Home Business Global supply constraints bite as maize prices rise in June

Global supply constraints bite as maize prices rise in June

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Kenya’s maize imports fell to 386,864 bags last month compared to a high of 1,169,072 bags reported in March this year according to latest data by the Ministry of Agriculture.

The drop last month is despite the government granting importers a four month to bring in maize from outside COMESA and EAC duty-free in order to stabilize maize flour prices.

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According to the Food and Nutrition Security Report for June by the ministry, millers attribute the reduction to low supplies in the global market coupled with reduced local demand on account of low consumer purchasing power.

“It is further noted that although the government gave a duty-free import window for maize outside EAC and COMESA between April to August 2023, very little has been imported by the legible millers and traders as they report inadequate global supplies, higher freight and insurance costs as well as shortage of the dollar. The imported maize arriving at Mombasa is slightly more expensive compared to local supplies,” the ministry stated in the report.

Agriculture ministry says while there was an increase in maize imports in June from 329,530 bags recorded in May, all the imports originated from the East Africa Community countries led by Tanzania.

“We have been buying maize from Tanzania but if they get another country wanting to buy their maize, they will use global prices and that will affect us by indirectly,” said Ken Nyaga, United Grain Millers Association (UGMA).

The duty-free window has had minimal impact on stabilizing maize prices as the average wholesale price of a 90 kg bag increased to Ksh 6,610 from Ksh 6,436 registered in May and Ksh 6,054 in April.

“By the end of the month of June, the average retail price of 1 Kg packet of unga ranged from Ksh 88-117 compared to Ksh 87.5-101 in May,” the report says.

Nonetheless, the government projects the maize balance sheet to have a surplus of 13.2 million bags by the end of September 2023 based on carryover stocks of 5.4 million bags and an estimated 0.9 million bags which is to be imported by private sector from the region and outside of COMESA.

The July/August harvest is projected at 19.6 million bags from the forecasted production as at June.

However, with Russia pulling out of the Black Sea Grain Initiative, global supply of grain is expected to escalate a move which is likely lead to price increments of wheat among other grains.

BBC reported that after Russia’s latest move, wheat prices on the European stock exchange soared by 8.2pc on Wednesday from the previous day, to £219.78 (Ksh 39,179) per tonne, while corn prices were up 5.4pc.

On the other hand, US wheat futures jumped 8.5pc on Wednesday, their highest daily rise since just after Russia’s invasion of Ukraine last year.

Wheat imports of 90kg bag of wheat in June rose to 1,732,176 from 606,756 bags in May in what is attributed to anticipated harvest in Narok.

“However, Narok wheat delayed (due to delayed long rains) and harvesting will start towards end of July; though with declined crop area.”

The wheat balance sheet projected to end of August shows a surplus of 3.7 million bags, assuming private sector imports of six million bags.

Kenya relies on wheat imports to sustain a consumption of 2,010,858 million bags per month mostly from Russia and Ukraine who are currently engaged in a war.

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