Cereal prices rise as poor harvests take effect

Prices of cereals are starting to go up in some countries in the Southern African region due to low production outlook following a poor rainfall season which resulted in reduced yields, the Food and Agriculture Organisation has said.

In its recent food assessment report for the region, the FAO said significant price gains were observed in South Africa in February this year, although the increase eased in March partly reflecting improved rains.

"Wholesale prices of maize increased by 30 percent since the beginning of the year and inflationary pressures are likely in importing countries, with Namibia already showing relatively large price increases during February," it said.

FAO said in most other countries, maize prices remained below their year-earlier levels due to the ample carry over supplies and were expected to decline in the coming months with the next harvest.

Historically, maize prices tend to increase seasonally from July. Forecasts for aggregate maize imports in the 2015/16 marketing year (May/April) indicate an increase to about 1.8 million tonnes, approximately double the low level of 2014/15 and one-third above the average, FAO said.

"The bulk of the increase is expected from South Africa, provisionally forecast at 600 000 tons, mainly consisting of yellow maize used in the feed industry, compared to negligible volumes in the previous year," it said.

FAO also speculates that local maize imports would nearly double in anticipation of a tight domestic supply situation. In anticipation of this scenario, the Zimbabwe government earlier this year lifted the ban on maize imports imposed in 2014.