November 8, 2004
South African Corn Crop Seen at 9.6 Million MT
FAS/Pretoria estimates the current South African corn crop at 9.6 million tons, 700,000 tons more than the South African Government's estimate. The revision is based on deliveries exceeding the estimate. The 2004 crop is due to be planted soon but a lack of rain is delaying planting. Good rains are currently needed to allow planting at the optimum planting dates. The 2004 wheat crop is estimated at 2 million tons, well short of domestic and regional needs. The shortfall will be imported, with a high percentage sourced from the USA, according to the U.S. Department of Agriculture's Foreign Agriculture Service, released Friday, but dated Nov 2. SUMMARY
South Africa's 2003 corn crop (2003 indicating the year of planting) is currently estimated by the South African Department of Agriculture at 8.9 million tons, 1.9 million tons more than the initial estimate made in February.
We, however, estimate the 2003 crop at 9.6 million tons, about 700,000 tons more than the official South African estimate. The estimate is under pressure from deliveries exceeding the estimate. From March 2004 to the end of September about 8.92 million tons was received. Between October and the end of February 2005, another 80,000 tons can be delivered pushing the total to 9 million tons. Farm retentions are considered to be about 400,000, which must be added for a total commercial crop of 9.4 million tons. If the 200,000 tons in the developing sector is added the total crop estimated increases to 9.6 million tons and the average yield to 3.2 tons per hectare, the second highest on record. This is leading to a considerable oversupply, as exports have been slow.
Planting intentions for the new growing season, which is due to start soon, are to increase the area planted on commercial farms to 2.85 million ha. This could lead to another 9-million-ton-plus crop aggravating the oversupply at current prices and exchange rate.
Weather is, however, becoming a concern. Rainfall to date has been low and temperatures high. Planting has been delayed and rain is urgently needed to get the season started. The 2004 wheat plantings increased to 851,000 hectares after only 748,000 hectares were planted in 2003. The crop estimate is 1.98 million tons compared to the 1.54 million tons produced last year. A small import tariff of R18.67 or $2.84/ton was announced in August, but this is not expected to affect imports, which reached about 1.28 million tons in 2003/04 and could reach 900,000 tons again in 2004/05. US$1=Rand 6.10 on 11/02/2004. Production
South Africa's current, 2003 (referring to the year of planting), corn crop continues to surprise. The National Crop Estimates Committee released the eighth official estimate on September 20, 2004. The total crop was estimated at about 8.9 million tons, 27% more than the initial estimate.
We estimate the 2003 commercial crop at 9.4 million tons, about 700,000 tons more than the official estimate. We base the bigger crop on actual deliveries to the silos, from March 2004 to the end of September about 8.92 million tons was received. Between October and the end of February 2005 another 80,000 tons can be delivered pushing the total to 9 million tons. Farm retentions are considered to be about 400,000, which must be added for a total commercial crop of 9.4 million tons. If the 200,000 tons from the developing sector is added the total crop estimated increases to 9.6 million tons and the average yield to 3.2 tons per hectare, the second highest on record. 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. New varieties also played a role. Farmers were 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, it is estimated that about 150,000 hectares were planted under full or supplemental irrigation, probably producing 1.5 million tons of the total. Because of the decline in total area planted, the irrigated crop plays a proportionally bigger role in the total production.
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 first planting intentions report was also released on September 20. Based on replies received from producers the expected area to be planted to corn on commercial farms later this year is 2.85 million hectares of which 1.81 million ha. (63%) is earmarked for white corn and 1.04 million ha. is to be planted to yellow corn. The survey shows that producers intend to increase the area planted to white corn by 83,100 ha. (4.8%) compared to the previous season. The area to be planted to yellow corn is expected to increase by 125,300 ha. (13.6%).
Under normal conditions the 2004 crop soon to be planted could yield a crop similar to the current crop. In the summer grain growing areas, however, the new seasons' rainfall to date has been low and the prediction is for below normal rainfall and above normal temperatures into December. Farmers have not yet been able to plant while we are already in the optimum planting window. Any further hot and dry weather could already impact on the potential yield. 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. To correlate the commercial S&D 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 added to the new season's deliveries and deducted from the May 1 carry over. Imports for re-exports, and the relevant stocks, are incorporated in the figures.
The expected carry over of more than 3 million tons at the end of April 2005 will alleviate price pressure if weather conditions deteriorate. Prices are already increasing as shown in the following table, assisted by an R31.67/ton ($5.20) import tariff levied on October 8. The tariff is formula driven as explained on the SAGIS website. 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. Exports during the current MY 2004/05, marketing season are not faring so well. Between May 1 and the end of October 2004 South Africa exported 298,000 tons of corn, or about 50,000 tons per month. If this rate continues the export total for the season could be as low as 600,000 tons, although we still show 750,000 tons in the S&D. Production
The third National Crop Estimates Committee estimate of South Africa's 2004 wheat crop was released on October 20, 2004. According to the estimate the expected crop decreased by 73,825 tons from 2.05 million tons to 1.98 million tons over the past month. The current estimate is still 436,475 tons, or 28.3% higher than the crop for the previous season, mainly due to an increase in area planted. The main producing areas are the Free State, with 712,500 tons or 36% of the total and the Western Cape with 640,800 tons or 32.4%. The main reason for the decrease in the crop estimate over the past month is drought in the Free State and the Western Cape, which affected yields.
Only in the Free State and the Western Cape is wheat mainly grown under dry land conditions, in the other provinces wheat is grown under irrigation, explaining the much higher yields.
The crop will still be insufficient to satisfy domestic demand, currently around 2.7 million tons, and the needs of the region. As a result imports of about 900,000 tons are expected for the 2004/05 season after 1.278 million tons were imported during 2003/04.
During My 2003/04 the US supplied 560,089 tons, or 43.8% of the wheat imported followed by Argentina with 26.8% and Australia with 23.4%. In October 2004, the first month of the new 2004/05 marketing year, imports amounted to 88,545 tons of which 49,978 tons were supplied by Argentina and 38,567 tons by the US. An R18.67/ton import tariff was instituted on August 13, 2004 but the futures prices mainly reflect import parity and the volatile Rand exchange rate.
