- South Africa is repositioning itself as major regional exporter of maize this year, with a sharp increase in exports due to regional demand as well as outside contracts.
According to South African Grain Information Service (SAGIS) more than 35,000 tonnes of yellow maize was exported only last week with also over 23,000 tonnes of white maize, mainly going to South Africa's neigbours, Botswana, Lesotho, Mozambique and Zimbabwe.
Reports show that grains demands in the region, especially maize, staple food for most of Southern Africa region, have almost doubled, compared to same period last year.
The latest exports have pushed South Africa's international maize sales up considerably, with a total of 136,960 tonnes of white maize and 53,356 tonnes of yellow exported since the marketing year started. South Africa exported a total of 396,832 tonnes of white maize and 72,227 tonnes of yellow in the entire previous marketing period which ran from April 2007 to May 3, 2008.
Maize traders, who would be smiling to the bank with new fresh maize earnings, have welcomed developments in regional markets, and not showing much refrain whether their crop is going to Zimbabwe or any other place. Many of the regional members, such as Zambia and Malawi have opted to reserve their maize produce for this year, due to food insecurity, as a result of floods and other climate factors.
According to Food and Agriculture Organisation (FAO)'s outlook, in Africa, total imports are likely to decline by 1 million tonnes, to 16 million tonnes in 2008/09. "In Morocco, a recovery in output from last year's drought-reduced barley crop is expected to result in lower imports. In addition, an expectation of bumper maize crops in South Africa is expected to help the country to cut imports and resume its regional position as a major maize exporter. However, in Kenya, a likely decline in this year's maize production could result in a doubling of imports. Little variation is expected in imports by most other countries in Africa," FAO had forecast.
The world utilisation of coarse grains in 2008/09 is forecast to reach 1 096 million tonnes, up 2.3 percent, or roughly 24 million tonnes, from the previous season and above the ten-year trend for the second consecutive season, says FAO, adding that this expansion will be driven primarily by strong growth in industrial use.
"As in previous seasons, expanding use of maize for ethanol production is behind the surge in industrial usage of all grains and most of that expansion is taking place in the United States. Total utilization of grains for production of ethanol in 2007/08 is estimated at roughly 98 million tonnes, up 27 million tonnes, or 40 percent, from the previous season. Maize accounts for most of this use, at nearly 92 million tonnes, of which some 79 million tonnes are used in the United States alone," explained FAO outlook.
The outlook continued that strong demand coupled with uncertainties surrounding this year's crops has continued to push prices higher so far this year, also saying increase in energy prices and a continuing slide in US Dollar have also provided support. "Depending on the type and origin, most coarse grains registered substantial price gains in recent months, rising by as much as 45 to 65 percent above the corresponding period last year. International maize prices started to increase from February, breaking all-time high levels on several occasions since.
FAO reports that the main factor for continuing strength in maize prices is tight supplies. "In the United States, the world's largest maize producer and exporter, reported decline in this year's planted area coupled with cold and wet weather which slowed seedings continued to lend support to maize as well as to prices of other feed grains in April and early May.
In other grain markets, reorts point out that feed Barley prices have increased by around 45 percent compared with last year's level. Good prospects for this year's crops have put some pressure on barley prices but the general tight market situation is seen to continue until production estimates become firmer. Sorghum prices have risen by around 60 percent compared with last year boosted by strong import demand and record purchases by the European Union.
Price developments in the futures market also echoed the prevailing situation in cash markets with expectations of tighter maize supplies and strong demand pushing up prices.
Based on the current supply and demand forecasts for new season, prices could be expected to remain high. While, to some extent, the greater abundance of wheat could dampen the demand for coarse grains and put some downward pressure on prices as the season progresses, the general fundamentals remain supportive with further gains still possible especially if production in 2008 falls below the current expectation.
The food outlook released in May this by FAO says global cost of imported foodstuffs in 2008 is forecast to reach USD 1 035 billion, 26 percent higher than last year's peak. The bulk of the anticipated growth in the world food import bill would rest on higher expenditures on rice, wheat and vegetable oils, which are all forecast to rise to unprecedented levels from 2007, further explaining that combination of rapidly rising prices and higher freight costs is behind higher global bills for imported coarse grains.
FAO outlook concludes that among economic groups, most economically vulnerable countries are set to bear highest burden in the cost of importing food, with total expenditures by LDCs and LIFDCs anticipated to climb by 37-40 percent from 2007, after rising 30 and 37 percent, respectively, already last year. It continued that sustained rise in imported food expenditures for both vulnerable country groups constitutes a worrying development, as on current expectations by the end of 2008, their annual food import basket could cost four times as much as it did in 2000.
"This is in stark contrast to the trend prevailing for developed countries, where year-to-year import costs have risen far less," said FAO outlook, further explaining that higher food import bills are not necessarily resulting from more imported food.
The report said numerous LDCs and LIFDCs are expected to curtail procurement of many foodstuffs from international markets, a reaction that in numerous cases does not reflect improved domestic supply prospects. Moreover, food staple inventories have far from recovered in many LDCs which only adds to their vulnerability, especially given the considerable uncertainty in international price prospects.
However, with this year's maize exports bringing smiles to SA farmers, experts have also warned that climate change could cut South Africa's maize crop by 20 percent in the next 15 to 20 years, as the west of the country dries out while the east is afflicted with increasingly severe storms.
According to SA's environmental affairs and tourism minister Marthinus van Schalkwyk the news was very bad news, saying this was too soon in the future.
"For a developing country, that's major, and major bad news," Mr Van Schalkwyk was reported yesterday after arriving in northern Japan, where leaders of the Group of Eight have gathered to discuss amongst other effects of climate change and G8's commitments on the subject.
Mr Van Schalkwyk called on developed countries to keep their promise to slash emissions, to achieve meaningful progress in fighting climate change, further adding developing countries such as South Africa would need technology transfers to slow their growth in emissions.
In Japan international community was called upon to act immediately to ease the plight of tens of millions of people suffering under soaring global food prices, heads of UN and World Bank said yesterday.
A World Bank study released last week estimates that up to 105 million people, including 30 million in Africa, could drop below the poverty line because of rising food prices as grain prices have more than doubled since January 2006.
"High food prices are already turning back the clock on development gains," UN secretary-general Ban Ki-moon had told reporters, calling on world leaders to "deliver a full range of immediate needs, including food assistance as well as fertiliser and other inputs, for this year's planting cycle".
In his appeal, World Bank president, Robert Zoellick, said there was an urgent need for $10 billion (about R78 billion) to provide food and cash for the poorest and for farming inputs for the next growing season. "What we need now is resources, actions and results in real time," he told G8 leaders.
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