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Southern Africa

Prices dropped seasonally amid a recovery in maize production in 2020

10/06/2020

Prices of maize grain and meal products declined in May with the 2020 ongoing harvests, which are estimated to have recovered from the reduced levels last year in several countries due to adverse weather. Downward price pressure from the increased seasonal availabilities has generally outweighed the upward support emanating from the impacts of the COVID-19 lockdown measures, mostly relating to logistical disruptions. In South Africa, prices of white maize fell sharply in May, more than reversing the gains of the previous two months. The decline in prices was underpinned by favourable production prospects, with the 2020 harvest expected to be the second largest on record. In addition, a modest strengthening of the country’s currency combined with lower international quotations exerted further downward pressure on domestic prices. At their May levels, prices of both white and yellow maize were lower on a yearly basis, reflecting the improved supply outlook compared to the tighter situation in the previous year. Similar trends were observed in Zambia, where prices of maize grain continued to fall steeply in May from their record highs in March. The large monthly decrease was driven by a significant boost to domestic supplies from the ongoing 2020 harvest, estimated at an above-average level of 3.4 million tonnes. Prices of meal products also declined, although by a lesser extent. Similarly, in Malawi, prices of maize grain continued to fall seasonally, pressured by improved market availabilities from the ongoing harvest, estimated at an above-average level. However, several markets registered an uptick in prices as harvest pressure abated. Furthermore, large scale purchases by the Government at MWK 200 per kg, which is above the average retail price, is likely to exert upward pressure on market prices in the next weeks. In Mozambique, prices generally declined seasonally in May, but remained above their year-earlier values as the 2020 harvest is expected at only a near-average level, owing to adverse weather conditions that particularly affected southern regions. Food prices in Zimbabwe continued to increase in April, with the annual inflation rate estimated to be above 700 percent, although the monthly inflation rate eased in comparison to the levels in March. The high food prices have been driven by tight supplies and severe macro-economic instability, particularly related to the weak value of the country’s currency that has continued to lose value on the parallel market. A continuation of supply shortages reflecting a second consecutive below-average harvest in 2020 is expected to sustain the upward pressure on prices in the medium term. In the import-dependent countries of Botswana and Eswatini, prices of maize meal were generally stable in April and are expected to come under downward pressure reflecting lower prices in South Africa, the main source of grains of these countries.