September 13, 2004

South Africa's 2003 Corn Crop Seen At 8.7 Million MT

South Africa's 2003 corn crop is currently estimated at 8.7 million metric tons, 1.7 million tons more than the initial estimate, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site.
 
Summary
 
South Africa's 2003 corn crop (2003 indicating the year of planting) is currently officially estimated at 8.7 million tons, 1.7 million tons more than the initial estimate made in February, the report said. The 24% increase is indicative of the much more favorable conditions and widespread rainfall over the second half of the season, and the importance of the distribution of the rainfall over the season. Harvesting is in progress and deliveries from March to the end of July amount to 7.15 million tons. South African supplies will be adequate for domestic needs, but imports of especially yellow corn and exports of mainly white will continue.
 
Exports to date have been slow.
 
The 2004 wheat plantings increased to 851,000 hectares after only 748,000 hectares were planted in 2003. The crop estimate is 2 million tons compared to the 1.54 million tons produced last year. Drought in the Western Cape initially affected about 365,000 hectares, but late rains saved the situation. A small import tariff of R18.67 or $2.84/ton was announced in August.
 
Corn
 
Production
 
South Africa's current, 2003 (referring to the year of planting), corn crop continues to astound observers. The seventh official estimate was released on August 19, 2004. The total crop is estimated at about 8.7 million tons, 24% more than the initial estimate. In spite of a late start to the rainy season, and a December/January dry spell, the expected average yield
increased by 9.4% compared to the previous season. Since the first estimate was made on Feb. 19, conditions improved considerably and the seventh estimate shows an increase of 1.7 million tons on the initial estimate. The 2003 crop is a good example of the gain in yield that can be achieved when the area planted is cut back, as production is intensified on the better soils. It also shows that the rainfall distribution over the season is as important as the
total precipitation.
 
The estimate is supported by the deliveries to the silos, from March 2004 to the end of July about 7.15 million tons has already been received while harvesting continuous. Because the crop was planted late in some areas the final estimate will only be made at the end of September. The average yield for the whole crop is estimated at 2.9 ton per hectare. According to the Abstract of Agricultural Statistics this is third highest average yield ever recorded. The 14.9 million ton 1980 crop yielded 3.3 tons per hectare and the 11.5 million ton 1999 crop 3 tons per hectare.
 
The most significant feature of the latest estimate is that the average yield of the commercial crop increased by 8.5% compared to the previous season. The yellow corn crop is actually expected to surpass the 2002 yield by 12%. It can be argued that the cutback in area planted mainly consisted of low potential soils resulting in a proportional increase in the area of high potential soil planted. This facilitated the increase in yield. Farmers were probably also able to optimize input use as a result of the smaller area. The role of irrigation cannot be ignored. In the Northern Cape, where only irrigated production is possible, 45,500 hectares were planted this year and this is expected to produce 455,000 tons at 10 tons per hectare. Although the area planted under irrigation declined in 2003 due to the dry start to the season, and some water sources ran dry during the season, it is estimated that about 120,000 hectares were planted under full or supplemental irrigation, probably producing 1.2 million tons of the total. Because of the decline in total area planted, the irrigated crop plays a bigger role in the total production.
 
The outlook for the 2004 crop to be planted from mid September is also affected by the bigger than expected 2003 crop. With exports for the first three months of the current season running at less than half of the sales of the same period last season, and local sales depressed, the industry is facing an oversupply situation again. As shown in the consumption section, carry over at the end of April 2005 could exceed 2 million tons.
 
Grain
 
South Africa has made planting recommendations to farmers. The crux is that the area planted to white corn should be cut back and the area planted to yellow increased.
 
The recommendation is not to severely cut back the total area planted, but to cut the area planted to white corn by 240,000 ha. and to increase the area planted to yellow by 180,000 ha. One concern is South Africa's variable weather. There has not been a serious drought since 1991 and a drought could cause a severe shortage. Cutting the area planted to 2.59 million hectare, and using the long-term yield of about 2.8 mt/ha, should produce a crop of about 7.25 million tons, which will decrease supplies. But if the average yield of the past two seasons is used in conjunction with the smaller area, production could still exceed 8 million tons. Farmers' response to the recommendations will however be determined by the early season rainfall.
 
Since the introduction of the free market system the area planted to corn has dropped about 25% from the recent high of 4 million hectares in 1996 and 40% of the all time high of about 5 million hectares in 1975.
 
The crop in the developing sector amounts to less than 3% of total production and is defined as crops produced primarily for home consumption.
 
Appendix 1, "Definitions relating to the crop estimates committee", clarifies definitions of grains, cereals, pulses, oilseeds, etc. It defines area planted for grain as the area planted with the intention of harvesting it for grain. Therefore areas planted with the intention of using it for silage etc. are excluded.
 
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
 
During the 2003/04 May to April marketing season South Africa imported 468,000 tons and exported 1,126,000 tons of corn.
 
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).
 
Exports during the current, MY 2004/05 marketing season are not faring so well. Between May 1 and the end of August 2004 South Africa exported 172,000 tons of corn, or nearly 43,000 tons per month. To reach the goal of exporting 1 million tons over the season, monthly shipments needs to exceed 83,300 tons per month, and to reach the goal after only exporting 172,000 tons in the first four months, more than 100,000 tons have to be exported monthly over the next 8 months. One of the reasons for the slowdown in exports is that the neighboring states have just harvested their own crops and thus have stocks available. Zimbabwe only took about 46,000 tons in the first four months after buying more than 400,000 tons during the previous season.
 
Competition is also increasing. Zambia, Zimbabwe's northern neighbor, has become a net food exporter after years of relying on imports. Zambia's white corn production has increased from 600,000 tons harvested in 2002 to 1.2 million tons in 2003 and 1.4 million tons in 2004. Zambia is exporting into the region as well as selling to the WFP.
 
Domestic prices are basically determined by the Rand/Dollar exchange rate, which is also the main cause of the price instability. The increasing crop estimate and slow domestic and exports sales aggravated the decrease in producer prices.
 
Wheat
 
Production
 
The first official production estimate for the 2004 (year of planting) wheat crop is 2.03 million tons compared to the final estimate of the 2003 crop of 1.54 million tons. The revised area planted estimate is 851,000 ha. which is 13.8% or 103,000 hectares more than in the previous season. About 356,000 hectares (42%) were planted in the Western Cape and 375,000 hectares, (44%) in the Free State. The expected crop in the Western Cape is 712,000 tons at 2 mt./ha. and in the Free State 694,000 tons at 1.85 mt./ha. It appears that the early season drought in the Western Cape did not have a detrimental affect on the crop.
 
Tariffs
 
On Aug. 13, 2004, the import tariff on wheat was increased from Zero to R18.67/ton, or $2.84/ton at the current exchange rate of $1=R6.58.

Source: USDA