AFEX, a commodities player in Africa, has predicted that domestic commodity prices are expected to rise consistently throughout the year.
It noted that key export commodities like cocoa and sorghum are projected to rise by 50 per cent and 20 per cent, due to declined production, while key consumption commodities like maize and paddy rice are projected to rise by 25 and 40 per cent, despite a four per cent increase in projection on production of paddy rice.
This was contained in its 2024 commodities outlook.
The yearly commodities outlook is a key literature that analyses critical socio-economic factors shaping the demand and supply dynamics of commodities, to highlight challenges and opportunities in the market while providing an accurate forecast that steers price and volumes for the year.
Vice President, Financial Markets, AFEX, Oluwafunto Olasemo noted that the outlook is an indispensable component of the commodities market, dictating trading flows and movement across the physical market and secondary market players.
Read Also: Imported medical syringes killing local industry, says NAFDAC
She said this year the commodities market will see a complex balance amid geopolitical, economic, and environmental factors, which will on one hand demand continual monitoring and strategic adaptation, and on the other spur vigilance on the part of market stakeholders and policy makers.
Olasemo argued that in managing the complexity of these factors, there was the need to enhance domestic agricultural production, streamline trade policies, and establish strategic reserves to cushion against market volatility and ensure food security.
She suggested looking at alternative investments as a hedge against potential windfalls than now.
The report said: “Globally, the commodities market was marked by turbulence, owing to global shocks across energy scarcity, geopolitical tensions, financial crises and more, however, despite these challenges, the global market witnessed a 24 per cent decline from their peaks in 2022.
“The Nigerian commodities market on the other hand faced trickle down effects of inflation, and economic reforms, which pegged the growth in the first three quarters of 2023 at 0.63 percent a sharp decline from 1.90 percent in the same period of 2022. Agriculture commodities witnessed price surges with the greatest factor responsible being supply shortage due to low production and increased international demand.
Of all tracked commodities, Maize exhibited the highest volatility at 24 percent, resulting in a peak price of N550,000/mt by the end of Q3, and closing the year at N480,000/mt. This increase is a consequence of decreased input usage, a still-felt effect of the Russia-Ukraine crisis impacting fertilizer prices.”
According to report the 2024 global commodity prices suggests a downward trend due to factors such as improved supplies and the expiration of certain trade policies. It noted that the direction of this trend can be significantly influenced by numerous factors, each capable of either posing a downside or upside risk to commodity prices.
It said energy prices are expected to drop by 5 percent in 2024 and then further decrease by 0.7 percent in 2025, while agriculture commodities are projected to decrease by 2 percent in 2024 and 3 percent in 2025, provided that the Middle East conflict de-escalates.
It recommended boosting agriculture productivity adopting sustainable farming practices such as diversified crop rotation, which serves to optimise soil capacity and increase productivity, which in turn has been seen to boost farming income by 21 percent.