• June 25th, 2019
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Trouble looms in absence of March rains

Deon Schlechter

WINDHOEK - If rain does not materialise in the next two weeks, maize producers in Namibia will only be able to supply about 30 percent (some 35 000 tonnes) of local demand. 

This will be some 22 000 tonnes less than last year when the country harvested 57 000  tonnes and supplied 47 percent of domestic demand. Rainfall conditions in Namibia remain negative for the next few days in the southern and western parts but could improve for the central to northern parts. The CEO of Namib Mills and Namib Poultry, Ian Collard, says Namibia requires roughly 120 000 tonnes of white maze for human consumption and some 50 000 tonnes of yellow maize for animal fodder. 

That means Namibia will have to import some 150 000 tonnes of maize this season. The most lucrative of these products is white maize, as the local marketing schemes ensures local millers must first use all local white maize before the deficit can be imported.

“This is a success story for Namibia, as due to government’s agreement with producers and manufacturers, the harvest increased from some 5 000 tonnes in the 1990’s to more than 10 times that in 2018,” he observes.
Collard says yields are lower in Namibia due to rainfall, soil quality, farm practices as well as the fact that only non-genetically modified organism (GMO) seed is allowed to be planted in the country. 

He stresses that it is of utmost importance that government, producers and food manufacturers work together and ensure the industry grows and develops further. He also emphasises that it is very important for Namibia to understand the grain situation in South Africa (SA), as SA is the largest producer of maize in the region and all markets in the region react to their price, specifically with regard to SAFEX, which is the most relevant public grain trading platform in the region.
Most weather models indicated that there would be normal rain patterns in late 2018 and dry spells in early 2019. As the season progressed, what transpired was exactly the opposite. Due to weather scares, and traders reacting to the afore-mentioned, significant price movements on SAFEX were witnessed. White maize prices, during the middle of November 2018 were around R2 400 per tonne, climbing 38 percent to R3 300 per tonne in just two months. After positive rainfall was received in the central and north-western maize production areas of South Africa, white maize prices fell by 15 percent to settle at the current level of around N$2 700 per tonne. 

“The total SA maize (white and yellow) estimate is still a very positive 2.2 million hectares, which is thought to be conservative by many market players. Based on previous season yields, SA could see a 12 million tonnes harvest for the 2019 season. Damage due to early frost has never had significant effect on the size of the crop, but that being said, SA has never had the bulk of its harvest planted this late before. As there is still carry over stock of more than three million tonnes and consumption of 11 million tonnes, SA could grow their carry over stock to four million tonnes if the rest of the season is favourable. Even with poor rain going forward, a more conservative harvest of ten million tonnes would still mean SA has two million tonnes of carry over stock into the 2020 season,” informs Collard. One of the most important aspects to take into consideration regarding the price of maize, is the difference in import and export parity. “When SA has a grain deficit, the SA price moves to an import parity price, which means SA maize prices increase to such levels that internationally traded maize can ship to, and compete with SA maize, to mills located in South Africa. Farmers then have the benefit of higher prices. When there is a surplus of grain, SA maize prices decrease to export parity, which is the level that SA maize is competitive on the global stage, and can price into international markets usually serviced by other surplus producing origins, such as Brazil, Argentina, and the USA.”

Collard adds that the price difference between import parity and export parity is vast, with the former being about N$2 800 per tonne and the latter being some N$1 900, meaning a 30 percent price shift between either too much or not enough maize in the market.

“Based on the current weather outlook, stock available, production forecast and recent movements on SAFEX, it would seem that the current maize price is trading too high, currently being close to import parity levels, and should start trading lower towards export parity price levels,” he concludes.

Staff Reporter
2019-03-19 08:45:18 3 months ago

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