South African maize prices closed the session higher on Thursday after a big selloff over the last two days‚ with traders seeing value at the lower levels.
“Maize prices should have been lower due to a better than expected crop estimate figure print on Wednesday with about 300‚000 tons more maize expected‚ but the market shrugged off the higher crop estimate figure‚ after two days of heavy selling‚” said Piet Faure‚ trader at CJS Securities.
“A higher maize crop will help inflation lower in the long run‚ unless we have a crop failure next year‚ which would drive prices higher and increase inflation‚” he added.
White maize for December delivery‚ the most active contract on the South African Futures Exchange‚ gained 2.55% to close at R2‚294 a ton. Meal made from the grain is SA’s staple food.
Yellow maize for December delivery climbed 2.98% to R2‚315 a ton. The grain is used mainly as animal feed in SA.
Wheat for December delivery slipped 0.40% to R3‚446 a ton.
“The sell-off in maize the last two days has been completely overdone‚ and we have seen some buyers coming back into the market at these lower levels and we have now reached favourable price levels to export maize‚” said Faure.
Wheat prices closed lower due to a stronger rand and lower prices on the Chicago Board of Trade.
SA increased its 2012 maize output forecast on Wednesday — above market expectations — to 11.495 million tons from 11.192 million tons in its previous forecast because of higher deliveries to silos and better yields‚ the South African government’s crop estimates committee (CEC) said on Wednesday.
The maize crop will now consist of an estimated 6.506 million tons of white maize and 4.989 million tons of yellow maize.
However South African wheat farmers are likely to produce a bit less at 1.762 million tons this year‚ compared with 1.764 million tons in the previous forecast. - I-Net Bridge