Domestic maize market is shifting towards the next season
Spotlight on global wheat market
August 13, 2018
Spotlight on the domestic wheat market
August 15, 2018
The focus in the domestic maize market is shifting towards the next season
- There is a general understanding in the market that South Africa’s maize supplies are in good shape in the 2018/19 marketing year which ends in April 2018. As indicated in our previous note, the supplies are estimated at 16.7 million tonnes, well above the annual maize consumption of 10.8 million tonnes. About 2.5 million tonnes will probably be exported and the rest be carried over to the next marketing year.
- The focus is now shifting towards the 2018/19 production season which will commence in October. The forecasts of an El Niño over the coming months have created uncertainty in the market about the potential size of the next season crop. This uncertainty is somewhat reflected on maize prices which are currently double digits up from levels seen at the beginning of August 2017.
- We should highlight, however, that the annual uptick on domestic maize prices is not only caused by uncertainty ahead of the new season but more by the weaker domestic currency and the higher Chicago maize prices. The impact of weather will largely be mirrored on maize prices when the planting season begins in October 2018 and probably runs until the end of February 2019 when the new season crop starts to mature.
- The global observers such as the United States Department of Agriculture are still optimistic about South Africa’s new season crop. The agency placed South Africa’s 2018/19 maize production estimate at 14.0 million tonnes, up by a percentage point from the current season. Meanwhile, the International Grains Council forecasts an 11 percent decline from the 2017/18 harvest to 12.3 million tonnes.
- We generally do not attach much weight on these particular estimates due to the aforementioned weather uncertainty. We will get more reliable estimates about the weather prospects in the coming month, and then release our view on crop size.
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