Oil and LNG have remained steady but the gold price rises and coffee is up. Business Advantage PNG’s monthly review of Papua New Guinea commodities and financial markets.

Gold bullion. Credit: Pixabay

The oil price is down 1.2 per cent over the month according to Kina Securities, but it jumped 11.5 per cent in a week after the incidents between the US and Iran and it is up 27.5 per cent over the year. The LNG price rose by 0.8 per cent but over the year it is down by 47 per cent, according to Kina.

Jonathon Prince, Treasurer for Westpac PNG, notes there has been ‘plenty of volatility in commodity markets with growing concerns about global growth.’

According to Dailyfx, rising geopolitical risks stemming from tensions between the US and Iran are keeping oil prices ‘tilted’ to the upside.

‘Iran plans to breach the limit on its stockpile of enriched uranium set by the nuclear deal, which in turn should see the rising geopolitical risk premium keep oil prices buoyed.

‘Elsewhere, despite US sanctions impacting the production in both Iran and Venezuela, the fragile nature of the oil given the concerns of a global slowdown should see OPEC rollout the production cuts throughout the rest of the year.’

It’s a complicated world.

Agriculture

Coffee prices continued to rise, according to Kina. The price rose 9.3 per cent over the month, erasing its 12-month losses. Over the year, the price is up 0.1 per cent.

According to Kina, cocoa prices rose by 1.8 per cent over the month and are up 4 per cent over the year.

‘Gold moved up sharply in response to the rising global uncertainty.’

Palm oil prices fell slightly, dropping 1 per cent over the month. The price is down 1.8 per cent over the year.

Metals

Gold moved up sharply in response to the rising global uncertainty. It was up 10 per cent over the month, and 10.7 per cent over the year, according to Kina.

The silver price also jumped, rising 6.2 per cent over the month, although it is down 0.5 per cent over the year.

‘We expect further Australian dollars weakness which could see kina as high as 0.44 before the year ends.’

The copper price moved sideways, increasing by 0.2 per cent over the month; it is up 2.8 per cent over the year.

Equities

The stock markets did little. The KSI Home Index (PNG-listed stocks only) was up 0.7 per cent over the month, according to Kina.

The KSI Index (which also includes dual-listed stocks) rose 0.1 per cent over the month and is up 0.7 per cent per cent over the year.

Looking at individual stocks, Steamship Trading Company’s share price fell 6.5 per cent over the month; it is down 15 per cent over the year over the year.

Meanwhile, those investors who have held onto their Kina Securities shares have been rewarded this year. The stock was trading at AUD$1.36 on the ASX yesterday, up from AUD$0.86 in December last year.

The Australian All Ordinaries Index was up 3.1 per cent over the month and 18.1 per cent over the year.

America’s S&P 500 was up by 4.2 per cent over the month and 17.5 per cent over the year.

In the currency markets, the kina was steady over the month against most currencies. It fell 1.9 per cent against the Japanese yen.

‘We expect further Australian dollars weakness which could see kina as high as 0.44 before the year ends,’ comments Westpac’s Prince. ‘This will be a bonus to importers from Australia as long as there is sufficient liquidity to take advantage.’

Half year Treasury Bills are trading at 4.7 per cent, while full year Bills are trading at 6.83 per cent. Three year inscribed stock has an interest rate of 8.06 per cent.