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Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards

Proshare

Friday, December 16, 2016 10:08 AM /FDC

Oil prices reached the highest level this year in an inter-day trade of $58pb, following a deal by oil producers, before closing lower at $53.50pb.

While this is good news for Nigeria, the downside risk is the recent U.S Fed interest rate hike of 25 bps. This typically strengthens the dollar, reducing the demand for dollar denominated commodities like oil.

Headline inflation rate for November increased marginally to 18.48%, in line with the FDC think tank forecast. As anticipated, month-on-month inflation slowed further as the base year effect loses steam.

The prices of Christmas sensitive staple foods remain sticky downwards with marginal increases as traders take advantage of the year end festivities.

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

Burning Economic Issues

• President Buhari presents the 2017 budget of recovery and growth

• Expenditure up 20% to N7.29trn; revenue up 30% to N4.94trn

• Debt service to consume 34% of revenue

• Oil amnesty budget for militants up 225% to N65bn

• U.S Fed increased rate by 25 bps

• Naira flat at N485/$ - parallel; N305.5/$ - Interbank

Domestic Commodity Prices
•Inflation to climb marginally to 18.4% (FDC)

•Food basket up slightly

•Consumer resistance increasing as disposable income shrinks

•Diesel prices at N203/liter. Kerosene at N300/liter




Stock Market – Santa Clause Rally ??? 

 

• NSE ASI 1.29% (26,407.64pts)

•Bargain hunting ahead of budget spending



Oil Prices Surge

• Brent crude 3.27% to $53.90pb

• WTI 3.66% to $51.04pb

• 27% above Nigerian budget benchmark of $42.5pb

• U.S Fed rate hike puts pressure on oil prices

• OPEC production in November up 0.47% to 33.87mbpd

• U.S crude stockpiles down by 2.6mb – EIA

Oil Markets Today



Outlook – Oil Prices

• U.S Fed rate hike will strengthen the dollar and depress oil prices

• Production cut compliance amongst members remains a key uncertainty

• Investors to keep an eye on mounting U.S crude stockpiles

Outlook – Agric Prices

Grains

• Ample global supplies to weigh on prices

• Fed rate hike could dampen demand for U.S grains

Soft

Sugar

• Supply could exceed demand next season - Rabobank

Cocoa
• Favourable rains will improve crop production in West Africa

Related News
1.       Domestic Commodity Prices Oblivious to a Falling Naira

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

3.      Retailers Brace up for a Bleak Christmas

4.      Militants Disrupt a Potential 400,000bpd from Forcados Export terminal; Food Prices Remain Flat

5.      Oil Price Slips on OPEC Deal Concerns; Price of a Bag of Rice is Tapering

6.      Rise in Crude Oil Price to Boost Nigeria’s Revenue by 8.7%

7.      Commodity Prices Remain Relatively Unchanged

8.     Domestic Commodity Prices Tick Upwards In Spite of Expected Harvests

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

10.  Consumers Are Resisting Price Increases in the Retail Market - FDC

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

12.  Receding Weather Shocks Hand baton to Fundamentals

13.  Domestic Commodity Prices Remain Fairly Stable

14.  Potash Price Surge Could Lead To Higher Food Costs For Billions

15.   Domestic Commodity Prices Declining in the Last 24hours - FDC

16. Uranium Prices Set To Double By 2018

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