Spotlight on maize market

• Last night the International Grains Council kept its production forecast for South Africa’s 2017/18 maize production unchanged from last month, at 13.4 million tonnes. This is 3 percent lower than the national Crop Estimate Committee’s forecast of 13.8 million tonnes for commercial and non-commercial maize production.
• These forecasts are well above South Africa’s average maize production of 12.5 million tonnes, albeit being lower than the 2016/17 harvest of 17.6 million tonnes. Most importantly, the expected production, combined with the stocks from the previous season implies that South Africa’s maize supplies will be higher than annual consumption of 10.8 million tonnes. To reiterate a point made in our notes, South Africa could see exports exceeding 2.5 million tonnes in the 2018/19 marketing year which ends in April 2019.
• Beyond our borders, the focus is already on the 2018/19 production season which will only commence in October 2018 here at home. The International Grains Council forecasts 2018/19 global maize production at 1.05 billion tonnes, up by a percentage point from the previous season.
• The countries driving this increase are Brazil, Ukraine, China, and Russia, with 2018/19 maize production estimated at 94 million tonnes (+10% y/y/), 48 million tonnes (+20% y/y), 221 million tonnes (+2% y/y) and 15 million tonnes (+10% y/y), respectively. The potential decline in production in the US, India and the EU region will not be largely pronounced on a global scale. Overall, this will have minimal impact on the local market. Over the coming months, the SAFEX prices will largely be driven by domestic factors as the country is a net exporter of maize.

Click HERE to read the full report by Wandile Sihlobo