VII. INTERNATIONAL MARKET PRICES

There are no regularly published international market prices for white maize which would indicate ruling price levels. Although in the United States the Kansas City Board of Trade cash market quotes prices for white maize and publishes them regularly, individual exporting countries use their own methods for setting prices and, normally, sales prices are not made public. Thus, importers have to put out tenders or request price quotations directly from international grain trading houses or agencies, whenever foreign purchases are contemplated.

In many countries, prices are often available only for local country markets indicating levels at which buyers are willing to purchase from farmers. More recently, within the framework of structural adjustment programmes and measures to liberalize trade, attempts have been made to establish agricultural commodity exchanges in some countries, including South Africa, Zambia and Zimbabwe, to bring together buyers and sellers for the conclusion of contracts. All such contracts are, so far, on a cash basis only. Forward contracts and hedging facilities do not yet exist but are envisaged to be introduced.

The South African Futures Exchange in Johannesburg is at present the only futures market on which white maize is traded.

Otherwise, hedging is usually done with yellow maize futures, primarily at the Chicago Board of Trade. However, as prices for both types sometimes diverge substantially and can even move in different directions, using yellow maize to hedge white maize remains a risky operation.

Irrespective of the fact that white maize is predominantly used for food and yellow maize for feed, the price quotations for white maize are generally determined by the developments on the international market for yellow maize. This is due to the sheer volume of global supplies of yellow maize and to a certain degree of substitutability of white by yellow maize. White maize is normally quoted at a premium over yellow maize on the international market (Table 7).

In general, the premium reflects yield differences and the additional cost for more careful grading and handling of a food versus feed commodity. In years of extreme shortages of white maize, the price can exceed that of yellow maize by a wide margin, as happened in the United States in 1988 and in the Republic of South Africa in 1991. By contrast, on occasions, white maize can also be traded at a discount, when exceptionally large supplies are available for exports. This occurred in the Republic of South Africa, particularly in 1989 and more recently in 1994 when domestic requirements for human consumption were met and yellow maize was preferred to white maize as animal feed.

TABLE 7 - Annual average prices for white and yellow maize, 1970-1995¹

	United States		Price Premium	Republic of South Africa		Price Premium
	Kansas City cash market No 2 grade, delivered2			Average export tender prices free alongside port elevator3
	White	Yellow		White	Yellow
	(US$/ton)		(percent)	(US$/ton)		(percent)
1970	83	58	42	65	62	4
1971	51	50	3	59	57	2
1972	96	72	33	62	64	-3
1973	142	112	27	122	84	44
1974	175	123	42	134	136	-1
1975	120	107	12	131	127	3
1976	120	92	31	135	121	11
1977	133	89	51	109	101	8
1978	119	99	20	112	111	1
1979	178	106	69	168	129	30
1980	216	131	65	178	152	17
1981	107	104	3	140	139	1
1982	130	114	14	124	125	-1
1983	193	133	44	-	-	-
1984	139	110	26	-	-	-
1985	102	93	9	-	113	...
1986	89	65	37	-	83	...
1987	104	83	25	91	83	10
1988	154	103	50	143	145	-1
1989	122	100	23	110	125	-12
1990	122	96	26	124	123	1
1991	125	100	24	178	129	38
1992	102	89	14	-	-	-
1993	113	106	7	136	131	4
1994	113	86	31	129	139	-7
1995	105	103	2	...	...	...
1996	78	72	8	1184	1294	-8

- = no quotation
... = not available
¹ Marketing years, beginning the year shown.
² September/August.
³ March/February.
⁴ Average price for maize delivered to the Board.

Sources:

United States: Kansas City Board of Trade.
Republic of South Africa: Maize Board, various annual reports.
USDA, FAS, Annual Grain Feed Report, South Africa, 1997.