Maize crop negatively impacted by drought

Susie via pixabay

It is clear that the drought conditions impacted negatively on the maize crop. According to the Crop Estimates Committee (CEC) the maize crop will drop by 4.41 million tons or 30% (14.25 million tons in 2014 to 9.84 million tons in 2015). As is the case in a free market system supply and demand forces will result in higher prices due to current supply conditions. The price of yellow maize has increased by 54.36% year on year from July 2014 to July 2015. The price of white maize increased by 85.67% over the same period.

According to the NAMC Food Price Monitor, the price of 1kg and 2.5kg special maize meal decreased by 14.67% and 11.98%, respectively, from July 2014 to July 2015. The price of 1kg, 2.5kg and 5kg super maize meal increased by 9.20%, 10.75%, and 5.39%, respectively over the same period.

From the above it is clear that the increases in the white maize price was not completely transmitted to the maize meal price, i.e. the significant increase in the price of white maize was largely absorbed in the white maize value chain.

Cognisance should be taken that the expected large import volumes for the 2015/16 marketing year is in the yellow maize value chain. Yellow maize is mainly used in the animal feed sector.