20121130 1022 Global Markets Related News.

Asia FX By Cornelius Luca (Source:CME/www.lucafxta.com)
The appetite for risk improved overall for a second day on Tuesday on hopes that the US politicians will manage to avoid the "fiscal cliff" by Christmas. Politicians have taken to their battle to the public in order to put themselves in a better light if somehow success is achieved. The market will continue to overreact to both good and bad rumors. The European currencies extended gains after ending up from their lows on Wednesday. The Aussie was clobbered by fears for a rate cut. The US stock indexes closed slightly higher. Gold, oil and silver ended up as well. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on all European currencies. Good luck!

Overnight
US: The NAR's pending home sales index jumped 5.2% to 104.8 in October after edging up by 0.4% to an upwardly revised 99.6 in September.
US:  Jobless claims decreased 23,000 to 393,000 from the previous week's revised figure of 416,000 (from the 410,000 originally reported).
US:  The GDP for the third quarter was revised upward to an annual rate of 2.7% from the 2.0% growth previously reported.
Canada: Current account deficit widened to $18.91 billion during the third quarter from $16.02 billion in the second quarter.
Canada: The Industrial Product Price index has contracted 0.1% in October after rising 0.5% in September.

Today's economic calendar
Japan: Nomura/ JMMA Manufacturing Purchasing Manager Index for October
Japan: National Consumer Price Index for October
Japan: Tokyo Consumer Price Index for November
Japan: Overall Household Spending  for October
Japan: Unemployment Rate for October
Japan: Industrial Production  for October
Japan: Annualized housing starts for October
Japan: Construction orders for October
Japan: Housing starts for October
UK: Gfk Consumer confidence for November
Australia: Private sector credit for October

Asian Stocks Rise on U.S. Budget Talks, Japan Production (Bloomberg)
Asian stocks rose, with the benchmark regional gauge heading for its second weekly advance, amid investor optimism that U.S. lawmakers will reach a resolution in federal budget negotiations and as Japanese industrial production unexpectedly increased. Rio Tinto Group (RIO) advanced 3.2 percent in Sydney as JPMorgan Chase & Co. analysts said plans by the world’s second-largest mining company to cut costs by $5 billion through the end of 2014 may boost shareholder returns. Mitsubishi Heavy Industries Ltd. rose 1.9 percent after agreeing to merge its energy- equipment businesses with Hitachi Ltd. Gold producer Northern Star Resources Ltd. (NST) slumped 10 percent in Sydney after directors cut stakes in the company. The MSCI Asia Pacific (MXAP) Index gained 0.2 percent to 124.44 as of 10:06 a.m. in Tokyo, before markets opened in China and Hong Kong. About two shares advanced for each that fell. The gauge has increased 1.3 percent this week.
“The market can go higher even if U.S. lawmakers drag out budget discussions all the way to the last minute,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “They will not let the U.S. economy shrink. There’s a lot of room for negotiation and compromise.” Japan’s Nikkei 225 Stock Average rose 0.2 percent. Australia’s S&P/ASX 200 Index (AS51) advanced 0.6 percent and South Korea’s Kospi Index was little changed.

Japan Stocks Swing From Gains, Losses on Economic Data (Bloomberg)
Japanese stocks swung between gains and losses as the nation’s cabinet approved 880 billion yen ($10.7 billion) of stimulus ahead of next month’s elections and the nation’s industrial production unexpectedly rose, while consumer prices declined. Komatsu Ltd. (6301), Japan’s largest construction machinery maker, rose 0.6 percent. Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. gained after agreeing to merge energy-equipment businesses. Tokai Holdings Corp. slumped 11 percent on plans to raise 5 billion yen in a share sale. The Nikkei 225 Stock Average (NKY) added 0.3 percent to 9,425.21 at 10:09 a.m. in Tokyo after falling as much as 0.6 percent. The gauge has risen 0.2 percent this week and 5.6 percent this month, the biggest monthly gain since February, on speculation next month’s election will lead to more monetary easing. The broader Topix Index slid 0.2 percent to 781.01.
“We’ve seen weakness in data related to spending and other areas as demand has been uneven,” said Akihiro Tsunoda, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which manages about 5 trillion yen ($61 billion) in assets. “I don’t think politicians will say anything negative prior to the race, which will give the market support.”

U.S. Stocks Climb Amid Optimism Over Budget Negotiations (Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, amid investor optimism that lawmakers will reach a resolution in federal budget negotiations. All 10 groups in the S&P 500 rose as commodity producers rallied. Apple Inc. (AAPL) and Advanced Micro Devices Inc. (AMD) led an advance in technology stocks. Kroger Co. (KR) jumped 4.8 percent after boosting its profit projection for the year. Walt Disney Co., the world’s largest entertainment company, added 1.1 percent after raising its dividend. Tiffany & Co. (TIF) tumbled 6.2 percent after cutting its profit forecast. Kohl’s Corp. (KSS) plunged 12 percent after reporting disappointing sales for November. The S&P 500 increased 0.4 percent to 1,415.95, the highest level since Nov. 6, at 4 p.m. in New York. The Dow Jones Industrial Average rose 36.71 points, or 0.3 percent, to 13,021.82. About 6.2 billion shares traded hands on U.S. exchanges today, in line with the three-month average, according to data compiled by Bloomberg.
“There’s going to be increasingly divisive negotiations that might shake the market’s confidence a bit,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview. “We might see a lot of volatility.” Equities briefly erased gains after Speaker of the House John Boehner said to reporters in Washington today that “no substantive progress” has been made in budget talks. Senate Majority Leader Harry Reid said Democrats were all on the same page on budget talks and Senator Chuck Schumer said there has been progress, helping the market recover after Boehner’s comments.

Recap Stock Index Market Report (CME)
The December S&P 500 trended higher throughout the session and broke out above its 50 day moving average in the process. Early support for market came from optimism over US budget negotiations, positive European economic data earlier this morning and better than expected October Pending Home Sales figures lent support. Technology shares were the upside leaders early in the session, helped by gains in Apple, Advanced Micro Devices and Research in Motion. However, stocks took a negative turn toward unchanged levels in response to comments from US House Speaker John Boehner indicating that no substantive progress had been made on budget negotiations. Some traders noted fresh buying interest on the mid-day dip, and that helped the index finish near the upper end of the day's range.

European Stocks Climb Amid Optimism on U.S. Budget Talks (Bloomberg)
European stocks rallied to their highest in 17 months as optimism grew that U.S. President Barack Obama will reach an agreement with Congress on a new budget. Rio Tinto Group gained 5.1 percent after the world’s second-largest mining company said it will reduce costs by $5 billion during 2013. Invensys Plc surged 8.9 percent as RBC Capital wrote that the company may be acquired after selling its rail unit to Siemens AG. Electricite de France SA slid 1 percent as the country’s highest court ruled that the utility has overcharged households. The Stoxx Europe 600 Index advanced 1.2 percent to 276.31 at the close in London, its highest level since June 1, 2011. The equity benchmark erased a decline of as much as 0.6 percent yesterday as Republican House Speaker John Boehner expressed optimism that Congress will reach a deal to prevent the so- called fiscal cliff coming into force.
“The President is on strong ground, having defeated his Republican challenger, and the House Speaker is sounding conciliatory too,” said Manish Singh, who helps manage $2 billion as head of investment at Crossbridge Capital LLP in London. “A deal is a certainty. News on the fiscal cliff has been incrementally positive, so investors are increasingly optimistic too.”

Emerging Stocks Rise Most in 11 Weeks on Commodity Rally (Bloomberg)
Emerging-market stocks advanced the most in 11 weeks as commodities rallied after U.S. politicians expressed confidence they will reach a budget deal and Goldman Sachs Group Inc. upgraded Indian shares. OAO MegaFon (MFON), Russia’s second-largest mobile-phone provider, climbed above its initial offer price on the second day of London trading. Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA rallied. Gold Fields Ltd. (GFI), the world’s fourth- biggest gold producer, gained the most in a year on plans to spin off some South African operations. Franshion Properties China Ltd. (817) rose the most on the benchmark gauge for emerging- market stocks as ICBC International said the developer met its sales target. The MSCI Emerging Markets Index gained 1.3 percent to 1,003.79 in New York, the highest since Nov. 7. The BSE India Sensitive Index (SENSEX) jumped 1.7 percent to the highest close since April 2011 as Goldman Sachs upgraded the country’s shares to overweight.
The world economy is at its healthiest in 18 months, with the U.S. looking likely to avoid tax increases and spending cuts, the latest Bloomberg Global Poll of investors showed. Commodities climbed for the first time this week. “Global risk appetite and investor sentiment has been improving,” Neil Shearing, chief emerging markets economist at Capital Economics Ltd., said by phone from London. “We’ve had pretty good data from the U.S. on top of hopes for action to avoid the fiscal cliff, and commodities are up, so that’s all supportive.”

Yen Remains Lower Versus Euro After Japan CPI Report (Bloomberg)
The yen remained lower versus the euro after data showed Japan’s consumer prices were unchanged last month, fanning speculation the central bank will increase fund provision to spur inflation. Shinzo Abe, leader of Japan’s opposition Liberal Democratic Party, yesterday reiterated his call for the Bank of Japan (8301) to pump unlimited cash into the financial system until inflation reaches 2 percent. The dollar was 0.3 percent from a one-month low against the euro as Democrats and Republicans wrangled over the spending cuts and tax increases of the so-called fiscal cliff looming in the U.S. in January. “Abe’s remarks are pulling down the yen,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “Markets are completely driven by what Republicans and Democrats say over the fiscal cliff.”
The yen traded at 106.55 per euro as of 9:52 a.m. in Tokyo after losing 0.3 percent to 106.58 at the close in New York. It was at 82.11 per dollar from 82.12. The dollar was little changed at $1.2977 per euro after touching $1.3014 yesterday, the weakest since Oct. 31. Japan’s consumer prices excluding fresh food were unchanged in October from a year earlier after a 0.1 percent decline in September, the statistics bureau said in Tokyo today. The BOJ has an annual inflation target of 1 percent. Abe’s LDP had an approval rating of 23 percent, compared with 13 percent for the ruling Democratic Party of Japan, the Nikkei newspaper reported yesterday, citing a Nov. 26-28 opinion poll. The nation will hold elections on Dec. 16 for the lower house of parliament.

Aussie Set for Weekly Drops Versus Majors Before RBA Meeting (Bloomberg)
Australia’s dollar was set for weekly declines against most of its major peers amid speculation the central bank will lower interest rates next week to shield the economy from a slowdown in mining. The so-called Aussie was 0.2 percent from a three-week low versus its New Zealand counterpart as traders added to bets the Reserve Bank of Australia will lower interest rates to 3 percent after a government report yesterday showed a lower mining investment projection for 2012-2013. Australian bonds rose, with the 10-year yield touching the lowest in 10 days. Demand for the New Zealand dollar was limited after data showed building permits unexpectedly fell.
“It wouldn’t be overly surprising if the RBA cuts rates next week given yesterday’s capital expenditure data, which was downgraded,” said Peter Dragicevich, a currency economist in Sydney at Commonwealth Bank of Australia. (CBA) “We don’t think an actual cut next week will put too much downward pressure on Aussie -- a lot of the cuts are already factored into the market.” The Australian dollar slid 0.1 percent to $1.0428 as of 11:01 a.m. in Sydney from yesterday. The currency is poised for a 0.3 percent decline this week, paring its monthly gain to 0.5 percent. The Aussie traded at NZ$1.2673 from NZ$1.2682 yesterday, when it touched NZ$1.2660, the lowest since Nov. 7. New Zealand’s currency bought 82.26 U.S. cents from 82.27 yesterday. It has lost 0.1 percent since the end of last week and is little changed on the month.
Australian government bonds rose, with the 10-year yield falling seven basis points, or 0.07 percentage point, to 3.15 percent. It earlier touched 3.13 percent, the lowest since Nov. 20.

Treasuries Set to Beat Corporate Bonds in November (Bloomberg)
U.S. government bonds were poised to beat corporate debt this month for the first time since May as the pending fiscal cliff and Europe’s debt crisis drove demand for safety. Treasuries returned 0.5 percent in November as of yesterday, according to Bank of America Merrill Lynch data. Bonds in an index of investment-grade and high-yield debt were little changed, the figures show. Consumer spending probably cooled in October, economists said before a report today. “There’s a flight to quality,” said Hiromasa Nakamura, a senior investor for Tokyo-based Mizuho Asset Management Co., which oversees the equivalent of $40 billion and is part of Japan’s third-biggest bank. “The government may increase taxes on higher-end households. That’s negative for the stock market and the economy.”
Benchmark 10-year yields were unchanged at 1.62 percent as of 9:56 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent security due in November 2022 was 100 2/32. The rate slid 7 basis points, or 0.07 percentage point, this month in the first decline since July. Treasury Secretary Timothy Geithner offered Republican House Speaker John Boehner a proposal to avert the end-of-the- year fiscal cliff that would include $1.6 trillion in tax increases and $400 billion in unspecified entitlement program cuts, a Republican aide said yesterday. Household purchases were unchanged in October, after increasing 0.8 percent in September, based on the median estimate from 79 economists surveyed by Bloomberg News before the Commerce Department report at 8:30 a.m. New York time today.

World Economy in Best Shape for 18 Months, Poll Shows (Bloomberg)
The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the so-called fiscal cliff, according to the latest Bloomberg Global Poll of investors. Two-thirds of the 862 surveyed described the global economy as either stable or improving. That’s up from just over half who said that in September and is the most since May 2011. The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year. China ranked second, reversing a decline to fourth in the September poll of investors, analysts and traders who are Bloomberg subscribers. The European Union, beset by a debt crisis, was seen offering the worst returns.
“The global economy is improving, recovering and healing, thanks to the U.S. and the emerging markets,” said Andrea Guzzi, a poll respondent and vice president of IST Investmentstiftung fuer Personalvorsorge, which manages money for Swiss pension funds. “More people are becoming wealthy, less and less are poor.” Stocks were seen as the asset of choice, with more than one in three of those surveyed on Nov. 27 forecasting equities would have the best returns in the coming year. Real estate came in second: Just less than one in five investors singled it out favorably, the best showing since the quarterly poll began in July 2009. Bonds were seen as offering the worst returns.

Jobless Claims in U.S. Decrease as Sandy Effect Dissipates (Bloomberg)
Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed. Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24, Labor Department figures showed today. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey. The drop in claims indicates the job market in the mid- Atlantic region, which employs about 14 percent of U.S. workers, may be stabilizing after Sandy put some area residents out of work at the start of the month. Apart from the storm-related damage, job creation will probably be limited as companies navigate the global economic slowdown and U.S. fiscal outlook.
Claims are “going to be distorted for a period of time by the after-effects of the storm,” said James Shugg, a senior economist at Westpac Banking Corp. in London, who forecast applications would drop to 395,000. “We’ve been surprised by the strength of hiring, but we’re anticipating a sharply lower number for the payrolls in the next month because there’s not going to be a strong enough economic growth base.” Estimates for first-time claims ranged from 350,000 to 430,000 in the Bloomberg survey of 49 economists. The previous week’s figure was revised to 416,000 from a previously reported 410,000.

Consumer Spending in U.S. Grows Less Than Forecast (Bloomberg)
Consumer spending in the U.S. grew less than forecast in the third quarter, underscoring why Federal Reserve policy makers are zeroing in on fighting unemployment to spur the world’s largest economy. Household purchases climbed at a 1.4 percent rate, the smallest gain in more than a year and down from a previously reported 2 percent advance, revised figures from the Commerce Department showed today in Washington. Gains in inventories and a smaller trade deficit more than offset the slowdown to propel gross domestic product to a 2.7 percent rate, exceeding the 2 percent pace previously reported. “The economy is moving forward at a moderate pace,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “The pace of consumer spending was disappointing, but it seems less worrisome given that some other sectors of the economy are doing better, like housing.”
Fed policy makers such as William Dudley say joblessness remains too high as central bankers consider whether they need to step up record stimulus heading into the so-called fiscal cliff of tax increases and spending cuts that may take effect next year if lawmakers fail to reach a compromise. At the same time, another report today reinforced signs of a rebound in housing that is helping underpin consumer confidence. Economists projected consumer spending, which accounts for about 70 percent of the economy, expanded at a 1.9 percent pace last quarter, according to the median forecast in a Bloomberg survey. The revised reading was lower than any of the 18 estimates, which ranged from 1.7 percent to 2.7 percent. Purchases advanced at a 1.5 percent pace in the second quarter.

Consumer Comfort in U.S. Picks Up as Buying Climate Improves (Bloomberg)
Consumer confidence climbed to a seven-month high last week as more Americans said it was a good time to make purchases, pointing to a brighter holiday shopping season. The Bloomberg Consumer Comfort Index rose to minus 33 in the period ended Nov. 25, the highest level since April, from minus 33.9 the previous week. It marked the highest level for a Thanksgiving week, when shoppers begin their year-end holiday gift buying, since before the recession began five years ago. Expanded store hours combined with deals, discounts and online offers last week may have helped propel the share of Americans saying it’s a good time to spend to a seven-month high. Improving labor and housing markets will probably lift spirits further, benefiting retailers such as Target Corp. and Macy’s Inc. between now and the final shopping days before Christmas, the most important period of the year for retailers.
“Consumers started the holiday-shopping season their cheeriest since 2007, a hopeful sign for retailers in their make-or-break time of year,” said Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg. A report from the Commerce Department showed the economy in the third quarter expanded more than previously estimated as a narrower trade deficit and gains in inventory overshadowed a smaller increase in consumer spending. Gross domestic product rose at a 2.7 percent annual rate, up from a 2 percent previous estimate, the agency said. Household purchases climbed at a 1.4 percent rate, the slowest in more than a year.

Pending Sales of Existing U.S. Homes Rose 5.2% in October (Bloomberg)
Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained. The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8 after a revised 0.4 percent gain in September, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain. The lowest mortgage rates on record, stable prices and waning foreclosures are helping underpin sales three years after the last recession ended. Federal Reserve policy makers have targeted the industry with purchases of mortgage-backed securities as they seek to bolster the labor market and the expansion.
“As folks start to feel a little more comfortable about their home price, they’re going to put it on the market and you’re going to start to see this trend continue” of higher sales, Anika Khan, a Charlotte, North Carolina-based senior economist at Wells Fargo & Co., said before the report. “We still see the overall residential market continuing to add to growth in the coming quarters.” Estimates in the Bloomberg survey ranged from a 1 percent drop to a 4 percent gain. The prior month’s figure was originally reported as a 0.3 percent advance. Compared with a year earlier, the index increased an unadjusted 18 percent after an 8.7 percent gain in the 12 months ended in September. After seasonal adjustment, pending purchases climbed 13.2 percent from a year ago. Stocks held gains after the figures and amid optimism lawmakers will reach a budget deal. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,416.47 at 10:08 a.m. in New York.

Cliff-Skeptics in Both Parties Deepen Fiscal Challenges (Bloomberg)
President Barack Obama says going over the fiscal cliff by missing the deadline for a deficit reduction deal by year’s end would be a “rude shock” for Americans. Republican House Speaker John Boehner says it would be a “fiasco.” Yet a small and potentially influential group of lawmakers in both parties is emerging as fiscal-cliff skeptics, willing -- and some even arguing -- to take the dive. Their attitude may make striking a compromise a messy and drawn-out process. Allowing the more than $600 billion mix of tax increases and automatic spending cuts to begin in January if no deal is reached isn’t their first choice, these lawmakers said, yet it’s a better alternative than a compromise that violates their principles. Senator Patty Murray of Washington, the fourth-ranking Democrat in the leadership, said her side is willing to push the debate into 2013 if Republicans refuse to raise taxes on high earners as part of the deal.
“No one wants to go off any cliff or hill or slope; there is a responsible way to resolve this,” Murray said yesterday on MSNBC. “But if we take a bad deal and say that all of the nation’s fiscal problems are to be balanced on the back of middle-class families and the wealthy don’t participate, that’s a bad deal that we cannot and should not live with.”

China Economic Optimism Returns in Poll as Xi Beats Hu (Bloomberg)
Confidence in China’s economy is at the highest in more than a year amid optimism that the new leadership headed by Xi Jinping will be better for the financial climate, according to a Bloomberg investor poll. Respondents who see the Chinese economy improving or remaining stable surged to 72 percent this week from September’s 38 percent in the quarterly global poll of investors, analysts and traders who are Bloomberg subscribers. Fifty-three percent said they’re more optimistic about the effect of Xi’s policies on investors, up from 42 percent who were asked in September about President Hu Jintao. The renewed faith in the world’s second-largest economy reflects data from factory production to retail sales showing growth picking up this quarter after a seven-quarter slowdown. Almost half of respondents anticipate Xi’s government will pursue policies that boost expansion or keep it stable.
“China’s growth trajectory will accelerate moderately on a six- to 12-month horizon based on the new leadership immediately finalizing and implementing projects toward urbanization, rural development and services,” said respondent Brad Bechtel, head of sales at Stamford, Connecticut-based Faros Trading LLC. “Going into 2013 a lot of the concerns regarding China growth falling off a cliff will subside.”

Hong Kong Bourse Wins Approval for $2.2 Billion LME Deal (Bloomberg)
The London Metal Exchange’s $2.2 billion takeover by Hong Kong Exchanges & Clearing Ltd. won approval from the Financial Services Authority, a British regulator. The acquisition still needs approval of the High Court of England and Wales, with a hearing set Dec. 5, Hong Kong Exchanges said in a statement on its website yesterday. The transaction will take effect on or around Dec. 6, the LME said in a separate statement. The LME backed Hong Kong Exchanges’ offer on June 15 over bids from CME Group Inc., Intercontinental Exchange Inc. and NYSE Euronext. LME shareholders approved the takeover a month later. The LME handles more than 80 percent of metals trading, and Hong Kong Exchanges may help the exchange gain access to China, the biggest metals buyer. “This is what we’ve been waiting on,” Thomas Monaco, an analyst at Mizuho Securities Asia Ltd. in Hong Kong, said in a telephone interview. “It’s a little later than we would have thought, probably about a month or so.”
Hong Kong Exchanges plans to sell about $995 million of shares (388) at HK$118 each, a 5.4 percent discount to yesterday’s closing price of HK$124.80, according to a statement from the bourse today. The share sale will help fund the LME takeover, it said. Deutsche Bank AG, HSBC Holdings Plc and UBS AG will manage the sales, it said. The exchange also sold $500 million in convertible bonds in September for the deal. They have an initial conversion price of HK$160 a share.

Japan’s Industrial Production Unexpectedly Gains in October (Bloomberg)
Japan’s output unexpectedly rose the most since December, signaling a contraction in the world’s third-largest economy may be short lived. Industrial production in October increased 1.8 percent from the previous month, when it dropped 4.1 percent, the Trade Ministry said in Tokyo today. The median estimate of 23 economists surveyed by Bloomberg News was for a 2 percent fall. Japan’s economy is at risk of a recession as a contraction in Europe and a diplomatic dispute with China hurt exports and the expiry of car-purchase subsidies weakens consumer demand at home. Government reports showing signs of recovery in the U.S. and China, the world’s two biggest economies, may alleviate an economic slump in Japan.
“Japan’s economy will probably return to growth in the first quarter of 2013, after possibly having two consecutive quarters of contraction” through December, Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo, said before the report. “The U.S. economy is looking solid and China’s economy may have a clear rebound this quarter, boding well for Japanese exports.” The Japanese yen has weakened more than 4 percent against the dollar in the past three months, the most among Asia’s 11 most-traded currencies, according to data compiled by Bloomberg. The currency was trading at 82.12 at 9:12 a.m. in Tokyo after touching a seven-month low of 82.84 last week.

Japan’s Consumer Prices Unchanged as Abe Calls for More Easing (Bloomberg)
Japan’s consumer prices were unchanged in October after five months of declines, limiting the case for more monetary easing being made by Shinzo Abe, the front-runner to become the nation’s next prime minister. Consumer prices excluding fresh food didn’t change from a year earlier, the statistics bureau said in Tokyo today. The median of 23 estimates was for a 0.1 percent drop. The nation’s jobless rate stayed at 4.2 percent for a third month, according to a separate report. Today’s data show the Bank of Japan (8301)’s 1 percent inflation goal remains distant, and will keep pressure on Governor Masaaki Shirakawa to add stimulus at next month’s policy meeting. Abe, head of the Liberal Democratic Party that polls suggest will win the election, called again yesterday for unlimited easing and a price-gains target of 2 percent.
“It’s hard to imagine consumer prices will rise steadily when the economy is at risk of falling into a recession,” said Yoshimasa Maruyama, chief economist at Itochu Corp. (8001) in Tokyo. “The BOJ will come under pressure to ease more.”

Dung Sees Vietnam Inflation at Decade Low With Investment Rising (Bloomberg)
Vietnam’s Prime Minister Nguyen Tan Dung pledged to bring inflation down to a decade low as the nation seeks to boost foreign investment and cope with the aftermath of a credit boom that’s hobbled the banking industry. “Inflation in 2012 will be about 7 percent and next year we will have even better control of it, at about 6 percent,” Dung, 63, said in an interview in Hanoi on Nov. 28. He said overseas investment will rise “sharply” in the next two years as officials overhaul state enterprises and recapitalize banks. Slower gains in consumer prices would reduce the risk of labor strikes undermining Vietnam’s campaign to position itself as an alternative manufacturing base to China. Concern that growth has peaked after a quarter-century of market opening, and that policy makers are struggling to manage a legacy of non- performing loans, contributed to a 21 percent slide in investment pledges from abroad so far this year.
“It would help Vietnam’s image significantly” to contain inflation, said Peter Ryder, the Hanoi-based chief executive of fund manager and property developer Indochina Capital. “Clearly the fact that inflation hit 20-plus percent in two of the last four years has made people question the government’s management of the economy.” Dung’s administration has made inroads into quelling what was Asia’s fastest inflation in 2011, at 18 percent in December from the previous year. Consumer prices rose 7.1 percent in November. The last year costs rose less than 6 percent was in 2003, according to data compiled by Bloomberg.

Brazil Signals Key Rate to Stay at Minimum for Record Period (Bloomberg)
Brazil signaled it plans to keep its benchmark rate at a record low for a period that economists predict will be the longest in history to prop up an economy heading toward its worst two-year performance in a decade. Policy makers last night kept the Selic rate at 7.25 percent, ending the second-longest streak of reductions in an effort to prevent inflation from accelerating. The unanimous decision, which was forecast by all 75 economists surveyed by Bloomberg, took into account the “the balance of risks for inflation,” the board said in its statement, which was almost identical to last month’s announcement. Central bankers led by President Alexandre Tombini reiterated their intent to keep rates steady for a “prolonged period” as they try to keep inflation within their 2.5-to-6.5 percent target range without derailing the economy’s recovery. Economists surveyed by the central bank forecast that the Selic will remain unchanged through 2013.
“Interest rates are at a level that allow for the economy to rebound at a pace moderate enough to contain inflation below the upper range of the target,” Marcelo Salomon, co-head for Latin America economics at Barclays Plc, said in a phone interview from New York. “The idea is to leave interest rates at a minimum for as long as possible.” Swap rates on the contract maturing in January 2014 rose three basis points, or 0.03 percentage point, to 7.32 percent at 9:04 a.m. local time. The real strengthened 0.2 percent to 2.0896 per U.S. dollar.

Euro-Area Economic Sentiment Unexpectedly Up in November (Bloomberg)
Economic confidence in the euro area unexpectedly rose in November even as the single-currency bloc was mired in its second recession in four years and leaders worked to contain the debt crisis. An index of executive and consumer sentiment in the 17- nation euro area increased to 85.7 from a revised 84.3 in October, the European Commission in Brussels said today. Economists had forecast no change from an initial October reading of 84.5, the median of 33 economists’ estimates in a Bloomberg News survey showed. Euro-area finance ministers earlier this week eased the terms on emergency aid for Greece, declaring that after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.
“Today’s numbers are good news and could mean a turnaround,” Marco Valli, chief euro-zone economist at UniCredit Global Research in Milan, said by telephone. “While the final quarter of this year still will be clearly negative, the unexpected rise indicates that the economy could stabilize at the beginning of 2013.”

EU Nations Clash on Thresholds for Direct ECB Oversight (Bloomberg)
The European Union is quarreling over thresholds on how big euro-area lenders must be in order to be designated for direct oversight by the European Central Bank, according to draft proposals. Nations are at odds over three different size thresholds, according to the document drawn up by Cyprus, which holds the EU’s rotating presidency. Some countries are seeking to set the bar as low as banks with more than 2.5 billion euros ($3.2 billion) in assets, while others are calling for divisions at 20 billion euros or 60 billion euros, according to the text, dated Nov. 27 and obtained by Bloomberg News. States are also split over having direct ECB supervision triggered by a ratio between a bank’s assets and the gross domestic product of its home country, according to the proposals, intended to forge a deal on the supervision plan. Suggested thresholds in the text put the tipping points at assets of more than 20 percent, 50 percent or 75 percent of GDP.
Governments are racing to meet an end of 2012 deadline to set up a single supervisor at the Frankfurt-based ECB. EU finance ministers will meet next week to seek compromises on the bank-oversight plan, which the bloc’s leaders have labeled as an essential step to break the bank-sovereign link that has worsened Europe’s debt crisis. The draft document didn’t reveal what nations held what positions in the talks.

German Unemployment Rose for an Eighth Month in November (Bloomberg)
German unemployment climbed for an eighth straight month in November as Europe’s debt crisis curbed company investment and economic growth. The number of people without a job increased a seasonally adjusted 5,000 to 2.94 million, the Federal Labor Agency in Nuremberg said today. Economists forecast a gain of 16,000, the median of 37 estimates in a Bloomberg News survey shows. The adjusted jobless rate held at 6.9 percent. Separately, a gauge of economic confidence in the euro area unexpectedly rose. With the 17-nation currency bloc in recession and growth slowing in emerging markets, German firms are postponing investment and hiring decisions. The unemployment rate rose for the first time in three years in September. While Europe’s largest economy expanded 0.2 percent in the third quarter, latest reports suggest growth may grind to a halt in the fourth as export demand wanes.
“It is doubtful whether private consumption can really take over the baton as the main growth driver for the German economy,” said Carsten Brzeski, an economist at ING Group in Brussels. “German unemployment looks set to increase further. This increase, however, should only be very mild, mainly located in the export industry.” The euro advanced to $1.2983 at 11:15 a.m. in Frankfurt for a 0.2 percent gain today. European stocks rose to their highest level in three weeks amid optimism that U.S. President Barack Obama will reach an agreement with Congress over a new budget. The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent to 275.39.

20121130 1021 Global Commodities Related News.

New Norm High Food Costs Boost Supply Risk as World Hunger Grows (Bloomberg)
High and volatile global food prices have become the “new norm,” creating increased risk for supplies at a time when 12 percent of the population remains chronically undernourished, the World Bank said. Even after the World Bank’s food-price index slipped from a record in July, the measure was still 7 percent higher in October than a year earlier, the Washington-based lender said today in a report. While costs have dropped in recent months, fats and oils still are 12 percent more expensive than a year earlier, and grains are “very close” to the all-time high reached in 2008, the bank said. “A new norm of high prices seems to be consolidating,” Otaviano Canuto, the World Bank Group’s vice president for poverty reduction and economic management, said in an e-mailed statement. “Although we haven’t seen a food crisis as the one of 2008, food security should remain a priority.”
Weather will play a large role in determining food prices in the near future, along with the cost of fuel and export competition, the bank said. About 870 million people live in chronic undernourishment, the United Nations Food and Agriculture Organization estimates. The world population will rise to 7.02 billion this year, according to the U.S. Census Bureau. Also, malnutrition accounts for more than one-third of mortality of children under 5 years old and is responsible for more than 20 percent of maternal mortality, according to the World Bank report. “The world cannot afford to get used to or be complacent” about high food costs, Canuto said. The World Bank Group committed more than $9 billion to agriculture and related sectors in the year ended June 30, the bank said.

Corn Market Recap for 11/29/2012 (CME)
December Corn finished down 8 3/4 at 751 1/2, 11 1/2 off the high and 1/2 up from the low. March Corn closed down 5 1/4 at 758 3/4. This was 2 1/2 up from the low and 8 1/4 off the high.
March corn traded lower on the day on light profit taking and pressure from a weaker wheat market. Above normal precipitation in Argentina and below normal in Southern Brazil continues to help the market move higher but it seems the recent run to the upside needed a break and traders took profits. Export sales were disappointing which likely triggered the move lower. Sales came in at 236,100 tonnes for the current marketing year and 27,400 for the next marketing year for a total of 263,500. As of November 22nd, cumulative corn sales stand at 42% of the USDA forecast for the current marketing year versus a 5 year average of 49%. Sales of 421,000 tonnes are needed each week to reach the USDA forecast. The last two weeks of sales have been slightly better than earlier in the crop year but cheaper corn continues to flow out of South America and Ukraine. Some traders suggest that Asia may be short corn supplies from January forward which could mean the US may become very active in the export market in 2013.
January Rice finished down 0.08 at 15.11, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
December Wheat finished down 6 3/4 at 869 1/4, 10 1/2 off the high and 4 1/4 up from the low. March Wheat closed down 5 3/4 at 885 1/2. This was 4 3/4 up from the low and 9 1/2 off the high.
Chicago and KC wheat traded lower into the closing bell on light profit taking following an export sales report that came in below market expectations. Net weekly export sales came in at 279,300 tonnes for the current marketing year and no sales were reported for the next marketing year. As of November 22nd, cumulative wheat sales stand at 54% of the USDA forecast for the current marketing year vs. a 5 year average of 68%. Sales of 506,000 tonnes are needed each week to reach the USDA forecast. The US missed out on the 50,000 tonne Algerian tender today and it's being reported that the purchase was for 375,000 tonnes, likely French origin. Poor weather conditions in the western plains continue to support the US wheat markets this week. No significant precipitation is expected in the next two weeks. The EU granted export licenses for 438,000 tonnes of soft wheat bringing the 2012/13 season total to 7.3 million tonnes vs. 6.5 for the same period last year.
December Oats closed down 10 at 360 3/4. This was 3/4 up from the low and 11 3/4 off the high.

Wheat Halts Weeklong Rally as Demand for U.S. Exports Slackening (Bloomberg)
Wheat futures fell for the first time in five sessions on signs of declining demand for supplies from the U.S., the world’s biggest exporter. Export sales in the week through Nov. 22 totaled 279,337 metric tons, down 56 percent from a week earlier, the U.S. Department of Agriculture said today. Since June 1, overseas buyers have agreed to purchase 16.2 million tons, down 10 percent from the same period a year earlier, USDA data show. The government said Nov. 9 that exports would rise 4.8 percent. “Demand bearishness has reared its head after the export- sales report came out,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said by telephone. Wheat futures for March delivery slid 0.6 percent to close at $8.855 a bushel at 2 p.m. on the Chicago Board of Trade. The price has gained 36 percent this year as dry weather reduced global production 6.4 percent to a five-year low.
The grain climbed 3.7 percent in the previous four sessions as dry weather eroded conditions for winter varieties grown in the U.S. Great Plains. About 78 percent of Kansas, the biggest grower of the variety, was in extreme or exceptional drought as of Nov. 27, compared with 36 percent a year earlier, data from the weekly U.S. Drought Monitor show. Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Corn Futures Drop as Export Demand Ebbs; Soybeans Advance (Bloomberg)
Corn futures fell from a five-week high as demand by producers of grain-based fuel, animal feed and food ebbed. Soybeans gained. U.S. export sales of corn in the week ended Nov. 22 tumbled 69 percent to 263,140 metric tons from a week earlier, the Department of Agriculture said today. Production of ethanol slid 1 percent in the week ended Nov. 23 to the lowest in five weeks, the Energy Department said yesterday. The number of chicks placed on feed last week dropped 3.8 percent from a year earlier, USDA data show. “The rally in prices slowed exports and ethanol production,” Jerrod Kitt, the director of research at the Linn Group on Chicago, said in a telephone interview. “The drop in chicken production also weighed on the market.”
Corn futures for March delivery dropped 0.7 percent to close at $7.5875 a bushel at 2 p.m. on the Chicago Board of Trade. Yesterday, the price reached $7.675, the highest for a most-active contract since Oct. 19. The grain has gained 17 percent this year after a Midwest drought reduced production. Soybean futures for January delivery rose 0.1 percent to $14.48 a bushel in Chicago. Earlier, the price reached $14.60, the highest since Nov. 9. Export demand increased last week for animal feed and cooking oil made from supplies in the U.S., the world’s biggest producer. U.S. exporters sold 365,058 metric tons of soy-based animal feed in the week ended Nov. 22, up 84 percent from a week earlier and the most in two years, the USDA said today. Soybean- oil sales surged more than 13-fold to 121,527 tons from a year earlier.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Natural Gas Futures Tumble After Inventories Advance (Bloomberg)
Natural gas futures tumbled in New York, heading for the biggest weekly decline since June, after a government report showed an unexpected gain in U.S. stockpiles as mild weather reduced demand. Gas dropped 4 percent after an Energy Department report showed supplies rose by 4 billion cubic feet last week to 3.877 trillion cubic feet, the latest seasonal gain since 2009. Analyst estimates compiled by Bloomberg showed a decline of 9 billion cubic feet. Gas has slid 7.2 percent on moderating temperatures after reaching a one-year high on Nov. 23. “That’s a pretty bearish inventory number,” said Gordy Elliott, a risk-management specialist at FC Stone LLC in St. Louis Park, Minnesota. “December forecasts have turned warmer and there are no supply issues at all. This storage report could be the thing that breaks the market.”
Natural gas for January delivery fell 15.3 cents to settle at $3.648 per million British thermal units on the New York Mercantile Exchange. Gas futures have dropped 6.5 percent this week, heading for the biggest decline since the seven days ended June 1. February $3.50 puts were the most active gas options in electronic trading. They were 4.4 cents higher at 13.4 cents on volume of 2,510 contracts as of 3:07 p.m. Puts accounted for 57 percent of options volume. The five-year average gas stockpile change for the week is a decline of 18 billion cubic feet, department data show. A surplus to the five-year average rose to 5.2 percent from 4.5 percent the previous week, widening for the first time since the week ended Oct. 26.

Oil Trims First Monthly Gain Since August as Rise Seen Excessive (Bloomberg)
Oil trimmed its first monthly gain since August in New York amid speculation that the biggest daily rise in almost two weeks was excessive. Futures slid as much as 0.7 percent after climbing 1.8 percent yesterday, the most since Nov. 19, as a Commerce Department report showed the U.S. economy expanded more than previously estimated last quarter. West Texas Intermediate is giving up gains after failing to trade higher than the 50-day moving average, a sign of technical resistance, according to data compiled by Bloomberg. This indicator, at about $88.61 a barrel today, is where sell orders may be clustered. “The market climbed to the top-end of a range and people have grabbed some profits,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
Crude for January delivery dropped as much as 60 cents to $87.47 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.73 at 12:12 p.m. Sydney time. The contract increased $1.58 yesterday to $88.07. Prices are down 0.6 percent this week, the first weekly decline in four, and up 1.7 percent this month. Brent for January settlement slid 26 cents to $110.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.77 to West Texas Intermediate futures, from $22.69 yesterday.

Recap Energy Market Report (CME)
January crude oil prices trended higher throughout the session and climbed to their highest level since November 20th in the process. Early support for the crude oil market came from a decisive risk-on vibe, supported by gains in global equity markets and weakness in the US dollar. It seemed that a shift in sentiment that US lawmakers would be able to compromise on budget negotiations and avert the fiscal cliff was taken as a positive. Added support for the crude oil market came from rising tensions in the Middle East and the potential disruption of near term supply. The geopolitical risk came from Iran's uranium enrichment program and comments from the IAEA to take quick action to resolve the conflict. Further protests are being called for in Egypt in opposition to President Mursi's decree. Sentiment in the market took a slightly negative turn around the mid-session following comments from US House Speaker John Boehner that no substantive progress had been made on budget negotiations. January WTI crude oil finished the US trading session up 1.8% and back above the $88.00 level.

Copper Shortage Seen Extending as China Accelerates: Commodities (Bloomberg)
Copper supply shortages will extend into the first half of next year as an accelerating Chinese economy more than doubles the pace of growth in global consumption even as mines extract a record amount of metal. Demand will outpace supply by 316,000 metric tons in the first six months, more than all copper in London Metal Exchange warehouses, before a surplus emerges in the second half, Barclays Plc estimates. Production has lagged behind consumption since 2010, according to the International Copper Study Group. The metal may average $8,300 a ton in the second quarter, 5.1 percent more than now and the most in a year, according to the median of 21 analyst and trader estimates compiled by Bloomberg.
China, which uses 41 percent of the world’s copper, is rebounding from seven quarters of slowing growth after the government approved a $161 billion subways-to-roads construction plan in September. It’s being joined by central banks from the U.S. to Europe to Japan, who also pledged more stimulus. Housing starts in the U.S., the second-largest consumer, reached a four- year high last month and business confidence unexpectedly strengthened in Germany, Europe’s biggest economy. “U.S. growth will be moderate and Europe is stabilizing, so that drag might reverse partially, and then it all falls back to China,” said Dominic Schnider, Singapore-based global head of non-traditional assets at UBS AG’s wealth-management unit. “Economic activity doesn’t have to be that strong in China for inventories to get drawn down and you could see a rally in the first half, but then you come into the second half where mine supply comes in on the strong side.”

Gold, Silver Rise on Bets Fed Will Expand U.S. Stimulus (Bloomberg)
Gold rose for the first time in four days on speculation that the Federal Reserve will buy more debt to boost the U.S. economy. Silver climbed to a seven-week high. “I will be assessing the employment and inflation outlook in order to determine whether we should continue Treasury purchases into 2013,” Federal Reserve Bank of New York President William C. Dudley said in a speech in New York. Treasury Secretary Timothy F. Geithner began talks with congressional leaders on a budget accord. “Talks about more stimulus measures being introduced are bullish for gold,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. “The market is expecting some sort of resolution soon to avert the fiscal-cliff crisis” on U.S. spending and taxes, he said. Gold futures for February delivery gained 0.6 percent to settle at $1,729.50 an ounce at 1:49 p.m. on the Comex in New York. The price slumped 1.9 percent in the previous three days.
The metal has climbed 10 percent this year, heading for the 12th straight annual gain, as the Fed announced stimulus measures. Silver futures for March delivery increased 2 percent to $34.431 an ounce on the Comex. Earlier, the price reached $34.49, the highest since Oct. 8. The metal has advanced 23 percent this year. On the New York Mercantile Exchange, platinum futures for January delivery rose 0.5 percent to $1,619.50 an ounce. Palladium futures for March delivery gained 1.8 percent to $687.45 an ounce. Earlier, the price reached $692, the highest since Sept. 17.

Silver Market Recap Report (CME)
December silver took a setback today and kept on ticking. In fact, from the Wednesday low to the mid afternoon high, December silver prices managed a very impressive recovery bounce of roughly $1.40 an ounce. With the rally today December silver prices reached up to the highest level since October 8th. Silver clearly benefited from favorable US scheduled data early on and mostly positive action in US equities throughout the trading session.

Gold Market Recap Report (CME)
The bull camp has to come away from the action today somewhat emboldened as two sided political dialogue today could have swamped physical commodity markets today. However, favorable equity market action, supportive currency market action, mostly positive US scheduled data and ongoing hopes for an eventual fiscal cliff solution, simply left the bull camp in gold with the benefit of the headlines today. Others are suggesting that the brunt of the gains in gold today were simply technical in nature after the sharp compacted slide in the prior trading session.

20121130 1021 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
January Soybeans finished up 1 3/4 at 1448, 12 off the high and 6 3/4 up from the low. March Soybeans closed up 6 at 1441. This was 9 1/4 up from the low and 9 1/4 off the high. December Soymeal closed up 2.8 at 442.7. This was 3.7 up from the low and 2.9 off the high. December Soybean Oil finished down 0.34 at 49.77, 0.69 off the high and 0.03 up from the low.
January soybeans ended the day near the unchanged. Early gains eroded near 11 am cst after outside markets lost momentum due to negative comments in regards to the Fiscal Cliff by a Republican leader. Early strength was linked speculation that China will be in the market for 3-4 million tonnes of soybeans in the coming weeks after canceling cargos earlier this month. Net weekly export sales for soybeans came in at 319,100 tonnes for the current marketing year and as of November 22nd, cumulative sales stand at 75% of the USDA forecast for the current marketing year vs. a 5 year average of 61%. Net meal sales came in at 365,100 tonnes for the current marketing year and cumulative meal sales stand at 64% of the USDA forecast vs. a 5 year average of 42%. Net oil sales came in at a whopping 121,500 tonnes for the current marketing year and 1,000 for the next marketing year for a total of 122,500. As of November 22nd, cumulative soybean oil sales stand at 105% of the USDA forecast vs. a 5 year average of 32%. At this point, sales exceed the current USDA export estimate for the current crop year.

EDIBLE OIL: Malaysian palm oil futures fell to a 2-week low extending losses for a third straight session as weak sentiment dominated the market with investors worrying about record high stocks. (Reuters)

Refinery growth to boost Indonesia's palm oil output next year
By Michael Taylor
NUSA DUA, Indonesia | Thu Nov 29, 2012 6:05am EST
Nov 29 (Reuters) - An expansion in the edible oil processing industry in top palm oil producer Indonesia is expected to boost its consumption to about 7.5 million tonnes next year, which may reduce the amount available for export, industry officials said on Thursday.
After years of increasing the acreage devoted to palm oil, Indonesia is now rapidly expanding its downstream and processing industries. Last year, it slashed export duties for refined oil in a bid to boost investment in the sector.
Palm oil consumption this year is expected to rise to 7 million tonnes from the 5 million-6 million tonnes used up in 2011, and is set to increase further in 2013, delegates at the 8th Annual Indonesian Palm Oil Conference told Reuters.
"The increase will mostly be in olein chemical and food," said Derom Bangun, chairman of the Indonesian Palm Oil Board.
An increase in domestic consumption will benefit palm oil producers who do not sell overseas such as BW Plantation .
Sebastian Sharp, BW Plantation's head of investor relations, expects Indonesia to soon overtake India as the world's biggest palm oil consumer. He also forecast the company's output to rise by up to 25 percent next year from 130,000 tonnes this year.
"Indonesia is the fastest growing consumer and overtook China last year," said Sharp. "It will eventually overtake India."
According to industry estimates, Indian palm oil consumption will be about 7.8 million tonnes in 2013, rising from 7.3 million tonnes this year.

EUROPEAN ASSAULT?
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or as a biofuel.
Producers are seeking new ways to generate demand after benchmark prices fell by about a quarter this year, but their efforts to drum up sales to their traditional European customers may be hampered by renewed attacks by Western governments on the oil's green credentials.
Environmental groups have been critical of the expansion in the palm sector, which they blame for deforestation, speeding up climate change and killing wildlife.
The U.S. Environmental Protection Agency recently visited Indonesia to review the environmental aspects of its palm oil industry, while France has proposed an increase in duties on foods using palm oil, which has been dubbed the "Nutella tax".
Bangun of the Indonesian Palm Oil Board said attempts by European countries to curb the use of palm oil were simply protectionism masked as green and health concerns.
"In France's case, maybe they also need additional funds for their budget," he added.
It hasn't all been bad news from Europe for palm oil. This week, the European Commission said it had approved a scheme that would certify as sustainable transport fuel made from palm oil.
"It is one access to the European biodiesel (market)," said Bangun. "It will give more opportunity for producers to get into this industry, which is very important."


Malaysia will announce details of its proposed cut to crude palm oil export taxes by the end of  December, a government official said.  "We will make an announcement on the exact pricing in the last few days of December," said the official who declined to be named due to sensitivity of the issue.  The tax, due to take effect on Jan. 1, is aimed at making crude exports more competitive in the face of a tax cut for refined grades by top producer Indonesia last year. The Malaysian government has proposed pegging the tax at between 4.5 and 8.5% depending on the market prices, a cut from the current 23%. (Reuters)

The European Commission has approved a scheme that would certify as sustainable transport fuel made from palm oil, condemned by environmental groups as one of the most damaging sources of biodiesel. The Commission made public on Tuesday a decision taken last week to endorse the Roundtable on Sustainable Palm Oil scheme, which means the palm oil producers it licenses can qualify for subsidies. (Reuters)

An expansion in the edible oil processing industry in Indonesia is expected to boost its consumption to about 7.5m tonnes next year, which may reduce the amount available for export, industry officials said. Palm oil consumption this year is expected to rise to 7m tonnes from 5-6m tonnes used in 2011. (Reuters)

Indonesia is discussing changes to its export tax structure to counter competition from Malaysia which will cut tariffs from Jan. 1 to boost shipments and pare record inventories. “We want the taxes to be similar if not exactly the same as Malaysia,” Joko Supriyono, secretary-general of the Indonesian Palm Oil Association said. (Bloomberg)

20121129 1810 FCPO EOD Daily Chart Study.

FCPO closed : 2386, changed : -8 points, volume : lower.
Bollinger band reading : correction range bound downside biased.
MACD Histogram : weakening, buyer seller battling.
Support : 2400, 2350, 2300, 2250, 2230 level.
Resistance : 2400, 2450, 2490, 2520, 2550 level.
Comment :
FCPO closed recorded loss with thinner volume exchanged. Soy oil price currently trading little higher after overnight closed flat while crude oil price currently trading higher.
Price swing between gains and losses ahead of Indonesia conference key industry outlook, news on Indonesia projected higher production for 2013 by 7% and Malaysia will announce details of crue palm oil exports tax cut by end of December.
Nevertheless daily chart study remained calling a correction range bound downside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20121129 1734 FKLI EOD Daily Chart Study.

FKLI closed : 1611 changed : +2 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : recovering, seller taking profit.
Support :  1610, 1600, 1595, 1590 level.
Resistance : 1615, 1623, 1627, 1635 level.
Comment :
FKLI closed little firmer with slower volume traded doing 4 points premium compare to cash market that closed marginally higher. Overnight U.S markets traded lower and today Asia markets ended positively and European markets also trading higher currently.
Global markets sentiment improved as U.S. lawmakers are optimistic that they are able to reach an agreement to avoid budget spending buts and tax hike.
FKLI daily chart reading continue to suggesting a pullback correction down side biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20121129 1634 Global Markets & Commodities Related News.

STOCKS: Asian shares touched their highest levels in more than three weeks and European stock index futures opened  higher as sentiment improved after a senior U.S. lawmaker said he was "optimistic" on reaching a budget deal before the end of the year to avoid a fiscal crisis. U.S. stocks rose in volatile trade on Wednesday. (Reuters)



FOREX-Euro eases but supported by U.S. fiscal hopes
SINGAPORE, Nov 29 (Reuters) - The euro eased versus the dollar but its losses were limited after comments from U.S. policymakers rekindled hopes for a deal to avoid a sharp fiscal tightening that could hurt the global economy.
"For the moment, the U.S. fiscal cliff seems to be a dominant theme in the market," said Katsunori Kitakura, associate general manager of market-making at Sumitomo Mitsui Trust Bank.

Obama says hopes for deficit deal by Christmas (Reuters)
President Barack Obama said on Wednesday he hoped to reach an agreement with Congress before Christmas to avoid the looming "fiscal cliff" and shrink the budget deficit, and ramped up efforts to rally the public to press Republicans for action.

GRAINS: U.S. wheat futures eased, snapping a seven-day rally that was their longest stretch of gains since July, as a sharp rise in prices temporarily hit export demand.  (Reuters)

U.S. cuts crop insurance rates for soybeans, rice despite drought (Reuters)
The U.S. government has ordered crop insurers to charge lower premiums to soybean growers for the second year in a row as part of rate revisions for six major crops, even as many farmers collect on claims following this year's severe drought.

U.S. bans BP from new govt contracts after oil spill deal (Reuters)
The U.S. government banned BP Plc on Wednesday from new federal contracts over its "lack of business integrity" in the 2010 Deepwater Horizon oil spill, possibly imperilling the company's role as a top U.S. offshore oil and gas producer and the No. 1 military fuel supplier.

OIL: Brent crude rose towards $110 a barrel, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened, although investors remained wary of the outlook for oil demand next year.  (Reuters)

Rio Tinto to slash costs, steps up iron ore output (Reuters)
Rio Tinto aims to axe $7 billion in costs over the next two years as it faces weaker commodity prices, and despite cutting costs the global miner had managed to beef up production at its lucrative Australian iron ore operations.

BASE METALS: London copper inched up after a prominent U.S. lawmaker expressed confidence the world's top economy would avert a looming fiscal crisis, but worries China's return to growth will be sluggish weighed on sentiment. (Reuters)

PRECIOUS METALS: Gold ticked higher, after suffering its biggest daily decline in nearly four weeks in the previous session, as the looming deadline of the U.S. fiscal crisis kept investors on their toes. (Reuters)


METALS-LME copper edges up, US fiscal hopes support
SINGAPORE, Nov 29 (Reuters) - London copper inched up after a prominent U.S. lawmaker expressed confidence the world's top economy would avert a looming fiscal crisis, but worries China's return to growth will be sluggish weighed on sentiment.
"We expect some degree of resolution to the U.S. cliff but  there will still be some drag on the U.S. economy.  We are expecting growth of around 2 percent next year," said Thomas Lam, chief economist at DMG & Partners Securities.

PRECIOUS-Gold steady after sell-off, US fiscal talks eyed
SINGAPORE, Nov 29 (Reuters) - Gold steadied to trade in a narrow range, after suffering its biggest daily decline in nearly four weeks in the previous session, as investors nervously eyed a looming deadline for averting a U.S. fiscal crisis.
"Generally people are still pretty bullish on gold and last night was just a one-off correction, nothing extraordinary," said a Singapore-based trader, adding that $1,650-$1,700 would be a good buying level.

20121129 1535 Soy Oil & Palm Oil Related News.

Malaysia to detail crude palm oil tax cut in Dec-official
29-Nov-2012 15:20
NUSA DUA, Indonesia, Nov 29 (Reuters) - Malaysia, the world's second largest palm oil producer, will announce details of its proposed cut to crude palm oil export taxes by the end of December, a government official said on Thursday.
"We will make an announcement on the exact pricing in the last few days of December," said the official who declined to be named due to sensitivity of the issue.
The tax, due to take effect on Jan. 1, is aimed at making crude exports more competitive in the face of a tax cut for refined grades by top producer Indonesia last year.
The Malaysian government has proposed pegging the tax at between 4.5 and 8.5 percent depending on the market prices, a cut from the current 23 percent.



VEGOILS-Palm oil falls to 2-week low on stocks concerns - RTRS
29-Nov-2012 13:07
Palm oil to test support at 2,353 ringgit -technicals Traders eye 2013 price forecasts at Bali conference on Thurs, Fri Indonesia palm oil output to climb 7 pct to 27 mln tonnes in 2013 India oilseed industry pushes for hike in import taxes -sources
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Nov 29 (Reuters) - Malaysian palm oil futures fell to a 2-week low on Thursday, extending losses for a third straight session as weak sentiment continued to dominate the market with investors worrying over record high stocks.
Traders are looking out for Malaysia's palm products export figures for November due Friday, with expectations of a slight decline compared to a month ago. The latest data for first 25 days of the month showed a drop of less than 2 percent. PALM/ITS PALM/SGS
A lower export demand may push Malaysian inventory levels slightly higher in November despite slowing production.
"The market is still under pressure. Exports should be down by more than 1.5 percent for the month," said a trader with a foreign commodities brokerage in Malaysia.
"People are asking whether production can neutralise exports, and I think it's unlikely that stocks will go up sharply," he added.
By the midday break, the benchmark February contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to 2,372 ringgit ($777) per tonne. Prices earlier touched a low of 2,367 ringgit, a level last seen on Nov. 14.
Technicals suggested palm oil is expected to test a support at 2,353 ringgit, a break below which will lead to a further drop to 2,288 ringgit. (Full Story)
Total traded volumes stood at 9,955 lots of 25 tonnes each, thinner than the usual 12,500 lots, as some traders remained on the sidelines ahead of top analysts presenting their price forecasts for 2013 at the Indonesian Palm Oil Association's two-day conference in Bali on Thursday and Friday. (Full Story)
Palm oil output in the world's biggest producer Indonesia is expected to climb 7 percent next year to 27 million tonnes, a top industry association official said on the sidelines of the conference, as three years of acreage expansion efforts bear fruit. (Full Story)
Two trading sources also told Reuters at the conference that India's oilseed industry has submitted a proposal to the government to raise import taxes on palm oil and other edible oils, arguing demand for local output is being hurt after a sharp fall in prices. (Full Story)
In related markets, Brent crude rose on Thursday, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened. (Full Story)
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 fell 0.3 percent in early trade. The most-active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange lost 0.7 percent by the midday break.

20121129 1238 Soy Oil & Palm Oil Related News.

INTERVIEW-Indonesia 2013 palm output set to rise 7 pct -assoc - RTRS
29-Nov-2012 12:21
By Michael Taylor
NUSA DUA, Indonesia, Nov 29 (Reuters) - Palm oil output in the world's biggest producer Indonesia is expected to climb 7 percent next year to 27 million tonnes, a top industry association official said on Thursday, as three years of acreage expansion efforts bear fruit.
Output of the edible oil is also forecast to end 2012 at 25.2 million tonnes, up from 23.5 million tonnes in 2011, Fadhil Hasan, executive director at the Indonesian Palm Oil Association (GAPKI), told Reuters.
"If 2013 is going to be like 2012 in terms of weather and climate, and there are no shocks in the supply, maybe output will be about 27 million tonnes," said Hasan, speaking on the sidelines at the 8th Annual Indonesian Palm Oil Conference on the island of Bali.
"A lot of expansion has happened in the last three years or so, so now the trees are mature."
Palm estates sprawl across 8.2 million hectares in Indonesia, and that number is expected to rise by about 200,000 hectares a year for the next decade.

DEMAND WOES
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or as a biofuel. Indonesia and Malaysia account for about 90 percent of global production.
Demand for the edible oil has fallen this year due to the global economic slowdown, which has led to record-high inventories. Benchmark palm oil futures FCPOc3 have also lost a quarter of their value so far this year. POI/
Indonesian palm oil stocks are currently between 2.5 million and 2.8 million tonnes, said Hasan. "We used to have one month of production as stock but maybe more than that now," he added
Palm producers are seeking new ways to generate demand, but their efforts may be hampered by renewed attacks by Western governments on the oil's green credentials.
Environmental groups have been critical of the expansion in the palm sector, which they blame for deforestation, speeding up climate change, ruining watersheds and destroying wildlife.
"The perception, especially from European countries, towards palm oil is worse than two or three years because of the intensity and scale of campaigns by NGOs," Hasan said.
The U.S. Environmental Protection Agency recently visited Indonesia to review the environmental aspects of its palm oil industry, while France has proposed a hike in duties on foods using palm oil, which has been dubbed the "Nutella tax". (Full Story) (Full Story)
To improve its green credentials, Indonesia signed a two-year forest moratorium in May last year, although critics say breaches still occur.
Hasan urged the government not to extend the ban, which is due to end in 2013, saying it would damage the economy. The palm oil industry is one of the biggest in Indonesia.
"We don't know exactly what is going to happen, but in the interests of the Indonesian economy we hope that the moratorium is not going to be extended," Hasan said.

20121129 1211 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares up on hopes of U.S. budget deal
TOKYO, Nov 29 (Reuters) - Asian shares edged higher, mirroring U.S. and European stock rises overnight, as sentiment improved after a senior U.S. lawmaker said he was "optimistic" on reaching a budget deal before the end of the year to avoid a fiscal crisis.
"Global stocks have recently tended to focus on one issue, which is the U.S. fiscal cliff," said Cho Byung-hyun, an analyst at Tong Yang Securities.

FOREX-Yen off 1-week high, euro firm on renewed U.S. fiscal hopes
TOKYO, Nov 29 (Reuters) - The yen slipped from a one-week high hit overnight and the euro regained some footing after comments from U.S. policy makers rekindled hopes of a deal to avert a sharp fiscal tightening.
"For the moment, the U.S. fiscal cliff seems to be a dominant theme for the market," said Katsunori Kitakura, associate general manager of market-making at Sumitomo Mitsui Trust Bank.

Obama says hopes for deficit deal by Christmas
WASHINGTON, Nov 28 (Reuters) - President Barack Obama said on Wednesday he hoped to reach an agreement with Congress before Christmas to avoid the looming "fiscal cliff" and shrink the budget deficit, and ramped up efforts to rally the public to press Republicans for action.
Obama encouraged Americans to use Twitter - with the hashtag #My2K - and other social media to swamp their lawmakers with requests to act quickly to keep their tax rates low.

OIL - Brent rises towards $110, on improved U.S. budget talks, MEast
SINGAPORE, Nov 29 (Reuters) - Brent crude rose towards $110 a barrel, as U.S. lawmakers appeared to be inching closer to a deal on the "fiscal cliff" and tensions in the Middle East worsened, although investors remained wary of the outlook for oil demand next year.
"Right now it's all on the U.S., if they can get a deal on the fiscal cliff, they will be on their way to a sustained economic recovery," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

US crude stocks fall slightly, gasoline stocks rise-EIA
NEW YORK, Nov 28 (Reuters) - U.S. crude oil inventories dropped slightly last week and gasoline stocks rose sharply as refineries increased processing rates, data from the U.S. Energy Information Administration showed on Wednesday.
U.S. crude oil inventories fell 347,000 barrels in the week to Nov. 23, to 374.12 million barrels, after analysts polled by Reuters had forecast a build of about 300,000 barrels.

US bans BP from new govt contracts after oil spill deal
WASHINGTON, Nov 28 (Reuters) - The U.S. government banned BP Plc  on Wednesday from new federal contracts over its "lack of business integrity" in the 2010 Deepwater Horizon oil spill, possibly imperiling the company's role as a top U.S. offshore oil and gas producer and the No. 1 military fuel supplier.
The suspension, announced by the Environmental Protection Agency, comes on the heels of BP's Nov. 15 agreement with the U.S. government to plead guilty to criminal misconduct in the Gulf of Mexico disaster, the worst offshore oil spill in U.S. history. The British energy giant agreed to pay $4.5 billion in penalties, including a record $1.256 billion criminal fine.

U.S. shale oil won't flood global market-EOG CEO
Nov 28 (Reuters) - Crude oil extracted from the United States shale formations is not likely to flood the global market because only the Eagle Ford and Bakken formations are driving significant growth, EOG Resources Inc's  chief executive Mark Papa said on Wednesday.
From 2011 to 2015, EOG expects U.S. oil production will grow only 2 million barrels per day to 7.7 million barrels, driven mostly by higher output from the Eagle Ford in South Texas and the Bakken in North Dakota, Papa told the Jefferies Global Energy Conference in Houston.

Argentina says wellhead natural gas prices to rise
BUENOS AIRES, Nov 28 (Reuters) - Argentina will allow wellhead natural gas prices to rise substantially from current levels as the energy-hungry South American country seeks to attract foreign investment into new fields, President Cristina Fernandez said on Wednesday.
Fernandez, who is keen to lure private investment to bring hefty shale energy resources on stream, said wellhead prices would rise to $7.50 per million British Thermal Units.

20121129 1011 Global Markets Related News.

Asia FX By Cornelius Luca - Wed 28 Nov 2012 16:44:41 CT (Source:CME/www.lucafxta.com)
The foreign currencies ended either flat or higher after recovering early losses; the yen extended its recovery from last week's 7-1/2-month low. The US stock markets closed up. Gold, oil and silver ended down. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on all European currencies. Good luck!

Overnight
US: New home sales edged down 0.3% to an annual rate of 368,000 in October from the revised September rate of 369,000 (originally 389,000).

Today's economic calendar
Japan: Retail trade for October
Australia: HIA New Home Sales  for October
Australia: Private capital expenditure for the third quarter

World Economy in Best Shape Since 2011 Investors (Bloomberg)
The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the so-called fiscal cliff, according to the latest Bloomberg Global Poll of investors. Two-thirds of the 862 surveyed described the global economy as either stable or improving. That’s up from just over half who said that in September and is the most since May 2011. The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year. China ranked second, reversing a decline to fourth in the September poll of investors, analysts and traders who are Bloomberg subscribers. The European Union, beset by a debt crisis, was seen offering the worst returns.
“The global economy is improving, recovering and healing, thanks to the U.S. and the emerging markets,” said Andrea Guzzi, a poll respondent and vice president of IST Investmentstiftung fuer Personalvorsorge, which manages money for Swiss pension funds. “More people are becoming wealthy, less and less are poor.” Stocks were seen as the asset of choice, with more than one in three of those surveyed on Nov. 27 forecasting equities would have the best returns in the coming year. Real estate came in second: Just less than one in five investors singled it out favorably, the best showing since the quarterly poll began in July 2009. Bonds were seen as offering the worst returns. The Federal Reserve is expected to provide continued support to the bond market after its Operation Twist program ends next month, according to the poll. About three in four said the U.S. central bank will begin outright purchases of Treasury securities after its plan for swapping short-dated securities for longer-dated ones expires.

Asian Stocks Rise on U.S. Budget Remarks, Japan Stimulus (Bloomberg)
Asian stocks rose as U.S. lawmakers said they’re optimistic for an agreement to avoid automatic spending cuts and tax increases and as Japan’s main opposition leader called for unlimited monetary policy easing. Toyota Motor Corp. Asia’s biggest carmaker, gained 1 percent. Sky Network Television Ltd., New Zealand’s largest pay TV operator, jumped the most in more than a year in Wellington after the company announced payment of a special dividend. Starpharma Holdings Ltd. (SPL) tumbled 34 percent in Sydney as the biotechnology company said it won’t file a drug application in the U.S. following a disappointing clinical trial for a new treatment. The MSCI Asia Pacific (MXAP) Index gained 0.5 percent to 123.62 as of 10 a.m. in Tokyo, before markets opened in China and Hong Kong. The gauge rose 13 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be ending.
“Market expectations are that the U.S. cutbacks will be watered down and spread over several years,” said Matthew Sherwood, Perpetual Investment’s head of markets research in Sydney. Perpetual manages about $25 billion. “If the cliff is successfully flattened out over several years, the U.S. recession feared by markets is unlikely to occur.” Japan’s Nikkei 225 Stock Average (NKY) gained 0.4 percent, with trading volume 10 percent below its 30-day average for the time of day, according to data compiled by Bloomberg. The broader Topix Index rose 0.8 percent. The Topix may surge 19 percent in 2013 on compelling valuations and earnings, Goldman Sachs Group Inc. strategist Kathy Matsui wrote in a report today.

Japan Stocks Rose After Goldman Says Election May Help Shares (Bloomberg)
Japan stocks rose, with the Nikkei 225 (NKY) Stock Average poised to rebound from yesterday’s loss, after Goldman Sachs Group Inc. said shares will benefit from policy changes if the opposition wins next month’s election. Shikoku Electric Power Co. paced gains among utilities on expectations it will seek a 10 percent rate increase. Toyota Motor Corp. (7203), which gets a quarter of its sales in North America, rose 0.9 percent on optimism a budget agreement can be reached in the U.S. to avoid the so-called fiscal cliff. Nakayama Steel Works Ltd. fell 7.5 percent on a Nikkei newspaper report it’s seeking creditor-led restructuring. The Nikkei 225 gained 0.6 percent to 9,366.44 as of 10:09 a.m. in Tokyo after yesterday falling 1.2 percent, the biggest decline in three weeks. The broader Topix Index climbed 0.8 percent to 777.47, with more than three stocks advancing for each that fell.
“Investors are hoping the election will diminish frustration with politics following confusion in the wake of the earthquake,” said Koji Toda, chief fund manager at Tokyo-based Resona Bank Ltd., which oversees about 15 trillion yen ($183 billion). “People are buying Japanese shares because prices are too low, even with the economy in a rut.” The Topix advanced 6.8 percent through yesterday from Nov. 14, when Prime Minister Yoshihiko Noda called for a Dec. 16 election, causing the yen to drop on speculation the opposition Liberal Democratic Party may win and call for more monetary easing by the Bank of Japan.

U.S. Stocks Rise as Boehner, Obama Fuel Optimism on Talks (Bloomberg)
U.S. stocks rose, erasing an earlier loss for the Standard & Poor’s 500 Index, after comments by Speaker of the House John Boehner and President Barack Obama fueled optimism an agreement can be reached in budget talks. Costco Wholesale Corp. (COST) advanced 6.3 percent after saying it plans to pay a special dividend. J.C. Penney Co. rallied 4.6 percent as consumer staples and discretionary stocks posted gains among 10 groups in the S&P 500. Knight Capital Group Inc. (KCG) jumped 15 percent after receiving takeover offers from Getco LLC and Virtu Financial LLC. Cliffs Natural Resources Inc. (CLF) dropped 1.3 percent as commodities declined. The S&P 500 climbed 0.8 percent to 1,409.93 in New York, after erasing a decline of as much as 1 percent. The Dow Jones Industrial Average added 106.98 points, or 0.8 percent, to 12,985.11 today. About 6.1 billion shares traded hands on U.S. exchanges today, in line with the three-month average, according to data compiled by Bloomberg.
Obama “was confident of something being done by the end of the year,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in an e-mail. His firm oversees about $80 billion. “This is something that the market is worried about not getting done by year-end, so if they can get it done, it would provide some relief. The market doesn’t like uncertainty.” Equities reversed declines as Boehner, an Ohio Republican, said he is optimistic lawmakers engaged in budget talks can “avert this crisis sooner rather than later.” He made his remarks to reporters, while saying he continues to oppose the expiration of tax cuts for top earners and Democrats need to get “serious” on budget cuts. Obama said separately at the White House, “My hope is to get this done before Christmas.”

Recap Stock Index Market Report (CME)
The December S&P 500 grinded lower during the early morning hours, weighed down by concerns that lawmakers would be unable to reach a deal on budget negotiations. Weakness in the market was compounded by US New Home Sales data for October that came in below expectations. The morning weakness pushed the December S&P 500 to a new four day low and below 1385.00. Sentiment in the market took a positive turn in the wake of optimistic comments from US House Speaker John Boehner in averting the fiscal cliff. The positive remarks buoyed equity markets, inspiring a drive back toward unchanged levels at mid day. That tone gained more momentum following comments from President Obama that a resolution to the fiscal cliff could be reached by Christmas. There was also a measure of support coming into retail-related shares, driven by gains in Costco and favorable earnings from American Eagle Outfitters.

German Stocks Advance as Boehner ‘Optimistic’ on Budget (Bloomberg)
German stocks advanced for a second day, extending a three-week high, as U.S. Speaker of the House John Boehner said he is “optimistic” budget talks with President Barack Obama will continue. Bayer AG (BAYN), the maker of drugs and chemicals, gained 1 percent. Continental AG added 1.4 percent. ThyssenKrupp AG (TKA) slid 2.5 percent after a report that it may get as little as 1 billion euros ($1.29 billion) from the sale of its Steel Americas unit. The DAX Index (DAX) added 0.2 percent to 7,343.41 at the close of trading in Frankfurt, erasing an earlier decline. The equity benchmark has rallied 23 percent from this year’s low on June 5 as the European Central Bank approved an unlimited bond-buying program and euro-region finance ministers eased the terms of aid for Greece. The broader HDAX Index gained 0.1 percent today.
“Now that the Greek headlines are moving to the back burner, the U.S. fiscal-cliff debate is taking center stage,” Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Markets will remain hostage to a decision, with volatility rising for the next few weeks.” The DAX earlier fell as much as 0.9 percent as Erskine Bowles, the co-chairman of Obama’s 2010 fiscal commission, said it’s unlikely the president and Congress will reach a deal by the end of this year.

Emerging Stocks Tumble on Outlook as Crude Sinks Russia (Bloomberg)
Emerging-market equities declined the most in two weeks, led by industrial and consumer stocks. Falling oil spurred declines in Russia’s benchmark index. Orascom Construction Industries (OCIC) plunged in Cairo after reporting a 31 percent drop in third-quarter net income, while Hankook Tire Worldwide Co. (000240) slid to a four-week low in Seoul. Citic Securities Co. (6030), China’s biggest-listed brokerage, sank for the first time in six days as equity trading shrank in China and the Shanghai Composite Index declined to its lowest level since January 2009. Russia’s Micex Index (VTBMICX) dropped the most in two weeks as crude tumbled in New York.
The MSCI Emerging Markets Index (MXEF) fell 0.5 percent to 991.27 in New York, its biggest one-day decline since Nov. 15. The global economic recovery will be “hesitant and uneven” over the next two years as a recession in Europe crimps demand, the Organization for Economic Cooperation and Development said in a report issued yesterday. The gauge pared losses as U.S. President Barack Obama floated a resolution to the country’s budget impasse by Christmas. “The OECD report focused on the deteriorating growth backdrop, and that certainly is going to weigh on emerging markets,” Nick Chamie, global head of emerging-markets and currency strategy at Royal Bank of Canada, said in a phone interview from Toronto. “This lingering concern over the fiscal cliff as well as the overhang of the downgraded growth prospects focused in on a number of risks that lie ahead.”

Dollar Trades Near November Low Before Geithner Discusses Cliff (Bloomberg)
The dollar was 0.5 percent from a four-week low against the euro before Treasury Secretary Timothy F. Geithner meets congressional leaders to discuss the so-called fiscal cliff. The Dollar Index (DXY) fell yesterday for the first time this week after comments from U.S. lawmakers fueled optimism the $607 billion combination of tax increases and spending cuts due to take effect in January will be avoided. The yen weakened against the majority of its counterparts as Asian stocks gained before U.S. data forecast to show that gross domestic product expanded faster than previously estimated. “The fiscal cliff can be a selling catalyst for the dollar regardless of whether risk is on or off,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The U.S. GDP figure will be positive for risk sentiment, spurring yen selling.”
The dollar traded at $1.2946 per euro as of 10:02 a.m. in Tokyo from $1.2953 in New York yesterday. It touched $1.3009 on Nov. 27, the weakest since Oct. 31. The yen was little changed at 106.22 per euro and 82.06 per greenback. It was at 85.88 per Australia’s currency following a 0.2 percent drop to 85.99. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, was little changed at 80.304 after falling 0.1 percent to 80.336 yesterday. The MSCI Asia Pacific Index (MXAP) of shares rose 0.5 percent, sapping demand for lower-yielding, haven assets. Geithner will meet separately with each of the four top leaders in Congress today, accompanied by Rob Nabors, the administration’s director of legislative affairs. House Speaker John Boehner said yesterday he is “optimistic” lawmakers engaged in budget talks can avert the crisis.
The U.S. economy probably grew at an annualized 2.8 percent in the third quarter, according to the median estimate of economists surveyed by Bloomberg News. The initial reading from the Commerce Department last month showed a 2 percent increase.

Aussie Near 2-Month High on Stock Gains, U.S. Budget Optimism (Bloomberg)
Australia’s dollar traded 0.2 percent from a two-month high after global equities rebounded on speculation the U.S. will avoid the so-called fiscal cliff, boosting demand for higher-yielding assets. The New Zealand dollar remained higher after U.S. Republican House Speaker John Boehner said he is optimistic officials can “avert this crisis sooner rather than later.” Demand for the so-called Aussie was limited after a report showed Australia’s business investment grew at a slower pace in the third quarter, supporting expectations that the Reserve Bank of Australia will cut interest rates next week. “Everybody expects some resolution to the fiscal cliff,” said Hans Kunnen, the chief economist at St. George Bank Ltd. in Sydney. “The better the solution, the smoother it is, the easier it will be for the economies to grow, which is good for Australia’s dollar.”
The Australian currency was little changed at $1.0466 as of 11:39 a.m. in Sydney from yesterday, when it gained 0.3 percent. It touched $1.0490 on Nov. 27, the highest since Sept. 21. The Aussie fetched 85.97 yen after rising 0.2 percent yesterday to 85.99. New Zealand’s currency traded at 82.41 U.S. cents from 82.37 yesterday, when it advanced 0.4 percent. The so-called kiwi dollar added 0.1 percent to 67.69 yen. U.S. Treasury Secretary Timothy F. Geithner will meet today with congressional leaders amid negotiations to lower the nation’s budget deficit. If lawmakers fail to reach agreement, more than $600 billion in automatic spending cuts and tax increases are set to begin Jan. 1. The MSCI World Index (MXWO) of stocks rose 0.4 percent yesterday, rallying from a 0.4 percent decline over the previous two days.

Fiscal Cliff Avoided in Poll Seeing Market Gain on Limited Deal (Bloomberg)
Three out of four global investors expect President Barack Obama and congressional leaders to reach a short-term agreement to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1. Only 6 percent of investors anticipate a political impasse that would send the U.S. economy over the so-called fiscal cliff and into a recession, according to a Bloomberg Global Poll conducted on Nov. 27. “Both sides understand the importance of striking a deal, increasing taxes and cutting entitlements,” says Richard Salerno, director of fixed income for Kovitz Management Corp. in Chicago, in a follow-up interview. “The market just wants to know the rules going forward so they can move on and begin to lift us out of our fiscal mess.”
The survey of 862 Bloomberg customers who are investors, traders or analysts found that 40 percent expect financial markets to rise after a short-term tax-and-spending deal. An additional 28 percent forecast no significant market reaction while 26 percent say markets would fall, seeing a short-term deal as delaying an unavoidable day of reckoning with the country’s finances. On Nov. 20, Federal Reserve Board Chairman Ben S. Bernanke, who enjoys a 65 percent approval rating in the Bloomberg poll, warned that failure to reach an agreement before the end of the year “would pose a substantial threat to the recovery.”

Narrowing Trade Gaps Makes Bullish Case for Global Growth (Bloomberg)
In October 2010, the world’s top finance ministers and central bankers flew to the South Korean resort town of Gyeongju to discuss how to protect a fragile economic recovery. Treasury Secretary Timothy F. Geithner arrived from the U.S. with a goal in mind. He wanted an agreement to even out the imbalances in global trade -- reducing the surpluses of exporters such as China and Germany and cutting the deficits of the U.S. and other countries that are net buyers of the world’s goods. These so-called current-account imbalances grew before the financial crisis in 2008 and helped trigger the global recession. When trade gets far enough out of whack, something has to give, Bloomberg Markets magazine reports in its January issue. Those with the consumer demand that helps drive economic activity go deeper and deeper in debt, while exporters accumulate their IOUs and worry about getting paid. Look no further than China’s holdings of more than $1 trillion in U.S. Treasury securities to understand what can happen.
Geithner argued at the summit that addressing the imbalances would strengthen global growth and make it more likely to last. The U.S. pushed to commit each Group of 20 nation to keeping its surplus or deficit to less than 4 percent of gross domestic product. The agreement wasn’t to be, shot down by China, Japan and other countries with export might. Rainer Bruederle, then Germany’s economy minister, opposed the idea. “We should lean toward a market economy process and not a command economy,” he told his counterparts at the meeting. The Gyeongju talks ended with a tepid accord to pursue policies conducive to reducing excessive imbalances.

Sales of New U.S. Homes Fell 0.3% in October (Bloomberg)
Builders in the U.S. sold fewer new homes than forecast in October and purchases were revised down for the prior month, highlighting the hurdles facing a rebound in the industry at the heart of the financial crisis. Sales dropped 0.3 percent to a 368,000 annual pace following a 369,000 rate in September that was 20,000 lower than initially reported, figures from the Commerce Department showed today in Washington. The median estimate of 74 economists surveyed by Bloomberg projected a 390,000 pace. The report runs counter to recent data showing gains in residential construction, builder confidence and mortgage applications that indicate housing is on the verge of contributing more to economic growth. Easier access to credit and more employment are still needed to ensure the real-estate rebound is sustained -- one reason why Federal Reserve Chairman Ben S. Bernanke has pledged to maintain record stimulus.
“Better job growth is the key factor,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who projected a 365,000 rate of sales. “We really have a lot of ground to make up from the recession.” Stocks rose, erasing early losses, as lawmakers said they are optimistic a budget agreement can be reached to avoid automatic spending cuts and tax increases in 2013. The Standard & Poor’s 500 Index climbed 0.8 percent to 1,409.93 at the 4 p.m. close of trading in New York. The yield on the benchmark 10-year Treasury note decreased to 1.63 percent from 1.64 percent late yesterday.

Brazil Ends Streak of 10 Straight Rate Cuts on Inflation (Bloomberg)
Brazil left its benchmark interest rate unchanged today at a record low, ending its second-longest streak of borrowing-cost reductions in an effort to prevent inflation from accelerating. Policy makers led by central bank President Alexandre Tombini held the Selic rate at 7.25 percent, after reducing it by 525 basis points in the previous 10 meetings. The decision, which was unanimous, was forecast by all 75 economists surveyed by Bloomberg. “Considering the balance of risks for inflation, the recovery of domestic activity and the complexity surrounding the global environment, the committee understands that the stability of monetary conditions for a sufficiently prolonged period of time is the most adequate strategy to guarantee the convergence of inflation to target,” policy makers said in their statement, which was almost-identical to their October announcement.
Inflation, which accelerated to its fastest pace in nine months in mid-November, has remained above the central bank’s 4.5 percent target for more than two years even as Europe’s debt crisis and a slowdown in China ensnare Latin America’s biggest economy. Economists surveyed by the central bank expect the growth rate to more than double next year, to 3.94 percent, further stoking price increases. “A recovery in economic activity with inflation already at a fast pace creates more inflationary risk,” Roberto Padovani, chief economist at brokerage Votorantim CTVM, said before today’s decision.

Thailand Holds Policy Rate as Economic Data Signal Recovery (Bloomberg)
Thailand kept its policy interest rate unchanged today after an unexpected cut last month, and signaled it may be done with easing as data show the economy is improving after last year’s floods. The Bank of Thailand held its one-day bond repurchase rate at 2.75 percent, it said in Bangkok today. The outcome was predicted by 16 of 19 economists in a Bloomberg survey, while the rest called for a quarter-point reduction. The monetary policy committee’s decision was unanimous, the central bank said. Thai manufacturing and exports increased in October, adding to signs from the U.S. and China of a recovery in the global economy. While the central bank last month lowered its growth forecast for 2013, it said today risks to expansion have subsided, and that it doesn’t see much need for more rate cuts.
“Although the recovery seems to be slowing, the economy continued to expand,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. “There’s no pressing reason for them to cut, especially when the economy has started to expand again. I think they are probably already done with the easing cycle.” The Thai baht fell 0.1 percent to 30.71 per dollar as of 3:41 p.m. in Bangkok today. The benchmark Stock Exchange of Thailand index gained 0.3 percent.

20121129 1011 Global Commodities Related News.

U.S. Heads for Warmest Year Recorded in Lower 48 States (Bloomberg)
The U.S. is about to register the warmest year on record in the lower 48 states, and the world its ninth-hottest, a United Nations agency said in a report, adding new urgency to the quest to control global warming. Two-thirds of the U.S. states suffered drought this year, while heat waves hit across Europe and in Morocco, Jordan, China and Russia, the World Meteorological Organization said in a report released in Doha, where UN climate talks began this week. It noted Arctic sea ice shrank to its smallest on record. “The alarming rate of its melt this year highlighted the far reaching changes taking place on Earth’s oceans and biosphere,” WMO Secretary-General Michel Jarraud said in a statement. “Climate change is taking place before our eyes and will continue to do so as a result of the concentrations of greenhouse gases in the atmosphere, which have risen constantly and again reached new records.”
Envoys from 194 nations are working on setting the framework for negotiations on a treaty that would be agreed to in 2015 and come into force in 2020. It would limit fossil fuel emissions, which the WMO earlier this month said reached their highest ever. As delegates met for their third day of discussions scheduled to conclude on Dec. 7, environmental groups joined China, Brazil and 48 of the least developing countries in the world saying industrial nations must make good on their promises for $100 billion a year in aid for developing nations.

Obama Urged to Declare Emergency for Mississippi River (Bloomberg)
Shippers and lawmakers are pressuring President Barack Obama to declare a federal emergency along the Mississippi River, citing potential “catastrophic consequences” in the Midwest if barge traffic is curtailed by low water on the nation’s busiest waterway. Lawmakers, including Senator Tom Harkin of Iowa, and the National Association of Manufacturers, the U.S. Chamber of Commerce and the American Petroleum Institute urged Obama to tell the U.S. Army Corps of Engineers to hasten the planned removal of submerged rocks near Cairo, Illinois, that may impede barge traffic at low water levels. The Corps also should stop its seasonal restriction on the flow of Missouri River water into the Mississippi, which it began last week, the groups said. “We still got a lot of stuff to move down that Mississippi before winter totally sets in,” Harkin said in an interview. “They can release more water, sure they can.”
Mississippi River barge traffic is slowing as the worst drought in five decades combines with a seasonal dry period to push water levels to a near-record low, prompting shippers including Archer-Daniels-Midland Co. (ADM) to seek alternatives. Computer models suggest that without more rain, navigating the Mississippi will start to be affected Dec. 11 and the river will reach a record low Dec. 22, Corps spokesman Bob Anderson, based in Vicksburg, Mississippi, said.

Wheat Market Recap Report (CME)
December Wheat finished up 3 at 876, 4 off the high and 11 1/4 up from the low. March Wheat closed up 2 3/4 at 891 1/4. This was 11 1/2 up from the low and 4 1/4 off the high.
Chicago, KC, and Minneapolis wheat ended the day with marginal gains but traded in positive territory throughout the day. Strong cash markets and the terrible weather conditions in the western plains continue to support the US wheat markets this week. The sluggish demand fundamentals have been set aside as traders instead focus on the potential for deteriorating supply of winter wheat next year. No significant precipitation is expected in the next two weeks and temperatures are expected to be above normal which will keep some wheat from entering dormancy in the south. Conditions in the east remain mostly favorable. Very poor soil moisture conditions have improve since September which should promote good root and stand establishment for much of the Soft Red Winter wheat growing region. US Soft Red Winter wheat has become competitive in the global market so some traders expect the US wheat export sales pace to pick up in 2013 which could add additional support to the trade going forward.
December Oats closed down 2 1/4 at 370 3/4. This was 1 up from the low and 5 1/2 off the high.

Corn Market Recap for 11/28/2012 (CME)
December Corn finished up 1/4 at 760 1/4, 3 off the high and 5 1/2 up from the low. March Corn closed unchanged at 764. This was 5 1/4 up from the low and 3 1/2 off the high.
March corn ended the day slightly lower but traded both sides of the unchanged. Basis in the Gulf of Mexico was steady on light demand but low water levels on the Mississippi River south of St. Louis continues to help support. The stronger trade in the wheat market helped to lift corn to new highs this morning but the action settled down as soybeans trended lower off early highs. This morning's ethanol stocks report was considered mixed against trade expectations. Ethanol production for the week ending November 23rd averaged 803,000 barrels per day, down from 811,000 last week and down 13.7% vs. last year. Total ethanol production for the week was 5.62 million barrels. Corn used in last week's production is estimated at 84.3 million bushels vs. 85.16 last week. This crop year's cumulative corn used for ethanol production for this crop year is 1.02 billion bushels. Corn use needs to average 86.64 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of November 23rd were 18.35 million barrels. This is down 3.06% vs. last week and up 7.63% vs. last year. January Rice finished up 0.105 at 15.19, equal to the high and 0.14 up from the low.

Recap Energy Market Report (CME)
January crude oil prices traded sharply lower during the early US trading session, falling to their lowest level since November 15th. Early pressure in the market came from a definitive risk-off vibe coming from uncertainty surrounding the Greek debt deal and US budget negotiations. This morning's EIA data showed an unexpected draw in crude oil stocks last week of 347,000 barrels. Crude oil imports for the week stood at 8.118 million barrels per day compared to 7.768 million barrels the previous week. The refinery operating rate was up 1.1% to 88.6%. January crude oil prices rallied on the inventory data, as well as a positive reversal in outside markets. Optimistic comments over the US fiscal cliff debate from US House Speaker John Boehner provided an added lift.

Natural Gas Falls as Moderating Weather Cuts Heating Demand (Bloomberg)
Natural gas futures declined for the third time in four days as forecasts for mild weather next week signaled reduced demand for the heating fuel. Gas dropped as much as 3.8 percent as forecasters including MDA Weather Services predicted above-normal temperatures for most of the lower 48 states over the next 10 days. Unusually cold weather helped reduce a supply glut this month. The December contract expires today. “The weather is moderating so it’s wearing a little bit on the market,” said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures LLC in Miami. “We’ve got an expiring contract today, that could be part of it.” Natural gas for December delivery fell 12.7 cents, or 3.4 percent, to $3.642 per million British thermal units at 1:34 p.m. on the New York Mercantile Exchange. Prices are up 8.3 percent from a year ago. The January futures contract dropped 12.6 cents to $3.766 per million Btu.
Volume was 175,317 contracts at 12:32 p.m. in electronic trading, up 36 percent from about 129,000 at the same time yesterday. Gas has slumped 7.4 percent since rising to 13-month intraday high of $3.933 on Nov. 23 as revised forecasts showed a warmer start to December. Warm weather building up over the next five days in the western two-thirds of the U.S. will spread to the East Coast next week, according to MDA in Gaithersburg, Maryland.

Oil Snaps Three-Day Drop on Falling Supplies, U.S. Budget Talks (Bloomberg)
Oil snapped a three-day decline in New York after U.S. stockpiles unexpectedly fell and political leaders said they’re optimistic a budget agreement can be reached in the world’s biggest crude consumer. Futures rose as much as 0.3 percent after sliding 0.8 percent yesterday to a two-week low. Republican House Speaker John Boehner is optimistic that budget talks on the so-called fiscal cliff can “avert this crisis sooner rather than later,” he told reporters. President Barack Obama said he hopes to reach a deal before Christmas. U.S. crude supplies slid 347,000 barrels last week, an Energy Department report showed. They were forecast to climb 350,000 barrels, according to a Bloomberg News survey of analysts. “The fiscal cliff is a very significant thing for world economies and therefore oil demand,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The consensus view is that a reasonable compromise will be reached.”
Crude for January delivery climbed as much as 26 cents to $86.75 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.65 at 12:04 p.m. Sydney time. The contract pared a decline of as much as $1.82 yesterday to close down 69 cents at $86.49, the lowest since Nov. 15. Prices have fallen 12 percent this year. Brent for January settlement rose 21 cents to $109.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.07 to West Texas Intermediate futures, compared with $23.02 yesterday.

Rio Tinto Targets $5 Billion Spending Cuts, Production Boost (Bloomberg)
Rio Tinto Group, the world’s second- largest mining company, said it’s targeting savings of $5 billion by the end of 2014, while simultaneously boosting production at its iron ore, copper and alumina units. “We are taking further tough action to roll back the unsustainable cost increases of the past few years,” Tom Albanese, chief executive officer of the London-based company, said today in a statement. “Our two most challenged businesses are aluminum and coal, and in particular Australian coal,” he later told reporters in Sydney. Rio Tinto plans to cut the $5 billion in operating and support costs compared with expected costs this year, joining mining companies including BHP Billiton Ltd. (BHP) in seeking cost savings as well as curbing investment on new projects as metal demand wanes. Rio last month said it’s delaying investment decisions in commodities such as coal while continuing spending on its Australian iron ore expansion.
“Those two businesses are potentially loss-making where commodity prices currently are, which is clearly not sustainable,” Prasad Patkar, who helps manage about A$1.1 billion at Sydney-based Platypus Asset Management Ltd., said by phone. “Banking on a sharp recovery would be foolish at this stage so the only thing managements can do is to aggressively take costs out.” Rio rose 0.6 percent to A$57.06 as of 10:56 a.m. in Sydney trading while the key S&P/ASX 200 gained 0.2 percent.

Copper Shortage Seen Extending as China Accelerates: Commodities (Bloomberg)
Copper supply shortages will extend into the first half of next year as an accelerating Chinese economy more than doubles the pace of growth in global consumption even as mines extract a record amount of metal. Demand will outpace supply by 316,000 metric tons in the first six months, more than all copper in London Metal Exchange warehouses, before a surplus emerges in the second half, Barclays Plc estimates. Production has lagged behind consumption since 2010, according to the International Copper Study Group. The metal may average $8,300 a ton in the second quarter, 6.9 percent more than now and the most in a year, according to the median of 21 analyst and trader estimates compiled by Bloomberg.
China, which uses 41 percent of the world’s copper, is rebounding from seven quarters of slowing growth after the government approved a $161 billion subways-to-roads construction plan in September. It’s being joined by central banks from the U.S. to Europe to Japan, who also pledged more stimulus. Housing starts in the U.S., the second-largest consumer, reached a four- year high last month and business confidence unexpectedly strengthened in Germany, Europe’s biggest economy. “U.S. growth will be moderate and Europe is stabilizing, so that drag might reverse partially, and then it all falls back to China,” said Dominic Schnider, Singapore-based global head of non-traditional assets at UBS AG’s wealth-management unit. “Economic activity doesn’t have to be that strong in China for inventories to get drawn down and you could see a rally in the first half, but then you come into the second half where mine supply comes in on the strong side.”

Gold Tumbles Most in Three Weeks on Fiscal-Cliff Concerns (Bloomberg)
Gold futures fell the most in three weeks as pessimism on a U.S. budget resolution eroded demand for commodities. On the Comex in New York, gold futures for February delivery tumbled 1.5 percent to settle at $1,718.80 an ounce at 1:38 p.m., the biggest drop for a most-active contract since Nov. 2. In the first 30 seconds of floor trading, 7,700 contracts traded, according to PVM Futures Inc. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell as much as 1.4 percent, erasing this year’s gain. Erskine Bowles, the co-chairman of President Barack Obama’s 2010 fiscal commission, said that a deal with Congress to avert the so- called fiscal cliff is unlikely by the end of this year. “There’s ‘risk-off’ trading, and behind that is talk of the fiscal cliff becoming more of a reality than people had thought,” Harry Denny, a broker at Hoboken, New Jersey-based PVM, said in a telephone interview. “The fiscal-cliff resolution has everyone a little cautious.”
An estimated 437,259 futures contracts traded as of 2:26 p.m. Total volume rose to a record 484,721 on May 29. Through yesterday, the daily average was 176,000 this year. Floor trading starts at 8:20 a.m. The most-traded gold options yesterday were bets on further price drops. Exchange data show 9,573 put options traded, giving owners the right to sell at $1,700 on the Comex by January. That compares with 461 contracts a day earlier. Each contract is for 100 ounces. The next-most-traded contracts were January puts giving owners the right to sell at $1,690 and at $1,695.

Silver Market Recap Report (CME)
December silver also started out waffling around both sides of unchanged with the bear camp appearing to have only moderate control. However, in the wake of a sharp downside breakout in gold prices, silver and a host of physical commodity markets came under pressure and the press was quick to blame the slide on ideas that certain members of Congress felt that going off the fiscal cliff was probably in the cards. However, the president was hopeful that a deal could be seen before Christmas and that might have stemmed the slide in silver today.

Gold Market Recap Report (CME)
The gold market waffled around both sides of unchanged early in the session before a wave of selling entered gold and then seemingly spilled over into other physical commodity markets. Some players blamed the lack of fiscal cliff progress undermined gold and other commodities but if that was the focus of the trade one might have expected gold to have bounced more significantly into the President's White House Press conference. In fact, equities rallied off a wave of fiscal cliff hopes but yet gold remained within striking distance of its lows. At times today, adverse currency market action undermined gold, but currency action didn't seem to be the primary catalyst for the gold dive today.

20121129 1010 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
January Soybeans finished down 3 at 1446 1/4, 10 1/2 off the high and 6 1/4 up from the low. March Soybeans closed down 2 1/2 at 1435. This was 7 up from the low and 10 1/2 off the high. December Soymeal closed up 0.6 at 439.9. This was 1.6 up from the low and 3.0 off the high. December Soybean Oil finished down 0.01 at 50.11, 0.09 off the high and 0.45 up from the low.
January soybeans traded slightly lower to finish the day. Oil saw modest losses while meal finished lower on market on close sell pressure. The soybean market traded mostly negative throughout the day after failing to see follow through momentum overnight to the upside. Losses were limited due to strength in the corn and wheat market and also after the USDA reported that US exporters sold 290,000 tonnes of soybeans to China for the current marketing year. The demand picture continues to be robust but the overall weather outlook for South America remains mostly favorable which is adding resistance. Central and northern Brazil continue to see steady precipitation which has improved conditions while Southern Brazil is trending drier but is expected to see an uptick in rainfall. Argentina will see another shot of precipitation at the end of this week followed by a drier weather pattern. Basis in the Gulf of Mexico was steady to slightly weaker nearby but still well above historical levels. Concern that low water levels on the Mississippi River south of St. Louis may slow supply to the Gulf of Mexico is adding support to cash markets.

EDIBLE OIL: Malaysian palm oil futures eased dropping for a second straight session on concerns that U.S. fiscal woes could hamper global economic growth and commodity demand. (Reuters)

European vegoils: Palm oil easier on follow-through selling - RTRS
29-Nov-2012 02:39
ROTTERDAM, Nov 28 (Reuters) - Palm oil on the European vegetable oil market slipped further on Wednesday because of follow-through technical selling on worries over the global economy and prospects for further growth of palm oil stocks. OILS/E
* “The worries over the U.S. economy and therefore the growth of the global economy pressured prices in various markets. Markets closed a touch off the lows on some bargain hunting,” one broker said.
Palm oil was offered between $5 and $12.50 a tonne down from Tuesday after Malaysian palm oil futures closed between 15 and 29 ringgit per tonne down on concerns over the U.S. budget woes that could hamper global economic growth and therefore demand for commodities. 0#FCPO: Jan/March RBD palm olein traded $10 down from Tuesday between $825 and $817.50 a tonne fob Malaysia, April/June changed hands between $850 and $845, also down $10 also. At 1700 GMT CBOT soyoil futures were 0.05 and 0.43 cents per lb down in a technical correction on Tuesday’s gains of more than half a cent. Liquid oils – soyoil, rapeoil and sunoil, were offered between two euros down and seven euros per tonne up from Tuesday following Wednesday’s strong close in CBOT soyoil futures and stronger rapeseed futures. EU rapeoil traded three euros up from Tuesday at 925 euros per tonne fob exmill for Feb/April, May/July fetched between 927 euros, up two euros, Aug/Oct changed hands at 914 and 912 euros and 920 euros was paid for Nov/Jan 2013. Lauric oils were offered between $5 per tonne down and $25 up from Tuesday after Feb/March coconut oil changed hands at $840 a tonne per tonne cif Rotterdam. No deals were reported in palmkernel oil.

Indonesia Poised to Top India as World’s Largest Palm Oil User (Bloomberg)
Indonesia, the world’s biggest producer of palm oil, is set to surpass India as the largest user next year as economic growth boosts demand. Consumption may climb 13 percent to 8.5 million metric tons from 7.5 million tons this year, Indonesia’s Deputy Trade Minister Bayu Krisnamurthi said by text message. That exceeds U.S. government estimates of 7.95 million tons for India and 7.87 million tons for Indonesia in the 2012-2013 year. Rising demand for palm used in everything from instant noodles to candy and fuel may curb exports that rose 2.9 percent in October from a month earlier. The economy expanded at more than 6 percent in the past eight quarters as President Susilo Bambang Yudhoyono raised spending, luring investors such as Unilever (UNA) and L’Oreal SA. Palm use in the world’s fourth most populous country jumped 51 percent in the past four years as wheat climbed about 21 percent and sugar rose about 15 percent, U.S. Department of Agriculture estimates show.
“We’ve seen very strong demand growth from Indonesia,” said Erin Fitzpatrick, a London-based analyst at Rabobank International. “You certainly can see that story continuing,” she said by phone Nov. 27. The country may surpass Germany and the U.K. by 2030 to be the world’s seventh-largest economy, generating $1.8 trillion in sales for agriculture, consumer and energy companies by that year, McKinsey & Co. said in September. McKinsey estimates consumer spending in urban areas will rise 7.7 percent a year to $1.1 trillion by 2030, according to the report.

L’Oreal, Unilever
L’Oreal (OR), the world’s largest cosmetic maker, expects to boost sales in Indonesia by as much as 35 percent in the next five years, Vismay Sharma, the company’s country head, said Oct. 29. The Paris-based company is investing $128 million to build its largest factory globally in West Java province. Unilever plans to spend $150 million building a factory in Sei Mangkei, North Sumatra, that will produce ingredients for soaps and shampoos, said Sancoyo Antarikso, a Jakarta-based director at the unit of the second-largest consumer-goods maker. Consumer-product companies like Unilever and noodle-maker PT Indofood CBP Sukses Makmur (ICBP) will benefit from a government plan to raise minimum wages, according to John Rachmat, an analyst at PT Mandiri Sekuritas, in a Nov. 22 report.
The Jakarta province will increase the minimum by 44 percent to 2.2 million rupiah ($229) a month in 2013 from this year, said Mandiri Sekuritas. East Kalimantan will boost the wage by 49 percent to 1.75 million rupiah, while Papua, the eastern most province, will raise it by 8 percent to 1.71 million rupiah, according to the report.

Blending Rate
Consumption will increase as Indonesia raises the blending rate of palm-based biofuel in petroleum diesel to 7.5 percent from 5 percent, said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association, said by phone Nov. 27. Demand from oleochemicals is also increasing, he said. Palm-oil refining capacity may climb to more than 30 million tons next year, exceeding output, as companies step up investments following tax changes, Andreas Bokkenheuser, a Singapore-based analyst at UBS AG said last month. Investors are planning $1 billion of investments following the duty reduction, Sinaga said then. Capacity has gained “significantly” this year, said Krisnamurthi on Nov. 27, without specifying the increase.
The government cut taxes in October last year to boost processed exports as it seeks to raise the value of commodity shipments to spur growth and create jobs. Indonesia, which is rich in minerals such as nickel, bauxite and copper, also started a ban on ore exports by some miners in May, with exemption for companies planning smelters. Those shipments are subject to a 20 percent tax.