White maize prices on 19 February rose by R45/t for a second consecutive day, hitting a four-year high, amid grave concerns that the dry weather will severely damage crops in the main growing areas.
With the rand stabilising, white maize for delivery in March advanced to R1 623/t on the SA Futures Exchange. Following the two consecutive days of price rises of R45/t, and steady hikes during the previous week, the limit for price movement on white maize on the market on 20 February was set at R65/t. A ccording to Grain chairperson Neels Ferreira, the current severe drought in these areas – and with no prospect of rain – is now driving the market. “The past few days I have been travelling extensively through the areas, and they are bitterly dry.”
Ferreira said white maize prices are now moving very close to export parity. “An international trader told me there was now a premium of between $1,90 and $2,00 per bushel, which boils down to $70/t to $80/t, for US maize. That brings import parity to figures that one can barely imagine, a mind-boggling R2 300/t,” he said. nternational maize prices have hit a new price ceiling.
The sharpest rise in grain prices to the highest level in a decade is attributed in particular to ethanol production. In 2006, 18% of the maize crop went to this new industry. T he average maize price in 2007 is estimated at $4,04 per bushel (119/ t) – 61% higher than last year’s average of $2,51, according to a recent report by financial services company JP Morgan. “However, all these figures and high expectations mean very little to the South African producer if there is no crop and if good rains do not very soon come to the rescue in the main white maize-growing areas.
At this stage, it seems we can only pray for a miracle,” said Ferreira. he Weather Service said the probability of rain over the Free State, where most of the nation’s white maize is grown, remains slim. – Lynette van Hoven
