This is you monthly update on southern African markets.
Zimbabwean maize prices have been following a downward trend since December of 2016, and have continued with that trend in anticipation of the higher maize crop. For the month of May 2017, prices declined by 8.2% compared to April of 2017. Maize prices had previously been trading higher compared to wheat prices, but recently, with the anticipation of the higher maize crop, the gap in prices between these two commodities started to close. As a result, the average maize price traded below that of wheat from April 2017. Until April 2017, maize prices had been trading above wheat prices since August of 2016.
Maize prices in Zimbabwe are expected to remain at low levels as a result of higher expected maize crop. This is as the 2017 grain production is expected to recover significantly from the low crop of 2016 which was negatively impacted by the drought. The 2017 grain season saw good growing conditions due to favourable rainfall.
The higher anticipated grain production in 2017 will be positive for the country as it will lead to reduced import requirement, which will result in the country being less exposed to the volatility of the exchange rate. The declines in maize prices are expected to benefit maize meal prices. Harvesting activities intensified across Zimbabwe during the month of May, following delays due to late planting.
Meanwhile, Zimbabwe’s poultry industry was hit by an outbreak of highly pathogenic avian influenza in June 2017, which affected thousands of chicken at a poultry farm near Harare. As a result, Botswana, South Africa and Mozambique have banned Zimbabwean chicken imports.
Very little poultry is imported into South Africa from Zimbabwe, however, the trade ban is standard practice according to OIE protocols – OIE is the World organization for animal health. Avian influenza has been reported in Europe, Asia and some parts of Africa where it has killed millions of domesticated birds.
This is the first time that HPAI has been found in commercial chickens in Zimbabwe.
Maize production in Zambia is expected to reach 3.61 million tons this year, following favourable growing conditions. Total maize availability is expected to be higher than the national cereal requirement, leaving exportable surpluses. As a result of the higher expected production, maize prices continue to trade downwards. The average white maize price (Lusaka) for the first two weeks of June 2017 reached US$160/t, which is a 13% decline from the average price realized during April 2017. Maize and meal prices are expected to fall below levels of the previous season between now and September. Forecasts of large maize outputs in Zambia are currently weighing down on prices.
Meanwhile, the Government of Zambia recently lifted the 10% tax on exports of maize grain .The government has also lifted the export of Maize into Congo. Prior to lifting of the ban, only two milling companies were allowed to export maize meal into Congo. With outbreaks of the bird flu in the region, the importation of poultry and poultry products from the Democratic Republic of Congo, Zimbabwe and all countries that have recorded an outbreak of highly pathogenic avian influenza (H5N8) were banned into Zambia.
It was also reported that government agencies have also stepped up surveillance of H5N8 in various water bodies within the country and on routes for wild migratory birds as a way of preventing the outbreak of the disease in Zambia.
Several other crops, including soybeans and groundnuts, also experienced a significant production increase due to favourable prices during the 2016/17 production year.
Kenyan maize and wheat prices continue to follow an upward trend. The average maize prices for the first two weeks of June reached US$496/t, which is 1.6% higher than the price realized in May 2017. This price is 46% higher than the price seen in January 2017. Wheat prices also recorded good gains over the past months. The high grain prices lead to high staple food prices.
As a result of the high staple food prices, the Government of Kenya in May announced they would grant temporary subsidies to maize imports and to sell imported maize to millers at an average price of KES 2 300 (USD 21.87) for a 90 kg bag of maize flour, compared to the average cost of more than KES 4 000 (USD 38) in the local market. These efforts by the government aim to offset the deficit and stabilize prices. Retail maize prices have been on an increasing trend since early 2017.
Crop production activities are ongoing, with crops ranging from germination to knee-height due to late planting. Below average production is expected during the July harvest as a result of high probability that there will not be enough rainfall through the end of the season. The impact of the fall armyworm will also negatively impact production.
- This market report was supplied and compiled by Karabo Takadi, agricultural economist at Absa.