Oil and palm oil prices have strengthened but LNG continues to fall. Business Advantage PNG’s monthly review of Papua New Guinea commodities and financial markets.

The oil price has strengthened by 3.8 per cent over the month, according to Kina Securities, and is up 27.5 per cent for the year to date. The LNG price, however, is 7.5 per cent lower over the month and is 35.5 per cent lower for the year to date.

According to the Nikkei Asian Review (NAR), analysts expect continued weakness for LNG prices in the near future, due to strong competition and a slowing global economy.

‘Despite the prospect of winter, spot LNG prices in Asia have fallen to around $US5.70 per million British thermal units, from over $US10 in the same period last year,’ the NAR says. ‘This is in large part due to the production of the gas at new fields in the US, Australia and elsewhere. LNG prices were even higher at nearly $US20 in the winter of 2014.

‘The global economy is losing steam in the face of US-China trade frictions.’

Crude Oil increased 11.39 USD/BBL or 24.47 per cent since the beginning of 2019. Credit: TradingEconomics

Palm oil up

The big mover in agricultural commodities was palm oil, which rose sharply by 17.8 per cent over the month. It is up by 32.2 per cent for the year to date.

‘The price of palm oil has been surging, sending its discount to soybean-oil futures from more than US$150 a metric ton six weeks ago to less than US$26 a tonne,’ commented the Washington Post. One factor is Indonesia’s plans to increase the share of biodiesel in domestic fuel to 30 per cent from 20 per cent by the start of 2020.

‘That’s sent producers, refiners and traders scrambling to secure supplies in a market that was already around its tightest levels in three years,’ according to the newspaper.

The coffee price also jumped. It was up 17.2 per cent for the month, which clawed back recent losses. For the year to date, it is up 15.7 per cent.

Cocoa was strong. It is up 7.5 per cent for the month and 9.6 per cent for the year to date, according to Kina Securities.

Metals prices were weak. Gold was down 2.3 per cent over the month, but is up 14.1 per cent for the year to date.

The silver price was off sharply. It was down 4.9 per cent over the month; for the year to date, it is up 9.2 per cent.

The copper price did little. It was down by 0.8 per cent over the month but is up 1.2 per cent for the year to date.

According to Trading Economics, Silver increased 1.47 USD/t. oz or 9.51 per cent since the beginning of 2019. Credit: Trading Economics

Equities

The stock market moved sideways. The KSI Home Index (PNG listed stocks only) fell by 0.8 per cent in the month, according to Kina, but is up 13.8 per cent for the year to date. The KSI Index (which includes dual listed stocks) was up 1.8 per cent and is up 35.4 per cent this year.

The Australian All Ordinaries Index moved sideways, rising by 0.1 per cent over the month; it is up 19.7 per cent for the year to date. The  S&P 500 performed better, with a monthly rise of 3.1 per cent. It is up by a quarter for this year.

The kina was steady over the month against the major currencies.

Half year Treasury Bills are trading at 4.7 per cent, while full year Bills are trading at 7.02 per cent. Four year inscribed stock has an interest yield of 7.9 per cent.