July 23, 2007

 

South Africa corn output seen slashed by 3.5 percent

 

 

The South African Department of Agriculture's Crop Estimates Committee is expected to cut its corn production forecast by 3.5 percent, or 250,000 tonnes, to 6.80 million tonnes, according to an I-Net Bridge poll of five agricultural traders.

 

Corn deliveries to silos "over the past few weeks have been too slow for the July month," a trader, who declined to be named, said.

 

Henk Vermeulen, acting chief executive of commercial farmers' representative body Free State Agriculture, said the slower pace of deliveries reflected the impact of the drought earlier this year.

 

"I think the drought might have been taken too lightly. We're only starting to realize the impact of the drought now," said Vermeulen, who added he was working in the fields with farmers.

 

Vermeulen declined to give his estimates of the extent of damage to farmers, saying he had been working in one region only and that it would not be representative of the whole country.

 

South Africa's key harvest months are June and July. But over the past few weeks corn deliveries to the silos dropped sharply. Traders and analysts gave conflicting views on the slow pace.

 

"Remember towards the end of June and the first two weeks of July we had snow falls and that could have prevented farmers from going to the fields," one trader said.

 

For the week ended June 29, the South Africa Grain Information Service's harvest report recorded the sharpest drop in corn deliveries to date. Deliveries fell from a hefty 497,000 tonnes that week to 316,000 tonnes the following week and rose slightly by 40,000 tonnes the next week before falling sharply to 274,000 last week.

 

Another trader said that the slow pace was directly linked to the dry spell that swept over the country's corn heartland between January and March this year.

 

"We had a healthy pace of deliveries during May and June because that was the corn planted during favourable weather conditions," the trader said.

 

It is unclear what size of corn benefited under favourable conditions in September to December and suffered under stubbornly hot dry conditions January to March. But analysts have roughly estimated that about 60 percent of corn was safe and 40 percent was planted late and a portion of it could have suffered under scorching heat.

 

The CEC is due to release its 6th summer production forecast Wednesday. It will also release the winter preliminary area planted on the same date.