Thursday, January 17, 2013

20130117 1707 Palm Oil Related News.

Malaysian palm oil futures down 2 pct on India duty hike FCPOc3 - RTRS
17-Jan-2013 17:05
SINGAPORE, Jan 17 (Reuters) - Malaysian palm oil futures tumbled 2 percent on Thursday after India, the world's biggest buyer of vegetable oils, imposed a duty of 2.5 percent on imports, a move that could hurt demand for the edible oil and leave stocks near record highs.
By 0900 GMT, the benchmark January contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had lost 2 percent to trade at 2,382 ringgit ($790) per tonne.
India's move is aimed at cutting imports and protecting domestic oilseeds growers. (Full Story) ($1=3.02 ringgit)

20130117 1643 Gobal Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a weaker start and Asian shares fell as investors avoided strong bets before results from major U.S. companies and a slew of economic data from China. U.S. stocks ended mixed on Thursday. (Reuters)

FOREX: The dollar edged higher against the yen after a media report quoted Japan's economics minister as saying that his recent comments on the yen had been misinterpreted. (Reuters)

FOREX-Euro rises to 9-1/2 month high versus sterling
LONDON, Jan 17 (Reuters) - The euro rose to a 9-1/2 month high against sterling as worries about the poor UK economic outlook contrasted with better sentiment towards the single currency.
The euro  rose 0.3 percent on the day to 83.33 pence, its highest level since early April. It hit stiff technical resistance at 83.33 pence, equivalent to 1.20 euros per pound  and a key level for British companies looking to hedge their foreign exchange exposure.

Factory, price data give hopeful signs for U.S. economy (Reuters)
The U.S. economy ended 2012 on a surprisingly sound note as factory output climbed and low inflation lifted consumers' purchasing power, signs the economy may be able to weather the higher tax bills that rang in the new year.

Sahara hostage siege turns Mali war global (Reuters)
Islamist fighters have opened an international front in Mali's civil war by taking dozens of Western hostages at a gas plant in the Algerian desert just as French troops launched an offensive against rebels in neighbouring Mali.

Rain needed by month's end for Argentina to hit corn target (Reuters)
Argentina needs rain by the end of the month to maximize corn yields and to realize forecasts that the global supplier will have a record harvest of 28 million tonnes, farmers and agronomists say.

OPEC sees weaker demand for its crude in 2013 (Reuters)
OPEC expects demand for its crude to be lower than expected in 2013 because of higher supply from rival producers, indicating inventories could build up substantially even after a cut in output by top exporter Saudi Arabia.

OIL: Brent futures weakened to stay below $110 a barrel as concerns about a weakening global economic outlook revived demand worries, but prices were supported from supply concerns after Islamist militants attacked an Algerian gas field. (Reuters)

China aluminium consumption to pick up but lag output -industry  (Reuters)
China's consumption of aluminium is set to pick up speed this year, though not by enough to keep up with production as a swelling surplus of the metal caps prices, industry sources and a leading analyst said.

BASE METAS: London copper inched up following a four-session losing streak, with robust U.S. factory data bolstering the outlook for demand, but caution ahead of Chinese growth data later this week tempered gains. (Reuters)

PRECIOUS METALS: Gold traded flat as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big on an economic recovery while easing concerns about immediate supply shortages from South Africa clipped platinum's seven-day rally. (Reuters)

METALS-Copper edges up on US factory data; caution on China
SINGAPORE, Jan 17 (Reuters) - London copper inched up following a four-session losing streak, with better-than-expected U.S. factory data bolstering the outlook for demand, but caution ahead of Chinese growth data later this week tempered gains.
"There seems to be a bit more confidence in the economic outlook which has clearly favoured some relief in metals prices," said analyst Stefan Graber of Credit Suisse in Singapore.

PRECIOUS-Gold flat, platinum snaps seven-day rally
SINGAPORE, Jan 17 (Reuters) - Gold traded steady on Thursday as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big, while easing concerns about immediate supply shortages from South Africa clipped platinum's seven-day rally.
"If growth continues to be really good, it could shift central banks' bias from easing to tightening, which would not be good for the precious metals complex," said Jeremy Fries, commodity strategist at Societe Generale in Hong Kong.

20130117 1612 Palm Oil Related News.

Indian edible oil futures extend gains on import duty hike - RTRS
17-Jan-2013 15:46
MUMBAI, Jan 17 (Reuters) - Soyoil and crude palm oil futures on Indian commodity exchanges extended gains on Thursday afternoon after the government decided to raise import duty on crude edible oils.
India has slapped a 2.5 percent import duty on crude edible oils, Information Minister Manish Tewari, a move taken to stem overseas purchases by the world's top vegetable oil buyer and protect its domestic oilseed growers. (Full Story)
Soyoil futures NSOG3 on the National Commodity and Derivatives Exchange extended gains up to 1 percent, while crude palm oil futures MCAG3 on Multi Commodity Exchange rose up to 2.6 percent after the announcement.

VEGOILS-Palm edges down, investors eye exports
Thu Jan 17, 2013 12:36am EST
* Profit-taking on positive market sentiment -analyst
    * Rangebound trade expected for rest of week -analyst
    * Palm oil to retrace to 2,403 ringgit -technicals

 (Updates prices, adds detail)
    By Anuradha Raghu
    KUALA LUMPUR, Jan 17 (Reuters) - Malaysian palm oil futures
edged down on Thursday as investors locked in profits after
steady gains in prices, although market optimism was capped by a
dismal export performance in the first half of January.
    The tropical oil posted gains this week after Malaysia, the
world's no.2 producer, said it would keep its crude palm oil
export tax at zero percent in February to spur shipments and cut
stockpiles which hit a record 2.63 million tonnes in December.
    Traders also took cues from hints of recovering demand from
major buyers as temperatures become warmer and more suitable for
palm oil, which solidifies in winter.
    "We are seeing some profit-taking today. For the rest of the
week the market is going to trade on a rangebound basis," said
Phillip Futures analyst Ker Chung Yang in Singapore.
    "We have positive sentiment from the zero-duty tax
structure, but at the same time we also have cargo surveyor data
showing us Malaysian exports falling by double digits."
    By the midday break, the benchmark April contract
on the Bursa Malaysia Derivatives Exchange had inched down 0.6
percent to 2,417 ringgit ($800) per tonne.
    Total traded volume stood at 16,603 lots of 25 tonnes each,
higher than the usual 12,500 lots as investors traded to lock in
    Technical analysis showed that Malaysian palm oil may end
its current rebound around resistance at 2,449 ringgit per
tonne, retracing to 2,403 ringgit, said Reuters market analyst
Wang Tao.
    Malaysia, which neighbours top producer and rival Indonesia,
has been struggling with record stocks since September due to
tepid global economic conditions and the euro zone crisis which
have stifled demand and caused prices to tumble 23 percent in
    While end-stocks are expected to slowly shrink in the first
quarter of the this year on the back of a seasonally slowing
production, sluggish exports could crimp any recovery in prices.
    "For December we have stocks at 2.63 million tonnes. My
assumption is that we are not going to see a 3 million tonne
stock level, but it all depends on how exports play out for the
rest of the month."
    Brent futures slipped on Thursday as signs of a weakening
global economic outlook revived demand worries, but the contract
stayed above $109 a barrel on supply concerns after Islamist
militants attacked an Algerian gas field.
    U.S. soyoil for March delivery fell 0.5 percent in
early Asian trade. The most active May soybean oil contract
 on the Dalian Commodity Exchange rose 0.4 percent.  

Palm Oil Drops as Lower Exports, Indian Tax May Bolster Reserves
2013-01-17 04:40:31.385 GMT

    Jan. 17 (Bloomberg) -- Palm oil declined for the first time
in three days on concerns that inventories in Malaysia may stay
near record levels as exports drop and India, the world’s
biggest buyer, plans to tax imports to protect local growers.
    The contract for delivery in April, which has the largest
volume, fell as much as 0.9 percent to 2,408 ringgit ($797) a
metric ton on the Malaysia Derivatives Exchange, and ended the
morning session at 2,417 ringgit in Kuala Lumpur.
    Palm oil slumped 23 percent last year, falling to a three-
year low of 2,217 ringgit on Dec. 13, as economic slowdowns in
Europe and China reduced demand. Stockpiles in Malaysia jumped
to an all-time high of 2.63 million tons in December, according
to the nation’s palm oil board. Exports tumbled 21 percent to
570,510 tons in the first 15 days of this month from the same
period in December, Intertek said Jan. 15.
    “Malaysian exports are not that impressive and showed
demand weakness,” Chung Yang Ker, an analyst at Phillip Futures
Pte Ltd. in Singapore, said by phone. Futures may trade in a
range of 2,400 ringgit and 2,480 ringgit a ton, he said.
    JPMorgan Chase & Co. cut its palm oil price forecast by 10
percent to 2,600 ringgit a ton for 2013-2014 from 2,900 a ton
earlier, analysts Simone Yeoh and Ying-Jian Chan said in a
report today, citing an overhang of inventories.
    India will consider imposing a 5 percent duty on crude palm
oil imports to shield domestic oilseed growers from cheap
supplies, according to two government officials. The cabinet may
also discuss raising the tariff on refined cooking oils to 10
percent from 7.5 percent today, they said yesterday.
    A duty on Indian imports would delay palm oil price
recovery further, Chye Wen Fei, an analyst at Hong Leong
Investment Bank in Kuala Lumpur, wrote in a report today.
    Refined palm oil for delivery in May fell 0.5 percent to
6,740 yuan ($1,083) a ton on the Dalian Commodity Exchange.
Soybean oil for September rose 0.4 percent to 8,698 yuan a ton.

Palm Oil Stockpiles in Indonesia Seen Rising as Exports Decline
2013-01-17 03:59:48.839 GMT

    Jan. 17 (Bloomberg) -- Palm oil inventories in Indonesia
will probably rise to almost 90 percent of capacity as exports
from the largest grower drop after Malaysia set its tariff at
zero and as China imposed more stringent rules on shipments.
    Stockpiles may gain to 3.5 million metric tons in January
from 3.25 million tons in December, according to the median of
estimates from two plantation companies, a refiner and an
analyst compiled by Bloomberg. Shipments may decline 0.6 percent
to 1.54 million tons, while production is seen stable at 2.5
million tons, the medians of estimates from the same four
respondents and a third plantation company showed.
    Rising inventories would increase pressure on Indonesia to
cut its export tax to compete with Malaysia. The second-largest
producer set the tariff on shipments at zero this month to drain
record reserves and the government has said the rate will be
unchanged in February. Indonesia has about 4 million tons of
storage capacity, according to Deputy Trade Minister Bayu
Krisnamurthi. It doesn’t publish official data on inventories.
    “If the government cuts the export tax, it will definitely
help boost shipments because we’re still in oversupply in the
short term,” Jeffrosenberg Tan, a Jakarta-based analyst at PT
Sinarmas Sekuritas, said yesterday.
    Attempts by Indonesian exporters to cut reserves are
hampered by the zero tariff in Malaysia, causing inventories to
stay high at about 3.5 million tons this month, Joko Supriyono,
a director at PT Astra Agro Lestari, said by phone from Jakarta
on Jan. 15. Supriyono is also secretary-general at the
Indonesian Palm Oil Association.

                          Zero Too

    Indonesia’s Trade Minister Gita Wirjawan said Jan. 11 that
the government is considering a cut in its export tax and
“ideally” the tariff should be zero too so it can compete with
Malaysia. The palm oil association, known as Gapki, has asked
the government to reduce the tax to avoid losing market share in
countries such as India that typically buy more crude oil. The
tax was set at 7.5 percent this month.
    Shipments from Indonesia in January would be the lowest
since October, when they reached 1.42 million tons, according to
Gapki figures. Exports of palm and lauric oils surged 39 percent
to 1.98 million tons in November from a month earlier, the
highest level since at least January 2008, which is the earliest
data available from the growers and refiners group.
    Palm oil futures have tumbled into a bear market in Kuala
Lumpur as inventories in Indonesia and Malaysia surged because
of low demand amid an economic slowdown in China and Europe.
Prices dropped 23 percent last year. The contract for April
delivery fell 0.8 percent today to 2,411 ringgit ($798) a ton.
    China’s tightening of checks on oils imports from Jan. 1
will also affect shipments as cargoes will need more time to
pass customs, said Susanto, head of marketing at Gapki. Imports
of palm by China, the biggest cooking oil user, may drop to
300,000 tons this month, less than half of those in December
because of the new rules, according to the median of estimates
from six traders and researchers in Bloomberg survey this week.

20130117 1134 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares consolidate, global growth worry weighs
TOKYO, Jan 17 (Reuters) - Asian shares consolidated as better-than-expected U.S. earnings lifted sentiment, but concerns over the global economic outlook and U.S. fiscal problem capped markets.
"Fourth-quarter earnings results for U.S. companies have been better than expected, lifting investor outlook. However, concerns over the fiscal slope continue to weigh, and the main board is expected to see choppy trading above the 1,950-mark,"  Kim Soon-young, an analyst at IBK Securities, referring to South Korean shares, which opened up 0.3 percent at 1,983.67.

Factory, price data give hopeful signs for U.S. economy
WASHINGTON, Jan 16 (Reuters) - The U.S. economy ended 2012 on a surprisingly sound note as factory output climbed and low inflation lifted consumers' purchasing power, signs the economy may be able to weather the higher tax bills that rang in the new year.
Manufacturing output climbed 0.8 percent in December, the Federal Reserve said on Wednesday, a day after retail sales data pointed to robust consumer spending last month.

FOREX-Euro still looking for inspiration, yen firm
SYDNEY, Jan 17 (Reuters) - The euro struggled to regain its momentum even after a top European central banker sounded relaxed about its recent run higher, while the yen hovered at one-week highs, still underpinned by a wave of short-covering.
"We continue to think any dips in EURUSD provide buying opportunities," said Vassili Serebriakov, strategist at BNP Paribas."In our view the euro also remains attractive on the crosses, and we are holding long EURCHF and EURSEK trade recommendations."

OIL-Oil rises on Algerian gas field attack, US stock draw
NEW YORK, Jan 16 (Reuters) - Oil prices rose on Wednesday after an Algerian gas field came under attack from Islamist militants and as data showed crude stocks fell in the United States last week.
"Given how successful Algeria has been at protecting its oil and gas installations over the decades, a raid like this was seen as fairly unlikely," said Sam Ciszuk, analyst with British-based consultancy KBC Energy Economics.

US crude stocks fall, fuel stocks rise-EIA
NEW YORK, Jan 16 (Reuters) - U.S. crude stocks fell last week as imports dropped and fuel stocks rose, according to weekly data from the U.S. Energy Information Administration on Wednesday.
Crude stocks fell by 951,000 barrels to 360.3 million barrels in the week to Jan. 11, the EIA said. Analysts polled by Reuters had expected stocks to rise by 2.3 million barrels. Crude oil imports fell by 312,000 barrels per day to 7.99 million bpd in the week.

OPEC sees weaker demand for its crude in 2013
LONDON, Jan 16 (Reuters) - OPEC expects demand for its crude to be lower than expected in 2013 because of higher supply from rival producers, indicating inventories could build up substantially even after a cut in output by top exporter Saudi Arabia.
The Organization of the Petroleum Exporting Countries' monthly report indicated world supply will comfortably outstrip demand in the first half of 2013, even after Riyadh cut output in December by almost 500,000 barrels per day to fend off a supply overhang and defend prices well above $100 a barrel. E

20130117 0944 Global Economy Related News.

Developing countries, led by China, will remain the main engines of global economic growth in 2013 as Europe and the US plod along, the  World Bank said, whilst lowering its forecast for global growth to 2.4%, from a Jun estimate of 3.0% as  the economic recovery remains "fragile and uncertain" despite lower financial risk. (AFP)

The US NAHB housing market index stalled at 47 in Jan, underperforming consensus of 48. (Bloomberg)

US consumer prices experienced no change in Dec on a mom basis (-0.3% in Nov), matching consensus. (Bloomberg)

US industrial production gained 0.3% mom in Dec (a revised 1.0% in Nov), exceeding consensus of 0.2%, whilst the  capacity utilisation rate stood at 78.8% (a revised 78.7% in Nov), again higher than consensus of 78.5%. The manufacturing index rose 0.8% mom (a revised 1.3% in Nov), doubling consensus of 0.4%. (Bloomberg)

The US MBA mortgage applications index  rose 13.0% wow in the 11 Jan week (10.0% in the earlier week), whilst the  refinance index gained 15.0% wow (12.0% in the prior week). (Bloomberg)

The US economy has picked up pace since Nov, with Christmas sales modestly stronger and New York and New Jersey rebounding from Hurricane Sandy, the Federal Reserve's Beige Book showed. However, manufacturing was still sluggish, hiring and inflation still subdued and the stifling effect of the fiscal cliff fight still lingering. (AFP)

New car registrations in the European Union fell by 8.2% from their 2011 level to 12.05m units last year, the lowest point in 17 years. (AFP)

Eurozone consumer prices held steady at 2.2% yoy in Dec, unchanged from an initial estimate and in line with expectations. The IMF will release €3.2bn in aid to Greece that had been frozen for months amid fears about the country's ability to surmount its debt crisis. (AFP)

Average residential land prices in China rose 2.26% yoy to reach Rmb4,620 (US$733.33) per square meter in 2012. The growth rate was slower than the 3.34% increase in commercial land prices and the 2.7% rise in industrial land prices in 2012. (Xinhua)

The number of newly-built housing units sold in 54 major Chinese cities soared 103% yoy in the first 13 days of 2013, reaching 104,800 units. (Xinhua)

China's growth is expected to have re-accelerated to near 8% in the fourth quarter of last year, but there are some troubling inconsistencies in the economy, according to the China Beige Book. Despite easing credit conditions just 32% of companies surveyed borrowed money, falling from 34% in the third quarter, and below first-half figures. (Reuters)

China's foreign direct investment inflows fell last year for the first time since the global financial crisis, slipping 4% to US$111.7bn in 2012 (US$116bn in 2011). In Dec FDI fell 4.5% yoy (-5.4% in Nov). (Reuters)

Japan’s machinery orders rose 3.9% mom in Nov (2.6% in Oct), the second straight rise. This far surpasses the consensus estimate of 0.3%. (Bloomberg)

The  Bank of Japan downgraded its  assessment of local economies in eight of its nine regions in Jan, , compared with the previous report released in Oct, fueling expectations the central bank will take fresh easing action at next week's policy-setting meeting. (WSJ)

The Energy and Mineral Resources Ministry is still in full control of Indonesia’s mining industry despite a Supreme Court ruling that stripped the ministry of power because the law is under review, a government official said. The official said the government is currently unable revise the regulation due to an ongoing review of the 2009 Law on Mineral Resources by the Constitutional Court. The law states that when a law is under review, no supporting regulations can be revised.  (Jakarta Globe)

Indonesia has downgraded its forecast for the rupiah this year, with a floor of Rp9,700/US$, after budgeting for a rupiah at Rp9,300/US$ earlier. (Jakarta Globe)

Thailand’s Ministry of Commerce ordered the Department of Internal Trade to ask manufacturers to maintain their current product prices for at least three more months. (Bangkok Post)

20130117 0944 Malaysia Corporate Related News.

IJM Corp's entry into Scomi Group has enabled Scomi to obtain a RM118m bridging loan which was used as an interim measure to settle part of a debt obligation of RM200m. Scomi had RM200m MTN facility that had been extended several times and finally fell due on Oct 12, 2012. In Sep 12, it repaid RM57.9m. Proceeds from the share placement to IJM Corp and the amount from the bridging loan were utilised to fully settle the debt obligation due on Oct 12 last year. Scomi is calling for an EGM on Jan 31, seeking shareholder support for the proposed convertible bond issue. The proceeds from the bonds will be used to settle the remaining RM61m due from the bridging loan and a sum of RM46m to be used for working capital. (Financial Daily)

SP Setia has introduced a four-year programme as an incentive for its staff and management personnel to stay with the company. The proposed "long-term incentive programme" (LTIP), stretches beyond a typical employee share option scheme and includes a share grant plan that will reward staff with shares for zero consideration. This is in view of the anticipated departure of company founder and CEO Tan Sri Liew Kee Sin two years from now. Speculation had it that some within the management rank may start a new venture with Liew. And for those who may not join Liew, there needs to be fresh incentives to discourage them from joining other property firms. The LTIP will involve the issuance of new shares of up to 15% of the company's paid-up capital. It will be tabled for approval by SP Setia shareholders in a coming meeting. The LTIP includes an employee share grant plan (ESGP) that will see selected employees and executive directors being awarded shares for
zero consideration. There are two plans under the ESGP: the restricted share plan and the performance share plan. (Financial Daily)

Proton Holdings Bhd has been mandated to raise its annual production to 500,000 units in five years by its parent DRB-Hicom Bhd. "Moving forward, it is going to be challenging, and it will be difficult. Competition is going to get harder and tougher, cost will be higher and this also applies to Proton," said DRB-Hicom managing director Datuk Seri Mohd Khamil Jamil. He added the company was looking to build that volume from the export market, and deemed it fundamental to the survival and growth of Proton. Currently, Proton manufactures about 150,000 units of cars annually. (StarBiz)

Bank Muamalat Malaysia Bhd is awaiting approval on a collaboration deal that will allow it to offer Islamic banking services through post office counters by the third quarter of the year. Bank Muamalat chief executive officer Datuk Mohd Redza Shah Abdul Wahid said the deal with sister company  Pos Malaysia Bhd, which is awaiting regulatory approvals, would provide the bank a substantially wider reach through more than 1,000 post office service counters nationwide. Under the same alliance, Bank Muamalat will also offer Pos Malaysia services through its counters. (Malaysian Reserve)

DiGi aims to grow its online business by 30% this year, mainly driven by the increasing trend of online shopping among consumers. Its online store, DiGi Store Online, allows customers to buy new mobile devices for their existing plans, sign up to a new plan and reload prepaid airtime, among others. The portal also allows non-DiGi customers to buy devices by signing up to a plan -via a new DiGi number or porting from their existing number. (BT)

Salcon secured a RM110m contract from the Energy, Green Technology and Water Ministry's sewerage services department to build the sewerage pipes network in Klang. The scope of works covers sewage rationalisation within the South Klang sub-catchment located in Klang. Contract duration is 48 months, starting from Jan 2013 to Jan 2017. (Starbiz)

Westports Malaysia Sdn Bhd, which is reportedly eyeing an initial public offering (IPO) worth US$500m this year, said it has yet to make any firm plans regarding the matter. While admitting that the terminal operator is considering an IPO, its CEO Ruben Emir Gnanalingam said it has not decided when or where to go public. He said Westports Malaysia is looking at various fund raising options, including an IPO. "Yes, we may (consider an IPO), but we don't know when. We are still discussing the matter (with the bankers)," Ruben said. (Sun)

KNM Group Bhd has revised the expected date for the listing of subsidiary Borsig on the Singapore Stock Exchange from the first quarter to third quarter of the year. Chief financial officer  Richard Voon said the company has not completed the paperwork to list Borsig earlier. "Our plans to have the listing early part of this year was not tenable as we have to have the audited accounts and other documentations ready before listing and this is more likely that we can make it happen in the later part of the year," he said. (Malaysian Reserve)

DRB-Hicom: MYR11b projects will make it a major player in property market. DRB-Hicom Bhd's planned MYR11b property projects over the next 36 months will catapult the conglomerate to be among the larger players in the property market. "The land that we have in DRB-Hicom spans from Rebak Island in Kedah right down to Johor and sites in between. We still have about 800 acres more to be developed in Tanjung Malim, which is part of the Proton plant, and also 350 acres to be developed in Rebak Island, Kedah," said Datuk Mohamed Razeek Md Hussain Maricar, chief operating officer of services and property. (Source: The Star)

Oil & Gas: PETRONAS to launch contract bids for two fields next month. The next round of risk-service contract (RSC) bids by PETRONAS will be launched in February, and the fields of Tembikai and Chenang will once again be up for grabs, said sources. One to two other new marginal oilfields would likely be included to make the RSC offering more attractive. The source added that PETRONAS has a prequalified bid list for the fields of Tembikai and Chenang, and the players include Australia-based Hydra Energy Holdings Pty Ltd, Tap Oil Ltd and AWE Ltd. Hydra Energy's local partner is said to be Daya Materials Bhd. (Source: The Star)

Tradewinds: Buys over planter. Tradewinds Plantation Bhd has taken full control of Northern Integrated Agriculture Sdn Bhd with the purchase of the remaining 30% stake for MYR24m. (Source: Bursa Malaysia)

20130117 0937 Global Markets Related News.

Asia FX (CME/
The appetite for risk was essentially neutral on Wednesday, when that Fed's Beige Book confirmed that fiscal uncertainty was having an impact on hiring and the economy. The statement hardly uncovered anything new, but sanctioned the status quo; no news is good news. All foreign currencies but the pound and Canadian dollar made little progress. The latter fell. The US stock markets closed mixed. The gold/oil spread closed down. 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 long euro, yen, and the commodity currencies, and short pound and franc. Good luck!

US: The CPI was unchanged in December after declining 0.3% in November. The core CPI increased 0.1% in December, the same as in November.
US: The total net TIC flows rose to $27.8 billion in November from -$56.7 billion in October and the net long-term TIC flows jumped to $52.3 billion from $1.3 billion.
US: Industrial production rose 0.3% in December, less than 1% in November, while capacity utilization improved marginally to 78.8% in December from 78.7% in November.
US: The NAHB/Wells Fargo Housing Market Index was unchanged at 47 in January.

Today's economic calendar
Japan: Tertiary Industry Index for November
Australia: Consumer inflation expectation for January
Australia: Unemployment rate for December

Asian Stocks Rebound as Yen Snaps Two-Day Gain; Aussie Falls (Bloomberg)
Asian stocks rebounded from the biggest drop in two months as the yen snapped a two-day gain against the dollar. Australia’s dollar slid after a report showed employers unexpectedly cut jobs.
The MSCI Asia Pacific Index (MXAP) of regional shares rose 0.4 percent as of 9:51 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed. The yen weakened 0.3 percent to 88.60 per dollar after gaining 1.2 percent over the previous two days. The so-called Aussie slid 0.2 percent to $1.0550.
Asia’s stocks benchmark has risen more than 10 percent in the last two months as a slide in the yen boosted Japanese shares amid speculation a new government would add economic stimulus. Jobs in Australia fell by 5,500 in December, the statistics bureau said today. China’s economic growth probably accelerated for the first time in eight quarters, data from the National Bureau of Statistics are forecast to show tomorrow.
“There’s justifiable optimism out there,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “There’s tremendous upside in the Japanese share market as we’re seeing a significant shift in Japanese policy.”
The Japanese currency resumed declines amid bets Bank of Japan Governor Masaaki Shirakawa and his fellow board members will raise a 1 percent inflation goal at a meeting on Jan. 21-22. Prime Minister Shinzo Abe has called for the target’s doubling.
China’s National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. That’s up from a three- year low of 7.4 percent in the previous period.

Japanese Stocks Swing From Gains, Losses on Yen, GS Yuasa (Bloomberg)
Jan. 17 (Bloomberg) -- Japanese stocks swung between gains and losses as the yen’s decline lifted the outlook for exporters while GS Yuasa Corp. (6674) led losses on the Nikkei 225 (NKY) Stock Average.
Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 1.8 percent as the yen dropped against all its major counterparts. GS Yuasa, a supplier of batteries to Boeing Corp., dropped 4.4 percent after U.S. regulators grounded 787 Dreamliner aircraft after an emergency landing in Japan. Sharp Corp. (6753) led gains on the Nikkei 225 on a report it may sell a television factory in China to Lenovo Group Ltd.
The Nikkei 225 gained 0.6 percent to 10,665.41 as of 9:57 a.m. in Tokyo after falling 2.6 percent yesterday, the biggest drop since May 18. The broader Topix Index advanced 0.7 percent to 894.26.
“Stocks are moving in a lockstep with the yen as the market’s theme is monetary easing and inflation bets add to downward pressure on the yen,” said Ichiro Yamada, general manager of equities who helps manages about 300 billion yen ($3.4 billion) at Fukoku Mutual Life Insurance. “Common sense tells you that the yen’s drop up to about 100 against the dollar won’t have any negative impact on the Japanese economy.”

Most U.S. Stocks Fall as World Bank Offsets Apple Rally (Bloomberg)
Most U.S. stocks fell, following yesterday’s gain, as a cut in the World Bank’s growth forecasts offset a rally in Apple Inc. as investors watched earnings.
Boeing Co. (BA) slumped 3.4 percent as All Nippon Airways Co. and Japan Airlines Co., the world’s largest users of the 787 jets, grounded their entire fleet of Dreamliners. Custody banks Bank of New York Mellon Corp. and Northern Trust Corp. (NTRS) dropped at least 2.7 percent. Apple, which slid below $500 a share yesterday for the first time in 11 months, rallied 4.2 percent to halt a three-day decline. Goldman Sachs Group Inc. added 4.1 percent after the bank’s profit almost tripled.
Three stocks retreated for every two rising on U.S. exchanges at 4 p.m. New York time. The Standard & Poor’s 500 Index advanced less than 0.1 percent to 1,472.63. The Dow Jones Industrial Average declined 23.66 points, or 0.2 percent, to 13,511.23. About 5.6 billion shares changed hands on U.S. exchanges, or 8.6 percent below the three-month average.
“The cuts in growth forecasts are reminders that there’s still work to be done,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp. His firm has $1.92 trillion in client assets. “In the U.S., it’s early to talk about the earnings season, but so far we’re relatively pleased with what we’ve seen. We’ve had a good start to the year in stocks. There’s very little doubt that there’s quite a bit of money on the sidelines that could provide a nice boost higher.”

European Stocks Are Little Changed; TUI Travel Gains (Bloomberg)
European stocks were little changed, erasing an earlier retreat for the region’s benchmark Stoxx Europe 600 Index, as U.S. industrial production climbed and Goldman Sachs Group Inc.’s earnings topped estimates.
TUI Travel Plc (TT/) gained 3.9 percent after Europe’s largest tour operator said it received an approach from its German majority owner. Anglo American Plc (AAL) dropped 3.1 percent as the African National Congress said South Africa’s government should withdraw the company’s platinum licenses. Societe Generale SA (GLE) lost 2.8 percent as CA Cheuvreux downgraded the French lender.
The Stoxx 600 rose less than 0.1 percent to 286.03 at the close of trading, after earlier falling as much as 0.4 percent. The gauge has advanced 2.3 percent since the start of the year after U.S. lawmakers agreed on a budget, avoiding tax increases and spending cuts.
“Things have improved, compared to last year the world looks better,” Sebastian Paris-Horvitz, chief market strategist at HSBC Private Bank, told Francine Lacqua in an interview on Bloomberg Television today. “I do believe in the rotation towards equities, it looks better value for the future and is the reason we have been advocating the move toward riskier assets.”
The volume of shares changing hands in companies listed on Europe’s Stoxx 600 (SXXP) was 20 percent higher than the 30-day average today, according to data compiled by Bloomberg.

Emerging Stocks at One-Week Low on Slower Growth Forecast (Bloomberg)
Emerging-market stocks fell to a one-week low and currencies weakened after the World Bank and Germany cut economic growth forecasts and India’s central bank chief tempered expectations for monetary stimulus.
Tata Motors Ltd. (TTMT) sank by the most since Oct. 30 after sales of its Jaguar and Land Rover units dropped below estimates. OAO Gazprom and OAO Novatek, Russian natural-gas producers, dropped the most in at least a month, while Brazilian port operator LLX Logistica SA tumbled. Anglo American Platinum Ltd. (AMS), South Africa’s largest producer of the metal, slumped as employees at three of its mines refused to go to work. The Hungarian forint and Brazilian real led currency losses among emerging markets.
The MSCI Emerging Markets Index (MXEF) lost 0.2 percent to 1,071.21 in New York, the lowest close in eight days. The World Bank projected the global economy will expand 2.4 percent this year, down from a June forecast of 3 percent, and Germany cut its growth outlook to 0.4 percent from 1 percent. While India’s inflation rate remains “quite high,” the scope for monetary and fiscal stimulus is limited, Reserve Bank of India Governor Duvvuri Subbarao said yesterday.
“Risk assets in emerging markets are more vulnerable to the swing in the global economy,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “Slower growth will hurt profitability in emerging-nation companies more than those in developed countries given the proportion of exports in their economies.”

Yen Snaps Two-Day Gain Versus Dollar, Euro on BOJ Stimulus Bets (Bloomberg)
The yen snapped a two-day gain against the dollar and euro as investors weighed the likelihood of new monetary easing measures by the Bank of Japan (8301) next week.
Demand for the Japanese currency was limited after a government report today showed a measure of demand for services declined, adding to the case for more central bank stimulus. Australia’s dollar slid versus most major counterparts after data showed the nation lost jobs in December.
“There is no doubt that the BOJ will act at the next meeting,” said Yuki Sakasai, a foreign-exchange strategist in New York at Barclays Plc. “Otherwise, the yen wouldn’t stay at the 88 level against the dollar.”
The yen fell 0.2 percent to 88.58 per dollar at 9:32 a.m. in Tokyo, after gaining 1.2 percent over the previous two days. It sank to 89.67 on Jan. 14, the lowest since June 2010. The yen dropped 0.2 percent to 117.67 per euro, after rising 0.6 percent yesterday. The euro was little changed at $1.3288.
The so-called Aussie slid 0.3 percent to $1.0538. It touched $1.0599 on Jan. 10, the strongest since Sept. 14.
BOJ Governor Masaaki Shirakawa, who’s due to step down in April, and his fellow board members will review the central bank’s inflation goal at their Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”
Asian Development Bank President Haruhiko Kuroda is the “No. 1 candidate” for governor, according to a research note today by Masaaki Kanno, the chief economist in Tokyo at JPMorgan Securities Japan Co. Kuroda advocated unlimited monetary easing in a seminar in Tokyo on Jan. 11.
Japan’s tertiary index fell 0.3 percent in November from a month earlier, when it decreased 0.1 percent, the Ministry of Economy, Trade and Industry said today.

Aussie Drops Versus Peers as Payrolls Unexpectedly Fell (Bloomberg)
Australia’s dollar slid versus most of its 16 major counterparts after a report today showed employers in the country unexpectedly cut payrolls last month, adding to concern the domestic economy is slowing.
The so-called Aussie weakened versus the dollar after the jobless rate rose. New Zealand’s currency, known as the kiwi, remained higher against the dollar after milk powder prices increased to a two-month high at an auction.
“Domestically, the economy does not look that strong,” said Thomas Harr, head of Asia local markets strategy at Standard Chartered Plc in Singapore. “In the very, very short term, there’s a risk to the downside for the Aussie.”
The Australian dollar lost 0.3 percent to $1.0546 at 11:43 a.m. in Sydney. It bought 93.42 yen after falling 1.2 percent in the previous two days to close at 93.44 in New York. New Zealand’s currency added 0.1 percent to 84.19 U.S. cents after rising 0.2 percent yesterday. It gained 0.4 percent to 74.59 yen.
Ten-year yields in Australia dropped to as low as 3.32 percent, the least since Jan. 2. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was unchanged at 2.79 percent.
Australia’s statistics bureau said the number of people employed in the country fell in December by 5,500 after a revised 17,100 gain in the previous month. The jobless rate rose to 5.4 percent from 5.3 percent in November.
In New Zealand, whole-milk powder for March delivery rose 2.4 percent, according to a trade-weighted index on Fonterra Cooperative Group Ltd. (FCG)’s GlobalDairyTrade website. The near-term contract for New Zealand product rose to $3,261 a metric ton, the highest price since Nov. 20. Fonterra accounts for about 40 percent of the global trade in dairy products.

Treasuries Most Expensive in Two Weeks on Debt Concern (Bloomberg)
Treasuries were the most expensive in two weeks on speculation the U.S. debt-ceiling debate will curb economic growth, driving demand for the safest assets.
The 10-year term premium, a model created by economists at the Federal Reserve that includes expectations for interest rates, growth and inflation, was minus 0.77 percent yesterday in New York, the least since Jan. 1. A negative reading indicates investors are willing to accept yields below what’s considered fair value. Housing starts rose to a four-year high, a report today will show, based on a Bloomberg News survey of economists.
“Yields can fall,” said Tomohisa Fujiki, an interest-rate strategist in Tokyo at BNP Paribas SA, whose New York unit is one of the 21 primary dealers that are obligated to bid at U.S. debt sales. “The uncertainty on the debt-ceiling talks will support demand for Treasuries in coming months.”
The 10-year rate was little changed at 1.82 percent as of 9:53 a.m. in Tokyo, according to Bloomberg Bond Trader data. The 1.625 percent security due November 2022 traded at 98 1/4. The yield will fall to 1.75 percent within a month, Fujiki said.
Housing starts probably rose 3.36 percent to an 890,000 annual rate in December from November, reaching the fastest pace since July 2008, based on responses from economists ahead of the Commerce Department report at 8:30 a.m. New York time today.
With as little as a month until the U.S. runs out of money to pay its bills, President Barack Obama and Republicans in Congress are at odds on raising the debt ceiling.
The U.S. government makes about 80 million payments each month, including for Social Security, veterans’ benefits, defense contractors, law enforcement and income tax refunds.
The Treasury uses emergency measures to delay a default as the total value of debt nears the ceiling. Exhausting the extraordinary steps without raising the limit would require the Treasury to fund the government with cash on hand, which wouldn’t be adequate “for any meaningful length of time,” according to Treasury Secretary Timothy F. Geithner.
Congress has increased or revised the limit 79 times.

U.S. Industrial Production Rises 0.3% on Equipment Demand (Bloomberg)
Production at U.S. factories climbed more than forecast in December and the cost of living was little changed, showing the economy gained momentum entering 2013 while inflation remained at bay.
Manufacturing output advanced 0.8 percent after jumping 1.3 percent in November, the strongest back-to-back reading in almost a year, Federal Reserve figures showed today. The Labor Department said its consumer-price index was unchanged last month, capping the third-smallest annual gain in a decade.
Rebounds in housing, the auto industry and business investment combined with stabilization in global growth will probably support gains in manufacturing into this year. The lack of inflation and an improving job market are also helping boost Americans’ buying power, easing the risk that household spending will slump as the budget battles in Washington shake confidence.
“We’re likely to start this year on much firmer footing than we did last year,” said Millan Mulraine, an economist at TD Securities LLC in New York. “We’re moving in a positive direction.”
The Fed said today in its Beige Book business survey that the economy picked up across much of the nation last month, boosted by sales of cars and homes.
“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the central bank said in its survey, which is based on reports from the Fed’s district banks.

Fed Sees Economy Picking Up Across U.S. in Beige Book Survey (Bloomberg)
The U.S. economy picked up across much of the country last month, boosted by auto and home sales, even as the outlook for unemployment showed few signs of improvement, the Federal Reserve said.
“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the central bank said today in its Beige Book business survey, which is based on reports from the Fed’s district banks.
The report, prepared for discussion at the Federal Open Market Committee’s Jan. 29-30 meeting, may strengthen the resolve of policy makers who want to press on with the Fed’s $85 billion in monthly bond purchases until the labor market improves substantially.
“There’s still plenty of potential headwinds” for the economy, said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, New Jersey. Policy makers “have not seen the recovery in labor markets that they had hoped for yet.”
The New York and Philadelphia districts “rebounded from the immediate impact of Hurricane Sandy,” while Boston, Richmond and Atlanta reported that growth increased slightly in their districts. Still, the report said that “labor market conditions remained mostly unchanged in all districts.”
The Beige Book provides anecdotal evidence on the health of the economy. In the previous report on Nov. 28, the Fed said the economy expanded at a “measured pace” and “consumer spending grew at a moderate pace in most districts, while manufacturing weakened.”

Foreign Demand for U.S. Assets Rises on Global Slowdown (Bloomberg)
International purchases of U.S. stocks, bonds and other financial assets were more than twice as much as forecast in November as investors sought shelter from a global economic slowdown.
Net buying of long-term financial assets totaled $52.3 billion during the month, swinging from net sales of $1 billion in October, the Treasury Department said today in Washington. Economists surveyed by Bloomberg projected net buying of $25 billion of long-term assets, according to the median estimate.
“The global economic slowdown and renewed uncertainty in the U.S. about the impact of the fiscal cliff following the general election motivated the flight to safety,” Millan Mulraine, senior U.S. strategist for TD Securities Inc. in New York, said after the report was released. “With intensification of these concerns in December we are likely to see further increase in flows.”
President Barack Obama vowed he won’t negotiate over raising the government’s debt ceiling even as he offered to deal on a separate track with the deficit reduction demanded by Republicans. Senate Republican leader Mitch McConnell of Kentucky said the debt-ceiling debate is the “perfect time” to address spending, while House Speaker John Boehner, an Ohio Republican, brushed off Obama’s insistence on keeping the two separate.

China Set to Exit Slowdown by Boosting Infrastructure (Bloomberg)
China’s economy is set to exit a seven-quarter slowdown as the government rolls out infrastructure projects and limited inflation lets officials hold off from tightening monetary policy.
The National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of 53 economists surveyed by Bloomberg News. That’s up from a three-year low of 7.4 percent in the previous period.
The risk is that the rebound may fade in the second half as the boost from railways and road projects ebbs and the government grapples with rising inflation and the expansion of shadow banking. While the nation is set to reverse its slide in economic growth, the pace remains short of the 10 percent average of the past two decades as higher wages and weakness in global demand limit export gains.
“The current recovery is being driven mostly by monetary and fiscal policy easing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Once the momentum of policy easing slows, growth may trend down again.”
Tomorrow’s report will also include the latest monthly data. Factory output probably rose 10.2 percent in December from a year earlier, up from 10.1 percent in November, while retail sales advanced 15.1 percent after a 14.9 percent gain the prior month, according to median analyst estimates.

Japan Opposition Party Won’t Back BOJ Officials for Governor (Bloomberg)
Japanese Prime Minister Shinzo Abe must not pick a Bank of Japan (8301) bureaucrat to be the next central bank governor and should consider former economy minister Heizo Takenaka for the post, an opposition party leader said.
Yoshimi Watanabe said his Your Party won’t support a BOJ insider to succeed Masaaki Shirakawa when his term ends in April or for two deputy governors who will step down in March. Abe has said he is seeking candidates who support his 2 percent inflation target and will enact “bold” monetary easing to overcome more than a decade of falling prices.
“If someone is chosen from within the BOJ, there will be no change in thinking,” Watanabe, 60, said yesterday in an interview. “It’s in the BOJ’s DNA to combat inflation but not deflation, so to change that we need to pick someone from outside.”
Abe needs votes from smaller opposition groups to win backing for his central bank chief in the upper house of parliament, where his Liberal Democratic Party and coalition ally New Komeito hold 102 of 242 seats. Watanabe’s party has 11 lawmakers in the chamber.
Chief Cabinet Secretary Yoshihide Suga yesterday said the ruling coalition “must show consideration to opposition parties” in regards to BOJ appointments.
“We can’t do this without their cooperation,” he told reporters in Tokyo. “It’s a very delicate issue.”
The next governor should be an economics PhD with fluent English and management skills, and while Takenaka “isn’t our only recommendation,” the former Cabinet minister would be a good fit, Watanabe said.

Abe Stimulus Risks Fizzling as Citigroup Sees Japan Job Gap (Bloomberg)
Japan’s 10.3 trillion yen ($117 billion) fiscal stimulus may add less than a quarter of the jobs the government predicts, casting doubt on Prime Minister Shinzo Abe engineering a sustained recovery.
Even with more central bank easing, most of the impact of Abe’s spending won’t spread far beyond public works projects, Citigroup Inc. (C) says. It estimates that 100,000 jobs will be created, compared with the government’s figure of 600,000. BNP Paribas SA (BNP) says 150,000.
Abe is returning to a strategy that failed to end Japan’s stagnation over the last two decades even as the nation’s debt burden nearly tripled and extra stimulus spending totaled 80 trillion yen, according to BNP Paribas. Another failure may deepen voter apathy in a political system that has produced seven prime ministers in six years, while adding to the risk of a surge in bond yields.
“Fiscal stimulus is like morphine, because if you want to maintain the same level of effect you have to keep upping the dose,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “Japan has failed to achieve a sustainable economic expansion, and the country’s record proves the strategy is wrong.”
The yen snapped a two-day gain against the dollar and euro as investors weighed the likelihood of more easing by the Bank of Japan (8301) next week. The currency was at 88.68 per dollar as of 9:20 a.m. The Nikkei 225 Stock Average (NKY) rose 0.5 percent after sliding yesterday by the most in eight months.

Russia May Overtake Germany as No. 5 Economy by 2020: PWC (Bloomberg)
Russian gross domestic product may overtake Germany’s by 2020, making the Russian economy the world’s fifth largest, PricewaterhouseCoopers LLP said in a report today.
“Russia has strong potential in the short to medium term,” PWC’s chief economist, John Hawksworth, said in a phone interview from London today. “It has strength in natural- resource sectors, which are much in demand.”
Russia, the world’s biggest energy exporter, will face declining growth in about a decade because of an aging population and shrinking workforce, Hawksworth said. By 2050, Russia’s economy is projected to fall back to sixth place in purchasing power parity terms, behind Japan, Brazil, India, the U.S. and China, PWC said in the report on its website.

Russia Says World Is Nearing Currency War as Europe Joins (Bloomberg)
The world is on the brink of a fresh “currency war,” Russia warned, as European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.
“Japan is weakening the yen and other countries may follow,” Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said at a conference today in Moscow.
The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a “dangerously high” euro and officials in Norway and Sweden expressed exchange-rate concern.
The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.
Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.

Brazil Holds Rate Steady as Inflation Rises Amid Slow Growth (Bloomberg)
Brazil’s central bank kept its benchmark interest rate at a record low for the second straight meeting, as inflation accelerates amid faltering growth.
The central bank, which ended the steepest rate-cutting cycle among Group of 20 nations in November, held the Selic at 7.25 percent today, as forecast by all 56 economists surveyed by Bloomberg.
The bank, in a statement, acknowledged that the balance of risks for inflation worsened in the short term at the same time that a domestic recovery was “less intense” than expected. Given those concerns, and continued “complexity” in the global economy, policy makers reiterated their view that the best strategy is to keep rates stable for a “prolonged period.”
Latin America’s biggest economy is struggling to emerge from two years of slowing growth as the government cuts taxes, lowers lending rates and boosts investment. At the same time that growth trails all major emerging markets, inflation in December accelerated faster than economists’ estimates for the sixth straight month and ended 2012 at 5.84 percent, higher than the bank’s 4.5 percent target for the third straight year.
“Brazil is in a horrible place where you have very low growth and very high inflation,” Gustavo Rangel, chief Latin America economist for ING Bank NV in London, said in a phone interview before today’s decision. “Activity data has been disappointing, but room for rate cuts doesn’t exist.”
After the government last week reported that consumer prices in December rose 0.79 percent, the fastest since March 2011, central bank President Alexandre Tombini said that inflation has proved “resilient” in the short term due to agricultural price shocks.

IMF Approves 3.2 Billion-Euro Disbursement for Greece (Bloomberg)
The International Monetary Fund agreed to disburse 3.2 billion euros ($4.3 billion) to Greece after the country made new budget cuts, received more favorable aid terms from European nations and conducted a bond buyback.
The IMF board made the decision during a meeting today, it said in a press statement. The funds are part of a joint 130 billion-euro package with European nations, which unblocked their share last month.
“The situation on the Greek front is improving,” Thomas Costerg, an economist at Standard Chartered in London, said in an e-mail. “This said, the situation remains fragile, and despite the buyback Greece’s huge debt is still an issue.”
The loan had been frozen since June as a recession and domestic opposition to the program drove Greece away from measures agreed to just three months earlier.
While European policy makers now turn their attention to reviving growth in the 17-country monetary zone and to bailing out Cyprus, Greece may yet again creep back on their agenda. The government has to deliver on its commitments to earn each future payout and European finance ministers committed to “additional measures” if the country’s debt reduction veers off track.

European Dividends Tumble to Four-Year Low as CEOs Hoard (Bloomberg)
Companies in the euro area are poised to cut dividends to the lowest level in four years as chief executive officers stockpile cash to weather the region’s sovereign-debt crisis.
Payouts to shareholders in the Euro Stoxx 50 Index (SX5E) will fall by 3.3 percent to a combined 115.48 euros a share this year, according to more than 500 analyst estimates compiled by Bloomberg. Reducing them by that much would cut the dividend yield to 4.3 percent from 6.3 percent in September 2011, even after cash on balance sheets climbed to the highest since 2008, the data show.
The forecasts suggest more companies will follow Royal KPN NV and Enel SpA (ENEL) in reducing payouts as the debt crisis pushes unemployment in Spain and Greece to more than 25 percent and China’s economy cools. Analysts are cutting estimates amid a rally that has sent the Euro Stoxx 50 to a 17-month high as central-bank measures hold down bond yields.
“Within Europe, it’s excess cash on balance sheets” that attracts investors, said Bank of America Corp.’s John Bilton, European investment strategist at Bank of America’s Merrill Lynch unit in London. “The current levels of dividend yield are not sustainable.”
Holdings of cash and equivalents at companies in the Euro Stoxx 50 climbed 9.3 percent to a combined 1,834.44 euros a share in 2012, according to data compiled by Bloomberg. While the gauge’s estimated dividend yield fell over the past year, projections for the Standard & Poor’s 500 Index increased to 2.3 percent from 2.2 percent, Bloomberg data show.

20130117 0936 Global Commodities Related News.

Drought Stretching to Second Year Boosting Risk for U.S. Crops (Bloomberg)
The risk of drought damaging U.S. corn and soybean crops for a second year is increasing as forecasters predict persistently dry weather in the Midwest and Great Plains through April, the start of the planting season.
The U.S. Climate Prediction Center probably will say tomorrow that the growing region will remain drier than normal over the next three months, according to four of five forecasters surveyed by Bloomberg. Almost 42 percent of the contiguous U.S. was in severe to exceptional drought as of Jan. 8, government data show. That’s more than double for the date a year earlier, before the worst drought since the 1930s cut combined output of corn and soybeans by the most since 1996.
“The drought will persist through May with warm temperatures and below-normal rain in the western half of the Midwest,” Joel Widenor, the director of agricultural services for Bethesda, Maryland-based Commodity Weather Group LLC, said in a telephone interview yesterday. “About 50 percent of the Midwest will remain in drought condition.”
Corn and soybean prices surged to records last year as output fell, while dry fields across the Great Plains left winter-wheat conditions in November at their worst since at least 1985, when the U.S. Department of Agriculture began collecting the data. Wheat futures jumped to a four-year high last year, and farmers have already collected a record $11.581 billion on insurance claims for damage to all crops in 2012.

Wheat Market Recap Report (CME)
March Wheat finished up 2 1/4 at 785, 6 off the high and 8 up from the low. May Wheat closed up 2 3/4 at 793 3/4. This was 7 3/4 up from the low and 5 1/4 off the high.
KC and Chicago wheat traded lower early in the session but managed to close higher on the day. Kansas City wheat led the way higher on concern over the dry conditions in the west. Short covering was noted in each market which helped to support the move higher. Export demand continues to be unimpressive for wheat and it was reported this morning that France likely sold as much as 400,000 tonnes of milling wheat to Algeria overnight for May/April shipment. Most expected the US to do the business but it seems other origins around the world are comfortable with their domestic supply outlook to sell additional cargos for export. This could add long term resistance to the price outlook in wheat. The tight corn supply this year suggests better feed wheat demand which may pick up some of the slack from missed export opportunities. Additional support continues to come from the drier weather outlook in the western plains for the next 10-14 days.
March Oats closed up 3/4 at 357 1/4. This was 4 up from the low and 2 3/4 off the high.

Corn Market Recap for 1/16/2013 (CME)
March Corn finished up 3/4 at 731 1/4, 3 3/4 off the high and 6 3/4 up from the low. May Corn closed up 1/2 at 731 1/4. This was 6 1/4 up from the low and 3 3/4 off the high.
March corn traded lower for most of the day but managed to close higher into the closing bell led by a sharply higher soybean market. Light profit taking was seen early on following 8 straight sessions of higher trade. Non-existent export demand and poor ethanol data continue to suggest that at least some kind of demand rationing has taken place due to the higher corn prices this year. Ethanol production for the week ending January 11th averaged 784,000 barrels per day, down 5% vs. last week and down 16.7% vs. last year. Corn used in last week's production is estimated at 82.3 million bushels, down from 86.7 the week prior and the lowest weekly usage for the 2012/13 marketing year. Corn use needs to average 86.8 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of January 11th were 20.4 million barrels, up 2.6% vs. last week and up 4.2% vs. last year. Implied demand, total supply net of the weekly change in stocks, fell to its lowest level in 5 weeks at 5.17 million barrels. The data was considered negative to the price outlook and suggests a slowdown in ethanol demand.

Soybeans, Corn Gain on South American Crops; Wheat Rises (Bloomberg)
Soybeans rose to a three-week high and corn extended the longest rally in a year on speculation that warmer, drier weather may hurt crops in South America, increasing demand for U.S. supplies. Wheat also advanced.
Soil moisture in central Argentina, Paraguay and southern Brazil will decline during the next seven days with little rain expected in the following week, World Weather Inc. in Overland Park, Kansas, said in a report. Frequent precipitation in northern Brazil into February will slow soybean harvesting, the company said.
“The forecast is starting to look more threatening for the crops in South America,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “We are capping crop potential, and yields will start to decline in February if the forecast verifies.”
Soybean futures for March delivery rose 1.6 percent to close at $14.365 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $14.39, the highest since Dec. 26. Prices are up 4.6 percent this week and 24 percent higher than a year ago.
Corn futures for March delivery rose 0.1 percent to $7.3125 a bushel on the CBOT, after touching $7.35, the highest since Dec. 10. The price has climbed 7.5 percent over eight sessions, the longest rally since December 2011.

Sugar Production in India to Drop on Cheap Imports, Dry Weather (Bloomberg)
Sugar output in India, the biggest producer after Brazil, is set to decline in the year from October as domestic prices fall on cheaper imports and dry weather curbs planting, the Indian Sugar Mills Association said.
Production will probably slide from 24 million metric tons in the year ending Sept. 30, M. Srinivaasan, president of the association, said in a phone interview. Decreasing local prices will hamper mills’ ability to make timely payments to farmers, encouraging them to switch to other crops, he said. He didn’t give a forecast for 2013-2014.
A lower harvest after two years of surplus may spur the world’s second-biggest consumer to boost imports further, curbing a slide in New York futures. Sugar slumped 16 percent in 2012 because of a second year of glut and Goldman Sachs Group Inc. cut its forecast this week to 18.5 cents a pound in three and six months from an earlier estimate of 22 cents, citing rising inventories. Cheaper sugar may extend a decline in food costs tracked by the United Nations.
“The domestic sugar situation right now is pretty bad,” said Srinivaasan. “We are going to have negative planting in consequence to that and also due to the drought situation in certain states. Imports are taking place too soon.”
Parts of Maharashtra and Karnataka states, which together account for 45 percent of India’s sugar output, have been facing drought in the past 24 months hurting monsoon and winter-sown crops, according to the farm ministry.

Brazil coffee trees enjoy showers after dry weeks (Reuters)
Brazil's coffee-growing regions are at last experiencing a bounty of rain after weeks of drier-than-average weather, moisture that will help beans swell out to a more desirable, yield-boosting size, forecaster Somar said on Monday.

Cotton Jumps to Highest Since October as China Mill Demand Grows (Bloomberg)
Cotton futures jumped to the highest since October on signs that demand is improving in China, the world’s biggest consumer and importer.
To satisfy domestic mill demand, the government began selling from state reserves this week, the China National Cotton Exchange said yesterday. Imports rose 75 percent in December from a month earlier, another report showed. The U.S. Department of Agriculture on Jan. 11 boosted its forecast of Chinese imports this year by 8.7 percent to 12.5 million bales. Prices fell 18 percent in 2012 on signs of ample supply.
“They are going to need to import more cotton over the next six weeks” to replenish stockpiles, Chris Kramedjian, a fibers and textiles consultant at INTL FCStone LLC, said in a telephone interview from Nashville, Tennessee.
Cotton for March delivery rallied 1.5 percent to 77.39 cents a pound at 12:08 p.m. on ICE Futures U.S. in New York, after touching 77.78 cents, the highest for a most active contract since Oct. 19.
On Jan. 11, the USDA cut its estimate for domestic production in the year ending July 31, reduced the outlook for stockpiles and boosted its projection for shipments. The U.S. is the world’s largest exporter.
A bale of cotton weighs 480 pounds, or 218 kilograms.

Recap Energy Market Report (CME)
February crude oil prices trended higher throughout the US trading session. The market was under attack during the overnight and early morning hours, weighed down by a sell off in global equity markets and a downwardly revised 2013 global growth forecast from the World Bank. Crude oil prices began to stabilize during the early US trading hours, drafting support from supply disruptions in the North Sea region and a rebound in US equity markets. February crude oil rallied to its high of the session in reaction to this morning's EIA inventory report that showed an unexpected draw last week of 951,000 barrels. Crude oil imports for the week stood at 8.03 million barrels per day compared to 8.342 million barrels the previous week. The refinery operating rate was down 1.2% to 87.9%. The crude oil market stayed firm and near their best levels of the session going into the close. The relative out performance of WTI compared to Brent crude oil tightened that spread differential by $0.75 on the session.

Oil Trades Near Four-Month High After Crude Stockpiles Decline (Bloomberg)
Oil traded near the highest level in almost four months in New York as stockpiles unexpectedly declined and petroleum consumption rose in the U.S., the world’s biggest crude-consuming nation.
West Texas Intermediate futures were little changed after climbing the most in two weeks yesterday. U.S. crude supplies slid 951,000 barrels last week, Energy Department figures show. They were forecast to increase 2.2 million barrels, according to a Bloomberg News survey of analysts. Fuel consumption climbed from the lowest level since March, the report showed.
Crude for February delivery was at $94.08 a barrel, down 16 cents, in electronic trading on the New York Mercantile Exchange at 10:43 a.m. Sydney time. The contract advanced 1 percent to $94.24 yesterday, the most since Jan. 2 and the highest close since Sept. 18. Prices dropped 7.1 percent last year.
Brent for February settlement, which expired yesterday, gained 31 cents to $110.61 a barrel on the London-based ICE Futures Europe exchange. The more active March contract rose 5 cents to $109.68. The front-month European benchmark contract closed at a premium of $16.37 to WTI futures, the narrowest spread since Sept. 19.
Total petroleum consumption increased 1.1 percent to 18 million barrels a day in the seven days ended Jan. 11, the Energy Department report showed. Gasoline demand climbed 3.9 percent to 8.32 million barrels a day.

Gold Drops From One-Week High; Platinum, Palladium Gain (Bloomberg)
Gold futures fell from a one-week high amid concern that demand is easing while global economic growth slows. Platinum closed at a three-month high.
Buyers of gold are holding back in anticipation of lower prices, according to Afshin Nabavi, a senior vice president at Geneva-based MKS (Switzerland) SA, a bullion refiner. The World Bank cut its growth forecast for this year and predicted a second year of contraction in the euro region.
“Any talk about slowing physical demand will put pressure on prices,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Overall, there is some nervousness because of slowdown worries.”
Gold futures for February delivery fell 70 cents to settle at $1,683.20 an ounce at 1:34 p.m. on the Comex in New York. Yesterday, the price reached $1,684.90, the highest for a most- active contract since Jan. 3. The metal rallied 7 percent last year, the 12th straight annual advance.
Silver futures for March delivery rose less than 0.1 percent to $31.542 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for April delivery gained 0.2 percent to $1,694.10 an ounce, the highest closing price since Oct. 9.
Yesterday, the platinum settlement topped gold for the first time since March.
Anglo American Platinum Ltd. (AMS), the world’s biggest producer, said yesterday it will cut jobs and output in South Africa.
Palladium futures for March delivery rose 1.8 percent to $726.45 an ounce on the Nymex. Earlier, the price reached $727.90, the highest since Sept. 19, 2011.

Silver Market Recap Report (CME)
The silver market started out in a corrective mode but managed to throw off that negative bias and return to the vicinity of the prior session's highs early in the afternoon trade. A recovery in platinum prices might have provided silver with some spillover buying interest and it is also possible that a recovery in US equities helped to bring silver prices up off the mat. Technical traders might suggest that the morning correction in March silver today might have served to balance the markets partially overbought condition. The 50 day moving average in silver comes in above the market at $32.08.

Gold Market Recap Report (CME)
While gold showed corrective action early in the trading session, prices seemed content to claw back toward the highs into mid session and in the early afternoon. German gold reserve movements probably served to keep gold in the headlines but gold and silver today didn't seem to be tracking off a specific fundamental theme today. Weakness in the Euro might have partially undermined gold today but the currency market influence wasn't overly significant. Given the run in gold prices recently, any lack of upside momentum in gold could unnerve a portion of the bull camp, especially since the markets are anticipating fresh and potentially important economic readings from China. For the time being headline flow from the BOJ and from other central banks is likely to become more important, especially after the Gold Fields Mineral Services prediction of more central bank gold buying ahead. Offset the positive GFMS central bank talk was news that total 2012 world gold investment actually declined by 1.2%.

20130117 0936 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
January Soybeans finished up 25 at 1438 1/2, 1/2 off the high and 26 1/4 up from the low. November Soybeans closed up 13 3/4 at 1297. This was 17 up from the low and 3 off the high.
January Soymeal closed up 7.2 at 419.1. This was 8.4 up from the low and -7.2 off the high.
January Soybean Oil finished up 0.44 at 51.31, 0.19 off the high and 0.63 up from the low.
March soybeans traded sharply higher on the day on support from a stronger meal market and oil saw gains as well. Thoughts that China has secured additional cargos this week helped to support along with a drier forecast for Argentina and Southern Brazil. Northern Brazil continues to see beneficial rainfall but scattered showers in Mato Grosso could delay harvest activity this week. The CIF basis was steady midday on the jump in futures but interior basis levels remain historically high as traders attempt to drum up cash grain movement in the country. Crush margins remain positive but have contracted modestly due to the firm basis levels. The tight domestic supply outlook and strong pace of demand continues to favor the bulls but some suggest that the possible bumper crop in South America along with a shift in demand to the Southern Hemisphere could limit gains as we move into February and March.

Indonesia rules out changes to palm export tax structure (Reuters)
Indonesia, the world's biggest palm oil producer, will not change its export tax structure for the edible oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero, the trade minister said on Wednesday.

EDIBLE OIL: Malaysian palm oil futures rose to their highest in over a week on Wednesday on investor optimism a zero-duty tax structure will spur exports from the world's No.2 producer and help boost global demand for the tropical oil.   (Reuters)

Prices of palm oil remain marooned near three-year lows as the vegetable oil is caught between opposing fundamentals that may take several months to resolve themselves. However, over the next six months, the bearish factors appear more likely to dissipate, while the bullish ones will remain in place. On the bearish side of the ledger are record inventories in Malaysia, a rapid slowdown in Chinese imports as new customs inspection rules take effect and demand in Europe that is still soft because of economic weakness. On the positive side are robust and growing Indian imports, a zero export tax by Malaysia and 2013 output that is expected to be steady, or only slightly higher.Add to this the shape of the curve of the futures traded in Kuala Lumpur, which is still in a relatively rare contango, meaning prices for forward months  trade at a premium to those for immediate delivery.  Palm oil is also still trading at a steep discount to soya oil, a complementary product whose price palm oil has historically tracked fairly closely. It's likely that both palm oil's contango in the futures curve and its wide discount to soya oil will reverse in time, but first the short-term factors that are capping prices will have to be worked through. (Reuters)

India will consider imposing a 5% duty on imports of crude palm oil to shield domestic oilseed growers from cheap supplies, two government officials said. The Cabinet may also discuss raising the tariff on refined cooking oils to 10% from 7.5%, said the officials, who declined to be identified. (Malaysian Reserve)

VEGOILS-Malaysia's zero export-tax optimism lifts palm oil
Wed Jan 16, 2013 5:18am EST
* Zero pct CPO tax in Feb to boost exports -trader
    * Investors see stockpiles coming off in February from
record high
    * Palm oil may test resistance at 2,449 ringgit -technicals

 (Updates prices, adds detail)
    By Anuradha Raghu
    KUALA LUMPUR, Jan 16 (Reuters) - Malaysian palm oil futures
rose to their highest in over a week on Wednesday on investor
optimism a zero-duty tax structure will spur exports from the
world's No.2 producer and help boost global demand for the
tropical oil.
    The positive sentiment was also buoyed by seasonally slowing
production which could help curb stockpiles that hit a new
record of 2.63 million tonnes in December.
    The Malaysian government announced on Tuesday that it will
retain its crude palm oil export tax at zero percent for
February, the same as January, in an effort to give a
competitive edge over top producer and biggest rival Indonesia.

    "Indonesia's crude palm oil is now pricier than Malaysian
crude palm oil. So Malaysian exports will definitely pick up,"
said a trader with a foreign commodities brokerage.
    "Most traders are trading on the forward view. Even though
exports are not looking so good now, but with the overall drop
in production, we are expecting stocks to be lower in February
or March," the trader added.
    The benchmark April contract on the Bursa Malaysia
Derivatives Exchange closed 0.5 percent higher at 2,428 ringgit
($804) per tonne. Prices had earlier touched 2,444 ringgit, the
highest level seen since Jan. 7.
    Total traded volume stood at 35,249 lots of 25 tonnes each,
higher than the usual 25,000 lots.
    Technical analysis showed that Malaysian palm oil may test a
resistance of 2,449 ringgit per tonne, a break above which will
lead to a further gain to 2,522 ringgit, said Reuters market
analyst Wang Tao.
    Weaker winter demand from Europe and China had taken a toll
on palm oil exports, causing shipments to fall more than 20
percent in the first 15 days of January. Palm oil tends to
solidify in cold temperatures.
    But with warmer weather on its way, traders expect demand to
pick up in the next few weeks.
    "Moving forward, it can only improve -- it will not go
worse. The weather is getting warmer and you will see more
imports going into China," the trader added.
    Brent crude rose towards $111 a barrel on Wednesday after
robust U.S. retail sales boosted hopes for stronger demand in
the world's top oil consumer, while oil inventories there rose
much less than expected.
    U.S. soyoil for March delivery rose 0.2 percent in
late Asian trade. The most active May soybean oil contract
 on the Dalian Commodity Exchange edged up 0.4 percent.