Commodity Update: Prices Remain Stable

Proshare

Thursday, April 7, 2016 3:23PM /FDC

Yet again, Nigerians are hopeful that the excruciating spell of fuel scarcity will come to an end sooner rather than later just in time for an improved economic atmosphere in Q2’16. A few of the domestic commodity prices remained stable while others met some level of consumer resistance.

Global oil prices rebound ahead of the April 17th meeting in Qatar’s capital, Doha. Expectations of a production freeze seems far-fetched, but Kuwait and the U.S hint towards an optimistic outcome.

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

Domestic Commodity Prices Stable



Palm Oand Cement prices jolt the market

•Cement has high logistics and distribution costs

•Palm oil up due to high demand and import restrictions

•Palm oil is a major input to noodles

•Most commodities declined while others were unchanged

•Scarcity to end in Lagos and Abuja this week

•Nigeria, 2nd largest producer of tomatoes in Africa, loses approx N12bn to tomato imports annually

Stock Market
•A year after elections, the equity market is down 26%

•Naira peg continues to impair investor confidence

•Dangote cement P.A.T up 13.68% to N181.3billion

•Turnover up 25.56% to N491.7billion



 

Oil Price Movement

• Brent crude up 5.70% to $39.84pb

• Ahead of April 17th meeting in Doha

• U.S. crude oil supplies fell by 4.9mb - EIA

• Decline attributed to an increase in refinery activity

• Refinery capacity increased to 91.4% from 90.4% in the prior week

• Since the Nigerian election, oil prices have fallen by 32%

Oil Markets Today


 

Agric Commodities – Mixed performances

 




 

Outlook

Oil

•Kuwait’s OPEC governor expressed optimism and expects the oil market to rebalance in Q2’16

•Oil prices may maintain gains if U.S inventory data glides downwards

•U.S production may slide below the 9 million barrels mark if weekly declines persist

•US refineries expected to shift to foreign suppliers against the backdrop of lower production levels

Grains 
•Wheat prices to remain bearish on favorable crop condition

•Bullish outlook for corn futures as Brazilian exports slow

Soft
Sugar – Demand expected to increase as confectionaries prepare for the summer season

Cocoa – Positive outlook as the global confectionary market is expected to grow by 1.8% in 2016

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