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Domestic Commodity Prices Remain Sticky Downwards as Crop Diseases Keep Prices Elevated

Proshare

Thursday, May 18, 2017 4:59PM /FDC

Oil stabilised at $52pb due to an unexpected decline in US crude inventories. All eyes are on OPEC’s meeting scheduled for May 25th. Investors remain cautious as US politics undermine market confidence.


Nigeria on the other hand is back on the radar as Forcados is expected to commence loading cargoes in May. Domestic commodity prices remain sticky downwards as crop diseases coupled with seasonal factors keep prices elevated.


The attached report summarizes the commodity price movements for this week.


Burning Economic Issues

·         Food inflation hits 8 year high despite slowing headline inflation
·        
Forcados to load at least two crude cargoes in May

·        
CBN sold $100mn in spot and forward transactions

·        
External reserves declined by 0.32% to $30.78bn

·        
Diesel prices decline 5.98% to N160/ltr

·        
Crop diseases threaten Nigeria’s food security

Economic News  

The Good   
·         Forcados’ reopening will boost Nigeria’s revenue
·         Lower diesel price positive for PPI  
 

Bad news
·         Crop diseases could see food inflation spike further  
 

Power Generation analysis & Impact

May 16th: On grid power output was 3688MWh/hour (down 86MWh/h)

·         Total Power constraints: 2354MW due to gas, line and water constraints

·         Estimated loss: N1.130bn (annualised at N406.8bn /$1.02bn)

·         Improved supply of gas to plants is leading to increased generation, however line constraints at Afam VI persist, along with high frequency constraints at Okpai

·         Average diesel price across states reduced by 2.26% in April to N229.25/ltr 

 

 

Domestic Commodity Prices Movement



 
 

Stock Market  


 
Oil prices
 
 

·        Brent crude 0.75% to $52.21pb

·        EIA reported a decline of 1.8mb in crude inventories

·        Against API’s projection of a build-up of 882,000 barrels

·      Investors stuck between OPEC cut and expectations of accelerating oil output from the U.S.

  Oil markets today  
 

 

Outlook – oil prices
  
·        All eyes on OPEC meeting scheduled for May 25th

·        Market anticipate data on US rig count

·        Fears of lingering oversupply will weigh on prices

·        Crude oil prices may drop as US Politics undermine market confidence

·        Prices expected to remain above $50pb barring any unforeseen events  

Outlook – agric prices 

Grains    

·        Expectations of lower grain production will support prices  

Soft

Sugar

·        El Niño likely to suppress Brazil’s cane production COCOA

·        Rapid response to mutiny in Ivory Coast will stabilize prices  

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1.       Price of a Bag of Rice Declined by 14%
2.      Commodity Prices Maintained Upward Trajectory
3.      Recent Spike in Commodity Prices Confounded Analysts
4.      Retail Prices Remained Stubbornly Static as Naira Strengthened at the New Forex Window
5.      Commodity Retailers Leave Retail Prices Unchanged
6.      Oil Prices Took a Hit as Naira Converged Below N400 to a Dollar
7. Retail Commodity Prices Remained Relatively Unchanged as Manufacturers Capitalize on Margins
8.     The Impact of CBN's Intervention on Commodity Prices Not Yet Seen
9.      The Impact of Global and Domestic Developments on the Commodity Markets
10. 
Naira Recovers by 5 percent in 2 days to N495 to 1$; Oil Trades at $57pb
11.   Are The Economic Realities of 2016 to Persist in 2017?
12.  Increasing Consumer Resistance and Declining Income Is Taking Its Toll on Retail Prices
13.  Consumer Effective Demand Negatively Affected By Festive Spending
14.  Domestic Commodity Prices Have Reached Their Peak
15.   Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards
16.  Domestic Commodity Prices Oblivious to a Falling Naira
17.   Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder
18.  Retailers Brace up for a Bleak Christmas
19.  The China Futures Association Signs MoU with Intnl’ Commodities & Derivatives Assn
20. Militants Disrupt a Potential 400,000bpd from Forcados Export terminal; Food Prices Remain Flat
21.  Dubai Gold & Commodities Exchange Opens Vital Trading Link To Chinese Bullion Market

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