Naira Strengthened In October to N363 - $ as Food Inflation Jumped to 15.34%


Friday, November 17, 2017 / 10:05AM /FDC

Even though, the naira strengthened in October to N363/$, surprisingly imported food inflation jump by 0.51% to 15.34%. The only reason why the food basket actually declined marginally was as a result of the bumper harvest this year.

In the last four days, Brent oil price has declined by 3.6% to $61.53pb after reaching a two-year high last week. Sell pressures are being underpinned by an unexpected jump in U.S shale output. The market is looking out for signals from OPEC ahead of the cartel’s bi-annual meeting on November 30.  

The attached slides sum up the events that took place in the domestic and global commodity markets this week.

Burning Economic Issues  
•Inflation eases for the ninth consecutive month to 15.91% 

•Cumulative decline of 2.8% in 10 months 

•Senate approves FGN external borrowing programme ($5.5bn) 

•Brent slides by 0.39% to $61.48pb, cumulative decline in November of 3.6% 

•On-grid power stays above 4,000MW 

•Naira trades flat at N363/$ 

Economic News  

The Good News
• Improved gas supply is boosting on-grid power output – 4,000MW

• Diesel price flat at N200/litre

• Inflation slide may force accommodative stance (MPC)

The Bad News
·         Oil markets face renewed turmoil, could slide below $60pb 

Power Generation analysis & Impact 
November 13th: Average power output sent was 4,019MWh/hour (up 256.93MWh/h) 

•Gas constraint was 1,436MW; frequency management constraint due to loss of DisCo feeders was 405.7MW, water management constraint was 150MW 

• Estimated loss: N0.98bn (annualised at N360.98bn /$1bn) 

•Shiroro Hydro has commenced water management measures to ensure dry season Efficiency  

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Domestic Commodity Prices Movement
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Stock Market 
·         NSE ASI up 0.05% to 36,634.89pts

Consumer goods sub index down 0.79% to 884.91 pts

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Oil prices
Brent crude down 0.35% to $61.48pb 

• On an unexpected jump in U.S shale output

• Concerns of global demand also weighed on prices

Oil markets today
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Outlook – Oil Prices
• Prices likely to remain above $60pb in the near term 

• On-going tensions in the Middle East will continue to support market.

• However, resurgence in U.S output will cap gains.

Outlook – Agric Prices

·         Bumper U.S harvest to keep prices bearish

·         Prices will be determined by supply/demand dynamics 

·         Lower production forecasts in Ivory Coast will continue to support prices 

Related News
1.       Most Food Prices In Nigeria Have Shrugged off The Currency Gains and Remained Relatively Static
2.   Commodity with a 150-Day Lag Could Be a Game Changer for Economic Diversification
3. Diesel Prices Increased by 20.4% Despite the Improvement in on-grid Power Generation
4.      Domestic Commodity Prices Responding to the Increased Harvest Output
5.      Harvest Season Has Begun; Expected to Increase Supply and Moderate Prices
6.      Price of Cement is up 8% to N2,700 while Brent Slipped to $56.34pb
7.      Domestic Price of Palm Oil Has Declined by 25% in 12 Months
8.     FG to Bring Down the Price of a 50kg Bag of Rice to N9,000 Within a Month
9.      Price of Cement Dropped by 3.8% to N2,500 per Bag
10.  Oil Prices Climbed Sharply to a 2-year High of $59pb
11.   Cashew Nut Exports Increased Significantly by 463% to $37m in Q2’17
12.  Volatile Oil Prices in August
13.  Oil Prices Hovered Around $55pb Ahead of OPEC Meeting
14.  Higher Price of Oil Has More Than Compensated for Any Cocoa Shortfalls
15.   Oil Price Up to $54.16pb Due to Lower OPEC Production

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