Africa Newsletter 10-16-20

East Africa Update

Maize Flour Price Drops By Biggest Margin In Years

The current weak demand for maize flour has seen the price fall compared to the past two years as a result of lower maize grain prices in the Kenyan market with a 2kg packet retailing at KES 103 for Soko, KES 108 for Pembe, and KES 110 for Jogoo compared to the KES 115 price that was retailing previously in September.

According to Business Daily, the maize grain price has affected the flour price as a decline has come with the new harvest approaching in the North Rift and also the continued imports from Tanzania and Uganda. In July maize grain was quoted at KES 3,300 per 90kg bag in the Nairobi area but this price has fallen to KES 2,800 per 90kg bag this month.

The continued supply of maize has forced millers to lower costs of the flour in order to attract more customers with the new prices, as last year saw maize flour prices at a yearly average of KES 120 per 2kg pack with maize prices relatively stable.

Kenya Market Update

The North Rift is seeing lower maize prices at KES 2,600 and KES 2,700 per 90kg bag as the continued supply of maize grain forces lower prices for farmers. Soybeans continue to be in demand as crushers are still favorable to Ethiopian origin compared to the Uganda origin oilseeds.

Soybean prices in Nairobi are still relatively low and quotes are circa KES 41 per kg for machine cleaned and dried with a maximum moisture content of 10%. Yellow beans are currently trading at KES 100 per kg in the Nairobi area as demand is increasing with the opening of schools and more easing of guidelines set by the government.

Uganda Market Update

Maize in Kampala is now trading at UGX 730 per kg which sees an increase of the grain as we move towards the end of the season with the new crop expected in December/January. In Gulu maize is trading at UGX 650 per kg and in Bweyale maize is being quoted at UGX 680 per kg.

Maize is expected to increase in pricing over the coming weeks even though schools have partially opened and the economy seeing increased activity. Maize bran is trading at UGX 475 per kg in Kampala and Mukono and soybeans are now trading between UGX 1,400 and 1,450 per kg in Kampala.

Egg Prices In Kenya Rise As Covid-19 Drains Supply

As feed prices increase in Kenya, the cost of eggs has also seen an increase as supply and production was disrupted by the pandemic. Feed prices are now at KES 3,700 per 70kg bag compared to KES 3,300 per 70kg bag last year.

The Nation reports on the reports increase of egg prices from KES 280 per tray in April to KES 360 per tray or KES 15 per eg this month and the Kenya Poultry Farmers Association has stated that large farms reduced production during the lockdown which also saw a surplus that was not being sold on leading to the decision to scale down operations.

Supplies from Uganda have also slowed down as the authorities moved in to close loopholes that were being used by traders to import eggs at certain border points that saw an increasing number of cheap imports affecting local production.

Barley Supply Troubles Force Drop-In Breweries’ Production Capacity

The Breweries industry has seen large capacity shortages due to the pandemic and lockdowns in the region which has affected the supply of barley from Ugandan farmers as community restrictions limited the access to seed providers.

As reported in The Monitor, Nile Breweries, one of the largest breweries in the region, have stated that their production fell by 50% during the lockdown and other breweries were not able to receive enough supply of raw materials used in the production of beverages.

Farmers in Eastern and Western Uganda also faced challenges with weather, such as heavy rains, affect their production of sorghum and barley. There are an estimated 25,000 farmers in these regions with an estimated 15,000 farmers growing barley while an estimated 10,000 farmers focusing on sorghum.

According to Nile Breweries, the company spends approximately UGX 60 billion, or 16 million dollars, buying raw materials for their production of beer, and due to the recent challenges, the company is supporting barley farmers with a  crop insurance scheme that will cover at least 60% of the barley farmers.

Rwanda Approves Cannabis Production For Export

The government of Rwanda has approved the cultivation and export of cannabis with the target of growing export earnings from the global cannabis market that has an estimated value of USD 345 billion.

The East African reports on how the East African nation has remained firm on the use of cannabis for medical or recreational purposes in the country with its use attracting a two-year jail term.

This announcement has raised a number of questions in the country such as how difficult it will be to enforce the recreational use while a number of key operators will be allowed to produce a controversial commodity.

Other countries in the region have also faced the same challenges while trying to capitalize on the demand in the global market with Uganda issuing a license to just one operator with a key purpose of export even though over 100 companies are on a government waiting list for approval to become licensed operators.

Find our report Hot Commodities at panxchange.com/hot-commodities