Agricultural commodities in Nigeria are recording an unprecedented decline in prices, as a report assessing the impact of COVID-19 on the market by AFEX, the country’s functional commodity exchange, notes that commodity prices have taken a beating since the beginning of the year.
This followed the early rush for commodities in the first two months of the marketing year, and now prompted by the relative absence of large buyers from the market. In addition to this absence, the report noted that delivery of maize and soybeans imported into the country placed downward pressures on domestic prices. The decline in prices witnessed in 2020 followed a price hike in November and December 2019 as companies rushed to fill inventory and stock up for Q1-2020.
It was noted that soybean has so far witnessed the steepest decline, falling by 13.55 percent while maize fell by 5.94 percent over the same period. On the other hand, export crops such as ginger and cocoa have gained 5 percent and 11.69 percent respectively.
The domestic commodity markets are noted to have been further dampened by the outbreak of COVID-19 in the country, and the subsequent lockdown instructions being implemented across the country. An important effect is the disruption faced by businesses across the country as they struggle to reach customers, distribute products and in some cases prepare for the worst-case scenario.
The report noted that the impact of the coronavirus outbreak has been reflected in the suspension of procurement by industries consuming the commodities as they evaluate the demand levels and seek alternative supply and distribution networks for their products. Due to the more informed and formal nature of participants sourcing commodities via the commodities exchange in the country, trading activities on the exchange have witnessed a lull as companies recalibrate demand levels and seek alternative supply and distribution networks for final products.
Ginger has however defied the negative impacts of the COVID-19 crisis as the production freeze witnessed in China (largest producer in the world) prompted a rise in prices of the root crop. A secondary factor for the resilience of ginger to the negative effects of the virus is the rise in the demand of the commodity due to its therapeutic benefits. On the back of these two factors, international prices of the commodity have spiked across the world.
In the short term, put between one and six months, recovery according to the report is predicated on the ability of primary producers to access their farms across the country.
