Maize price increases still too low

Maize producers shouldn’t get too excited about the slight rise in maize prices, as it’s still a “touch and go” price, said Grain SA’s manager of industry services Nico Hawkins.

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At the end of September, white maize traded for a Safex price of R1 282/t for October 2010, and R1 295 for delivery in December. The white maize price for delivery in July 2011 was R1 397/t and R 1456/t for yellow maize. “These prices still remain relatively low,” cautioned Hawkins. “Farmers will have to realise exceptionally high yields per hectare to produce maize profitably in the coming season.

For example, in the North West, it means yields of more than 4t/ha, and in Mpumalanga more than 7t/ha, depending on production practices and potential.”Chris Schoonwinkel, Grain SA maize working group vice-chairperson, said for producers in the North West and the north-west Free State, it’s vital that the maize price breaks through the R1 500/t Safex price barrier.

In Gauteng and Mpumalanga a price of about R1 560 is needed.The ban on wheat exports from Russia supported international grain prices. “One shouldn’t only think of wheat in terms of bread,” said Schoonwinkel. “A significant percentage of the world’s wheat is used for animal feed. Maize is now used instead of wheat. The industrial use of maize for biofuel increased markedly. But local prices are also adversely affected by the exchange rate, given that it remains on import parity.”

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Hawkins said South African maize export markets are declining rapidly, mainly due to rising self-sufficiency in Africa. The total exports for the first 20 weeks of 2010 stand at 514 958t compared to 712 585t for the same time last year. Meanwhile, the latest National Crop Estimates Committee statistics show a slight drop in the expected size of the maize crop.

It’s now 13 043 million tons, some 50 600t lower than the previous estimate of 13 094 million tons. The production estimate of white maize remains unchanged at 7 822 million tons, while the estimate for yellow maize is 0,96% lower at 5 271 million tons. Sunflower remained unchanged at 516 265 million tons. Soya-beans fell to 4 750t, sorghum to 11 500t, while groundnuts remained unchanged at 57 450t.