Absa AgriTrends 2022

Maize Market Dynamics Due to favourable local production conditions over the past four seasons, surplus maize production has resulted in prices trading at export parity over the past months. Strong global prices, high shipping costs, and a weakening exchange rate therefore all contributed to bolstering local prices to record levels. During July, when global prices eased, local prices held firm due to the offsetting effect of a rapidly depreciating exchange rate. As global prices regained momentum in August this year, local prices were again fueled by global price dynamics and a currency that was under pressure. The Rand has been under pressure, depreciating by over 25% year on year in by October 2022, as a result of tighter global monetary policy and concerns about a global recession. This was exasperated by increased incidences of load-shedding. In terms of global dynamics, and as mentioned above, global crop progress in the Northern Hemisphere will be a notable determinant of price dynamics over the fourth quarter of 2022. In this

regard, prolonged dry spells across the U.S. have put their crop quality at risk, shown by the deterioration in the corn condition ratings, from 73% good-excellent at the onset of the 2022 rating season in June down to only 54% good-excellent for the August report. The October

United States Department of

Drought also affected crop quality in the US

Agriculture (USDA) production report, also showed that U.S corn yield decreased by 4.8 bushels per acre due to persisting hot and dry conditions. Drought is weighing on Argentina’s early season corn production, due to smallerarea planted as poor early season rainfall outlooks are discouraging corn planting. This makes up around 40% of the total area. These factors have resulted in CBOT corn prices in September being almost 27% higher than the corresponding time last year. This effect on SAFEX yellow maize prices, in turn, was even more pronounced at 67.4%


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