Economy
Global Food Prices Jump 11th Consecutive Month in April
By Adedapo Adesanya
The prices of food commodity globally rose for the 11th consecutive month in April 2021, led by sugar, oil, and meat, the Food and Agriculture Organisation of the United Nations (FAO) has said.
The FAO said this in its Food Price Index report released on Thursday. The index tracks international prices of most commonly traded food commodities.
The FAO Food Price Index averaged 120.9 points in April, 1.7 per cent higher than March 2021 and 30.8 per cent higher than the same period of last year.
“The increase marked the 11th conservative monthly rise in the value of the FAO Food Price Index to its highest level since May 2014.
“And in nominal terms is 12 per cent below its all-time peak in February 2011,” it said.
The FAO Sugar Price Index increased 39 per cent from March and reached levels nearly 60 per cent above those registered in the corresponding month last year.
“The April rebound in international sugar price quotations was prompted by strong buying amid heightened concerns over tighter global supplies in 2020/21, due to the slow harvest progress in Brazil and frost damage in France.
“Further support was provided by the strengthening of the Brazilian Real against the US Dollar, which tends to affect shipments from Brazil, the world’s largest sugar exporter.
According to the report, the FAO Vegetable Oil Price Index averaged 162.0 points in April, up 1.8 per cent month-on-month, driven by rising soy, rapeseed and palm oil quotations more than offsetting lower sunflower oil values.
“International palm oil prices continued to rise in April on concerns over slower-than-expected production growth in major exporting countries.
“Soy and rapeseed oil values climbed further too, underpinned by respectively, firm global demand, including from biodiesel producers and protracted global supply tightness.
“By contrast, international prices of sunflower oil contracted moderately on-demand rationing,” it said.
In the report, the FAO Meat Price Index averaged 101.8 points in April, up 1.7 per cent from the slightly revised value for March, marking a seventh consecutive monthly increase and raising the index by 5.1 per cent above the corresponding month last year.
“In April, bovine and ovine meat quotations rose, underpinned by solid demand from East Asia, amidst tight supplies from Oceania due to ongoing herd rebuilding and low inventories.
“Elevated internal sales in some producing regions also supported bovine and ovine meat prices.
“Pig meat quotations firmed on continued high purchases by East Asia, despite increased overall shipments from the European Union, while Germany continued with no access to the Chinese market over African swine fever concerns.
“Meanwhile, poultry meat prices remained steady, reflecting generally balanced global markets,” the report said.
The report said the FAO Cereal Price Index averaged 125.1 points in April, up 1.2 per cent from March, resuming its climb after a short-lived one-month respite in March, and stood 26 per cent above its April 2020 level.
“Maize prices rose 5.7 per cent in April.
“With overall tightening maize supplies, on top of continued strong demand, maize prices stood 66.7 per cent above their values one year earlier and remain at their highest level since mid-2013.
“Among other coarse grains, international barley and sorghum prices continued to soften, falling 1.2 and 1.0 per cent in April but remained 26.8 and 86.5 per cent above their respective values in the corresponding month last year,” it said.
International wheat prices were generally steady in April, remaining over 17 per cent above their April 2020 values.
“By contrast, international rice prices decreased again in April, mainly reflecting currency movements and slow trading activities, with persistent logistical constraints and freight costs continuing to hinder fresh deals,” it said.
The report said the FAO Dairy Price Index averaged 118.9 points in April, up 1.2 per cent from March, rising for the eleventh consecutive month and lifting the index 24.1 per cent above its value a year ago.
“In April, butter quotations rose, underpinned by solid import demand from Asia, notwithstanding weaker internal demand in Europe.
“Skim milk powder prices increased due to high import demand from East Asia, induced partly by concerns over potential shipping delays amid limited spot supplies from Europe and Oceania.
“Cheese prices also increased due to high demand from Asia, amid lower-than-expected production in Europe and seasonally declining supplies from Oceania.
“By contrast, quotations for whole milk powder declined slightly, reflecting lower import demand for the available supplies, following significantly high volumes traded recently,” it said.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices gained more than 3 per cent on Friday, after comments by US President Donald Trump and Iran’s foreign minister further dented hopes of a deal.
Brent crude settled at $109.26 a barrel after chalking up $3.54 or 3.35 per cent, and the US West Texas Intermediate (WTI) finished at $105.42 a barrel, up $4.25 or 4.2 per cent. Over the week, Brent has climbed 7.84 per cent and WTI 10.48 per cent on uncertainty over the shaky ceasefire in the Iran war.
President Trump said he was running out of patience with Iran and has agreed with Chinese President Xi Jinping that the Middle East nation cannot be allowed to have a nuclear weapon and must reopen the Strait of Hormuz, which is the waterway where about a fifth of the world’s oil and liquefied natural gas normally passes.
On his part, Iran’s Foreign Minister Abbas Araqchi said on Friday that it does not trust the US and is interested in negotiating only if the US is serious, adding that Iran is prepared to go back to fighting but also prepared for diplomatic solutions.
On the US-China front, while the Chinese President did not directly make a comment on Iran, a statement from the foreign ministry spoke out against the conflict.
Among the deals the market was looking for from the US-China summit, President Trump said China wants to buy oil from the US, also saying he could lift sanctions on Chinese companies that buy Iranian oil.
Iran’s Revolutionary Guards said 30 vessels had crossed the strait between Wednesday evening and Thursday, far from 140 a day that was typical before the war. Two of the 30 vessels that reportedly cleared the Strait of Hormuz earlier this week were tankers, one en route to Japan and the other headed to China.
A prolonged closure of the Strait of Hormuz points toward tighter physical markets, potential refined product shortages, and upward pressure on prices in the coming weeks and months.
Even though the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced production increases in recent weeks, traders saw little immediate benefit because many barrels still cannot move efficiently through the Gulf region.
By Adedapo Adesanya
Nigeria received its first credit rating upgrade since 2012 from S&P Global Ratings, driven by improved oil market conditions and the country’s growing ability to refine and export crude locally.
The credit ratings agency upgraded the country’s rating by one notch to B, five levels below investment grade, according to a statement on Friday.
It raised its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B-‘ and affirmed its ‘B’ short-term ratings. It also raised its long- and short-term Nigeria national scale ratings on the sovereign to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’.
S&P also cited Nigeria’s decision to liberalise the exchange rate as crucial to the development, and changed the outlook to stable.
The decision also comes as the federal government ruled out the reintroduction of subsidies on refined petroleum products, in order to avoid a return to larger budgetary deficits and drains on foreign currency (FX) liquidity.
S&P projected the general government deficit will widen to over 4 per cent of GDP on average during 2026 and 2027, a year of a general election.
It added that the implementation of reforms to broaden the tax base from very narrow levels is underpinning a steady decline in Nigeria’s debt-to-revenue ratio to 338 per cent in 2026 versus 500 per cent in 2023.
The agency said it could raise ratings over the next two years if fiscal outcomes improve significantly, either due to fiscal consolidation or structurally higher revenue, resulting in lower debt service costs.
It, however, warned that it could also lower the ratings if the implementation of Nigeria’s reform programme, particularly the series of critical steps taken to liberalise the exchange rate in 2023, reverses.
On the oil production forecast, S&P expects 2026 production to average approximately 1.66 million barrels per day, including condensates.
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