Maize prices fuel farm bankruptcy fears

JOHANNESBURG – South African maize futures closed higher on Friday, with traders torn between worry over low demand and a massive crop and concerns that at such low prices levels farmers might go bankrupt.

A slightly softer rand currency in early trade gave further strength to Johannesburg maize, allowing it to shrug off a near three-week low at the Chicago Board of Trade on Illinois rains, which dented global prices. “Mainly people are looking at the rand and Chicago,” said one trader.”There’s a huge crop coming in but at the same time there is support.We can’t stay at these levels forever or the entire farming industry will go bankrupt.”July white maize – against which farmers hedge their crop – closed up six rand or 1,1 per cent at 578 a tonne on Friday, while the September contract closed up seven rand or 1,2 per cent at 601 a tonne.July yellow was up 2,40 rand or 0,4 per cent at 607,4 a tonne.Prices came crashing down from over 1 000 rand a tonne in November after good rains allowed farmers to plant, but many growers say the current price is too low for them to break even and say they may not be able to plant for the 2006 crop.Many traders expect the final harvest to be in excess of 12 million tonnes, far more than South Africa can shift to hungry African nations desperate for stocks.”We can maybe shift one million tonnes to Africa if the logistics are good,” said one trader.On Thursday, Zimbabwe’s state-run Herald newspaper said the country was buying 1,8 million tonnes of maize to feed humans and livestock, but traders say they doubt the final amount moved will be that high.Figures from the South African Grain Information Service showed 19 545 tonnes of white maize shipped to Zimbabwe in the week to June 24, with another 10 000 tonnes shipped to other African destinations.Over 9 000 tonnes of yellow maize was shipped to Iran, part of a long-booked shipment, while another 773 tonnes was shipped to Botswana, Lesotho, Namibia and Swaziland.-Nampa-Reuters”Mainly people are looking at the rand and Chicago,” said one trader.”There’s a huge crop coming in but at the same time there is support.We can’t stay at these levels forever or the entire farming industry will go bankrupt.”July white maize – against which farmers hedge their crop – closed up six rand or 1,1 per cent at 578 a tonne on Friday, while the September contract closed up seven rand or 1,2 per cent at 601 a tonne.July yellow was up 2,40 rand or 0,4 per cent at 607,4 a tonne.Prices came crashing down from over 1 000 rand a tonne in November after good rains allowed farmers to plant, but many growers say the current price is too low for them to break even and say they may not be able to plant for the 2006 crop.Many traders expect the final harvest to be in excess of 12 million tonnes, far more than South Africa can shift to hungry African nations desperate for stocks.”We can maybe shift one million tonnes to Africa if the logistics are good,” said one trader.On Thursday, Zimbabwe’s state-run Herald newspaper said the country was buying 1,8 million tonnes of maize to feed humans and livestock, but traders say they doubt the final amount moved will be that high.Figures from the South African Grain Information Service showed 19 545 tonnes of white maize shipped to Zimbabwe in the week to June 24, with another 10 000 tonnes shipped to other African destinations.Over 9 000 tonnes of yellow maize was shipped to Iran, part of a long-booked shipment, while another 773 tonnes was shipped to Botswana, Lesotho, Namibia and Swaziland. -Nampa-Reuters