May 11, 2004

South Africa's 2003/04 Corn Crop Predicted At 7.8 Million MT

South Africa's MY 2003/04 corn crop is estimated at 7.8 million metric tons compared to the 9.7 million tons produced in the previous season, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated May 3.
 
Summary
 
South Africa's 2003 (year of planting) corn crop is currently estimated at about 7.8 million metric tons, compared to the 9.7 million tons produced in 2002. The decrease is mainly due to a 17% market-related decrease in the area planted, the report said. With total domestic disappearance currently estimated at 8.6 million tons, and exports at 1.1 million tons, imports were needed.
 
The current shortage is in yellow corn with white corn in surplus with the result that about 400,000 tons of yellow corn, mainly from Argentina, and 60,000 tons of white corn from the U.S. has been imported to date. Imports are also expected to reach 700,000 tons in MY 2004/05, which started on May 1.
 
The area to be planted from October this year is expected to rebound to about 3.3 million hectares which could produce a 9 million ton plus crop again, assuming normal weather which rarely occurs.
 
The 2004 wheat plantings are starting but more details will only be available next month. In the meantime imports continue unabated.
 
Corn
 
Production
 
The third official estimate of South Africa's 2003 corn crop was released on April 20, 2004 (2003 referring to the year of planting). The total crop is estimated at about 7.8 million tons, 19% less than the 9.7 million 2002 crop, mainly due to a decline in area planted. The total area declined by 17.7% due to a combination of market and weather factors. As a result of a late start to the rainy season, and a December/January dry spell, the average yield is also expected to decline by about 2.7%. Since the first estimate was made on Feb. 19, rainfall has improved considerably and the third estimate shows an increase of 790,000 tons, or 11% on the initial estimate. At this stage the main concern is early frost as many fields were planted late.
 
The most significant feature of the latest estimate is that the average yield of the commercial crop decreased by less than 3% compared to the previous season, in spite of the difficult growing conditions. The main, market related reason for the smaller crop was the 540,000-hectare, 17.7%, decrease in the area planted in response in response to economic and agronomic factors earlier in the season.
 
According to the estimate the yield in Mpumalanga is actually higher this season compared to the previous season. The irrigated yield in the Northern Cape, at about 10 MT/ha is also significant. Unfortunately we do not have a good figure for the total corn irrigated area, but this could be around 145,000 ha. this year compared to 200,000 ha. In 2002, implying production of about 1.45 million tons this season compared to 2 million tons in 2002. The decline in the irrigated area is blamed on low irrigated water supplies early in the growing season. It is also noticeable that the average yield of the total commercial crop is higher than for the four main production areas, implying that irrigation also plays a major role in some of the smaller areas. Irrigation also occurs in the three main producing provinces.
 
Consumption
 
Commercial deliveries, that is corn delivered to the silos according to the South African Grain Information Service (SAGIS), forms the basis of the commercial supply and distribution.
 
The quantity of corn produced and consumed outside the formal trading environment is small and estimated, as actual figures similar to the delivery figures do not exist. This amounted to the crop in the developing sector, 286,000 tons, and commercial farm retentions, 425,000 tons, to total 711,000 tons in My 03/04 and an expected 624,000 tons in My 04/05, or less than 9% of the total consumption.
 
To correlate the commercial supply and demand with a specific crop we use the March to February deliveries and not the formal May to April marketing year. The March and April deliveries are then deducted from the May 1 carry over and added to the new season's deliveries.
 
Prices
 
Although the crop and consumption estimates have basically settled, implying a major white corn surplus and a yellow corn shortage, prices on SAFEX are still fluctuating. This is not a bad phenomenon as it implies high liquidity in the market, the report said. The main determinant in the market seems to be the exchange rate as the supply and distribution situation is clear and the regional export market potential the only other unknown. The market does not seem to be perturbed by the 3 million tons of unutilized stocks still lying in the silos at the end of March 2004 with the new crop deliveries starting. It is interesting that the Government is seriously considering the idea of a strategic reserve while the market has kept carry over stocks of around 2 million tons over the past few seasons.
 
Wheat
 
Production
 
Farmers are due to start planting the 2004 winter wheat crop this month but early indications are that the area to be planted is about 850,000 hectare, nearly 14% larger than in 2003 but about 10% less than in 2002. As soil moisture in the Free State is quite high and the winter rainfall season in the Cape has started, climatic conditions favor bigger plantings. The problem is that price expectations are not favorable which may be the limiting factor. The first meaningful estimates will only be available next month. Deliveries from the 2003 crop amount to about 1.49 million to date, surpassing the estimate again. Consumption is also showing growth to about 2.7 million tons which means that imports continue to arrive.
 
To date, the U.S. enjoys a nearly 60% market share followed by Australia with about 24%, the report said.
 

Source: USDA