Tuesday, January 8, 2013
Reuters Survey :
Malaysia Dec 2012 Crude Palm Oil
- Exports seen down 4% at 1.59 million tonnes from Nov 2012
- Stocks seen down 2.5% at 2.5 million tonnes from Nov 2012
- Output seen down 10% at 1.7 million tonnes from Nov 2012
Indonesia palm sector may face strikes despite wage hikes -trade union
Jan 8 (Reuters) - Indonesia's palm sector, the world's largest producer of the edible oil, faces the risk of wildcat strikes this year despite increasing minimum wages, a trade union said on Tuesday, as employers eye redundancies and benefit cuts to fund the hikes.
Both domestic and international plantation companies have benefited from a large, young and cheap workforce that has helped power Southeast Asia's largest economy to grow at more than 6 percent in recent years.
However, last year saw a spurt in industrial disputes as unions in many cities rallied to demand a greater share of the benefits from the boom and protest against employers' use of contract labour to skirt employment regulations.
To quell the unrest, provinces across the country offered workers varying levels of increases in monthly minimum wages in 2013.
Palm oil firms have responded by talking about redundancies or fewer employee benefits, such as free housing or subsidised electricity and food, said Khoirul Anam, president of the Indonesian Forestry and Allied Workers' Union (KAHUTINDO).
"Palm workers are quite cheerful about the increases but it is not over or finished yet," said Anam, whose union has 126,000 members in forestry industries, including palm oil.
"Companies say the wage increases are not logical or are outside their wage structure," he added. "Strikes could occur at any time, should a company not wish to abide by the minimum wage or as a consequence of reducing benefits."
Any industrial action by palm oil workers could hurt output, which is forecast to hit 27 million tonnes this year, or exports to top buyers India, China and Europe.
Palm oil is used mainly as an ingredient in food, such as biscuits and ice cream, or as biofuel.
BIGGEST HIKE IN EAST KALIMANTAN
While the average minimum rate rise is less than 15 percent, Anam said the palm-producing region due to implement Indonesia's biggest such hike was East Kalimantan, on the island of Borneo, with an increase of 49 percent, to 1.752 million rupiah ($180).
The differing scales of increases are prompting workers to move to provinces offering bigger hikes, stepping up pressure on plantation firms to offer equal pay regardless of location.
Only 25 of Indonesia's 33 provinces have approved the increases in minimum wages, Anam said, which would make close monitoring of implementation necessary from the end of January.
Palm plantations usually employ workers on renewable contracts running from three months to a year, or through subcontractors, he added.
The Indonesian Palm Oil Association (GAPKI), which represents plantations, said it had received no complaints and that industrial action was unlikely, as most firms now paid the minimum wage, or more.
"With regard to the crude palm oil industry, there are no complaints of protests from employees," said Executive Director Fadhil Hasan, brushing aside the prospect of sudden strikes.
"The ones who fight for the increase in the minimum wage are mostly workers in urban areas, such as the textiles industry in Jakarta."
GAPKI had participated in regional talks about the minimum wage levels, Hasan added. "The increases are rational and we can accept them." ($1=9,667.5 Indonesian rupiahs) (Reporting by Michael Taylor; Editing by Clarence Fernandez)
Posted by MW Chong at 5:57 PM
STOCKS: European stock index futures pointed to a lower open after recent advances to 22-month highs while Asian shares fell tracking U.S. stocks which lost ground on Monday in anticipation of sluggish growth in corporate profits. (Reuters)
FOREX-Dollar slips vs yen; euro supported as Japan eyes ESM debt
SINGAPORE, Jan 8 (Reuters) - The euro sagged against the yen but bounced from early lows after Japan said it will buy bonds issued by the euro zone's permanent rescue fund.
"I think the market will now try to find what the dollar's range against the yen will be, for example whether we are in for an 83-88 range or 85-90," said Satoshi Okinawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation.
FOREX: The euro sagged against the yen, but bounced from early lows after Japan said it will buy bonds issued by the euro zone's permanent rescue fund. (Reuters)
Euro zone sentiment rises for 5th month in row in January (Reuters)
Euro zone sentiment improved for a fifth consecutive month in January, with investors' expectations rising to their highest level in almost two years after a successful Greek bond buyback and a dip in Spanish jobless figures.
Vietnam sees rice exports down slightly in 2013 (Reuters)
Vietnam expects to export 7.5-7.6 million tonnes of rice this year, down slightly from a record high of 7.72 million tonnes in 2012, due to rising supply from major export nations, state-run newspapers reported on Tuesday.
Brazil's Petrobras begins production in offshore Sapinhoa field (Reuters)
Brazil's state-led oil company, Petrobras, said on Monday it had begun pumping oil commercially in the Sapinhoa field, one of the country's biggest offshore reserves, as the company struggles to boost flagging output.
Iraq Dec oil exports slip to 2.34 mbpd, official says (Reuters)
Iraq's oil exports fell to 2.34 million barrels per day in December from 2.62 million bpd in November due to a slowdown in Kurdistan exports, rough weather and technical problems with a single point mooring terminal, an official said on Monday.
OIL: Brent crude above $111 per barrel, trading in a tight range, as investors opted for caution ahead of key data from China and a European Central Bank meeting this week. (Reuters)
Mississippi River has enough water to stay open-Senator (Reuters)
The drought-drained Mississippi River has enough water for barges to maintain shipments of billions of dollars worth of commodities, and the White House will consider "any option" to keep it open for commerce, U.S. Sen Dick Durbin said on Monday.
BASE METAS: London copper steadied supported by hopes Chinese trade data this week will show a recovery is gathering steam in the world's top metal consumer, although worries about corporate earnings reporting season commencing this week kept traders cautious. (Reuters)
PRECIOUS METALS: Gold inched up as the euro held on to gains on expectations the European Central Bank will refrain from a rate cut this week, and with robust physical demand in Asia underpinning prices. (Reuters)
METALS-London copper steady, China prospects support
MELBOURNE, Jan 8 (Reuters) - London copper steadied supported by hopes Chinese trade data will show a recovery is gathering steam in the world's top metal consumer, although worries about the corporate earnings season starting this week kept traders on edge.
"Most of what we've seen so far in January has been reactions to specific events in the U.S.," said metals analyst Ivan Szpakowski at Credit Suisse in Singapore.
PRECIOUS-Gold edges up on euro, Asia physical buying
SINGAPORE, Jan 8 (Reuters) - Gold inched up as the euro held on to gains on expectations the European Central Bank will refrain from a rate cut this week, and with robust physical demand in Asia underpinning prices.
"Physical demand is very strong," said a Beijing-based trader. "It's a combination of the attraction of lower prices as well as pre-holiday demand."
Posted by MW Chong at 5:31 PM
GLOBAL MARKETS-Asian shares capped ahead of earnings reports
TOKYO, Jan 8 (Reuters) - Asian shares steadied on Tuesday but prices were capped by investor caution ahead of corporate earnings season for the last quarter of 2012 and the European Central Bank's policy meeting later in the week.
"Trading for the new year kicked off in full force yesterday and it is natural for investors to start cautiously with profit taking from the new year's rally," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. "I expect position adjustments to continue ahead of key events such as the ECB meeting and earnings reports starting with Alcoa," Saito said.
PREVIEW-China Q4 GDP growth seen rebounding to 7.8 pct
BEIJING, Jan 8 (Reuters) - China's annual economic growth may have quickened to 7.8 percent in the fourth quarter a Reuters poll showed, snapping seven straight quarters of weaker expansion, but the recovery is likely to be tepid and the economy may need continued policy support.
The median forecast of 24 analysts polled is for gross domestic product to have expanded 7.8 percent in Q4 from a year earlier, quickening from 7.4 percent in the third quarter -- the weakest expansion since the depths of the global financial crisis in early 2009.
Euro zone sentiment rises for 5th month in row in January
BERLIN, Jan 7 (Reuters) - Euro zone sentiment improved for a fifth consecutive month in January, with investors' expectations rising to their highest level in almost two years after a successful Greek bond buyback and a dip in Spanish jobless figures.
Research group Sentix said its monthly index tracking investor sentiment in the 17-nation currency bloc climbed to -7.0 in January, up from -16.8 in December, coming in well above a Reuters consensus forecast for an increase to -15.0.
FOREX-Yen corrects higher against dollar, euro from recent lows
TOKYO, Jan 8 (Reuters) - The yen bumped higher against the dollar and the euro in early Asian trading on Tuesday, as investors took profits after the Japanese unit's recent surge.
"From a fundamental and technical perspective, the euro/dollar appears poised for a stronger recovery," said Kathy Lien, managing director at BK Asset Management.
OIL-Oil firm, Brent's premium to U.S. narrowest since Sept
NEW YORK, Jan 7 (Reuters) - Brent crude oil prices were steady above $111 a barrel on Monday while U.S. crude futures edged higher, cutting the spread between the two benchmarks by a penny to its narrowest since September as a U.S. pipeline expansion project neared completion.
"U.S. pipelines and infrastructure will be one of the key areas the market focuses on this year," said Andy Lebow, vice president at Jefferies Bache in New York. "Traders were expecting the Seaway expansion to start a little later so knowing it could be flowing at a higher rate from this week has helped support U.S. crude relative to Brent."
Iraq Dec oil exports slip to 2.34 mbpd, official says
BAGHDAD, Jan 7 (Reuters) - Iraq's oil exports fell to 2.34 million barrels per day (bpd) in December from 2.62 million bpd in November due to a slowdown in Kurdistan exports, rough weather and technical problems with a single point mooring terminal, an official said on Monday.
Iraq shipped 2.02 million bpd from the southern oil hub of Basra, down from 2.194 million bpd in November, said Abdul-Ilah Qasim, an energy adviser to the Iraqi government.
Argentina cuts oil export tax as it seeks to lure investment
BUENOS AIRES, Jan 7 (Reuters) - Argentina unveiled a new system of export taxes on oil shipments on Monday that will cut levies as the government seeks to lure investment to revive stagnant production.
The change means energy companies will receive $70 per barrel of exported oil, up from $42 previously. Argentina controls the price of oil exports in order to guarantee domestic supply.
Posted by MW Chong at 11:03 AM
Adventa unaware of surge in price, volume
Adventa is unaware of any factors which might have caused the surge in the price and volume of its shares last Friday. It said on Monday there was no corporate development relating to its business and affairs, which had not been previously announced, which could have triggered the unusual market activity of its shares. Adventa said the recent announcement was the entitlement and payment date of the distribution of RM1.70 per share via a special dividend of RM1.30 per share and capital reduction and repayment of 40 sen per share. It also cited its announcement about acquiring shares in PTM Progress Trading SB. (StarBiz)
Scomi Group's oilfield services orderbook hits over RM1.7bn
Scomi Group's oilfield services business has increased to over RM1.7bn with the latest RM380m contract to provide drilling fluids and services. It said the project was the first cooperation between Scomi and Total E&P Indonesie (TEPI) for a three-year mega project starting in July 2013. Recently, it secured a RM93.6m contract in Myanmar and a RM130m contract in Qatar. In total, Scomi has secured RM603.6m in drilling fluids and drilling waste management contracts from major clients for these recent wins. "To-date, the oilfield services has a healthy order book of over RM1.7bn and participated in tenders in excess of RM3.0bn," said Wan Ruzlan, the president of market units for Scomi Oilfields services’ division.(StarBiz)
Brahim's completes buyout of unit, forecasts quantum leap in earnings
Brahim's Holdings expects a quantum leap in net profit and revenue in the current year, to be driven by its wholly-owned subsidiary Brahim's-LSG Sky Chefs Holdings SB (BLSG), says director Datuk Howard Choo. The group yesterday completed the process to buy the remaining 49% stake it does not already own in BLSG from its German partner, LSG Asia GmbH, a company owned by Deutsche Lufthansa AG, in a deal worth RM130m. In a filing to Bursa Malaysia, Brahim's said it also signed a two-year technical assistance agreement with LSG Catering Hong Kong Ltd for electronic data processing as well as cost control and management technics. (BT)
IJM eyes West Coast Expressway jobs
IJM Corp, Malaysia's second biggest expressway operator, is eyeing key packages of the RM5.6bn West Coast Expressway (WCE) project to boost its current order book of over RM3bn. "We are pleased to note that the WCE has been signed by the concessionaire and the government. Going forward, there is a possibility that IJM will enhance its order book by participating in key packages of the WCE. We think tenders for the project will likely be called in the fourth quarter of this year after the financial closure. Construction may commence by year-end," IJM chief executive officer and managing director, Datuk Teh Kean Ming said. (BT)
Sunway wins RM45m Legoland contract
Sunway announced a letter of award worth RM45m by IDR Assets SB to its wholly-owned subsidiary Sunway Construction SB to design and construct a water theme park under the package 11-Legoland Water Theme Park development located in Johor. In an exchange filing yesterday, the construction arm of the property-based conglomerate announced that the project is targeted to be fully completed on or by 30 Sept 2013, with a construction period of nine months. (Malaysian Reserve)
Hua Yang gets RM119m credit facilities
Hua Yang's wholly-owned unit, Bison Holdings SB has secured RM118.5m in credit facilities from an undisclosed local bank, the property developer said in an exchange filing yesterday. The money is meant to partly finance Bison's purchase of five vacant plots of leasehold land measuring 29.2 acres in the district of Petaling, Selangor, from Mentari Hari SB for RM158m. The credit facilities consist of an eight-year term loan facility of RM78.5m and a revolving credit facility of RM40m. (Malaysian Reserve)
Kumpulan Jetson gets UK contract
Kumpulan Jetson's UK subsidiary, Jetson (UK) Ltd, has accepted a letter of award (LoA) for a turnkey project to upgrade and refurbish a 162-room hotel and an additional 135 rooms in London for a total contract value of GBP17.02m (RM82.98m). The hotel is believed to be owned by the Shapadu group, which recently became a substantial shareholder of Kumpulan Jetson with a 8.81% stake. Kumpulan Jetson said the UK company had accepted the LoA from Cranborne Enterprises Ltd to undertake the turnkey project.. The hotel is located at the junction of Kennington Road and Lambeth Road in London, England. (Financial Daily)
Malakoff's aggressive expansion
Malakoff Corp plans to bid for a nine-month power plant in Indonesia and possibly build another coal-fired power plant in Tanjung Bin, Johor, to export electricity to Singapore. The expansion of its electricity generation business in the region is part of the plan by Malaysia's largest independent power producer (IPP) to increase its generation capacity to 10,000MW by 2020 from 5,500MW currently. In a draft exposure prospectus last Friday, Malakoff revealed its plan to expand its capacity in Malaysia to 7,000MW by 2020 from the current 5,200MW. It is already adding another 1,000MW to the existing 2,100MW power plant in Tanjung Bin. (Financial Daily)
UK: Home prices rise as Halifax sees stagnating market
UK house prices rose for a second month in December and will probably remain little changed in 2013 as the uncertain economic outlook constrains property demand, according to Halifax. Values advanced 1.3% from the previous month to an average 163,845 pounds (USD262,900), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. The monthly price gain in November was revised to 1.6% from a previous estimate of 1%. From a year earlier, values rose 2.6% in December. (Bloomberg)
NZ: Consumer confidence, spending boosted rising house prices
New Zealand consumers increased spending for a third month in December, emboldened by rising house prices, adding to the case for a faster economic recovery and higher interest rates in 2013. Spending on credit and debt cards rose 0.5% from November, Paymark, which processes three quarters of all card transactions, said in an e-mailed statement today. House prices in Auckland, home to a third of the nation’s 4.4m population, rose at the fastest pace in five years, another report showed. (Bloomberg)
US: Wages a balm for US workers facing payroll tax shock
An improving job market is boosting wages and providing needed relief just as every American worker gets hit with a tax increase. Hourly earnings climbed 0.3% on average in December for a second month, the biggest back-to-back increase since the economic recovery began in mid-2009, Labor Department figures showed. Combined with a lengthening of the workweek, this brought the average weekly paycheck to USD818.69, up 1.2 % from October and the steepest two-month gain since February-March 2007, before the recession began. (Bloomberg)
US: Employment trends gauge rises in December
A gauge of employment trends rose in December, but current job growth may be difficult to keep up, according to a monthly labor market report released Monday by the Conference Board. The New York-based private research group said its employment trends index, which is designed to forecast turning points in employment, increased 0.77% in December. "After posting a significant increase in December, following an upward revision in November, the employment trends index is improving," said Gad Levanon, macroeconomic research director at the Conference Board. (MarketWatch)
US: Banks win four-year delay as Basel liquidity rule loosens
Global central bank chiefs gave lenders four more years to meet international liquidity requirements and watered down the measures in a bid to stave off another credit crunch. Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis. Bank shares soared after the decision to overhaul the proposed ratio. (Bloomberg)
Malaysia Funds Subway With First Exchange Bonds: Southeast Asia (Bloomberg)
Malaysia, Southeast Asia’s biggest local-currency bond market, will let retail investors fund Kuala Lumpur’s new subway when it starts marketing its first exchange- traded notes to individuals.
Prime Minister Najib Razak will unveil details of the issuance today during a presentation at Bursa Malaysia Bhd. (BURSA), the exchange operator for the nation’s stocks and bonds based in the capital. DanaInfra Nasional Bhd., a state-owned company that’s financing the rail network, will kick off the offerings.
The country joins Indonesia, Thailand and the Philippines in tapping the general public for funds and providing an alternative investment to bank deposits and equities. The new securities will help boost market volumes, Tajuddin Atan, chief executive officer at the bourse, said in an e-mail on Jan. 6. Malaysia sold a record amount of debt last year as companies help fund the government’s $444 billion development program to build railways, roads and power plants.
The securities will “provide retail investors with an opportunity to be part of a major public infrastructure project,” Ranjit Ajit Singh, chairman of Malaysia’s Securities Commission, said in an e-mail yesterday. “One of the key components of our capital-market strategy is to continue to grow the bond market, which is already the fourth largest in Asia.”
Asian Stocks Swing Between Gains, Losses; Mazda Declines (Bloomberg)
Asian stocks swung between gains and losses as Japanese exporters declined after the yen’s advance dimmed the outlook for overseas earnings. Oil producers rose as crude futures gained.
Mazda Motor Corp. (7261), which gets about 72 percent of its sales outside of Japan, sank 3.3 percent. Aozora Bank Ltd. (8304) declined 3.6 percent, extending losses for a second day, after the Japanese lender confirmed Cerberus Capital Management LP will sell most of its holdings. Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 1 percent as crude oil traded near a four-month high.
The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 131.33 as of 10:35 a.m. Tokyo time, erasing earlier gains of as much as 0.3 percent. The regional benchmark gauge posted its seventh weekly advance last week, the longest winning streak since March last year, after the U.S. Congress approved a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery.
“We don’t expect a no-brainer, one-way climb for stocks,” said Michael Kurtz, chief global equity strategist at Nomura Holdings Inc. in Hong Kong. “Japan for its part has delivered a key step toward expectations of a major pro-reflation policy shift.”
Japan’s Nikkei 225 Stock Average climbed 22 percent through yesterday from Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus, and as a weakening currency boosted the earnings outlook for exporters. Prime Minister Shinzo Abe, a proponent for more monetary policy easing, will have a chance to reshape the Bank of Japan early this year, when the terms of Governor Masaaki Shirakawa and his two deputies expire.
Japanese Stocks Swing Between Gains, Losses as Yen Rises (Bloomberg)
Japanese stocks swung between gains and losses as the yen headed for its biggest two-day gain against the dollar in two months, cutting the earnings outlook for exporters.
Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America, dropped 3.9 percent. Aozora Bank Ltd. fell 2.8 percent, extending yesterday’s 10 percent plunge, after confirming Cerberus Capital Management LP is set to offload most of its stake in the lender. Shiseido Co. gained 3.1 percent after BNP Paribas recommended buying the cosmetics maker’s shares.
The Nikkei 225 Stock Average (NKY) slid 0.1 percent to 10,585.4 at 9:59 a.m. in Tokyo with trading volume 23 percent higher than the 30-day average. The broader Topix Index fell 0.1 percent to 880.34.
“The yen’s weakness has been excessive and is getting adjusted today as well,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 6 trillion yen ($69 billion). “It’s no surprise the market is experiencing a correction because the recent rally ignored technical overheating signs.”
The Nikkei 225’s 14-day relative strength index, a technical indicator of price momentum, showed shares may have been overbought after the benchmark gauge last week rose to a 22-month high.
The Topix has risen about 22 percent since Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus. An advance of 20 percent or more from a low signals a bull market to some investors.
Goldman Sachs Group Inc. raised its 12-month target for the Topix to 1,000 from 930 amid optimism new Prime Minister Shinzo Abe’s policies will bolster th
U.S. Stocks Decline Ahead of Corporate Earnings Season (Bloomberg)
U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to a five-year high, as investors awaited the start of the corporate earnings season tomorrow.
Boeing Co. slumped 2 percent as a 787 Dreamliner operated by Japan Airlines Co. caught fire on the ground today at Boston’s Logan International Airport. Applied Materials Inc., the world’s largest producer of chipmaking equipment, declined 1.2 percent after being downgraded at JPMorgan Chase & Co. Amazon.com Inc. rallied 3.6 percent to a record high after Morgan Stanley upgraded the world’s largest online retailer.
The S&P 500 fell 0.3 percent to 1,461.89 at 4 p.m. New York time. The Dow Jones Industrial Average lost 50.92 points, or 0.4 percent, to 13,384.29. About 5.8 billion shares changed hands on U.S. exchanges, 5 percent below the three-month average.
“We’ve come a long way in a very short time,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a phone interview. “I’m expecting better-than-anticipated earnings. Yet we need to see some consolidation first.”
The S&P 500 ended last week at the highest level since 2007 after data showed employers added workers in December at about the same pace as the prior month. The gauge rallied 2.5 percent on Jan. 2 after Republicans and Democrats agreed on a compromise budget that avoided the so-called fiscal cliff of sweeping tax increases and spending cuts.
German Stocks Decline Amid U.S. Budget Deficit Concerns (Bloomberg)
German stocks declined as continuing concern that the U.S. budget deal won’t reduce the fiscal deficit quickly enough offset gains in lenders after central banks eased a liquidity rule at a meeting in Switzerland.
Infineon Technologies AG (IFX) fell 2.2 percent as Bank of America Corp. downgraded the stock. Deutsche Bank AG (DBK) and Commerzbank AG (CBK) rose 2.8 percent and 4.2 percent, respectively, after global central bank chiefs agreed to water down and delay a planned bank-liquidity regulation.
The DAX (DAX) lost 0.6 percent to 7,732.66 at the close of trading in Frankfurt. The gauge has still gained 1.6 percent this year as U.S. lawmakers struck a New Year deal to prevent most scheduled tax increases and delay spending cuts in the world’s largest economy. The broader HDAX Index dropped 0.5 percent today.
“Everyone was hoping that they would find a proper solution before the year-end,” Guillermo Hernandez Sampere, head of trading at Fpm Frankfurt Performance Mgmt AG, who helps manage about 500 million euros ($652 million), said, referring to the U.S. budget discussions. “What they have done is to buy more time. We have not received the solution that the market was looking for.”
Republicans are planning to use the need to raise America’s $16.4 trillion debt ceiling to force President Barack Obama to accept spending cuts to entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default.
Emerging Stocks Retreat From Valuations at September High (Bloomberg)
Emerging-market stocks declined after a seven-week rally sent valuations to the most expensive level since September. Technology shares slumped before earnings this week from companies including Samsung Electronics Co. (005930)
Samsung sank for a third day in Seoul. Largan Precision Co. (3008), which makes camera lenses, tumbled 7 percent in Taipei after Deutsche Bank AG said the company’s sales missed its forecast. Centrais Eletricas Brasileiras SA (ELET6) drove a drop in Brazilian power producers on concern low water levels at hydropower dams may compel the country to ration electricity. Istanbul’s ISE National 100 Index rallied to a record high.
The MSCI Emerging Markets Index fell 0.2 percent to 1,075.76 after seven weeks of gains, the longest rising stretch since October 2010. The measure traded at 12.63 times trailing earnings last week, the highest level since the week ended Sept. 28. About 49 companies on the developing-markets gauge are scheduled to post results in the next two weeks including Infosys Ltd. (INFY) and HTC Corp. (2498), data compiled by Bloomberg show.
“The markets look a little overbought,” David Semple, who helps oversee about $37 billion as director of international equity at Van Eck Global, said by phone in New York. “The key is to see whether earnings start to follow the modestly better growth trajectory for many countries.”
Treasuries Have Worst Start to a Year Since 2009 (Bloomberg)
Treasuries are off to their worst start to a year since 2009 as money managers prepared to bid at three debt sales this week starting with a $32 billion note auction today.
U.S. government securities handed investors a 0.7 percent loss in 2013 as of yesterday, according to Bank of America Merrill Lynch indexes. It was the biggest decline for the first week of a year since the Treasury Department was preparing to ramp up debt sales as it tried to snap a recession during the global financial crisis. Bonds slid last week as lawmakers averted the so-called fiscal cliff and the Federal Reserve indicated it may stop its debt purchases in 2013.
“The Fed may reduce the amount of Treasuries it buys as the economy grows,” said Kei Katayama, who buys non-yen debt in Tokyo for Daiwa SB Investments Ltd., which manages the equivalent of $56.8 billion and is a unit of Japan’s second- largest brokerage. “Yields will go up, but only gradually.”
Benchmark 10-year rates held at 1.90 percent as of 9:37 a.m. in Tokyo, based on Bloomberg Bond Trader prices. The 1.625 percent note maturing in November 2022 changed hands at 97 18/32. The yield climbed to 1.97 percent on Jan. 4, the most since April.
Treasuries securities maturing in 10 years and longer were the world’s worst-performing bonds in local currency terms in the past month with a 4.7 percent loss, based on 144 bond indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies.
Yen Gains a Second Day on Bets Declines Were Excessive (Bloomberg)
The yen headed for the biggest two- day gain in two months, extending a rally from its 2 1/2 year low on speculation recent declines were excessive.
Japan’s currency strengthened against all of its 16 major counterparts even amid prospects the nation’s newly elected prime minister, Shinzo Abe, will press the central bank to expand monetary stimulus at a Jan. 21-22 meeting in an effort to revive growth. The euro remained higher after rising for two days amid speculation the European Central Bank will refrain from cutting borrowing costs this week.
“The yen has had a very sharp depreciation and it must be due for some kind of consolidation,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk- management company. “I do think dollar-yen needs a bit of a breather. The fact that the Bank of Japan (8301) is under pressure to make monetary policy even easier and print money is going to drive the yen weaker over time.”
Japan’s currency rose 0.3 percent to 87.51 per dollar at 9:57 a.m. in Tokyo, gaining 0.7 percent so far this week, the biggest two-day percentage advance since Nov. 8. It touched 88.41 on Jan. 4, the weakest since July 2010. The yen added 0.3 percent to 114.78 per euro. The euro bought $1.3118 from $1.3117, after gaining 0.5 percent over the previous two days.
The yen’s 14-day relative strength index against the dollar was at 26 today, below the 30 level that traders view as a signal that an asset’s price has fallen too fast. The similar gauge versus the euro was at 30.
Wages a Balm for U.S. Workers Facing Payroll-Tax Shock (Bloomberg)
An improving job market is boosting wages and providing needed relief just as every American worker gets hit with a tax increase.
Hourly earnings climbed 0.3 percent on average in December for a second month, the biggest back-to-back increase since the economic recovery began in mid-2009, Labor Department figures showed Jan. 4. Combined with a lengthening of the workweek, that brought the average weekly paycheck to $818.69, up 1.2 percent from October and the steepest two-month gain since February- March 2007, before the recession began.
The boost comes just as the fiscal pact passed by Congress last week lets the payroll tax used to pay for Social Security benefits rise to 2010 levels, reducing paychecks by $41.67 from someone earning $50,000 who is paid twice a month. The higher salaries, together with the lowest gasoline prices in almost a year, will provide a lift to household spending, which accounts for about 70 percent of the world’s largest economy.
“Let’s not be too quick to write off the American consumer,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Paychecks are a little healthier. The outlook for the consumer is probably a bit brighter than people think.”
Arnaud Collin is among those recognizing a more attractive salary will help draw the workers he needs. The chief marketing officer at Los Altos, California-based Catalog Spree, developer of a mobile shopping application, says “there’s just more competition” in the Silicon Valley region for people with skills in commerce and mobile marketi
Obama Said Close to Choosing Lew for Treasury Following Geithner (Bloomberg)
President Barack Obama is close to choosing White House Chief of Staff Jack Lew for Treasury secretary with an announcement as soon as this week, according to two people familiar with the matter.
Selecting Lew to replace Timothy F. Geithner would also require Obama to install a new chief of staff, the first step in a White House staff shuffle for his second term. Many of the president’s senior aides may be taking new roles as the president recasts his team, said the people, who requested anonymity to discuss personnel matters.
While Obama hasn’t made a final decision to pick Lew, his staff has been instructed to prepare for his nomination, said one of the people. Among the leading candidates to replace Lew as Obama’s chief of staff are Denis McDonough, currently a deputy national security adviser, and Ron Klain, who had served as Vice President Joe Biden’s chief of staff.
The next Treasury secretary will play a leading role in working with Congress to raise the government’s $16.4 trillion debt ceiling. The U.S. reached the statutory limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.
Geithner plans to leave the administration by the end of January even if the debt ceiling issue hasn’t been settled.
Japan Weighing BOJ Accord With Employment Mandate, Mainichi Says (Bloomberg)
The Japanese government and the Bank of Japan (8301) are discussing a policy accord aimed at achieving stable employment conditions, the Mainichi newspaper reported.
The agreement won’t define any specific policies to be followed by the central bank and won’t set a timeframe for achieving a 2 percent inflation goal sought by Prime Minister Shinzo Abe, the Mainichi reported today, without citing anyone and without giving any further details.
While Federal Reserve officials are debating how soon to end their cash infusions, Japan’s central bank is under pressure from Abe to do more to end deflation and boost growth. The yen has weakened around 8 percent since mid-November as Abe has called for unlimited liquidity, with the currency sliding through 88 per dollar in Tokyo last week for the first time since July 2010.
As of 9:32 a.m. in Tokyo, the yen was at 87.43 per dollar.
The result of the government’s discussions with the BOJ will be announced at the central bank’s meeting on Jan. 21-22, the Mainichi said.
A BOJ spokesman declined to comment on the report.
Last month, the Fed linked the outlook for its main interest rate to unemployment, saying rates will stay low “at least as long” as the U.S. jobless rate remains above 6.5 percent.
Japan’s unemployment rate fell to a four-year low of 4.1 percent in November, the government said last month.
BOJ Governor Masaaki Shirakawa’s board pledged last month to review its inflation goal of 1 percent after Abe called for the target to be doubled.
N.Z. Consumer Confidence, Spending Boosted by House Price Rises (Bloomberg)
New Zealand consumers increased spending for a third month in December, emboldened by rising house prices, adding to the case for a faster economic recovery and higher interest rates in 2013.
Spending on credit and debt cards rose 0.5 percent from November, Paymark, which processes three-quarters of all card transactions, said in an e-mailed statement today. House prices in Auckland, home to a third of the nation’s 4.4 million people, rose at the fastest pace in five years, another report showed.
Rising property values and record-low interest rates have boosted consumer confidence, encouraging spending in the weeks before Christmas and in the immediate aftermath when retailers offer large discounts. Central bank Governor Graeme Wheeler kept the official cash rate at 2.5 percent last month and signaled he will be monitoring the economy for signs of emerging pressure on inflation.
“The Auckland housing market is quite strong,” said Craig Ebert, a senior economist at Bank of New Zealand Ltd. in Wellington. “Strong’s good in terms of construction, but not if it just spills over to inflation which seems to be happening up there.”
Eight of 16 economists surveyed by Bloomberg News last month forecast Wheeler will raise borrowing costs this year, probably in the fourth quarter. New Zealand’s currency has gained 2.3 percent the past three months on expectations of faster growth and rate rises. It bought 83.69 U.S. cents at 10:40 a.m. in Wellington.
Australia Trade Gap Widens More Than Forecast as Imports Gain (Bloomberg)
Australia’s trade deficit widened more than economists forecast in November as stronger imports of transport equipment outpaced higher exports of iron ore in an economy driven by mining investment.
Imports outpaced exports by A$2.64 billion ($2.77 billion), compared with a revised A$2.44 billion shortfall in October, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 15 economists was for a deficit of A$2.3 billion.
The data validate central bank Governor Glenn Stevens’s decision to reduce interest rates four times last year as commodity prices retreated. Policy makers are trying to revive demand outside of a resource boom that may crest in the first half of 2013 as they seek to extend 21 recession-free years.
A slowing global economy “deflated resource commodity prices in 2012 to the detriment of Australia’s trade performance,” Michael Blythe, chief economist in Sydney at Commonwealth Bank of Australia, said in a research report before the release. “We see trade deficits continuing.”
Exports rose 1 percent to A$24.7 billion, led by a 6 percent gain in metal ores and minerals, today’s report showed. Imports advanced 2 percent to A$27.3 billion on a 6 percent increase in fuels and lubricants, the report showed.
U.K. Home Prices Rise as Halifax Sees Stagnating Market (Bloomberg)
U.K. house prices rose for a second month in December and will probably remain little changed in 2013 as the uncertain economic outlook constrains property demand, according to Halifax.
Values advanced 1.3 percent from the previous month to an average 163,845 pounds ($262,900), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. The monthly price gain in November was revised to 1.6 percent from a previous estimate of 1 percent. From a year earlier, values rose 2.6 percent in December.
While the British economy emerged from a recession in the third quarter and the Bank of England is trying to boost the availability of credit, uncertainty about the recovery is curtailing property demand. Nationwide Building Society said last week that house prices may decline “modestly” in 2013.
“During 2012, house prices were broadly flat and we expect this subdued trend to continue,” said Blerina Uruci, an economist at Barclays Plc in London. “However, we forecast a gradual recovery to emerge toward the second half supported by improving economic conditions, loose monetary policy and restricted supply. We also expect the BOE’s Funding for Lending Scheme to provide some support to prices, albeit modest.”
Prices were 0.6 percent higher in the fourth quarter compared with the third, and were down 0.3 percent from a year earlier, according to today’s report.
Cameron, Clegg See U.K. Economy ‘Healing’ as Deficit Cut (Bloomberg)
Prime Minister David Cameron and his deputy Nick Clegg, announcing new priorities for their governing coalition, said the U.K. economy is “healing” as they vowed to push ahead with deficit-reduction plans.
“I am confident the British economy is healing; I am confident we are doing the right things to tackle the black hole in the public finances,” Liberal Democrat leader Clegg said at a news conference, after the leaders were asked if they could see growth returning after suffering a double-dip recession. “Of course we want the healing process to take place faster, but look at the headwinds we’re having to deal with,” such as the crisis in the euro area and consumer debt, he said.
Cameron, who leads the Conservative Party, and Clegg were highlighting their shared agenda in Cameron’s Downing Street office as they published a “Mid-Term Review” summing up the government’s achievements since 2010 and setting out policies to take them to the next election in 2015. It is more than 2 1/2 years since they gave a joint news conference in the rose garden at the London residence to mark the formation of the coalition.
The 46-page document published today, titled “The Coalition: Together in the National Interest,” says detailed plans will be published before the summer for public spending for the 2015-16 fiscal year. Any spending or deficit-reduction plans made then will outlive the current coalition commitment that runs to the election in May 2015.
Cameron said the coalition had confounded expectations that it would not last much beyond the fall of 2010.
Draghi Seeks Extended Calm in 2013 on Fading Euro Economy (Bloomberg)
European Central Bank President Mario Draghi will turn his attention to nursing the euro region back to economic health this week as the urgency to deploy emergency crisis measures recedes after three years.
Draghi’s Governing Council, which holds its first session this year on Jan. 10, will seek to extend the calm it’s instilled on markets with last year’s pledge to do anything in its power to end the crisis, economists said. While policy makers will probably keep interest rates unchanged for now, the threat of unlimited bond purchases has bought time to focus more on ending the region’s looming recession.
“Draghi’s threat is working,” Tobias Blattner, an economist at Daiwa Capital Markets in London, said in an interview. “Foreign investors are gradually coming back and Spain can live with the current yield levels,” he said, referring to a 10-month low in Spanish borrowing costs.
Draghi and European policy makers are returning to work with the turmoil that has ravaged the region’s bond markets at bay. Even so, they face potential pitfalls arising from mounting debt in Spain, next month’s parliamentary election in Italy and continuing austerity in Greece.
European finance ministers are also assembling a rescue package for Cyprus, the crisis’s fifth bailout.
Corn Market Recap for 1/7/2013 (CME)
March Corn finished up 5 1/4 at 685 1/2, 4 1/2 off the high and 7 1/2 up from the low. May Corn closed up 4 1/2 at 685 1/4. This was 6 3/4 up from the low and 4 3/4 off the high.
March corn traded higher into the closing bell on thoughts that US cargos are becoming more competitive in the global export market and bullish signals in calendar spreads added support. The USDA reported this morning that US exporters sold 102,200 tonnes of corn to an unknown destination for the 2012/13 crop year which was seen as a positive for demand but much more is needed at this point in the crop year to meet the USDA estimate of 1.15 billion bushels. Inspections were once again disappointing with only 7.2 million bushels shipped; this was down from 7.9 last week. Shipments needed each week to reach this crop years USDA estimate are 25.8 million bushels, up from 25.2 last week. Cumulative shipments are now 23% of the USDA export estimate vs. the 5 year average of 33%. Weather in South America is mixed with a drier pattern in Argentina which should promote healthy growth for row crops. Brazil will see light showers with the exception of Northeast Brazil which is too dry at the moment. A private analyst in Brazil cut their Brazilian corn production estimate from 73.57 million tonnes to 72.06 million tonnes but this is still well above the USDA estimate of 70 million tonnes.
January Rice finished down 0.055 at 14.975, equal to the high and equal to the low.
Wheat Market Recap Report (CME)
March Wheat finished up 4 at 751 1/4, 9 1/4 off the high and 7 3/4 up from the low. May Wheat closed up 4 1/4 at 761. This was 8 up from the low and 8 3/4 off the high.
KC and Chicago wheat markets trade higher early in the session but saw pressure the second half of the day despite a strong performance by the corn and soybean markets and a lower US Dollar. Technical short covering was seen early on but the lack of any new bullish headlines left the bears in control. Thoughts that feeders are showing more interest in the southwest and east coast in feed wheat along with US wheat being competitively priced in the world market are adding a positive tilt to the trade long term. Outside markets were mixed with equities trending modestly lower and the US Dollar was down on the day. Wheat export inspections fell in line with market estimates at 13.4 million bushels, up from 7.8 last week. Inspections needed each week to reach this crop years USDA export estimate are 24.5 million bushels, up from 24 million last week. The cumulative shipment pace is now 50% of the current USDA export estimate vs. the 5 year average of 59%.
March Oats closed down 1 1/4 at 331 1/2. This was 3 up from the low and 7 off the high.
Wheat Advances as U.S. Drought Threatens Winter Harvest (Bloomberg)
Wheat futures rose on speculation that farmers will abandon more of their winter crop than usual amid lingering drought in the U.S., the world’s top exporter.
As much as 25 percent of hard red winter wheat may not be harvested after the most-severe drought since the 1930s killed plants, Mark Hodges, the executive director of Plains Grains Inc. in Stillwater, Oklahoma, said last week. The Department of Agriculture will announce planting estimates on Jan. 11.
“The winter wheat-seeding number is generally expected to be higher” than last year, Jeff McReynolds, the owner of McReynolds Marketing & Investments in Hays, Kansas, said in a telephone interview. “If the weather pattern doesn’t change, abandonment will be up.”
Wheat futures gained 0.5 percent to settle at $7.5125 a bushel at 2 p.m. on the Chicago Board of Trade. Last week, the price slumped 4 percent, the fifth straight decline and the longest slump since October 2011, amid signs of declining U.S. exports.
On Jan. 4, the price closed at $7.4725, down more than 20 percent from $9.4325 on July 20, the highest settlement since April 9, 2008. That signaled the start of a bear market.
In 2012, wheat gained 19 percent, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
Soy, Corn Rise From Six-Month Lows on U.S. Supply Concern (Bloomberg)
Soybean and corn futures rose from six-month lows on speculation that U.S. reserves fell to the lowest in nine years after the worst drought in seven decades damaged crops.
On Dec. 1, soybean inventories probably fell 16 percent from a year earlier to the lowest since 2003, while corn supplies dropped 15 percent, a Bloomberg News survey showed. The U.S. government will update its estimates on Jan. 11.
“The market is beginning to refocus on tightening U.S. supplies,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. “We have had a big selloff, and there is some end- user interest in locking in supplies.”
Soybean futures for March delivery climbed 1.6 percent to close at $13.885 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain since Dec. 21. On Jan. 4, the commodity touched $13.56, the lowest intraday price since June 20.
On Dec. 31, the oilseed closed at $14.095, down 20 percent from the record settlement of $17.6825 on Sept. 4. That signaled the start of a bear market.
Soybeans inspected for export rose 21 percent to 39.652 million bushels in the week ended Jan. 3 from a year earlier, the U.S. Department of Agriculture said today.
Corn futures for March delivery gained 0.8 percent to $6.855 a bushel. Earlier, the price touched $6.78, the lowest since July 3.
The price reached an intraday record of $8.49 on Aug. 10 after drought cut U.S. production to a six-year low.
Export demand for U.S. grain may increase after five consecutive weeks of declines, Grow said. U.S. exporters sold 102,200 metric tons to unknown destinations, the USDA said today.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government data show.
Sugar, Coffee Climb on Index Rebalancing; Cocoa Rises (Bloomberg)
Sugar and coffee futures rose on speculation that investment funds tracking commodity indexes will increase their holdings. Cocoa and cotton also advanced, while orange juice dropped.
Investors will probably buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as weightings shift for the Standard & Poor’s GSCI and Dow Jones-UBS Commodity gauges, Morgan Stanley estimates. That may bring inflows of $1.5 billion to the sugar, coffee, cocoa and cotton markets, the New York- based bank said today in a report.
As the weightings shift this month, “one would think we should at least see some stability” for prices, Michael McDougall, a senior vice president at Newedge Group in New York, said in a report.
Sugar for March delivery gained 0.1 percent to settle at 18.86 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the first increase in three sessions. The price fell 16 percent last year.
Coffee futures for March delivery rose 2.1 percent to $1.504 a pound, the second straight gain.
Cocoa futures for March delivery jumped 2.1 percent to $2,267 a metric ton, the biggest increase for a most-active contract since Dec. 12.
Processing in Europe, the world’s top consuming region, probably fell 4 percent last quarter, according to the median estimate in a Bloomberg survey of 12 traders. That compares with declines of 16 percent in the third quarter and 18 percent in second. The European Cocoa Association will publish its latest figures on Jan. 15.
“People are buying ahead of the grinding numbers, which might show improvement,” Keith Flury, an analyst at Rabobank International in London, said in a telephone interview.
Cotton futures for March delivery climbed 0.9 percent to 75.71 cents a pound in New York.
Orange-juice futures for March delivery slumped 2.1 percent to $1.106 a pound. Earlier, the price touched $1.105, the lowest since Nov. 14.
Commodity Investments Attract $20.5 Billion in 2012, Citi Says (Bloomberg)
Investors put a net $20.5 billion into commodity exchange-traded funds and index swaps last year, led by purchases of energy and precious metals, according to Citigroup Inc.
The rise contrasted with a net withdrawal of $12.3 billion in 2011, analysts including Aakash Doshi and Edward Morse in New York said in a report dated yesterday. Crude and other fuels had a net inflow of $8.8 billion in 2012, while precious metals drew in a net $6.7 billion, led by gold, they wrote.
The Standard & Poor’s GSCI Index of 24 raw materials advanced 0.3% last year, the smallest gain since 2008, amid concern that China’s expansion was slowing. Brent crude climbed 3.5 percent, rising for a fourth year, while gold posted a 12th consecutive annual advance.
This year, in the period to Jan. 4, investors withdrew more than $400 million from commodities as the dollar strengthened, the analysts said. Minutes from the U.S. Federal Reserve showed that policy makers debated an end to the bank’s asset-purchase program in 2013, driving the Dollar Index to a six-week high.
Natural Gas Drops on January Weather Outlook, Record Production (Bloomberg)
Natural gas futures fell for the fourth time in five days after revised forecasts called for milder weather in late January that would reduce fuel demand and a government report showed record production.
Gas slid 0.6 percent after MDA Weather Services said a midday weather update showed warmer weather for the Midwest and the East over the next 11 to 15 days. Output in the contiguous U.S. states climbed 0.4 percent to a record 73.54 billion cubic feet a day in October, according to the Energy Department’s monthly EIA-914 report.
“The market is holding out hope that colder weather at the end of January will salvage the heating season,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The problem is the 11- to 15-day forecast turned warmer. Less heating demand than originally expected will mean slightly higher end-of-season storage levels. The 914 data is just affirmation that supplies are continuing to grow.”
Natural gas for February delivery dropped 2.1 cents to settle at $3.266 per million British thermal units on the New York Mercantile Exchange. Trading volume of 174,473 contracts at 2:42 p.m. was 42 percent below the 100-day average. Prices have risen 6.7 percent from a year ago.
April $2.50 puts were the most active options in electronic trading on the Nymex. They were down 0.4 cent to 0.9 cent on volume of 1,873 lots as of 2:44 p.m. Puts accounted for 69 percent of the volume.
Oil Trades Near Four-Month High as Run Rates, Supply Seen Rising (Bloomberg)
Oil traded near the highest level in almost four months in New York before a government report that may show refinery utilization rose and stockpiles increased in the U.S., the world’s biggest crude-consuming nation.
West Texas Intermediate futures were little changed after advancing a second day yesterday. Refineries probably boosted their average run rate last week by 0.2 percentage points to 90.6 percent, according to a Bloomberg survey before an Energy Department report tomorrow. Crude inventories probably climbed 1.4 million barrels and fuel supplies also gained, the survey shows. The U.S. corporate earnings season starts today, while Chinese export and import data for December are due Jan. 10.
“Investors will want to see that we’re getting the numbers during earnings season to suggest that the recovery in the U.S. is sustained,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We’ve got data due out this week from China and I think that will be a key as to whether or not we bust through $95.”
Crude for February delivery was at $93.17 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 1 p.m. Sydney time. The contract increased 10 cents to $93.19 yesterday, the highest settlement since Sept. 18.
Brent for February settlement rose 3 cents to $111.43 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $18.26 to WTI. It closed at $18.21 yesterday, the narrowest since Sept. 24.
Recap Energy Market Report (CME)
February crude oil prices experienced a choppy trading session but managed to post a new high for the day late in the session. Some traders indicated that some of the support in the crude oil market came on the growing hope that the Seaway pipeline expansion effort would go into effect later this week. The expansion is expected top increase the flow of supply out of Cushing Oklahoma to the US gulf coast to as much as 400,000 barrels per day. Expectations of the expansion has tightened the spread differential between February Brent and WTI below the $18.00 during the session. Meanwhile, some traders pointed to concerns surrounding the US debt ceiling as a force that could limit demand.
Gold Drops for Third Straight Session on Fed’s Stimulus Signals (Bloomberg)
Gold futures declined for the third straight session on signs that Federal Reserve policy makers may end monthly purchases of U.S. debt this year.
The drop today followed the longest run of weekly declines since May 2004. On Jan. 3, minutes from the Fed showed $85 billion in monthly bond purchases, the third round of so-called quantitative easing, probably will end sometime in 2013. Gold gained 5.1 percent in September when the central bank announced the stimulus measures.
“The market is lackluster since people want some clarity from the Fed,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Gold futures for February delivery fell 0.2 percent to settle at $1,646.30 an ounce at 1:57 p.m. on the Comex in New York. On Jan. 4, the price touched $1,626, the lowest for a most-active contract since Aug. 21. Last week, the metal dropped 0.4 percent, the sixth straight decline. In the previous two sessions, the commodity slumped 2.4 percent.
Fed Bank of Richmond President Jeffrey Lacker said on Jan. 4 that further monetary stimulus is unlikely to boost economic growth and will “test the limits” of the central bank’s credibility. He speaks tomorrow in Columbia, South Carolina.
Silver futures for March delivery rose 0.5 percent to $30.082 an ounce.
On the New York Mercantile Exchange, platinum futures for April delivery slipped 0.1 percent to settle at $1,556.30 an ounce. Palladium futures for March delivery slumped 2.7 percent to $670 an ounce, the biggest fall for a most-active contract since Oct. 23.
Silver Market Recap Report (CME)
The silver market diverged with the gold market today, as silver spent most of the Monday US trade action in positive ground, while gold prices spent a large portion of the day in negative territory. Silver saw some minor outside market support today from platinum, but weakness in gold and copper prices probably discouraged some would-be buyers of silver. In the near term, silver might continue to diverge with gold as silver seems to be primarily focused on its physical commodity market fundamentals.
Gold Market Recap Report (CME)
The gold market tried to start out on a positive footing before prices reversed course and tracked lower. With the setback off the early highs, February gold seemed to settle back toward the middle point of the large range down trade from last Friday. While the currency market action today was somewhat supportive, gold seemed to be positively tied to the US equity markets and the ebb and flow of the US economy. Gold probably saw only fleeting support from scheduled data today as the data released was certainly not a top tier report. With the gold market seemingly taking some direction from the US macro economic picture today, that could make the kick off of the US corporate earnings cycle on Tuesday afternoon, a fairly important event.
Soybean Complex Market Recap (CME)
January Soybeans finished up 22 3/4 at 1411 3/4, equal to the high and 30 3/4 up from the low. March Soybeans closed up 19 3/4 at 1387. This was 30 up from the low and 2 1/2 off the high.
January Soymeal closed up 10.3 at 408.5. This was 10.5 up from the low and equal to the high.
January Soybean Oil finished up 0.08 at 49.5, 0.38 off the high and 0.18 up from the low.
March soybeans traded a wide range on the day seeing both sides of the unchanged but ultimately closed sharply higher into the closing bell. Thoughts that demand is beginning to shift to South America from the US favors the bear camp along with the mostly favorable weather conditions. Support was found from technical short covering ahead of Friday's USDA report after sharp losses last week. Brazil will see light showers this week with the exception of Northeast Brazil which is trending too dry at the moment. A local analyst increased their production estimate for Brazil to 83.11 million tonnes vs. 83 in December. The USDA is estimating production at 81 million tonnes. Argentina looks drier to start the week but temperatures are expected to back off to more normal levels. Export Inspections fell in line with market estimates this morning but the shipment pace is certainly beginning to ratchet lower. Shipments were reported at 39.7 million bushels vs. 35.5 last week. Inspections needed each week to reach this crop years USDA export estimate are now 15.4 million bushels, down from 16.1 last week. Cumulative shipments are 60.5% of the USDA estimate vs. the 5 year average of 47%.
EDIBLE OIL: Malaysian palm oil futures dropped to a 2-week low, its third consecutive fall, as investors remained cautious ahead of the release of export data this week which will provide clues about the demand outlook for the edible oil. (Reuters)
VEGOILS-Palm oil falls to 2-week low, demand outlook uncertain BOZ2 DBYF3 FCPOc3 - RTRS
Traders await MPOB and USDA data due later this week Prices on track for third straight session of loss Palm oil to drop further to 2,407 ringgit -technicals Indonesia palm exports seen up as much as 9 pct in 2013 -industry
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Jan 7 (Reuters) - Malaysian palm oil futures dropped to a 2-week low on Monday, its third consecutive fall, as investors remained cautious ahead of the release of export data this week which will provide clues about the demand outlook for the edible oil.
Traders are eyeing shipment data for the first 10 days of January, due out on Thursday, to gauge the impact of Malaysia's zero crude palm oil export tax. The market is also keeping a close watch on any rejected cargoes from China due to its stricter import policy.
Malaysia's inventory levels are expected to edge lower in December due to slower production. Industry regulator, the Malaysian Palm Oil Board (MPOB), will release official stocks and output data also on Thursday.
The U.S. Department of Agriculture (USDA) report on the 2012 U.S. soybean harvest due Friday is also in focus, as a higher soybean production for crushing into soybean oil may shift demand away from palm oil. GRA/
"People are waiting for the MPOB & USDA data releases later this week. Traders are staying on the sideline as palm oil technically faces stress at the 2,500-ringgit mark," said a dealer with a foreign commodities brokerage in Malaysia.
The benchmark March contract FCPOc3 on the Bursa Malaysia Derivatives Exchange closed 1.9 percent down at 2,420 ringgit ($796) per tonne. Prices had earlier fallen to as low as 2,416 ringgit, a level last seen on Dec. 24.
Total traded volume stood at 58,065 lots of 25 tonnes each, more than double the usual 25,000 lots.
Technicals showed that palm oil is expected to fall further to 2,407 ringgit, as a drop from the Jan. 2 high of 2,524 ringgit has yet to end, said Reuters market analyst Wang Tao. (Full Story)
Favourable weather in South America leading to better soybean crop prospects and potentially higher supply of soybean oil could also place further pressure on palm oil prices.
Palm oil exports from Indonesia, the world's biggest producer of the edible oil, may rise by as much as 9 percent this year, a top industry association official said on Monday, as improving global economic conditions boost demand. (Full Story)
In related markets, Brent crude futures slipped towards $111 per barrel on Monday as profit taking and inventory data showing weak fuel demand in the United States offset optimism that the world's biggest economies are on a steady recovery path. O/R
In competing vegetable oil markets, U.S. soyoil for March delivery BOH3 gained 0.2 percent in late Asian trade, lifted by bargain-hunting activities in the soybeans market, which bounced back from a six-week low.
The most active May soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 0.4 percent lower.
Posted by MW Chong at 10:59 AM