Maize crop bodes well for food inflation
By Colleen Goko - Apr 26th 2017, 08:31
It will be a year of plenty for SA with expectations for a maize harvest 87% bigger than the 2016 crop. The bounty comes after crippling drought in 2016 resulted in the smallest summer harvest since 2007.
In its third production estimate report for the year, the crop estimates committee said on Tuesday farmers were likely to harvest 14.53-million tonnes of maize in 2017, making it the second-biggest crop on record.
The revised output is 1.48% up from the previous estimate.
"I am surprised, but this is excellent news," said Wandile Sihlobo, head of economic and agribusiness research at Agbiz. He said he had expected a downward revision of about 1%, based on late planting in some regions and inconsistent rain patterns in others.
"Overall, it is good. SA can now regain its status as a net exporter of maize from May 1. When we are importers we are at the mercy of currency volatility. Consumers have reason to celebrate. For the next 18 months or so, food inflation could come down," he said.
On winter crops, the committee said early indications were that producers intended to plant 2.36% fewer hectares of wheat in the 2017 season.
Wessel Lemmer, Absa senior agricultural economist, said farmers, especially in the Free State, had chosen to plant summer crops to recoup their losses from last season. "When it comes to wheat, farmers have to leave the land fallow. This didn’t happen this time as maize was planted. Wheat is planted in May, while maize is harvested from June through to August."
Lemmer said this was the highest yield per hectare for maize since 1924.
"By the end of June we will see benefits in staple foods."
"Animal feed costs will also come down, which will be good for livestock farmers. They will all benefit from the lower prices and the abundance of the crop," Lemmer said.
Some companies on the JSE who stand to benefit include poultry producer Astral and food producer Pioneer.
The expectation of bumper yields has already led to a significant drop in grain prices. The white maize futures contracts for July delivery settled at R1,836 a tonne on the JSE’s commodity derivatives market on Tuesday, which is down considerably from R5,000 a tonne a little more than a year ago.© BusinessLIVE MMXVII
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