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Nigeria Drops to Seventh Position as Cocoa Producer

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Cocoa farm

Nigeria has dropped to the seventh position from fourth as a top cocoa producer in the world, according to data made available by the International Cocoa Organisation.

The President, Cocoa Association of Nigeria, Mr. Sayina Riman, said the review of the rankings was made by the ICO based on the country’s 2015/2016 production projection of 190,000 metric tonnes.

“Nigeria has fallen from four to seven. It is shocking to us. The ranking was announced to us at a meeting that our 2015/2016 production figure leaves us at 190,000 metric tonnes,” he said.

According to the ICCO statistics, Nigeria occupied the fourth position in the 2013/2014 season based on its estimated production output of 230,000 metric tonnes after Côte d’Ivoire, Ghana and Indonesia.

Riman, who said that the 2015/2016 season yielded about 275,000 metric tonnes for the country, expressed optimism that the new planting season would yield between 280,000 metric tonnes and 300,000 metric tonnes provided that the production factors were favourable.

The output of 275,000 metric tonnes fetched the country about $792m in that period based on the ICCO daily price of $2,878.55 per tonne of cocoa beans on September 15, 2016.

This shows that cocoa production rose by 17 per cent from 235,000 metric tonnes in the 2014/2015 planting season to 275,000 metric tonnes in the 2015/2016 season.

The production of individual countries, according to the ICCO, is based on cocoa beans purchased or reaching the ports of the countries concerned and consequently, may differ from the harvested crop.

Riman, however, explained that many exporters were avoiding the ports and were smuggling cocoa beans out of the country, because they were discouraged by the earnings from the commodity, which had been restricted to N305 to $1 adopted as the interbank rate.

According to him, it is not profitable for exporters because the export business is done with loans at 29 per interest rate.

He explained, “Last year, the drought adversely affected our cocoa output and secondly, the monetary policy affected us. We have the limitations of not having free access to our proceeds as they come and some cocoa beans are now being smuggled to other countries so that exporters can have their proceeds there.

“What the CBN is doing, which is not acceptable to the export commodity sector, is that they still want us to change the export proceeds at the interbank rate. The parallel market rate is N420 to the dollar, while the interbank rate is N320.

“Who takes the N100 difference? We understand the system perfectly well that some people may be round-tripping the money. We are borrowing money at 29 per cent interest rate and you are still asking people, without providing any form of incentive, to bring their money and sell at the interbank rate. This is affecting the commodity sector.”

The CAN president stressed, “It is a boost to the economy if they allow us unfettered access to our proceeds. During former President Olusegun Obasanjo’s regime, we found out that our export proceeds through the agricultural sector were about $770m but that was shared because of the monetary policy of the CBN then. We went to the President and they gave us unfettered access. And when that was done, incentives were also added. The proceeds rose from $770m to $12bn.”

Nigeria’s cocoa performance in the global market in the past years had been hampered by dry weather, scanty rainfall as well as old and worn trees.

The Federal Government, during the last administration, targeted a yearly increase that would raise production to around 700,000 metric tonnes in 2016 and one million metric tonnes by 2020.

As such, farmers were provided with early-maturing, high-yielding and disease-resistant beans that mature in about 18 months to replace seedlings with four to five years’ maturity rate.

“We have distributed more than 140 million seedlings of high-yielding cocoa varieties to recapitalise the cocoa plantations, because they are old. That will give us a yield of almost five times. By 2020, Nigeria should be certainly in the one million metric tonnes cocoa production club,” the immediate past Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, had said in 2014.

The Chief Executive Officer, Nigerian Export Promotion Council, Mr. Segun Awolowo, last year said that a drop in cocoa production would adversely affect the target to increase yield.

“We need to scale up production; the idea is to surpass Ivory Coast and Ghana. Ghana is already at 700,000 metric tonnes, and we are still hovering around 240,000 metric tonnes, but the idea was to get to 500,000 metric tonnes in the next few years,” he said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Oil Gains Slightly on Thursday as China Eases COVID-19 Measures

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Oil prices rebound on Thursday following China’s announcement that it was easing COVID-19 measures imposed to curb the spread of the virus.

China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.

Brent crude rose 27 cents, or 0.4%, to $77.44 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 49 cents, or 0.7%, to $72.50.

“Today, we do see some green price action,” said Naeem Aslam, analyst at Avatrade. “Prices are oversold due to the intense sell-off for the past few days. However, the price action still doesn’t show a strong bullish bias.”

The 14-day relative strength index for Brent was below 30 on Thursday according to Eikon data, a level taken by technical analysts as indicating an asset is oversold and could be poised for a rebound.

Both Brent and U.S. crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new the restrictions on Dec. 5 aimed at Russian oil exports.

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Wind Out of the Sails

UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets are making small losses on Tuesday, while US futures are relatively unchanged ahead of the open.

The recovery rally has lost momentum in recent sessions which is understandable after that jobs report. That’s not to say optimism can’t and won’t return but that wages component was a huge body blow. Investors are a little winded and it may just take a little time to get their breath back.

The PPI data on Friday could offer a helping hand on that front but even then, it will be hard to ease the concern Fed policymakers will undoubtedly have about the pace of wage growth, consumer resilience and the still large savings buffer. None of this aligns with a swift and relatively pain-free return to 2% inflation.

RBA maintains flexible approach

The key takeaway from the RBA meeting today was flexibility. There is no pre-set path and while policymakers expect to need to raise rates at upcoming meetings, the data will dictate if so and by how much. That doesn’t help investors gage exactly what we can expect from the central bank but in such uncertain times, that makes a lot of sense. And you can see that reflected in the interest rate probabilities for the first quarter of next year. As it stands, no change or 25 basis points in February is a coin toss, while 3.35% in March (25bps above the current rate) is seen as being 50% likely with 25bps either side around 25% each. Clearly the RBAs communication strategy is going to plan.

Households feeling the squeeze this festive season

It will come as a surprise to no one that UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase. With inflation running at 11.1%, spending is falling well behind, as is the case with wages, which suggests people are buying less and being more selective with what they do this festive season. Again, what can you expect when the economy is probably already in recession amid a terrible cost-of-living crisis that hurts those worst off most. The road to recovery for the UK is going to be long and painful, it seems.

The only guarantee for oil markets

It’s been a volatile start to the week in oil markets, continuing in much the same way we ended last, with traders still working through the announcements from the G7 and OPEC+, as well as the latest Covid moves from China. In many way, none of the above improve visibility in the crude oil space; they arguably actually make the outlook more uncertain.

But the intial response to the above has seemingly been negative for crude prices, with the loosening of Chinese Covid curbs not enough to offset the $60 price cap and unchanged OPEC+ decision. The cap is probably viewed as a business as usual for now, with Russia reportedly selling below these levels already and improving its ability to get around the sanctions. Which means output remains broadly steady.

The move from OPEC+ was probably driven by the lack of visibility on China and Russia but as the group has warned in the past, should prices fall too far and the market become imbalanced, it won’t wait until the next scheduled meeting to respond. It seems that the only thing guaranteed in the oil market for now is volatility.

Gold paring losses

The dollar recovered strongly on Monday as trade became increasingly risk-averse, hitting gold and forcing it back below $1,800 where it briefly traded above. It’s attempting to pare those losses today, up around half a percent on the day but it may struggle in the short-term. It’s been an incredible recovery until now but Friday was a massive setback. We now have to wait for PPI on Friday for some good news, with Fed policymakers in the blackout period ahead of the final meeting of the year, next week.

Stabilising?

The risk-reversal trade on Monday took the wind out of bitcoins sails, not that it would have taken much in the circumstances. It’s trading back around $17,000 where it has spent most of the last week, which the community will probably be relieved about. Anticipating what’s going to come next for cryptos feels incredibly difficult and dependent on the ongoing fallout from FTX. To reiterate what I’ve said recently, silence is bliss.

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A Nervy Start to the Week

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower.

The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock markets higher into year-end. Perhaps it’s not quite so dramatic but it was a real setback, something we should be used to by now.

The wages component was the killer blow. That was not just a beat, it obliterated expectations and came in double the forecasted number. It may be a blip, but it’s a huge one and it will almost certainly take more than one much cooler report in January to comfort those that still fear inflation becoming entrenched.

That’s ultimately where we’re now up to in the inflation story. Many accept that base effects and lower energy prices will drive the headline inflation figure much lower next year, among other things, while a slower economy – maybe recession – will eventually hit demand and contribute to the decline. But what the Fed fears now is fighting entrenched inflation and these wage numbers won’t make for comfortable reading.

An economic victory for China amid gloomy PMIs

Chinese stocks were the clear outperformer overnight as authorities continued to work towards a softening of the country’s zero-Covid stance with the end goal seemingly being the end of it altogether. It’s thought that it will be downgraded to category B management as early as next month with officials claiming it’s less threatening than previous strains, a huge move away from the rhetoric and approach of the last few years.

This came as the Caixin services PMI slipped to 46.7, much lower than anticipated. That said, I’m not sure anyone will be shocked given the record Covid surge, but the more targeted – albeit seemingly confused – approach being taken has ensured less disruption, as evidenced by how much better the PMI has performed compared with earlier this year.

And it’s not just China that’s seeing surveys underperforming and, in many cases, putting in sub-50 readings. Europe is either already in recession or heading for it and the surveys highlight just how pessimistic firms are despite the winter getting off to a warmer start.

Japan is among the few recording a growth reading, although having slipped from 53.2 in October to 50.3 last month, you have to wonder for how long. Input prices are punishing firms, with some now raising prices in order to pass those higher costs on. That won’t help activity or convince the BoJ to declare victory, as higher energy and food costs are also hitting domestic demand. The one major outlier is India where the services PMI accelerated higher to 56.4 buoyed by domestic and external demand. An impressive feat in this global environment.

Oil higher as China looks to ease Covid restrictions

Oil prices are higher on Monday, rallying 2%, after the G7 imposed a $60 price cap on Russian oil and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.

From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective. The decision to leave output unchanged was probably the right one for now and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.

A major setback

It goes without saying that the jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.

But the yellow metal did recover those jobs report losses and even hit a new four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and simply doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold and a corrective move of some kind may be on the cards.

Silence is bliss

Bitcoin continues to enjoy a mild relief rally and has even moved above $17,000 to trade at its highest level in almost a month. It’s probably too early to celebrate yet though as these are very cautious gains that could be quickly and easily wiped out by more negative headlines related to FTX. Silence is currently bliss for the crypto community.

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