Afreximbank’s African commodity index declines moderately in Q3-2020

Must Read

China lifts 770 million rural people out of poverty

More than 770 million of China's rural population living below the current poverty line have been raised...

Facility upgrade begins in Oro General Hospital soon, says Kwara Gov

By Steve Oni, Ilorin Kwara State would commence the upgrade and equipping of the...

Why price of cement is high in Nigeria -Dangote

The management of Dangote Cement Plc. says a bag of cement from its factories and plants in...

The African Export-Import Bank (Afreximbank) says that in its Quarter Three 2020 (Q3-2020) reading of the Afreximbank African Commodity Index (AACI), its composite index fell marginally by one per cent quarter-on-quarter.

It made this known in a statement issued on Wednesday in Cairo, Egypt after the release of the AACI for Q3-2020.

The AACI is a trade-weighted index designed to track the price performance of 13 different commodities of interest to Africa and the bank on a quarterly basis.

The bank said the decline was mainly on account of a pull-back in the energy sub-index.

“In comparison, the agricultural commodities sub-index rose to become the top performer in the quarter, outstripping gains in base and precious metals.”

The bank said that the recurrence of adverse commodity terms of trade shocks had been the bane of African economies.

It added that in tracking the movements in commodity prices, the AACI highlights areas requiring pre-emptive measures by the bank, its key stakeholders and policymakers in its member countries and global institutions interested in the African market.

This was to effectively mitigate risks associated with commodity price volatility, it said.

Giving an overview of the AACI for Q3-2020, it said there were indications that on a quarterly basis, the energy sub-index fell by eight per cent largely due to a sharp drop in oil prices as Chinese demand waned and Saudi Arabia cut its pricing.

Also, that the agricultural commodities sub-index rose 13 per cent due in part to sub-optimal weather conditions in major producing countries.

It, however, said that within that index, sugar prices gained on expectations of firm import demand from China and fears that Thailand’s crop could shrink in 2021 following a drought.

According to the bank, cocoa futures enjoyed a pre-election premium in Ghana and Côte d’Ivoire in spite of the looming risk of bumper harvests in the 2020/21 season and the decline in the price of cocoa butter.

It said cotton rose to its highest level since February due to the threat of storm Sally on the United States of America’s cotton harvest, coupled with poor field conditions in the U.S.

It added that within that index also, coffee rose 10 per cent as La Nina weather conditions in Vietnam, the world’s largest producer of Robusta coffee raised the possibility of a shortage in exports.

Other indications are that base metals sub-index rose nine per cent due to several factors including ongoing supply concerns for copper in Chile and Peru and strong demand in China, especially as the State Grid boosted spending to improve the power network.

For precious metals sub-index, the best performer year-to-date rose seven per cent in the quarter as the demand for haven bullion continued in the face of persistent economic challenges triggered by COVID-19 and heightening geopolitical tensions.

In addition, Gold enjoyed record inflows into gold-backed exchange traded funds (ETFs) which offset major weaknesses in jewellery demand, Afreximbank said.

“Regarding the outlook for commodity prices, the AACI highlights the generally conservative market sentiment with consensus forecasts predicting prices to stay within a tight range in the near term with the exception of crude oil, coffee, crude palm oil, cobalt and sugar.”

Dr Hippolyte Fofack, Chief Economist at Afreximbank, said commodity prices in Q3-2020 had largely been impacted by COVID-19.

He said that the pandemic had exposed global demand shifts that had seen the oil industry incur backlogs and agricultural commodity prices dwindle in the first half of the year.

“The outlook for 2021 is positive, however, conservative the markets still are. We hope to see an increase in global demand within Q1 and Q2 – 2021 buoyed by the relaxation of most COVID-19 disruptions and restrictions.’’

Our correspondent reports that Afreximbank is a Pan-African multilateral financial institution with the mandate of financing and promoting intra-and extra-African trade.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Latest News

China lifts 770 million rural people out of poverty

More than 770 million of China's rural population living below the current poverty line have been raised...

Facility upgrade begins in Oro General Hospital soon, says Kwara Gov

By Steve Oni, Ilorin Kwara State would commence the upgrade and equipping of the Oro General Hospital in Irepodun...

Why price of cement is high in Nigeria -Dangote

The management of Dangote Cement Plc. says a bag of cement from its factories and plants in Obajana and Gboko  N2,450, and...

Ondo Govt Petitions Police Over Former Deputy’s Refusal to Return Govt Vehicles

The Ondo State Government, on Tuesday, petitioned the state Commissioner of Police, Salami Bolaji, over the refusal of the former deputy governor,...

House of Reps adjourns to honor late members

The House of Representatives on Tuesday adjourned plenary for seven legislative days in honour of two of their colleagues’ who died during...
- Advertisement -

More Articles Like This

- Advertisement -