20130103 0933 Global Commodities Related News.

DTN Closing Grain Comments 01/02 14:28 Grains On the Defensive Again Wednesday (CME)
After a higher start to the day, grain contracts quickly collapsed as heavy investment selling hit the sector.
General Comments:
Corn closed 7 1/2 cents lower in the March and 6 3/4 cents lower in the May.
Soybeans closed 17 1/4 cents lower in the March and 15 cents lower in the May.
Wheat closed 22 3/4 cents lower in the March Chicago, 20 cents lower in the
March Kansas City, and 24 cents lower in the March Minneapolis. The U.S. dollar
index is 0.068 higher at 79.839. February gold is $12.70 higher at $1,688.50
while March silver is $0.828 higher and March copper is $.0810 higher. The Dow
Jones Industrial Average is 235 points higher at 13,339. February crude oil is
$1.04 higher at $92.86. February heating oil is $.0129 higher while February
RBOB gasoline is $.0356 higher and February natural gas is $0.114 lower.

Corn Market Recap for 1/2/2013 (CME)
March Corn finished down 7 1/2 at 690 3/4, 16 1/2 off the high and 3 up from the low. May Corn closed down 6 3/4 at 693 1/2. This was 3 up from the low and 15 1/2 off the high.
March corn trade lower into the closing bell after an initial surge higher. Weaker trade in the soybean and wheat markets helped to pressure corn. Outside markets were mostly supportive throughout the session with crude oil, copper, and stocks trading higher after Congress reached a deal on the "Fiscal Cliff". The US Dollar erased early losses and traded higher midday which added pressure to the grain complex. South American weather remains most favorable with drier conditions in Argentina this week and showers are expected in growing regions of Brazil. Traders continue to see Brazil production near 70 million tonnes, right in line with the USDA forecast but Argentina estimates remain near 22.5-23.0 million tonnes as compared with the USDA estimate of 27.50 million tonnes. More than 20% of the crop still needs to be planted in Argentina but harvest for earlier planted corn is expected to begin in about two weeks. The trade ministry in Brazil estimated December corn exports of 2.8 million tonnes vs. 3.91 in November. Corn basis in the Gulf is slightly higher but still lower from levels Monday as farmer sales come to a halt. Export demand remains sluggish.
January Rice finished down 0.105 at 14.755, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
March Wheat finished down 22 3/4 at 755 1/4, 32 3/4 off the high and 2 3/4 up from the low. May Wheat closed down 21 3/4 at 766. This was 3 1/4 up from the low and 31 off the high.
Kansas City and Chicago wheat rallied on the pit open but the market saw sell pressure shortly thereafter to close down 19-20 cents on the day. The US Dollar turned higher midday which helped to pressure the grain markets. US wheat exporters are looking ahead to Iraq's 50,000 tonne option-origin tender and Syria issued a 100,000 tonne soft wheat tender overnight. The US has a chance of doing both bits of business which could be supportive to price. Kansas and Oklahoma released state crop condition ratings on Monday. Kansas was at 24% good/excellent vs. 29% last month. Poor/very poor was reported at 31%. Oklahoma was pegged at 11% good/excellent vs. 14% last month. The western plains are expected to dry out this week after seeing decent rain and snowfall last week. Conditions have not improved for most of the growing region but significant accumulation was seen in the central third of KS which will help protect crops from winterkill.
March Oats closed down 12 at 335 1/2. This was 3 1/4 up from the low and 13 off the high.

Wheat Slumps to Six-Month Low on Slowing Exports by U.S. (Bloomberg)
Wheat futures fell to a six-month low on mounting concern that export demand is slowing for supplies from the U.S., the world’s biggest shipper.
Export sales totaled 13.2 million tons from June 1 through Dec. 20, down 13 percent from the same period a year earlier, U.S. Department of Agriculture data show. While shipments jumped 55 percent in the most recent week, the most since January 2011, more gains are needed to change market sentiment, said Frank J. Cholly, a senior commodities broker at RJO Futures in Chicago. Short positions, or bets on lower prices, exceeded longs by 11,899 wheat futures and options as of Dec. 24, the most-bearish since May, government data show.
“We need a more compelling demand story to move the market higher,” Cholly said by telephone. “Buyers have to step up to the plate sooner or later. It’s cheap enough now.”
Wheat futures for March delivery fell 2.9 percent to settle at $7.5525 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest decline since Dec. 11, after touching $7.525, the lowest for a most-active contract since June 29. Prices tumbled 9.9 percent in December, the biggest drop since September 2011.
Even with the decline last month, the grain ended 2012 up 19 percent for the year, and reached a four-year high of $9.4725 on July 23 as drought cut output in countries including the U.S. and Russia.
Wheat’s fourth-quarter slump makes the commodity an attractive investment because drought conditions persist in the U.S. and may affect production next year, Cholly said.
“I’d like to own wheat after this type of correction,” he said. “We don’t have any snow here, and we’re still in a drought. We planted into dry soils. If I’m an end-user, now’s a good time to be buying.”
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Soybeans Slump to Six-Week Low on South America Outlook (Bloomberg)
Soybean futures fell to a six-week low on speculation that South America will harvest a record crop this year and boost exports. Corn dropped.
A unit of the U.S. Department of Agriculture said today in a report that Brazil will harvest 83 million metric tons this year, surpassing the U.S. as the world’s largest grower and exporter. Rain expected in the next two weeks may boost yields in Brazil, while dry weather in Argentina firms muddy soils for farmers to finish planting, Overland Park, Kansas-based World Weather Inc. said.
“South American weather remains very conducive for reaching current USDA crop forecasts,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Harvesting is just beginning in Brazil and will increase available supplies.”
Soybean futures for March delivery dropped 1.2 percent to close at $13.9225 a bushel at 2 p.m. on the Chicago Board of Trade. Earlier, the price touched $13.8625, the lowest for a most-active contract since Nov. 20. In 2012, the oilseed rose 17 percent after drought cut U.S. production to the lowest in four years.
In Argentina, output may jump 34 percent to a record, the USDA said on Dec. 10.
Corn futures for March delivery fell 1.1 percent to $6.9075 a bushel in Chicago. Earlier, the price touched $6.8775, the lowest since Dec. 20. Last year, the grain advanced 8 percent, the fourth straight increase.
In the U.S., corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Sugar Climbs on Economic Outlook; Coffee, Cotton, Cocoa Rise (Bloomberg)
Sugar advanced to an almost one-month high on speculation that demand for commodities will rise after U.S. lawmakers reached a budget deal. Coffee, cotton and cocoa also gained, while orange juice fell.
The vote in the House of Representatives broke a yearlong impasse over how to avert $600 billion in tax increases and spending cuts that threatened to send the economy back into recession. The Standard & Poor’s GSCI Spot Index of 24 raw materials jumped as much as 1.6 percent.
Commodities “are going to enjoy a nice bounce after the majority of fiscal-cliff worries are now behind us,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in an e-mail.
Raw sugar for March delivery climbed 0.9 percent to settle at 19.69 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after touching 19.75 cents, the highest for a most-active contract since Dec. 4. Prices tumbled 16 percent last year.
Also on ICE, arabica-coffee futures for March delivery rose 3.9 percent to close at $1.494 a pound, the biggest gain since Sept. 10. Prices dropped 37 percent last year.
Cocoa futures for March delivery advanced 1 percent to close at $2,259 a metric ton in New York, capping the first increase since Dec. 14. Prices rose 6 percent last year.
Cotton futures for March delivery added 0.3 percent to settle at 75.36 cents a pound on ICE. The fiber fell 18 percent in 2012.
Orange-juice futures for March delivery slid 0.6 percent to close at $1.166 a pound in New York. Prices are down 19 percent since reaching a seven-month high on Dec. 19.
Florida “didn’t get cold,” Sterling Smith, a market specialist at Citigroup Inc. in Chicago, said in an e-mail. “The market is taking out most of the frost premium. Also, the good weather in Brazil is helping crops there, adding to the bearishness.”
Brazil is the world’s largest orange grower, followed by Florida.

Natural Gas Drops Most in 5 Weeks on Forecasts of Warmer Weather (Bloomberg)
Natural gas futures in New York tumbled the most in five weeks on forecasts of moderating temperatures that may reduce demand for the power-plant fuel.
Gas fell as much as 9 percent, the biggest intraday drop in more than three years, after Commodity Weather Group LLC said cold weather in most of the U.S. this week would give way to above-normal temperatures from Jan. 7 through Jan. 11. The low in New York on Jan. 10 may be 37 degrees Fahrenheit (3 Celsius), 10 higher than usual, AccuWeather Inc. said.
“We’re going to see some warm weather across the primary gas-consuming regions,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “As we get into the new year without signs of sustained cold weather, the fundamental picture is going to force us lower.”
Natural gas for February delivery fell 11.8 cents, or 3.5 percent, to settle at $3.233 per million British thermal units on the New York Mercantile Exchange. On a settlement basis, the drop was the biggest since Nov. 26. The intraday percentage decline was the most since Sept. 11, 2009. The futures have risen 8.2 percent from a year ago.
Trading volume was 297,874 contracts at 3:19 p.m., 3.8 percent below the 100-day average.
February $3.10 puts were the most active gas options in electronic trading. They were 3 cents higher at 6.6 cents on volume of 1,270 contracts as of 3:16 p.m. Puts accounted for 53 percent of options volume.
Gas slid to $3.05 in electronic trading, the lowest price since Sept. 26, before rebounding. A 900-contract sell order at 7:52 p.m. yesterday caused the “scary” drop, Drew Wozniak, vice president of market research and analysis at ICAP Energy LLC in Louisville, Kentucky, said in a note to clients today.

Oil Slips From Highest in Three Months on Signs Gains Excessive (Bloomberg)
Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive.
Futures lost as much as 0.5 percent after rallying 2.6 percent in the two days through yesterday as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that had threatened growth in the world’s biggest oil-consuming country. Crude slipped today as a technical indicator showed futures may have risen too quickly for further gains to be sustainable, according to data compiled by Bloomberg.
“We’re getting a mild sell signal and the coincidence of those levels mean that some traders will be bailing out,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we’re seeing is longs closing out, taking some profit.”
West Texas Intermediate for February delivery dropped as much as 42 cents to $92.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.75 at 8:08 a.m. in Singapore. The contract yesterday advanced 1.4 percent to $93.12 a barrel, the highest settlement since Sept. 18. The volume for WTI oil contracts was 60 percent below the 100-day average for the time of day.
Brent for February settlement rose $1.36, or 1.2 percent, to $112.47 a barrel on the London-based ICE Futures Europe exchange yesterday. The North Sea grade advanced 3.5 percent in 2012, a fourth annual gain.
New York oil’s 14-day relative strength index rose to 68.1 yesterday, the highest level since Sept. 14. A reading above 70 is a signal to investors that price gains may have been excessive. It was 66 today.

Recap Energy Market Report (CME)
February crude oil prices trended higher throughout the early US trading hours, registering a new 2.5 month high in the process. The market drafted support on reports that US lawmakers were temporarily able to avert the fiscal cliff, and that was seen boosting risk sentiment. Early weakness in the US dollar and gains in global equity markets to start 2013 were seen benefiting the crude oil market. Some traders indicated that February crude oil challenged its 200 day moving average early on, but seemed to back track from those levels into the close.

Brent Crude Oil Market Report (CME)
February Brent crude oil prices trended higher throughout Wednesday's trading session, climbing to their highest level since October 17th. The market garnered an overnight lift on reports that US lawmakers agreed on a bill to temporarily avert the fiscal cliff. This was seen as a positive for risk-taking sentiment, boosted global equity markets and pressured the US dollar. Reports that China's manufacturing sector expanded for a third consecutive month was also seen as a positive demand force. The nearby Brent calendar spread expanded its backwardated pricing structure another nickel on the session.

Gold Reaches Two-Week High as Commodities Gain on Budget (Bloomberg)
Gold futures rose to a two-week high as commodities gained after U.S. lawmakers passed a budget accord. Palladium advanced to the costliest in 10 months, and silver jumped the most in eight weeks.
The Standard & Poor’s GSCI Spot Index of 24 raw materials gained as much as 1.6 percent after the House of Representatives approved a bill that prevents income taxes from rising for most U.S. workers. Industrial metals also jumped, while equities rallied.
“Markets reacted positively to news that a deal of sorts has been reached,” Steve Scacalossi, a New York-based vice president at TD Securities Inc., said in an e-mail.
Gold futures for February delivery rose 0.8 percent to settle at $1,688.80 an ounce at 1:38 p.m. on the Comex in New York. Earlier, the price reached $1,695.40, the highest for a most-active contract since Dec. 18. Floor trading was closed yesterday for the New Year’s holiday.
In 2012, the metal gained 7 percent, advancing for the 12th straight year, as central banks from the U.S. to China pledged more steps to bolster their economies.
President Barack Obama said he will sign the bill passed by Congress that makes the George W. Bush-era income tax cuts permanent for most workers while letting them expire for top earners.
The bipartisan vote in the House broke a yearlong impasse over how to head off $600 billion in tax increases and spending reductions that had been set to begin taking effect at the start of this year. Those measures may have triggered a recession, the Congressional Budget Office said.
Palladium futures for March delivery rose 0.7 percent to $707.95 an ounce on the New York Mercantile Exchange. Earlier, the price reached $718.85, the highest since March 2.
Silver futures for March delivery surged 2.6 percent to $31.007 an ounce on the Comex, the biggest increase since Nov. 6.
Platinum futures for April delivery gained 1.7 percent to $1,568 an ounce on the Nymex, the biggest gain since Nov. 23.

Copper Advances in New York Following U.S. Budget Accord (Bloomberg)
Industrial metals rallied to a three- month high, leading commodities higher, as a U.S. budget agreement that averted higher taxes and spending cuts brightened the outlook for demand.
The House approved a measure skirting income-tax increases for most households in the country, the world’s second-largest metals consumer. President Barack Obama said he would sign the bill into law. Global equities advanced, and lead, aluminum and nickel led gains on the Standard & Poor’s GSCI Spot Index (LMEX) of 24 raw materials. Copper rose the most in more than three months.
“This does help growth prospects, because if the tax increases went into play, it definitely would have taken a huge chunk out of gross domestic product,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “We’re looking for improved demand this year for industrial metals.”
Copper futures for delivery in March increased 2.3 percent to settle at $3.736 a pound at 1:22 p.m. on the Comex in New York, the biggest gain since Sept. 14. China is the largest metals consumer.
On the London Metal Exchange, copper for delivery in three months climbed 3.5 percent to $8,209 a metric ton ($3.72 a pound).
The metal advanced 4.4 percent in 2012 on the LME, the third gain in four years, helped by forecasts for supply to lag demand. Copper inventories tracked by the exchange declined 14 percent in 2012, the third straight contraction.
The LMEX Index, which tracks the six primary metals on the exchange, settled at 3,581.7, the highest since Sept. 14.
Tin surged as much as 4.7 percent today, rising to the highest since February and leading gains among the London exchange’s six main metals. Lead reached $2,439 a ton, the highest since September 2011. Aluminum, zinc and nickel also increased.

Silver Market Recap Report (CME)
The silver market began the year with a significant rally, with prices climbing far above their late December trading range by the close of Wednesday's session. Some traders felt that silver has acted more as a physical commodity than as a safe-haven asset this week, so the removal of fiscal cliff anxiety is widely felt to have provided significant strength to silver prices. Other traders noted that March silver was able to climb back above its 200-day moving average, which they felt may provide additional support for the market.

Gold Market Recap Report (CME)
The gold market was able to build on overnight strength, and started out 2013 by posting sizable gains and by rallying up to a new 2-week high. Last night's approval of the fiscal cliff bill was seen by many traders to have provided a sharp early boost to global risk sentiment that lifted gold and other metals markets, although some traders felt that gold's flight-to-quality status at the end of last year may have limited further gains during today's trading. A report that India may enact additional curbs on gold imports was seen by some traders as an additional positive factor for the market. A recovery rally in the Dollar due to ongoing Euro zone anxiety was seen by other traders to have weighed on gold prices later on during today's session.

20130103 0933 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (CME)
January Soybeans finished down 13 1/4 at 1405 1/2, 38 3/4 off the high and 7 up from the low. March Soybeans closed down 16 1/2 at 1393. This was 6 3/4 up from the low and 42 off the high.
January Soymeal closed down 13.5 at 407.1. This was 2.1 up from the low and 17.9 off the high.
January Soybean Oil finished up 1.36 at 50.52, 0.6 off the high and 0.45 up from the low.
March soybeans saw double digit losses on the day after the bear camp quickly sold into this morning's initial rally. Outside markets were mostly supportive with gains seen in crude oil, copper, and stocks. The US Dollar erased all of its earlier losses which helped to pressure grain markets. Soybean meal traded lower but oil saw sharp gains after Congress passed a $1 per gallon tax credit for biodiesel producers through 2013. Central and Southern Brazil continues to see light showers while the northeastern region is trending slightly drier. Argentina will dry down this week. Early harvest has begun in areas of Mato Grosso and early yields are reportedly near year ago levels but most expect improvement by the middle of January with some estimates coming in at 50 or more bushels per acre. Planting in Argentina was pegged at 82% last week, up 6 1/2% from the week prior. Some traders still view the current USDA estimates for production in Brazil and Argentina at 81 and 55 million tonnes respectively as a bit too high but given the mostly favorable weather, some traders are pushing Brazil production above 81 million tonnes.

VEGOILS-Palm hits 2-month high on U.S. fiscal deal, demand outlook
Wed Jan 2, 2013 5:17am EST
* Malaysia's zero tax structure may boost demand
    * China's stricter import rule may hurt
    * Traders eye Malaysia palm oil inventory data due next week

 (Updates prices, adds milestone)
    By Chew Yee Kiat
    SINGAPORE, Jan 2 (Reuters) - Malaysian palm oil futures rose
to a 2-month high on Wednesday as the United States averted a
fiscal crisis and as traders look forward to better demand for
the edible oil on a lower export tax structure.
    Investors were relieved after U.S. lawmakers approved a deal
preventing huge tax hikes and spending cuts that would have
pushed the world's largest economy into recession and hurt
global commodity demand.
    Market players were also betting on Malaysia's zero export
tax in January to spur demand and help clear record-high stocks.
    "The zero export tax will be long-term positive. But the
short-term impact may be neutralised by tighter edible oil
import rules by China," said Alan Lim Seong Chun, research
analyst with Malaysia's Kenanga Investment Bank.
    Stricter quality measures set to be enforced by Beijing on
Jan. 1 could hurt demand for palm oil.
    At market close, the benchmark March contract on
the Bursa Malaysia Derivatives Exchange gained 2.7 percent to
2,503 ringgit ($825) per tonne, off its intraday high at 2,524
ringgit, a level last seen since Nov. 2.
    Total traded volumes stood at 33,431 lots of 25 tonnes each,
higher than the usual 25,000 lots.  
    Traders are looking out for official data on Malaysia's palm
oil December inventory level due next week, which is expected to
ease slightly from November's record-high 2.56 million tonnes.
    But they said the drop could be limited as Malaysian palm
exports during December fell as much as 7.9 percent from a month
ago, according to cargo surveyor data.    
    Brent crude oil hit a one-month high above $112 per barrel
on Wednesday after the U.S. Congress approved a deal to avert a
fiscal crisis, while promising data from top energy consumer
China also supported prices.
    Soybean oil markets in the U.S. and China were closed for
the New Year holiday.        

Malaysia's Felda Global appoints new CEO
KUALA LUMPUR | Wed Jan 2, 2013 6:58am EST
Jan 2 (Reuters) - Malaysian palm oil-to-sugar producer Felda Global Ventures Holdings Bhd has appointed Mohammed Emir Mavani Abdullah to replace Sabri Ahmad as chief executive once his contract ends in July 15.
A former adviser to the United Arab Emirates' finance minister, Mohammed Emir now holds directorships in government linked Malaysia Nuclear Power Corporation and the Malaysian Petroleum Resource Corporation.
"The appointment is part of succession planning and to ensure smooth phasing in of the new leadership after the expiry of contract of the current Group President/CEO," Felda Global told the stock exchange on Wednesday.

20130102 1801 FCPO EOD Daily Chart Study.

FCPO closed : 2503, changed : +65 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histogram : resume rising, buyer in control.
Support : 2490, 2450, 2400, 2350 level.
Resistance : 2520, 2550, 2570, 2600 level.
Comment :
FCPO closed rallied higher with improved volume distributed. Crude oil price continue to trade firmer.
FCPO daily chart reading suggesting an upside 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.

20130102 1720 FKLI EOD Daily Chart Study.

FKLI closed : 1684 changed : -0.5 point, volume : higher.
Bollinger band reading : correction range bound upside biased.
MACD Histogram : weakening, buyer taking profit.
Support :  1680, 1670, 1660, 1650 level.
Resistance : 1690, 1700, 1710, 1720 level.
Comment :
FKLI closed recorded marginal loss with better volume transacted doing about 6 points premium compare to cash market that fell 14 points lower. Today Asia markets advanced higher while European markets currently having positive development.
Daily chart reading suggesting a correction range bound upside 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.

20130102 1559 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a rally and Asian stocks rose nearly two percent to hit a five-month high after U.S. lawmakers approved a deal preventing massive tax hikes and spending cuts that threatened to drag the economy into recession. U.S. stocks closed out the last trading day of the year on a high note on Monday. (Reuters)


FOREX-Yen slides as U.S. avoids 'fiscal cliff', dollar retreats
SINGAPORE, Jan 2 (Reuters) - The yen fell broadly and tumbled to an 18-month low versus the euro as U.S. lawmakers passed a bill to avoid the "fiscal cliff", bolstering investors' appetite for risky assets.
"The market is basically in risk-on mode, with Asian equities doing great, the euro being bought and the yen falling across the board," said a trader for a Japanese bank in Singapore.

With final vote, US Congress resolves 'fiscal cliff' drama (Reuters)
The United States averted economic calamity on Tuesday when lawmakers approved a deal preventing huge tax hikes and spending cuts that would have pushed the world's largest economy off the "fiscal cliff" into recession.

China official factory PMI points to steady growth revival (Reuters)
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, as growth in new orders was unchanged and the pace of output softened marginally.

U.S. Senate, House ag committees in deal to avert milk price spike (Reuters)
Farm-state lawmakers have agreed to a one-year extension of the expiring U.S. farm law that, if enacted, would head off a possible doubling of retail milk prices to $7 or more a gallon in early 2013.

PetroChina steps up LNG spot imports to meet winter demand (Reuters)
PetroChina, China's largest oil and gas producer, will import an additional 400 million cubic metres of liquefied natural gas  from the spot market for the first quarter to meet surging winter demand, parent company CNPC said on Monday.

OIL: Brent crude rose toward $112 to hit a one-month high as the U.S. Congress approved a deal to avert a fiscal crisis, while promising data from top energy consumer China also supported prices. (Reuters)

BASE METAS: London copper hit a two-week high as the U.S. Congress finally reached a deal to avert a fiscal calamity, while upbeat China data indicating steady improvement in the world's top copper consumer also boosted prices. (Reuters)

PRECIOUS METALS: Gold rebounded from intraday lows after the U.S. Congress finally passed a bill that avoids tax hikes and spending cuts worth $600 billion, but the temporary reprieve drew muted reaction from bullion investors in Asia. (Reuters)

METALS-Copper aims at biggest daily rise in 6 weeks on US fiscal deal
SINGAPORE, Jan 2 (Reuters) - London copper rose more than 2 percent headed for its biggest daily rise since mid-November, as the U.S. Congress struck a deal to avert a fiscal disaster and upbeat China data indicating steady improvement in the world's top copper consumer also boosted prices.
"Less tail risk in the U.S., China coming up with a cyclical bound, combined with a weaker dollar. Voila! There you have the higher prices," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.

PRECIOUS-Gold regains strength, U.S. fiscal crisis ends
SINGAPORE, Jan 2 (Reuters) - Gold rebounded from intraday lows after the U.S. Congress finally passed a bill that avoids tax hikes and spending cuts worth $600 billion, but the temporary reprieve drew muted reaction from bullion investors in Asia.
"Right now nobody really seems to be doing very much. Investors want to see how other markets react, equity markets in particular," said Nick Trevethan, senior metals strategist at ANZ in Singapore.

20130102 1105 Global Markets & Energy Related News.

GLOBAL MARKETS-Asia holds breath as U.S. fiscal talks go to wire
SYDNEY/HONG KONG, Jan 2 (Reuters) - Asian stocks started new year trading with tentative gains as investors anxiously wait to see if the U.S. Congress can strike a last-minute compromise and avert the harsh "fiscal cliff" tax rises and spending cuts that are technically already in force.
"Frankly, we don't know what to make of it all. It's like a circus there," said one exasperated forex dealer at an Australian bank in Sydney. "The markets have always assumed they would eventually strike a deal that would avoid the worst affects of the fiscal cliff, but it's getting harder and harder to stay optimistic."

US House Republicans weigh last-ditch challenge to fiscal deal
WASHINGTON, Jan 1 (Reuters) - The U.S. Congress headed toward another showdown over the "fiscal cliff" on Tuesday as Republicans in the House of Representatives mounted a last-ditch effort to reshape a tax deal meant to prevent Washington from pushing the world's biggest economy into recession.
If successful, the measure would set up a high-stakes showdown with the Democratic-controlled Senate and risk a stinging rebuke from financial markets about to open in Asia. If it fails, lawmakers - including many Republicans - would likely back tax hikes for the wealthiest Americans and thus resolve a main chapter of the fiscal crisis that has consumed Washington for months.  

U.S. 'fiscal cliff' deal called a dud on deficit front
By Kim Dixon
In the controversy surrounding the "fiscal cliff" issue, it's easy to forget that the origin of the entire debate was a professed desire to reduce swollen federal deficits.
Whether the target was $4 trillion over 10 years, as proposed by the Bowles-Simpson deficit reduction commission, or in the $2 trillion range, as tossed around by House of Representatives Speaker John Boehner and President Barack Obama, the idea was to rein in total debt that now tops $16 trillion.

FOREX-Dollar rises in thin trade, ends 2012 lower overall
NEW YORK, Dec 31 (Reuters) - The dollar rose against most currencies on Monday in thin trading, and held its gains even after President Barack Obama said a deal was in sight to avert a fiscal disaster that would have meant tax hikes and spending cuts for the world's largest economy.
"Even though, it's not definitive yet, overall it is hopeful," said Nick Bennenbroek, head of New York FX strategy, at Wells Fargo in New York. "So long as Obama's statements are consistent with the idea that we are getting a deal, that is going to keep the market relatively calm. That should be positive for foreign currencies because of risk appetite and negative for the dollar as a safe-haven."

China factory sector strongest since May 2011-survey (Reuters)
Activity in China's vast manufacturing sector hit its fastest pace in December since May 2011, a survey of private factory managers showed, with a sub-index for new orders pointing to continued strength in the new year. The final reading for the HSBC Purchasing Managers' Index rose to 51.5 in December, well above the preliminary reading of 50.9 published in the middle of the month and November's final reading of 50.5. A complementary December survey by China's National Bureau of Statistics, due to be published on Tuesday, is expected to show similar signs of manufacturing strength. Economists polled by Reuters expect the official PMI to show a rise to 51.0 from 50.6 in November, expanding at its fastest pace in eight months. The HSBC PMI rose above 50, the line that demarcates accelerating from slowing growth, in November for the first time in more than a year.

Merkel says euro zone crisis far from over (Reuters)
The euro zone sovereign debt crisis is far from over even though reform measures designed to address the roots of the problem are beginning to bear fruit, German Chancellor Angela Merkel has said in her New Year's address. In a taped interview to be broadcast on Monday evening, Merkel urged Germans to be more patient even though the euro zone crisis has already dragged on for three years. She drew a line linking German prosperity to a prosperous European Union. "For our prosperity and our solidarity we need to strike the right balance," Merkel said. "The European sovereign debt crisis shows how important this balance is. "The reforms that we've introduced are beginning to have an impact," she said. "Nevertheless we need to have further continued patience. The crisis is far from over." Merkel indirectly contradicted Finance Minister Wolfgang Schaeuble with those comments. In an interview  on Friday in Bild newspaper Schaeuble said the worst of the crisis was over.
Germany has been the paymaster in the euro zone crisis, to the chagrin of many German voters and a growing bloc of conservative lawmakers in Merkel's coalition. Germans remain wary of euro zone bailout efforts but give Merkel high marks for what they consider to be her judicious handling of the crisis. Merkel, who is seeking a third term in an election in September, proudly pointed out that unemployment in Germany had fallen to its lowest level since reunification in 1990 while the number of people employed had also risen to record highs.

OIL-Brent crude rises, hits record annual average for 2012
NEW YORK, Dec 31 (Reuters) - Brent crude rose on Monday, closing 2012 up for the fourth straight year after geopolitical threats to production offset worries about flagging oil demand.
"Oil is going to be attached to the Middle East issues, I don't think Iran is going away, they have been quiet of late," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.

20130102 1014 Malaysia Corporate Related News.

Daibochi eyes value-added products
Daibochi Plastic and Packaging, a manufacturer and converter of flexible packaging within Asean, is looking at penetrating the higher value-added medical gloves and electronic markets. Managing director Thomas Lim said that the company has begun supplying small quantities of flexible packaging (also known as flexpack) to medical gloves manufacturers in Malaysia, and has undertaken testing and trials worldwide for electronics packaging. (Financial Daily)

Adventa plans acquisition
Medical products and devices manufacturer and distributor Adventa plans to acquire investment holding company PTM Progress Trading & Marketing SB for a total cash consideration of RM7.5m. In a statement to Bursa Malaysia, Adventa said the acquisition, which was expected to be completed in two months, would enable its subsidiaries to utilise PTM's property as warehouses for the group's distribution and dialysis business. PTM is the beneficial owner of an industrial land in Subang. (StarBiz)

YNH guides for flat growth next five years
In anticipation of lacklustre new real estate sales in the immediate to medium term, YNH Property has guided for flat profit growth in the next five years. Head of corporate services Daniel Chan said the Perak-based developer expected to register a net profit of RM50m annually over the period as the company’s “property sales are not so good”. (Financial Daily)

Tambun Indah to launch more projects in Penang
Property developer Tambun Indah Land targets to launch at least five new projects in the first half of this year, with a total gross development value (GDV) of RM252.9m. All of the projects will be in Penang, where the company has been active in recent years and will continue to do so, as it taps into the growing Penang property market. The company is actively looking for new land banks in the Klang Valley and other areas where it can develop future projects, either on its own or in collaboration with joint-venture partnerships. (BT)

20130102 1014 Global Economy Related News.

Singapore: 2012 GDP grew 1.2% as recession seen in second half
Singapore’s expansion eased to a three-year low in 2012, according to government estimates that suggest the economy probably contracted in the 4Q, slipping into its first recession since 2009. GDP rose 1.2% in 2012, Prime Minister Lee Hsien Loong said. (Bloomberg)

South Korea: Exports unexpectedly fell in December, data show
South Korea’s exports unexpectedly fell for the first time in three months, suggesting that tepid global demand and gains in the won are sapping economic momentum as a new president prepares to take office. Overseas shipments dropped 5.5% in December from a year earlier, after a revised 3.8% increase in November, the Ministry of Knowledge Economy said. The median estimate in a Bloomberg News survey of 12 economists was for a 0.8% advance. (Bloomberg)

China: Manufacturing index shows third straight expansion
A gauge of China’s manufacturing showed a third month of expansion, adding evidence that the recovery in the world’s second-biggest economy will extend into the new year. The Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. That compares with the 51.0 median estimate in a Bloomberg News survey of 27 analysts and 50.6 in November. A reading above 50 indicates expansion. (Bloomberg)

Pakistan: Inflation accelerates for first time in seven months
Pakistani inflation accelerated for the first time in seven months in December, limiting room for another interest-rate cut to boost a struggling economy. Consumer prices rose 7.93% from a year earlier, the Bureau of Statistics said, compared with 6.93% in November and the median 7.7% projection in a Bloomberg News survey of five economists. (Bloomberg)

US: House republicans oppose senate budget bill, seek cuts
US House Republicans oppose the Senate’s budget bill and will seek to insert spending cuts, jeopardizing a bipartisan effort to undo USD600bn in automatic tax increases and spending cuts. The Democratic-controlled Senate won’t take up a House-amended bill, a Democratic leadership aide said on condition of anonymity. (Bloomberg)

Stocks cement 2012 gains on hope for tax deal
US stocks rallied on Monday, cementing yearly gains as Wall Street embraced emerging details of a budget deal that reportedly will have tax cuts extended for most households. At a Monday afternoon news conference, President Barack Obama said an accord to avoid the cliff was within sight, but not yet complete. Senate Republican leader Mitch McConnell later said an agreement had been reached on the tax issues of the deal. Up 7.3% on the year, the Dow Jones Industrial Average climbed 166 points, or 1.3%, to 13,104.14. The S&P 500 index added 23.76 points, or 1.7%, to 1,426.19, positioning it for a 13% yearly rise. The Nasdaq Composite climbed 59.20 points, or 2%, to 3,019.51, up almost 16% from the end of 2011. (Market Watch)

20130102 1008 Global Markets Related News.

US FX By Cornelius Luca - Mon 31 Dec 2012 07:05:10 CT (CME/www.lucafxta.com)
The appetite for risk remains limited by the lack of progress in the ongoing "fiscal cliff" negotiations ahead of New Year's Eve. Congress returns back today with only a few hours of actual legislative time scheduled in which to act to avert the crisis. Most foreign currencies open lower or off their overnight highs. Only the pound opens slightly higher. The Asia/Pacific stock indexes were mixed. The European bourses are mixed, while the US stock markets are little changed in pre-open trading. The gold/oil spread is up.
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 foreign currencies.

Overnight
Australia: Private sector credit was flat in November after rising 0.1% in October.
China: The final HSBC manufacturing PMI rose to 51.5 in December from 50.5 in November.

Asian Stocks Advance After Senate Passes U.S. Budget Bill (Bloomberg)
Asian stocks rose after the Senate passed a U.S. budget bill that may avert some automatic tax increases and spending cuts if approved by the House.
Australian gold producer Newcrest Mining Ltd. (NCM) added 1.7 percent as the precious metal climbed. BHP Billiton Ltd., the world’s biggest mining company, advanced 0.8 percent, leading gains among raw-material producers. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rose 0.3 percent to 467.59 as of 11:34 a.m. in Sydney, before markets open in Hong Kong and South Korea. About three shares increased for each that fell. Markets in Japan and China are closed today and tomorrow for public holidays.
U.S. lawmakers are racing to address a budget impasse that congressional analysts have warned has the potential to send the world’s biggest economy into a recession if not resolved. As Congress seeks to undo $600 billion in tax increases and spending cuts that took effect yesterday, House amendments to the Senate’s bill could throw a deal into doubt, forcing lawmakers to begin again when the new session starts tomorrow.
“It’s extremely disappointing not just for the U.S. economy and investors but for global markets, that the U.S. political system itself just can’t seem to get it done,” Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion, told Bloomberg Television today. “The process we’re going through at the moment does anything but build confidence.”
The broader benchmark MSCI Asia Pacific Index, which includes Japan, surged 14 percent last year as central banks from the U.S., Europe, Japan and China took action to spur economic growth.
Trading volume on Australia’s S&P/ASX 200 Index was 51 percent below its 30-day average for the time of day, according to data compiled by Bloomberg. The measure rose 0.6 percent.

Aussie Trades Near Month-Low Amid U.S. Budget Struggle (Bloomberg)
The Australian dollar was 0.7 percent from its lowest level in more than a month as U.S. lawmakers struggle to find agreement to avoid the so-called fiscal cliff, damping demand for higher-yielding assets.
The Aussie dollar dropped versus most of its 16 major counterparts as U.S. House Republicans opposed the Senate’s budget bill and said they will seek to insert spending cuts. New Zealand’s currency also weakened after posting its biggest annual gain in two years.
“We remain somewhat in limbo,” said Robert Rennie, the Sydney-based chief currency strategist at Westpac Banking Corp. “The goodwill from the very positive Senate outcome on the budget bill hasn’t spilled over into the House and the clock is ticking.”
The Australian dollar bought $1.0399 as of 11:08 a.m. in Sydney, little changed from its $1.0394 close on Dec. 31. It fell to $1.0329 on Dec. 25, the weakest since Nov. 16. The Aussie may rise toward $1.07 by mid-year before approaching $1.01 by the end of 2013, Westpac’s Rennie said.
The yield on Australia’s 10-year bond rose six basis points, or 0.06 percentage point, to 3.33 percent.
In the U.S., the Democratic-controlled Senate won’t take up a House-amended budget bill, a Democratic leadership aide said on condition of anonymity. The impasse between the Senate and the Republican-dominated House threatens an effort to head off automatic tax increases and spending cuts that risk tipping the world’s biggest economy back into recession.
New Zealand’s currency dropped 0.1 percent to 82.73 U.S. cents after climbing 6.6 percent last year, the most since 2010. The country’s two-year swap rate, a fixed payment made to receive floating rates, fell 2 1/2 basis points to 2.67 percent.

Yen Touches 18-Month Low Against Euro on Abe’s Currency Policy (Bloomberg)
The yen touched an 18-month low against the euro after Japanese Prime Minister Shinzo Abe reiterated his intention to weaken his nation’s currency.
Abe said in a New Year statement yesterday that “bold” monetary policy is one of the three prongs of his economic measures. The dollar was little changed against the euro as the U.S. Senate and House sought to avoid the so-called fiscal cliff of automatic tax increases and spending cuts that started to take effect yesterday.
“For the moment, the yen is probably going to remain weak,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “If you look out a month or two, it really depends upon what the government is able to achieve as far as the central bank is concerned.”
The yen touched 114.78 per euro, the weakest since July 11, 2011, and traded at 114.46 as of 8:48 a.m. in Singapore from 114.46 at the close on Dec. 31. It was little changed at 86.71 per dollar. The greenback traded at $1.3201 per euro from $1.3193.
There was no trade in major markets yesterday, and Japan is closed till Jan. 4 for national holidays.
Abe said in the statement that the most urgent issue for Japan is to break out of currency appreciation and deflation. The premier has called on the Bank of Japan (8301) to undertake unlimited money printing to spur growth and achieve inflation of 2 percent, twice the BOJ’s target.
While the Japanese currency dropped 11 percent last year versus the dollar, the biggest annual slide since 2005, it is still about 17 percent stronger than the 10-year average of 101 per greenback.
“Neutral territory” for the yen is about 100 against the U.S. currency, Nissan Motor Co. President Carlos Ghosn told reporters during a year-end briefing. “Please bring it back to the neutral territory so that we can do our job without a handicap,” he said.

Senate Budget Pact Would Crimp Not Crush U.S. Growth (Bloomberg)
The budget deal passed by the Senate probably would crimp the U.S. economic recovery without stopping it.
The elimination of a 2 percent payroll tax cut, coupled with higher income taxes on the wealthy, will help reduce growth in the first quarter to 1 percent, from 3.1 percent in 2012’s third quarter, the latest data available, according to economists at JPMorgan Chase & Co. (JPM) and Bank of America Corp. The expansion will strengthen later in the year as the housing market continues to rebound, they forecast.
“It’s going to definitely present a headwind for the economy,” Michael Feroli, chief U.S. economist for JPMorgan Chase in New York, said of the fiscal pact that the Senate approved early today, sending it to the House of Representatives. “We’re looking for a downdraft in growth in the first half of the year, with the economy coming back in the second.”
The first half slowdown will mean that the U.S. will make limited progress in reducing unemployment in 2013, according to projections by Ethan Harris, co-head of global economic research for Bank of America in New York. He sees the jobless rate falling to 7.5 percent in the fourth quarter of 2013 from 7.7 percent in November 2012.

Jobless Benefits
The agreement forged in talks between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, would avert some, though not all, of more than $600 billion in automatic tax increases and spending cuts slated to take effect this year. Under the accord, passed by the Senate early today, households making less than $450,000 per year would be spared an income tax rate increase. And the unemployed would still be eligible for extended jobless benefits.
Payroll taxes would rise, to 6.2 percent from 4.2 percent last year. And the wealthy would see an increase in their top income tax rate, to 39.6 percent, from 35 percent.
The deal faces an uncertain fate in the Republican- controlled House. House Speaker John Boehner of Ohio said last night the chamber would consider any budget measure passed by the Senate. “Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation,” Boehner said in a statement.
Even if the House passes the bill, the agreement won’t mean the end of budget brinksmanship, Andrew Laperriere, senior managing director for ISI Group in Washington, said in a report yesterday to clients.

Debt Ceiling
The U.S. has hit its $16.4 trillion debt limit, forcing the Treasury Department to take what it called “extraordinary measures” to keep funding the government for now.
The Treasury probably will exhaust such measures by late February or early March, setting up another confrontation between President Barack Obama and congressional Republicans, according to Laperriere, who spent eight years working on Capitol Hill before joining ISI in 1999.
The stock market bounded ahead yesterday as lawmakers looked increasingly likely to reach agreement on the budget. The Standard & Poor’s 500 Index (SPX) rose 1.7 percent to 1,426.19 at 4 p.m. in New York, bringing the gain for the year to 13 percent.
The biggest hit to the economy from the fiscal package probably will come from the expiration of the payroll tax cut, Feroli said. The payroll tax cut was designed as a temporary measure to boost the economy in 2011 and then was extended through 2012. He reckons that its elimination will slow growth by just over a half percentage point this year by taking $125 billion out of consumers’ pockets.

‘Meaningful Impact’
It “would have a meaningful impact because it hits everybody,” said Michael Gapen, a New York-based senior economist at Barclays Plc. “You’d see it in the first quarter, and consumption would ratchet down.”
Higher taxes on the wealthy, in contrast, won’t have that much of an effect because top earners tend to save more of their income rather than spend it, he added.
Possible federal spending cuts would reduce economic growth by more than a half percentage point if they eventually are implemented, based on estimates by Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Defense companies such as Northrop Grumman Corp. (NOC) and Lockheed Martin Corp. (LMT) could be particularly hard hit.
The deal would prevent automatic spending cuts from taking effect for two months, Senate Republicans told reporters.

Resilient Recovery
The recovery should prove resilient in the face of government belt-tightening because of the progress that the private sector in rebounding from the 2007-2009 recession, said Bank of America’s Harris.
“Both the housing market and the banking sector have healed significantly,” he said.
Residential real estate, which collapsed and helped trigger the 18-month economic downturn that ended in June 2009, is picking up. Existing homes sold at their strongest pace in more than two years in November and building permits reached a four- year high. Companies including Toll Brothers Inc. (TOL) and KB Home are competing for buildable lots and raising prices.
“We’ve seen a virtuous cycle building in housing,” said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, New Jersey.

Bank Profits
Banks are bouncing back as well, with profits in the third quarter the highest in six years, according to the Federal Deposit Insurance Corp. in Washington.
The number of lenders on FDIC’s confidential list of so- called problem banks -- those deemed to be at greater risk of collapse -- fell from 732 in the second quarter to 694 in the third, the smallest number since a peak of 888 after the financial crisis.
Another encouraging sign: The job market has held up even in the face of concerns about the possibility of higher taxes and government spending cuts in 2013. Payroll gains this year through November averaged about 151,000 a month compared with 147,000 in the same period of 2011.
Labor Department figures due Jan. 4 may show employers added 150,000 jobs in December, about the same pace as the prior month, according to the median forecast of economists surveyed by Bloomberg.
“Underneath the fiscal drama is an improving economy,” said Ryan Sweet, a senior economist at Moody’s Analytics. “The fiscal drag will take some wind out of it but once there is more clarity, we can expect stronger growth.”

Senate Passes Budget Agreement to Undo Tax Increases (Bloomberg)
The Senate passed a budget agreement seeking to undo tax increases that took effect today for almost every U.S. worker after Congress and the Obama administration allowed a fiscal deadline to expire.
The legislation, passed 89-8 this morning, would make permanent the tax cuts for most households that expired at midnight, continue expanded unemployment benefits and delay automatic spending cuts for two months.
The measure emerged from an agreement yesterday between Vice President Joe Biden and Senate Minority Leader Mitch McConnell to stave off more than $600 billion in tax increases and federal spending cuts set to begin this month. The 157-page bill now moves to the House for consideration.
“We all knew that if we did nothing, they’d be going up on everyone today,” McConnell said before the vote. “We weren’t going to let that happen.”
After more than 17 months of bickering, Congress and President Barack Obama have yet to enact a deal to avert the budget changes known as the fiscal cliff. Even if an agreement clears both chambers of Congress in coming days, it would be more limited than what Obama and leaders of both parties sought.
The deal passed early today by the Senate would extend income tax cuts for household income up to $450,000, with rates rising to 39.6 percent on income above that level. Expanded unemployment insurance would be continued through 2013.

House Republicans Drop Bid to Add Spending Cuts to Bill (Bloomberg)
House Republicans abandoned their effort to add spending cuts to the Senate’s budget legislation and one member predicted the measure will be passed tonight.
Oklahoma Representative Tom Cole said he expects the House to pass the Senate bill unchanged with a “substantial” bipartisan vote. The House Rules Committee scheduled an 8:10 p.m. meeting to set the parameters for the vote.
House passage of the Senate bill would avert $600 billion in automatic tax increases and spending cuts that take effect starting today. The Senate passed its plan on an 89-8 vote early this morning.
“Let’s accept the wins that we have and live to fight another day,” Cole said in an interview on Bloomberg Television.
House Speaker John Boehner had offered fellow Republicans two options, including allowing a vote on the Senate bill if party members couldn’t show they had a majority vote to amend it with spending cuts sought by many Republicans.

House Republicans to Seek Spending Cuts in Budget Bill (Bloomberg)
U.S. House Republicans oppose the Senate’s budget bill and will seek to insert spending cuts, jeopardizing a bipartisan effort to undo $600 billion in automatic tax increases and spending cuts that take effect starting today.
The Democratic-controlled Senate won’t take up a House- amended bill, a Democratic leadership aide said on condition of anonymity. The Senate adjourned until noon tomorrow, and House Republicans were meeting privately today to decide how to proceed.
“I do not support” the Senate bill, House Majority Leader Eric Cantor of Virginia told reporters as he left a private meeting of House Republicans today in Washington.
“We’re all greatly disappointed with the Senate,” said Republican Jack Kingston of Georgia. “This appears to be really heavy on revenues and really light on cuts.”
The Senate’s 89-8 passage of its measure early today shifted the pressure to House Speaker John Boehner of Ohio. In his two years as speaker, Boehner has had to quell rebellions among fellow Republicans backed by the anti-tax Tea Party.
House amendments to the Senate bill would throw into doubt a deal worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, with fewer than 48 hours until the current Congress expires. Lawmakers would have to begin again when the new session starts Jan. 3.

China Manufacturing Index Shows Third Straight Expansion (Bloomberg)
A gauge of China’s manufacturing showed a third month of expansion, adding evidence that the recovery in the world’s second-biggest economy will extend into the new year.
The Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That compares with the 51.0 median estimate in a Bloomberg News survey of 27 analysts and 50.6 in November. A reading above 50 indicates expansion.
Today’s report, along with a separate manufacturing gauge yesterday showing the fastest expansion in 19 months, reflects increased infrastructure spending that’s helping drive a rebound from a seven-quarter slowdown as a new generation of Communist Party leaders takes the nation’s reins. Li Keqiang, set to succeed Wen Jiabao as premier in March, is championing urbanization to put economic growth on a more sustainable path.
“Most data points, especially the industrial earnings, have been pointing to an impressive recovery,” Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong, said in a note today. At the same time, “investors should be wary of getting too optimistic in coming months,” he said.
The final December reading of a purchasing managers’ index released yesterday by HSBC Holdings Plc and Markit Economics was 51.5, the highest in 19 months, after a 50.9 preliminary reading and a final 50.5 in November. The HSBC index focuses more on smaller businesses.

Hu Jintao Says China to Step Up Efforts to Support Growth (Bloomberg)
China will work toward bolstering global economic growth in 2013, President Hu Jintao said in a New Year’s Eve address, amid optimism that a recovery in the world’s second-biggest economy is gaining traction.
The nation will “step up efforts to promote strong, sustainable and balanced growth in the world economy,” Hu said in the speech broadcast by state radio and television. China achieved stable economic development in 2012 and will seek to do the same this year while making restructuring of its growth model a focus, he said.
Hu’s last New Year’s Eve address before he steps down as president in March signaled Chinese leaders’ confidence the economy may be rebounding after a seven-quarter slowdown. A recovery may facilitate the transfer of power to Xi Jinping, appointed head of the Communist Party in November and set to become president, as authorities seek to assuage discontent sparked by corruption and a widening income gap.
The Chinese people are now uniting around the leadership of Xi to work toward building a “well-off society,” Hu said.
China’s new Communist Party leaders have pledged to abandon extravagance, cut down on lavish receptions and live more frugally, amid a broader push to stamp out corruption and win back people’s trust.
Hu’s speech didn’t indicate how China, set to complete its once-a-decade leadership transition in March, plans to manage an economy that’s estimated to expand 8.1 percent this year.

Japan’s Population Falls by Record in 2012 as Births Decrease (Bloomberg)
Japan’s population last year declined by 212,000, the biggest drop on record, according to an estimate by the nation’s health ministry.
That’s the largest reduction since the ministry started recording the data in 1947 and a sixth straight year of declines. The number of births fell by 18,000 to a record low of 1.03 million last year, the ministry said.

North Korea Picks Stronger Economy, South Ties as Top 2013 Tasks (Bloomberg)
North Korea’s Kim Jong Un named improving the economy and better relations with South Korea as top policy goals for his second year as leader, signaling he may ease his country’s confrontational approach toward Seoul.
“The building of an economic giant is the most important task that comes to the fore in the present stage of building a thriving socialist country,” Kim said today in a New Year address carried by the official Korean Central News Agency. “The reunification of the country is the greatest national task that brooks no further delay.”
Kim departed from the past year’s saber-rattling against South Korean President Lee Myung Bak as Lee’s successor Park Geun Hye prepares to take office Feb. 25. Park has repudiated Lee’s hard-line North Korea policy, expressing her willingness to talk to Kim and help the North join global organizations to thaw ties.
“Kim’s speech mentioned the importance of the economy at far greater frequency than the military,” said Cheong Seong Chang, senior research fellow at the Seoul-based Sejong Institute, in an e-mail. “The success of the Dec. 12 missile launch has given Kim enough confidence to not have to rely on his father’s military-first policy to garner support.
‘‘The urgency of economic issues also compounds to the North’s need to better ties with South Korea, which makes it likely that Pyongyang will aggressively engage in efforts to resume dialogue,” Cheong said.

Singapore GDP Topped Survey Last Quarter, Avert Recession (Bloomberg)
Singapore’s economy expanded more than economists estimated last quarter, averting a recession even after the central bank refrained from monetary stimulus as it sought to contain elevated inflation.
Gross domestic product rose an annualized 1.8 percent in the three months to Dec. 31 from the previous period, when it contracted a revised 6.3 percent, the Trade Ministry said in a statement today. The median of 11 estimates in a Bloomberg News survey was for a 1.6 percent expansion. The economy grew 1.2 percent last year, less than a quarter of 2011’s pace.
The World Bank last month raised its outlook for emerging nations in East Asia, citing a recovery in China. The export- dependent region still faces risks from Europe’s protracted sovereign debt crisis and a U.S. budget impasse that congressional analysts have warned has the potential to send the world’s biggest economy into a recession if not resolved.
“Going forward, what happens will to a large extent depend on things like what stimulus from China looks like, how well the signs of nascent recovery seen in the U.S. is held up,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. Singapore “will do better than it did last year.”
The Singapore dollar was little changed at S$1.2223 against the U.S. currency as of 8:56 a.m. local time. It gained 6.2 percent last year, and reached a record in October after the central bank said it would maintain a modest and gradual appreciation. A majority of analysts surveyed by Bloomberg predicted the pace of strengthening would slow.

Italy Debt Rallies in Euro-Area Bonds’ Best Year as Crisis Eases (Bloomberg)
Italian and Portuguese bonds rallied in 2012 as euro-area government securities had their best year on record after policy makers stepped up efforts to contain market turmoil that threatened to destroy the currency bloc.
A pledge in July from European Central Bank President Mario Draghi to do “whatever it takes” to safeguard the monetary union pulled down Spain’s borrowing costs from a euro-era record. Irish securities delivered the best returns since 1993 as the ECB outlined a bond-buying plan that eased tension in Europe’s three-year-old debt crisis. German bunds underperformed French and Austrian peers as record-low yields dented demand for the region’s top-rated fixed-income assets.
“We have seen a significant change in sentiment,” said Mohit Kumar, head of European fixed-income strategy at Deutsche Bank AG in London. “Portugal, Ireland, Italy, they’ve all done really well. The primary support for the market came from the ECB, which removed the risk of an aggressive selloff in any of the markets and of a breakup of the euro region.”
Portuguese bonds handed investors a 57 percent return through Dec. 28, the largest since at least 1994, according to indexes compiled by Bloomberg and European Federation of Financial Analysts Societies. Italian debt rose 21 percent, the first annual gain since 2009, while Irish sovereign securities returned 29 percent.
An index of all euro-region government bonds surged 12 percent, the most since Bloomberg began collecting the data in 1999, and extending the previous year’s 1.5 percent advance.

20130102 1008 Global Markets Related News.

US FX By Cornelius Luca - Mon 31 Dec 2012 07:05:10 CT (CME/www.lucafxta.com)
The appetite for risk remains limited by the lack of progress in the ongoing "fiscal cliff" negotiations ahead of New Year's Eve. Congress returns back today with only a few hours of actual legislative time scheduled in which to act to avert the crisis. Most foreign currencies open lower or off their overnight highs. Only the pound opens slightly higher. The Asia/Pacific stock indexes were mixed. The European bourses are mixed, while the US stock markets are little changed in pre-open trading. The gold/oil spread is up.
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 foreign currencies.

Overnight
Australia: Private sector credit was flat in November after rising 0.1% in October.
China: The final HSBC manufacturing PMI rose to 51.5 in December from 50.5 in November.

Asian Stocks Advance After Senate Passes U.S. Budget Bill (Bloomberg)
Asian stocks rose after the Senate passed a U.S. budget bill that may avert some automatic tax increases and spending cuts if approved by the House.
Australian gold producer Newcrest Mining Ltd. (NCM) added 1.7 percent as the precious metal climbed. BHP Billiton Ltd., the world’s biggest mining company, advanced 0.8 percent, leading gains among raw-material producers. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rose 0.3 percent to 467.59 as of 11:34 a.m. in Sydney, before markets open in Hong Kong and South Korea. About three shares increased for each that fell. Markets in Japan and China are closed today and tomorrow for public holidays.
U.S. lawmakers are racing to address a budget impasse that congressional analysts have warned has the potential to send the world’s biggest economy into a recession if not resolved. As Congress seeks to undo $600 billion in tax increases and spending cuts that took effect yesterday, House amendments to the Senate’s bill could throw a deal into doubt, forcing lawmakers to begin again when the new session starts tomorrow.
“It’s extremely disappointing not just for the U.S. economy and investors but for global markets, that the U.S. political system itself just can’t seem to get it done,” Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion, told Bloomberg Television today. “The process we’re going through at the moment does anything but build confidence.”
The broader benchmark MSCI Asia Pacific Index, which includes Japan, surged 14 percent last year as central banks from the U.S., Europe, Japan and China took action to spur economic growth.
Trading volume on Australia’s S&P/ASX 200 Index was 51 percent below its 30-day average for the time of day, according to data compiled by Bloomberg. The measure rose 0.6 percent.

Aussie Trades Near Month-Low Amid U.S. Budget Struggle (Bloomberg)
The Australian dollar was 0.7 percent from its lowest level in more than a month as U.S. lawmakers struggle to find agreement to avoid the so-called fiscal cliff, damping demand for higher-yielding assets.
The Aussie dollar dropped versus most of its 16 major counterparts as U.S. House Republicans opposed the Senate’s budget bill and said they will seek to insert spending cuts. New Zealand’s currency also weakened after posting its biggest annual gain in two years.
“We remain somewhat in limbo,” said Robert Rennie, the Sydney-based chief currency strategist at Westpac Banking Corp. “The goodwill from the very positive Senate outcome on the budget bill hasn’t spilled over into the House and the clock is ticking.”
The Australian dollar bought $1.0399 as of 11:08 a.m. in Sydney, little changed from its $1.0394 close on Dec. 31. It fell to $1.0329 on Dec. 25, the weakest since Nov. 16. The Aussie may rise toward $1.07 by mid-year before approaching $1.01 by the end of 2013, Westpac’s Rennie said.
The yield on Australia’s 10-year bond rose six basis points, or 0.06 percentage point, to 3.33 percent.
In the U.S., the Democratic-controlled Senate won’t take up a House-amended budget bill, a Democratic leadership aide said on condition of anonymity. The impasse between the Senate and the Republican-dominated House threatens an effort to head off automatic tax increases and spending cuts that risk tipping the world’s biggest economy back into recession.
New Zealand’s currency dropped 0.1 percent to 82.73 U.S. cents after climbing 6.6 percent last year, the most since 2010. The country’s two-year swap rate, a fixed payment made to receive floating rates, fell 2 1/2 basis points to 2.67 percent.

Yen Touches 18-Month Low Against Euro on Abe’s Currency Policy (Bloomberg)
The yen touched an 18-month low against the euro after Japanese Prime Minister Shinzo Abe reiterated his intention to weaken his nation’s currency.
Abe said in a New Year statement yesterday that “bold” monetary policy is one of the three prongs of his economic measures. The dollar was little changed against the euro as the U.S. Senate and House sought to avoid the so-called fiscal cliff of automatic tax increases and spending cuts that started to take effect yesterday.
“For the moment, the yen is probably going to remain weak,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “If you look out a month or two, it really depends upon what the government is able to achieve as far as the central bank is concerned.”
The yen touched 114.78 per euro, the weakest since July 11, 2011, and traded at 114.46 as of 8:48 a.m. in Singapore from 114.46 at the close on Dec. 31. It was little changed at 86.71 per dollar. The greenback traded at $1.3201 per euro from $1.3193.
There was no trade in major markets yesterday, and Japan is closed till Jan. 4 for national holidays.
Abe said in the statement that the most urgent issue for Japan is to break out of currency appreciation and deflation. The premier has called on the Bank of Japan (8301) to undertake unlimited money printing to spur growth and achieve inflation of 2 percent, twice the BOJ’s target.
While the Japanese currency dropped 11 percent last year versus the dollar, the biggest annual slide since 2005, it is still about 17 percent stronger than the 10-year average of 101 per greenback.
“Neutral territory” for the yen is about 100 against the U.S. currency, Nissan Motor Co. President Carlos Ghosn told reporters during a year-end briefing. “Please bring it back to the neutral territory so that we can do our job without a handicap,” he said.

Senate Budget Pact Would Crimp Not Crush U.S. Growth (Bloomberg)
The budget deal passed by the Senate probably would crimp the U.S. economic recovery without stopping it.
The elimination of a 2 percent payroll tax cut, coupled with higher income taxes on the wealthy, will help reduce growth in the first quarter to 1 percent, from 3.1 percent in 2012’s third quarter, the latest data available, according to economists at JPMorgan Chase & Co. (JPM) and Bank of America Corp. The expansion will strengthen later in the year as the housing market continues to rebound, they forecast.
“It’s going to definitely present a headwind for the economy,” Michael Feroli, chief U.S. economist for JPMorgan Chase in New York, said of the fiscal pact that the Senate approved early today, sending it to the House of Representatives. “We’re looking for a downdraft in growth in the first half of the year, with the economy coming back in the second.”
The first half slowdown will mean that the U.S. will make limited progress in reducing unemployment in 2013, according to projections by Ethan Harris, co-head of global economic research for Bank of America in New York. He sees the jobless rate falling to 7.5 percent in the fourth quarter of 2013 from 7.7 percent in November 2012.

Jobless Benefits
The agreement forged in talks between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, would avert some, though not all, of more than $600 billion in automatic tax increases and spending cuts slated to take effect this year. Under the accord, passed by the Senate early today, households making less than $450,000 per year would be spared an income tax rate increase. And the unemployed would still be eligible for extended jobless benefits.
Payroll taxes would rise, to 6.2 percent from 4.2 percent last year. And the wealthy would see an increase in their top income tax rate, to 39.6 percent, from 35 percent.
The deal faces an uncertain fate in the Republican- controlled House. House Speaker John Boehner of Ohio said last night the chamber would consider any budget measure passed by the Senate. “Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation,” Boehner said in a statement.
Even if the House passes the bill, the agreement won’t mean the end of budget brinksmanship, Andrew Laperriere, senior managing director for ISI Group in Washington, said in a report yesterday to clients.

Debt Ceiling
The U.S. has hit its $16.4 trillion debt limit, forcing the Treasury Department to take what it called “extraordinary measures” to keep funding the government for now.
The Treasury probably will exhaust such measures by late February or early March, setting up another confrontation between President Barack Obama and congressional Republicans, according to Laperriere, who spent eight years working on Capitol Hill before joining ISI in 1999.
The stock market bounded ahead yesterday as lawmakers looked increasingly likely to reach agreement on the budget. The Standard & Poor’s 500 Index (SPX) rose 1.7 percent to 1,426.19 at 4 p.m. in New York, bringing the gain for the year to 13 percent.
The biggest hit to the economy from the fiscal package probably will come from the expiration of the payroll tax cut, Feroli said. The payroll tax cut was designed as a temporary measure to boost the economy in 2011 and then was extended through 2012. He reckons that its elimination will slow growth by just over a half percentage point this year by taking $125 billion out of consumers’ pockets.

‘Meaningful Impact’
It “would have a meaningful impact because it hits everybody,” said Michael Gapen, a New York-based senior economist at Barclays Plc. “You’d see it in the first quarter, and consumption would ratchet down.”
Higher taxes on the wealthy, in contrast, won’t have that much of an effect because top earners tend to save more of their income rather than spend it, he added.
Possible federal spending cuts would reduce economic growth by more than a half percentage point if they eventually are implemented, based on estimates by Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Defense companies such as Northrop Grumman Corp. (NOC) and Lockheed Martin Corp. (LMT) could be particularly hard hit.
The deal would prevent automatic spending cuts from taking effect for two months, Senate Republicans told reporters.

Resilient Recovery
The recovery should prove resilient in the face of government belt-tightening because of the progress that the private sector in rebounding from the 2007-2009 recession, said Bank of America’s Harris.
“Both the housing market and the banking sector have healed significantly,” he said.
Residential real estate, which collapsed and helped trigger the 18-month economic downturn that ended in June 2009, is picking up. Existing homes sold at their strongest pace in more than two years in November and building permits reached a four- year high. Companies including Toll Brothers Inc. (TOL) and KB Home are competing for buildable lots and raising prices.
“We’ve seen a virtuous cycle building in housing,” said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, New Jersey.

Bank Profits
Banks are bouncing back as well, with profits in the third quarter the highest in six years, according to the Federal Deposit Insurance Corp. in Washington.
The number of lenders on FDIC’s confidential list of so- called problem banks -- those deemed to be at greater risk of collapse -- fell from 732 in the second quarter to 694 in the third, the smallest number since a peak of 888 after the financial crisis.
Another encouraging sign: The job market has held up even in the face of concerns about the possibility of higher taxes and government spending cuts in 2013. Payroll gains this year through November averaged about 151,000 a month compared with 147,000 in the same period of 2011.
Labor Department figures due Jan. 4 may show employers added 150,000 jobs in December, about the same pace as the prior month, according to the median forecast of economists surveyed by Bloomberg.
“Underneath the fiscal drama is an improving economy,” said Ryan Sweet, a senior economist at Moody’s Analytics. “The fiscal drag will take some wind out of it but once there is more clarity, we can expect stronger growth.”

Senate Passes Budget Agreement to Undo Tax Increases (Bloomberg)
The Senate passed a budget agreement seeking to undo tax increases that took effect today for almost every U.S. worker after Congress and the Obama administration allowed a fiscal deadline to expire.
The legislation, passed 89-8 this morning, would make permanent the tax cuts for most households that expired at midnight, continue expanded unemployment benefits and delay automatic spending cuts for two months.
The measure emerged from an agreement yesterday between Vice President Joe Biden and Senate Minority Leader Mitch McConnell to stave off more than $600 billion in tax increases and federal spending cuts set to begin this month. The 157-page bill now moves to the House for consideration.
“We all knew that if we did nothing, they’d be going up on everyone today,” McConnell said before the vote. “We weren’t going to let that happen.”
After more than 17 months of bickering, Congress and President Barack Obama have yet to enact a deal to avert the budget changes known as the fiscal cliff. Even if an agreement clears both chambers of Congress in coming days, it would be more limited than what Obama and leaders of both parties sought.
The deal passed early today by the Senate would extend income tax cuts for household income up to $450,000, with rates rising to 39.6 percent on income above that level. Expanded unemployment insurance would be continued through 2013.

House Republicans Drop Bid to Add Spending Cuts to Bill (Bloomberg)
House Republicans abandoned their effort to add spending cuts to the Senate’s budget legislation and one member predicted the measure will be passed tonight.
Oklahoma Representative Tom Cole said he expects the House to pass the Senate bill unchanged with a “substantial” bipartisan vote. The House Rules Committee scheduled an 8:10 p.m. meeting to set the parameters for the vote.
House passage of the Senate bill would avert $600 billion in automatic tax increases and spending cuts that take effect starting today. The Senate passed its plan on an 89-8 vote early this morning.
“Let’s accept the wins that we have and live to fight another day,” Cole said in an interview on Bloomberg Television.
House Speaker John Boehner had offered fellow Republicans two options, including allowing a vote on the Senate bill if party members couldn’t show they had a majority vote to amend it with spending cuts sought by many Republicans.

House Republicans to Seek Spending Cuts in Budget Bill (Bloomberg)
U.S. House Republicans oppose the Senate’s budget bill and will seek to insert spending cuts, jeopardizing a bipartisan effort to undo $600 billion in automatic tax increases and spending cuts that take effect starting today.
The Democratic-controlled Senate won’t take up a House- amended bill, a Democratic leadership aide said on condition of anonymity. The Senate adjourned until noon tomorrow, and House Republicans were meeting privately today to decide how to proceed.
“I do not support” the Senate bill, House Majority Leader Eric Cantor of Virginia told reporters as he left a private meeting of House Republicans today in Washington.
“We’re all greatly disappointed with the Senate,” said Republican Jack Kingston of Georgia. “This appears to be really heavy on revenues and really light on cuts.”
The Senate’s 89-8 passage of its measure early today shifted the pressure to House Speaker John Boehner of Ohio. In his two years as speaker, Boehner has had to quell rebellions among fellow Republicans backed by the anti-tax Tea Party.
House amendments to the Senate bill would throw into doubt a deal worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, a Kentucky Republican, with fewer than 48 hours until the current Congress expires. Lawmakers would have to begin again when the new session starts Jan. 3.

China Manufacturing Index Shows Third Straight Expansion (Bloomberg)
A gauge of China’s manufacturing showed a third month of expansion, adding evidence that the recovery in the world’s second-biggest economy will extend into the new year.
The Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That compares with the 51.0 median estimate in a Bloomberg News survey of 27 analysts and 50.6 in November. A reading above 50 indicates expansion.
Today’s report, along with a separate manufacturing gauge yesterday showing the fastest expansion in 19 months, reflects increased infrastructure spending that’s helping drive a rebound from a seven-quarter slowdown as a new generation of Communist Party leaders takes the nation’s reins. Li Keqiang, set to succeed Wen Jiabao as premier in March, is championing urbanization to put economic growth on a more sustainable path.
“Most data points, especially the industrial earnings, have been pointing to an impressive recovery,” Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong, said in a note today. At the same time, “investors should be wary of getting too optimistic in coming months,” he said.
The final December reading of a purchasing managers’ index released yesterday by HSBC Holdings Plc and Markit Economics was 51.5, the highest in 19 months, after a 50.9 preliminary reading and a final 50.5 in November. The HSBC index focuses more on smaller businesses.

Hu Jintao Says China to Step Up Efforts to Support Growth (Bloomberg)
China will work toward bolstering global economic growth in 2013, President Hu Jintao said in a New Year’s Eve address, amid optimism that a recovery in the world’s second-biggest economy is gaining traction.
The nation will “step up efforts to promote strong, sustainable and balanced growth in the world economy,” Hu said in the speech broadcast by state radio and television. China achieved stable economic development in 2012 and will seek to do the same this year while making restructuring of its growth model a focus, he said.
Hu’s last New Year’s Eve address before he steps down as president in March signaled Chinese leaders’ confidence the economy may be rebounding after a seven-quarter slowdown. A recovery may facilitate the transfer of power to Xi Jinping, appointed head of the Communist Party in November and set to become president, as authorities seek to assuage discontent sparked by corruption and a widening income gap.
The Chinese people are now uniting around the leadership of Xi to work toward building a “well-off society,” Hu said.
China’s new Communist Party leaders have pledged to abandon extravagance, cut down on lavish receptions and live more frugally, amid a broader push to stamp out corruption and win back people’s trust.
Hu’s speech didn’t indicate how China, set to complete its once-a-decade leadership transition in March, plans to manage an economy that’s estimated to expand 8.1 percent this year.

Japan’s Population Falls by Record in 2012 as Births Decrease (Bloomberg)
Japan’s population last year declined by 212,000, the biggest drop on record, according to an estimate by the nation’s health ministry.
That’s the largest reduction since the ministry started recording the data in 1947 and a sixth straight year of declines. The number of births fell by 18,000 to a record low of 1.03 million last year, the ministry said.

North Korea Picks Stronger Economy, South Ties as Top 2013 Tasks (Bloomberg)
North Korea’s Kim Jong Un named improving the economy and better relations with South Korea as top policy goals for his second year as leader, signaling he may ease his country’s confrontational approach toward Seoul.
“The building of an economic giant is the most important task that comes to the fore in the present stage of building a thriving socialist country,” Kim said today in a New Year address carried by the official Korean Central News Agency. “The reunification of the country is the greatest national task that brooks no further delay.”
Kim departed from the past year’s saber-rattling against South Korean President Lee Myung Bak as Lee’s successor Park Geun Hye prepares to take office Feb. 25. Park has repudiated Lee’s hard-line North Korea policy, expressing her willingness to talk to Kim and help the North join global organizations to thaw ties.
“Kim’s speech mentioned the importance of the economy at far greater frequency than the military,” said Cheong Seong Chang, senior research fellow at the Seoul-based Sejong Institute, in an e-mail. “The success of the Dec. 12 missile launch has given Kim enough confidence to not have to rely on his father’s military-first policy to garner support.
‘‘The urgency of economic issues also compounds to the North’s need to better ties with South Korea, which makes it likely that Pyongyang will aggressively engage in efforts to resume dialogue,” Cheong said.

Singapore GDP Topped Survey Last Quarter, Avert Recession (Bloomberg)
Singapore’s economy expanded more than economists estimated last quarter, averting a recession even after the central bank refrained from monetary stimulus as it sought to contain elevated inflation.
Gross domestic product rose an annualized 1.8 percent in the three months to Dec. 31 from the previous period, when it contracted a revised 6.3 percent, the Trade Ministry said in a statement today. The median of 11 estimates in a Bloomberg News survey was for a 1.6 percent expansion. The economy grew 1.2 percent last year, less than a quarter of 2011’s pace.
The World Bank last month raised its outlook for emerging nations in East Asia, citing a recovery in China. The export- dependent region still faces risks from Europe’s protracted sovereign debt crisis and a U.S. budget impasse that congressional analysts have warned has the potential to send the world’s biggest economy into a recession if not resolved.
“Going forward, what happens will to a large extent depend on things like what stimulus from China looks like, how well the signs of nascent recovery seen in the U.S. is held up,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. Singapore “will do better than it did last year.”
The Singapore dollar was little changed at S$1.2223 against the U.S. currency as of 8:56 a.m. local time. It gained 6.2 percent last year, and reached a record in October after the central bank said it would maintain a modest and gradual appreciation. A majority of analysts surveyed by Bloomberg predicted the pace of strengthening would slow.

Italy Debt Rallies in Euro-Area Bonds’ Best Year as Crisis Eases (Bloomberg)
Italian and Portuguese bonds rallied in 2012 as euro-area government securities had their best year on record after policy makers stepped up efforts to contain market turmoil that threatened to destroy the currency bloc.
A pledge in July from European Central Bank President Mario Draghi to do “whatever it takes” to safeguard the monetary union pulled down Spain’s borrowing costs from a euro-era record. Irish securities delivered the best returns since 1993 as the ECB outlined a bond-buying plan that eased tension in Europe’s three-year-old debt crisis. German bunds underperformed French and Austrian peers as record-low yields dented demand for the region’s top-rated fixed-income assets.
“We have seen a significant change in sentiment,” said Mohit Kumar, head of European fixed-income strategy at Deutsche Bank AG in London. “Portugal, Ireland, Italy, they’ve all done really well. The primary support for the market came from the ECB, which removed the risk of an aggressive selloff in any of the markets and of a breakup of the euro region.”
Portuguese bonds handed investors a 57 percent return through Dec. 28, the largest since at least 1994, according to indexes compiled by Bloomberg and European Federation of Financial Analysts Societies. Italian debt rose 21 percent, the first annual gain since 2009, while Irish sovereign securities returned 29 percent.
An index of all euro-region government bonds surged 12 percent, the most since Bloomberg began collecting the data in 1999, and extending the previous year’s 1.5 percent advance.

20130102 1008 Global Commodities Related News.

Grains Ring Out the Old in Quiet Fashion
By DTN/The Progressive Farmer - Mon 31 Dec 2012 15:05:00 CT
Related Keywords: Agriculture
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DTN Closing Grain Comments 12/31 14:31 (CME)
Grains Ring Out the Old in Quiet Fashion
Grain markets seemed to be slumbering throughout Monday's session, preparing
for a late night party to ring in the New Year.
General Comments:
Corn closed 4 1/4 cents higher in the March and 3 1/2 cents higher in the May. Soybeans closed 8 1/2 cents lower in the March and 10 1/4 cents lower in the May. Wheat closed 3/4 cent lower in the March Chicago, 5 cents higher in the March Kansas City, and 2 1/4 cents lower in the March Minneapolis. The U.S. dollar index is 0.098 higher at 79.776. February gold is $20.40 higher at $1,676.30 while March silver is $0.390 higher and March copper is $.0610 higher. The Dow Jones Industrial Average is 70 points higher at 13,007. February crude oil is $0.99 higher at $91.79. January heating oil is $.0003 higher while January RBOB gasoline is $.0121 higher and February natural gas is $0.119 lower.

Wheat Market Recap Report (CME)
March Wheat finished down 3/4 at 778, 2 off the high and 10 1/4 up from the low. May Wheat closed down 3/4 at 787 3/4. This was 9 3/4 up from the low and 2 1/4 off the high.
Kansas City and Chicago wheat eased lower midday but closed mixed to slightly higher on the day. Weak technical signals triggered additional fund liquidation in early trade but outside markets turned positive late in the session which added some buying support to the commodity complex. The tender lineup is very thin with Iraq's 50,000 tonne option-origin tender the only notable change. Basis in the Gulf of Mexico ended last week on a supportive tone as many believe export demand has turned the corner which could be supportive to wheat futures long term. Export Inspections were considered bearish this morning with only 7.8 million bushels shipped vs. 15.1 last week. Shipments needed each week to reach this crop years USDA estimate are 23.9 million bushels, up from 23.3 last week. Cumulative shipments are now 49% of the current USDA forecast vs. the 5 year average of 58%. Oklahoma saw around a half inch of precipitation around the panhandle in the last 24 hours but this may not have helped the depleted soil moisture conditions. Central KS could see 3-4 inches of snowfall by January 4th which would help insulate wheat crops from winterkill.
March Oats closed down 1 1/2 at 347 1/2. This was 4 1/4 up from the low and 3 1/4 off the high.

Corn Market Recap for 12/31/2012 (CME)
March Corn finished up 4 at 698, 2 off the high and 8 3/4 up from the low. May Corn closed up 4 3/4 at 701 1/2. This was 9 1/2 up from the low and 1/4 off the high.
March corn traded lower early in the session but stabilized midday to trade higher into the closing bell. Export demand remains sluggish with inspections for the week ending December 27th reported at 7.9 million bushels, down from 13.5 last week. Shipments needed each week to reach this crop years USDA export estimate are 25.2 million bushels, up from 24.8 last week. The cumulative shipment pace is now 22% of the USDA export estimate vs. the 5 year average of 31%. Ethanol data was supportive last Friday after ethanol production and corn usage increased week over week. Furthermore, The USDA Hogs and Pigs Report, released after the close Friday, showed all hogs and pigs inventory at slightly higher levels than trade estimates. The market was looking for a modest decline in the herd and breeding stock due to the summer drought and high feed costs but instead the herd size stabilized and the breeding stock actually saw a slight uptick. The data is considered supportive to corn and wheat markets long term.
January Rice finished down 0.095 at 14.86, equal to the high and equal to the low.

Brent Crude Oil Market Report (CME)
February Brent crude oil prices traded lower during the initial morning hours, falling to a new four day low in the process. Uncertainty surrounding US budget negotiations and whether leaders would be able to avert the fiscal cliff seemed to rattle risk-taking sentiment. However, better than expected Chinese Manufacturing data in December was seen as a positive demand force. Favorable headlines out of the US later in the session, that leaders might be close to a deal on the fiscal cliff, lifted Brent crude oil prices back toward their highs of the session. Additional support came on reports of bidding activity in the Brent forties market, which saw that differential gain $0.45 on the session. Meanwhile, weak refining margins and build up of Nigerian cargoes might have limited upside action in February Brent crude oil. The premium between February Brent and WTI crude oil lost a little more than $0.40 on the session and was down for the fifth consecutive day.

Oil Trades Near Two-Month High as U.S. Senate Passes Budget Bill (Bloomberg)
Oil traded near a two-month high in New York after the U.S. Senate passed a budget bill that may avert some tax increases and spending cuts that threaten economic growth in the world’s biggest crude user.
Futures were little changed after rallying 1.1 percent on Dec. 31. If passed by Congress, the Senate’s plan would spare U.S. households making less than $450,000 per year an income- tax-rate increase as part of the automatic measures that took effect yesterday. House amendments to the bill could throw a deal into doubt, forcing lawmakers to begin again when the new session starts Jan. 3.
Crude for February delivery traded at $91.69 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 8:09 a.m. in Singapore. It rose $1.02 to $91.82 on Dec. 31, the highest settlement since Oct. 18. Trading was closed yesterday for the New Year holiday. Prices dropped 7.1 percent last year and 0.4 percent in the fourth quarter. They rose 3.3 percent in December.
Brent oil for February settlement rose 49 cents, or 0.4 percent, to end the session at $111.11 a barrel on the London- based ICE Futures Europe exchange on Dec. 31. Brent has advanced 3.5 percent in 2012, a fourth annual gain. It slipped 12 cents in December and 1.1 percent in the fourth quarter.

Recap Energy Market Report (CME)
February crude oil prices registered a positive outside day reversal during Monday's session and the highest close since October 18th. The market came under pressure early in the session, and fell to a new three day low, weighed down by uncertainty surrounding US budget negotiations. Traders indicated that volumes were running about half their average pace ahead of the New Year's Day holiday. As a result, mid-day comments that US leaders were making progress on a plan to avert the fiscal cliff helped lift risk-taking sentiment and powered the crude oil market higher. Some traders indicated that any deal to avert falling over the cliff would be seen as a positive demand force for crude oil.

Silver Market Recap Report (CME)
The silver acted more as a physical commodity than as a safe-haven vehicle during Monday's trading session, as prices initially stayed close to unchanged levels before finding a late surge of strength to finish with some fairly sizable gains. A better than expected reading for the Dallas Fed's Texas manufacturing survey provided little initial benefit for silver prices, as the ongoing fiscal cliff saga was seen by many traders as the key factor for the market. A late rebound in optimism that a deal can get done to avoid the fiscal cliff provided the catalyst for March silver's late rally. A report that the solar industry's silver usage during 2012 dropped by one-third from last year's levels due to high prices was seen by some traders as providing some headwinds for the silver market to overcome during today's session but clearly not enough to overcome the late boost to global market risk sentiment.

Gold Market Recap Report (CME)
The gold market went through a bumpy ride during the final trading day of 2012 but managed to hold onto early strength to finish Monday's trading session with sizable gains. Many traders felt that gold's safe-haven status was able to overcome physical commodity concerns coming into this morning's trading, as an early setback in fiscal cliff optimism failed to take prices down into negative territory. The improving outlook that a deal could get done in time gave gold prices an additional boost later in the session. News reports that a well-regarded West Coast trader feels that gold will rally during next year was seen by some traders to have given gold prices an additional measure of support as well. Other traders felt that noted amounts of end-of-quarter and end-of-year long liquidation may well have kept further gain in check during the rest of today's pre-holiday trading session.

Shipping Loses as Faster Trade Means Record Fuel Costs: Freight (Bloomberg)
Accelerating world trade means the merchant fleet will burn the most fuel oil ever in 2013, driving ship owners’ biggest cost to a record and boosting profit for Aegean Marine Petroleum Network Inc. and other suppliers.
Demand for the so-called bunker fuel will rise 2.2 percent to 3.37 million barrels a day, according to JBC Energy GmbH, a Vienna-based research company. Prices will gain by the same amount to an all-time high of $690 a metric ton, according to McQuilling Services LLC, an industry consultant based in Garden City, New York. Shares of Aegean Marine, the largest independent fuel supplier, will jump 75 percent in 12 months, according to the average of four analyst estimates compiled by Bloomberg.
While the International Monetary Fund says world trade will grow 4.5 percent this year, from 3.2 percent in 2012, that may not be enough to curb the glut of shipping capacity that means most carriers are losing money. The fleet is already the biggest on record and will expand another 5 percent in 2013, according to Clarkson Plc (CKN), the biggest shipbroker. Some vessels may sail faster as demand gains, increasing fuel use, said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo.
“If world trade speeds up, the fleet speeds up, bunkers go up and vessel supply goes up,” said Simon Newman, the London- based head of tanker research at ICAP Shipping International Ltd. “Ship owners will be the clear losers, as an oversupplied fleet will continue to make it difficult to pass on the cost.”

20130102 1007 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap
January Soybeans finished down 5 1/4 at 1418 3/4, 15 off the high and 9 1/4 up from the low. March Soybeans closed down 9 at 1409. This was 8 1/4 up from the low and 16 1/2 off the high.
January Soymeal closed down 7.1 at 420.6. This was 0.6 up from the low and 9.2 off the high.
January Soybean Oil finished up 0.22 at 49.16, 0.01 off the high and 0.82 up from the low.
March soybeans traded 14 cents lower midday but managed to climb off session lows late in the session but still closed in negative territory. Early weakness was linked to speculative profit taking but buying support showed up in the corn and wheat markets midday which helped to lift soybeans prices. The market saw mixed demand side data this morning with the USDA reporting new soybean sales but export inspections were hardly inspiring. The USDA announced this morning that US exporters sold 140,000 tonnes of US soybeans to an unknown destination for the 2012/13 marketing year. Demand for US soybeans remains robust but the pace of shipments is beginning to slow which is helping to offset. Inspections for the week ending December 27th totaled 35.5 million bushels vs. 44.5 last week. This was the lowest weekly inspection estimate since September 20th of this year. Shipments needed each week to reach this crop years USDA export estimate are only 16.2 million bushels, down from 16.6 last week. South American weather remains favorable for most areas. Central and Southern Brazil continues to see light showers while the northeastern region is trending slightly drier. Argentina was dry over the weekend and the pattern is set to remain in place for most of this week.

EDIBLE OIL: Malaysian palm oil futures fell weighed by lower exports although losses were limited by expectations that heavy rains in the world's No.2 producer may disrupt production and bring down record high stocks. (Reuters)

VEGOILS-Palm slips, set to post worst annual loss since 2008
Mon Dec 31, 2012 12:34am EST
* Futures down 22 pct since start of year, steepest loss
since 2008
    * Malaysia's December exports down 5.7 pct -ITS
    * Malaysia's new tax structure in focus for 2013 -trader
    * Malaysia's weather office upgrades heavy rain warning from
yellow to orange stage

 (Updates prices, adds details)
    By Chew Yee Kiat
    SINGAPORE, Dec 31 (Reuters) - Malaysian palm oil futures
fell on Monday, weighed by lower exports although losses were
limited by expectations that heavy rains in the world's No.2
producer may disrupt production and bring down record high
stocks.
    Palm oil is on track to notch its worst annual performance
since the financial crisis in 2008, losing more than one-fifth
thanks to high stocks and a sluggish global growth that has
dented edible oil demand.
    For the coming year, traders are watching the impact of
Malaysia's zero export tax for crude palm oil in January and a
stricter import rule for edible oil to be enforced by China, the
world's second-largest edible oil buyer.
    "Malaysia's new export duty will be tested. There are more
concerns on the tax structure because it is now an even
playground for both countries (Malaysia and Indonesia)," said a
dealer with a foreign commodities brokerage in Malaysia.
    "I foresee an even fiercer price competition."
    Malaysian cargoes are still likely to be cheaper as it set
the January export tax rate at zero compared to Indonesia's 7.5
percent.
    By the midday break, the benchmark March contract
on the Bursa Malaysia Derivatives Exchange had lost 1 percent
percent to 2,471 ringgit ($808) per tonne.
    Prices hit a high of 2,515 ringgit per tonne on Friday -- a
level last seen on Nov. 2, prompted some traders to book profits
soon after.
    Total traded volumes stood at 18,786 lots of 25 tonnes each,
higher than the usual 12,500 lots.
    Malaysian palm exports during December fell 5.7 percent to
1,568,510 tonnes from 1,663,092 tonnes a month ago, said cargo
surveyor Intertek Testing Services on Monday.  
    Another cargo surveyor Societe Generale de Surveillance will
issue exports data for the same period later in the day.

    Concerns of heavy rains in Malaysia disrupting supply
persisted after the weather office upgraded its warning on
Monday from yellow to orange stage for key producing states such
as Pahang and Johor.    
    Brent crude was steady above $110 per barrel on Monday on
concerns over the U.S. fiscal crisis that could erode fuel
demand.
    In competing vegetable oil markets, U.S. soyoil for March
delivery rose 0.2 percent in early Asian trade. The most
active May soybean oil contract on the Dalian Commodity
Exchange had gained 0.4 percent by the midday break.