Namib Mills warns of looming maize price hikesExpected

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Windhoek

Due to the drought Namibia’s dry-land maize harvest was nearly completely wiped out with total a production of 6 100 tonnes at a yield of 0.5 tonnes per hectare (ha). The harvest from irrigated fields was ±32 600 tonnes at a yield of eight tonnes per ha. The total harvest was, therefore, in the region of 38 700 tonnes.

“The shortfall had to be imported mainly from South Africa and some small volumes from Zambia. Unfortunately, the quality from Zambia was very poor due to bad storage practices as most of the maize with that origin was contaminated with live insects,” CEO of Namib Mills Ian Collard told New Era in an interview.

Collard says the harvest in South Africa was still in the region of 11 million tonnes for white and yellow maize, which was quite high taking the drought into account.

This good harvest under adverse circumstances was due to the growing contribution of irrigated production and better farming practices. The local milling industry also procured their anticipated usage very early in the harvesting season to ensure availability.“Currently the South African maize market is trading on import parity, specifically regarding yellow maize as the local availability is strained.

The result for the consumer was that maize became more expensive due to the shortage. Shortfalls of yellow maize can be easily replenished, as most of the world’s production of (970 million tonnes) is yellow maize. The availability of white maize is, however, more problematic as only 70 million tonnes are produced globally, including southern Africa. Availability can be ensured via pre-planting contracts with producers in the United States of America, but at a higher premium,” he observes.

He says the greatest concern regarding maize relates to the current weather conditions in the region, taking into account the predictions by weather forecasters, the rise of El Niño, and the late rains in South Africa. It does not look very positive currently, but luckily it started raining in South Africa late last week.

We are still awaiting our rain in Namibia. Although the current maize prices are positive for producers to plant, the history of the two droughts very closely together had put a lot of producers under financial strain, which can have a downward influence on hectares planted in South Africa and Namibia. The fact that a lot of producers cannot insure against drought anymore will also effect plantings negatively.

“Taking the above into account, along with the depleted stocks on specifically white maize there can be upward pressure on white maize should the rain not be sufficient. Pre-planting contracts will then be done with producers in the USA. This will be at higher premiums and lower quality product.

The increase will actually not be very dramatic, as the region is already trading on the high import parity levels. This does not take into account any major exchange rate fluctuations.“The expected wheat harvest in Namibia is lower than prior years due to lower plantings. The wheat harvest in South Africa is significantly smaller due to a late seasonal dry-spell in the Western Cape. Luckily, the world stocks and expected harvest is healthy.

Shortfalls can, therefore, be easily supplied from global sources. Prices on wheat are quite low in US$, but unfortunately was negatively affected due to the weakness of the NAD.“Shipping costs are also currently very competitive due to the low oil prices. The world wheat harvest is quite healthy with relatively high stock levels. The Black Sea countries and Russia are producing more and better quality wheat very year. This is lowering prices in US$-terms. Unfortunately, this advantage is not available to local consumers due to the weakening exchange rate.

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