Why commodity prices will rise in 2024 – Report

AFEX, a leading commodity player in Africa, presented its 2024 outlook, predicting a further rise in prices of commodities during a hybrid event hosted at its Lagos office.

The annual report analyses critical socioeconomic factors shaping global and Nigerian commodity markets, addressing challenges, opportunities and providing forecasts that could influence pricing and volumes for the year.

Globally, commodities faced turbulence from energy scarcity, geopolitical tensions and financial crises, resulting in a 24 per cent decline from 2022.

In Nigeria, the commodities market grappled with inflation and economic reforms, leading to a sharp decline in growth during the first three quarters of 2023.

The report noted that maize exhibited the highest volatility, reaching a peak price of N550,000/mt by Q3’s end and closing the year at N480,000/mt due to decreased input usage following the Russia-Ukraine crisis impacting fertiliser prices.

Predictions for the 2024 global commodity prices suggest a downward trend influenced by improved supplies and the expiration of certain trade policies.

However, the direction of this trend is susceptible to various factors, including geopolitical events, the report noted.

But on the other hand, domestic commodity prices are expected to rise consistently in 2024, with key export commodities like cocoa and sorghum projected to rise by 50 per cent and 20 per cent respectively.

Speaking at the event, Vice President of the Financial Markets, Oluwafunto Olasemo, highlighted the complexity of geopolitical, economic and environmental factors in 2024, urging continual monitoring and strategic adaptation.

Olasemo stressed the need to enhance domestic agricultural production, streamline trade policies and establish strategic reserves for food security.

She noted that mechanisation would increase agricultural output, but that the challenge of accessible lands and equipment needed to be surmounted by the government.

She said, “Land is a very difficult area to address because most of the farmlands owned by these small holder farmers are ancestral lands and there is also insecurity.

“In the short to medium-term, the volume produced by the small holder farmers would continue to be what would drive activities on the commodity space overtime if we get the mechanisation right, then it would be adopted across the entire ecosystem.”

The report advocated a boost in agricultural productivity by adopting sustainable farming practices such as diversified crop rotation to optimise soil capacity and increase income for farmers.