Bullish Run Across Commodities on the Exchange - AFEX Commodities Monthly Report - December 2020


Tuesday, February 02, 2021 / 4:12PMKainosedge Consulting for AFEX Commodities Exchange / Header Image Credit: Ecographics

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A. Market Summary

December opened the new season with maize and soybean prices plunging in the open market driven by the just concluded harvest period. However, Soybean prices trended upward on the back of increased demand by large buyers (institutional) amid limited supply.


Soybean prices on the exchange mirrored movements in the open market averaging N204.96/KG. Meanwhile, maize and paddy witnessed an inverse but marginal prices movement on the exchange compared to open market prices as investors priced the commodities higher. In the international space, Soybean price appreciated but underperformed by c.22% points, prices in the domestic markets. Compared to prices in the domestic market.


The Exchange executed prices for the month under review increased for maize, soybeans, and paddy rice. However, the Exchange prices of maize and paddy rice were lower than the physical markets for comparative commodity grades being offered on the Exchange. While exchange prices of soybeans were relatively higher by 0.45% than the physical market.


B. Market Perspective

This report focuses on the average monthly price, analyzing three key indicators: Price variance analysis, volatility analysis, price seasonality performance analysis for maize, soybeans, and paddy rice across crop endemic zones in Nigeria and the international market.


Open Markets

Commodity prices increased by a wide margin in December for soybeans while maize and paddy rice prices plummeted. This was primarily due to large commodities supply from the concluding harvest period for maize and paddy rice.

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1. Soybeans

The average monthly price sustained a positive trend with a wide margin as compared to last month. The average price increased by 26.47% M-o-M. The new seasons start with a massively increased average monthly market price. In addition, Soybean recorded a Y-o-Y performance of 60.00% (417.70%-points) in comparison to December 2019. In December, daily volatility of Soybean increased by 1.72% points M-o-M at 7.10%.


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2. Maize


The average monthly price sustained a negative trend. Maize prices declined by 23.98% M-o-M due to the concluding harvest period from last season.


The seasonality performance for the commodity increased by 70.56% Y-o-Y (up 10.85%-points) in comparison to December 2019.


The price volatility for the commodity in December was 7% (up 1%-points) M-o-M. The commodity had a low-price volatility reflecting Maize's price stability to begin this season.


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3. Paddy Rice


Paddy rice prices mirrored the trend witnessed in the maize market as prices plunged. The commodity declined 12.04% (up 2.31%-points) M-o-M. Market seasonality performance stood at 49.78% Y-o-Y (down 10%-points).


Paddy rice market price experienced marginal daily declines, the average volatility was 6% in December (down 9%-point M-o-M), while the commodity however had the lowest price volatility in the group of commodities reflecting Paddy rice's comparative price stability this month.


AFEX Commodities Exchange 

The Exchange experienced relatively lower price points when compared to the open market for maize, and paddy rice; and experienced higher price points when compared to the open market for soybeans in December 2020. The month-average executed prices on the Exchange were lower than the open market prices for maize and paddy rice by 5.02% and 1.95% respectively and higher for soybeans by 0.45%.


The M-o-M volatility declined considerably for Maize and Soy and increased for Paddy on the exchange; Maize 61% (Â¥W28%-points), Soybeans 9% (down 19%-points), and Paddy Rice 17% (up 2%-points). The seasonality trend of the volatility revealed a Y-o-Y increase for Maize 61% (up 49%-points), Soybeans 9% (up 0%-points), and Paddy Rice 17% (up 10%-point) in volatility.


International Market

Maize, paddy rice and soybeans prices increased marginally in December; maize increased by 5.42%, soybeans increased by 7.45%, while paddy rice increased by 2.86% M-o-M.


Despite the excess supply of paddy rice in Asia, average international a price tightened further.

Furthermore, the global stocks for soy have also been impacted by the strong underlying export demand from USA. Worries about the impact of dryness on South America crops also has led to an increase in average international prices.

M-o-M volatility declined in December for Maize, Soybeans and Paddy rice to 2% (down 4%-points), 4% ( down 7%-point) and 3% (down 2%-point) respectively.

Price seasonality (Y-o-Y) performance experience wide margin increase for Maize 2% (42%), Soybeans 4% (44%) and Paddy 3%

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C. Composite Price Index Monitor


Composite Index 

The ACI opened the month at 271.02 points however, closed the calendar year at 312.78 representing a 15% MtD increase in investors value driven a surge by c.145% in the Soybean sub-index. On a Y-o-Y and StD comparison, returns on the ACI were high enough to ameliorate the impact of inflation on investors purchasing power.


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Maize Sub Index 

The Maize Sub-Index opened at 350.1 points, and recorded a monthly average performance of 459.1 points, representing an increase in the performance of the Sub-Index as against November 2020, closing at a value of 480.3points.

The Maize Sub-index outperformed the ACI on a S-+-D, Y-o-Y and M-o-M comparison. In December 2020, Maize price on the exchange was significantly higher when compared to December 2019.


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Soybeans Sub-Index 

The Soybeans Sub-Index opened at 237.4points and recorded a month average performance of 344.2points, representing a positive M-o-M performance for the sub-Index. It closed with a value of 353.9points.

The Soybean index also outperformed the ACI index across analyzed timelines.


In December 2020, Soybeans price on the exchange was relatively higher when compared to December last year.


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Paddy Rice Sub-Index 

The Paddy Rice Sub-Index opened at 222.6 points and had a monthly average value of 244.7 points, representing a M-o-M positive performance to close at 254.1 points at the end of the month. The paddy rice sub-index underperformed the ACI in December across analyzed timelines. Paddy rice Exchange price was significantly higher in December 2020 compared to November 2019.


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