AFEX, leading commodities player in Africa, has projected that maize and paddy rice prices will rise by 25 and 40 percent respectively in Nigeria in 2024.
The commodities market unveiled this outlook in a hybrid event hosted at its Lagos office on Wednesday.
It said, “Key consumption commodities like Maize and Paddy Rice are projected to rise by 25 percent and 40 percent respectively, despite a 4 percent increase projection on production of Paddy Rice.”
Read also: AFEX predicts rise in commodity prices
In 2023, AFEX said in a report, maize exhibited the highest volatility, of all tracked commodities, resulting in a peak price of N550,000/mt by the end of Q3, and closing the year at N480,000/mt.
The increase was attributed to decreased input usage, and a lingering effect of the Russia-Ukraine crisis impacting fertiliser prices.
AFEX also predicts that key export commodities like cocoa and sorghum are projected to rise by 50 percent and 20 percent respectively, underpinned by declined production.
In the global context, AFEX projects that 2024 commodity prices will see a downward trend due to factors such as improved supplies and the expiration of certain trade policies.
“However, 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,” the report 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 added.
A review of the past year showed that the global commodities market was marked by turbulence, owing to global shocks across energy scarcity, geopolitical tensions, financial crises and more.
Despite the challenges, however, “the global market witnessed a 24 percent decline from their peaks in 2022.”
On the other hand, the Nigerian commodities market 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, according to the report.
Speaking at the event, Oluwafunto Olasemo, vice president, Financial Markets, 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.
“This year, the commodities market will see a complex balance amidst 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.
“In managing the complexity of these factors, there is a pressing need to enhance domestic agricultural production, streamline trade policies, and establish strategic reserves to cushion against market volatility and ensure food security. Similarly, there perhaps isn’t a better time to look to alternative investments as a hedge against potential windfalls than now.”
The report recommended that boosting agricultural productivity is hinged on pivoting from traditional food production systems and 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.