Grain and Feed Quarterly Update

An Expert's View about Crops and Support Services in South Africa

Posted on: 13 Feb 2012

Commercial farmers in South Africa planted 2.63 million hectares of corn for the 2011/12 MY (2012/13 MY for South Africa), almost 11 percent more than the previous season.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 1/27/2012 GAIN Report Number: South Africa - Republic of Grain and Feed Update Quarterly Update Approved By: Nicolas Rubio Prepared By: Dirk Esterhuizen Report Highlights: Commercial farmers in South Africa planted 2.63 million hectares of corn for the 2011/12 MY (2012/13 MY for South Africa), almost 11 percent more than the previous season’s 2.37 million hectares on the back of higher domestic corn prices. Conditions in most of the corn producing regions look satisfactory, however, due to dry weather conditions that persisted during planting season most of the corn crop was planted two to four weeks later than optimal. Consequently, post revised its October 2011 commercial corn crop estimate downwards to 11.5 million tons. South Africa has exported almost 2.15 million tons of corn so far in the 2010/11 MY, but with reports that current stock levels could be depleted before the start of the new marketing season, which resulted in a sharp increase in domestic prices, post expects corn exports to slow down over the next few months to reach 2.4 million tons by the end of the marketing year. Post: Pretoria Summary According to the Crop Estimates Committee’s (CEC) first estimate, commercial farmers planted 2.63 million hectares of corn for the 2011/12 MY1 (the 2012/13 MY in South Africa which runs from May 2012 to April 2013). Furthermore, post forecasts that subsistence farmers planted about 500,000 hectares of corn. This means total corn plantings, at 3.13 million hectares, are almost nine percent more than in the 2010/11 MY. Corn plantings are up in response to record high domestic corn prices on the back of reports that corn stock levels in South Africa are decreasing due to increased exports and over concerns that a drought in Argentina would limit global supplies. Currently, conditions in most of the corn producing regions look satisfactory. However, due to dry weather conditions that persisted during planting season most of the corn crop was planted two to four weeks later than optimal. This will have an impact on yields hence post revised South Africa’s total corn crop (including both the commercial and subsistence sectors) estimate for the 2011/12 MY downwards to 12.07 million tons. For the rest of the season, above average rainfall is forecasted for the grain producing areas due to the presents of a strong La Nina weather pattern. South Africa has so far for the 2010/11 MY exported almost 2.15 million tons of corn which includes 1.47 million tons of white corn and 684,000 tons of yellow corn. With reports that current stock levels could be depleted before the start of the new marketing season, post expects corn exports to slow down in the next few months to reach 2.4 million tons by the end of the marketing year. With an estimated total corn crop of 12 million tons in the 2011/12 MY, post forecast that South Africa will be able to export another two million tons of corn in the 2011/12 MY. South Africa has also started to import corn on the back of a stronger Rand and a downward movement in international corn prices, making corn imports more attractive. Post expects that corn imports could reach 300,000 tons in the 2010/11 MY. US$1 = Rand 7.90 (01/26/2012) Sources: www.sagis.org.za www.grainsa.co.za www.safex.co.za www.daff.gov.za [1] The marketing years (MY) used in the text refers to the USDA marketing years in the PS&D table and not to the marketing years used by the South African corn industry. Corn Production The first estimate for the area planted to 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 January 24, 2012. According to the CEC, commercial farmers planted 2.63 million hectares of corn. This estimate by the CEC on hectares planted for the 2011/12 MY is in line with post’s estimate of 2.6 million hectares in October 2011. Furthermore, post forecasts that subsistence farmers planted about 500,000 hectares of corn. This means total corn plantings, at 3.13 million hectares, are almost nine percent more than in the 2010/11 MY. Corn plantings are up in response to higher domestic corn prices (almost double) compared to the previous season. Domestic corn prices are up on the back of reports that corn stock levels in South Africa are decreasing due to increased exports and over concerns that a drought in Argentina would limit global supplies. Commercial farmers planted 1.59 million hectares with white corn, 12 percent more than the previous year, and 1.04 million hectares with yellow corn, nine percent more than the previous year. Currently, conditions in most of the corn producing regions look satisfactory. However, due to dry weather conditions that persisted during planting season most of the corn crop was planted two to four weeks later than optimal. This will have an impact on yields hence post revised South Africa’s total corn crop estimate for the 2011/12 MY downwards to 12.07 million tons. For the rest of the season, above average rainfall is forecasted due to the presents of a strong La Nina weather pattern. On December 1, 2011 the CEC finalized the 2010/11 MY commercial corn crop at 10.36 million tons. This is 248,400 tons or two percent lower than the CEC’s final crop estimate in September. The corn crop from subsistence farming was kept unchanged and finalized at 564,335 tons. As a result, South Africa’s total corn crop for the 2010/11 marketing year is 10.92 million tons, almost 19 percent lower than the previous season’s 13.42 million tons on the back of lower yields and a decrease in area planted. The area planted with corn at 2.87 million hectares, was approximately 12 percent less than the previous year. Of the area planted with corn, 62 percent was white corn and 38 percent yellow corn. The following table details area planted and production figures of white and yellow commercial and subsistence corn for the 2009/10 (actual), 2010/11 (actual) and 2011/12 (estimate) marketing years. Table 1: Area planted and production of commercial and subsistence corn in South Africa Area Yield Prod. Area Yield Prod. Area Yield Prod. 1,000ha t/ha 1,000 t 1,000ha t/ha 1,000 t 1,000ha t/ha 1,000 t MY 2009/10 2010/11 2011/12 Commercial corn White 1,720 4.5 7,830 1,418 4.3 6,052 1,590 4.3 6,800 Yellow 1,023 5.1 4,985 954 4.5 4,308 1,040 4.5 4,700 Sub Total 2,742 4.8 12,815 2,372 4.4 10,360 2,630 4.4 11,500 Subsistence corn White 372 1.1 422 347 1.1 396 350 1.1 390 Yellow 149 1.2 184 140 1.2 168 150 1.2 180 Sub Total 521 1.2 606 487 1.1 564 500 1.1 570 TOTAL 3,263 4.1 13,421 2,872 3.8 10,924 3,130 3.9 12,070 Source: SAGIS and CEC Consumption For the 2011/12 MY, post forecasts that the commercial demand for corn for human consumption and animal feed purposes will remain basically flat at 4.7 million tons and 4.6 million tons, respectively, on the back of increased corn prices. Total commercial corn consumption for the 2010/11 MY is estimated to be around 10 million tons, three percent more than the 9.7 million tons consumed in the 2009/10 MY, driven mainly by an increase in the demand for corn for feed purposes (mainly yellow corn). Corn for human consumption (mainly white corn) is expected to reach be 4.65 million tons, while corn for feed purposes is expected to reach 4.5 million tons. The following table outlines the commercial consumption for white and yellow corn for the 2009/10 (actual), 2010/11 (estimate) and 2011/12 (forecast) marketing years. Please note that consumption figures in the PS&D table also include corn utilized by the subsistence farming sectors. Table 2: The commercial consumption of white and yellow corn in South Africa CORN White Yellow Total White Yellow Total White Yellow Total 1,000 t MY 2009/10 2010/11 2011/12 Human 4,159 356 4,515 4,250 400 4,650 4,300 400 4,700 Animal 1,658 2,613 4,271 1,300 3,200 4,500 1,000 3,600 4,600 Other 353 513 866 300 500 800 300 500 800 TOTAL 6,170 3,482 9,652 5,850 4,100 9,950 5,600 4,500 10,100 Source: SAGIS, Grain SA Trade With an estimated total corn crop of 12.07 million tons, post forecast that South Africa will be able to export about 2 million tons of corn in the 2011/12 MY. South Africa has so far for the 2010/11 MY exported almost 2.15 million tons of corn which includes 1.47 million tons of white corn and 684,000 tons of yellow corn (see also Table 3 below). Almost half of the corn exports (1.02 million tons of white corn) went to Mexico. With reports that current stock levels could be depleted before the start of the new marketing season, which resulted in a sharp increase in domestic prices, post expects corn exports to slow down in the next few months. Furthermore, export parity prices for white corn and yellow corn decreased, respectively, by 35 percent and nine percent the past three months on the back of a stronger Rand and a downward movement in international corn prices, making corn exports less attractive. As a result, post expects corn exports to reach about 2.4 million tons in the 2010/11 MY. South Africa has also started to import yellow corn from Romania and small amounts of white corn from Zambia. Post expects that corn imports could reach 300,000 tons in the 2010/11 MY. Table 3: Export and Import Countries for white and yellow corn (1,000 tons) MY 2009/10 2010/11 (May 1, 2010 – April 30, 2011) (May 1, 2011 – Jan 20, 2012) White corn Yellow corn White corn Yellow corn Export Destinations Botswana 158 17 108 18 Cameroon 10 5 Chad 3 Ghana 8 Guinea 5 Iran 41 Italy 131 68 Japan 98 49 Kenya 41 Korea 203 611 45 302 Kuwait 82 28 Lesotho 108 4 105 4 Mauritius 10 Madagascar 6 3 Mexico 72 1,021 Mozambique 74 24 46 13 Namibia 80 20 16 13 Nigeria 13 Portugal 30 5 Senegal 2 4 3 Somalia 27 20 Spain 26 Swaziland 55 55 5 40 Taiwan 51 162 Venezuela 31 Zimbabwe 37 TOTAL EXPORTS 1,049 1,018 1,465 684 Import Suppliers Zambia 60 0 Romania 93 TOTAL IMPORTS 0 0 60 93 Source: SAGIS Prices The South Africa Future Exchange (SAFEX) prices as of January 20, 2012, are shown in Table 4. Currently, white corn prices and yellow corn prices are at record highs as the price of both commodities are progressing towards import parity levels on the back of reports that South Africa’s corn export push might have exhausted stocks. Since October 2011, the SAFEX March contract price for white corn increased by almost 12 percent and the yellow corn price by 14 percent. On a year-on-year basis, local white corn prices have increased by more than 90 percent and yellow corn prices by almost 76 percent. Table 4: SAFEX prices for corn SAFEX Futures prices (as of 01/20/2012) Commodity 2012/01 2012/03 2012/05 2012/07 2012/09 White corn R2,800/t R2,642/t R2,264/t R1,965/t R1,995/t ($354/t) ($334/t) ($287/t) ($249/t) ($252/t) Yellow corn R2,919/t R2,641/t R2,244/t R1,926/t R1,961/t ($369/t) ($334/t) ($284/t) ($244/t) ($248/t) PS&D Table Corn South Africa 2009/2010 2010/2011 2011/2012 Market Year Begin: May 2010 Market Year Begin: May 2011 Market Year Begin: May 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 3,263 3,263 2,859 2,872 3,000 3,130 Beginning Stocks 4,113 4,113 5,169 5,166 2,893 3,490 Production 13,420 13,420 10,924 10,924 12,500 12,070 MY Imports 0 0 100 300 25 0 TY Imports 27 27 6 6 100 300 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 17,533 17,533 16,193 16,390 15,418 15,560 MY Exports 2,064 2,067 3,000 2,400 2,000 2,000 TY Exports 1,586 1,586 2,839 2,839 2,300 2,300 Feed and Residual 4,600 4,600 4,700 4,800 4,800 4,850 FSI Consumption 5,700 5,700 5,600 5,700 5,700 5,750 Total Consumption 10,300 10,300 10,300 10,500 10,500 10,600 Ending Stocks 5,169 5,166 2,893 3,490 2,918 2,960 Total Distribution 17,533 17,533 16,193 16,390 15,418 15,560 1000 HA, 1000 MT, MT/HA
Posted: 13 February 2012

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