In the global markets, Brent slipped to $56.34pb due to concerns that rising U.S production will offset OPEC’s efforts at maintaining market stability.Nigeria is the world’s 5th largest palm oil producer accounting for only 2% of production. With 990,000 tonnes, aggregate supply is far below demand of 1.56million tonnes.

Oil palm producers and processors are making super normal profits and their share prices are sky rocketing. Domestic price of palm oil has declined by 25% in 12 months to N12,000 (25 ltr).

The retail price of cement is up 8% to N2,700. This is not unusual because at this time of the year, the demand for cement surges due to increased real estate activity. In addition, the FGN’s increased capex of N2.2trn in 2017 means more civil works and construction.

In the global markets, Brent oil gained marginally to $56.75 due to OPEC’s bullish stance on tighter market rebalancing in 2018.

Attached is a synopsis of the commodity markets for the week

Burning Economic Issues

Oil price down 1.07% to $56.34pb· Cement price jumps 8% to N2700

· IMF warns against excessive foreign borrowing

· Naira flat at N363/$ and N475/£

· Diesel retail price rises to N200/ltr

Economic News

The Good

OPEC’s determined to curb excess supplies

The Bad

High diesel price will stoke inflationCement price up to N2,700 per bag

Power Generation analysis & Impact

October 8th: Average power output sent was 3486MWh/hour (up 312MWh/h)

Gas constraint was 302.4MW; frequency management constraint due to loss of DisCo feeders was 2169.6MW· Estimated loss: N1.187bn (annualised at N433.25bn /$1.21bn)

· DisCos’ inability to pick load is the largest constraint to improved service delivery

Domestic Commodity Prices Movement

Stock Market

· NSE ASI 0.22% to 36,732.24pts

· Consumer goods sub index 0.61% to 933.24pts

Oil Prices

· Brent crude 1.07% to $56.34pb

· EIA reported a 2.8mb drawdown in U.S. crude Inventories

· Refineries in Texas recover from hurricane-related shutdowns

· De facto OPEC leader – Saudi Arabia determined to reduce monthly crude exports

· On expectations that market rebalancing is underway

Oil Markets Today

Outlook – Oil Prices

· Oil prices expected to maintain upward trend

· Supply & demand gap is expected to narrow further in coming months

· Amid a surge in global demand growth

· OPEC’s Secretary-General seeks U.S. shale producers cooperation to help cut excess global supplies

Outlook – Agric Prices

Grains

Markets await the release of the USDA crop report· Prices expected to trade lower on forecasts of rising inventories and weak demand

Soft

Sugar

Demand from bulk consumers will drive price movement

Cocoa

Prices will trade slightly higher due to lower than expected cocoa deliveries in Ivory Coast

Brandspurng

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