Overall market risk: Macroeconomic conditions in Africa experienced a significant downturn last year, with economic growth decelerating to 3.1 percent. According to the AFDB, this slowdown resulted from several factors: persistently high food and energy prices due to the sustained impacts of Russia’s invasion of Ukraine, weak global demand affecting export performance, climate change and extreme weather events impacting agricultural productivity and power generation, and pockets of political instability and conflict in some African countries. While the impact of these factors is now diminishing, the AfDB notes that despite a positive medium-term outlook, the continent’s economic growth rate remains too sluggish to drive the necessary transformation to improve lives across Africa.
In other news, there are fears of food insecurity this year in southern Africa following a record-breaking drought driven by an unrelenting El Niño. Most crops, including typically resilient ones like sorghum and sunflowers, have reached the permanent wilting point. The invasion of pests such as fall worms has further worsened the already dire situation. On the global fertilizer scene, urea prices have continued to firm up due to the disruption of Egyptian gas supplies and low production rates. Similarly, phosphate prices have risen due to the lack of Chinese supply and India’s indecision on their tender and refusal of current prices. In contrast, South Africa’s Foskor prices remain depressed.
Availability and Affordability: Across the region, no major fertilizer shortages have been reported. In the East, farmers are preparing for the short rain season beginning in September, which could lead to an increase in imports. In the Southern region, the winter cropping season has just concluded.
Kenya’s KTDA is sourcing the remaining half of their yearly tender of NPK 26-5-5 (45,000 MT). Other shipments include DAP from Maaden and NPK 17-17-17 for ETG. Increased imports are expected, although cautiously, as the government continues to provide subsidized fertilizers. In Ethiopia, where the main season is ongoing, fertilizer distribution is active. The EABC has been commended for timely procurement this year compared to previous years. In Tanzania, the Tanzania Fertilizer Company (TFC) is in the process of awarding contracts for 30,000 tons of DAP and urea, while One Acre Fund is sourcing 10,000 tons of various fertilizers for Rwanda. Malawi has reported low fertilizer availability as the winter cropping season ends, with forex issues being a major problem. In South Africa, the import market is slowing down as importers are believed to have secured substantial tonnages.
Distribution: Overall, most ports are reporting normal operations, and in-country transportation is running smoothly. The ongoing protests in Kenya have not affected fertilizer distribution. Djibouti port is experiencing congestion, leading to delays in fertilizer discharge and high demurrage costs. In Ethiopia, the ongoing conflict in various parts of the country continues to disrupt the fertilizer supply. The conflict in the Amhara region has resulted in restrictions and delays in delivering essential agricultural inputs, including fertilizers. Freight costs remain relatively unchanged. Rates from the Baltic and Middle East to East Africa remain high at $82/t and $32/t, respectively, while rates to South Africa are $50/t and $27/t.