Watch the grain price!

Milk producers must watch grain prices carefully as conditions can change rapidly. Safex yellow maize July 2015 contracts currently (12 February) traded at R2 410, up from the February 10 price of R2 275. The main reason for the increase is the drought in the west of the country. Grain SA warned about the possible effect of the drought on the total maize crop. Indications are that it may reduce the total crop by between 10% and 20%. Timely rain in production areas may alleviate the problem. At present, the size of the 2014/2015 crop is still highly uncertain. Total yellow maize exports to 6 February of 1,3 million tonnes were 26% more than that of the same period last year. Price volatility will continue and milk producers must take note of price changes. According to MPO economist Dr Koos Coetzee, the prudent option for maize buyers is to ensure that they buy maize at current prices in winter. Farmers should consult their brokers before taking any actions.