Maize prices firm

With yields now expected to be lower than had initially been anticipated because of the incessant rains, forward prices at the Zimbabwe Commodity Exchange (Zimace) are firming with some offers for white maize as high as $5 000 for March, April and May deliveries.

The prices of maize have firmed since the country ran out of maize meal for nearly two weeks in the capital. It was not clear whether there was a genuine maize shortage or millers were holding back following a freeze on maize meal prices.

According to Zimace, although official crop forecasts are still some way off, the general consensus appears to be that yields of both maize and soya beans will be down.

The major discussion, it says, is now centred on the question of by how much these yields will be affected. Yields will, however, be down and demand will in all probability outstrip supply.

White maize is already trading at between $4 300 and $4 400 while yellow maize is going for $4 350 a tonne.

Bids for soya beans are around $7 900 while offers are around $8 400 and forward prices for April, May and June are as high as $8 800 and US$230 a tonne.

Wheat is also doing well on the market with prices of between $6 150 to $6 300 a tonne. Forward prices for March are $7 000 and US$175.

But what seems to be disturbing in the market are continued price reversals by the government.

Industry and Commerce Minister, Nathan Shamuyarira has just reversed the price increases on flour and bread. According to one market analyst, the logic behind this move is questionable.

“Is the minister still convinced that this industry is run by cartels when the combined production of Blue Ribbon, Victoria Foods and National Foods sits around 25 percent of overall milling production?,” the analyst asks.

“It is indigenous entrepreneurs, the very people the government has vowed to protect that will suffer as a result of this decision.”

The analyst argues that cost increases the milling industry are experiencing must be passed on to the consumer if the industry is to remain viable. With maize meal shortages experienced in Harare this month, the analyst says, delaying price increases will only precipitate another shortage.

But the government has an envious task before it. Despite the price controls it started implementing last year after food riots that rocked the capital, the prices have continued to soar.

According to the latest figures from the Central Statistics Office food now costs 10 times more than it did in 1990.

Although the rate of inflation went down from 46.6 percent in December to 44.2 percent in January, one market commentator says the rate only went down because the January figure was coming off a higher base.

The month-on-month increase, for example, was 6 percent on food. This was due to a 1.3 percent increase in the price of bread and cereals, a 9.8 percent increase on beef and a 9.3 percent increase in the price of fruit and vegetables

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