Spotlight on domestic maize market
It is worth noting that local maize prices have improved notably from lower levels seen at this period last year, although there are available large maize supplies in the market. Friday’s white and yellow maize spot prices of R2 084 per tonne and R2 177 per tonne are respectively 16 percent and 14 percent 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. Moreover, 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 2018/19 marketing year, maize exports average 57 000 a week, well above the levels seen in the corresponding period last year. Furthermore, the regional demand, which was weak last year, is expected to improve in the 2018/19 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 2017/18 maize harvest, leaning on the National Crop Estimates Committee’s production estimate of 12.9 million tonnes, 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.
The 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. Furthermore, the harvest activity should progress smoothly within the next two weeks as the weather forecasts show a possibility of cool and drier weather conditions over the maize belt.