Wednesday, December 19, 2012
20121219 1118 Global Markets & Energy Related News.
GLOBAL MARKETS-Shares, euro up on hopes of U.S. "cliff" deal, BOJ easing
SINGAPORE, Dec 19 (Reuters) - Asian shares rose and the euro hovered around multi-month highs as signs of progress in resolving the U.S. "fiscal cliff" budget crisis boosted demand for riskier assets.
"The market is already in overbought territory, but investors are increasingly being alarmed that there is a risk of not having Japanese stocks in their portfolios," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
FOREX-Euro outperforms majors, yen still pinned down
SYDNEY, Dec 19 (Reuters) - The euro hovered at multi-month highs against the dollar and yen, having extended recent gains as tentative signs of progress in the U.S. fiscal talks bolstered demand for riskier assets.
"We believe the year-end position squeeze is the main driver of the euro's broad outperformance at the moment, especially as both valuations and positioning are starting to appear stretched for the high-beta currencies," analysts at BNP Paribas wrote in a note.
Obama puts Democrats in bind with Social Security concession
WASHINGTON, Dec 18 (Reuters) - President Barack Obama has put Democrats in Congress in a tough spot politically after he conceded to Republican demands in the "fiscal cliff" negotiations that the government use a lower inflation index for calculating federal benefits.
Although Obama was open to changing the index during last year's budget fight with Republicans, Democrats and progressives who helped re-elect Obama in November hoped new leverage gained from the win would prevent a repeat of that concession and had been warning the White House not to do so.
OIL-Oil rises on 'fiscal cliff' optimism, refinery issues
NEW YORK, Dec 18 (Reuters) - Oil prices rose on Tuesday as apparent progress in resolving the U.S. budget crisis eased concerns that the world's top economy could slip into recession.
"Everything is keying on the 'cliff' hopes, because people are assessing if we're closer to a deal," said Mark Waggoner, president at Excel Futures Inc.
U.S. crude stocks drop, oil products mixed last week –API
NEW YORK, Dec 18 (Reuters) - U.S. crude stocks fell last week as imports dropped and refined product stocks were mixed as processing rates rose, data from the American Petroleum Institute showed on Tuesday.
Crude oil stocks fell by 4.1 million barrels in the week to Dec. 14. Analysts polled by Reuters had forecast a 1.1 million barrel drawdown.
POLL-US crude inventories seen lower as refiners import less
Dec 18 (Reuters) - U.S. commercial crude oil stockpiles were expected to have fallen last week on lower imports as refiners drew down inventories for end-of-the-year tax purposes, an extended Reuters poll of 11 analysts showed on Tuesday.
The survey ahead of weekly inventory reports from industry group the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA), forecast that crude stocks would drop by 1.1 million barrels on average for the week ended Dec. 14.
20121219 1006 Malaysia Corporate Related News.
Petronas Chemicals: Looking to 'fertilise' growth in new markets. Petronas Chemicals Group Bhd (PChem) president and chief executive officer Abd Hapiz said that petrochemical players had not established their presence in the newly opened Asean economies because they did not know to whom to go in the markets, and also perhaps the industry was not mature enough yet. That said, PChem is looking to expand overseas as its exporting markets are focused around the Asia-Pacific. Hapiz said PetChem could look into Myanmar as a new market as soon as next year. (Source: Business Times)
O&G: MYR1b for Pengerang water project. A total of MYR1b is needed to develop commercial infrastructure for the supply of raw water in the Pengerang Integrated Petroleum Complex (PIPC). Johor Petroleum Development Corp chief executive Mohd Yazid Jaafar said the National Economic Council will bear 10% of the cost of the water supply infrastructure, while the remaining will either come from the state government or via privatisation. The infrastructure will include building underground piping that will provide raw water needed for commercial use in the 8,800-hectare PIPC. (Source: Business Times)
TNB to invest RM9.7bn in next 5 years to boost capacity
TNB will invest RM9.7bn in new capacity over the next five years to meet Malaysia’s electricity demand, which is expected to grow by 3.5% to 4.6% p.a. during the period. TNB is currently building two hydroelectric projects in Hulu Teregganu, Terengganu and Ulu Jelai, Pahang. It is also constructing a biomass plant in Jengka, Pahang and a coal-fired power plant in Manjung, Perak. In a statement yesterday, the Energy Commission announced that it will float an open tender to develop two coal-fired power plants with total capacity of 3,000MW. (Malaysian Reserve)
MAS acquires 36 new turboprop aircraft from ATR for RM3bn
MAS yesterday acquired 36 new ATR 72-600 aircraft for RM3bn from ATR, the turboprop manufacturer based in Toulouse, France. MAS group CEO and MD Ahmad Jauhari Yahya said ATR had already committed to delivering three turboprop aircraft next year, another five the following year and six in 2015. Ahmad Jauhari said an advantage of the turboprop operation is its ability to turn around very quickly, in less than 30 mins, translating into increased flight frequencies. (Malaysian Reserve) Please see accompanying report.
Prestariang gets O&G training job
Prestariang has received an approval letter from the Finance Ministry to provide training and certification to O&G graduates. The deal is worth RM4.8m. Prestariang said the Professional Skill Set for O&G Industry Programme will be conducted for 360 university graduates, diploma and certificate holders for three months. It said the programme would be conducted by Prestariang in collaboration with industry partners and professional certified trainers. (Financial Daily) Please see accompanying report.
Bina Puri concession cancelled
Bina Puri Holdings has announced that the National Highway Authority (NHA) of Pakistan has terminated the concession agreement with its unit Bina Puri Pakistan (Pte) Ltd. The company said that the concession agreement, which was terminated on 10 Dec, was for the construction of a 136-km long motorway described as the “conversion of the existing four-lane Karachi-Hyderabad superhighway into a six-lane motorway (M-9)” and valued at RM864m. The company also announced that Bursa Malaysia had rejected Bina Puri's application for the proposed acquisition of PT Power. (StarBiz)
BLand unit to acquire land from Selangor Turf Club
Berjaya Land’s (BLand) unit, Selat Makmur SB, has proposed to acquire 99.06ha of leasehold land in Sungai Besi from Selangor Turf Club for RM640m. BLand said the acquisition included all existing buildings and structures erected and had also proposed to acquire about 303.514ha of freehold land in Sungai Tinggi from Berjaya City SB. The company had also proposed to appoint Berjaya City as the turnkey contractor to carry out the construction of the new turf club for RM605m. (StarBiz)
20121219 1005 Global Economy Related News.
China: Foreign investment declines for 12th time in 13 months
Foreign direct investment (FDI) in China fell for the 12th time in 13 months, suggesting the nation’s economic-growth rebound has yet to attract a fresh influx of capital spending from abroad. Investment dropped 5.4% in November from a year earlier to USD8.29bn. FDI inflows in the first 11 months of the year fell 3.6% to USD100bn. (Bloomberg)
China: Said to set growth target at 7.5% for second year
China has set its initial target for economic growth at 7.5% for a second year and tightened its inflation goal to the lowest level since 2010, two bank executives and a regulatory official briefed on the matter said. Policy makers said during the annual central economic work conference that ended on 16 Dec that they aim to keep inflation at about 3.5%, they said. (Bloomberg)
Australia: RBA cites softer labor market for 4 Dec interest rate cut
The Reserve Bank of Australia decided to cut interest rates to match the half-century low set during the 2009 global recession as a softer job market gave it room to bolster demand, minutes of its 4 Dec meeting showed. “Further confirmation that the peak in resource sector investment was near, and that the short-term outlook for non-resource investment remained subdued, indicated that there was a case for the board to provide that support,” the minutes showed. (Bloomberg)
UK: Inflation remains at 2.7% on cost of food, utility
UK inflation held at the highest rate since May last month as higher electricity and gas costs kept consumer-price growth above the Bank of England’s target. Consumer prices rose 2.7% from a year earlier, unchanged from Oct, as upward pressure came mostly from food and utilities. (Bloomberg)
US: Homebuilder confidence rises to highest level since 2006
Confidence among US homebuilders climbed in Dec for the eighth straight month, reaching its highest level in more than six years and adding to signs the real-estate market is aiding the economic expansion. The National Association of Home Builders/Wells Fargo index of builder confidence increased to 47, the highest since April 2006, from a revised 45. (Bloomberg)
US: Current account deficit narrowed 9% in third quarter
The current account deficit in the US narrowed in the third quarter, helped by slowing imports. The gap, the broadest measure of international trade because it includes income payments and government transfers, shrank 9% to USD107.5bn, the smallest in almost two years, from a USD118.1bn shortfall in the prior quarter. (Bloomberg)
S&P 500 advances to 2-month high amid optimism on budget talks
US stocks advanced, sending the Standard & Poor’s 500 Index to the highest level in two months, amid signs of progress in the efforts by President Barack Obama and Republicans to reach agreement on a new budget in Washington. The S&P 500 rose 1.2% to 1,446.79. It has gained 15% so far in 2012. The Dow Jones Industrial Average added 115.57 points, or 0.9%, to 13,350.96 yesterday. About 7.4bn shares changed hands on US exchanges, 20% above the three-month average. (Bloomberg)
20121219 1002 Global Markets Related News.
Asia FX By Cornelius Luca - Tue 18 Dec 2012 17:20:50 CT (CME/www.lucafxta.com)
The appetite for risk remained firm on Tuesday on checkered signs of progress in the "fiscal cliff" politics. The politicians' differences narrowed significantly after President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy.
The European currencies ended higher again, but the commodity currencies fell. The yen remains under pressure after hitting over a 1 ½- year low on Monday. The US stock markets, gold, oil and silver advanced.
The short-term outlook for the financial currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on all European and commodity currencies and short yen. Good luck!
Overnight
US: The current account deficit narrowed to $107.5 billion in the third quarter from $118.1 billion in the second quarter.
US: The NAHB/Wells Fargo Housing Market Index climbed to 47 in December from a revised 45 in November.
Today's economic calendar
Australia: Westpac Leading Index for October
Japan: Merchandise trade balance total for November
Japan: The BoJ monetary policy meeting minutes
Japan: All Industry Activity Index for October
Japan: Leading Economic Index for October
Asian Stocks Rise on U.S. Optimism; Nikkei Above 10,000 (Bloomberg)
Asian stocks rose, with the regional benchmark headed for the highest close since February, amid confidence U.S. policy makers will reach a budget deal and the Bank of Japan will add to economic stimulus.
Canon Inc. (7751), a camera maker that gets 27 percent of its sales in the Americas, gained 4.5 percent as Japan’s benchmark Nikkei 225 Stock Average climbed above 10,000 for the first time since April 4. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, jumped 5.9 percent on speculation the BOJ will add to monetary easing when a two-day meeting concludes tomorrow. Whitehaven Coal Ltd. added 5.5 percent in Sydney after saying it hasn’t received approaches to buy assets from China Shenhua Energy Co. in Australia or any proposal from the Chinese company to take over the coal producer.
The MSCI Asia Pacific Index gained 0.6 percent to 128.67 as of 10:01 a.m. in Tokyo before markets in Hong Kong and China opened. The Nikkei 225 advanced 1.2 percent to 10,044.95. The Nikkei has climbed 16 percent since Nov. 14 on speculation the Liberal Democratic Party, which returned to power in weekend elections, will press for more bond purchases by the BOJ.
“I think U.S. lawmakers will be able to avoid the worst- case scenario,” said Kazuyuki Terao, chief investment officer of Allianz Global Investors Japan Co., Ltd. Allianz Global Investors oversees about 250 billion euros ($331 billion) in assets globally. “Japan’s new leadership is showing its resolve that the government and the BOJ will join forces to beat deflation. The BOJ is under pressure to change, given its governor is to step down soon.”
Asia’s benchmark equities index has risen 13 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.6 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Nikkei 225 Climbs Above 10,000 for First Time Since April (Bloomberg)
Japanese stocks rose, pushing the Nikkei 225 Stock Average (NKY) above 10,000 for the first time since April, amid optimism the Bank of Japan will expand stimulus tomorrow at the close of a two-day policy meeting.
Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, jumped 6.3 percent amid bets for more monetary easing. Toyota Motor Corp. gained 2.3 percent after the Nikkei newspaper reported the carmaker plans to raise its output to 9.9 million vehicles next year. Canon Inc., the world’s top camera maker, led exporters higher as the yen traded near a 20-month low against the dollar.
The Nikkei 225 gained 1.3 percent to 10,055.45 as of 9:54 a.m. in Tokyo, heading for the first close above 10,000 since April 3. The broader Topix Index climbed 1.8 percent to 831.02, with all but one of its 33 industry groups advancing.
“The Bank of Japan is likely to expand the asset- purchasing program to stimulate and sustain growth momentum,” Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the central bank, said in a Bloomberg Television interview. “We expect around 10 trillion yen, mainly by JGB purchasing. This kind of policy will encourage yen selling and support overseas investments into Japanese corporates.”
S&P 500 Advances to 2-Month High Amid Optimism on Budget (Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level in two months, amid signs of progress in efforts by President Barack Obama and Republicans to reach agreement on a new budget in Washington.
An index of homebuilders gained 2.3 percent as confidence among U.S. homebuilders climbed in December to the highest in more than six years. Bank of America Corp. (BAC) and Morgan Stanley rose more than 3.1 percent to pace gains in financial shares. Apple Inc. (AAPL), the most valuable company, added 2.9 percent.
The S&P 500 rose 1.2 percent to 1,446.79 at 4 p.m. in New York. It has gained 15 percent so far in 2012. The Dow Jones Industrial Average added 115.57 points, or 0.9 percent, to 13,350.96 today. About 7.4 billion shares changed hands on U.S. exchanges, 20 percent above the three-month average.
“There is certain optimism that it could potentially be done before the end of the year and that would be a very positive sign to the market,” Philip Tasho, chief investment officer at Alexandria, Virginia-based Tamro Capital Partners LLC, which manages about $1.8 billion, said in a phone interview. “Once the solutions are in the rear view mirror in terms of fiscal policy, we will simply look forward. It’s a blip in the long-term trend.”
The S&P 500 sank as much as 7.7 percent from its 2012 high in September as Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives. The benchmark gauge has climbed 6.9 percent since its November low amid optimism a compromise will be reached to avoid more than $600 billion in automatic tax increases and spending cuts.
European Stocks Rise Amid U.S. Budget Optimism (Bloomberg)
European stocks rose for the first time in four days as U.S. President Barack Obama changed his position on tax increases, leading to optimism that Democrats and Republicans will agree on a compromise budget.
BHP Billiton Ltd. (BHP) climbed 1.2 percent as mining companies gained after China’s policy makers set their economic-growth target at 7.5 percent for next year. Banco Santander SA (SAN) and UBS AG (UBSN) gained 2.2 percent and 1.9 percent, respectively, as the shares of lenders rose. Ratos AB (RATOA) tumbled 5.1 percent after saying it will pay a smaller dividend this year.
The Stoxx Europe 600 Index added 0.5 percent to 280.46 at the close of trading. The equity benchmark has rallied 15 percent this year, its first annual gain since 2010, as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“It looks like the U.S. budget talks are getting better and better,” said Pierre Mouton, who helps oversee $6 billion as portfolio manager at Notz Stucki & Cie. in Geneva. “We’re not quite there yet, but both camps seem to be trying to get to an agreement. It’s quite positive and the market’s reaction is linked to that.”
The volume of shares changing hands on the Stoxx 600 companies was 37 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. On Spain’s IBEX 35 Index, the volume was more than double the average.
Emerging-market stocks advanced, pushing the benchmark index to an eight-month high, as prospects of a recovery in China and a resolution to the U.S. budget impasse bolstered raw materials companies. (Bloomberg)
Gold producer Zhaojin Mining Industry Co. (1818) rallied the most in six weeks in Hong Kong, while Industrias CH SAB (ICHB), Mexico’s largest steelmaker, helped lead a gauge of emerging-market materials stocks to the highest level since May. OAO Rostelecom’s preferred shares rallied to a six-week high on a report the Russian phone operator may need to buy stock to maintain state control. Usinas Siderurgicas de Minas Gerais SA led the Bovespa Index’s advance to the highest in 12 weeks.
The MSCI Emerging Markets Index (MXEF) climbed 0.6 percent to 1,046.24 in New York, the highest close since April 3. Goldman Sachs Group Inc. raised its quarterly growth forecast for China, where the economy has slowed over the past seven quarters. U.S. President Barack Obama and House Speaker John Boehner moved closer to a budget deal as Obama lowered his tax revenue demand by $200 billion and offered to start tax rate increases at incomes of $400,000, not $250,000.
“China’s coming back, and that means better times not only for China but throughout the region,” Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, where he oversees more than $20 billion, said by phone. “In the short run, everyone is waiting to see what the fiscal cliff resolution is.”
The 21 countries in the emerging-markets index send about 17 percent of their exports to the U.S., according to data compiled by the World Trade Organization. China is the world’s largest exporter and counts the U.S. and Europe as its biggest trading partners.
Yen Falls to August 2011 Low Versus Euro on Stimulus Bets (Bloomberg)
The yen fell to its lowest level since August last year against the euro on prospects that the Bank of Japan (8301) will expand stimulus at the meeting that starts today, its first after the nation’s general election.
Japan’s currency traded near the weakest level since April 2011 versus its U.S. counterpart after data today showed the country’s trade deficit widened in November. The 17-nation euro maintained seven days of gains against the dollar that pushed it to a seven-month high yesterday amid optimism U.S. lawmakers will reach a budget pact, reducing demand for the greenback as a haven.
“Yen-selling is likely to remain intact,” said Koji Iwata, vice president of foreign-exchange trading in New York at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “The BOJ will probably disappoint the market if it doesn’t boost asset purchases.”
The yen touched 111.63 per euro, the weakest since Aug. 30, 2011, before trading at 111.57 as of 9:01 a.m. in Tokyo, 0.2 percent below the close yesterday. Japan’s currency lost 0.2 percent to 84.35 per dollar, after falling to 84.48 on Dec. 17, the lowest since April 12 last year. The euro was little changed at $1.3230 after it reached $1.3238 yesterday, the most since May 2.
Seventeen of 21 analysts surveyed by Bloomberg expect the BOJ to ease monetary policy at the end of the two-day meeting. Incoming Prime Minister Shinzo Abe, whose Liberal Democratic Party swept to victory in elections for the lower house of Japan’s Parliament on Dec. 16, said yesterday that he requested BOJ Governor Masaaki Shirakawa agree to an accord containing a 2 percent inflation target.
Japan’s exports fell 4.1 percent last month from a year earlier, leaving a trade deficit of 953.4 billion yen ($11.3 billion), the Finance Ministry said today in Tokyo.
The yen has lost 13 percent this year, the worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar weakened 3.3 percent and the euro has dropped 1.1 percent.
Australian Dollar Holds Gains Against Yen Before BOJ (Bloomberg)
Australia’s dollar maintained a six- day advance against the yen before a Bank of Japan (8301) decision tomorrow amid speculation the central bank will add monetary stimulus and weaken the Asian nation’s currency.
Gains in the so-called Aussie were limited after the Australian Financial Review reported Reserve Bank of Australia Governor Glenn Stevens said there may not be a seamless “handover” from mining to other drivers of economic growth. New Zealand’s dollar remained lower versus its U.S. peer after a two-day decline even after the nation’s annual current-account deficit narrowed.
“There’s no doubt the events of the past week and the expectations of the new government will weaken the yen,” said Hans Kunnen, economist at St. George Bank Ltd. in Sydney, referring to the victory by Shinzo Abe’s Liberal Democratic Party in Japan’s parliamentary elections. “A fair bit of Bank of Japan easing has been built in the Aussie-yen, so now we have to see the actual action.”
The Australian dollar bought 88.64 yen as of 11:13 a.m. in Sydney from 88.71 yesterday, having climbed 2.7 percent over the previous six days. It touched 89.13 on Dec. 17, the highest since May 2011. The Aussie slid 0.2 percent to $1.0512.
New Zealand’s dollar, known as the kiwi, fetched 70.81 yen from 70.86 yesterday. It reached 71.51 yen on Dec. 17, the strongest since October 2008. The currency bought 83.98 U.S. cents from 84.14 yesterday, when it declined 0.4 percent.
The yield on Australia’s 10-year government debt was 3.39 percent from 3.38 percent yesterday.
Yields on Treasury seven-year notes were near a two-month high before a $29 billion sale today amid speculation U.S. leaders will avert the so-called fiscal cliff that could push the economy into recession. (Bloomberg)
An auction of five-year notes yesterday, part of sales worth $113 billion this week, drew the least demand in five months. President Barack Obama and House Speaker John Boehner are negotiating to end a budget stalemate as spending cuts and tax increases totaling more than $600 billion are set to start in January.
“There are more signs that we’ll avoid a complete drop off the fiscal cliff, which are driving bond yields higher,” said Makoto Suzuki, a senior bond strategist in Tokyo at Okasan Securities Co.
The seven-year yield was little changed at 1.23 percent as of 9:24 a.m. in Tokyo after touching 1.25 percent yesterday, the highest since Oct. 26. The 1 percent security due in November 2019 traded at 98 1/2, according to Bloomberg Bond Trader Prices. The benchmark 10-year rate was at 1.81 percent from 1.82 percent yesterday.
Japan’s 10-year government bond yield added as much as two basis points to 0.775 percent, the most since Nov. 2.
Boehner Seeks to Sell Tax Boost to Anti-Tax Republicans (Bloomberg)
House Speaker John Boehner is trying to sell a tax increase for top earners to fellow Republicans whose opposition to tax increases for anyone is a central part of their identity and pitch to voters.
The speaker said the House will vote this week on a budget “plan B” that would raise tax rates on income of more than $1 million a year. President Barack Obama’s administration and other Democrats immediately rejected the proposal as inadequate.
“It’s important that we protect as many American taxpayers as we can,” Boehner told reporters in Washington today. House Republicans met privately late today to hear details.
Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January. Boehner’s decision to set up a second legislative track complicates the situation, which had been focused on the intensifying talks between the speaker and the president.
After the meeting, Minnesota Republican John Kline declined to predict how much support Boehner would get for his plan because that’s “hard to quantify.”
Still, the discussion showed “there is an understanding” that “absent action we are going to be faced with a huge, huge tax hike,” Kline said.
Current-Account Deficit in U.S. Narrowed 9% in Third Quarter (Bloomberg)
The current-account deficit in the U.S. narrowed in the third quarter, helped by slowing imports.
The gap, the broadest measure of international trade because it includes income payments and government transfers, shrank 9 percent to $107.5 billion, the smallest in almost two years, from a $118.1 billion shortfall in the prior quarter, a Commerce Department report showed today in Washington. The median forecast of economists in a Bloomberg survey called for the deficit to narrow to $103 billion.
Cooling demand in the world’s largest economy is limiting imports at the same time that a slowdown in growth from Europe to China reduces overseas sales, a sign it’ll get harder to keep shrinking the trade deficit. The balance of payments gap also is a reminder the U.S. remains dependent on foreign investors for funding.
“We could have the current account balance remaining broadly where it is,” Jeremy Lawson, senior U.S. economist at BNP Paribas in New York, said before the report. “If growth in emerging markets picks up next year, that would boost export performance. Similarly, faster growth in the U.S. would increase imports. It’s hard to say how much of an improvement we could see.”
Estimates in the Bloomberg survey ranged from deficits of $98.5 billion to $116.1 billion. The second-quarter shortfall was revised to $118.1 billion from a previously reported $117.4 billion.
Bank Deposits Surge $2 Trillion More Than Loans: Credit Markets (Bloomberg)
Deposits at U.S. banks exceed loans by an unprecedented $2 trillion as the threat of a slowing economy tempers borrower demand and lenders preserve tightened standards.
Cash deposited at firms from JPMorgan Chase & Co. to Bank of America Corp. expanded 8.7 percent this year to a record $9.17 trillion through Dec. 5, Federal Reserve data show. That outpaced a 3.7 percent gain in loan assets to $7.17 trillion. The gap between what banks take in and lend out has surged since October 2008, the month after Lehman Brothers Holdings Inc. collapsed, when loans exceeded deposits by $205 billion.
U.S. consumers paring debt loads and banks tightening lending practices that fueled the credit bubble in 2007 are limiting the reach of the Fed, which has sought to spur spending by holding its benchmark interest-rate at almost zero for four years. The low rates are limiting investment options, making savers content to hold their cash at lenders, according to Royal Bank of Canada’s Gerard Cassidy.
“Borrowers are still de-leveraging, so the demand is not at the level it would be in this part of the recovery,” Cassidy said in a telephone interview. “That combined with the low-r
Builders Hanging Help-Wanted Signs as Industry Rebounds (Bloomberg)
Construction employment in the U.S. is poised to rebound as a swelling pipeline of projects prompts companies to expand.
Builders in October had the most job openings and broke ground on more homes than at any time in four years, government data show. Billing by architecture firms, which typically leads construction by at least nine months, is climbing at the fastest pace since December 2010.
“You have a lot of projects right now in design and development, and as soon as the financing hits and the approvals are out, then the shovels go in the ground,” said Suzanne Breistol, co-owner of ConstructionConnection.com, a Marble Falls, Texas-based employment consulting service.
While construction payrolls accounted for 4.1 percent of all U.S. employment in November, a six-decade low, industry hiring will ripple through the world’s largest economy, prompting manufacturers, retailers, landscapers, real-estate brokers and transportation companies to also take on staff, according to economist Mark Zandi. About 250,000 construction and related jobs will be created in 2013, 13 percent of the 1.93 million Zandi projects the U.S. will add.
“Construction is a small share of the job market, but it can be a very large share of job growth, particularly when the construction industry is in an upswing,” said Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “A big share of the improvement in jobs growth that I anticipate will come from construction and anything related.”
Homebuilder Confidence Rises to Highest Level Since 2006 (Bloomberg)
Confidence among U.S. homebuilders climbed in December for the eighth straight month, reaching its highest level in more than six years and adding to signs the real-estate market is aiding the economic expansion.
The National Association of Home Builders/Wells Fargo index of builder confidence increased to 47, the highest since April 2006, from a revised 45, the Washington-based group reported today. The December figure matched the median forecast in a Bloomberg survey of 49 economists.
Low interest rates and rising prices are bringing more buyers into the market at the same time a growing number of households boosts demand. That’s injected optimism at Toll Brothers Inc. (TOL) and Hovnanian Enterprises Inc., which are rebounding from the 2008 financial crisis that flooded the market with foreclosures and brought building to a near halt. Hovnanian is among companies that are raising prices.
“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Florida. “One thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”
China Company Profits to Grow 10% Next Year, Russell Says (Bloomberg)
Chinese corporate earnings are set to climb as much as 10 percent next year as the world’s second- biggest economy emerges from its slowdown and more people move to cities, Russell Investments says.
Companies that can benefit from an increase in domestic consumption may post even greater growth, Gustavo Galindo, who helps manage $8 billion of emerging-market equities for Russell in New York, said in a phone interview yesterday.
“What you have is more and more people joining into the middle class and that trend is very likely to continue,” Galindo said. “When the economy improves, they have to buy more goods and services and they are the ones that will be pushing consumer companies to better profits.”
Goldman Sachs Group Inc. raised its fourth-quarter and 2013 economic growth forecasts for China yesterday to account for gains in production, after data last week showed industrial output climbing the most in eight months in November. Retail sales last month also rose at the fastest pace since March, adding to signs the economy is emerging from a slowdown that started in the first quarter of 2011.
The Russell Emerging Markets Fund that Galindo oversees has returned 16 percent this year, beating 43 percent of its peers. The MSCI Emerging Markets Index has returned 18 percent, while the Shanghai Composite Index of domestic Chinese shares posted a return of 0.9 percent, data compiled by Bloomberg show.
Japan Exports Slide Even as Yen Decline Improves ’13 Outlook (Bloomberg)
Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth.
Shipments slid 4.1 percent from a year earlier, the Finance Ministry said in Tokyo today. The median forecast of 23 economists was for a 5.5 percent decline. Imports rose 0.8 percent leaving a deficit of 953.4 billion yen ($11.3 billion), the third-largest on record.
The Nikkei 225 Stock Average (NKY) rose above 10,000 for the first time since April on speculation that the Bank of Japan (8301) will expand monetary stimulus, a move that could aid exports by fueling more declines in the yen. JPMorgan Chase & Co. and Bank of America Merrill Lynch forecast that that the central bank will add 10 trillion yen to an asset-purchase fund at a policy meeting that ends tomorrow.
“The improvement of overseas economies will cause a pickup in exports in the second half of 2013,” Junko Nishioka, chief economist at RBS Securities Japan Ltd., said before the report. At the same time, “the trade deficit will probably not shrink much, as the weaker yen will raise the cost of energy imports.”
Exports to China fell 14.5 percent from the previous year as car shipments to the country tumbled 64 percent. Exports to the European Union dropped 19.9 percent, while those to the U.S. rose 5.3 percent.
Greeks Can’t Find Euros to Buy Heating Oil With Winter Economy (Bloomberg)
In the Greek mountain town of Kastoria, less than an hour from the Albanian border, Kostas Tsitskos, 88, can’t afford fuel to heat his home against the winter’s cold. So he and his son live in a single bedroom, warmed by a small electric heater.
“One room is enough,” said Tsitskos, who lives on a 734 euro-a-month ($971) pension and doesn’t have the 1,000 euros a month he needs to buy heating oil.
Greece is facing a heating-oil crisis. With an economy that has contracted for five years and an unemployment rate at a record 25 percent, residents in northern Greece can’t heat their homes. Kastoria hasn’t received funds from the central government to warm schools and the mayor said he will close all 53 of them rather than let children freeze, a step already taken in a nearby town. Truckloads of wood are arriving from Bulgaria as families search for alternative fuels.
“This is the coldest place in Greece,” said Emmanouil Hatzisimeonidis, Kastoria’s mayor, in an interview in his office. “It’s winter from October to April. This year we are very lucky. Last year, it was snowing for four months.”
When temperatures fall below freezing, Tsitskos spends most of his time in his bedroom and rarely leaves the house, he said. For meals, he and his son move the electrical heater to the kitchen. Other older residents in the town spend their days at a senior center and cafes to save on heating costs, returning home only to sleep, he said.
U.K. Inflation Remains at 2.7% on Cost of Food, Utility: Economy (Bloomberg)
U.K. inflation held at the highest rate since May last month as higher electricity and gas costs kept consumer-price growth above the Bank of England’s target.
Consumer prices rose 2.7 percent from a year earlier, unchanged from October, the Office for National Statistics said in London today. That matched the median forecast of 34 economists in a Bloomberg News survey. Upward pressure on inflation came mostly from food and utilities.
“Consumers’ spending power is being tightly squeezed in the run-up to Christmas,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. “Looking ahead, inflation looks set to hover between 2.5 and 3 percent for the best part of the next year as further increases in utility and food prices kick in.”
Bank of England Chief Economist Spencer Dale raised concerns last week that inflation may show “stickiness,” complicating the task of policy makers seeking to stimulate the economy with price growth above their 2 percent goal. The central bank raised its near-term inflation forecast last month and today’s data may fuel debate on whether the central bank’s mandate should be changed.
The pound remained higher against the dollar after the data were published. It traded at $1.6215 as of 11:17 a.m. in London, up almost 0.1 percent on the day.
Moody’s Seeks Feedback on Changes to Its Sovereign Rating Method (Bloomberg)
Moody’s Investors Service is seeking feedback on changes to the way it rates governments to boost transparency after being criticized for its methodology.
The proposed changes will place more importance on economic growth and event risk of countries among its metrics, the world’s second-largest credit-rating company said in a statement today. The system will continue to focus on a nation’s institutional and fiscal strength, it said.
In the past year, ratings companies have been criticized for issuing sovereign-debt downgrades that countries including Portugal, Greece and Ireland say triggered their need for bailouts from the European Union and the International Monetary Fund. Investors ignored 56 percent of Moody’s rating and outlook changes this year, data compiled by Bloomberg showed.
The proposed amendments “are aimed at further increasing the transparency and forward-looking nature of Moody’s current approach,” it said today. Feedback will be received until Feb. 1, 2013, it said, adding that it does not expect any revisions of current ratings when the changes are implemented.
Yields on sovereign securities moved in the opposite direction from what ratings by Moody’s and Standard and Poor’s suggested in 53 percent of the 32 upgrades, downgrades and changes in credit outlook this year, according to data compiled by Bloomberg.
While Moody’s and S&P face legal proceedings and increased regulation after contributing to the worst financial calamity since the Great Depression, politicians cite the grades as one reason for austerity.
Moody’s has downgraded 6.4 government ratings for every upgrade this year in the U.S. and Europe, the highest ratio since at least 2002, Bloomberg data show. S&P, Moody’s and Fitch Ratings, a unit of Paris-based Fimalac SA, provided more than 99 percent of rankings of government, municipal, and sovereign debt and 96 percent of all outstanding grades last year, according to a Nov. 15 U.S. Securities and Exchange Commission report.
20121219 1001 Global Commodities Related News.
Goldman Bullish With Hedge Funds Amid Citi Warning: Commodities (Bloomberg)
Investors almost doubled purchases of commodities this year, at a time when Goldman Sachs Group Inc. and Morgan Stanley are forecasting higher prices and Citigroup Inc. (C) says the best returns are over.
Money invested in commodity funds increased by $21.6 billion this year, up 92 percent from the gain in 2011, according to Cambridge, Massachusetts-based EPFR Global, which tracks the flows. Hedge funds’ bets on a rally are 51 percent bigger than a year ago, U.S. government data show. Precious metals will lead returns in 2013, rising as much as 25 percent, as grains advance 18 percent and industrial metals 16 percent, according to a Bloomberg survey of 131 traders, investors and analysts across 15 raw materials.
While commodities are headed for their first annual retreat since 2008, growth in emerging markets will boost demand and tighten supply, Goldman Sachs’ analysts said in a report Dec. 5. The Standard & Poor’s GSCI gauge of 24 raw materials almost tripled in the past decade as producers failed to keep up with consumption. That “super cycle” of returns has now ended because China is growing more slowly and supply has caught up, Citigroup’s analysts said in a report last month.
“It comes back to the uncertainty about the economy, and the government policies that are going to be enacted or potentially changing over the next year,” said Peter Jankovskis, who helps oversee about $3 billion of assets as co- chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. “That’s why you’re seeing that disparity in the outlooks of many of these forecasting firms.”
Wheat Market Recap Report (CME)
March Wheat finished up 3 1/4 at 811 1/4, 3 off the high and 9 3/4 up from the low. May Wheat closed up 2 3/4 at 823. This was 9 3/4 up from the low and 3 off the high.
March Chicago and KC wheat traded higher on the day with most of the action linked to inter-commodity spread trading. Traders noted significant strength in the March Chicago wheat vs. March corn spread and Kansas City wheat lost some ground to Chicago on a better weather forecast for the westerns plains this week. A sharp decline in the soybean market offered resistance to price gains midday. Additional support in the wheat market stemmed from ideas that Chicago wheat was now competitive to Egypt, Brazil and possibly Europe following the recent decline in prices. Egypt released a tender for Feb 11-20 shipment near the closing bell which added a positive tilt to prices near the end of the day. UK wheat exports fell sharply in October to 90,355 tonnes while imports were pegged at 220,874 tonnes, down from 224,023 last month. Weather maps show a better chance for rainfall and snow for portions of eastern Colorado, western Kansas, and Nebraska this week which kept new crop wheat contracts on the defensive.
March Oats closed down 8 3/4 at 380 1/2. This was 1 up from the low and 12 3/4 off the high.
Corn Market Recap for 12/18/2012 (CME)
March Corn finished down 4 at 720, 5 3/4 off the high and 4 3/4 up from the low. May Corn closed down 3 3/4 at 723 3/4. This was 4 3/4 up from the low and 5 1/4 off the high.
March corn finished slightly lower on the day amid a weaker trade in calendar spreads and a steady basis in the Gulf of Mexico. The slow export demand for US corn continues to be a drag on prices in the short term but a slightly wetter forecast for Argentina triggered some buying support near the key technical levels this morning. The corn market also saw selling resistance from a sharply lower soybean market. Traders noted midday that support was seen in the long Chicago wheat vs. short corn spreads as feeders might be taking on feed wheat coverage in the east for 2013. Interior cash markets were firm as farmer selling has shut off due to the recent decline in prices. A more favorable outlook for precipitation for the US Corn Belt in the 8-14 day weather map favored the bear camp midday but the western plains remains extremely dry.
January Rice finished down 0.05 at 15.155, 0.055 off the high and equal to the low.
Wheat Heads to 5-Month Low on Moving Average: Technical Analysis (Bloomberg)
Wheat futures, already heading for their biggest monthly decline in more than a year, may extend decline to a five-month low, according to technical analysis by Dan Hofstad, a risk management consultant at INTL FCStone.
The contract for March delivery on the Chicago Board of Trade slipped below its 200-day moving average for four straight sessions to close yesterday at $8.1125 a bushel. A drop below $8 will send prices slumping over two or three days to $7.65 a bushel, the lowest since July 2, as hedge funds and other large speculators liquidate bullish bets that already are the lowest since June, Hofstad said in an e-mail from London.
Prices that reached a four-year high in July, during a U.S. drought, have tumbled 6.1 percent this month, heading for the biggest drop since September 2011. The U.S. Department of Agriculture said Dec. 11 that world stockpiles as of May 31 will total 176.95 million metric tons, more than the 173.61 million forecast in a Bloomberg survey.
“Wheat broke the 200-day moving average, which was major support, now the only support below us is $8, which is a psychological level,” Hofstad said. “Improving crop and weather for winter wheat in Ukraine and Russia, and weaker cash markets in the U.S.” have led to the lower prices, he said.
Wheat futures still are up 24 percent this year, the most of 24 commodities tracked by the Standard & Poor’s GSCI Spot Index, after drought curbed production in Russia, Ukraine, Australia and the U.S., the world’s largest exporter.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
Wheat Advances as U.S. Budget Progress Spurs Commodity Optimism (Bloomberg)
Wheat rose for the second time in three sessions on signs of progress in resolving a U.S. budget dispute that threatened to slow the economy and erode demand for commodities.
House Speaker John Boehner said today that he will push a budget “plan B” measure that will include tax increases for those making more than $1 million a year and that he hopes to reach a broader deal with President Barack Obama. A solution will prevent $600 billion in automatic spending cuts and tax increases and reduce concern that demand for raw materials will decline. The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed for the second time in three sessions.
“There’s more optimism than I’ve seen in a month as far as a deal getting done,” Mike Zuzolo, the president at Global Commodity Analytics in Lafayette, Indiana, said by telephone. “The funds had done a good job liquidating so the short traders are buying back.”
Wheat futures for March delivery advanced 0.4 percent to settle at $8.1125 a bushel at 2 p.m. on the Chicago Board of Trade. The price has risen 24 percent this year.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
Recap Energy Market Report (CME)
February crude oil prices grinded higher during the US trading hours, and registered a new eight day high in the process. Early support for the crude oil market came from optimism flowing out of Japan and China, as well as signs of compromise by US lawmakers in reaching a solution to avert the fiscal cliff. Risk-appetites benefited and the US dollar sold off to a fresh two month low, and that lent added support to the crude oil market. Expectations for this week's EIA crude stocks report are for a draw in the range of 1.25 million barrels last week.
Oil Trades Near Two-Week High as U.S. Crude Stockpiles Decline (Bloomberg)
Oil traded near the highest level in two weeks in New York after an industry report showed stockpiles fell the most in more than three months in the U.S., the world’s biggest crude consumer.
West Texas Intermediate futures were little changed after advancing a third day yesterday. U.S. crude supplies declined 4.1 million barrels in the seven days to Dec. 14, the most since the week ended Aug. 31, data from the American Petroleum Institute showed. An Energy Department report today is forecast to show inventories shrank by 1.75 million barrels, according to a Bloomberg News survey. Oil has gained this week amid speculation lawmakers will agree a deal on the U.S. budget.
Crude for January delivery, which expires today, was up 4 cents at $87.97 a barrel in electronic trading on the New York Mercantile Exchange at 11:16 a.m. Sydney time. The more-actively traded February future rose 2 cents to $88.42. Front-month prices advanced 73 cents to $87.93 yesterday, the highest close since Dec. 4., and are down 11 percent this year.
Brent for February settlement climbed $1.20 to $108.84 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month European benchmark contract closed at premium of $20.44 to the corresponding WTI contract.
More than $600 billion in automatic spending cuts and tax increases are set to start in the U.S. in January unless a deal to avert the measures is reached. House Speaker John Boehner said yesterday he will push a budget “plan B” measure that would include tax increases for people on incomes of more than $1 million, while continuing to negotiate with President Barack Obama.
Silver Market Recap Report (CME)
The silver market fell sharply today in sync with gold and the grain markets. Surprisingly sharply higher equities, weaker Treasuries and hope for a fiscal deal were basically discounted by the silver trade. Some players fear that a poor deal might be similar to going over the fiscal cliff, while others think that discouraging Chinese growth targeting is mostly responsible for the washout today in silver and other physical commodity markets. It probably goes without saying that silver suffered at least some technically related selling in the hard range down action today.
Gold Market Recap Report (CME)
While other markets saw the potential to avoid falling off the fiscal cliff, gold didn't seem to take that approach today. In fact, sharp gains in equities, sharp declines in US Treasuries and a slide in the Dollar would seem to have suggested that some type of deal was in the works. However, gold and grains were under what appeared to be a deflationary selling wave that might have been indirectly the result of rather disappointing economic growth targeting from China. Some suggest that slower official growth targeting in China signaled a desire to knock inflation down even further, before any fresh Chinese stimulus was applied and that was probably seen as a negative by a portion of the bear camp. With a series of technical chart violations in February gold, it is also possible that some of the selling in gold today was knock on or stop loss type selling.
20121219 1001 Soy Oil & Palm Oil Related News.
SGS CPO export down 3.3% to 734,571 tonnes for the period of 1~15 Dec 2012.
Soybean Futures Tumble as Exports Canceled; Corn Declines (Bloomberg)
Soybean futures tumbled the most in five weeks after China, the world’s largest consumer, canceled purchases from the U.S. Corn also declined.
Exporters said 420,000 metric tons of soybeans registered for delivery before Sept. 1 were canceled, including 300,000 tons to China, the U.S. Department of Agriculture reported today in a statement. The U.S. was the world’s largest grower and shipper last year.
“The Chinese cancellations are driving people out of the market and raising fears of a slowdown in U.S. exports,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Soybean futures for March delivery slid 1.9 percent to close at $14.605 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest drop since Nov. 12. Yesterday, the price touched $15.0125, the highest since Nov. 8. Still, the most- active futures have gained 21 percent this year after a drought in the U.S. reduced output and prompted concern that global supplies will fall short of growing demand from China.
Prices also slipped on signs that wet weather will aid crops in South America. As much as 3 inches (7.6 centimeters) of rain will improve soil moisture for plant growth in Paraguay and most of Brazil during the next two weeks, while delaying planting in Argentina, the Commodity Weather Group LLC said in a report.
Corn futures for March delivery declined 0.6 percent to $7.20 a bushel in Chicago. The price has gained 11 percent in 2012 after drought cut U.S. production to a six-year low. The grain reached a record $8.49 on Aug. 10.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
Soybean Complex Market Recap (CME)
January Soybeans finished down 30 1/4 at 1466, 35 3/4 off the high and 3 1/2 up from the low. March Soybeans closed down 27 3/4 at 1460 1/2. This was 3 1/2 up from the low and 33 1/4 off the high.
January Soymeal closed down 10.5 at 444.9. This was 1.4 up from the low and 12.5 off the high.
January Soybean Oil finished down 0.62 at 49.17, 0.9 off the high and 0.07 up from the low.
January soybeans traded sharply lower on the day after the USDA reported that China canceled 300,000 tonnes of US soybeans for 2012/13 and an unknown destination canceled 120,000 tonnes of US soybeans. At the same time, the USDA than reported that US exporters sold 110,000 tonnes of soybeans to an unknown destination for the same marketing year as the cancelations. The sale of soybeans offered very little support as the market found greater importance in the cancelations. Favorable weather conditions for Brazil continue add a negative bias towards price direction long term but an uptick in rainfall for Argentina over the next couple of weeks is raising concerns that additional planting delays may be seen. Most traders feel that any major disruptions to soybean planting or harvest in South America could be a positive for prices in 2013.
EDIBLE OIL: Malaysian palm oil futures edged lower in rangebound trading hurt by a slowdown in exports at a time when inventory levels remain at record highs. (Reuters)
VEGOILS-Palm dips in rangebound trade, weak exports hurt
Tue Dec 18, 2012 5:21am EST
* Prices may recover to 2,750 ringgit in 2013 -analysts
* Palm oil may retrace to 2,285 ringgit -technicals
* Malaysia sets Jan crude palm export tax at zero pct
(Updates prices)
By Chew Yee Kiat
SINGAPORE, Dec 18 (Reuters) - Malaysian palm oil futures
edged lower in rangebound trading on Tuesday, hurt by a slowdown
in exports at a time when inventory levels remain at record
highs.
Cargo surveyors reported a slight drop in Malaysian palm oil
exports for Dec. 1-15 from a month ago, leaving traders to hope
for slowing production to bring down stock levels that hit 2.56
million tonnes in November.
Palm oil futures have shed more than a quarter of their
value since the start of the year, set for their biggest annual
drop since 2008, although analysts say prices should recover in
2013 as stocks begin to ease.
"For next year, we see a rebound in crude palm oil prices
back to 2,750 ringgit per tonne from the current weak position,
with signs only expected to start kicking in when inventories
are back to optimal levels," Malaysia's Public Investment Bank
said in a research note.
"Although production levels are back to normal, demand from
the major consuming countries remains uncertain due to the
slowdown in economic activity and tightening measures on imports
of vegetable oils."
China, the world's second largest edible oil buyer, will
impose stricter quality measures on edible oil imports from Jan.
1 onwards.
The benchmark March contract on the Bursa Malaysia
Derivatives Exchange dropped 0.4 percent to close at 2,341
ringgit ($766) per tonne. Prices traded in a tight range between
2,332 and 2,355 ringgit.
Total traded volumes stood at 30,911 lots of 25 tonnes each,
higher than the usual 25,000 lots.
Technical analysis showed palm oil faces resistance at 2,381
ringgit per tonne, and may revisit 2,285 ringgit, a high touched
on Dec. 14, said Reuters market analyst Wang Tao.
Traders are hoping for Malaysia's crude palm oil export tax,
set at zero percent for January, to spur shipments of the grade
and bring down record stocks.
In a bullish sign for palm oil, Brent crude rose above $108
a barrel on Tuesday as the outlook for demand improved on signs
of progress in U.S. talks to resolve a budget crisis that
threatens to dip the world's top oil consumer into recession
again.
In other vegetable oil markets, U.S. soyoil for January
delivery was almost flat in late Asian trade. The most
active May 2013 soybean oil contract on the Dalian
Commodity Exchange edged up 0.1 percent.
India Bought 24,000 tonnes of RBD palmolein (The Star)
NEW DELHI: India's MMTC Ltd has bought 24,000 tonnes of RBD palmolein at US$809 per tonne, trade sources said on Tuesday, lower than the last known price paid by the state-run trading company.
India, the world's top vegetable oil importer, buys mainly palm oils from Malaysia and Indonesia, and a small quantity of soyoil from Brazil and Argentina.
The price includes cost, insurance and freight.
The cargoes will be delivered on the east coast by Jan. 11. The quantities have been purchased on behalf of the government of the southern state of Andhra Pradesh for subsidised sale.
MMTC's tender, issued on Nov. 21, sought 36,000 tonnes of refined, bleached and deodorised (RBD) palmolein.
Earlier this month, MMTC bought 22,500 tonnes of RBD palmolein at $821 per tonne on behalf of the southern state government.
Meanwhile Malaysian palm oil futures edged lower in rangebound trading on Tuesday, hurt by a slowdown in exports at a time when inventory levels remain at record highs.
Cargo surveyors reported a slight drop in Malaysian palm oil exports for Dec. 1-15 from a month ago, leaving traders to hope for slowing production to bring down stock levels that hit 2.56 million tonnes in November.
Palm oil futures have shed more than a quarter of their value since the start of the year, set for their biggest annual drop since 2008, although analysts say prices should recover in 2013 as stocks begin to ease.
"For next year, we see a rebound in crude palm oil prices back to 2,750 ringgit per tonne from the current weak position, with signs only expected to start kicking in when inventories are back to optimal levels," Malaysia's Public Investment Bank said in a research note.
"Although production levels are back to normal, demand from the major consuming countries remains uncertain due to the slowdown in economic activity and tightening measures on imports of vegetable oils."
China, the world's second largest edible oil buyer, will impose stricter quality measures on edible oil imports from Jan. 1 onwards.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange dropped 0.4 percent to close at 2,341 ringgit ($766) per tonne. Prices traded in a tight range between 2,332 and 2,355 ringgit.
Total traded volumes stood at 30,911 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technical analysis showed palm oil faces resistance at 2,381 ringgit per tonne, and may revisit 2,285 ringgit, a high touched on Dec. 14, said Reuters market analyst Wang Tao.
Traders are hoping for Malaysia's crude palm oil export tax, set at zero percent for January, to spur shipments of the grade and bring down record stocks.
In a bullish sign for palm oil, Brent crude rose above $108 a barrel on Tuesday as the outlook for demand improved on signs of progress in U.S. talks to resolve a budget crisis that threatens to dip the world's top oil consumer into recession again.
In other vegetable oil markets, U.S. soyoil for January delivery was almost flat in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange edged up 0.1 percent. - Reuters
Monday, December 17, 2012
20121217 1803 FCPO EOD Daily Chart Study.
FCPO closed : 2354, changed : +8 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : rising higher, seller reducing position.
Support : 2350, 2300, 2270, 2250 level.
Resistance : 2400, 2450, 2490, 2520 level.
Comment :
FCPO closed recorded small gain with declined volume changed hand. Soy oil price currently trading firmer after last Friday closed 2% higher while crude oil price easing little lower.
FCPO price opened substantially higher after last Friday soy oil price surge but lower exports figure released by cargo surveyor pressure price to move downwards capping gain limited.
FCPO daily chart reading continue to suggesting a pullback correction downside biased market development with MACD having positive crossed up.
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.
20121217 1729 FKLI EOD Daily Chart Study.
FKLI closed : 1646.5 changed : -4.5 points, volume : lower.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : weaknening, buyer taking profit.
Support : 1645, 1640, 1635, 1627 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed recorded loss with quiet volume traded doing 2 points discount compare to cash market that closed little lower. Last Friday U.S markets closed recorded small loss and today Asia markets ended mixed while European markets currently trading lower.
Global market traded mixed on unsettle U.S. budget discussion and Japan opposition party won landslide victory on its election.
Daily chart reading continue to suggesting a pullback correction 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.
20121217 1603 Global Markets & Commodities Related News.
STOCKS: European stock index futures pointed to a higher open and Japan's Nikkei average climbed to an 8-1/2-month high after a landslide victory by Japan's Liberal Democratic Party sparked recovery hopes for the world's third biggest economy. U.S. stocks fell on Friday as another slide in Apple took a toll and investors unloaded some shares because of the uncertainty surrounding the "fiscal cliff" negotiations. (Reuters)
FOREX-Yen skids to 20-mth low vs dollar after Japan LDP victory
TOKYO/SYDNEY, Dec 17 (Reuters) - The yen slumped to its lowest in over a year-and-a-half against the U.S. dollar as part of a broad skid after Japan's conservative Liberal Democratic Party, which is committed to aggressive monetary easing, won a landslide victory.
"What remains to be seen is what policies will come next. There is no mistake that Abe had clearly spoken out for steps against deflation," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
Boehner opens door to tax hikes, shifts US fiscal cliff talks (Reuters)
The first real movement in the "fiscal cliff" talks began on Sunday, with Republican House Speaker John Boehner edging slightly closer to President Barack Obama's key demands as they try to avert the steep tax hikes and spending cuts set to take effect unless Congress intervenes by Dec. 31.
GRAINS: Chicago soybeans hit a six-week top, stretching their gains into a fourth straight session after data showed last month's U.S. soy crush was the most in almost three years, while talk of purchases by top consumer China also supported prices. Corn slid, having touched a one-week high earlier in the session, while wheat tracked lower. (Reuters)
Argentina soy crop seen at 53 mln tonnes-Rosario exchange (Reuters)
Argentina's 2012/13 soybean harvest is seen at 53 million tonnes while corn production should reach 24 million tonnes, the Rosario grains exchange said on Friday in its first output forecasts for these crops.
OIL: Brent crude held steady above $108 a barrel, drawing support from a brighter economic outlook for top energy consumer China, although investors remained skittish as U.S. talks to avert a year-end "fiscal cliff" dragged on. (Reuters)
BASE METAS: London copper was steady, consolidating from a five-week winning streak on signs of reviving growth momentum in top consumer China, while tentative progress on the U.S. "fiscal cliff" helped warm investor sentiment towards metals. (Reuters)
PRECIOUS METALS: Gold edged lower, extending losses to a third straight session, as slowing trade ahead of the year-end holidays responded little to the latest progress in the U.S. budget talks. (Reuters)
METALS-Copper edges up as China revival, US hopes support
SINGAPORE, Dec 17 (Reuters) - London copper edged up after a five-week winning streak, on signs of reviving growth in top consumer China and tentative progress in U.S. "fiscal cliff" talks that helped warm investor sentiment towards metals.
"There was some pretty good momentum over the weekend in the fiscal cliff negotiations. I don't think there are many people expecting the negotiations to blow up," said metals analyst Ivan Szpakowski at Credit Suisse in Singapore.
PRECIOUS-Gold edges down; extends losses to third day
SINGAPORE, Dec 17 (Reuters) - Gold edged lower extending losses to a third straight session, as trade slowed ahead of the year-end holidays and investors showed little response to the latest progress in U.S. budget talks.
"Participation is really low right now," said a Hong Kong-based trader. "It hasn't been a very exciting year for most people and I don't think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013."
Baltic Index down on weak capesize, panamax rates
Dec 14 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Friday as capesize and panamax rates continued their losing streak.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 1.88 percent to 784 points. The index has dropped about 16 percent this week.
FOREX-Yen skids to 20-mth low vs dollar after Japan LDP victory
TOKYO/SYDNEY, Dec 17 (Reuters) - The yen slumped to its lowest in over a year-and-a-half against the U.S. dollar as part of a broad skid after Japan's conservative Liberal Democratic Party, which is committed to aggressive monetary easing, won a landslide victory.
"What remains to be seen is what policies will come next. There is no mistake that Abe had clearly spoken out for steps against deflation," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
Boehner opens door to tax hikes, shifts US fiscal cliff talks (Reuters)
The first real movement in the "fiscal cliff" talks began on Sunday, with Republican House Speaker John Boehner edging slightly closer to President Barack Obama's key demands as they try to avert the steep tax hikes and spending cuts set to take effect unless Congress intervenes by Dec. 31.
GRAINS: Chicago soybeans hit a six-week top, stretching their gains into a fourth straight session after data showed last month's U.S. soy crush was the most in almost three years, while talk of purchases by top consumer China also supported prices. Corn slid, having touched a one-week high earlier in the session, while wheat tracked lower. (Reuters)
Argentina soy crop seen at 53 mln tonnes-Rosario exchange (Reuters)
Argentina's 2012/13 soybean harvest is seen at 53 million tonnes while corn production should reach 24 million tonnes, the Rosario grains exchange said on Friday in its first output forecasts for these crops.
OIL: Brent crude held steady above $108 a barrel, drawing support from a brighter economic outlook for top energy consumer China, although investors remained skittish as U.S. talks to avert a year-end "fiscal cliff" dragged on. (Reuters)
BASE METAS: London copper was steady, consolidating from a five-week winning streak on signs of reviving growth momentum in top consumer China, while tentative progress on the U.S. "fiscal cliff" helped warm investor sentiment towards metals. (Reuters)
PRECIOUS METALS: Gold edged lower, extending losses to a third straight session, as slowing trade ahead of the year-end holidays responded little to the latest progress in the U.S. budget talks. (Reuters)
METALS-Copper edges up as China revival, US hopes support
SINGAPORE, Dec 17 (Reuters) - London copper edged up after a five-week winning streak, on signs of reviving growth in top consumer China and tentative progress in U.S. "fiscal cliff" talks that helped warm investor sentiment towards metals.
"There was some pretty good momentum over the weekend in the fiscal cliff negotiations. I don't think there are many people expecting the negotiations to blow up," said metals analyst Ivan Szpakowski at Credit Suisse in Singapore.
PRECIOUS-Gold edges down; extends losses to third day
SINGAPORE, Dec 17 (Reuters) - Gold edged lower extending losses to a third straight session, as trade slowed ahead of the year-end holidays and investors showed little response to the latest progress in U.S. budget talks.
"Participation is really low right now," said a Hong Kong-based trader. "It hasn't been a very exciting year for most people and I don't think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013."
Baltic Index down on weak capesize, panamax rates
Dec 14 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Friday as capesize and panamax rates continued their losing streak.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 1.88 percent to 784 points. The index has dropped about 16 percent this week.
20121217 1702 Soy Oil & Palm Oil Related News.
Malaysia sets January crude palm oil export tax at zero percent 0#FCPO: - RTRS
17-Dec-2012 17:05
SINGAPORE, Dec 17 (Reuters) - Malaysia, the world's No.2 palm oil producer, will set its crude palm oil export tax for January at zero percent, a government circular showed on Monday.
The Southeast Asian country has calculated a reference price of 2,147.81 ringgit per tonne for crude palm oil for January, effectively setting the export duty for the grade at zero.
Malaysia announced in October that it will reduce export taxes for crude from 23 percent and it will set duties on a monthly basis to better reflect international prices, responding to rival Indonesia's own tax reforms.
TABLE-Malaysia's official crude palm oil export tax schedule 0#FCPO: - RTRS
17-Dec-2012 17:14
KUALA LUMPUR, Dec 17 (Reuters) - Following is the official crude palm oil export tax schedule for Malaysia, the world's No.2 producer of the edible oil, issued by the government on Monday:
CRUDE PALM OIL MARKET PRICE EXPORT DUTY
(FOB RM/TONNE) (in pct)
Less than 2,250 nil
2,250-2,400 4.5
2,401-2,550 5.0
2,551-2,700 5.5
2,701-2,850 6.0
2,851-3,000 6.5
3,001-3,150 7.0
3,151-3,300 7.5
3,301-,3450 8.0
More than 3,450 8.5
Malaysia says imposes zero export duty for crude palm oil for Jan 2013. (Reuters)
Malaysia says sets reference price for crude palm oil gfor Jan 2013 at RM2,147 per tonne.(Reuters)
VEGOILS-Palm gains on soybean oil, but exports cap gains BOZ2 DBYF3 FCPOc3 - RTRS
17-Dec-2012 14:04
Palm edges up on Dalian, Chicago soybean oil Malaysia Dec 1-15 palm oil exports down 6.4 pct -ITS Traders looking out for Malaysia's new crude palm oil tax for Jan
(Updates prices, adds detail)
By Chew Yee Kiat
SINGAPORE, Dec 17 (Reuters) - Malaysian palm oil futures inched up on Monday, riding on rival soybean oil's gains after U.S. soy crushing data sent soybeans to a six-week peak.
Chicago soybeans hit their highest since Nov. 8 after data from the National Oilseed Processors Association showed U.S. soybean processors crushed the most soybeans in almost three years and on higher demand especially from top buyer China.
Soybean oil rose in tandem, supporting palm oil, a competing vegetable oil used to make products ranging from food to biofuels.
Gains were limited, however, as concerns over high stockpiles remained, especially as the latest data pointed to signs of slowing exports, although traders said easing production could help bring down stock levels.
"The market is up a bit on the back of Dalian and Chicago soybean oil," said a trader with a foreign commodities brokerage in Malaysia. "Malaysian palm production should come down this month, so inventory should probably go down a bit."
By the midday break, the benchmark March contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had gained 0.4 percent to 2,355 ringgit ($771) per tonne.
Total traded volumes stood at 13,501 lots of 25 tonnes each, higher than the usual 12,500 lots.
Exports of Malaysian palm oil products for Dec. 1-15 fell 6.4 percent to 719,817 tonnes from 769,087 tonnes for the Nov. 1-15 period, cargo surveyor Intertek Testing Services said on Saturday. PALM/ITS
Another cargo surveyor Societe Generale de Surveillance will issue data for the same period later on Monday. PALM/SGS
Traders are waiting for Malaysia's new January crude palm oil export tax, which could be announced either on Monday or Tuesday, according to a government source who declined to be identified as he is not authorised to speak to the media.
The tariff, likely to be set at zero, could boost export demand for the crude grade and help lower inventory levels in the world's No.2 largest palm producer.
In related markets, Brent crude held steady above $108 a barrel on Monday, drawing support from a brighter economic outlook for top energy consumer China, although investors remained skittish as U.S. talks to avert a year-end "fiscal cliff" dragged on. O/R
In other vegetable oil markets, U.S. soyoil for January delivery BOF3 had edged down 0.1 percent by 0545 GMT after earlier gains. The most active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange was up 1.2 percent.
20121217 1108 Global Markets & Energy Related News.
GLOBAL MARKETS-Yen fall boosts Nikkei, Asian shares pause on "fiscal cliff"
TOKYO, Dec 17 (Reuters) - The Liberal Democratic Party of Japan's electoral triumph propelled the yen to a 20-month low that saw the Nikkei stock average open up 1.6 percent on expectations of much better export earnings.
"I think that the policies that Abe plans to introduce will only serve to weaken the yen even further. If there is an unwinding opportunity, it will likely be short lived, maybe falling back to 82 or so on the USD/JPY," said Neal Gilbert, market strategist at GFT Forex.
FOREX-Yen slumps to 20-mth low following LDP victory
SYDNEY, Dec 17 (Reuters) - The yen slumped to its lowest in over a year-and-a-half against the U.S. dollar as part of a broad skid after Japan's conservative LDP party, pledged to hyper-easy monetary policy, won a landslide victory at an election.
"Our view is that PM Abe is unlikely to sound as aggressive as he came across as the leader of the opposition. We also believe markets are putting too much emphasis on the BoJ policy and too little on the Fed's, especially after the latter fully delivered last week," strategist Vassili Serebriakov wrote in a report.
Boehner opens door to tax hikes, shifts US fiscal cliff talks
WASHINGTON, Dec 16 (Reuters) - U.S. House of Representatives Speaker John Boehner's offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican road block to a deal resolving the year-end "fiscal cliff."
The question now boils down to what President Barack Obama offers in return. Such major questions, still unanswered so close to the end of the year suggest, however, that no spending and tax agreement is imminent.
Oil rises on China data as January Brent nears expiry
NEW YORK, Dec 14 (Reuters) - Oil prices rose on Friday on expectations for improved demand in China after data showed the manufacturing sector of the world's No. 2 oil consumer expanded in December at its fastest pace in more than a year.
"Oil is particularly dominated by Chinese potential demand, and any sign of an upturn in China tends to have a positive effect on oil," said Tony Machacek, a broker at Jefferies Bache in London.
20121217 1057 Malaysia Corporate Related News.
Gamuda: Extends MD's contract for 5 years. Gamuda Bhd group managing director Datuk Lin Yun Ling will head the conglomerate for another 5 years. In an announcement to Bursa Malaysia last Friday, the group said that its board of directors had appointed Lin's contract renewal for 5 years, from July 1, 2013 to June 20, 2018. In a press conference after the company AGM last week, Lin said that he would accept the contract renewal for another term if he was offered by the board. (Source: The Edge Financial Daily)
Banking: Kenanga-ECM Libra merger to dominate IA sector. Kenanga Invetsment Bank Bhd aims to dominate the independent advisory (IA) segment, leveraging its acquisition of ECM Libra Investment Bank Bhd. The merger will make the group the largest independent investment bank in the country. The MYR875.1m acquisition, sealed last Friday, will see Kenanga rationalise its operations to materialise merger synergies. (Source: The Edge Financial Daily)
Healthcare: B. Braun plans MYR1.75b expansion. B. Braun vice-president of operations and head of global centre of excellence for Intravenous Access Dr Juergen Schloesser said the company will invest MYR1.75b in its Penang plant to expand research and development facilities. With with a state-of-the-art automation and production technology, the company aims to increase its production by 50% by the end of 2013. The Penang plant is the largest production site outside Europe, which houses production plants for medical devices, surgical instruments and pharmaceuticals in the region with some 5,000 employees. (Source: Business Times)
Bank Muamalat posts lower profit
Bank Muamalat Malaysia posted a lower pre-tax profit of RM120.2m for its first half-year ended 30 Sept compared with RM123.5m in the same period previously. In a statement last Friday, the bank said net income rose 19.2% to RM496.4m from the previous corresponding period, underpinned by higher financing income. (Financial Daily)
AirAsia aims high
AirAsia, which is buying 100 more Airbus aircraft valued at USD9.4bn as it transforms into an Asian airline, sees the potential to achieve the target of between 60m and 70m passengers. AirAsia chief executive officer Tan Sri Tony Fernandes said the low-cost carrier was in a fantastic part of the world, especially in South-East Asia. Fernandes said 50% of AirAsia’s destinations are those which had not been served by airlines and it has been able to open new routes and destinations. (StarBiz)
UEM sells RM600m of five-year sukuk at 4.25%
UEM Land, Malaysia’s biggest property company, cut costs on its first Islamic bond after investors bid for six times the amount on offer, seeking to diversify holdings amid a shortage of real estate sukuk. The company, ranked the fourth-highest investment grade of AA- by Malaysian Rating Corp, sold RM600m of five-year notes at 4.25%, the low-end of its price guidance, according to an e-mail statement that clarified orders were close to RM3.7bn. (StarBizWeek)
Pharmaceutical tech park to draw RM1.5bn
Malaysian Biotechnology Corp (BiotechCorp) expects the pharmaceutical technology park in Alor Gajah, Malacca, to attract RM1.5bn (USD500m) in investments in the next three years. BiotechCorp chief executive officer Datuk Dr Mohd Nazleen Kamal said the investments would include the cost to develop the park. He said the first phase of the park consisted of 81ha, with construction expected to start by the fourth quarter next year or the first quarter of 2014. (StarBizWeek)
IJM India to launch RM168m project in Hyderabad
IJM (India) Infrastructure, a subsidiary of IJM Corp, plans to launch a new commercial development project here with a gross development value of 300 crore rupees (RM168m) next year, its country head Anthony Teoh said. The development will be on a 1.6ha site and the company hopes to start the project next year, which will be followed by a mixed development project. (Financial Daily)
MAS-GMR Aerospace Engineering in talks with Spicejet for MRO biz
MAS-GMR Aerospace Engineering (MGAE) is in talks with India’s budget airline Spicejet to provide maintenance, repair and overhaul (MRO) services for its new fleet of Bombardier Q400s. Spicejet was MGAE’s first customer since its operation on 1 Nov 2011, its chief executive officer Khairuddin Hamzah said. (Malaysian Reserve)
Takaful Malaysia declares second interim dividend of 10%
Syarikat Takaful Malaysia declared a second interim dividend of 10% for the financial year ending 31 Dec 2012 last Friday, bringing the total dividends declared to 25%. In a statement last Friday, the company said this translated into a dividend yield of 4.62% based on its share closing price of RM5.41 as at 13 Dec. The total interim dividend represented a payout ratio of about 60% of the net profits generated for the period ended 30 Sept 2012. (Malaysian Reserve)
Malakoff to issue RM460m sukuk to buy Hicom Power
Malakoff Corp’s move to buy Hicom Power for RM575m will be funded primarily by a sukuk issuance. This is seen as a move to strengthen the MMC Corp’s energy utilities subsidiary before its initial public offering in the second-quarter of next year. The acquisition of Hicom Power, an operation and maintenance company for power plants, will be funded by issue of sukuk worth RM460m while the rest will be paid through internally generated funds. (Malaysian Reserve)
FGVH, Astro to replace AirAsia, MMHE on KLCI index from 24 Dec
Felda Global Ventures Holdings (FGVH) and Astro Malaysia Holdings, which raised funds in two of Asia’s biggest initial public offerings this year, will join the country’s benchmark FTSE Bursa Malaysia KLCI Index from 24 Dec. AirAsia, the region’s biggest low-cost carrier, and Malaysia Marine and Heavy Engineering Holdings (MMHE), a rig builder, will make way in the half-yearly review, FTSE Group and Bursa Malaysia said in a joint statement last Thursday. (Malaysian Reserve)
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