Culled—Proshare

January 13, 2017/FDC

Increasing consumer resistance, changing preference and declining income is taking its toll on retail prices in January. This coincides with FDC Think Tank’s forecast of a slight dip in December inflation to 18.3%.

Rice and beans have shed over 20% in 2 weeks. We expect further declines as consumers switch to paying school fees from shopping malls.

OPEC’s deal is hanging in there with prices at $55pb. Nigeria is hoping for better production numbers than December’s level of 1.45mb.

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

Burning Economic Issues

• FG to roll out $300mn Diaspora Bond in March
• Gross external reserves level rose by $400mn in three days to $26.6bn
• Power supply to Nigerians in Q4’16 declined by 37% – NOI Polls
• Nigeria oil union suspends three-day nationwide strike after talks
• Inventory costs hit N100mn – MAN Domestic Commodity Prices
• FDC projects December inflation to slow to 18.3%
• Base year effects largely responsible for the decline
• Diesel flat at N270/l
• Kerosene woes spreading
• Still trading within the band of N350/l – N400/l
• Parallel market rate depreciates to N492/$
• IFEM remains flat at N305/$

Stock Market

• NSE ASI 0.15% (26,385.80)
• Market volatility to remain until results are released

Oil Prices

• Brent crude by 0.29% to $55.10pb
• Oil prices gained on weaker dollar
• Gains were capped by concerns over rising production in Libya and Iran
• US inventory increased by 4.1mb, significantly higher than analysts’ expectation of 1.6mb build-upOil Markets Today

Outlook – Oil Prices

• Bearish outlook for oil prices as OPEC strategy may prove counterproductive
• Libya has tripled production in the last 6 months, threatening OPEC plans
• Iran has moved approx. 13.2mb of oil from floating storage in the past 2 months
• EIA expects crude production in the US to increase by 110,000bpd to 9mbpdOutlook – Agric Prices

Grains

• Improved weather conditions will weigh on grain pricesSoftSugar
  • Prices expected to trade higher on strong demand from bulk consumers

  Cocoa
  • Cocoa futures to slide on expectation of improved port arrivals at Ivory Coast