The Week Ahead

Food and market commodity prices in the week ahead

The prices of major staple food items surged to record high across major Nationwide. Notably, the price of pasta, cooking gas, beans, egg, and onions all recorded a significant spike in October compared to the previous month.

In the week ahead, the price of a 12.5kg cylinder of cooking gas that was initially sold for an average of N6,250 would now sell for an average of N8,333, representing a month-on-month increase of 33.3% in price.

The price of food items continues to increase by the day, largely attributed to seasonal fluctuations and the general increase in the price of goods and services in the country.

Also, a big bag of brown beans would sell for an average of N97,500. The price of a big of new onions increased by 35.7% to sell for an average of N44,333.

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Similarly, a big bag of dry onions now sells for an average of N57,667, representing a month-on-month increase of 21.8% in price.

A carton of frozen chicken now sells for an average of N17,750, which is 7.6% higher than N16,500 recorded in the previous month.

Also, the price of nylon of crayfish increased by 24.7% to sell for an average of N15,167 compared to an initial average of N12,167.

A 5kg pack of Dangote pasta increased by 10.7% to sell for an average of N5,950 compared to N5,375 recorded in the previous month.

A 10kg bag of Mama Gold rice rose from N5,375 to sell for an average of N6,100. This represents a 13.5% increase in price compared to September 2021.

The price of a crate of eggs has surged to sell for an average of N1,800 compared to an initial average of N1,700 recorded in the previous month.

The price of a carton of noodles currently sells at N3,800 from the initial average of N3,200 in the previous month

Other items that recorded an increase in price include yam as well as beverages.

While the price of most food items recorded significant increases in the review period, the prices of some food items declined.

The price of a big bag of melon reduced by 9.5% to sell for an average of N95,000 compared to the previous month.

A big basket of round-shaped tomatoes recorded a marginal decrease in price to sell for an average of N17,167.

The price of a medium-sized basket of pepper also dipped by 11.1% to sell for an average of N4,000.

The price of Ijebu garri reduced by 27.3% to sell for an average of N15,000 compared to N20,625 recorded in the previous month.

Oil Market

Oil prices climbed on Monday, extending pre-weekend gains to hit multi-year highs as global supply remained tight amid solid fuel demand in the United States and elsewhere in the world as economies pick up from coronavirus pandemic-induced slumps.

The United Nations on Wednesday called on G20 economies to ensure that the net-zero commitments of financial institutions are robust, backed by science, and ended financing for new fossil fuel projects.

Top U.S. oil firms Chevron Corp, Exxon Mobil Corp, and ConocoPhillips have rejected a direct role in wind and solar, putting less of their finance into energy transition plans compared with the Europeans. Most US fund managers also said they prefer oil firms to generate returns from their existing portfolio and give shareholders cash to make their own renewable bets.

The Secretary-General of OPEC, Mohammad Sanusi Barkindo, on Thursday, warned that the global tight supply of gas could worsen given the limited investment in the industry.

Oil prices edged up on Friday but were headed for their first weekly losses in at least eight weeks after U.S. oil stocks rose more than expected and Iran flagged it was resuming talks with Western powers which could lead to an end to sanctions. Brent had a weekly decline of -0.92%.

In the coming week, oil prices are expected to rise on support by expectations that the petroleum exporting countries, Russia and their allies, would maintain production cuts.

Currency Market

The Naira depreciated slightly at the I & E FX window for most of the trading session last week. At the close of trading on Friday, it closed at N415.10/US$ indicating a week-on-week (W-on-W) fall of +0.01% while at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it fell more significantly by +1.24%.

Money Market

Money market rates were elevated last week despite several liquidity inflows.

At the close of the trading on Friday, open buy-back (OBB) and overnight rates (O/N) was 18.00% and 18.5% respectively indicating a W-o-W fall of -5.26% and -3.90% for OBB and O/N.

Rates are expected to hover around current levels barring any inflows from the Apex bank.

Treasury Bills Market

The treasury bills market was mostly quiet last week, with a marginal fall in yields. At the close of trading on Friday, average benchmark yield for T. Bills rose by +1.86%, yields on OMO bills fell by -1.09% while yields on CBN’s special bills was up by +1.34%

The DMO sold N235.05bn worth of notes against N150.05bn offered at its NTB auction this week. The 91-day, 182-day and 364-day notes were allotted at 2.50%, 3.50% and 6.99% respectively.

Activity next week is expected to be dictated by the market liquidity situation.

FGN Bond and EUROBOND Market

The bond market was bullish last week as the bulls dominated most of the trading session. At the close of trading on Friday, the trend was sustained, with selling pressure across the board.

The overall average benchmark yields closed at 8.32% at the close of trading indicating a W-on-W rise of -0.93%.

The Eurobond market was relatively bearish today, with selloffs seen across several maturities. Average benchmark yield rose by 1bps to 6.52%.

Market sentiment is expected to remain soft in the near term in the absence of any trigger.

Nigeria Capital Market

The equity market witnessed a bullish trend last week, supported by gains in large to mid-cap stocks and renewed buying interest. Investors gained N144.04bn W-o-W as NGXASI Inched up by +0.66%, to Close the Week Positive. Year-to-date return moderated to +4.39%, while the market capitalization settled at N21.94 trillion.

The volume and values of shares traded on the exchange last week advanced by +91.80% and +87.62% respectively.

Sectoral performance across sectors tracked was positive last week as the NGX Insurance was the highest gainer for the week with +5.28%. NGX Oil and Gas, NGX Banking, NGX Consumer Goods and NGX-IND closed positive with +4.04%, +2.43%, +1.52% and +0.49% respectively.

Market breadth for the week closed positive with 47 gainers led by UPL and AIICO as against 25 losers led by GLAXOSMITH and UNIVINSURE.

In the coming week, we expect the possibility of sustained bargain hunting as investors look to take advantage of good bargains; however, press releases from listed companies and other macroeconomic developments are likely to impact investors’ decisions.

In addition, we expect investors to monitor the movement of yields in the fixed income market.

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