A possible El-Nino event may support maize prices going into 2019

07 August 2018

Weather forecasts indicate more than a 50% chance of another El-Nino event. The occurrence may start in late 2018 and will likely continue into autumn of 2019. If the event materialises, the likelihood increases for lower rainfall and higher-than-average-temperatures during Nov 2018- early 2019, during the summer crop production period. This could lead to lower maize crop in 2019. The South African maize industry is currently sitting with large stocks in silos.

This season, harvesting started late, therefore maize deliveries are expected to gain significant momentum in August 2018, adding to already large stocks. A lower maize crop in the next season due to weather anomalies (El-Nino events) may bode well for maize prices locally, as the market consumes and reduces supplies. Policy uncertainty and the weakening of the rand, may support prices. The current local surpluses and good rains received from February to May 2018 will buffer some of the potential crop losses if weather patterns follow forecasts.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.