Cocoa surges but oil and gas prices remain weak: a monthly review of Papua New Guinea commodity and financial markets

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Business Advantage PNG’s monthly review of Papua New Guinea commodity and financial markets. The big mover this month was the cocoa price, up 6.6 per cent for the month. Otherwise, commodity prices moved sideways or weakened.

The Japan LNG Import price Source: ycharts

The Japan LNG Import price. Source: ycharts

The weakness in Liquefied Natural Gas (LNG) prices has continued. According to Platts, North East Asian prices dropped 2.1 per cent from the previous month.

An S&P Global report says that the environment remains uncertain but hopeful. It describes the LNG market as being at a tipping point.

‘If you are in LNG today, you want to be in Asia, the world’s biggest market for the power plant fuel,’ the report says.

‘Concerns about oversupply due to significant new and expected output from the US and Australia have raised questions.’

‘As much as there is opportunity, however, there also is uncertainty. The continent accounts for more than 70 per cent of the world market for LNG.

‘At the same time, concerns about oversupply due to significant new and expected output from the US and Australia have raised questions about how the renewal of long-term contracts will shake out as they expire by early next decade.’

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Oil prices have weakened, according to Kina Securities. West Texas Intermediate is down 11.4 per cent for the month and 10.9 per cent over the year.

Precious metals

Precious metals have moved modestly. Gold is up 0.4 per cent per cent for the month and 9.3 per cent over the year. Continued uncertainty about the direction of the US economy continues to put a floor under the market. The silver price has fallen 1.1 per cent over the month but is up 13.3 per cent over the year.

The one-year copper price Source: Infomine

The one-year copper price Source: InfoMine.com

Copper is weaker. It fell 2.2 per cent over the month but is up 5 per cent for the year.

Agriculture

The biggest mover was the cocoa price, which has risen 6.6 per cent in a month, according to Kina, but this is recovering previous losses. It is up 1.1 per cent for the year.

Coffee prices moved sideways, up 0.1 per cent for the month, and 1.6 per cent for the year.

‘Once again the disparity was marked between stocks listed only in PNG and the dual- listed stocks.’

Palm oil was weak. It was down 2.6 per cent for the month and has fallen 11.7 per cent for the year.

Equities

Once again, the disparity was marked between stocks listed only in PNG and the dual-listed stocks. This is likely to be of particular interest to Bank South Pacific, which has flagged an interest in dual listing on the Australian Securities Exchange.

‘The KSI Home Index (PNG listed stocks only) rose 2.7 per cent in the month.’

In a statement to the Port Moresby Stock Exchange, BSP said it was ‘an initiative being undertaken to improve the liquidity of the company’s shares for the benefit of both existing shareholders and the Company.’

The KSI Home Index (PNG-listed stocks only) rose 2.7 per cent in the month, reports Kina. But the KSI Index (which includes dual-listed stocks as well) had a monthly rise of 9.1 per cent.

Over the same period, the Australian All Ordinaries Index rose by 0.3 per cent and America’s S&P 500 fell by 1.2 per cent.

Half-year Treasury Bills are trading at 4.73 per cent, while full-year Bills are trading at 7.82 per cent. Inscribed stock for 2018–2020 has an interest yield of 9.09 per cent.

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