis Co. (012330), which got 21 percent of third-quarter sales from America, climbed to a six-week peak in Seoul. OAO Rostelecom, Russia’s state-run telephone operator, had the biggest gain in almost two months after a court ruling allowed investor Konstantin Malofeev to keep immunity from prosecution. Absa Group Ltd. (ASA) headed for the highest close since June on Barclays Plc’s plan to increase its stake in the Johannesburg- based lender.
The MSCI Emerging Markets Index added 0.2 percent to 1,019.48 at 1 p.m. in London, heading for the highest close since May. A few dozen Republicans joined a bipartisan push to break an impasse between President Barack Obama and House Speaker John Boehner over taxes for the highest-earning Americans, signing a letter calling for openness to “all options.” The leader of India’s fourth-largest party in the parliament said she would support the government’s plan to allow foreign investment in retail. “There has been growing optimism that a solution can finally be reached to resolve the fiscal cliff problem,” said Saharat Chudsuwan, who helps oversees $5 billion at Tisco Asset Management Co. in Bangkok. The BSE India Sensitive Index, or Sensex (SENSEX), gained for a third day, adding 0.5 percent. The rupee strengthened 0.8 percent versus the dollar, the highest in a month. Russia’s Micex Index (INDEXCF) increased 0.3 percent, rising for a second day, and Brazil’s Bovespa index declined 0.5 percent.
Aussie Set for Weekly Gain Before Chinese Production, Sales Data (Bloomberg)
Australia’s dollar was set for a five-day advance before Chinese data next week that may show the world’s second-largest economy is picking up. The so-called Aussie was near a two-month high after a private report showed the nation’s construction industry contracted at a slower pace. Demand for the currency was also supported after the statistics bureau reported a smaller-than- estimated trade deficit. “Chinese economic data are improving after concern about a slowdown,” said Teppei Ino, a Tokyo-based analyst at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “That’s providing some support for the Australian and New Zealand dollars.” Australia’s currency traded at $1.0484 as of 11:47 a.m. in Sydney after rising 0.3 percent to $1.0486 in New York when it reached $1.0516, the highest since Sept. 21. The New Zealand dollar, nicknamed the kiwi, bought 83.24 U.S. cents from 83.27. The Aussie has risen 0.5 percent this week, while the kiwi has advanced 1.5 percent.
China’s industrial production probably rose 9.8 percent in November from a year earlier, the fastest pace since March, according to the median estimate of economists surveyed by Bloomberg News. Retail sales are forecast to have increased 14.6 percent last month, compared with a 14.5 percent gain in October. The National Bureau of Statistics is due to release the figures on Dec. 9.
Euro Holds Drop on Slowdown Signs; Aussie Lower (Bloomberg)
The euro remained lower against the dollar after posting the biggest drop in a month on concern Europe’s debt crisis is weighing on growth. The shared currency headed for weekly declines against most of its 16 major peers before data forecast to show German industrial production stagnated. The European Central Bank yesterday cut its growth forecasts, leaving the door open to interest-rate reduction. Australia’s dollar fell from a two- month high before reports which may show the trade deficit widened. Demand for the yen was limited amid speculation the Bank of Japan will ease policy to boost economic growth. “Europe is in recession and with no prospects of it getting better any time soon,” said Kikuko Takeda, senior currency economist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. “The euro will continue to be sold.”
The euro was little changed at $1.2969 per dollar as of 8:37 a.m. in Tokyo from yesterday, when it dropped 0.8 percent, the biggest decline since Nov. 2. The common currency traded at 106.85 yen from yesterday, when it lost 0.9 percent to 106.84. For the week, the euro is set for a 0.1 percent slide against the greenback and a 0.2 percent decline versus the yen. The Japanese currency traded at 82.39 to the dollar from 82.40 yesterday, and is up about 0.1 percent on the week. Australia’s dollar slipped 0.1 percent to $1.0477 from yesterday, when it touched $1.0516, the highest since Sept. 21.
Consumer Comfort in U.S. Holds Near Highest Since April (Bloomberg)
Consumer confidence held close to a seven-month high last week as the holiday-shopping season put more Americans in the mood to spend, and claims for unemployment benefits declined. The Bloomberg Consumer Comfort Index eased to minus 33.8 in the period ended Dec. 2 from minus 33. The reading, within the margin of error of 3 percentage points, was the 11th straight above minus 40, a point associated with recessions and their aftermath. Jobless claims decreased by 25,000 to 370,000 in the week ended Dec. 1, the Labor Department said. Holiday shoppers are taking advantage of discounting, expanded store hours and Internet deals, explaining why a gauge of the buying climate climbed to a five-year high. While confidence is getting a lift from cheaper gasoline and an improving job market, failure by lawmakers to prevent automatic tax increases threatens to throttle the household spending that accounts for 70 percent of the economy.
“I don’t expect that consumers will hold back during the holidays,” said Dean Maki, chief U.S. economist at Barclays Plc in New York. “I think the bigger risk is that as we move into the first quarter, if there’s not a resolution on the fiscal cliff,” Americans would cut back as their after-tax incomes decline, he said. The drop in claims was the third straight. The mid-Atlantic region, which employs about 14 percent of U.S. workers, is recovering after Sandy. Apart from the storm-related damage -- which may also be reflected in the November payrolls report tomorrow -- employers will probably curb hiring until the risks from the global slowdown and looming fiscal tightening dissipate.
Jobless Claims in U.S. Decline as Sandy Effect Wanes (Bloomberg)
Fewer Americans than projected filed applications for unemployment benefits last week as disruptions caused by superstorm Sandy waned. Jobless claims decreased by 25,000 to 370,000 in the week ended Dec. 1, Labor Department figures showed today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a drop to 380,000. A Labor Department spokesman said there was nothing unusual in last week’s data. The mid-Atlantic region, which employs about 14 percent of U.S. workers, is recovering after Sandy. Apart from the storm- related damage -- which may also be reflected in the November payrolls report tomorrow -- employers will probably curb hiring until the risks from the global slowdown and looming U.S. fiscal tightening dissipate.
“Sandy pushed up claims temporarily, and with this number we are pretty much back to where we were before the hurricane,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, who accurately projected the drop in claims. “Layoffs are lingering at the same pace. Hiring remains relatively anemic.” Stock-index futures fell after European Central Bank President Mario Draghi said policy makers cut growth forecasts for the region and continued to see ‘downside risks.” The contract on the Standard & Poor’s 500 Index maturing this month fell 0.2 percent to 1,405.7 at 8:48 a.m. in New York.
Greenspan Says Painless Solution to U.S. Debt is Fantasy (Bloomberg)
Reducing U.S. long-term deficits will inevitably cause economic pain, former Federal Reserve Chairman Alan Greenspan said. “The presumption that we’re going to have a painless solution to this, I think, is fantasy,” Greenspan said today during a “Bloomberg Surveillance” television interview with Tom Keene and Sara Eisen. “There are a lot of risks out there but the one thing I can be reasonably certain of is we won’t get through this whole issue without some pain.” The U.S. faces twin fiscal challenges with more than $600 billion of spending cuts and tax increases scheduled to hit at the beginning of next year, threatening to send the economy into an austerity-induced recession, even as rising long-run deficits may prove unsustainable.
Greenspan, 86, who preceded Ben S. Bernanke as chairman of the central bank, blamed U.S. deficits on growth in spending and blamed both political parties, saying “strangely enough, and ironically, the spending surge which is creating the problem here is fundamentally both Republicans and Democrats.” Bernanke has also spoken of the need to control U.S. deficits. In a Nov. 20 speech in New York, he said Congress and the president should reach a plan to close deficits in the long term without harming the economy in the near term. “A credible framework to set federal fiscal policy on a stable path -- for example, one on which the ratio of federal debt to GDP eventually stabilizes or declines -- is thus urgently needed to ensure longer-term economic growth and stability,” Bernanke said last month in New York.
Household Net Worth in U.S. Increases by $1.72 Trillion (Bloomberg)
Household wealth in the U.S. climbed in the third quarter, reflecting increases in stock values and home prices that are helping boost consumer confidence. Net worth for households and non-profit groups increased by $1.72 trillion from July through September, or 2.7 percent from the previous three months, to $64.8 trillion, the Federal Reserve said today from Washington in its flow of funds report. A recovery in household wealth, which plunged in the wake of the recession, may put more Americans in the mood to spend during the holiday-shopping season and give the world’s largest economy a lift. Net worth is still below its pre-recession peak, one reason the Federal Reserve is considering additional actions to spur expansion.
“Households have gotten themselves into much, much better financial shape,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “The ability of consumers to weather a shock is higher because buying power has increased. There’s no question that rising home prices are really helping to underpin buying power.” The value of financial assets owned by American households, including stocks and pension fund holdings, increased by $1.3 trillion in the third quarter, today’s Fed report showed.
Short Sales of Homes Surge as Tax Break to Expire: Mortgages (Bloomberg)
Homeowners and banks are accelerating sales of properties for less than the amount owed as a U.S. law that gives them a tax break expires at the end of the year. The transactions, known as short sales, increased by 35 percent in the third quarter from a year earlier, while sales of bank-owned homes dropped 20 percent, according to a report today by mortgage data seller Renwood RealtyTrac LLC. Together, they accounted for 41.5 percent of home purchases in the quarter. Short sales have accounted for as many as 1.1 million transactions since 2009, helping to reduce the inventory of homes owned by banks that can blight neighborhoods and flood the market. Barring a last-minute extension of the 2007 Mortgage Forgiveness Debt Relief Act, homeowners will be taxed on the forgiven principal. With Congress focused on the so-called fiscal cliff, federal spending cuts and tax-rate hikes set to kick in on Jan. 1, the law may not be extended, leading to a drop in short sales and a rise in foreclosures.
“If you’re struggling to pay your mortgage, it’s not likely you can afford an extra $25,000 or $35,000 tax bill to avoid foreclosure,” said Edward Mills, a financial policy analyst at FBR Capital Markets in Arlington, Virginia. “Mortgage forgiveness has become part of fiscal cliff politics.” The Internal Revenue Service typically taxes forgiven debt as income to the debtor. For short sales, the average price tag was $94,896 below the mortgage on the property, according to the RealtyTrac report. Tacking that onto borrowers’ income would not only raise the amount of taxes due -- it could push them into a more expensive tax bracket.
China State-Driven Rebound at Risk as Small Firms Suffer (Bloomberg)
China’s growth rebound, forecast to have gathered pace in November, is bypassing smaller businesses in a sign the government may need to step up policy support to secure a more broad-based recovery. Industrial production growth probably accelerated for a third month to 9.8 percent from a year earlier, while retail sales probably rose 14.6 percent, the most since March, according to median estimates in Bloomberg News surveys before data due Dec. 9. At the same time, 80 percent of small businesses polled by a state-run association said they hadn’t seen any “obvious benefits” from government policies. China’s rebound from a seven-quarter slowdown is being driven by state-funded transport projects, boosting the shares of railcar makers such as China CNR Corp. even as the benchmark stock index dropped. The focus on infrastructure and the lack of a more widespread pickup may threaten the sustainability of the economic recovery.
“The recovery is uneven as the recent rebound is mainly driven by government-sponsored investment projects,” said Ding Shuang, a Hong Kong-based economist with Citigroup Inc. “Since the policy easing this time is more measured than previous rounds, the rebound is likely to be mild and may not persist. More support is needed for smaller firms to sustain growth and jobs.” China’s economy is stabilizing and positive factors are increasing, the ruling Communist Party’s top decision-making body said this week in its first public assessment of the economy under new leader Xi Jinping. Authorities will put “enhancing quality and efficiency of economic growth at the center” in 2013, the official Xinhua News Agency cited the Politburo as saying.
Draghi’s Go-to ECB Seen Risking Credibility Through Overload (Bloomberg)
Mario Draghi isn’t just battling to save Europe’s monetary union, he’s being asked to run it. The European Central Bank president is taking on more and more responsibility to keep the currency bloc afloat, from propping up bond markets to monitoring fiscal policies and assuming supervision of the region’s 6,000 banks. Economists, academics and officials past and present say the ECB is at risk of becoming overloaded, which could erode the credibility it needs to achieve its primary goal of price stability. “The ECB saved the euro,” says Andrew Bosomworth, managing director at Pacific Investment Management Co. in Munich. “But the extra responsibilities, in particular its supervisory role, put additional burdens and risks onto its mandate.”
The ECB has been the euro area’s go-to institution during the sovereign debt crisis, filling the void as governments procrastinate and squabble over how to fight the turmoil. Unencumbered by the need to win votes, the ECB’s ability to act quickly has seen it steadily accrue new roles and made its president at least as powerful as Europe’s elected leaders. Draghi yesterday left interest rates at a record low and said the ECB stands ready to intervene in bond markets if governments sign up to fiscal and economic reforms.
Draghi Leaves Rate-Cut Door Ajar as ECB Reduces Forecasts (Bloomberg)
The European Central Bank cut its growth and inflation forecasts and President Mario Draghi said the euro area won’t start to shake off its slump until the second half of 2013, leaving the door ajar for further interest- rate reductions. “Weak activity is expected to extend into next year,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. “By the second part of the next year, we should see the beginning of a recovery” as global demand strengthens and the ECB’s low rates feed through to the economy, he said. While Draghi’s pledge to buy government bonds has reduced borrowing costs in countries such as Spain and Italy and soothed concerns about the euro’s survival, the 17-nation currency bloc fell back into recession in the third quarter. The ECB’s latest forecasts paint a picture of economic stagnation and inflation falling well below its 2 percent limit. The euro dropped almost a cent to $1.2977 at 4:15 p.m. in Frankfurt.
The new projections “firmly support the case for lower interest rates,” said Howard Archer, chief European economist at IHS Global Insight in London. “The ECB appears to have the door open for an interest-rate cut, and we expect it to step through early in 2013.”
BOE Keeps Stimulus on Hold as Osborne Extends Fiscal Squeeze (Bloomberg)
Bank of England officials left their bond-buying program on hold as they assessed the need for more stimulus a day after Chancellor of the Exchequer George Osborne committed the country to five more years of austerity. Governor Mervyn King and the Monetary Policy Committee kept their quantitative-easing target at 375 billion pounds ($604 billion), a move predicted by all 36 economists in a Bloomberg News survey. Still, they have indicated the door is open to more purchases if needed, and Osborne said yesterday his “credible” fiscal plan “allows for supportive monetary policy.” The Bank of England is struggling to stoke a recovery amid a squeeze on consumers, cooling global growth and headwinds from Europe’s debt crisis. It introduced its Funding for Lending Scheme this year to boost credit, and Osborne’s affirmation of his fiscal strategy confirmed the central bank’s role as the key source of stimulus for the economy.
“The scope for easier fiscal policy is pretty limited in the U.K.,” Kevin Daly, an economist at Goldman Sachs Group Inc. in London, said in an interview with Guy Johnson on Bloomberg Television today. “The slack needs to be closed through much easier monetary policy and specifically credit policy.” The Bank of England also left its key interest rate at a record low of 0.5 percent.
ECB Keeps Benchmark Rate at 0.75% as Yields Decline (Bloomberg)
The European Central Bank kept interest rates on hold after its pledge to buy government bonds lowered borrowing costs and boosted confidence that the euro area can emerge from recession next year. Policy makers meeting in Frankfurt today left the benchmark rate at a record low of 0.75 percent, as predicted by 56 of 61 economists in a Bloomberg News survey. They also left the deposit rate at zero. ECB President Mario Draghi will hold a press conference at 2:30 p.m. to brief reporters on the decision and reveal new economic forecasts, including a first projection for 2014. Italian and Spanish bond yields have plummeted since Draghi promised to do whatever it takes to save the euro and announced an unlimited bond-purchase program. That’s helping to ease the strain on the euro region’s third- and fourth-largest economies and fueling optimism that the sovereign debt crisis can be contained, even after the 17-nation currency bloc slipped into recession.
“I expect solid growth for the euro area next year and no change in interest rates,” said Ulrich Kater, chief economist at DekaBank Deutsche Girozentrale in Frankfurt. “Only if the economy doesn’t grow might the ECB have to come up with a Plan B and lower interest rates.”
German Manufacturing Orders Surge in Sign of Resilience (Bloomberg)
German factory orders surged almost four times as much as economists forecast in October, driven by foreign demand. Orders, adjusted for seasonal swings and inflation, jumped 3.9 percent from September, the Economy Ministry in Berlin said today. It revised September’s drop to 2.4 percent from 3.3 percent. The increase in October is the biggest since January 2011 and exceeds the median forecast for a 1 percent gain in a Bloomberg News survey of 42 economists. From a year earlier, orders fell 2.4 percent when adjusted for work days. German business confidence unexpectedly rose in November after growth slowed less than economists predicted in the third quarter. At the same time, the euro area, Germany’s largest export market, slipped into recession. The Bundesbank has warned that the economic slowdown could continue in the fourth quarter as the region’s debt crisis and weaker global growth damp demand.
“The music is playing outside the euro region, where the label ‘Made in Germany’ is enjoying everlasting popularity,” said Mario Gruppe, an economist at NordLB in Hanover. “That’s good news for the economic outlook. We’re in for a cold winter but not a recession - everything speaks for an economic dent.” The euro rose after the report and was trading unchanged at $1.3068 at 12:40 p.m. in Frankfurt. The benchmark DAX index rose 1 percent today to 7526.30.
King Seen Maintaining QE as Osborne Extends Fiscal Squeeze (Bloomberg)
Bank of England officials may today leave their bond-buying program on hold as they assess the need for more stimulus a day after Chancellor of the Exchequer George Osborne committed the country to five more years of austerity. Governor Mervyn King and the Monetary Policy Committee will probably leave their quantitative-easing target at 375 billion pounds ($604 billion), according to a Bloomberg News survey of economists. Still, they have left the door open to more purchases if needed, and Osborne said yesterday his “credible” fiscal plan “allows for supportive monetary policy.” The central bank is struggling to stoke a recovery amid a squeeze on consumers and headwinds from Europe’s debt crisis. Bank of Canada Governor Mark Carney was appointed last month to lead that effort from July, and Osborne’s affirmation yesterday of his fiscal strategy confirmed the BOE’s role as the key source of stimulus for the economy.
“There’s no prospect of any unwinding of any quantitative easing before Mervyn leaves, or a rate increase,” said David Tinsley, an economist at BNP Paribas SA and a former central bank official. “In fact the risks lately have shifted a bit to doing more QE because the data haven’t been so good.” All 36 economists in the Bloomberg poll see no increase in gilt purchases today, while the median forecast in a separate survey is that the benchmark interest rate will remain at a record-low 0.5 percent. The central bank will announce the decisions at noon in London. The pound rose 0.1 percent against the dollar today and was trading at $1.6114 as of 9:58 a.m. in London. The yield on the 10-year gilt rose 2 basis points to 1.8 percent.
Osborne Targets Welfare and the Rich as Fiscal Targets Slip (Bloomberg)
Chancellor of the Exchequer George Osborne took aim at welfare spending and the pensions of the rich after an ailing economy blew his deficit-cutting strategy off course. Osborne announced a broadly neutral fiscal plan for the next four years with a package of measures for companies, while telling the House of Commons in his autumn statement yesterday he no longer expects to meet his debt target and will have to extend austerity well beyond the 2015 general election. With the economy forecast to shrink by 0.1 percent this year and expand little more than 1 percent in 2013, Osborne is finding it increasingly difficult to stick to the plans on which he staked his political reputation two years ago. He now expects to balance the budget in 2018 instead of 2015, as originally planned, after announcing a 5 billion-pound ($8 billion) spending squeeze from 2017.
“The plan’s still there but it’s going to be the next government implementing it,” said Neville Hill, head of European Economics at Credit Suisse Group AG (CSGN) in London and a former U.K. Treasury official. “It’s pushing austerity back by almost Greek proportions. It’s a case of kicking the can down the road, which the government can afford to do.” Osborne told lawmakers that his fiscal watchdog, the Office for Budget Responsibility, believes he will miss his target to begin cutting the burden of government debt in 2015-16. Instead, debt as a share of gross domestic product will peak at 79.9 percent in that year, and then start to decline in following years, he said.
2012 Expected to be Warmest Year on Record for U.S. (Bloomberg)
This year will probably overtake 1998 to become the warmest year on record in the U.S., the National Oceanic and Atmospheric Administration said in its monthly climate report.
The first 11 months of 2012 were the warmest start to any year in the contiguous 48 states since the U.S. began keeping records in 1895, NOAA’s Climatic Data Center reported today. The average national temperature for the period was 57.1 degrees Fahrenheit (13.9 Celsius), 1 degree above the old mark set in 1934 and 3.3 degrees above the average for the 20th century, the agency said.
For all of 1998, the average temperature was 54.3 degrees.
“It appears virtually certain that 2012 will surpass the current record as the warmest year for the nation,” the Asheville, North Carolina-based center said. December temperatures would have to be lower by 1 degree than the coldest average for the month on record, in 1983, for the year not to set a new mark.
The U.S. autumn, which for meteorologists was from September through November, was the 21st warmest on record. The period was drier than normal for much of the central U.S. and Southeast, the agency said.
Only eight of the lower 48 states, along the West Coast and across the north from Washington through Minnesota, had average or above-normal rainfall during November.
DTN Closing Grain Comments 12/06 14:23 Grains Mostly Higher On Late Rally (CME)
A strong closing rally in the soybean market pulled wheat contracts higher. Corn struggled throughout the session, but did close well off session lows on spillover support from beans.
Wheat Futures Rise as Dry Spell Erodes Crop Prospects (Bloomberg)
Wheat prices gained for a second straight day on speculation that dry weather may curb production in the U.S., the world’s biggest exporter. Rainfall and snow will miss winter-wheat areas in the Great Plains, forecaster Commodity Weather Group said in a report today. Little or no rain has fallen during the past 30 days in parts of Oklahoma, Texas and Kansas, the biggest U.S. grower of winter wheat, National Weather Service data show. “They’re dry as far as the eye can see,” Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa, said in a telephone interview. “That by itself is going to offer some underlying support for wheat.” On the Chicago Board of Trade, wheat futures for March delivery gained 0.2 percent to settle at $8.62 a bushel at 2 p.m. For the year, prices still are up 32 percent after the worst U.S. drought in 56 years. Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
Corn Market Recap for 12/6/2012 (CME)
March Corn finished down 6 1/4 at 751 1/2, 7 1/2 off the high and 3 1/2 up from the low. May Corn closed down 5 1/2 at 753. This was 4 up from the low and 6 3/4 off the high.
March corn ended the day with modest losses but closed off the session lows. The weekly export sales report was extremely disappointing at only 51,600 tonnes for the current marketing year and -4,200 for the next marketing year for a total of 47,400 tonnes. This was well below market expectations and against 236,100 tonnes last week. As of November 29th, cumulative sales stand at 42% of the USDA forecast for the current marketing year vs. the 5 year average of 50.5%. Sales of 431,000 tonnes are needed each week to reach the USDA forecast which increased from 421,300 last week. The US remains a stiff premium to South America corn at the moment which is hampering any progress in export sales. Support in the market continues to come from a dry weather outlook in the western plains and a very wet forecast for Argentina. Some analysts expect Argentina's corn production estimate to be cut from 28 million tonnes next week.
January Rice finished down 0.245 at 15.31, 0.16 off the high and equal to the low.
Wheat Market Recap Report (CME)
March Wheat finished up 2 at 862, 2 1/4 off the high and 9 up from the low. May Wheat closed up 2 1/2 at 871. This was 8 3/4 up from the low and 1 1/2 off the high.
March Chicago and KC wheat traded slightly higher into the closing bell. This morning's export sales report was considered neutral to market direction but wheat sold off early on after terrible corn sales were reported. The market gained traction near the close as soybeans rallied. Net weekly export sales came in at 353,100 tonnes and as of November 29th, cumulative wheat sales stand at 55% of the USDA forecast vs. a 5 year average of 69%. Sales of 511,000 tonnes are needed each week to reach the USDA forecast. Kansas City and Minneapolis wheat saw support after it was reported that Japan purchased 196,383 tonnes from the US and Canada. The US business was a mixture of western white, northern spring, and hard red winter wheat. Asian business has been the only real bright spot for the demand side of the US wheat balance sheet. Strength was also found on really no significant moisture for the western plains over the next couple of week.
March Oats closed up 1 at 398. This was 4 1/4 up from the low and 1 3/4 off the high.
Recap Energy Market Report (CME)
January crude oil prices traded sharply lower during the US trading session and back below the $86.00 level. Some traders pointed to slowing economic growth concerns out of Europe and strength in the US dollar as forces weighing on the market. There also seemed to be a level of uncertainty in the market regarding the US debt negotiations, as well as tomorrow's Non-Farm Payroll report. January RBOB prices extended yesterday's decline and fell to its lowest level since November 9th. Meanwhile, January natural gas prices established a higher high on the session in response to EIA inventory data that showed a larger than expected draw last week of 73 bcf. Total storage stands at 3,804 bcf, or 4.6% above the 5 year average. Over the last four weeks natural gas storage has declined 125 bcf.
Oil Trades Near Three-Week Low as ECB Cuts Europe Growth Outlook (Bloomberg)
Oil traded near the lowest level in three weeks in New York after the European Central Bank cut its forecast for euro-area economic growth and U.S. lawmakers struggled to reach agreement on a budget plan. Futures were little changed after sliding 1.8 percent yesterday, the biggest decline in more than two weeks. The euro area will probably contract 0.5 percent this year, worse than the September forecast of 0.4 percent, ECB President Mario Draghi said. U.S. President Barack Obama warned lawmakers that the economy will suffer unless there’s an agreement on a way to avert more than $600 billion in automatic spending cuts and tax increases known as the fiscal cliff. Oil is poised for its first weekly decline in more than a month. Crude for January delivery was at $86.36 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 10:58 a.m. Sydney time.
The contract slid $1.62 yesterday to $86.26, the lowest close since Nov. 15. Prices are down 2.9 percent this week and 13 percent this year. Brent for January settlement fell $1.78 to $107.03 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $20.77 to West Texas Intermediate, the narrowest gap since Oct. 19. The euro area won’t start to shake off its slump until the second half of 2013, Draghi said at a press conference yesterday in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. The European Union accounted for 16 percent of the world’s oil consumption last year and the U.S. for 21 percent, according to BP Plc (BP/)’s Statistical Review of World Energy.
Iran Oil Export Delays Seen Worsening as Sanctions Hinder Trade (Bloomberg)
Iranian oil tankers are contending with longer delays in shipments and some are idled amid increasing pressure on buyers to curb purchases from what was once OPEC’s second-biggest producer. NITC, the Tehran-based tanker owner, has 42 crude oil carriers and 13 were delayed in transit since Oct. 21, according to data compiled by Richard Hurley, a senior maritime consultant at IHS Fairplay in London who has tracked vessel movements for two decades. Four NITC ships with cargoes are idling while they await orders and four others have switched off their signals and are presumed to be anchored, the data show. Iran is reliant on NITC ships because EU sanctions imposed in July barred about 95 percent of the global tanker fleet from carrying the nation’s crude. NITC has renamed vessels, switched their flag states and signaled inaccurate information about where they are registered, according to the data from IHS, which maintains the United Nations’ shipping database.
“Iran is finding it harder to place cargoes,” Hurley wrote in an e-mail. “China, while still a major purchaser, seems unwilling to take all the cargoes which are being sent to her and has been letting some ships wait at anchor for several weeks. India, while still a purchaser, is not taking much.” Two phone calls and e-mails over two days to Habib-ullah Seyedan, NITC’s commercial director, weren’t answered.
Silver Market Recap Report (CME)
March silver almost forged a quasi double bottom low on the charts. The bull camp will claim the trade rejected the prior session's low, while the bear camp might claim today's low was close enough to suggest that support under the Wednesday closing level is questionable. Silver might have been undermined by weakness in the Euro and perhaps silver was put off balance by weakness in copper and energy prices. The bull camp might be somewhat disappointed that a positive sweep of US scheduled data had only a marginal capacity to support silver prices today.
Gold Market Recap Report (CME)
The gold market saw initial weakness before catching some lift off favorable US equity market action and somewhat better than expected US scheduled data. The gold bulls apparently discounted potentially undermining action in the currency markets and the gold trade also generally played down concerns that the two parties in Washington remained far apart on the fiscal cliff dealings. Gold was temporarily undermined in the wake of the ECB news but seeing US stocks spend a lot of time in positive ground and seeing silver and platinum track higher, probably served to embolden the bull camp in gold today.
Soybean Complex Market Recap (CME)
January Soybeans finished up 12 at 1491 1/4, 1 1/4 off the high and 18 up from the low. March Soybeans closed up 12 1/4 at 1486. This was 18 1/2 up from the low and 1 1/2 off the high. January Soymeal closed up 4.4 at 450.7. This was 4.8 up from the low and 0.3 off the high. January Soybean Oil finished up 0.2 at 51.2, 0.12 off the high and 0.9 up from the low.
January soybeans traded sharply higher into the closing bell after reporting explosive export demand data. The market ran higher on the news but quickly found selling interest on thoughts that the Brazil soybean crop might be getting larger due to favorable weather patterns. Brazil's government is projecting soybean production at 82.6 million tonnes vs. a range of 80.1-83 million tonnes in November. The USDA is at 81. Net weekly export sales came in at 1,142,700 tonnes for the current marketing year and 1,000 for the next marketing year for a total of 1,143,700. As of November 29th, cumulative sales stand at 78% of the USDA forecast for vs. a 5 year average of 63%. Sales of 208,000 tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 463,600 tonnes for the current marketing year and 1,200 for the next marketing year for a total of 464,800 tonnes. As of November 29th, cumulative meal sales stand at 70% of the USDA forecast vs. a 5 year average of 44%. Sales of 49,000 tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 19,000 tonnes and cumulative sales stand at 109% of the USDA forecast vs. a 5 year average of 34%. The late rally in soybeans was linked to strong demand by China and firm cash markets.
EDIBLE OIL: Malaysian palm oil futures edged up 0.4 percent as traders bet on demand rising in the face of tighter supplies of competing soyoil due to unfavourable weather in Argentina. (Reuters)
Palm Oil Shipments From Indonesia Seen Falling to Five-Month Low (Bloomberg)
Palm oil exports from Indonesia, the world’s largest producer, will probably drop to the lowest level in five months in December as a global economic slowdown curbs demand, according to a Bloomberg survey.
Shipments may fall 3 percent to 1.55 million metric tons from an estimated 1.6 million tons in November, according to the median of estimates from two traders, a plantation executive, refiner and an analyst compiled by Bloomberg. Inventories may remain unchanged at 3 million tons, the survey showed. Production may drop to 2.51 million tons from 2.54 million, four of the respondents said.
Palm oil, used in everything from soaps to candy to biofuels, has slumped 24 percent since the end of August as a decline in demand from Europe and China boosted stockpiles in Indonesia and Malaysia, the top growers. The commodity will probably tumble into a bear market next year as monthly output in Malaysia and Indonesia surges to records, according to Dorab Mistry, director at Godrej International Ltd.
“Demand from Europe is still weak especially for biodiesel,” Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association, said by phone from Jakarta. “We could see demand picking up in the first quarter with India maintaining its import tariff and recovery in China. It will help boost prices.”
Futures in Kuala Lumpur, the global benchmark, may rally to 2,700 ringgit ($886) a ton by January, Sinaga said. The commodity will trade between 2,300 ringgit and 2,600 ringgit a ton between now and February, and drop below 2,200 ringgit in August or earlier, Godrej’s Mistry told a conference on Nov. 30.
The contract for February delivery rose 0.5 percent to close at 2,295 ringgit a ton on the Malaysia Derivatives Exchange yesterday. Futures have lost 28 percent this year, set for the biggest annual loss since the financial crisis in 2008.
Food demand for palm oil “is still relatively stable because palm is cheap compared with other oils,” said Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas. Exports typically slow in December because of year-end holidays, he said.
Indonesia’s exports this month would be the lowest since July, when they reached 1.51 million tons, according to data from the palm oil association, known as Gapki. Shipments were 1.8 million tons and 1.5 million tons in November and December of last year, data showed. Gapki, which releases monthly export data, doesn’t publish stockpiles and production figures.
Malaysia’s inventories probably held near a record last month as production exceeded exports, according to another Bloomberg survey published yesterday. Stockpiles were 2.5 million tons compared with 2.51 million tons in October, according to the median of estimates from four analysts and two plantation executives. Output probably fell 5.7 percent to 1.83 million tons, while exports gained 1.7 percent to 1.79 million tons, the survey showed.
Posted by MW Chong at 9:44 AM