Illinois Schedules Vote On Tax Breaks For CME, CBOE (Source: CME)
Illinois legislators aim to complete a deal granting tax relief to the state's derivatives exchanges before Thanksgiving even though that might not be soon enough to prevent the exchanges from moving their headquarters to a more tax-friendly state. Lawmakers have yet to agree on a plan to reduce taxes for CME Group Inc. and CBOE Holdings Inc. as they debate broader legislation that adds incentives to keep Sears Holdings Corp. in Illinois, too. Other provisions include a multiyear extension of research-and-development tax credits for all Illinois businesses and tax relief for workers, even as Illinois struggles to overcome massive budget deficits. Hearings on the bill are scheduled for next Wednesday and Friday, with votes by the full Illinois Senate and House of Representatives on Nov. 21, according to John Bradley, chairman of the House Revenue and Finance Committee. "It's a Herculean effort," said Bradley, referring to the legislative schedule.
"We want to get something done as soon as we can, but we want to make sure we get it right," said Bradley, during a phone interview. Testifying before Bradley's committee Tuesday evening, CME Chairman Terry Duffy urged lawmakers to vote on the plan this week, stating that he did not want to limit the options of CME's board of directors. CME's board is considering what Duffy described as "very, very lucrative" offers from other states. It is unclear whether CME and CBOE have agreed to the delay. Representatives for both exchanges declined to comment on the latest developments. The exchanges have waged a public battle on what they view as an unfair tax burden after the Illinois legislature in January raised the corporate income tax to 7%, from 4.8%. The tax increase costs CME an extra $50 million a year, according to Duffy. CME pays 6% of all corporate taxes paid in Illinois, which Duffy said is "not acceptable."
A measure introduced by Illinois Senate President John Cullerton would tax the exchanges on only about 25.7% of the trades performed on their electronic platforms. Currently, they pay taxes on all electronic transactions, which make up the vast majority of the derivatives business. Duffy warned that if CME moves its headquarters elsewhere, it would also relocate its Globex electronic control center, now based in Aurora, Ill. Only the trading floors at the Chicago Board of Trade would remain, which account for less than 5% of CME's business, said Duffy. CME, owner of the Chicago Mercantile Exchange and CBOT, has been based in Illinois for 163 years. CME is the world's largest futures exchange as measured by trading volume, and CBOE is the largest options exchange in the U.S.
McDonald's To Raise Capex In 2012, Sees Commodity Costs Rising (Source: CME)
McDonald's Corp. said it would boost capital expenditure to $2.9 billion next year, opening 1,325 new outlets and continuing the revamp of existing locations. The world's largest restaurant chain by revenue also reaffirmed its expansion goals, targeting annual average sales growth of 3% to 5%, with operating income rising by 6% to 7% and return on incremental invested capital in a high teen percentage. Income from franchised restaurants has been the largest driver of profit growth, though Chief Executive Jim Skinner said at the company's biennial investor conference that these would stay stable at around 80% of the global store count. Franchising accounts for 89% of U.S. stores, but penetration is small or non-existent in some large markets, including China. McDonald's plans to open 1,100 locations in 2011, and 750 of next year's expansion will be in Asia, the Middle East and Africa, together with 250 in Europe, 200 in the U.S. and Canada and 125 in Latin America. It's also renovating 2,400 current locations.
The rise in capex to $2.9 billion compares with the recently-lifted $2.6 billion slated for 2011. McDonald's also expects commodity costs for its overall basket of goods to rise 4.5% to 5.5% in the U.S. and 2.5% to 3.5% in Europe, with less pressure in the latter region because of lower chicken and dairy prices. Executives also said that its sponsorship of the summer Olympics in London, its annual convention and a technology upgrade would lead to one-off costs of around $100 million next year, accounting for around five cents or per-share earnings.
Corn (Source: CME)
US corn futures fell, bucking the supportive influence of sharply higher crude oil futures and US dollar weakness. Poor export demand reflected in USDA's weekly export sales report served as a catalyst to drag prices lower, analysts say. Export sales signal world buyers aren't interested in buying US supplies at current prices, analysts say. However, corn remained the strongest leg in CBOT grain complex, buoyed by tight cash supplies and robust demand from domestic end users such as ethanol processors and livestock feed industry, analysts add. CBOT Dec corn ended down 10 1/2c at $6.45 1/2/bushel.
Wheat (Source: CME)
US wheat futures ended lower amid weak export demand. Weekly export sales today confirmed ongoing trend of poor sales, with flood of Black Sea region competition beating out US supplies. Add to that ample South America supplies, analysts say. Rumors also that the US was importing some Brazilian wheat added to the pressure, and helped send nearby CBOT wheat even lower. Dec CBOT wheat ends down 23c to $6.20/bushel, while March CBOT wheat falls 15 1/4c to $6.47. KCBT Dec wheat down 16c to $6.97; MGEX Dec wheat down 6 1/4c to $9.45 1/2.
Rice (Source: CME)
US rice futures continued tumbling, ending lower on weak export demand and technical selling. Nov rice falls to fresh four-month low, and down 13% from an Oct 25 intraday high. Nov CBOT rice ends down 25c to $15.03 1/2 per hundredweight.
Thai Rice Exports Down On Floods, High Prices (Source: CME)
Thailand's October rice exports fell 24% on month to 628,837 metric tons as ongoing flooding and weak demand slowed shipments, the Thai Rice Exporters Association said. That was a 29% fall in shipments from the same month last year. November exports may fall further to around 500,000 tons or lower, the Association said. Thailand is world's biggest rice exporter, shipping more than $500 million worth of rice, supplying most markets including Sub-Saharan Africa. Monthly exports were more than 1 million tons in the first half of the year. With the slow-down in shipments in the second half, exports of parboiled rice fell 51% on month to 176,322 tons in October, the Association said. "Most of the central plains are still flooded and farmers are facing immense difficulty transporting grain to the mills," Managing Director of Bangkok-based exporter Uthai Produce Ltd., Chareon Laothamatas said.
There are currently nine ships loading around 270,000 tons of rice for exports at the Bangkok Port but no fresh orders are being placed, said Phaitoon Rasmee, manager at cargo surveyor Intertek Testing Services. Meanwhile, millers are holding back stocks in anticipation of higher prices from the government. Exporters said many of the traditional customers have turned to other suppliers such as India to source cheaper rice. Indian rice is at least $170/ton cheaper than Thai grades. The Middle East typically buys around 20% of its total requirement from Thailand and Vietnam and will now have to look at other origins to meet its needs, said Darren Cooper, a senior economist at the International Grains Council.
According to Chookiat Ophaswongse, honorary president of Thai Rice Exporters Association, the October numbers are much below initial expectations of more than 700,000 tons and indications are that volumes will fall further in November as farmers continue to bear the brunt of abnormally high water levels wi th at least 20% of the crop is badly affected. Thailand usually produces around 25 million tons of unmilled rice from its November-January harvest. Chookiat said harvesting has begun in north-eastern Thailand, the region least affected by flooding, but transportation of the grain to designated millers through which the government buys the grain has been difficult. Government procurement so far has been barely 300,000 tons. Because of logistical constraints, the Association has cancelled a survey planned earlier this month to assess the damage to the crop, Chookiat said.
Preliminary estimates indicate 3.0 million tons to 7.0 million tons of paddy could have been damaged by the floods, Cooper said.
India, Indonesia negotiate rice trade deals
NEW DELHI/JAKARTA, Nov 10 (Reuters) - Indonesia, the world's third-biggest rice consumer, has asked India for supplies of the staple food grain after floods hit top rice exporter Thailand, potentially disrupting shipments.
India, the world's second-biggest producer and consumer of rice, is willing to sell 500,000 tonnes from government stores as warehouses are overflowing after bumper harvests.
Australia overtakes Russia to become No.3 wheat exporter
SYDNEY, Nov 10 (Reuters) - Australian wheat shipments surged 36 percent to 18.6 million tonnes in the marketing year ended September, putting the country ahead of Russia as the world's third largest exporter of the grain.
Another bumper year is expected, with the country's government forecaster previously saying wheat exports could rise again to a record 20.4 million tonnes in the current marketing year.
Soybeans, Corn Drop as Bigger South America Crops May Slow U.S. Shipments (Source: Bloomberg)
Soybeans fell to the lowest in a month and corn dropped on speculation that rains will boost crops in South America, reducing demand for U.S. supplies. Rains in the next two weeks will benefit crops that farmers are finishing planting in Brazil and Argentina, the world’s biggest producers after the U.S., World Weather Inc. said. Brazil will export more soybeans than the U.S. for the first time ever this year, the Department of Agriculture said yesterday. China’s imports of the oilseed fell 7.1 percent to 3.81 million metric tons in October, government data show. “There is no compelling story for the bulls right now in soybeans with weather improving crops in South America and China slowing purchases,” Tim Emslie, the research director for Country Hedging Inc. in Inver Grove Heights, Minnesota, said in a telephone interview. “Rains will also aid corn.”
U.S. soy at 1-mth low as European debt crisis deepens
SINGAPORE, Nov 10 (Reuters) - U.S. soy slid to a 1-month low , falling for four out of five sessions, while corn and wheat lost ground as Europe's worsening debt crisis offset the bullish fundamental factor of tight world supplies.
"Given that yesterday's mildly supportive USDA data did not help corn register any gains, the market is likely to take direction from larger economic concerns," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Maize shortage looms in South Africa -paper
JOHANNESBURG, Nov 10 (Reuters) - South Africa will run out of maize as early as next month after the country committed most its harvest for exports, the Business Day newspaper reported on Thursday, quoting Jannie de Villiers, chief executive officer of farmers' group Grain SA.
De Villiers was reiterating what he told Reuters in June that Africa's biggest maize producer would have to import maize by the end of this year because export orders were more than the surplus available.
US corn supply tighter, Chinese imports up-USDA
WASHINGTON, Nov 9 (Reuters) - The U.S. corn supply is tightening, partly due to rising Chinese demand and a cut in yields after a year of tumultuous weather swings, the government forecast on Wednesday.
With the fall harvest in its final stages, the Agriculture Department cuts its estimate of the corn crop by 1 percent, reflecting the lowest nationwide yield since 2003.
Farm body cuts French 2011/12 maize stock estimate
PARIS, Nov 9 (Reuters) - French farm office FranceAgriMer on Wednesday cut by 200,000 tonnes its monthly estimate for the country's maize stocks at the end of the current 2011/12 season to 1.82 million tonnes, now 18 percent down on the 2010/11 stocks.
It predicted a rise of 200,000 tonnes in its forecast for exports outside the European Union at a rare level of 700,000 tonnes and an increase of 200,000 tonnes in demand for animal feed at 3.4 million tonnes, shrugging off its higher crop estimate this month
Zambia exports 496,000 T maize, stocks 1.9 mln T
LUSAKA, Nov 9 (Reuters) - Zambia exported more than 496,000 tonnes of maize to its neighbours from September last year to October this year after a bumper harvest left it with a surplus of 1.6 million tonnes, the Food Reserve Agency (FRA) said on Wednesday.
The maize exports went to Zimbabwe, Democratic Republic of Congo, Kenya, Mozambique, South Africa, Botswana, Burundi and Namibia, the FRA said in a statement.
China's corn import seen at 10 mln T by 2015 -Rabobank
BEIJING, Nov 9 (Reuters) - China, the world's second-largest corn consumer, is likely to import 10 million tonnes of corn a year by 2015 to meet its hog feedmeal demand, a senior manager with Rabobank Nederland said on Wednesday.
The estimate by Pan Chenjun, a senior manager with the bank, was in line with expectations by traders and analysts as China faces shrinking farmland and strains to improve its corn yields to meet its strong domestic demand from livestock breeders.
ICE sugar consolidates, eyes on euro debt crisis
LONDON, Nov 10 (Reuters) - ICE sugar rose in early trade, in line with steadier commodity markets, as the eurozone debt crisis continued to overshadow fundamentals in the softs markets.
ICE raw sugar edged higher in early trade but remained stuck within its recent trading range, with dealers noting technical support had helped keep the market above 25 cents a lb.
US sugar supply outlook up on imports from Mexico
NEW YORK, Nov 9 (Reuters) - The U.S. sugar supply situation for 2011/12 has improved due to higher estimates for imports from Mexico and beginning stocks, the U.S. Agriculture Department said on Wednesday.
USDA forecast sugar imports from Mexico at 1.581 million short tons, almost 37 percent higher than an estimate last month of 1.155 million tons.
Oil Falls in New York, Poised for Longest Weekly Winning Streak Since 2009 (Source: Bloomberg)
Oil fell in New York, while heading for the longest run of weekly gains since April 2009, as concern that Europe’s debt crisis will derail its economy countered signs the U.S. is recovering. Crude for December delivery slid as much as 0.4 percent. It rose 2.1 percent yesterday and is poised for its sixth weekly increase. The number of Americans filing applications for unemployment benefits fell to a seven-month low, a Labor Department report showed. Italy votes today on a package of austerity measures to clear the way for a new government. Futures fell as much as 43 cents to $97.35 a barrel in electronic trading on the New York Mercantile Exchange and were at $97.55 at 8:02 a.m. Singapore time. Oil is up 3.5 percent this week and 6.8 percent this year.
U.S. crude futures rise $1 on stock fall
LONDON, Nov 10 (Reuters) - U.S. crude oil futures rose by $1 to $96.74 a barrel after an unexpected drop in U.S. crude oil stocks.
Crude stocks in the United States fell 1.37 million barrels to 338.09 million barrels in the week to Nov. 4, the Energy Informational Administration said on Wednesday.
U.S. STOCKS-Index futures signal bounce after selloff
Nov 10 (Reuters) - U.S. stock index futures pointed to a rebound on Wall Street, with futures for the S&P 500 up 1.1 percent, Dow Jones futures up 0.9 percent and Nasdaq 100 futures up 1 percent at 0947 GMT.
European stocks were up slightly in morning trade after reversing sharp losses in morning trade, with Italian shares rallying on fresh hopes the country will have a new government soon while the European Central Bank was reportedly buying the country's bonds to ease the tensions surrounding its debt pile.
Asia Gasoline/Gasoil-Kenya seeks 50,000T diesel, gasoline for Dec
SINGAPORE, Nov 10 (Reuters) - Kenya is seeking 50,000 tonnes of diesel and gasoline for December, after securing over a total of 250,000 tonnes of the two products for this month and next, trading sources said on Thursday.
The country is seeking 35,000 tonnes of 500 ppm sulphur diesel for delivery over Dec. 11-12 and 15,000 tonnes of gasoline for delivery Dec. 9-10. The tender closes on Nov. 15.
China Oct oil demand up 1.5 pct on yr, Nov seen firmer
BEIJING, Nov 10 (Reuters) - China's implied oil demand grew at one of the slowest paces this year in October, as oil companies raised fuel imports by a modest amount to compensate for trimmed refinery production.
Implied oil demand rose 1.5 percent year-on-year in October, when the world's second largest oil consumer burned about 9.04 million barrels per day (bpd) of oil, slightly more than September's 8.9 million bpd, Reuters calculations based on preliminary trade and output data showed.
Copper Drops to Two-Week Low as European Union Cuts Forecasts for Growth (Source: Bloomberg)
Copper fell to a two-week low as the European Union cut its growth forecast for next year by more than half amid the struggle to contain the debt crisis. Gross domestic product may expand 1.5 percent this year and 0.5 percent in 2012, the European Commission, the EU’s executive arm, said today. That’s down from projected expansion at 1.6 percent and 1.8 percent, respectively. Copper also dropped as China’s exports climbed at the slowest pace in almost two years, signaling cooling growth. “For now, everyone is looking for the next problem,” Dan Smith, an analyst at Standard Chartered Plc in London, said in a telephone interview. “The story for commodities over the medium term and long term is still a good one, but we’re going to see a few more weeks, or maybe months, of continued volatility.”
Gold Traders Most Bullish Since 2004 on Deepening Debt Crisis: Commodities (Source: Bloomberg)
Gold traders and analysts are the most bullish in at least seven years as investors accumulate metal at the fastest pace since August to protect their wealth from a widening European debt crisis. Twenty-one of 22 surveyed by Bloomberg expect bullion to rise on the Comex in New York next week, the third consecutive increase and the highest proportion in data going back to April 2004. Holdings in exchange-traded products backed by gold rose 25.4 metric tons this week, within 1 percent of the record set almost three months ago, data compiled by Bloomberg show.
Gold exceeded $1,800 an ounce for the first time in seven weeks on Nov. 8 and hedge funds are holding their biggest bet on higher prices since mid-September, Commodity Futures Trading Commission data show. The metal is rebounding after tumbling as much as 20 percent in three weeks in September on demand for what are perceived as the safest assets. Almost $9 trillion was wiped off the value of global equities since May and yields on Italian and Greek bonds rose to euro-era records this week.
Gold Falls Most in Three Weeks as Haven Demand Ebbs on Italy, Greece Moves (Source: Bloomberg)
Gold futures fell the most in three weeks as demand for a haven eased after Italian bond yields dropped and a new Greek leader was named, reducing concerns that Europe’s sovereign-debt crisis will escalate. Italy sold 5 billion euros ($6.8 billion) of one-year bills, the maximum for the Treasury auction. Lucas Papademos, a former vice president of the European Central Bank, became the head of a national unity government in Greece. Gold jumped to a record $1,923.70 an ounce on Sept. 6 on demand for an alternative to equities and some currencies. “At least for now, the fear trade has taken a back seat,” Sterling Smith, an analyst at Country Hedging Inc. in St. Paul, Minnesota, said in a telephone interview.
