Trade falters on ZMX auction, as farmers demand high prices

Source: The Herald – Breaking news.

Trade falters on ZMX auction, as farmers demand high prices 
Dr Reneth Mano

Agriculture Specialist Writer

TRADING plunged to its lowest ebb on Day 8 of the Zimbabwe Mercantile Exchange (ZMX) auction after farmers demanded high price bids for maize and soya bean, which saw buyers temporarily suspending activities or drastically cutting quantities they bought.

Stock feed Manufacturers Association of Zimbabwe (SMAZ) executive administrator Dr Reneth Mano said the prices farmers were asking for were very high and had the capacity to stoke inflation at a time when general prices in the market were trending downwards.

“The ZMX weekly prices of maize are rising at a faster rate than domestic inflation implying that the shortage of maize, which is driving prices up was set to nudge domestic food price inflation up at a time when macroeconomic fundamentals are exerting downward pressure,” Dr Mano said.

Dr Mano said what is happening was contrary to economic basics, as the Government policy of allowing duty-free imports of maize meal was bound to reduce demand for maize.

“When market prices are rising in the presence of a stable demand from the stock feed industry and no demand from roller meal companies who are reeling from unfair competition with duty-free maize meal imports from neighbouring countries then supply of maize must be falling short of demand,” he said.

Soya bean trading debuted at the weekly ZMX auction last week with farmers selling all the 167, 38 tonnes of the crop at an average price of US$480 per kilogramme and pocketed US$80 342, 40.

Statistics from ZMX show that on this week’s trade, soya bean farmers offered 145 tonnes at an elevated average price of US$540 per tonne, up from last week’s US$480.

Buyers bid for 3 500 tonnes at an average price of US$485 per tonne valued at US$1 697 500 but there was no successful trading.

A total of 3 645 bids and offers, with an average price of US$487, 19 were unsuccessful in comparison to last week’s 3 833 at an average price of US$480.

Maize buyers also submitted bids for 370 tonnes at an average price of US$325, 14 worth US$120 301, 80 on the same day.

Sellers offered 2 343, 42 tonnes at an average price of US$356, 14 per tonne valued at US$834 585, 60.

Farmers increased their average offer price by five percent to US$356, 14 per tonne from US$337, 98 last week.

Only 243, 42 tonnes of maize were sold at an average price of US$330 per tonne worth US$80 328, 60.

The average successful price rose to US$330 per tonne from last week’s US$315 and the previous week’s U$310.

The maize bid and offer prices, which had narrowed to US$13 on Day 6 widened further to US$31 up from last week’s US$26 due to the increase in offer price by farmers.

ZMX chief executive officer Mr Collen Tapfumaneyi said the platform was going through a normal process where participants are getting used to how a commodities exchange works.

“Market volatility at this transitional stage was to be expected as part of the price discovery process. For improved deliveries into the warehouse receipt system to increase trades, more work is required to ensure availability of warehouse facilities closer to the farmers.

“We are happy that additional warehouse operators have come forward to register on the platform and this increased capacity will certainly help improve trading volumes,” said the ZMX boss.