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All not rosy for SA maize exports - expert

May 26 2017 18:37

Cape Town - South Africa is facing stiff maize export competition, warns Wandile Sihlobo, head of economic and agribusiness intelligence at the Agricultural Business Chamber (Agbiz).

"This is likely to be a challenging year for South Africa’s white maize producers due to lower global demand. Meanwhile, yellow maize could potentially see a better uptake in the global markets," says Sihlobo.

He already raised concern in March this year, emphasising the need for South Africa’s maize industry to penetrate new maize export markets, particularly outside the continent. Sihlobo's research identified Japan, Taiwan, the United Arab Emirates, Thailand and Zimbabwe as key and attractive markets South Africa should prioritise to increase its export share in the short to medium term.

Indonesia, Malaysia, Saudi Arabia, Mauritius, Iran, the Democratic Republic of Congo and Yemen were also identified as attractive markets for South African maize exports.

Sihlobo explains that the South African maize industry has made a remarkable rebound and is expecting a bumper crop this season. However, new developments have compelled him to revise parts of his recent maize export market analysis done in January - particularly regarding maize export opportunities within the African continent.

"The dynamics in African agricultural markets have changed dramatically. While South African maize farmers are struggling to break even due to lower prices, white maize prices in East Africa are well above R7 200 a tonne, which is treble the current prices on the JSE," Sihlobo writes in the latest Agbiz newsletter.

READ: SA raises maize-crop forecast to biggest in 36 years

Uptick in East Africa

The uptick in East African maize prices is largely due to lower supplies in the region caused by adverse weather conditions during the 2016/17 production season.

"Meanwhile, the South African maize market is depressed as a result of an expected 14.5 million tonnes harvest, which is well above an average production of 12.5 million tonnes in a normal season," says Sihlobo.

"As a result, South Africa has regained its status as a net exporter of maize after being a net importer for two consecutive seasons – 2015/16 and 2016/17."

The 2017/18 exports are set to reach 2.7 million tonnes. About 52% of this is projected to be white maize and 48% to be yellow maize. This will be the largest maize export volume in two decades.

Sihlobo initially expected these exports to be partially absorbed by the East African market, and that South Africa would benefit from the prevailing higher prices in those markets. However, he now cautions that this is unlikely to happen, mainly due to competition from other African maize-producing countries that produced above market expectations and genetically modified (GM) seed restrictions.

About 85% of South Africa’s maize production is grown with GM seeds, which could restrict the country from penetrating many African markets.

"Despite fears that Fall Armyworm could decimate maize crops in Zambia and Malawi earlier this season, the pest caused minimal damage and bumper harvests are expected in both countries. As a result, even within markets that permit GM maize imports, South Africa will face stiff competition from the likes of Zambia and Malawi," says Sihlobo.

Another major importer of white maize, Zimbabwe, is set to harvest a bumper maize crop of 1.8 million tonnes, which is treble last year’s output of 512 000 tonnes.

Sihlobo points out that, according to data from the US Department of Agriculture, Zimbabwe’s annual maize consumption is roughly 2.2 million tonnes, which means imports of about 400 000 tonnes will be needed later in the season.

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agbiz  |  agribusiness  |  agriculture  |  maize
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