Commodities to help grow economy

Farming

The PNG economy has been projected by economists to grow at a 2.8 per cent rate next year driven by the rebound in agriculture, fisheries and forestry, mining and quarrying and the non-resource sectors after dismal performance this year.
According the recently passed 2017 budget plans, the medium term will see the country’s economy grow by 2.7 per cent by the traditional drivers in the non-mining sectors, led by the agriculture, fishery and forestry.
Prices for PNG’s key agricultural exports have been subject to continued weakening in global demand and supply constraints for most agriculture commodities.
Coffee
The adverse effects of El Nino in 2015 hampered production in 2016 resulting in poor crop yields and supply constraints thus pushing price high, particularly, for coffee.
The dry weather has impaired production in Brazil – the world’s top coffee producer – in the second half of the This was also the case for Vietnam and South America. Looking ahead, the adverse weather conditions in Vietnam is likely to reduce output in 2016 and 2017.
Moreover, the potential development of La Nina (Cold) weather in Colombia could also affect the crop.
Cocoa
The La Nina and extensive Harmattan (very dry, dusty wind) weather have adversely affected cocoa harvest in 2015 and 2016.
These developments have placed cocoa prices on a rising trend in the first half of 2016.
Severe weather issues in some major growing regions might hamper production, in particular, August rainfalls in the Ivory Coast – the world’s top cocoa producer.
This is likely to push up the price further. The risk to this up side relates to the anticipated crop recovery in Ghana in 2017.
Palm Oil
The price of palm oil is mainly influenced by developments in Southeast Asia. Palm oil prices increased in 2016 driven by the impact of El Nino which hampered production from leading producers (Indonesia and Malaysia).
Apart from weather issues, higher use of palm-based biodiesel by Indonesia could tighten supplies of the tropical oil from the world’s top exporter for the rest of 2016 and early 2017.
Palm oil price is expected to continue to increase in 2017.
Copra Oil
Frequent typhoons in Philippines – world’s top producer of copra oil – has continued to affect output and harvest thus causing prices to surge higher.
An emergence in demand for fresh coconut water (kulau) has reduced production of copra oil.
The global economy is projected to recover tnext year, growing by 3.4 per cent from 3.1 this year.
The recovery in the global economy will translate to gradual increase in commodity prices. Prices of key commodities such as oil are expected to increase slightly.
The PNG economy continues to grow but not as strong as the recent past years.

Leave a Reply