Domestic Commodity Prices Remain Sticky Downwards as Crop Diseases Keep Prices Elevated


Thursday, May 18, 2017 4:59PM /FDC

Oil stabilised at $52pb due to an unexpected decline in US crude inventories. All eyes are on OPEC’s meeting scheduled for May 25th. Investors remain cautious as US politics undermine market confidence.

Nigeria on the other hand is back on the radar as Forcados is expected to commence loading cargoes in May. Domestic commodity prices remain sticky downwards as crop diseases coupled with seasonal factors keep prices elevated.

The attached report summarizes the commodity price movements for this week.

Burning Economic Issues

·         Food inflation hits 8 year high despite slowing headline inflation
Forcados to load at least two crude cargoes in May

CBN sold $100mn in spot and forward transactions

External reserves declined by 0.32% to $30.78bn

Diesel prices decline 5.98% to N160/ltr

Crop diseases threaten Nigeria’s food security

Economic News  

The Good   
·         Forcados’ reopening will boost Nigeria’s revenue
·         Lower diesel price positive for PPI  

Bad news
·         Crop diseases could see food inflation spike further  

Power Generation analysis & Impact

May 16th: On grid power output was 3688MWh/hour (down 86MWh/h)

·         Total Power constraints: 2354MW due to gas, line and water constraints

·         Estimated loss: N1.130bn (annualised at N406.8bn /$1.02bn)

·         Improved supply of gas to plants is leading to increased generation, however line constraints at Afam VI persist, along with high frequency constraints at Okpai

·         Average diesel price across states reduced by 2.26% in April to N229.25/ltr 



Domestic Commodity Prices Movement


Stock Market  

Oil prices

·        Brent crude 0.75% to $52.21pb

·        EIA reported a decline of 1.8mb in crude inventories

·        Against API’s projection of a build-up of 882,000 barrels

·      Investors stuck between OPEC cut and expectations of accelerating oil output from the U.S.

  Oil markets today  


Outlook – oil prices
·        All eyes on OPEC meeting scheduled for May 25th

·        Market anticipate data on US rig count

·        Fears of lingering oversupply will weigh on prices

·        Crude oil prices may drop as US Politics undermine market confidence

·        Prices expected to remain above $50pb barring any unforeseen events  

Outlook – agric prices 


·        Expectations of lower grain production will support prices  



·        El Niño likely to suppress Brazil’s cane production COCOA

·        Rapid response to mutiny in Ivory Coast will stabilize prices  

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