Commenting on the current summer grain plantings Ernst Janovsky, head of Absa Agribusiness, said he is positive despite the recent pessimism from commodity organisations. “There was an overreaction, especially with commodities, but international markets are starting to stabilise,” he summarised.
Janovsky said South Africa is expecting good rain and a rather big harvest. “Farmers have already fixed contracts for prices of R1 500/t as a minimum, and sometimes even as high as R1 700/t,” he explained.
Ferdi Meyer, a senior economist at the University of Pretoria, also noted that while South Africa harvested a surplus last year, consumption of white maize was higher by 14% to 15% over the first few months after the harvest. He attributed this to consumers returning to buying basic grains because they couldn’t afford expensive food. Meyer explained that because of this, the projected carry-over stock will be lower than first anticipated, and lower than they should have been after last year’s record harvest.
In June 2008 it was projected that 2,5 million hectares were going to be planted to maize. As the Crop Estimates Committee (CEC) said in October, the expected area planted for the 2008/09 production season was estimated at 2,56 million hectares, 237 000ha (8,5%) less than the 2,8 million hectares planted last season.
The CEC’s figures show producers intend to plant about 1,6 million hectares to white maize, which is 137 000ha (7,9%) less than the previous season. They expect plantings of yellow maize to hit only 962 000ha, which is 100 000ha (9,4%) down on the previous season.
In Mpumalanga and the eastern highveld things look promising, while farmers in the western areas experienced very dry conditions over December. Nevertheless Deon Scheepers, a director at Grainvest Futures, said that with 2,5 million hectares and the current weather situation South Africa will produce a maize surplus. “There is an expectancy in the market of the figure going down to about 2,3 million hectares, but I don’t think it’s going to be that low,” said Scheepers.
Meyer warned that the weather over the next four weeks is going to be critical in determining where we will be trading. “If we get good rains we can trade closer to export parity,” explained Meyer. “If we don’t get rain we can easily get a R200/t or R300/t jump in the maize price, with prices rising to R2 000/t or R2 100/t.
“I believe the price of R1 700/t is where it’s going to stay until the weather plays its cards. Scheepers said we’re already halfway through January and the weather looks good.” – Rudi Massyn