DURBAN - THE ZIMBABWE government’s decision to suspend all maize and maize meal imports with immediate effect last week could have consequences for South Africa’s maize export market, said the Agricultural Business Chamber (Agbiz).
Agbiz chief economist Wandile Sihlobo said Zimbabwe was South Africa’s most dominant maize export market.
“In the 2.6 million tons of maize that South Africa exported within the 2020/21 marketing year, which started in May 2020 and ended in April 2021, about 20 percent of the volume went to Zimbabwe. This made Zimbabwe the single-largest maize export market for South Africa in the 2020/21 marketing year. Other notable export markets are Taiwan, South Korea, Botswana, Vietnam and Japan, amongst others,” said Sihlobo.
Last year, maize was South Africa’s fifth-largest exported agricultural product in value terms after citrus, grapes, wine and apples.
The suspension of imports came as Zimbabwe approached its maize harvest period.
According to data from the US Department of Agriculture (USDA), the domestic crop could reach 2.7 million tons, the largest harvest since 1984.
The views from local analysts generally concur with the USDA’s forecast that Zimbabwe was likely to have a good maize and a strong agricultural season overall.
The expected large maize output was primarily supported by the expansion in the area planted, coupled with favourable rainfall since the start of the season.
Sihlobo said Zimbabwe would have the largest maize surplus in nearly three decades, as its annual maize consumption was between 1.8 and 2 million tons, against the aforementioned crop of 2.7 million tons.
He said South Africa, which had benefited from the Zimbabwean maize demand in the past, could have 2.8 million tons of surplus maize available for export markets.
This would be the largest volume since 1994/95, when South Africa exported 4.7 million tons of maize, according to data from the South African Grain Information Services (SAGIS).
He said the available maize export volumes were on the back of a large forecast harvest, which Agbiz currently forecast to be 16.7 million tons.
“This would be the second-largest maize harvest on record. With Zimbabwe as a potential export market out of the picture, and various regional maize-producing and consuming countries in the Southern Africa region, such as Malawi, Zambia, Tanzania and Mozambique, expecting large harvests, regional demand for maize will be weaker than usual. The consistent markets that South Africa will likely have are the Far East markets, including Taiwan, South Korea and Japan.”
The chamber said Zimbabwe’s decision to ban maize imports would inconvenience South African exporters that had established relations with importers in Zimbabwe.
Agbiz said in the 2020/21 marketing year Southern Africa’s demand for maize was relatively strong, because neighbouring countries did not enjoy as good a harvest as South Africa did. Sihlobo said this strong demand helped to support domestic maize prices.
Other important maize price drivers were the weaker exchange rate, combined with increasing demand for South African maize in the Far East and higher global maize prices.
He said this time around the exchange rate had strengthened notably compared to last year, and regional maize demand would likely weaken. He said these two factors added downward pressure on domestic maize prices.
According to Sihlobo, however, their influence had been overshadowed by global maize prices, which have continued to support the increase in domestic maize prices.
Last week, the spot prices of South Africa’s yellow and white maize were up 27 percent year-on-year and 19 percent year-on-year, respectively, trading at R3 395 per ton and R3 270 per ton.
The higher global maize prices, which were anchoring domestic maize prices, were supported by the unfavourable production weather conditions in South America and growing demand from China.
BUSINESS REPORT