Overall market risk: In the third quarter of 2024, most Eastern African currencies weakened against the U.S. dollar, with the exceptions of Kenya and Uganda. As of September, South Sudan and Sudan ranked among the three countries with the sharpest currency declines in the parallel market, experiencing drops of 78 percent and 69 percent, respectively. Burundi’s franc also saw a substantial depreciation, falling by 36 percent (ReliefWeb). The cost of living remained high. As of September 2024, the annual inflation rate across the region was, on average, 19.9 percent.
The fertilizer market continues to witness a lot of volatility. Throughout the first half of October, Urea prices were on the high as a result of India being in the market seeking the product. The surge was also intensified by the ongoing conflict in the Middle East. China’s tight export strategy also exacerbated the situation indicating firm price trends might persist to the end of year. The last week of October though witnessed soft and stable Urea prices attributed to the upcoming Diwali celebrations. For phosphates, the prices are rising driven by India’s demand and Ethiopia’s 1.27 million demand for its 2024/25 agricultural season with tight deliveries starting end of November. The Potash market has remained relatively stable with anticipated demand from West Africa for its blend market.
Availability and Affordability: In the East African region where the short rain season is coming to an end, demand for fertilizers is dropping.
In Kenya, 640,000 MT of fertilizers has so far been imported into the country, indicating a positive supply of 85% of annual demand.
In Tanzania, adequate stocks to meet demand is being reported. So far, 56% of the projected demand for 2024 of 1 million MT has been sufficiently met.
Of the 1.94 million MT purchased by the Ethiopian Agricultural Business Corporation (EABC), 99.9% has arrived at the ports of Djibouti and Lamu, and 97% has been transported to central warehouses and farmer cooperative union warehouses, ensuring timely distribution to farmers as per import planning allocations of the Ministry of Agriculture. EABC recently received bids for its 1.27 million MT buy tender of DAP from a growing pool of suppliers, including Samsung C&T, Aditya Birla Group, ETG, and Promising International.
In Rwanda, no fertilizer shortage has been reported. 75,000 MT has so far been imported out of an annual requirement of about 100K MT.
Zambia has registered a consistent supply of Urea and Compound D as they enter peak season. In Zimbabwe, the situation looks dire with 40% of annual requirements currently met. The harsh macroeconomic environment and delayed payments are also making it difficult for communal farmers who traditionally bought through these outlets to fund themselves.
In the southern region, Malawi has recorded very low inventories (about 50,000 MT) as of September, less than 20% of its annual requirement. The 2024/2025 Affordable Inputs Program (AIP) was officially launched on October 14. The program will subsidize approximately 1,048,445 million beneficiaries. Forex continues to be the main issue in Malawi.
Distribution: Ports and border points are operating normally with minimal disruptions.
Mozambique experienced significant unrest following disputed elections. The unrest has prompted increased security measures across the country as tensions remain high, with planned further demonstrations. This could affect the transportation and distribution of commodities including fertilizers.
Freight costs to East Africa have slightly dropped. Month-over-month, rates from the Baltic and the Middle East to East Africa have dropped to $77 per MT and $22 per MT, respectively, while rates to South Africa have dropped to $44 per MT and $20 per MT.