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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


01 August 2013

USDA GAIN: Republic of South Africa Grain and Feed Quarterly UpdateUSDA GAIN: Republic of South Africa Grain and Feed Quarterly Update

Based on a trend analysis, post estimates that the commercial area planted to corn for the South African 2013/14 marketing year (MY) will decrease by six percent to 2.6 million hectares. This could realize a commercial corn crop of about 11.5 million tons and an exportable surplus of two million tons. For the 2012/13 MY, post kept its commercial corn crop estimate unchanged at 11.1 million tons and exports at around 1.9 million tons.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Corn

Production

Post forecasts that the area planted to corn later in 2013, for the 2013/14 MY, will be around 3.1 million hectares. Commercial farmers will plant about 2.6 million hectares and subsistence farmers 500,000 hectares. This forecast is based on a trend analysis of hectares planted with corn in the past 10 years in South Africa. Based on national average yields, an area of 3.1 million hectares could realize a corn crop of about 12.2 million tons.

The fifth production estimate for corn planted by commercial farmers and the first estimate for corn planted by subsistence farmers, for the 2012/13 MY, was released by the CEC on June 25, 2013. The CEC estimates the commercial corn crop at 11.4 million tons, which is already one million tons or eight percent lower than its first estimate in February. The area planted was kept unchanged at 2.8 million hectares. The drought that hit the Northwest and Free State Provinces earlier this year, severely affected the summer crops. Expectations are that the CEC will decrease its production estimate for commercial corn even more by the end of July. Hence, post kept its commercial corn crop estimate unchanged at 11.1 million tons. On the eastern side of the corn producing area of South Africa, where producers received enough rain during the summer season, relatively high yields were realized during harvesting. On the eastern side, producers plant predominately yellow corn, while in the drought-restricted western side, corn producers plant predominately white corn. Yellow corn is mainly used for animal feed, while white corn is mainly used for human consumption.

Post estimates the commercial white corn crop at 5.7 million tons, 17 percent less than the previous season and the commercial yellow corn crop at 5.4 million tons or four percent higher than the previous season. Five percent of the total white corn area is planted under irrigation, while 14 percent of the total yellow corn area is planted under irrigation.

According to the CEC, subsistence farmers produced 675,090 tons of corn on 456,900 hectares in the 2012/13 MY. This means that post estimates that South Africa’s total corn crop for the 2012/13 MY is at 11.8 million tons on 3.2 million hectares.

At a meeting held on May 7, 2013, the Crop Estimates Liaison Committee decided that the commercial corn crop for the 2011/12 MY, that was set at 11.8 million tons in November 2012, should be revised upwards by two percent to 12.1 million tons, due to the fact that the actual deliveries of corn for the period November 2012 to February 2013, was considerably higher than what was projected.

Consumption

Post forecasts that the local commercial demand for corn will only grow marginally, to 9.7 million tons, in the 2013/14 MY. As illustrated in Figure 1, the demand for corn for human consumption and animal feed has flatten the past three years, due to relatively high corn prices and slow economic growth. South Africa’s economy is expected to grow by less than three percent in 2013 and 2014 as labor unrest, financial uncertainties, and prospects of slower global economic recovery will impact negatively on economic growth. The Rand also depreciated against major currencies the past year and expectations are that this will continue through 2013, which will have an impact on the price of corn.

The commercial consumption for corn in the 2011/12 MY was finalized at 9.6 million tons, precisely on the same level as the previous year. According to the South African Grain Information Services (SAGIS), 5.2 million tons of white corn and 4.4 million tons of yellow corn were consumed, while 4.5 million tons were used for human consumption and 4.4 million for animal feed.

Post estimates that the commercial demand for corn for human consumption and animal feed in the 2012/13 MY will also stay relatively constant at approximately 4.5 million tons and 4.4 million tons, respectively, due to slow economic growth and relatively high corn prices.

Figure 1: The commercial consumption of corn in the food and feed markets of South Africa since the 1997/98 MY

Trade

For the 2013/14 MY, post estimates that South Africa will have sufficient stocks to export about 2.0 million tons of corn. In the first three months of the 2012/13 MY, South Africa already exported 701,818 tons of corn of which 545,399 tons were yellow corn and 108,611 ton white corn. The 2011/12 MY’s corn exports were finalized at 1.8 million tons of which 1.4 million tons were white corn and 413,152 tons yellow corn (see also Table 3).

Where Mexico was South Africa’s major market in the 2011/12 MY, receiving 45 percent of total corn exports (mainly white corn), Japan is currently the major market with more than 56 percent of total corn exports (mainly yellow corn). Due to the uncertainty of the total impact of the drought that hit the Northwest and parts of the Free State Provinces during the corn growing season (where predominately white corn is produce), South Africa is currently exporting more yellow corn of which an exportable surplus are available.

Post estimates that South Africa will export around 1.9 million tons of corn in the 2012/13MY. This estimate is based on the permits issued by the Department of Agricultural, Forestry and Fisheries (DAFF) for the exporting of corn containing Genetically Modified Organisms and the weakening R/US$ exchange rate that is increasing South Africa’s corn price competitiveness. The rand lost more than 14 percent of its value since the beginning of the year, due to South Africa’s financial and labor uncertainties, and expectations are that this trend will continue.

Prices

SAFEX prices as of July 16, 2013, are shown in Table 4. Since March, both white corn and yellow corn traded in a price range of between R2,100 per ton and R2,400 per ton. However, on a year-to-year basis yellow corn and white corn prices are respectively, 15 percent and 13 percent lower and replicate the decline in world corn prices, due to an expected record corn crop in the United States.

August 2013

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