Global grain prices to remain under pressure: RMB
Global grain prices are likely to remain under pressure due to the US drought until Southern Hemisphere harvests start next year‚ RMB agricultural economist Johann Theron said in a conference call on Friday.
"There will be no relief from the high prices as the damage to the US maize and soya bean harvest is baked in. What is likely to happen is that Southern Hemisphere farmers will expand their acreage due to the high prices‚ so the earliest grain prices could decline would be next year when the increased plantings are harvested‚" he said.
The recent sharp increase in global grain prices was due to the drought in the US. This was reflected in the July SA producer price grain index‚ which rose by 13.1% from June‚ and 27.6% from July 2011.
Gauteng's main storage dam‚ the Vaal dam‚ is at 66.6% of capacity currently compared with 94.9% a year ago.
Theron warned that the poor summer rainfall in the 2011/12 season had reduced soil moisture‚ so if the rains in the next season did not come timeously‚ then the SA maize harvest could come under stress.
Stocks were still sufficient to provide for domestic demand‚ so the SA maize price was still closer to export parity rather than the higher import parity.
The worst US drought since 1956 and dry weather in Eastern Europe and Russia drove the US maize price to a record US$8.49 a bushel in August. Food prices tracked by the United Nations rose the most since 2009 in July.
Soya beans increased by 46% on the Chicago Board of Trade this year and set a new record on August 30.
Corn production will drop 13% from last season to the lowest since 2006‚ and the soybean crop may be 12% smaller‚ the US Department of Agriculture (USDA) said on August 10. It will update its crop forecast on September 12.
Source: I-Net Bridge
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