Global competition and local challenges shake South African maize prices
South Africa’s maize prices are under pressure due to production challenges, exchange rate fluctuations, and international competition. The summer drought has reduced white maize production by nearly 20%, driving up prices. While there are hopes for better production next season, this could lead to a price drop, which may harm farmers’ profitability. Geopolitical tensions, input costs, and competition from global markets like Brazil and Argentina further complicate the situation. As a result, the maize sector faces uncertainty, balancing food security and farmer viability.
According to Paul Makube, FNB’s senior agricultural economist, maize prices in South Africa are facing pressure due to a combination of local production challenges, exchange rate fluctuations, and rising international competition. While prices remain high, significant changes are expected in the upcoming season.
“The current elevated maize prices are largely due to weather-related disruptions, such as the recent summer drought that significantly affected white maize production,” says Makube. These droughts have led to a nearly 20% reduction in harvested maize compared to the previous year, which is driving up prices.
The rising cost of white maize
White maize, a staple food for millions of South Africans, is at the centre of this price surge. The increasing cost of maize is contributing to higher food prices across the country, putting pressure on households already facing financial constraints. “With many South Africans relying on white maize as an affordable food source, the price hikes are becoming a burden on consumers,” says Makube. “This is a critical issue for food security in the country.”
Despite these challenges, there is hope for an improvement in production conditions in the next season, which may help stabilise prices. However, this brings new concerns for farmers. “We expect a sharp decline in maize prices in 2025, largely due to an anticipated increase in production,” explains Makube, while lower prices may be a relief for consumers, farmers are facing the opposite challenge — maintaining profitability.”
Adding further to the pressure on prices is the fact that global maize prices are relatively depressed due to an oversupply in key markets like the United States and South America.
This, combined with South Africa’s stronger rand and better weather prospects, reinforces the likelihood that local prices could drop significantly in the next year. Maize futures also confirm this anticipated decline, with futures prices for July 2025 trading below R4,000 per tonne, intensifying concerns about the financial viability of maize farming in the near future.
Geopolitical tensions and cost volatility
Although input costs have moderated recently, particularly for fertilisers and fuel, we might see a reversal of this trend as a result of the heightened geopolitical tensions in the Middle East.
“South African farmers import around 80% of their fertiliser requirements, and despite international prices falling by as much as 30% compared to last year, these savings have not yet fully filtered through to the local market,” says Makube. This pricing lag is creating significant pressure on farmers, who are finding it difficult to plan for the future.
Adding to the complexity, near-term yellow maize prices remain high, with local prices ranging between R4,000 and R4,400 per tonne. Millers and processors, particularly those in coastal areas where yellow maize is not produced in abundance, are increasingly looking to import yellow maize from countries like Brazil and Argentina, where prices are lower.
“For some coastal processors, it’s cheaper to import yellow maize from overseas than to buy from local inland producers,” says Makube. “This is clearly challenging for South African farmers, who may be forced to export their crops to remain competitive.”
Taking all these factors into consideration, as the 2025 season approaches, the South African maize sector faces a delicate balancing act between protecting local farmers and providing affordable food for consumers.
“While the outlook for production is positive, the volatility in input costs and increasing international competition mean that farmers and consumers are facing a somewhat uncertain road ahead,” Makube concludes.
Source Link : Zawya
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