FEWS NET Price Watch August 2019 Prices

PRICE WATCH August 2019 Prices

September 30, 2019

KEY MESSAGES

? In West Africa, 2019/20 crop production is expected to be average to favorable. Market supplies are currently decreasing, and demand is increasing seasonally, but at below-average levels due to substantial outstanding stocks. The ongoing lean season in the Sahel remains marked by atypical month-to-month decreases and, in some cases, stability in coarse grain prices, which are below both last year and average levels. On the other hand, above-average local and imported rice prices persist in most coastal countries. Disrupted trade activities and atypical market trends persist in insecurity-stricken Greater Lake Chad basin, Tibesti region, and Liptako-Gourma region. Furthermore, Nigeria has recently closed land borders to curb smuggling and banditry (Page 3).

? In East Africa, maize and sorghum prices declined or remained stable in August across Uganda, Tanzania, Ethiopia, and South Sudan. Sorghum prices increased seasonally at elevated levels at the peak of the lean season in Sudan. Maize prices increased in the main producing markets of Somalia in response to a second consecutive below-average season. Wheat flour prices were stable at elevated levels in Yemen. Livestock prices were stable with improved rangeland conditions during the ongoing June-to-November rainy season in many countries (Page 4).

? In Southern Africa, maize supplies on major markets were at average to below-average levels in August. Maize grain prices exhibited mixed trends across the major markets in the region and are anticipated to increase atypically during the September to October period. The exception will be South Africa where prices will likely remain stable during this period. Maize grain was generally able to circulate between surplus and deficit areas, except for Zambia where export restrictions remain in place (Page 5).

? In Central America, maize and bean market supplies remained sufficient region-wide in August with carryover stocks from the Postrera harvest and international imports. Month on month maize and bean price trends varied in line with seasonal trends, while maize prices remaining above average and bean prices below average. In Haiti, markets were adequately supplied with imported staple foods while supply of local staples was limited due to below-average Printemps harvests. Prices of both local and imported staple foods continue to be significantly above-average levels. The Haitian gourde was stable against the USD for the second consecutive month but maintains a 30 percent year-on-year depreciation (Page 6).

Figure 1. FEWS NET Country Coverage

? Central Asia sustained adequate supplies and intraregional trade is expected to fill local wheat deficits within the region. Local wheat availability in Afghanistan, Kazakhstan, and Pakistan is expected to be at average levels. Wheat prices have been increasing but remain at average levels in Kazakhstan and are above average in Pakistan, Afghanistan, and Tajikistan (Page 7).

? International staple food markets are well supplied. Maize, wheat and soybean prices decreased while rice prices were stable in August (Figure 2). Global crude oil decreased in August partly in response to declining global economic indicators while global fertilizer prices fell in August (Page 2).

Source: FEWS NET.

FEWS NET monitors trends in staple food prices in countries at risk of food insecurity. The Price Watch provides an update on market and price trends in selected reference markets. Specific trends for key reference markets and commodities are available in the Price Watch Annexes 1 and 2. FEWS NET gratefully acknowledges partner organizations, ministries of agriculture, national market information systems, the Regional Agricultural Intelligence Network, the Food and Agriculture Organization of the United Nations (FAO), the World Food Programme (WFP), and others for their assistance in providing price data.

FEWS NET fewsnetinfo@

FEWS NET is a USAID-funded activity. The content of this report does not necessarily reflect the view of the United States Agency for International Development or the United States Government.

PRICE WATCH

September 2019

INTERNATIONAL MARKETS

Current situation

? International rice prices were largely stable in August except for Thailand where prices increased from tighter exportable surpluses and a revaluation of the Thai Baht against the U.S. dollar (InterRice). Rice prices remain close to both August 2018 and 5-year average levels (Figure 2).

Figure 2. Food commodity prices in selected international markets, January 2013 ? August 2019

? Global maize prices decreased in August on larger South American harvest and improved crop prospects in the U.S. (Figure 3). Maize prices are close to or below August 2018 and 5-year average levels except for South Africa where below average 2019 harvests have resulted in aboveaverage prices (AMIS and USDA).

? International wheat prices decreased in August from a

combination of favorable northern hemisphere harvests, weak export demand and lower maize prices (AMIS and

Source: Food and Agriculture Organization of the United Nations (FAO), World Bank.

USDA). Wheat prices remain close to August 2018 and 5year average levels.

Figure 3. Global Market Indicators, 2019/20 compared to 2014-2018 average

? Global soybean prices decreased on average in August. U.S. prices have been falling since mid-July on improved crop prospects. Soybean prices are significantly below August 2018 levels but remain close to 5-year average levels (AMIS and IGC).

? International crude oil prices decreased in August partly in response to declining global economic indicators. Crude oil prices remain below August 2018 and 5-year average levels (U.S. Energy Information Administration). Global fertilizer prices were stable or decreasing in August as natural gas prices fell from rising inventory levels. Fertilizer price trends were on average below August 2018 and 5-year average levels (AMIS).

Source: FEWS NET calculations based on USDA data.

Outlook

? Global rice production will likely fall marginally due to expectations for a smaller crop in some major Asian producing countries but will likely continue to outpace consumption levels (InterRice and AMIS).

? Global maize production is expected to fall below last year levels while trade will be below 2018/19 record levels due to reduced U.S. export availabilities and weaker demand (IGC and USDA).

? Global wheat production is expected to recover in 2019/20 from last year's reduced levels. Trade is expected to rebound year-on-year because of increased demand from Asia and Africa (USDA and AMIS).

? Global soybean production is expected to fall mainly from reduced U.S. output. Expectations are for weaker Chinese demand as the industry adjusts to the spread of the African Swine Flu (USDA and AMIS).

? International crude oil production in the U.S. is expected to largely offset lower OPEC production targets (U.S. Energy Information Administration). Global fertilizer production growth will likely be modest as demand recovers (AMIS).

Staple food price trends across the countries monitored by FEWS NET will vary considerably in the coming months in response to local and regional market conditions; international market trends will play a more limited role in most countries (Figure 2). Fuel price trends in FEWS NET countries will depend on both international market conditions, the evolution of local exchange rates in relation to the U.S. Dollar, and the design and implementation of local fuel import and price policies.

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PRICE WATCH

September 2019

WEST AFRICA

Current situation

? As the 2018/19 marketing year lean season peaks, market supplies are seasonally decreasing, but remain above average due to last year's favorable production. Supply is strengthened by green harvests, cross border trade, and subsidized government cereal sales. At the same time, market functioning remains limited in insecurity and conflict stricken Greater Lake Chad basin, Tibesti region, and the Liptako-Gourma region. Moreover, the Government of Nigeria decided to close some land borders at the end of August in order to reduce smuggling, particularly of rice and petroleum, and to curb insecurity in northern areas.

Figure 4. Sorghum prices in West Africa compared to fiveyear average

? Demand is at its seasonal high level, but reportedly below

average in most markets due to reduced institutional purchases and sustained stocks. Current stocks available at

Source: FEWS NET

trader and farmer levels are reportedly above average in Figure 5. Imported rice prices in West Africa compared to several areas. Moreover, there are reduced cross-border five-year average

and sub-national trade flows in and around conflict zones.

? In Nigeria, household stocks are seasonally depleting with increased dependence on markets. Market supply across the country has also decreased, but August prices were stable or lower compared to the previous month for most markets, as stocks are higher than average and institutional purchases and cross border demand are lower. However, above-average prices remained for both local and imported rice.

? In the Sahel, despite the lean season, coarse grain prices

were decreasing or stable, and are below both last year and

Source: FEWS NET.

average level for most markets. Nevertheless, price

increases were observed in areas affected by insecurity and border closures (Figure 4). In several (mostly non-XOF)

coastal countries, above-average prices persist for both local and imported rice due to currency depreciation and

inflation, while prices for other staples are stable or lower than average (Figure 5).

? The availability of pasture varies across the region due to varied rainfall distribution, but this is offset by stable and/or subsidized feed prices. Livestock trade has declined in insecure areas. Small-ruminant prices remained above average in most markets. Low staple food prices have maintained terms of trade favorable to pastoralists.

Outlook

? The 2019/20 agro-pastoral season is expected to be average to good in terms of crop production. Nevertheless, forage production is reported to be lower in the Western Sahel and in parts of the Central and Eastern basin (PREGEC). In the Sahel, market supplies will stabilize with early green products and the release of stocks. Demand and prices will decrease with the expected main harvest starting in October. Prices will be below average throughout the harvest period until December.

? In Nigeria, with some land borders closed, supply for imported rice will further decline and, with increased fuel and transport costs, price increases for rice and other imported items could be expected. In the northeast, uncertainties remain in terms of the functionality of the markets, which will continue to impact trade as some of the connecting routes remain restricted.

Famine Early Warning Systems Network

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PRICE WATCH

September 2019

EAST AFRICA

Current situation

? Market and price trends varied substantially across East Africa in August. Markets and price dynamics remain heavily affected by conflict and severe macroeconomic conditions in Yemen, South Sudan, and Sudan. Staple food prices continued to decline seasonally during the post-harvest period in Uganda and Tanzania. Maize prices increased in Somalia because of a second consecutive below-average harvest in June-to-July. Livestock prices were typically stable due to improved body conditions stemming from availability of water, pasture, and browse. High inflation sustained elevated prices in Yemen, Ethiopia, South Sudan, and Sudan (Figure 6 and Figure 7).

Figure 6. Average January to August price and exchange rate trends in Sudan (Al Qadarif), 2014-2019

? Tanzania remained the main source for maize imports in the

region the East Africa region because of an estimated

Source: FEWS NET and WFP, Yemen.

tradeable stock of 500,000 MT at relatively lower and stable

prices. Although prices in Uganda's maize surplus areas are Figure 7. August 2019 maize prices in East Africa compared

trending downward, they were still volatile due to to the previous year (% change)

uncertainty overproduction.

? In Yemen, despite recent efforts to reduce the depreciation rate of the YER, conflict and severe macro-economic instability continued to disrupt markets and sustain significantly high prices. After appreciating during the second half of 2018, the value of the YER on the parallel market has declined progressively in 2019. Price trends varied at elevated levels in South Sudan with the progression of the May-to-August harvests. Incidences of conflict have reduced, thereby permitting the recovery of oil production, market, and livelihood activities and improving humanitarian access to conflict-affected areas. Oil production has risen from 135,000 bpd to 180,000bpd in July 2019. While markets are operational in urban areas, rural markets continue to recover.

? Maize prices were stable or declined seasonally across most markets in Kenya with the onset of harvests and the

Source: FEWS NET estimates based on Food and Agriculture Market Information System (FAMIS), FSNAU, Uganda Bureau of Statistics and Farmgain, Tanzania Ministry of Industry, Trade and Marketing (MITM),

availability of Tanzanian imports. The prices of staple grains across most markets in Ethiopia remained stable at high

Ethiopia Grain Trade Enterprise (EGTE), National Drought Management Authority (NDMA).

levels in August at the peak of the June-to-September lean season. However, maize, sorghum, and teff prices were higher

than last year and recent five-year average levels because of the below-average previous October-to-January (Meher)

harvest and delayed June-to-July 2019 (Belg) harvest; higher inflation, depreciation of the local currency, and high costs

of imported fuel that has increased transport costs. Millet and sorghum prices continued to increase during the lean

season in Sudan due to various compounding factors, including the direct and indirect effects of the severe

macroeconomic situation which has affected government and private sector import capacity. As the exchange rate has

depreciated, price levels and variability has increased (Figure 6). Sorghum prices in Somalia have varied in recent months

Outlook

? Staple food prices are expected to follow seasonal patterns across most markets but will likely remain above the 2018 and recent five-year average levels. The prices of most staple commodities in the region are expected to decline between October and December as harvests set in and reduced rural household demand.

? The recent formation of the new government in Sudan is likely to provide stability and some improvement to the deteriorating macroeconomic situation. However macroeconomic recovery will be gradual over a long period of time.

Famine Early Warning Systems Network

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PRICE WATCH

September 2019

SOUTHERN AFRICA

Current situation

? In Southern Africa, maize supplies on major markets were at average to below-average levels. Intra-regional trade remained strong as South Africa continued exporting to the grain deficit countries of Botswana, Eswatini, Lesotho, Namibia, and Mozambique. In Madagascar, local and imported rice supplies were at average levels.

Figure 8. White maize grain prices in selected markets (USD/kg)

? Maize grain prices at major markets in the region were stable or increasing rapidly (Figure 8). Typically, prices are stable or increasing marginally in August which marks the peak of the marketing season. However, in South Africa of maize grain followed typical trends by remaining stable. Maize grain prices remain significantly above their respective 2018 and 5-year average levels (Figure 9). Price trends were mixed for common substitutes, including rice and cassava.

? In South Africa, maize supplies were at normal levels on the SAFEX market. Maize availability remains adequate and is

Source: FEWS NET estimates based on data from SADC and government ministries.

expected to cover domestic consumption needs and exports to typically grain deficit countries in the region. Export parity prices decreased for both white and yellow maize but

Figure 9. August 2019 maize grain prices in Southern Africa compared to the previous year (% change)

remain above Argentina and the U.S. prices. In Zambia,

maize supplies were at average to below-average levels in

key reference markets. Maize grain prices exhibited mixed

trends and were significantly above July 2018 and 5-year

average levels due to below-average 2019 harvests and an

upward revision of maize producer prices by the National

Food Reserve Agency (FRA). Qualitative reports suggest

negligible formal and informal maize flows to neighboring

DRC, Malawi, Tanzania, and Zimbabwe as maize export

restrictions remain in place.

? In Zimbabwe, maize grain and maize meal prices were

increasing rapidly in terms of local currency, and up to 100

percent in some reference markets. However, maize grain

prices were about 30 percent below April 2019 levels in USD

Source: Ministry of Agriculture, Irrigation, and Water Development of

partly due to currency depreciation as the ZWL value weakened by about 243 percent against the USD between

Malawi, Ministry of Agriculture of Mozambique, Central Statistics Office of Zambia, SAFEX, WFP, OdR (Madagascar) and FEWS NET.

April and August 2019. Tanzania's wholesale maize grain prices increased as exports to East African markets remain

strong. In Malawi, maize grain prices were increasing up to 40 percent while household stocks in grain deficit areas are

being depleted and are becoming increasingly reliant on markets for maize grain. In Mozambique, maize grain prices

were stable or increasing as reduced 2019 harvests have led to below-average availability in some surplus producing

areas. In Madagascar, yellow maize grain prices were stable while local and imported rice prices exhibited mixed trends.

In DRC, maize meal and cassava flour prices increased and were significantly above April 2019 levels.

Outlook

? Maize supplies will likely be at average to below-average levels across key regional markets. South Africa is expected to continue supplying structurally grain deficit countries along with Mozambique and Zimbabwe. Zambia's maize grain exports to the region will remain restrained due to below average 2019 harvests. Tanzania's maize exports to the region will similarly remain weak as the country increases outflows to East African countries. Maize prices will continue increasing in the short term in all countries except in South Africa where they are likely to remain stable during the September to October 2019 period. Across the region, maize grain prices are expected to be sustained at levels well above those of 2018 and remain above average for the remainder of the 2019/20 marketing year.

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