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Commodity Prices Maintained Upward Trajectory

Proshare

Thursday, May 11, 2017 4:45 PM /FDC

Commodity prices have maintained their upward trajectory this week with further spikes in the price of rice and tomatoes. Tomato prices have increased by a whopping 27% to N14, 000 as the crop season is over, thus, supply has declined as a result, sending prices through the roof.

Rice prices have also shot up by 17% to N17, 500 on border closure taking to account the commodity’s import dependence. On the global front oil prices have sustained a rally this week, trading above $50pb. This comes after last week’s lows of $47pb. 

The FDC Think Tank summarizes these events as the week draws to a close.

Burning Economic Issues
·         NASS increases 2017 budget by N143bn
·         Tomato prices surge by 27% to N14,000
·         Rice up 17.14% to N17, 500
·         CBN intervenes in wholesale SMIS window ($100m)
·         Naira appreciates to N390/$
·         Oil prices in slight rally to $50.41
·         Diesel creeps to N200/ltr  

Economic News  

The Good  
·         Budget approval and increased expenditure
·         Cocoa price creeps above $1,900/mt  

The Bad
·         In spite of rally, oil markets are soft  

Power Generation analysis & Impact

May 9th: On grid power output was 3425MWh/hour (up 468MWh/h)
 

·         Total Power constraints: 2325MW due to gas, line and water constraints
·         Estimated loss: N1.144bn (annualised at N417.56bn /$1.04bn)
·         System collapse due to sharp and sudden drop in frequency (51.06Hz to 43.37Hz)

·         Benin/Egbin was out due to cut sky wire prior to system collapse 2,500.00



Domestic Commodity Prices Movement

 



 

 

Stock Market

 


Oil prices
·         Brent crude 3.45% to $50.41pb
·         Positive market sentiment due to potential supply cuts
·        Saudi Aramaco to cut supply by about 7m barrels to Asia
·         API reports a stock draw of 5.789m barrels
·         Defies analysts expectation of 1.8m barrels   

Oil markets today   

 

 


Outlook – oil prices 
·         Rising inventories continue to weigh on prices
·         Production ramp up in Libya negates OPEC agenda
·         Expectations of smooth upward trend in prices are thwarted
·         Expect oil prices to close within $49 - $50 range this week  
  
Outlook – agric prices 

Grains 
·         Persistent wet conditions favourable for grains
·         Expect bearish trend in market 

Soft

Sugar
·         Global sugar exports to exceed demand and thus weigh on prices

      Cocoa
·     Cocoa prices to trade above $1,900/mt this week

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