Wandile Sihlobo, Agbiz

The picture of South Africa’s maize supplies for the 2018/2019 marketing year is somewhat clear and points to comfortable levels of domestic supplies. This means that South Africa’s 2018/2019 maize supplies could reach 16,7 million tons, well above the local demand of 10,8 million tons, according to data from the national Supply and Demand Estimates Committee.

The supplies figure includes an opening stock and expected production. However, the preliminary weather forecasts for the upcoming production season which will start in October 2018 presents an unfavourable outlook. The most recent data from the International Research Institute for Climate Society indicates an El Niño occurrence of over 60% next season. Therefore, there is a higher chance that South Africa could experience a drier season next year.

Overall, these are still initial estimates; we will keep a close eye on the developments over the coming months in order to ascertain the impact of this on next season’s crop production. In the near term, this will probably have minimal impact on maize prices until there is some level of confidence or clarity on the estimates, which should be revealed a month or two.

Aside from these weather developments, the global maize market is also in good shape, following a slight upward revision of the production estimate for the 2018/2019 season to 1,05 billion tons, according to the United States Department of Agriculture (USDA). Most importantly, this is 2%higher than the 2017/2018 global maize production. The key contributing countries are Brazil, Argentina, Russia, Ukraine and China, amongst others. Going forward, the weather will remain an important factor to monitor across the globe as it could still influence the aforementioned estimates. –Wandile Sihlobo

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.

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