Report Highlights:

South Africa is battling one of the worst droughts ever recorded limiting the production of grains. Corn production is expected to drop by 25 percent to 8.0 million tons in the 2015/16 MY, while wheat production at 1.5 million tons is 14 percent lower. As a result, South Africa will have to import about 3.0 million tons of corn, 2.0 million tons of wheat and about 1.0 million tons of rice in the 2015/16 MY to meet local demand.

Executive Summary

South Africa is battling one of the worst droughts ever recorded that already started in early 2015. As a result, the 2014/15 MY corn crop dropped by 30 percent to 10.6 million tons. Early estimates are that the 2015/16 MY corn crop might drop by another 25 percent to 8.0 million tons. As a result, post estimates that South Africa will have to import about 3.0 million tons of corn. Post lowered its commercial demand for corn in the 2015/16 MY by three percent to 10.0 million tons as drought related high corn prices will reverse any demand growth.

The Crop Estimates Committee (CEC) released its sixth forecast for wheat production in South Africa for the 2015/16 MY on January 27, 2016. The CEC kept the area planted and wheat production unchanged at 482,150 hectares and 1.5 million tons, respectively. The 2015/16 MY wheat crop is 14 percent lower than the previous year's crop of 1.75 million tons, mainly due to drought conditions. Post increased its previous consumption estimates of wheat for the 2015/16 MY by seven percent to 3.43 million tons, due to the drought in the corn producing areas of South Africa, especially in the white corn growing areas. White corn prices are currently trading higher than wheat prices as white corn is not freely available on the world market. As a result, post increased its estimate for wheat imports in the 2015/16 MY by 18 percent to about 2.0 million tons.

Post predicts a ten percent increase in South Africa's rice consumption in the 2015/16 MY to 970,000 tons, due to drought reflected record corn prices. Therefore, South Africa's rice imports are expected to increase by 10 percent to 1.1 million tons.

US$1 = Rand 16.40 (1/27/16)

WHEAT

Production

The CEC released its sixth forecast for wheat production in South Africa for the 2015/16 MY on January 27, 2016. The CEC kept the area planted and wheat production unchanged at 482,150 hectares and 1.5 million tons, respectively. The 2015/16 MY wheat crop is 14 percent lower than the previous year's crop of 1.75 million tons, mainly due to drought conditions.

The following table indicates the area planted and production figures of wheat in South Africa for the 2013/14 MY (actual), 2014/15 MY (actual) and 2015/16 MY (estimate).

Area planted and production of wheat in South Africa

MY

Area

(hectares)

Yield

(tons/ha)

Production

(1,000 tons)

2013/14 (actual)

505,500

3.7

1,870

2014/15 (actual)

476,570

3.7

1,750

2015/16 (estimate)

482,150

3.1

1,501

Consumption

Post increased its previous consumption estimates of wheat for the 2015/16 MY by seven percent from its previous estimate of 3.2 million tons to 3.430 million tons, due to the extreme drought in the corn producing areas of South Africa, especially in the white corn growing areas. As a result, white corn prices are currently trading higher than wheat prices as white corn is not freely available on the world market. Consumers can substitute white corn products for wheat or rice products on price preferences. Wheat consumption for the 2014/15 MY was finalized by the South African Grain Information Service (SAGIS) at 3.140 million tons, about two percent lower from the previous year's consumption of 3.2 million tons, due to price increases of local and imported wheat.

Consumption of wheat in South Africa

Wheat (1000 tons)

Marketing year

Human

Animal

Seed

Other

TOTAL

2013/14 (actual)

3,122

54

18

6

3,200

2014/15 (actual)

3,109

4

23

4

3,140

2015/16 (forecast)

3,400

5

20

5

3,430

Trade

Post increased its estimate for wheat imports in the 2015/16 MY by 18 percent to 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. For the first 16 weeks of the 2015/16 MY, South Africa already imported 607,210 tons of wheat, mainly from Russia. For the 2014/15 MY, South Africa's wheat imports reached 1.8 million tons, ten percent higher than the 2013/14 MY's 1.7 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, up seven percent from the previous year. South Africa's wheat exports are expected to reach 300,000 tons in the 2015/16 MY.

Export and import countries for wheat

2014/15 MY

(Oct 1, 2014 – Sept 30, 2015)

2015/16 MY

(Oct 1, 2015 – Jan 15, 2016)

Import Suppliers

United States

28,311

25,947

Argentina

59,607

0

Australia

95,254

0

Germany

348,385

60,402

Canada

105,457

53,793

Finland

0

0

Latvia

61,005

0

Ukraine

279,364

61,101

Poland

91,483

48,020

Lithuania

43,791

44,441

Russia

719,784

313,506

TOTAL IMPORTS

1,832,441

607,210

Export destinations

Botswana

68,037

3,151

Lesotho

21,940

0

Mauritius

1,532

0

Mozambique

56

2,490

Namibia

22,780

3,199

Swaziland

16,349

412

Zambia

53,138

169

Zimbabwe

90,423

12,270

TOTAL EXPORTS

274,255

21,691

Prices

Local wheat prices increased by 26 percent year-on-year, when it was trading at R3,905 per ton, and by 16 percent the last three months, following the upward trend in the import parity price. The upward movement in the import parity price of wheat is mainly due to the weakening of the rand and the increase in the import tariff of wheat. The rand depreciated by 25 percent in 2015 and by another six percent in January 2016. In September 2015, South Africa raised the wheat import duty to a record level of R911.20 (US$55) per metric ton, to protect local producers after the international wheat price dropped to the lowest level in five years. Local wheat prices will continue to trade at import parity levels in the foreseeable future as local production represents less than 50 percent of local demand.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2015

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

505

505

477

477

482

482

Beginning Stocks

747

747

830

830

940

997

Production

1870

1870

1750

1750

1500

1501

MY Imports

1668

1668

1785

1832

1800

2000

TY Imports

1800

1800

1900

1900

1800

2000

TY Imp. from U.S.

97

97

0

0

0

25

Total Supply

4285

4285

4365

4412

4240

4498

MY Exports

255

255

275

275

300

300

TY Exports

322

322

250

250

250

250

Feed and Residual

55

55

60

30

70

30

FSI Consumption

3145

3145

3090

3110

3130

3400

Total Consumption

3200

3200

3150

3140

3200

3430

Ending Stocks

830

830

940

997

740

768

Total Distribution

4285

4285

4365

4412

4240

4498

(1000 HA) ,(1000 MT)

CORN

Production

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. As a result, the 2014/15 MY corn crop dropped by 30 percent to 10.6 million tons. Early estimates by post, taking into account the CEC's preliminary release of area planted and production forecast on January 27, are that the 2015/16 MY corn crop might drop by another 25 percent to 8.0 million tons. Due to the late arrival of rain in the 2015/16 MY, only about 75 percent of the normal corn area could be planted. Area planted with corn (including subsistence farmers) is estimated at 2.3 million hectares, compared to the previous year's 3.1 million hectares. In the Kwazulu-Natal provinces about 90 percent of corn fields were planted compared to only about 65 percent in the Northwest and Free State provinces. These two provinces normally produce about 60 percent of South Africa's corn crop. Although most corn field in the Mpumalanga province was planted, many fields were planted after the optimal planting period.

Commercial white corn production is expected to decrease by 30 percent from last year's crop of 4.7 million tons to 3.3 million tons and is 57 percent lower than the 2013/14 MY's crop of 7.7 million tons. Commercial yellow corn production is expected to decrease by 20 percent from last year's crop of 5.2 million tons to 4.2 million tons and is 35 percent lower than the 2013/14 MY crop of 6.5 million tons.

The following table details area planted and production figures of white and yellow commercial and subsistence corn for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (estimate).

Area planted and production of commercial and subsistence corn in South Africa

Area 1,000ha

Yield

t/ha

Prod.

1,000 t

Area

1,000ha

Yield

t/ha

Prod.

1,000 t

Area

1,000ha

Yield

t/ha

Prod.

1,000 t

MY

2013/14

2014/15

2015/16

Commercial corn

White

1,551

5.0

7,710

1,450

3.2

4,703

1,030

3.2

3,300

Yellow

1,137

5.8

6,540

1,205

4.3

5,239

970

4.3

4,200

Sub Total

2,688

5.3

14,250

2,655

3.7

9,942

2,000

3.7

7,500

Subsistence corn

White

288

1.6

447

278

1.6

442

200

1.5

300

Yellow

120

1.9

228

117

2.0

232

100

2.0

200

Sub Total

408

1.7

675

395

1.7

674

300

1.7

500

TOTAL

3,096

4.8

14,925

3,050

3.5

10,616

2,300

3.5

8,000

Consumption

Post lowered its commercial demand for corn in the 2015/16 MY by three percent to 10.0 million tons as drought related high corn prices will reverse any demand growth. Post expects that South Africa will use 4.6 million tons of corn for human consumption (two percent lower than the previous year) and 5.1 million tons of corn for animal feed, excluding corn utilized by the subsistence farming sectors, commercial on-farm usages and other usages. Post foresees a four 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, estimates indicate a 27 percent drop in the commercial consumption of white corn for the same reasons as mentioned above and 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 human consumption of corn is expected to drop by three percent to 4.7 million tons as consumers can substitute white corn products for wheat or rice products on price preferences. Animal consumption of corn is expected to stay unchanged at 5.0 million tons and will consist of mainly yellow corn.

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

2013/14

2014/15

2015/16

Human

4,360

480

4,840

4,200

500

4,700

4,050

550

4,600

Animal

1,470

3,570

5,040

100

4,950

5,050

50

5,050

5,100

Other

110

270

380

50

200

250

100

200

300

TOTAL

5,940

4,320

10,260

4,350

5,650

10,000

4,200

5,800

10,000

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

For the 2015/16 MY, post estimates that South Africa will have to import about 3.0 million tons of corn, as the drought reduced normal corn production by more than 30 percent. Argentina and Brazil seem to be South Africa's most favorable trading partners in terms of yellow corn, while Mexico is the preferred trading partner for supplying white corn.

Although all of the Genetically Engineered (GE) events currently commercially produced in South Africa were developed in the United States, United States commercial corn cannot be exported to South Africa as South Africa and the United states are not synchronous in terms of GE event approvals for corn. According to the South African regulatory procedures, the application process for commodity import permits requires that the exporting country must have approved the same type and number of GE events that have been approved in South Africa. The South African regulatory procedures for approving GE events take longer than those in supplier countries and as a result the United States has approved corn events that are not yet approved in South Africa. South African legislation also does not provide for any tolerance threshold for the presence of unauthorized (in South Africa) GE events in food and feed commodities, even if they have been approved elsewhere.

For the 2014/15 MY, post estimates that South Africa will import about 1.0 million tons of corn. Most of the imports will be yellow corn as it is more readily available on the world markets for imports. For the first 38 weeks of the 2014/15 MY, South Africa already imported 756,300 tons of corn mostly from Argentina and Brazil. 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)

2013/14 MY

May, 2014 – April, 2015

2014/15 MY

May 1, 2015 – Jan 15, 2016

White corn

Yellow corn

White corn

Yellow corn

Export Destinations

Angola

0

3

0

0

Botswana

163

32

116

42

Cameroon

0

4

0

0

Central African Republic

0

0

0

1

Italy

0

50

0

0

Japan

0

198

0

0

North Korea

4

1

0

3

South Korea

0

214

0

2

Lesotho

107

8

49

7

Mozambique

103

23

53

29

Namibia

86

38

73

33

Portugal

0

53

0

0

Swaziland

28

48

17

43

Saudi Arabia

0

56

0

0

Taiwan

0

679

0

0

Zimbabwe

57

4

2

0

TOTAL EXPORTS

548

1,410

310

160

Imports

Argentina

0

65

0

330

Brazil

0

0

0

317

Mexico

0

0

51

0

Paraguay

0

0

0

41

Zambia

0

0

18

0

TOTAL IMPORTS

0

65

69

688

Prices

Both white corn and yellow corn are trading at record levels reflecting the impact of the drought on local corn supplies and the sharp depreciation in the exchange rate. The rand depreciated by 25 percent in 2015 and by another six percent in January 2016, pushing up import parity price levels. On a year-on-year basis, white corn and yellow corn prices are respectively, 163 percent and 96 percent higher. In the last three months white corn and yellow corn prices increased, respectively, by 69 percent and 38 percent. White corn is trading at a premium higher than import parity prices as white corn is not freely available on the world market. Post foresees that local yellow corn prices will continue to trade at import parity levels and white corn at a premium above import parity levels for the rest of the year, as South Africa will have to import a substantial part of local corn demand in the 2015/16 MY.

Corn

2013/2014

2014/2015

2015/2016

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

3076

3096

3048

3050

2200

2300

Beginning Stocks

664

664

2198

2198

2348

2014

Production

14925

14925

10800

10616

8000

8000

MY Imports

66

66

1200

1000

1500

3000

TY Imports

79

79

469

350

1700

2000

TY Imp. from U.S.

4

4

2

0

0

0

Total Supply

15655

15655

14198

13814

11848

13014

MY Exports

1957

1957

650

600

200

600

TY Exports

2104

2104

745

745

500

500

Feed and Residual

5500

5500

5500

5500

5000

5500

FSI Consumption

6000

6000

5700

5700

5700

5500

Total Consumption

11500

11500

11200

11200

10700

11000

Ending Stocks

2198

2198

2348

2014

948

1414

Total Distribution

15655

15655

14198

13814

11848

13014

(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 predicts a ten percent increase in South Africa's rice consumption in the 2015/16 MY to 970,000 tons, due to drought reflected record corn prices. Consumers can substitute rice, wheat and corn products on price and taste preferences.

South Africa consumed approximately 880,000 tons of rice in the 2014/15 MY, down 16 percent from the consumption levels in the 2013/14 MY. The South African economy grew by less than two percent in 2014, coupled by relatively constant wheat prices and relatively low corn prices, diminishing a demand growth for rice in the 2014/15 MY.

Consumption of rice in South Africa

Marketing years

2013/14 (actual)

2014/15 (estimate)

2015/16 (forecast)

Consumption

(1,000 tons)

1,050

880

970

Imports

In the 2015/16 MY, South Africa's rice imports are expected to increase by 10 percent to 1.1 million tons on increased demand. So far in the 2015/16 MY (May 1, 2015 to November, 2015), South Africa imported 622,893 tons of rice. Rice imports reached 981,594 tons in the 2014/15 MY, 14 percent down from the previous year due to a weaker demand. India and Thailand, together, supply more than 92 percent of South Africa's rice demand.

South Africa imports of rice (metric tons)

Countries

2014/15 MY

2015/16*MY

(May/April)

May/November

Imports form:

United States

528

373

Others:

Thailand

547,475

400,884

India

357,856

168,650

China

2,410

461

Vietnam

39,814

26,469

Singapore

15,933

2,376

Pakistan

10,270

3,212

Total for Others

974,286

602,052

Others not Listed

7,308

20,841

Grand Total

981,594

622,893

*05/01/2015 – 11/30/2015

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 would be at the same level as the previous marketing year i.e. 120,000 tons

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

May 2013

May 2014

May 2015

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

16

16

30

28

30

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

1144

1144

980

982

950

1100

TY Imports

910

910

980

982

950

1000

TY Imp. from U.S.

2

2

0

0

0

2

Total Supply

1160

1160

1010

1010

980

1110

MY Exports

80

82

90

120

90

120

TY Exports

114

114

110

110

90

90

Consumption and Residual

1050

1050

890

880

880

970

Ending Stocks

30

28

30

10

10

20

Total Distribution

1160

1160

1010

1010

980

1110

(1000 HA) ,(1000 MT)