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Consumer Effective Demand Negatively Affected By Festive Spending

Proshare

Thursday, December 29, 2016 07:38 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 

• Mexico to abandon 80-year price ceiling with a hike in petrol pump price by 14.2%

• Attributed to rising global oil prices

• Oil price average $54.82pb in December

• Diesel price crosses N255/ltr, up 59.09% YTD

• Airline passengers suffer from Harmattan and jet fuel saga

• Naira appreciates by 1.02% to N490/N on holiday lull

Domestic Commodity Prices 

• Commodity prices static in the last week of 2016

• Expected to decline in January

• Perishable prices likely to slump faster

• Downside risk: higher energy prices feeding cost push element in prices

 
Stock Market  

• NSE ASI 0.76% (26,688.25 pts)

• Market opens after holidays to bullish sentiment  


Oil Prices Surge  

• Brent crude 1.74% to $56.12pb

• WTI 1.4% to $53.76pb

• Production cut deadline edges closer – January 1st

• Optimism in the market is currently fuelling bullish trend

• Amidst reports that Iranian oil supply increased by 19% in the first 9 months of 2016 - EIA

• Venezuela vows to cut production in 2017 by 95,000 bpd  

Oil Markets Today


Outlook – Oil Prices
• Oil prices to close at a year end rate of $58pb

• This is to be driven by optimism about product cut by OPEC and non-OPEC members

• More countries are expected to volunteer more production draws

• This is due to the effect it has on prices in the short to medium run

Outlook – Agric Prices 

Grains

• Drier weather forecast for grain producers is to support price rally

Soft 

Sugar

• Harsh weather conditions in Brazil to support prices  

Cocoa

• Cocoa prices to trend lower on anticipation of global oversupply  

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9.      Commodity Prices Remain Relatively Unchanged

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11.   Naira Depreciates to N407/$ in the Parallel Market; Impact on Imported Commodities to be Felt in Sep

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13.  Continuing Slide of the Naira Leading to Higher Prices of Inelastic Commodities

14.  Receding Weather Shocks Hand baton to Fundamentals

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