Global commodities’ prices up 1.3% in July – FAO

Global food commodity prices rose in July, influenced by the termination of the Black Sea grain initiative and new trade restrictions on rice, the Food and Agriculture Organization of the United Nations (FAO) has stated. The FAO Food Price Index, which tracks monthly changes in the international prices of globally-traded food commodities, averaged 123.9 points in July, up 1.3 percent from the previous month while 11.8 percent below its July 2022 level. The increase was driven by a sharp jump in the FAO Vegetable Oil Price Index, which rose 12.1 percent from June after seven months of consecutive declines. International sunflower oil prices rebounded by more than 15 percent in the month, due mostly to renewed uncertainties surrounding the exportable supplies after the Russian Federation’s decision to end the implementation of the Black Sea Grain Initiative. World prices for palm, soy, and rapeseed oils increased on concerns over output prospects in leading producing countries. The FAO Cereal Price Index declined by 0.5 percent from June, driven by a 4.8 percent drop in international coarse grain quotations due to increased seasonal supplies of maize from ongoing harvests in Argentina and Brazil and potentially higher-than-anticipated production in the United States of America. However, international wheat prices rose by 1.6 percent, their first monthly increase in nine months, due to uncertainty over exports from Ukraine as well as continued dry conditions in North America. The FAO All Rice Price Index increased by 2.8 percent on the month and 19.7 percent on the year to reach its highest nominal level since September 2011, as India’s 20 July prohibition of non-parboiled Indica exports fostered expectations of greater sales in other origins, amplifying upward pressure already exerted on prices by seasonally tighter supplies and Asian purchases. This upward pressure of rice prices “raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food,” FAO warned, adding that export restrictions can bear adverse consequences on production, consumption and prices that last beyond the duration of their implementation and risk exacerbating high food domestic inflation in many countries. The FAO Sugar Price Index declined by 3.9 percent as good progress in Brazil’s sugarcane harvest and improved rains across most growing areas in India weighed on world quotations, as did subdued demand from Indonesia and China, the world’s largest sugar importers. Persistent concerns over the potential impact of the El Niño phenomenon on sugarcane crops, along with higher international crude oil prices, mitigated the decline. The FAO Dairy Price Index declined by 0.4 percent in July to stand 20.6 percent below its July 2022 value. World cheese prices recovered slightly after steep recent declines as hot weather affected seasonally declining milk supplies in Europe. The FAO Meat Price Index declined 0.3 percent from June. Quotations for bovine, ovine and poultry meat declined on solid supply availability and in some cases lower demand from leading importers. Pig meat prices, by contrast, rose, reflecting high seasonal demand coupled with ongoing tight supplies from Western Europe and the United States of America.

NGX market cap gains N1.8trn in July

Transactions at Nigerian Exchange Limited (NGX) closed the month of July 2023 on a positive note as earnings and dividend declarations from quoted companies helped NGX’s market cap to gain N1.814 trillion. The gain was also supported by insider dealings among companies as directors and related parties consolidated their positions in a show by such investors of their belief in the inherent values of such companies, as well as sustained positive reactions to the ongoing reforms by President Bola Tinubu. Despite the profit taking, selloffs and FX pressures witnessed within the period, the benchmark NGX All-Share index which opened the trading month at 60,968.27 points, closed at 64,337.52 points, representing a 5.53 per cent growth while year-to-date (YTD) close at 25 per cent in the month under review.  Also, market capitalization- listed value of equities rose by N1.814 trillion from N33.197 trillion to N35.011 trillion. There were also better-than-expected corporate earnings, higher dividend payouts and relatively improved liquidity as fixed income yields were not stable in the face of soaring inflation which supported buying interests in the market and flow of funds into the equity space. It will be recalled that a total turnover of 2.854 billion shares worth N37.645 billion in 41,547 deals was traded by investors on the floor of the Exchange last week Friday. The high traded volume and mixed sentiment experienced during the month reflected the buying interests by majority shareholders and activities of institutional investors as they sought to hedge against inflation on a mixed outlook for fixed income rates and yields. This followed the fact that the second quarter (Q2) performance of some quoted companies beat the inflation rate, raising hopes of better earnings that will support price and payout at the end of the financial year. Given the outcome of the Monetary Policy Committee meeting in the month under review, the prevailing mixed economic data and as well more corporate earnings now looking up, analysts believe that positive earnings surprises and possible interim dividend declarations from companies would spur increased bargain-hunting activities on the bourse. They also added that profit-taking activities on stocks that have experienced substantial appreciation might be possible. Analysts at Cordros Research said, “In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market”.