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Are The Economic Realities of 2016 to Persist in 2017?

Proshare

Friday, January 20, 2017 4:08 PM /FDC

The events of 2016 have rattled the average consumer to say the least and now the question on everyone’s mind is ‘are the economic realities of 2016 to persist in 2017?’

Prices have remained static in the last week of 2016 however; we expect commodity prices to decline as we enter January 2017.

This is because consumer effective demand has been negatively affected by festive spending and January school fees.

Producers will have to be long cash and short inventory. Hence, we are likely to see a ‘dumping’ of goods in the market.

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

Burning Economic Issues

• Senate retains N305/$ exchange rate for the MTEF/FSP

• Oil benchmark is raised by 4.7% to $44.5/barrel

• N2.321 trillion borrowing plan was approved

• National blackout still widespread

•Diesel price drops slightly to N255/ltr

• External reserves rise above $27bn

• Abuja airport closure still a hot potato

Economic News

The Good: 
 
• Borrowing plan approval to help fiscal plans to boost the economy

• External reserves boost could ease pressure on naira

Bad news:
• Abuja closure comes with financial and economic disruptive costs

• Financial costs in excess of N7bn($14m)

• Economic disruptive costs likely to exceed $3.6bn

Domestic Commodity Prices





Stock Market
•NSE ASI 0.13% (26, 245.34 pts)
• Market dips slightly as it awaits earnings and MPC meeting



Oil Prices
• Brent crude by 2.58% to $54.42pb

• Shale production costs have declined 39% in 2 years

• Encouraging more oil production from the US

• Comments on output cut deal triggered a dip in oil prices

• Saudi Arabia hinted that cut deal is unlikely to go beyond June

“We don’t think it’s necessary given the level of compliance...and given the expectations of demand.” - Saudi Arabia Energy minister

Oil Markets Today



Outlook – Oil Prices
• An early end to the OPEC quota deals might make current efforts futile

• This happens on the backdrop of threats from increased shale production

• However, IMF predicts that oil prices will rally 20% in 2017

Outlook – Agric Prices
Grains

• Strong Brazilian corn production to weigh on prices

• Increased Indian demand to support bullish wheat market

Soft

Sugar

• Abrupt end of crushing season to support a rally in prices

Cocoa
• US cocoa to be mainly driven by dollar movements this week

Related News
1.       Increasing Consumer Resistance and Declining Income Is Taking Its Toll on Retail Prices
2.      Consumer Effective Demand Negatively Affected By Festive Spending
3.      Domestic Commodity Prices Have Reached Their Peak
4.      Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards
5.      Domestic Commodity Prices Oblivious to a Falling Naira
6.      Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder
7.      Retailers Brace up for a Bleak Christmas
8.     Militants Disrupt a Potential 400,000bpd from Forcados Export terminal; Food Prices Remain Flat
9.      Oil Price Slips on OPEC Deal Concerns; Price of a Bag of Rice is Tapering
10.  Rise in Crude Oil Price to Boost Nigeria’s Revenue by 8.7%
11.   Commodity Prices Remain Relatively Unchanged
12.  Domestic Commodity Prices Tick Upwards In Spite of Expected Harvests
13.  Naira Depreciates to N407/$ in the Parallel Market; Impact on Imported Commodities to be Felt in Sep
14.  Consumers Are Resisting Price Increases in the Retail Market - FDC
15.   Continuing Slide of the Naira Leading to Higher Prices of Inelastic Commodities
16.  Receding Weather Shocks Hand baton to Fundamentals
17.   Domestic Commodity Prices Remain Fairly Stable
18.  Potash Price Surge Could Lead To Higher Food Costs For Billions
19.  Domestic Commodity Prices Declining in the Last 24hours - FDC

 

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