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Economy

World Food Prices Drop 20% From One Year Peak

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World food prices

By Adedapo Adesanya

World food prices have fallen for the 12th month in a row, now down 20 per cent from a one-year peak in March, according to the latest data from the Food and Agriculture Organisation (FAO).

The FAO Food Price Index (FFPI) averaged 126.9 points in March 2023, down 2.8 points (2.1 per cent) from February.

During the past 12 months since March 2022, the index has fallen by as much as 32.8 points (20.5 per cent).

The decline in the index in March was led by drops in the cereal, vegetable oil and dairy price indices, while those of sugar and meat increased.

The FAO Cereal Price Index averaged 138.6 points in March, down 8.2 points (5.6 per cent) from February and 31.6 points (18.6 per cent) below its one year ago.

This month’s decrease reflects a fall in international prices of all major cereals. International wheat prices fell the most, by 7.1 per cent, driven by ample global supplies and strong competition among exporters.

The extension of the Black Sea Grain Initiative, allowing Ukraine to continue to export from its Black Sea ports, also contributed to the decline.

Higher estimates for Australia’s production, along with improved crop conditions in the European Union this month, boosted the global supply outlook further. Strong competition from the Russian Federation, where high supplies continue to support competitive prices, also sustained the downward pressure on markets.

World maize prices also fell, by 4.6 per cent, in March, pressured by seasonal availability from harvests in South America, expectations of record output in Brazil, and the extension of the Black Sea Grain Initiative.

Among other coarse grains, world prices of barley and sorghum declined by 6.7 per cent and 5.7 per cent, respectively, influenced by spillover from weakness in international maize and wheat markets.

International rice prices eased by 3.2 per cent in March, weighed by ongoing or imminent harvests in major exporting countries, including India, Viet Nam and Thailand.

The FAO Vegetable Oil Price Index averaged 131.8 points in March, down 4.1 points (3.0 per cent) from February and standing as much as 47.7 per cent below its level a year ago.

The decrease in the index was the net result of lower soy, rapeseed and sunflower oil quotations more than offsetting higher world palm oil prices.

After falling for three consecutive months, international palm oil prices rebounded in March. Besides lower output levels in Southeast Asia due to unfavourable weather and floodings in some growing regions, palm oil prices received further support from limited global exportable supplies amid temporary export restrictions imposed by Indonesia.

By contrast, world soy oil prices continued to fall, following the trend of lower international soybean quotations. In the meantime, rapeseed and sunflower oil prices also kept declining, underpinned by, respectively, ample world supplies and subdued global import demand.

The FAO Dairy Price Index averaged 130.3 points in March, down 1.1 points (0.8 per cent) from February and standing 15.6 points (10.7 per cent) below its level in the corresponding month a year ago.

The decline in March was driven by lower price quotations for cheese and milk powders, while butter prices increased.

The decline in the international price quotations for cheese was underpinned by slower purchases by most leading importers in Asia amid increased export availabilities, including inventories, in leading exporters.

Milk powder prices fell for the ninth consecutive month, primarily reflecting sluggish import demand, especially for near-term deliveries, and seasonally rising milk production in Western Europe.

By contrast, butter prices increased due to solid import demand, especially from North and Southeast Asian countries, for supplies from Oceania, where seasonally falling milk production tracked slightly below trend levels.

The FAO Meat Price Index* averaged 113.0 points in March, slightly up (0.9 points and 0.8 per cent) from February but down 6.3 points (5.3 per cent) from one year ago.

In March, price quotations for bovine meat increased, influenced by rising internal prices in the United States of America, where cattle supply is expected to be lower in the months ahead.

Pig meat prices increased slightly, mainly due to higher prices in Europe on the continued supply limitations and increased pre-Easter demand.

By contrast, poultry meat prices fell for the ninth successive month on subdued global import demand, despite supply challenges amid widespread avian influenza outbreaks in several large exporting countries.

Ovine meat prices also averaged lower, reflecting a downward adjustment from the high prices registered in February, driven by increased pre-Easter demand and the impact of exchange rate movements.

The FAO Sugar Price Index averaged 127.0 points in March, up 1.8 points (1.5 per cent) from February, marking the second consecutive monthly increase and reaching its highest level since October 2016.

The increase in prices mostly resulted from concerns over lower global availabilities of sugar in the 2022/23 season, following declining production prospects in India, Thailand and China.

However, the positive outlook for the sugarcane crops in Brazil, about to be harvested, limited the upward pressure on world sugar prices.

The decline in international crude oil prices, encouraging greater use of sugarcane to produce sugar in Brazil, coupled with the weakening of the Brazilian Real against the United States Dollar, contributed to limiting the month-on-month increase in world sugar prices.

Despite the fall in the global price of food commodities, domestically, factors like inflation, weakening currencies, and other factors, including taxes and hikes in interest rates, are making them expensive.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Economy

Bitcoin, Ethereum, Others Plunge as US Sues Binance, Founder

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Bitcoin education

By Adedapo Adesanya

The cryptocurrency market is under fresh headwinds as the United States Securities and Exchange Commission (SEC) accused Binance and its Chief Executive Officer, Mr Changpeng Zhao, of mishandling customer funds, misleading investors and regulators, as well as breaking securities rules.

Bitcoin (BTC), Ethereum (ETH), and a host of other digital coins are now trading at their lowest in almost three months.

The US SEC complaint filed in a federal court in Washington, D.C., listed 13 charges against Binance, Mr Zhao, and the operator of its purportedly independent US exchange.

The agency laid out a range of alleged violations against the world’s biggest crypto exchange and its leader and warned that “The public should beware of investing any of their hard-earned assets with or on these unlawful platforms.”

The SEC alleged that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict US customers from its platform and misled investors about its market surveillance controls.

The SEC also claimed that Binance and its billionaire founder and one of the crypto industry’s highest-profile moguls, secretly controlled customers’ assets, allowing them to commingle and divert investor funds “as they please.”

Binance created separate US entities “as part of an elaborate scheme to evade U.S. federal securities laws,” the SEC also alleged, citing a number of practices first reported by Reuters in a series of investigations into the exchange published this year and in 2022.

From almost three years ago until June 2022, the SEC also alleged that a trading firm owned and controlled by Mr Zhao, Sigma Chain, engaged in so-called wash trading that artificially inflated the trading volume of crypto asset securities on the Binance.US platform. The SEC said Sigma Chain spent $11 million from an account on a yacht.

SEC Chair Gary Gensler said, “We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”

In a blog post, Binance, in its defence, said: “We intend to defend our platform vigorously,” adding that “because Binance is not a US exchange, the SEC’s actions are limited in reach.”

“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure,” the blog post said.

In the statement, Binance said it had “actively cooperated” with the SEC from the start and respectfully disagreed with the SEC’s allegations.

Binance said it had been trying to find a “reasonable resolution” with the SEC, but the agency “at the eleventh hour” issued new requests and went to court, adding the SEC’s actions appeared to be an effort to “claim jurisdictional ground from other regulators.”

As the events continue to unfold, the market is reacting negatively as BTC has lost over 4.1 per cent in the last 24 hours to trade at $25,721.67 while ETH has lost 3.00 per cent to $1,817.01 while Binance Coin (BNB), Binance’s token, has lost nearly 8 per cent of its value as it trades at $277.33.

Other tokens like Cardano (ADA), Solana (SOL), Litecon (LTC), Polygon (MATIC), and Dogecoin (DOGE) have also lost more than 6-7 per cent of their respective values.

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Economy

BUA Cement Gets $500m for Two New Production Lines

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BUA Cement

By Adedapo Adesanya

Nigeria’s second-largest cement producer, BUA Cement, has gotten a $500 million financing package from the International Finance Corporation (IFC) to develop two new production lines in Sokoto State.

In what is IFC’s largest-ever investment in northern Nigeria, the financing package, which saw input from African and European partners to BUA Cement Plc, will help the company part-finance and develop two new, energy-efficient cement production lines that will create up to 12,000 direct and indirect jobs.

The funding includes a $160.5 million loan from IFC’s account, a $94.5 million loan through the Managed Co-Lending Portfolio Program (MCPP), and $245 million in parallel loans from syndication partners; the African Development Bank (AfDB) – $100 million, the Africa Finance Corporation (AFC) – $100 million, and the German Investment Corporation, Deutsche Investitions- und Entwicklungsgesellschaft (DEG) – $45 million.

The financing was announced during the Africa CEO Forum in Abidjan, Cote d’Ivoire.

It was disclosed that the plants would run partly on alternative fuels derived from waste and solar power. Each will produce about three million tons of cement annually when complete, serving markets in Nigeria, Niger, and Burkina Faso.

Speaking on this, Mr Abdul Samad Rabiu, Chairman and Founder of BUA Group, said that “BUA is delighted to partner with IFC and other esteemed institutions in securing this $500 million facility to develop energy-efficient cement production capacity and strengthen our equipment and logistics capabilities in northern Nigeria.

“In line with our commitment to sustainability and ESG principles, this investment will create jobs and contribute to economic and infrastructural development within Nigeria and the greater Sahel region.

“We are particularly pleased to have successfully gone through the rigorous process with IFC, AfDB, AFC, and DEG, which validates our responsible business practices. By focusing on greener fuels and enhancing our equipment and logistics platform, BUA Cement is building a foundation for sustainable infrastructure growth and a more inclusive society,” he said.

“We are pleased to join with our partners to support BUA with an investment that will boost industrialization, create jobs and deliver economic growth in northern Nigeria, a region with significant economic potential,” said Mr Makhtar Diop, IFC’s Managing Director.

Investing in northern Nigeria is integral to IFC’s strategy to promote sustainable development in underserved regions. This includes areas with limited opportunities and a need for increased private-sector engagement.

The new plants will provide local developers with a reliable and affordable source of cement, and bolster the construction of essential infrastructure, fostering economic growth and prosperity for the region.

The project is expected to create about 1,000 direct jobs and 10,800 indirect jobs. Direct jobs include those in manufacturing, engineering, and advanced automation systems. Indirect jobs include those in the cleaning, maintenance, mining, and transportation sectors.

The financing package will also allow BUA to replace some of its diesel trucks with vehicles that are run partly on natural gas, over time producing fewer emissions. As part of the project, IFC will also advise BUA on developing a gender-inclusive workplace strategy that creates more opportunities for women across its operations.

“Following an initial $200 million investment in BUA Group in 2021, we are proud to play another key role in this landmark manufacturing project to transform northern Nigeria’s construction sector and the entire country. Investing in this project will sustainably build Nigeria’s local manufacturing capacity, empower local communities, and create employment opportunities. AFC is committed to working with our partners to accelerate development impact through infrastructure solutions that support value addition, industrialization, and job creation throughout Africa,” added Mr Samaila Zubairu, CEO & President of Africa Finance Corporation (AFC).

“The African Development Bank is pleased to be partnering with IFC and BUA on this expansion project as it is aligned with our priority strategies of industrializing Africa and improving the quality of lives of Africans through the increase in cement production, which will lead to the development of additional affordable housing and critical infrastructure in Nigeria and neighbouring West African countries while supporting the use of cleaner energy at BUA’s Sokoto facility,” said Mr Solomon Quaynor, Vice President of AfDB’s Private Sector, Infrastructure and Industrialization arm.

“DEG’s mission is to be a reliable partner to private sector enterprises as drivers of development and creators of qualified jobs. We are pleased to contribute to this transaction together with our development finance partner institutions. Together we support BUA in its transformation towards a more sustainable production by implementing innovative technology. The significant reduction of CO2 emissions and the creation of decent jobs in a region with many vulnerable households are key factors for DEG’s financing,” said Mr Gunnar Stork, Senior Director at DEG.

The investment in BUA is part of IFC’s strategy to promote diversified, inclusive growth and job creation in Nigeria, where IFC supports the manufacturing agribusiness, healthcare, infrastructure, technology, and financial services sectors. IFC has an active investment portfolio of $2.3 billion in Nigeria.

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Economy

Nigeria’s OTC Stock Market Depreciates by 1.40%

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OTC Stock Market

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange opened the week in the negative territory as the bourse witnessed a 1.40 per cent loss on Monday, June 5.

This was influenced by the sole price loser, FrieslandCampina Wamco Nigeria Plc, which fell by N4.00 to sell at N71.00 per unit compared with the preceding session’s N75.00 per unit.

The milk-producing firm pushed down the efforts of Niger Delta Exploration and Production (NDEP) Plc and Industrial and General Insurance (IGI) Plc to lift the OTC stock market.

NDEP gained N1.16 during the session to finish at N246.21 per share versus N245.05 per share, and IGI Plc appreciated by 1 Kobo to 8 Kobo from 7 Kobo.

At the close of business, the market capitalisation of the bourse decreased by N14.30 billion to N1.008 trillion from N1.022 trillion, and the NASD Unlisted Securities Index (NSI) recorded a 10.35 points decline to wrap the session at 728.86 points compared with 739.21 points of the previous session.

Amid the weak sentiment, there was a 1,768.8 per cent rise in the volume of securities traded at the bourse yesterday to 22.7 million units from the previous trading session’s N1.2 million, the value of shares transacted by investors rose by 151.0 per cent to N142.9 million from the N56.9 million reported last Friday, as the number of deals surged by 500.0 per cent to 48 deals from eight deals.

Geo-Fluids Plc remained the most traded stock by volume (year-to-date) with 832.1 million units worth N1.3 billion, followed by IGI Plc with 628.3 units valued at N49.5 million, and UBN Property Plc with 395.9 million units valued at N336.6 million.

Similarly, VFD Group Plc was the most traded stock by value (year-to-date) with 11.0 million units valued at N2.5 billion, trailed by Geo-Fluids Plc with 832.1 million units worth N1.3 billion, and FrieslandCampina Wamco Nigeria Plc with the sale of 17.1 million units worth N1.2 billion.

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