March 24, 2015

 

South Africa imports corn as drought destroys crops

 

 

Crops in South Africa have been decimated by the country's most severe drought since 1992. The disaster has prompted the country to import corn for the first time in 11 months, according to a local grain farmers' organisation.

 

Affected areas include those in the Free State and North West, which provided 64% of crop output last year. There were rains at the end of February but they were insufficient to mitigate the impact.

 

The Crop Estimates Committee has a pessimistic outlook for crops; harvests will be at their lowest since 2007 as growers are expected to harvest 9.67 million tonnes of white and yellow corn in 2015, 32% lower than in 2014.

 

However, harvests might still reach 10 million tonnes due to the recent rains, according to Jannie de Villiers, the chief executive of Grain SA.

 

In the meantime, prices rose, with corn of white varieties increasing 27% this year, and yellow types by 13%. These had an upward effect on the price of cornmeal as well as feed for poultry livestock. As a result, the price of poultry meat will increase along.

 

About 934,000 tonnes of yellow corn deliveries are needed in the year to March 2016, and these, at a value of about US$134 million, will come from Argentina and Ukraine as well as other countries, said De Villiers.

 

On the way to Cape Town are three shipments from Argentina, each weighing 30,000 tonnes. These will provide feed for dairy cows in the Western Cape.

 

However, De Villiers is doubtful about importing white corn into South Africa as its availability is limited in the world market. Still, a surplus of at least 100,000 tonnes of this type is expected in South Africa, an adequate volume for domestic needs as well as supplying the neighbouring countries of Botswana, Lesotho, Namibia and Swaziland.

 

The present drought will continue to pose a significant challenge for South Africawhich saw a 6.4% inflation rate last year.

 

De Villiers claimed that there could be a "double digits" rise from May as more costly corn enters the supply chain.

 

In addition, the country has to ensure it is able to continue meeting international demands. Since the start of the marketing season in May, it has delivered 1.4 million tonnes of yellow corn, with China, South Korea and Japan as its biggest buyers.

 

South Africa has also sold 475,201 tonnes of white corn, with Botswana taking up 30% of such deliveries.

 

According to Grain SA, a demand of 517,000 tonnes of yellow corn could be expected from Botswana, Lesotho, Namibia and Swaziland in the year to March 2016.