Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder


Friday, December 02, 2016/9:44 AM /fdc

OPEC surprised sceptics in reaching a production cut deal for the first time in a decade. The cartel has agreed to cut production by 1.2mbpd to 32.5mbpd, which is 34.7% of global oil demand.

This is great for Nigeria who is among the countries exempt from the output cut. With the prospect of higher oil prices and an increase in production, Nigeria’s fiscal and external buffers should record accretion, all things being equal.

Domestic food prices may have reached a plateau as consumer resistance bites harder. A 50kg bag of rice sells for N24,000 (Stallion) and N23,000 (Caprice) in preparation for Christmas.

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

Burning Economic Issues
• Vienna meeting re-establishes Saudi Arabia as price leader

• Total production now 34.7% of world demand

• OPEC’s relevance reduced as Russia takes some slack

• Oil prices up 10% to above $50pb

• Economic recovery and growth plan to be announced

• Naira remains weaker at N480/$

Domestic Commodity Prices

• Prices of domestic commodities remain stubbornly high

• Increased price volatility in December

• December is a month when Naira usually appreciates

• Cocoa main crop and returning friends and relatives

• Diesel prices flat at N200/liter

Stock Market
•NSE ASI up marginally by 0.03% (25, 241.63pts)

•Driven by bargain hunting


Oil Markets Today

Oil Prices Above $50 Per Barrel

• Brent crude 8.82% to $50.47pb

• WTI 10.88% to $50.15pb

• OPEC agrees to cut production by 1.2mbpd, effective January 2017

• A final agreement will involve OPEC and non-OPEC – Saudi Oil Minister


• Russia agree to cut production by 300,000bpd

• U.S crude supplies declined by 900,000b - EIA

Agric Commodities

Outlook – oil prices

• OPEC cut deal will drive prices in the near term

• High prices may encourage more U.S oil drillers

Outlook – agric prices


• Further increase in grain prices will be limited by the strong dollar



• A production surplus of 2mt is expected in 2017/18


• Christmas demand season will bolster prices in the short term

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6.      Domestic Commodity Prices Tick Upwards In Spite of Expected Harvests
7.      Naira Depreciates to N407/$ in the Parallel Market; Impact on Imported Commodities to be Felt in Sep
8.     Consumers Are Resisting Price Increases in the Retail Market - FDC
9.      Continuing Slide of the Naira Leading to Higher Prices of Inelastic Commodities
10.  Receding Weather Shocks Hand baton to Fundamentals
11.   Domestic Commodity Prices Remain Fairly Stable
12.  Potash Price Surge Could Lead To Higher Food Costs For Billions
13.  Domestic Commodity Prices Declining in the Last 24hours - FDC
14.  Uranium Prices Set To Double By 2018
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