June 8, 2004

 

 

South Africa's 2004/2005 Corn Crop Seen At 7.9 Million MT

 

South Africa's MY2004/05 corn crop is now estimated at 7.9 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 June 2 and released Monday.

 

Summary

 

South Africa's 2003 corn crop (2003 indicating the year of planting) is currently officially estimated at 7.9 million tons, 875,000 tons more than the initial estimate made in February.

 

The 12.5% increase is indicative of the generally more favorable conditions over the second half of the season. Harvesting is in progress and indications are that the estimate may even increase further, the report said. South African supplies will be adequate for local needs but with the free market imports of especially yellow corn and exports of mainly white will continue.

 

At this stage it is expected that wheat plantings will increase to 886,000 hectares this year after only 748,000 hectares were planted in 2003. This could lead to a crop in excess of 2 million tons compared to the 1.5 million tons produced last year. At this stage there are some concern about the lack of rain in the Western Cape. High levels of imports are expected to continue.

 

Production

 

The fourth official estimate of South Africa's 2003 corn crop was released on May 20, 2004 (2003 referring to the year of planting). The total crop is estimated at about 7.9 million tons, 18.4% less than the 9.7 million 2002 crop, mainly due to a decline in area planted. In spite of a late start to the rainy season, and a December/January dry spell, the average yield is expected to decline by less than 1%. Since the first estimate was made on Feb. 19, rainfall has improved considerably and the fourth estimate shows an increase of 875,000 tons, or 12.5% on the initial estimate.

 

The most significant feature of the latest estimate is that the average yield of the commercial crop decreased by 1.7% compared to the previous season, in spite of the difficult growing conditions. The yield of the yellow corn crop is actually expected to surpass the yield attained in 2002. The main, market related reason for the smaller crop was the 540,000-hectare,

17.7%, decrease in the area planted in response to market and weather factors. As harvesting continue the crop size is expected to increase further.

 

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.

 

Trade

 

South Africa again exported more than 1.1 million tons in MY2003/04, very similar to the 2002/03 exports, the report said.

 

Only about 50,000 tons were exported overseas, with only 10,000 tons going to Japan and the rest going to nearby islands. More than a million tons, 980,000 tons of white and 80,000 tons of yellow, were exported overland to African states, of which a high proportion needed to be GMO free. For the first time we are also able to trace actual sales to the Customs Union partners (the BLNS countries).

 

Historically these sales were considered part of the domestic market. It has been previously estimated these sales between 400,000 and 600,000 tons depending on the season.

 

Mozambique, not part of the Customs Union, takes about 90,000 tons annually so South Africa can at least bank on exports of more than 500,000 tons annually.

 

The most remarkable figure in the table is the 413,000 tons that went to Zimbabwe including 397,000 tons of white and 16,000 tons of yellow corn. Zimbabwe had to purchase the bulk of the shipments, which is hard to believe given the state of the economy. The figure does include food aid shipments bought with donor funds as Zimbabwe insists on GMO free whole corn. GMO corn donations had to be milled before delivery and are not included in the whole

corn trade figures.

 

Prices

 

Although the crop and consumption estimates have settled, implying a major white corn surplus and a yellow corn shortage, prices on SAFEX are still fluctuating. 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 2.5 million tons of unutilized old crop stocks lying in the silos at the end of April 2004 with the new crop deliveries picking up. It is interesting that the Government is considering the idea of a strategic reserve while the market has held carry over stocks of around 2 million tons over the past few seasons.

 

Wheat

 

Production

 

Farmers have started planting the 2004 winter wheat crop and early indications are that the area to be planted could reach 886,000 hectare, more than 18% larger than in 2003 but about 6% less than in 2002. As soil moisture in the Free State is favorable and the winter rainfall season in the Cape has started, climatic conditions favor bigger plantings. The problem is that price expectations are poor which may be the limiting factor. The first meaningful estimates will only be available next month.

 

Deliveries from the 2003 crop amount to about 1.5 million to date, surpassing the earlier estimates again. Consumption is also showing growth to about 2.75 million tons which means that imports continue.

 

To date the U.S. enjoys 57.5% market share followed by Australia with about 24%.

 

The SAFEX corn futures prices ex Randfontein are lower than the coastal landed prices, but higher for wheat and, while the Randfontein - Durban freight rate is at least R145/ton, there is obviously scope to import grain especially into the coastal areas.

 

Source: USDA