LNG and coffee prices have come off dramatically, while oil is weaker. Business Advantage PNG’s monthly review of Papua New Guinea commodities and financial markets.

Credit: Olle Svensson/Flickr

The LNG price fell sharply, according to Kina Securities. The price is down 24.5 per cent this year and off 23.8 per cent over the last month.

Notably, the PNG Government’s 2020 Budget Strategy Paper projects an LNG price (US$ per thousand cubic feet) of US$10, which is almost double the current price of US$5.40.

The situation in the LNG market is likely to worsen, according to the Australian Financial Review. ‘Liquefied natural gas prices are poised to test record lows this year thanks to an onslaught of new supply and warmer winter temperatures curbing consumption,’ an AFR report says.

‘The start up of new export projects from Australia to the US has flooded the market, while brimming stockpiles in Europe and an expected slowdown in Chinese demand have dumped cold water on consumption prospects.’

The oil price also fell 14.4 per cent over the month and is down 13.7 per cent for the year to date.

Coffee has decreased by 17.8 per cent per cent since the beginning of 2020. Credit: TradingEconomics

Agriculture

In the agriculture sector, coffee prices also fell sharply. The price was off 19.3 per cent over the month, according to Kina, and is down by 17.8 per cent for year to date.

Cocoa prices rose strongly, however. They were up 11 per cent for the month and 7.6 per cent for the year to date.

Palm oil prices fell by 5.6 per cent since last month and are down 3.8 per cent so far this year.

Metals

Metals prices were steady. Gold continued to be a strong performer, rising 4.5 per cent over the month and 4.2 per cent for the year-to-date, according to Kina.

The silver price moved sideways, rising 0.5 per cent over the month and by 1 per cent for the year-to-date.

The copper price, however, was weaker, falling 8.4 per cent over the month, and 7.2 per cent for the year to date.

Gold rises 4.5 per cent over the month. Credit: TradingEconomics

Equities

The stock markets did little. The KSI Home Index (PNG-listed stocks only) was up 0.3 per cent over the month and year to date, according to Kina.

The KSI Index (which includes dual-listed stocks) did slightly better, rising 0.5 per cent over the month and year to date.

The Australian All Ordinaries Index rose strongly, by 4.1 per cent, over the month and by 5.9 per cent for the year to date.

America’s S&P 500 went sideways rising 0.7 per cent over the month.

In the currency markets, the kina was steady over the month against the US dollar and, over the last month, was up 2.8 per cent against the Australian dollar.

Half year Treasury Bills are trading at 4.69 per cent, while full year Bills are trading at 7.09 per cent. Four-year inscribed stock (2018-21) is carrying an interest rate of 7.9 per cent.