Amaiz­ing pace

Price of white maize could climb fur­ther

Finweek English Edition - - Economic trends & analysis - GARTH THE­UNIS­SEN

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.


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