SA maize deficit looms on Mexico exports
Fin24 - Mar 26th 2012, 08:26
Johannesburg/Hamburg - South Africa has committed an additional 400 000 tonnes of maize exports to drought-stricken Mexico, a scenario that will likely push Africa’s largest corn producer into a deficit situation this marketing season and propel domestic food prices higher.
According to government data, South Africa has already exported just over 1 million tonnes to Mexico in this marketing season which began May 1 last year.
A South African trader said export permits had been issued for 150 000 tonnes but the understanding was that an order of 400 000 tonnes had been put in by Mexican customers for South African maize.
This was confirmed by European trading sources.
“All true, about 400 000 tonnes done,” said one trader who noted that South African maize was trading at a huge discount to US and Argentinian corn at the time it was sold around 3 weeks ago.
A second European trader said Mexico had been unable to source from the Black Sea because of logistical issues.
“Mexico has bought from South Africa. They had been seeking to buy from the Black Sea but the price was too high because of the winter logistics freeze-up. South African corn was cheaper than the Black Sea and got the business,” said another.
For regional breadbasket South Africa, the commitments will almost certainly push it into a maize deficit at a time when prices for the staple grain are within striking distance of recently-scaled record highs.
South Africa’s grain trade is largely market driven and players face few government restrictions. South Africa has already been importing maize from places like Romania to make up for deficits due its export commitments.
Last year South Africa’s maize crop was around 10.3 million tonnes, while its consumption is usually between 8 and 9 million tonnes.
But government data shows in this marketing season, South Africa had already exported 2.3 million tonnes up until the end of January and the scale of this latest order means there is bound to be a shortfall as the carryover from the previous season was low.
Looking ahead, South Africa is likely to lower its maize output forecast for the 2011/12 season as late-season drought hits some parts of the country, a Reuters survey showed on Friday.
The most active July white maize contract closed 3.57% higher at R2 324 a tonne on Friday, while yellow maize for delivery in the same month ended 2.12% higher at R2 216 a tonne.
If prices push higher it will fan food inflation in a country where many poor households are already feeling the strain, a situation that could see higher wage demands from unions again in 2012.
Food inflation slowed to 9.6% in February from 10.3% in January but remains high and in the current environment could easily spike again
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