Tuesday, September 29, 2020Global commodity priceschanging in Ghana’s favourIN recent months theprices on globalcommodity marketsof two out of thethree major primarycommodities that make upGhana’s main traditionalexports have been moving inthe country’s favouraccording to the latest datareleased by the Bank ofGhana at the week end.However price hedgingby exporters from Ghanahave led to slightly differentresults with regards to allthree commodities.Cocoa spot market pricesThis was largely dueto backwardation inboth New York andLondon as fears ofsupply chaindisruptions due to theCOVId 19 pandemicwhich led traders tobegin quoting lowerprices for futuredelivery inevitablyserving to drag spotmarket pricesdownwards as well.Consequently, globalmarket spot pricesbegan a prolongeddescent, falling as lowas US$2,2O6.8 per tonneby July. Since thenthough a price rally ofsorts has set in, whichhas seen the spotmarket price rise toUS$2,482.1 by the end ofaugust.However Ghanasells its own premiumquality cocoa beans onthe futures marketrather than the spotmarket, a strategy thatenables COCBOd toborrow a minimum ofUS$1.3 billion every yearfrom an enthusiasticconsortium ofinternational banks atrebounded in august to reachUS$2,482.1 which was still 1.4per cent lower than the startof year price of US$2518.4 pertonne.This is good newsnevertheless; after a full yearrise in spot market price of11.6 per cent during 2019 anda further strong price rally inJanuary this year which tookthe spot market price toUS$2,673.1 per tonne, andmore of the same in Februarywhich propelled the privce toUS$2,825.9 per tonne, a priceslump set in.rates considerably lowerthan those demandedby investors ongovernment’s ownEurobond issuances.But this year, futuresmarket sales have comeat a price due to thebackwardation pricingstrategy used by manycocoa traders.The futures marketprice was US$ 2,283.6per ton, by augustwhich was lower thanthe spot price and 2.4per cent lower than theopening futures marketprice for 2020 ofUS$2,442.4 per ton.In 2019, the futuresmarket price rose by 9.8per cent and 2020started well withJanuary ending atUS$2,462.4, a 0.8 percent further increase inyear to date terms.However during thefollowing months priceswere bearish, falling toUS$ 2,145.2 per tonne byJuly, this being 12.2per cent lower than theopening futures marketprice for this year.“Although gold pricingstrategy is entirely inthe hands of privateproducers in Ghana,they rely on pricehedging to someextent, which generallytends to work in thesellers’ favour...despite the slightly lowerfutures market price for cocoa as ataugust, compared with the spotmarket price, Ghana has generallybenefitted from comparativelypositive price movements on theformer this year as compared withthe latter. during the first eightmonths of 2020, prices on thefutures market have risen duringfive months and fallen duringthree months. On the other handspot market prices have risen overjust two months and fallen duringsix months.GOLdGold prices are enjoying theirstrongest price rally to date.By august, the gold price set onglobal commodity markets througha process known as the gold fix wasUS$1,971.1 per fine ounce,producing expectations that theUS$2,000 mark could be passes on asustained basis before the end ofthis year.The price as at end of augustwas an unprecedented 33.1 per centincrease on the price at the start of2020. Indeed, the gold price hasrisen steadily through every monthof 2020 so far, with little sign of areversal of this trend, even though,analysts are beginning to suspectthat the price may peak just shortof the US$, 2000 per ounce mark.This has come on the back of an18.0 per cent rise in the gold priceto US$1,480.1 during the whole of2019.However as with cocoa, marketstrategy has not allowed Ghana toreap the full rewards of this hugeprice rally.although gold pricing strategyis entirely in the hands of privateproducers in Ghana, they rely onprice hedging to some extent,which generally tends to work inthe sellers’ favour during periods offalling prices but works againstthem during periods of risingprices as has been the casethroughout this year.Indeed, by august Ghana’srealized price for gold exports wasUS$1,915.5 per ounce, translatinginto a price increase of 29.4 per centsince the beginning of the year, alittle below the gains on the spotmarket.CRUdE OILGhana’s oil is premium qualitylight crude which means it ispriced similarly toBrent crude oil, thebenchmark for thattype of crude.Ghana, like therest of the oilexporting countriesall around theworld, has sufferedthe effects of supplychain disruptionsbrought about bythe eruption of thecoronaviruspandemic as well aslower global demanddue to lower levels ofglobal economicactivity, anotherconsequence ofCOVId 19.By the end ofaugust Brent crudewas trading at US$45.0 per barrel,down 30.9 per cent from its price atthe start of the year. This is areversal of then 13.0 per centincrease in the price enjoyedduring the whole of 2019 whichtook the price to US$65.2 per barrelby the turn of the year.Indeed, the price of oil fellduring the first four months of2020 reaching a trough of US$26.6per barrel by the end of april. Thiswas 59.1 per cent below its openingprice for the year. However it hasrecovered somewhat since then aseconomies re-open and return tonormal following COVId 19instigated lock downs all aroundthe world.as with gold, price hedging byproducers in Ghana has meant aslightly different turn out for crudeoil exports from Ghana, ascompared with spot marketpricing.By the end of august Ghana’sactual realized price was US$44.6per barrel, this down by 31.3 percent compared with the openingrealized price.This came on the back of a 12.8per cent increase in Ghana’srealized price through the whole of2019.as with spot market prices,Ghana is now enjoying upwardmovement with regard to itsrealized prices, which bottomedout at US$28.2 per cent in March,which was 56.7 per cent lower thanthe opening realized price for theyear.
Tuesday, September 29, 2020PAGE 11Ghanaian Stocks:September 25, 2020GHANA FIXED INCOME MARKET TRADING RESULTSGovernment of Ghana Treasury Yields: 28-Sep to 02-OctGhana Interbank Fx Rates: September 25, 2020Ethical FundREAL ESTATE Fund
Change language