Cotton merchants buying white gold at $0,48/kg

THE marketing season for most agricultural commodities kicked off on June 1, 2017 with the Grain Marketing Board (GMB) buying maize and all small grains at $390 per tonne, while cotton buyers are offering $0,48 per kilogramme.

To avoid side-marketing, the GMB has introduced a comprehensive tracking process for maize from Command Agriculture beneficiaries, although there is plenty of “free” maize/grain on the market.

Statistics from the Second Crop Assessment Report indicate that the country is expecting 2,1 million tonnes of maize.  This, together with small grains should give over 2,7 million tonnes of grain this year, well above the national requirements of 1,8 million tonnes.

Within the region, a large surplus maize crop primarily from South Africa, Zambia, and Malawi is expected. South Africa is expecting to harvest between 12,4 and 14,5 million tonnes  against their domestic requirement of nine million tonnes. Zambia and Malawi are expecting to harvest three million tonnes. Thus, the South African Futures Exchange (SAFEX) maize (non-genetically modified) prices for July deliveries are quoting free-on-board prices as low as $180 per tonne, landing in Zimbabwe at $280 per tonne, inclusive of any premium on foreign currency payments for imports.

Zambia also has a massive soya bean crop and it is anticipated that prices will stabilise at the end of July. Zimbabwe is expected to import the bulk of the crop as production for 2016/2017 was 20 000 tonnes. The import parity price is currently pegged at $420 per tonne although local prices quoted by the Agricultural Marketing Authority indicate that buyers such as GMB and Staywell are buying the crop at $500 to $560 per tonne respectively.

Total national seed cotton seasonal sales as at June 16, 2017 stood at seven million kilogrammes, compared to no intake during the same time last year. Cotton production this year, is expected to reach 100 000 tonnes, compared to 30 000 tonnes last year.

Buyers include Cottco, buying the bulk of the crop at $0,48 per kilogramme, China Africa, Grafax, ETG, Olam and Alliance Ginneries. The companies are all buying the crop at $0,48 per kg compared to an expected price of $0,55 per kg.

Grade differential prices are expected to be paid after grading.

As of June 28, the Cotlook A Index quoted a price of $0,83 per pound.

Area put under tobacco increased by seven percent from 102 000 hectares in 2016 to 110 000 hectares in 2017. Tobacco production in 2017, at 215 million kgs, surpasses the previous year’s output of 203 million kgs.

On day 70 of the marketing season, the Tobacco Industry and Marketing Board quoted an average seasonal price of $2,93 per kg. Sales stood at 169 million kgs worth $492 million.

The average price for Brazil according to the International Tobacco Growers Association, is $2,80 per kg, Argentina $2,65, India $2,15,  Malawi $2,45 and Zambia $3,10.

The marketing season opened with a price of $4,60 per kg, which was  two percent higher than the opening price for the previous season of $4,50.

Beef slaughters are poised for recovery after some decline during the first quarter of the year 2017 at 60 768 cattle slaughters, against 67 331 slaughtered during the corresponding period in 2016.

The Treasury Quarterly Bulletin indicated that the slump in cattle slaughters was partly due to the restocking exercise by farmers following forced slaughters experienced in the previous year of drought.

The decline in beef production is also attributed to low aggregate demand prevailing in the economy, causing meat processors to reduce slaughters.