Thursday, August 18, 2016 6:02pm /fdc
Consumers are beginning to resist price increases in the retail market. One exception is the price of rice, which has now surged to N19,000 per bag.
This is because of its relative price inelasticity.
The good news is that oil prices are up 20% since July. This, we believe, will go a long way to support a wallowing naira.
Attached/Below is a brief summary of the commodities market update for the week.
Domestic Commodities Market
· Food commodity prices mixed
· Semolina and rice edge higher, sugar and cassava ease
· Consumer resistance is driving some commodity prices down
· PMS down to N143/ltr (Conoil), diesel up to N185/ltr
· Naira– parallel market and IFEM rates flat at N393/N314
· Equities market gained 0.18% to 27,437.25pts
· Positive reaction to earnings
· GTB earns N91billion mostly due to forex translation gains
• Brent crude 3.29% to $50.85pb
• 19.75% higher than July
• WTI 3.35% to $48.14pb
• Dollar at record seven-week low
• Dollar weakening usually leads to higher oil prices
• Market is divided over oil freeze talks in Algiers
• Crude draws of 1milliion barrels, higher than 200,000 barrels expectation
· Output quota talks are never easy
· Dollar weakness means higher oil prices
· Increased corn planting to weigh on prices
· Ranging $2.85-$3.45/bushel
· Wheat likely to maintain bearish trend
· Sugar prices to ease on tighter supply projections
· Bullish outcome for cocoa as dollar weakens and supply deficits recorded in Ivory Coast