Nigerian maize price soars, as global prices increase

The price of Nigerian maize has risen as imports are speculated to have reduced to 200,000 metric tonnes (MT), as a result of global increase in prices of maize.

This development was shown in the maize outlook for 2016 by Novus Agro Nig. Ltd, which was made available on Thursday to the News Agency of Nigeria (NAN) in Lagos.

The agro-company attributed the curtailed imports to the weakening of the naira and higher global maize prices, a trend for the first time in many years.

According to the outlook, although, the prices of maize increased slightly in mid-October 2015 between N45, 000 and N50, 000 per MT until early January, selling at N65, 000.

“Prices of maize and other grains have risen sharply in the past few weeks, leading into January 2016 bucking a five-year trend in the market.

“While several reasons have been attributed to this unprecedented increase in farm-gate prices, no single reason seems to account for the percentage year-on-year change.

“Maize prices fluctuate over the course of the year primarily due to the rain-fed nature of Nigerian agriculture and consequent availability of maize in the market place.

“Curtailed imports of maize into Nigeria is the combination of a weak naira and higher global maize prices.

“This has seen Nigerian maize for the first time in many years, cheaper than imported maize, leading to lower import prospects.

“However, with the perspective that only about 200,000 MT is imported annually, as against the 7.5million tons produced locally.

“This effect only fuels speculation, which will increase the belief that macro-economic uncertainties might be largely to blame,’’ the outlook stated.

It also indicated that the prices of maize increased early January due to the spike in dollar exchange rate, from N225 in Dec. 2015 to N305 in mid-January.

Other attributes to the increase included insurgency in North-East Nigeria and increased spot-buying at the farm gate, by poultry farmers.

“The Naira fell sharply against the dollar from NGN225 in Dec. 2015 to NGN305 in mid-January.

“This has led to nervousness as to possible inflationary effects on the wider economy, by traders.

“Global rise in maize prices with spikes in Southern Africa due to drought in 2015.

“Current maize contracts for March delivery in South Africa are hitting $315 in this week’s trading.

“Effects of the insurgency in the North-East of Nigeria, while this has been proffered as a reason with Adamawa State specifically cited.

“The effects can only be largely speculative, as prices in neighbouring Taraba and Gombe, remained largely unaffected till early to mid-January.

“Also, increased spot-buying by large-sized poultry farms that are self-milling feeds primarily has the effect of keeping higher prices stickier than usual.

“Even when lower volumes are traded, they represent a baseline demand at almost any price point, set by traders,’’ it said.

NAN reports that traditionally, maize prices start trending downwards from mid-October and get to their lowest prices between January and February, as new maize stocks are harvested and brought into the market.