Mixed reactions on gov’t maize price.

August 27, 2018

The maize grain market price continued to increase gradually as farmers hoard their crop in anticipation for receiving the government announced grain price of Ugx.500/kg farm gate level. Maize in Kampala increased from Ugx.430/kg to Ugx.440/kg. Slowed down maize grain flow was observed compared to early August.

Likewise the grain price in Busia regional border market increased slightly from Ksh.13/kg to Ksh.14/kg (Ugx.512). The volumes of grain closing to Kenya reduced from an estimated 800Mt to 600Mt on a daily basis.

Supply from inland (production areas) reduced as farmers held on to their crop. They are waiting for the government announced farm gate price of Ugx.500/kg. However, there were mixed reactions as to whether this price will hold since the selected large grain buyers were not clear about where they would sell the grain, and if it would make business sense to stock maize and wait for a higher market price. A few grain houses talked to were skeptically about the market for this grain in the near future.

Forecast indicate that if this maize grain was purchased at Ugx.500/kg then it should be exposed off at Ugx.750/kg to stay in business since it accrues an interest of 15% per annum. Ideally if the rain distribution in the coming season was more or less similar to last season, then the projected Ugx.750/kg wouldn’t be possible to be attained.

Other school of thought specifies that farmers are already disappointed with the current commodity market trends and will most likely not cultivate maize in the coming season which implies lower production/ yield estimates. This will probably thrust the maize price by February 2019 when 2nd harvest will be ready.

Brisk grain purchase has been going on in parts of the western region where Rwandese traders bought lots of grain heading to “Minimex” in Rwamagana where major grain processing takes place for flour and brewery products. Most of the exported grain to Rwanda went via Kakyitumba border post. Maize was bought in Kamwenge, Kasese, Kibaale and other large production areas in the western region. In Kamwenge it was bought at Ugx.390-400/kg. Elsewhere they bought grain at Ugx.410/kg or below depending on distance and quality.

Farmgain Africa.

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