Report Highlights:

Dry weather is overruling the lure of high corn prices and producers' decisions to plant more corn in the 2015/16 MY. As a result, post lowered its previous forecast of total corn area to be planted in the 2015/16 MY, by six percent to 3.0 million hectares. Wheat imports in the 2015/16 MY is expected to decrease by five percent to 1.7 million tons, despite a 12 percent drop in production, as a weakening exchange rate, an increased wheat import tariff, and a sluggish economic growth outlook for South Africa, diminished any major demand growth forecast in wheat products. However, South Africa's rice imports in the 2015/16 MY are expected to increase by about 10 percent to 1.1 million tons on increased demand, due to relatively high local wheat and corn prices.

Executive Summary

South Africa's Crop Estimates Committee (CEC), estimated that farmers planted 482,150 hectares of wheat in the 2015/16 MY, which is marginal higher than the record low of 476,570 hectares planted in the 2014/15 MY. For the 2015/16 MY, local production of wheat is estimated at 1.542 million tons, 12 percent lower than the previous year's crop of 1.750 million tons, mainly due to drought condition that developed in parts of South Africa wheat producing areas. Due to the increase in the local and import parity prices of wheat (as the result of a weakening exchange rate and the increase of the wheat import tariff) and the economic growth outlook for South Africa that remains sluggish, post estimates no major increase in the consumption of wheat in the 2015/16 MY. As a result, wheat imports by South Africa in the 2015/16 MY is expected to decrease by five percent from the 1.785 million tons imported in the previous marketing year to 1,700 million tons.

Post lowered its previous forecast of the commercial corn area to be planted in the 2015/16 MY by seven percent to 2.6 million hectares, as concerns about the weather overrode the lure of high corn prices. Subsistence farmers are expected to plant about 400,000 hectares with corn, which will bring South Africa's total corn area in the 2015/16 MY at 3.0 million hectares. Based on national average yields the past five years, an area of 3.0 million hectares could realize a total corn crop of about 12.2 million tons. As a result, South Africa should have sufficient stocks to export about 700,000 tons of corn in the 2015/16 MY.

Post predicts a ten percent increase in rice consumption in the 2015/16 MY from the previous year to 970,000 tons, due to the local price increases of corn and wheat products. As a result, South Africa's rice imports are expected to increase by about 10 percent to 1.1 million tons.

The marketing years (MY) used in the text refer to the USDA marketing years in the PS&D table, and do not necessarily correspond with the marketing years used by the South African grain industry

WHEAT

Production

The CEC released its third forecast for wheat production in South Africa on October 27, 2015. According to the CEC, farmers planted 482,150 hectares of wheat in the 2015/16 MY, which is marginal higher than the record low of 476,570 hectares planted in the 2014/15 MY. The local production of wheat is estimated at 1.542 million tons, which is lower than post's previous estimate of 1.665 million tons, and 12 percent lower than the previous year's crop of 1.750 million tons, mainly due to drought condition that developed in parts of South Africa wheat producing areas, especially in the western side of the Western Cape Province.

Consumption

Post estimates the consumption of wheat in the 2015/16 MY will decrease by about 10 percent from its previous estimate of 3.570 million tons to 3.200 million tons, due to the lower wheat production, the increase in the local and import parity prices of wheat, (as the result of a weakening exchange rate and the increase of the wheat import tariff), and the economic growth outlook for South Africa that remains sluggish. For the 2014/15 MY, post estimates, based on new data from the South African Grain Information Service (Sagis), that the local consumption of wheat will drop by about two percent from the previous year to 3.150 million tons, due to price increases of local and imported wheat. This is nine percent lower than post's previous estimate of 3.450 million tons.

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 (estimate)

3,060

60

25

5

3,150

2015/16 (forecast)

3,105

70

20

5

3,200

Trade

On September 25, South Africa raised the wheat import duty to a record level of R911.20 (US$68) per metric ton, to protect local producers after the international wheat price dropped to the lowest level in five years. The duty is determined by the difference between a reference price of $294 a ton and a weekly price for United States' hard red winter wheat, which averaged about $220 a ton in the week through September 22. The South African rand also has weakened by about 15 percent against the United States dollar this year, reaching a record R14.08 on September 24, increasing the wheat import tariff by 78 percent from the previous tariff of R510.60 (US$38) a metric ton. As a result of a weakening exchange rate, the increase of the wheat import tariff, and the economic growth outlook for South Africa that remains poor, post estimates that wheat imports by South Africa in the 2015/16 MY can decrease by as much as 200,000 tons or by ten percent to 1.700 million tons from post's previous estimate of 1.900 million tons. This is five percent less wheat imports than the estimated imports of 1.785 million tons in the 2014/15 MY.

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 275,059 tons to neighboring countries, up eight 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

2013/14 MY

(Oct 1, 2013 – Sept 30, 2014)

2014/15 MY

(Oct 1, 2014 – Sept 30, 2015)

Import Suppliers

United States

66,468

28,311

Argentina

0

58,987

Australia

49,780

98,192

Germany

179,436

355,263

Canada

111,289

106,521

Finland

25,430

0

Latvia

22,013

61,005

Ukraine

372,500

273,721

Poland

0

91,483

Lithuania

40,532

43,791

Russia

800,964

667,838

TOTAL IMPORTS

1,668,412

1,785,112

Export destinations

Botswana

84,859

69,933

Lesotho

63,595

21,940

Mauritius

0

1,530

Mozambique

0

3,116

Namibia

37,054

22,414

Swaziland

11,539

16,724

Zambia

0

51,548

Zimbabwe

58,089

87,854

TOTAL EXPORTS

255,136

275,059

Prices

The South Africa Future Exchange (SAFEX) prices for wheat as of 10/13/2015 are shown in the following table. Local wheat prices increased by 14 percent year-on-year, when it was trading at R3,600 per ton, and by ten percent the last six months, following the upward trend in the import parity price. As already mentioned, 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. Local wheat prices will continue to trade at import parity levels in the foreseen future as local production represents less than 50 percent of local demand.

PS&D Table for Wheat

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2016

South Africa

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

505

505

477

477

480

482

Beginning Stocks

747

747

830

830

965

940

Production

1870

1870

1750

1750

1635

1542

MY Imports

1668

1668

1785

1785

1700

1700

TY Imports

1800

1800

1900

1900

1700

1700

TY Imp. from U.S.

97

97

0

0

0

0

Total Supply

4285

4285

4365

4365

4300

4182

MY Exports

255

255

250

275

300

300

TY Exports

322

322

250

250

250

250

Feed and Residual

55

55

60

60

70

70

FSI Consumption

3145

3145

3090

3090

3130

3130

Total Consumption

3200

3200

3150

3150

3200

3200

Ending Stocks

830

830

965

940

800

682

Total Distribution

4285

4285

4365

4365

4300

4182

(1000 HA) ,(1000 MT)

CORN

Production

South Africa is still battling continues drought which started early in 2015 and meteorologists have predicted a hot dry 2015/16 summer, due to El Niño conditions. Too little rain has prompted farmers on the eastern side of the country, mainly in the Mpumalanga and Kwazulu-Natal provinces, to delay plantings, which is usually done in the middle of October. These farmers need rain soon as the optimal planting date ends mid-November. Farmers in the Free State and Northwest provinces have until end-November to mid-December to plant corn.

The "intention to plant survey" was published by the CEC on October 27, 2015. According to the CEC, commercial farmers indicated that they will plant 2.6 million hectares of corn in the 2015/16 MY, four percent lower than in the 2014/15 MY. The intention by commercial farmers is to plant 1.4 million hectares of white corn and 1.1 million hectares of yellow corn. Over the past two seasons the "intention to plant survey" only marginally varied from the actual hectares that were planted, illustrating the effectiveness of the survey.

Due to the dry weather and taking into account the results of the survey, post lowered its previous forecast of the area to be planted in the 2015/16 MY by seven percent to 2.6 million hectares, as concerns about the weather overrode the lure of high corn prices. Subsistence farmers are expected to plant about 400,000 hectares, which will bring South Africa's total corn area in the 2015/16 MY at 3.0 million hectares. Based on national average yields the past five years, an area of 3.0 million hectares could realize a total corn crop of about 12.2 million tons.

The final commercial production estimate for summer crops in the 2014/15 MY, was released on September 29, 2015 by the CEC. According to the CEC, the commercial corn crop reached 9.9 million tons in the 2014/15 MY, in line with post's estimate in March and 30 percent less than the previous year's crop. White corn production for the 2014/15 MY, was estimated at 4.7 million tons on 1.5 million hectares, almost 40 percent lower than the previous year's crop of 7.7 million tons. Yellow corn production was estimated at 5.2 million tons on 1.2 million hectares, 20 percent lower than the previous year's crop of 6.5 million tons.

According to the CEC, subsistence farmers produced 673,800 tons of corn on 395,200 hectares in the 2014/15 MY. This brings South Africa's total corn crop (commercial plus subsistence) for the 2014/15 MY at 10.6 million tons, almost 30 percent less than the record corn crop of 14.9 million tons harvested on 3.1 million hectares in the 2013/14 MY.

Consumption

Post forecasts a recovery in the commercial demand for corn in the 2015/16 MY to 10.3 million tons. Post expects that South Africa will use 4.9 million tons of corn for human consumption and 5.0 million tons of corn for animal feed, excluding corn utilized by the subsistence farming sectors and commercial on-farm usages.

Post estimates that commercial demand for corn will decrease by three percent in the 2014/15 MY, to 10.0 million tons, due to relatively high corn prices as South Africa will be a net-importer of corn in the 2014/15 MY. Post also foresees an almost 25 percent drop in the commercial consumption of white corn to 4.5 million tons, as it was mainly the white corn producing areas that was mostly effected by the drought conditions. On the other hand, commercial yellow corn consumption is expected to increase by almost 30 percent from the 2013/14 MY's 4.3 million tons to 5.5 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.

Table 7 outlines the commercial consumption for white and yellow corn in South Africa for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (forecast).

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

4,400

500

4,900

Animal

1,470

3,570

5,040

200

4,800

5,000

500

4,500

5,000

Other

110

270

380

100

200

300

100

300

400

TOTAL

5,940

4,320

10,260

4,500

5,500

10,000

5,000

5,300

10,300

Trade

For the 2015/16 MY, post estimates that South Africa will have sufficient stocks to export about 700,000 tons of corn, as commercial production is expected to exceed 11.5 million tons.

For the 2014/15 MY, post estimates that South Africa will import about 700,000 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 25 weeks of the 2014/15 MY, South Africa already imported 297,498 tons of yellow corn from Argentina and 93,569 tons of yellow corn from 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 – Oct 16, 2015

White corn

Yellow corn

White corn

Yellow corn

Export Destinations

Angola

0

3

0

0

Botswana

163

32

72

25

Cameroon

0

4

0

0

Italy

0

50

0

0

Japan

0

198

0

0

Korea

4

214

0

2

Lesotho

107

8

32

4

Mozambique

103

23

37

21

Namibia

86

38

38

22

Portugal

0

53

0

0

Swaziland

28

48

6

25

Saudi Arabia

0

56

0

0

Taiwan

0

679

0

0

Zimbabwe

57

4

0

0

TOTAL EXPORTS

548

1,410

185

99

Imports

Argentina

0

65

0

297

Brazil

0

0

0

94

Zambia

0

0

12

0

TOTAL IMPORTS

0

65

12

391

Prices

On a year-on-year basis, white corn and yellow corn prices are respectively, 62 percent and 47 percent higher, driven mainly by the impact of the drought in the main corn producing areas of South Africa, pushing prices towards import parity. A year ago corn prices traded at export parity levels driven by a record corn crop. The weakening of the rand against the United States dollar also adds to higher local corn prices. Post foresees that local corn prices will continue to trade close to import parity levels for the rest of the year, as South Africa will be a net-importer of corn in the 2014/15 MY.

PS&D Table for Corn

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

3200

3000

Beginning Stocks

664

664

2198

2198

1598

1714

Production

14925

14925

10800

10616

13500

12200

MY Imports

66

66

500

700

25

0

TY Imports

79

79

350

350

100

0

TY Imp. from U.S.

4

4

0

0

0

0

Total Supply

15655

15655

13498

13514

15123

13914

MY Exports

1957

1957

700

600

1500

700

TY Exports

2104

2104

800

800

1000

500

Feed and Residual

5500

5500

5500

5500

5500

5500

FSI Consumption

6000

6000

5700

5700

5900

5900

Total Consumption

11500

11500

11200

11200

11400

11400

Ending Stocks

2198

2198

1598

1714

2223

1814

Total Distribution

15655

15655

13498

13514

15123

13914

(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 lowered its consumption forecast of rice in the 2015/16 MY by 180,000 tons, but still predicts a ten percent increase in rice consumption from the previous year to 970,000 tons, due to the local price increases of corn and wheat products. 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, due to a record crop, and a weakening exchange rate, diminished 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 August 31, 2015), South Africa imported 308,079 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)

2013/14 MY (May/April)

2014/15 MY

(May/April)

2015/16*MY

May/August

Imports form:

United States

1,907

528

221

Others:

Thailand

441,234

547,475

229,166

India

409,325

357,856

52,077

China

221,602

2,410

315

Vietnam

31,170

39,814

15,760

Singapore

5,572

15,933

0

Pakistan

6,925

10,270

1,815

Total for Others

1,117,735

974,286

299,354

Others not Listed

25,865

7,308

8,725

Grand Total

1,143,600

981,594

308,079

*05/01/2015 – 08/31/2015

Exports

South Africa imports a small amount of rice to export to neighboring countries. In the 2013/14 MY, South Africa exported 81,491 tons of rice to neighboring countries and in the 2014/15 MY it reached 122,262 tons, due to increased demand for rice from 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.

PS&D Table for Rice

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)