AFEX Commodities Exchange and the domestic market experienced marked price volatility for Maize, Soybeans and Paddy rice in February. On the exchange, month-average executed prices were lower than the Market Survey Prices for Maize, Soybeans, and Paddy rice by 5.8%, 7.7%, and 3.5% respectively.
Cereal prices in the international market eased in February for the three crops and was more evident for Paddy rice as it declined by 11.6% points due to seasonal pressures. Supply chains are at risk of disruption from the COVID-19 Global Pandemic as social distancing observed by affected countries to slow the outbreak, will also lead to a decline in business activities.
Market activity in February for maize, soybeans and paddy rice was characterized by a marked increase in price volatility for all commodities in domestic markets and the exchange as the participants in the markets engage in bargain hunting on the price of commodities. Physical market prices, on the other hand, firmed up for maize and soybean, due, majorly, to the seasonality in the supply of these commodities in the market. Soybean prices gained the most rising by 4.7% M-o-M (Month-on-Month) due to increased demand activities in the open markets. Furthermore, the exchange executed prices for the month under review, were generally lower than the physical markets for comparative commodity grades.
Global cereal prices eased in February for all three commodities and was most pronounced for Paddy, which declined by 11.6% points as a result of due seasonal pressures. Though optimism remains from expected market replenishment of market stocks and easing of tensions between the USA and China, supply chains are at risk of disruption from the current global pandemic of COVID-19 which has its epicentre situated in South-east Asia.
The AFEX Commodities Index Composite opened at a value of 175.25points and had a month average value of 165.19points, a negative M-o-M performance against January 2020 to close at 163.1 points at the end of the month. The season-to-date' performance of the ACI Composite at the last trading day of the month was negative, closing 9.42points below the index opening at the beginning of the season.
Maize extended its 3-month uninterrupted steady price increase from December with 1.8% price increase M-o-M in February. The price gains reflected in February indicate a moderation in the price of the commodity. Furthermore, the commodity had a decline in Y-o-Y (year-on-year) seasonality price performance (Â¥5%}) in comparison to February 2019. Monthly volatility tripled to 13% (&9%) M-o-M in February, while the seasonality trend shows a neutral Y-o-Y change in the price volatility for Maize in February 2019.
Soy prices took the lead rising by 4.7% points increase M-o-M reflecting a reversal of the downward trend witnessed in January. This was stimulated by the increased demand witnessed in the open markets. Volatility has ramped up significantly as price changes in February spiked by 11% versus 3% witnessed in January. However, the volatility environment remained dampened in comparison to that witnessed in February 2020.
Paddy rice prices experienced a M-o-M negative price change of -1.4% terminating its previous 2month price increase. Market stocks have swelled despite the persistence of the land border closure moderating the market price volatility from the start of the season. The seasonality performance for Paddy rice showed a Y-o-Y price increase (47%) in comparison to February 2019 indicating a fair stability for Paddy rice.