It is worth noting that local maize prices have improved notably from lower levels seen at this period last year (2017), although large maize supplies are available in the market. Friday’s (8 June 2018) white and yellow maize spot prices of R2 084 per ton and R2 177 per ton are respectively 16% and 14% higher than the corresponding period last year (08 June 2017). Part of the reason for an uptick in prices is the relatively weaker Rand against the US Dollar and higher Chicago maize prices for the corresponding period. The general improvement in global maize demand has also presented a bullish sentiment to the market.
The demand story is clear from South Africa’s recent maize export activity. In the first five weeks of the 2018/2019 marketing year, maize exports averaged 57 000 tons a week, well above the levels seen in the corresponding period last year. The regional demand, which was weak last year, is expected to improve in the 2018/2019 marketing year due to lower production in countries such as Zimbabwe, Zambia and Malawi, amongst others.
From a production perspective, although we are generally positive about South Africa’s 2017/2018 maize harvest, leaning on the National Crop Estimates Committee’s production estimate of 12.9 million tons, the reports of frost in parts of the North West province could lower the maize crop quality. So far, we have received reports of frost in areas around Lichtenburg, Delareyville and Sannieshof.
Harvest activity has commenced in the North West province and other provinces. We will closely monitor the yields and crop quality reports in the coming weeks in order to get a sense of the extent of the damage. Harvest activity should progress smoothly during the next two weeks as the weather forecasts show a possibility of cool and drier weather conditions over the maize belt. – Wandile Sihlobo, Agbiz
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.