FKLI and FCPO Futures Corner - Bursa Malaysia

20130118 1658 Global Markets & Commodities Related News.

2013-01-18T16:58:00.002+08:00

STOCKS: European stock index futures pointed to a higher open and Asian shares advanced as encouraging data from the United States and China boosted prospects for the global economy. Stronger-than-expected data on U.S. housing starts and jobless claims lit a fire under stocks on Thursday, pushing the S&P 500 to a five-year high and its third day of gains. (Reuters)

FOREX: The yen hit a 2-1/2 year low against the dollar as markets positioned for the Bank of Japan to take bold action to tackle deflation at a policy-setting meeting early next week. (Reuters)

FOREX-Yen hits 2-1/2 year low, bold BOJ easing eyed
SINGAPORE/SYDNEY, Jan 18 (Reuters) - The yen hit a 2-1/2 year low against the dollar as markets positioned for the Bank of Japan to take bold action to tackle deflation at a policy-setting meeting early next week.
"There might be a dip after the BOJ, but the drop could turn out to be surprisingly shallow, and I think from there the direction will be a rise towards 93 yen to 95 yen," Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo said.

China's economy rebounds in Q4, 2012 weakest since 1999 (Reuters)
China's economy regained speed in the final quarter of 2012, pulling out of a post-global financial crisis downturn that produced the slowest year of economic growth since 1999.

Argentina cuts wheat crop view due to bad weather (Reuters)
Argentina will produce 10.1 million tonnes of wheat this season, the agricultural ministry said on Thursday, citing extreme weather as the reason for cutting back its previous estimate of 10.5 million tonnes.

UK Brent oil flow resumes, cargo delayed (Reuters)
A Brent crude cargo in January has been delayed by this week's shutdown of the Brent pipeline system, although the restart of the flow on Thursday suggested no lasting disruption to supply of the oil which forms part of the global Brent benchmark.

OIL: Brent crude steadied above $111 per barrel, supported by a rebound in China's growth and encouraging data from the United States, while a steep jump in the previous session, triggered partly by an Algerian crisis, limited further gains. (Reuters)

China 2012 crude steel output up 3 pct at 716.5 mln tonnes (Reuters)
China produced 716.5 million tonnes of steel in the whole of 2012, up 3 percent from the previous year, despite crumbling profit margins and a slowdown in the economy, data from the country's statistics bureau showed.

BASE METAS: London copper was steady, on track to close the week little changed as improving economic landscapes in China and the United States bolstered the demand outlook, but concerns over the U.S. debt ceiling loomed over prices. (Reuters)

PRECIOUS METALS: Platinum and palladium hovered near multi-month highs hit in the previous session as upbeat data from the world's top two economies bolstered hopes for global recovery, while gold was little changed after marking a one-month peak. (Reuters)

METALS-Copper inches up as China, US data lifts demand outlook
SINGAPORE, Jan 18 (Reuters) - London copper climbed on track to close the week with small gains as improving economic landscapes in China and the United States made for a sunnier demand outlook, but concerns about the U.S. debt loomed over prices.
"The (China) numbers were a little bit higher than expected," said analyst Ed Meir of INTL FC Stone in New York. "We could therefore have a decent uptick going into next week. The macro picture both out of the United States and China look good for metals," Meir said.

PRECIOUS-Palladium hits 16-month high on economic recovery hope
SINGAPORE, Jan 18 (Reuters) - Palladium rose to a 16-month high and platinum hovered near a three-month high hit in the previous session, buoyed by upbeat data from the world's top two economies, as gold traded slightly higher to near a one-month high.
"They are clearly in a sweet spot," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.

Baltic index up on higher capesize demand
Jan 16 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose for a tenth straight day on Wednesday as demand for capesizes surged.
The main index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertilizer, rose 16 points or 2.09 percent to 781 points.

20130118 1442 Palm Oil Related News.

2013-01-18T14:44:00.001+08:00

VEGOILS-Palm rises, overcomes India's import duty jitters
Fri Jan 18, 2013 1:17am EST
* India's palm oil demand still strong despite import tax
-trader
* Malaysian palm oil prices must stimulate exports to cut
stocks -analyst
* Palm oil signals mixed in 2,332-2,449 ringgit range
-technicals

(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Jan 18 (Reuters) - Malaysian palm oil futures
rose on Friday on steady buying ahead of the weekend, riding out
market jitters that India's new import duties could potentially
hurt demand and leave bulging stockpiles at record highs.
India, the world's biggest buyer of vegetable oils, slapped
a 2.5 percent import duty on crude edible oils on Thursday,
triggering a fall of 2.1 percent in prices of palm oil for fear
that the taxes would take a toll on exports, which have been
sluggish in January.
But traders say India's move, aimed at trimming a hefty
import bill and protecting its domestic oilseed industry, is
smaller than expected and not drastic enough to hurt demand.
"Earlier there was talk about much higher taxes, but they
came up with this because India still needs oil," said a trader
with a foreign commodities brokerage in Kuala Lumpur.
"Today, the market is a bit oversold because there is a lot
of covering going on toward the weekend," he added.
By the midday break, the benchmark April contract
on the Bursa Malaysia Derivatives Exchange was up 1 percent at
2,405 ringgit ($798) per tonne, up from Thursday's close of
2,378 ringgit.
Total traded volume stood at 18,097 lots of 25 tonnes each,
higher than the usual 12,500 lots, as investors hedged positions
ahead of the weekend.
Technical analysis showed that Malaysian palm oil will
display mixed signals as long as prices remain in a range of
2,332 to 2,449 ringgit per tonne, Reuters market analyst Wang
Tao said.
Record high stocks in Malaysia, the world's No.2 producer,
have caused prices to tumble more than 20 percent in 2012,
widening palm oil's discount to competing soybean oil and making
it the cheapest vegetable oil in the market.
But despite Malaysia's zero-duty tax structure, which it
will retain next month, the country posted dismal export
performance in the first half of January.
"Going forward, a lot depends on the export pace and whether
prices are low enough to encourage demand," said ANZ
agricultural and commodity strategist Victor Thianpiriya in
Singapore.
"Prices need to find that point which encourages exports.
The market is going to do whatever it needs to stimulate enough
exports to get stocks lower," he added.
Brent crude steadied above $111 per barrel on Friday,
supported by a rebound in China's growth and encouraging data
from the United States, while a steep jump in the previous
session, triggered partly by an Algerian crisis, limited further
gains.
U.S. soyoil for March delivery was almost flat in
early Asian trade. The most active May soybean oil contract
on the Dalian Commodity Exchange rose 0.7 percent.

20130118 1109 Global Markets & Energy Related News.

2013-01-18T11:09:00.001+08:00

GLOBAL MARKETS-Asian shares rise on strong U.S. data, China in focus
TOKYO, Jan 18 (Reuters) - Asian shares edged higher, tracking overnight gains in global equities markets after firm U.S. data signalled strength in the world's largest economy, lifting sentiment ahead of a batch of economic indicators from China later in the day.
"China's fourth-quarter GDP announcement expected during trading could prove a variable in today's session," said Lim Jong-pil, an analyst at Hyundai Securities in Seoul.

China Q4 GDP growth picks up to 7.9 pct yr/yr
BEIJING, Jan 18 (Reuters) - China's economy grew 7.9 percent in the fourth quarter from a year earlier with a bounce that snapped seven straight quarters of slowing expansion, official data showed on Friday.
The figures, announced by the National Bureau of Statistics, were slightly stronger than market expectations in the consensus Reuters poll of a 7.8 percent expansion.

FOREX-Yen bears rampage; China data in focus
SYDNEY, Jan 18 (Reuters) - The yen languished at two-and-a-half year lows against the dollar following a dramatic selloff as markets positioned for the Bank of Japan to take bold policy action to tackle deflation.
"We think there is some risk of disappointment at the BOJ meeting and scope for a yen rally. It is now consensus that the BOJ will move to a 2 percent inflation target. However, more aggressive measures may not come until closer to the nomination of the new governor/deputy governors in Q2," said Kiran Kowshik, strategist at BNP Paribas.

OIL-Oil rises on improving U.S. jobs, housing data
NEW YORK, Jan 17 (Reuters) - Oil rose on Thursday as financial markets got a boost from improving U.S. economic data showing jobless claims fell to a five-year low and housing starts rose sharply.
"Oil prices have risen because of broader economic optimism across the markets, which we've seen reflected in the U.S. jobless claims and housing numbers today," said Matt Smith of Summit Energy in Louisville, Kentucky.

20130118 1006 China Economic Data.

2013-01-18T10:06:00.001+08:00

China Q4 GDP growth picks up to 7.9 pct yr/yr - RTRS
18-Jan-2013 10:03
BEIJING, Jan 18 (Reuters) - China's economy grew 7.9 percent in the fourth quarter from a year earlier with a bounce that snapped seven straight quarters of slowing expansion, official data showed on Friday.
The figures, announced by the National Bureau of Statistics, were slightly stronger than market expectations in the consensus Reuters poll of a 7.8 percent expansion. (Full Story)
The fourth quarter bounce from Q3's 7.4 percent - the weakest since the first quarter of 2009 when the global financial crisis raged - left full year growth at 7.8 percent, making 2012 the weakest year of economic expansion since 1999.
Other data released alongside GDP showed industrial output grew 10.3 percent in December from a year ago, versus expectations of 10.1 percent.
Retail sales in December rose 15.2 percent on a year ago versus an estimated 14.9 percent in a Reuters poll.
Annual fixed-asset investment growth was 20.6 percent in 2012, versus the 20.7 percent forecast in the Reuters poll. The government only publishes cumulative investment data.

Following is a breakdown of China's quarterly GDP growth rates:
(percent change from a year earlier):
Q412 Q312 Q212 Q112 Q411 Q311 Q211 Q111 Q410 Q310

7.9 7.4 7.6 8.1 8.9 9.1 9.5 9.7 9.8 9.6

Other key economic data released by the bureau
(percent change from a year earlier):
2012 Dec F/C-Dec Nov
Industrial output 10.0 10.3 10.1 10.1
FAI 20.6 n/a 20.7 20.7
Retail sales 14.3 15.2 14.9 14.9

20130118 0938 Malaysia Corporate Related News.

2013-01-18T09:38:00.001+08:00

Malaysian Institute of Economic Research's (Mier) business conditions index decreased to a three-year low of 94.1 pts in 4Q12 from 96 pts in 3Q12. This indicates that businessmen view that activities are contracting and they do not see a bright picture in 1Q13, said Mier ED Dr. Zakariah Abdul Rahid. The declining business confidence trend among manufacturers could deteriorate further, due to the weak demand from local and overseas markets as a result of dampened domestic manufacturing activities. On the other hand, the consumer sentiment index increased to 118.7 pts in 4Q12 from 118.3 pts in 3Q12. The residential property index rose to 124.8 pts in 4Q12 from 113.6 pts in 3Q12. The tourism market index was largely unchanged at 129.8 pts compared with 129.9 pts in 3Q12. The retail trade index and the automotive industry index, however, faltered significantly to 105.4 pts and 94.8 pts respectively (vs. 160 pts and 130.2 pts respectively in 3Q12). (Financial Daily)

The Malaysian economy is expected to grow 5.6% this year (5.1% in 2011) driven primarily by domestic economy, while inflation is expected to rise to 2.5% (1.7% in 2011) due to increased inflow of capital into the manufacturing sector, said the Malaysian Institute of Economic Research. It also projected the GDP growth for 2014 to be within 5% and 6% and inflation to stay at 2.5%. (Bernama)

US jobless claims plunged 37,000 to 335,000 in the 12 Jan week (a revised 372,000 in the earlier week), massively below consensus of 368,000. (Bloomberg)

US housing starts rebounded by a sharp 12.1% mom in Dec to a seasonally adjusted annualized rate of 954,000 units (a revised 851,000 in Nov) from a 4.3% dip the month before. Economists were expecting a reading of 887,000. (Bloomberg)

Eurozone construction output fell 0.4% mom in Nov (no change in Oct), whilst on a yoy basis, the measure fell 4.7% (-3.3% in Oct). (RTTNews)

China will sharply increase planned railway investment in 2013 to more than US$100bn (Rmb650bn), as part of plans to boost the economy. That marks a 30% increase from the planned investment of Rmb500bn for 2012. (AFP)

Japan’s tertiary industry index fell 0.3% mom in Nov (-0.1% in Oct), underperforming the consensus estimate of +0.1%. (Bloomberg)

Payrolls in Australia advanced 148,300 in 2012 after a 49,800 gain in 2011 for a two-year increase that was the weakest since 1996-1997. Unemployment rose to 5.4% last month (5.3% in Nov) as the number of workers fell by 5,500, against expectations of a 5,000 job gain. (WSJ)

State-run Indian oil marketing companies can now raise diesel prices in line with increases in global crude oil prices, a move that could help the government reduce its vast subsidy bill. (Reuters)

Singapore’s non-oil exports fell 16.3% yoy in Dec (-2.6% in Nov), worse than the median 8% on-year contraction forecast in a poll. Electronics shipments were especially weak, down 19.1% yoy, following a 16.5% drop in Nov. But non-electronics exports also sank 14.8% yoy, compared with a 6.1% rise last month. (WSJ)

The Philippines’ money supply (M3) growth rose to 9.8% yoy in Nov (8.6% in Oct). Credit growth however slowed to 13.3% yoy (14.2% in Oct). (Bloomberg)

The Bangko Sentral ng Pilipinas reported that the gross inflow of foreign portfolio investments reached US$18.46bn last year, the highest in a decade. The amount was also up by 12% from US$16.47bn in 2011. The outflows reached US$14.57bn, up by 17.5% from US$12.4bn the previous year. Thus, the net inflow of foreign hot money reached US$3.88bn, which was down by about 5% yoy from US$4.1bn. (Philippine Daily Inquirer)

20130118 0937 Local & Global Economy Related News.

2013-01-18T09:37:00.001+08:00

Perisai Petroleum has named its new jack-up drilling rig Perisai Pacific 101. The technologically advanced rig marks the company’s maiden investment in the high-value drilling business segment. “Costing US$208m and under construction in Singapore by established shipyard PPL Shipyard, Perisai Pacific 101 is set to enhance the group’s focus on upstream offshore development and production activities,” said MD Izzet Ishak. (Bernama)

Perisai Petroleum Teknologi Bhd expects its bottom line to register double-digit growth this year, riding on the sector's booming performance, especially in the Asia Pacific region. Perisai Petroleum managing director Izzet Ishak said this year there will be more activities in the oil and gas sector, of which some of the oil majors will be using its services such as chartering its vessels and drilling services. "We will also be allocating US$200m for capital expenditure this year on FPSO (floating, production, storage and offshore) activities," Izzet said. He added the company is expected to take delivery of Perisai Pacific which is its first drilling rig by July next year costing US$208m. The first rig will impact Perisai's earnings at around RM50m and RM60m a year. (BT)

Khazanah Nasional saw its portfolio value jump to a record high as at the end of 2012. Its overall realisable asset value increased by 12.4% to a new high of RM121.6bn. Its net worth adjusted (NWA) portfolio value surged 24.3% to a record RM86.9bn, outstripping the stock market benchmark index's total return of 14.1%. "A lot of it was driven by IPOs (like IHH Healthcare and Astro Malaysia), which contributed RM9.1bn to the NWA value, although the telco sector also did well," MD Tan Sri Azman Mohtar said. (BT)

Khazanah Nasional Bhd and Sun Life Financial Inc, a Canada-based insurer, have agreed to purchase a 98% stake in CIMB Aviva Assurance Bhd, the insurance arm of the CIMB Banking group, in a transaction valued at RM1.8bn. Khazanah and Sun Life are each paying RM900m for the transaction, which includes entering into a new 20-year exclusive bancassurance agreement with CIMB Bank Bhd to distribute the products through its chain of 312 branches nationwide. (Financial Daily)

Tengku Datuk Ibrahim Petra, the former substantial shareholder of Perdana Petroleum, has been ordered by the High Court to return the shares in the company that he had held on behalf of his former partner Kho Tian Boo by today. On 11 Jan, the Kuala Lumpur High Court ruled that Tengku Ibrahim was holding 833,860 Perdana shares in trust, on behalf of Kho, and ordered Tengku Ibrahim to transfer these shares back within seven days. The High Court also ordered Tengku Ibrahim to pay damages, an interest of 5% on the damages and costs to Kho. Tengku Ibrahim and Kho founded Perdana, formerly known as Petra Perdana and went on to list the company in 2000. Kho is the father of Perdana's executive directors Datuk Henry Kho and Francis Koh. (Star)

Achiever Development Sdn Bhd, the third biggest shareholder in Perdana Petroleum Bhd, has sold its 35.53m shares (about 7.4%) of the o&g service provider. As such Datuk Tiong Su Kok and Tiong Chiong Hiiung have ceased to be shareholders of Perdana Pertroleum. Su Kok also owns Nam Cheong Ltd, a Singapore-listed company specialising in offshore support vessels. Two weeks ago Perdana Petroleum received a RM430m contract from Petronas Carigali for a five-year charter for anchor handling tug supply vessels with effect from Jan 2013. (Financial Daily)

Shareholders of Scomi Group, including factions that had previously opposed the entry of IJM Corp, are now ready to vote in favour of the construction giant becoming the former's biggest shareholder, sources said. This means the proposed issuance of RM110m worth of bonds to IJM, is likely to sail through, contrary to earlier reports that two opposing sides within Scomi were preparing to lock horns. The bond issuance, when converted, would make IJM the single largest shareholder in Scomi with a 24.4% stake. IJM will not be entitled to vote at the EGM because it is an interested party. Maju Group executive chairman Tan Sri Abu Sahid Mohamed and his associate Datuk Phillip Siew Mun Chuang were believed to have initially opposed the entry of IJM, citing the dilution of their stakes should the latter convert its debt into equity. (Starbiz)

The RM5.2bn privatisation of KFC Holdings (M) Bhd and its parent QSR Brands Bhd will be completed on Monday, subsequently paving the way for the delisting of both firms. QSR Brands managing director Datuk Ahmad Zaki Zahid said KFC and QSR shareholders will be paid on January 23 and January 25, respectively. “The RM5.2bn privatisation cost is being paid by Johor Corp Bhd (JCorp), the Employees Provident Fund and CVC Capital Partners,” Ahmad Zaki told reporters. (BT)

AirAsia Bhd's head honcho Tan Sri Tony Fernandes hinted at the possibility of forming another joint venture (JV) airline, but stopped short of saying with whom. However, he dismissed JV opportunities in South Korea, Cambodia, Vietnam, Laos and Brunei. "No (South) Korea. No Cambodia. No Vietnam, etc. We have got a fantastic spread of countries and we will now build all those to (the) size of Malaysia," he said, referring to AirAsia's existing operations in Thailand, Indonesia, the Philippines and Japan. AirAsia was recently reported in the Indian media to have held preliminary discussions with the Videocon group for a possible JV in India. (Sun)

Malaysia Airlines (MAS), which is set to become a full member of the oneworld airline alliance, will start offering a full range of oneworld services and benefits from 1 February. MAS passengers will gain access to the alliance's global network which covers over 850 destinations in almost 160 countries. Current oneworld members include airberlin, American Airlines, British Airways, Cathay Pacific Airways, Finnair, Iberia, Japan Airlines, LAN Airlines, Qantas, Royal Jordanian and S7 Airlines. Separately, Khazanah denied plans to take MAS private, dismissing market speculation that such a move may be on the cards for the ailing airline. Managing director Tan Sri Azman Mokhtar said: “Yes, we can take it private, but if we do so, we still haven't solved the problem of how to put more money into the company." (BT)

Managing director Tan Sri Azman Mokhtar quashed speculation that it is joining a consortium comprising Malaysia Airports and YTL Corp to bid for the UK's Stansted Airport. "Our interest is through MAHB, we are not averse to it (bidding). But Khazanah is not going in directly," he said. To a question on whether Khazanah, which owns 40.4% of MAHB, had found a potential replacement for MAHB's managing director Tan Sri Bashir Ahmad, whose contract ends this June, he said it was "too premature" to talk about the issue of replacement. However, Tan Sri Azman vaguely alluded that former Pos Malaysia Bhd CEO Datuk Syed Faisal Albar Syed Albar is in the running with a few others to potentially replace Bashir. (BT)

AirAsia X CEO Azran Osman-Rani said the carrier is targeting some 50,000 passengers flying to Jeddah in its first year, with commercial services starting from 16 February, starting with three weekly flights, then increasing to 4x weekly from 1 May. He said there was a lot of demand from Malaysians, who are looking for affordable flights into Saudi Arabia and equally from around the region, such as Indonesia. (BT)

The Malaysian Technology Development Corporation (MTDC), which has granted funds worth RM80m to the country's young technopreneurs, wants to extend the grant to more states this year. Since MTDC launched its Symbiosis Programme in 2008, the focus "seemed to be very federal", said its chief executive Datuk Norhalim Yunus, adding that it's time for it to expand the reach to create the necessary critical mass of start-up companies in technology businesses. (BT)

20130118 0930 Global Markets Related News.

2013-01-18T09:30:00.003+08:00

Asia FX (CME/www.lucafxta.com)
The appetite for risk improved selectively on Thursday. The euro, pound and Canadian dollar ended higher amid greater optimism about the euro zone, while the franc, Aussie and yen declined. The yen sank to a new low for the downtrend on concern of further easing next week. The US stock markets advanced. 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 long euro, yen, and the commodity currencies, and short pound and franc. Good luck!

Overnight
US: The initial jobless claims fell 37,000 to 335,000 in the week ending January 12th from the previous week's revised figure of 372,000 (371,000 originally reported).
US: Housing starts rose to 0.954 million in December from 0.861 million in November, while building permits rose 0.903 million from November's 0.899 million.
US: The Philly Fed manufacturing survey fell 5.8 in January after rising 8.1 in December.
Canada: Canadian residents have purchased C$7.81 billion in foreign securities in November, up from C$3.36 billion in October, while foreign residents incremented their holdings of Canadian securities by C$5.62 billion during the same period, less than C$12.7 billion in October.

Today's economic calendar
Australia: Export / import Price Index for the fourth quarter
China: House Price Index for December
China: Gross Domestic Product for the fourth quarter
China: Industrial Production for December
China: Retail sales for December
China: Urban investment for December
Japan: Industrial production for November

Asian Stocks Snap Rise on Better-Than-Forecast U.S. Data (Bloomberg)
Asian stocks rose for the first time in three days, with the regional benchmark index erasing its weekly loss, after initial jobless claims and housing data in the U.S. beat estimates, boosting the outlook for exporters.
Honda Motor Co. (7267), the Japanese carmaker that gets about 44 percent of sales from North America, climbed 3.9 percent. Fanuc Corp., a supplier of factory automation equipment to Chinese factories, gained 1.2 percent before that release of data that’s expected to show China’s economy accelerated from a three-year low. Alacer Gold Corp. jumped 4.3 percent in Sydney after reporting increased output.
The MSCI Asia Pacific Index (MXAP) gained 0.6 percent to 132.04 as of 9:41 a.m. Tokyo time. The gauge has advanced 2.1 percent this month amid signs the U.S. and Chinese economies are recovering and Japanese shares rallied for a 10th week on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies.
“The macroeconomic risks that the markets have been dealing with for the last couple of years continue to recede,” Mark D. Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said on Bloomberg Television. His firm manages about $54 billion in assets. “As a result, equity risk premiums will compress around the world. The intervention the Bank of Japan is undertaking to weaken the yen should produced better profits for Japanese multinationals.
The Nikkei 225 Stock Average (NKY) jumped 2.2 percent, heading for its longest streak of weekly gains since April 1987, as the yen traded near a 2 1/2-year low amid speculation the Bank of Japan will decide to conduct open-ended asset buying to stoke inflation at a two-day policy meeting starting Jan. 21. South Korea’s Kospi Index added 0.6 percent, while Australia’s S&P/ASX 200 Index gained 0.4 percent. Markets in China and Hong Kong have yet to open.
Data due to be released today is expected to show China’s gross domestic product expanded 7.8 percent in the fourth quarter, according to the median estimate of 53 economists surveyed by Bloomberg. That’s up from 7.4 percent in the previous three months.

Japanese Stocks Head for 10-Week Gain on Yen, U.S. Data (Bloomberg)
Jan. 18 (Bloomberg) --　Japan stocks rose, with the Topix Index headed for its longest weekly winning streak since 1986, after the yen fell below 90 to the dollar for the first time since June 2010, and U.S. housing and jobs data beat estimates.
Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America, jumped 8.1 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 2.1 percent after the Nikkei newspaper reported the Bank of Japan is preparing to ease policy next week. Advantest Corp. (6857), the world’s biggest maker of memory-chip testers, gained 6.7 percent after bellwether Intel Corp. beat earnings estimates.
The Topix advanced 1.9 percent to 907.08 as of 9:24 a.m. in Tokyo, heading for a 0.9 percent weekly gain. The equity gauge is poised to rise a 10th week, the longest such streak since July 1986. The Nikkei 225 Stock Average (NKY) gained 2.2 percent to 10,843.10.

S&P 500 Advances to Five-Year High on Economic Reports (Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index to a five-year high, amid better- than-forecast initial jobless claims and housing data.
A measure of homebuilders in S&P indexes jumped 3 percent to the highest level since 2007. EBay Inc., operator of the largest online marketplace, increased 2.4 percent after revenue topped some estimates. Intel Corp. fell 4.9 percent in after- hours trading after reporting a second quarter of declining sales. BlackRock Inc. (BLK), the biggest money manager, added 4.4 percent after earnings increased 24 percent and the firm boosted its dividend and its buyback program.
The S&P 500 (SPXL1) rose 0.6 percent to 1,480.94 at 4 p.m. New York time. The Dow Jones Industrial Average added 84.79 points, or 0.6 percent, to 13,596.02. It briefly topped the highest closing level since 2007. About 6.5 billion shares changed hands on U.S. exchanges, 5.2 percent above the three-month average.
“The economy is entering the year maybe not with a running start, but certainly a head start,” said Jack Ablin, who helps oversee about $66 billion as chief investment officer of BMO Private Bank in Chicago. He spoke in a telephone interview. “It helps build a nice story for 2013.”
Equities rose as builders broke ground on more houses than forecast in December, capping the best year for the industry since 2008, another sign residential real estate is boosting the U.S. economic expansion. The number of Americans filing first- time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.

European Stocks Rise on Retailer Rally, U.S. Housing Data (Bloomberg)
European stocks gained the most in a week as retailers climbed on increased revenue and U.S. housing starts jumped more than forecast to a four-year high.
Carrefour SA, France’s biggest retailer, Delhaize Group SA, the Belgian owner of Food Lion supermarkets, and Associated British Foods Plc (ABF) advanced more than 3 percent. Petropavlovsk Plc surged the most in four months after the gold producer reported better-than-forecast output. SAP AG fell 1.5 percent as Citigroup Inc. lowered its recommendation on the shares.
The Stoxx Europe 600 Index (SXXP) rose 0.5 percent to 287.35 at the close of trading, the biggest increase since Jan. 9. The measure has rallied 2.7 percent this year after U.S. lawmakers agreed on a budget that avoided most tax increases and spending cuts, extending the advance from its June 4 low to 23 percent.
“This is further confirmation that the market is recovering in many regions of the U.S.,” said Michael Morris, who oversees $1 billion as head of European equities at Mitsubishi UFJ Asset Management in London. “It’s another sign that we are in an upward phase. For some time now, there have been positive signs and we are well past a trough.”
The volume of shares changing hands in Stoxx 600 companies today was 6.7 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
The U.S. economy picked up across much of the country last month, boosted by auto and home sales, even as the outlook for unemployment showed few signs of improvement, the Federal Reserve said late yesterday in its Beige Book business survey.

Emerging Stocks Rise From Week Low on Earnings; Asia Stocks Fall (Bloomberg)
Emerging-market stocks rebounded from the lowest level in a week on prospects of improved earnings for companies Koc Holding AS (KCHOL), Dubai Financial Market PJSC (DFM) and OAO Gazprom. Asian shares retreated.
Koc, Turkey’s biggest industrial group, climbed to a record as Dubai Financial led the benchmark DFM General Index (DFMGI) to a two- year high. Gazprom, the world’s biggest natural-gas producer, drove gains in Russia’s Micex index. Brazil’s Bovespa rose to a two-week high as the central bank signaled borrowing costs would remain at a record low. Shares fell in Shanghai (SHCOMP) for a second day ahead of China’s fourth-quarter growth figures.
The MSCI Emerging Markets Index (MXEF) rose 0.2 percent to 1,073.15 in New York. Koc said it targeted a 6 percent profit increase while investors expected the emirates’ biggest companies to report improved full-year earnings as the region’s economy recovers from a property market crash that started in 2008. Gazprom said profit doubled in the third quarter. Data released today in the U.S. showed signs of an improved labor and housing market.
“Some of the earnings recently have been absolutely fantastic,” Gavin Redknap, an emerging-markets strategist at Nikko Asset Management, said by phone from London. “If we’re in a situation where monetary policy is relatively loose across the globe and economic data is improving, that’s clearly good for equity markets.”

Yen Is Near 2 1/2-Year Low Before BOJ Meets; Volatility Rises (Bloomberg)
The yen traded near a 2 1/2-year low amid speculation the Bank of Japan (8301) will decide to conduct open- ended asset buying to stoke inflation at a two-day policy meeting starting Jan. 21.
One-week implied volatility on the dollar against the yen surged to the highest in 17 months after Reuters reported the central bank may introduce the plan, citing people familiar with the BOJ’s thinking. Australia’s dollar was headed for a third- weekly advance before Chinese data today that may show growth accelerated in the world’s second-largest economy.
“Expectations for additional easing by the BOJ haven’t yet peeled off,” said Masato Yanagiya, the head of currency and money trading in New York at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “With rising implied volatility, there are quite a few people who are alerted by the pace of dollar-yen moves.”
The yen declined 0.1 percent to 89.93 per dollar as of 9:54 a.m. in Tokyo after touching 90.13 yesterday, the weakest since June 23, 2010. The currency dropped 0.1 percent to 120.29 per euro. The European currency was at $1.3376 after climbing 0.7 percent to $1.3376.
Implied volatility on the dollar-yen rate, derived from option premiums, surged to 16.6 percent, the highest since August 2011.
The Australian dollar, known as the Aussie, was little changed at $1.0541, having gained 0.1 percent since Jan. 11.

Housing Accelerates in Boost to U.S. Expansion: Economy (Bloomberg)
The rebound in U.S. homebuilding accelerated in December, capping the best year for the industry since 2008 and adding to signs residential real estate is contributing to economic growth.
Housing starts climbed 12.1 percent last month to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists, according to Commerce Department data today in Washington. Other reports showed fewer Americans applied for jobless benefits last week and manufacturing in the Philadelphia region unexpectedly contracted in January.
Spurred by record-low mortgage rates, home construction will probably keep making headway in 2013 as it recovers from the worst slump since the Great Depression. Consumers, buttressed by an improving job market, rising home prices and lower fuel costs, may also be able to move ahead even as the debate over the federal budget heats up and taxes cut paychecks.
“Housing clearly continues to be one of the bright spots in an otherwise gloomy and sluggish economic-growth story,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “On the labor market side of things, we continue to get overall positive momentum.”
The number of Americans filing first-time claims for unemployment insurance payments fell last week to the lowest level in five years, pointing to further improvement in the labor market, figures from the Labor Department also showed.

Lockhart Sees Fed’s Bond Buying Continuing Beyond Mid-2013 (Bloomberg)
Federal Reserve Bank of Atlanta President Dennis Lockhart said he expects the central bank to continue buying bonds beyond mid-year to achieve sustained improvement in the labor market.
“It is probably going to be a struggle to see by mid- year” enough progress in the jobs outlook to warrant stopping, Lockhart said, speaking in an interview with Matthew Winkler, editor-in-chief of Bloomberg News, in New York today at the Bloomberg Global Markets Summit hosted by Bloomberg Link.
While the U.S. economy will probably expand by about 2 percent this year, resolution of U.S. fiscal challenges may spur deferred business spending and fuel better-than-forecast growth, Lockhart said. He predicted that Congress will agree to raise the nation’s statutory borrowing limit “because it has to.”
Lockhart backed the Federal Open Market Committee decision in December to add $45 billion in purchases of Treasury notes each month to $40 billion in monthly buying of mortgage bonds. Policy makers have pushed the benchmark interest rate close to zero and expanded Fed assets to $2.93 trillion to stoke growth and reduce 7.8 percent unemployment. They are debating whether to continue stimulus this year or stop adding to it.
Minneapolis Fed President Narayana Kocherlakota said this week the Fed should ease more to boost hiring, while Boston Fed President Eric Rosengren said bond-buying could be expanded if necessary. Charles Plosser of Philadelphia and Jeffrey Lacker of Richmond have voiced doubts about the effectiveness of bond purchases and warned of inflation risks.

Manufacturing in the Philadelphia Area Unexpectedly Shrinks (Bloomberg)
Manufacturing in the Philadelphia region unexpectedly contracted in January, an indication companies are becoming more concerned about across-the-board U.S. government spending cuts that could slow growth.
The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 5.8 from 4.6 in December. Readings lower than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 58 economists surveyed by Bloomberg was 5.6. Estimates ranged from minus 3 to 10.
The report follows New York Fed data released earlier this week showing factory activity shrank for a sixth straight month and raises the risk manufacturing, once a pillar of the recovery, will again weaken in early 2013. Looming changes in federal spending and stagnant prices give companies little reason to expand inventories, which may hurt manufacturers.
“Manufacturing is going to be touch-and-go over the next few months until we get some fiscal clarity,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, the only economist to project the index would turn negative. The New York and Philadelphia surveys are “a sign that the fiscal deal struck on new year’s was a good first step, but it didn’t reduce the uncertainty.”
Other reports today showed housing starts surged more than forecast in December, fewer Americans than projected applied for jobless benefits last week and Americans’ economic outlook deteriorated in January to a three-month low as paychecks began reflecting higher taxes.

Fed Concerned About Overheated Markets Amid Record Bond Buys (Bloomberg)
Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases.
Investors have been snapping up riskier assets since the Fed boosted its bond buying to reduce long-term borrowing costs after cutting its overnight rate target close to zero in December 2008. Enthusiasm for speculative-grade bonds is at unprecedented levels, driving a Credit Suisse index that tracks the yield on more than 1,500 issues to a record-low 5.9 percent last week.
Now, as central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it.
“Prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels,” George said in a speech last week. “We must not ignore the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances.”
Bernanke himself raised that concern this week, saying the central bank has to “pay very close attention to the costs and the risks” of its policies during a Jan. 14 discussion at the University of Michigan’s Gerald R. Ford School of Public Policy in Ann Arbor.

Americans’ Economic Outlook Fell in January to Three-Month Low (Bloomberg)
Americans’ economic outlook deteriorated in January to a three-month low as paychecks began reflecting higher taxes.
The gap between positive and negative expectations widened to minus 7 this month from zero in December as the share saying the U.S. economy is improving dropped to the lowest since September, according to the Bloomberg Consumer Comfort Index. The weekly measure declined to minus 35.5, the weakest since Oct. 7, from minus 34.4 in the prior period.
Households may find it harder to boost spending after payroll taxes to fund Social Security benefits reverted to 6.2 percent this year from 4.2 percent. While improving property values and cheaper gasoline are providing some relief, Americans are being subjected to constant political bickering over the federal debt limit and the budget.
“The depressed attitudes are undoubtedly a function of a diminished paycheck and uncertainties surrounding the U.S. fiscal situation,” said Richard Yamarone, a senior economist at Bloomberg LP in New York. “Consumers can’t spend what they don’t have.”
Other reports todays showed housing starts surged more than forecast in December and fewer Americans than projected applied for jobless benefits last week.
Builders broke ground on 12.1 percent more houses last month, taking starts to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists and the most since June 2008, the Commerce Department reported. For all of last year, construction began on 780,000 homes, up from 608,800 in 2011 and also the most since 2008. 1

Jobless Claims in U.S. Fell to Lowest Level in Five Years (Bloomberg)
The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.
Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the lowest level since the period ended Jan. 19, 2008, Labor Department figures showed today. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey. A spokesman for the agency said the drop may reflect the difficulty the government has in adjusting the data after the holidays when seasonal workers are let go.
Fewer claims indicate businesses have grown comfortable with their current headcounts, a necessary development before hiring starts to pick up. At the same time, higher payroll taxes that shrink paychecks may prompt companies to hold the line on expanding headcount should Americans cut back on discretionary spending.
“The labor market is certainly getting better,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected 345,000 claims. Even with the seasonal adjustment issues, “this is still a good report. Chances are claims remain at a fairly low level.”
Another report today showed housing starts climbed 12.1 percent in December to a 954,000 annual rate, capping the best year for the industry since 2008. For all of 2012, builders began work on 780,000 homes, up from 608,800 a year earlier, Commerce Department figures showed.

Japan Learned to Love Deflation in Wage Malaise Facing BOJ (Bloomberg)
A decade and a half after Japan slumped into deflation, the central bank is set to signal its strongest effort yet to reverse the trend. The biggest challenge may be that the nation has come to rely on falling prices.
More than 80 percent of respondents in a Bank of Japan (8301) survey released this month who noticed rising prices last year said it was bad. More than a third of those who said prices fell were happy about it. Even so, the BOJ next week will adopt the government’s desired 2 percent inflation target, according to 20 of 22 economists surveyed by Bloomberg News.
Ending consumer price declines would give companies and households more incentive to borrow, and boost revenue for businesses and the government in a nation that saw its third recession in five years in 2012. The danger: prolonged deflation has altered behavior across the economy, from entrenching declines in pay to driving more than half of savings into cash.
“The key is wages,” said Nobuyasu Atago, principal economist at the Japan Center for Economic Research and a former BOJ official in charge of price data. “Without pay increases, the economy won’t recover and households will only suffer from inflation.”
Japan’s main business lobby signaled it won’t endorse pay rises at regular wage negotiations with labor unions this spring, Kyodo News reported Dec. 20. Prime Minister Shinzo Abe’s Liberal Democratic Party is considering tax breaks for companies that raise pay or expand hiring.

Abe Currency Policy Stokes Gaffe Risk as Amari Roils Yen (Bloomberg)
Japan’s newly installed government saw one danger of verbal intervention in the foreign-exchange market this week, with a Cabinet member’s remarks interpreted as indicating a shift in stance that he later disowned.
Economy Minister Akira Amari today told reporters in Tokyo that the yen is still correcting from excessive appreciation, two days after flagging the danger of the exchange rate getting too weak. His Jan. 15 remarks stoked a two-day gain in the yen. Today, comments by Amari snapped the rise, with the currency down 0.9 percent at 89.15 per dollar at 7:06 p.m. in Tokyo.
The Abe administration’s determination to end deflation through coordinated action with the central bank has driven a 4.4 percent slide in the yen since it took office Dec. 26. A cheaper yen aids the competitiveness of exporters from Panasonic Corp. (6752) to Nissan Motor Co. (7201) that have labored under years of exchange-rate strength that saw the currency reach a postwar high in 2011.
“This is what I feared,” said Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd and a former Bank of Japan (8301) official. “Abe has put correcting a strong yen at the center of his agenda -- that prompts various ministers to talk about the currency, bringing volatility to the market.”
Further risk of official comments roiling the currency may come next week, when the Bank of Japan meets and is forecast to adopt an inflation target and reach a policy agreement with the government.

Brazil to Hold Key Rate as Inflation Quickens Amid Slow Growth (Bloomberg)
Brazil’s central bank signaled it will keep borrowing costs at a record low this year as it tries to manage faster inflation amid a slower than expected recovery.
The central bank board, led by Alexandre Tombini, kept the benchmark interest rate at 7.25 percent for the second straight meeting yesterday, matching the forecast of all 56 analysts surveyed by Bloomberg. In the statement accompanying the unanimous decision, policy makers reiterated that the best strategy is to keep monetary policy conditions unchanged for a “prolonged period.”
While inflation is slowing in Mexico and Chile, price pressures are building in Brazil as the government pumps demand by reducing taxes and expanding credit amid record low unemployment. At the same time, a contraction in investment and industrial output is complicating President Dilma Rousseff’s efforts to revive the slowest growth in three years.
The Selic rate “will stay unchanged the whole year,” Andre Perfeito, the chief economist at Gradual Investimentos, said by phone from Sao Paulo. “The bank doesn’t have much room to maneuver between a slow economy and rising inflation.”
Inflation in December accelerated more than economists’ estimates for the sixth straight month and ended 2012 at 5.84 percent, higher than the bank’s 4.5 percent target for the third straight year.
The central bank ended the steepest rate-cutting cycle among Group of 20 nations in November after adverse climate in the U.S. and Brazil led to a jump in food prices.

Euro Area Seen Stalling as Draghi’s Pessimism Shared: Economy (Bloomberg)
The euro-area economy won’t return to growth until the next quarter as a recovery in Italy is delayed and France continues to shrink, according to a survey of economists.
Gross domestic product in the 17-nation currency region will stay unchanged in the three months through March, before rising 0.1 percent and 0.2 percent in the second and third quarters, the median forecast in a Bloomberg News monthly survey showed. GDP probably fell 0.4 percent last year and will decline 0.1 percent in 2013, economists said.
The survey follows a downbeat assessment by European Central Bank President Mario Draghi last week when he said that while the euro-area crisis has eased, “we are not at all seeing an early and strong recovery.” The 17-nation region’s economy last grew in the third quarter of 2011 and remains under pressure from government budget cuts and weak confidence. Goldman Sachs Group Inc. says authorities need to resolve the debt turmoil “fully” to encourage growth.
“Without a decisive resolution it will be hard to fully restore private-sector confidence and credit availability, and stimulate growth,” Goldman analysts including George Cole in London said in a report. “As a result, 2013 promises to be another year of weakness for Europe’s economy.”

20130118 0930 Global Commodities Related News.

2013-01-18T09:30:00.001+08:00

Wheat Market Recap Report (CME)
March Wheat finished down 3 3/4 at 781 1/4, 8 1/4 off the high and 5 1/4 up from the low. May Wheat closed down 4 at 789 3/4. This was 4 3/4 up from the low and 8 off the high.
KC and Chicago wheat traded lower on the day despite positive export demand data this morning. Chicago wheat export sales were impressive while Kansas City continues to struggle with new sales given its premium price in the world market. Wires reported this morning that Iraq bought 300,000 tonnes of milling wheat from Australia and Canada while Algeria bought close to 400,000 tonnes of soft wheat from France yesterday. Export sales this morning were positive towards price direction but the US remains well behind the pace needed to reach this crop year's USDA export estimate. Net weekly export sales came in at 536,200 tonnes for the current marketing year and 38,500 for the next marketing year for a total of 574,700. As of January 10th, cumulative wheat sales stand at 69% of the USDA forecast vs. a 5 year average of 76%. Sales of 431,000 tonnes are needed each week to reach the USDA forecast. The EU reported that they granted export licenses for 340,000 tonnes of soft wheat taking the total since the beginning of the crop year to 10.4 million tonnes vs. 7.7 for the same period in 2011/12.
March Oats closed down 2 1/4 at 355. This was 3 up from the low and 5 off the high.

Corn Market Recap for 1/17/2013 (CME)
March Corn finished down 6 3/4 at 724 1/2, 9 1/2 off the high and 2 up from the low. May Corn closed down 6 at 725 1/4. This was 2 1/4 up from the low and 8 1/2 off the high.
March corn traded slightly lower on the day due to light profit taking following surprisingly positive export data this morning. Traders noted that the 9 day rally may have gotten a bit over extended and some were taking money off the table. Net weekly export sales came in at 393,300 tonnes for the current marketing and as of January 10th, cumulative sales stand at 54.5% of the USDA forecast vs. a 5 year average of 60%. Sales of 328,000 tonnes are needed each week to reach the USDA forecast, down from 330,000 last week. The market continues to keep a watchful eye on weather in South America as warmer and drier conditions settle into Argentina and South Brazil over the next 10-14 days. A private consultant in Brazil raised their corn production estimate to 74.7 million tonnes for 2012/13 from last year's 72.7 million tonnes. The analyst cited beneficial rainfall in key growing regions that should help boost the yield outlook. The USDA is estimating production at 71 million tonnes.

Corn Drops on Slowing Fuel, Export Demand; Soybeans, Wheat Fall (Bloomberg)
Corn declined for the first time in nine sessions after a government report showed slowing demand for the grain to make fuel in the U.S., and exports tumbled. Soybeans and wheat dropped.
Ethanol production fell last week to the lowest since the government began reporting data in June 2010, and inventories rose to the highest in four weeks, the Energy Department said yesterday. Export sales of corn were 48 percent smaller than a year earlier in the week ended Jan. 10, and commitments since Sept. 1 were down 49 percent compared with the same date a year ago.
“The slowdown in ethanol production will curb demand for corn,” Jerry Gidel, the chief market analyst for Rice Dairy LLC in Chicago, said in a telephone interview. “Corn exports remain depressed.”
Corn futures for March delivery slid 0.9 percent to close at $7.245 a bushel at 2 p.m. on the Chicago Board of Trade. The grain jumped 7.5 percent in the prior eight sessions, the longest rally since December 2011.
Corn and soybeans also fell as rain overnight in Argentina and forecasts for more in northern Brazil increased crop potential, reducing the outlook for U.S. exports when harvesting begins in South America next month, Roy Huckabay, an executive vice president for the Linn Group in Chicago, said in a telephone interview.
Soybean futures for March delivery declined 0.4 percent to $14.3025 a bushel on the CBOT. Earlier, the price touched $14.48, the highest since Dec. 19.
Wheat futures for March delivery slipped 0.5 percent to $7.8125 a bushel in Chicago, after gaining 5.4 percent the prior four sessions. Yesterday, the price touched $7.91, the highest since Dec. 26.
Corn is the biggest U.S. crop, valued at a record $76.5 billion in 2011, with soybeans in second place at $35.8 billion, government figures show. Wheat is the fourth-biggest crop, behind hay, with a value of $14.4 billion.

China Said to Have Bought 250,000 Tons of Sugar as Price Falls (Bloomberg)
China, the second-biggest sugar consumer, bought 250,000 metric tons of the sweetener as a 23 percent decline in prices in the past year has made imports more attractive, said two executives with direct knowledge of the matter.
The raw-sugar cargos will arrive in January and February at about $460 a ton, cost-and-freight to China, said the executives, who asked not to be identified because the information is private. At least one cargo will be sourced from Guatemala, they added.
China’s purchases may help absorb the global sugar surplus. Goldman Sachs Group Inc. cut its price forecast this week amid the glut.
Sugar in New York dropped in the past year as farmers from Russia to Thailand planted more crops.

Natural Gas Jumps to 6-Week High on Above-Forecast Supply Drop (Bloomberg)
Natural gas futures jumped to the highest price in almost six weeks after a government report showed a bigger-than-expected U.S. inventory decline.
Gas rose 1.7 percent after the Energy Information Administration said stockpiles fell 148 billion cubic feet last week to 3.168 trillion. Analyst estimates compiled by Bloomberg showed a decrease of 139 billion. Supplies were 4.4 percent below year-earlier levels, the widest deficit in 17 months. Frigid Northeast and Midwest weather may boost demand next week.
“It’s a supportive report,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “The current weather and weather forecasts for key gas-consuming areas for the weeks ahead are supportive of prices.”
Natural gas for February delivery increased 5.9 cents to $3.494 per million British thermal units on the New York Mercantile Exchange, the highest settlement price since Dec. 7. Trading volume was 34 percent above the 100-day average at 2:54 p.m. Gas has climbed 40 percent from a year ago.
April $4.50 calls were the most active gas options in electronic trading. They were 0.1 cent higher at 1 cent on volume of 6,760 contracts as of 2:53 p.m. Calls accounted for 47 percent of options volume.

Oil Declines From Four-Month High Before China Economic Reports (Bloomberg)
Oil fell from the highest level in four months in New York, paring the longest weekly winning streak in 14 months, before reports that will show whether China halted a seven-quarter economic slowdown.
Futures slid as much as 0.4 percent after rising the most in two weeks yesterday. The economy in China, the world’s second-biggest crude user, probably expanded 7.8 percent in the fourth quarter from a year ago, up from 7.4 percent in the three months through September, according to a Bloomberg survey before data from the National Bureau of Statistics. The bureau may also say factory output and retail sales accelerated in December.
Crude for February delivery slid as much as 34 cents to $95.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.17 at 10:56 a.m. Sydney time. The contract advanced 1.3 percent to $95.49 yesterday. That’s the biggest gain since Jan. 2 and the highest close since Sept. 17. Prices are up 1.7 percent this week for a sixth weekly advance, the longest winning streak since November 2011.
Brent for March settlement increased $1.42, or 1.3 percent, to $111.10 on the London-based ICE Futures Europe exchange yesterday. The front-month European benchmark contract closed at a premium of $15.16 to West Texas Intermediate futures, the narrowest spread since July 24.
London-traded Brent will struggle to advance past the combined barrier of a one-year resistance line and a downward- sloping trend channel at $112.82 a barrel, according to technical analysis by Societe Generale SA.

Brent Crude Oil Market Report (CME)
March Brent crude oil traded higher on the session and back above the $111.00 level. Some of the support for the market came from an improvement in macroeconomic sentiment following better than expected US economic readings, as well as a boost in geopolitical tension in Algeria. Meanwhile, North Sea Forties traded sharply lower relative to Brent crude oil on the session, weighed down by a boost in near term supply flows. UAE's TAQA indicated that oil flows from the Brent pipeline had restarted after this week's stoppage. As a result, North Sea Forties traded below dated Brent crude oil. The March Brent vs. West Texas crude oil spread came under added pressure early in the session, trading down to $14.61 premium to Brent. The spread differential rallied to $15.10 later in the session, up about $.10 compared to yesterday's settlement.

Silver Market Recap Report (CME)
The silver market ranged up sharply today and in the process the March silver contract reached back up to the highest level since December 19th. Technical players might be emboldened by the fact that March silver rejected a lower low today and then flashed back up to a multi-week high. In addition to favorable scheduled data from the US, silver might have been able to draft support from higher copper prices, strength in equities and marginally supportive currency market action.

Gold Market Recap Report (CME)
The gold bulls have to come away from the action today emboldened as the market appeared to be on the ropes in the morning trade and then the gold market seemed to fall even further in the face of better than expected US scheduled data. Eventually the gold market recovered and charged back into positive ground as the overall attitude in the market returned to a widely embraced risk-on stance. From a technical perspective February gold showed what appeared to be a rather definitive reversal and that had to put some gold bears back on their heels today.

20130118 0929 Soy Oil & Palm Oil Related News.

2013-01-18T09:29:00.001+08:00

Soybean Complex Market Recap (CME)
January Soybeans finished down 5 1/2 at 1431, 17 off the high and 8 3/4 up from the low. November Soybeans closed down 11 3/4 at 1285 1/4. This was 2 1/2 up from the low and 15 3/4 off the high.
January Soymeal closed up 2.1 at 414.0. This was 3.3 up from the low and -2.1 off the high.
January Soybean Oil finished up 0.18 at 51.49, 0.17 off the high and 0.57 up from the low.
March soybeans traded lower on the day despite explosive export sales data this morning. Net weekly export sales for soybeans came in at 1,608,800 tonnes for the current marketing year and 180,000 for the next marketing year for a total of 1,788,800. The USDA also reported that US exporters sold 240,000 tonnes of soybeans to an unknown destination for the 2013/14 crop year. Sales of only 117,000 tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 236,100 tonnes for the current marketing year and 9,000 for the next marketing year for a total of 245,100 tonnes. Sales of 45,000 tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 12,900 tonnes for the current marketing year and sales of 8,000 tonnes are needed each week to reach the USDA forecast. Strong demand from international buyers continues to add support to the market but an expected record crop in Brazil could limit gains long term. A private analyst in Brazil raised their production forecast for Brazil to 84 million tonnes, up 900,000 tonnes from their prior estimate and vs. the USDA forecast of 82.5 million tonnes.

Palm oil inventories in Indonesia will probably rise to almost 90%of capacity as exports from the largest grower drop after Malaysia set its tariff at zero and as China imposed more stringent rules on shipments. Stockpiles may gain to 3.5m metric tons in January from 3.25m tons in December, according to the median of estimates from two plantation companies, a refiner and an analyst compiled by Bloomberg. Shipments may decline 0.6% to 1.54m tons, while production is seen stable at 2.5 million tons, the medians of estimates from the same four respondents and a third plantation company showed. (Bloomberg)

India Taxes Palm Oil for First Time Since 2008 to Shield Growers (Bloomberg)
India, the world’s biggest cooking oil consumer after China, will tax crude palm oil imports for the first time since 2008 after a slump in prices spurred record shipments, hurting domestic oilseed growers.
Crude palm and soybean oil imports will be taxed at 2.5 percent, while the tariff on purchases of refined cooking oils will be maintained at 7.5 percent, the Agriculture Ministry said in a statement yesterday. The benchmark price for calculating the tariff will be changed for the first time since 2006 on all cooking oils on a fortnightly basis, the government said in another statement on its website.
The taxes may cut Indian imports, boosting palm oil inventories in Indonesia and Malaysia, the world’s largest producers, and pressure futures in Kuala Lumpur. Futures will trade between 2,300 ringgit ($763) and 2,600 ringgit a metric ton until February, keeping inventories high, Dorab Mistry, director at Godrej International Ltd., said Nov. 30.
“Crude palm oil demand from Indian refiners are probably going to decline and the extent may not be significant because palm oil is still far cheaper than alternatives,” said Ben Santoso, an analyst at DBS Group Holdings Ltd. in Singapore. “We expect prices to remain range-bound until at least May, when demand normally picks up again.”
Futures for delivery in April fell 2.1 percent to 2,379 ringgit ($792) a ton yesterday on the Malaysia Derivatives Exchange, the most at close in more than a week. The most-active contract has rebounded 7.3 percent after slumping to a three- year low of 2,217 ringgit on Dec. 13.

EDIBLE OIL: Malaysian palm oil futures fell after India imposed an import duty on crude palm oil imports, a move that could hurt demand and leave stocks near record highs. (Reuters)

20130117 1707 Palm Oil Related News.

2013-01-17T17:07:00.001+08:00

Malaysian palm oil futures down 2 pct on India duty hike FCPOc3 - RTRS
17-Jan-2013 17:05
SINGAPORE, Jan 17 (Reuters) - Malaysian palm oil futures tumbled 2 percent on Thursday after India, the world's biggest buyer of vegetable oils, imposed a duty of 2.5 percent on imports, a move that could hurt demand for the edible oil and leave stocks near record highs.
By 0900 GMT, the benchmark January contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had lost 2 percent to trade at 2,382 ringgit ($790) per tonne.
India's move is aimed at cutting imports and protecting domestic oilseeds growers. (Full Story) ($1=3.02 ringgit)

20130117 1643 Gobal Markets & Commodities Related News.

2013-01-17T16:43:00.001+08:00

STOCKS: European stock index futures pointed to a weaker start and Asian shares fell as investors avoided strong bets before results from major U.S. companies and a slew of economic data from China. U.S. stocks ended mixed on Thursday. (Reuters)

FOREX: The dollar edged higher against the yen after a media report quoted Japan's economics minister as saying that his recent comments on the yen had been misinterpreted. (Reuters)

FOREX-Euro rises to 9-1/2 month high versus sterling
LONDON, Jan 17 (Reuters) - The euro rose to a 9-1/2 month high against sterling as worries about the poor UK economic outlook contrasted with better sentiment towards the single currency.
The euro rose 0.3 percent on the day to 83.33 pence, its highest level since early April. It hit stiff technical resistance at 83.33 pence, equivalent to 1.20 euros per pound and a key level for British companies looking to hedge their foreign exchange exposure.

Factory, price data give hopeful signs for U.S. economy (Reuters)
The U.S. economy ended 2012 on a surprisingly sound note as factory output climbed and low inflation lifted consumers' purchasing power, signs the economy may be able to weather the higher tax bills that rang in the new year.

Sahara hostage siege turns Mali war global (Reuters)
Islamist fighters have opened an international front in Mali's civil war by taking dozens of Western hostages at a gas plant in the Algerian desert just as French troops launched an offensive against rebels in neighbouring Mali.

Rain needed by month's end for Argentina to hit corn target (Reuters)
Argentina needs rain by the end of the month to maximize corn yields and to realize forecasts that the global supplier will have a record harvest of 28 million tonnes, farmers and agronomists say.

OPEC sees weaker demand for its crude in 2013 (Reuters)
OPEC expects demand for its crude to be lower than expected in 2013 because of higher supply from rival producers, indicating inventories could build up substantially even after a cut in output by top exporter Saudi Arabia.

OIL: Brent futures weakened to stay below $110 a barrel as concerns about a weakening global economic outlook revived demand worries, but prices were supported from supply concerns after Islamist militants attacked an Algerian gas field. (Reuters)

China aluminium consumption to pick up but lag output -industry (Reuters)
China's consumption of aluminium is set to pick up speed this year, though not by enough to keep up with production as a swelling surplus of the metal caps prices, industry sources and a leading analyst said.

BASE METAS: London copper inched up following a four-session losing streak, with robust U.S. factory data bolstering the outlook for demand, but caution ahead of Chinese growth data later this week tempered gains. (Reuters)

PRECIOUS METALS: Gold traded flat as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big on an economic recovery while easing concerns about immediate supply shortages from South Africa clipped platinum's seven-day rally. (Reuters)

METALS-Copper edges up on US factory data; caution on China
SINGAPORE, Jan 17 (Reuters) - London copper inched up following a four-session losing streak, with better-than-expected U.S. factory data bolstering the outlook for demand, but caution ahead of Chinese growth data later this week tempered gains.
"There seems to be a bit more confidence in the economic outlook which has clearly favoured some relief in metals prices," said analyst Stefan Graber of Credit Suisse in Singapore.

PRECIOUS-Gold flat, platinum snaps seven-day rally
SINGAPORE, Jan 17 (Reuters) - Gold traded steady on Thursday as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big, while easing concerns about immediate supply shortages from South Africa clipped platinum's seven-day rally.
"If growth continues to be really good, it could shift central banks' bias from easing to tightening, which would not be good for the precious metals complex," said Jeremy Fries, commodity strategist at Societe Generale in Hong Kong.

20130117 1612 Palm Oil Related News.

2013-01-17T14:26:00.001+08:00

Indian edible oil futures extend gains on import duty hike - RTRS
17-Jan-2013 15:46
MUMBAI, Jan 17 (Reuters) - Soyoil and crude palm oil futures on Indian commodity exchanges extended gains on Thursday afternoon after the government decided to raise import duty on crude edible oils.
India has slapped a 2.5 percent import duty on crude edible oils, Information Minister Manish Tewari, a move taken to stem overseas purchases by the world's top vegetable oil buyer and protect its domestic oilseed growers. (Full Story)
Soyoil futures NSOG3 on the National Commodity and Derivatives Exchange extended gains up to 1 percent, while crude palm oil futures MCAG3 on Multi Commodity Exchange rose up to 2.6 percent after the announcement.

VEGOILS-Palm edges down, investors eye exports
Thu Jan 17, 2013 12:36am EST
* Profit-taking on positive market sentiment -analyst
* Rangebound trade expected for rest of week -analyst
* Palm oil to retrace to 2,403 ringgit -technicals

(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Jan 17 (Reuters) - Malaysian palm oil futures
edged down on Thursday as investors locked in profits after
steady gains in prices, although market optimism was capped by a
dismal export performance in the first half of January.
The tropical oil posted gains this week after Malaysia, the
world's no.2 producer, said it would keep its crude palm oil
export tax at zero percent in February to spur shipments and cut
stockpiles which hit a record 2.63 million tonnes in December.
Traders also took cues from hints of recovering demand from
major buyers as temperatures become warmer and more suitable for
palm oil, which solidifies in winter.
"We are seeing some profit-taking today. For the rest of the
week the market is going to trade on a rangebound basis," said
Phillip Futures analyst Ker Chung Yang in Singapore.
"We have positive sentiment from the zero-duty tax
structure, but at the same time we also have cargo surveyor data
showing us Malaysian exports falling by double digits."
By the midday break, the benchmark April contract
on the Bursa Malaysia Derivatives Exchange had inched down 0.6
percent to 2,417 ringgit ($800) per tonne.
Total traded volume stood at 16,603 lots of 25 tonnes each,
higher than the usual 12,500 lots as investors traded to lock in
profits.
Technical analysis showed that Malaysian palm oil may end
its current rebound around resistance at 2,449 ringgit per
tonne, retracing to 2,403 ringgit, said Reuters market analyst
Wang Tao.
Malaysia, which neighbours top producer and rival Indonesia,
has been struggling with record stocks since September due to
tepid global economic conditions and the euro zone crisis which
have stifled demand and caused prices to tumble 23 percent in
2012.
While end-stocks are expected to slowly shrink in the first
quarter of the this year on the back of a seasonally slowing
production, sluggish exports could crimp any recovery in prices.
"For December we have stocks at 2.63 million tonnes. My
assumption is that we are not going to see a 3 million tonne
stock level, but it all depends on how exports play out for the
rest of the month."
Brent futures slipped on Thursday as signs of a weakening
global economic outlook revived demand worries, but the contract
stayed above $109 a barrel on supply concerns after Islamist
militants attacked an Algerian gas field.
U.S. soyoil for March delivery fell 0.5 percent in
early Asian trade. The most active May soybean oil contract
on the Dalian Commodity Exchange rose 0.4 percent.

Palm Oil Drops as Lower Exports, Indian Tax May Bolster Reserves
2013-01-17 04:40:31.385 GMT

Jan. 17 (Bloomberg) -- Palm oil declined for the first time
in three days on concerns that inventories in Malaysia may stay
near record levels as exports drop and India, the world’s
biggest buyer, plans to tax imports to protect local growers.
The contract for delivery in April, which has the largest
volume, fell as much as 0.9 percent to 2,408 ringgit ($797) a
metric ton on the Malaysia Derivatives Exchange, and ended the
morning session at 2,417 ringgit in Kuala Lumpur.
Palm oil slumped 23 percent last year, falling to a three-
year low of 2,217 ringgit on Dec. 13, as economic slowdowns in
Europe and China reduced demand. Stockpiles in Malaysia jumped
to an all-time high of 2.63 million tons in December, according
to the nation’s palm oil board. Exports tumbled 21 percent to
570,510 tons in the first 15 days of this month from the same
period in December, Intertek said Jan. 15.
“Malaysian exports are not that impressive and showed
demand weakness,” Chung Yang Ker, an analyst at Phillip Futures
Pte Ltd. in Singapore, said by phone. Futures may trade in a
range of 2,400 ringgit and 2,480 ringgit a ton, he said.
JPMorgan Chase & Co. cut its palm oil price forecast by 10
percent to 2,600 ringgit a ton for 2013-2014 from 2,900 a ton
earlier, analysts Simone Yeoh and Ying-Jian Chan said in a
report today, citing an overhang of inventories.
India will consider imposing a 5 percent duty on crude palm
oil imports to shield domestic oilseed growers from cheap
supplies, according to two government officials. The cabinet may
also discuss raising the tariff on refined cooking oils to 10
percent from 7.5 percent today, they said yesterday.
A duty on Indian imports would delay palm oil price
recovery further, Chye Wen Fei, an analyst at Hong Leong
Investment Bank in Kuala Lumpur, wrote in a report today.
Refined palm oil for delivery in May fell 0.5 percent to
6,740 yuan ($1,083) a ton on the Dalian Commodity Exchange.
Soybean oil for September rose 0.4 percent to 8,698 yuan a ton.

Palm Oil Stockpiles in Indonesia Seen Rising as Exports Decline
2013-01-17 03:59:48.839 GMT

Jan. 17 (Bloomberg) -- Palm oil inventories in Indonesia
will probably rise to almost 90 percent of capacity as exports
from the largest grower drop after Malaysia set its tariff at
zero and as China imposed more stringent rules on shipments.
Stockpiles may gain to 3.5 million metric tons in January
from 3.25 million tons in December, according to the median of
estimates from two plantation companies, a refiner and an
analyst compiled by Bloomberg. Shipments may decline 0.6 percent
to 1.54 million tons, while production is seen stable at 2.5
million tons, the medians of estimates from the same four
respondents and a third plantation company showed.
Rising inventories would increase pressure on Indonesia to
cut its export tax to compete with Malaysia. The second-largest
producer set the tariff on shipments at zero this month to drain
record reserves and the government has said the rate will be
unchanged in February. Indonesia has about 4 million tons of
storage capacity, according to Deputy Trade Minister Bayu
Krisnamurthi. It doesn’t publish official data on inventories.
“If the government cuts the export tax, it will definitely
help boost shipments because we’re still in oversupply in the
short term,” Jeffrosenberg Tan, a Jakarta-based analyst at PT
Sinarmas Sekuritas, said yesterday.
Attempts by Indonesian exporters to cut reserves are
hampered by the zero tariff in Malaysia, causing inventories to
stay high at about 3.5 million tons this month, Joko Supriyono,
a director at PT Astra Agro Lestari, said by phone from Jakarta
on Jan. 15. Supriyono is also secretary-general at the
Indonesian Palm Oil Association.

Zero Too

Indonesia’s Trade Minister Gita Wirjawan said Jan. 11 that
the government is considering a cut in its export tax and
“ideally” the tariff should be zero too so it can compete with
Malaysia. The palm oil association, known as Gapki, has asked
the government to reduce the tax to avoid losing market share in
countries such as India that typically buy more crude oil. The
tax was set at 7.5 percent this month.
Shipments from Indonesia in January would be the lowest
since October, when they reached 1.42 million tons, according to
Gapki figures. Exports of palm and lauric oils surged 39 percent
to 1.98 million tons in November from a month earlier, the
highest level since at least January 2008, which is the earliest
data available from the growers and refiners group.
Palm oil futures have tumbled into a bear market in Kuala
Lumpur as inventories in Indonesia and Malaysia surged because
of low demand amid an economic slowdown in China and Europe.
Prices dropped 23 percent last year. The contract for April
delivery fell 0.8 percent today to 2,411 ringgit ($798) a ton.
China’s tightening of checks on oils imports from Jan. 1
will also affect shipments as cargoes will need more time to
pass customs, said Susanto, head of marketing at Gapki. Imports
of palm by China, the biggest cooking oil user, may drop to
300,000 tons this month, less than half of those in December
because of the new rules, according to the median of estimates
from six traders and researchers in Bloomberg survey this week.

20130117 1134 Global Markets & Energy Related News.

2013-01-17T11:34:00.001+08:00

GLOBAL MARKETS-Asian shares consolidate, global growth worry weighs
TOKYO, Jan 17 (Reuters) - Asian shares consolidated as better-than-expected U.S. earnings lifted sentiment, but concerns over the global economic outlook and U.S. fiscal problem capped markets.
"Fourth-quarter earnings results for U.S. companies have been better than expected, lifting investor outlook. However, concerns over the fiscal slope continue to weigh, and the main board is expected to see choppy trading above the 1,950-mark," Kim Soon-young, an analyst at IBK Securities, referring to South Korean shares, which opened up 0.3 percent at 1,983.67.

Factory, price data give hopeful signs for U.S. economy
WASHINGTON, Jan 16 (Reuters) - The U.S. economy ended 2012 on a surprisingly sound note as factory output climbed and low inflation lifted consumers' purchasing power, signs the economy may be able to weather the higher tax bills that rang in the new year.
Manufacturing output climbed 0.8 percent in December, the Federal Reserve said on Wednesday, a day after retail sales data pointed to robust consumer spending last month.

FOREX-Euro still looking for inspiration, yen firm
SYDNEY, Jan 17 (Reuters) - The euro struggled to regain its momentum even after a top European central banker sounded relaxed about its recent run higher, while the yen hovered at one-week highs, still underpinned by a wave of short-covering.
"We continue to think any dips in EURUSD provide buying opportunities," said Vassili Serebriakov, strategist at BNP Paribas."In our view the euro also remains attractive on the crosses, and we are holding long EURCHF and EURSEK trade recommendations."

OIL-Oil rises on Algerian gas field attack, US stock draw
NEW YORK, Jan 16 (Reuters) - Oil prices rose on Wednesday after an Algerian gas field came under attack from Islamist militants and as data showed crude stocks fell in the United States last week.
"Given how successful Algeria has been at protecting its oil and gas installations over the decades, a raid like this was seen as fairly unlikely," said Sam Ciszuk, analyst with British-based consultancy KBC Energy Economics.

US crude stocks fall, fuel stocks rise-EIA
NEW YORK, Jan 16 (Reuters) - U.S. crude stocks fell last week as imports dropped and fuel stocks rose, according to weekly data from the U.S. Energy Information Administration on Wednesday.
Crude stocks fell by 951,000 barrels to 360.3 million barrels in the week to Jan. 11, the EIA said. Analysts polled by Reuters had expected stocks to rise by 2.3 million barrels. Crude oil imports fell by 312,000 barrels per day to 7.99 million bpd in the week.

OPEC sees weaker demand for its crude in 2013
LONDON, Jan 16 (Reuters) - OPEC expects demand for its crude to be lower than expected in 2013 because of higher supply from rival producers, indicating inventories could build up substantially even after a cut in output by top exporter Saudi Arabia.
The Organization of the Petroleum Exporting Countries' monthly report indicated world supply will comfortably outstrip demand in the first half of 2013, even after Riyadh cut output in December by almost 500,000 barrels per day to fend off a supply overhang and defend prices well above $100 a barrel. E

20130117 0944 Global Economy Related News.

2013-01-17T09:44:00.003+08:00

Developing countries, led by China, will remain the main engines of global economic growth in 2013 as Europe and the US plod along, the World Bank said, whilst lowering its forecast for global growth to 2.4%, from a Jun estimate of 3.0% as the economic recovery remains "fragile and uncertain" despite lower financial risk. (AFP)

The US NAHB housing market index stalled at 47 in Jan, underperforming consensus of 48. (Bloomberg)

US consumer prices experienced no change in Dec on a mom basis (-0.3% in Nov), matching consensus. (Bloomberg)

US industrial production gained 0.3% mom in Dec (a revised 1.0% in Nov), exceeding consensus of 0.2%, whilst the capacity utilisation rate stood at 78.8% (a revised 78.7% in Nov), again higher than consensus of 78.5%. The manufacturing index rose 0.8% mom (a revised 1.3% in Nov), doubling consensus of 0.4%. (Bloomberg)

The US MBA mortgage applications index rose 13.0% wow in the 11 Jan week (10.0% in the earlier week), whilst the refinance index gained 15.0% wow (12.0% in the prior week). (Bloomberg)

The US economy has picked up pace since Nov, with Christmas sales modestly stronger and New York and New Jersey rebounding from Hurricane Sandy, the Federal Reserve's Beige Book showed. However, manufacturing was still sluggish, hiring and inflation still subdued and the stifling effect of the fiscal cliff fight still lingering. (AFP)

New car registrations in the European Union fell by 8.2% from their 2011 level to 12.05m units last year, the lowest point in 17 years. (AFP)

Eurozone consumer prices held steady at 2.2% yoy in Dec, unchanged from an initial estimate and in line with expectations. The IMF will release €3.2bn in aid to Greece that had been frozen for months amid fears about the country's ability to surmount its debt crisis. (AFP)

Average residential land prices in China rose 2.26% yoy to reach Rmb4,620 (US$733.33) per square meter in 2012. The growth rate was slower than the 3.34% increase in commercial land prices and the 2.7% rise in industrial land prices in 2012. (Xinhua)

The number of newly-built housing units sold in 54 major Chinese cities soared 103% yoy in the first 13 days of 2013, reaching 104,800 units. (Xinhua)

China's growth is expected to have re-accelerated to near 8% in the fourth quarter of last year, but there are some troubling inconsistencies in the economy, according to the China Beige Book. Despite easing credit conditions just 32% of companies surveyed borrowed money, falling from 34% in the third quarter, and below first-half figures. (Reuters)

China's foreign direct investment inflows fell last year for the first time since the global financial crisis, slipping 4% to US$111.7bn in 2012 (US$116bn in 2011). In Dec FDI fell 4.5% yoy (-5.4% in Nov). (Reuters)

Japan’s machinery orders rose 3.9% mom in Nov (2.6% in Oct), the second straight rise. This far surpasses the consensus estimate of 0.3%. (Bloomberg)

The Bank of Japan downgraded its assessment of local economies in eight of its nine regions in Jan, , compared with the previous report released in Oct, fueling expectations the central bank will take fresh easing action at next week's policy-setting meeting. (WSJ)

The Energy and Mineral Resources Ministry is still in full control of Indonesia’s mining industry despite a Supreme Court ruling that stripped the ministry of power because the law is under review, a government official said. The official said the government is currently unable revise the regulation due to an ongoing review of the 2009 Law on Mineral Resources by the Constitutional Court. The law states that when a law is under review, no supporting regulations can be revised. (Jakarta Globe)

Indonesia has downgraded its forecast for the rupiah this year, with a floor of Rp9,700/US$, after budgeting for a rupiah at Rp9,300/US$ earlier. (Jakarta Globe)

Thailand’s Ministry of Commerce ordered the Department of Internal Trade to ask manufacturers to maintain their current product prices for at least three more months. (Bangkok Post)

20130117 0944 Malaysia Corporate Related News.

2013-01-17T09:44:00.001+08:00

IJM Corp's entry into Scomi Group has enabled Scomi to obtain a RM118m bridging loan which was used as an interim measure to settle part of a debt obligation of RM200m. Scomi had RM200m MTN facility that had been extended several times and finally fell due on Oct 12, 2012. In Sep 12, it repaid RM57.9m. Proceeds from the share placement to IJM Corp and the amount from the bridging loan were utilised to fully settle the debt obligation due on Oct 12 last year. Scomi is calling for an EGM on Jan 31, seeking shareholder support for the proposed convertible bond issue. The proceeds from the bonds will be used to settle the remaining RM61m due from the bridging loan and a sum of RM46m to be used for working capital. (Financial Daily)

SP Setia has introduced a four-year programme as an incentive for its staff and management personnel to stay with the company. The proposed "long-term incentive programme" (LTIP), stretches beyond a typical employee share option scheme and includes a share grant plan that will reward staff with shares for zero consideration. This is in view of the anticipated departure of company founder and CEO Tan Sri Liew Kee Sin two years from now. Speculation had it that some within the management rank may start a new venture with Liew. And for those who may not join Liew, there needs to be fresh incentives to discourage them from joining other property firms. The LTIP will involve the issuance of new shares of up to 15% of the company's paid-up capital. It will be tabled for approval by SP Setia shareholders in a coming meeting. The LTIP includes an employee share grant plan (ESGP) that will see selected employees and executive directors being awarded shares for
zero consideration. There are two plans under the ESGP: the restricted share plan and the performance share plan. (Financial Daily)

Proton Holdings Bhd has been mandated to raise its annual production to 500,000 units in five years by its parent DRB-Hicom Bhd. "Moving forward, it is going to be challenging, and it will be difficult. Competition is going to get harder and tougher, cost will be higher and this also applies to Proton," said DRB-Hicom managing director Datuk Seri Mohd Khamil Jamil. He added the company was looking to build that volume from the export market, and deemed it fundamental to the survival and growth of Proton. Currently, Proton manufactures about 150,000 units of cars annually. (StarBiz)

Bank Muamalat Malaysia Bhd is awaiting approval on a collaboration deal that will allow it to offer Islamic banking services through post office counters by the third quarter of the year. Bank Muamalat chief executive officer Datuk Mohd Redza Shah Abdul Wahid said the deal with sister company Pos Malaysia Bhd, which is awaiting regulatory approvals, would provide the bank a substantially wider reach through more than 1,000 post office service counters nationwide. Under the same alliance, Bank Muamalat will also offer Pos Malaysia services through its counters. (Malaysian Reserve)

DiGi aims to grow its online business by 30% this year, mainly driven by the increasing trend of online shopping among consumers. Its online store, DiGi Store Online, allows customers to buy new mobile devices for their existing plans, sign up to a new plan and reload prepaid airtime, among others. The portal also allows non-DiGi customers to buy devices by signing up to a plan -via a new DiGi number or porting from their existing number. (BT)

Salcon secured a RM110m contract from the Energy, Green Technology and Water Ministry's sewerage services department to build the sewerage pipes network in Klang. The scope of works covers sewage rationalisation within the South Klang sub-catchment located in Klang. Contract duration is 48 months, starting from Jan 2013 to Jan 2017. (Starbiz)

Westports Malaysia Sdn Bhd, which is reportedly eyeing an initial public offering (IPO) worth US$500m this year, said it has yet to make any firm plans regarding the matter. While admitting that the terminal operator is considering an IPO, its CEO Ruben Emir Gnanalingam said it has not decided when or where to go public. He said Westports Malaysia is looking at various fund raising options, including an IPO. "Yes, we may (consider an IPO), but we don't know when. We are still discussing the matter (with the bankers)," Ruben said. (Sun)

KNM Group Bhd has revised the expected date for the listing of subsidiary Borsig on the Singapore Stock Exchange from the first quarter to third quarter of the year. Chief financial officer Richard Voon said the company has not completed the paperwork to list Borsig earlier. "Our plans to have the listing early part of this year was not tenable as we have to have the audited accounts and other documentations ready before listing and this is more likely that we can make it happen in the later part of the year," he said. (Malaysian Reserve)

DRB-Hicom: MYR11b projects will make it a major player in property market. DRB-Hicom Bhd's planned MYR11b property projects over the next 36 months will catapult the conglomerate to be among the larger players in the property market. "The land that we have in DRB-Hicom spans from Rebak Island in Kedah right down to Johor and sites in between. We still have about 800 acres more to be developed in Tanjung Malim, which is part of the Proton plant, and also 350 acres to be developed in Rebak Island, Kedah," said Datuk Mohamed Razeek Md Hussain Maricar, chief operating officer of services and property. (Source: The Star)

Oil & Gas: PETRONAS to launch contract bids for two fields next month. The next round of risk-service contract (RSC) bids by PETRONAS will be launched in February, and the fields of Tembikai and Chenang will once again be up for grabs, said sources. One to two other new marginal oilfields would likely be included to make the RSC offering more attractive. The source added that PETRONAS has a prequalified bid list for the fields of Tembikai and Chenang, and the players include Australia-based Hydra Energy Holdings Pty Ltd, Tap Oil Ltd and AWE Ltd. Hydra Energy's local partner is said to be Daya Materials Bhd. (Source: The Star)

Tradewinds: Buys over planter. Tradewinds Plantation Bhd has taken full control of Northern Integrated Agriculture Sdn Bhd with the purchase of the remaining 30% stake for MYR24m. (Source: Bursa Malaysia)

20130117 0937 Global Markets Related News.

2013-01-17T09:37:00.001+08:00

Asia FX (CME/www.lucafxta.com)
The appetite for risk was essentially neutral on Wednesday, when that Fed's Beige Book confirmed that fiscal uncertainty was having an impact on hiring and the economy. The statement hardly uncovered anything new, but sanctioned the status quo; no news is good news. All foreign currencies but the pound and Canadian dollar made little progress. The latter fell. The US stock markets closed mixed. The gold/oil spread closed down. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long euro, yen, and the commodity currencies, and short pound and franc. Good luck!

Overnight
US: The CPI was unchanged in December after declining 0.3% in November. The core CPI increased 0.1% in December, the same as in November.
US: The total net TIC flows rose to $27.8 billion in November from -$56.7 billion in October and the net long-term TIC flows jumped to $52.3 billion from $1.3 billion.
US: Industrial production rose 0.3% in December, less than 1% in November, while capacity utilization improved marginally to 78.8% in December from 78.7% in November.
US: The NAHB/Wells Fargo Housing Market Index was unchanged at 47 in January.

Today's economic calendar
Japan: Tertiary Industry Index for November
Australia: Consumer inflation expectation for January
Australia: Unemployment rate for December

Asian Stocks Rebound as Yen Snaps Two-Day Gain; Aussie Falls (Bloomberg)
Asian stocks rebounded from the biggest drop in two months as the yen snapped a two-day gain against the dollar. Australia’s dollar slid after a report showed employers unexpectedly cut jobs.
The MSCI Asia Pacific Index (MXAP) of regional shares rose 0.4 percent as of 9:51 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed. The yen weakened 0.3 percent to 88.60 per dollar after gaining 1.2 percent over the previous two days. The so-called Aussie slid 0.2 percent to $1.0550.
Asia’s stocks benchmark has risen more than 10 percent in the last two months as a slide in the yen boosted Japanese shares amid speculation a new government would add economic stimulus. Jobs in Australia fell by 5,500 in December, the statistics bureau said today. China’s economic growth probably accelerated for the first time in eight quarters, data from the National Bureau of Statistics are forecast to show tomorrow.
“There’s justifiable optimism out there,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “There’s tremendous upside in the Japanese share market as we’re seeing a significant shift in Japanese policy.”
The Japanese currency resumed declines amid bets Bank of Japan Governor Masaaki Shirakawa and his fellow board members will raise a 1 percent inflation goal at a meeting on Jan. 21-22. Prime Minister Shinzo Abe has called for the target’s doubling.
China’s National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. That’s up from a three- year low of 7.4 percent in the previous period.

Japanese Stocks Swing From Gains, Losses on Yen, GS Yuasa (Bloomberg)
Jan. 17 (Bloomberg) --　Japanese stocks swung between gains and losses as the yen’s decline lifted the outlook for exporters while GS Yuasa Corp. (6674) led losses on the Nikkei 225 (NKY) Stock Average.
Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 1.8 percent as the yen dropped against all its major counterparts. GS Yuasa, a supplier of batteries to Boeing Corp., dropped 4.4 percent after U.S. regulators grounded 787 Dreamliner aircraft after an emergency landing in Japan. Sharp Corp. (6753) led gains on the Nikkei 225 on a report it may sell a television factory in China to Lenovo Group Ltd.
The Nikkei 225 gained 0.6 percent to 10,665.41 as of 9:57 a.m. in Tokyo after falling 2.6 percent yesterday, the biggest drop since May 18. The broader Topix Index advanced 0.7 percent to 894.26.
“Stocks are moving in a lockstep with the yen as the market’s theme is monetary easing and inflation bets add to downward pressure on the yen,” said Ichiro Yamada, general manager of equities who helps manages about 300 billion yen ($3.4 billion) at Fukoku Mutual Life Insurance. “Common sense tells you that the yen’s drop up to about 100 against the dollar won’t have any negative impact on the Japanese economy.”

Most U.S. Stocks Fall as World Bank Offsets Apple Rally (Bloomberg)
Most U.S. stocks fell, following yesterday’s gain, as a cut in the World Bank’s growth forecasts offset a rally in Apple Inc. as investors watched earnings.
Boeing Co. (BA) slumped 3.4 percent as All Nippon Airways Co. and Japan Airlines Co., the world’s largest users of the 787 jets, grounded their entire fleet of Dreamliners. Custody banks Bank of New York Mellon Corp. and Northern Trust Corp. (NTRS) dropped at least 2.7 percent. Apple, which slid below $500 a share yesterday for the first time in 11 months, rallied 4.2 percent to halt a three-day decline. Goldman Sachs Group Inc. added 4.1 percent after the bank’s profit almost tripled.
Three stocks retreated for every two rising on U.S. exchanges at 4 p.m. New York time. The Standard & Poor’s 500 Index advanced less than 0.1 percent to 1,472.63. The Dow Jones Industrial Average declined 23.66 points, or 0.2 percent, to 13,511.23. About 5.6 billion shares changed hands on U.S. exchanges, or 8.6 percent below the three-month average.
“The cuts in growth forecasts are reminders that there’s still work to be done,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp. His firm has $1.92 trillion in client assets. “In the U.S., it’s early to talk about the earnings season, but so far we’re relatively pleased with what we’ve seen. We’ve had a good start to the year in stocks. There’s very little doubt that there’s quite a bit of money on the sidelines that could provide a nice boost higher.”

European Stocks Are Little Changed; TUI Travel Gains (Bloomberg)
European stocks were little changed, erasing an earlier retreat for the region’s benchmark Stoxx Europe 600 Index, as U.S. industrial production climbed and Goldman Sachs Group Inc.’s earnings topped estimates.
TUI Travel Plc (TT/) gained 3.9 percent after Europe’s largest tour operator said it received an approach from its German majority owner. Anglo American Plc (AAL) dropped 3.1 percent as the African National Congress said South Africa’s government should withdraw the company’s platinum licenses. Societe Generale SA (GLE) lost 2.8 percent as CA Cheuvreux downgraded the French lender.
The Stoxx 600 rose less than 0.1 percent to 286.03 at the close of trading, after earlier falling as much as 0.4 percent. The gauge has advanced 2.3 percent since the start of the year after U.S. lawmakers agreed on a budget, avoiding tax increases and spending cuts.
“Things have improved, compared to last year the world looks better,” Sebastian Paris-Horvitz, chief market strategist at HSBC Private Bank, told Francine Lacqua in an interview on Bloomberg Television today. “I do believe in the rotation towards equities, it looks better value for the future and is the reason we have been advocating the move toward riskier assets.”
The volume of shares changing hands in companies listed on Europe’s Stoxx 600 (SXXP) was 20 percent higher than the 30-day average today, according to data compiled by Bloomberg.

Emerging Stocks at One-Week Low on Slower Growth Forecast (Bloomberg)
Emerging-market stocks fell to a one-week low and currencies weakened after the World Bank and Germany cut economic growth forecasts and India’s central bank chief tempered expectations for monetary stimulus.
Tata Motors Ltd. (TTMT) sank by the most since Oct. 30 after sales of its Jaguar and Land Rover units dropped below estimates. OAO Gazprom and OAO Novatek, Russian natural-gas producers, dropped the most in at least a month, while Brazilian port operator LLX Logistica SA tumbled. Anglo American Platinum Ltd. (AMS), South Africa’s largest producer of the metal, slumped as employees at three of its mines refused to go to work. The Hungarian forint and Brazilian real led currency losses among emerging markets.
The MSCI Emerging Markets Index (MXEF) lost 0.2 percent to 1,071.21 in New York, the lowest close in eight days. The World Bank projected the global economy will expand 2.4 percent this year, down from a June forecast of 3 percent, and Germany cut its growth outlook to 0.4 percent from 1 percent. While India’s inflation rate remains “quite high,” the scope for monetary and fiscal stimulus is limited, Reserve Bank of India Governor Duvvuri Subbarao said yesterday.
“Risk assets in emerging markets are more vulnerable to the swing in the global economy,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “Slower growth will hurt profitability in emerging-nation companies more than those in developed countries given the proportion of exports in their economies.”

Yen Snaps Two-Day Gain Versus Dollar, Euro on BOJ Stimulus Bets (Bloomberg)
The yen snapped a two-day gain against the dollar and euro as investors weighed the likelihood of new monetary easing measures by the Bank of Japan (8301) next week.
Demand for the Japanese currency was limited after a government report today showed a measure of demand for services declined, adding to the case for more central bank stimulus. Australia’s dollar slid versus most major counterparts after data showed the nation lost jobs in December.
“There is no doubt that the BOJ will act at the next meeting,” said Yuki Sakasai, a foreign-exchange strategist in New York at Barclays Plc. “Otherwise, the yen wouldn’t stay at the 88 level against the dollar.”
The yen fell 0.2 percent to 88.58 per dollar at 9:32 a.m. in Tokyo, after gaining 1.2 percent over the previous two days. It sank to 89.67 on Jan. 14, the lowest since June 2010. The yen dropped 0.2 percent to 117.67 per euro, after rising 0.6 percent yesterday. The euro was little changed at $1.3288.
The so-called Aussie slid 0.3 percent to $1.0538. It touched $1.0599 on Jan. 10, the strongest since Sept. 14.
BOJ Governor Masaaki Shirakawa, who’s due to step down in April, and his fellow board members will review the central bank’s inflation goal at their Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”
Asian Development Bank President Haruhiko Kuroda is the “No. 1 candidate” for governor, according to a research note today by Masaaki Kanno, the chief economist in Tokyo at JPMorgan Securities Japan Co. Kuroda advocated unlimited monetary easing in a seminar in Tokyo on Jan. 11.
Japan’s tertiary index fell 0.3 percent in November from a month earlier, when it decreased 0.1 percent, the Ministry of Economy, Trade and Industry said today.

Aussie Drops Versus Peers as Payrolls Unexpectedly Fell (Bloomberg)
Australia’s dollar slid versus most of its 16 major counterparts after a report today showed employers in the country unexpectedly cut payrolls last month, adding to concern the domestic economy is slowing.
The so-called Aussie weakened versus the dollar after the jobless rate rose. New Zealand’s currency, known as the kiwi, remained higher against the dollar after milk powder prices increased to a two-month high at an auction.
“Domestically, the economy does not look that strong,” said Thomas Harr, head of Asia local markets strategy at Standard Chartered Plc in Singapore. “In the very, very short term, there’s a risk to the downside for the Aussie.”
The Australian dollar lost 0.3 percent to $1.0546 at 11:43 a.m. in Sydney. It bought 93.42 yen after falling 1.2 percent in the previous two days to close at 93.44 in New York. New Zealand’s currency added 0.1 percent to 84.19 U.S. cents after rising 0.2 percent yesterday. It gained 0.4 percent to 74.59 yen.
Ten-year yields in Australia dropped to as low as 3.32 percent, the least since Jan. 2. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was unchanged at 2.79 percent.
Australia’s statistics bureau said the number of people employed in the country fell in December by 5,500 after a revised 17,100 gain in the previous month. The jobless rate rose to 5.4 percent from 5.3 percent in November.
In New Zealand, whole-milk powder for March delivery rose 2.4 percent, according to a trade-weighted index on Fonterra Cooperative Group Ltd. (FCG)’s GlobalDairyTrade website. The near-term contract for New Zealand product rose to $3,261 a metric ton, the highest price since Nov. 20. Fonterra accounts for about 40 percent of the global trade in dairy products.

Treasuries Most Expensive in Two Weeks on Debt Concern (Bloomberg)
Treasuries were the most expensive in two weeks on speculation the U.S. debt-ceiling debate will curb economic growth, driving demand for the safest assets.
The 10-year term premium, a model created by economists at the Federal Reserve that includes expectations for interest rates, growth and inflation, was minus 0.77 percent yesterday in New York, the least since Jan. 1. A negative reading indicates investors are willing to accept yields below what’s considered fair value. Housing starts rose to a four-year high, a report today will show, based on a Bloomberg News survey of economists.
“Yields can fall,” said Tomohisa Fujiki, an interest-rate strategist in Tokyo at BNP Paribas SA, whose New York unit is one of the 21 primary dealers that are obligated to bid at U.S. debt sales. “The uncertainty on the debt-ceiling talks will support demand for Treasuries in coming months.”
The 10-year rate was little changed at 1.82 percent as of 9:53 a.m. in Tokyo, according to Bloomberg Bond Trader data. The 1.625 percent security due November 2022 traded at 98 1/4. The yield will fall to 1.75 percent within a month, Fujiki said.
Housing starts probably rose 3.36 percent to an 890,000 annual rate in December from November, reaching the fastest pace since July 2008, based on responses from economists ahead of the Commerce Department report at 8:30 a.m. New York time today.
With as little as a month until the U.S. runs out of money to pay its bills, President Barack Obama and Republicans in Congress are at odds on raising the debt ceiling.
The U.S. government makes about 80 million payments each month, including for Social Security, veterans’ benefits, defense contractors, law enforcement and income tax refunds.
The Treasury uses emergency measures to delay a default as the total value of debt nears the ceiling. Exhausting the extraordinary steps without raising the limit would require the Treasury to fund the government with cash on hand, which wouldn’t be adequate “for any meaningful length of time,” according to Treasury Secretary Timothy F. Geithner.
Congress has increased or revised the limit 79 times.

U.S. Industrial Production Rises 0.3% on Equipment Demand (Bloomberg)
Production at U.S. factories climbed more than forecast in December and the cost of living was little changed, showing the economy gained momentum entering 2013 while inflation remained at bay.
Manufacturing output advanced 0.8 percent after jumping 1.3 percent in November, the strongest back-to-back reading in almost a year, Federal Reserve figures showed today. The Labor Department said its consumer-price index was unchanged last month, capping the third-smallest annual gain in a decade.
Rebounds in housing, the auto industry and business investment combined with stabilization in global growth will probably support gains in manufacturing into this year. The lack of inflation and an improving job market are also helping boost Americans’ buying power, easing the risk that household spending will slump as the budget battles in Washington shake confidence.
“We’re likely to start this year on much firmer footing than we did last year,” said Millan Mulraine, an economist at TD Securities LLC in New York. “We’re moving in a positive direction.”
The Fed said today in its Beige Book business survey that the economy picked up across much of the nation last month, boosted by sales of cars and homes.
“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the central bank said in its survey, which is based on reports from the Fed’s district banks.

Fed Sees Economy Picking Up Across U.S. in Beige Book Survey (Bloomberg)
The U.S. economy picked up across much of the country last month, boosted by auto and home sales, even as the outlook for unemployment showed few signs of improvement, the Federal Reserve said.
“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the central bank said today in its Beige Book business survey, which is based on reports from the Fed’s district banks.
The report, prepared for discussion at the Federal Open Market Committee’s Jan. 29-30 meeting, may strengthen the resolve of policy makers who want to press on with the Fed’s $85 billion in monthly bond purchases until the labor market improves substantially.
“There’s still plenty of potential headwinds” for the economy, said Terry Sheehan, an economic analyst at Stone & McCarthy Research in Princeton, New Jersey. Policy makers “have not seen the recovery in labor markets that they had hoped for yet.”
The New York and Philadelphia districts “rebounded from the immediate impact of Hurricane Sandy,” while Boston, Richmond and Atlanta reported that growth increased slightly in their districts. Still, the report said that “labor market conditions remained mostly unchanged in all districts.”
The Beige Book provides anecdotal evidence on the health of the economy. In the previous report on Nov. 28, the Fed said the economy expanded at a “measured pace” and “consumer spending grew at a moderate pace in most districts, while manufacturing weakened.”

Foreign Demand for U.S. Assets Rises on Global Slowdown (Bloomberg)
International purchases of U.S. stocks, bonds and other financial assets were more than twice as much as forecast in November as investors sought shelter from a global economic slowdown.
Net buying of long-term financial assets totaled $52.3 billion during the month, swinging from net sales of $1 billion in October, the Treasury Department said today in Washington. Economists surveyed by Bloomberg projected net buying of $25 billion of long-term assets, according to the median estimate.
“The global economic slowdown and renewed uncertainty in the U.S. about the impact of the fiscal cliff following the general election motivated the flight to safety,” Millan Mulraine, senior U.S. strategist for TD Securities Inc. in New York, said after the report was released. “With intensification of these concerns in December we are likely to see further increase in flows.”
President Barack Obama vowed he won’t negotiate over raising the government’s debt ceiling even as he offered to deal on a separate track with the deficit reduction demanded by Republicans. Senate Republican leader Mitch McConnell of Kentucky said the debt-ceiling debate is the “perfect time” to address spending, while House Speaker John Boehner, an Ohio Republican, brushed off Obama’s insistence on keeping the two separate.

China Set to Exit Slowdown by Boosting Infrastructure (Bloomberg)
China’s economy is set to exit a seven-quarter slowdown as the government rolls out infrastructure projects and limited inflation lets officials hold off from tightening monetary policy.
The National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of 53 economists surveyed by Bloomberg News. That’s up from a three-year low of 7.4 percent in the previous period.
The risk is that the rebound may fade in the second half as the boost from railways and road projects ebbs and the government grapples with rising inflation and the expansion of shadow banking. While the nation is set to reverse its slide in economic growth, the pace remains short of the 10 percent average of the past two decades as higher wages and weakness in global demand limit export gains.
“The current recovery is being driven mostly by monetary and fiscal policy easing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Once the momentum of policy easing slows, growth may trend down again.”
Tomorrow’s report will also include the latest monthly data. Factory output probably rose 10.2 percent in December from a year earlier, up from 10.1 percent in November, while retail sales advanced 15.1 percent after a 14.9 percent gain the prior month, according to median analyst estimates.

Japan Opposition Party Won’t Back BOJ Officials for Governor (Bloomberg)
Japanese Prime Minister Shinzo Abe must not pick a Bank of Japan (8301) bureaucrat to be the next central bank governor and should consider former economy minister Heizo Takenaka for the post, an opposition party leader said.
Yoshimi Watanabe said his Your Party won’t support a BOJ insider to succeed Masaaki Shirakawa when his term ends in April or for two deputy governors who will step down in March. Abe has said he is seeking candidates who support his 2 percent inflation target and will enact “bold” monetary easing to overcome more than a decade of falling prices.
“If someone is chosen from within the BOJ, there will be no change in thinking,” Watanabe, 60, said yesterday in an interview. “It’s in the BOJ’s DNA to combat inflation but not deflation, so to change that we need to pick someone from outside.”
Abe needs votes from smaller opposition groups to win backing for his central bank chief in the upper house of parliament, where his Liberal Democratic Party and coalition ally New Komeito hold 102 of 242 seats. Watanabe’s party has 11 lawmakers in the chamber.
Chief Cabinet Secretary Yoshihide Suga yesterday said the ruling coalition “must show consideration to opposition parties” in regards to BOJ appointments.
“We can’t do this without their cooperation,” he told reporters in Tokyo. “It’s a very delicate issue.”
The next governor should be an economics PhD with fluent English and management skills, and while Takenaka “isn’t our only recommendation,” the former Cabinet minister would be a good fit, Watanabe said.

Abe Stimulus Risks Fizzling as Citigroup Sees Japan Job Gap (Bloomberg)
Japan’s 10.3 trillion yen ($117 billion) fiscal stimulus may add less than a quarter of the jobs the government predicts, casting doubt on Prime Minister Shinzo Abe engineering a sustained recovery.
Even with more central bank easing, most of the impact of Abe’s spending won’t spread far beyond public works projects, Citigroup Inc. (C) says. It estimates that 100,000 jobs will be created, compared with the government’s figure of 600,000. BNP Paribas SA (BNP) says 150,000.
Abe is returning to a strategy that failed to end Japan’s stagnation over the last two decades even as the nation’s debt burden nearly tripled and extra stimulus spending totaled 80 trillion yen, according to BNP Paribas. Another failure may deepen voter apathy in a political system that has produced seven prime ministers in six years, while adding to the risk of a surge in bond yields.
“Fiscal stimulus is like morphine, because if you want to maintain the same level of effect you have to keep upping the dose,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “Japan has failed to achieve a sustainable economic expansion, and the country’s record proves the strategy is wrong.”
The yen snapped a two-day gain against the dollar and euro as investors weighed the likelihood of more easing by the Bank of Japan (8301) next week. The currency was at 88.68 per dollar as of 9:20 a.m. The Nikkei 225 Stock Average (NKY) rose 0.5 percent after sliding yesterday by the most in eight months.

Russia May Overtake Germany as No. 5 Economy by 2020: PWC (Bloomberg)
Russian gross domestic product may overtake Germany’s by 2020, making the Russian economy the world’s fifth largest, PricewaterhouseCoopers LLP said in a report today.
“Russia has strong potential in the short to medium term,” PWC’s chief economist, John Hawksworth, said in a phone interview from London today. “It has strength in natural- resource sectors, which are much in demand.”
Russia, the world’s biggest energy exporter, will face declining growth in about a decade because of an aging population and shrinking workforce, Hawksworth said. By 2050, Russia’s economy is projected to fall back to sixth place in purchasing power parity terms, behind Japan, Brazil, India, the U.S. and China, PWC said in the report on its website.

Russia Says World Is Nearing Currency War as Europe Joins (Bloomberg)
The world is on the brink of a fresh “currency war,” Russia warned, as European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.
“Japan is weakening the yen and other countries may follow,” Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said at a conference today in Moscow.
The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a “dangerously high” euro and officials in Norway and Sweden expressed exchange-rate concern.
The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.
Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.

Brazil Holds Rate Steady as Inflation Rises Amid Slow Growth (Bloomberg)
Brazil’s central bank kept its benchmark interest rate at a record low for the second straight meeting, as inflation accelerates amid faltering growth.
The central bank, which ended the steepest rate-cutting cycle among Group of 20 nations in November, held the Selic at 7.25 percent today, as forecast by all 56 economists surveyed by Bloomberg.
The bank, in a statement, acknowledged that the balance of risks for inflation worsened in the short term at the same time that a domestic recovery was “less intense” than expected. Given those concerns, and continued “complexity” in the global economy, policy makers reiterated their view that the best strategy is to keep rates stable for a “prolonged period.”
Latin America’s biggest economy is struggling to emerge from two years of slowing growth as the government cuts taxes, lowers lending rates and boosts investment. At the same time that growth trails all major emerging markets, inflation in December accelerated faster than economists’ estimates for the sixth straight month and ended 2012 at 5.84 percent, higher than the bank’s 4.5 percent target for the third straight year.
“Brazil is in a horrible place where you have very low growth and very high inflation,” Gustavo Rangel, chief Latin America economist for ING Bank NV in London, said in a phone interview before today’s decision. “Activity data has been disappointing, but room for rate cuts doesn’t exist.”
After the government last week reported that consumer prices in December rose 0.79 percent, the fastest since March 2011, central bank President Alexandre Tombini said that inflation has proved “resilient” in the short term due to agricultural price shocks.

IMF Approves 3.2 Billion-Euro Disbursement for Greece (Bloomberg)
The International Monetary Fund agreed to disburse 3.2 billion euros ($4.3 billion) to Greece after the country made new budget cuts, received more favorable aid terms from European nations and conducted a bond buyback.
The IMF board made the decision during a meeting today, it said in a press statement. The funds are part of a joint 130 billion-euro package with European nations, which unblocked their share last month.
“The situation on the Greek front is improving,” Thomas Costerg, an economist at Standard Chartered in London, said in an e-mail. “This said, the situation remains fragile, and despite the buyback Greece’s huge debt is still an issue.”
The loan had been frozen since June as a recession and domestic opposition to the program drove Greece away from measures agreed to just three months earlier.
While European policy makers now turn their attention to reviving growth in the 17-country monetary zone and to bailing out Cyprus, Greece may yet again creep back on their agenda. The government has to deliver on its commitments to earn each future payout and European finance ministers committed to “additional measures” if the country’s debt reduction veers off track.

European Dividends Tumble to Four-Year Low as CEOs Hoard (Bloomberg)
Companies in the euro area are poised to cut dividends to the lowest level in four years as chief executive officers stockpile cash to weather the region’s sovereign-debt crisis.
Payouts to shareholders in the Euro Stoxx 50 Index (SX5E) will fall by 3.3 percent to a combined 115.48 euros a share this year, according to more than 500 analyst estimates compiled by Bloomberg. Reducing them by that much would cut the dividend yield to 4.3 percent from 6.3 percent in September 2011, even after cash on balance sheets climbed to the highest since 2008, the data show.
The forecasts suggest more companies will follow Royal KPN NV and Enel SpA (ENEL) in reducing payouts as the debt crisis pushes unemployment in Spain and Greece to more than 25 percent and China’s economy cools. Analysts are cutting estimates amid a rally that has sent the Euro Stoxx 50 to a 17-month high as central-bank measures hold down bond yields.
“Within Europe, it’s excess cash on balance sheets” that attracts investors, said Bank of America Corp.’s John Bilton, European investment strategist at Bank of America’s Merrill Lynch unit in London. “The current levels of dividend yield are not sustainable.”
Holdings of cash and equivalents at companies in the Euro Stoxx 50 climbed 9.3 percent to a combined 1,834.44 euros a share in 2012, according to data compiled by Bloomberg. While the gauge’s estimated dividend yield fell over the past year, projections for the Standard & Poor’s 500 Index increased to 2.3 percent from 2.2 percent, Bloomberg data show.

20130117 0936 Global Commodities Related News.

2013-01-17T09:36:00.003+08:00

Drought Stretching to Second Year Boosting Risk for U.S. Crops (Bloomberg)
The risk of drought damaging U.S. corn and soybean crops for a second year is increasing as forecasters predict persistently dry weather in the Midwest and Great Plains through April, the start of the planting season.
The U.S. Climate Prediction Center probably will say tomorrow that the growing region will remain drier than normal over the next three months, according to four of five forecasters surveyed by Bloomberg. Almost 42 percent of the contiguous U.S. was in severe to exceptional drought as of Jan. 8, government data show. That’s more than double for the date a year earlier, before the worst drought since the 1930s cut combined output of corn and soybeans by the most since 1996.
“The drought will persist through May with warm temperatures and below-normal rain in the western half of the Midwest,” Joel Widenor, the director of agricultural services for Bethesda, Maryland-based Commodity Weather Group LLC, said in a telephone interview yesterday. “About 50 percent of the Midwest will remain in drought condition.”
Corn and soybean prices surged to records last year as output fell, while dry fields across the Great Plains left winter-wheat conditions in November at their worst since at least 1985, when the U.S. Department of Agriculture began collecting the data. Wheat futures jumped to a four-year high last year, and farmers have already collected a record $11.581 billion on insurance claims for damage to all crops in 2012.

Wheat Market Recap Report (CME)
March Wheat finished up 2 1/4 at 785, 6 off the high and 8 up from the low. May Wheat closed up 2 3/4 at 793 3/4. This was 7 3/4 up from the low and 5 1/4 off the high.
KC and Chicago wheat traded lower early in the session but managed to close higher on the day. Kansas City wheat led the way higher on concern over the dry conditions in the west. Short covering was noted in each market which helped to support the move higher. Export demand continues to be unimpressive for wheat and it was reported this morning that France likely sold as much as 400,000 tonnes of milling wheat to Algeria overnight for May/April shipment. Most expected the US to do the business but it seems other origins around the world are comfortable with their domestic supply outlook to sell additional cargos for export. This could add long term resistance to the price outlook in wheat. The tight corn supply this year suggests better feed wheat demand which may pick up some of the slack from missed export opportunities. Additional support continues to come from the drier weather outlook in the western plains for the next 10-14 days.
March Oats closed up 3/4 at 357 1/4. This was 4 up from the low and 2 3/4 off the high.

Corn Market Recap for 1/16/2013 (CME)
March Corn finished up 3/4 at 731 1/4, 3 3/4 off the high and 6 3/4 up from the low. May Corn closed up 1/2 at 731 1/4. This was 6 1/4 up from the low and 3 3/4 off the high.
March corn traded lower for most of the day but managed to close higher into the closing bell led by a sharply higher soybean market. Light profit taking was seen early on following 8 straight sessions of higher trade. Non-existent export demand and poor ethanol data continue to suggest that at least some kind of demand rationing has taken place due to the higher corn prices this year. Ethanol production for the week ending January 11th averaged 784,000 barrels per day, down 5% vs. last week and down 16.7% vs. last year. Corn used in last week's production is estimated at 82.3 million bushels, down from 86.7 the week prior and the lowest weekly usage for the 2012/13 marketing year. Corn use needs to average 86.8 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of January 11th were 20.4 million barrels, up 2.6% vs. last week and up 4.2% vs. last year. Implied demand, total supply net of the weekly change in stocks, fell to its lowest level in 5 weeks at 5.17 million barrels. The data was considered negative to the price outlook and suggests a slowdown in ethanol demand.

Soybeans, Corn Gain on South American Crops; Wheat Rises (Bloomberg)
Soybeans rose to a three-week high and corn extended the longest rally in a year on speculation that warmer, drier weather may hurt crops in South America, increasing demand for U.S. supplies. Wheat also advanced.
Soil moisture in central Argentina, Paraguay and southern Brazil will decline during the next seven days with little rain expected in the following week, World Weather Inc. in Overland Park, Kansas, said in a report. Frequent precipitation in northern Brazil into February will slow soybean harvesting, the company said.
“The forecast is starting to look more threatening for the crops in South America,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “We are capping crop potential, and yields will start to decline in February if the forecast verifies.”
Soybean futures for March delivery rose 1.6 percent to close at $14.365 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $14.39, the highest since Dec. 26. Prices are up 4.6 percent this week and 24 percent higher than a year ago.
Corn futures for March delivery rose 0.1 percent to $7.3125 a bushel on the CBOT, after touching $7.35, the highest since Dec. 10. The price has climbed 7.5 percent over eight sessions, the longest rally since December 2011.

Sugar Production in India to Drop on Cheap Imports, Dry Weather (Bloomberg)
Sugar output in India, the biggest producer after Brazil, is set to decline in the year from October as domestic prices fall on cheaper imports and dry weather curbs planting, the Indian Sugar Mills Association said.
Production will probably slide from 24 million metric tons in the year ending Sept. 30, M. Srinivaasan, president of the association, said in a phone interview. Decreasing local prices will hamper mills’ ability to make timely payments to farmers, encouraging them to switch to other crops, he said. He didn’t give a forecast for 2013-2014.
A lower harvest after two years of surplus may spur the world’s second-biggest consumer to boost imports further, curbing a slide in New York futures. Sugar slumped 16 percent in 2012 because of a second year of glut and Goldman Sachs Group Inc. cut its forecast this week to 18.5 cents a pound in three and six months from an earlier estimate of 22 cents, citing rising inventories. Cheaper sugar may extend a decline in food costs tracked by the United Nations.
“The domestic sugar situation right now is pretty bad,” said Srinivaasan. “We are going to have negative planting in consequence to that and also due to the drought situation in certain states. Imports are taking place too soon.”
Parts of Maharashtra and Karnataka states, which together account for 45 percent of India’s sugar output, have been facing drought in the past 24 months hurting monsoon and winter-sown crops, according to the farm ministry.

Brazil coffee trees enjoy showers after dry weeks (Reuters)
Brazil's coffee-growing regions are at last experiencing a bounty of rain after weeks of drier-than-average weather, moisture that will help beans swell out to a more desirable, yield-boosting size, forecaster Somar said on Monday.

Cotton Jumps to Highest Since October as China Mill Demand Grows (Bloomberg)
Cotton futures jumped to the highest since October on signs that demand is improving in China, the world’s biggest consumer and importer.
To satisfy domestic mill demand, the government began selling from state reserves this week, the China National Cotton Exchange said yesterday. Imports rose 75 percent in December from a month earlier, another report showed. The U.S. Department of Agriculture on Jan. 11 boosted its forecast of Chinese imports this year by 8.7 percent to 12.5 million bales. Prices fell 18 percent in 2012 on signs of ample supply.
“They are going to need to import more cotton over the next six weeks” to replenish stockpiles, Chris Kramedjian, a fibers and textiles consultant at INTL FCStone LLC, said in a telephone interview from Nashville, Tennessee.
Cotton for March delivery rallied 1.5 percent to 77.39 cents a pound at 12:08 p.m. on ICE Futures U.S. in New York, after touching 77.78 cents, the highest for a most active contract since Oct. 19.
On Jan. 11, the USDA cut its estimate for domestic production in the year ending July 31, reduced the outlook for stockpiles and boosted its projection for shipments. The U.S. is the world’s largest exporter.
A bale of cotton weighs 480 pounds, or 218 kilograms.

Recap Energy Market Report (CME)
February crude oil prices trended higher throughout the US trading session. The market was under attack during the overnight and early morning hours, weighed down by a sell off in global equity markets and a downwardly revised 2013 global growth forecast from the World Bank. Crude oil prices began to stabilize during the early US trading hours, drafting support from supply disruptions in the North Sea region and a rebound in US equity markets. February crude oil rallied to its high of the session in reaction to this morning's EIA inventory report that showed an unexpected draw last week of 951,000 barrels. Crude oil imports for the week stood at 8.03 million barrels per day compared to 8.342 million barrels the previous week. The refinery operating rate was down 1.2% to 87.9%. The crude oil market stayed firm and near their best levels of the session going into the close. The relative out performance of WTI compared to Brent crude oil tightened that spread differential by $0.75 on the session.

Oil Trades Near Four-Month High After Crude Stockpiles Decline (Bloomberg)
Oil traded near the highest level in almost four months in New York as stockpiles unexpectedly declined and petroleum consumption rose in the U.S., the world’s biggest crude-consuming nation.
West Texas Intermediate futures were little changed after climbing the most in two weeks yesterday. U.S. crude supplies slid 951,000 barrels last week, Energy Department figures show. They were forecast to increase 2.2 million barrels, according to a Bloomberg News survey of analysts. Fuel consumption climbed from the lowest level since March, the report showed.
Crude for February delivery was at $94.08 a barrel, down 16 cents, in electronic trading on the New York Mercantile Exchange at 10:43 a.m. Sydney time. The contract advanced 1 percent to $94.24 yesterday, the most since Jan. 2 and the highest close since Sept. 18. Prices dropped 7.1 percent last year.
Brent for February settlement, which expired yesterday, gained 31 cents to $110.61 a barrel on the London-based ICE Futures Europe exchange. The more active March contract rose 5 cents to $109.68. The front-month European benchmark contract closed at a premium of $16.37 to WTI futures, the narrowest spread since Sept. 19.
Total petroleum consumption increased 1.1 percent to 18 million barrels a day in the seven days ended Jan. 11, the Energy Department report showed. Gasoline demand climbed 3.9 percent to 8.32 million barrels a day.

Gold Drops From One-Week High; Platinum, Palladium Gain (Bloomberg)
Gold futures fell from a one-week high amid concern that demand is easing while global economic growth slows. Platinum closed at a three-month high.
Buyers of gold are holding back in anticipation of lower prices, according to Afshin Nabavi, a senior vice president at Geneva-based MKS (Switzerland) SA, a bullion refiner. The World Bank cut its growth forecast for this year and predicted a second year of contraction in the euro region.
“Any talk about slowing physical demand will put pressure on prices,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Overall, there is some nervousness because of slowdown worries.”
Gold futures for February delivery fell 70 cents to settle at $1,683.20 an ounce at 1:34 p.m. on the Comex in New York. Yesterday, the price reached $1,684.90, the highest for a most- active contract since Jan. 3. The metal rallied 7 percent last year, the 12th straight annual advance.
Silver futures for March delivery rose less than 0.1 percent to $31.542 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for April delivery gained 0.2 percent to $1,694.10 an ounce, the highest closing price since Oct. 9.
Yesterday, the platinum settlement topped gold for the first time since March.
Anglo American Platinum Ltd. (AMS), the world’s biggest producer, said yesterday it will cut jobs and output in South Africa.
Palladium futures for March delivery rose 1.8 percent to $726.45 an ounce on the Nymex. Earlier, the price reached $727.90, the highest since Sept. 19, 2011.

Silver Market Recap Report (CME)
The silver market started out in a corrective mode but managed to throw off that negative bias and return to the vicinity of the prior session's highs early in the afternoon trade. A recovery in platinum prices might have provided silver with some spillover buying interest and it is also possible that a recovery in US equities helped to bring silver prices up off the mat. Technical traders might suggest that the morning correction in March silver today might have served to balance the markets partially overbought condition. The 50 day moving average in silver comes in above the market at $32.08.

Gold Market Recap Report (CME)
While gold showed corrective action early in the trading session, prices seemed content to claw back toward the highs into mid session and in the early afternoon. German gold reserve movements probably served to keep gold in the headlines but gold and silver today didn't seem to be tracking off a specific fundamental theme today. Weakness in the Euro might have partially undermined gold today but the currency market influence wasn't overly significant. Given the run in gold prices recently, any lack of upside momentum in gold could unnerve a portion of the bull camp, especially since the markets are anticipating fresh and potentially important economic readings from China. For the time being headline flow from the BOJ and from other central banks is likely to become more important, especially after the Gold Fields Mineral Services prediction of more central bank gold buying ahead. Offset the positive GFMS central bank talk was news that total 2012 world gold investment actually declined by 1.2%.

20130117 0936 Soy Oil & Palm Oil Related News.

2013-01-17T09:36:00.001+08:00

Soybean Complex Market Recap (CME)
January Soybeans finished up 25 at 1438 1/2, 1/2 off the high and 26 1/4 up from the low. November Soybeans closed up 13 3/4 at 1297. This was 17 up from the low and 3 off the high.
January Soymeal closed up 7.2 at 419.1. This was 8.4 up from the low and -7.2 off the high.
January Soybean Oil finished up 0.44 at 51.31, 0.19 off the high and 0.63 up from the low.
March soybeans traded sharply higher on the day on support from a stronger meal market and oil saw gains as well. Thoughts that China has secured additional cargos this week helped to support along with a drier forecast for Argentina and Southern Brazil. Northern Brazil continues to see beneficial rainfall but scattered showers in Mato Grosso could delay harvest activity this week. The CIF basis was steady midday on the jump in futures but interior basis levels remain historically high as traders attempt to drum up cash grain movement in the country. Crush margins remain positive but have contracted modestly due to the firm basis levels. The tight domestic supply outlook and strong pace of demand continues to favor the bulls but some suggest that the possible bumper crop in South America along with a shift in demand to the Southern Hemisphere could limit gains as we move into February and March.

Indonesia rules out changes to palm export tax structure (Reuters)
Indonesia, the world's biggest palm oil producer, will not change its export tax structure for the edible oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero, the trade minister said on Wednesday.

EDIBLE OIL: Malaysian palm oil futures rose to their highest in over a week on Wednesday on investor optimism a zero-duty tax structure will spur exports from the world's No.2 producer and help boost global demand for the tropical oil. (Reuters)

Prices of palm oil remain marooned near three-year lows as the vegetable oil is caught between opposing fundamentals that may take several months to resolve themselves. However, over the next six months, the bearish factors appear more likely to dissipate, while the bullish ones will remain in place. On the bearish side of the ledger are record inventories in Malaysia, a rapid slowdown in Chinese imports as new customs inspection rules take effect and demand in Europe that is still soft because of economic weakness. On the positive side are robust and growing Indian imports, a zero export tax by Malaysia and 2013 output that is expected to be steady, or only slightly higher.Add to this the shape of the curve of the futures traded in Kuala Lumpur, which is still in a relatively rare contango, meaning prices for forward months trade at a premium to those for immediate delivery. Palm oil is also still trading at a steep discount to soya oil, a complementary product whose price palm oil has historically tracked fairly closely. It's likely that both palm oil's contango in the futures curve and its wide discount to soya oil will reverse in time, but first the short-term factors that are capping prices will have to be worked through. (Reuters)

India will consider imposing a 5% duty on imports of crude palm oil to shield domestic oilseed growers from cheap supplies, two government officials said. The Cabinet may also discuss raising the tariff on refined cooking oils to 10% from 7.5%, said the officials, who declined to be identified. (Malaysian Reserve)

VEGOILS-Malaysia's zero export-tax optimism lifts palm oil
Wed Jan 16, 2013 5:18am EST
* Zero pct CPO tax in Feb to boost exports -trader
* Investors see stockpiles coming off in February from
record high
* Palm oil may test resistance at 2,449 ringgit -technicals

(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Jan 16 (Reuters) - Malaysian palm oil futures
rose to their highest in over a week on Wednesday on investor
optimism a zero-duty tax structure will spur exports from the
world's No.2 producer and help boost global demand for the
tropical oil.
The positive sentiment was also buoyed by seasonally slowing
production which could help curb stockpiles that hit a new
record of 2.63 million tonnes in December.
The Malaysian government announced on Tuesday that it will
retain its crude palm oil export tax at zero percent for
February, the same as January, in an effort to give a
competitive edge over top producer and biggest rival Indonesia.

"Indonesia's crude palm oil is now pricier than Malaysian
crude palm oil. So Malaysian exports will definitely pick up,"
said a trader with a foreign commodities brokerage.
"Most traders are trading on the forward view. Even though
exports are not looking so good now, but with the overall drop
in production, we are expecting stocks to be lower in February
or March," the trader added.
The benchmark April contract on the Bursa Malaysia
Derivatives Exchange closed 0.5 percent higher at 2,428 ringgit
($804) per tonne. Prices had earlier touched 2,444 ringgit, the
highest level seen since Jan. 7.
Total traded volume stood at 35,249 lots of 25 tonnes each,
higher than the usual 25,000 lots.
Technical analysis showed that Malaysian palm oil may test a
resistance of 2,449 ringgit per tonne, a break above which will
lead to a further gain to 2,522 ringgit, said Reuters market
analyst Wang Tao.
Weaker winter demand from Europe and China had taken a toll
on palm oil exports, causing shipments to fall more than 20
percent in the first 15 days of January. Palm oil tends to
solidify in cold temperatures.
But with warmer weather on its way, traders expect demand to
pick up in the next few weeks.
"Moving forward, it can only improve -- it will not go
worse. The weather is getting warmer and you will see more
imports going into China," the trader added.
Brent crude rose towards $111 a barrel on Wednesday after
robust U.S. retail sales boosted hopes for stronger demand in
the world's top oil consumer, while oil inventories there rose
much less than expected.
U.S. soyoil for March delivery rose 0.2 percent in
late Asian trade. The most active May soybean oil contract
on the Dalian Commodity Exchange edged up 0.4 percent.

20130116 1615 Global Markets & Commodities Related News.

2013-01-16T16:16:00.000+08:00

STOCKS:European stocks were set for a mixed opening and Asian shares fell after the World Bank cited global growth concerns and uncertainty about the strength of fourth-quarter earnings. The Dow and the S&P closed higher on Tuesday supported by stronger-than-expected retail data. (Reuters)

FOREX:The yen rose for a second day after a Japanese cabinet minister warned of the potential harm of excessive yen weakness, while the euro slipped after a European official complained about its recent gains. (Reuters)

FOREX-Dollar falls 1 percent on day versus yen
LONDON, Jan 16 (Reuters) - The dollar fell 1 percent versus the yen, extending losses as investors took profit on the Japanese currency's recent sharp rise.
The dollar fell to 87.825 yen on trading platform EBS, with market players reporting supporting bids at 87.80 yen. The euro also retreated against the Japanese currency, falling 1.4 percent on the day to 116.53 yen .

U.S. retail sales point to firmer consumer spending(Reuters)
U.S. retail sales rose solidly in December as Americans shrugged off the threat of higher taxes and bought automobiles and a range of other goods, suggesting momentum in consumer spending as the year ended.

UK wheat imports surpass one million tonnes (Reuters)
UK wheat imports surpassed one million tonnes during the first five months of the 2012/13 season, exceeding the total for the entire previous marketing year, customs data showed on Tuesday.

U.S. gasoline and crude stocks rise-API(Reuters)
U.S. gasoline and crude inventories rose last week even as crude imports fell, data from the American Petroleum Institute showed on Tuesday.

Norway sees record demand for mature oil licences(Reuters)
Norway has awarded 51 gas and oil licences after attracting record interest from firms spurred on by high prices to renew exploration in well-developed areas of the country's continental shelf deemed uninteresting a few years ago.

OIL:Brent crude rose towards $111 a barrel after robust U.S. retail sales boosted hopes for stronger demand in the world's top oil consumer, while oil inventories there rose far less than expected. (Reuters)

Workers at S.Africa's Amplats down tools -labour leader(Reuters)
Workers at the Rustenburg operations of South Africa's Anglo American Platinum refused to go underground for overnight shifts to protest company plans to close mines, a labour leader said on Wednesday.

BASE METAS:London copper steadied around two-week lows hit in the previous session as a pick-up in U.S. consumer spending bolstered risk appetite, while prospects for renewed growth momentum from top metals buyer China also underpinned prices. (Reuters)

PRECIOUS METALS:Gold inched up towards a near two-week high hit in the previous session on expectations easy global monetary policies will continue, while platinum took a breather after rising for six straight sessions to a three-month peak. (Reuters)

EU Commission finds China subsidises steelmakers -sources
BRUSSELS, Jan 15 (Reuters) - The European Commission has concluded China illegally subsidises steel producers and wants EU members to back punitive tariffs, which could anger the bloc's second largest trading partner, trade sources said.
The conclusion would address blame at China itself, rather than Chinese companies. China has in the past accused the European Union of protectionism and has filed its own complaints against the bloc with the World Trade Organisation.

U.S. primary aluminum output rises 4.2 percent in 2012
Jan 15 (Reuters) - Primary aluminum production in the United States rose 4.2 percent to 2.07 million tonnes in 2012, according to data released by the Aluminum Association.
Output of the metal however, fell by almost 4 percent to 171,019 tonnes in December from a year earlier, said the association, which released the data late last week.

METALS-London copper steadies on U.S. spending uptick
SINGAPORE, Jan 16 (Reuters) - London copper held steady slightly above two-week lows hit in the previous session, propped up by a pick-up in U.S. consumer spending which bolstered risk appetite and prospects of further economic growth in top metals buyer China.
"It looks as though there has been some stronger data from China and we're flagging upside risk to our forecasts. It might be that people are just holding out for confirmation," said Alexandra Knight, an economist with National Australia Bank in Melbourne.

PRECIOUS-Platinum reverses losses on Amplats; gold inches up
SINGAPORE, Jan 16 (Reuters) - Platinum reversed early losses to extend its winning streak into a seventh straight session, buoyed by rising supply concerns after staff at top producer Anglo American Platinum downed tools.
"In the short term, platinum may see more strength, boosted by news from Amplats," said Alice Chiu, assistant manager of PGM trading at Heraeus Metals Hong Kong.

20130116 1437 Palm Oil Related News.

2013-01-16T14:38:00.001+08:00

VEGOILS-Malaysia's zero export-tax move lifts palm to more than 1-week high BOZ2 DBYF3 FCPOc3 - RTRS
16-Jan-2013 14:29
Zero pct CPO tax in Feb to boost exports -trader Investors see stockpiles coming off in February from record high Palm oil may test resistance at 2,449 ringgit -technicals

(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Jan 16 (Reuters) - Malaysian palm oil futures rose to a more than one-week high on Wednesday on investor optimism a zero-duty tax structure will spur exports from the world's No.2 producer and help boost global demand for the tropical oil.
The positive sentiment was also buoyed by seasonally slowing production which could help curb stockpiles that hit a new record of 2.63 million tonnes in December.
The Malaysian government announced on Tuesday that it will retain its crude palm oil export tax at zero percent for February, in an effort to give a competitive edge over top producer and biggest rival Indonesia. (Full Story)
"Indonesia's crude palm oil is now pricier than Malaysian crude palm oil. So Malaysian exports will definitely pick up," said a trader with a foreign commodities brokerage.
"Most traders are trading on the forward view. Even though exports are not looking so good now, but with the overall drop in production, we are expecting stocks to be lower in February or March," the trader added.
By the midday break, the benchmark April contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had climbed 0.8 percent to 2,433 ringgit ($806) per tonne. Prices earlier touched 2,441 ringgit, the highest level seen since Jan. 7.
Total traded volume stood at 15,373 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technical analysis showed that Malaysian palm oil may test a resistance of 2,449 ringgit per tonne, a break above which will lead to a further gain to 2,522 ringgit, said Reuters market analyst Wang Tao. (Full Story)
Weaker winter demand from Europe and China had taken a toll on palm oil exports, causing shipments to fall more than 20 percent in the first 15 days of January. Palm oil tends to solidify in cold temperatures.
But with warmer weather on its way, traders expect demand to pick up in the coming weeks ahead.
"Moving forward, it can only improve -- it will not go worse. The weather is getting warmer and you will see more imports going into China," the trader added.
Brent crude rose towards $111 a barrel on Wednesday on hopes of a revival in demand growth in the world's top oil consuming nation after U.S. retail sales beat forecasts and oil inventories there rose far less than what was expected. O/R
U.S. soyoil for March delivery BOH3 was almost flat in early Asian trade. The most active May soybean oil contract DBYcv1 on the Dalian Commodity Exchange edged up 0.1 percent.

Indonesia rules out changes to palm export tax structure
JAKARTA | Wed Jan 16, 2013 2:18am EST
Jan 16 (Reuters) - Indonesia, the world's biggest palm oil producer, will not change its export tax structure for the edible oil or follow rival producer Malaysia by cutting tariffs on crude grades to zero, the trade minister said on Wednesday.
"Indonesian government will not change the palm oil export tax structure although Malaysia has been lowering its CPO export tax to zero percent," Trade Minister Gita Wirjawan said.
"We have set up a progressive palm oil export structure in line with our policy to boost the palm oil downstream industry," he added. "Although the Malaysian government has lowered its CPO export tax to zero percent, we will not be."
Malaysia, the world's No.2 palm oil producer, set at zero export taxes for crude palm oil for January and February after announcing last year that it would set duties -- formerly at 23 percent -- on a monthly basis.
The Malaysian tax changes were aimed at clawing back market share from Indonesia, which in 2011 slashed export taxes on refined palm oil in a bid to boost its processing and downstream industries.
Industry group the Indonesian Palm Oil Association (GAPKI) has repeatedly called for a reduction in palm oil export taxes to provide greater parity against Malaysian competitors.
But on the downstream and processing side, the Indonesian Vegetable Oil Association says it wants to keep things as they are to maintain consistency.
Indonesia reduced its export tax on crude palm oil to 7.5 percent for January from 9 percent in December.
Last month, a junior minister in Indonesia's trade ministry said his department was resisting pressure from parts of the palm oil industry to change its export tax system in response to planned tax cuts by Malaysia.

20130116 1144 Global Markets & Energy Related News.

2013-01-16T11:44:00.001+08:00

GLOBAL MARKETS-Asian shares inch higher, Nikkei down as yen declines pause
TOKYO, Jan 16 (Reuters) - Asian shares inched higher as investors waited for more clues on global growth prospects, while the Japanese stock market took a break from its recent rally as the yen's declines paused.
"There's no real momentum in the market before China's fourth quarter GDP figures on Friday, so shares are likely to coast, with individual stocks aligning with earnings expectations," said Kim Sung-hwan, an analyst at Bookook Securities in Seoul.

Doves push back on Fed's hawks, call for more US easing
GOLDEN VALLEY, Minn./PROVIDENCE, R.I., Jan 15 (Reuters) - T wo dovish Federal Reserve officials pushed back against some of their more hawkish peers on Tuesday, arguing that the U.S. central bank's accommodative policies are appropriate and may even need to be eased further.
In a speech that stamped him as perhaps the most dovish of the central bank's 19 policymakers, Minneapolis Federal Reserve President Narayana Kocherlakota said the Fed "should provide more monetary accommodation" by targeting a 5.5 percent unemployment level.

FOREX-Euro stung by Juncker's comment, yen holds firm
SYDNEY, Jan 16 (Reuters) - The euro had its winning streak clipped after a top European official complained about its recent run higher, while the yen held firm following a warning about its excessive weakness by a Japanese politician.
"The pullback from the 2013 high looks poised to turn into a larger correction, and we may see the euro-dollar fall back towards the $1.3100 region as heightening growth concerns fuels speculation for additional monetary support," said David Song, analyst at DailyFX.

Oil-Oil slips as German data, US debt ceiling worries weigh
NEW YORK, Jan 15 (Reuters) - Oil prices dipped in heavy trading on Tuesday, weighed down by German economic data and concerns about the brewing fight over the U.S. debt ceiling stoked concerns about fuel demand.
"I think the warnings by the Fed Chairman about the debt ceiling seems to have taken the wind out of yesterday's strong close," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut, referring to gains seen in Brent and U.S. crude on Monday.

POLL-US crude stocks seen rising on higher imports
Jan 15 (Reuters) - U.S. crude oil inventories were forecast to have risen last week, marking the second straight week, on expectations imports rose, an extended Reuters poll of analysts showed on Tuesday.
The poll of nine analysts forecast crude stocks to show a rise of 2.3 million barrels for the week ended Jan. 11, with eight analysts predicting a build in stocks.

U.S. gasoline and crude stocks rise-API
NEW YORK, Jan 15 (Reuters) - U.S. gasoline and crude t week even as crude imports fell, data from the American Petroleum Institute showed on Tuesday.
Gasoline stocks rose 4.1 million barrels in the week to Jan 11, accordingAPI data, compared with expectations for a 2.9 ters poll of analysts. Crude stockpiles rose by 46,000 barrels in the week to Jan. 11, compared with expectations for a 2.3 million barrel rise. Distillate fuels, which include diesel and heating oil, fell 568,000 barrels, compared with expectations for a 1.9 million barrel rise, the API data showed.

EXCLUSIVE-Iran charters oil ship with Indian insurance- sources
NEW DELHI, Jan 15 (Reuters) - A loophole in an Indian insurance scheme has allowed Iran's state-run tanker company NITC to bolster oil exports by chartering a vessel insured by India's state-run firms, industry and shipping sources said on Tuesday.
European Union and U.S. sanctions to force Iran to curb its nuclear programme cut Iran's oil exports by more than half last year. An EU ban on insuring vessels carrying Iranian oil was among measures that disrupted the flow to top Asian buyers, as the maritime insurance industry is mostly based in Europe.

Norway to cut gas transport charges to encourage output
OSLO, Jan 15 (Reuters) - Norway plans to sharply reduce natural gas transport tariffs for new gas contracts, hoping to encourage higher production in mature fields and more exploration in the frontier areas of the Arctic, the oil ministry said on Tuesday.
The government also aims to reduce the charges for bookings from this spring as pipeline firm Gassled has been earning more than the desired return on its investment, while future returns are seen elevated for years to come, the ministry said in a consultation paper. The lower tariffs would then encourage energy firms to explore for more gas in the Arctic Barents Sea, where only a few discoveries have been made so far.

20130116 1009 Global Economy Related News.

2013-01-16T10:09:00.001+08:00

US producer price index lost 0.2% mom in Dec (-0.8% in Nov), double the consensus of -0.1%, whilst on a yoy basis, the measure gained 1.3% (1.4% in Nov). (Bloomberg)

US inventories gained 0.3% mom in Nov (a revised 0.3% in Oct), matching consensus. (Bloomberg)

Fitch Ratings warned that it might revise downward the US’ rating from its current top "AAA" level if Congress does not reach agreement on raising the ceiling for the national debt. (AFP)

US retail sales gained 0.5% mom in Dec (a revised 0.4% in Nov), more than double the consensus estimate of 0.2%, whilst retail sales less autos and gas gained 0.6% mom, matching Nov‟s revised pace and exceeding the consensus estimate of 0.5%. (Bloomberg)

Chinese sovereign wealth fund China Investment Corp could cut holdings of US Treasury Bonds as they are becoming a less attractive investment, state media said. (AFP)

Without seasonal adjustments, the Eurozone had a trade surplus of €13.7bn, up from €4.9bn in the same month of 2011. (NASDAQ)

Japan’s money stock M2 rose 2.6% yoy in Dec (2.1% in Nov), higher than expectations of a 2.1% gain. (Bloomberg)

Japan’s corporate bankruptcies fell 13.8% yoy in Dec (-12% in Nov). (Bloomberg)

Japan’s machine tool orders fell 27.5% yoy in Dec (-21.3% in Nov), the eighth straight month of decline. (Bloomberg)

Retail sales in Singapore dropped 1.1% yoy in Nov (-1.1% in Oct) as a result of lower sales of motor vehicles. Excluding motor vehicles, retail sales rose 2.0% yoy (1.2% in Oct). (AFP)

Remittances sent home by Filipinos overseas amounted to US$1.92bn in Nov, up 7.6% from US$1.78bn in the same month last year. (Philippine Daily Inquirer)

20130116 1008 Malaysia Corporate Related News.

2013-01-16T10:08:00.003+08:00

Alam Maritim has bagged a RM576m contract from Petronas Carigali for the supply of six vessels for five years effective 1 Jan. (BMSB)

Gamuda is in talks to sell its stakes in highway operators Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint) and Lingkaran Trans Kota Holdings Bhd (Litrak) for more than RM4 bn, said people familiar with the matter. Business Times was told that Gamuda is talking to a government-linked special purpose vehicle. The whole deal is part of a wider plan by the government to consolidate the toll industry. Officials from Gamuda declined to deny the existence of the talks when contacted. (BT)

Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) is on track to achieve its 2012 target of RM2bn in pre-tax profit and zakat. Chairman Tan Sri Sabbaruddin Chik said the optimism is based on the bank's nine-month performance ended Sept 30, 2012 of RM1.62bn. This was an increase of 8.1% over the same period in 2011 where it posted RM1.5bn, he said. (Bernama)

DRB-Hicom says there will be more corporate exercises this year as it strives to better its topline and bottomline. "In the next short to mid-term period, there will be a couple of exercises that we are looking into to assist the progress of enhancing and making sure DRB-Hicom expands," MD Datuk Seri Mohd Khamil Jamil said. Khamil hinted at more acquisitions and ventures but declined to name specific targets or industries. The group expects its services, property and defence business, apart from the automotive division, to grow further and be major revenue contributors in the next 36 months. "We are looking at streamlining and rationalising our core business and creating group synergies within the whole group to further drive the growth of DRB-Hicom," said the group's finance, strategy and planning COO Datuk Seri Che Khalib Mohamad Noh. (StarBiz, Financial Daily)

Sime Darby Bhd subsidiary, Sime Darby Healthcare Sdn Bhd, has sold its day care facility in Petaling Jaya (Sime Darby Specialist Centre Megah) to BP Healthcare group. The sale price was not disclosed, but it is believed to be negligible to the group's overall revenue. An industry executive said the disposal of the "small" Sime Darby Specialist Centre Megah will enable Sime Darby Healthcare to concentrate on its three bigger hospitals - Sime Darby Medical Centre Subang Jaya, Sime Darby Medical Centre Ara Damansara, and Sime Darby Medical Centre ParkCity. (Financial Daily)

Perodua aims to increase its service intake by 5% to 1.88m vehicles this year, from the record 1.78m registered last year, said MD Datuk Aminar Rashid Salleh. He said the group was also eyeing to increase market share in the after-sales services segment to 55% from the current 53%. "In tandem with the higher demand for after-sales services, we're targeting to increase parts sales by 6% to RM255m this year," he added. Aminar Rashid said Perodua also planned to increase its sales and service centres to 343 outlets this year from the current 267. Perodua has also taken the initiative to reach out to existing customers in the rural areas, starting with Sabah and Sarawak. On exports, he said the group was in the midst of discussions as to which existing export markets it was likely to introduce the Myvi to, and also consider the need to look into other areas. "Exports for 2014 would depend on how fast we can complete the RM790m manufacturing facility. If it is ready in time, there's a possibility for exports to increase," he said. (Bernama)

Myanmar‟s government has begun the process of opening up the country‟s telecoms industry, inviting foreign companies to submit expressions of interest for two national licences by January 25. The licences, to be issued by June, will be the first of four telecoms licences planned for the sector and could run as long as 20 years with an option for renewal, the government said. The move signals the opening up of a sector long controlled by Myanmar Posts and Telecommunications, the state-owned telephone service provider. The tender comes as Myanmar‟s parliament considers a draft telecoms law – which could be passed within the next few months – that sets out a sweeping overhaul of the industry. Among international operators to have shown interest are Russia‟s VimpelCom, Telenor of Norway, Vietnam‟s VNPT-Fujitsu, a joint-venture between Vietnam and Japan‟s Fujitsu; Axiata; and Digicel. Myanmar has among the lowest rates of telecoms coverage in Asia, with fixed-line coverage of about 1 per cent and about 5.5m mobile phone subscribers representing a 9 per cent penetration rate, compared with 70% in Cambodia and more than 110% in Thailand. The value of a service licence, under Myanmar‟s telecoms reform plans, could be worth “billions of dollars”, said a Bangkok-based telecoms executive. However, he noted, analysts have been unable to accurately value the sector. (FT)

Axiata is likely to heed the "call" by the Myanmar to investors to express interest in two telecoms licenses up for grabs. "The government of Myanmar has asked all interested parties to submit an expression of interest by jan 25 and Axiata will be doing so." (Starbiz)

The state governments of Sarawak and Sabah have dropped their request for stakes in domestic carrier MASwings, a wholly owned subsidiary of Malaysia Airlines (MAS) formed as a rural air service operator to serve rural communities in the two states. State Tourism Minister Datuk Amar Abang Johari Tun Openg said the decision was made following the carrier's business restructuring which met the objectives of the two state governments. Abang Johari said the restructuring fulfilled the state governments' desire to see MASwings not just serving rural routes in Sabah and Sarawak but also fly to new routes within the Brunei, Indonesia, Malaysia, the Philippines-East Asean Growth Area (BIMP-EAGA). The two governments were prepared to inject additional money to the carrier for such an expansion. (BT)

Eversendai Corp has been conditionally awarded a RM325m contract to carry out structural steelworks of the Abu Dhabi International Airport. The award will boost its existing order book to RM1.5bn, Datuk AK Nathan, executive chairman and group MD of Eversendai, said this is one of the most anticipated projects in the region and reaffirms Eversendai's continued success in winning iconic projects in the Middle East. The work is expect to start next month. (Financial Daily)

20130116 1003 Global Markets Related News.

2013-01-16T10:08:00.000+08:00

Asia FX By Cornelius Luca - Tue 15 Jan 2013 16:36:14 CT (CME/www.lucafxta.com)
The financial markets were divergent on risk on Tuesday amid worries about the US earnings and after Eurogroup head Jean-Claude Juncker warned that the euro's exchange rate was dangerously high. All European currencies fell, commodity currencies consolidated, while the yen struggled higher after falling steadily in the previous weeks. The US stock markets closed divergently. The gold/oil spread ended higher. 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 long on European currencies and commodity currencies, and short yen. Good luck!

Overnight
US: The NY Empire state manufacturing index slipped to -7.8 in January from -7.3 in December.
US: The PPI dipped 0.2% in December after falling 0.8%. The core PPI rose again by 0.1%.
US: The retail sales rose 0.5% in December after rising 0.4% in November.\\\\
US: The business inventories rose 0.3% in November, the same as in October. Business sales rose 1.0% after falling by 0.3% in October.

Today's economic calendar
Japan: Domestic Corporate Goods Price Index for December
Japan: Machinery orders for November
Japan: Consumer confidence index for December

Asian Stocks Drop as Japan Shares Retreat After Yen Gains (Bloomberg)
Asian stocks fell, with the regional benchmark index heading for its first decline in three days, as Japan’s Nikkei 225 Stock Average retreated from a 32-month high after the yen gained, dimming the outlook for export earnings.
Honda Motor Co. (7267), which gets 81 percent of its auto sales overseas, slipped 1.3 percent in Tokyo. Brother Industries Ltd. slid 1 percent after Credit Suisse Group AG recommended selling the shares of the Japanese office-equipment maker. Leighton Holdings Ltd. added 1.1 percent after the Australian Financial Review reported Hong Kong’s PCCW Ltd. may bid for the telecommunications infrastructure of Australia’s biggest construction company.
The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 132.51 as of 9:34 a.m. Tokyo time, before markets in China and Hong Kong open. The gauge has rallied since November after reports showed China’s economy is recovering and Japanese shares gained on speculation new Prime Minister Shinzo Abe will pursue more aggressive policies to stimulate the world’s third-largest economy. Japan’s Nikkei 225 dropped 0.9 percent, after closing yesterday at the highest level since April 2010.
“There should be some short-term selling amid a feeling that shares are overheating and the yen has stopped sliding,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Investors are confident in the policy mix being put forward by the Abe government and there’s less worry about the global economy, so people are looking to buy on dips.”

Japan Stocks Fall as Rising Yen Outweighs Machine Orders (Bloomberg)
Japanese shares fell, with the Nikkei 225 (NKY) Stock Average retreating from a 32-month high, after the yen climbed for a second day, overshadowing a bigger-than- expected increase in machinery orders.
Canon Inc. (7751), a camera maker that gets 80 percent of its revenue outside Japan, slid 2.5 percent. Dai-Ichi Life Insurance Co. declined 2.3 percent after closing at its highest since May 2011 yesterday. The Nikkei 225’s relative strength index, an indicator of price movements, was at 80 yesterday, above the 70 threshold that some investors view as a sign to sell. Sumitomo Realty & Development Co. fell 2.4 percent after its rating was cut at SMBC Nikko Securities Inc.
The Nikkei 225 fell 1.1 percent to 10,761.79 as of 9:47 a.m. in Tokyo after closing yesterday at the highest level since April 2010. The broader Topix (TPX) Index slid 0.7 percent to 900.23, with about nine stocks declining for every six that rose.
“There should be some short-term selling amid a feeling that shares are overheating and the yen has stopped sliding,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.
The 25-day Toraku index, which compares the number of advancing stocks with declining shares on the Tokyo Stock Exchange, rose to 158 yesterday. The gauge since Dec. 13 has stayed above 120, a level that indicates to some traders that a decline is likely.

U.S. Stocks Rise as Retailer Rally Offsets Debt-Ceiling (Bloomberg)
U.S. stocks advanced, rebounding from earlier losses in the Standard & Poor’s 500 Index, as a rally in retail and transportation companies overshadowed concern about discussions on raising the debt ceiling.
Consumer discretionary companies led the gains in the S&P 500 as data showed retail sales rose more than forecast in December. Dell Inc. (DELL) rallied 7.2 percent, following yesterday’s 13 percent surge, as the computer maker is said to be in buyout talks. Apple Inc. and Hewlett-Packard Co. dropped at least 2.4 percent to pace losses in technology shares. Facebook Inc. retreated 2.7 percent after the company introduced a tool for searching information posted to its social network.
The S&P 500 rose 0.1 percent to 1,472.34 at 4 p.m. New York time, after falling as much as 0.5 percent earlier. The Dow Jones Industrial Average added 27.57 points, or 0.2 percent, to 13,534.89. The Dow Jones Transportation Average gained 0.7 percent to a record 5,639.64. About 5.8 billion shares changed hands on U.S. exchanges, or 5.7 percent below the three-month average, according to data compiled by Bloomberg.
“The retail data is good news for economic expansion,” said Peter Jankovskis, who helps oversee $3 billion of assets as co-chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. He spoke in a telephone interview. “It’s encouraging. We have the earnings season going on, people are on wait-and-see mode. In addition, there’s a lot of rhetoric on the debt-ceiling front. Though it’s probably a bit early to start getting concerned about that.”

European Stocks Are Little Changed; SAP Shares Tumble (Bloomberg)
European stocks were little changed as concern that debt-ceiling talks will harm the U.S. economy and a report showing weaker-than-forecast German growth offset Spain’s better-than-targeted sale of debt.
IG Group Holdings Plc (IGG) slipped 1.1 percent after saying first-half net trading revenue fell. SAP AG (SAP) sank the most in six months after reporting earnings that trailed estimates. Air Liquide SA dropped 1 percent after Bank of America Corp. cut its recommendation on the stock. Hennes & Mauritz AB (HMB) advanced 3.6 percent after posting sales that beat analyst forecasts.
The Stoxx Europe 600 Index (SXXP) lost less than 0.1 percent to 285.97 at the close of trading. The measure has still gained 2.3 percent since the start of the year after U.S. lawmakers agreed on a budget, avoiding tax increases and spending cuts that threatened to push the world’s biggest economy into a recession.
“We had a relief rally after the fiscal cliff was pushed out,” Lucy MacDonald, chief investment officer for equities at Allianz Global Investors in London, which oversees $401 billion, said in a Bloomberg Television interview. “Now the focus will go back on the fiscal cliff and the debt ceiling. That can be a catalyst for a pause.”
National benchmark indexes fell in 11 of the 18 western European markets. France’s CAC 40 lost 0.3 percent and Germany’s DAX sank 0.7 percent. The FTSE 100 added 0.2 percent.
The volume of shares changing hands on the Stoxx 600 was 17 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

Emerging Stocks Drop Led by Biggest Technology Slump in 3 Weeks (Bloomberg)
Emerging-market stocks fell, driven by the biggest slump in technology shares in three weeks, on concern waning demand for iPhones will hurt suppliers while energy producers declined with oil prices.
Hon Hai Precision Industry Co. (2317) and Catcher Technology Co. dragged Apple Inc. suppliers lower for a second day, with a gauge of technology stocks falling 1.5 percent. Brazilian oil producer OGX Petroleo & Gas Participacoes SA stoked a 0.6 percent drop in the Bovespa index, while OAO Novatek (NVTK), Russia’s largest independent gas producer, slumped in London.
The MSCI Emerging Markets Index declined 0.7 percent to 1,073.48 in New York. Apple Inc. cut orders for iPhone 5 displays this quarter by about 50 percent, the Nikkei newswire reported yesterday. The U.S. risks economic and social calamity if the $16.4 trillion debt ceiling isn’t increased, President Barack Obama said. The 21 nations in the emerging-markets gauge send an average 17 percent of their exports to the U.S., World Trade Organization data show.
The Apple order reduction report “hit the supply chain and there were big declines in Taiwan’s component producers,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by e-mail. “Commodity prices are impacting Russia, hurting sentiment in the Middle East.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, dropped 0.4 percent to $44.47. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 4.3 percent to 17.25.

Yen Rises for 2nd Day Before BOJ Holds Policy Meeting Next Week (Bloomberg)
The yen gained for a second day amid speculation the Bank of Japan (8301) will fail to impress investors with extra policy measures at its Jan. 21-22 meeting.
The euro remained lower following a drop yesterday after Luxembourg Prime Minister Jean-Claude Juncker said the currency is “dangerously high.” European Central Bank Governing Council member Ewald Nowotny speaks on monetary policy today.
A further decline in the yen “requires much bolder measures, as additional easing from the BOJ has been already priced in,” said Ken Takahashi, an assistant vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “The euro will remain susceptible to comments from officials and economic indicators as investors are weighing on the monetary policy outlook.”
The yen rose 0.4 percent to 88.42 per dollar as of 10:11 a.m. in Tokyo following a 0.8 percent jump yesterday. It weakened to 89.67 on Jan. 14, a level unseen since June 2010. The euro was little changed at $1.3302 after dropping 0.6 percent yesterday. It reached $1.3404 on Jan. 14, the strongest since Feb. 29. The currency fell 0.5 percent to 117.51 yen.
BOJ Governor Masaaki Shirakawa and his fellow board members will review the central bank’s 1 percent inflation goal at their policy meeting next week. Prime Minister Shinzo Abe has called for the target to be doubled and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”

Euro Exchange Rate Is ’Dangerously High,’ Juncker Says (Bloomberg)
The euro’s 8.4 percent gain against the U.S. dollar in the past six months is posing a fresh threat to the European economy just as it shows signs of escaping the debt crisis, said Jean-Claude Juncker, who leads the group of euro-area finance ministers.
Echoing policy makers from Switzerland to Japan in bemoaning strong exchange rates, Juncker late yesterday called the euro’s value “dangerously high” after the 17-nation currency this week traded above $1.34 against the dollar for the first time since February last year.
The euro has rallied amid growing signs in financial markets that the three-year debt turmoil is fading and after European Central Bank President Mario Draghi last week signaled no immediate plan to ease monetary policy further.
“It was said last year that the euro zone was at risk of breaking and I said last year that this won’t happen,” Juncker, who steps down this month as head of the so-called eurogroup, told an annual gathering of business leaders in Luxembourg. “The euro zone has become more stable after lots of efforts,” Juncker said, adding that now “the euro foreign-exchange rate is dangerously high.”
The European currency dropped as much as 0.9 percent after Juncker’s comments, the biggest intraday decline since Jan. 3. The euro traded at $1.3306 at 5 p.m. New York time, down 0.6 percent. It touched an intraday high of $1.3404 on Jan. 14, the strongest since Feb. 29, 2012.

Aussie Dollar Falls Versus Kiwi After Confidence Report (Bloomberg)
The Australian dollar fell versus its New Zealand peer after data showed consumer confidence was little changed from a two-month low, underscoring concern the larger South Pacific nation’s economy is weakening.
The so-called Aussie remained lower following a one-day drop against the yen after the World Bank cut its global growth forecast for this year, damping demand for higher-yielding assets. The New Zealand dollar, known as the kiwi, advanced versus all of its 16 major counterparts.
“We’ve seen over the last week that domestic data hasn’t been that good and the Aussie’s taken perhaps a slight hit,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “I wouldn’t say today’s data reflects any kind of booming confidence.”
Australia’s dollar fell 0.2 percent to NZ$1.2557 at 11:28 a.m. in Sydney. It was little changed at $1.0570. The Aussie bought 93.71 yen after sliding 0.8 percent to 93.81 yesterday. New Zealand’s currency gained 0.2 percent to 84.16 U.S. cents. It bought 74.61 yen, 0.1 percent above the close in New York.
Ten-year yields in Australia were at 3.42 percent from 3.44 percent yesterday. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to rate expectations, was little changed at 2.81 percent.
Australia’s sentiment index for January rose 0.6 percent to 100.6, a Westpac Banking Corp. and Melbourne Institute survey taken Jan. 7-13 of 1,200 adults showed today in Sydney. This month’s figure was little changed from the 100.03 level in December, the least since October. Readings above 100 indicate optimists outnumbered pessimists.
The Washington-based World Bank projects the world economy will expand 2.4 percent, down from a June forecast of 3 percent, after growing 2.3 percent in 2012. It halved its forecast for Japan, cut the U.S. projection b

Treasuries Hold Three-Day Gain on Debt Debate (Bloomberg)
Treasuries held a three-day gain on concern political wrangling over the U.S. debt ceiling will curb economic growth, fueling demand for the relative safety of government bonds.
Fitch Ratings said yesterday its AAA credit rankings on France, the U.S. and the U.K. are likely to come under pressure this year due to the slow pace of economic expansion and high debt levels.
“We will have a serious problem next month” if politicians don’t raise the debt limit, said Kim Youngsung, the head of fixed income in Seoul at Samsung Asset Management Co., South Korea’s largest private bond investor with the equivalent of $106.4 billion in assets. “It will have a negative impact on the global economy. We’ve seen yields go down over the past couple of days. I hope the problem will be solved, and yields will go up again.”
Ten-year yields were little changed today at 1.83 percent as of 9:42 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent security due in November 2022 was 98 5/32. The rate dropped six basis points, or 0.06 percentage point, over the past three days.
The Treasury uses emergency measures to delay a default as the total value of debt nears the ceiling. Exhausting the extraordinary steps without raising the limit would require the Treasury to fund the government with cash on hand, which wouldn’t be adequate “for any meaningful length of time,” according to Treasury Secretary Timothy F. Geithner.

Treasury Bill Rate Curve Inverts Amid Debt-Ceiling Showdown (Bloomberg)
Rates on Treasury bills maturing around the time the U.S. is forecast to run out of money to pay its obligations are higher than those on longer-maturity securities, suggesting investors are concerned lawmakers may fail to agree to lift the debt ceiling.
Feb. 28 bill rates rose to 0.108 percent, an increase of 2 basis points, or 0.02 percentage point, and the highest since Nov. 14. That compares with 0.08 percent for bills due April 18. At the end of last year, the April bills yielded 7 basis points more than the February securities.
“You can see the debt-ceiling-related move pretty clearly now in the bill curve, which is a dynamic that only started in the last two days,” Andrew Hollenhorst, fixed-income strategist at Citigroup Inc. in New York, said in a telephone interview. “We think it is an opportunity. It’s very unlikely that payments would actually be delayed. If you’re an investor who can take advantage of the tactical situation, we’d wait for yields to move a little bit higher in those maturities and then think about investing.”
The Treasury reached its statutory borrowing limit on Dec. 31 and is using “extraordinary” measures to pay for the government. It will lack sufficient funds to pay all its bills as early as Feb. 15, according to the Washington-based Bipartisan Policy Center.

World Bank Cuts Growth Forecasts as Developed Nations Lose Steam (Bloomberg)
The World Bank cut its global growth forecast for this year as austerity measures, high unemployment and low business confidence weigh on economies in developed nations.
The Washington-based bank projects the world economy will expand 2.4 percent, down from a June forecast of 3 percent, after growing 2.3 percent in 2012. It halved its forecast for Japan, cut the U.S. projection by 0.5 percentage point and predicted a second year of contraction in the euro region. It also lowered projections for emerging markets led by Brazil, India and Mexico.
“Overall, the global economic environment remains fragile and prone to further disappointment, although the balance of risks is now less skewed to the downside than it has been in recent years,” the World Bank said in its twice-yearly report.
Developed economies failed to gain steam in 2012 even after measures to stem the European debt crisis helped boost financial markets around the world. Uncertainties surrounding a U.S. political agreement on spending cuts and Japan’s diplomatic tensions with China may weigh further on the global economy just as emerging markets recover from one of their slowest growth rates of the past decade.
“What we’re seeing is the recovery that we anticipated in June being pushed a little further back in time, beginning closer to the end of the first quarter, into the second quarter of 2013,” Andrew Burns, the World Bank’s director of global economic trends, said on a conference call.

Retail Sales Rise in U.S. to Close 2012 on Upbeat Note: Economy (Bloomberg)
Retail sales rose more than forecast in December to end 2012 on a positive note, indicating Americans may be able to rise above Washington’s budget rancor to keep contributing to economic growth.
Purchases climbed 0.5 percent, the biggest gain in three months, after a revised 0.4 percent increase in November that was larger than previously reported, according to Commerce Department data issued today in Washington. Another report showed wholesale prices retreated more than forecast last month to cap the smallest annual gain in four years.
An improving job market, a rebound in housing, lower gasoline prices and discounting by chains such as Macy’s Inc. (M) will give households the means to keep shopping after the holidays. Consumers need the support as they deal with a tax- induced drop in take-home pay and warnings from President Barack Obama that the economy will suffer if Congress fails to raise the debt limit and agree on budget cuts.
“It looks like households are saving us from a lot worse outcome for the economy,” said Jonathan Basile, a U.S. economist at Credit Suisse in New York. “The first quarter is going to be about adjusting to higher taxes and taking home less pay. It doesn’t mean the end of the expansion.”
Stocks fell, extending yesterday’s decline in the Standard & Poor’s 500 Index, as concern about discussions on raising the debt ceiling intensified. The S&P 500 fell 0.2 percent to 1,467.85 at 11:34 a.m. in New York.

Fed’s Rosengren Sees More QE on If No Jobless Progress (Bloomberg)
Federal Reserve Bank of Boston President Eric Rosengren said the central bank could still enlarge its $85 billion monthly purchases of bonds if policy makers are not making progress toward their twin goals of stable prices and full employment.
“I think there is the capacity to enlarge it if that were to become necessary,” Rosengren, 55, said in a telephone interview with Bloomberg News.
Rosengren added that it’s “difficult to strategize what our response would be without knowing what the source of potential weakness would be” and that he expects the economy to make enough progress to avoid the need to enlarge the program.
The Boston Fed chief becomes a voting member of the Federal Open Market Committee this year as part of a rotation among Fed regional presidents. He will lend his voice to a debate over when to halt or shrink the $40 billion monthly purchases of mortgage bonds and $45 billion monthly purchases of Treasuries announced last year.
Minutes of the central bank’s most recent meeting showed policy makers already debating when it would be appropriate to halt purchases. “Several members” said it would be appropriate to slow or stop purchases “well before the end of 2013” and a “few” willing to let the program run to the end of the year.

Bernanke presses Congress to raise U.S. debt ceiling (Reuters)
Federal Reserve Chairman Ben Bernanke urged U.S. lawmakers on Monday to lift the country's borrowing limit to avoid a potentially disastrous debt default, warning that the economy was still at risk from political gridlock over the deficit.

China Defends Export Data After Economists’ Skepticism (Bloomberg)
China’s customs administration said every dollar of trade is documented, defending the quality of export data that analysts at UBS AG and Australia & New Zealand Banking Group Ltd. (ANZ) said may fail to capture the true picture.
“Customs import and export statistics are based upon actual customs declarations,” the General Administration of Customs said in an e-mailed statement yesterday, responding to questions submitted by Bloomberg News on Jan. 11. “In our published export and import data, every dollar has a corresponding customs declaration document to back it.”
Last week’s customs report showing export growth of 14.1 percent in December from a year earlier, after a 2.9 percent gain in November, spurred skepticism from economists at banks including UBS, which cited discrepancies with other nations’ imports from China. Smaller trade gains could signal a less robust recovery from a seven-quarter slowdown.
“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs Group Inc.’s Beijing-based economists Yu Song and Yin Zhang wrote in a Jan. 10 note. “Having said that, there is no concrete evidence to suggest this is what actually happened.”
Goldman Sachs and ANZ also cited a divergence from overseas orders in a manufacturing index, while Mizuho Securities Asia Ltd. said the increase could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the official 2012 target of 10 percent growth.
Customs collects trade statistics “in accordance with the relevant laws and regulations,” according to the agency’s statement. Companies within special-trade zones, or bonded zones, that have actual transactions with overseas partners are included in the statistics, while transactions with domestic companies aren’t included in data, customs said.

Li’s Urban Planning Sends Invesco Into Machinery Stocks (Bloomberg)
China’s move to develop urban areas is luring Invesco Great Wall Fund Management Co. and Harvest Fund Management Co. to industrial stocks that are trading at an 11 percent premium to the benchmark index.
Yu Guang, who manages the $350 million Invesco Great Wall Energy fund, and Zhang Tao, who oversees the $480 million Harvest Research Selective Equity fund, are buying construction machinery stocks and railway companies. Their funds beat at least 92 percent of rivals in the past 12 months, data compiled by Bloomberg show.
A gauge of industrial companies in the CSI 300 Index (SHSZ300) has rallied 20 percent since Dec. 4, trailing the 22 percent advance in the benchmark measure, when the official Xinhua News Agency cited the nation’s new leaders as saying they would promote urban development. Urbanization is a “huge engine” of China’s future growth, Li Keqiang, poised to succeed Wen Jiabao as premier in March, wrote in a full-page article in the People’s Daily on Nov. 21.
“There are a lot of expectations for reforms and urbanization,” Invesco’s Yu said by phone yesterday. “I am optimistic about China’s stocks.”
Li is among a new generation of Chinese leaders headed by Xi Jinping that is due to take power in two months. Urbanization is expected to spur 40 trillion yuan ($6.4 trillion) of investment by 2020, the Southern Metropolis Daily reported Dec. 25, citing a draft plan by the National Development and Reform Commission, the nation’s top economic planner.

Japan Machine Orders Rise More Than Expected in November (Bloomberg)
Japan’s machinery orders rose more than expected in November, suggesting that companies were optimistic about the economic outlook as the yen weakened.
Orders, an indicator of capital spending, climbed 3.9 percent from the previous month, the Cabinet Office said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a 0.3 percent increase. Large orders can cause volatile results.
Prime Minister Shinzo Abe last week unveiled a 10.3 trillion yen ($116 billion) stimulus package that Nomura Securities Co. forecasts will help deliver real annualized growth of 3.5 percent in the April-June quarter. Prospects for exporters may also improve this year as the yen has fallen about 10 percent against the dollar since mid-November.
“The current recession may end up being very short,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. “The rapid depreciation of the yen may make companies more inclined to invest in the coming months.”
Economy Minister Akira Amari said yesterday that the nation faces risks from any excessive decline in the yen, adding that the currency is “correcting” to a level in line with economic fundamentals. He declined to comment on an appropriate value.
The yen has fallen amid expectations the central bank will increase cash infusions to jump-start growth and defeat deflation. The currency was at 88.78 per dollar as of 8:52 a.m. in Tokyo.
The Bank of Japan (8301) will adopt a 2 percent inflation target advocated by Abe at its Jan. 21-22 meeting, according to people familiar with officials’ discussions.

India Banks System Face Worsening Asset Quality, IMF Says (Bloomberg)
India’s financial system has been made vulnerable by a deterioration in bank assets and a lack of capital as the economy slowed, according to the International Monetary Fund.
“The main near-term risks to the financial system are a worsening of bank asset quality and renewed pressures on systemic liquidity,” the Washington-based lender said in a statement today. Stress tests have shown the risks are “manageable” for now, according to the IMF, which concluded its assessment of India’s financial stability in February 2012.
Increasing involvement of the state in the financial industry leaves the government exposed to losses at banks and is acting as a brake on economic growth, the IMF said. India’s economy will expand 6 percent this year, the body said in October, after gross domestic product rose 4.9 percent in 2012, the least since at least 2005.
The IMF urged Indian regulators to loosen a mandatory requirement for banks to hold government securities, saying that it would boost the flow of capital to other industries. India should also foster development of the local corporate bond market to broaden funding sources, according to the statement.
India remains committed to adopting international standards “in a phased manner and calibrated to local conditions,” the Reserve Bank of India said in a statement.

U.K. Inflation Stays Above BOE Goal (Bloomberg)
U.K. inflation held at the highest rate since May last month as increases in gas and electricity bills helped to keep consumer-price growth above the Bank of England’s target.
Consumer prices rose 2.7 percent from a year earlier, the same as in November and October, the Office for National Statistics said today in London. That matched the median estimate of 36 economists in a Bloomberg News survey. Housing and utility costs added 0.26 percentage points to inflation. From the previous month, prices rose 0.5 percent.
Britain’s economy is struggling to recover after emerging from a double-dip recession in the third quarter. Still, with inflation above the Bank of England’s 2 percent goal, that may leave some of the Monetary Policy Committee reluctant to support more stimulus to help bolster growth.
“Inflation could pick up a bit further in the near-term, quite possibly reaching 3 percent,” said Vicky Redwood, an economist at Capital Economics in London. “It will probably stay relatively high for most of this year, prompting households’ real pay to fall again in 2013. But we continue to expect inflation to fall back below its target towards the end of the year.”
The pound pared gains against the dollar after the report and was trading at $1.6087 as of 9:56 a.m. in London, up 0.1 percent on the day. The yield on the benchmark 10-year U.K. government bond was little changed at 2.04 percent.

Spanish Underlying Inflation Rate Declines Amid Recession (Bloomberg)
Spain’s core inflation rate fell in December as price pressures ease in an economy confronting a second straight year of contraction.
Annual core inflation, which excludes energy and fresh food prices, fell to 2.1 percent from 2.3 percent in November, the National Statistics Institute in Madrid said today. That compares with an 2.3 percent median forecast of five estimates in a Bloomberg survey. Underlying prices were unchanged from the previous month.
The recession in the euro region’s fourth-biggest economy is deepening as Prime Minister Mariano Rajoy struggles to tackle a budget deficit that matches that of Greece as the euro-area’s second biggest after Ireland. The European Central Bank last week left its benchmark interest rate unchanged as it sees flat growth in the region in 2013.
Spain’s headline inflation rate, based on EU calculations, was 3 percent, matching an estimate published on Jan. 2. Tax increases are fueling price increases even as a 26.6 percent jobless rate undermines demand. Retail sales fell 7.8 percent in November, after 9.7 percent in October.
Stripping out their impact, inflation was 0.9 percent in December, according to the Spanish statistics institute, and 0.2 percent if fresh food and energy were also excluded, according to the Spanish measure.

Draghi Boosts 30-Year German Index-Linked Debt Hope (Bloomberg)
The prospect of an economic rebound midwifed by Mario Draghi’s successful calming of the European bond market may finally prompt Germany to sell 30-year inflation-linked government debt.
Draghi’s European Central Bank forecasts the euro region will rally from recession in 2013, while European Union leaders say the worst of the debt crisis is over. The prospect of those forces stoking inflation is sharpening investor appetite for a top-rated, long-dated security after France’s rating downgrade left the region without a AAA index-linked security with more than 10 years to maturity.
“We are likely to be a buyer of German 30-year index- linked debt if they offer,” said Robin Marshall, a fixed-income director at Smith & Williamson Investment Management in London, which oversees the equivalent of $19 billion. “Inflation may not be a threat in the euro zone now, but I would like to be able to express a longer-term view on that without having to take a credit risk. At the moment, it’s not easy to do that.”
Germany came late to the inflation market, selling its first bonds linked to consumer prices in March 2006. The U.K. issued inflation-protected securities in 1981, with France tapping the market in 1998 and Italy debuting in 2004. The debt is designed to keep its value when consumer prices rise.

20130116 1002 Global Commodities Related News.

2013-01-16T10:02:00.003+08:00

Wheat Market Recap Report (CME)
March Wheat finished up 15 3/4 at 782 3/4, 7 off the high and 16 1/4 up from the low. May Wheat closed up 17 1/2 at 791. This was 17 1/2 up from the low and 7 1/4 off the high.
KC and Chicago wheat traded sharply higher on the day. Short covering and technical buying helped to support the move higher. Wheat saw significant gains on corn as some suggested wheat's premium to corn had narrowed too much given the likely increases in feed wheat usage going forward. Export demand remains weak despite Chicago wheat's competitive price structure in the world market. Syria and Algeria have tendered for soft wheat and many expect the US to be active in each tender. A tightening global supply outlook caused by less than ideal weather conditions has added optimism that the US will begin to sell a greater share of world export business. Recent sales to Egypt by the US has been supportive but as a whole, total sales and shipments continue to lag the pace needed to reach this crop years USDA export estimate. Active rainfall patterns east of Missouri have helped improve soil moisture levels but conditions in the west remain too dry. Much of the snowfall has melted in areas of the western plains which is raising concern that wheat could be subject to winterkill if temperatures plummet.
March Oats closed up 2 1/2 at 356 1/2. This was 5 up from the low and 4 1/4 off the high.

Corn Market Recap for 1/15/2013 (CME)
March Corn finished up 6 1/2 at 730 1/2, 4 off the high and 8 1/2 up from the low. May Corn closed up 7 3/4 at 730 3/4. This was 9 3/4 up from the low and 3 off the high.
March corn traded higher on the day as with support coming from active bull spreads and a firm interior basis. A slightly drier forecast for areas of Argentina and Southern Brazil continue to add support but many are still positive in the aftermath of last Friday's USDA report that showed a small than expected December 1st stocks and 2012/13 ending stocks estimate. Feed and ethanol demand continue to be supportive demand features but exports have shown no signs of improvement this year which could limit gains in the short term. Taiwan was in for corn overnight seeking US, Argentina, and Brazil origins. Argentina's Agriculture of Ministry reported midday that they expect the 2012/13 corn harvest to come in between 28-30 million tonnes, up from prior estimates of 24.5 and against the current USDA estimate of 28 million tonnes. Argentina began the year with too much rainfall which delayed planting but a shift to more favorable conditions in December has likely benefited the crop production outlook.

Corn Futures Record Longest Rally in a Year; Wheat Gains (Bloomberg)
Corn futures rose, capping for the longest rally in a year, as dry weather depletes soil moisture and increases crop stress in South America, boosting demand for shrinking U.S. supplies. Wheat also advanced, and soybeans fell.
Parts of Argentina, Paraguay and southern Brazil will have dry conditions in the next 10 days, Mike Tannura, the president of T-Storm Weather LLC in Chicago, said in a telephone interview. Rain will be needed by late January to prevent crop damage after parts of Brazil and Argentina got less than 60 percent of normal rain since Dec. 1, he said.
“South American weather is less than ideal for big crops,” Jerry Gidel, the chief feed-grain analyst at Rice Dairy LLC in Chicago, said in a telephone interview. “If it’s still dry at the start of February, there could be some real yield losses.”
Corn futures for March delivery rose 0.9 percent to close at $7.305 a bushel at 2 p.m. on the Chicago Board of Trade. The price climbed for the seventh straight session, the longest rally since Dec. 28, 2011. Earlier, the grain reached $7.345, the highest for a most-active contract since Dec. 17.
Inventories of corn as of Dec. 1 fell to the lowest in nine years for that date, the U.S. Department of Agriculture said on Jan. 11. The grain surged to a record $8.49 on Aug. 10 after the worst drought since the 1930s reduced Midwest production.
Wheat futures for March delivery jumped 2.1 percent to $7.8275 a bushel in Chicago. The price rose for the third straight session, the longest rally since Nov. 28, as drought and cold threatened U.S. winter plants.
Temperatures may fall as low as minus 10 Fahrenheit (minus 23 Celsius) as far south as Kansas and Illinois, increasing risk for damage to crops without a blanket of snow protection, Tannura of T-Storm Weather said. The U.S. Drought Monitor showed severe to exceptional drought conditions on 86 percent of the six-state Great Plains region as of Jan. 8.
Soybean futures for March delivery fell 0.3 percent to $14.135 a bushel. Earlier, the oilseed reached $14.3625, the highest since Dec. 26.

Brent Crude Oil Market Report (CME)
March Brent crude oil grinded lower throughout the session and encountered a late day selling spree that took prices below the $110.00 level. The outside market tone seemed to be under pressure throughout the session, first by weaker than expected Q4 growth data out of Germany, then a sell off in European equity markets. It seemed that Brent crude oil came under added pressure on prospects for a near term boost in supply, highlighted by a third cargo being added to the February loading schedule. Some traders also noted a near term boost in North Sea Forties supply coming from strong output in the Buzzard oil field. The added weakness in March Brent crude oil, relative to March WTI, tightened that spread differential below the $16.00. February Brent crude oil expires during Wednesday's session.

Oil Trades Near One-Week Low as U.S. Crude Inventories Increase (Bloomberg)
Oil traded near the lowest level in almost a week in New York after U.S. crude stockpiles increased and a gauge of New York-area manufacturing contracted for a sixth consecutive month.
Futures were little changed after slipping the most in almost a month yesterday. U.S. crude supplies gained a second week and inventories at Cushing, the delivery point for West Texas Intermediate, rose to a record, data from the industry- funded American Petroleum Institute showed. An Energy Department report today may show stockpiles climbed 2.2 million barrels, according to a Bloomberg News survey. The Federal Reserve Bank of New York’s general economic index fell to minus 7.8 this month from a revised minus 7.3 in December.
Crude for February delivery was at $93.44 a barrel, up 16 cents, in electronic trading on the New York Mercantile Exchange at 10:58 a.m. Sydney time. The contract declined 86 cents to $93.28 yesterday, the lowest close since Jan. 9. Prices dropped 7.1 percent last year.
Brent for February settlement, which expires today, fell $1.58 to $110.30 a barrel on the London-based ICE Futures Europe exchange yesterday. The more active March contract slid $1.32 to $109.63. The front-month European benchmark contract closed at a premium of $17.02 to West Texas Intermediate futures, the narrowest spread since Sept. 19.
Total U.S. crude stockpiles rose 46,000 barrels last week, according to the API. Supplies at Cushing increased 1.8 million barrels, a sixth weekly gain, to a record 51.8 million.
U.S. gasoline supplies rose 4.1 million barrels, the API said. They are projected to gain by 2.7 million in the Energy Department report, according to the median estimate of 11 analysts. Distillate inventories, a category that includes heating oil and diesel, fell 568,000 barrels, compared with a forecast 1.5 million barrel gain in the survey.

Platinum Advances to Three-Month High on Production Cuts (Bloomberg)
Platinum surged to a three-month high, exceeding the price of gold for the first time since April, after the world’s largest producer said it will cut production. Palladium reached a 10-month high and gold rose.
Anglo American Platinum Ltd. (AMS) said today it will idle four shafts in South Africa, cutting output by 400,000 ounces a year, after a review of its operations. The reduction is equal to almost 7 percent of total global production. The metal is mainly used in pollution-control devices in cars and in jewelry, and Barclays Plc estimated last month that supply will fall short of demand by 38,000 ounces this year.
“There is a rush to buy platinum as today’s news means that the market will be pushed further into deficit,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “We are seeing strength in other precious metals as well.”
Platinum futures for April delivery climbed 1.9 percent to settle at $1,689.90 an ounce at 1:15 p.m. on the New York Mercantile Exchange after touching $1,706.80, the highest for a most-active contract since Oct. 9. The precious metal has gained 9.6 percent this month, compared with last year’s 9.8 percent advance.
An ounce of gold bought as little as 0.99 ounce of platinum in London earlier today, compared with about 1.16 ounces in August, data compiled by Bloomberg show.
Palladium futures for March delivery added 1.4 percent to $713.35 on the Nymex, after reaching $725, the highest since Feb. 29.

Silver Market Recap Report (CME)
March silver prices rose back within striking distance of the 2013 highs today. Some think that most of silver's upside action is coming from outside market pressures, while others think that silver is just as undervalued as gold and platinum in the face of revived inflationary hopes, ongoing US easing and another round of pathetic Washington antics looming directly ahead. While silver isn't seeing as direct of a threat to its supply as either gold or platinum, that situation is probably lending silver some support.

Gold Market Recap Report (CME)
Gold prices started out strong, fell back ahead of mid session and then returned to the highs of the day in the early afternoon action. Many traders think that gold was primarily lifted in the wake of renewed assurances that the US Fed was going to continue to support the economy while others think that the approach of another significant Washington fiscal battle is sparking increased safe haven interest in the precious metals markets. To a certain degree some of the ongoing gains in gold, platinum and silver prices are probably the result of evidence of severe turmoil in certain areas of the South African mining sector!