August 30, 2012

Kenya cuts wheat output forecast due to late planting

Due to late planting and delayed buying of fertiliser, Kenya has cut the output forecast of its main wheat crop season by more than a third.

East Africa's biggest economy imports about two-thirds of its wheat needs, but traders said they do not expect huge jumps in prices despite the projected drop in output, saying yields would be good from the main growing areas.

Some traders however remained wary of the rising global prices of cereals, triggered by adverse weather in the world's largest wheat producer, US.

"The country is a net importer of wheat and the changes in the global front may reflect locally at one point in terms of pricing. The US and Russia are having challenges with production and that could drive up prices," said George Kimani, a cereals trader in Nairobi.

Kenya mainly imports wheat from Egypt and Mauritius through the Common Market for Eastern and Southern Africa trade bloc. It consumes about 900,000 tonnes of wheat per year and produces 350,000 tonnes.

Officials expect farmers to produce 3.68 million 90-kilogramme bags of wheat this year, 37% lower than an earlier forecast of 5.8 million bags the government had forecast in March.

Declining yields due to erratic rains and late acquisition of planting fertilisers would cause average yields to fall to 32 bags per hectare from a target of 36 bags. Farmers had also failed to achieve the targeted 159,988 hectares for planting, with just 103,386 hectares being achieved.

"Planting has been delayed mainly in the North Rift due to very heavy rains that interfered with land preparation. In Eastern Province, late rains also delayed planting," the ministry said in an update seen by Reuters.

National stocks of wheat stood at 512,050 bags in July compared with 476,390 bags the previous month following the arrival of imports, the ministry said.