AFEX, a leading commodities exchange in Nigeria, has forecasted significant price increases for maize and paddy rice in 2024.
The report, released in Lagos on Wednesday, anticipates a 25% rise in maize prices and a 40% increase in paddy rice prices.
In 2023, maize prices experienced considerable fluctuations, peaking at N550,000/mt in the third quarter and closing the year at N480,000/mt. The report attributes the increase to reduced input usage and the impact of the Russia-Ukraine crisis on fertiliser prices.
AFEX also expects key export commodities such as cocoa and sorghum to see price hikes of 50% and 20%, respectively, in the domestic market. These increases are underpinned by declining production levels.
Globally, the report predicts a downward trend in commodity prices for 2024, influenced by factors like improved supplies and the expiration of certain trade policies.
Energy prices are projected to drop by 5% in 2024 and decrease further by 0.7% in 2025. Agricultural commodities are expected to see a 2% reduction in 2024 and a 3% decrease in 2025, contingent on the de-escalation of the Middle East conflict.
Oluwafunto Olasemo, Vice President of Financial Markets at AFEX, stressed the importance of the outlook in dictating trading flows and movement across both physical and secondary market players.
He noted the complexities of balancing geopolitical, economic, and environmental factors in the commodities market.
Olasemo stressed the need for enhancing domestic agricultural production, streamlining trade policies, and establishing strategic reserves to mitigate market volatility and ensure food security.
He also recommended looking into alternative investments as a hedge against potential market windfalls.
The report also advocates for the adoption of sustainable farming practices like diversified crop rotation to optimise soil capacity and boost productivity, which can increase farming income by 21%.
A review of the past year revealed global market turbulence due to shocks across energy scarcity, geopolitical tensions, and financial crises. Despite these challenges, the global commodities market saw a 24% decline from its peak in 2022.
The Nigerian market, in contrast, faced the trickle-down effects of inflation and economic reforms, resulting in a growth rate of only 0.63% in the first three quarters of 2023, a significant drop from the 1.90% growth rate in the same period of 2022.
Agricultural commodities in Nigeria experienced price surges primarily due to supply shortages and increased international demand.
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