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Markets

Price of grains drop globally in Futures Market

Wheat was set for a 3.5% plunge for the week, its biggest weekly loss in a month.

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Price of grains drop globally in Futures Market

US wheat futures dropped to a near three week low on Friday, as forecasts for ample global supplies set the grain on track for a weekly loss of 3.5%.

In addition, Corn also dropped in value, and soybeans were set for their first weekly slide in three weeks.

The most-traded one-month wheat contract on the Chicago Board Of Trade lost 0.5% at $4.96-3/4 a bushel at the time this report was drafted near the trading session low of $4.96-3/4 a bushel – its lowest since May 20. Wheat closed down 1.4% on Thursday.

It was set for a 3.5% plunge for the week, its biggest weekly loss in a month.

READ MORE: Dangote, BUA Cement drag Nigerian Stock market down, investors lose N154.28 billion

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Importance of tracking Grain Futures; Farmers around the world want to sell their grain produce at the most profitable price available, so they hedge their produce by the help of investment banks. A grain futures contract is legally designed naturally to make the farmer and other parties involved agree for the delivery of grain in the future at an agreed-upon price. The grain contracts are standardized by a futures exchange as to time quality, quantity, and place of delivery.

Experts explained that the U.S. Agriculture Department’s (USDA) predictions were weighing on wheat.

“The USDA’s crop report has sunk the wheat because it added a hefty amount to their global wheat inventory estimate,” Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia told Reuters.

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The U.S. Agriculture Department’s fixed wheat ending stocks at 983 million bushels for 2019/20, 5 million higher than May, and 925 million bushels for 2020/21, 16 million higher than May.

The U.S. winter wheat harvest forecast was raised by 11 million to 1.266 billion bushels, Analysts had been expecting a cut. 

 

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading and Financial Market Analysis. Member of the Chartered Financial Analyst Society. You can follow Olumide on Twitter @tokunboadesina or email olumide.adesi[email protected]

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Stock Market

GTBank, Cadbury, keep Nigerian Stocks fired up, Investors gain N105.76 Billion

Market breadth closed positive as LINKASSURE led 46 Gainers as against 2 Losers topped by WEMABANK

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Value of shares traded by top 10 stockbrokers up 133% despite COVID-19, investors, Raging Bulls lift Brent Crude price by 10%

Nigerian Stock Market ended the Tuesday trading session on a bullish note.

The All Share Index gained by 0.28% to close at 28,777.96 basis points as against +0.28% appreciation recorded previously. Its Year-to-Date (YTD) returns currently stand at +7.21%, and investors gained 105.76 Billion.

READ: #EndSARS protests curb Bulls at the Nigerian Stock Market

  • Nigerian bourse trading turnover also ended positively as volume ticked up by +20.44%, as against the +20.44% uptick recorded in the previous session.
  • FBNH, ACCESS, and FIDELITYBK were the most active to boost market turnover. CILEASING led the list of active stocks that recorded an impressive volume spike at the end of today’s session.
  • Market breadth closed positive as LINKASSURE led 46 Gainers as against 2 Losers topped by WEMABANK at the end of today’s session – an improved performance when compared with the previous outlook.

READ: Why you should avoid investing long term in Nigeria’s stock market

Top gainers

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  1. FLOURMILL up 9.50% to close at N26.5
  2. CONOIL up 9.81% to close at N17.35
  3. CADBURY up 9.21% to close at N8.3
  4. GUINNESS up 5.63% to close at N16.9
  5. GUARANTY up 1.96% to close at N31.25

READ: #EndSARS: FG creates new N25 billion Youth Fund, to increase to N75 billion in 3 years

Top Losers

  1. WEMABANK down 1.72% to close at N0.57
  2. NEM down 1.46% to close at N2.03
  3. DEAPCAP flat to close at N0.27
  4. UNIONDICON flat to close at N10.95
  5. MOBIL flat to close at N178.3

READ: Nigerian bourse close flat, triggered by low market liquidity

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Outlook
Nigerian Stocks were all fired up at Tuesday’s trading session. The surge is partially attributed to the leading blue-chip stocks that includes GTBank, Cadbury, Conoil, and Flour mills.

  • Buying pressure got intensified as Nigeria’s major export earning – crude oil recorded impressive gains amidst the falling US dollar.
  • Nairametrics, however, advises that you seek to buy stocks from a certified stockbroker, as some local equities exhibit cyclic returns.

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Company Results

Flour Mills reports N9.9 billion profit in HY 2020/21

The increase in profit before tax was largely driven by the agro-allied segment.

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Port Harcourt residents shocked as explosion hits flour mills factory owned by Chagoury

Flour Mills Nigeria, announced its unaudited 2020/21 half-year financial results today, showing continued growth with a Profit after Tax of N9.9 billion for the six months ended 30th September 2020.

This information is contained in the press release by the Group, which is in line with Flour Mills’ Half-year 2020/21 financial statement.

READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision? 

What you should know

  • Flour Mills’ revenue was N355.1 billion, compared to N270,8 billion in H1 2019/20.
  • The Group’s profit before tax was N14.6 billion, compared to N8.6 billion in H1 2019/20. The increase in profit before tax was largely driven by the agro-allied segment, which generated a profit of N6.3 billion compared to a loss the previous year.
  • The agro-allied segment saw very strong improvement in the edible oils and fats, protein, and fertilizer businesses, following the investments over the last few years.
  • The Group’s profit after tax was N9.9 billion, compared to N5.9 billion in H1 2019/20.
  • FMN continued to show sustained growth in key segments driven by the closure of the Nigerian border since August 2019.

READ: CBN approves emergency maize import for 4 companies

Operational review

Despite prevailing economic headwinds, the Group continued to show sustained growth in key segments driven by the border closure since August 2019.

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As the FMN key segment continues to capitalize on this development due to the strategic placement of the Group’s business in the industry.

READ: Access, GTBank, two others pay PWC & EY N1.5 billion as Audit fees in H1 2020 

This development led to a strong performance in edible oils and proteins supported by agro-inputs (fertilizer) and agro-distribution and aggregation structures.

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In line with FMN’s growth strategy, the edible oils and fats value chain saw a significant year-on-year increase of 32% in volume, turning in a profit when compared to the loss in H1 2019/20.

However, volumes for the protein value chain also increased by 18% year-on-year, while the starch value chain was up by 31% year-on-year.

READ: Warehousing and logistics: Key to the success of deregulation in Nigeria

What they are saying

Commenting on the result, Paul Gbededo, the Group Managing Director /CEO, stated; “With this result, our business has once again shown resilience, by following the path of sustainable growth despite the prevailing challenges in both the local and global economy.”

He further assured that “in line with our vision to continue to grow value for our investors, Management will for the remaining part of the financial year continue to concentrate on improving operational effectiveness through accelerated strategies for Group-wide cost optimization, which will ensure sustainability in the current market climate, while we continue to invest in growing the business further.”

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Currencies

U.S dollar drops over resurging COVID-19

The U.S dollar dropped amid worries about the second wave of COVID-19 caseloads in the emerged markets.

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Possibilities of a second wave of COVID-19 infections Limits U.S dollar gains

The dollar pulled back some gains recorded on Monday against most of its major rivals at London’s trading session, amid worries about the second wave of COVID-19 caseloads in the emerged markets that include France, Germany, and the United States.

Against a basket of major global currencies, the U.S dollar dropped by 0.13% at the time of this publication.

READ: Will CBN’s recent MPR reduction have any positive outcomes?

READ: U.S Banks now permitted to hold Tether, Circle

Also, the highly contested U.S election made currency traders a bit cautious about taking large currency positions.

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However, since the U.S election is about a week away, many currency traders appear to have already figured out their positions.

READ: How declining interest rates, others drive a shift in Nigeria’s investment sector

READ: U.S dollar drops, low U.S interest rates expected to persist for long

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Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in fulfilling such payment obligations.

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics further gave insights on the macros prevailing at the currency market

READ: Currency traders relatively neutral on U.S dollar, despite impressive U.S Jobs report

“The markets want to load up on currencies but are still dealing with the fool me twice syndrome, as inaccurate polls from 2016 remain fresh in their mind and are wary of making the same mistake twice in a row.

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“And this has introduced significant bias for the past week. Traders want to get involved but are holding back, fearing the worst-case of a socially disruptive outcome and have not fully started to take heart in the improved prospects of a bipartisan stimulus agreement even as the dollar sits on the brink of the next leg lower.”

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READ: U.S dollar drops lower, as U.S Federal Reserve plans on boosting inflation

READ: Exchange rate remains flat, currency traders resume operations after curfew is relaxed

“Adding more pressure on the dollar in the midterm,” are comments made by Federal Reserve Chair, Jerome Powell, stating an accommodative shift in the central bank’s approach to inflation is increasing pressure on the greenback as currency traders interpreted that U.S interest rates could remain lower for a longer period of time.

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