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Africa may lose $4.8 billion in crop exports due to Coronavirus

The sector accounts for the jobs of as much as 60% of economically active people in the sub-Saharan part of the continent.

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Top 10 Agricultural Products Export from Nigeria, Nigeria’s cocoa exports to fall by $100m as prices rise in futures market., Africa May Lose $4.8 Billion in Crop Exports Due To Coronavirus

As a result of the disruptions caused by cancelled flights as well as the closure of many factories in Europe, there has been limited exportation of crops, McKinsey has said, while also noting that it will affect the livelihoods of many. According to the consultancy firm, the pandemic could cost Africa a whopping $4.8 billion in lost agricultural exports while also affecting the livelihoods of 10 million farmers.

Not only is the sector a backbone of many economies in Africa, accounting for as much as 23% in GDP, it also accounts for the jobs of as much as 60% of economically active people in the sub-Saharan part of the continent. Only the exports from the continent are worth between $35 billion and $40 billion every year.

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Other losses forecasted by McKinsey include:

  • Loss of between $500 million and $2 billion in the exportation of fruit, vegetables, and nuts
  • Cocoa exports could be reduced by as much as $2 billion owing to the fall in demand for chocolate as well as a decline in general prices
  • Loss of almost $200 million in exports of coffee, which supports 6.6 million jobs primarily in East Africa
  • Between $400 million and $600 million in revenue from flower exports could also be lost

These very disruptions could affect preparations for the next planting season and particularly make it harder to curtail an invasion of crop-eating locusts in East Africa. They, however, noted that rich harvests in the current season

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READ MORE:Carbon supports Techpreneurs in Africa with $100,000 fund initiative

Still, bumper harvests from the current season in certain countries could mitigate the negative impact.

 

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Commodities

Crude oil prices drop by over 5%

Crude oil prices dropped more than 5% and falling below the key $40 per barrel support, at the American trading session mid-week

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CRUDE OIL, U.S Shale, Naira under pressure, as crude oil hits $25 per barrel, Oil Price: A dead cat bounce in the making?, Bears tear Crude oil futures into shreds as Brent slumps more than 20%

The slide is attributed to unexpectedly large U.S. crude oil inventories for last week reported by the government, which reinforced concerns about depleting demand for fuel amidst the worsening global outbreak of Covid-19.

At the time of writing, Brent crude traded at $39.44/Barrel down more than 5%.

Why crude oil prices are falling heavily now?

The macros weighing down on oil prices are reports coming from the EIA showing U.S. crude stockpiles gained 4.3 million barrels, against an increase of 1.23 million barrel as anticipated by energy analysts, showing there is soft demand for gasoline in the world’s largest economy.

 

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Commodities

What next for Oil amid rising COVID-19 cases?

The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

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OPEC+ Alliance, US, Russia, Canada, Mexico reach historic deal to cut 13.4 million bpd, Oil market still uncertain over the OPEC+ deal as prices react positively, 7 oil producing countries most affected by covid-19, see where Nigeria is placed

Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three, according to Bloomberg. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. A further increment in Libyan oil production will lead to more supply to an oversupplied market that is wrestling with a pandemic-induced sales decline.

This declaration comes in the wake of the ongoing tussles in the North African region, which marked a lasting truce arrangement.

READ: OPEC+ to reduce production cuts in August to 7.7 million barrels a day

Finance Minister, Faraj Boumtari, told Al-Jazeera that in recent years, the regular oil barricades in Libya have cost the nation a sum of US$130 billion in lost incomes.

The truce in Libya is just going to empower more production there and keep it consistent for some time, as the COVID-19 circumstance is not generally improving. Libya’s oil industry has been tormented by battles, as opponent groups have been battling for authority over zones in Libya and its oil terminals and ports since the overturning of Muammar Gaddafi in 2011.

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READ: Libya’s output could destabilise OPEC’s cuts and affect crude prices

In other news, Russia downplayed the likelihood that OPEC+ could expand its present 7.7 million barrels everyday production cuts in one year from now, as per Russian President Vladimir Putin. The remarks could be only jawboning to a market that is urgently looking for consolations that oil production will not increase excessively. However, Russia has in the past been hesitant to keep up its part of the oil production cuts; So, any notice that it is contemplating a slower tightening of the cuts is critical.

Russia had neglected to cut its own oil production to the level it consented to in 2019 and mid-2020. Given how oil production in the United States bounced back two weeks ago, however, it was still down from its March 13 high of 13.1 million bpd. U.S. oil production presently sits at 10.5 million bpd – 2.6 million bpd under those March highs, as indicated by the Energy Information Administration –

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READ: 4 key reasons why Brent crude might slip back to $35 per barrel

China has assumed a critical function in supporting global oil demand as of late, by bringing in its most volumes since May. In contrast, there is a slow recovery in the remainder of Asia and poor refining margins. But how long would China be able to help the fragile global oil market, when demand outside China is weak, with the second wave of COVID-19 contaminations wrecking world economies.

In recent months, China’s unrefined petroleum imports have not fallen under 11 million barrels per day (bpd), with June orders of 12.9 million bpd crushing the past record from May by more than 1.5 million bpd. The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

READ: Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

A few U.S. states detailed daily record increments in COVID-19 infections on Thursday, raising worries about future gasoline interest, while France extended curfews as the second wave of the pandemic compasses across Europe.  Oil prices rose last week when the House Speaker, Nancy Pelosi, spoke about the possibility of a stimulus package.

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Commodities

Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

Growing concern that oil supply could fall by 3% continues as a result of increasing cases of COVID-19 in the US and Europe.

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Crude oil prices slump, as partial lockdowns resume

There is a growing concern that oil supply will fall by 3%, escalating last week’s losses as a result of growing cases of COVID-19 in the United States and Europe.

This has raised worries about the market conditions – the demand and supply of crude oil. The United States reported its highest number of new coronavirus infections in two days – Saturday inclusive, while in France, new cases hit a record of more than 50,000 on Sunday, underlining the severity of the outbreak.

On the supply side, Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1 million barrels per day (bpd) in four weeks, a quicker ramp-up than many analysts had predicted.

OPEC+, a grouping of producers including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, is also set to increase output by 2 million bpd in January 2021, after cutting production by a record amount earlier this year.

What you should know

Recently, Nairametrics reported that the oil prices had continued to decline as a result of worsening COVID-19 pandemic cases which are threatening to bring more restrictions on movement and consumption and ultimately hit demand for crude products.

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What they are saying

According to Avtar Sandu, Senior Manager of Commodities at Phillip Futures in Singapore, “New barrels of Libyan oil come at a time when the crude oil market had just faced the disappointment from the recently concluded OPEC+ ministerial panel, when the organization made no new policy proposals.”

Last week, Russian President, Vladimir Putin, indicated he may have to agree to extend OPEC+ oil production reductions if that could be beneficial in stabilizing the market.

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