July 1, 2005

USDA: South Africa grain and feed monthly update
 

South Africa's 2004 corn crop now being harvested is estimated at 12.2 million tons, 25% bigger than the 2003 crop. This harvest, coupled with last year's carry over stocks, greatly increases the over-supply. 

The area planted increased by only 4.3% to 3.3 million hectares. The crop on commercial farms (11.9 million tons) is expected to produce a new record yield of 4.1 tons per hectare.

This abundance leads to low producer prices. The July 2005 white corn price dropped by more than 47% from R1,089 a ton on November 1 last year to R574 a ton on June 28 this year.

The price drop is the cumulative effect of the favorable crop prospects and the big carryover, which reached nearly 3 million tons of old season stocks by the end of April 2005. 

With total annual consumption at about 8.7 million tons, the over-supply situation is clear. Exports are picking up due to the low prices and depreciated Rand, coupled to strong demand in Zimbabwe and Malawi. Even if this demand for about 1.5 million tons could be met, and total exports jump to 1.8 million tons, it would still not have a major effect on the over-supply situation. Farmers are considering cutting back the area to be planted this year while looking at ethanol production as the long-term solution.

The wheat situation is mainly unchanged from previous reports. However, wheat farmers have already decided to cut back the area to be planted this year.

For the full USDA report, click here.