Retail Commodity Prices Remained Relatively Unchanged as Manufacturers Capitalize on Margins


 Wednesday, April 18, 2017/ 12:52 PM /FDC

Naira appreciated by 1.2% to N405/$ on news of a 300% increase in dollar supply to BDCs to $40, 000 per week. While this is good news, the magnitude of appreciation is marginal but is expected to increase further this week.

Retail commodity prices have remained relatively unchanged as manufacturers capitalize on margins. The fear of an exchange rate reversal continues to haunt traders, who are now taking precautionary steps by increasing inventory levels.

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

Burning Economic Issues 

·         CBN increases forex intervention to record levels - $120mn per week

·         $40,000 a week per BDC

·         Causing unprecedented naira scarcity - Interbank rates rose sharply to 300%

·         Naira appreciated to N405/$ but expected to appreciate further this week

·         Power supply down to 3521MW on April 16th

·         Wholesale price of diesel down to N200 per litre after a brief rally to N205

·         No change in retail prices as manufacturers trying to maximise retail margins  

Economic News  

The Good   

·         Dollar supply in forex market sharply higher

·         Economic activity increasing including inventories – PMI

·         World Bank agrees to fund PSRIP  

The Bad

·         Power supply 12% lower than target at 3500MW

·         Naira resistant to supply pressure at N410/$

·         Manufacturers stubbornly refuse to lower retail prices  

Power Generation analysis & Impact

April 16th: On grid power output was 3521MWh/hour (down 361MWh/h)

·         Total Power constraints: 2,247MW, attributed to gas and high frequency constraints

·         Estimated loss: N1.158bn (annualised at N416.88bn /$1.04bn)

·         Jebba restored its 4 turbines, previously out due to mechanical issues

·         Nationwide average diesel price declined from 249/l in Feb to N235/l in Mar

Domestic Commodity Prices Movement




Stock Market


Oil prices  

·        Brent crude by 1.13% to $55.26pb

·        Oil prices fell on rising number of active US rig count

·        US oil rig count rose for the 13th consecutive week to 683

·        The highest in two years

·        US oil production gains and future of OPEC’s cut creating uncertainty in the market  

Oil markets today   



Outlook – Oil Prices

·         Global oil prices continues to be challenged by a steady rise in US oil production

·         Markets anticipates US crude inventory data

·         OPEC extension of output curb still in view

·         This will provide an underlying support for oil prices

Outlook – Agric Prices 


·         Losses will be limited by delays in planting in the United States  



·         Weather conditions in South America to support price


·         Supply-demand dynamics to weigh on prices

Related News

1.      The Impact of CBN's Intervention on Commodity Prices Not Yet Seen

2.     The Impact of Global and Domestic Developments on the Commodity Markets

3.     Naira Recovers by 5 percent in 2 days to N495 to 1$; Oil Trades at $57pb

4.     Are The Economic Realities of 2016 to Persist in 2017?

5.     Increasing Consumer Resistance and Declining Income Is Taking Its Toll on Retail Prices

6.     Consumer Effective Demand Negatively Affected By Festive Spending

7.     Domestic Commodity Prices Have Reached Their Peak

8.    Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards

9.     Domestic Commodity Prices Oblivious to a Falling Naira

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

11.  Retailers Brace up for a Bleak Christmas

12. The China Futures Association Signs MoU with Intnl’ Commodities & Derivatives Assn

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

14. Dubai Gold & Commodities Exchange Opens Vital Trading Link To Chinese Bullion Market

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


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