February 9, 2004

 

 

South Africa's 2003 Corn Crop Estimated Down To 6.6 Million MT

 

This report highlights the drought damage to South Africa's current, 2003 corn and wheat crops. The 2003 corn crop is now estimated at 6.6 million metric tons, more than 30% down on the 9.7 million-ton 2002 crop. The smaller crop will lead to imports of more than 1 million tons, mainly yellow corn during MY 2004/05, according to a U.S. Department of Agriculture attache report.

 

The 2003 wheat crop is estimated at 1.4 million tons compared to 2.4 million tons in 2002. This will lead to imports of about 1.2 million tons in 2004 compared to 870,000 tons in 2003. This includes imports for re-export to the region. About 60% of the wheat imports may be sourced from the U.S. if market conditions do not change significantly.

 

Production

 

The National Crop Estimates Committee released its preliminary commercial area planted estimate for summer crops for the 2003/04 season on January 20, 2004. The area planted to corn is estimated at 2.6 million hectares, nearly 20% down on the 3.2 million hectares planted in 2002. This is the lowest area planted since 1939. Farmer's initial intention was to cut back the area by 12% for economic reasons; the additional 8% cutback was due to the November/December drought. The ratio of white to yellow corn plantings is 65:35. The area planted to white corn is 1.67 million hectares, down 25.4% from the previous season's 2.23 million hectares, while the yellow corn plantings are estimated at 892,000 hectares, down 6.4% from 952,500 hectares last year.

 

The data takes into account that 772,000 hectares, or 17.3% of the available land, was not planted this year. It is unlikely that the area planted increased much after the mid January estimate as the summer solstice was on December 21 and one would prefer not to plant much after midsummer. Later plantings were probably for fodder. In the eastern areas the first frost could be expected by April 15 limiting the length of the growing season.

 

Forecasting production is even more difficult as weather conditions are, and have been, very poor. Soil moisture was low after a long, dry, winter and early spring rains also disappointed. November and December rainfall was under normal while good rains only arrived in mid-January. Temperatures have been above normal to date. Unfortunately South Africa's summer grain growing areas are not homogeneous but have different soils and microclimate areas. Rainfall has also been very patchy.

 

The 2003 area planted could have produced a 7.685 million ton crop at normal yields, which means that the area cutback is the reason for a 1.315 million ton or 14.6% drop in expected production. The lower yield expected caused another 1.285 million ton or 14.3% reduction in the expected crop for a total decrease of 2.6 million ton or 29% on the five year average.

 

Consumption

 

Commercial deliveries, that is corn delivered to the silos according to SAGIS, forms the basis of the commercial PS&D. Corn produced and consumed outside the formal trading environment is not well documented. To correlate the commercial PS&D with a specific crop we use the March to February deliveries and not the formal May to April marketing year. The reason is that the quantity of early deliveries has been increasing. Early deliveries only amounted to 120,000 tons in March and April 2001 but jumped to 740,000 tons in 2002 and 760,000 in 2003. The March and April deliveries are then deducted from the May 1 carry over and added to the new season's deliveries. Adding the early deliveries to the carry in stocks skews the PS&D analysis, as the crop has to be decreased by the same amount, which could be confusing.

 

Trade

 

Exports

 

Since May South Africa has exported 781,000 tons of white and 95,000 tons of yellow corn, for a total of 876,000 tons, or about 110,000 tons per month. Exports to Customs Union Partners, the so-called BLNS countries amounted to about 40,000 tons per month and this is likely to continue in future except if South African prices increase much more. Some other regional sales are also foreseen for 2004 pushing the 2004/05 seasonal total to about one million tons.

 

Imports

 

A severe shortage of yellow corn is developing in Southern Africa. Since May 2003 South Africa has imported about 49,000 tons of yellow corn but this pace is expected to jump to about 50,000 per month over the next few months for a My 2003/04 total of about 200,000 tons. The crunch is coming in the new, MY 2004/05 season, when yellow corn import needs could jump to about 1.1 million tons, or nearly 100,000 tons per month. Coupled to the anticipated monthly need of 100,000 tons of wheat, and the corn and Wheat exports, pressure on the transport sector is increasing.

 

Production

 

According to the sixth production estimate, the 2003 wheat crop is estimated at 1.428 million tons, compared to the 2.32 million tons produced in 2002. The main reason for the decline is a 20.5% decline in area planted, due to dry conditions at planting from May 2003, especially in the Free State. The November/December 2003 drought further damaged the crop.

Although South Africa has developed as a net importer of wheat, the 2004 demand will be especially high. Since the beginning of October up to January 23 about 373,000 tons were imported at about 93,000 tons per month. To move the anticipated local and regional import demand of about 1,200,000 tons the rate will have to be pushed up to more than 100,000 tons per month. Currently the U.S. share of the trade is about 66% and this could continue through the season leading to U.S. sales reaching 600,000 to 800,000 tons.