Report Highlights:

South Africa should return to be a net exporter of corn in the 2016/17 MY of about 1.0 million tons on higher production. Post forecasts that South Africa's wheat imports for the 2016/17 MY will be five percent lower at 1.9 million tons due to an expected increase in local production, while rice imports are expected to increase by 10 percent to 1.1 million tons on increased demand For the 2015/16 MY, post estimates that South Africa will have to import about 3.5 million tons of corn, as drought reduced normal corn production by more than 40 percent. Wheat and rice imports could reach about 2.0 million tons and 1.0 million tons, respectively, on increased demand.

Executive Summary

Post forecasts that South Africa will plant about 460,000 hectares of wheat in the 2016/17 MY, as the declining trend in hectares planted with wheat will continue and record high local corn price should motivate an increase in corn area planted rather than an increase in wheat area. An area of 460,000 hectares will, on average yields and normal climatic conditions, realize a wheat crop of about 1.7 million, 17 percent higher than the 2015/16 MY's crop of 1.5 million tons. As a result, South Africa's wheat imports for the 2016/17 MY could be five percent lower than in the 2015/16 MY at 1.9 million.

The area to be planted with corn later in 2016, for the 2016/17 MY, will be influence in a positive manner by record high local corn price levels, especially for white corn prices. Hence, post forecasts that around 2.8 million hectares of corn will be planted later in 2016 under normal climatic conditions, which is about 10 percent higher than the five year average in area planted. Under normal climatic conditions and taking into account the subsistence farming sector, South Africa's corn crop for the 2016/17 MY could reach 12.6 million tons. As a result, South Africa should return to be a net exporter of corn in the 2016/17 MY of about 1.0 million tons of corn.

Post lowered its previous total corn crop (including commercial and subsistence farming) estimate for the 2015/16 MY, by 13 percent or 1.0 million tons to 7.0 million tons on 2.2 million hectares. Post estimates that due to the drought, only about 70 percent of the normal corn area will be harvested. As a result, South Africa will have to import approximately 3.5 million tons of corn in the 2015/16 MY.

In the 2016/17 MY, South Africa's rice imports are expected to increase by 10 percent to 1.1 million tons on increased demand. Post forecast a ten percent increase in South Africa's rice consumption in the 2016/17 MY to 970,000 million tons, due to drought reflected record corn prices. Consumers can substitute rice, wheat and corn products on price and taste preferences.

WHEAT

Production

Post forecasts that South Africa will plant about 460,000 hectares of wheat in the 2016/17 MY, as the declining trend in hectares planted with wheat will continue. In addition, corn price levels are at record highs which should motivate an increase in corn area planted rather than an increase in wheat area. The declining trend in hectares planted with wheat and the gap it created between the production and demand for wheat in South Africa. Unless drastic technology changes occur that could improve wheat yields, the decreasing trend in hectares planted with wheat in South Africa will continue in future. An area of 460,000 hectares will, on average yields and normal climatic conditions, realize a wheat crop of about 1.7 million tons.

The Crop Estimates Committee (CEC) released its final estimate for wheat production in South Africa for the 2015/16 MY on February 25, 2016. The CEC kept the area planted unchanged at 482,150 hectares, but lowered the production estimate to 1.46 million tons, due to the impact of the drought conditions, especially in the Western Cape province. Most of South Africa's wheat crop was produced in the Western Cape Province (697,500 tons or 48 percent), followed by the Northern Cape (259,200 tons or 18 percent) and Free State (184,000 tons or 13 percent) provinces. The 2015/16 MY wheat crop is 17 percent lower than the 2014/15 MY's crop of 1.75 million tons.

Consumption

Post forecasts that wheat consumption in the 2016/17 MY should be on the same levels as in the 2015/16 MY levels i.e. 3.45 million tons as corn prices will stay relatively high for at least until next years' harvest season. Consumers can substitute white corn products for wheat or rice products on price preferences.

Post estimates that wheat consumption for the 2015/16 MY will be around 3.43 million tons, nine percent higher than the 3.14 million consumption in the 2014/15 MY. Due to the current extreme drought in the corn producing areas of South Africa, especially in the white corn growing area, white corn prices are currently trading higher than wheat prices as white corn is not freely available on the world market. As already mentioned, consumers are substituting white corn products for wheat or rice products on price preferences.

Trade

Post forecasts that South Africa's wheat imports for the 2016/17 MY will be five percent lower than in the 2015/16 MY at 1.9 million tons due to an expected 17 percent increase in local production under normal climatic conditions.

Post estimates that wheat imports in the 2015/16 MY could reach about 2.0 million tons on an increase in demand due to the expected shortage of white corn after extreme drought hit South Africa's summer rainfall area resulting in an estimated 33 percent decrease in local white corn production. For the first five months of the 2015/16 MY, South Africa already imported 916,409 tons of wheat, mainly from Russia and Germany. For the 2014/15 MY, South Africa's wheat imports reached 1.8 million tons.

South Africa also exports wheat to the Southern Africa region and acts as a conduit for imported grain. In the 2014/15 MY, South Africa exported 274,255 tons to neighboring countries. South Africa's wheat exports are expected to reach 300,000 tons in the 2015/16 MY and 2016/17 MY, respectively.

Export and import countries for wheat

2014/15 MY (Oct 1, 2014 – Sept 30, 2015)

2015/16 MY

(Oct 1, 2015 – Mar 4, 2016)

Import Suppliers

United States

28,311

25,947

Argentina

59,607

24,934

Australia

95,254

38,329

Germany

348,385

178,930

Canada

105,457

72,613

Finland

0

0

Latvia

61,005

0

Ukraine

279,364

61,129

Poland

91,483

48,258

Lithuania

43,791

44,853

Russia

719,784

421,416

TOTAL IMPORTS

1,832,441

916,409

Export destinations

Botswana

68,037

47,341

Lesotho

21,940

39,661

Mauritius

1,532

0

Mozambique

56

2,490

Namibia

22,780

4,601

Swaziland

16,349

20,914

Zambia

53,138

169

Zimbabwe

90,423

25,310

TOTAL EXPORTS

274,255

140,486

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

May 2016

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

477

477

482

482

0

460

Beginning Stocks

830

830

997

997

0

724

Production

1750

1750

1500

1457

0

1700

MY Imports

1832

1832

2000

2000

0

1900

TY Imports

1901

1900

2000

2000

0

1900

TY Imp. from U.S.

0

0

0

25

0

50

Total Supply

4412

4412

4497

4454

0

4324

MY Exports

275

275

300

300

0

300

TY Exports

250

250

250

250

0

250

Feed and Residual

30

30

30

30

0

30

FSI Consumption

3110

3110

3400

3400

0

3420

Total Consumption

3140

3140

3430

3430

0

3450

Ending Stocks

997

997

767

724

0

574

Total Distribution

4412

4412

4497

4454

0

4324

(1000 HA) ,(1000 MT)

CORN

Production

The area to be planted with corn later in 2016, for the 2016/17 MY, will be influence in a positive manner by record high local corn price levels, especially for white corn prices. Local corn prices is expected to trade at import parity price levels for at least until next years' harvest season, giving farmers enough initiative to plant more fields to corn. Hence, post forecasts that around 2.8 million hectares of corn will be planted later in 2016 under normal climatic conditions, which is about 10 percent higher than the five year average in area planted. Under normal climatic conditions and taking into account the subsistence farming sector, South Africa's corn crop for the 2016/17 MY could reach 12.6 million tons.

The CEC released its second estimate for the 2015/16 MY corn crop on February 25. According to the CEC, South Africa's commercial corn crop is estimated at 7.3 million tons which is 27 percent lower than the 2014/15 MY's crop of 10.0 million tons and almost half that of the 2013/14 MY's crop of 14.3 million tons. South Africa is battling one of the worst droughts ever recorded that already started in early 2015. According to the South African Weather Services, 2015 was then also the driest year on record in South Africa dating back to 1904. The CEC estimate the commercial area planted with corn at 2.0 million hectares. Many of these corn fields were also planted late and after the optimal planting period, especially in the Free State and Northwest provinces, which will negatively impact on yield and makes the current crop estimates extremely difficult.

Given the above, post lowered its previous total corn crop (including commercial and subsistence farming) estimate by 13 percent or 1.0 million tons to 7.0 million tons on 2.2 million hectares. Post estimates that due to the drought, only about 70 percent of the normal corn area will be harvested.

Consumption

Post forecasts a recovery in the commercial demand for corn in the 2016/17 MY to 10.3 million tons, due to increased production. Post expects that South Africa will use 4.9 million tons of corn for human consumption and 5.1 million tons of corn for animal feed, excluding corn utilized by the subsistence farming sectors and commercial on-farm usages.

Post kept the commercial demand for corn in the 2015/16 MY unchanged at 10.0 million tons as drought related high corn prices will impact negatively on any demand growth. Post foresees a seven percent drop in the commercial consumption of white corn to 4.2 million tons in the 2015/16 MY, due to the drought and the unavailability of white corn on the world market.

For the 2014/15 MY, post estimates that the commercial consumption of corn will drop by three percent to 10.0 million tons, due to higher corn prices. Post estimates a 27 percent drop in the commercial consumption of white corn due to an almost 40 percent drop in production. On the other hand, commercial yellow corn consumption is expected to increase by more than 30 percent from the 2013/14 MY's 4.3 million tons to 5.7 million tons, as yellow corn is more readily available on the world markets for imports.

The commercial consumption of white and yellow corn in South Africa

CORN

1,000 Mt

White

Yellow

Total

White

Yellow

Total

White

Yellow

Total

MY

2014/15

2015/16

2016/17

Human

4,200

500

4,700

4,050

550

4,600

4,400

500

4,900

Animal

100

4,950

5,050

50

5,050

5,100

500

4,600

5,100

Other

50

200

250

100

200

300

100

200

300

TOTAL

4,350

5,650

10,000

4,200

5,800

10,000

5,000

5,300

10,300

Source: SAGIS; Grain SA

Note: Please note that consumption figures in the PS&D table also include corn utilized by the subsistence farming sectors and commercial on-farm usages.

Trade

Under normal climatic conditions, South Africa should return to be a net exporter of corn in the 2016/17 MY on higher production. Post estimates South Africa could export about 1.0 million tons of corn in the 2016/17 MY.

For the 2015/16 MY, post estimates that South Africa will have to import about 3.5 million tons of corn, as the drought reduced normal corn production by more than 40 percent. Argentina and Brazil seems to be South Africa most favorable trading partners in terms of yellow corn, while Mexico and the United States is the preferred in supplying white corn. South Africa will continue exporting corn to its neighboring countries, which should amount to about 600,000 tons in the 2015/16 MY

For the 2014/15 MY, post increased its imports estimate for corn to 1.6 million tons as South Africa already imported 1.4 million tons in the first 45 weeks of the marketing year. Most of the imports are yellow corn (1.3 million) as it is more readily available on the world markets for imports. South Africa continues exporting corn to its neighboring countries, which should amount to about 600,000 tons in the 2014/15 MY.

Export and import countries for white and yellow corn (1,000 tons)

2014/15 MY

May 1, 2015 – Mar 4, 2016

White corn

Yellow corn

Export Destinations

Botswana

135

51

Central African Republic

0

1

North Korea

0

3

South Korea

0

2

Lesotho

58

10

Mozambique

59

35

Namibia

90

39

Swaziland

23

48

Zimbabwe

21

0

TOTAL EXPORTS

385

190

Imports

Argentina

0

665

Brazil

0

487

Mexico

51

0

Paraguay

0

172

Zambia

21

0

TOTAL IMPORTS

72

1,325

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

May 2015

May 2016

May 2016

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3048

3050

1900

2150

0

3100

Beginning Stocks

2198

2198

2498

2628

0

1528

Production

10800

10630

6500

7000

0

12600

MY Imports

1900

1600

3500

3500

0

25

TY Imports

469

470

2700

2000

0

25

TY Imp. from U.S.

2

0

0

0

0

0

Total Supply

14898

14428

12498

13128

0

14153

MY Exports

700

600

800

600

0

1000

TY Exports

745

745

800

500

0

500

Feed and Residual

6000

5500

5500

5500

0

5600

FSI Consumption

5700

5700

5500

5500

0

5700

Total Consumption

11700

11200

11000

11000

0

11300

Ending Stocks

2498

2628

698

1528

0

1853

Total Distribution

14898

14428

12498

13128

0

14153

(1000 HA) ,(1000 MT)

RICE

Production

South Africa is totally dependent on rice imports to meet the local demand as no rice production takes place in the country, due to the high water requirements of the crop. As a result, rice imports are duty free and local consumption is based on the import data as supplied by the Global Trade Atlas.

Consumption

Post forecast a ten percent increase in South Africa's rice consumption in the 2016/17 MY to 970,000 million tons, due to drought reflected record corn prices. Consumers can substitute rice, wheat and corn products on price and taste preferences.

Post lowered its previous local rice consumption estimate for the 2015/16 MY by nine percent to 880,000 tons based on updated trade data. South Africa also consumed approximately 880,000 tons of rice in the 2014/15 MY.

Imports

In the 2016/17 MY, South Africa's rice imports are expected to increase by 10 percent to 1.1 million tons on increased demand. In the 2015/16 MY post estimates South Africa will import about 1.0 million tons of rice. So far in the 2015/16 MY (May 1, 2015 to January, 2016), South Africa already imported 715,174 tons of rice. India and Thailand, together, supply more than 90 percent of South Africa's rice demand.

South Africa imports of rice (metric tons)

Countries

2014/15 MY

(May/April)

2015/16*MY

May/January

Imports form:

United States

528

414

Others:

Thailand

547,475

449,949

India

357,856

199,323

China

2,410

626

Vietnam

39,814

34,993

Singapore

15,933

2,400

Pakistan

10,270

4,825

Total for Others

974,286

692,530

Others not Listed

7,308

22,644

Grand Total

981,594

715,174

*05/01/2015 – 01/31/2016

Exports

South Africa imports a small amount of rice to export to neighboring countries. In the 2014/15 MY South Africa exported 122,262 tons of rice to neighboring countries. Post estimates rice exports in the 2015/16 MY and 2016/17 MY would be at the same level i.e. 120,000 tons, respectively.

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

May 2014

May 2015

May 2016

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

30

30

13

10

0

10

Milled Production

0

0

0

0

0

0

Rough Production

0

0

0

0

0

0

Milling Rate (.9999)

0

0

0

0

0

0

MY Imports

980

982

1080

1000

0

1100

TY Imports

1000

982

1000

1000

0

1000

TY Imp. from U.S.

1

0

0

2

0

2

Total Supply

1010

1012

1093

1010

0

1110

MY Exports

117

122

120

120

0

120

TY Exports

120

110

90

90

0

90

Consumption and Residual

880

880

960

880

0

970

Ending Stocks

13

10

13

10

0

20

Total Distribution

1010

1012

1093

1010

0

1110

(1000 HA) ,(1000 MT)