African commodity traders seek funding to increase trading capacity

The price of commodities globally have not only recovered post 2020, but surpassed pre-pandemic levels in some cases – and African exporters are well placed to take advantage of this in the international markets.

Commodity prices across the globe have increased when compared to 2020 for various reasons, including an increase in demand following the pandemic and strategic commodity price increases in West Africa. So far, 60% of the requests on the Orbitt platform were trade-related, from companies seeking financial support to meet increasing trade demand.

The increase in the price of agricultural commodities has been noted across the market, and is projected to keep increasing – presenting an opportunity for commodity traders as demand across the globe increases. Thirty-one percent of the trade-related funding requests this year were to support agricultural commodity trading. 

From the requests analysed, the most prevalent funding requirements came from companies trading cashews, cocoa, rice, sesame and edible oils. For these five commodities, the majority of the funding requests originated from West Africa, East Africa or companies operating across all regions. Many source commodities from Ghana, Tanzania, Benin and Nigeria.

Most of these companies were exporting commodities from their source countries to Asia (35%) or to Europe (32%), implying increased foreign currency revenue. At a time where investors are increasingly looking for ways to mitigate risk and further secure their investments, this is a significant advantage for these companies when seeking financial support.

Additionally, companies are more regularly working with collateral managers and using banking instruments to further secure their trading activities. 

The Orbitt Perspective

Global commodity prices have increased notably this year, specifically agricultural commodities, presenting an opportunity for African commodity traders. As a result, companies exporting these commodities from Africa to the international markets continue to seek financial support to increase their trading capacity and meet the increasing demand.

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