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


02 August 2012

USDA GAIN: South Africa Grain and Feed Update July 2012USDA GAIN: South Africa Grain and Feed Update July 2012

Post increased its forecast for corn area planted in the 2012/13 MY by 10 percent to 3.3 million hectares, as farmers will react positively on higher prices. This should result in a commercial corn crop of about 11.8 million tons and a 2.1 million tons exportable surplus. South Africa’s commercial corn crop estimate for the 2011/12 MY decreased by two percent to 10.8 million tons, only five percent more than the 10.4 million tons harvested in the 2010/11 MY, with prospects of a much higher crop largely been spoilt by spells of dry weather during the growing season. However, South Africa should still be able to export around 1.5 million tons of corn in the 2011/12 MY.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Executive Summary

Currently, domestic corn prices are at record levels, driven mainly by events in the United States where the worst drought in more than 50 years is impacting negatively on the corn crop. As farmers usually reacts positively on higher prices, post has increased its area planted forecasts for corn later in 2012 for the 2012/13 MY [1] (2013/14 MY for South Africa) by ten percent from the previous forecast. Hence, post forecast that commercial farmers will plant about 2.8 million hectares of corn and subsistence farmers 500,000 hectares. This will, based on a national average yields, result in a crop of about 12.4 million tons, eight percent more than 2011/12 MY’s crop and a 2.1 million tons of exportable surplus.

The Crop Estimates Committee’s (CEC) decreased the 2011/12 MY commercial corn crop by two percent, from 11.1 million tons to 10.8 million tons, due to lower yields in the Northwest province, which is currently in the process of harvesting corn. The current crop is only five percent more than the 10.4 million tons harvested in the 2010/11 MY, with prospects of a much higher crop largely been spoilt by spells of dry weather between January and April this year. However, despite the unfavorable climatic conditions, South Africa is expected to continue to be a net exporter of corn due to a 14 percent increase in commercial hectares planted with corn. Post estimates that these exports will be around 1.5 million tons.

The CEC also announced the estimates for subsistence farmers. According to the CEC subsistence farmers produced 638,463 tons of corn on 442,114 hectares in the 2011/12 MY. This means that South Africa’s total corn crop for the 2011/12 MY is estimated at 11.5 million tons on 3.1 million hectares.

US$1 = Rand 8.50 (07/25/2012)

Production

Domestic corn prices have increased drastically the last couple of weeks, hitting record highs; due to the drought conditions in the United States (see Figure 1 and Figure 2). If the current situation the United States persists, domestic corn prices are expected to remain at record highs, due to tight stock levels worldwide. In addition, domestic corn prices are expected to move upwards and closer to import parity levels in the current marketing season, due to South Africa’s export commitments. As farmers usually reacts positively on higher prices, post has increased its area planted forecasts for corn later in 2012 for the 2012/13 MY (2013/14 MY for South Africa) by ten percent from the previous forecast. Hence, post forecast that commercial farmers will plant about 2.8 million hectares of corn and subsistence farmers 500,000 hectares. This will, based on a national average yields, result in a crop of about 12.4 million tons, eight percent more than 2011/12 MY’s crop.

The Trend in the SAFEX Price for White Corn Since January 2011


The Trend in the SAFEX Price for Yellow Corn Since January 2011

The sixth estimate for the area planted and production of corn by commercial farmers for the 2011/12 MY (the 2012/13 MY in South Africa which runs from May 2012 to April 2013) was released by the CEC on July 24, 2012. The CEC decreased the commercial corn crop by two percent, from 11.1 million tons to 10.8 million tons, due to lower yields in the Northwest province, which is currently in the process of harvesting corn. The current crop is only five percent more than the 10.4 million tons harvested in the 2010/11 MY, with prospects of a much higher crop largely been spoilt by spells of dry weather between January and April this year.

According to the CEC, commercial farmers planted 2.7 million hectares of corn in the 2011/12 MY, 14 percent more than the previous season. Corn plantings were up in response to higher domestic corn prices during planting time (almost double) compared to the previous season. Commercial farmers planted 1.6 million hectares with white corn, 15 percent more than the previous year, and 1.1 million hectares with yellow corn, 11 percent more than the previous year.

The CEC also announced the estimates for subsistence farmers. According to the CEC subsistence farmers produced 638,463 tons of corn on 442,114 hectares in the 2011/12 MY. This means that South Africa’s total corn crop for the 2011/12 MY is estimated at 11.5 million tons on 3.1 million hectares.

Consumption

Post forecasts that the demand for corn for human consumption and animal feed in the 2012/13 MY, will increase by only one percent and two percent, respectively, due to slower economic growth in South Africa and higher corn prices. The demand for corn for human consumption is expected to increase to 4.6 million tons, while the demand for corn for animal feed purposes will increase to 4.5 million tons.

For the 2011/12 MY, it is estimated that commercial demand for corn will remain flat from the previous season, due to relative high domestic corn prices which will hinder an increase in demand. Total commercial corn consumption for the 2010/11 MY was finalized at 9.6 million tons.

Trade

With an estimated commercial corn crop of 11.8 million tons, post forecasts that South Africa will be able to export about 2.1 million tons of corn in the 2012/13 MY. Despite the unfavorable climatic conditions in the 2011/12 MY, South Africa is expected to continue to be a net exporter of corn due to the increase of hectares planted with corn. Post estimates that these exports will also be around 1.5 million tons.

For the 2010/11 MY, South Africa exported 2.4 million tons of corn which included 1.7 million tons of white corn and 711,816 tons of yellow corn (see also Table 4 below). South Africa also imported 288,304 tons of yellow corn from Romania and Ukraine, which was mostly used at the coastal regions of the country. A small amount of white corn (133,771 tons) was imported from Zambia and milled in the far northern parts of South Africa where there is especially a strong demand for corn meal from neighboring Zimbabwe. Total corn imports reached 422,075 tons in the 2010/11 MY.

Prices

SAFEX prices as of July 20, 2012, are shown in Table 5. Currently, domestic white corn and yellow corn prices are at record levels, driven mainly by events in the United States where the worst drought in more than 50 years is impacting negatively on the corn crop. The South African corn market inter alia takes its cues from the Chicago Board of Trade as South Africa is a major player in the world corn market and has an open market policy. White corn and yellow corn prices are, respectively, 20 percent and 24 percent higher than three months ago. On a year-on-year basis, white corn prices are 47 percent higher and yellow corn prices 46 percent higher.

August 2012

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