anz research · 2017. 11. 27. · anz pacific monthly / 11 february 2016 / 3 of 13 pacific news...
TRANSCRIPT
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11 FEBRUARY 2016
INSIDE
Pacific News
Pacific region 2
Fiji 3
Cook Islands 3
Guam 3
Kiribati 3 New Caledonia 2
Samoa 3
American Samoa 3
Solomon Islands 3
Timor-Leste 3
Tonga 3
Vanuatu 4
Key Data Releases 5
Macro Forecasts 8
FX Market Developments 9 Commodity Market Developments 11
Important Notice 13
CONTRIBUTORS
[email protected] Glenn Maguire Chief Economist, South Asia, ASEAN & Pacific [email protected] Devika Mehndiratta Senior Economist, South Asia & ASEAN [email protected] Eugenia F. Victorino Economist, ASEAN & Pacific [email protected] Weiwen, Ng Economist, ASEAN & Pacific [email protected] Eugin Lee Analyst, ASEAN & Pacific [email protected] Daniel Hynes Commodity Strategist [email protected]
Follow us on Twitter @ANZ_Research
PACIFIC MONTHLY
ANZ RESEARCH
HIGHLIGHTS
The 2016-17 Pacific currency outlook appears to be a heady one for Pacific
currencies, with global and regional developments impacting various currency
pairs unevenly. In particular, amid an uneven global backdrop, the extent of
exposure of each economy’s trade, commodity and ‘services industry’ will
determine the trajectory of its currency performance.
In January, the contrary performance between the USD and commodity
currencies (AUD, NZD) has led to a divergence in their respective
individual Pacific crosses, to varying degrees.
Commodity prices remain under pressure as oversupply and fears of
stagnating demand permeate key commodity segments. In crude oil, we
still see the possibility of prices dipping into the mid USD20s per barrel
range in the coming months, with chances of coordinated production cuts
by OPEC and Russia highly unlikely.
Economic data in the aftermath of Cyclone Pam reveals uneven impacts
across the region. Vanuatu (which suffered the brunt of the cyclone)
continues to see deep cuts in tourism arrivals, with nationwide restoration
still underway. Interestingly, it seems that tourists are diverting their
itineraries to other less-affected Pacific Islands (rather than cancelling
plans altogether). The region (excluding Vanuatu) is seeing a marked
improvement in arrivals with the approach of the peak tourism season.
CHART OF THE MONTH – COULD OUTSOURCING EMERGE AS A NEW
DRIVER OF PACIFIC GROWTH?
A World Bank study suggests that the Pacific region (Fiji, Samoa and Tonga,
in particular) has the potential to attract offshoring, online outsourcing and
other IT-related industries. Arithmetically, this could add between 0.4 to 3.5%
to their GDP over the next five years, creating thousands of job opportunities
in the process. Indeed, Fiji is already showing promise as major companies
(including ANZ Pacific) set up their offshoring operations to its shores. The
report noted that the region’s young, cheap and tech-savvy population is a
key strength, and its best bet would be to provide ‘nearshoring’ services to
corporations in Australia and New Zealand.
OPTIMISTIC CASE ESTIMATES OF INDUSTRY IMPACTS IN THE NEXT 5 YEARS
Source: World Bank, ANZ Research
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ANZ Pacific Monthly / 11 February 2016 / 2 of 13
PACIFIC NEWS
Note to readers:
Due to resource constraints, we have
temporarily suspended PNG coverage as we
transition a new economist into covering this
important economy. We appreciate your
patience on this matter.
PACIFIC REGION
The United States government has officially
announced that it is pulling out of the
South Pacific Tuna Treaty, a move that will
take effect in 12 months, according to the
terms of the nearly 30-year-old deal with the
region. The cessation of the agreement is due to
a standoff between fishing licenses and treaty
payments. The move could strongly affect the
livelihoods of smaller Pacific islands that are
dependent on the tuna trade. (ABC news,
Marianas Variety)
A World Bank report said that up to 20,000
jobs could be created in the Pacific through
IT-enabled outsourcing industries. The
study noted that Fiji, Samoa and Tonga,
especially, have significant competitive
advantages, such as a young qualified labour
market, improving Internet infrastructure, and
strong political support. (Radio New Zealand
International)
FIJI
Fiji’s sugar cane farmers will be receiving
an advance payment of FJD2/t to cope with
drought, announced Prime Minister Voreqe
Bainimarama. The payment will then be
deducted from the Q3 and Q4 quarter payments.
(Fiji Times Online)
Fiji airways is operating four direct flights
from China to Fiji, in a move to bring in
tourism flows boosted by the Chinese New Year
holidays. The chartered flights are expected to
bring in 1,200 tourists amid a seasonal low point
in the country’s tourism industry.
(Fiji Times Online)
A new Tuvatu mining lease awarded to
Canadian Mining Company Lion One Metals
is expected to provide 200 employment
opportunities, according to Steven Mann, who
is in charge of the Tuvatu Gold Mine project. The
new mine is projected to generate USD414m of
revenue when it goes into operation.
(Fiji Times Online)
Fiji will host the 25th Asia-Pacific
Parliamentary Forum in January 2017,
according to an announcement made by the
Forum’s executive committee. (Fijilive)
COOK ISLANDS
The Cook Islands Tourism Corporation is
expecting strong tourism growth in 2016,
with the introduction of new seasonal flights and
intensive marketing and branding efforts.
(Cook Islands News)
The Cook Islands could be among the
richest countries in the world if its
resources are ‘wisely and sustainably
harvested’, according to the Prime Minister,
Henry Puna. The Cook Islands has the 20th
largest exclusive economic zone in the world and
vast quantities of fisheries and seabed minerals.
(Cook Islands News)
GUAM
Guam’s economy could grow 3-4% this
year, benefiting from higher military
spending and a surge in tourism arrivals,
according to the Chief Economist of the Bank of
Guam, Joseph Bradley, who noted that if growth
remains as envisaged, Guam should be well
positioned for another minimum wage increase.
(Pacific Daily News)
Guam’s tourist arrivals reached a record
1.4m last year, owing to a boost in South
Korean and Chinese tourists, according to the
numbers from Guam Visitors Bureau. Japanese
tourists, which are traditionally Guam’s largest
visitor market, have declined due a weaker yen.
(Pacific Daily News)
KIRIBATI
Kiribati’s Presidential election will likely be
held in March this year, according to the
Electoral Commission. The outgoing President
Anote Tong, is bowing out of politics after having
served the maximum of three terms.
(Radio New Zealand International)
NEW CALEDONIA
The New Caledonian government has
authorised nickel exports to Japan and
Australia in a bid to combat industry wide
losses. (Radio New Zealand International)
Lower planned investment and possible job
cuts are a new reality in New Caledonia’s
SLN nickel company, according to the Head of
SLN, Jerome Fabre. Mr Fabre expects that
suppressed nickel prices (which have already
slumped 40%) will persist till the end of 2017.
(Radio New Zealand International)
The Congress of New Caledonia has
approved the budget for 2016, with the
expectation that growth would weaken to
0.6%. (Radio New Zealand International)
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ANZ Pacific Monthly / 11 February 2016 / 3 of 13
PACIFIC NEWS
SAMOA
An USD3.83m supplementary budget has
been introduced by the Samoa Government. In
summary, the funds are allocated to develop
woman in agriculture, supplement the overseas
disease scheme, support the Samoa Broadband
Highway Project and other education needs.
(Samoa Observer)
Talofa Airways is set to launch from Samoa
in April, serving the region with priority
given to in-demand routes between Samoa
and American Samoa. Currently, Locally-
owned Talofa is in process of acquiring two Twin
Commander aeroplanes and would likely
compete with regional air service providers
Polynesian Airlines and Samoa Air.
(Samoa Observer)
Affordable, high speed satellite internet
would soon be a reality in Samoa, following
multi-transponder contract signed between
Bluesky Pacific Group, the local leading
telecommunications provider and Satellite
operators A.B.S. The multi-year capacity deal
will offer expanded satellite connectivity services
across the Samoan islands and the Pacific.
(Samoa Observer)
The US CDC health agency declared a Zika
virus travel alert to Samoa, prompting a
reassurance announcement from the Samoan
government. The Ministry of Health had confirmed
three cases since last year although more recent
blood samples tests have returned negative.
Measures are currently put in place to control the
disease. Caretaker Prime Minister Tuila’epa
Sa’ilele Malielegaoi said that reports of Zika in
Samoa will have an adverse impact on the
tourism industry. (Radio New Zealand)
AMERICAN SAMOA
The US Interior has released the final
USD18.3m in grant assistance for fiscal
2016 to American Samoa. Funds would be
used to support the daily operations of the
American Samoa government. (Marianas Variety)
American Samoa is becoming a new Zika
Hotspot in the Pacific, with local doctors
reportedly diagnosing an average of six cases a
day. The Health Department has recorded 25
suspected cases although lab testing delays
have yet to confirm those cases. Nonetheless,
the US CDC health agency has announced a
travel alert to American Samoa. (Radio New
Zealand, US Centers for Disease Control and
Prevention)
SOLOMON ISLANDS
Solomon Islands’ economy is expected to
expand by 3.5% over the next year,
according to Moody’s. However, the uncertain
outlook of the logging industry, underdeveloped
state institutions and frequently changing
government could present downside risk to that
forecast. (Radio New Zealand International)
TIMOR-LESTE
The Export Import Bank of China has
granted a soft loan of USD50m to Timor-
Leste for Dili sewage system improvements,
said the Timorese Ministry of Finance. The
Finance Ministry described the loan terms as
‘favourable’ and divulged that the deal includes
a ‘donation equivalent to 27.76% of the loan
value’. (Macauhub)
French group Bolloré Transport & Logistics
has been appointed to build and manage
the deep-water port of Dili under a
partnership with the government, according
to a press release statement. The partnership
will be in place for 30 years and is expected to
generate 350 direct job opportunities.
(Macauhub)
TONGA
Tonga Airports (TAL) has declared a
TOP1.3m dividend payable to the
government for the financial year 2014-15.
The dividend payment represents 75% of TAL’s
profit after tax in a year where revenue
exceeded TOP10m mark for the first time.
(Matangi Tonga Online)
Vava’u will receive two new direct flights
from Nadi, Fiji starting 2 April this year,
according to an announcement by Fiji Airways.
These flights should facilitate international
tourism flows, especially for North American
tourists who prefer to transit in Nadi. Vava’u is a
popular tourist destination famous for its
Humpback Whales tourism activities. (Matangi
Tonga Online)
Australia has pledged up to $500,000 in aid
to Tonga to help combat the spread of the
Zika virus after an outbreak was declared last
week raised concerns in the region. The initial
focus on strengthening the fight against the
mosquito-borne virus would be in Tonga, Pacific
Minister Steven Ciobo said in a statement. He
said Australia would work with World Health
Organisation (WHO) officials and the Tongan
government to control the mosquito population
and increase access to testing.
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ANZ Pacific Monthly / 11 February 2016 / 4 of 13
PACIFIC NEWS
Tonga declared an outbreak of the Zika
virus last week, after five cases were confirmed
and 259 suspected. The US CDC health
agency has issued a travel alert to Tonga.
(ABC News, US Centers for Disease Control and
Prevention)
VANUATU
Vanuatu recorded its third consecutive and
largest ever fiscal surplus last year,
according to Vanuatu’s caretaker Prime Minister
Sato Kilman. PM Kilman that the surplus of over
USD8m is extremely commendable in the face
of challenges caused by Tropical Cyclone Pam.
(Radio New Zealand International)
Air New Zealand (and subsequently,
Qantas and Virgin Australia) have decided
to suspend flights to Port Vila on concerns
about runway safety, according to Vanuatu’s
Civil Aviation Authority which conceded that the
runway may not be up to par. The suspension
has reduced tourism arrivals from Australia and
New Zealand significantly. Nonetheless, regional
airlines to other Pacific Islands are still
operating amid ongoing discussions to reinstate
flight services. (Radio New Zealand)
Vanuatu’s tourism is starting to return to
Pre-Cyclone Pam levels, with tourism veering
towards northern islands such as Espiritu Santo,
that were not affected by Tropical Cyclone Pam.
(Radio New Zealand International)
17 parties and 8 independent members
have been elected into the 52-seat
Parliament, following the country’s Jan’16 snap
elections. A Memorandum of Agreement has
been signed by more than two-third of
Vanuatu’s 52 MPs to commit to forming a
new coalition government. The new
government is expected to formally take shape
next week when Parliament sits on 11
February to elect a prime minister.
(Radio New Zealand International, Radio
Australia)
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ANZ Pacific Monthly / 11 February 2016 / 5 of 13
KEY DATA RELEASES
New data are shaded.
For a more in-depth view on the data flow, please refer to our August Pacific Quarterly here.
INFLATION LATEST PREVIOUS
Fiji CPI (y/y) Nov-15 1.8% 1.4%
Samoa CPI (y/y) Dec-15 -2.3% -0.5%
Solomon Is. CPI (y/y, 3mma) Oct-15 1.2% 0.1%
Timor-Leste CPI (y/y) Dec-15 -0.6% -0.1%
Tonga CPI (y/y) Nov-15 -1.9% -1.3%
Vanuatu CPI (y/y) Q3-15 -3.5% 5.7%
Source: The respective central banks and national statistics offices. *Due to natural disaster distortion.
TRADE LATEST PREVIOUS
Fiji Exports (y/y, ytd)** June-15
-10.1% -6.2%
Fiji Imports (y/y, ytd)** June-15
-13 -13
-9.7% -9.7%
Samoa Exports (y/y) Oct-15 26.9% 76.9%
Samoa Imports (y/y) Oct-15 -9.8% 4.3%
Solomon Is. Exports (y/y) Nov-15 29.2% -10.4% 2 Solomon Is. Imports (y/y) Nov-15 9.0% -5.7%
Timor-Leste Exports (y/y) Nov-15
2.0% 148%
Timor-Leste Imports (y/y) Nov-15
-13 -13
0.5% 43%
Tonga Exports (y/y) Nov-15 6.0% -8.7%
Tonga Imports (y/y) Nov-15 11.1% 13.4%
Vanuatu Exports (y/y) * Jul-15 -54% 54.7%
Vanuatu Imports (y/y) * Jul-15 20.2% 93.4%
Source: The respective central banks and national statistics offices. *Due to natural disaster distortion. ** Excld Aircraft
POLICY RATES LATEST PREVIOUS
Fiji Overnight Policy Rate Sept-15 0.50% 0.50%
PNG Kina Facility Rate Feb-16 6.25% 6.25%
Samoa Official Interest Rate Nov-15 0.15% 0.15%
Tonga Wtd Ave Lending Rate Nov-15 8.07% 8.09%
Vanuatu Rediscount Rate May-15 5.25% 5.25%
Source: The respective central banks and national statistics offices.
TOURIST REMITTANCES LATEST PREVIOUS
Fiji Visitor Arrivals (y/y, ytd) Nov-15 8.8% 8.7%
Samoa Tourist Arrivals (y/y) Nov-15 -3.9% 15.5%
Samoa Remittances (y/y) Nov-15 -11% %
3.3%
Tonga Tourist Receipts (y/y) Nov-15 12.1% 9.5%
Tonga Remittances (y/y) Nov-15 13.1% 10.7%
Vanuatu Tourist Air Arrivals (y/y) Q3-15 -20.3% -41%
Timor-Leste Visitor Arrivals at Dili Airport Q3-15 2.5% 5.2%
Source: The respective central banks and national statistics offices.
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ANZ Pacific Monthly / 11 February 2016 / 6 of 13
KEY DATA RELEASES
MONETARY LATEST PREVIOUS
Fiji M3 - Money Supply (y/y) Oct-15 15.3% 12.9%
Fiji Domestic Credit (y/y) Oct-15 12.8% 12.1%
Samoa M2 - Money Supply (y/y) Nov-15 10% 9.9%
Samoa Public & Private Sector Credit (y/y) Nov-15 6% 8.11%
Solomon Is. Private Sector Credit, y/y Nov-15 16.7% %
18.8%
Solomon Is. M3 - Money Supply (y/y) Nov-15 11.3% 9.0% % Timor-Leste M2 - Money Supply (y/y) Dec-15 7.1% 8.3%
Timor-Leste Private Sector Credit (y/y) Q4-15 7.9% 10.9%
Tonga Private Sector Credit (y/y) Nov-15 12.8% 14.4%
Tonga M3 - Money Supply (y/y) Nov-15 13.4% 15.0%
Vanuatu M2 - Money Supply (y/y) Q3-15 11.4% 10.2%
Source: The respective central banks and national statistics offices.
RESERVES LATEST PREVIOUS IMPORT COVER
(MONTHS)
Fiji Foreign Reserves (USDm) Nov-15 902.4 915.9 5.9
Samoa Foreign Reserves (USDm) Nov-15 122.2 126.5 5.4
Solomon Is. Foreign Reserves (USDm) Nov-15 500 497 10.0
Timor-Leste* Foreign Reserves (USDm) Nov-15 16,650 16,770 n/a
Tonga Foreign Reserves (USDm) Dec-15
147.4 142.8 9.6
Vanuatu Foreign Reserves (USDm) Q3-15 261 221 7.6
* Petroleum Fund Balance. **ANZ’s estimate. Source: The respective central banks and national statistics offices.
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ANZ Pacific Monthly / 11 February 2016 / 7 of 13
MACRO FORECASTS
REAL GDP GROWTH (%) NOMINAL GDP (USDbn)
2013 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji 4.6 4.5 4.0 3.0 Fiji 3.4 3.7 3.9 4.1
Samoa** 0.0 1.9 2.4 2.5 Samoa** 0.8 0.8 0.8 0.9
Solomon Is. 3.2 1.0 3.3 3.0 Solomon Is. 1.1 1.2 1.3 1.4
Timor-Leste* 9.5 7.0 6.2 6.0 Timor-Leste* 1.4 1.5 1.7 1.8
Tonga -3.0 1.9 2.5 2.8 Tonga 0.5 0.5 0.5 0.5
Vanuatu 3.2 3.6 -0.5 4.0 Vanuatu 0.8 0.9 0.9 0.9
INFLATION (%) FISCAL BALANCE (% of GDP)
2013 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji 2.9 0.5 3.0 3.0 Fiji -2.8 -2.1 -2.7 -1.7
Samoa** -0.2 -1.2# 2.0 2.3 Samoa** -6.1 -4.8 -4.2 -3.9
Solomon Is. 5.8 4.8 1.8 3.0 Solomon Is. 2.3 -1.3 -3.5 3.0
Timor-Leste 9.7 1.5 3.1 3.3 Timor-Leste 39.7 21.0 22.5 19.0
Tonga 1.0 1.5 1.9 2.5 Tonga -1.1 -0.2 -0.1 -0.2
Vanuatu 1.4 1.0 3.0 3.0 Vanuatu 0.7 -2.1 -3.0 -3.0
CURRENT ACCOUNT BALANCE (% OF GDP) FOREIGN EXCHANGE RESERVES (USDm)
2013E 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji -20.7 -10.0 -8.7 -8.9 Fiji 755 750 764 780
Samoa** -2.0 -5.4 -5.2 -5.0 Samoa 137 155# 156 160
Solomon Is. -4.0 -6.0 -5.1 -7.5 Solomon Is. 515 530 550 550
Timor-Leste* 45 22 12 12 Timor-Leste 15.0bn 16.5bn 18.2bn 19.0bn
Tonga -6.0 -4.8 -4.8 -5.0 Tonga 140 138 140 140
Vanuatu -6.2 -6.0 -7.0 -7.0 Vanuatu 189 212 228 228
Source:
Fiji: Reserve Bank of Fiji, ADB, IMF, ANZ Research
Samoa: IMF, ADB, ANZ Research
Solomon Islands: Central Bank of Solomon Islands, IMF, ANZ Research
Timor-Leste: IMF, ANZ Research
Tonga: Reserve Bank of Tonga, IMF, ANZ Research
Vanuatu: Reserve Bank of Vanuatu, IMF, ANZ Research
* Real and nominal GDP pertain to non-oil GDP; C/A balance as % of non-oil GDP.
** Samoa’s fiscal year runs from July–June.
^Actual figure.
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ANZ Pacific Monthly / 11 February 2016 / 8 of 13
FX MARKET DEVELOPMENTS
The run of US data has been soft of late and calls for rate hikes have thus eased significantly. Pacific currencies
have also reacted accordingly, with depreciation against the USD slowing down in the past 30 days. However,
commodity currencies (AUD and NZD) have remained suppressed, given the recent fixation towards low
commodity prices and the stability of Chinese assets. For the Pacific economies, this has led to a divergence in
the USD/Pacific against the AUD/Pacific and the NZD/Pacific crosses to varying degrees. For a detailed update
on our Pacific FX outlook, please read our note.
FIJI – FJD CROSS RATES
SOLOMON ISLANDS – SBD CROSS RATES
VANUATU – VUV CROSS RATES
TONGA – TOP CROSS RATES
SAMOA – WST CROSS RATES
Updated as of 18 January 2016. Source: Bloomberg, ANZ Research
0.60
0.63
0.66
0.69
0.72
0.75
0.45
0.49
0.53
0.57
0.61
0.65
0.69
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
FJD-USD FJD-AUD FJD-NZD (RHS) FJD-SGD (RHS)
4.7
4.9
5.1
5.3
5.5
5.7
5.9
6.1
6.3
6.5
5.4
5.8
6.2
6.6
7.0
7.4
7.8
8.2
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16USD-SBD AUD-SBD
NZD-SBD (RHS) SGD-SBD (RHS)
66
68
70
72
74
76
78
80
82
84
86
72
76
80
84
88
92
96
100
104
108
112
116
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
USD-VUV AUD-VUV NZD-VUV (RHS) SGD-VUV (RHS)
1.28
1.31
1.34
1.37
1.40
1.43
1.46
1.49
1.52
1.55
1.58
1.61
1.441.501.561.621.681.741.801.861.921.982.042.102.162.22
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
USD-TOP AUD-TOP NZD-TOP (RHS) SGD-TOP (RHS)
0.49
0.52
0.55
0.58
0.61
0.64
0.67
0.70
0.73
0.76
0.79
0.82
0.340.360.380.400.420.440.460.480.500.520.540.560.58
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
WST-USD WST-AUD WST-NZD (RHS) WST-SGD (RHS)
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ANZ Pacific Monthly / 11 February 2016 / 9 of 13
FX MARKET DEVELOPMENTS
For an in-depth currency forecast commentary, please contact your ANZ Representative.
Note: The source of FX data is Bloomberg and the respective central banks in the Pacific. As the currencies are illiquid with wide bid/offer spreads, the rates published are only indicative.
* Overnight policy rate.
^ Discount rate.
Updated as of 25 January 2016.
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ANZ Pacific Monthly / 11 February 2016 / 10 of 13
COMMODITY MARKET DEVELOPMENTS
FIGURE 1. COMMODITY PRICE INDICES
Commodity prices remain under pressure as
oversupply and fears about stagnating demand permeate key commodity segments. In crude oil, we still see a possibility of prices dipping into the mid-USD20s/bbl in the coming months, with chances of coordinated production cuts by OPEC and Russia highly unlikely.
Oil prices fell 15% during the first three weeks of January, before finding some support late in the month from hopes of supply cuts. A meeting between Russia and OPEC was touted, with Russia suggesting it could join a potential coordinated approach on oil output. A 5%
production cut had been raised at the last OPEC meeting.
We believe the likelihood of such action is extremely low. Russia is heavily reliant on oil, which contributes to 40% of budget revenue. Russia is also on track to reach a record high 10.9Mb/d in January and thus is unlikely to cut production. Meanwhile OPEC remains steadfast in its strategy of maintaining current output levels. There are
also political barriers in place, with Saudi Arabia and Russia currently backing opposite sides in the Syrian conflict. We still see the possibility of prices dipping into the mid USD20s per barrel in the coming months. With Iran now able to boost exports and inventories continuing to build in the US, fundamentals are likely to
get worse before they get better.
Palm oil prices defied the broader sell-off in commodity markets in January. Palm oil prices in US dollar terms rallied 6% m/m, breaking key resistance levels and hitting a six month high. Supporting prices in the second
half of January was the release of key statistics by the Malaysian Palm Oil Board (MPOB),showing a 10% fall in the country’s palm oil stocks as Crude Palm oil (CPO) production fell 15% m/m. The El Nino, which caused dryness in South East Asia. is expected to continue to reduce palm oil yields over the next six months in both Indonesia and Malaysia and push prices higher still.
Global palm oil production is only expected to grow marginally in 2016, a sharp contrast to the last five years when global palm oil production grew at an average rate of 3 million tonnes pa.
Sugar prices fell in late January, breaking key support levels established in the last quarter. Prices lacked any impetus to rally, given that Brazil’s main cane producing region had finished harvesting and rainfall in the country’s centre south region has been above average – setting the stage for another large cane crop in 2016.
Near term supplies are also ample in other key exporting
countries such as Thailand, where cane mills have operating at high processing capacity for three weeks, allowing an early season shortfall in production to be narrowed considerably.
FIGURE 2. COMMODITY PRICE INDICES
FIGURE 3. COMMODITY PRICE INDICES
*Fish prices are a proxy derived from shrimp prices.
Source: Bloomberg, World Bank, Haver, ANZ Research
*Updated as of 18 January 2016. Source: Bloomberg, ANZ Research
30
50
70
90
110
130
150
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Oil (Tapis) Gold Copper Silver
60
80
100
120
140
160
180
200
220
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Coconut oil Palm oil Copra
60
80
100
120
140
160
180
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Sugar Cocoa Coffee Rice Fish*
Price
changes*
Oil
(tapis)Gold Silver Copper Coc. oil
Palm
oilSugar Coffee Cocoa Rice Copra Fish
M/M 0.7% 3.4% 5.8% 0.6% 5.1% 0.3% 29.6% 11.0% -5.8% 5.0% -7.6% -8.3%
3M/3M -16.8% 3.8% 7.8% -2.9% -1.0% -3.3% 12.1% -0.9% -6.8% -7.7% 5.7% -7.7%
Y/Y -44.6% -4.9% -7.1% -20.7% 0.7% -5.6% -13.3% -40.3% 0.0% -13.0% -29.1% -19.5%
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ANZ Pacific Monthly / 11 February 2016 / 11 of 13
COMMODITY MARKET DEVELOPMENTS
ANZ PACIFIC COMMODITY PRICE INDEX (PCPI)
The commodity slump continues to adversely affect
Pacific economies, with import and export indices
registering double digit y/y declines. On a sequential
basis, export prices posted slight gains on the back of
signs of stabilisation in agricultural prices. In
contrast, the import price indices continue to slide as
global energy prices are still struggling to find a floor.
Over the near term, ANZ commodity analysts expect
current trends to persist.
FIJI – COMMODITY PRICE INDICES
TIMOR-LESTE – COMMODITY PRICE INDICES
SAMOA – COMMODITY PRICE INDICES
SOLOMON ISLANDS – COMMODITY PRICE INDICES
TONGA – COMMODITY PRICE INDICES
Source: World Bank, Haver, ANZ Research
VANUATU –COMMODITY PRICE INDICES
Fiji Timor Samoa Sol. Tonga Van.
Export, y/y -23.4 -37.8 -30.6 -11.7 -23.6 -19.8
Export, m/m 0.3 -13.8 1.4 0.5 0.0 2.5
Import, y/y -33.5 -22.4 -26.3 -32.9 -17.9 -25.5
Import, m/m -7.7 -2.8 -5.4 -8.4 -1.3 -4.1
ANZ Pacific Commodity Price Index (ANZ PCPI) Dec 2015
50
60
70
80
90
100
110
120
130
140
150
50
60
70
80
90
100
110
120
130
140
150
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
40
60
80
100
120
140
40
60
80
100
120
140
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
60
70
80
90
100
110
120
130
140
60
70
80
90
100
110
120
130
140
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
1002
010 =
100
Terms of Trade (RHS) Exports Imports
20
40
60
80
100
120
140
160
180
50
60
70
80
90
100
110
120
130
140
150
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
80
85
90
95
100
105
110
115
120
70
80
90
100
110
120
130
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
60
80
100
120
140
160
180
60
80
100
120
140
160
180
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
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