South African maize prices ended firmer on Tuesday‚ tracking maize prices on the Chicago Board of Trade‚ amid dry weather conditions in the US. Wheat prices followed the lead of maize‚ adding strength.
“The only reason local maize prices are increasing is that American maize prices are increasing due to drought‚ with our local maize prices tracking prices on the Chicago Board of Trade‚” a local maize trader said.
“We might see price relief in the markets due to technical reasons of markets being overpriced‚ and prices might come down due to profit taking‚” the trader said.
“Wheat prices — more expensive than maize prices — might catch up with the prize of maize‚ which is used as animal food‚ and one might reach the stage where animals might have to be fed cheaper wheat. Wheat might become cheaper than animal feed‚ and one would not want that‚” the trader said.
The near-dated July white maize contract was up R28 to R2‚227 a ton‚ September white maize gained R26.80 to R2‚271 a ton and December white maize garnered R28 to R2‚333 a ton‚ according to preliminary I-Net Bridge data.
The near-dated July yellow maize contract added R25 to R2‚205 a ton‚ the September yellow maize contract lifted R26 to R2‚245 a ton and the December yellow maize contract climbed R31 to R2‚303 a ton.
The July wheat contract edged up R18 to R3‚203 a ton‚ September wheat added R20 to R3‚260 a ton and the December wheat contract was up R8 at R3‚168 a ton.
Dow Jones Newswires reported that US traders were factoring in the risk of yield losses as the hot‚ dry weather forecasts for the Midwest were seen as a detriment to maize yield potential. The price of new crop December futures has risen 30% in the last two weeks‚ while traders were also mindful of prices rising to levels that would cause demand destruction.
CBOT July maize climbed 20 cents‚ or 3%‚ to $6.92 1/2 a bushel‚ and December maize ended up 21 cents‚ or 3.3%‚ to $6.55 3/4.
The hot‚ dry weather could not come at a worse time for maize crops moving through their critical pollination stage of development‚ Teucrium Trading’s Sal Gilbertie said.
Pollination determines the number of kernels each ear of maize produces‚ and damage at this stage is irreversible.
Traders were also mindful of prices rising to levels that cause demand destruction‚ particularly with the ethanol industry and livestock feeders reporting poor profit margins due to higher maize prices.
Wheat futures also traded higher‚ with the possibility of dry weather conditions threatening crops in the Black Sea area‚ northern China and Australia.
CBOT July soybeans rose 19 1/2 cents‚ or 1.3%‚ to $15.32 1/4 a bushel‚ and November soybeans added 10 1/4 cents‚ or 0.7%‚ to $14.38. CBOT September wheat rose 15 1/4 cents‚ or 2%‚ to $7.72 1/2‚ September KCBT Wheat climbed 21 cents‚ or 2.8%‚ to $7.77‚ and MGEX September wheat settled up 18 1/4 cents‚ or 2.2%‚ at $8.62 3/4. - I-Net Bridge