Maize meal prices set to increase. Here’s why

Maize harvest estimates, for the first time in five years, sit below 13 million tons.

According to the National Crop Estimates Committee’s (CEC) eighth production forecast, maize harvest estimates sit at 12.80 million tons, which is 22% down year-on-year and 5% below the 10-year average of 13.47 million tons.

Paul Makube, Senior Agricultural Economist at FNB Commercial says the estimation comes after the El Niño-induced heat decimated crops earlier in the year. Initially, estimations sat at 14.36 million.

Expected maize forecast

He says they did expect the decrease to happen given the lower producer deliveries of just over 9.95 million tons as of the week ended 20 September 2024, which is 78% of the expected crop and 28% below the three-year average of 13.88 million tons.

Referencing the South African Grains and Oilseed Supply and Demand Estimates Committee, Makube adds that they have seen a good carryover stock.

“The carryover stock provides a slight buffer to ensure we meet our export commitments estimated at 1.85 million tons for the 2024/25 marketing year.”

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Increase in maize prices

He explains that the price response due to the harvest contraction has led to upward pressure on prices. White maize prices for September 2024 went up by 40.7% year-on-year, which is almost 9% above the early-year level (in February) at R5,503 per ton.

“While yellow maize prices were 9.6% above last year at R4,196 per ton.”

Will there be an increase in imports?

To answer whether there is going to be an increase in imports, Makube says yellow maize imports have increased with 172,928 tons sourced from Argentina as of 13 September 2024.

When it comes to white maize, South Africa remains a net exporter.

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Other crops

“The CEC downgraded the sunflower harvest estimate by 2% from the previous month to 635,750 tons which is 11.7% lower year-on-year.”

Makube adds soybean was revised upwards by 1.8% month-on-month but still down by 34.6% year-on-year. Therefore, consumers must brace themselves for a potential increase in imports of oil cake.

Groundnut harvest is still lower at 51,745 tons, down 1.7% from last month’s estimate and 2.4% lower year-on-year.

“Sorghum and dry beans estimates remained unchanged from the previous month but showed increases of 1.6% and 0.5% year-on-year respectively at 95,830 tons and 50,495 tons.”

La Niña weather conditions

He says the next focus for farmers will be production conditions with La Niña back in the forecast for the 2024/25 agriculture season.

“Input cost indicators so far show a modest decline relative to last year with fuel prices having been cut for three consecutive months and we expect another one for October.”

The potential cuts in diesel will contribute positively to the summer crop farmers, as there will be an increased activity of planting for the 2024/2025 agriculture season.

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