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Traders puzzled by 2.4m 'missing tons' of maize
October 25, 2005
By Ed Stoddard
Johannesburg - Where's the maize? That's the question many local grain traders are asking in light of the discrepancy between the official 12.18 million ton forecast for this year's maize harvest and the 9.65 million tons that have been delivered so far.
At least part of the gap may be explained by farmers feeding maize to their cows and chickens, and by the recent appearance of giant plastic storage bags on farms. But neither accounts fully for the roughly 2.4 million "missing tons".
There are strong market suspicions that the official forecast, which would be a bumper crop and the best in over two decades, is accurate and that farmers are hoarding maize in-house in a bid to drive prices up.
Many farmers, who have obvious market incentives for saying so, maintain that the official forecast is too high. It is possible that the crop committee's forecast is spot on - but there is still less than 12.18 million tons available for the market.
"Because of the low price we reckon a lot of farmers have fed maize to their livestock and poultry," said Rodney Dredge, the chairman of the Crop Estimates Committee.
That is how yellow maize often ends up but white maize can also be used for this purpose.
A recent drop in the yellow maize price when the cost of its white counterpart was marching higher was attributed by traders to an abundance of animal feed in the market - a scenario which points to farmers feeding excess grain to livestock.
But few market watchers believe that feeding animals would explain all of the gap between the forecast and deliveries. Some farm storage is clearly being done, especially given the price.
Some farmers have been storing grain in silo bags - huge plastic tubes that can store up to 200 tons of maize for up to two years, depending on the moisture level in the crop.
The product hit the local market late last year and enables farmers to keep maize on their property relatively cheaply as it saves them from building barns or silos for storage. The bags can be kept outdoors.
"There are about 170 000 tons of maize stored in my bags and another 130 000 tons stored in the bags of another supplier who we work with," said Wilhelm Grutter, the manager of Silo Bags Africa, the main distributor of the product in South Africa.
That would explain where 300 000 tons of the missing maize is but far from all of it. Dredge said he reckoned that farmers had the capacity to store at least 1 million tons of maize on their properties - an estimate that some farmers admit is probably right.
"I think the guys can keep about 1 million tons of maize in storage on their farms. But I don't have facilities and have delivered all of my crop myself," one commercial maize farmer said.
The crop committee has stuck to its forecast based on a range of factors from good rains to the amount of land that farmers said they planted last year. Dredge said the committee was still determined to get to the bottom of the matter.
He said the committee was undertaking an expanded survey, based on questionnaires to about 7 000 farmers. But Dredge said they would not have this finalised for a month or so.
In the meantime, the market's immediate short-term focus is on the weather and how much farmers intend to plant for the upcoming season.
- Reuters
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