Commodities
Cocoa prices record gains amid pending holiday season
Cocoa prices are rising on the bias that demand would pick up especially during festivities.
Cocoa prices are up as Chocolate makers increased their buying pressure on the soft commodity on the basis that demand would pick up especially during festivities like Christmas.
New York-traded Cocoa on ICE closed at $2,333 per tonne. However, it’s important to note that the soft commodity lost over 8% in value in October alone, recording its biggest monthly drop for U.S. cocoa futures since March, when the market dropped 18.5% at the height of worldwide lockdowns over the COVID-19.
READ: CBN to sanction exporters who default on export proceed number
That said, Cocoa traders are wary of the recent lockdown modes prevalent in key markets that include Germany and France, and with the world’s largest economy, the United States recording 9 million COVID-19 cases and more than 225,000 deaths, demand for chocolates are expected to soften, as social mobility is curbed.
READ: Nigeria’s export earnings dropped to $13.39 billion in April due to COVID-19 – CBN
What you should know
Nigeria plays a leading role in the cocoa industry, covering a 6.5% share of the global production of cocoa.
- Africa’s largest economy, Nigeria is also the fourth largest exporter of cocoa beans globally. It is behind Côte d’Ivoire, Ghana, and Indonesia, according to the National Export Promotion Council.
- Cocoa exports in Nigeria are projected to grow annually by 4% in the coming years.
- These export earnings from cocoa, if invested properly, could further help Nigeria reduce its reliance on crude oil, which makes up a large chunk of its export earnings (about 90% Est), and minimize the impact of oil price swings on its economy.
READ: U.S dollar up, U.S GDP expands at record 33.1%
Price swings were prevalent in last week’s trading session at the Cocoa market, on fears that the ongoing political climate in Ivory Coast, the world’s largest producer of cocoa, might disrupt the flow of supplies – on the bias that the recent election won by Alassane Ouattara, the incumbent leader might trigger more uncertainty as the opposition parties staged a walkout.
READ: Bitcoin whale transfers $105 million worth of crypto, BTC trading at $15,800
Commodities
Lagos Commodities Exchange to start gold trading
The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.
The Lagos Commodities and Futures Exchange has concluded plans to commence trading of gold with the admission of Dukia Gold’s diversified financial instruments, backed by gold as the underlying asset.
The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.
Dukia Gold said the financial instruments, which would be in form of exchange-traded notes, commercial papers and other gold-backed securities would enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the government to diversify external reserves and create jobs across the metal production value chain.
While making the disclosure, during a Pre-Listing media interactive session in Lagos on Thursday, the Chairman of Dukia Gold, Mr Tunde Fagbemi, applauded the Ministry of Mines and Steel Development and the Security and Exchange Commission (SEC) for supporting trading of gold in Nigeria.
What the Chairman of Dukia Gold is saying
He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us to facilitate our infrastructure development, expand capacity and create fungible products.
This has the potential to shore up Nigeria’s foreign reserve and create an alternative window for the preservation of pension funds. Gold-backed security is a hedge against inflation and convenient preservation of capital.”
Fagbemi pointed out that the company has refinery services to smelt metals with the capacity to meet local and international demand.
Going further, he said, “As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located.’’
Context of Gold Mining in Nigeria
It can be recalled that the Federal Government, in June 2020, commissioned the operations of Dukia Gold and Precious Metals Project (DGPMP). The project is expected to enable Nigeria to mine its gold reserves properly, trade responsibly and refine locally.
The Vice President, Prof. Yemi Osinbajo, while performing the virtual commissioning of the project, said Nigeria has potential reserves of 200 million ounces of gold reserves.
Osinbajo said that he believed that the Dukia gold project would encourage the emergence of smaller-scale mining companies which, for the first time, would have a transparent and welcoming market for their mined gold and precious metals.
Commodities
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
