The price of Nickel jumped by 111% to $101,365 a ton on Tuesday following a 66% increase in price in the previous trading session. The unprecedented jump in price forced London Metal Exchange (LME) to suspend trading in its nickel market in the early hours of Tuesday after several margin calls, Investors King understands.
In the last two trading sessions, the commodity gained 177% before paring gains to about $83,500 per ton. The jump in price was a result of traders’ pricing in supply disruption ahead of expected sanctions on Russian nickel supply.
“Commodity markets are increasingly pricing in a scenario under which a significant portion of Russian supply will be excluded from the market,” Morgan Stanley said in a note. “Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium.”
To put things in perspective, Nickel, used in making stainless steel and electric vehicle battery, has only gained $11,000 in the last 5 years before jumping more than $72,000 a ton this week alone.
“It’s going crazy — it’s not reflecting any industry fundamentals,” said Jiang Hang, head of trading at Yonggang Resources Co. The “LME trading system is out of control and requires intervention,” or the contagion may spill over to other metals, he said.
Nickel and other commodities like crude oil jumped in price as the U.S and European allies continued to increase sanctions impose on Russia to force the Eastern European nation to abandon its ongoing war with Ukraine, its former province.
These series of sanctions are expected to disrupt global supplies of commodities and increase price volatility as seen in crude oil and now Nickel.
The price of Brent crude oil rose above $130 a barrel on Monday and now nickel, an important component of several manufacturing products, jumped by over 110% on Tuesday.
Wheat Importation Costing Nigeria N2trn Annually: FMAN Laments
Members of the Flour Millers Association of Nigeria have decried about N2 trillion yearly losses incurred on the importation of wheat from Canada, the United States, Mexico and other countries.
FMAN made the disclosure at the 2022 edition of the annual Wheat Farmers Greenfield Day, organised by the association, on Tuesday, in one of the largest wheat farms in Zindi, Misau LGA of Bauchi State.
According to the National President of FMAN, Alhaji Salim A. Salim, wheat farmers in the country have not been able to meet up the demands, as Nigeria is one of the top consumers of the commodity. Calling for increased wheat farming, Salim stressed that the importation of wheat has a negative impact on Nigeria’s economic growth, costing the nation N2 trillion annually.
Salim advised that if Nigeria can get serious with wheat production, “we will save money and make our farmers wealthy. We need to concentrate on farming wheat to meet up with our local demand.”
Applauding the Central Bank of Nigeria’s agricultural initiative – Anchor Borrowers’ Programme, the FMAN president explained that the scheme aided in boosting wheat farming and production in 15 Northern states. He urged more farmers to key into the initiative and participate in the program to boost wheat production in the country, significantly reducing the level of importation.
Salim also assured the farmers that their products will be purchased directly by FMAN association members. He added that presently, there are 27 demonstration wheat farms in 7 Local Government Areas across Bauchi state.
Wheat is a popular commodity in Nigeria as an estimated 75 million food portions consumed daily in Nigerian homes are wheat derivatives. Food products such as semolina, bread, noodles, and pasta among others are produced from wheat flour. They form a regular part of meals in most urban and rural households across the country.
On his part, the state governor, Senator Bala Mohammed Abdulkadir, represented by the Commissioner of Agriculture and Rural Development, Tula Mbami commended the Anchor Borrowers’ Programme, funded by the CBN. While declaring the programme opened in Bauchi, Mohammed stated that if well implemented, the country will benefit from growth in food production and security, while imports will be reduced.
The governor said his administration is ready to support agricultural development, as it has invested much in the sector, through the procurement of improved seedlings, pesticides, chemicals and other farming implements. He advised the farmers to reciprocate the government’s efforts by committing to increasing wheat production.
He said, “Bauchi State has been in the forefront of wheat production over the years. We are ready to do that again as can be seen here in Zindi wheat farm.”
Nigerians Decry Rising Price of Food Items
As prices of commodities surge, Nigerians have expressed displeasure especially on the quantity of food items now sold at high prices.
Investors King reports from an online survey on the prices of food items in different regions of the country.
While residents in the west and east decried the prices of tomatoes, pepper, onions, egg, chicken and some other food items, they envied the northerners who according to them are enjoying these items in large quantities at cheaper rates.
Viewing the quantity of pepper and onions sold in Kano for N50, a dweller of the east exclaimed, “Wow! People dey enjoy for North. That Onions and Pepper go reach N400 for East. Things too cost here.”
A resident of Ogun state, showing the items she purchased at the market, lamented that she couldn’t get all the items on her list due to the increased prices.
She said a crate of eggs which was formerly N600 and N850 is currently sold for N1800. After bargaining on the price of a basket of tomatoes, she bought it for N1500 and 5kg of chicken for N8500.
“These are some of the things I got last Saturday from the market. The price of things continues to rise on a daily basis. I couldn’t get some of the things on my list because the money wasn’t enough to cover the rest of the other items. Life isn’t getting any easier,” she said.
A resident of Benin also aired his voice, saying a crate of eggs is now 1,850 while a basket of tomatoes goes for N1,000.
“Only God can help us out. Things are expensive especially foods and food materials and some Nigerians can not boast of making $5 per day. Our leaders are there enjoying themselves. To make things worse, ‘na Poor man pikin dem go still use for rituals.’ We need your help O Lord!” he said.
Meanwhile, a dweller of Magodo in Lagos State stated that the basket of tomatoes sold for N1500 in Ogun state cannot be sold less than N2500 in his area.
“I’m still hopeful that things will get better. Nigeria has been through worse and still survived. The major problem we have is lack of consistency,” one of them expressed hope.
Samed Olukoya, a Senior Analyst at Investors King, explained that some of the factors responsible for the continuous rise in the price of commodities are scarcity caused by farmers and herders crisis, government policies and transportation costs in conveying the goods to different locations.
In his words, “Rise in the prices of food items can be attributed to scarcity caused by farmers and herders crisis, bandit and other insecurity issues. For instance, most farmers can no longer cultivate on their farms or harvest because of kidnappers or killer herdsmen. The few that managed to do so are ready to part with it for a substantial amount.
“Also, the persistent increase in costs due to government policy is another factor pressuring the price of food items. Transportation cost to the city, cost of imported fertilizer, preservatives, etc have to be added to the price of a unit item.”
Speaking on the lower price of food items in the north, Olukoya said, “The North is known for its agriculture, hence the price disparity in food items between North and other parts of the country. It is also imperative to factor in the cost of transportation from the North to other regions, warehousing and prevalent insecurities that are preventing free movement of goods across the nation.”
Olukoya added that the situation is worsened by the nation’s weak wage growth, low household income and a high unemployment rate of 33.33 percent.
In his recommendation, he charged the government to ease rising prices of food items and address insecurity in the country as well as increase financial support for farmers.
Soybean Oil Prices to Rise by 4% in 2022 Over Increase in Demand for Biofuels
In 2022, global soybean oil prices, driven by an increase in the demand for biofuels, have been projected to rise by about 4 percent, to $1,425 per tonne; a market report from IndexBox reveals.
According to the IndexBox report, the growing demand for biofuels, especially in Asia, will increase the prices of soybean oil globally.
The platform put it that in 2021, the average annual soybean oil price rose by 65 percent year-on-year to $1,385 per tonne, from $838 per tonne. Strong demand and high freight rates in China, which is the world’s second-largest importer of soybean oil, resulted in the most rapid price growth of the commodity in the third quarter (Q3) of the same year. Weather-related disruptions to production in South America also caused soybean oil prices to rise fast.
In 2020, IndexBox estimates that soybean oil purchases in the foreign markets rose by 7.5% to 13 million tonnes, increasing for the second year in a row after three years of decline. In value terms, soybean oil imports have grown notably to $10.3 billion.
India was the highest importing country with a purchase volume of around 3.7 million tonnes, accounting for 28% of global supplies. China ranked second with a purchase volume of 963 thousand tonnes. Algeria (670 thousand tonnes) and Bangladesh (666 thousand tonnes) were ranked as the third and fourth major importing country.
The four countries altogether accounted for about 17% of total soybean oil imports. Coming behind as the fifth-highest importer is Morocco (547 thousand tonnes), followed by Mauritania (537 thousand tonnes), Peru (521 thousand tonnes), South Korea (390 thousand tonnes), Colombia (378 thousand tonnes), Venezuela (373 thousand tonnes), Egypt (243 thousand tonnes), Poland (229 thousand tonnes) and Nepal (215 thousand tonnes).
India in value terms ($3 billion) being the largest market for soybean oil imports in the world, accounted for 29 percent of global imports. The second position in the ranking was taken by China ($725 million) with a 7 percent share. North African country, Algeria came third with a share of 4.6 percent of the total value.
Top Soybean oil exporters
In 2020, Argentina was the major exporter of soybean oil (5.3 million tonnes), constituting 42% of total exports. The United States (1238 thousand tonnes), Brazil (1110 thousand tonnes), Paraguay (631 thousand tonnes), the Netherlands (615 thousand tonnes) and Russia (611 thousand tonnes) follow, altogether accounting for 33% of global supplies. Meanwhile, Spain (387 thousand tonnes), Bolivia (377 thousand tonnes), Ukraine (302 thousand tonnes), Turkey (208 thousand tonnes) and Germany (192 thousand tonnes) had relatively small shares in the total volume.
In value terms, Argentina remains the largest supplier of soybean oil in the world ($ 3.7 billion), which accounts for 39% of global exports. The United States ($ 979 million), with a share of 10% of the total supply is ranked second. Both countries are followed by Brazil with an 8% share.
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