THE Russian invasion of Ukraine has spiked prices of wheat, crude and palm oils as market volatility and shortfalls continue to push up costs of these products in the global market.
Nigerian traders who deal in crude, wheat and palm oil are expected to leverage from these rising market prices and earn the much-needed foreign exchange.
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Brent crude and West Texas Intermediate (WTI) oil prices reached $120 and $116 per barrel respectively on Thursday as the market expected more sanctions on Russia after capturing a Ukranian city of Kherson.
Brent crude price fell on Friday but it was nearly $114 per barrel at 2.56 pm, which was highest in at least six years. The WTI was nearly $112 at the same time.
The price of wheat hit $11 a bushel on Thursday, March 3, for the first time in 14 years, reaching $11.34 per bushel by close of the market. Prices fell to between $8.43 and $10 per bushel on Friday, but they were still attractive to traders.
According to the Ministry of Agriculture, Nigeria produces 400,000 MTPA of wheat annually, mostly in northern Nigeria. Challenges of insurgency and banditry have, however, reduced production of wheat in Africa’s most populous nation, according to the Food and Agriculture Organization (FOA).
From less than $1000 per ton in 2021, Indonesian palm oil price reached $1680 per ton on Friday, March 4, fueling food inflation across the world. Russia and Ukraine are key exporters of wheat and oils.
Russia’s attacks on Ukraine have cut supplies on wheat and oils globally, but traders are making brisk business across the world.
Nigeria produces 900,000 metric tonnes of palm oil, but local demand is estimated at 1.7 to 2.1 million tonnes. The country had 45 per cent share of the global industry in 1960 but its current market share has fallen to only 1.7 per cent due to an age-long neglect.
The oil palm belt covers 24 states, including all nine states of the Niger Delta and the South-East part of the country. Eighty per cent of production comes from smallholder farmers who are underfunded and often ignored in the value chain.
“Nigeria has an opportunity to increase dollar inflows now with rising prices, but the issue is supply. Do we have enough palm oil and wheat for households and firms? No. Do we have enough to export? No,” market analyst Ike Ibeabuchi said.
Chairman of Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN) Fidelis Ayabae told The ICIR recently that Nigeria would be benefitting from global emergencies had it taken its productive sectors seriously.
Russia is world’s biggest gas producer and second largest oil producer. Its attack on Ukraine has roiled world’s financial and commodity markets.
Russia is receiving global sanctions and the situation is biting Kremlin.
The Financial Times reported that Europeans are boycotting Russian natural gas. Moody’s and Fitch have cut Russia’s rating to junk, meaning that investors can only touch the country with a very long pole. BP, Shell and other big firms are exiting Russia after the Ukraine attack.
Ford has suspended operations in Russia, with at least 4,000 people losing their jobs. General Motors has halted exports to Russia, with Volkswagen stopping production in the country.