Friday, December 14, 2012

20121214 1811 FCPO EOD Daily Chart Study.

FCPO closed : 2276, changed : +46 points, volume : higher.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward, seller taking profit.
Support : 2250, 2230, 2200, 2150 level.
Resistance : 2270, 2300, 2350, 2400 level.
Comment :
FCPO closed recorded gains with better volume traded. Soy oil price currently surging more than 1% snaping back all overnight loss while crude oil price currently trading higher.
FCPO price recovered today due to profit taking activities and change of active month to March contract ahead of cargo surveyor export figures.
FCPO daily chart reading revised to suggesting a pullback correction downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20121214 1727 FKLI EOD Daily Chart Study.

FKLI closed : 1651 changed : 0.5 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward, buyer taking profit.
Support :  1650, 1645, 1640, 1635 level.
Resistance : 1660, 1670, 1680, 1690 level.
Comment :
FKLI closed 1 tick higher with slower volume exchanged doing about 1 point discount compare to cash market that closed marginally lower. Overnight U.S markets closed recorded loss and today Asia markets ended mixed while European markets trading mostly little higher.
World markets reacted differently on unfruitful U.S. budget discussion development and a surveys showed China’s manufacturing may accelerate this month.
FKLI daily chart study adjusted to suggesting a pullback correction upside 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.

20121214 1559 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a higher open. Asian shares were mixed with a pick-up in China's manufacturing sector lending support but worries over the progress of U.S. budget talks to avert the "fiscal cliff" weighing on investor sentiment. U.S. stocks slid after the S&P's six days of gains on Thursday as uncertainty about Washington's "fiscal cliff" negotiations offset encouraging data on retail sales and jobless claims.

FOREX-Yen slips to 9-mth low ahead of Japan election
TOKYO, Dec 14 (Reuters) - The yen slipped to nine-month lows as Japan looks set to get a prime minister keen to push for more money printing by the central bank to stimulate the moribund economy.
"The market is growing confident the next government will be one of the most aggressive about easing that you could think of," said a trader at a Japanese bank.

China HSBC Dec flash manufacturing PMI firms to 50.9
Growth in China's vast manufacturing sector picked up in December, a preliminary private survey showed, with rises in areas such as new orders and employment underlining a brighter outlook for the economy in coming months.

Obama, Boehner hold 'frank' meeting amid 'fiscal cliff' frustration
President Barack Obama and House of Representatives Speaker John Boehner held a "frank" face-to-face meeting on Thursday in an effort to break an impasse in talks to avert the "fiscal cliff" of steep tax increases and spending cuts.

EU wheat exports, maize imports stay brisk
The European Union this week awarded the third-largest volume of soft wheat export licences so far this season, official data showed on Thursday, confirmation of brisk demand for EU wheat after a two-year high the previous week.

GRAINS: U.S. wheat rose for the first session in six, boosted by bargain hunting, but the staple remains on course for its biggest weekly loss in more than six months. Soybeans rose, supported by strong exports from the United States, while corn firmed after six straight sessions of losses.

OPEC relaxed on prospect of early 2013 stockbuild
OPEC is relaxed about the prospect of rising inventories in the first half of next year, the group's secretary general said on Thursday, so long as oil prices avoid extreme moves from their current acceptable level.

Miner Centamin tumbles as flagship mine suspended
Egypt-focused Centamin has suspended operations at its flagship Sukari mine after a dispute over diesel supplies and an export hitch left it without fuel and short of cash, sending its shares to a seven-year low.

OIL: Brent crude rose above $108 a barrel on a brighter outlook for China's economy, the world's second largest oil consumer, but worries about the impact of a possible U.S. fiscal crisis capped price gains.

BASE METAS: London copper firmed after data showed China's manufacturers built on a recovery this month, driving a fifth straight week of gains, but a lack of resolution to the U.S. "fiscal cliff" kept a lid on prices.

PRECIOUS METALS: Gold traded steady, with prices heading for their third consecutive weekly drop, as investors cautiously watched U.S. talks to avoid a looming fiscal calamity that have so far made little progress.

METALS-LME copper firms after China manufacturing picks up
SINGAPORE, Dec 14 (Reuters) - London copper firmed after data showed China's manufacturers built on a recovery this month, driving a fifth straight week of gains, but a lack of resolution to the U.S. "fiscal cliff" kept a lid on prices.
"Going forward, this is all part of another big growth phase these numbers are good for a reason. Optimism is improving for the first quarter," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm.

PRECIOUS-Gold heads for 3rd weekly drop; US budget talks eyed
SINGAPORE, Dec 14 (Reuters) - Gold struggled to rise above $1,700 an ounce and prices headed for their third consecutive weekly drop, as investors cautiously watched U.S. talks to avoid a looming fiscal calamity that have so far made little progress.
"It is hard to glean a real trend as everyone has closed down for the year," said a Sydney-based trader, adding that the sell-off on Thursday was a result of position liquidation by funds to lock in profit for the year.

Baltic Index down as capesize weakness continues
Dec 13 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Thursday as capesize rates extended a drop the previous day.
Capesize rates dropped for an 11th straight session on Thursday on weak iron ore demand in major consumer China.

20121214 1526 Palm Oil Related News.

VEGOILS-Palm oil inches up, but set for 4th straight weekly loss
Fri Dec 14, 2012 1:05am EST
* Prices bounce from 3-yr low, but investors cautious on
record stocks
    * Traders looking out for Malaysia's new crude palm oil tax
for Jan
    * Coming up: Malaysia palm export data for Dec. 1-15 by ITS
on Sat

 (Updates prices, adds detail)
    By Chew Yee Kiat
    SINGAPORE, Dec 14 (Reuters) - Malaysian palm oil futures
rebound on Friday from the previous day's three-year low but
prices were still on course for the fourth straight weekly loss
as worries persisted over record high stocks.
    For the week, palm oil has lost more than 2 percent after
slumping to the lowest since November 2009 on Thursday. Sluggish
global economic growth hurting commodity demand has also put the
edible oil on track for the steepest annual loss since 2008.  
    "Concerns about large stockpiles are still hovering despite
the fact that, on the financial market side, we have further
stimulus coming from the U.S. Fed and some speculation that
Japan may expand its asset purchasing programme," said Ker Chung
Yang, commodities analyst with Phillip Futures in Singapore.
    "For today we see some kind of a relief rally after
yesterday's drop, but the fundamentals are still the same."
    By the midday break, the benchmark February contract
 on the Bursa Malaysia Derivatives Exchange edged up 0.8
percent to 2,248 ringgit ($736) per tonne. Prices fell to 2,217
ringgit the previous day, a level unseen since November 2009.
    Total traded volumes stood at 15,860 lots of 25 tonnes each,
higher than the usual 12,500 lots.
    Traders will be looking out for Malaysia's export data for
the first half of December, hoping for a stronger export demand
after cargo surveyor Intertek Testing Services reported a 2.8
percent slide in shipments for the Dec. 1-10 period.
    They are also waiting for Malaysia's new January crude palm
oil export tax set to be announced on Monday, with analysts
expecting it to be set at zero, a level that could boost export
demand and help bring stocks down.  
    In a bullish sign for palm oil, Brent crude rose above $108
a barrel on Friday on a brighter economic outlook for China, the
world's second largest oil consumer, but worries about the
economic impact of a possible U.S. fiscal crisis capped price
    In other vegetable oil markets, U.S. soyoil for January
delivery gained 0.8 percent in early Asian trade. The
most active May 2013 soybean oil contract on the Dalian
Commodity Exchange edged up 1 percent.

20121214 1115 Global Market & Energy Related News.

GLOBAL MARKETS-Asian shares ease as "fiscal cliff" weighs
TOKYO, Dec 14 (Reuters) - Asian shares snapped a week-long winning streak, tracking global equities lower, on concerns that U.S. lawmakers are still too far apart to avert a fiscal crisis with an end-of-year deadline looming.
"The index is likely to waver a little following U.S. markets, and also on profit-taking since it crossed the 2,000-mark yesterday," Kim Joo-yong, an analyst at Bookook Securities, said of the Korea Composite Stock Price Index.

FOREX-Yen on track for another sorry week as BOJ looms
SYDNEY, Dec 14 (Reuters) - The yen remained in the doldrums as investors continued to give it a wide berth on expectations the Bank of Japan would print more money next week to stimulate the world's third biggest economy.
"We forecast more yen weakness in 2013... eventually, the yen must weaken because the economy needs help so badly, but we have seen many years of policy timidity and frequent policy disappointments," said Kit Juckes, strategist at Societe Generale.

U.S. labor market brightens, consumers step up spending
WASHINGTON, Dec 13 (Reuters) - The number of Americans filing new claims for jobless benefits fell sharply last week to a near four-year low and retail sales rebounded in November, hopeful signs for the struggling U.S. economic recovery.
Initial claims for state unemployment aid fell for a fourth straight week, dropping 29,000 to a seasonally adjusted 343,000, the Labor Department said on Thursday. They are now at their lowest level since early October, and within a hair of territory last seen in early 2008.

Oil falls as fiscal cliffhanger fuels caution
NEW YORK, Dec 13 (Reuters) - Oil prices fell on Thursday as worries about the economic impact of a U.S. fiscal crisis overshadowed improvements in U.S. jobs data and retail sales.
"The U.S. data took our minds off the fiscal cliff for a few moments, but the possibility that going over the cliff might cause a recession continues to limit crude prices, along with high inventories and relatively warm temperatures in the U.S.," said Phil Flynn, an analyst at Price Futures Group in Chicago.

20121214 0951 Malaysia Corporate Related News.

Axiata Group is set to strengthen its foothold in Cambodia through a merger between Hello Axiata Company Ltd and Latelz Company Ltd, which it acquires for a consideration of US$155m (RM473m). In a statement, Axiata announced that its Cambodian arm had entered into a sales and purchase agreement to acquire shares of Latelz, owned by Timeturns Holdings Ltd based in Cyprus. Post merger, Axiata will hold a 90% stake in the combined entity and emerge as one of the largest operators in Cambodia in terms of subscribers and revenue. The company said: “Unique subscriber penetration in Cambodia is currently below 40% with an expected double digit growth of around 10% over the next 3 years. As such, the headroom for growth is now and with this merger, Axiata will have a head start with a significantly strengthened entity and clear market leadership.” The acquisition of Latelz will be financed by Axiata's internal generated funds and/or existing financing facilities and is not expected to have any material effect on the gearings and net assets of the Axiata Group for the financial year ending Dec 31, 2012. (StarBiz)

AirAsia has placed a new order for 100 A320 family aircraft, bringing the total orders with Airbus to 475. Thirty-six of the new planes will be fitted with the current engine option, with deliveries running up to 2016 - two in 2013, four in 2014, 22 in 2015 and eight in 2016. The remaining 64 planes with the new engine option will be delivered beginning 2017 with eight deliveries, 14 in 2018, 15 in 2019, 14 in 2020 and 13 in 2021. AirAsia is already expecting the delivery and leases of 34 planes in 2013 - 10 for Malaysia, eight for Thailand, nine for Indonesia, three for Philippines and four for Japan. (Financial Daily)

Jaks Resources Bhd said its subsidiary JAKS Hai Duong Power Co Ltd has agreed to terminate the contract to develop a 2 x 600MW coal-fired power plantin Hai Duong , Vietnam. (BT)

Astro Malaysia Holdings Bhd and  Felda Global Ventures Holdings Bhd will replace  AirAsia Bhd and  Malaysia Marine and Heavy Engineering Bhd in the FTSE Bursa Malaysia  Kuala Lumpur Composite Index. (BT)

KUB Agrotech Sdn Bhd, a wholly-owned unit of  KUB Malaysia Bhd, is banking on its maiden RM50m palm oil mill to generate almost RM130m in revenue annually by 2015. The construction of the mill, which will be built in Mukah, Sarawak, is also aligned with the company's mission  to increase its landbank of up to 28,000ha for the development of oil palm plantations. KUB Agrotech chairman Datuk Gumuri Hussain did not dismiss the possibility of the company acquiring land overseas for the development of oil palm plantations.  "We have in our very own strategic plan to expand our landbank, which is not confined to acquiring land in the country but also abroad. (BT)

DiGi, which enjoys a 25% share of the smartphone market, expects to see a rise in the number of its customers with the much anticipated  Apple-iPhone 5 which will hit the Malaysian market Friday. Its Head of Internet and Services Product Marketing, Praveen Rajan, said they have been seeing very encouraging response since they opened up for pre-order for the iPhone sale via DiGi's online store. He said the postpaid and prepaid plans offered by DiGi were expected to bring in more sales due to the affordable pricing structure. He said DiGi postpaid plan starts from as low as RM60 per month and the phone pricing starts from RM2012. DiGi said the iPhone 5 will be available at six key locations for DiGi stores in the country including Kuala Lumpur, Penang, Ipoh, Malacca, Kota Kinabalu and Kuching. (Bernama)

Navis Capital Investments Ltd could make a second attempt to take SEG International Bhd (SEGi) private.  On Apr 25, the private equity firm and SEGi group managing director Datuk Seri Clement Hii made a general offer to privatise SEGi, the country's second largest private education group by sales, at RM1.74 per share and RM1.214 per outstanding warrant. Minority shareholders have generally brushed aside the offer. The mother shares yesterday closed at RM1.87 each while the warrants closed at RM1.38 per unit. Navis has started buy the warrants at above its own offer price and market observers suspect that the private equity firm intends to convert the warrants into mother shares to help push its shareholding to above the 75% threshold. Navis and parties acting in concert with the private equity currently control about 70.% of the company. This month alone, Navis Capital has bought some 300,000 warrants from the open market. Hii, one of the parties said to be acting in concert with Navis, told B T that he is not aware of any fresh general offer bid by the private equity firm. "I believe that they are buying on the open market as they feel that the current price is attractive enough to increase their stake," said Hii. (BT)

Petronas has awarded a production sharing contract for  Block SB311 offshore Sabah to a partnership of ConocoPhillips Sabah Gas Ltd, Shell Energy Asia Ltd and Petronas Carigali Sdn Bhd. In a statement, Petronas said the block, measuring 1,046 km2, was located in the central part of the Sabah. “Basin in water depths ranging from 50 to 100 metres. The area is located within a proven hydrocarbon fairway with key discoveries such as Kebabangan, Kinarut, and Erb West,” the firm said. Under the terms of the contract, ConocoPhillips will operate the block with a participating interest of 40% while Petronas Carigali and  Shell Energy Asia will each own a 30% interest in the block each. The three parties are committed to drill two wildcat wells, acquire 400 line km of new 2D seismic data and re-process existing 3D seismic data on the block under the contract. (StarBiz)

Axis-REIT Managers plans to buy about RM350m worth of properties next year. It is setting sights on industrial properties in Iskandar Malaysia in Johor, the Klang Valley, Selangor and Seberang Prai in Penang. "The current environment for growth for the REIT  industry is going to be challenging next year because yields have dropped so far. Besides, mall owners are not willing to sell for now. Fortunately, it's easier in industrial properties," said CEO George Stewart Labrooy. (Financial Daily)

Malaysia's overall media advertising expenditure (adex) rose to RM10.1bn in the first 11 months, up from RM9.6bn in the same period a year ago. According to the Nielsen Media Research Adex, advertisers spent RM5.4bn on television advertising compared with RM4.9bn in the corresponding period last year. During the period, newspapers' adex revenue dropped slightly to RM3.91bn from RM3.95bn recorded in 2011. Among the newspaper companies, The New Straits Times Press (NSTP) group's adex revenue improved to RM1.2bn from RM1.1bn previously. The group's market share rose by 4.1% to 31.5%, compared with 30%  last year. Leading the adex growth in the group was the Malay daily Harian Metro with revenue of RM535m, compared with RM473m the previous year, followed by its Sunday version  Metro Ahad with revenue of RM110m compared with RM94m. Adex in free-to-air TV stood at RM2.8bn compared with RM2.7bn, while pay-TV commanded RM2.5bn in adex, higher than the RM2.1bn it captured
over the same period last year. Nielsen also noted that outdoor adex grew steadily from a revenue of RM108.2m to RM129.3m this year.(BT)

UEM Land Bhd, started marketing  RM600m sukuk, its first issuance of syariah-compliant Islamic bonds, two people familiar with the sale said. The company was seeking to price the five-year sukuk to yield 4.25% to 4.4%, said the people who asked not to be named as the information is private. That's as much as 114 basis points above similar-maturity non-Islamic government debt, according to Bank Negara Malaysia index. The issuance is its first under a RM2bn bond programme disclosed by Malaysian Rating Corp on Dec 3. UEM Land, which was helping develop Iskandar Malaysia, would use the proceeds for syariah-compliant corporate purposes, the company said in an e-mailed to Bloomberg News on Dec 6, without elaborating. (Starbiz)

KNM Group Bhd has signed a shareholders cum joint-venture agreement with HMS Oil and Gas Sdn Bhd to form KNM HMS Energy Sdn Bhd (KHE) to secure opportunities in the upstream oil and gas (O&G) sector in Malaysia.KNM will hold a 70% stake in KHE with the balance 30% being held by HMS, KNM said in a Bursa Malaysia’s filing. (Starbiz)

AirAsia X intends to increase the flight frequency from  Kuala Lumpur to Melbourne, Taipei and Chengdu effective May 1, 2013 to strengthen its market positioning. The company announced that its daily flights to Melbourne will increase to nine flights weekly by 1 May and subsequently to 12 flights weekly by 1 July. Daily flights to Taipei will hit 10 weekly flights effective 1 May and with double daily flights commencing 1 July. Flights to Chengdu will increase from its current five flights weekly to six by 1 May and daily flights by 1 July. (Malaysian Reserve)

Mycron Steel Bhd will agree to continue buying 50% of its raw material needs from Megasteel Sdn Bhd and the other half from abroad provided its three conditions are met, its top executives said.  International Trade and Industry Minister Datuk Seri Mustapa Mohamed had reportedly told Mycron in a meeting earlier this month that the Government would still require it to procure hot-rolled coils (HRC) from Megasteel, the country's sole producer of the material, and import the rest, which is the current practice. The decision is said to have been a blow to local cold-rolled coil (CRC) makers as most steel players are in the red, while industry utilisation rates remain depressed at a paltry 31%. HRC is the raw material for making CRC, which can either be scrap-based or iron ore-based. The latter is of higher quality and used for various applications in the automotive, petroleum, palm oil, and electronic and electrical industries. Mycron chairman and major shareholder Tunku Datuk Yaacob Tunku Abdullah said after the company's AGM yesterday that it had agreed “in principle” with the ministry based on three conditions consistency of product quality from Megasteel; a rollback of duty-exemption on imported CRC, essentially making it more expensive; and an independent audit to ensure that Megasteel does not enjoy any transfer pricing advantage between its upstream and downstream operations.“If those three conditions are fulfilled, we are comfortable with the 50:50 purchase policy,” he said. Although the final decision rests with the minister, Yaacob said he was optimistic Mycron's conditions would be met. According to industry executives, an announcement is due to be made in the coming weeks on the new steel policy by Mustapa. This is likely to take place before the end of the year as the regulation will take effect on Jan 1, 2013. (Starbiz)

The  Malaysian Communications and Multimedia Commission (MCMC) should not to play the industry’s “God” by selecting which companies’ pockets to fatten with arbitrary awards, said DAP federal lawmaker Tony Pua. He insisted here that the regulator should have auctioned off the 4G-LTE broadband spectrum instead of awarding a comparatively large block to logistics tycoon Tan Sri Syed Mokhtar Al-Bukhary. He scoffed at MCMC chairman Datuk Mohd Sharil Tarmizi’s claim that the award of 40MHz to Syed Mokhtar’s Puncak Semangat was to “introduce additional competition”, saying his explanation defied logic as the eight existing players in the industry was adequate to offer a surfeit of consumer choice. “By international standards, eight players are more than sufficient to generate a highly competitive environment. Most other developed nations have far fewer than eight players in the industry, and yet remain highly competitive and innovative." According to The Edge on Tuesday, Shahril defended the MCMC’s award of the largest share of the high speed 4G-LTE broadband spectrum to Puncak Semangat, which Pua had on Monday criticised for its “zero track record” in the field. (The Malaysian Insider)

Genting in UK ops revamp, while Quek purchases more casinos
Genting Group is revamping its operations in London where more casino-friendly laws are being weighed alongside potential job creation, while Tan Sri Quek Leng Chan’s Rank Group awaits the final go-ahead for a deal that would unseat Genting as the largest UK casino operator. Genting is revamping The Fox Poker Club in Shaftesbury Avenue, a poker-only club, into a full casino even as London legislators contemplate legislative changes that would allow easier casino licences movement between UK localities. Rank still needs the Competition Commission’s clearance for its GBP205m (RM1bn) purchase of 26 Gala Coral casinos. (Financial Daily)

Melewar looking to sell Siam Power
Melewar Industry Group could sell its power generation arm, Siam Power Generation Co Ltd, which operates a 160MW combined cycle co-generation gas-fired power plant in Rayong, Thailand. The sale is likely to come after April 2013, when G Steel, one of Melewar’s customers, completes a restructuring exercise and commences buying electricity from Siam Power again. Siam Power could fetch a better price with an impending ruling that removes a cap and allow the Electricity Generating Authority of Thailand to acquire power from small power producers like Siam Power. (Financial Daily)

Petra Energy proposes renounceable rights issue
Petra Energy has proposed a rights issue of up to 107.25m new ordinary shares on a basis of one rights share for every two existing Petra shares held, with the issue price and entitlement date to be determined later. The company intends to raise a minimum of RM102m and will be used to fund its participation in a petroleum development and production project at the Kapal, Banang and Meranti cluster of small fields inoffshore Terengganu. (Malaysian Reserve)

20121214 0951 Local & Global Economy Related News.

The Northern Corridor Economic Region (NCER) has attracted RM12.3bn in investments and created 16,335 jobs to date, said the Northern Corridor Implementation Authority (NCIA). Last year, the region attracted RM9.9bn in investments with 10,369 job opportunities. The major investments came from the agriculture and manufacturing sectors, with strong participation from the Japanese investors. Local private sector participation in the economic region grew to 39% from 19.4% last year, it said. (Bernama)

Applications for jobless benefits in the US fell by 29,000 to 343,000 in the week ended 8 Dec. Economists forecast 369,000 claims. (Bloomberg)

US producer prices lost 0.8% mom, largely pulled down by a 4.6% drop in energy prices, as food prices rose 1.3%. Stripped of those two volatile components, the rate was an increase of just 0.1%. (AFP)

US retail sales rebounded in Nov to 0.3% mom (-0.3% in Oct). Excluding automobile sales, up 1.4% after a 1.9% tumble in October, retail sales were unchanged from Oct. (AFP)

US business inventories rose 0.4% mom in Oct (+0.7% in Sep), in line with market expectations. This was the lowest rise since Jun. Business sales fell 0.4% to end three straight months of gains. The mismatch pushes the stock-to-sales ratio to 1.29 vs. Sep's 1.28. (Bloomberg)

The US Federal Reserve extended until Feb 2014 dollar swap lines with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank. (WSJ)

Euro-area finance ministers approved €49.1bn (US$64bn) of rescue payments to Greece to keep the recession-wracked country solvent, after wrapping up a 14-hour negotiation on banking union. Eurozone finance ministers brokered terms for the ECB to begin direct supervision of big eurozone lenders from early 2014. (Bloomberg, FT)

Standard & Poor's has become the third large credit rating agency to downgrade the outlook on Britain’s triple A rating to "negative". The move came because the agency is concerned by the weak recovery and delays in seeing a sufficient improvement in the public finances. (FT)

The  Thai government has started planning the 2014 fiscal budget, with a focus on reducing the budget deficit to below 2% of GDP. (Bangkok Post).

Bangko Sentral ng Pilipinas (BSP) maintained the overnight borrowing and lending rates at 3.5% and 5.5%, respectively. It maintained its inflation target of 3-5% for 2013 and 2014, but reduced its target for 2015 and 2016 to 2-4% from 3-5%. (Bloomberg)

Credit growth in the Philippines was unchanged at 14.2% yoy in Oct. Money supply growth quickened to 8.6% yoy in Oct (7.5% in Sep). (Bloomberg)

The Bank of Korea kept the benchmark seven-day repurchase rate at 2.75% in Dec after 25 bp cuts in Jul and Oct, in line with predictions by the majority of economists. (Bloomberg)

China: First shibor jump in six quarters presages easing
Chinese banks’ borrowing costs are rising for the first time in six quarters as they raise cash before national holidays, reinforcing economists’ forecasts of a cut in lenders’ reserve requirements early next year. The Shanghai interbank offered rate, or Shibor, for three-month yuan loans climbed 17 basis points since September to a five-month high of 3.86%, according to data from the National Interbank Funding Center. India’s three-month interbank rate decreased nine basis points to 8.72%, while the equivalent cost to borrow dollars in London dropped five basis points to 0.31%, Bloomberg data show. (Bloomberg)

Canada: Yield forecasts cut most in three months in housing
Economists cut their yield forecasts for Canadian 30-year bonds by the most in three months and pushed back the date of an expected Bank of Canada interest-rate increase with the housing market showing signs of slowing. Yields in the first quarter of next year will be 2.45%, down from a forecast of 2.55% last month, according to the median estimate of nine economists surveyed by Bloomberg from 7 Dec. (Bloomberg)

20121214 0942 Global Markets Related News.

Asia FX By Cornelius Luca - Thu 13 Dec 2012 17:59:01 CT (CME/
The appetite for risk was mixed on Thursday after briefly flaring up the previous day on news that the Federal Reserve targeted a 6.5% unemployment rate before tightening borrowing. All eyes are on the "fiscal cliff" game of politics. The Eurozone finance ministers confirmed the next round of aid for Greece, as expected. The foreign currencies ended divergently, with only euro and franc gaining. The yen remains soft after sliding to a new low for its downtrend and is approaching the neckline of a long-term head –and-shoulders in the 1.1960 area. The US stock indexes fell. The short-term outlook for the financial 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: Retail sales increased by 0.3% in November following a 0.3% decrease in October.
US: The PPI fell by 0.8% in November following a 0.2% drop in October. The core PPI edged up by 0.1% in November after dipping by 0.2% in October.US: Initial jobless claims decreased 29,000 to 343,000 last week from the previous week's revised figure of 372,000 (370,000 originally reported).
US: Business inventories rose 0.4% in October, less than +0.7% in September. Business sales fell 0.4% after surging 1.2% in the previous month.
Canada: Capacity utilization was unchanged at 80.9% in the third quarter.
Canada: The New Housing Price Index rose again by 0.2% in October.

Today's economic calendar
China: HSBC manufacturing PMI for December
China: FDI - Foreign direct investment  for November
Japan: Tankan large all industry for the fourth quarter
Japan: Industrial production for October

Asian Stocks Snap 11-Day Rally Amid U.S. Budget Deadlock (Bloomberg)
Asian stocks fell, with the regional benchmark index heading for its first decline in 12 days, amid a deadlock in U.S. budget negotiations and as investors awaited a report on Chinese manufacturing. Samsung Electronics Co. (005930), the world’s biggest smartphone maker, retreated 1.1 percent in Seoul after closing at a record yesterday. Tohoku Electric Power Co. slipped 1.6 percent in Tokyo after Jiji News Agency reported its Higashidori nuclear plant is on an active fault line. APN News & Media Ltd. sank 6.4 percent in Sydney after the newspaper publisher forecast lower second-half revenue. The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 127.01 as of 9:33 a.m. Tokyo time. Markets in China and Hong Kong have yet to open. The gauge advanced 12 percent this year through yesterday amid signs the world’s biggest economies are improving and optimism U.S. lawmakers will agree on a budget deal to avert the so-called fiscal cliff.
“It’s very hard to gauge a handle on what’s happening with the fiscal cliff,” said Stephen Corry, a Hong Kong-based chief investment strategist at LGT Group, a private banking and asset management group that manages about $102 billion. “Valuations don’t look particularly excessive to me. With the reacceleration of the Chinese economy and a better cyclical outlook for the first half of next year, people are more confident in the price- earnings multiples that they’re paying.”

Japan Stocks Swing Between Gains, Losses on Tankan Survey (Bloomberg)
Japanese shares swung between gains and losses after the central bank’s Tankan survey of large manufacturers showed more pessimism than expected, and as an opposition party calling for more easing is poised to return to power in an election this weekend. The Nikkei 225 Stock Average (NKY) fell 0.1 percent to 9,733.41 as of 9:16 a.m., breaking a two-day rally. The price for December futures and options contracts, also known as the “special quotation,” settled at 9,720.36, according to data compiled by Bloomberg. The broader Topix Index gained 0.1 percent to 799.99, with about four stocks falling for every three that gained.

U.S. Stocks Fall as Budget Impasse Offsets Jobless Claims (Bloomberg)
U.S. stocks retreated, snapping a six-day advance in the Standard & Poor’s 500 Index, as the standoff in federal budget negotiations overshadowed a decline in jobless claims and a rebound in retail sales. Newmont Mining Corp. and Mosaic Co. dropped at least 1.4 percent to pace losses in commodity shares. Phillips 66, the crude refiner that was spun off from ConocoPhillips in May, declined 1.6 percent on plans to raise as much as $400 million in an initial public offering for a minority interest in some of its pipeline and logistics assets. CVS Caremark Corp. (CVS) climbed 2 percent after forecasting profit that beat estimates. Best Buy Co. jumped 16 percent on a report that founder Richard Schulze will offer to take the company private by Dec. 15.
The S&P 500 fell 0.6 percent to 1,419.45 at 4 p.m. New York time. The Dow Jones Industrial Average dropped 74.73 points, or 0.6 percent, to 13,170.72. About 6.1 billion shares changed hands on U.S. exchanges, or in line with the three-month average, according to data compiled by Bloomberg. “It’s going to be a bumpy ride until we see some type of deal on the fiscal cliff,” said Matt McCormick, who helps oversee $7.3 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc. “Speeches and speculation are the drivers of the market right now. I’m hopeful that we’ll see a resolution, but the politicians seem to be going a different tune.”
U.S. House Speaker John Boehner repeated his insistence that President Barack Obama’s budget proposal is “anything but” balanced and accused the president of being “not serious” about cutting spending. Obama said the negotiations are “still a work in progress.” The deadlock in talks to avoid more than $600 billion in tax increases and spending cuts will start taking effect in January unless Congress averts them.

European Stocks Drop on Bernanke’s Fiscal-Cliff Warning (Bloomberg)
European stocks fell from an 18- month high as Federal Reserve Chairman Ben S. Bernanke said the central bank’s plan to buy $45 billion a month of Treasuries will fail to offset the effects of the fiscal cliff. Deutsche Bank AG (DBK) slid 2.7 percent after Germany’s biggest lender said fourth-quarter profit will fall short of estimates. Centamin Plc (CEY) tumbled 47 percent after a fuel dispute halted production at its gold mine in Egypt. Volvo AB (VOLVB) retreated 4.3 percent as Renault SA (RNO) sold its remaining stake in the Swedish truckmaker to increase funding. The Stoxx Europe 600 Index lost 0.4 percent to 279.63 at the close, its first decline this month. The equity benchmark has still increased 14 percent in 2012, closing at the highest level since May 2011 yesterday, as the European (SXXP) Central Bank pledged to buy the bonds of nations who seek aid.
“What Bernanke said is true: the extension of the program can’t offset the fiscal drag,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “Interest rates are already very low and any additional monetary stimulus is marginal. All the focus is still on the ongoing negotiation between the U.S. government and the majority leader of the House of Representatives. The sentiment is still cautious.” National benchmark indexes retreated in 11 of the 18 western European markets. The U.K.’s FTSE 100 (UKX) slid 0.3 percent and Germany’s DAX declined 0.4 percent. France’s CAC 40 decreased 0.1 percent.

Most Emerging Stocks Fall on U.S. Fiscal Cliff Deadline (Bloomberg)
Most emerging-market stocks declined, as consumer and energy companies fell amid wrangling between U.S. lawmakers over a solution to avert more than $600 billion in spending cuts and tax increases. Paper maker Klabin SA dropped the most since May, leading a slump in raw-material producers in Brazil. National Societe Generale Bank (NSGB) plunged 9.9 percent in Cairo after the biggest shareholder sold its stake in the Egyptian lender for less than market value. Samsung Electronics Co. (005930) climbed 2.9 percent to a record, boosting a gauge of developing-nation technology stocks to its highest level since April 2000.
The MSCI Emerging Markets Index (MXEF) was little changed at 1,042.56 in New York, with 390 stocks falling and 384 rising, after advancing over the past six days. Commodities plunged the most in a week and oil dropped for the first time in three days after Republican House Speaker John Boehner said the White House is not serious about cutting spending to prevent the cuts and tax increases that are due to come into force at the start of January. Data today showed U.S. retail sales climbed less than expected in November. “There’s a lot of concern about the fiscal cliff in the U.S.,” Seth Freeman, chief executive officer at EM Capital Management LLC, said by phone from San Francisco. “It’s just classic uncertainty. Investors, no matter how experienced, are more cautious.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, lost 0.4 percent to $43.19 in New York. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, increased 0.4 percent to 21.22.

Air Cargo Slowdown Puts Squeeze on Specialist Carriers (Bloomberg)
Dedicated air-freight operators are struggling to remain viable as a sluggish economy undermines their ability to compete with the cargo space on offer from carriers focused on the more buoyant passenger market. Companies such as Cargolux Airlines International SA, Europe’s top freight-only carrier, are reviewing their business models, while Deutsche Lufthansa AG (LHA), which runs a cargo-only unit alongside its passenger routes, has idled planes. The utilization of freighter aircraft has slumped below 42 percent as capacity far outstrips demand, the International Air Transport Association said yesterday. That’s forcing cargo specialists to target marginal markets where they don’t have to compete with hold space available from passenger operators. “For the pure freight guys it is going to be tough,” Niko Herrmann, an aviation specialist at Oliver Wyman in Zurich, said in an interview. “Carriers may be forced to seek partnerships and consolidate to gain scale, or to exit the market.”
Forecasts from IATA, which represents 240 airlines, suggest there’s little chance of an earnings rebound in the $70 billion market any time soon, with cargo yields, a measure of prices, expected to drop 2 percent this year and 1.5 percent in 2013. As the economic crisis drags into a fifth year, planes are flying with only 44 percent of cargo space taken up, including belly capacity on passenger jets, with the market essentially “stagnant,” IATA Chief Executive Officer Tony Tyler said.

Yen Hits 9-Month Low as Election, Tankan Spur Easing Bets (Bloomberg)
The yen touched the weakest level since March against the dollar on bets that Shinzo Abe’s Liberal Democratic Party will win Japanese elections this weekend and push the central bank to expand monetary easing. The Japanese currency headed for a weekly loss versus all of its 16 major counterparts as the Bank of Japan’s Tankan survey showed large manufacturers were the most pessimistic in almost three years. The euro traded near a one-week high after the currency bloc’s finance ministers approved 49.1 billion-euro ($64.2 billion) of rescue payments to Greece yesterday.
“The extent of the dollar-yen rally is quite striking,” said Sean Callow, a Sydney-based senior currency strategist at Westpac Banking Corp. (WBC) “It’s reasonable to think that there would be some impact on BOJ policy from a change of leadership. If Abe wins a comfortable mandate, he will certainly be keen to appoint somebody who is willing to take more aggressive steps” he said referring to the position of central bank governor. Incumbent Masaaki Shirakawa’s five-year term ends in April. The yen touched 83.68 per dollar, the lowest level since March 21, before trading little changed at 83.66 at 9:12 a.m. in Tokyo from the close yesterday. It fetched 109.38 per euro from 109.39, after yesterday weakening to 109.54, the least since April 4. The Japanese currency has lost 1.4 percent versus the greenback this week, while dropping 2.5 percent against the euro. Europe’s shared currency bought $1.3074 from $1.3077. It rose to as high as $1.31 yesterday, the strongest since Dec. 5.

Australian Dollar Slides From 3-Month High Amid U.S. Deadlock (Bloomberg)
The Australian dollar remained lower after declining yesterday as a standoff in U.S. budget negotiations sapped investor appetite for risk. The currency has dropped from its highest level in three months, while its New Zealand counterpart has retreated from a nine-month high. The so-called Aussie and kiwi dollars were poised to advance for a second week before a private report that may show Chinese manufacturing is improving. The currencies rallied following a decision this week by the Federal Reserve to implement further asset purchases, a move that tends to debase the greenback. The U.S. budget standoff has “probably contributed to the Aussie coming off a little,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “I’m not overly convinced that both currencies are going to continue moving up against the U.S. dollar.”
The Aussie bought $1.0526 as of 11:19 a.m. in Sydney after dropping 0.3 percent to $1.0528 yesterday. It’s set for a 0.4 percent weekly gain, having touched $1.0586 on Dec. 12, the strongest since Sept. 14. The New Zealand currency was at 84.26 U.S. cents from 84.31 yesterday when it reached as high as 84.61, the most since Feb. 29. The yield on Australian 10-year debt rose as much as four basis points, or 0.04 percentage point, to 3.34 percent, the most since Sept. 19. In the U.S., Republicans and Democrats remain deadlocked over how to avoid more than $600 billion in tax increases and spending cuts that will take effect from January unless Congress averts them, a scenario that threatens to throw the world’s biggest economy back into recession.
Risk sentiment was buoyed ahead of a report from HSBC Holdings Plc and Markit Economics that may indicate an expansion in Chinese manufacturing this month. Economists surveyed by Bloomberg News predict that a flash estimate of the gauge will show a reading of 50.8, up from last month’s final reading of 50.5.

Retail Sales Rebound as Jobless Claims Decline in U.S. (Bloomberg)
Retail sales rebounded in November and applications for jobless benefits fell more than forecast last week, pointing to strength in U.S. consumer demand as the holiday-shopping season gets under way. Purchases climbed 0.3 percent following an October decrease of 0.3 percent, Commerce Department figures showed today in Washington. Unemployment claims fell by 29,000 to a nine-week low of 343,000, the Labor Department said. Economists forecast 369,000 first-time claims, according to the median estimate in a Bloomberg survey. “We’re off to a fairly strong holiday-spending season,” said Millan Mulraine, senior U.S. strategist for TD Securities in New York, who correctly projected the November sales gain. “Consumer spending could offset some of the weakness” in other areas such as corporate investment, he said. Americans snapped up clothes and electronics at stores and online last month, while vehicle sales jumped as some Northeast residents sought replacements for autos damaged by superstorm Sandy.
Another report  showed consumer confidence cooled, underscoring the effects of limited job opportunities that prompted the Federal Reserve yesterday to boost record monetary stimulus. Stocks fell, snapping a six-day advance in the Standard & Poor’s 500 Index, amid a standoff in federal budget negotiations. The S&P 500 dropped 0.6 percent to 1,419.45 at the close in New York. Ten of 13 major categories in the retail sales report showed November gains, led by a 1.4 percent increase at auto dealers, a 2.5 percent jump at electronics outlets and a 0.9 percent gain at clothing stores.

S&P Cuts U.K. Outlook to Negative on Risks From Weak Economy (Bloomberg)
Standard & Poor’s lowered its outlook on Britain’s top credit rating to negative, citing weak economic growth and a worsening debt profile. The outlook on the AAA grade, revised from stable, means there is a one-in-three chance that S&P could cut the rating in the next two years, it said in a statement in London today. This could happen if the U.K.’s economic and fiscal performance “weaken beyond our current expectations,” it said. “We expect economic growth to accelerate slowly, but the risks to our growth assumptions are weighted to the downside however, with associated risks to government finances,” the ratings company said.
The revision increases political pressure on Chancellor of the Exchequer George Osborne, who has promised investors he would stick to plans for the biggest fiscal squeeze since World War II even as the economic recovery struggles to gain traction. Still, investors often ignore such actions, evidenced by the drop in French 10-year bond yields following a downgrade last month and a rally in Treasuries after the U.S. lost its top rating at S&P in 2011. S&P forecast today that Britain’s ratio of debt to gross domestic product will continue to rise in 2015 and peak that year at 92 percent. It sees a risk it could approach 100 percent if the economic recovery is weaker than currently projected.

Consumer Comfort Stagnates as U.S. Lawmakers Debate Budget (Bloomberg)
Consumer confidence in the U.S. stagnated last week, showing a lack of improvement since October as lawmakers continue to search for common ground on taxes and government spending in 2013. The Bloomberg Consumer Comfort Index slipped to minus 34.5 in the period ended Dec. 9, the lowest level in six weeks, from minus 33.8. The reading was the 12th straight above minus 40, the level associated with recessions and their aftermath. The decrease was within the margin of error of 3 percentage points. Appreciating property values and cheaper gasoline have given consumers reason to be upbeat as the year draws to a close. At the same time, limited wage gains associated with a 7.7 percent jobless rate will probably do little to help households should lawmakers fail to avert a broad-based increase in taxes in 2013.
“Households are likely coming around to estimating the risk associated with a decline in after-tax income that would result due to the fiscal shock,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York. “The risk to the economic outlook is that the recent improvement in consumer sentiment will see retrenchment, similar to what was observed during the debt-ceiling debate in summer 2011, that will offset the stabilization in the housing market and falling gasoline.” Other reports today showed jobless claims fell last week to the lowest level since early October, while retail sales rebounded in November. A 0.3 percent gain in purchases reflected more demand for autos, electronics and clothes after a 0.3 percent drop in October, according to Commerce Department data.

Jobless Claims in U.S. Decline to a Nine-Week Low (Bloomberg)
First-time claims for unemployment insurance payments declined more than forecast last week to the lowest level since early October, adding to evidence the labor market is improving. Applications for jobless benefits fell by 29,000 to 343,000 in the week ended Dec. 8, the fewest since reaching a four-year low in the period ended Oct. 6, Labor Department figures showed today. Economists forecast 369,000 claims, according to the Bloomberg survey median. The number of people on unemployment benefit rolls declined for a fourth straight week. Jobless claims have dropped 108,000 in the latest four weeks after a superstorm Sandy-related surge, indicating companies are comfortable with current staffing levels. To help encourage more hiring, the Federal Reserve said yesterday that it intends to keep policy accommodative until unemployment falls to 6.5 percent from the current 7.7 percent.
“The job market is holding up reasonably well,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, the best forecaster of claims in the past two years, according to Bloomberg data. At the same time, “expectations are tempered somewhat by the uncertainty surrounding the fiscal cliff” of tax increases and budget cuts in 2013, he said. Other reports today showed a decline wholesale prices and a rebound in retail sales in November. The 0.3 percent gain in purchases reflected stronger sales of automobiles, electronics and clothes, according to Commerce Department data. Stock-index futures were little changed after the figures. The contract on the Standard & Poor’s 500 Index expiring this month fell 0.1 percent to 1,426.3 at 8:54 a.m. in New York.

Obama Meets Boehner at White House for Budget Talks (Bloomberg)
President Barack Obama and House Speaker John Boehner met for 50 minutes today at the White House on the budget stalemate. Treasury Secretary Timothy Geithner also attended the meeting, according to an administration official who sought anonymity. The White House and Boehner’s office released almost identical statements that said the meeting was “frank” and that “the lines of communication remain open.” Earlier today, Boehner repeated his insistence that the president’s budget proposal is “anything but” balanced, and accused Obama of not being serious about cutting spending. Still, the speaker, during his weekly news conference, didn’t rule out allowing a House vote on extending tax cuts for income up to $250,000 a year for married couples, as Obama has demanded, if a broader tax-and-spending deal isn’t reached soon.
“The law of the land today is that everyone’s income taxes are going to go up on Jan. 1,” Boehner said when asked by reporters if he would rule out such a vote. “I have made it clear I think that is unacceptable. Until we get this issue resolved, that risk remains.” Obama and Boehner have been stymied in negotiations over how to avert more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff, scheduled to start taking effect in January. Also today, Senate Majority Leader Harry Reid said the Senate won’t consider a limited bill to avoid an expansion of the alternative minimum tax or a cut in Medicare reimbursements to physicians if a broader budget deal isn’t reached.

Americans Back Obama Tax-Rate Boost Tied to Entitlements (Bloomberg)
A majority of Americans say President Barack Obama is right to demand that tax-rate increases for the highest earners be a precondition for a budget deal that cuts U.S. entitlement programs, a Bloomberg National Poll shows. Just over half say Obama and Democrats are more on their side in the debate over taxes and government spending than House Speaker John Boehner and other Republicans, in a survey conducted Dec. 7-10 that suggests the president has broad public backing for his stance in the deficit-reduction talks. While Americans are divided over solutions to avoid spending cuts and tax increases slated to take effect in January if no deal is reached, majorities want the wealthy to bear the burden of such a compromise. And while more than half say Republicans were right initially to sign a pledge never to raise taxes, that includes about one-third who say things have changed and lawmakers should back away from the promise.
The results indicate a sense of urgency among Americans for an accord between Obama and Congress to avert a fiscal crisis, and a willingness to make sacrifices to strike a deal. J. Ann Selzer of Selzer & Co., the Des Moines, Iowa, firm that conducted the poll, says the findings encapsulate American views on the fiscal debate. “Obama won the election promising to raise taxes on the wealthy,” Selzer says. “Republicans who refuse to budge from their pledge not to raise taxes are wrong-headed. Failure to strike a deal would put the national economy and the people who live in it at risk.”

Japan Tankan Business Confidence Falls to Near 3-Year Low (Bloomberg)
Big Japanese manufacturers are the most pessimistic in almost three years after a diplomatic dispute with China and Europe’s austerity measures dragged exports to a fifth monthly decline in October. The quarterly Tankan index for large manufacturers fell to minus 12 in December from minus 3 in September, the Bank of Japan (8301) said in Tokyo today, a fifth straight negative reading and the lowest since March 2010. The median estimate of 25 economists surveyed by Bloomberg News was for minus 10. A negative figure means pessimists outnumber optimists. The slide in sentiment gives the central bank an extra reason to ease policy on Dec. 20 after the Federal Reserve moved this week. JPMorgan Chase & Co. sees a 10-trillion yen ($120 billion) expansion of an asset-purchase program and the pressure for further loosening is likely to mount if opposition leader Shinzo Abe’s party wins an election in two days’ time.
“The focus is on whether the economy will show any improvement after the election,” said Hideo Kumano, chief economist at Daiichi Life Research Institute who correctly predicted today’s reading. “Given that exporters’ confidence has weakened so much, calls for a cheaper yen will mount.” At the next BOJ policy meeting, officials will also consider an extension of currency-swap arrangements involving the Fed, European Central Bank, and the central banks of Canada, England and Switzerland, the Japanese central bank said last night.

King Said to Have Faced Revolt on U.K. Credit Plan Talks (Bloomberg)
Bank of England Governor Mervyn King faced a revolt this year from policy makers he kept out of the loop on an emergency plan to spur U.K. economic growth, said two people with knowledge of the matter. Monetary Policy Committee members Ben Broadbent, David Miles, Adam Posen and Martin Weale wrote to King after finding out he and key aides were privately designing the Funding for Lending Scheme, said the people, who declined to be named because the matter is confidential. The letter was written in the days before the plan to boost credit was announced June 14, the people said. The complaint of the four so-called external MPC members, who are part-time officials appointed by the government, was that failing to inform them undermined the committee’s legitimate control over monetary policy and their ability to gauge and manage the economic outlook, one of the people said. King then shared information on the program before unveiling it, the people said.
The letter’s existence provides a glimpse of the factors at play when policy makers were torn on whether to expand stimulus amid questions over the potency of quantitative easing, three years after the bank began buying bonds and as the economy was in the throes of a double-dip recession. It also follows recent criticism in probes of the central bank ordered by its governing panel, known as the Court, which questioned its governance. The confrontation over the FLS highlights the management challenge Bank of Canada Governor Mark Carney, 47, will inherit when he succeeds King, 64, in July.

Europe’s Headway on Greece, Banks Masks Deeper Divisions (Bloomberg)
European policy makers made headway in fighting the three-year-old debt crisis, keeping Greece’s lifeline intact and laying the groundwork for a bank supervisor to prevent financial miscues. Finance ministers declared the two-front victory hours before a summit of European leaders that is set to expose differences between a German-led bloc and France and its allies over the long-term retooling of the euro zone. “We have achieved a lot,” German Chancellor Angela Merkel, the dominant figure in the crisis management, said on her way into the Brussels summit. “It was a very laborious year but it was also a year in which we made great progress.”
The decisions underscore the move away from the austerity- driven measures that characterized European leaders’ first attempts to counter the crisis that emerged in Greece in 2009. Financial-market tensions have abated, thanks mainly to a pledge by the European Central Bank, first made in late July and yet to be acted on, to put a floor under the bond markets of vulnerable countries such as Spain or Italy. Greek bonds rallied, with the 10-year yield dropping 17 basis points to 13 percent, near the lowest since a March debt restructuring. The euro was little changed at $1.3085 at 5:40 p.m. in Brussels. With the summit deadline looming, finance ministers from all 27 European Union countries opened a packed day and night of decision-making with a 4:30 a.m. accord to make the ECB the hub of bank supervision in the euro area.

Greek Debt-Relief Debate Flares After Release of Fresh Aid (Bloomberg)
European governments geared up to provide extra aid or debt relief for Greece after releasing the country’s first loan payment in six months, signaling renewed battles over how to stabilize the euro economy. Euro-area finance ministers approved the payout of 49.1 billion euros ($64 billion) of loans through March and committed to “additional measures” in case Greece’s debt reduction veers off track. While another cut in bailout-loan rates and an increase in infrastructure funding would top the list of extra measures, the policy makers hinted that outright debt relief -- still a taboo topic in creditor countries led by Germany -- would be on the table as well. “Other tools are possible and it doesn’t make any sense to be more precise on these possible tools,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing the meeting on the Greek package in Brussels.
Today’s meeting concluded what European Union Economic and Monetary Affairs Commissioner Olli Rehn called an “odyssey” that started with two Greek elections in the first half of the year and concerns that popular opposition to bailout terms would force Greece out of the euro. Greece will get 34.3 billion euros in coming days, covering 16 billion euros for bank recapitalization, 7 billion euros for the government’s budget and 11.3 billion euros to finance a bond buyback that was used to retire debt. Another 14.8 billion euros will flow in the first quarter of 2013 as long as Greece meets conditions to be agreed on with creditors. That sum consists of 7.2 billion euros for bank recapitalization in January, plus three monthly tranches for the budget.

Greek Aid Payments Approved by Euro Finance Ministers (Bloomberg)
Euro-area finance ministers approved 49.1 billion-euro ($64 billion) of rescue payments to Greece to keep the recession-wracked country solvent. Finance chiefs at a meeting in Brussels today rubber stamped the next tranches of aid after wrapping up a 14-hour negotiation on banking union at 4:30 a.m. Of the funds, 34.3 billion euros will be released within the next few days with the remaining money doled out in the first quarter. “The disbursement agreed to today will allow for liquidity to flow back into the Greek economy,” European Union Economic and Monetary Affairs Commissioner Olli Rehn said at a press conference. The Greek government this week said it plans to pay 11.29 billion euros to buy back 31.9 billion euros of bonds to reduce its debt burden and retain the support of the EU and the International Monetary Fund. The buyback underscores a move away from the austerity-first measures European leaders have embraced since the financial crisis began in 2009.
To repurchase all the debt tendered, Greece needed approval to spend more than the 10 billion-euro loan from Europe’s bailout fund earmarked for the buyback.

20121214 0941 Global Commodities Related News.

DTN Closing Grain Comments 12/13 14:51 Grains Close Mostly Lower (CME)
Grains struggled throughout the session for the most part, with corn and wheat struggling to find buying interest. Soybeans rallied and fell a couple of times over the course of the day, closing on the defensive.

Corn Market Recap for 12/13/2012 (CME)
March Corn finished down 5 1/4 at 720 1/4, 7 3/4 off the high and 5 1/4 up from the low. May Corn closed down 4 1/2 at 724. This was 5 1/2 up from the low and 6 3/4 off the high.
March corn traded lower into the closing bell. Grain markets saw pressure from a stronger dollar and a steady dose of weak demand data this week. The ethanol stocks report was not considered supportive to the market yesterday and despite today's export sales falling in line with market estimates, they are still well below the pace needed to reach the USDA forecast. Net weekly export sales came in at 258,900 tonnes for the current marketing year and 13,700 for the next marketing year for a total of 272,600. This was up from 51,600 tonnes last week. As of December 6th, cumulative sales stand at 43% of the current USDA forecast vs. a 5 year average of 52%. Sales of 435,000 tonnes are needed each week to reach the USDA forecast which is up about 5,000 tonnes from last week at 430,700 tonnes. Cash basis was steady midday on light farmer selling but the sluggish ethanol and export demand helped to offset.
January Rice finished up 0.155 at 15.5, equal to the high and 0.19 up from the low.

Wheat Market Recap Report (CME)
March Wheat finished down 3 1/2 at 808 1/2, 9 1/4 off the high and 7 up from the low. May Wheat closed down 3 1/4 at 821 1/4. This was 7 up from the low and 9 off the high.
March Chicago and KC wheat traded lower on the day. The US Dollar was stronger and outside markets had a negative tilt which pressured most commodity markets. Net weekly export sales came in at 518,600 tonnes for the current marketing year and 54,900 for the next marketing year for a total of 573,500. Sales fell in line with market estimates and were up from 353,000 last week. As of December 6th, cumulative sales stand at 59.5% of the USDA forecast for the current marketing year vs. a 5 year average of 71%. Sales of 457,000 tonnes are needed each week to reach the USDA forecast. Traders also note that inquiries are being made to work wheat into feed rations in 2013. Wheat vs. corn spreads have collapsed this week following Tuesday's bearish wheat report released from the USDA. Furthermore, the sharp decline in Chicago wheat futures could pull in export demand soon which would likely help stabilize price levels. The EU cleared 583,000 tonnes of soft wheat export licenses this week taking the crop year total to 8.6 million tonnes vs. 6.9 for the same period last year.
March Oats closed up 1 3/4 at 387. This was 6 3/4 up from the low and 1 1/2 off the high.

Recap Energy Market Report (CME)
January crude oil prices broke their latest three day wining streak with another late day sell off. The market was under pressure early in the session on concerns regarding US budget negotiations and modest gains in the US dollar. January crude oil prices managed to turn into positive territory into the mid session but struggled to overcome the $87.00 level. It is possible that some of the morning lift in prices came in the wake of US jobless claims data that showed a much larger than expected decline. However, mid day comments from both parties seemed to reflect further distance between them, and that weighed heavy on crude oil prices for the balance of the session.

Natural Gas Drops Near 11-Week Low After Unexpected Supply Gain (Bloomberg)
Natural gas futures fell to the lowest price in almost 11 weeks after a government report showed that U.S. stockpiles increased unexpectedly as mild weather cut demand for heating fuels. Gas slid 1 percent after the Energy Department said inventories rose 2 billion cubic feet in the week ended Dec. 7 to 3.806 trillion cubic feet. Analyst estimates compiled by Bloomberg showed an expected drop of 3 billion. It was the latest seasonal supply gain since the week ended Dec. 30, 2005, according to department data compiled by Bloomberg. “The storage injection was reflective of the very, very warm temperatures,” said Kyle Cooper, director of research with IAF Advisors in Houston. “If Mother Nature continues to deal bearish blows, the market is going to head lower.”
Natural gas for January delivery decreased 3.5 cents to $3.347 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Sept. 28. The futures have risen 12 percent this year, heading for the first annual gain since 2007. January $3.70 calls were the most active gas options in electronic trading. They were 0.5 cent lower at 1.2 cents on volume of 2,629 contracts as of 3:15 p.m. Calls accounted for 49 percent of options volume. The stockpile increase compares with the five-year average decline for the week of 113 billion cubic feet, department data show. Supplies were 8 percent above the five-year average, wider than 4.6 percent the previous week. Inventories were 1.3 percent higher than year-earlier levels after being 0.9 percent lower in last week’s report.

Oil Heads for Weekly Gain on U.S., China Manufacturing Outlook (Bloomberg)
Oil rose in New York, extending a weekly gain, before reports that are forecast to show a recovery in manufacturing in the U.S. and China, the world’s biggest crude consumers. Futures advanced as much as 0.6 percent and headed for the fifth weekly increase in six. U.S. industrial production expanded by 0.3 percent in November, according to the median estimate in a Bloomberg survey before Federal Reserve data today. A preliminary index of China’s manufacturing for this month by HSBC Holdings Plc and Markit Economics may rise to 50.8, a separate Bloomberg survey showed. A number above 50 indicates an expansion. Crude for January delivery climbed as much as 50 cents to $86.39 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.30 at 8:11 a.m. Singapore time. The contract fell 88 cents to $85.89 yesterday, the lowest close since Dec. 11. Prices are up 0.4 percent this week and down 13 percent this year.
Brent for January settlement slid 1.5 percent to $107.91 a barrel on the London-based ICE Futures Europe exchange yesterday and settled at a premium of $22.02 to New York-traded West Texas Intermediate. The European benchmark contract is up 0.5 percent in 2012.

Gold Drops to Lowest Level in a Week on U.S. Budget Negotiations (Bloomberg)
Gold declined to a one-week low as a rally to the highest level this month prompted some investors to sell the metal amid concern about the U.S. budget deadlock. Silver, platinum and palladium retreated. Spot gold slumped as much as 1 percent to $1,694.35 an ounce, the lowest price since Dec. 7, and traded at $1,700.90 at 10:49 a.m. in Singapore. The metal climbed to $1,723.40 yesterday, the most expensive since Nov. 30, after the Federal Reserve said it will expand asset purchases. The rally was “modest” as additional Fed balance sheet expansion was already “priced in,” according to Goldman Sachs Group Inc. Gold dropped with other commodities including oil and copper as the dollar rebounded from a three-day decline against a basket of six major currencies. U.S. lawmakers said it’s becoming less likely an agreement on the budget can be enacted before the Christmas holiday, as House Speaker John Boehner said yesterday both parties have “got some serious differences.”
“Investors are now focused on the fiscal cliff negotiations, which are looking protracted and threatening to weigh on all markets,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. “ We view a drop below $1,700 as a good buying opportunity. The Fed sent a strong signal about supporting the economy and keeping the easy monetary policy stance unchanged, which should support higher gold prices in the longer term.” Prices may be underpinned at $1,662 to $1,672.50, according to technical analysis from Commerzbank AG, an area of support made up of the November low, 200-day moving average and 50 percent retracement of the May-to-October rise, technical analyst Karen Jones wrote in a report.

Silver Market Recap Report (CME)
March silver was unable to shake off heavy pressure during today's trading and finished the session more than $1.50 below yesterday's highs. US equity markets were unable to hold their early gains after today's series of US economic reports, which many traders felt was a source of additional headwinds for silver prices this morning. Lukewarm strength in the Dollar may have provided some measure of support to the silver market but was unable to overcome the negative turnaround in global risk sentiment during the later stages of today's trading session.

Gold Market Recap Report (CME)
The gold market could not sustain a modest recovery from early lows and ended up posting heavy losses by the close of Thursday's session. A decline to multi-year lows for both the Initial and Continued Jobless Claims numbers provided a limited boost to macro-economic sentiment, which helped gold prices find their early lows after finding severe and sustained overnight pressure. Many traders felt that global risk appetites took a negative shift during Asian trading hours, as the market started to have second thoughts over the impact of the FOMC meeting results from yesterday afternoon. A lack of progress with the US fiscal cliff situation continues to be widely seen as a key negative factor for gold prices late in this week's trading.

20121214 0941 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
January Soybeans finished up 3 at 1476 1/2, 13 1/2 off the high and 11 1/2 up from the low. March Soybeans closed up 2 at 1472 1/2. This was 10 1/4 up from the low and 12 3/4 off the high.
January Soymeal closed up 3.3 at 455.3. This was 6.3 up from the low and 2.9 off the high.
January Soybean Oil finished down 0.54 at 49, 0.91 off the high and 0.1 up from the low.
January soybeans ended the day with modest gains on the heels of another impressive display of export demand. Net weekly export sales came in at 1,319,400 tonnes for the current marketing year which was the second straight reporting week of over 1 million tonnes. This was well above market expectations and outdid last week's sales total by 176,700 tonnes. As of December 6th, cumulative sales stand at 81% of the USDA forecast for the current marketing year vs. a 5 year average of 65%. Sales of 179,000 tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 271,900 tonnes for the current marketing which fell in line with market estimates. Cumulative meal sales stand at 71.5% of the USDA forecast for the current marketing year vs. a 5 year average of 45%. Sales of 50,000 tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 30,500 tonnes and cumulative oil sales stand at 76% of the USDA forecast vs. a 5 year average of 37%. Sales of 5,000 tonnes are needed each week to reach the USDA forecast. Exports and crush demand continue to add a bullish tilt to the market but the favorable weather in Brazil has limited the upside momentum.

EDIBLE OIL: Malaysian palm oil futures fell to their lowest in more than three years, as record stocks and concerns that U.S. fiscal woes might drag on global growth spooked investors. (Reuters)

VEGOILS-Palm oil ends off 3-year low on stocks, U.S. fiscal woes
Thu Dec 13, 2012 5:12am EST
* Investors cautious on record stocks and U.S. fiscal woes
    * Prices hit 2,217 ringgit, lowest since Nov 2009
    * Traders looking out for Malaysia's new crude palm oil tax
for Jan

 (Updates prices, adds detail)
    By Chew Yee Kiat
    SINGAPORE, Dec 13 (Reuters) - Malaysian palm oil futures
fell on Thursday to their lowest in more than three years, as
record stocks and concerns that U.S. fiscal woes might drag on
global growth spooked investors.
    Despite announcements of more monetary stimulus by the U.S.
Federal Reserve, traders remained cautious as sharp differences
on the 2013 budget persisted between Congressional Republicans
and the White House, and negotiators warned the showdown could
drag on past Christmas.
    Record high stocks in Malaysia, the world's No.2 palm
producer, also drove palm oil futures to their third straight
daily loss.
    "The market looks exhausted at current levels, and some
correction is anticipated. But any bounce will be limited with
supply seen at record levels," a trader with a local commodities
brokerage in Malaysia said.      
    At the close, the benchmark February contract on
the Bursa Malaysia Derivatives Exchange lost 0.6 percent to
settle at 2,227 ringgit ($730) per tonne, slightly above its
intraday low of 2,217 ringgit, a level unseen since November
    Total traded volumes surged to 34,576 lots of 25 tonnes each
after the midday break, compared to the usual 25,000 lots.
    Traders will be counting on Malaysian exporters to use their
tax-free export quota ahead of its year-end expiration and
looking to stronger Chinese demand to bolster export figures for
the first half of December.
    India's monthly imports of cooking oil fell by a third in
November, a trade body said, largely because of a drop in
purchases of palm oil, as cold weather makes the commodity
unusable and volatile prices deterred buyers.  
    Malaysia's new crude palm oil export tax for January is also
in focus as analysts said the tax, likely to be set at zero,
could boost exports of the crude grade and ease record stock
    In a bearish sign for palm oil,  Brent crude slipped toward
$109 a barrel on rising U.S. oil stockpiles, while fears the
world's largest economy might miss a deadline for next year's
budget and risk a recession also kept bulls in check.
    In other vegetable oil markets, U.S. soyoil for January
delivery lost 0.1 percent in late Asian trade. The most
active May 2013 soybean oil contract on the Dalian
Commodity Exchange closed 0.6 percent lower.

Palm Oil Falls for Third Day to Three-Year Low as Exports Drop (Bloomberg)
Palm oil slumped to a three-year low on speculation that shipments from Malaysia, the world’s second- largest producer, may decline for a second month.
The contract for February delivery fell 0.5 percent to 2,230 ringgit ($730) a metric ton on the Malaysia Derivatives Exchange, the lowest price at close for the most-active contract since November 2009. Futures are set for a 30 percent drop this year, the worst annual loss since the financial crisis in 2008.
Tariff on crude palm oil exports from Malaysia may be zero next month under a new tax structure, Maybank Investment Bank Bhd. said Dec. 11. The average free-on-board price between Nov. 10 and Dec. 9 that will be taken to set the January levy is estimated to be below the minimum threshold of 2,250 ringgit for the tax to apply, analysts Ong Chee Ting and Chai Li Shin said.
“If the tax next month is going to be zero, some people may take the opportunity to export next month,” said Ivy Ng, an analyst at CIMB Group Holdings Bhd. “Most people will just buy hand-to-mouth. I would expect exports to be better in January.”
Exports from Malaysia fell 2.8 percent to 504,032 tons in the first 10 days of December from 518,688 tons in the same period a month earlier, surveyor Intertek said Dec. 10. Stockpiles climbed 2.3 percent to an all-time high of 2.56 million tons in November from a month earlier, the Malaysian Palm Oil Board said Dec. 10.
“The stocks are still high and they have to keep prices low to get rid of the stocks,” said Ng.
Soybean oil for delivery in January was little changed at 49.51 cents a pound on the Chicago Board of Trade. Soybeans for March lost 0.2 percent to $14.6825 a bushel.
Palm oil for May delivery gained 0.3 percent to close at 6,698 yuan ($1,070) a ton on the Dalian Commodity Exchange. Soybean oil for May was little changed at 8,610 yuan a ton.

Palm Oil Slumps to Three-Year Low as Stockpiles Reach Record (Bloomberg)
Palm, the world’s most consumed cooking oil, tumbled to the lowest level in more than three years amid record inventories in Malaysia and on signs that global supplies will be more than enough to meet demand.
Futures fell as much as 1.1 percent to 2,217 ringgit ($727) a metric ton on the Malaysia Derivatives Exchange, the lowest price since November 2009, and settled at 2,230 ringgit in Kuala Lumpur. Prices are heading for a 30 percent decline this year, the worst annual loss since the 2008 financial crisis.
Palm, used in everything from Nestle SA (NESN)’s Maggi instant noodles to Unilever’s soap bars, has plunged as output in Indonesia and Malaysia, the biggest producers, outpaced demand from China and India. Prices have declined even as soybeans jumped 22 percent this year and wheat advanced 25 percent. Futures will probably drop into a bear market next year, said Dorab Mistry, director at Godrej International Ltd.
“The stocks are still high and they have to keep prices low to get rid of them,” said Ivy Ng, an analyst at CIMB Group Holdings Bhd. in Kuala Lumpur. “Most people will just buy hand- to-mouth. I would expect exports to be better in January.”
Global inventories of soybean oil, an alternative, will reach 3 million tons in the year that began Oct. 1, up from 2.9 million tons forecast a month ago, the U.S. Department of Agriculture said Dec. 11. Palm oil stockpiles in Malaysia reached an all-time high of 2.56 million tons in November, according to the nation’s palm oil board.

Malaysian Tax
The S&P GSCI Agriculture Index of eight commodities has gained 6.9 percent this year, while soybean oil lost 5.4 percent. Futures in Malaysia 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 to clear inventories, Godrej’s Mistry said Nov. 30.
Malaysian shipments may slow this month as exporters await a new tax structure from Jan. 1, CIMB’s Ng said. The new system will help create more demand, Bernard Dompok, Malaysia’s Plantation Industries and Commodities Minister, said yesterday.
Tax on crude palm oil exports may be zero next month, Maybank Investment Bank Bhd. said on Dec. 11. The average free- on-board price between Nov. 10 and Dec. 9 that will be taken to set the January levy is estimated to be below the minimum threshold of 2,250 ringgit for the tax to apply, analysts Ong Chee Ting and Chai Li Shin said in a report.