Palm oil, rice, cocoa: What to expect from Africa in 2021

The 35th CyclOpe report on commodity markets, published last week, highlights that the prices of agricultural commodities did not evolve at the same rate as those of industrial metals and energy. This is due to the economic crisis that has resulted from the ongoing pandemic.

The price of industrial metals and energy collapsed, before firmly recovering at the end of the year due to strong Chinese demand. However, the average cost of these items has not reverted to that of 2019 levels, an article in The Africa Report based on the CyclOpe release said.

On the other hand, agricultural commodities – such as palm oil (+28%), rice (+16%), coffee (+8%) and cocoa (+1%) – have done better than resist. The only exception is cotton, whose average prices have fallen by 8%.

CyclOpe expects that commodity prices will continue to rise in 2021, particularly for all agricultural products: +26% for palm oil, +20% for coffee, +20% for maize, +11% for cotton, +5% for rice and +1% for cocoa.

Even though Philippe Chalmin, the report’s coordinator, believes that “agricultural tensions should not be exaggerated”, it is obvious that commodities have once again become an asset rich in potential capital gains among investors.

The markets are therefore on the lookout for information on insufficient stocks – for example, for oils at their highest level in 10 years – and on China’s appetite – for cotton, for instance – which is on the rise again. Finally, they are also interested in products that are in excess of supply over demand – for example, cocoa, which is in poor shape.

The report also analyses the paradoxical bean market. The tug of war taking place between Côte d’Ivoire and Ghana – which was responsible for 62% of the world’s production between 2019 and 2020 – as well as multinational chocolate companies, seemed to benefit producers.

By demanding a ‘decent income differential’ from buyers of some $400 per tonne exported, the two countries obtained a 21% increase in selling price for Ivorian producers and 28% for Ghanaian producers in 2020. The fact remains that cocoa prices are stagnating, and not because consumption has been paralysed by the pandemic.

“Overall, West African supply is high enough to act as a lead weight for the market whenever prices appear to be rising,” says the report, adding that some multinationals have limited “their purchases of West African origin cocoa to avoid paying the new high price” and have turned “to beans from certified future market warehouses.”

Planters are now finding it difficult to sell their crops and the multinationals have not yet had their last word, the report said.

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