The oil price has cratered and LNG prices have also been weak. Copper is down sharply and the cocoa price is also off sharply. Business Advantage PNG’s monthly overview of commodity and financial markets.

Copper cable. Credit Pixabay

The oil price has fallen off a cliff due to Saudi Arabia and Russia flooding the market with increased oil and the drop off in global demand because of the COVID-19-induced economic crisis. According to Zero Hedge, the curtailment of activity that is suppressing consumption ‘will create the perfect storm of excess supply.’

The price is down by an extraordinary 52 per cent over the last month, according to Kina Securities. It is currently trading at US$20.41, reports CNBC.

Gas prices have also been weak, falling by 43.9 per cent for the year to date, according to Kina. The COVID-19 outbreak has ‘eviscerated’ demand for gas and other commodities, according to Reuters.

Metals

After initially falling when the crisis hit, gold has since stabilised. It is up by 1.1 per cent over the month according to Kina, and by 9 per cent for the year to date. It is trading at US$1660 an ounce.

The other precious metal, silver, has done poorly, however. It is down by 17.2 per cent over the month and by 18 per cent for the year to date. It is trading at US$14.68 an ounce.

‘Other stock markets did far worse as investors bailed out because of the economic impact of the coronavirus.’

The copper price has weakened sharply, falling by 15.3 per cent over the month and down by more than a fifth for the year to date. It is trading at US$2.18 a pound, according to Kina.

Agribusiness

Cocoa prices have fallen by 20.4 per cent over the month. For the year to date, however, the price is down a more modest 11.2 per cent.

The coffee price was strong. It was up 15.2 per cent for the month although it is down 3.9 per cent for the year to date.

Malaysian palm oil prices continued to slide. The price fell by 3.1 per cent over the month and is down 20.4 per cent for the year to date.

Oil prices have plummeted over the last month given the COVID-19 crisis. Credit: Trading Economics

Equities

The KSi Home Index (stocks listed only in Papua New Guinea) fell by a modest 3.5 per cent over the month and is up 2.1 per cent for the year to date. The KSi index (which includes dual-listed stocks) fared worse, however. It dropped 7.5 per cent over the month and is down 10.8 per cent for the year to date.

Over the month, the dual-listed stocks did badly. Oil Search fell by 57.1 per cent and Kina Securities dropped by 38.2 per cent. By contrast, shares in the domestically-listed Bank South Pacific eased by only four per cent in the same period.

Other stock markets did far worse as investors bailed out because of the economic impact of the coronavirus. The Australian All Ordinaries Index was down 23.8 per cent over the month, while America’s S&P 500 fell 11.7 per cent for the month.

Meanwhile, the Kina was strong against most currencies. Over the month it was slightly lower against the US dollar, falling by 0.5 per cent. But in the same period it rose by 10.2 per cent against the Australian dollar, and by 8.6 per cent against the British pound. It was stable against the Japanese yen.

Half year Treasury Bills are trading at 4.69 per cent, while full year Bills are trading at 7.12 per cent. Inscribed stock for 2018-21 is yielding 7.9 per cent.