AFEX, a leading commodities player in Africa,has projected that the prices of key staple crops in Nigeria are expected to rise significantly this year, with maize and paddy rice prices set to increase by 25 per cent and 40 per cent, respectively.
The AFEX 2024 Commodities Outlook Report, unveiled recently in Lagos, also predicted that domestic commodity prices in Nigeria will continue to rise over the course of 2024.
The report noted that the price of maize in Nigeria has been highly volatile, reaching a high of N550,000 per metric tonne in the third quarter of 2023, before falling to N480,000 per metric tonne by the end of the year. This was attributed to the fluctuating prices to reduced input usage, such as fertiliser, caused by a lack of access and rising costs, as well as the impact of the Russia-Ukraine crisis on global fertiliser prices.
AFEX also predicts that the prices of major export commodities like cocoa and sorghum will rise by 50 per cent and 20 per cent, respectively, in the Nigerian domestic market,underpinned by declining production.
On the global stage, the report expects a downward trend in the prices of commodities, which it attributes to factors such as improved supplies and the expiration of certain trade policies. However, the report cautions that this trend could be influenced by numerous factors that could have a negative or positive impact on commodity prices.
“Energy prices are expected to drop by five per cent in 2024 and then further decrease by 0.7 per cent in 2025, while agriculture commodities are projected to decrease by two per cent in 2024 and three per cent in 2025, provided that the Middle East conflict de-escalates,” the report stated further.
According to the report, inflation and economic reforms had a negative impact on the Nigerian commodities market in the first three quarters of 2023, resulting in growth of just 0.63%. This is a sharp decline from the 1.90% growth seen in the same period of 2022. The report highlights agriculture commodities as one of the hardest hit sectors, with prices rising due to supply shortages caused by low production and increased international demand.
The report noted that turbulence in the global commodities market was a defining feature of 2023, with a variety of shocks, including energy scarcity, geopolitical tensions, and financial crises, impacting the market. Despite these challenges, the report stated that the global market experienced a 24 per cent decline from its peak in 2022.
In light of the challenges facing the commodities market, the report calls for urgent action to improve domestic agricultural production and streamline trade policies. The report argues that increasing domestic production is crucial for ensuring food security and reducing dependence on imported goods.
The report recommended the adoption of sustainable farming practices, such as crop rotation, as a key strategy for improving productivity and boosting farmer income. It also cited research showing that crop rotation can increase farming income by up to 21 per cent.
Oluwafunto Olasemo, vice president of financial markets at AFEX, emphasized the importance of market outlooks in the commodities industry. She noted that they are a key component of the market, influencing trading flows and movements across the physical and secondary markets.
Olasemo stated that the commodities market will face a complex and challenging landscape in 2023, with a variety of geopolitical, economic, and environmental factors impacting the market. On the one hand, she noted that market participants and policymakers will need to be vigilant and adapt their strategies accordingly. On the other hand, she said that the ongoing challenges will also present opportunities for innovation and growth.