South African corn supplies tight and prices firm

By Lynda Searby

- Last updated on GMT

Credit: GettyImages
Credit: GettyImages
South African growers are expected to increase plantings of yellow (feed grade) corn by 10% per cent in 2019, which “should decrease corn prices”, according to the latest report from the USDA Foreign Agricultural Service (FAS).

The USDA’s FAS attaché in Pretoria forecasts that around 2.6 million hectares of corn will be planted by commercial producers in South Africa later in 2019 for the 2019/20 Marketing Year (MY), which is 13% higher than the area planted in 2018/19. 

“We expect a 15% increase in white corn plantings to 1.5 million hectares and a 10% increase in yellow corn plantings to 1.1 million hectares,”​ a spokesperson told FeedNavigator.  

The increased plantings are primarily driven by elevated local corn prices, which were up by 27% for yellow corn to $195/ton as a result of a drought-induced lower corn crop, according to the GAIN report. 

“The increases in corn prices are mainly due to the 2018/19 MY’s lower crop in South Africa due to dry conditions, and late plantings in the US due to wet weather conditions that impacted international corn prices,” ​wrote the report’s author. 

Prices to remain firm until planting season

In the near future, prices are not expected to fall – Grain SA’s future price estimates for yellow corn are $199/ton for September, increasing to $204/ton going into 2020 before dipping below $200/ton again by May. 

“Local corn prices are expected to trade at above export parity levels until planting season,” ​wrote the FAS in its report. 

However, if normal weather conditions prevail, the FAS said the increase in plantings could result in a 13.3 million ton total corn crop and should reduce corn prices for feed industry consumers. 

“However, South Africa’s corn is traded in a relatively free market environment where local prices are determined by local and international supply and demand conditions, as well as the exchange rate. Thus, the condition of the US corn crop also impacts local corn prices,” ​the spokesperson explained.  

Tight supplies

The total commercial crop for 2018/19 is estimated at 10.9 million metric tons – 13% less than the previous year’s corn crop. The yellow corn crop is estimated at 5.4 million metric tons – nine per cent lower than the six million tons produced in the previous season. As a result, the report estimated that South Africa would import about 500,000 tons of yellow corn to supplement local production. 

The FAS report said South Africa should be able to export about 1.0 million tons of corn in the MY 2018/19, mainly white corn, and mainly to neighboring countries. It said that expected lower domestic usage of white corn for animal feed and carry-over stock would mean there was enough white corn to meet local and export demands.

“South Africa is the largest corn producer in the Africa, and roughly the tenth largest in the world. 

It plays an important role in food security in Southern Africa by supplying its neighboring countries  - Botswana, Lesotho, Eswatini, Namibia, Mozambique and Zimbabwe – with white corn,”​ said the spokesperson.

Last year (2017/18) South Africa exported 2.1 million tons of yellow corn and 544,000 tons of white corn. 

Corn is South Africa’s major grain in terms of production and consumption. Yellow corn is mainly used for animal feed as the major source of energy at an inclusion rate of around 50%, although white corn can also be used depending on price ratios. Annual demand for corn for feed is about 5.6 million tons.  

South Africa’s 2019/20 Marketing Year starts in May 2020 and ends in April 2021.

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