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New season prospects for maize

March 2018

It is always good to look back and assess lessons learnt in previous years and use those lessons to anticipate what could be expected in the year ahead. The 2017/2018 marketing year was no doubt a good year in as far as production goes.

Maize production reached a record harvest and sparked topics all over the world. The high production was however met by challenges. While South Africa harvested over 16 million tons of maize, export volumes were still below trade expectations and maize prices were under pressure due to the large supplies.

During the 2017/2018 marketing year, South Africa had an exportable amount of 4,8 million tons of total maize, this means that the country could meet an export demand of over 4 million tons.

By December 2017, total maize exports had only amounted to 1,7 million tons, which was significantly below expectations. As at 8 December 2017, white maize exports amounted to 540 097 tons, while yellow maize exports amounted to 1,2 million tons. The surge in yellow maize is mainly backed by demand in the Eastern parts of the world, particularly, Japan, Taiwan and South Korea which mainly import for animal feed purposes. Although there has been generally good demand of maize, mainly from the deep-sea countries, it Is highly unlikely that the country would fulfil its exportable amount of 4,8 million tons.

Another challenge the country is faced with is high ending stocks which in this case, is largely fuelled by low export volumes. Any carryover stock that is not exported would lead to generally large surplus, thus placing pressure on local prices. It is expected that maize carryover stocks could amount to just over 4 million tons, with white maize accounting for about 65% of the surplus.

New season
According to the Crop Estimates Committee, overall maize production for the new season (2018/2019) is likely to decline by 6%. It is no surprise then that the area planted to white maize could decline by 15% while yellow maize plantings are expected to increase by 8,2% from the previous season. This is due to a recognised higher demand for yellow maize which could go into the feed market both locally and internationally.

Since maize prices have become under pressure, white maize in particular has become less attractive also due to its low profitability and export demand. Farmers who are moving away from planting white maize could turn to looking at more profitable alternatives such as soybeans in order to secure profits and not crowd the market with stock.

Essentially, what we see is that the previous season plays a big role on the expectations for the new season. This it remains important to follow the trends of the previous season in order to draw expectations of what the market can expect in the new season.

Article submitted by Michelle Mokone, Agricultural Economist: Grain SA. For more information, send an email to Michelle@grainsa.co.za.

Publication: March 2018

Section: Pula/Imvula