Commodity with a 150-Day Lag Could Be a Game Changer for Economic Diversification


Wednesday, November 08, 2017 / 10:30 AM /FDC

Nigeria is the world’s 15th largest producer of Soybean. It earns a paltry $200mn and contributes only 0.05% of GDP. This commodity which has a 150-day lag between planting and harvesting could be a game changer in the quest for economic diversification. It is currently trading at $369 per tonne and is used for bio-fuels, animal feed, vegetable oil, soymilk, soy flour etc. 

Brent oil is trading at a 2 year high of $63.72pb, which is excellent news for Nigeria. 

Burning Economic Issues

·        Brent crude continued its bullish trend, trading at $63.72pb

Internal squabbling in Saudi Arabia could destabilize OPEC (Sunni vs Shiite)

Soybean price up 0.10% to $365.8/tonne, down 1.62% YTD

Soybean in Nigeria – great potential, low output

Diesel price crashes 17.1 % to N175/ltr

Naira flat at N363/$ (parallel), IEFX: N360.46/$

Economic News

The Good
Diesel price down to N175/ltr, expected to go lower

Oil price now above $63pb – revenue positive ($3.2bn per month)

Inflation to decline to 15.89% in October

The Bad
·        Saudi squabble could affect OPEC meeting

Food inflation still high at 20.10%

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Power Generation analysis & Impact
November 1st : Average power output sent was 3,871.92MWh/hour (down 107MWh/h)

Gas constraint was 1,305.5MW; frequency management constraint due to loss of DisCo feeders was 1,220.50MW

Estimated loss: N1.21bn (annualised at N441.65bn /$1.22bn)

Proshare Nigeria Pvt. Ltd.

Domestic Commodity Prices Movement

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Stock Market 
·        NSE ASI 0.22% to 37,013.75pts

Consumer goods sub index 0.66% to 909.03pts

Proshare Nigeria Pvt. Ltd.

Oil prices
·        Brent crude 2.36% to $63.72pb

        OPEC determined to deepen and extend output cuts

        Saudi Arabia driven to keep oil prices high ahead of the Aramco sale

        Political uncertainty in Saudi Arabia contributing to the uptick in prices


Oil markets today

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Outlook – Oil Prices

·        Slightly higher price levels will likely be sustained in the near term

On rising global demand amid tighter supply

Strong macro-economic backdrop and inventory drawdown in the US

Outlook – Agric Prices

·        Prices to remain elevated on increased global Demand


·        Expectation of substantial global surplus will keep a lid on prices

·        Concerns of crop diseases (brown rot & black pod) in Ivory Coast could curb production

Related News
1.       Diesel Prices Increased by 20.4% Despite the Improvement in on-grid Power Generation
2.      Domestic Commodity Prices Responding to the Increased Harvest Output
3.      Harvest Season Has Begun; Expected to Increase Supply and Moderate Prices
4.      Price of Cement is up 8% to N2,700 while Brent Slipped to $56.34pb
5.      Domestic Price of Palm Oil Has Declined by 25% in 12 Months
6.      FG to Bring Down the Price of a 50kg Bag of Rice to N9,000 Within a Month
7.      Price of Cement Dropped by 3.8% to N2,500 per Bag
8.     Oil Prices Climbed Sharply to a 2-year High of $59pb
9.      Cashew Nut Exports Increased Significantly by 463% to $37m in Q2’17
10.  Volatile Oil Prices in August
11.   Oil Prices Hovered Around $55pb Ahead of OPEC Meeting
12.  Higher Price of Oil Has More Than Compensated for Any Cocoa Shortfalls
13.  Oil Price Up to $54.16pb Due to Lower OPEC Production
14.  BUA Group Additional Investment Likely to Drive Cement Price Downwards
15.   Commodities Market Exports – Brent Crude Traded Bullish in the 2nd Half of August

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