Soybean Outlook For 2019/ 2020 Season

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Insights on the commodity markets in Nigeria are critical as we enter into the 2019/2020 season. All key crops traded on AFEX Commodities Exchange are being considered in view of the demand and supply dynamics as well as a look into possible proactive measures that investors can take. Read below for the AFEX soybean outlook for the 2019/2020 season in Nigeria.

Soybean Outlook Supply-Side Dynamics

Soybean production for the season has been characterized by heavy rains. Harvest has commenced as the rains are beginning to recede in most parts of the North, and the grain moisture levels are high at 15-16% MC from the end of October to mid – November.

In Benue and Taraba, the rains have persisted slightly longer and only a handful of farmers have been able to harvest by early November, most of which have high levels of immature grains with very high moisture content. We expect a stable 12% and below from the end of November across all locations.

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Prices started at N115, 000 per MT in Benue, N100, 000 in Taraba and N110, 000 in the North West (Kaduna, Katsina, and Kano). We also envisage that logistics will be a challenge for most suppliers especially those in the Northeast with prices as high as N600, 000 – N700, 000 for deliveries to the South Western States.


Soybean Outlook Demand Side Dynamics

The local demand for soybean has over the years outweighed the local supply of the product and by a significant margin. Demand players have positioned themselves strategically to mop up volumes at the farm gate. We anticipate a conservative 25% – 30% differential between market prices for grains at point of harvest in mid-late November and Peak period in July/ August. The market is basically liquidity-driven with products going to the biggest pockets.

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Strategy to Adopt

We recommend a dual strategy with an objective to achieve volume targets, but at a comparative price advantage to the competition.

  1. Aggressive trade volumes but with a closed pricing approach, so the market isn’t further upset.
  2. The aggressive stock build-up at farm gate/AFEX Warehouse for shipment in June/July.

This post first appeared on the AFEX blog

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