Thursday, December 20, 2012
20121220 1710 Palm Oil Related News.
VEGOILS-Palm down on technicals; market eyes export tax impact
Thu Dec 20, 2012 12:57am EST
* Stockpiles set to fall next year, February's export duty
seen at zero percent-trader
* Palm oil to fall to 2,217 ringgit -technicals
* Prices seen rising to 2,800-2,9900 ringgit in first
quarter 2013 -analyst
(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Dec 20 (Reuters) - Malaysian palm oil futures
edged lower on Thursday as technical selling weighed on prices,
although losses were curbed by investor optimism that a new
export tax next year will boost shipments of the crude grade and
cut stocks.
Malaysia, the world's No.2 producer of the tropical oil, has
faced record high stocks since September, which seen prices fall
27 percent this year -- the worst annual performance since 2008.
The low prices have enabled the Malaysian government to set
the crude palm oil export tax for January at zero percent, which
could see Malaysia grab more market share from top producer
Indonesia. Traders are even expecting February taxes to remain
at zero given the price downtrend.
"Today the market is still trying to find a base.
Technically, they are trying to set it down below 2,300 ringgit
per tonne," said a trader with a foreign commodities brokerage.
"(But) stocks will reduce very fast starting next year
because now everybody can ship crude palm oil," he added.
By the midday break, the benchmark March contract
on the Bursa Malaysia Derivatives Exchange inched down 0.6
percent to 2,318 ringgit ($757) per tonne.
Total traded volumes stood at 16,813 lots of 25 tonnes each,
higher the usual 12,500 lots as investors went for a technical
sell down of the market.
Technical analysis showed that a bearish target of 2,217
ringgit per tonne has been established for palm oil, said
Reuters market analyst Wang Tao.
Exports in the first twenty days of the month fell a 1.9
percent compared to the period in November. Investors are
waiting for data from another cargo surveyor Societe Generale de
Surveillance which will be released later on Thursday.
Seasonally slowing production towards the year end could
give additional support to Malaysia's palm oil prices in the
first quarter of 2013, analysts say.
"The first quarter is always the "low production" season.
With the new tax structure kicking in, it should help stimulate
demand," said James Ratnam, an analyst with TA Securities in
Kuala Lumpur.
"I expect prices to go up in the first quarter, maybe to
about 2,800-2,900 ringgit per tonne. But we have to see whether
stocks can come down to a more manageable level," he added.
Brent crude slipped on Thursday to trade around $110 a
barrel as investors took profits after recent gains as talks to
avert a U.S. fiscal crisis stalled, stoking worries about demand
in the world's biggest oil consumer.
In other competing vegetable oil markets, U.S. soyoil for
January delivery rose 0.5 percent early Asian trade
despite declines in the wider soy complex. Soybean prices have
come under pressure after China scrapped a contract for 300,000
tonnes of U.S. soy recently.
The most active May 2013 soybean oil contract on
the Dalian Commodity Exchange fell 1.5 percent.
20121220 1656 Global Markets & Commodities Related News.
STOCKS: European stock index futures pointed to a slightly lower open and Asian shares retreated from near 17-month highs, tracking U.S. stocks which sold off late in the day to close at session lows on Wednesday as investors used frictions in U.S. budget talks as an excuse to take profit on some overbought indexes. (Reuters)
FOREX-Yen gains on profit taking after long-awaited BOJ easing
TOKYO, Dec 20 (Reuters) - The yen firmed after the Bank of Japan, as expected, eased monetary policy, increasing its asset purchases by 10 trillion yen and saying it would review its policy goal in a likely move towards adopting an inflation target.
"The BOJ is saying it will provide funds if investors want to invest in foreign bonds... This does nothing when markets are risk-off but as soon as markets become risk-on, this is going to have a huge impact and will speed up fall in the yen," said Seiya Nakajima, chief economist at Itochu Corp.
U.S. 'fiscal cliff' talks turn sour, Obama threatens veto (Reuters)
The conflict over the stalled "fiscal cliff" talks grew more heated Wednesday and threatened to become even more so Thursday when the action is expected to shift for the first time to the floor of the U.S. House of Representatives.
Rising German business morale points to growth rebound (Reuters)
Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.
GRAINS: U.S. corn prices edged higher but remained near a five-month low, weighed down by a forecast that 2013 acreage would be the largest in nearly 80 years, while soybeans fell to a three-week low on signs of waning Chinese demand. (Reuters)
U.S. corn plantings to be biggest since 1936-Informa (Reuters)
Private analytics firm Informa Economics raised its 2013 U.S. corn acreage forecast to 99.026 million acres from its previous outlook of 97.7 million, trade sources said on Wednesday.
U.S. crude stocks fall, gasoline rises on more refining-EIA (Reuters)
U.S. crude inventories fell and gasoline inventories rose for a fourth week in a row as refiners boosted their processing rates, data from the U.S. Energy Information Administration showed on Wednesday.
OIL: Brent crude slipped to trade around $110 a barrel as investors took profits after recent gains as talks to avert a U.S. fiscal crisis stalled, stoking worries about demand in the world's biggest oil consumer. (Reuters)
INTERVIEW- S.Africa wants platinum, iron ore export curb (Reuters)
South Africa is drawing up laws to force platinum and iron ore miners to sell "small amounts" of production to local processors at a discount to diversify its economy, a top trade ministry official said on Wednesday.
BASE METAS: London copper hit its lowest in three weeks as talks to avert a U.S. fiscal crisis stalled, keeping investors on edge, but losses were limited by signs of improvement in the economy of top consumer China. (Reuters)
PRECIOUS METALS: Gold edged up as uncertainty around U.S. budget talks kept investors nervous while Asia's physical buying interest failed to lift prices substantially from a more than three-month low struck earlier this week. (Reuters)
METALS-Copper hits 3-week low, U.S. fiscal talks eyed
SINGAPORE, Dec 20 (Reuters) - London copper hit a three-week low as talks to avert a U.S. fiscal crisis stalled, keeping investors on edge, but losses were limited by signs of improvement in the economy of top consumer China.
"A lot of people in Western markets are on holiday and that may make the LME market relatively quiet so (prices) are likely to remain around current levels for now," said Chunlan Li, a Beijing-based copper analyst with consultancy CRU.
PRECIOUS-Gold inches up, nerves over U.S. fiscal talks weigh
SINGAPORE, Dec 20 (Reuters) - Gold edged up but uncertainty around U.S. budget talks kept investors nervous and Asia's physical buying interest failed to lift prices substantially from a more than three-month low struck earlier this week.
"There is decent Asian physical buying but it's not enough to send prices recovering," said a Tokyo-based trader.
FOREX-Yen gains on profit taking after long-awaited BOJ easing
TOKYO, Dec 20 (Reuters) - The yen firmed after the Bank of Japan, as expected, eased monetary policy, increasing its asset purchases by 10 trillion yen and saying it would review its policy goal in a likely move towards adopting an inflation target.
"The BOJ is saying it will provide funds if investors want to invest in foreign bonds... This does nothing when markets are risk-off but as soon as markets become risk-on, this is going to have a huge impact and will speed up fall in the yen," said Seiya Nakajima, chief economist at Itochu Corp.
U.S. 'fiscal cliff' talks turn sour, Obama threatens veto (Reuters)
The conflict over the stalled "fiscal cliff" talks grew more heated Wednesday and threatened to become even more so Thursday when the action is expected to shift for the first time to the floor of the U.S. House of Representatives.
Rising German business morale points to growth rebound (Reuters)
Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.
GRAINS: U.S. corn prices edged higher but remained near a five-month low, weighed down by a forecast that 2013 acreage would be the largest in nearly 80 years, while soybeans fell to a three-week low on signs of waning Chinese demand. (Reuters)
U.S. corn plantings to be biggest since 1936-Informa (Reuters)
Private analytics firm Informa Economics raised its 2013 U.S. corn acreage forecast to 99.026 million acres from its previous outlook of 97.7 million, trade sources said on Wednesday.
U.S. crude stocks fall, gasoline rises on more refining-EIA (Reuters)
U.S. crude inventories fell and gasoline inventories rose for a fourth week in a row as refiners boosted their processing rates, data from the U.S. Energy Information Administration showed on Wednesday.
OIL: Brent crude slipped to trade around $110 a barrel as investors took profits after recent gains as talks to avert a U.S. fiscal crisis stalled, stoking worries about demand in the world's biggest oil consumer. (Reuters)
INTERVIEW- S.Africa wants platinum, iron ore export curb (Reuters)
South Africa is drawing up laws to force platinum and iron ore miners to sell "small amounts" of production to local processors at a discount to diversify its economy, a top trade ministry official said on Wednesday.
BASE METAS: London copper hit its lowest in three weeks as talks to avert a U.S. fiscal crisis stalled, keeping investors on edge, but losses were limited by signs of improvement in the economy of top consumer China. (Reuters)
PRECIOUS METALS: Gold edged up as uncertainty around U.S. budget talks kept investors nervous while Asia's physical buying interest failed to lift prices substantially from a more than three-month low struck earlier this week. (Reuters)
METALS-Copper hits 3-week low, U.S. fiscal talks eyed
SINGAPORE, Dec 20 (Reuters) - London copper hit a three-week low as talks to avert a U.S. fiscal crisis stalled, keeping investors on edge, but losses were limited by signs of improvement in the economy of top consumer China.
"A lot of people in Western markets are on holiday and that may make the LME market relatively quiet so (prices) are likely to remain around current levels for now," said Chunlan Li, a Beijing-based copper analyst with consultancy CRU.
PRECIOUS-Gold inches up, nerves over U.S. fiscal talks weigh
SINGAPORE, Dec 20 (Reuters) - Gold edged up but uncertainty around U.S. budget talks kept investors nervous and Asia's physical buying interest failed to lift prices substantially from a more than three-month low struck earlier this week.
"There is decent Asian physical buying but it's not enough to send prices recovering," said a Tokyo-based trader.
20121220 1102 Global Markets & Energy Related News.
GLOBAL MARKETS-Asian shares pause as U.S. budget talks stall, yen eyes BOJ
TOKYO, Dec 20 (Reuters) - Asian shares paused after rallying to their highest in nearly 17 months the day before, as talks to avert a U.S. fiscal crisis stalled - prompting worries of the world's largest economy sliding back into recession.
"If this discussion continues to go as it has gone today (Wednesday), watch for more selling off as hopelessness begins to take hold for many investors across all asset classes," said Neal Gilbert, market strategist at GFT Forex, in a note to clients.
FOREX-Yen choppy as BOJ decision looms; NZD hit by data
SYDNEY, Dec 20 (Reuters) - The yen languished near 20-month lows against its U.S. peer, but trading was choppy in thin conditions with yen bears possibly suffering a case of cold feet as the Bank of Japan's policy decision loomed.
"At the same time, they will be keen on maintaining their credibility and insisting that the bigger problem is a fiscal one. The odds are that the BOJ may do enough not to frighten the markets too much, but leave major decisions to January."
US 'fiscal cliff' talks turn sour, Obama threatens veto
WASHINGTON, Dec 19 (Reuters) - Talks to avoid a U.S. fiscal crisis stalled on Wednesday as President Barack Obama accused opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational."
As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.
OIL-Oil rises on U.S. budget deal hopes, demand optimism
NEW YORK, Dec 19 (Reuters) - Oil prices rose on Wednesday as expectations a battle over the U.S. budget will be resolved spurred optimism about crude demand in the world's top consumer.
"There was a risk-on tone when we started the day globally. All markets were looking to go higher, and I think crude has fed off that," said Addison Armstrong, director of market research, Tradition Energy in Stamford, Connecticut.
US crude stocks fall, gasoline rises on more refining-EIA
NEW YORK, Dec 19 (Reuters) - U.S. crude inventories fell and gasoline inventories rose for a fourth week in a row as refiners boosted their processing rates, data from the U.S. Energy Information Administration showed on Wednesday.
Crude stocks fell by 964,000 barrels to 371.65 million barrels, compared with an average analyst forecast for a 1.1 ion barrel drawdown in a Reuters poll. Crude imports fell 101,000 barrels per day (bpd) to 8.36 million bpd.
U.S. sets plan for oil drilling in Alaska Petroleum Reserve
WASHINGTON, Dec 19 (Reuters) - The federal government on Wednesday announced plans to develop petroleum reserves on part of Alaska's North Slope, with the 23-million-acre National Petroleum Reserve to be divided between areas available for oil leases and those that are protected from development for now.
The announcement by U.S. Interior Secretary Ken Salazar followed the completion of an environmental impact study, which recommended development of about 72 percent of the estimated "economically recoverable" oil in the reserve.
EXCLUSIVE-India to cut Iran oil imports 2013/14-sources
NEW DELHI, Dec 19 (Reuters) - India plans to cut oil imports from Iran by 10 to 15 percent in the next fiscal year, and more if Tehran does not lower prices to help cover higher costs resulting from Western sanctions, a government source said.
Iran's top Asian oil buyers - China, India, Japan and South Korea - have all reduced imports after the United States and the European Union imposed sanctions aimed at curbing Tehran's nuclear ambitions. The sanctions have more than halved Iran's oil exports this year, costing Tehran up to $5 billion a month in lost revenue.
Russian crude exports seen shifting to Asia from Europe
MOSCOW, Dec 19 (Reuters) - Russia is expected to redirect some oil exports from Europe to Asia in the early months of 2013, when crude will flow through an expanded pipeline from the country's eastern oilfields to the Pacific port of Kozmino.
Russian pipeline operator Transneft's preliminary export schedule showed exports of crude oil from Kozmino, the termination point of the East-Siberia-Pacific-Ocean (ESPO) pipeline, will soar in the early part of next year, while westward exports will drop.
20121220 1014 Malaysia Corporate Related News.
MCMC sets 1 Jan deadline for telcos to cut access fee charges
The Malaysian Communications and Multimedia Commission (MCMC) says telecommunication companies will have to reduce its wholesale access fee charges for call “termination” by 6% for fixed lines and 8% for mobile calls beginning 1 Jan 2013. MCMC said the rate for fixed-lines calls will be reduced by 12% of the current prices in 2014 and by 18% in 2015. Telcos currently charge each other 5 sen/min when a call is connected for fixed and termination. The reduction for mobile access rates, currently also at 5 sen/min, is at a higher 7.4% for 2013, 15% in 2014 and 22.5% by 2015. (Malaysian Reserve) Please see accompanying report
Prasarana LRT line extension delayed to 2015
The completion of the Prasarana LRT line extension project by Syarikat Prasarana Negara will now be delayed to 2015 from the earlier estimated time of completion in 2014. A delay in the land acquisition process, mainly in Puchong, was cited as the cause. The Ampang extension line, 17.7km long with 12 new stations, will start from the Sri Petaling station to Putra Heights while the extended Kelana Jaya Line will run from the Kelana Jaya station, covering a distance of 17km and 13 new stations, before ending at Putra Heights. (Financial Daily)
November CPI rises on higher food cost
The Consumer Price Index (CPI) for November rose 1.3% to 105.5 from 104.1 a year earlier following higher cost for food and non-alcoholic beverages. The Statistics Department said the index for food and non-alcoholic beverages and non-food for November showed increases of 2% and 1.1% respectively as compared with the same month in 2011. It said the CPI for Jan-Nov period increased by 1.7% to 104.9 compared with 103.1 a year earlier. When compared with October, it said the CPI last month was up marginally by 0.1%. (StarBiz)
MyEG plans new services
MyEG Services is planning to use RM60m in capex for the financial year ending 30 June 2013 to roll out the online tax monitoring system and online renewal service for foreign worker permits. According to MyEG MD T.S. Wong, the capex was generated internally and it would not affect its current dividend payout policy which is 30% of its net profit. (StarBiz)
New law for Islamic finance
Malaysia is in the final stages of introducing new legislation for Islamic Banking and takaful products, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said, which gives a stronger legal basis to contracts devised by financial institutions. Zeti did not give a time-frame for the launch of the legal framework. She said the legislation would help the central bank better regulate and supervise the Islamic finance industry, which is globally valued at USD1.3trn (RM3.96trn). (StarBiz)
20121220 1012 Global Markets Related News.
Asia FX By Cornelius Luca - Wed 19 Dec 2012 17:03:21 CT (CME/www.lucafxta.com)
The appetite for risk disappeared late in the US session after the "fiscal cliff" politics turned south. Speaker John Boehner said the House of Representatives will pass a budget proposal that President Barack Obama had already threatened to veto. The European currencies surrendered gains and the commodity currencies added to their losses. The yen remains under pressure at a 20-month low. The US stock markets sank. Gold and silver closed down as well. The short-term outlook for most major currencies is sideways with downside risk. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on all European and commodity currencies and short yen. Good luck!
Overnight
US: Housing starts fell 3.0% to an annual rate of 861,000 in November from the revised October estimate of 888,000. Building permits rose 3.6% to an annual rate of 899,000 in November from the revised October rate of 868,000.
Canada: Wholesale sales rose 0.9% in October after falling -1.5% in September.
Today's economic calendar
Japan: The BoJ will leave interest rates unchanged
Australia: The RBA Bulletin for the fourth quarter
China: Leading economic index for November
Asian Stocks Swing Between Gains, Losses on U.S. Budget Talks (Bloomberg)
Asian stocks swung between gains and losses amid signs U.S. budget negotiations are faltering and as investors await the outcome of a Bank of Japan policy meeting. Japanese shares fell as the yen rose, weighing on exporters.
Samsung Electronics Co. (005930), which gets a fifth of its revenue in America, dropped 1.1 percent in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 1.2 percent. Capcom Co. slumped 12 percent in Tokyo after the gamemaker cut its profit forecast and delayed the release of a new game. Mitsubishi Motors Corp. (7211) dropped 6.6 percent after saying it will recall 1.21 million vehicles in Japan.
The MSCI Asia Pacific Index slipped 0.1 percent to 129.23 at 10:17 a.m. in Tokyo after rising 0.1 percent. Markets in Hong Kong and China are yet to open. The measure closed yesterday at the highest level since August 2011.
“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, Melbourne-based markets strategist at IG Markets Ltd. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”
Asia’s benchmark equities index has risen 13 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.7 times average estimated earnings, compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Nikkei 225 Declines as Yen Climbs Amid U.S. Budget Talks (Bloomberg)
Japan’s Nikkei 225 Stock Average (NKY) fell from its highest level since March as the yen strengthened amid concern U.S. budget talks are stalling. The Bank of Japan is scheduled to conclude a policy meeting today.
Canon Inc. (7751), which gets 27 percent of its revenue from the Americas, lost 1.6 percent. Capcom Co. plunged 12 percent after the gamemaker cut its forecast on weakening sales and delays for a key title. Mitsubishi Motors Corp. sank 6.6 percent after Japan’s transport ministry issued a warning to the automaker for being “passive” after a fourth round of recalls.
The Nikkei 225 lost 0.8 percent to 10,079.31 as of 10:00 a.m. in Tokyo today after reaching its highest level since March 28 yesterday. Volume on the gauge was 74 percent higher than the 30-day average. The Topix Index fell 0.3 percent to 837.11 with about three stocks falling for each that gained.
“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, Melbourne-based markets strategist at IG Markets Ltd. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”
Standard & Poor’s 500 Index futures were little changed today. The gauge slid 0.8 percent yesterday as deteriorating federal budget negotiations fueled concern that $600 billion in automatic tax increases and spending cuts will be triggered if a compromise is not reached by the end of the year.
U.S. Stocks Fall on Housing Data, Budget Negotiations (Bloomberg)
U.S. stocks fell, pulling the Standard & Poor’s 500 Index (VIX) down from a two-month high, as deteriorating federal budget negotiations fueled concern that automatic tax increases and spending cuts will be triggered.
Alcoa Inc. (AA) fell 3 percent as Moody’s Investors Service placed the aluminum producer’s credit rating under review for a downgrade. Consumer-staples, health-care and phone stocks lost more than 1 percent for the worst performance among 10 S&P 500 groups. General Motors Co. (GM) jumped 6.6 percent on plans to purchase 200 million shares from the government. Knight Capital Group Inc. rose 5.4 percent on plans to be bought by Getco LLC.
The S&P 500 lost 0.8 percent to 1,435.81 today. The Dow Jones Industrial Average slipped 98.99 points, or 0.7 percent, to 13,251.97. The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 12 percent to 17.36 for the biggest gain since Oct. 23.
“The underlying situation for U.S. equities isn’t bad, but a lot hinges on the fiscal cliff negotiations,” George Feiger, chief executive officer of Contango Capital Advisors Inc., the San Francisco-based wealth management arm of Zions Bancorporation, said in a phone interview. He manages about $3.6 billion at Contango and Western National Trust Co. “If we get through the fiscal cliff with a reasonable result, then the odds are quite substantial that things are going to be better than many people expect by the middle of 2013,” he said. “All of this can be postponed for a year if they screw up on the negotiations and we slide into a recession.”
European Stocks Rise on German Business Confidence Report (Bloomberg)
European (SXXP) stocks climbed to their highest level in 19 months as German business confidence rose more than forecast and optimism mounted that U.S. policy makers will reach an agreement on next year’s budget.
HSBC Holdings Plc (HSBA) advanced 2 percent as European banking shares contributed the most to the benchmark Stoxx Europe 600 Index’s advance. Stada Arzneimittel AG (SAZ) jumped 5.4 percent. Merck KGaA (MRK) lost 2.1 percent after an experimental drug missed the main goal in a trial with lung-cancer patients.
The Stoxx 600 climbed 0.4 percent to 281.63 at the close of trading. The equity benchmark advanced to its highest level since May 2011 after Standard & Poor’s upgraded Greece’s debt. The gauge has rallied 15 percent this year as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“The market is still focused on the fiscal-cliff talks in the U.S., in which investors seem to expect an agreement relatively soon,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “News such as the upgrade of Greece’s credit rating is positive, albeit not a big surprise, helping to continue a year-end rally. Sentiment at the beginning of 2013 will be cautious as we face some political risk.”
National benchmark indexes rose in every western-European market except Finland. France’s CAC 40 and the U.K.’s FTSE climbed 0.4 percent. Germany’s DAX gained 0.2 percent. Greece’s ASE rallied 4.8 percent.
Treasuries Remain Higher on Cliff Concern as Stocks Snap Gains (Bloomberg)
Treasuries remained higher following a gain yesterday amid speculation U.S. leaders are struggling to reach an agreement on the so-called fiscal cliff that could send the world’s largest economy into recession.
President Barack Obama is trying to pressure congressional Republicans to accept a tax-rate increase for top earners as part of his proposal to avert more than $600 billion in automatic spending cuts and tax increases that start taking effect next month. Asian shares snapped a two-day advance, bolstering demand for safer assets.
“It’s inevitable, after all this, that higher taxes will be imposed on the wealthy, which is a negative for consumer spending,” said Hiromasa Nakamura, a senior investor for Tokyo- based Mizuho Asset Management Co., which oversees the equivalent of $39 billion and is part of Japan’s third-biggest financial group. Ten-year yields may fall to 1 percent by the end of next year, he forecast. The record low is 1.38 percent set on July 25.
The yield on the benchmark 10-year note fell one basis point to 1.79 percent as of 9:24 a.m. in Tokyo after declining two basis points yesterday. The price of the 1.625 percent security maturing in November 2022 gained 1/8, or $1.25 per $1,000 face amount, to 98 17/32.
Japan’s 10-year government bond yield slid one basis point to 0.77 percent in Tokyo, according to Japan Bond Trading Co., the nation’s largest inter-dealer debt broker.
The MSCI Asia Pacific Index (MXAP) of shares was little changed after advancing 1.6 percent in the previous two days.
Obama administration officials told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said.
Yen Gains Versus Major Peers on Fiscal Cliff Concern, Before BOJ (Bloomberg)
The yen gained against most major counterparts as concern that U.S. lawmakers are failing to make progress in budget talks boosted demand for refuge assets.
The dollar rallied from an eight-month low versus the euro after the the White House was reported to have said that negotiations with House Speaker John Boehner regressed yesterday, as both sides seek to avoid the so-called fiscal cliff of $600 billion in tax increases and spending cuts. The Bank of Japan ends a two-day meeting today, at which it is expected to expand monetary stimulus.
“The dollar-yen and euro-yen are falling as people are wary about the BOJ’s decision and there’s news about the fiscal cliff,” said Masato Yanagiya, head of currency and money trading in New York at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “Markets were ahead of themselves in terms of expectations for a cliff agreement.”
The yen strengthened 0.2 percent to 111.47 per euro at 9:36 a.m. in Tokyo from the close yesterday, when it touched 112.50, the weakest since August 2011. The Japanese currency rose 0.1 percent to 84.33 per dollar. The euro slid 0.1 percent to $1.3219 per dollar, after it reached $1.3308 yesterday, the highest since April 3.
Officials in President Barack Obama’s administration told leaders of business and financial services groups that negotiations with Boehner deteriorated in the last 24 hours, a person familiar with the meeting said.
Aussie Holds Losses on U.S. Cliff Concern; Kiwi Touches Week Low (Bloomberg)
Australia’s dollar maintained a three-day loss and the nation’s bonds rose amid concern U.S. lawmakers are deadlocked on a deal to avert the so-called fiscal cliff, reducing demand for riskier assets.
New Zealand’s dollar, nicknamed the kiwi, touched a one- week low versus the greenback after data showed the nation’s gross domestic product grew less than forecast in the third quarter. The Reserve Bank of Australia’s currency sales to other the clients that can include foreign central banks totaled A$117 million ($123 million) in November, data showed today.
“Another 24 hours goes by and we still don’t have any concrete development on the fiscal cliff with the end of the year not far away,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. “That’s one good argument for a lower Aussie.”
Australia’s currency slid 0.1 percent to $1.0472 as of 12:17 p.m. in Sydney after falling 0.8 percent in the previous three days. The so-called Aussie dropped 0.2 percent to 88.28 yen.
The kiwi touched 83.31 U.S. cents, the lowest since Dec. 10, before trading at 83.46, up 0.1 percent from yesterday. It slid 0.1 percent to 70.36 yen.
Australian government bonds rose, with yields on 10-year debt falling three basis points, or 0.03 percentage point, to 3.36 percent. New Zealand’s two-year swap rate, a fixed payment made to receive a flowing rate, was little changed at 2.71 percent.
The MSCI Asia Pacific Index of shares slid 0.2 percent today, after the Standard & Poor’s 500 Index (SPX) dropped 0.8 percent in the U.S.
Malaysia’s ringgit dropped by the most in almost two weeks as signs U.S. federal budget talks are faltering reduced demand for emerging-market assets. (Bloomberg)
President Barack Obama will veto House Speaker John Boehner’s budget proposal because it would burden the middle class, White House Communications Director Dan Pfeiffer said. Democrats and Republicans are trying to come up with a deal to avert more than $600 billion in automatic spending cuts and tax increases. Japan, Malaysia’s third-largest export market, said yesterday overseas sales fell for a sixth month in November.
“There are still a lot of uncertainties in the market on the fiscal cliff,” said Andy Ji, a Singapore-based foreign- exchange strategist at Commonwealth Bank of Australia. “We may see more dollar strength.”
The ringgit declined 0.2 percent, the most since Dec. 7, to 3.0610 per dollar as of 9:06 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has advanced 3.7 percent this year.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell seven basis points, or 0.07 percentage point, to 4.47 percent. It has fallen 4.03 percentage points this year.
Inflation held at 1.3 percent in November, the same as in the previous two months and the least since February 2010, according to a government report yesterday. The median estimate of analysts surveyed by Bloomberg was 1.4 percent.
Government bonds were little changed yesterday. The yield on the 3.492 percent notes due March 2020 was steady at 3.48 percent, according to Bursa Malaysia.
Building Permits Increase as U.S. Housing Rebounds: Economy (Bloomberg)
The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013.
Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of 58 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington. While housing starts fell 3 percent to an 861,000 pace, the average rate from September through November was the strongest since the three months ended August 2008.
Record-low mortgage rates and an improving job market are giving Americans the confidence and wherewithal to buy a house, boosting builders such as Toll Brothers Inc. (TOL), which are now able to raise prices. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013.
“We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected starts would drop to an 865,000 pace. “Housing is coming back.”
Stocks fell as deteriorating federal budget negotiations fueled concern that automatic tax increases and spending cuts will be triggered next year. The Standard & Poor’s 500 Index dropped 0.8 percent to 1,435.81 at the close in New York.
Obama Says Republicans Posturing in Rejecting Budget Deal (Bloomberg)
President Barack Obama said he offered congressional Republicans a “fair deal” during budget talks and accused them of “posturing” in negotiations.
The president, at a White House news conference, vowed to continue to reach out to House Speaker John Boehner and said there is no reason to breach the end-of-the-year deadline and allow automatic spending cuts and tax increases to take effect.
“I have gone at least half way” in negotiations for a accord to avoid the so-called fiscal cliff and Republicans need to “take the deal” he’s offered, Obama said. “The fact that they haven’t taken it yet is puzzling.”
Obama also said he still wants to get an agreement by Christmas. He said the proposals he and Boehner have advanced are “pretty close.”
FedEx Maintains Full-Year Forecast Amid Economic Concerns (Bloomberg)
FedEx Corp. (FDX), operator of the world’s largest cargo airline, maintained its full-year profit forecast amid increasing concern that U.S. economic growth may slow.
The shares rose, as broader market indexes declined, after Memphis, Tennessee-based FedEx re-affirmed its fiscal 2013 earnings outlook of $6.20 to $6.60 a share, excluding costs associated with a voluntary buyout program.
FedEx, an economic bellwether because it moves goods as varied as pharmaceuticals, financial documents and electronics, beat fiscal second-quarter sales estimates while struggling with falling profit at its express division. That drop is caused in part by customers’ long-term shift to cheaper shipping options.
“It was a pretty impressive quarter, especially given the economy,” said Logan Purk, an Edward Jones & Co. analyst in St. Louis, who recommends buying the shares. “Something else the market likes is that in this sluggish environment they came out and maintained their guidance” for full-year profit.
FedEx increased 0.9 percent to $93.20 at the close in New York, while United Parcel Service Inc. (UPS), the world’s largest package-delivery company, gained 0.7 percent to $75.61. The Standard & Poor’s 500 Index and the Dow Jones Industrial Average both fell as federal budget talks deteriorated, stoking concern that the lack of an agreement will hurt the economy.
South Korean Won Forwards Weaken After Park Elected; Bonds Gain (Bloomberg)
Won forwards fell for the first time in a week after the ruling party’s Park Geun Hye was elected South Korea’s first female president, damping speculation of a major shift in the nation’s exporter-friendly policies. Government bonds advanced.
Park defeated main opposition nominee Moon Jae In by 51.6 percent to 48 percent in yesterday’s election, according to the National Election Commission. Park has called for tighter regulation of family-owned conglomerates such as Samsung Group, but stopped short of Moon’s call for banning existing and new cross-shareholdings. U.S. shares fell yesterday on concern lawmakers are struggling to reach agreement on budget changes.
“The ruling New Frontier Party is more corporate friendly than the opposition, which means less tolerance for a stronger won,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “There is caution against government intervention considering what we saw on Dec. 18, and also the U.S. budget deal is a continuous concern.”
One-month non-deliverable forwards on the won weakened 0.1 percent to 1,074.76 per dollar as of 10:04 a.m. in Seoul, according to data compiled by Bloomberg. The won traded at 1,072.78 per dollar from a close of 1,073.23 on Dec. 18, when it touched a 15-month high of 1,070.73. Local markets were closed yesterday for the election.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, was little changed today at 4.75 percent. That is down from 13.55 percent at the start of this year. The won has strengthened 7.4 percent this year, the best performance among Asia’s 11 most-used currencies.
Park Win Lifts Korean ETF as Export Outlook Brightens on China (Bloomberg)
An exchange-traded fund of South Korean stocks rose in New York as Park Geun Hye was elected president of the Asian nation amid signs China, the nation’s biggest trading partner, is emerging from a slowdown.
The iShares MSCI South Korea Index Fund, an exchange traded fund incorporated in the U.S., added 0.1 percent to $62.38, while the Bank of New York Mellon Corp. (BK) index of Korean American depositary receipts closed little changed at 187.70, after gaining as much as 0.5 percent during the U.S. day.
Park, 60, of the ruling New Frontier Party, led main opposition nominee Moon Jae In, 51.6 percent to 48 percent with 91.4 percent of the vote counted, the National Election Commission said on its website as of 12:25 a.m. in Seoul. Moon, 59, conceded defeat. The election results come as the World Bank said in a report issued yesterday that the economy of China, the biggest buyer of South Korean goods, may “have bottomed out” after a seven-quarter slowdown.
“This government won’t be anti-business, there’s no such tone,” Michael Ding, lead manager of the China Region Fund at U.S. Global Investors Inc. in San Antonio, Texas, which oversees $2.2 billion including investments in South Korean stocks, said by phone yesterday. “The market is also up because of the recovery of Chinese economy. There’s a lot of tailwinds in South Korea’s favor.”
Park will take office Feb. 25, when President Lee Myung Bak’s single five-year term ends. She has pledged stronger support for small- and medium-sized businesses, to help them compete with dominant exporters such as Samsung Electronics Co. and Hyundai Motor Co.
N.Z.’s Economic Growth Slows More Than Forecast; Kiwi Falls (Bloomberg)
New Zealand’s economic growth slowed more than economists forecast last quarter amid a drop in manufacturing and farm output, sending the currency toward its steepest weekly decline since May.
Gross domestic product rose 0.2 percent in the three months ended Sept. 30 from the previous quarter, when it expanded a revised 0.3 percent, Statistics New Zealand said in a report released today in Wellington. Growth matched the central bank’s 0.2 percent forecast and was half the 0.4 percent median estimate in a Bloomberg News survey of 13 economists.
The New Zealand dollar fell as traders bet central bank Governor Graeme Wheeler will extend a period of record-low interest rates. Still, sluggish growth may be temporary amid signs of a pick-up in reconstruction in Christchurch and a rise in consumer confidence in the fourth quarter that may revive domestic demand in 2013.
“The economy shifted down a gear,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. “With 2013 approaching, the real issue is identifying the drivers of growth outside construction against a fickle global and labor market backdrop.”
New Zealand’s dollar dropped against the U.S. currency after the data. It bought 83.35 U.S. cents as of 11:35 a.m. in Wellington from 83.61 cents immediately before the result. The so-called kiwi has fallen 1.5 percent since Dec. 14.
Spain’s $185 Billion Restructuring Test for Rajoy Cleanup (Bloomberg)
A rush by recession-hit Spanish businesses and consumers to refinance their loans will test Prime Minister Mariano Rajoy’s pledge of a “definitive” cleanup of the nation’s crisis-hit banks.
Spain’s banks have restructured about 140 billion euros ($185 billion) of loans outside the country’s crippled real estate industry, according to Oliver Wyman, a consulting firm that did a stress test of Spanish lenders. Bad loans surged to a record 11.2 percent of total lending, the Bank of Spain said yesterday.
“We are working with factories, restaurants, any kind of business,” Agusti Bou, who works on restructuring credit at Jausas, a Barcelona-based law firm, said in a phone interview. “There’s going to be a growing default problem because the huge issue in Spain is not the public debt, it’s the private.”
Spain has ordered banks to recognize 84 billion euros of losses to purge their balance sheets of real estate as Rajoy recapitalizes at least four failed lenders with about 40 billion euros of European bailout funds. The strategy focuses on soured property assets and may neglect impending losses on loans to firms and homeowners as the economy shrinks, analysts say.
While small and medium-sized businesses have restructured as much as 21 percent of the 230 billion euros they owe, according to Oliver Wyman, total non-performing loans in the country grew by 7.8 billion euros to 190 billion euros in October, the Bank of Spain said. The nation’s bad-loan ratio will jump to 14.5 percent of all lending, assuming that 30 percent of refinanced credit turns sour within a year, said Daragh Quinn, a banking analyst at Nomura Holdings Inc. (8604) in Madrid.
Greeks Can’t Find Euros to Buy Heating Oil in Winter Economy (Bloomberg)
In the Greek mountain town of Kastoria, less than an hour from the Albanian border, Kostas Tsitskos, 88, can’t afford fuel to heat his home against the winter’s cold. So he and his son live in a single bedroom, warmed by a small electric heater.
“One room is enough,” said Tsitskos, who lives on a 734 euro-a-month ($971) pension and doesn’t have the 1,000 euros a month he needs to buy heating oil.
Greece is facing a heating-oil crisis. With an economy that has contracted for five years and an unemployment rate at a record 25 percent, residents in northern Greece can’t heat their homes. Kastoria hasn’t received funds from the central government to warm schools and the mayor said he will close all 53 of them rather than let children freeze, a step already taken in a nearby town. Truckloads of wood are arriving from Bulgaria as families search for alternative fuels.
“This is the coldest place in Greece,” said Emmanouil Hatzisimeonidis, Kastoria’s mayor, in an interview in his office. “It’s winter from October to April. This year we are very lucky. Last year, it was snowing for four months.”
When temperatures fall below freezing, Tsitskos spends most of his time in his bedroom and rarely leaves the house, he said. For meals, he and his son move the electrical heater to the kitchen. Other older residents in the town spend their days at a senior center and cafes to save on heating costs, returning home only to sleep, he said.
20121220 1014 Global Economy Related News.
South Korea: Park the first woman to lead the nation
Park Geun Hye was elected president of South Korea, becoming the first woman to lead Asia’s fourth-biggest economy more than 30 years after her father’s reign as dictator ended with his assassination. Park, 60, of the ruling New Frontier Party, led main opposition nominee Moon Jae In, 51.7% to 47.9% with 94.2% of the vote counted. (Bloomberg)
Japan: Exports slide even as yen decline improves 2013 outlook
Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth. Shipments slid 4.1% from a year earlier while imports rose 0.8% leaving a deficit of JPY953bn, the third-largest on record. (Bloomberg)
Germany: Business confidence rises for a second month
German business confidence increased for a second month in December, signalling Europe’s largest economy may support a euro-area recovery next year. The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 from 101.4 in November, the second straight increase after sentiment dropped to a 2 year low in October. (Bloomberg)
US: Republicans said to consider spending cuts in bill
House Republican leaders are considering giving members a chance to vote on spending cuts to firm up support for House Speaker John Boehner’s tax measure, said a Republican lawmaker and a congressional aide who spoke on condition of anonymity. In announcing his proposal yesterday to raise tax rates for income above USD1m, Boehner had said his plan wouldn’t reverse automatic spending cuts set to take effect in January. (Bloomberg)
US: Obama says Republicans posturing in rejecting budget deal
US President Barack Obama said he offered congressional Republicans a “fair deal” during budget talks and accused them of “posturing” in negotiations. The president vowed to continue to reach out to House Speaker John Boehner and said there is no reason to breach the end-of-the-year deadline and allow automatic spending cuts and tax increases to take effect. (Bloomberg)
US: Building permits increase as housing rebounds
The number of building applications issued in Nov rose to a four-year high, a sign the US housing-market recovery will extend into 2013. Permits climbed 3.6% to an 899,000 annual rate, the most since July 2008. While housing starts fell 3% to an 861,000 pace, the average rate from Sept through Nov was the strongest since the three months ended Aug 2008. (Bloomberg)
US stocks decline from two-month high amid budget negotiations
US stocks fell, pulling the Standard & Poor’s 500 Index down from a two-month high, as deteriorating federal budget negotiations fueled concern that automatic tax increases and spending cuts will be triggered. The S&P 500 lost 0.8% to 1,435.81 yesterday. The Dow Jones Industrial Average slipped 98.99 points, or 0.7%, to 13,251.97. The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 12% to 17.36 for the biggest gain since Oct 23. (Bloomberg)
20121210 1010 Global Markets Related News.
Asia FX By Cornelius Luca - Wed 19 Dec 2012 17:03:21 CT (CME/www.lucafxta.com)
The appetite for risk disappeared late in the US session after the "fiscal cliff" politics turned south. Speaker John Boehner said the House of Representatives will pass a budget proposal that President Barack Obama had already threatened to veto. The European currencies surrendered gains and the commodity currencies added to their losses. The yen remains under pressure at a 20-month low. The US stock markets sank. Gold and silver closed down as well. The short-term outlook for most major currencies is sideways with downside risk. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on all European and commodity currencies and short yen. Good luck!
Overnight
US: Housing starts fell 3.0% to an annual rate of 861,000 in November from the revised October estimate of 888,000. Building permits rose 3.6% to an annual rate of 899,000 in November from the revised October rate of 868,000.
Canada: Wholesale sales rose 0.9% in October after falling -1.5% in September.
Today's economic calendar
Japan: The BoJ will leave interest rates unchanged
Australia: The RBA Bulletin for the fourth quarter
China: Leading economic index for November
Asian Stocks Swing Between Gains, Losses on U.S. Budget Talks (Bloomberg)
Asian stocks swung between gains and losses amid signs U.S. budget negotiations are faltering and as investors await the outcome of a Bank of Japan policy meeting. Japanese shares fell as the yen rose, weighing on exporters.
Samsung Electronics Co. (005930), which gets a fifth of its revenue in America, dropped 1.1 percent in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 1.2 percent. Capcom Co. slumped 12 percent in Tokyo after the gamemaker cut its profit forecast and delayed the release of a new game. Mitsubishi Motors Corp. (7211) dropped 6.6 percent after saying it will recall 1.21 million vehicles in Japan.
The MSCI Asia Pacific Index slipped 0.1 percent to 129.23 at 10:17 a.m. in Tokyo after rising 0.1 percent. Markets in Hong Kong and China are yet to open. The measure closed yesterday at the highest level since August 2011.
“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, Melbourne-based markets strategist at IG Markets Ltd. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”
Asia’s benchmark equities index has risen 13 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.7 times average estimated earnings, compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Nikkei 225 Declines as Yen Climbs Amid U.S. Budget Talks (Bloomberg)
Japan’s Nikkei 225 Stock Average (NKY) fell from its highest level since March as the yen strengthened amid concern U.S. budget talks are stalling. The Bank of Japan is scheduled to conclude a policy meeting today.
Canon Inc. (7751), which gets 27 percent of its revenue from the Americas, lost 1.6 percent. Capcom Co. plunged 12 percent after the gamemaker cut its forecast on weakening sales and delays for a key title. Mitsubishi Motors Corp. sank 6.6 percent after Japan’s transport ministry issued a warning to the automaker for being “passive” after a fourth round of recalls.
The Nikkei 225 lost 0.8 percent to 10,079.31 as of 10:00 a.m. in Tokyo today after reaching its highest level since March 28 yesterday. Volume on the gauge was 74 percent higher than the 30-day average. The Topix Index fell 0.3 percent to 837.11 with about three stocks falling for each that gained.
“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, Melbourne-based markets strategist at IG Markets Ltd. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”
Standard & Poor’s 500 Index futures were little changed today. The gauge slid 0.8 percent yesterday as deteriorating federal budget negotiations fueled concern that $600 billion in automatic tax increases and spending cuts will be triggered if a compromise is not reached by the end of the year.
U.S. Stocks Fall on Housing Data, Budget Negotiations (Bloomberg)
U.S. stocks fell, pulling the Standard & Poor’s 500 Index (VIX) down from a two-month high, as deteriorating federal budget negotiations fueled concern that automatic tax increases and spending cuts will be triggered.
Alcoa Inc. (AA) fell 3 percent as Moody’s Investors Service placed the aluminum producer’s credit rating under review for a downgrade. Consumer-staples, health-care and phone stocks lost more than 1 percent for the worst performance among 10 S&P 500 groups. General Motors Co. (GM) jumped 6.6 percent on plans to purchase 200 million shares from the government. Knight Capital Group Inc. rose 5.4 percent on plans to be bought by Getco LLC.
The S&P 500 lost 0.8 percent to 1,435.81 today. The Dow Jones Industrial Average slipped 98.99 points, or 0.7 percent, to 13,251.97. The Chicago Board Options Exchange Volatility Index, known as the VIX, jumped 12 percent to 17.36 for the biggest gain since Oct. 23.
“The underlying situation for U.S. equities isn’t bad, but a lot hinges on the fiscal cliff negotiations,” George Feiger, chief executive officer of Contango Capital Advisors Inc., the San Francisco-based wealth management arm of Zions Bancorporation, said in a phone interview. He manages about $3.6 billion at Contango and Western National Trust Co. “If we get through the fiscal cliff with a reasonable result, then the odds are quite substantial that things are going to be better than many people expect by the middle of 2013,” he said. “All of this can be postponed for a year if they screw up on the negotiations and we slide into a recession.”
European Stocks Rise on German Business Confidence Report (Bloomberg)
European (SXXP) stocks climbed to their highest level in 19 months as German business confidence rose more than forecast and optimism mounted that U.S. policy makers will reach an agreement on next year’s budget.
HSBC Holdings Plc (HSBA) advanced 2 percent as European banking shares contributed the most to the benchmark Stoxx Europe 600 Index’s advance. Stada Arzneimittel AG (SAZ) jumped 5.4 percent. Merck KGaA (MRK) lost 2.1 percent after an experimental drug missed the main goal in a trial with lung-cancer patients.
The Stoxx 600 climbed 0.4 percent to 281.63 at the close of trading. The equity benchmark advanced to its highest level since May 2011 after Standard & Poor’s upgraded Greece’s debt. The gauge has rallied 15 percent this year as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“The market is still focused on the fiscal-cliff talks in the U.S., in which investors seem to expect an agreement relatively soon,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “News such as the upgrade of Greece’s credit rating is positive, albeit not a big surprise, helping to continue a year-end rally. Sentiment at the beginning of 2013 will be cautious as we face some political risk.”
National benchmark indexes rose in every western-European market except Finland. France’s CAC 40 and the U.K.’s FTSE climbed 0.4 percent. Germany’s DAX gained 0.2 percent. Greece’s ASE rallied 4.8 percent.
Treasuries Remain Higher on Cliff Concern as Stocks Snap Gains (Bloomberg)
Treasuries remained higher following a gain yesterday amid speculation U.S. leaders are struggling to reach an agreement on the so-called fiscal cliff that could send the world’s largest economy into recession.
President Barack Obama is trying to pressure congressional Republicans to accept a tax-rate increase for top earners as part of his proposal to avert more than $600 billion in automatic spending cuts and tax increases that start taking effect next month. Asian shares snapped a two-day advance, bolstering demand for safer assets.
“It’s inevitable, after all this, that higher taxes will be imposed on the wealthy, which is a negative for consumer spending,” said Hiromasa Nakamura, a senior investor for Tokyo- based Mizuho Asset Management Co., which oversees the equivalent of $39 billion and is part of Japan’s third-biggest financial group. Ten-year yields may fall to 1 percent by the end of next year, he forecast. The record low is 1.38 percent set on July 25.
The yield on the benchmark 10-year note fell one basis point to 1.79 percent as of 9:24 a.m. in Tokyo after declining two basis points yesterday. The price of the 1.625 percent security maturing in November 2022 gained 1/8, or $1.25 per $1,000 face amount, to 98 17/32.
Japan’s 10-year government bond yield slid one basis point to 0.77 percent in Tokyo, according to Japan Bond Trading Co., the nation’s largest inter-dealer debt broker.
The MSCI Asia Pacific Index (MXAP) of shares was little changed after advancing 1.6 percent in the previous two days.
Obama administration officials told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said.
Yen Gains Versus Major Peers on Fiscal Cliff Concern, Before BOJ (Bloomberg)
The yen gained against most major counterparts as concern that U.S. lawmakers are failing to make progress in budget talks boosted demand for refuge assets.
The dollar rallied from an eight-month low versus the euro after the the White House was reported to have said that negotiations with House Speaker John Boehner regressed yesterday, as both sides seek to avoid the so-called fiscal cliff of $600 billion in tax increases and spending cuts. The Bank of Japan ends a two-day meeting today, at which it is expected to expand monetary stimulus.
“The dollar-yen and euro-yen are falling as people are wary about the BOJ’s decision and there’s news about the fiscal cliff,” said Masato Yanagiya, head of currency and money trading in New York at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “Markets were ahead of themselves in terms of expectations for a cliff agreement.”
The yen strengthened 0.2 percent to 111.47 per euro at 9:36 a.m. in Tokyo from the close yesterday, when it touched 112.50, the weakest since August 2011. The Japanese currency rose 0.1 percent to 84.33 per dollar. The euro slid 0.1 percent to $1.3219 per dollar, after it reached $1.3308 yesterday, the highest since April 3.
Officials in President Barack Obama’s administration told leaders of business and financial services groups that negotiations with Boehner deteriorated in the last 24 hours, a person familiar with the meeting said.
Aussie Holds Losses on U.S. Cliff Concern; Kiwi Touches Week Low (Bloomberg)
Australia’s dollar maintained a three-day loss and the nation’s bonds rose amid concern U.S. lawmakers are deadlocked on a deal to avert the so-called fiscal cliff, reducing demand for riskier assets.
New Zealand’s dollar, nicknamed the kiwi, touched a one- week low versus the greenback after data showed the nation’s gross domestic product grew less than forecast in the third quarter. The Reserve Bank of Australia’s currency sales to other the clients that can include foreign central banks totaled A$117 million ($123 million) in November, data showed today.
“Another 24 hours goes by and we still don’t have any concrete development on the fiscal cliff with the end of the year not far away,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. “That’s one good argument for a lower Aussie.”
Australia’s currency slid 0.1 percent to $1.0472 as of 12:17 p.m. in Sydney after falling 0.8 percent in the previous three days. The so-called Aussie dropped 0.2 percent to 88.28 yen.
The kiwi touched 83.31 U.S. cents, the lowest since Dec. 10, before trading at 83.46, up 0.1 percent from yesterday. It slid 0.1 percent to 70.36 yen.
Australian government bonds rose, with yields on 10-year debt falling three basis points, or 0.03 percentage point, to 3.36 percent. New Zealand’s two-year swap rate, a fixed payment made to receive a flowing rate, was little changed at 2.71 percent.
The MSCI Asia Pacific Index of shares slid 0.2 percent today, after the Standard & Poor’s 500 Index (SPX) dropped 0.8 percent in the U.S.
Malaysia’s ringgit dropped by the most in almost two weeks as signs U.S. federal budget talks are faltering reduced demand for emerging-market assets. (Bloomberg)
President Barack Obama will veto House Speaker John Boehner’s budget proposal because it would burden the middle class, White House Communications Director Dan Pfeiffer said. Democrats and Republicans are trying to come up with a deal to avert more than $600 billion in automatic spending cuts and tax increases. Japan, Malaysia’s third-largest export market, said yesterday overseas sales fell for a sixth month in November.
“There are still a lot of uncertainties in the market on the fiscal cliff,” said Andy Ji, a Singapore-based foreign- exchange strategist at Commonwealth Bank of Australia. “We may see more dollar strength.”
The ringgit declined 0.2 percent, the most since Dec. 7, to 3.0610 per dollar as of 9:06 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has advanced 3.7 percent this year.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell seven basis points, or 0.07 percentage point, to 4.47 percent. It has fallen 4.03 percentage points this year.
Inflation held at 1.3 percent in November, the same as in the previous two months and the least since February 2010, according to a government report yesterday. The median estimate of analysts surveyed by Bloomberg was 1.4 percent.
Government bonds were little changed yesterday. The yield on the 3.492 percent notes due March 2020 was steady at 3.48 percent, according to Bursa Malaysia.
Building Permits Increase as U.S. Housing Rebounds: Economy (Bloomberg)
The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013.
Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of 58 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington. While housing starts fell 3 percent to an 861,000 pace, the average rate from September through November was the strongest since the three months ended August 2008.
Record-low mortgage rates and an improving job market are giving Americans the confidence and wherewithal to buy a house, boosting builders such as Toll Brothers Inc. (TOL), which are now able to raise prices. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013.
“We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected starts would drop to an 865,000 pace. “Housing is coming back.”
Stocks fell as deteriorating federal budget negotiations fueled concern that automatic tax increases and spending cuts will be triggered next year. The Standard & Poor’s 500 Index dropped 0.8 percent to 1,435.81 at the close in New York.
Obama Says Republicans Posturing in Rejecting Budget Deal (Bloomberg)
President Barack Obama said he offered congressional Republicans a “fair deal” during budget talks and accused them of “posturing” in negotiations.
The president, at a White House news conference, vowed to continue to reach out to House Speaker John Boehner and said there is no reason to breach the end-of-the-year deadline and allow automatic spending cuts and tax increases to take effect.
“I have gone at least half way” in negotiations for a accord to avoid the so-called fiscal cliff and Republicans need to “take the deal” he’s offered, Obama said. “The fact that they haven’t taken it yet is puzzling.”
Obama also said he still wants to get an agreement by Christmas. He said the proposals he and Boehner have advanced are “pretty close.”
FedEx Maintains Full-Year Forecast Amid Economic Concerns (Bloomberg)
FedEx Corp. (FDX), operator of the world’s largest cargo airline, maintained its full-year profit forecast amid increasing concern that U.S. economic growth may slow.
The shares rose, as broader market indexes declined, after Memphis, Tennessee-based FedEx re-affirmed its fiscal 2013 earnings outlook of $6.20 to $6.60 a share, excluding costs associated with a voluntary buyout program.
FedEx, an economic bellwether because it moves goods as varied as pharmaceuticals, financial documents and electronics, beat fiscal second-quarter sales estimates while struggling with falling profit at its express division. That drop is caused in part by customers’ long-term shift to cheaper shipping options.
“It was a pretty impressive quarter, especially given the economy,” said Logan Purk, an Edward Jones & Co. analyst in St. Louis, who recommends buying the shares. “Something else the market likes is that in this sluggish environment they came out and maintained their guidance” for full-year profit.
FedEx increased 0.9 percent to $93.20 at the close in New York, while United Parcel Service Inc. (UPS), the world’s largest package-delivery company, gained 0.7 percent to $75.61. The Standard & Poor’s 500 Index and the Dow Jones Industrial Average both fell as federal budget talks deteriorated, stoking concern that the lack of an agreement will hurt the economy.
South Korean Won Forwards Weaken After Park Elected; Bonds Gain (Bloomberg)
Won forwards fell for the first time in a week after the ruling party’s Park Geun Hye was elected South Korea’s first female president, damping speculation of a major shift in the nation’s exporter-friendly policies. Government bonds advanced.
Park defeated main opposition nominee Moon Jae In by 51.6 percent to 48 percent in yesterday’s election, according to the National Election Commission. Park has called for tighter regulation of family-owned conglomerates such as Samsung Group, but stopped short of Moon’s call for banning existing and new cross-shareholdings. U.S. shares fell yesterday on concern lawmakers are struggling to reach agreement on budget changes.
“The ruling New Frontier Party is more corporate friendly than the opposition, which means less tolerance for a stronger won,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “There is caution against government intervention considering what we saw on Dec. 18, and also the U.S. budget deal is a continuous concern.”
One-month non-deliverable forwards on the won weakened 0.1 percent to 1,074.76 per dollar as of 10:04 a.m. in Seoul, according to data compiled by Bloomberg. The won traded at 1,072.78 per dollar from a close of 1,073.23 on Dec. 18, when it touched a 15-month high of 1,070.73. Local markets were closed yesterday for the election.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, was little changed today at 4.75 percent. That is down from 13.55 percent at the start of this year. The won has strengthened 7.4 percent this year, the best performance among Asia’s 11 most-used currencies.
Park Win Lifts Korean ETF as Export Outlook Brightens on China (Bloomberg)
An exchange-traded fund of South Korean stocks rose in New York as Park Geun Hye was elected president of the Asian nation amid signs China, the nation’s biggest trading partner, is emerging from a slowdown.
The iShares MSCI South Korea Index Fund, an exchange traded fund incorporated in the U.S., added 0.1 percent to $62.38, while the Bank of New York Mellon Corp. (BK) index of Korean American depositary receipts closed little changed at 187.70, after gaining as much as 0.5 percent during the U.S. day.
Park, 60, of the ruling New Frontier Party, led main opposition nominee Moon Jae In, 51.6 percent to 48 percent with 91.4 percent of the vote counted, the National Election Commission said on its website as of 12:25 a.m. in Seoul. Moon, 59, conceded defeat. The election results come as the World Bank said in a report issued yesterday that the economy of China, the biggest buyer of South Korean goods, may “have bottomed out” after a seven-quarter slowdown.
“This government won’t be anti-business, there’s no such tone,” Michael Ding, lead manager of the China Region Fund at U.S. Global Investors Inc. in San Antonio, Texas, which oversees $2.2 billion including investments in South Korean stocks, said by phone yesterday. “The market is also up because of the recovery of Chinese economy. There’s a lot of tailwinds in South Korea’s favor.”
Park will take office Feb. 25, when President Lee Myung Bak’s single five-year term ends. She has pledged stronger support for small- and medium-sized businesses, to help them compete with dominant exporters such as Samsung Electronics Co. and Hyundai Motor Co.
N.Z.’s Economic Growth Slows More Than Forecast; Kiwi Falls (Bloomberg)
New Zealand’s economic growth slowed more than economists forecast last quarter amid a drop in manufacturing and farm output, sending the currency toward its steepest weekly decline since May.
Gross domestic product rose 0.2 percent in the three months ended Sept. 30 from the previous quarter, when it expanded a revised 0.3 percent, Statistics New Zealand said in a report released today in Wellington. Growth matched the central bank’s 0.2 percent forecast and was half the 0.4 percent median estimate in a Bloomberg News survey of 13 economists.
The New Zealand dollar fell as traders bet central bank Governor Graeme Wheeler will extend a period of record-low interest rates. Still, sluggish growth may be temporary amid signs of a pick-up in reconstruction in Christchurch and a rise in consumer confidence in the fourth quarter that may revive domestic demand in 2013.
“The economy shifted down a gear,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. “With 2013 approaching, the real issue is identifying the drivers of growth outside construction against a fickle global and labor market backdrop.”
New Zealand’s dollar dropped against the U.S. currency after the data. It bought 83.35 U.S. cents as of 11:35 a.m. in Wellington from 83.61 cents immediately before the result. The so-called kiwi has fallen 1.5 percent since Dec. 14.
Spain’s $185 Billion Restructuring Test for Rajoy Cleanup (Bloomberg)
A rush by recession-hit Spanish businesses and consumers to refinance their loans will test Prime Minister Mariano Rajoy’s pledge of a “definitive” cleanup of the nation’s crisis-hit banks.
Spain’s banks have restructured about 140 billion euros ($185 billion) of loans outside the country’s crippled real estate industry, according to Oliver Wyman, a consulting firm that did a stress test of Spanish lenders. Bad loans surged to a record 11.2 percent of total lending, the Bank of Spain said yesterday.
“We are working with factories, restaurants, any kind of business,” Agusti Bou, who works on restructuring credit at Jausas, a Barcelona-based law firm, said in a phone interview. “There’s going to be a growing default problem because the huge issue in Spain is not the public debt, it’s the private.”
Spain has ordered banks to recognize 84 billion euros of losses to purge their balance sheets of real estate as Rajoy recapitalizes at least four failed lenders with about 40 billion euros of European bailout funds. The strategy focuses on soured property assets and may neglect impending losses on loans to firms and homeowners as the economy shrinks, analysts say.
While small and medium-sized businesses have restructured as much as 21 percent of the 230 billion euros they owe, according to Oliver Wyman, total non-performing loans in the country grew by 7.8 billion euros to 190 billion euros in October, the Bank of Spain said. The nation’s bad-loan ratio will jump to 14.5 percent of all lending, assuming that 30 percent of refinanced credit turns sour within a year, said Daragh Quinn, a banking analyst at Nomura Holdings Inc. (8604) in Madrid.
Greeks Can’t Find Euros to Buy Heating Oil in Winter Economy (Bloomberg)
In the Greek mountain town of Kastoria, less than an hour from the Albanian border, Kostas Tsitskos, 88, can’t afford fuel to heat his home against the winter’s cold. So he and his son live in a single bedroom, warmed by a small electric heater.
“One room is enough,” said Tsitskos, who lives on a 734 euro-a-month ($971) pension and doesn’t have the 1,000 euros a month he needs to buy heating oil.
Greece is facing a heating-oil crisis. With an economy that has contracted for five years and an unemployment rate at a record 25 percent, residents in northern Greece can’t heat their homes. Kastoria hasn’t received funds from the central government to warm schools and the mayor said he will close all 53 of them rather than let children freeze, a step already taken in a nearby town. Truckloads of wood are arriving from Bulgaria as families search for alternative fuels.
“This is the coldest place in Greece,” said Emmanouil Hatzisimeonidis, Kastoria’s mayor, in an interview in his office. “It’s winter from October to April. This year we are very lucky. Last year, it was snowing for four months.”
When temperatures fall below freezing, Tsitskos spends most of his time in his bedroom and rarely leaves the house, he said. For meals, he and his son move the electrical heater to the kitchen. Other older residents in the town spend their days at a senior center and cafes to save on heating costs, returning home only to sleep, he said.
20121220 1010 Global Commodities Related News.
IntercontinentalExchange Said in Merger Talks With NYSE Euronext (Bloomberg)
IntercontinentalExchange Inc., the energy and commodity futures venue that was part of a hostile bid for NYSE Euronext (NYX) last year, now is in talks to acquire the New York Stock Exchange owner, according to a person with direct knowledge of the matter.
The cash-and-stock proposal may be announced as soon as this week, said the person, who declined to be identified because the talks are private. NYSE Euronext shares rose in late New York trading after the Wall Street Journal reported the negotiations earlier.
Combining the owners of the biggest American stock exchange and the second-largest futures market may revive the wave of exchange takeover offers from 2011, almost all of which failed. ICE’s joint bid with Nasdaq OMX Group Inc. to acquire NYSE was rejected by the U.S. Justice Department on concern the combination would dominate U.S. stock listings.
“This is a much easier deal to get done,” said Brian Barish, who helps oversee about $7 billion including about 4 million NYSE Euronext shares as president and chief investment officer of Denver-based Cambiar Investors LLC. “When Nasdaq was talking about doing something with NYSE, there were obvious antitrust market concentration problems. ICE is a totally different story because they don’t do equities.”
Atlanta-based ICE, its shares up 6.4 percent this year, has a market value of $9.3 billion, according to data compiled by Bloomberg. NYSE Euronext, whose stock fell 7.9 percent in 2012, has a capitalization of $5.8 billion. NYSE Euronext closed at $24.05 earlier and rose as much as 29 percent to $31 in trading after U.S. exchanges closed.
U.S. House Panel to Try Again With Full Agriculture Bill in 2013 (Bloomberg)
The House Agriculture Committee will go back to the drawing board on the farm bill in the next Congress, after unsuccessful efforts to include the legislation in any deal to avert more than $600 billion in tax increases and spending cuts set to trigger on Jan. 1.
“I see no reason to delay,” the committee’s chairman, Frank Lucas, an Oklahoma Republican, told reporters today.
Representative Collin Peterson of Minnesota, the committee’s top Democrat, said the panel probably will begin consideration of the bill, designed to set farm policy for five years, on Feb. 27. The old law expired Sept. 30. “What else are we going to do? we have no other choice,” Peterson said.
Some farm-state lawmakers had been talking about trying to get the agriculture bill included in a larger deal to avert the tax increases and spending cuts that have been labeled the fiscal cliff. With time running out, and facing opposition from House Speaker John Boehner, Republican of Ohio, the conversation has changed.
Instead, House leaders are considering doing an extension of the bill, according to a Republican leadership aide. Details on what that might look like haven’t been revealed.
Lucas said he ordered committee staff months ago to draft a “buffet of legislation” as a contingency for just such a scenario.
DTN Closing Grain Comments 12/19 14:26 Beans, Corn Fall Hard Again Wednesday (CME)
The soy complex and corn market continue to struggle to find buying interest as contracts fall through technical price support levels.
By Darin Newsom DTN Senior Analyst
General Comments:
Corn closed 17 cents lower in the March and 16 3/4 lower in the May.
Soybeans closed 29 cents lower in the January and 29 1/2 cents lower in the
March. Wheat closed 5 1/2 cents lower in the March Chicago, 2 1/2 cents lower
in the March Kansas City, and 6 cents lower in the March Minneapolis. The U.S.
dollar index is 0.076 lower at 79.283. February gold is $0.90 lower at
$1,669.80 while March silver is $0.509 lower and March copper is $.0495 lower.
The Dow Jones Industrial Average is 69 points lower at 13,280. January crude
oil is $1.58 higher at $89.51. January heating oil is $.0390 higher while
January RBOB gasoline is $.0527 higher and January natural gas is $0.094 lower.
Wheat Market Recap Report (CME)
March Wheat finished down 5 1/2 at 805 3/4, 17 off the high and 3 3/4 up from the low. May Wheat closed down 5 3/4 at 817 1/4. This was 3 3/4 up from the low and 16 1/2 off the high.
March Chicago and KC wheat traded lower on the day but held up rather well against sharp declines in the corn and soybean markets. The USDA reported that US exporters sold 180,000 tonnes of Soft Red Winter wheat to Egypt overnight. Furthermore, the USDA reported that US exporters sold 110,000 tonnes of KC hard red winter wheat to private Egyptian buyers. Both were seen as signs of increased demand for the broader wheat market which has been expected for some time now. Newswires also reported that Syria bought 100,000 tonnes of soft wheat overnight and it's expected to be sourced from the Black Sea. The missed business was shrugged off amid the positive sales by the US to Egypt. The NOAA 6-10 and 8-14 day precipitation outlooks show a better chance of rainfall for the eastern Corn Belt and above average precipitation for the southeast. Morning maps show snowfall and rain inching towards eastern Colorado and light showers are moving across central Kansas and the panhandle of Oklahoma this morning. Accumulation is expected to be light. A private grain analyst released updated 2013 winter wheat planting estimates and pegged planting at 42.198 million acres vs. prior estimates of 42.5. The decline in acres is likely due to the drought conditions in the western plains.
March Oats closed down 5 1/4 at 375 1/4. This was 1/4 up from the low and 8 1/4 off the high.
Corn Market Recap for 12/19/2012 (CME)
March Corn finished down 17 at 703, 20 off the high and 1 1/2 up from the low. May Corn closed down 16 3/4 at 707. This was 1 1/2 up from the low and 19 1/2 off the high.
March corn traded sharply lower and hit its lowest level in 5 months following another week of disappointing ethanol data. Ethanol production for the week ending December 14th averaged 822,000 barrels per day, down 0.24% from last week and down 12.8% vs. last year. Total Ethanol production for the week was 5.75 million barrels. Corn used in last week's production is estimated at 86.3 million bushels, down 210,000 bushels for the week. This crop year's cumulative corn used for ethanol production is 1.3 billion bushels. Corn use needs to average 86.6 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of December 14th were 20.8 million barrels, up 4.04% vs. last week and up 17.9% vs. last year. Imports surged higher to 2.59 million barrels, up 1.75 million on the week. Momentum was added to the downside after a private analyst released 2013 corn planting estimates that showed corn planting at just over 99 million acres from their previous forecast of 97.7 and against 96.9 in 2012/13. Wet weather in Argentina is seen as supportive factor in the corn market but the weak ethanol data along with the sluggish export pace favored the bear camp.
January Rice finished up 0.04 at 15.195, equal to the high and 0.025 up from the low.
Wheat Falls as Precipitation May Boost Crops in U.S. Plains (Bloomberg)
Wheat fell, heading for its biggest monthly decline in more than a year, on speculation that rain and snow in the U.S. Great Plains and Midwest will boost prospects for crops that are dormant for the winter.
Snow is expected in the southern Plains, where hard-red winter wheat is grown, and precipitation may fall as a winter storm covers most of Iowa, Nebraska and northwestern Missouri, forecaster DTN said in a report today. Concern that crops would be damaged by the worst U.S. drought since 1956 had helped send wheat prices up as much as 51 percent since mid-June.
“We’re getting some rain and some snow in areas that needed it,” Jon Marcus, the president of Lakefront Futures and Options LLC in Chicago, said by telephone.
Wheat futures for March delivery fell 0.7 percent to settle at $8.0575 a bushel at 2 p.m. on the Chicago Board of Trade. The price is down 6.7 percent since Nov. 30, heading for the biggest monthly slump since September 2011, on speculation that global stockpiles won’t fall as much as expected.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
Corn Falls to 11-Week Low on Slowing Demand; Soybeans Decline(Bloomberg)
Corn fell to the an 11-week low after the government said production of ethanol fell and inventories rose last week. Soybeans declined for a third time this week as rains aid crops in Brazil.
Production of ethanol in the U.S., mostly from corn, fell 13 percent in the week ended Dec. 14 from a year earlier, the Department of Energy said in a weekly report. About 42% of this year’s crop will be used to make ethanol, according to the U.S. Department of Agriculture. Stockpiles rose 4 percent last week from a year earlier to the highest since June. Ethanol producers are losing as much as 25 cents a gallon producing the fuel, according to Northstar Commodity Investments Inc.
“Ethanol production is slowing and inventories are still rising, a negative combination,” Mark Schultz, the chief analyst for Minneapolis-based Northstar, said in a telephone interview. “Corn demand is slowing.”
Corn futures for March delivery declined 1.5 percent to $7.09 a bushel at 11:20 a.m. on the Chicago Board of Trade, after touching $7.0575, the lowest since Sept. 28. The price through yesterday gained 11 percent this year after drought cut U.S. production 13 percent to a six-year low. The grain reached a record $8.49 on Aug. 10.
Soybean futures for March delivery dropped 1.1 percent to $14.4425 a bushel, heading for the first three-day decline since Nov. 12. Earlier, the oilseed touched $14.4225, the lowest since Dec. 4. Most-active futures through yesterday gained 21 percent this year after a drought in the U.S. triggered concern that supplies will fall short of growing demand from China.
Rain may boost Brazilian soybean production to 81.5 million metric tons in the marketing year that begins Feb. 1, up from 81.3 million forecast in November and 67.7 million harvested this year, the soybean processors group Abiove said today. The USDA predicts Brazil will surpass the U.S. as the top producer and exporter of the crop.
Recap Energy Market Report (CME)
February crude oil trended higher throughout the session, climbing to a new 12 day high in the process. Early support for the crude oil market came from gains in global equity markets and weakness in the US dollar. A better than expected read on German business sentiment, as well as hopes that US lawmakers might be getting closer to a budget deal offered support. This morning's EIA inventory report was a mixed bag, with crude oil stocks falling by a slightly smaller than expected amount of 964,000 barrels. Meanwhile, imports were a little lower than the prior week and the refinery operating rate was up 1.1% to 91.50%. EIA distillate stocks showed an unexpected draw last week of 1.085 million barrels. The entire complex traded higher after the report, led by gains in the crude oil market.
Oil Drops From Two-Month High as U.S. Budget Talks Deteriorate(Bloomberg)
Oil fell from the highest level in two months amid speculation its four-day gain was exaggerated as budget negotiations deteriorated in the U.S., threatening the economy of the world’s biggest crude user.
West Texas Intermediate futures slid as much as 0.4 percent, snapping the longest winning streak since September. President Barack Obama would veto House Speaker John Boehner’s budget proposal as it would put “too big a burden on the middle class,” according to White House Communications Director Dan Pfeiffer. Oil climbed 1.8 percent yesterday after the Energy Department said U.S. crude stockpiles declined and refinery rates rose to the highest since August.
Crude for February delivery slid as much as 39 cents to $89.59 a barrel and was at $89.64 in electronic trading on the New York Mercantile Exchange at 10:58 a.m. Sydney time. The January contract, which expired yesterday, rose $1.58 to $89.51, the highest settlement since Oct. 19. Front-month prices are down 9.3 percent this year.
Brent for February settlement climbed $1.52 to $110.36 a barrel on the London-based ICE Futures Europe exchange yesterday. Prices are up 2.8 percent this year. The European benchmark contract closed at a premium of $20.38 to WTI.
Oil is dropping in New York after reaching technical resistance at the upper Bollinger Band, according to data compiled by Bloomberg. Futures halted rallies from mid-July to mid-September and in early December near this indicator, around $89.96 a barrel today. Sell orders tend to be clustered near chart-resistance levels.
Silver Market Recap Report (CME)
The silver market fell down in another slide that ultimately resulted in a lower low for the move. Some players suggested that the March silver contract was gunning for the 200 day moving average down at $30.995 and others simply think that physical commodities are out of favor perhaps until the US fiscal cliff thing is out of the way. In short, supportive currency market action, sharp gains in energy prices and residual hope that the two sides were moving closer together was of little importance to would-be silver buyers today.
Gold Market Recap Report (CME)
In retrospect, February gold spent a lot of time waffling around unchanged levels but at times the market did return to the vicinity of the prior session's lows. Perhaps some players were simply defeated in the wake of the downward bias on the charts and perhaps others were simply discouraged because of gold recent lack of benefit from supportive outside market action. Even scheduled US data today was confusing as the data might have been softer than some expectations. The bulls probably need some significant improvement in global macro economic sentiment or perhaps a serious flight to quality event to regain control as recently potential bullish developments haven't been given much attention.
Gold Near Lowest Since August as U.S. Impasse Counters Holdings(Bloomberg)
Gold traded near the lowest level since August as an impasse in U.S. budget talks helped to boost the dollar, countering investor holdings in exchange-traded products at an all-time high.
Spot gold was little changed at $1,667.95 an ounce at 9:34 a.m. in Singapore after dropping 0.2 percent yesterday and falling to $1,661.10 on Dec. 18, the lowest level since Aug. 31 on signs of progress in the U.S. negotiations. Gold for February delivery rose 0.1 percent to $1,670.10 an ounce on the Comex.
Officials in President Barack Obama’s administration told leaders of business and financial-services groups that talks with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said. Lawmakers are negotiating to avert more than $600 billion in automatic tax rises and spending cuts set to start in January, known as the fiscal cliff. The Dollar Index snapped a four-day decline.
“We’ve had a few violent moves towards the downside,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Looking into 2013, we still feel confident about prices eventually moving higher,” he said, citing prospects for increased ETP demand, central-bank buying and a weaker dollar next year.
Holdings in ETPs climbed 12 percent this year to 2,631.794 metric tons yesterday, data compiled by Bloomberg show. Bullion has advanced 6.8 percent this year, set for a 12th annual gain, as central banks around the world added to stimulus.
Cash silver climbed as much as 0.5 percent to $31.20 an ounce, and was at $31.16. The metal, which has risen 12 percent this year, fell to $30.9825 yesterday, the cheapest since Nov. 5. Palladium slipped 0.3 percent to $693 an ounce.
Spot platinum was little changed at $1,590 an ounce, after falling for the past three days. The best performing precious metal this year, up 13.5 percent, reached a two-week low of $1,584 earlier today.
20121220 1103 Soy Oil & Palm Oil Related News.
ITS CPO export down 1.9% to 1,004,159 tonnes for the period of 1~15 Dec 2012.
Soybean Complex Market Recap (CME)
January Soybeans finished down 29 at 1437, 35 1/4 off the high and 4 up from the low. March Soybeans closed down 29 1/2 at 1431. This was 4 3/4 up from the low and 35 1/2 off the high.
January Soymeal closed down 8.4 at 436.5. This was 3.7 up from the low and 10.5 off the high.
January Soybean Oil finished down 0.76 at 48.41, 1.08 off the high and 0.13 up from the low.
March soybeans traded sharply lower for the second day in a row after failing to recover from yesterday's 300,000 tonne soybean cancelation by China. The negative sentiment and poor technical charts added to the negative bias. The historically firm basis in the interior of the US and export markets continues to add underlying support and physical traders noted that farmer selling is non-existent given the slide in soybean prices. Pressure is coming from year end fund liquidation and favorable growing conditions in Brazil at the moment. A good mixture of rainfall and sunshine is expected over the next 2 weeks. Showers are expected to shift to the drier regions in the south and some expect harvest to begin in areas as early as January 5th. The USDA currently has the Brazil production estimate at 81 million tonnes but some analysts are beginning to raise their expectations. Brazil's vegetable oils association raised their production forecast to 81.6 million tonnes vs. 81.3 previously. A closely followed private analyst released updated 2013 planted acreage estimates and pegged soybean planting at 78.96 million bushels vs. prior estimates of 80.1 and against 77.2 this year.
EDIBLE OIL: Malaysian palm oil futures inched lower for a second day as sluggish exports in the first half of the month fan concerns that stockpiles in the world's No.2 producer could hit another record high. (Reuters)
Soybean Complex Market Recap (CME)
January Soybeans finished down 29 at 1437, 35 1/4 off the high and 4 up from the low. March Soybeans closed down 29 1/2 at 1431. This was 4 3/4 up from the low and 35 1/2 off the high.
January Soymeal closed down 8.4 at 436.5. This was 3.7 up from the low and 10.5 off the high.
January Soybean Oil finished down 0.76 at 48.41, 1.08 off the high and 0.13 up from the low.
March soybeans traded sharply lower for the second day in a row after failing to recover from yesterday's 300,000 tonne soybean cancelation by China. The negative sentiment and poor technical charts added to the negative bias. The historically firm basis in the interior of the US and export markets continues to add underlying support and physical traders noted that farmer selling is non-existent given the slide in soybean prices. Pressure is coming from year end fund liquidation and favorable growing conditions in Brazil at the moment. A good mixture of rainfall and sunshine is expected over the next 2 weeks. Showers are expected to shift to the drier regions in the south and some expect harvest to begin in areas as early as January 5th. The USDA currently has the Brazil production estimate at 81 million tonnes but some analysts are beginning to raise their expectations. Brazil's vegetable oils association raised their production forecast to 81.6 million tonnes vs. 81.3 previously. A closely followed private analyst released updated 2013 planted acreage estimates and pegged soybean planting at 78.96 million bushels vs. prior estimates of 80.1 and against 77.2 this year.
EDIBLE OIL: Malaysian palm oil futures inched lower for a second day as sluggish exports in the first half of the month fan concerns that stockpiles in the world's No.2 producer could hit another record high. (Reuters)
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