Cooling food inflation faces new threat as maize prices soar to record highs

South African food inflation has been cooling, but things could heat up again soon. Domestic futures prices for the staple white maize in the week of 18 November scaled record highs above R6,300 a tonne, a scorching rise in the year to date of about 60%.

“The market is jittery because there is not much maize in the silos, and speculators are jumping in. But there are still deliveries to the silos of between 20,000 tonnes and 35,000 tonnes a week of both white and yellow maize,” Tom van Rooyen, a commercial maize farmer in North West, told Daily Maverick.

There have been several accelerants for the maize price. First and foremost was last summer’s poor crop, which withered under the onslaught of a mid- to late-summer drought triggered by the El Niño weather phenomenon.

White maize production for this past summer season could be more than 23% lower at just over 6 million tonnes, according to the latest estimate from the government’s crop estimates committee.

Adding fuel to the futures price fire has been the fading prospect of La Niña – which typically brings good rains to the southern African region – forming this summer. If the weather pattern does emerge, it is expected to be weak and short-lived.

Another spark has been the renewed weakness in the rand since the election of former and now future US president Donald Trump. On the global stage, maize is called corn and it is priced in dollars, and so the rand’s exchange rate with the greenback has a huge influence on domestic prices in South Africa.

There is usually a time lag of several months between futures prices and what consumers pay at the shops, so the impact will not be felt immediately. But a retail price surge is certainly a possibility on the horizon and it will hit lower-income households, who depend on maize meal as a caloric staple, the hardest.  

South African food inflation in October was 2.8% on an annual basis, its lowest level since May 2019. This has mirrored the overall slowing of ­consumer inflation, which braked to 2.8% in October – its lowest level since June 2020 – from 3.8% in September.

Notably on this front, Statistics South Africa said the price of maize meal declined 2.0% in October from September, its third straight monthly decline.

This welcome trend now looks like it could be set for a painful reversal next year, but a lot will hinge on the rand’s performance and how this season’s maize crop shapes up.

Read more: White September — a red alert for rural farmers planting maize

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