First, these higher maize prices reflect the impact of the 2023-24 drought on South Africa’s maize harvest. Our maize crop is down 23% y/y at 12,72 million tonnes. About 6,72 million tonnes is yellow maize (down 21% y/y), and 6,00 million tonnes is white maize (down 24% y/y).
Second, while South Africa’s harvest is poor, we continue to see maize exports to the broader Southern Africa region. Judging from the import need in Zimbabwe, Botswana, Namibia, Mozambique, and others, we will continue to see strong regional white maize demand through the first quarter of 2025.
Here, I must quickly clarify that South Africa’s maize harvest of 12,72 million tonnes is well above the annual needs of 11,8 million. Moreover, South Africa had large stocks of over two million tonnes from the last season, further boosting the domestic supplies this year.
This ultimately meant that while South Africa’s maize production was down, the country continued to export maize to the Southern African region.
South Africa’s overall maize exports are estimated by industry stakeholders at 1.9 million tonnes through the April 2025 marketing year (about 1.2 million tonnes is white maize, and 700k tonnes is yellow). About 1,36 tonnes have been exported, mainly to Southern Africa, and 65% of the exports are white maize.
Third, because of this poor harvest and the strong regional demand, the market participants seem worried about commodity scarcity, which is adding to the price increases. Remember, Mexico is the only maize white maize supplier outside South Africa in the world market.
I doubt Mexico has surplus white maize for exports to our region, similar to the US, which has, interestingly, signalled possible exports to our region. I doubt they have the supplies of white maize.
Genetic and mechanised innovations in SA maize production
One must also appreciate that the US generally does not produce white maize in any significant volume for export. Therefore, such maize would have been planted on contract for particular buyers. It is possible that such maize could be a few consignments for the coastal regions while South Africa ramps up exports to the broader Southern Africa region.
Regardless of these challenges, South Africa will likely remain a net exporter of maize in the 2024-25 marketing year. The country will likely export just under two million tonnes of maize. Any possible imports will be far less, and maize will serve the broader Southern Africa region and the coastal areas of South Africa.
For example, coastal regions will continue to import small volumes of yellow maize for animal feed because of price advantages. We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports were at 342k tonnes at the end of November 2024.
So, this is my long-winded way of saying there are some supply constraints and fears in the market, possibly explaining the price increases we see. I also believe these are near-term challenges, and we should see some price moderation over the medium term.
And yes, the current price surge will reflect on grain products at the consumer inflation level in the coming months. But you see – there is a leg in these things, typically about three to four months before the prices appear at the consumer level.
For this reason, I have consistently pointed to grain-related products of the food basket in the inflation data as an upside risk to food prices. But again, the increases may not be as high. The world market has low wheat and rice prices because of the ample supplies, which will help smoothen the grains inflation part of the food basket.
Where do I draw my optimism? The new 2024-25 production season is favourable. In this view, I am leaning on the expected La Nina rains. The farmers have stated that they will plant a slightly bigger area for maize, which will help, assuming we get the much-needed rains to support the crop.
And yes, the rains have been delayed by roughly a month in some areas, and we have gone through a week of heatwave. Still, the forecasts point to a possible rainy summer season, which will help with maize production recovery and possible price moderation. This will be positive for the consumer in 2025.
