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Govt to Blame for Suspension of Nigeria’s Beans by EU — Aiyegbusi

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Corn, Soybeans Decline As Favorable Weather May Boost U
  • Govt to Blame for Suspension of Nigeria’s Beans by EU

The Chairman/Chief Executive Officer, Olu Olu Group of Companies, a company operating in four continents, Mr. Olumuyiwa Aiyegbusi, in this interview with SUCCESS NWOGU, speaks on how to achieve national food security

How do you react to the extension of ban on Nigerian beans in the EU market?

It is very unfortunate. I remember that when the one year initial suspension was about to expire, the Executive Director/Chief Executive Officer of NEPC, Mr. Segun Awolowo, called to ask for my view and input having been a corn grower and established in the UK for over 30 years, putting my products on the shelf in the UK, the United States and Ireland. I told him that I would phone around and get back to him. It was when I called that I learnt that they had extended the ban for another three years. The reason they gave was not out of place. They said we had not done the needful in that one year to show them that we are serious that we are tackling the problem and therefore, they had to extend the suspension.

It was a sad development because I know how much beans I sell. You cannot blame the people. The government over there cares about its people because healthcare delivery in the UK is free. They call it social service. The position of their government is that if it can prevent people from being sick, that is cheaper than curing for sick people. So, their health and quarantine officers at the ports are very stringent in scrutinising containers and analysing them. Some beans from Nigerian contain very high milligrams of preservatives.  They will not accept that because it will kill their citizens. Therefore, I will not blame them. We can play with our healthcare here but the EU will not. Some people may say, ‘it does not matter; we have been eating it all the time and we have not died.’ Do you know so many people are dying and you do not know what is causing their deaths? There are many young people now having high blood pressure or diabetes.

What is the way out?

Let us do the needful; let us call a stakeholders’ meeting. Let all concerned know about all these things. If some experts in Nigeria come in, let them teach farmers. There are ways we can preserve beans without using too much pesticide. It is being practised in Kenya and South Africa. It seems we do not borrow knowledge into our system.

What is the quality of Nigerian food in the international market?

I can only talk about the quality of the products that I operate. We have durability and reliability. So, quality is just the starting point. If you want to enter the international market, you cannot joke with quality. You cannot joke with traceability, where you can trace the product back to the source.

You operate in four continents; what is it doing business in Nigeria?

It is not easy doing business in Nigeria. Should we start from the fact that a young person cannot get a start-up capital from banks if he does not have a history or collateral? Finance anywhere is always difficult for a starter, even if you are well-established. There are some infrastructural facilities that are not in place. Electricity is taken for granted in Europe, China, South America and the United States. So, a competitor there doing the same thing you are doing here has an edge over you.

Here you look for generator. So, you are spending a big amount of money for diesel or petrol, between N5m and N15m; and they may say you need your own transformer. I have never heard anybody in my industrial estate in London talk about a transformer. Here, people will say you need a transformer, which may cost about N1.5m. Then, you need to drill your own borehole; provide your security; God help you if you are bringing your raw materials from Lagos to Kwara or Benue, with the number of police checkpoints on the road. This is where costs increase. It is not easy to be a manufacturer in Nigeria. In fact, we should give kudos to the manufacturers because it is easier to be a seller in Nigeria.

How is the economic recession affecting business in Nigeria?

It is three or four times more difficult doing business in Nigeria than in other (developed) countries. First, the banks do not have enough liquidity anymore to give out loans as they used to give. In other words, they are stringent in the evaluation of loan application.

I know that the Bank of Industry is trying to encourage entrepreneurs to take up loans but I am sure there are other grants in place (like for women and others) that could be made easily accessible to the applicants. They could be channelled through the banks. If a bank wants to give you a loan, you may have to have some big persons to influence it. Secondly, the purchasing power of an average Nigerian is twice poorer compared to two years ago. So, if you produce something that is too expensive, you will just be looking at it on your shelf. People are looking for things that they can manage to buy and eat; you have to be smarter in what you are producing. So, it is three or four times more difficult surviving in business in Nigeria than in other places.

You find some airlines folding up and some reducing their flight schedules or even some foreign airlines not coming to Nigeria. But smart people will know that there are still some opportunities now. When things look bad, some people make more money. It may not be immediate. Some take advantage of this time to start something; and in few years when the economy becomes good, they are already established and they go ahead of their competitors.

Also, the fluctuation in the foreign exchange rate is affecting business. It has made things to become more expensive and the workers have little purchasing power from their income. The recession is biting hard but with ingenuity, manoeuvring and adjustment, people should position themselves and sooner or later, there will be light at the end of the tunnel.

So, what are the opportunities?

The opportunities are in the agriculture sector. People should now take advantage of this time to invest in agriculture-value chain. We are number two in fresh fruit production in the world but most of the produce is wasted. For instance, when Nigerians want to go to harvest vegetable, it is in the afternoon. This is the wrong time to harvest because when you are harvesting in the afternoon, in the heat of the sun, the sun is already taking water from the vegetable and you carry it on your head. They do not do that in Kenya or Uganda. They go to the farm around 4pm, harvest around 6pm and by 8pm, the produce is at the processing centre where they will process it, wash and package it. And by 11pm, it is at the airport and you see it landing in London at about 5.30am. So at 6am, it is in the market and still fresh. But here, we insist on doing it the old way. We can never grow like that. We are cheating ourselves.

Is it true that Nigeria’s post-harvest losses have negatively impacted on its quest for food security and increased exports?

It is very true. This area of agricultural value has been of great concern for me for the last 10 years. I am passionate about the need to minimise these losses. The food import of Nigeria annually is estimated to be close to N9tn. These food items include those things we grow such as rice and palm oil, which we were the major producers in the 1960s. Malaysia bought palm seedlings from Nigeria and grew them. Now, they are exporting palm oil to us. Can you imagine that places like Shoprite and other spa would not buy Nigerian-grown pawpaw, mango or even banana? They prefer to buy banana from Cameroun or import pawpaw from Uganda or South Africa; but we grow all these things.

Nigeria is number one in terms of ranking in cassava production in the world; Nigeria is number one producer of yam in the world. Nigeria is number four in production of fresh vegetables. In fruits, we are number two. So, why do we have to import banana, mango to Nigeria? The reason is: even though we produce so much and expect that there should be sufficiency and excess to process for export, our post-harvest practices are old fashioned. There is no way a nation can grow like that. It pains me so much. You hear every government department or agency talks on the need to produce more food but we are wasting the ones that we are producing. It is high time we addressed the losses. I have nothing against production but if we are wasting so much of the things we are producing now, then if we produce more, chances are that we will waste more.

My estimate of our post-harvest losses of the six items that I have mentioned, which we are major global leader, will be over N1tn annually. This does not even include other items. I can say that the post-harvest losses in Nigeria are over N2tn.

What is the way out?

We need to address the fact that the farmer’s primary assignment is to grow. It is not their duty to preserve. There should be off-takers. The farmer that produces yam in Zaki-Biam, for instance, should not be the one that brings it from Zaki-Biam to Lagos or from Paiko in Niger to Lagos. There should be off-takers.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Oil Prices Drop 3 Percent on Tuesday After Moderna’s CEO Comment

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Oil prices - Investors King

Oil prices tumbled more than 3% on Tuesday after Moderna’s CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant, spooking financial markets and adding to worries about oil demand.

The head of drugmaker Moderna told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the Omicron variant of the coronavirus as they have been against the Delta variant.

Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel at 0912 GMT after slipping to an intraday low of $70.52, the lowest since Sept. 1.

U.S. West Texas Intermediate (WTI) crude futures fell $2.15, or 3.1%, to $67.80 a barrel, off a session low of $67.06, the weakest since Aug. 26.

Fed Chairman Jerome Powell will also tell U.S. lawmakers later in the day the variant could imperil economic recovery, prepared remarks show.

“The economic impact is driven by fear, and by the policy response… Fear is impacting travel. There are outright bans. But also the fear of being stranded which causes travel plans to alter,” Paul Donovan from UBS said in a note.

Oil plunged around 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global oil demand. It is still unclear how severe the new variant is.

With a weakening demand outlook , expectations are growing that the Organization of the Petroleum Exporting countries, Russia and their allies, together called OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) to supply in January.

“We think the group will lean towards pausing output hikes in light of the Omicron variant and the oil stockpile release by major oil consumers,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

Pressure was already growing within OPEC+, due to meet on Dec. 2, to reconsider its supply plan after last week’s release of emergency crude reserves by the United States and other major oil-consuming nations to address soaring prices.

“Following the global strategic reserve releases and the announcement of dozens of countries restricting travel… OPEC and its allies can easily justify an output halt or even a slight cut,” OANDA analyst Edward Moya said in a note.

Still, Citi analysts expect OPEC+ to continue to add more barrels in January.

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Omicron Worries Subside, Solid US Data, Oil Rebounds, Gold Softer, Bitcoin Rises

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Gold and Bitcoin - Investors King

By Edward Moya

Financial markets have been on a rollercoaster ride since the middle of last week.  We wanted to believe we were getting close to the end of COVID, but the latest jitters from Omicron variant signaled the inevitable COVID winter surge might already be here. Omicron is the latest COVID test for the economic outlook and we won’t have a clear picture until a couple more weeks. Friday’s turmoil looked a lot worse given the lack of liquidity, options volatility and overall frothy levels for equities.

US stocks are rebounding as optimism grows that the Omicron variant is a cause for concern, but not a ’cause for panic’ and could potentially be the catalyst needed to get more of the country vaccinated. Investors will learn over the next couple of weeks if the Omicron variant causes more severe disease than the other variants. So far the MRNA vaccines have proved effective against other variants such as delta and optimism is that even they will eventually need to get tweaked that could be done in a few months time.

Risk appetite got a boost from both the Pfizer CEO and President Biden calmed markets nerves that we won’t go back to the darkest days of the pandemic.  The Pfizer CEO Bourla said he thinks the data will ultimately show the current vaccine will protect less against Omicron but will likely still offer some protection.  President Biden said the US won’t need shutdowns to curb the Omicron variant.

US Data

Pending home sales unexpectedly surged in October as rents skyrocketed and buyers were highly motivated as borrowing costs seem poised to increase steadily as the Fed positions itself to raise rates. US pending homes sales increased by 7.5% from a month earlier, which was a 10-month high.

The Dallas Fed Manufacturing Survey came in slightly below expectations, but still showed manufacturing activity is healthy and the outlook has dramatically improved. The index for general activity came in at 11.8, a miss of the 17.0 consensus estimate and drop from the 14.6 reading in October.  The six-month outlook almost doubled to 28.6, while the raw materials price index hit a series high.

Oil

Oil prices rebounded for two key reasons: the Omicron variant seemed like it would most likely be short-term disruptive to the crude demand outlook and on growing expectations that OPEC+ will refrain from increasing production by 400,000 bpd.

The Chairman of the South African Ministerial Advisory Committee on Vaccines noted that the cases so far had all been mild, mild -to- moderate which was a good sign. As long as South Africa does not see a massive uptick in hospitalizations, optimism will grow that this new variant won’t lead to a wrath closing of borders.  Highly vaccinated countries will continue to thrive and political pressure will grow to get those countries with low vaccination rates more supplies.

OPEC+ pushed their meetings to better assess the impact of the Omicron variant, which will most likely be followed by a delay in delivering an extra 400,000 barrels a day in January. Following the global strategic reserve releases and the announcement of dozens of countries restricting travel to and from South Africa and neighboring nations, OPEC and its allies can easily justify an output halt or even a slight cut in production.

Crude prices gave back some its gains after US State Department advisor reminded traders the US could release more oil.

Gold

Gold prices remained heavy as Omicron panic eased, the dollar rally returned, and after another round of strong US economic data. Wall Street is quickly shaking off last week’s de-risking theme that triggered safe-haven demand for bullion. President Biden said economic lockdowns in response to the Omicron variant are off the table, which means gold could be in trouble if this latest variant mostly yields longer supply chain issues that might fuel the ‘inflation is persistent’ argument. If supply chain issues deteriorate even further, that could lead to faster tapering and quicker rate hikes by the Fed.

Cryptos

Cryptocurrencies are rebounding after last week’s widespread panic-selling from the Omicron variant blew past many stops. The crypto selloff was an overreaction and buyers are quickly reemerging as traders reassess the impact of a new coronavirus variant. Bitcoin is a part of today’s broad risk rally that stemmed from easing COVID fears but will likely struggle to completely get its groove back until vaccine efficacy results in the coming weeks confirm highly vaccinated countries are going back to lockdown mode.

Bitcoin rose 3.5% to $58,284, which makes the year-to-date gain at 101%. Ethereum is back above $4400 and is almost 500% higher this year. The top two cryptos seem like they may consolidate here, but if the Fed accelerates their taper plans and prospects of rate hikes grow, a return to record highs seen earlier in November will be hard to do.

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V For Volatility

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Nigerian Exchange Limited - Investors King

By Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA

The buy-the-dip mafia was out in force yesterday, with a fair bit Friday’s Wall Street and European equity sell-off unwound, as well as Friday moves in bond, currencies and commodities and energy. Notably, it hasn’t been a complete reversal by any means, as the world settles into a choppy holding pattern, for clarity about just worried, or not, we should be about the new Covid-19 omicron variant.

President Biden attempted to sooth nerves overnight, but what really drove the retracement were anecdotal reports from the South African medical establishment suggesting that symptoms were milder than delta. Always ready to selectively edit the facts to fit the prevailing market sentiment, cases popping up in multiple locations around the world (they were probably there already), kneejerk travel bans on travellers from Southern Africa (there is no evidence it originated there, they just reported it first), and in the case of Japan, all foreigners, and WHO warnings that the new variant posed a “very high” risk, were mostly ignored by investors worldwide. The fact that markets haven’t completely unwound the Friday meltdowns at least suggests a modicum of caution remains.

To be fair, having been scared by delta, much of Asia is still in ultra-cautious mode, as their recovery was only just gathering steam with borders being tentatively reopened. And one can’t blame national governments for shooting first and asking questions later, after paying the price so badly for their delta complacency earlier this year. Whether that escalates into wider restrictions than a ban on travellers from Southern Africa also remains to be seen.

It will likely be a couple of weeks before the great and good of the global scientific community can make a definitive judgement on how serious the omicron variant is. That means December is likely to be choppy and driven by omicron headlines, and the heavyweight data calendar this week, will be rendered irrelevant. All that will matter is whether more restrictions are coming back around the world, and whether central banks, especially the Fed, hit the pause button on monetary tightening plans. I already know the answer to that one. The big winner this month will be volatility, we should see plenty of it. But with markets selling everything on negative omicron headlines and clasping at the most tenuous of straws to buy everything back on any perceived positive headlines, investors looking for thematic direction moves this month, are likely to be sorely disappointed.

Markets got nothing out of the stream of Fed speakers overnight, who seemed to be going out of their way to avoid thoughts on omicron-world monetary policy. We have had some heavyweight data from Asia today though, although as I have just mentioned, it has been largely ignored. South Korean and Japanese Industrial Production was released, with the YoY data outperforming, while the MoM prints disappointed. South Korea falling -3.0%, while Japan rose on 1.10%. Electronics continued to perform well, but automotive and transport suffered due to the semiconductor bugbear. A cynic might say that the recoveries in both countries are stalling, much like the recent data from China suggests.

Speaking of China, official Manufacturing and Non-Manufacturing PMIs were released for November this morning. Manufacturing PMI managed to recover marginally into expansionary territory, creeping up to 50.1. that follows a sharp rise in Industrial Profits over the weekend, with metals refining and energy, unsurprisingly, leading the way. The data suggests China isn’t out of the woods yet though, although you wouldn’t bet against them. Non-Manufacturing PMI held steady at 52.3, with Covid-19 restrictions potentially offset by Singles Day. The general PMI rose sharply from 50.8 to 52.2, and overall, the data suggests an improvement driven by an easing of China’s power crunch and a slight easing in lending criteria to the property sector. The data is steady, rather than spectacular, and I won’t e breaking out the champagne yet.

We have a raft of GDPs across the Eurozone, as well as Eurozone November Flash Inflation, and German Unemployment this after. In the US, we have the Case-Shiller Home Price data, ad well as CB Consumer Confidence and both Janet Yellen and Jerome Powell are testifying on The Hill I believe. Sadly, unless Mr Powell says the taper will stop if omicron is serious, all of this be ignored. V is for volatility, and there is only one story in town this week, and it is invisible to the human eye.

Wall Street rebound lifts Asian equities.

Asian equity markets mostly ignored the sharp rally in US index futures yesterday morning, but with the rally consolidating in OTC markets in the US and Europe overnight, Asia feels confident about dipping its toes in the water today, although the gains are not universal. On Wall Street, investors unwound much of Friday’s sell-off drama, and despite the tenuous reasoning behind the move, always respect momentum.

The S&P 500 rose 1.32%, the Nasdaq leapt 1.88% higher, while the Dow Jones turned in a respectable 0.65% gain. In Asia, the FOMO mafia have continued pushing index futures higher with Dow futures lifting by 0.25%, and S&P 500 and Nasdaq futures booking 0.10% gains.

After a stunning downside reversal late in the Tokyo session as the government banned entry to all foreigners, the Nikkei 225 is doing what it does best today, following the Nasdaq. Softer Industrial Production data has tempered the gains, but the Nikkei 225 is still 0.60% higher. However, South Korea’s Kospi is 1.05% lower after the government shelved plans to relax Covid-19 restrictions, highlighting once again, what is really driving markets right now. Meanwhile, Mainland China markets have edged higher, the Shanghai Composite and CSI 00 rising by just 0.15%. The casino sell-off persists in Hong Kong today, the latest sector in the Chinese government spotlight, leading the Hang Seng to shed 1.20%.

Across the region, Singapore is unchanged, unable to shake of PM Lee’s comments that Covid-19 freedoms could be rolled back if necessary. Kuala Lumpur though, has risen by 0.55% with Jakarta rising by 0.40% and Bangkok climbing 1.05% as investors build a tourism premium back in once again. Manila has fallen 1.0% while Taipei has rallied by 0.80%. Australian markets, never short of herd-like optimism, or a proclivity to slavishly follow Wall Street, have rallied strongly. The All Ordinaries is 1.10% higher, while the ASX 200 has risen by 0.80%.

European markets reclaimed some losses overnight, and the price action in Asia will likely inspire more buying initially. The same is likely on Wall Street as the pull of the FOMO remains irresistible. I would caution, however, that we are just one negative omicron headline from the whole rally everywhere, evaporating into thin air.

Currency markets remain much more cautious.

Currency markets were volatile overnight but notably, the recovery rally in the US Dollar ran out of steam. US yields rose only slightly after Friday’s sharp falls. The dollar index rose nearly 50 points to test 96.50 intraday but retreated to finish just 0.13% higher at 96.19. In Asia, the last of those gains have been unwound, the index falling 0.08% to 96.11. The index looks like to trade in a choppy 95.75 to 96.50 range over the next few sessions.

Notably, Euro, Sterling and Yen all fell slightly overnight while the Swiss Franc still managed to record gains, as did the Chinese Yuan and Canadian Dollar. EUR/USD is back to 1.1300, with GBP/USD at 1.3325, while USD/JPY is holding steady at 113.65. USD/JPY will find a recovery back above 114.00 challenging this week. AUD/USD and NZD/USD booked modest gains to 0.7145 and 0.6825 overnight, suggesting caution prevails in the G-10 space regarding omicron, and both antipodeans are only just holding above their 2021 lows still at 0.7100 and 0.6800.

USD/MXN and USD/ZAR fell sharply overnight, and that sees the US Dollar is moving lower across the board versus Asian currencies today, helped along by a fall by USD/CNY to 6.3715. USD/KRW, USD/MYR, USD/INR have fallen by 0.25% while USD/SGD and USD/THB are holding steady.

In the G-10 space, currencies appear to be reflecting some well-deserved caution towards omicron still, as usual, refusing to indulge in the mindless FOMO price action in the equity space. However, in the Asian regional space, local currencies appear to be pricing in the likelihood of a slower Fed taper, or even a halt to it thanks to the new variant. It is hard to argue with either thesis at the moment.

That suggests that a lower than expected Non-Farm Payrolls number on Friday is likely to see strength in the emerging space, rather than the DM space versus the US Dollar. And omicron will likely mute any strong dollar effects from a higher than 500k print on Friday. Like other asset classes, markets will be on tenterhooks for the latest omicron headlines across the news ticker.

Oil’s recovery hits an OPEC+ wall.

Oil managed to claw back some losses overnight, but the price action was far from impressive. Brent crude left higher initially, climbing over 5.0% intra-day, but gave back almost all those gains to finish just 0.74% higher at $73.40 a barrel overnight. WTI fared slightly better, closing 2.75% higher at $70.05 a barrel, and reclaiming its 200-day moving average. (DMA) In Asia, both contracts have added another 0.80% to $73.95 and $70.55.

Brent crude appears to have a higher beta to the OPEC+ meeting, logical given it is an international pricing benchmark, whereas WTI is very much US-centric. Overnight, Russia said that other members had not contacted it regarding halting production increases at the full OPEC+ meeting later this week, and that seems to have capped Brent’s recovery. Things move quickly in OPEC+ circles though and I remain of the opinion that the odds of a temporary halt to production increases is well above 50% now, especially with OPEC+ compliance already above 100%, suggesting limited swing capacity anyway.

That said, Friday’s lows still feel like the bargain of the year if you were an oil buyer, speculative or physical. Rather than second-guessing OPEC+, I am content to watch from the side-lines from here, as oil markets will be more vulnerable than most omicron headlines and violent swings in sentiment. Heightened volatile means that long or short, you P and L can still be nought.

The respective 200-DMAs at $72.70 and $70.00 a barrel should provide some support, if for no reason that a fall to those points will send the relative strength indexes (RSIs) into oversold territory. Above, some resistance should be found at $77.00, and $74.00 a barrel respectively.

Gold looks unimpressive.

Gold’s price action continues to underwhelm, as it finished the overnight session down 0.46% at $1785.00 an ounce, before eking out a 0.20% gain to $1788.50 an ounce in Asia. There are zero signs of any safe-haven bids emerging to shelter from virus volatility, and it is falling despite both US yields and the US Dollar also falling. Gold has now closed below its 50,100 and 200 DMAs clustered between $1791.00 and $1792.50 an ounce.

Gold will have resistance at $1800.00 and $1815.00 to start the week, while yesterday’s spike to $1770.00 an ounce, will provide initial support. In between, gold may find some friends around $1780.00. Failure of $1770.00 signals a retest of $1760.00 and $1740.00 an ounce. Friends are what gold needs to find quickly though, and I do not rule out a move lower to $1720.00 this week, especially if the Non-Farms puts the Fed taper back in the spotlight and we have a lull in virus headlines.

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