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Commodity with a 150-Day Lag Could Be a Game Changer for Economic Diversification

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Wednesday, November 08, 2017 / 10:30 AM /FDC

Nigeria is the world’s 15th largest producer of Soybean. It earns a paltry $200mn and contributes only 0.05% of GDP. This commodity which has a 150-day lag between planting and harvesting could be a game changer in the quest for economic diversification. It is currently trading at $369 per tonne and is used for bio-fuels, animal feed, vegetable oil, soymilk, soy flour etc. 

Brent oil is trading at a 2 year high of $63.72pb, which is excellent news for Nigeria. 


Burning Economic Issues
  

·        Brent crude continued its bullish trend, trading at $63.72pb

·       
Internal squabbling in Saudi Arabia could destabilize OPEC (Sunni vs Shiite)

·       
Soybean price up 0.10% to $365.8/tonne, down 1.62% YTD

·       
Soybean in Nigeria – great potential, low output

·       
Diesel price crashes 17.1 % to N175/ltr

·       
Naira flat at N363/$ (parallel), IEFX: N360.46/$

Economic News

The Good
  
·       
Diesel price down to N175/ltr, expected to go lower

·       
Oil price now above $63pb – revenue positive ($3.2bn per month)

·       
Inflation to decline to 15.89% in October


The Bad
·        Saudi squabble could affect OPEC meeting

·       
Food inflation still high at 20.10%
 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Power Generation analysis & Impact
  
November 1st : Average power output sent was 3,871.92MWh/hour (down 107MWh/h)

·       
Gas constraint was 1,305.5MW; frequency management constraint due to loss of DisCo feeders was 1,220.50MW

·       
Estimated loss: N1.21bn (annualised at N441.65bn /$1.22bn)
 

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Domestic Commodity Prices Movement
  

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Stock Market 
·        NSE ASI 0.22% to 37,013.75pts

·       
Consumer goods sub index 0.66% to 909.03pts

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Oil prices
·        Brent crude 2.36% to $63.72pb

·
        OPEC determined to deepen and extend output cuts

·
        Saudi Arabia driven to keep oil prices high ahead of the Aramco sale

·
        Political uncertainty in Saudi Arabia contributing to the uptick in prices

 

Oil markets today

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Outlook – Oil Prices
 

·        Slightly higher price levels will likely be sustained in the near term

·       
On rising global demand amid tighter supply

·       
Strong macro-economic backdrop and inventory drawdown in the US

Outlook – Agric Prices
 

Grains 
  
·        Prices to remain elevated on increased global Demand

Soft

Sugar
·        Expectation of substantial global surplus will keep a lid on prices

Cocoa 
·        Concerns of crop diseases (brown rot & black pod) in Ivory Coast could curb production

Related News
1.       Diesel Prices Increased by 20.4% Despite the Improvement in on-grid Power Generation
2.      Domestic Commodity Prices Responding to the Increased Harvest Output
3.      Harvest Season Has Begun; Expected to Increase Supply and Moderate Prices
4.      Price of Cement is up 8% to N2,700 while Brent Slipped to $56.34pb
5.      Domestic Price of Palm Oil Has Declined by 25% in 12 Months
6.      FG to Bring Down the Price of a 50kg Bag of Rice to N9,000 Within a Month
7.      Price of Cement Dropped by 3.8% to N2,500 per Bag
8.     Oil Prices Climbed Sharply to a 2-year High of $59pb
9.      Cashew Nut Exports Increased Significantly by 463% to $37m in Q2’17
10.  Volatile Oil Prices in August
11.   Oil Prices Hovered Around $55pb Ahead of OPEC Meeting
12.  Higher Price of Oil Has More Than Compensated for Any Cocoa Shortfalls
13.  Oil Price Up to $54.16pb Due to Lower OPEC Production
14.  BUA Group Additional Investment Likely to Drive Cement Price Downwards
15.   Commodities Market Exports – Brent Crude Traded Bullish in the 2nd Half of August

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