US maize crop is in good shape

• Data from the USDA shows that 72 percent of the US maize crop was rated good or excellent on 22 July 2018, which is in line with the previous week, but 10 percentage point higher than the corresponding week last year.
• The uptick in crop conditions rating is generally underpinned by favourable weather conditions over the Midwest. Furthermore, the weather forecast for the week promises widespread showers, which could slightly improve soil moisture and possibly keep the crop in good shape for some time.
• Be that as it may, the US 2018/19 maize harvest is set to decline by 3 percent from the previous season to 361 million tonnes due to a reduction in area planted. From a global perspective, the potential decline in US maize harvest could be offset by an improvement in other regions such as South America and the Black Sea. The 2018/19 global maize harvest is estimated at 1.05 billion tonnes, up by 2 percent from the previous season. The uptick in production might not add pressure on prices due to the expected uptick in global maize consumption.
• The aforementioned developments will have minimal impact on the South African maize market, which is currently underpinned driven by domestic factors (as the country is again a net exporter of maize). We are of the view that the SAFEX maize prices could trade at relatively lower levels in the near term due to expected large supplies of 16.7 million tonnes, which is well above the domestic demand of 10.8 million tonnes.
• A large part of the maize crop has already been harvested. In the first 11-weeks of the 2018/19 marketing year, about 45 percent of the estimated harvest of 13.2 million tonnes had already been delivered to commercial silos. An update for the week of 20 July 2018 will be released by SAGIS at midday tomorrow.

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