Commodity: Domestic Prices Sticky Downwards

Proshare

Thursday, March 31, 2016 3:43PM /FDC

Domestic commodity prices have been stable this week, just as February Headline inflation at 11.4% is a season record. The price of diesel, a key determinant of core inflation, was flat at N130 per litre.

This commodity update looks at both global and domestic price movements for the week.

The attached/below is a brief analysis of the implications of these price movements and forecasts for the week ahead.

Oil Price Movement

• Brent crude up 0.31% to $39.26pb

• WTI futures down by 2.44% to $38.32pb

• The U.S Dollar weakened on the dovish stance of the Fed

• Inverse relationship between the dollar and commodity prices will continue

• Increase in U.S crude inventories lower than anticipated

• LNG price up 4.74% due to colder weather in the North East and Midwest of the U.S

Oil Markets Today



Agric Commodities



Outlook

Oil

•Negative sentiment for oil until April 17 meeting

•In the summer, lower demand for heating oil but higher demand for gasoline

•Middle East tension is low and prices expected to stay tepid

Grains

•Grain futures will be mainly US dollar dependent in the next few days

•Traders will focus attention to USDA data release of spring planting for next cues

SOFT

SUGAR – World sugar production estimated to drop to 171.1mt in 2015/16 season on weather abnormalities

•The Brazil political impeachment drama may have a marginal impact on sugar and ethanol

COCOA – ICCO expects global cocoa production to reach 4.154mmt in 2016, down 1.8% last year


Domestic Prices Remain High

• Prices of domestic commodities remain stubbornly high

•Diesel is trading at N130.00

•Fuel scarcity had limited impact

•Chronic fuel shortage amid low electricity supply hit hard on food prices

•Exchange rate stability at N320 will lead to some easing on the pace of price increases in April

Stock Market
•There is an insignificant link between FMCG stock price movement and global commodity prices

•2 straight days of negative trade

•Unilever PAT dipped by 51% to N1.19bn from N2.4bn in 2014
 


 

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