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The harvest activity is gaining momentum in the irrigation areas around the country. This is reflected in the volumes of maize delivered to commercial silos in the week ending 25 May 2018, which amounted to 255 903 tonnes, up by 77 percent from the previous week.

About 67 percent of this was yellow maize, with 33 percent being white maize. The fact that a large part of maize delivered to commercial silos is yellow maize signals that the harvest activity is gaining ground also in the early planted areas in the eastern parts of the country (areas that predominantly plant yellow maize). The total maize deliveries for the four weeks of the 2018/19 marketing year are estimated at 561 275 tonnes.

More maize will be delivered in the coming weeks because the harvest activity will soon gain momentum across the dryland regions of the country, particularly the early planted areas in the eastern and central parts of South Africa. The weather forecast is quite favourable for the next two weeks, which bodes well with the harvest activity and could also support the areas where maize is at drying and maturing stages.

Our conversation with farmers, as well as reported yields in areas that have already harvested ranges between average and above average (yields), which supports that National Crop Estimates Committee’s view of 12.9 million tonnes of maize production this season.

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I keep a close eye on the Zimbabwe agricultural sector because of its potential impact on regional demand. Since the collapse of the sector after the land reform programme in the early 2000s, the country has been one of the key markets for South African maize.

On average, South Africa’s maize exports to Zimbabwe accounted for nearly a third of overall maize exports between 2001 and 2017, according to Trade Map data. This came to a halt in October, when Zimbabwe banned maize imports after a recovery in domestic production to 2.2 million tons – its largest harvest in 23 years.

However, this season’s production estimates point to a lower harvest.

Recent data from the US Department of Agriculture shows that Zimbabwe’s 2017-18 maize production could reach 1.2million tons, 46% lower than last season’s bumper crop. This is largely due to a reduction in area planted, lower yields in some areas and unfavourable weather early in the season.

The expected decline puts the country in a net importing position, but it might not require the large volume seen in the past couple of years as the expected harvest is still higher than some years before the drought of 2015-16. Moreover, if the Zimbabwe Grain Marketing Board is to be relied on, there are about 500 000 tons of maize from the previous season. This means the total supply for the 2018-19 marketing year could amount to about 1.7 million tons.

Given that Zimbabwe’s annual maize consumption could vary between 1.8million and 1.9million tons, the country will still need to import to supplement domestic supplies, so the government would have to lift the maize import ban. This presents a small window of opportunity for South African farmers and traders to exploit.

The volume available is not large – about 720 000 tons, according to national supply and demand estimates committee data. The rest of the estimated 2.4 million tons of maize exports for the 2018-19 marketing year is yellow maize, which should flow to the world market. A large share of white maize exports may go to other regional markets.

It is worth noting that there might be limited competition in the 2018-19 marketing year in traditional African export markets from countries such as Zambia and Malawi. They are set to record a decline in maize production.

South Africa will also record a decline in production from last season’s record, but there will still be large supplies. This week, the crop estimates committee lifted its estimate from last month for 2017-18 maize production by 2% to 13.2 million tons.

Considering the domestic annual maize need of about 10.8 million tons, on the back of expected production coupled with an opening stock of 3.7 million tons, South Africa could see maize exports exceed the aforementioned estimate of 2.4 million tons in the 2018-19 marketing year, which ends on April 30.

Overall, the key fact is that Zimbabwe will again be a net importer of maize in the 2018-19 marketing year.

Most important, South African maize traders and farmers will have to look further afield for maize export markets, as the surplus might not all be absorbed by regional markets.

Sihlobo is head of agribusiness research at the Agricultural Business Chamber. 

Source: Business Live

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• 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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Sourced: Agbiz Morning Market Viewpoint on Agri-Commodities

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Sourced: Agbiz Morning Market Viewpoint on Agri-Commodities

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