Wandile Sihlobo, Agbiz

Last night (2 July 2018), the International Grains Council kept its production forecast for South Africa’s 2017/2018 maize production unchanged from last month (June), at 13,4 million tons. This is 3% lower than the national Crop Estimates Committee’s forecast of 13,8 million tons for commercial and non-commercial maize production.

These forecasts are well above South Africa’s average maize production of 12,5 million tons, albeit lower than the 2016/2017 harvest of 17,6 million tons. Most importantly, the expected production, combined with the stocks from the previous season implies that South Africa’s maize supplies will be higher than the annual consumption of 10,8 million tons. To reiterate a point made in our notes, South Africa could see exports exceeding 2,5 million tons in the 2018/2019 marketing year, which ends in April 2019.

Beyond our borders, the focus is already on the 2018/2019 production season which will only commence in October 2018 here at home. The International Grains Council forecasts the 2018/2019 global maize production at 1,05 billion tons, up by a percentage point from the previous season.

The countries driving this increase are Brazil, Ukraine, China and Russia, with the 2018/2019 maize production estimated at 94 million tons (+10% y/y/), 48 million tons (+20% y/y), 221 million tons (+2% y/y) and 15 million tons (+10% y/y), respectively. The potential decline in production in the United States (US), India and the European Union (EU) region will not be largely pronounced on a global scale. Overall, this will have minimal impact on the local market. During the coming months, the SAFEX prices will largely be driven by domestic factors as the country is a net exporter of maize. – 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.

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