IGI Logo

Oil, VAM and tea prices cooling off; other agri prices up sequentially

We analyze quarterly price movements in key commodities and identify companies under our coverage that could either benefit from or face adverse effects of the price movements.

In 3QFY24, prices of agricultural commodities have increased, whereas prices of non-agricultural commodities have declined on a sequential basis.

? Crude oil prices have been seeing a downtrend and dropped below USD75/bbl during the quarter due to sluggish demand, economic slowdown in the US and China, and concerns over surplus supply. Overall, during the quarter, crude prices have declined 4.4% YoY and 2% QoQ. On MoM basis, prices are down 8.2% in Dec’23 so far and are currently trading at USD77/bbl.

? Vinyl acetate monomer (VAM) prices have also decreased sharply by 23.6% YoY/11.5% QoQ in 3QFY24. They are down 7.7% MoM in Dec’23 and are currently trading at USD811/t.

? Other non-agriculture commodities - Titanium dioxide (TiO2) prices in China have increased by 7.5% YoY/5.6% QoQ in 3QFY24. However, it has declined 3.2% MoM in Dec’23 and currently stand at CNY16,650/MT. TiO2 prices, on the other hand, have been decreased 6.7% YoY/4.8% QoQ, with the current price standing at INR352/kg. Meanwhile, Liquid paraffin prices have been surging in Oct’23 and are up 2.4% MoM. Domestic gold prices have increased 15.6% YoY and 2.3% QoQ, and are currently trading at INR61,050 per 10gm.

? Agri commodities prices – Agri commodity prices have been rising due to the anticipation of low supply as production was disrupted by bad weather. Notably, prices of wheat, coffee, barley, sugar and maize have increased QoQ, while prices of other agricultural commodities, such as tea and menthe oil, have softened. Wheat prices have risen 7.2% QoQ and 1.6% YoY. Tea prices have seen a substantial decrease by 10.3% QoQ and 6.4% YoY. Coffee prices have jumped 16% YoY and 5.6% QoQ in 3QFY24. Maize prices have risen 2.9% QoQ to INR2,200/quintal. Barley prices have increased 9.9% QoQ but declined 32.5% YoY, with the average price reaching INR2,125/quintal. Mentha oil prices have dropped 13.4% YoY and 3.1% QoQ. Copra Cochin prices have fallen 2.3% YoY but increased 3.8% QoQ, reaching INR128/kg. Furthermore, sugar prices have risen 11.7% YoY and 6.6% QoQ in 3QFY24, owing to low production. The current price stands at INR3,950/quintal.

? Palm oil and palm fatty acid prices: Palm oil is a key raw material for soap companies and, to some extent, food players. Malaysian palm oil is down 6.4% YoY/3.2% QoQ. However, Palm fatty acid price is flat YoY while down 6.4% QoQ. Currently, the price stands at USD 723/MT.

? Overall, the commodity cost basket has fallen 2.4% YoY but remained relatively steady QoQ with a slight 0.5% increase. There has been a modest increase of 1.6% QoQ in the agricultural basket, while it down 4.4% YoY. The decrease in Tea, Malaysian palm oil prices has been offset by a rise in prices of wheat, sugar and barley.

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412