Oil and LNG prices have recovered to some extent and copper has also bounced back. Palm oil prices have strengthened but cocoa is weaker. Business Advantage PNG’s monthly overview of commodity and financial markets.

Industrial plant. Credit: Markus Distelrath/Pexels

The oil price has bounced back, continuing to recover from its catastrophic lows during March this year. According to Kina Securities the price for Brent Crude is up 16.1 per cent over the last month, trading at $US41.02 a barrel. But any further strengthening is likely to depend on economic recovery. According to analysts aa.com ‘increases in US crude oil production and inventories have spurred fears that the glut of global supply will be hard to eliminate in the second half of 2020 unless demand picks up.’

Gas prices have also strengthened, rising by 6.5 per cent over the month, although it is down 58.5 per cent for the year to date, according to Kina. According to Asia Times, global natural gas markets are under severe pressure due to a stubborn supply overhang in the Asia-Pacific, ‘which typically accounts for nearly two-thirds of global demand for the super-cooled fuel.’

Metals

Gold has been steady, rising by 1.6 per cent over the month to $US1780.3 an ounce. It is up 16.9 per cent for the year to date. The other precious metal, silver, weakened slightly, dropping by 1.8 per cent over the month. It is up by 1.4 per cent the year to date. It is trading at US$18.17 an ounce

The copper price was stronger, rising by 10.5 per cent over the month, although it is still down by 4.2 per cent for the year to date. It is trading at US$2.68 a pound, according to Kina.

Agribusiness

Cocoa prices slid, dropping by 4.2 per cent over the month. For the year to date, the price is down 7.4 per cent

The coffee price was slightly weaker, easing by 0.7 per cent for the month. It is down 26.3 per cent for the year to date.

The Malaysian palm oil price rose by 4.2 per cent over the month, but it is still down by 18.7 per cent for the year to date.

Equities

The KSi Home Index (stocks listed only in Papua New Guinea) did not move over the month and is up 1.4 per cent for the year to date. The KSi index (which includes dual-listed stocks) fell by 1.7 per cent over the month, and is down 18.2 per cent for the year to date.

Dual-listed stock Oil Search, which recently completed a capital raising, saw its share price fall by 10.3 per cent over the month. It is down by 57 per cent for the year to date, according to Kina. City Pharmacy’s stock price rose by 10 per cent over the month but is down by 32 per cent for the year to date.

The Australian All Ordinaries Index rose 2.4 per cent over the month, while America’s S&P 500 fell 1.2 per cent for the month.

Meanwhile, the PNG kina was steady against most currencies. The biggest moves over the month were a 3.7 per cent rise against the Australian dollar and a 3.1 per cent rise against the New Zealand. It was 0.3 per cent weaker against the US dollar.

Half year Treasury Bills are trading at 4.66 per cent, while full year Bills are trading at 7.2 per cent. Inscribed stock for 2020-22 is yielding 8.04 per cent.