Increase in Supply Crashes Price of Paddy Rice by 16.9%

By Ashemiriogwa Emmanuel

The price of paddy rice in the open market declined week-on-week by 16.9 per cent to N17,573 last week from N21,161 per contract of the preceding week.

Data on the AFEX showed that the drop in the price of the product was as a result of an increase in the supply end due to new harvest.

Similarly, the exchange-traded price of the commodity dropped by 5.15 per cent to N22,000 in the period under review from N23,195 recorded in the previous week.

Being an increasingly important crop in Nigeria and a major staple in many parts of the world, rice is a relatively easy crop to produce and is grown mainly for sale to processors.

The commodity is grown in paddies or on upland fields, depending on the requirements of the variety as some are being considered traditional varieties and other foreign varieties being introduced across the country over the years.

The same story played out for maize as the cost of the grain dropped by 5.2 per cent to N22,518 per contract in the open market from the previous N23,764.

AFEX, in the weekly report, projected that the prices of grain commodities in the open market will maintain a slow but downward trend towards the full harvest period. This will be a result of trends seen with the downward movement of food inflation in the country.

According to the National Bureau of Statistics (NBS), food inflation slowed by 0.86 per cent month-on-month in July, hitting the lowest point since February 2019. This is reflective of the current price declines recorded in the open market as harvest season nears.

This, of course, will be due to the supply of new commodities, especially maize, into the market.

The agribusiness firm said its total contracts reduced by 65.35 per cent week-on-week as there were 2,216 executed trades compared to the 6,395 successful trades at the preceding week.

The AFEX Commodities Index (ACI) declined by 0.6 per cent against a flat performance witnessed on the AFEX Export Index (AEI) for the second consecutive week.

Also, the Standard & Poor’s Goldman Sachs Commodity Index (S&P GSCI) Agriculture declined by 2.1 per cent week-on-week.

Season-to-Date, the ACI outperformed the S&P GSCI Agriculture Index. However, the AEI underperformed when compared to both indexes.