QUARTELY MAIZE MARKET ANALYSIS & OUTLOOK
BULLETIN 1 OF 2013
INTRODUCTION
The following discussion is a review of the maize market environment. The analysis is updated on
a quarterly1 basis and the interval covered in the current issue is from October 2011 to December
2012. This period is divided into five, three-month long quarters. The key issues discussed in the
review are trends in production, prices, trade, growth and volatility.
1.
PRODUCTION TRENDS
Figure 1 and Table 1 show the production trends and gross value of production (GVP). The first
five months on the table indicates that the level of production was extremely lower due to fact that
October to December is the planting season for maize. The production volume started to pick up in
April 2012, which is the beginning of harvest period for the grain. Table 1 and Figure 1 further
indicates that during the period May 2012 to July 2012 the production levels were higher mainly
due to the fact that harvests for maize normally peak during the second quarter of the year. Maize
production volumes started to decline dramatically from August 2012 until the lowest volumes were
harvested in December 2012.
The period under review closed with relatively lower volume of maize supply in December 2012
and the supply at that time was significantly higher compared to the volume of maize that was
supplied to the market during the corresponding month in 2011. Maize production volume/supply in
December 2012 was about 50% higher compared to the volumes that were available in the local
market during the corresponding month in 2011. It is also clear from Figure 1 that the GVP followed
a similar trend with production volumes over the period under analysis.
Quarter 1 (January to March), Quarter 2 (April to June), Quarter 3 (July to September), Quarter 4 (October to
December)
1
1
3000000
6000000
2000000
4000000
1000000
2000000
GVP (R'000)
8000000
Oc
t
No '11
v
De '11
c
Jan '11
'
Fe 12
b
M '1 2
ar
Ap '12
r
M '12
ay
'
Ju 12
n'1
Ju 2
l
Au '12
g
Se '12
p
O c '1 2
t
No '12
v
De '12
c'
12
Quantity (tons)
4000000
Figure 1: Maize Production and GVP
Period (Months)
PRODUCTION (TONS)
GVP (R'000 )
Source: Statistics and Economic Analysis, DAFF
The Crop Estimates Committee’s “Final Area Planted and Crop Production Figures for Maize” for
the year 2012 shows that that the area planted to maize during 2011/12 production season was
estimated at 2.7 million ha and the final crop is estimated at about 11.83 million tons. The current
production volume is about 14.19% higher compared to about 10.36 million tons of maize that were
harvested during 2010/11 season. The reason for higher estimate is based on recent producer
deliveries, as monitored by SAGIS, which were higher than expected.
148 107.4
121 900.8
57 790.59
343 524
271 721
126 711
Dec ‘12
185 508
401 344
Nov ‘12
915 251
2 033 582
Oct ‘12
3 159 798
6 598 056
Sept ‘12
3 789 629
6 914 715
Aug ‘12
May’12
2 916 414
5 409 128
July ‘12
April ‘12
448 895
88 901
June’12
Mar,12
195 224
452 403
Feb’12
66 206
156 008
Jan’12
52 084
125 511
Dec ‘11
35 543
80 188
Nov ‘11
90 705
201 854
Oct ‘11
151 584
305 554
Period
Production
(tons)
GVP (R’000)2
Table 1: Maize Production and GVP
Source: Statistics and Economic Analysis, DAFF
2
Gross Value of Production (Rands)
2
2.
PRICING TRENDS
2.1.
Domestic Maize Producer Prices
Figure 2 and Table 2 illustrate monthly producer prices for maize during the period under review.
Figure 2: Maize Producer Prices
3000
Price (Rands/ton)
2500
2000
1500
1000
O
ct
'
1
N 1
ov
'1
D 1
ec
'1
1
Ja
n'
12
Fe
b'
1
M 2
ar
'1
A 2
pr
'1
M 2
ay
'1
2
Ju
n'
12
Ju
l'
1
A 2
ug
'1
Se 2
p
'1
O 2
ct
'1
N 2
ov
'1
D 2
ec
'1
2
500
Period (Months)
Source: Statistics and Economic Analysis, DAFF
Maize is an internationally tradable commodity and as such, the local maize prices are heavily
influenced by prices in major producing nations as well other factors such as local supply in relation
to demand, value of rand against other currencies and prices of production inputs. Figure 2 shows
that domestic maize producer prices ranged from R2 016/ton and R2 192.59/ton during the period
under analysis. The figure indicates that the period under review opened with relatively higher
producer prices in October 2011 mainly because during this time of the year the supply for maize is
generally lower. This was followed by a continuous increase in producer price from November
2011 until March 2012. The prices started to decline from April 2012 to July 2012 following a peak
in supply volumes during the same period. The period under analysis closed with relatively higher
price in the fourth quarter of 2012 as the supply dropped to the lowest level during the same
period.
Period
Oct ‘11
Nov ‘11
Dec ‘11
Jan ’12
Feb ’12
Mar ’12
April ‘12
May ’12
June ’12
July ‘12
Aug ‘12
Sept ‘12
Oct ‘12
Nov ‘12
Dec ‘12
Producer
Prices
(R/ton)
2 015.74
2 25.39
2 256.12
2 409.78
2 356.41
2 317.34
1 980
1 855
1 825
2 088.13
2 221.88
2 163.48
2 319.43
2 229.03
2 192.59
Table 2: Maize Producer Prices
Source: Statistics and Economic Analysis, DAFF
3
The highest price over the period under review was attained in January 2012 (R2 410/ton) while
the lowest price was experienced in June 2012 (R1 825.00/ton). The maize producer price during
the closing month of the period under analysis (December 2012) experienced a decrease of about
2.77% compared to the price of the same product during the corresponding month in 2011.
2.2.
Domestic Future Prices
Table 3 above gives an idea of futures prices for both white and yellow maize. The domestic
producer prices for both yellow and white maize are expected to be stable between May 2013 and
July 2013. As of 05 March 2013, May 2013 contracts for white and yellow maize were trading at R2
294.00/t and R2 242.00/t respectively. At the same time, July contracts were trading at a relatively
lower price (R2 272.00/t for white maize and R2 225.00/t for yellow maize) mainly due to the
expectation that larger supply volumes will lead to lower spot prices in July 2013. Maize producer
prices are expected to experience a slight increase in September 2013.
Table 3: Futures prices for white and yellow maize
Commodity
White maize
Yellow maize
May 2013
R2 294.00/t
R2 242.00/t
Futures Prices (as on 2013/03/05)
July 2013
September 2013
R2 272.00/t
R2 307.00/t
R2 225.00/t
R2 245.00/t
Source: South African Grain Information Service (SAGIS), 2013
3.
IMPORTS AND EXPORTS
South Africa is one of the major exporters of maize in the world and the major destinations for the
maize exported by South Africa are Mexico, Mozambique, Philippines and Italy. The volume and
value of maize exported by South Africa are presented on Figure 3 and Table 4 below.
4
Figure 3: Maize Exports
800000000
700000000
Exports Quantity
(Tons)
250000
600000000
200000
500000000
150000
400000000
300000000
100000
200000000
50000
Exports Value (Rands)
300000
O
ct
'
No 11
v
'
De 11
c
'1
Ja 1
n'
1
Fe 2
b'
M 12
ar
'
Ap 12
r'
M 12
ay
'1
Ju 2
n'
1
Ju 2
l'
1
Au 2
g
'
Se 12
p
'1
O 2
ct
'
No 12
v
'
De 12
c
'1
2
100000000
Period (Months)
EXPORTS QTY (TONS)
EXPORTS VALUE (R )
Source: Statistics and Economic Analysis, DAFF
It can be observed from Figure 3 and Table 4 that the period under review started with the highest
level of maize exports. The period under analysis opened with maize exports of about 254
thousand tons in October 2011. This was followed by a consistent decline in the volume and value
of maize exports from November 2011 until February 2012. The volume and value of maize
exports started to pick up in the third quarter of 2013 on the back of higher production volumes.
The period under analysis closed with lower volume and value of maize exports during the fourth
quarter of 2012 and this can be attributed to lower production volumes in the fourth quarter of the
same year
162354.64
97791.78
82573.636
50865.118
49170.835
468429402
315466232
284632616
170354381
167341275
Dec‘12
92298.99
533582281
Nov ‘12
107658
404187269
Oct ‘12
July ‘12
79116
268596721
Sep’12
June,12
33236
113142308
Aug’12
May’12
50128
155816749
April’12
44778
143557221
Mar ‘12
72854
233858382
Feb ‘12
134862
412211089
Jan ‘12
150075
426709689
Dec ‘1
Oct‘11
254110
Nov ‘11
Period
Exports
quantity (t)
Exports
(R)
Value
(Rands)
719199310
Table 4: Maize Exports
Source: Statistics and Economic Analysis, DAFF
5
Volumes and values for maize imported by South Africa during the period under review are
presented in Figure 4 and Table 5.
180000000
80000
70000
160000000
140000000
60000
120000000
50000
100000000
40000
80000000
30000
20000
60000000
40000000
10000
20000000
Imports Value (Rands)
200000000
90000
O
ct
'1
No 1
v
'1
De 1
c
'1
Ja 1
n'
12
Fe
b'
1
M 2
ar
'1
Ap 2
r'
M 12
ay
'1
Ju 2
n'
12
Ju
l'
1
Au 2
g
'1
Se 2
p
'1
O 2
ct
'1
No 2
v
'1
De 2
c
'1
2
Import Quantity (Tons)
Figure 4: Maize Imports
100000
Period (Months)
IMPORTS QTY (TONS)
IMPORTS VALUE (R )
Source: Statistics and Economic Analysis, DAFF
Figure 4 and Table 5 indicate that the period under analysis opened with very low volumes of
maize imports. The imports remained very low from October 2011 until November 2011. This was
followed by a massive increase in maize imports between December 2011 and March 2012. The
period under review closed with relatively lower volume and value of maize imports in December
2012.
938
1019.74
547.07
6 291 855
27 451 062
20 411 284
Nov ‘12
3 113
27 696 396
Source: Statistics and Economic Analysis, DAFF
6
Oct‘12
1 029
10 661 273
Sept ‘12
434
5 372 960
Aug ‘12
2 979
8 764 429
July ‘12
7 821
20 413 612
June’12
90 097
178 340 111
May’12
47 792
99 982 788
April’12
82 764
181 033 976
Mar,12
60 598
133 089 859
Feb’12
11 076
28 006 976
Jan’12
Oct ‘11
8 006
Dec ‘11
Period
Imports
quantity (t)
Imports
(R)
Value
(Rands)
28 386 580
Nov ‘11
Table 5: Maize Imports
4.
PARITY PRICES
According to this maize market analysis and outlook bulletin, the price that farmers receive if they
sell their maize on the international market is known as the export parity price. To calculate this,
the international commodity price is adjusted by a factor to account for the difference between the
location and the quality of maize, as well as the costs that are incurred to export the maize from
Durban or Cape Town. The figure is then converted to local currency using the current exchange
rate. The import parity price reflects the price that maize millers, traders and feed manufacturers
would pay if they had to buy imported maize.
4.1.
Indicative Import Parity Prices
For traders, millers and feed manufacturers who would like to import maize from the United States
of America and Argentina, Table 6 gives the indicative import parity prices that they would pay.
Table 6: Indicative Import Parity Prices for Maize (2013/03/07)
Country
Import Parity Price
FOB Value ($/ton)
Freight rate ($/ton)
Insurance ($/ton)
Cost, Insurance and freight
($/ton)
Cost, Insurance and freight
(R/ton)
(US$1 = R9.0594)
Financing Costs (R/ton)
Cost, Insurance, Freight and
Financing Costs (R/ton)
Discharging costs (R/ton) at:
 Cape Town Harbor
 Durban Harbor
Import Tariff
F.O.R (R/ton) at:
 Cape Town Harbor
 Durban Harbor
Delivered Price: Durban –
Randfontein
Railage (R
233.00/ton)
Delivered price (R/ton)
Exchange rate (1$=)
USA
ARGENTINA
312.00
39.00
0.94
351.94
273.00
31.00
0.82
304.82
3188.37
2 761.49
22.27
19.29
3 210.64
2 780.78
100.58
139.99
0.00
100.58
139.99
0.00
33 11.22
3 350.63
2 881.36
2 920.77
233.00
233.00
3 583.63
3 153.77
9.0594
Source: SAGIS, 2013
Table 6 shows that it is relatively expensive to import a ton of maize from USA as compared to
importing the same product from Argentina. It is further evident that a ton of maize from the USA
7
costs US$312.00; while the same quantity from Argentina costs US$273.00. Freight costs when
importing from USA are charged at US$39.00 per ton as opposed to US$31.00/ton in Argentina.
Eventually importers would pay R3 583.63/ton to import maize from the USA versus R3 153.77/ton
to import the same product from Argentina at an exchange rate of R9.0594 to the US dollar. The
costs of moving maize from Argentina to South Africa are lower than that from the USA, leading to
lower import parity price for maize originating from Argentina compared to that originating from
USA.
4.2.
Indicative Export Parity Prices
A ton of maize in the international market sells at US$312.00. Taking into account US$10 which is
the difference in quality and location between the two countries a ton will sell at US$322.00
assuming an exchange rate of R9.0594 to the US Dollar. In the case of exporters who wish to
export maize to the international market through the Durban harbor; a ton of maize will earn R2
533.03 after taking into account the financing costs of R20.38/ton, railage costs of R233.00/ton and
loading costs at the Durban harbor of R130.72/ton. Tables 6 and 7 indicate that the import parity
price for maize is higher than the export parity price, which implies that traders will realize much
less earnings per ton if they export their maize to the international market and on the other hand
they will pay more if they have to import maize from other countries.
Table 7: Indicative Export Parity Prices (2013/03/07)
Commodity
FOB Gulf value ($/ton)
Difference in SA quality and locality from SA maize:
(Plus US$10/ton)
SA FOB price ($/ton)
Exchange rate (US$1 =)
SA Maize FOB Gulf value (R/ton)
Marketing Costs
Financing (at 8.50% Prime rate) (R/ton)
Railage: Randfontein - Durban (R/ton)
Loading costs (R/ton) at: Durban Harbor
Export Realization (R/ton): Durban Harbor ( FOB
price less Marketing costs)
USA Maize
312.00
10.00
322.00
9.0594
2 917.13
20.38
233.00
130.72
2 533.03
Source: SAGIS, 2013
5.
Growth, Volatility and Stability
Maize industry growth was calculated for the period under review and the volatility and stability
measures were determined by calculating the coefficient of variation for the various maize industry
statistical series. The formulae for these values are as follows:
8
Growth Rate
where:
G = [(B – A)/A]*100
G
B
= Growth Rate
= Values of Variables during the closing month of
the duration under analysis
= Values of Variables during the corresponding
month of the previous year
A
Volatility and Stability Analysis
V
    xi     
 
 
N
 
 
where:
V


xi
N
= Coefficient of Variation
= Standard deviation
= mean
= observation in months i
= Number of months
The outcomes of these growth and volatility calculations are presented in Table 8. They are
calculated using monthly statistics and covered the same five-quarter period under review
beginning in October 2011 and ending December 2012.
Table 8: Maize industry Growth Rates and Variation Coefficients (October 2011 – December
2012)
Category
Subcategory
Growth Rate (%)
Coefficient of variation
Production Volume
Gross Value
Volume
Value
49.52
45.37
1.59
1.53
Producer Prices
Value
-2.77
0.08
Exports
Volume
Value
-63.54
-59.40
0.60
0.53
Imports
Volume
Value
-99.71
-97.19
1.51
1.22
Source: Calculated from Statistics and Economic Analysis Data
Table 8 indicates that domestic maize production and supply increased by 49.52% and 45.37% in
volume and value respectively in December 2012 compared to production during the
corresponding month in 2011. On the other hand maize producer prices have decreased by 2.77%
over the same period while exports decreased by about 63.54% and 59.40% in volume and value
respectively. Imports of maize have also declined by about 99.71% and 97.19% in quantity and
value respectively.
Domestic maize production (in both volume and value terms) and imports (volume and value) were
highly volatile over the period under review while maize producer prices and export remained
relatively stable over the period under analysis.
9
5.
ACKNOWLEDGEMENTS
Acknowledgement is given to the following information sources:
1.
Directorate: Statistics and Economic Analysis
www.daff.gov.za
2.
South African Grain Information Services
www.sagis.org.za
For more information contact:
Director: Marketing
Tel: (012) 319 8455
Fax: (012) 319 8131
E-mail: [email protected]
Acting Deputy Director:
Commodity Marketing
Tel: (012) 319 8081
Fax: (012) 319 8077
E-mail: [email protected]
Senior
Agricultural
Economist: Field Crops
Marketing
Tel: (012) 319 8080
Fax: (012) 319 8077
E-mail: [email protected]
_____________________________
Disclaimer: This document and its contents have been compiled by the Department of Agriculture,
Forestry and Fisheries for the purposes of detailing the maize industry. Anyone who uses this
information does so at his/her own risk. The views expressed in this document are those of the
Department with regard to the industry, unless otherwise stated. The Department of Agriculture,
Forestry and Fisheries therefore, accepts no liability for losses incurred resulting from the use of
this information.
10