Online Reporter
Edgar Vhera
Specialist Writer – Agribusiness
THE Zimbabwe Mercantile Exchange (ZMX) postponed this week’s grain and oilseed auction trading activities to Wednesday next week as average maize price rises five percent to US$348 per tonne from US$332 previously.
The ZMX weekly bulletin for the period July 03-07, disclosed that this week’s live commodity auction had been postponed to Wednesday August 19 due this week’s holidays that left insufficient time to complete the operational preparations required for the auction.
After a price deadlock during the July 22 auction wherein buyers wanted a white maize price of US$330 per tonne while farmers offered their grain at US$350 per tonne, trade was successful on the July 29 auction and maize reached an average price of US$332.
As the spread between the buyers bid and sellers offer price narrowed, white maize price rose 5 percent from US$332 to US$348 per tonne on the August 5 auction conducted at the Mashonaland West provincial agricultural show in Chinhoyi.
ZMX said market activity remained subdued in the last trade, with demand of just 500 tonnes against more than 2 000 tonnes offered on the auction, reflecting weak buyer participation and ample supply.
“The price gap in the maize market persisted, with buyers and sellers continuing to trade at different price expectations, limiting transaction volumes,” said ZMX.
Analysis of auction results show that white maize and wheat remain adequately supplied, with available volumes of 2 000 and 5 000 tonnes respectively, exceeding current buyer demand.
“This imbalance has created downward pressure on prices, although relatively narrow bid-ask spreads suggest that transactions remain possible through price negotiations,” noted ZMX.
In contrast, soya and sugar beans are characterised by strong buyer demand against limited or non-existent market supply, reflecting tightening availability that is expected to keep prices firm.
“The premium offered by buyers for sugar beans further signals a willingness to pay higher prices to secure available stocks.
“Overall, market activity remains selective, with demand concentrated in a few strategic commodities while trading in most other crops is constrained by the absence of either buyers or sellers, as well as significant differences in price expectations,” disclosed ZMX.
The Mercantile Exchange said these market conditions point to reduced liquidity outside the major grain and oilseed markets, delaying price discovery and limiting trade execution. Going forward, the ZMX noted that commodities facing supply shortages are likely to maintain upward price momentum, while markets with excess supply will remain under pressure until demand strengthens sufficiently to absorb available stocks.
Regional grain markets continue to provide important price signals for Zimbabwe’s domestic market.
ZMX white maize price of US$348 per tonne continue to maintain a significant premium over regional benchmarks, such as the Johannesburg Stock Exchange (JSE) at US$224, 96, the Agricultural Commodity Exchange for Africa (ACE) on US$225, 00 and the Nigeria Commodity Exchange (NCX) trading at US$225, 70 per tonne.
ZMX said unlike many regional markets where lower prices are being driven by abundant harvests and lower production costs, the same cannot be said of Zimbabwe whose premium price was primarily a reflection of its higher cost of production.
“Rising expenditure on seed, fertiliser, crop chemicals, fuel, electricity, labour, transport, storage and financing continues to elevate producers’ breakeven prices, limiting the competitiveness of locally produced grain.
“Despite an improved maize harvest this season, these structural cost pressures have kept domestic prices well above regional levels,” remarked ZMX.
Consequently, while Zimbabwean maize remains attractive to local producers, the price differential continues to present opportunities for buyers to source competitively priced grain from neighbouring surplus-producing countries where trade regulations and logistics permit.
