Inflationary Pressure Will Drive Commodity Prices In 2022 – AFEX
AFEX, Nigeria’s Commodity Exchange, has predicted that 2022 will continue to be marked by inflationary pressures that will drive commodity prices higher over the course of the year.
According to hisAnnual Commodity Outlook Report 2022,The combination of growing inflationary pressures in the context of the expected end of oil subsidies would increase the price of cereals in the new marketing season 2021/2022.
Furthermore, he added that a possibility of naira devaluation in the parallel market and increased demand pressure for commodities in the country would push up the price of commodities during the period.
What they say
Speaking at the launch of the report, Oluwafunto Olasemo, Vice President of Financial Markets at AFEX, explained that the main objective of the report is to fill the data gap in the commodity sector in Africa and provide solid market information to key players in the commodity value chain. .
Notably, the report highlighted the fact that the Nigerian agricultural sector grew by an average of 1.60% in the first three quarters of the year, but the expansion was lower than the 1.72% recorded in 2020.
In his outlook for the year 2022, however, he said the new Omicron variant will have negligible impact on Nigeria’s commodity supply chain, also pointing to the fact that commodity prices have started the current season at a higher minimum base price than the previous season. , due to increased demand that exceeded supply levels.
Similarly, the report shows that the depreciation of the naira against the US dollar and the French CFA has increased the demand for most commodities, especially sorghum, which will help boost export products, including cocoa, sesame, ginger and cashew nuts.
Commenting on the report, David Ibidapo, senior research analyst at AFEX, said that in 2022 there will be a recovery in some of these commodities, driven by increased demand and also a relatively bleak outlook for the market. exchange rates, coupled with increased cross-border trade in the country putting pressure on the currently available supply of these commodities.
He said, “In the global space in particular, the first quarter for me would be the Russian-Ukrainian crisis, which, if it worsens, would have an effect on energy prices and fertilizer prices and ultimately on prices inputs and the cost of inputs and production this year. I think it’s an upward trend in commodity prices.
“For investors, we believe this is one of the best times to enter the market. We believe the commodity market offers a safe entry for currency valuation and there is a strong correlation in this state and that commodities also have a hedge against inflation, as we have seen over the last two or three years.
What you need to know about AFEX
On track to impact one million producers; providing productivity and value capture services and access to finance and markets, AFEX, since its inception in 2014, claims to have developed and deployed a commodity trading model for the West African market.
Its infrastructure and platform investments are unlocking capital to fuel an economy of trust in African commodity markets while fostering financial inclusion for rural communities, developing technologies for data collection and market access, and enabling the deployment of capital.