As Mozambique, Malawi and Zimbabwe continue to rebuild after the devastation wrought by  Cyclone Idai last month, we thought it appropriate to revisit the maize imports story we published at the start of this month. This is as more information about domestic supplies becomes available in some of the above mentioned countries. Last week, the government of Malawi placed its 2018/2019 maize production estimate at 3.4 million tons, which is 13% higher than market expectations, as better yields in some parts of the country have offset the impact of flooding in the southern regions. This estimate is however 3% lower than the 2017/2018 harvest. It means that, contrary to our expectations, Malawi could have sufficient maize supplies for the 2019/2020 maize marketing year which corresponds with the 2018/2019 production year.

Given that the country’s annual maize consumption is about 3 million tons, there could be excess supply available for the export market which would ease pressure in southern Africa. But it remains to be seen whether or not the government will be tempted to ban maize exports in a bid to keep prices down, ahead of the general elections on 21 May. This would not be an unusual tactic, although it is not ideal as it creates inefficiencies in the market. The government of Malawi has in the past banned maize exports to try and contain potential price increases.

In the case of Zimbabwe and Mozambique, there has not been any update of official government figures of maize production since the cyclone. We are therefore inclined to maintain our view that Zimbabwe and Mozambique will remain maize importers in the 2019/2020 marketing year. We think that Zimbabwe’s 2019/2020 maize imports could reach at least 900 000 tons to meet the annual need of roughly 2 million tons a year. Mozambique will most likely double the typical maize import volume of about 100 000 tons a year in the 2019/2020 marketing year.

In southern Africa, the clearest potential maize supplier is South Africa. We are hesitant about Zambia and Malawi’s ability to export maize to countries in need in the coming months. This is because of their domestic policy objectives of maintaining export bans when the stocks are slightly tight, and the possible political motive in the case of Malawi. Hence, aside from South Africa, the potential maize suppliers to Zimbabwe and Mozambique will most likely be Argentina, Mexico, Ukraine, Russia and the US. The reason for the need for non-regional maize supplies is because South Africa may have only 1.1 million tons of maize for export in the 2019/2020 marketing year, which will mainly be destined for Botswana, Namibia, Lesotho and Eswatini.

The interplay of these factors, combined with the relatively weaker domestic currency, and lower harvest compared to the 2017/2018 production season, has led to an uptick in domestic maize prices. On 11 April, SAFEX yellow and white maize prices were up by 23% and 33% from the corresponding period last year, trading at R2 543 per ton and R2 615 per ton, respectively. While this will be beneficial to farmers, from a consumer perspective there will be upside pressures which will be reflected in consumer price inflation in the coming months. –Wandile Sihlobo, Agbiz

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.

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