Stable Maize Prices in East Africa in Last Two Months of 2016 -East Africa Cross Border Trade Bulletin

Maize prices across the East African region are reported to have been seasonably stable between the months of November and December 2016 in Kenya, Uganda and Ethiopia following increased supplies from the October-to-January harvest, but there were exceptional localized increases.

The prices increased seasonably but atypically faster in Tanzania as supplies continued to tighten rapidly. The prices increased atypically in Somalia due to expectations of significantly below average January-to-February harvest. Sorghum prices on the other hand were stable in Sudan, Ethiopia, and Uganda because of increased supplies from the October-to-January harvest, but increased unseasonably in Somalia due tight supplies, and in South Sudan due to conflict related trade disruptions, according to a report from the 2016 East Africa Cross Border Trade Bulletin.

In Kenya maize and bean prices were seasonably stable or decreased marginally, pending a seasonal decline and remain low between January and March, as a result of reduced household demand and increasing market supplies from the ongoing slightly below average October-to-January harvest.

Maize grain was the most informally traded commodity in Eastern Africa in the fourth quarter of 2016 but its share of total trade decreased slightly from 35 percent in the third quarter to 31 percent in the fourth quarter because of average production and supplies in Kenya, Tanzania, Uganda, Rwanda and Burundi.

Rice and wheat flour displaced dry beans in the second position and accounted for 19 and 14 percent of the total commodity trade in the region. This was attributed to increased rice supplies from the previous above average harvest in Tanzania, high demand for maize during the Christmas period, and relatively high maize prices resulting in some substitution.

Trade in dry beans declined in the fourth quarter as most supplies tightened early following below average harvests in the main producing Uganda. Re-exports of sugar, wheat and wheat flour were also significantly traded in the region in the fourth quarter. Sesame seeds, which are mostly exported from Ethiopia to Sudan, increased seasonably in the fourth quarter of 2016 as supplies started to increase from the October-to-January harvest in Ethiopia.

Livestock trade in the region was mixed with exports from Ethiopia to Somalia declining following the end of the June-to-September religious festivities, and exports to Kenya increasing atypically as herders sell animals in Somalia following scarcity of water, pasture and browse.

The chart below shows the main staple food commodities informally traded across selected borders in E.A in the third quarter of 2016:

The report further disclosed that Uganda maize exports to Kenya declined precipitously due to below average June-to-August and October-to December 2016 harvest, acquisition and or storage of maize by traders in anticipation of higher prices from mid-year; and corresponding relatively higher prices that reduced the profitable price differentials with markets in Kenya.

Rice exports from Tanzania to Kenya remained seasonably stable between the third and fourth quarters of 2016, but were similar to and 33 percent higher than the respective 2015 and 2013/2015 average for fourth quarters due to high demand following below average October-to-January maize harvest in Kenya.

The report disclosed that between January to June 2017, about 100,000 MT of maize is expected to be exported to Kenya in the first half of 2017 resulting in about (17 percent (100,000 MT) shortfall in the estimated 358,696 MT into Kenya during the July 2016 to June 2017 marketing period

As a result of below average harvest in Kenya and Somalia, staple grain supplies are expected to tighten early and faster leading to relatively higher prices in northern and northeastern Kenya; southern, central and northern Somalia that will most likely attract maize and sorghum inflows from Ethiopia but at higher prices which in turn will moderate the price increases slightly.

Related: Maize retailing Highest in Kisumu and Lowest in Mombasa