South African maize prices closed the Tuesday session substantially higher‚ playing catch-up with American maize prices and also due to a softer rand.
“Local maize traded higher at its limit‚ up R80 today; this is due to incredible increases in American maize prices recently‚ although maize price moved lower in the US today due to some profit taking‚” said Thys Grobbelaar‚ grains analyst at agribusiness Senwes.
White maize for December delivery‚ the most active contract on the South African Futures Exchange‚ gained R80 to close at R2‚427 a ton. Meal made from the grain is SA’s staple food.
Yellow maize for December delivery also added R80 to R2‚449 a ton. The grain is used mainly as animal feed in SA.
Wheat for December delivery dipped R13 to close at R3‚499 a ton.
“Local wheat prices traded a bit lower today‚ because there is enough wheat in the world‚ and the wheat market is not as anxious as the maize market. However‚ SA has to import between 1.5m and 1.6m tons per marketing year and this figure is increasing‚” Grobbelaar said.
Standard Bank said in a note on Tuesday that the rand had weakened into World Global Bond Index (WGBI) inclusion and had also failed to strengthen into a rise in commodity prices‚ its main cyclical driver‚ over this period. “We believe that this is owing to a significant extent to rising domestic-specific risks‚ which include a sharp widening of the current account deficit‚ spreading labour unrest‚ heightened political uncertainty heading into the ANC’s electoral conference at year-end in Mangaung‚ a ratings downgrade and the possibility of more downgrades to follow‚ a surprise rate cut from the South African Reserve Bank in July and the possibility that the Bank might cut rates again within the next four to six months‚” the bank said. - I-Net Bridge