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Cyclone Eloise’s damage could have implications for South Africa’s maize price outlook

cyclone

By: Wandile Sihlobo, Bizcommunity, 29 January 2021, photo credit: MSN News

At the start of the year, I expressed an optimistic view that SA’s maize prices could begin to soften from about the end of February, as this is the time when more information about the expected sizeable domestic harvest would become available. A decline in commodity prices would be beneficial to the livestock industry, which has had to battle with higher feed prices over the past couple of months.

The prospect of a large crop was as much an SA story as it was a broader Southern African one. Hence, I believed demand for SA maize exports to the Southern Africa region could also soften in the 2021/2022 marketing year, thereby easing some pressure on domestic prices.

Zimbabwean farmers planted 1.4-million hectares of maize in the 2020/2021 season, roughly in line with the country’s 10-year average. However, the excellent weather conditions at the start of the 2020/2021 production season have been auspicious for a good harvest in the country.

A potential increase in domestic production would be positive for Zimbabwe, which produced only 908,000 tonnes of maize in the 2019/2020 season, making the country a net importer of about 1-million tonnes of maize to meet its domestic needs.

Thus far, SA has been a significant maize supplier to Zimbabwe, and that added demand has in part contributed to higher SA maize prices. On January 21, SA’s white and yellow maize spot prices traded at R3,436 a tonne and R3,472 a tonne, up 14% and 20% year-on-year respectively.
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