Wandile Sihlobo, Agbiz

Yesterday (4 September 2018) the SAFEX maize market opened on a fairly quiet note, but saw notable gains towards the end of the session and settled in positive territory. This was driven by the weaker Rand against the US Dollar, as well as slightly higher Chicago maize prices. This is likely to remain the key theme in today’s session as the currency remains at weaker levels, with Chicago maize prices continuing to provide support.

Apart from the aforementioned price movements, the focus today (5 September 2018) will be on the producer deliveries data which is due for release at midday. In the week ending 24 August 2018, maize producer deliveries amounted to 390 905 tons, down by 30% from the previous week (ending 17 August 2018) as a large share of the harvest has already been delivered to commercial silos. The yields in most regions generally varied between average and above-average.

This placed South Africa’s 2018/2019 maize marketing year producer deliveries at 10,3 million tons, which equates to 78% of the estimated commercial harvest of 13,2 million tons. The data that is due for release today is for the week ending 31 August 2018.

Beyond our borders, while the 2018/2019 global maize harvest is expected to increase by a percentage point from last year to 1,06 billion tons, supplies are tight due to an anticipated uptick of maize usage in industrial, feed and food industries. Industrial (mainly ethanol) and feed industries maize usages are set to increase by 3% each from the 2017/2018 season to 304 million and 641 million tons, respectively.

The uptick in feed demand from the animal feed industry is partly on the back of lower global wheat production resulting in feed processors aiming to utilise maize as a substitute. As a consequence, the 2018/2019 global maize stocks are set to decline by 14% from the previous season to 256 million tons.

The recent unfavourable weather conditions in parts of the United States (US) Midwest have negatively affected crop conditions. The most recent data from the United States Department of Agriculture (USDA) shows that on 02 September 2018, about 67% of the US maize crop was rated good/excellent, down by a percentage point from last week (ending 31 August 2018). –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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