There is a chance of an El Niño occurrence in the next production season

• The picture of South Africa’s maize supplies for the 2018/19 marketing year is somewhat clear and points to comfortable levels of domestic supplies. The means South Africa’s 2018/19 maize supplies could reach 16.7 million tonnes, well above the local demand of 10.8 million tonnes, according to data from the national Supply and Demand Estimates Committee. The supplies figure includes an opening stock and expected production.
• However, the preliminary weather forecasts for the upcoming production season which will start in October 2018 presents an unfavourable outlook. The most recent data from the International Research Institute for Climate Society shows that the likelihood of an El Niño occurrence next season is over 60 percent. This means that there is a higher chance that South Africa could experience a drier season next year.
• Overall, these are still initial estimates, we will keep a close eye on the developments over the coming months in order to ascertain the impact of this on next season’s crop production. In the near term, this will possibly have minimal impact on maize prices until there is some level of confidence or clarity on the estimates, which should be in the space of a month or two.
• Aside from these weather developments, the global maize market is also in good shape, following a slight upward revision of the production estimate for the 2018/19 season to 1.05 billion tonnes, according to the USDA. Most importantly, this is 2 percent higher than the 2017/18 global maize production. The key contributing countries are Brazil, Argentina, Russia, Ukraine and China, amongst others. Going forward, the weather will remain an important factor to monitor across the globe as it could still influence the aforementioned estimates.

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