Global commodities markets sustain gradual recovery as countries continue to lift business lockdown imposed to combat the coronavirus pandemic. Oil prices were up, precious metals shed their safe-haven positions while the agricultural sector remains mixed.
ENERGY
- Oil prices were up last week, sustaining prior week positive momentum.
- The rally was mainly supported by the OPEC, Russia, and allies’ agreement to extend
record oil production cuts till the end of July, prolonging a deal that has helped crude
prices double in the last two months, by withdrawing almost 10% of global supplies
from the market. - The group, known as OPEC+, also demanded countries such as Nigeria and Iraq, which exceeded production quotas in May and June, to compensate with extra cuts in July to September.
- Consequently, Nigeria’s benchmark crude oil, Bonny Light, was up by 18.95% w/w, to close at $41.17/barrel.
This week, we expect oil prices to remain strong, keeping their $40 plus levels. This is expected to be driven by improved demand (amongst others), as countries around the world continue to ease the pandemic induced lockdown.
AGRICULTURE
- Last week, Wheat prices were down by 1.20% w/w to close at $515.32 per bushel
despite reduced export from Russia. - Corn prices gained 1.69% w/w to close at $331.25 per bushel, as market players priced
in the potential effect of the brewing trade tension between the U.S. and China. - Cocoa prices shed 2.28% w/w to settle at $2,398.00/MT, buoyed by a persistent decline
in global cocoa production, especially from Ghana and Ivory Coast. - The price of Sugar was up by 10.17% w/w to $12.02/lbs owing to the lingering sugar
crisis in Pakistan.
This week, we expect the increased global output of grains to keep prices abated.
METAL
- Last week, the prices of Gold and Silver were down w/w by 3.10% and 5.51% to $1,683.00/oz and $17.48% respectively, losing their safe-haven positions. This came as many investors turned to mainstream assets (equities, money markets, and fixed income) to take advantage of the current attractive valuation, as well as liquidity benefit.
This week, we anticipate a mixed outlook for precious metals, as many investors are likely to shift towards mainstream assets due to their attractive valuation and near liquidity status.
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DOMESTIC COMMODITY PRICE MOVEMENT IN NIGERIA
GTI Research