Price of white maize could climb further
SINCE THE BEGINNING of February the white maize futures contract for July has increased by 47%, leaving SA’s staple grain trading at R1 979/ton at the time of writing.
Owing to dry weather, analysts think the price could rise even further.
Although farmers increased their acreage of white maize by 65,5% at the beginning of summer, the January/February dry spell has meant that production of white maize is expected to increase by just 11,3% on the previous year’s figure.
A further supply constraint is that white maize is difficult to import as it’s not as readily available as the yellow variety on the international market.
Fortunately, the potential for the white maize price to rise is constrained by what economists call the substitution effect. Apart from other staples like rice or bread, consumers can switch to yellow maize products. After all, why pay R30/kg for white maize meal when you can get the yellow variety for R10/kg?
That should provide some comfort to local consumers, who ensure that SA is one of the world’s largest end users of white maize for human consumption.