Oil and cocoa prices soar while the LNG price stabilises. Business Advantage PNG’s monthly overview of commodity and financial markets.

Hides well pad, PNG LNG. Credit: Santos

The oil price spiked by 27 per cent over the month, although it is still down 2.3 per cent for the year to date according to Kina Securities. Brent Crude is trading at $US47.80. LNG, however, went sideways, rising only 0.3 per cent over the month. It is up 31.1 per cent for the year to date.

According to Maple Rock Capital Partners, oil is becoming a better bet as demand rises from historic lows because of the coronavirus shutdowns. Suppliers are also reining in spending, potentially causing a supply shortage.

‘COVID has done things to oil demand that were unimaginable to a commodity investor,’ a Maple Rock analyst said.

Metals

The gold price was slightly down, falling by 2.9 per cent over the month and is at $US1814.20 an ounce. It is up 19.1 per cent for the year-to-date, according to Kina.

Silver was steady to US$23.42 an ounce, up 0.3 per cent over the month and 30.7 per cent for the year to date.

The copper price continued to strengthen, rising by 10.6 per cent over the month; it is up by 20.8 per cent for the year to date and is trading at US$3.38 a pound.

Agribusiness

Cocoa prices surged by 28 per cent over the month. For the year to date, the price is now in positive territory, up 17.8 per cent.

The coffee price also strengthened, rising by 9.5 per cent for the month, although it is still down by 11.7 per cent for the year to date.

The Malaysian palm oil price rose by 4.9 per cent over the month and is up by 12.5 per cent for the year to date.

Equities

The stock market was mixed. The KSi Home Index (stocks listed only in Papua New Guinea) was unchanged over the month and is up 1.5 per cent for the year to date. The KSi index (which includes dual-listed stocks) rose by 11.1 per cent but is still down by 3.8 per cent for the year to date.

The Australian All Ordinaries Index was up 11 per cent over the month, and has returned 0.7 per cent for the year to date. The S&P 500 rose by 9.7 per cent over the month and is up by 12.3 per cent for the year to date.

The Kina fell by 4.3 per cent against the Australian dollar over the month and 5.4 per cent in the same period against the New Zealand dollar.

Half year Treasury Bills are trading at 4.44 per cent, while full year Bills are trading at 7.2 per cent. Two year inscribed stock, 2020-2022, was 8.04 per cent.