December 15, 2003

 

 

South Africa 2003 Wheat, Corn Review

 

Summary

 

South Africa's current, 2003, wheat crop is estimated at 1.48 million tons, 36% less than the previous crop and the lowest crop in eleven years.  The decline is mainly due to a cutback in area planted and low rainfall.  Fortunately the carry over at the start of the season was close to 900,000 tons and imports started immediately.  Since the beginning of the new season in October 2003 imports already amount to about 175,000 tons including 150,000 tons from the US.  Total marketing year imports are likely to reach about 1.1 million tons, the bulk supplied by the US.

 

The 2003 corn crop, currently being planted, is also in trouble.  Starting with very low soil moisture after a long, dry, winter, and rainfall to date has been patchy.  Farmers were intending to cut back on the area planted due to low prices and the late rains may have also influenced planting intentions.  The next planting survey is due December 5, which should clarify matters, after which we can make a more meaningful estimate than the current 7.5 million tons. We expect the total crop estimate for the 2002 crop to be adjusted to about 9.7 million tons at the same time.  With a healthy carry over from the present crop and mainly yellow corn imports needed, we do not foresee any serious shortages developing within the Republic of South Africa.

 

Wheat

 

Production

 

The fourth official crop estimate of the 2003 wheat crop was released on November 20.  The estimate was decreased to 1,478,200 tons, 87,000 tons less than the previous estimate.  This is 843,000 tons or 36% lower than the previous crop, and the lowest crop in eleven years.  The reasons for the decline in production include drought in the Western Cape and Free State, and the fall in pre-season wheat prices.  The fall in prices was due to cheap wheat imported from Europe and the appreciation of the S.A. Rand.   The main production area is now the Western Cape, with a production forecast of 503,750 tons or 34.1% of the crop, followed by the Free State, with a production forecast of 487,500 tons (33%).  The area planted estimate remained unchanged at 748,000 hectares.  The expected yield is 2.0 mt/ha. as against 2.5 mt/ha. for the previous season.

 

Consumption

 

Total domestic utilization for the October 2002/September 2003 season amounts to 2.638 million tons, compared to 2.641 million tons for 2001/2002.  Milling for human consumption amounted to 2.575 million tons compared to 2.519 million tons for the previous season, an increase of 2.2%.  A small increase in consumption is foreseen for 2003/04.

 

Trade

 

Since the start of the new marketing year in October 2003 to November 21, South Africa imported 113,112 tons of US wheat for own use and 38,924 tons for re-export to its African neighbors.  Total imports from the US since October 1 thus amounted to 152,036 tons.  Canada supplied 21,682 tons for re-export pushing total imports to 173,718 tons.   The following table compares imports over the past two seasons with the cumulative MY 03/04 imports.

 

Corn

 

Production

 

At this stage the 2003 corn crop currently being planted is in trouble.

 

The October/November rainfall was going to be the deciding factor but it has been disappointing.  The eastern production area, mainly in the Mpumalanga province, received some general rain and most farmers were able to plant.  In the Northwest Province good rainfall was also reported but it has been patchy in the Free State.  The optimum planting window in the Eastern area is mid October to mid November.  Planting in the western areas can continue to mid December as the first date that frost can be expected determines planting times.  Frost is likely to occur earlier in the higher, colder, eastern areas limiting the length of the growing season.  Heavy general rain is urgently needed over the whole of the summer rainfall grain growing area, especially as soil moisture levels were very low after the long dry winter.

 

The FAS 02 crop estimate is still subject to review with the commercial white corn crop likely to be increased to about 6.3 million tons and the yellow corn crop decreased to about 3.1 million tons for a total of about 9.4 million tons.  These adjustments are based on producer deliveries to date.  For our analysis, the total crop estimate is not as important as the actual deliveries to the silos and the increased crop is used in the calculations. 

 

The FAS 03 forecast is preliminary and based on normal rainfall for the rest of the season.  It includes a 15% downwards adjustment of what would be expected under normal conditions, for damage already caused by the dry, hot weather.  These figures could change dramatically over the next few months.

 

Consumption

 

Commercial deliveries, that is corn delivered to the silos according to SAGIS, forms the basis of the commercial PS&D.  Corn produced and consumed outside the formal trading environment is not well documented.  To correlate the commercial PS&D with a specific crop we use the March to February deliveries and not the formal May to April marketing year.  The reason is that the quantity of early deliveries has been increasing.  The March and April deliveries are then deducted from the May 1 carry over and added to the new season's deliveries.  From the beginning of March 2003 to the end of October total deliveries amounted to 8.855 million tons, consisting of 6.135 million tons white- and 2.720 million tons yellow corn. The deliveries strengthen the argument for an increase in the FAS 02, MY 2003/2004 commercial corn crop estimate. 

 

Basically South Africa needs about 7.7 million tons for local use and about 1 million tons for exports into the region, for a total of 8.7 million tons.  With the more than 2 million ton carry over expected at the end of the current season, the need drops to 6.7 million tons.  About 1.7 million tons can be produced under irrigation, which cuts the amount needed from the dry land crop. The commercial crop is forecast at 7.3 million tons, at least 475,000 tons of imports will be needed to maintain stock levels.

 

Trade

 

Imports

 

The imports for re-export shown above for the past two seasons resulted from the famine in the region and consisted mainly of food aid shipped through South African ports.  Some assistance continues but it is either shipped through Mozambique or purchased in South Africa.  No imports for re-export occurred since May 1, 2003 at the start of the current local marketing season.  The main reasons for the cutback in aid include better crops in the recipient countries and the reluctance of some governments, mainly Zimbabwe, to accept genetically modified food.   As the aid shipments are not part of normal trade and unlikely to attain similar high levels again soon, it was not brought into the long term S&D situation.

 

Exports

 

In My 2001/02 South Africa exported 1.281 million tons of own corn and 2,000 tons of imported corn.  In My 2002/03 local corn exports dropped to 925,000 tons and imported corn exports jumped to 340,000 tons.  To date, in My 2003/04 about 660,000 tons of mainly South African corn was exported. 

 

 

Source: USDA