Wednesday, December 12, 2012
FCPO closed : 2238, changed : -53 points, volume : higher.
Bollinger band reading : downside biased.
MACD Histogram : turned downward, seller in control.
Support : 2230, 2200, 2150, 2130 level.
Resistance : 2250, 2270, 2300, 2350 level.
FCPO closed recorded substantial loss with better volume transacted. Soy oil price currently trading little weaker after overnight loss while crude oil price trading higher.
Negative price impact USDA data and possible zero export tax factor pressure FCPO price to lower level.
FCPO daily chart reading revised to suggesting a downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
Posted by MW Chong at 6:11 PM
VEGOILS-Palm oil falls to one-month low on bearish USDA data
Wed Dec 12, 2012 1:11am EST
(Updates prices, adds details)
* Prices drop to 2,233 ringgit, a level last seen on Nov. 12
* Traders looking out for Malaysia's new crude palm oil tax
* Palm prices to rise soon on export demand -Oil World
By Chew Yee Kiat
SINGAPORE, Dec 12 (Reuters) - Malaysian palm oil futures
dropped to a one-month low on Wednesday, as forecasts for a
higher supply of rival soybean oil stoked concerns of a global
vegetable oil surplus.
The bearish view of soybean oil from the U.S. Department of
Agriculture (USDA), coupled with Malaysia's record high palm oil
stocks in November, have put palm oil futures on track for their
steepest annual loss since 2008.
"CBOT (Chicago Board of Trade) soyoil came down yesterday by
about 90 points, and there were some traders who were trying to
break the previous low," said a trader with a foreign
commodities brokerage in Malaysia.
By the midday break, the benchmark February contract
on the Bursa Malaysia Derivatives Exchange had lost 2.4
percent to 2,235 ringgit ($730) per tonne, slightly off a low at
2,233 ringgit, a level unseen since Nov. 12.
Total traded volumes stood at 15,739 lots of 25 tonnes each,
higher than the usual 12,500 lots.
Traders are looking out for Malaysia's new crude palm oil
export tax that will be formalised in a gazette on Dec. 17 under
a new tax structure that aims to claw back market share from top
Despite higher supply of global vegetable oil, the steep
discount between palm oil and soybean oil could stimulate high
export demand for palm oil and send prices rising in early 2013,
said Hamburg-based analysts Oil World.
Palm oil imports by India, the world's top vegetable oil
buyer, are likely to have fallen in November from October
levels, which were the highest in at least three years, as
demand shrank with the start of cold weather that solidifies the
oil, a Reuters survey showed.
In a bullish sign for palm oil, Brent crude held above $108
a barrel on Wednesday as OPEC reduced oil supply, although
rising output from the United States and uncertainty about its
budget for next year limited price gains.
In other vegetable oil markets, U.S. soyoil for January
delivery fell 0.2 percent in early Asian trade, after
falling by almost 2 percent in the previous session. The most
active May 2013 soybean oil contract on the Dalian
Commodity Exchange also lost 1.5 percent.
Posted by MW Chong at 5:48 PM
FKLI closed : 1653.5 changed : +9.5 points, volume : lower.
Bollinger band reading : upside biased with possbile pullback correction.
MACD Histogram : rising higher, buyer in control.
Support : 1650, 1645, 1640, 1635 level.
Resistance : 1660, 1670, 1680, 1690 level.
FKLI rallied higher for the 3rd day with lesser volume traded doing about 4 points premium compare to cash market that also closed higher. Overnight U.S markets closed firmer and today Asia markets soared higher while European markets also registering gains.
World markets sentiment getting upbeat on hope that U.S. Federal Reserve will ease it's monetary policy again.
FKLI daily chart study revised to suggesting an upside 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 resistance or strength with quick cut loss and profit target.
Posted by MW Chong at 5:37 PM
STOCKS: European stock futures pointed to a fractionally higher open, while Asian shares rose buoyed by strength in global equities markets, hopes of a deal from U.S. budget talks and expectations for more stimulus from the Federal Reserve when it ends its two-day policy meeting later in the day. U.S. stocks rose on Tuesday, led by gains in technology companies, helping the S&P 500 end at its highest level since Election Day. (Reuters)
FOREX-Dollar rises to 8-month high versus struggling yen
LONDON, Dec 12 (Reuters) - The U.S. dollar rose to its highest in eight months against the yen boosted by bets the Bank of Japan will take more aggressive easing steps after a likely victory of the Liberal Democratic Party in the country's election on Sunday.
The dollar rose 0.4 percent on the day to 82.895 yen, its highest level since early April on reported buying by macro funds. Traders cited option barriers at 83 yen.
Fed set to expand its monetary stimulus(Reuters)
The U.S. Federal Reserve is expected to announce a fresh round of bond buying on Wednesday as part of its efforts to support a fragile economic recovery threatened by political wrangling over the government’s budget.
China corn imports seen down 54 pct in 2012/13, consumption up(Reuters)
Chinese corn imports are expected fall by more than half next year due to high U.S. prices, and a rise in overall consumption will put domestic supplies under more pressure despite another record harvest, according to an official forecast on Wednesday.
GRAINS: Chicago wheat futures fell to their lowest since July, adding to a loss of more than 3 percent in the previous session, after the U.S. government said it sees hefty stockpiles of the grain amid slower demand. The most-traded March wheat contract on the CBOT surrendered modest early gains to hit a session low of $8.09-1/4 a bushel, the weakest since July 3. Corn and soybeans also edged lower in sympathy with wheat. Corn slipped 0.2 percent to $7.26-1/4 a bushel, near Tuesday's trough of $7.23-3/4, which was the lowest in nearly a month. Soybeans dropped 0.8 percent to $14.60 per bushel.(Reuters)
U.S. oil production rising at record rate- EIA(Reuters)
U.S. crude oil production is rising at the fastest rate in history, the U.S. Energy Information Administration said on Tuesday, as the shale oil revolution pushes output toward a 20-year high next year.
U.S. crude and oil products up sharply last week –API(Reuters)
U.S. crude and refined product stocks rose sharply last week, data from the American Petroleum Institute released on Tuesday showed, despite expectations crude inventories would decline.
OIL: Brent crude held above $108 a barrel as OPEC pumped less oil last month, although rising output from the United States and uncertainty about its budget for next year limited price gains. Brent crude rose 24 cents to $108.25 a barrel, up for a third day. U.S. crude for January edged up 2 cents to $85.81 after rising for the first time in six trading sessions on Tuesday.(Reuters)
China oil, iron ore imports point to demand revival
BEIJING, Dec 10 (Reuters) - China's imports of iron ore were the second highest on record in November, while crude oil imports were at their joint third highest daily rate, providing encouraging signals on demand for commodities in the world's second-largest economy.
The strength in consumption in Monday's customs data, came despite disappointing overall foreign trade data, showing overall imports were flat in November and exports rose just 2.9 percent.
Australia ups 2012/13 iron ore output forecast to 529 mln/t(Reuters)
Australia has revised up its forecast for iron ore output in fiscal 2013 to 529 million tonnes from 526 million previously, citing a rise in demand from China.
BASE METAS: London copper was steady near two-month highs on Wednesday as signs of a revival in China's economic growth and hopes of further easing by the United States underpinned prices, while wrangling over the U.S. "fiscal cliff" weighed on sentiment. Three-month copper on LME traded at $8,112.75 a tonne, up 0.12 percent from the previous session, when it logged small losses. The most-traded March copper contract on the SFE rose 0.14 percent to close at 57,980 yuan a tonne.(Reuters)
PRECIOUS METALS: Gold rose ahead of the outcome of a U.S. Federal Reserve policy meeting that investors hope will unveil more bond buying measures, supporting bullion's appeal as a hedge against inflation. Spot gold was little changed at $1,710.50 an ounce. U.S. gold inched up 0.28 percent to $1,713.1.(Reuters)
METALS-LME copper steady on China pickup, Fed stimulus hopes
SINGAPORE, Dec 12 (Reuters) - London copper was steady near two-month highs as signs of a revival in China's economic growth and hopes of further easing by the United States underpinned prices, while wrangling over the U.S. "fiscal cliff" weighed on sentiment.
"Copper is a China and U.S. story. Right now China is in recovery and the U.S. is in recovery. It's still a weak recovery but we don't think the price will drop, so any good news from the liquidity side or the macro side will help the price go higher," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.
PRECIOUS-Gold inches up as investors await outcome of Fed meet
SINGAPORE, Dec 12 (Reuters) - Gold crawled higher ahead of the outcome of a U.S. Federal Reserve policy meeting that investors hope will unveil more bond buying measures, supporting bullion's appeal as a hedge against inflation.
"The market will trade in a tight range, as investors cautiously wait for the result of the Fed meeting," said Li Ning, an analyst at Shanghai CIFCO Futures.
Baltic Index down on depressed capesize rates
Dec 11 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, continued their losing streak on Tuesday on falling capesize rates.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 3.95 percent to 900 points.
Posted by MW Chong at 5:26 PM
GLOBAL MARKETS-Asian shares rise, dollar pressured before Fed
TOKYO, Dec 12 (Reuters) - Asian shares rose as strong overnight performances in global equities and firmer economic sentiment in Germany buoyed sentiment, while the dollar was pressured ahead of the outcome of the U.S. Federal Reserve's policy meeting later in the day.
"Although the view that the Fed will shift to outright Treasury purchases is now very widely shared by market participants, we do not believe it has been fully reflected into markets or in positioning," said Vassili Serebriakov, a strategist at BNP Paribas.
FOREX-Dollar on defensive as market eyes Fed stimulus
SYDNEY, Dec 12 (Reuters) - The dollar wallowed at three-month lows against the Australian currency and remained broadly under pressure as markets geared up for more stimulus from the Federal Reserve.
"Although the view that the Fed will shift to outright Treasury purchases is now very widely shared by market participants, we do not believe it has been fully reflected into markets or in positioning," said Vassili Serebriakov, a strategist at BNP Paribas.
Obama, Boehner talk and exchange new offers on 'fiscal cliff'
WASHINGTON, Dec 11 (Reuters) - Negotiations to avert the "fiscal cliff" ahead of a year-end deadline intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals.
White House and congressional aides confirmed that Obama gave Boehner a revised offer in talks on Monday, and the Republican responded with a counterproposal on Tuesday.
Oil up on OPEC output decline, ahead of group's meeting
NEW YORK, Dec 11 (Reuters) - Oil futures rose modestly after OPEC said its members pumped less oil last month and as a weaker U.S. currency helped to firm dollar-denominated commodity prices.
"We've seen some support from a weaker dollar," Marc Ground of Standard Bank commodities research said in a note.
U.S. oil production rising at record rate- EIA
NEW YORK Dec 11 (Reuters) - U.S. crude oil production is rising at the fastest rate in history, the U.S. Energy Information Administration said on Tuesday, as the shale oil revolution pushes output toward a 20-year high next year.
U.S. production will rise by more than 13 percent to 6.4 million barrels per day in 2012, the EIA said in its monthly Short-Term Energy Outlook. The 760,000 bpd rise should be the largest since commercial crude oil production began in the United States in the 1850s, the EIA said.
U.S. crude and oil products up sharply last week –API
NEW YORK, Dec 11 (Reuters) - U.S. crude and refined product stocks rose sharply last week, data from the American Petroleum Institute released on Tuesday showed, despite expectations crude inventories would decline.
Crude oil stockpiles rose by 4.3 million barrels in the week to Dec. 7, led by a build of 2.2 million barrels along the Gulf Coast and 1.2 million barrels in the Midwest, according to the API data.
OPEC set for easy oil deal, secretary-general dispute
VIENNA, Dec 11 (Reuters) - OPEC oil exporters on Tuesday were set to avoid a quarrel about how much crude they produce and argue instead about who should be the group's next secretary-general.
Oil prices are roughly where OPEC wants them - comfortably above $100 a barrel - but there is deadlock over who should be the new public face of the organization.
Exxon sees North America as energy exporter by 2025
Dec 11 (Reuters) - Soaring oil and gas production will propel North America into becoming a net energy exporter by 2025, Exxon Mobil Corp said in its annual energy outlook.
More than half of the growth in unconventional natural gas supply over the next two decades will be in North America, supplies that will help reshape global markets, Exxon said.
Posted by MW Chong at 11:01 AM
Malakoff proposes relisting on Bursa Malaysia next year
Malakoff Corp (MCB), a 51%-owned unit of MMC Corp that was taken private in 2007, has proposed a bonus issue, conversion and splitting of shares prior to its proposed relisting on Bursa Malaysia next year. Malakoff is the largest independent power producer in Malaysia with an effective power generation capacity of 5,020MW representing 22.5% of Malaysia’s total installed capacity. It has also the largest effective power generation capacity in Southeast Asia. (Malaysian Reserve)
Proton signs RM63m deal to buy engine technology from Petronas
Proton, a subsidiary of DRB-Hicom, has signed a RM63m agreement to buy engine technology from Petronas, which developed it as part of its involvement in Formula One racing sponsorship. The technology, covering 2.0-litre and 2.2-litre turocharged engines developed by Petronas Technology Ventures SB in 1997, will be used in Proton cars and possibly in models made by Proton-owned Lotus Group plc. (Malaysian Reserve)
Westports eyes overseas market to expand its business
Westports Malaysia SB, operator of the country’s busiest port, is looking at the overseas market to expand its business beyond Malaysia via partnerships. Its CEO Ruben Emir Gnanalingam said Westports was looking at a few potential markets, particularly in Southeast Asian countries and India, to expand its container business. He said despite the slowing down of demand in Europe, the US and China, fast-emerging markets such as India and countries in Africa and the Middle East were continuing to grow. (Financial Daily)
BToto gets nod for business trust listing in Singapore
Berjaya Sports Toto (BToto)'s proposed Sports Toto Malaysia (STM) business trust listing in Singapore has received approval to be listed on the republic's stock exchange soon. In a statement to Bursa Malaysia, BToto said yesterday it had received a conditional eligibility-to-list letter from the Singapore Exchange Securities Trading Ltd for the listing of the STM-Trust on the Main Board. News reports said BToto was seeking about SGD500m (RM1.3bn) from the IPO of the STM-Trust. (BT)
MCMC defends spectrum award to Puncak Semangat
The Malaysian Communications and Multimedia Commission (MCMC) has defended the allocation of a prized piece of spectrum to Tan Sri Syed Mokhtar Al-Bukhary-linked Puncak Semangat SB, saying the company’s entry will invigorate competition in the market as well as promote network sharing between old and new players. The regulator’s chairman, Datuk Mohamed Sharil Tarmizi, also dismissed reports that Puncak Semangat had received the “lion’s share” of the 2.6GHz bandwidth. (StarBiz)
Maxis: Sets aside MYR500m to activate 4G services. Maxis Bhd has allocated half a billion ringgit over the next three years to activate 4G Long Term Evolution (LTE) services as part of its ongoing network investments. Maxis' 4G LTE service will offer download speeds 10 times faster than 3G and work seamlessly with its existing 3G networks. (Source: Business Times)
Genting Plantation: JPO second phase to start ops in Q4 next year. The second phase of the Johor Premium Outlets (JPO), offering an additional 40 designer and high-end stores, will begin operations in the fourth quarter of 2013. Genting Simon director Alex Phang said the company had initially planned to launch the second phase in the third or fifth year of JPO's operations. However, JPO - the first Premium Outlet mall in Southeast Asia - has met the operator's target of four million visitors in the first year of operations. (Source: Business Times)
IJM Land: Starting its MYR5b Penang project in 2013. IJM Land Bhd will commence work for its MYR5b commercial precinct next to the Penang Bridge in the second half of next year. Its chief executive officer Datuk Soam Heng Choon said the commercial precinct located on a 102-acre site would comprise four hotels, a shopping centre, a convention centre, and an international business district. The commercial precinct would be developed in stages and would take seven to eight years to complete. (Source: The Star)
Indonesia: Holds key rate to shield IDR at three-year low
Indonesia’s central bank held its benchmark rate unchanged for a 10th straight meeting as its currency, near a three-year low, reduces scope for monetary easing. Bank Indonesia Governor Darmin Nasution and his board kept the reference rate at a record low of 5.75%, the central bank said. The decision was predicted by all 21 economists surveyed by Bloomberg News. (Bloomberg)
China: New loans trail forecasts in sign of slower growth
China’s new loans trailed forecasts last month, restraining the pace of recovery in the world’s second-biggest economy after a seven-quarter slowdown. Banks extended CNY522.9bn (USD84bn) of local currency loans, the People’s Bank of China said, compared to a RMB550bn median estimate in a Bloomberg News survey of 30 economists and CNY562.2bn the same month last year. M2, the broadest measure of money supply, rose 13.9% from a year earlier, below the median estimate of 14.1%. (Bloomberg)
Germany: Investor confidence jumps to seven-month high on outlook
German investor confidence jumped more than economists forecasted to a seven-month high in December on speculation that Europe’s largest economy will gather momentum next year. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from -15.7 in November. Economists predicted a gain to -11.5, according to the median of 38 estimates in a Bloomberg News survey. (Bloomberg)
US: Trade deficit in the US widens as exports slump
The trade deficit in the US widened in October as the biggest slump in exports in almost four years outweighed a drop in imports, evidence of the slowdown in global growth. The trade gap grew 4.9% to USD42.2bn from a revised USD40.3bn in September that was smaller than previously estimated, the Commerce Department reported. The median forecast in a Bloomberg News survey of 70 economists called for the deficit to expand to USD42.7bn. Exports declined 3.6%, the most since January 2009. (Bloomberg)
Asia FX By Cornelius Luca - Tue 11 Dec 2012 17:11:53 CT (CME/www.lucafxta.com)
The appetite for risk improved further on Tuesday, as the results of Greece's bond buyback should be acceptable under the circumstances and following subsiding fears about the political situation in Italy. The foreign currencies consolidated, with the euro as the main beneficiary. The main theme remains firmly in place: the lack of progress in the "fiscal cliff" game of politics. The US stock indexes ended higher and the gold/oil spread lower. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on all European currencies. Good luck!
US: The trade deficit expanded to -$42.24 billion in October from -$40.28 billion in September.
Canada: The international merchandise deficit narrowed to -C$0.17 billion in October from –C$1.01 billion in September.
Today's economic calendar
Australia: Westpac consumer confidence for December
Japan: Domestic corporate goods price index for November
Japan: Machinery orders for October
Japan: Tertiary industry index for October
Asian Stocks Rise for 10th Day as Yen Falls on Fed Easing Bets (Bloomberg)
Asian stocks rose, with a regional gauge heading for the longest winning streak in more than three years, amid speculation the Federal Reserve will step up monetary easing. The yen weakened and wheat rebounded. The MSCI Asia Pacific (MXAP) Index added 0.3 percent as of 9:56 a.m. in Tokyo, gaining for the 10th day. Standard & Poor’s 500 Index futures were little changed. The yen fell against 15 of 16 major counterparts. Wheat in Chicago gained 0.3 percent after sliding more than 3 percent yesterday. The Fed will announce today $45 billion in monthly Treasury buying after a two-day meeting, according to a Bloomberg News survey of economists. President Barack Obama told ABC News he remains optimistic that a budget agreement to avert the automatic spending cuts and tax increases known as the fiscal cliff can be reached as he traded proposals with House Republicans.
Japan’s machinery orders rose for the first time in three months, a sign that companies may expect the world’s third-largest economy to return to growth in 2013. Fed officials are considering whether to supplement $40 billion a month of mortgage-bond buying with purchases of Treasuries when their Operation Twist program expires at the end of the month. If expanded as economists expect, the new program will push the central bank’s balance sheet to almost $4 trillion. Japan’s Nikkei 225 Stock Average gained 0.6 percent while the broader Topix Index climbed 0.7 percent. The Topix will rally 14 percent in the next six months as automakers lead gains amid a stronger global economy, said Kathy Matsui, the chief Japan strategist at Goldman Sachs Group Inc. Australia’s S&P/ASX 200 Index rose 0.5 percent.
Wheat futures advanced to $8.2475 a bushel after tumbling yesterday to a five-month low. A U.S. Department of Agriculture report showed global inventories will shrink less than forecast, easing concern that droughts from the U.S. to Australia were creating a grain shortage.
Asia Stocks Set for Longest Winning Streak in Three Years (Bloomberg)
Asian stocks rose, with the regional benchmark index heading for its longest streak of gains in three years, amid speculation the Federal Reserve will step up monetary easing. Honda Motor Co. (7751), a Japanese carmaker that gets 44 percent of sales from North America, added 1.6 percent. Canon Inc. climbed 2.6 percent in Tokyo after the Nikkei newspaper reported the world’s biggest camera maker aims to cut costs by as much as 80 billion yen ($970 million) next year. BHP Billiton Ltd. rose 1 percent in Sydney after PetroChina Co. agreed to pay the world’s largest mining company $1.63 billion for its stake in a liquefied natural gas project.
The MSCI Asia Pacific Index (MXAP) advanced 0.3 percent to 126.72 as of 9:31 a.m., heading for its 10th day of advance, the longest winning streak since July 2009. The gauge advanced 11 percent this year through yesterday as central banks took steps to support economic growth. The Federal Reserve will conclude a two-day policy meeting today as policy makers consider whether to continue with quantitative easing. “The Fed is expected to announce QE4, or effectively $45 billion a month buying of U.S. treasuries to replace its expiring Operation Twist,” said Cameron Peacock, Melbourne- based market strategist at IG Markets Ltd., a provider of trading services in equities, currencies and commodities. “In theory, there shouldn’t be a huge reaction to news that the Fed is initiating this program given it has been speculated on for some time and should be priced in.”
Japan’s Nikkei 225 Stock Average climbed 0.6 percent, while South Korea’s Kospi Index added 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent. Markets in China and Hong Kong have yet to open.
Japanese Stocks Rise on U.S. Fed Monetary Easing Optimism (Bloomberg)
Japanese stocks rose, with the Nikkei 225 (NKY) Stock Average heading for its highest close in almost eight months, on optimism the U.S. Federal Reserve will add stimulus. Shares held gains even after North Korea launched a long-range rocket in defiance of international sanctions. Toyota Motor Corp. (7203), which gets 25 percent of its sales in North America, advanced 0.6 percent. Mitsubishi Motors Corp. (7211) jumped 7.6 percent after the Nikkei newspaper reported a withdrawal from European production will boost the carmker’s profits. Canon Inc. rose 2.1 percent after the Nikkei said the camera maker aims to cut costs by as much as 80 billion yen ($970 million) next year.
The Nikkei 225 gained 0.5 percent to 9,569.83 as of 10:10 a.m. in Tokyo, its highest since April 19. The broader Topix Index climbed 0.5 percent to 789.94, with about nine stocks rising for every five that fell. Shares rose as data showed Japan’s machinery orders rose for the first time in three months. The Fed ends a meeting today at which it may announce more bond purchases. “The Fed is expected to announce QE4, or effectively $45 billion a month buying of U.S. treasuries to replace its expiring Operation Twist,” said Cameron Peacock, Melbourne- based strategist at trading-services provider IG Markets Ltd. “In theory, there shouldn’t be a huge reaction to news that the Fed is initiating this program given it has been speculated on for some time and should be priced in. Look for a sizable negative reaction if the Fed either does a smaller size or delays the program until the New Year.”
U.S. Stocks Gain on German Confidence Amid Budget Talks (Bloomberg)
U.S. stocks rose, erasing losses since Election Day for the Dow Jones Industrial Average, after German investor confidence climbed and traders awaited progress on federal budget negotiations in Washington. American International Group Inc. added 5.7 percent as the government sells its remaining stake. Apple Inc. (AAPL) rose 2.2 percent as Morgan Stanley reiterated its overweight rating for the world’s most valuable company. Delta Air Lines Inc. (DAL) gained 5.1 percent after agreeing to buy a 49 percent stake in Virgin Atlantic Airways Ltd. from Singapore Airlines Ltd. The Standard & Poor’s 500 Index advanced 0.7 percent to 1,427.84 at 4 p.m. in New York, after rallying as much as 1.1 percent earlier. The Dow increased 78.56 points, or 0.6 percent, to 13,248.44, its highest level since Oct. 22. About 6.4 billion shares changed hands on U.S. exchanges, 3.2 percent above the three-month average.
“There’s speculation of progress on a deal, given that the two sides are still meeting and talking” about how to resolve the so-called fiscal cliff, Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a phone interview. “Right now, people want to see a deal, period. There will be quite a relief rally if one’s announced.” The S&P 500 is less than 0.1 percent from erasing its loss since the Nov. 6 election as President Barack Obama seeks a deal with Republican lawmakers to avoid more than $600 billion of automatic tax increases and spending cuts starting next year. House Speaker John Boehner said today he is still “hopeful” the parties can reach a budget agreement before the end of the year.
European Stocks Rise on Federal Reserve Stimulus Optimism (Bloomberg)
European stocks advanced to an 18- month high amid speculation the U.S. Federal Reserve will expand stimulus measures and as German investor confidence in November beat forecasts. ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, jumped 5.6 percent after saying the sale of its Steel Americas unit is on track. Suez Environnement (SEV) Co. climbed the most in more than three months after GDF Suez Chief Executive Officer Gerard Mestrallet said his company will retain its stake in Europe’s second-largest water utility. Diageo (DGE) Plc slid 1.6 percent after it ended talks to acquire the Jose Cuervo tequila brand. The Stoxx Europe 600 Index (SXXP) rose 0.3 percent to 280.49 at the close of trade, its seventh day of gains and longest winning streak in 17 months. The gauge advanced to its highest since May 2011 and has increased 15 percent this year as the European Central Bank announced an unlimited bond-buyback program and confidence grew that U.S. lawmakers will avoid fiscal deadlock.
“The main focus is the Fed meeting,” Markus Huber, head of German sales trading at ETX Capital in London, said in a telephone interview. “A majority expect the Fed to increase its bond-purchase program, in terms of the amount that they buy each month. The Fed is concerned that with the fiscal cliff, the economy could be negatively impacted so it may consider more stimulus.”
Emerging Stocks Jump to 8-Month High on German Confidence (Bloomberg)
Emerging-market stocks rose, pushing the benchmark index to an eight-month high, as improved German investor confidence boosted markets from Poland to the Czech Republic that benefit from growth in Europe’s biggest economy. Stalexport Autostrady SA (STX) jumped the most in three years to lead gains in Warsaw, while Central European Media Ltd. (CETV) climbed the most in three months in Prague. Seoul-based Daewoo Shipbuilding & Marine Engineering Co. Ltd. led advances in emerging-market industrial stocks as HMC Investment Securities said shipbuilders have an “attractive” valuation.
The MSCI Emerging Markets Index added 0.5 percent to 1,034.55 in New York, the highest level since April 6. German investor confidence jumped more than economists anticipated in December, according to the ZEW Center for European Economic Research in Mannheim, overshadowing data out of China showing new yuan loans trailed forecasts last month. U.S. lawmakers returned to Washington today as President Barack Obama and House of Representatives Speaker John Boehner attempt to make a deal on fiscal policy. “The mood is more upbeat today, despite rather unexciting loan growth in China,” Martial Godet, head of strategy at BNP Paribas CIB in London, said by e-mail. “The ZEW index may explain most of the positive trend today.”
Bovespa Rises to Seven-Week High as Vale Leads Producers Higher (Bloomberg)
The Bovespa index rose to a seven- week high as Vale SA led raw-material producers higher on optimism that a global economic recovery will boost demand for Brazil’s commodity exports. Vale, the world’s largest iron-ore mining company, advanced to the highest in three months as the MSCI Brazil/Materials index rose the most among 10 industry groups. Cia. Siderurgica (SID) Nacional SA led gains among steelmakers. OGX Petroleo & Gas Participacoes SA and LLX Logistica SA dropped after billionaire Eike Batista denied a report saying he plans to sell stakes to the national development bank. The Bovespa climbed 0.6 percent to 59,623.34 at the close of trading in Sao Paulo, the highest level since Oct. 18. Forty- four stocks rose on the measure while 21 fell. The real weakened 0.1 percent to 2.0787 per dollar. The Standard & Poor’s GSCI index of 24 raw materials rose 0.1 percent after advancing as much as 0.6 percent earlier after German investor confidence increased more than analysts estimated.
“We’ve been seeing signs of a recovery in the global economy, making investors more optimistic about the scenario for Brazilian exporters next year,” Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos, said by phone from Porto Alegre. Vale jumped 2 percent to 38.18 reais, the highest since Sept. 18. CSN, as Cia. Siderurgica is known, gained 2.1 percent to 11.50 reais, a one-month high.
Dollar Remains Lower Versus Euro as Fed Concludes Meeting (Bloomberg)
The dollar remained lower versus the euro after a two-day decline, with the Federal Reserve expected to announce today an expansion of asset purchases that tend to weaken the U.S. currency. The greenback slid yesterday versus most of its 16 major counterparts amid expectations the Fed will add Treasury purchases to an existing program that buys $40 billion in mortgage bonds each month. The euro was supported ahead of a meetings of European Union finance ministers and head of government this week, while Greece met its bond buyback target. The yen weakened against all its peers after Japan’s government said North Korea launched a rocket. “The bias is for the dollar to be sold,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The Fed seems to have no intention to relax its easing stance.”
The dollar was little changed at $1.3006 per euro as of 10:10 a.m. in Tokyo after falling 0.6 percent in the previous two days. It gained as much as 0.1 percent to 82.63 yen before trading at 82.55 from 82.52 in New York. Europe’s shared currency was at 107.36 yen after rising 0.7 percent yesterday, the biggest one-day gain since Nov. 21. The Federal Open Market Committee will announce $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to the median estimate in a Bloomberg News survey of 49 economists. It concludes a two-day policy meeting today.
Aussie Rises to 2-Month High as Stocks Gain Before Fed Decision (Bloomberg)
Australia’s dollar rose to a more than two-month high on prospects that further monetary easing by the U.S. central bank will debase the greenback. Australia’s government bonds slumped and the nation’s currency touched an eight-month high versus the yen as gains in global equities boosted demand for riskier assets. New Zealand’s dollar traded near the strongest in nine months versus its U.S. counterpart. Gains in the so-called Aussie were limited after a private report showed consumer confidence slumped the most in nine months. “Market sentiment is pretty buoyant,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “Provisions of liquidity from foreign central banks have been a key determinant of the Australian dollar’s performance.”
Australia’s dollar touched $1.0541, the highest since Sept. 17, before trading at $1.0535 as of 12:28 p.m. in Sydney, little changed from yesterday’s close. The Aussie rose 0.1 percent to 86.94 yen after earlier reaching 87.02, the strongest since March 28. The New Zealand dollar, known as the kiwi, was little changed at 83.95 U.S. cents from yesterday, when it touched 83.98, the highest since March 2. It fetched 69.29 yen from 69.26 yesterday, when it jumped to 69.33, the strongest since May 2010. Australian government bonds fell, with the 10-year yield rising seven basis points, or 0.07 percentage point, to 3.2 percent. The MSCI Asia Pacific Index of stocks gained 0.5 percent, following a 0.6 percent advance in MSCI’s World Index (MXWO) yesterday.
Job Openings in U.S. Rose in October to Four-Month High (Bloomberg)
Job openings in the U.S. rose to a four-month high in October, showing companies kept expanding in the face of looming tax increases and budget cuts. The number of positions waiting to be filled rose by 128,000 to 3.68 million from the prior month, the Labor Department said today in Washington. The trade deficit widened as exports slumped the most in four years, other figures showed. More openings lay the groundwork for the accelerated job growth needed to bolster consumer spending, which accounts for about 70 percent of the economy. Employment gains so far have failed to satisfy Federal Reserve policy makers, who are meeting today and tomorrow to consider further easing to spur the economy. “The labor market is healing gradually,” said Michael Gapen, a New York-based senior economist at Barclays Plc. “Policy makers would like to see more. We’re having more of the same -- moderate growth and moderate improvement in the labor market.”
Stocks rose after German investor confidence climbed and amid speculation progress was being made in talks in Washington to avoid more than $600 billion in automatic spending cuts and tax increases set to take effect next year. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,427.84 at the close in New York. German investor sentiment increased to a seven-month high in December on speculation Europe’s largest economy will gain momentum next year. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 6.9 from minus 15.7 in November.
Trade Deficit in the U.S. Widens as Exports Slump (Bloomberg)
The trade deficit in the U.S. widened in October as the biggest slump in exports in almost four years outweighed a drop in imports, evidence of the slowdown in global growth. The trade gap grew 4.9 percent to $42.2 billion from a revised $40.3 billion in September that was smaller than previously estimated, the Commerce Department reported today in Washington. The median forecast in a Bloomberg News survey of 70 economists called for the deficit to expand to $42.7 billion. Exports declined 3.6 percent, the most since January 2009. The decrease in exports, which may have been exacerbated by the drought in the Midwest that caused sales of soybeans to plunge, was nonetheless broad-based, indicating cooling economies from Europe to Asia may be sapping demand for American goods, once a mainstay of the economic recovery. The slowdown in imports, which affected everything from electronics to clothing and chemicals, may also be signaling slower U.S. growth.
“The export trend is clearly slowing, and that means the export engine is faltering,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, who projected the gap would grow to $42 billion. “The outlook seems more of the same for growth.” Stock-index futures held earlier gains after the report as German investor confidence climbed and traders awaited progress on federal budget talks in Washington. The contract on the Standard & Poor’s 500 Index maturing this month rose 0.2 percent to 1,423.5 at 8:49 a.m. in New York.
U.S. Fiscal Dispute Shows Sign of Thaw Before Deadline (Bloomberg)
Lawmakers returned to Washington today amid a potential thaw in the U.S. fiscal policy dispute, as President Barack Obama and House Speaker John Boehner attempt to make a deal to prevent spending cuts and tax increases from taking effect. Obama sounded conciliatory notes at a Daimler AG plant in Michigan yesterday. In his first comments since meeting with Boehner Dec. 9 at the White House, the president didn’t repeat frequent complaints about Republicans holding tax cuts for most Americans “hostage” because they oppose higher rates for wealthiest, and said he was ready to come to an agreement. Since Boehner complained Dec. 7 that Obama had wasted a week, statements from the speaker’s office have been milder, too.
“There is a change in tone, obviously,” Julian Zelizer, professor of history and public affairs at Princeton University in New Jersey, said in an interview. After building public support for higher tax rates for the highest earners, he said, Obama is negotiating and “preparing his own party for a possible deal” by sending signals about his willingness to cut entitlement programs including Medicare and Medicaid. While the private talks continue between the administration and aides to Boehner, each side is insisting publicly that the other must give in first. The result is a prolonged wait for more than 500 members of Congress who aren’t talking with Obama and will have to decide if they can accept a deal that he and Boehner may ultimately reach.
Fed Seen Pumping Up Assets to $4 Trillion in New Buying (Bloomberg)
The Federal Reserve will amplify record accommodation tomorrow by announcing $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to a Bloomberg survey of economists. Forty-eight of 49 economists predict the Federal Open Market Committee will purchase Treasuries to bolster an existing program to buy $40 billion in mortgage bonds each month. The panel pledged in October to continue that plan until the labor market improves “substantially.” “It’s going to be massive and open-ended in size,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former New York Fed economist. Chairman Ben S. Bernanke and his FOMC colleagues will press on with purchases at least through the first quarter of 2014, according to the median estimate in the Dec. 7-10 survey. They are expanding the balance sheet beyond $2.86 trillion in a bid to spur growth and lower an unemployment rate of 7.7 percent.
“They view this stimulus as what’s needed to sustain the economy” and reinforce improvements in industries such as autos and housing, said John Silvia, chief economist at Wells Fargo & Co., the biggest U.S. home lender. Stocks rose today, with the Standard & Poor’s 500 Index erasing its decline since Election Day, as investors speculated progress was being made in U.S. budget talks. The S&P 500 climbed 0.8 percent to 1,430.36, the highest since Oct. 22, at 11:02 a.m. in New York. The yield on the 10-year Treasury note climbed to 1.65 percent from 1.62 percent yesterday.
Wholesale Inventories in U.S. Rose More Than Forecast in October (Bloomberg)
Inventories at U.S. wholesalers rose more than forecast in October, a sign goods are piling up in the face of slowing demand. The 0.6 percent increase in stockpiles followed a 1.1 percent gain in September, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey was a 0.4 percent advance. Sales declined 1.2 percent, the biggest drop since June. While the Commerce Department said it couldn’t quantify the effect of Sandy on the data, it said companies reported both positive and negative influences from the storm. A global slowdown and looming U.S. tax and government spending changes may weigh on orders, indicating distributors will want to keep a tight rein on stockpiles. “There’s still a lot of uncertainty,” Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “Consumers probably are losing a little bit of momentum.”
At the current pace of sales, wholesalers had enough goods on hand to last 1.22 months, the most since October 2009, the report showed. The median forecast for wholesale inventories was based on a Bloomberg survey of 29 economists. Estimates ranged from a decrease of 0.5 percent to 0.7 percent gain. The prior month’s figure was unrevised. Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 1 percent, boosted by automobiles and computer equipment, today’s report showed. Demand for goods meant to last at least three years dropped 0.9 percent.
Pimco Sees Global Growth Slowing After U.S. Tightening (Bloomberg)
Pacific Investment Management Co., manager of the world’s largest mutual fund, said global growth will be hampered next year by a slowdown in the U.S. economy. Global growth will slow to 1.3 percent to 1.8 percent from about 2 percent this year as the private sector isn’t healthy enough to step in and extend credit amid deleveraging, Saumil Parikh, a portfolio manager who leads Newport Beach, California- based Pimco’s cyclical forum, said in a December report being posted on the firm’s website today. Economists expect growth of 2.5 percent in 2013, the average forecast in a Bloomberg survey. “Central banks, while they are effective in boosting asset prices, we think gradually they’re losing effectiveness in helping the real economy,” Parikh said in a telephone interview before the report was released. “The low growth rate of corporate profits and the low rate of investment means a near stall speed of the global economy.”
U.S. economic growth will drop to 1.25 to 1.75 percent in 2013 from 2.2 percent in the four quarters ended Sept. 30 because of “a policy mix of untimely fiscal tightening and increasingly ineffective monetary easing,” Parikh said in the report. Economists predict 2 percent growth for the U.S. in 2013 for the full year, the average of 79 responses in a Bloomberg survey. Growth will be buoyed by residential investment and an increase in home prices, which will support consumption in the U.S. economy as long as interest rates remain low, he said. European Central Bank President Mario Draghi’s plan for an unlimited bond-buying program to fight speculation of a currency breakup was positive, Parikh said. Even so, fiscal austerity will continue to be a drag on growth in 2013 as the euro-area economy shrinks 1 percent to 1.5 percent, he predicted.
Japan Machine Orders Rise as Abe Vows Stimulus Ahead of Poll (Bloomberg)
Japan’s machinery orders rose for the first time in three months, a sign that companies may expect the world’s third largest economy to return to growth in 2013. Orders, an indicator of capital spending, climbed 2.6 percent in October from the previous month, the Cabinet Office said today in Tokyo. The median estimate of 25 economists surveyed by Bloomberg News was for a 3 percent increase. Large orders can cause volatile results. Rising orders and production in October suggest the economy is laying the foundations for recovery after contractions in the last two quarters. The yen has weakened around 3.7 percent against the dollar in the last month, while Shinzo Abe’s Liberal Democratic Party, leading in polls before elections on Dec. 16, has pledged fiscal stimulus to stoke growth.
“Companies are still cautious but a weaker yen and signs of recovery in the global economy are providing some relief,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. “Japan’s economy is going to have a moderate recovery.” The Nikkei 225 Stock Average was 0.6 percent higher at 9:37 in Tokyo, after rising earlier in the morning to its highest level in almost eight months. The yen was little changed at 82.55 per dollar. Komatsu Ltd. (6301) the world’s second-biggest maker of construction and mining equipment, plans to spend as much as 50 billion yen ($606 million) over the next three years to improve efficiency at four domestic plants, Hiroshi Ishihara, a spokesman for the Tokyo-based company said yesterday.
Lee Bequeaths Full Employment to South Korean Successor (Bloomberg)
South Korean President Lee Myung Bak’s legacy of full employment has failed to bolster his party’s popularity or revive consumer confidence, prompting both candidates in Dec. 19 elections to pledge more social spending. The jobless rate was 3 percent in November, a government report showed in Gwacheon today, unchanged from October at a low reached just five times since mid-1999. A widening wealth gap on Lee’s watch, which ends in February, has accompanied the jobs strength and stoked concern that South Korea’s export success hasn’t translated into middle-class financial security. “The economy is relatively strong in terms of job growth, but the underlying imbalances are plaguing the country,” said Lee Jae Hyung, a fixed-income analyst at Tong Yang Securities Inc. in Seoul. “The next president will likely spend more to boost economic growth and provide more welfare benefits. Inflationary pressure may creep up.”
Both ruling-party candidate Park Geun Hye and opposition nominee Moon Jae Inare campaigning to increase aid to lower- income families. Extra government spending could fuel price gains just when the central bank is facing a tighter inflation target for next year of 2.5 percent to 3.5 percent, compared with the current 2 percent to 4 percent. The seasonally unadjusted jobless rate was at 2.8 percent in November, also unchanged from October, today’s report showed.
German Investor Confidence Jumps to 7-Month High on Outlook (Bloomberg)
German investor confidence jumped more than economists forecast to a seven-month high in December on speculation Europe’s largest economy will gather momentum next year. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in November. Economists predicted a gain to minus 11.5, according to the median of 38 estimates in a Bloomberg News survey. The German economy will contract this quarter and stagnate in the first three months of next year as the sovereign debt crisis curbs demand for its goods in the euro area, the Bundesbank forecast last week. Still, the benchmark DAX share index has rallied more than 17 percent since the European Central Bank pledged on July 26 to save the euro and unveiled an unlimited bond-purchase program. Business confidence unexpectedly rose in November.
Germany faces “a very favorable environment, largely on the back of expansionary monetary policy,” said Ralph Solveen, head of economic research at Commerzbank AG in Frankfurt. “Should the sovereign debt crisis continue to ease in the next few months as we expect, this implies a significant revival of the economy in the course of 2013.” ZEW’s gauge of the current economic situation rose to 5.7 from 5.4 in November. The euro gained after the report to trade at $1.2965 at noon in Frankfurt, up 0.2 percent today.
Posted by MW Chong at 10:10 AM
DTN Closing Grain Comments 12/11 14:34 Wheat's Collapse Drags All Grains Lower (CME)
A bearish surprise in the monthly USDA supply and demand report triggered a massive round of wheat futures selling, and skittish traders applied pressure to the entire grain sector despite soybeans' and corn's less-bearish fundamental outlooks.
Wheat Falls to Five-Month Low as Global Supplies May Gain (Bloomberg)
Wheat tumbled to a five-month low after a government report showed global inventories will shrink less than forecast, easing concern that droughts from the U.S. to Australia were creating a grain shortage. Stockpiles will be 176.95 million metric tons on May 31, more than the 174.18 million projected in November, the U.S. Department of Agriculture said today in a report. Analysts expected a cut to 173.61 million, based on 16 estimates in a Bloomberg survey. The agency increased its forecasts on crops in Canada, Australia and China. Prices have rallied 26 percent this year as drought cuts production in the U.S., Australia and Russia, last year’s largest exporters. While inventories will still be down 9.6 percent from a year earlier, the USDA has increased its forecast for a second straight month. Lower cereal prices helped reduce global food costs tracked by the United Nations 2.2 percent since September.
“Anytime you can alleviate fears about running out of wheat, that’s going to be a little bit bearish and temper the rallies to the upside,” Jason Britt, the president of Central States Commodities Inc. in Kansas City, Missouri, said by telephone. Wheat futures for March delivery fell 3.2 percent to settle at $8.215 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest drop since Oct. 12. Earlier, the price touched $8.16, the lowest for a most-active contract since July 11.
Tightest Corn Crop Since ‘74 as Goldman Sees Rally: Commodities (Bloomberg)
Three consecutive years of smaller U.S. corn harvests are driving inventories of the world’s most- consumed grain to a 39-year low and spurring Goldman Sachs Group Inc. to predict that prices will rise near record highs. Global stockpiles will drop 11 percent to 117.61 million metric tons by Oct. 1, or 13.6 percent of what will be used for food, ethanol and livestock feed, the lowest ratio since 1974, the U.S. Department of Agriculture said today in a report. Prices surged 44 percent since mid-June as U.S. farmers endured their worst drought in 56 years, and heat waves and dry weather seared crops from Australia to Europe. While futures fell 14 percent since reaching a record $8.49 a bushel on Aug. 10, tightening supply before next year’s harvest will drive prices to an average of $8.25 in the next six months, 13 percent higher than today, Goldman said in a Dec. 5 report.
“It will take more than one year of good weather and high yields to dig the world out of this supply hole,” said Peter Meyer, a senior director of agriculture commodities at PIRA Energy Group in New York. “While corn prices may not spike, they will remain well supported until the extreme moisture deficits in the U.S. are rectified.”
Wheat Market Recap Report (CME)
March Wheat finished down 27 1/4 at 821 1/2, 27 1/2 off the high and 5 1/2 up from the low. May Wheat closed down 26 1/2 at 833 3/4. This was 5 1/2 up from the low and 26 1/2 off the high.
March Chicago and KC wheat ended the day sharply lower following this morning's USDA report that was considered bearish against trade expectations. US all wheat carryout was increased to 754 million bushels vs. 704 in November and against trade estimates of 712. All wheat exports were cut by 50 million bushels from last month with a majority of the cuts coming out of the Kansas City market. World ending stocks for the 2012/13 season came in at 176.95 million tonnes as compared with 174.2 million last month. Australian production jumped 1 million tonnes to 22 million tonnes and Argentina production was left unchanged at 11.50 million tonnes. Many in the market feel Argentina production is closer to 10.50 million tonnes. Some in the trade expect Egypt to come to the market after the sharp sell off today. Jordan bought 50,000 tonnes of optional-origin wheat overnight and India officials are considering exporting an additional 2.5 million tonnes of wheat this year. Overall, the demand fundamentals and technical action favored the bears throughout the day.
March Oats closed down 1 at 388. This was 2 up from the low and 7 off the high.
Corn Market Recap for 12/11/2012 (CME)
March Corn finished down 2 at 728, 6 3/4 off the high and 4 1/4 up from the low. May Corn closed down 1 3/4 at 730 1/2. This was 4 1/4 up from the low and 6 1/2 off the high.
March corn traded marginally lower on the day after a slightly bullish USDA report. US ending stocks are pegged at 647 million bushels which was unchanged from last month and against trade estimates of 663 million. Total usage was left unchanged while many in the market expected a cut to export demand give the slow pace of exports. Export shipments so far this season have reached just 217.1 million bushels as compared with 438.1 million bushels last year. World ending stocks for the 2012/13 came in at 117.61 million tonnes vs. November estimates of 117.99 and against trade estimates of 118. Argentina corn production was cut by just 500,000 tonnes to 27.50 million vs. trade estimates of 26.02 and against the November estimate of 28 million tonnes. China corn production jumped a whopping 8 million tonnes to 208 million tonnes but usage was also revised higher by 8 million tonnes to 209 million. The bullish data was offset by a very bearish wheat report and the pressure from the sharply lower wheat market spilled over to corn. US corn remains a stiff premium to South America origins which continues to keep export demand subdued. Wheat narrowed its premium to corn on the day which could entice more feeders to use wheat in rations rather than corn going forward.
January Rice finished up 0.07 at 15.52, equal to the high and 0.13 up from the low.
Recap Energy Market Report (CME)
January crude oil prices traded early in the session, helped by a rebound in outside market sentiment and gains in global equity markets. Optimism seemed to come from better than expected sentiment readings out of Germany and speculation that US leaders might be getting closer to a fiscal cliff resolution. Another source of support to the crude oil market was the latest production figures from OEPC that showed a pullback in November, largely from a 230,000 barrel per day drop in Saudi Arabian output. While general expectations are for OPEC to leave their quota unchanged at tomorrow's meeting in Vienna, the trade appears cautious ahead of the final result. Expectations for this week's EIA crude oil inventory data are for a draw in the range of 2.0 million barrels last week.
Oil Fluctuates as U.S. Crude Stockpiles Climb Before OPEC Meets (Bloomberg)
Oil fluctuated after a report showed stockpiles rising in the U.S., the world’s biggest crude consumer, and as OPEC delegates gathered in Vienna to decide the group’s production quota. Futures were little changed after rising for the first time in six days yesterday. Crude inventories increased by 4.27 million barrels last week, the most since August, data from the American Petroleum Institute showed. An Energy Department report today may show supplies shrank by 2.5 million barrels, according to a Bloomberg News survey. Most members of the Organization of Petroleum Exporting Countries have signaled they’ll keep the output target unchanged at 30 million barrels a day. “The ceiling for this meeting we think won’t change,” David Lennox, an analyst at Fat Prophets in Sydney, said in a Bloomberg television interview today. “We do see that supply and demand probably at this particular point in time are pretty equally balanced.”
Crude for January delivery was at $85.85 a barrel, up 6 cents, in electronic trading on the New York Mercantile Exchange at 12:25 p.m. Sydney time. The contract gained 23 cents to $85.79 yesterday, the highest close since Dec. 7. Prices are down 13 percent this year. Brent for January settlement rose 21 cents to $108.22 a barrel on the London-based ICE Futures Europe exchange and was at a premium of $22.37 to West Texas Intermediate. The European benchmark contract is heading for its highest-ever average annual price, at $111.77 a barrel so far this year.
Australia Raises 2013 Iron Ore Price Outlook on China Demand (Bloomberg)
Australia, the world’s biggest iron ore exporter, raised its price forecast for next year on expectation that infrastructure projects and stimulus spending by China, the world’s biggest buyer, will boost demand. Prices will average $106 a metric ton in 2013, compared with a September estimate of $101 a ton, the Canberra-based Bureau of Resources and Energy Economics said in a report today. Prices are set to average $128 a ton in 2012 from $126 a ton forecast in September, the bureau said. Australia’s exports may total 481 million tons in 2012 and 543 million tons in 2013, from 483 million tons and 528 million tons predicted in September, it said.
Iron ore climbed yesterday to the highest price in more than four months on signs China will rebound after a seven- quarter slowdown. Industrial output and retail sales rose faster than economists estimated, data showed Dec. 9. China imported 65.78 million tons of the ore last month, the customs bureau said Dec. 10, the second-highest level after a record 68.97 million tons in January 2011, data compiled by Bloomberg show. “Prices in the first half of 2013 are expected to remain around current levels, while prices are forecast to increase in the fourth quarter of 2013 in line with an expected increase in steel consumption demand,” the report said. China approved plans including building of roads, subways and extra spending on railways in September.
The bureau’s forecast referred to iron ore with 62 percent content free-on-board Australia. The same grade of ore delivered to the Chinese port of Tianjin rose 1.2 percent to $124.90 a dry ton yesterday, the highest since July 20, according to a gauge compiled by The Steel Index Ltd. Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
Gold CEOs Told to Fix Slump as Investors Prove Restless (Bloomberg)
Gold-mine investors are losing patience with management in the $60 billion industry as their shares head for the first back-to-back annual slump since 1998, even as the metal completes a dozen years of gains. Producers from Canada’s Barrick Gold Corp. (ABX), the world’s biggest, to Newmont Mining Corp. (NEM) of the U.S. are failing to control expenses. The average cost to extract an ounce of gold by the largest miners jumped 23 percent to $584.70 in 2011, data compiled by Bloomberg show. In contrast, silver production costs fell 12 percent to the lowest since 2007, the data show. Money managers including billionaire investor George Soros reacted by boosting stakes in physical gold, pushing gold-mine executives to resign, or shifting into silver. Direct holdings of the metal reached a record 2,629.3 metric tons Dec. 10, valued at $145 billion, after more than tripling in five years, data compiled by Bloomberg show.
“Investors are very critical, voting with their feet and pushing management teams to resign,” said John Wong, a portfolio manager at CQS Group’s New City Investment Managers, who increased his silver holdings. “You can tell from the way investors sold Barrick down that they are on short fuses.” Barrick replaced Chief Executive Officer Aaron Regent with Chief Financial Officer Jamie Sokalsky on June 6, saying it was “disappointed” in the share performance after costs rose and production dropped. Since then the stock lost another 19 percent as the company missed earnings for four straight quarters amid delays and cost overruns at its Pascua-Lama project on the mountainous Argentina-Chile border. At least five more gold CEOs lost their jobs this year.
Silver Market Recap Report (CME)
The silver market saw a fleeting morning rally, weakened ahead of the scheduled data and then managed to bottom around mid morning. While the March silver contract managed a modest recovery bounce prior to mid session, the trade remained entrenched in negative ground for a large portion of the Tuesday US trade action. For some silver bulls the weak action in silver was accentuated by the very impressive action in the platinum market. Perhaps gold and silver are now in need of some fresh signs of progress on the fiscal cliff negotiations.
Gold Market Recap Report (CME)
February gold forged a lower high today as the gold trade wasn't emboldened by outside market forces that have recently favored the bull camp. A strong upward extension in US equities seemed to give off the impression of an impending fiscal cliff deal but even when the Speaker of the House claimed that the President wasn't serious yet, the stock market mostly held its gains. Gold on the other hand, generally gave some ground after the political news from the Capitol flooded the airwaves. One might have expected a weaker US currency to have underpinned gold prices but instead the bull camp in gold was simply disinterested.
Soybean Complex Market Recap (CME)
January Soybeans finished down 2 3/4 at 1472, 15 3/4 off the high and 7 3/4 up from the low. March Soybeans closed down 4 1/4 at 1471 1/4. This was 7 1/2 up from the low and 15 off the high.
January Soymeal closed up 3.2 at 448.1. This was 4.6 up from the low and 3.0 off the high.
January Soybean Oil finished down 0.95 at 50.2, 1.06 off the high and 0.05 up from the low.
January soybeans traded modestly lower on the day following a slightly supportive Supply and Demand report. The sharply lower trade in wheat weighed on the grain complex throughout the session. The USDA pegged US soybean ending stocks at 130 million bushels vs. 140 in November and against trade expectations of 130. The USDA managed to increase domestic crush demand by 10 million bushels and exports were left unchanged from last month. World ending stocks for the 2012/13 season came in at 59.93 million tonnes as compared 60.02 million tonnes in last month's estimate and against trade estimates of 59.41. The USDA left Brazil production, Argentina production and China supply/demand numbers unchanged from last month. In addition, the USDA announced a sale of 115,000 tonnes of soybeans to China for 2012/13 delivery just after the report was released. Basis in the Gulf of Mexico held firm on the drop in futures which could mean additional export sales were made today. South American weather remains mostly favorable in Brazil and Argentina is expected to dry down which should improve the soybean planting pace.
EDIBLE OIL: Malaysian palm oil futures ended lower as traders priced in record stocks in the world's second-largest producer of the edible oil. (Reuters)
VEGOILS-Palm oil closes lower as record stocks weigh
Tue Dec 11, 2012 5:15am EST
* Latest Malaysian data pointing to record stocks negative
* Traders hoping for higher shipments on quota, Chinese
By Chew Yee Kiat
SINGAPORE, Dec 11 (Reuters) - Malaysian palm oil futures
ended lower on Tuesday, as traders priced in record stocks in
the world's second-largest producer of the edible oil.
Malaysia's palm oil inventory level climbed for the fourth
straight month to a record 2.56 million tonnes in November,
weighing on futures that were headed for the worst annual
performance since the 2008 financial crisis.
"We view the latest inventory data negatively as high stocks
should keep crude palm oil prices at distressed levels of below
2,500 ringgit per tonne for an extended period well into 2013,"
Alan Lim Seong Chun, research analyst with Malaysia's Kenanga
Investment Bank, said in a note to clients.
The benchmark February contract on the Bursa
Malaysia Derivatives Exchange lost 0.9 percent to close at 2,292
ringgit ($750) per tonne. Prices traded in a range of 2,283 to
Total traded volumes stood at 38,386 lots of 25 tonnes each,
much higher than the usual 25,000 lots.
On the weather front, an absence of El Nino disrupting
production could lead to even higher palm oil supplies and pile
more pressure on record high stocks, while the latest export
data also failed to lift investor sentiment.
Malaysian exports fell 2.8 percent for the first 10 days of
December from a month ago, said cargo surveyor Intertek Testing
Services. Another cargo surveyor, Societe Generale de
Surveillance, reported a 0.4 percent rise for the same period.
But traders are hoping for higher shipments in the next few
weeks as planters rush to finish their annual tax-free export
quota that expires the end of December and as Chinese buyers
stock up before the implementation of a stricter quality
requirement on edible oil from next year.
In a bullish sign for palm oil, Brent crude oil rose to
around $108 a barrel on Tuesday as a slightly weaker dollar and
Middle East unrest supported prices, but stalled fiscal talks in
the United States capped gains.
In other vegetable oil markets, U.S. soyoil for January
delivery fell 0.3 percent in late Asian trade. The most
active May 2013 soybean oil contract on the Dalian
Commodity Exchange closed 0.1 percent lower.
Malaysia crude palm oil export tax seen at zero for Jan
SINGAPORE | Tue Dec 11, 2012 7:05am EST
Dec 11 (Reuters) - Malaysia will set a tax rate for the export of crude palm oil for January by using the average sales price from Nov. 10 to Dec. 9 as the reference price, a government source said, a level that analysts said could result in zero tax.
The new tax rate comes under a plan approved by the world's second-largest palm oil producer in October to cut crude palm oil (CPO) export taxes as it tries to claw back market share from top producer Indonesia.
Under the new structure, January export taxes are likely be set at zero, given that the average CPO price from Nov. 10 to Dec. 9 fell below the lowest reference price of 2,250 ringgit ($740) per tonne, Maybank Investment Bank said in a research note on Tuesday.
This would help Malaysian exporters ship as much CPO as possible to reduce a record stockpile of 2.56 million tonnes in November.
The government will announce the tax levy on the 15th of every month using Malaysian Palm Oil Board prices for reference and will formalise the January tax in a gazette set to be issued on Dec. 17, said the source, who declined to be identified because he is not authorised to speak to the media.
Malaysian exporters have been concerned that the new tax mechanism could spark a tax war with Indonesia, although the world's largest palm oil producer said it was resisting pressure to change its export tax system in response to Malaysia's planned tax cuts, a junior minister said on Tuesday. ($1 = 3.0595 Malaysian ringgit) (Reporting By Chew Yee Kiat; Editing by Jane Baird)