The soya bean prices is in a steep decline of 63 percent month-on-month and 31 percent lower than 2021 period, the latest First National Bank (FNB) Agri-business reports indicates.
The bank also says this year’s maize offer price does not reflect the prevailing and escalating cost of production in the country.
The June/July report stated that soya beans was currently trading at $441 per tonne, representing a steep decline of 63 percent month-on-month and 31 percent lower for the same period in 2021.
“This is the first such drop for a rally that has lasted since March 2021. The rally initially was caused by export demand from China and India coupled with regional demand for Zambian soya meal which pushed the commodity above $450 per tonne,” FNB said.
It states that the buoyancy in price was maintained by a global increase in commodity prices which saw Zambian oil seeds benefit after increased demand following the lifting of COVID-19 restrictions the world over.
According to the report, the price peaked at $720 per tonne in April 2021 and started cooling off after the commencement of the 2022 harvest as the steep decline signals a correction in price or a correction that was about to set it.
“The signal from major buyers is ample stocks have been acquired and they shall look to utilize carry-over stocks before the use of stock bought in for the correct season,” it stated.
On the recent maize floor price of K160 now K180, it observes that the cost of production for commercial producers increased going into the 2021/2022 season with the average cost of production for an hectare to around $1,300-$1,500.
“The conclusion is that the offer prices does not reflect the prevailing and escalating costs of production. Coupled with this, the restrictions placed on exports make it even more difficult to make a reasonable return from maize trading,” the report states.
FNB said the high cost production for maize had seen small holder farmers abandon their cultivation for a more lucrative crop in soya beans which was trading higher in price than maize for the same cost of production.
“Soya beans have been competitively priced and will be at the cost of production challenges illustrated in maize allowing both small-holder and commercial producers to make a decent profit for this season,” it stated.