The Chicago maize prices were again under pressure this morning due to favourable conditions for crops across the Midwest. The weather forecast for the next eight days shows a possibility of widespread showers in the Midwest, which should improve soil moisture and then benefit the new season crop.
In terms of crop conditions, about 97 percent of US maize area for 2018/19 season had already been planted in the week of 03 June 2018, which is slightly ahead of last year’s pace of 95 percent in the corresponding period. Moreover, about 86 percent of the planted crop had already emerged. With that said, the International Grains Council forecasts a 4 percent year-on-year decline in US 2018/19 maize production to 355 million tonnes.
The US is not the only country that is set to register a decline in 2018/19 maize production. The most recent data from the European Commission shows that the region’s 2018/19 maize production could decline by 2 percentage points from the previous season to 63.9 million tonnes due to a slight reduction in area planted, combined with expectations of lower yields in some countries within the region. Also in this list is India, where 2018/19 maize production is set to decline by 2 percent from the previous season to 26.5 million tonnes.
However, the aforementioned production decline could be offset by expected large harvest in Brazil, Argentina, Ukraine, China and Russia. This is evident on International Grains Council estimates which point to a percentage point annual increase in 2018/19 global maize production to 1.05 billion tonnes. This means that the global maize market will be well supplied over the next few months.
Overall, this will have minimal impact on the SAFEX maize prices due to large domestic supplies, estimated at 16.4 million tonnes, well above annual consumption of 10.7 million tonnes.