Thursday, January 10, 2013

20130110 1602 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a higher open tracking Asian shares which rose as much stronger-than-expected Chinese trade data magnified positive momentum from global markets overnight, strengthening signs of recovery in the world's second-largest economy. U.S. stocks rose, rebounding from two days of losses on Wednesday. (Reuters)

FOREX-Yen near 2-1/2-year low, Aussie up on strong China data
TOKYO, Jan 10 (Reuters) - The yen was on the defensive near a 2-1/2-year low on Thursday on expectations the Bank of Japan will take fresh measures to boost the economy, while the Australian dollar jumped after stronger-than-expected Chinese trade data.
"I just see a tremendous amount of pressure on the yen at the moment. If the previous low is broken, then the next target will be 90," said a trader at a Japanese bank.

COLUMN-Strong China commodity import growth rate may ease
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, Jan 10 (Reuters) - China's imports of key commodities, except copper, were unambiguously strong in December, serving both to confirm the current economic rebound and raise questions about how long it will continue. 
Iron ore was the stand out, with imports going above 70 million tonnes for the first time, jumping 7.8 percent from November and taking the 2012 gain to 8.4 percent over the prior year.

China exports pick up more than expected in December (Reuters)

China's export growth rebounded more strongly than expected in December from a three-month low, expanding at the fastest rate in seven months, although the outlook for 2013 remains cloudy with U.S. and European demand for Chinese goods still subdued.

ECB to hold fire as euro zone economy shows glimmers of hope (Reuters)
The European Central Bank is expected to keep interest rates at a record low of 0.75 percent on Thursday, refraining from a cut as the euro zone economy shows some signs of stabilising and inflation still tops its target.

ICO trims 2012/13 world coffee output to 144.1 mln bags (Reuters)
The International Coffee Organization has revised down its world 2012/13 coffee output forecast to 144.1 million 60-kg bags, its monthly report published on Wednesday showed.

U.S. fuel stocks rise sharply, crude up on imports jump-EIA (Reuters)
U.S. crude oil stocks rose in line with expectations last week and refined fuel stocks surged even as refineries cut utilization rates, according to weekly data from the U.S. Energy Information Administration on Wednesday.

OIL: Brent crude futures inched up towards $112 per barrel after trade numbers from China beat analysts' expectations, sparking hopes that recovery in the world's second-biggest oil consumer will drive fuel demand higher.  (Reuters)

China copper imports down in Dec, up 14.1 pct in 2012 (Reuters)
China's copper imports fell 6.6 percent in December on the month due to weak demand from plants which reduced purchases of metal at the end of the year due to low cash flows, but inflows increased 14.1 percent in 2012 from 2011 thanks to strong term bookings.

BASE METAS: London copper crawled higher, boosted by Chinese trade data that showed exports recovered in December but expectations of lower copper imports due to ample stockpiles in the world's top metals consumer helped put a lid on prices.   (Reuters)

PRECIOUS METALS: Gold was little changed, with investors eyeing a key resistance level just above $1,660 an ounce and awaiting a rate decision by the European Central Bank at its policy meeting later in the day. (Reuters)

METALS-Copper climbs after brightening China trade data
MELBOURNE, Jan 10 (Reuters) - London copper climbed boosted by Chinese trade data that showed total exports recovered in December, but the metal's advance was capped as copper imports dimmed due to ample stockpiles in the world's top metals consumer.
"The growth pickup in China is not really strong. GDP growth momentum on a yearly basis may rise 0.4 percent...from 7.6 to 8 percent and that is probably not sufficient to trigger a meaningful rally (in copper)," said Dominic Schnider, head of commodity research at UBS Wealth Management.

PRECIOUS-Gold steady below $1,660; platinum, palladium shine
SINGAPORE, Jan 10 (Reuters) - Gold edged up with investors eying a key resistance level just above $1,660 an ounce and awaiting a rate decision by the European Central Bank at its policy meeting later in the day.
"The market got a little concerned about how aggressive the Fed will be," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, adding that the market is expected to rebound.

20130110 1415 Palm Oil Related News.

SGS CPO export down 34% to 343,081 tonnes for the period of 1~10 Jan 2013.

VEGOILS-Palm oil edges down on slowing exports, high stocks BOZ2 DBYF3 FCPOc3 - RTRS
10-Jan-2013 13:52
Malaysia's Jan 1-10 palm exports fall 25 pct -ITS Malaysia Dec palm oil stocks up 2.4 pct to record 2.63 mln tonnes Palm oil to rebound to 2,453 ringgit -technicals

(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Jan 10 (Reuters) - Malaysian palm oil futures fell on Thursday, weighed by falling exports and persistently high stocks in the world's No.2 producer of the edible oil.
Exports of Malaysian palm oil products for Jan. 1-10 tumbled 25 percent to 373,462 tonnes from a revised 499,732 tonnes shipped during Dec. 1-10, cargo surveyor Intertek Testing Services said on Thursday. PALM/ITS
The fall came despite Malaysia's zero percent export tax that was expected to boost crude palm oil shipments and amid stricter Chinese regulations on edible oil imports that may have deterred some exporters.
"Exports were bad for the first ten days. A lot of people think that with the new tax structure, exports should improve but it's not necessarily so because for the past few years we already have a 3-million-tonne per year duty-free export quota," said a trader with a foreign commodities brokerage in Malaysia.
"For the longer term, yes, the tax structure is positive but if you expect immediate impact for the first ten days, I don't think it's possible."
By the midday break, the benchmark March contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had lost 0.5 percent to 2,399 ringgit ($791) per tonne.
Total traded volume stood at 19,678 lots of 25 tonnes each, higher than the usual 12,500 lots.
Palm oil is expected to rebound to 2,453 ringgit based on technical analysis, as it may have formed a temporary bottom at 2,382 ringgit, said Reuters market analyst Wang Tao. (Full Story)
But palm oil could face further pressure as data released by the Malaysian Palm Oil Board after the midday break showed stocks climbed 2.4 percent from previous month to a new record at 2.63 million tonnes, fuelling concerns that inventory level could remain high well into January. (Full Story)
The data went against market expectations that stocks likely dropped 2.5 percent to 2.5 million tonnes. PALM/POLL
Malaysia's weather office maintained its forecast for heavy rain, saying the downpour may cause floods in low-lying areas in the key palm producing state of Sarawak and could possibly disrupt harvesting.
Brent crude futures inched up towards $112 per barrel on Thursday after trade numbers from China beat analysts' expectations, sparking hopes that recovery in the world's second-biggest oil consumer will drive fuel demand higher. O/R
In competing vegetable oil markets, U.S. soyoil for March delivery BOH3 edged up 0.1 percent in early Asian trade, with investors awaiting a U.S. Department of Agriculture supply-demand report due to be released on Friday.

UPDATE 1-Malaysia's Dec palm stocks hit record high, market sell-off seen 0#FCPO: - RTRS
10-Jan-2013 13:44
Palm oil stocks hit record high for 4th straight month Output falling on seasonally heavy rains Exports slipping on slower orders, difficulty in booking vessels

(adds details, comments)
KUALA LUMPUR, Jan 10 (Reuters) - - Malaysia's December palm oil stocks hit a record high for the fourth straight month as exports failed to keep up with output, bucking market expectations for a drop and potentially weighing on benchmark futures.
Data from the Malaysian Palm Oil Board showed 2012 closing stocks in the world's No.2 producer of the edible oil climbed 2.4 percent to 2.62 million tonnes. Traders had expected stocks to ease a little.
Benchmark palm oil futures 0#FCPO: dropped 0.5 percent to 2,399 ringgit ($790) before the data release at midday. Traders expect a sell-off when the market reopens later in the day as record stocks add to a list of investor concerns, including a slump in Malaysian exports during Jan 1-10.
"It will be a good time to sell down," said a trader with a foreign commodities brokerage. "These high stocks are rather stubborn and we will see declines maybe after February."
December production dropped 5.8 percent to 1.78 million tonnes from November as seasonally heavy rains affected harvesting in key oil palm growing areas. Heavier rains in January could see a bigger drop in yields, planters say.
Yet December output was still higher in absolute terms compared to exports, which fell 0.7 percent to 1.65 million tonnes.
Malaysia's exports declined as the winter season saw top buyers India and China switch to domestic oilseed supplies as palm oil tends to crystallise in colder weather and edible oil import stocks remain high.
Additionally, traders in Malaysia said they found it difficult to book vessel at the end of the year to ship out cargoes to customers.
Cargo surveyor Intertek Testing Services data showed Malaysian exports for the first ten days of January tumbled 25 percent to 373,462 tonnes but traders are still hopeful.
"In the second half of January, we should see a massive export push with Malaysia having set the crude palm oil export tax at zero in January," said another trader. "There is hope, we just have to be patient."

20130110 1246 Soy Oil & Palm Oil Related News.

ITS CPO export down 25% to 373,462 tonnes for the period of 1~10 Jan 2013.

MPOB Official Data for the month of Dec 2012 vs Nov 2012
Exports down 0.7% to 1.65 million tonnes
Stocks up 2.4% to 2.63 million tonnes
Output down 5.9% to 1.78 million tonnes

Soybean Complex Market Recap (CME)
January Soybeans finished up 6 at 1419 3/4, 3 1/4 off the high and 10 1/2 up from the low. March Soybeans closed down 1 at 1385 1/2. This was 5 1/2 up from the low and 7 1/2 off the high.
January Soymeal closed up 0.4 at 411.0. This was 2.8 up from the low and 0.5 off the high.
January Soybean Oil finished up 0.1 at 49.24, 0.15 off the high and equal to the low.
March soybeans traded nearly unchanged on the day as traders positioned ahead of Friday's USDA report. There were reports yesterday that soybean cargos were sold to China out of South America for next spring which was seen as a negative to price direction and suggests buyers are beginning to shift away from the US border for cheaper cargos elsewhere. The USDA announced this morning that US exporters sold 120,000 tonnes of optional origin soybeans to China for 2013/14 delivery. The Brazilian government agency CONAB raised their 2012/13 soybean crop production estimate to 82.68 million tonnes vs. 82.6 in December. The USDA is currently projecting 81 million tonnes and some private analysts are estimating production near 85 million tonnes. The trade expects the USDA to raise their current estimate to 82.75 million tonnes on Friday. Argentina production is estimated at 54.75 million tonnes vs. current USDA estimates of 55 million tonnes.

China's Jan-Feb soy imports seen tumbling after year-end binge (Reuters)
China is likely to scale back soybean purchases in January and February by more than a third after buying unusually high amounts at the end of 2012, with a drop in poultry consumption also dulling the nation's appetite.

EDIBLE OIL: Malaysian palm oil futures rebounded from a more-than-two-week low snapping four consecutive days of losses, although gains were limited by investor caution ahead of a slew of key industry data this week. (Reuters)

European vegoils: Palm oil firmer on position squaring - RTRS
10-Jan-2013 02:28
ROTTERDAM, Jan 9 (Reuters) - Palm oil on the European vegetable oils market firmed a little on Wednesday as speculators squared positions ahead of fresh export and stocks data. OILS/E
Malaysian palm exports for the first 10 days of January and MPOB palm oil stocks for December are due on Thursday and on Friday USDA supply/demand data will be issued.* “Many speculators bought futures ahead of the fresh data in the hope the figures will turn out bullish, but on the cash market buyers were cautious expecting that already record high palm oil stocks could rise further,” one broker said.
Palm oil was offered between $5 and $12.50 a tonne up from Tuesday after Malaysian palm oil futures closed between 30 ringgit per tonne up and 10 ringgit down, mostly underpinned by hopes that exports in January will be optimistic. 0#FCPO: April/June RBD palm olein traded $2.50 a tonne up from Tuesday at $837.50 and $840 a tonne fob Malaysia and April/June changed hands at $850 and $855, up $2.50 also. At 1700 GMT, CBOT soyoil was between 0.09 and 0.23 cents per lb up on position evening ahead of the USDA supply/demand report. Liquid oils – soyoil, rapeoil and sunoil - were offered between eight euros per tonne down and four euros up from Tuesday with the market mostly going in all directions ahead of the key market data this week and supported by stronger rapeseed futures. 0#COM: Feb/April EU rapeoil changed hands at 908 euros per tonne fob exmill, up seven euros from Tuesday, May/July traded four euros up at between 905 and 908 euros and Aug/Oct fetched 895 euros fob. Lauric oils were offered between unchanged and $10 a tonne down from Tuesday as sellers tried to find buying interest. Coconut oil changed hands at $820 a tonne cif Rotterdam for March/April, the same position in palmkernel oil fetched $795 a tonne cif Rotterdam.

Cooking Oil Imports by India Seen Surging After Palm Oil Plunge (Bloomberg)
Cooking oil imports by India, the world’s second-largest user, probably jumped in December after palm oil prices slumped to a three-year low and farmers curbed domestic oilseed sales.
Purchases rose 34 percent to 900,000 metric tons in December from 669,912 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Imports of crude and refined palm oils probably gained 38 percent to 750,000 tons from 543,830 tons, the survey showed. The Solvent Extractors’ Association of India will publish data next week.
Palm oil dropped 23 percent in Kuala Lumpur last year, the worst slump since the financial crisis in 2008, as slowdowns in Europe and China curbed demand, boosting stockpiles in Indonesia and Malaysia, the biggest producers. Increased imports by India, the biggest palm oil buyer, may help pare inventories and stem the slide in futures. Reserves in Malaysia were probably 2.53 million tons in December, near a record 2.56 million tons a month earlier, according a Bloomberg survey.
“Prices have been cheaper than last year and there is good demand,” said Govindlal G. Patel, managing partner at GG Patel & Nikhil Research Co. “The local soybean harvesting is going on, but the oil content in the seed is lower and availability of oil is not comfortable.”

20130110 1114 Malaysia Corporate Related News.

Mudajaya entered into an MOU with the Government of Mandalay (Myanmar Region), represented by the Minister for Electricity and Industry, Mandalay Region Government and Koon Yew Yin, a Malaysian, with the intention to facilitate the setting up of  coal-fired power  plant and  solar-powered power plant projects. Mudajaya and Koon Yew Yin will form a 70:30 JV company. Mudajaya will prepare a feasibility report/proposal and submit to the Government of Mandalay within nine months. The MOU will expire in 12 months unless an extension period is agreed by all the parties. (BMSB)

DRB-Hicom is working on a plan to list the merged Proton Edar and EON Bhd, the distributors of Proton cars. This is part of the group's ambitious plan to create the Asian car project which will see Malaysia becoming a hub for the production of VW vehicles. As part of the plan, DRB-Hicom itself might be de-listed and then just the group's automotive manufacturing relisted later under the DRB-VW JV. (Financial Daily)

Tan Sri Syed Mokhtar AlBukhary may make a standalone offer to privatise DRB-Hicom, the country's biggest automotive company, people working on the plan said yesterday.BT understands that the plan is being helmed by privately-held Meridian Solutions Sdn Bhd. Meridian is a unit controlled by Syed Mokhtar's top financial aide, Ooi Teik Huat. The low-profile 53-year-old Ooi is one of the Syed Mokhtar's top backroom boys, who sits on the board of many companies in which the Kedah-born businessman has a controlling stake. Ooi currently sits on the board of Malakoff and MMC Corp Bhd. It is further understood that Hong Leong Bank Bhd and Public Bank Bhd  are the two top banks working with Ooi on the privatisation. "Hong Leong and Public Bank will help provide the financing for the exercise. It is scheduled to take place in the first quarter of this year," said the source. BT was also told that DRB-Hicom could be taken private for between RM3.50-RM4.00/share, and that the exercise will be solely driven by Syed Mokhtar, who controls some 55% of the company. (BT)

Sales for the first phase of the RM24bn  Battersea Power Station development,  the largest Malaysian property development outside the country, kicked off yesterday with up to 800 units of apartments on offer.SP Setia Bhd, Sime Darby Bhd and the Employees Provident Fund (EPF) launched the first phase, named Circus West, with a gross development value (GDV) of STG900m (RM2.7bn). "We are quietly optimistic about the take-up for the residential units," Battersea Power Station Development Co Ltd (BPSDC) CEO Robert Tincknell told the Malaysian media prior to the launch. BPSDC is the company managing the Battersea Power Station project. "We're confident. There's a lot of pent-up demand for these apartments, especially from Londoners," he said. The sales launch will be followed by sales exhibitions in Kuala Lumpur on Jan 12 before moving to Singapore, Hong Kong and back to London.  Tincknell noted that the company made an allocation for each market but did not give a quantum. The project's first phase comprises one-, two- and three-bedroom apartments, townhouses and penthouses as well as a mix of offices, shops, leisure and hospitality units.Prices start from STG0.34m (RM1m) for a studio unit, from STG0.42m (RM1.3m) for a one-bedroom, from STG0.61m (RM1.8m) for a two-bedroom and STG0.9m (RM2.7m) for a three-bedroom apartment as well as from STG6m (RM18m) for the penthouse units. Construction of the 990,000sf of residential space and 110,000sf of commercial space will start in 2H13. (BT)

A  risk service contract (RSC) that made  Scomi  a takeover target is not likely to come its way because its Australian partner is reassessing its plans to go into the venture. Sources said Cue Energy Resources Ltd is not keen on becoming a contractor and developer, which effectively is its responsibility as an RSC contractor of a marginal oil field offered by Petronas. Cue Energy's new management felt certain risks on the operations were not mitigated. Cue Energy was one of the companies invited to bid for the RSC of the Tembikai and Cenang marginal oil fields. (Financial Daily)

Axiata  is eyeing deals in Bangladesh, Indonesia and Sri Lanka, but reckons getting into Myanmar will be "very tough", CEO Datuk Seri Jamaludin Ibrahim said in an interview. "That's a good reflection of what we intend to do," he said. "It can be a small company, it can be a relatively large company. Generally what we would like to do is consolidation." Bangladesh, Sri Lanka, and Indonesia are the most likely candidates for similar deals, Jamaludin said. "That's the inorganic expansion. Of course, there are opportunities for new countries but in reality there's very few left." Axiata hopes to enter Myanmar but the country has attracted a host of potential bidders, including Digicel and Norway's Telenor, for the two telecoms licences Myanmar plans to offer to foreign operators. Five or six of the bidders were "really aggressive," Jamaludin said. "It's going to be a tough one, a very tough one." In contrast, he said Axiata had little interest in entering Vietnam, which he said was an "anti-climax" after widespread excitement over its potential a few years ago. "They have a high level of penetration, so the attractiveness has gone down dramatically."Jamaludin said there was increasing competition in Indonesia. Axiata doubled its spending on Indonesia last year and would invest another "big sum" this year, he said. "Everybody can see it's a big opportunity and this is the time to go for it. Smaller players have also decided to up the ante, whereas in a lot of the other countries, the smaller players are getting more quiet." (Reuters)

The Ayer Molek Rubber Co Bhd,  which had failed to implement its proposed restructuring scheme within the stipulated timeframe, will be delisted from the Bursa Malaysia on Jan 21. “The securities of the company will be delisted on Jan 21 unless an appeal against de-listing is submitted to Bursa Securities on or before January 16,” said the company. The trading in the company’s securities will remain suspended (BT)

Iris Corp Bhd, via its joint-venture company Iris JV, has entered into an addendum to the agreement with the Bangladesh government for the supply of additional equipment related to the Machine Readable Passport and Machine Readable Visa projects. Iris JV, which consists of Iris Corp, Data Edge Ltd and Polish Security Printing Works, has submitted a price of US$17.0m (RM52m) for the additional equipment and related services. The requirement came due to the increased volume of issuance of machine readable passports. (BT)

Takaso Resources Bhd is contemplating venturing into the defence business, one of its top executives indicated yesterday. Under the plan, Takaso may form a new subsidiary to partner Amdac Sdn Bhd (formerly known as Pesaka Astana (M)), a contractor with about 20 years of experience in building and supplying vehicles for the Ministry of Defence (Mindef).  Takaso executive director Chin Boon Kim said the company is always looking at ways to improve its income stream but thus far, nothing has been cast in stone yet.  On Jan 4, Takaso told Bursa Malaysia that it is in negotiations with Amdac on possible future project collaboration. (BT)

Malindo Air is ready for a takeoff and has no financial constraints as claimed by certain quarters, said its CEO Chandran Ramamuthy. He was responding to reports that suggest that the new airline has financial issues. "We have no cash problems," Chandran said. (Financial Daily)

Chin Teck Plantations Bhd, which suffered a 30.7% decline in net profit to RM52.67m for the financial year ended Aug 31, 2012, is taking steps to normalise its Indonesia operations located in Lampung province in Sumatra. Its oil palm plantation there had been affected by a suspension in routine harvesting since the second quarter of FY12 due to unrest in the villages located in the vicinity. Chin Teck has about 12,122ha of planted oil palm areas in Malaysia and Indonesia as at Aug 2012. On palm oil prices, the group is of the view that palm oil is one of the vital oils in meeting the world's dietary and energy requirements, and thus remains optimistic about the long-term prospects of the business. (Financial Daily)

LBS Bina Group Bhd is targeting the middle market segment with its first high-rise property project - BSP Skypark - in Bandar Saujana Putra, Jenjarom. The BSP Skypark serviced apartments, with a gross development value of RM320m, was launched yesterday and is targeted for completion by 2016. These units are priced from RM399,900 with a gross built up area from 1,004 sq ft with three bedrooms, two bathrooms and two parking lots per unit. (StarBiz)

Frost & Sullivan expects Malaysia's vehicle sales to decline 2.9% on-year to 600,000 units as some buyers await details of the revised National Automotive Policy (NAP). Its partner and head of the automotive & transportation practice for Asia Pacific, Kavan Mukhtyar said the marginal decline in total industry volume (TIV) was due to concerns about the general election and details of the NAP. (StarBiz)

20130110 1110 Local & Global Economy Related News.

Gross exports rose 3.3% yoy (-3.2% in Oct) while  gross imports  went up 4.3% yoy (+5.7% in Oct), leaving a trade surplus of RM9.3bn in Nov (RM9.6bn in Oct). Economists had projected the exports would increase by 1.9% yoy in Nov. For the first eleven months of 2012, exports and imports rose 1.3% and 7.1% respectively, resulting in a cumulative trade surplus of RM87.1bn. (Department of Statistics, BT)

Malaysian exporters may have shifted to markets away from Europe to developing and emerging economies, but some companies are still feeling the pinch from the eurozone crisis. For these exporters, problems of financing, a fall in orders and reduced demand from Europe for their goods have made a negative impact. (Malaysian Reserve)

OECD consumer prices rose 1.9% in the 12 months to Nov, compared with 2.2% in the 12 months to Oct. The drop in Nov followed three straight months of increase. (Dow Jones)

US oil output will jump 23% over the next two years to a quarter-century high of 7.92m bbl/day by 2014 (6.43m bbl/day in 2012), reducing demand for foreign supplies from the world's largest oil importer, according to a new official forecast by the Energy Information Agency. (AFP)

The US MBA mortgage applications index  rose 10.0% wow in the 4 Jan week (-14.8% in the earlier week), whilst the  refinance index  gained 12.0% wow (-23.3% in the earlier week). (Bloomberg)

The  Bank of Japan  will  consider easing monetary policy again  this month as it eyes doubling its inflation target, sources say, as weakness in the economy threatens to delay the country in getting out of deflation. (Reuters)

India's auto industry lowered its annual growth forecast for car sales to between zero and 1.0%, down from 1.0-3.0%, the third reduction this fiscal year, as a slowing economy and costlier loans keep buyers away from showrooms. (AFP)

The Society of  Indian Automobile Manufacturers (SIAM) said domestic car sales in Dec fell 12.5% yoy to 141,083 units. (AFP)

South Korea’s seasonally adjusted jobless rate in Dec stood at 3.0%, remaining unchanged since Oct. (AFP)

The  Bank of Thailand has maintained the  policy interest rate at 2.75%, despite rising concerns over personal-loan growth on the back of stimulus measures that gave a big boost to the economy in the final quarter of last year. (The Nation)

Vietnam’s domestic vehicle sales  fell 21.1% yoy in Dec (-4.1% in Nov). (Bloomberg)

20130110 1107 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares steady, eye China data, ECB
TOKYO, Jan 10 (Reuters) - Asian shares steadied following an overnight rise in global equities on early optimism about U.S. earnings, but investors remained cautious ahead of China's trade data and the European Central Bank meeting later in the day.
Global equities rose modestly on Wednesday after aluminium maker Alcoa Inc kickstarted the U.S. earnings season with a brighter outlook for global demand. U.S. agribusiness giant Cargill Inc followed with a four-fold increase in quarterly earnings on Wednesday.

FOREX-Yen near 2 1/2-year low as BOJ meeting nears
TOKYO, Jan 10 (Reuters) - The yen was on the defensive near a 2 1/2-year low on expectations Bank of Japan policy will take a fresh and bold approach to boost inflation later this month.
"I feel it's about time a for correction to set in after a big fall in the yen. Short-term players will likely take profits as soon as the yen stops falling," said Teppei Ino, currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

ECB to hold fire as euro zone economy shows glimmers of hope
FRANKFURT, Jan 10 (Reuters) - The European Central Bank is expected to keep interest rates at a record low of 0.75 percent, refraining from a cut as the euro zone economy shows some signs of stabilising and inflation still tops its target.
The 17-country euro zone is in recession, but recent data points to some stabilisation, and ECB President Mario Draghi could strike a slightly more positive tone in the news conference that follows the rate decision.

China trade to pick up in Dec, but outlook cloudy
BEIJING, Jan 10 (Reuters) - China's export growth is set to rebound from a three-month low in December, although the recovery is likely to be feeble as U.S. and European demand for Chinese goods is still far below levels that would herald a convincing revival.
In a sign that exports have been the biggest drag on China's economy in the past two years, economic data should also show the world's fastest-growing major economy missing its 10 percent growth target for trade for 2012.

OIL - Oil slips following big U.S. gasoline stock build
NEW YORK, Jan 9 (Reuters) - Oil futures fell slightly on Wednesday after government data showed U.S. fuel stocks rose sharply last week, a sign of ample supply in the world's top consumer of oil.
"The report is solidly bearish with the large builds in refined products, especially gasoline," said John Kilduff of hedge fund Again Capital in New York.

US fuel stocks rise sharply, crude up on imports jump-EIA
NEW YORK, Jan 9 (Reuters) - U.S. crude oil stocks rose in line with expectations last week and refined fuel stocks surged even as refineries cut utilization rates, according to weekly data from the U.S. Energy Information Administration on Wednesday.
Crude stocks rose by 1.31 million barrels to 361.25 million barrels in the week to Jan 4, the EIA said. Analysts polled by Reuters had expected stocks to rise by 1.5 million barrels. Crude oil imports rose 1.25 million barrels per day to 8.3 million barrels per day (bpd) in the week.

Norway 2012 gas exports at record thanks to Troll
OSLO, Jan 9 (Reuters) - Norway exported a record 107.6 billion cubic metres (bcm) of gas in 2012, gas system operator Gassco said on Wednesday.
Norway pipeline gas exports meets around a fifth of Europe's consumption, making it the second-biggest supplier after Russia, and its importance has been increasing as domestic production depletes in the UK.

UAE produced 2.6 mln bpd of oil in December – minister
ABU DHABI, Jan 9 (Reuters) - The United Arab Emirates (UAE) produced around 2.6 million barrels a day (bpd) of crude in December, its oil minister Mohammed al-Hamli said on Wednesday.
He said the current production capacity of the OPEC member  was 2.8 million bpd and he hoped it would rise at some point this year to 3 million bpd - a figure the country had been expecting to near at around the end of 2012.

West African oil exports to Asia to rise in January
LONDON, Jan 9 (Reuters) - West African crude oil exports to Asia will rise slightly in January versus December, according to data compiled by Reuters, with stronger demand from India offsetting a fall in exports to China.
Asia is expected to import 1.81 million barrels per day (bpd) of West African crude in January versus 1.75 million in December, with China importing 33 cargoes and India 18, according to data based on movements seen by oil traders.

20130110 1001 Global Markets Related News.

Asia FX By Cornelius Luca - Wed 09 Jan 2013 16:21:58 CT (CME/
The appetite for risk was mixed on Wednesday, with traders waiting to see the quality of earnings. All foreign currencies but the Australian dollar fell after the European and commodity currencies slipped on Tuesday. The severely oversold Japanese yen resumed losses after recovering for a couple of days and remains close to a 28-month low. The US stock markets edged up, while gold, oil and silver were barely changed. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on European currencies and long on commodity currencies and yen. Good luck!

Canada: Housing starts slipped to 198K in December from 201.4K in November.

Today's economic calendar
China:   Trade balance for December
Australia: Building permits for November
Japan: Leading economic index for November

Asian Stocks Rise for Second Day as Exporters Gain on Yen (Bloomberg)
Asian stocks rose, led by a rally in Japanese exporters as the yen neared a 2 1/2 year-low after Prime Minister Shinzo Abe urged the central bank to double its inflation target.
Honda Motor Co. (7267), which gets about 44 percent of sales from North America, climbed 1.2 percent in Tokyo. Rival Nissan Motor Co., which generates almost 80 percent of its revenue overseas, increased 1.2 percent.
The MSCI Asia Pacific Index (MXAP) rose 0.1 percent to 131.30 as of 9:22 a.m. Tokyo time, headed for a second day of gains. Markets in China and Hong Kong have yet to open. The benchmark gauge has climbed for seven straight weeks, its longest winning streak since March, after the U.S. Congress approved a budget deal and Japanese shares rallied on expectations the new government would call for more economic stimulus.
“The government’s economic policy can prompt a sustained improvement in investor sentiment by weakening the yen before the recovery in the U.S. economy becomes definite,” said Naoki Kamiyama, equity strategist at Bank of America Corp. in Tokyo. “It is a way to engineer an economic recovery.”
The yen weakened for a second day against the dollar as Abe urged Bank of Japan Governor Masaaki Shirakawa to double the inflation goal.

Japan Stocks Rise as Yen Weakens on Inflation Prospects (Bloomberg)
Japanese shares rose, with the Nikkei 225 (NKY) Stock Average poised for a two-day gain, as the yen fell a second day after Prime Minister Shinzo Abe pressed the central bank to double its inflation target.
Toyota Motor Corp. (7203), which gets about 70 percent of its sales outside Japan, advanced 1.4 percent. Izutsuya Co. jumped 24 percent after the department-store operator raised its profit forecast. Tokuyama Corp., a maker of materials used in solar cells, added 3.8 percent after Chinese solar stocks listed in the U.S. rallied. Isuzu Motors Ltd. jumped 5 percent on a Nikkei newspaper report it would partner with General Motors Co. to manufacture pickup trucks.
The Nikkei 225 gained 0.7 percent to 10,651.56 as of 9:49 a.m. in Tokyo. Trading volume on the gauge was 21 percent higher than the 30-day average. The broader Topix (TPX) Index advanced 0.9 percent to 886.89, with more than two stocks advancing for each that fell.
“The market seems to have priced in half of the weaker yen’s impact on earnings and the effect of Abe’s stimulus measures,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about 1.79 trillion yen ($20 billion). “Optimism for policy action is continuing from end of last year.”
The Topix advanced 23 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. The gauge is trading at 1.05 times book value, compared with 2.19 for the Standard & Poor’s 500 Index (SPXL1) and 1.59 for the Stoxx Europe 600 Index.
Abe said yesterday the Bank of Japan should aim for 2 percent inflation at the first meeting in four years of a panel that brings together government and central bank officials.
Futures on the S&P 500 Index were little changed today. The gauge yesterday advanced 0.3 percent amid investors’ optimism about fourth-quarter corporate earnings.
The Nikkei Stock Average Volatility Index (VNKY) added 3.7 percent to 20.13, indicating traders expect a swing of about 5.8 percent on the benchmark gauge over the next 30 days.

U.S. Stocks Advance on Optimism About Corporate Results (Bloomberg)
U.S. stocks advanced, snapping a two- day decline for the Standard & Poor’s 500 Index, amid investors’ optimism about fourth-quarter corporate earnings.
Alcoa Inc. (AA), which reported better-than-estimated sales, fell 0.2 percent after rallying as much as 2.5 percent earlier today. Seagate Technology Plc (STX) jumped 6.6 percent as revenue topped an earlier forecast. Herbalife Ltd. (HLF) added 4.2 percent after Daniel Loeb’s Third Point LLC took an 8.2 percent stake in the company. Bank of America Corp. (BAC) slid 4.6 percent after Credit Suisse Group AG cut its recommendation for the lender.
The S&P 500 rose 0.3 percent to 1,461.02 at 4 p.m. New York time. The Dow Jones Industrial Average added 61.66 points, or 0.5 percent, to 13,390.51. About 6.1 billion shares changed hands on U.S. exchanges, in line with the three-month average.
“Alcoa’s report got us off to a good start,” said Peter Jankovskis, who helps oversee $3 billion of assets as co-chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. He spoke in a telephone interview. “Still, earnings growth is going to be a little bit harder to come by. If we see some good results from bellwether companies, that will definitely give a lift to the market.”
Fourth-quarter profits at S&P 500 companies probably increased 2.9 percent, according to analysts’ estimates compiled by Bloomberg. That would be the second-slowest quarterly growth since 2009, the data show.
Six out of 10 groups in the S&P 500 rose today as health- care and industrial shares had the biggest gains. Telephone and utility companies retreated the most. The Dow Jones Transportation Average climbed 1 percent to the highest level since July 2011. An S&P index of homebuilders advanced 0.9 percent to the highest since August 2007.

VIX Ends Six-Day Drop, Rebounding From Lowest Since ’07 (Bloomberg)
The Chicago Board Options Exchange Volatility Index (VIX) rose, snapping a six-day streak of losses, after the gauge of U.S. stock options prices reached the lowest level since 2007.
The benchmark gauge, known as the VIX, rose 1.8 percent to 13.86 at 12:48 p.m. in New York, after earlier touching 13.22, the lowest intraday level since June 2007. The index dropped 40 percent over the previous days, the most since November 2008.
“People are just looking at these low levels as opportunity to buy portfolio protection,” Jonathan Krinsky, chief technical analyst at Miller Tabak & Co., said in an interview. “There were also a lot of eyes on it, and often times when that happens as an instrument breaks support levels, it reverses.”
The VIX tumbled a record 39 percent last week after U.S. lawmakers reached a deal to avert more than $600 billion in tax increases and spending cuts. During the week, the Standard & Poor’s 500 Index climbed 4.6 percent to 1,466.47, the highest level since December 2007. The S&P 500 (SPX) rose 0.3 percent today and investors’ optimism about fourth-quarter corporate earnings.
Record U.S. corporate profits and three rounds of Federal Reserve monetary stimulus have helped the S&P 500 climb 116 percent since the bull market began in March 2009. The VIX is 83 percent below its all-time high of 80.86 reached in the two months after Lehman Brothers Holdings Inc. declared bankruptcy in 2008.
“We are seeing the combination of unwinding of fiscal cliff hedges, which in the short term proved unnecessary, and a new year rally combining to crush volatility,” Alec Levine, an equity derivatives strategist at Newedge Group SA in New York, said in an interview.
Analysts predict profits at S&P 500 companies will rise 4.4 percent this year to a record $102.60 a share, according to data compiled by Bloomberg. Per-share earnings in the index probably rose 2.9 percent during the fourth quarter after increasing 4.6 percent in the previous three months, the estimates show.

European Stocks Advance on U.S. Earnings Optimism (Bloomberg)
European stocks rose to the highest in more than 22 months as Alcoa Inc. began the U.S. earnings season with sales that beat projections.
Telecom Italia SpA (TIT) led a gauge of telecommunications companies higher, climbing the most in 2 1/2 years, after a report that mobile-phone operators discussed sharing their infrastructure across Europe. Delta Lloyd NV (DL) jumped 6.6 percent after Aviva Plc (AV/) sold its stake in the Dutch insurer. ArcelorMittal slid 2.5 percent after the world’s biggest steelmaker said it will sell $3.5 billion of stocks and notes to lower debt.
The Stoxx Europe 600 Index (SXXP) advanced 0.7 percent to 288.22 at the close of trading, the highest since Feb. 18, 2011. The benchmark gauge last week surged 3.3 percent after U.S. lawmakers agreed on a compromise budget.
“Alcoa’s results were good, especially the revenue numbers and forward guidance, as was the comment that demand in China is coming back,” said Manish Singh, who helps manage more than $2 billion as head of investment at Crossbridge Capital in London. “U.S. earnings will probably beat expectations and this should lift European stocks.”
The volume of shares traded on the Stoxx 600 today was 70 percent higher than the average of the last 30 days, according to data compiled by Bloomberg. The VStoxx Index (V2X), a measure of Euro Stoxx 50 options prices, fell 4.5 percent to 16.15.

Emerging Stocks Rise as Alcoa Forecast Fuels China View (Bloomberg)
Emerging-market stocks rose for the first time in four days as utilities rebounded and Alcoa Inc. (AA) predicted stronger demand in the biggest developing nations.
Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, rose in Hong Kong as Alcoa’s sales beat estimates. Guangzhou Automobile Group Co. (2238), a Chinese partner of Toyota Motor Corp. (7203), surged the most in 18 months after Credit Suisse Group AG forecast growth in China’s car market. Cia. Energetica de Sao Paulo, Brazil’s second-biggest power generator, rose the most in a month to lead gains on the Bovespa. Vakiflar Bankasi TAO (VAKBN) rose to the highest level since 2005 after UBS AG upgraded the Turkish lender.
The MSCI Emerging Markets Index added 0.3 percent to 1,073.03 in New York, led by utilities as Brazilian power producers recovered on speculation yesterday’s slump was overdone. Alcoa, the largest U.S. aluminum producer, said yesterday that growth in global demand for the commodity will recover to 7 percent in 2013 as China’s economy rebounds. Chief Executive Officer Klaus Kleinfeld also forecast increased consumption in Brazil, India and Russia. The iShares MSCI Emerging Markets Index exchange-traded fund climbed 0.4 percent.
“Most people are comfortable with the story that China is starting to stabilize and turn up, which is supportive for emerging markets,” Win Thin, the global head of emerging- markets strategy at Brown Brothers Harriman & Co. in New York, said by phone today. “Between now and the end of the week we’ll have some pretty supportive China data that can keep the emerging markets story going.”

Yen Falls 2nd Day as Abe Urges BOJ on Inflation Target (Bloomberg)
The yen weakened for a second day and neared a 2 1/2 year-low against the dollar after Prime Minister Shinzo Abe urged Bank of Japan (8301) Governor Masaaki Shirakawa to double the central bank’s inflation goal.
Shirakawa said yesterday the BOJ was in close cooperation with the government, raising speculation policy makers will boost stimulus when they meet Jan. 21-22. Japan’s currency slid against all of its major peers before data forecast to show the nation’s trade deficit widened. The euro remained lower before the European Central Bank meets today following two days of declines against the greenback.
“The long-term downward trend in the yen hasn’t changed,” said Noriaki Murao, managing director of the marketing group in New York at Bank of Tokyo-Mitsubishi UFJ Ltd. “The BOJ may have no choice but to agree to the 2 percent inflation target, and it’s possible they may roll out additional quantitative easing,” Murao said, referring to asset purchases by the central bank.
The Japanese currency weakened 0.3 percent to 88.13 per dollar at 9:58 a.m. in Tokyo from yesterday, when it slid 0.9 percent. It touched 88.41 on Jan. 4, the lowest levle since July 2010. The yen declined 0.2 percent to 115.04 per euro. The 17- nation euro lost 0.1 percent to $1.3054.
Abe yesterday talked with Shirakawa at a meeting of Japan’s Council on Economic and Fiscal Policy, which was revived following its abolition by the previous government. The prime minister said the BOJ should aim for 2 percent inflation, double the current price goal which was introduced in February last year.

Australian Dollar Remains Higher Before Chinese Trade Data (Bloomberg)
The Australian dollar remained higher following a four-day gain before Chinese data today forecast to show imports grew last month in the South Pacific nation’s biggest overseas market.
New Zealand’s currency, known as the kiwi, reached its strongest level in more than four years against the yen as Asian stocks rose for a second day, boosting demand for higher- yielding assets.
“There should be positive support for the Aussie and kiwi from the Chinese data,” said Alex Sinton, director of institutional foreign exchange in Auckland at Australia & New Zealand Banking Group Ltd. (ANZ)
Australia’s currency traded at $1.0499 as of 11:38 a.m. in Sydney from $1.0514 in New York yesterday and fetched 92.55 yen from 92.39. New Zealand’s dollar traded little changed at 83.88 U.S. cents. It rose as high as 73.98 yen, the strongest since September 22, 2008, before trading at 73.95 yen from 73.78.
China’s imports probably increased 3.5 percent in December from a year earlier, a report today is forecast to show, according to the median estimate of economists in a Bloomberg News survey. Overseas shipments gained 5 percent, the economists predict.
Australian home-building approvals rose 2.9 percent in November from a month earlier, compared with the median economists’ forecast of a 3 percent gain, a report from the Bureau of Statistics showed today.

Stimulus From Jobless Aid Fades as U.S. Hiring Grows: Economy (Bloomberg)
By the time Congress got around to passing an extension of emergency jobless benefits last week, Clyde Lance no longer needed them.
On Dec. 17, his 52nd birthday, Lance started a full-time job helping train technicians for the International Society of Automation in Research Triangle Park, North Carolina, ending a three-year search for a permanent position.
“I didn’t even realize it was my birthday,” said Lance. “I believe God helped me, gave me this job.”
The dwindling ranks of the long-term unemployed, while testament to the improvement in the labor market, also shows the diminishing returns from what economists such as Mark Zandi say is one of the most effective government programs implemented to spur the recovery: extended unemployment insurance payments. By the time all figures are in, Lance will be among the almost 1.5 million people who stopped getting those checks last year.
“The bang-for-the-buck from the program is among the highest of any fiscal-stimulus program,” said Zandi, chief economist of Moody’s Analytics in West Chester, Pennsylvania, who estimated that every dollar spent in benefits generated 1.55 times as much economic activity. “It is important to have it in place as long as unemployment is high and the recovery is fragile.”
The legislation passed by Congress last week preserved benefits for harder-hit states that provide payments to the jobless for as long as 73 weeks, extending the normal program that typically lasts for the first 26 weeks of unemployment. About $30 billion in long-term benefits will be paid this year, down from about $45.5 billion in 2012, according to government estimates.

China December New Yuan Loans and Money Supply Trail Estimates (Bloomberg)
China’s December new local-currency loans totaled 454.3 billion yuan while M2 money supply rose 13.8 percent from a year earlier, the People’s Bank of China said today.
That compares with the median loan estimate of 550 billion yuan in a Bloomberg News survey of 37 analysts. Money supply was forecast to increase 14 percent. Aggregate financing of 1.63 trillion yuan exceeded the median 1.2 trillion yuan estimate of seven economists.
The nation’s foreign-exchange reserves were $3.31 trillion at the end of December, the central bank said, compared with the $3.32 trillion median estimate of seven analysts surveyed by Bloomberg.
The central bank released the data ahead of trade figures due today from the customs administration and tomorrow’s inflation report from the statistics bureau.

Japan’s Abe Urges 2% Inflation as Shirakawa Attends Meeting (Bloomberg)
Prime Minister Shinzo Abe said the Bank of Japan (8301) should aim for 2 percent inflation at the first meeting in four years of a panel that brings together government and central bank officials.
Abe said that the government and the BOJ should strengthen cooperation to achieve the price goal, in opening remarks at the Council on Economic and Fiscal Policy today in Tokyo that were open to the press. BOJ Governor Masaaki Shirakawa told reporters after the meeting that it was “meaningful” and that the central bank is in close cooperation with the government.
The meetings may help to decide whether the government pushes for a formal accord with the central bank as Abe calls for a doubling of the BOJ’s 1 percent inflation goal. Finance Minister Taro Aso, who also attended the meeting, said last week that such an agreement may be unnecessary if the gatherings are held regularly.
The BOJ pledged last month to reconsider its inflation goal at its next board meeting on Jan. 21-22.
The yen slid at least 0.3 percent against all of its 16 major peers as of 9:30 a.m. in New York. The Japanese currency weakened 0.6 percent to 87.55 per dollar, ending a two-day advance. It declined 0.4 percent per euro.

Australian Home-Building Permits Rose in November on Apartments (Bloomberg)
Australian home-building approvals advanced for the third time in four months in November as lower interest rates encouraged plans for apartment projects.
The number of permits granted to build or renovate houses and apartments gained 2.9 percent from October, when they fell a revised 5.1 percent, the Bureau of Statistics said in Sydney today. The result was in line with the median forecast for a 3 percent gain in a Bloomberg survey of 13 economists.
The Reserve Bank of Australia lowered borrowing costs five times from November 2011 to October to buttress the economy as a resource investment boom is predicted to peak this year. Governor Glenn Stevens is trying to revive industries including construction to rebalance economic growth and extend 21 recession-free years.
“Loan approvals, which lead building approvals, had been trending higher in prior months, pointing to underlying improvement in building approvals,” Justin Fabo, senior economist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney, said in a research report before the release.
Building approvals in November advanced 13.2 percent from a year earlier, the report showed. That compares with economists’ forecast for an 11.6 percent rise year-over-year.
Approvals to build private houses fell 0.3 percent to 7,518 in November from the previous month, the report showed. Approvals for apartments and renovations advanced 10.1 percent to 5,552, it showed.
The local dollar was little changed after the data were released, trading at $1.0501 at 11:38 a.m. in Sydney.
The RBA board meets Feb. 5 to decide whether to change monetary policy. Traders are pricing in a 37 percent chance Stevens will cut the benchmark rate to a record-low 2.75 percent, according to swaps data compiled by Bloomberg.

Thailand Holds Key Rate a Second Time as Outlook Improves (Bloomberg)
Thailand kept its policy interest rate unchanged for a second straight meeting on signs of an improving outlook for exports and strengthening domestic demand.
The Bank of Thailand held its one-day bond repurchase rate at 2.75 percent, it said in Bangkok today, as predicted by all 22 economists in a Bloomberg survey. The decision was unanimous, and forecasts for growth last year and this year will be revised upward after a better-than-expected expansion in the fourth quarter, the monetary policy committee said.
Prime Minister Yingluck Shinawatra’s government has extended subsidies, raised minimum wages and increased infrastructure investments to shield growth after the floods of 2011. While weakness in Europe and Japan persist, there is a broad-based recovery in Thai exports and the performance of Asian economies has turned positive, the central bank said today.
“The unanimous decision confirms our view that the easing cycle in Thailand has drawn to an end,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “There seems to be no change in their view on the strong domestic demand and benign inflation. The BOT’s focus in the near-term will be on the potential impact of volatile capital flows.”
The Thai baht rose 0.2 percent to 30.38 per dollar as of 3:01 p.m. in Bangkok today, approaching a 10-month high. The benchmark Stock Exchange of Thailand index gained 0.6 percent, having surged 36 percent in 2012.

German Industrial Production Rises Less Than Forecast (Bloomberg)
German industrial production increased less than economists predicted in November as the euro area’s recession left its mark on Europe’s largest economy.
Production rose 0.2 percent from October, when it fell a revised 2 percent, the Economy Ministry in Berlin said today. That’s the first increase in four months. Economists had forecast a gain of 1 percent, according to the median of 23 estimates in a Bloomberg News survey. From a year earlier, production fell 2.9 percent when adjusted for working days.
The Bundesbank predicts the German economy will stagnate in the first quarter after a marked contraction at the end of last year. Still, signs are increasing that the economy may recover soon. Sentiment among German entrepreneurs and investors climbed more than economists expected in December and economic confidence in the euro area, the country’s biggest export market, jumped to the highest level since July.
“The German economy probably experienced the worst growth performance in the fourth quarter since the first quarter of 2009,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Looking ahead, however, strengthening external demand and sound domestic fundamentals should lead the way out of contractionary territory in the first half of this year.”
Manufacturing output rose 0.4 percent on the month in November, with investment-goods production up 1.4 percent and basic-goods output up 0.2 percent, today’s report showed. Production of consumer goods declined 2.2 percent and energy output dropped 3.3 percent. Construction gained 1 percent from October.

20130110 1001 Global Commodities Related News.

Corn Market Recap for 1/9/2013 (CME)
March Corn finished up 5 1/2 at 694 1/4, 1 3/4 off the high and 7 3/4 up from the low. May Corn closed up 5 at 693 3/4. This was 7 up from the low and 1 3/4 off the high.
March corn traded higher into the closing bell as trader's position ahead of Friday's big USDA report. Firm interior basis levels and active bull spreading in calendar spreads continues to add a supportive tone to the market. Favorable weather in South America that at this point is signaling healthy production levels for Brazil and Argentina is adding a negative bias to the market. Ethanol production saw a nice rebound from last week. Production for the week ending January 4th averaged 826,000 barrels per day, up 2.4% vs. last week and down 12.5% vs. last year. Total Ethanol production for the week was 5.78 million barrels. Corn used in last week's production is estimated at 86.7 million bushels vs. 84.7 last week. This crop year's cumulative corn used for ethanol production for this crop year is 1.54 billion bushels. Corn use needs to average 86.7 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of January 4th were 19.9 million barrels, down 1.8% vs. last week and up 5.8% vs. last year.
January Rice finished up 0.04 at 15, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
March Wheat finished down 5 at 745 1/2, 11 1/2 off the high and 1/2 up from the low. May Wheat closed down 5 3/4 at 754 1/2. This was 1/2 up from the low and 11 1/2 off the high.
KC and Chicago wheat markets traded lower on the day with KC leading to the downside. Kansas City wheat lost ground to Chicago which is likely due to the fact areas of the southwestern plains are seeing moisture which could help soil moisture conditions. Storm systems covered Texas and southeast Oklahoma throughout the day and are expected to move to the northeast which could bring relief to dry areas of the eastern Corn Belt. Basis levels in Kansas City was a touch weaker today but up on the week which adds a supportive tilt to the cash market. Rumors that China has bought US milling wheat cargos from the US this week is seen as a positive to price direction. Concerns earlier this year that China may have been blending milling quality wheat with feed wheat could mean that "food grade" wheat supplies are in low supply which is supportive to the demand outlook long term.
March Oats closed up 4 3/4 at 336 1/2. This was 4 1/2 up from the low and 1/2 off the high.

Corn Supply Dropping Most Since 1995 Signals U.S. Rally (Bloomberg)
U.S. corn supplies, the world’s biggest, are dropping at the fastest pace in 17 years as drought damage exceeds government forecasts and five months of declining prices spurs demand from livestock producers.
Inventories on Dec. 1 were 15 percent lower than a year earlier at 8.22 billion bushels (208.8 million metric tons), the smallest post-harvest stockpile since 2003, according to the average of 26 analyst estimates compiled by Bloomberg. Goldman Sachs Group Inc., Morgan Stanley and Macquarie Group Ltd. expect prices to rebound at least 17 percent to $8.14 a bushel in 2013.
While futures surged to a record $8.49 in August as the drought spread, they then tumbled 18 percent as U.S. exports slowed and buyers sought cheaper supply from Brazil and Ukraine. Prices will rebound because the government overestimated the harvest and probably will lower the figure when it reports tomorrow, the analysts said. The U.S. Department of Agriculture already expects global stockpiles on Oct. 1 to be the smallest relative to consumption since 1974.
“Consumers have become too complacent waiting for lower prices,” said Christopher Gadd, an analyst at Macquarie in London who expects prices to reach $8.50 this year. “The story going forward will be an improvement in U.S. exports. Buyers have nowhere else to turn.”
Corn rose as much as 68 percent from June 15 to mid-August on the Chicago Board of Trade before retreating. It ended the year up 8 percent, compared with a 0.3 percent gain in the Standard & Poor’s GSCI gauge of 24 commodities. The MSCI All- Country World Index of equities jumped 13 percent. A Bank of America Corp. index shows Treasuries returned 2.2 percent.

Cooking Oil Imports by India Seen Surging After Palm Oil Plunge (Bloomberg)
Cooking oil imports by India, the world’s second-largest user, probably jumped in December after palm oil prices slumped to a three-year low and farmers curbed domestic oilseed sales.
Purchases rose 34 percent to 900,000 metric tons in December from 669,912 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Imports of crude and refined palm oils probably gained 38 percent to 750,000 tons from 543,830 tons, the survey showed. The Solvent Extractors’ Association of India will publish data next week.
Palm oil dropped 23 percent in Kuala Lumpur last year, the worst slump since the financial crisis in 2008, as slowdowns in Europe and China curbed demand, boosting stockpiles in Indonesia and Malaysia, the biggest producers. Increased imports by India, the biggest palm oil buyer, may help pare inventories and stem the slide in futures. Reserves in Malaysia were probably 2.53 million tons in December, near a record 2.56 million tons a month earlier, according a Bloomberg survey.
“Prices have been cheaper than last year and there is good demand,” said Govindlal G. Patel, managing partner at GG Patel & Nikhil Research Co. “The local soybean harvesting is going on, but the oil content in the seed is lower and availability of oil is not comfortable.”

Natural Gas Falls for Third Day as Warm Weather Cuts Use (Bloomberg)
Natural gas futures dropped to a 15- week low in New York on speculation that unusually mild weather next week will curtail demand for the heating fuel.
Gas fell 3.3 percent as forecasts from companies including MDA Weather Services in Gaithersburg, Maryland, turned warmer for the eastern and central U.S. through Jan. 18. Gas has dropped 21 percent from a one-year high on Nov. 23 as stockpiles hovered near seasonal records.
“We are going to have incredibly unseasonably warm temps here in the next week,” said Brad Florer, a trader at Kottke Associates LLC in Louisville, Kentucky. “You couple that with the fact that we have high storage to begin with, it puts gas in a very bearish place.”
Natural gas for February delivery fell 10.5 cents to $3.113 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Sept. 26. Trading volume was 329,359 contracts as of 2:41 p.m., up 12 percent from the 100-day average.
The futures climbed to $3.933 on Nov. 23 before plummeting to $3.05 on Jan. 2, the lowest intraday price since Sept. 26. The futures are up 3.4 percent from a year ago.
The low temperature in New York City on Jan. 15 may be 42 degrees Fahrenheit (6 Celsius), 15 above normal, with the high of the day reaching 50 degrees, 12 above normal, according to AccuWeather Inc. in State College, Pennsylvania. Chicago’s low on Jan. 14 will be 10 above the usual reading at 28 degrees.

Oil Trades Near Three-Day Low as U.S. Crude, Fuel Supplies Rise (Bloomberg)
Oil traded near the lowest level in three days and gasoline fell in New York after a government report showed increasing U.S. crude and fuel inventories.
West Texas Intermediate futures were little changed after slipping for a second day yesterday. Crude stockpiles rose 1.3 million barrels last week, the Energy Department said. They were projected to climb 2 million barrels, according to a Bloomberg News survey. Gasoline supplies surged by 7.4 million barrels, almost three times as much as forecast, to a 22-month high, the report showed.
Crude for February delivery was at $93.20 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 10:51 a.m. Sydney time. The contract rose to $93.19 on Jan. 7, the highest settlement since Sept. 18. Prices declined 7.1 percent last year.
Brent for February settlement decreased 18 cents to $111.76 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $18.66 to WTI futures.
Gasoline for February delivery slid 0.81 cents, or 0.3 percent, to $2.7708 a gallon on the New York Mercantile Exchange. It fell 0.6 percent to settle at $2.7789 yesterday.
U.S. gasoline stockpiles increased to 233 million barrels, the highest since February 2011, the Energy Department report showed. They were projected to gain by 2.5 million barrels, according to the median estimate of 11 analysts in the Bloomberg survey. Distillate inventories increased 6.8 million barrels to 131 million, versus a forecast advance of 1.9 million.

Recap Energy Market Report (CME)
February crude oil registered an inside day trading range with a slightly lower close. Crude oil prices were higher early in the US trading session, supported by favorable US corporate earnings that pointed to improving global demand. The market erased those gains and fell into negative territory following EIA weekly inventory data that showed much larger than expected product builds. EIA data showed a build in crude stocks last week of 1.314, which was slightly lower than expected. The build came from a rather large rebound in import activity, as well as a new record high level of supply in Cushing Oklahoma. The refinery operating rate was down 1.3% to 89.1%. Weakness in the complex was led by February RBOB, which turned sharply lower after logging its seventh consecutive build last week.

Turkey Beating Norway as Biggest Regional Oil Driller: Energy (Bloomberg)
Turkey is drilling for oil and natural gas with more rigs than any European country and plans new rules in 2013 to speed exploration of energy supplies for the fastest-growing major economy after China.
The country fielded 26 rigs at Dec. 31, according to data compiled by Bloomberg, and the number has since risen to 34, Energy Ministry officials said yesterday. Turkey has leapfrogged Norway as offshore drilling increased in the Black and Mediterranean seas. Spending on exploration jumped to $610 million last year from $42 million a decade earlier.
With economic growth forecast at 3.5 percent this year and about twice the pace of the most advanced economies to 2017, Turkey is drilling for its own energy to ease reliance on imports from Iran, Iraq and Russia. State-owned Turkish Petroleum Corp. has taken Royal Dutch Shell Plc (RDSA) and Exxon Mobil Corp. (XOM) as partners, after neighboring Israel and Cyprus made some of the decade’s biggest gas finds in the past three years.
“If there’s one country that needs energy, it’s Turkey,” said Darren Engels, an analyst at FirstEnergy Capital in Calgary. “Their domestic business doesn’t scratch the surface.”
Turkish Petroleum, which is known as TPAO and has operations in Libya, Iraq, Azerbaijan and Kazakhstan, needs to boost domestic output as it pursues a target of supplying all of Turkey’s energy needs by 2023.
Turkey had proved reserves of 307 million barrels of oil and gas in 2010, 88 percent of which is oil, according to FirstEnergy’s Engels. In 2011 alone, the country consumed about 258 million barrels, according to the EIA.

Alcoa Sees Aluminum Use Climbing on China Recovery: Commodities (Bloomberg)
Alcoa Inc. (AA), the largest U.S. aluminum producer, sees global demand growth for the commodity recovering to 7 percent in 2013 as China’s economic rebound drives demand for cans, transport and office buildings.
Aerospace demand will increase by as much as 10 percent as planemakers face record backlogs, the company said yesterday in its fourth-quarter earnings presentation. It also predicted aluminum consumption may climb 19 percent in China’s heavy-truck and trailer industry, while U.S. commercial building and construction expands for the first time in four years.
“The fundamentals are pretty positive,” Chief Executive Officer Klaus Kleinfeld said on a conference call. “We will absolutely see the rebound” in aluminum prices.
Demand in China, the world’s largest aluminum user, will grow 11 percent this year to 23 million metric tons as stimulus spending announced by the country’s new leadership begins to show its effect, Kleinfeld said. He also forecast an acceleration of consumption in Brazil, India and Russia. Global demand advanced 6 percent last year, according to Alcoa.
China’s economic growth probably quickened to 7.8 percent in the fourth quarter from a year earlier, up from a three-year low in the previous period, according to a Bloomberg News survey last month. The government will release quarterly gross domestic product data as well as December industrial production, retail sales and fixed-asset investment on Jan. 18.

Iron Ore Seen Set for Bear Market as Restocking Rally Fades (Bloomberg)
Iron ore, which posted the biggest quarterly climb on record in the final three months of 2012, may extend gains from a 14-month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.
Prices may rise to $170 a ton in the first half on demand in the biggest buyer, before falling to less than $120 as supply expands, Deutsche Bank said in a report. Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from the Steel Index Ltd. A drop from $170 to $120 implies a 29 percent fall, more than the 20 percent that typically defines a bear market.
The steelmaking raw material rallied 39 percent in the three months through December, the biggest gain since at least 2009, as demand in China rebounded on optimism the world’s second-largest economy is recovering. Gross domestic product is poised to expand 8.1 percent this year, from 7.7 percent in 2012, according to the median estimate of economists surveyed last month by Bloomberg. Baoshan Iron & Steel Co. (600019), China’s largest steelmaker, said on Jan. 7 that it will raise product prices.
“We could see a minor pullback if steel mills aren’t able to pass on the full extent of these rising input costs to end users and if demand doesn’t adequately match the recent build in supplies,” Natalie Rampono, an analyst at Australia & New Zealand Banking Group Ltd., said in an interview today, without providing a specific forecast. “There could be some risk to the downside from higher input costs.”

Indian Steel Revival as Tata Said to Seek Cheapest Coking Coal (Bloomberg)
India’s biggest steel producers, from Tata Steel Ltd. (TATA) and Steel Authority of India Ltd. to JSW Steel Ltd. (JSTL), are in talks to buy coking coal at the lowest price since 2010, according to three people familiar with the matter.
They expect to contract the steelmaking ingredient at as low as $160 a metric ton for the first quarter, 32 percent below year-ago prices, the people said, asking not to be identified as talks continue. Steelmakers in Korea and Japan that set a benchmark for India have negotiated similar cuts, they said.
Swelling global supply and Europe’s slumping demand have undercut prices, adding to the improving outlook for steelmakers, which jumped an average 11 percent in December. Prime Minister Manmohan Singh last month unveiled plans to accelerate infrastructure approvals and to make buying land easier, all to garner $1 trillion of investments by 2017 in roads, ports and power plants that will use the metal.
“This quarter will probably be the best in the fiscal year for all major Indian steel producers in terms of earnings,” Abhisar Jain, a Mumbai-based analyst at Centrum Broking Ltd., said in a phone interview. “Lower coking coal costs coupled with higher steel prices and an expected surge in demand after a probable interest rate cut are all good news.”
A predicted cut in benchmark interest rates this month may fuel car and home sales.
Charudatta Deshpande, a spokesman at Tata Steel, and R. Jayaraman, spokesman at JSW Steel, didn’t respond to e-mails seeking comment. Arti Luniya, a spokeswoman at Steel Authority, declined to comment before the contract prices are finalized.

China Shipyards Set to Spark Price War Among Rigmakers (Bloomberg)
China’s shipbuilders are set to spark a price war in the oil-rig market.
With orders for new ships plunging to an eight-year low in 2012, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) and its local rivals are foraying into the offshore business, lured by a market that will reach about $328 billion in 2017. The new entrants are lowering prices to grab contracts, hurting margins at Singapore-based Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM), the world’s two-biggest rig makers.
“It’s like moving from one bottomless pit to another,” said Park Moo Hyun, an analyst at E*Trade Securities Co. in Seoul. “Chinese shipyards are competitively trying to get into what they see as a lucrative business. But the consequence of that is they could end up distorting the whole market.”
China Rongsheng, the nation’s biggest yard outside state control, announced in October its first order to make a tender barge and rival Yangzijiang Shipbuilding Holdings Ltd. (YZJ) got its first rig contract last month. Shanghai-based China Rongsheng warned in December of posting a loss in 2012 after three straight years of profits.
Jinhai Heavy Industry Co., based in Zhejiang province, China, also secured its first offshore equipment contract last month.
“Whether or not the Chinese yards can earn money from the current orders is pretty much in the air,” said Vincent Fernando, an analyst at Religare Capital Markets in Singapore. “There’s a steep learning curve.”

Silver Market Recap Report (CME)
The silver market temporarily carved out an upside breakout on the charts, but surrendered that upward bias well ahead of mid session. Weakness in the Euro and gold prices might have undermined silver today but March silver did make some noted afternoon attempts to recover, with the early afternoon highs sitting as much as 23 cents an ounce above the morning lows. As in the gold market, the silver market just didn't seem to be overly interested in classical physical market fundamentals today.

Gold Market Recap Report (CME)
The gold market started out on a positive track but the trade wasn't able to hold those gains for long. While some players blame renewed Dollar strength for the slide in gold prices today, gold hasn't seemed to be tightly tied to the currency markets recently. In fact, gold prices sagged in the mid morning trade right in the face of a noted rally in US equities and that in turn seems to suggest that macro economic expectations aren't even providing support to gold prices. As suggested in the morning and mid day coverage, gold approached a critical longer term moving average and failed somewhat definitively and that could have emboldened the bear camp from a technical perspective.