(Agrimoney) – White maize futures in South Africa hit record highs, as the national weather service forecast the drought to continue through the southern-hemisphere summer.
“The forecasting system is confidently showing that going towards the late summer and early autumn seasons, the likelihood of dry conditions over most parts of the country is still high,” the South African Weather Service said.
White maize futures in Johannesburg found new highs of 4,235 rand a tonne on Friday, and are now up 22% since the start of the month.
30-year drought
South Africa is in the midst of the worst drought in 30 years, leaving the ground too dry to plant in some areas, and with the ideal sowings window having closed on Tuesday.
“Large part of South African maize producing region remains dry and some areas, particularly the western areas have not progressed much with planting,” industry group Grain SA said on Friday.
As of Monday, “maize plantings in North West province were estimated at 22% of the intended hectares and in the northwest and central Free State were estimated at 11% of the intended area”.
The drought has been ascribed to El Nino, which can cause dry weather in parts of Africa, and reaches its peak over the southern-hemisphere summer.
This month Grain SA warned that in the case of below normal rainfall South Africa, which is usually a net maize exporter, would have to import 130,000 tonnes of white maize, in addition to 2.27m tonnes of yellow maize.
Staple crop
White maize is processed into mealie meal, the staple food for most of South Africa’s population.
Less than 10% of the global corn crop is white maize, with the rest being yellow maize, used primarily in feed and ethanol production.
Although widely grown across Africa, few countries are net exporters.
With supplies from Zambia, where South Africa sourced white maize earlier this year, undergoing a squeeze, buyers will become more reliant on imports from Mexico.
Rand weakness
White maize futures have also been boosted by the weakness of the rand, which lifts the price of rand-denominated assets, and discourages imports.
The currency, which has been trending down against the dollar for years, plummeted to an all-time low this month when President Jacob Zuma unexpectedly fired his finance minister.
This week Grain SA ascribed around half of the strength in white maize futures this season to the effect of the rand, and half to the drought.
December white maize futures in Johannesburg were up 2.1% at 4,200 rand a tonne, just shy of an all-time high touched earlier in the day.
