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Expectations of a Sharp Fall in Consumer Prices Did Not Materialise

Proshare

Friday, January 27, 2016 09:58 AM /FDC

Expectations of a sharp fall in consumer prices after the Christmas did not materialise. The only commodities that have buckled are beans (20%) and rice (25%).

In the global market, oil held steady in spite of Trump’s order allowing for construction of the Dakota Access and Keystone XL pipelines. This price level of $55pb is great for Nigeria’s revenue, especially as it has been exempted from the OPEC global cuts.

The attached slides sum up the events that have taken place in the domestic and global commodities market this week. 

Burning economic issues 

•CBN issues forward contracts of non-disclosed amounts

•N150bn paid to downstream oil marketers as bridging payments

•Counterpart funding of N72bn approved for Lagos-Ibadan rail line

•Post- Christmas commodity prices decline after a delay in the seasonal trend

•Diesel price down sharply to N230/ltr 

Economic news 

• CBN leaning towards an accommodative stance to promote growth

• Railway project likely to reduce transportation costs and improve efficiency

• President Trump’s neo-nationalism might threaten trade relations and capital inflows into Nigeria

• 2017 economic recovery expected to be slow and painful

 

 

Stock market 

•NSE ASI 0.09% (26,240.45pts)

• Driven by bargain hunting

 

Oil prices 

• Brent crude by 0.86% to $55.05pb

• In spite of OPEC compliance meeting this weekend

• U.S oil production has risen by more than 6% since mid-2016,

offsetting bullish momentum

• President Trump’s energy plan to boost US production 

Oil markets today 

 

Outlook – oil prices 

• President Trump’s protectionist stance is likely to create a stronger dollar

• Global demand for oil is likely to fall as a result

• Potential resurgence of U.S shale production to dampen prices further  

Outlook – agric prices 

Grains

• 2016/17 Brazilian corn production estimated at 30% higher than in 2015/16

• Higher temperatures may cut wheat harvest by 20% 

Softs 

SUGAR

• Output expected at 8.1mt till September 2017

COCOA

• Favourable growing conditions to boost mid-crop harvest season between April and September 2017

Related News
1.   
Consumer Effective Demand Negatively Affected By Festive Spending
2.    Domestic Commodity Prices Have Reached Their Peak
3.    Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards
4.    Domestic Commodity Prices Oblivious to a Falling Naira
5.    Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder
6.    Retailers Brace up for a Bleak Christmas
7.   Militants Disrupt a Potential 400,000bpd from Forcados Export terminal; Food Prices Remain Flat
8.   Oil Price Slips on OPEC Deal Concerns; Price of a Bag of Rice is Tapering
9.   Rise in Crude Oil Price to Boost Nigeria’s Revenue by 8.7%
10.  Commodity Prices Remain Relatively Unchanged

 

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