16 Apr

Daily Watch – Fixed income transactions rise in March, Cocoa output expected to go up

  • Indian refiner Reliance purchased two cargoes of Nigerian oil, one Usan and one Qua Iboe, Reuters reports. The news agency quoted a source as saying that Total had sold the cargoes, but confirmation was not immediately available. Total, Shell and other oil companies have been offering cargoes, traders said, but many potential buyers said the differentials remained too high for them. Bonga was offered as high as $1.90 per barrel above dated Brent, Bonny Light in a range from $1.60-$1.90 per barrel and Agbami at 60 cent premiums. This comes as OPEC and its allies appear to have accomplished their mission of reducing global oil stocks to desired levels, according to the International Energy Agency, signalling that the market could become too tight if supply remains restrained. The IEA said it expects China to increase the pace of purchases for its strategic petroleum reserve this year, and that trade disputes with the U.S. could give this renewed impetus.
  • Transaction turnover in the Fixed Income and Currency markets for March amounted to ₦15.66 trillion, a 24.68 percent, ₦3.10 trillion increase from the value recorded in February and a 16.26 percent increase Y-o-Y. A breakdown of the contributions of the various market segments in the OTC Monthly report showed that investors invested the most in the forex market, accounting for 39.06 percent of total turnover in March, followed by Treasury Bills with 35.69 percent. Repurchase Agreement/Buy-Backs contributed 16.75 percent of total turnover, while FGN bonds were responsible for 7.37 percent. The value of transactions in the foreign exchange market settled at ₦6.12 trillion (about $18.67 billion) in March, an increase of 44.59 percent over February ($12.92 billion). Liquidity flows through the I&E FX Window increased in March, as total volumes traded for the month settled at $6.06 billion, a 55.38 percent ($2.16 billion) decrease from February.
  • Nigeria’s mid-crop cocoa output for 2017/18 could rise by 15 percent from last season, helped by a mix of rainfall and sunshine in the main growing regions which has helped the trees, the head of the cocoa association said on Friday. Drought cut last season’s mid-crop harvest by 40 percent. Sayina Riman, president of the Cocoa Association of Nigeria (CAN), said the drought affected the trees, reducing output of between 300,000 tonnes and 320,000 tonnes projected at the beginning of the 2017/18 season. Early rains in March and April has helped boost the mid-crop, which could see the season’s output close at around 290,000 tonnes, Riman said. The International Cocoa Organisation, however, gives much lower estimates of Nigerian cocoa output. It forecast last season’s production at 225,000 tonnes. The cocoa season in Nigeria runs from October to September, with an October-to-February main crop and a smaller light or mid-crop that begins in April or May and runs through September.
  • Finance minister, Kemi Adeosun, has appointed Mary Uduk as acting SEC director general in a major shakeup at the regulator. Uduk takes over from Abdul Zubair who has been redeployed to the external relations department of the ministry. Other reassignments approved by Adeosun are Reginald Karawusa (acting executive commissioner, legal and enforcement), Isiyaku Tilde (acting executive commissioner, operations), and Henry Adekunle (acting executive commissioner, corporate services). In a related development, Adeosun has requested for a formal explanation from the SEC of the recent communications mismatch between the commission and the NSE which “adversely impacted market confidence”. On 11 April, there was confusion over trading in Oando shares. The NSE had lifted a months-long suspension on trading in the oil services company’s equities only to suspend it again after three hours. The bourse later reversed itself, saying it acted based on a directive from SEC.
  • The NNPC’s engineering unit said on Friday its 2017 pretax profit fell 34 percent to ₦3.26 billion ($10.4 million) as a result of a lower foreign exchange gain. The National Engineering and Technical Company posted a pretax profit of ₦4.90 billion in 2016 when foreign exchange gains accounted for 56 percent of profit. However, they contributed just 4.8 percent last year. NETCO’s chairman Bello Rabiu said measures had been put in place during the year to cut costs and improve project execution, which had paid off. He said the company had delivered some big-ticket assignments on time and within budget. Rabiu said NETCO, which was set up in 1989 to boost engineering technology in the oil and gas sectors in Nigeria, expects to get more projects in the gas sector. NETCO said in a statement it had declared a dividend of ₦750 million, while revenue grew 122 percent to ₦22.46 billion in 2017 from the previous year.