Production

Post forecasts that the commercial area planted to corn later in 2015, for the 2015/16 MY, will increase by five percent to 2.8 million hectares, driven mainly by higher corn prices. All indications are that South Africa will have to import corn in 2015, due to drought conditions in the main corn producing areas, which will keep local corn prices close to import parity levels for most of the 2014/15 MY. 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 3.2 million hectares. Based on national average yields, an area of 3.2 million hectares could realize a total corn crop of about 13.0 million tons.

Except for Mpumalanga and Kwazulu-Natal, that had a late start to the planting season, all other corn producing areas in South Africa had a normal start to the season. During December most areas received normal to above-normal rainfall. However, during first two months of 2015, most parts of South Africa's main corn producing areas experienced extreme drought conditions that impacted negatively on yields, especially as it was also during the period of pollination. As a result, post decreased its corn production forecast for the 2014/15 MY by 2.5 million tons, from 12.9 million tons to 10.4 million tons (9.9 million tons for commercial farmers and 500,000 tons for subsistence farmers) on 3.1 million hectares. This means the 2014/15 MY corn crop will be 30 percent less than the record corn crop of 15.0 million tons harvested on 3.1 million hectares in the 2013/14 MY.

Post's estimate is in line with the first production estimate by the Crop Estimates Committee (CEC) for the 2014/15 corn crop which was released on February 26, 2015. The CEC estimated the South African commercial corn crop at 9.7 million tons on 2.7 million hectares. White corn production was estimated at 4.7 million tons on 1.5 million hectares, while yellow corn production was estimated at 5.0 million tons on 1.2 million hectares.

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 (forecast).

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

2013/14

2014/15

2015/16

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

Commercial corn

White

1,551

5.0

7,697

1,460

3.3

4,800

1,600

4.1

6,520

Yellow

1,137

5.8

6,610

1,205

4.2

5,100

1,200

4.9

5,880

Sub Total

2,688

5.3

14,307

2,665

3.7

9,900

2,800

4.4

12,400

Subsistence corn

White

288

1.6

447

300

1.3

380

300

1.5

450

Yellow

120

1.9

228

100

1.2

120

100

1.5

150

Sub Total

408

1.7

675

400

1.3

500

400

1.5

600

TOTAL

3,096

4.8

14,982

3,065

3.4

10,400

3,200

4.1

13,000

Source: SAGIS and CEC

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 the result of the current drought conditions in the main corn producing areas of South Africa. Post also foresees an almost 30 percent drop in the commercial consumption of white corn to 4.5 million tons, as it is mainly the white corn producing areas that is mostly effected by the current drought conditions. On the other hand, commercial yellow corn consumption is expected to increase by more than 30 percent from the 2013/14 MY's 4.1 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 four percent to 4.7 million tons as consumers will substitute white corn products for wheat and rice products on price preferences. Animal consumption of corn is expected to stay unchanged at 4.9 million tons and will consist of mainly yellow corn.

Post kept its January estimate for the 2013/14 MY commercial consumption unchanged at 10.3 million tons, based on data from the South African Grain Information Services (SAGIS).

Table outlines the commercial consumption for white and yellow corn in South Africa for the 2013/14 MY (estimate), 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

4,420

500

4,920

4,200

500

4,700

4,400

500

4,900

Animal

1,620

3,310

4,930

200

4,700

4,900

500

4,500

5,000

Other

160

290

450

100

300

400

100

300

400

TOTAL

6,200

4,100

10,300

4,500

5,500

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

For the 2015/16 MY, post estimates that South Africa will have sufficient stocks to export about 1.5 million tons of corn, as commercial production is expected to exceed 12.0 million tons on increased area planted.

For the 2014/15 MY, post estimates that South Africa will have to import about 500,000 tons of corn, due to the drop in corn production as the result of the current drought conditions. South Africa will, however, continue to export corn to its neighboring countries, which should amount to about 600,000 tons.

So far in the 2013/14 MY (up to March, 6), South Africa already exported 1.8 million tons of corn of which 1.4 million tons was yellow corn and 465,620 tons white corn. The major markets for South African corn in the current marketing year, include, Taiwan (679,185 tons yellow corn), Korea (214,474 tons yellow corn and 3,875 tons white corn), Japan (198,197 tons yellow corn) and Botswana (139,918 tons white corn and 24,158 tons yellow corn). Post estimates that South Africa's corn exports in the 2013/14 MY could reach 2.0 million tons. This estimate is 500,000 tons lower as post's previous estimate of 2.5 million tons as South Africa, with the current drought and the resulting increase in local corn prices, is uncompetitive in the global market and will only supply neighboring countries with corn.

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

2013/14 MY

May, 2014 – March 6, 2015

White corn

Yellow corn

Export Destinations

Angola

0

1

Botswana

140

24

Cameroon

0

4

Italy

0

50

Japan

0

198

Korea

4

214

Lesotho

93

7

Mozambique

83

24

Namibia

67

29

Portugal

0

52

Swaziland

22

41

Saudi Arabia

0

56

Taiwan

0

679

Zimbabwe

57

4

TOTAL EXPORTS

466

1,383

Source: SAGIS

Prices

SAFEX prices as of 03/10/2015 are shown in Table. White corn and yellow corn prices increased by 36 percent and 23 percent, respectively, the past two months, as prices move to towards import parity levels, due to the drought conditions in the main corn producing areas of South Africa. However, on a year-on-year basis, white corn and yellow corn prices are respectively, 28 percent and 35 percent lower. A year ago corn prices also traded at import parity levels driven mainly by relatively low corn stock levels in South Africa at that time, but prices dropped significantly in April as the industry realized a record corn crop was on hand. Import parity prices are also currently about 12 percent lower than a year ago, despite a more than 10 percent depreciation in the South African rand exchange rate, driven mainly by lower world corn prices after a recovery in global corn stock levels. Post foresees that local corn prices will continue to trade close to import parity levels for the rest of the year, due to the current drought conditions.

SAFEX prices for corn

SAFEX Futures prices (as of 03/10/2015)

Commodity

2015/03

2015/05

2015/07

2015/09

2015/12

White corn

R2,678/t

($216/t)

R2,722/t

($220/t)

R2,765/t

($223/t)

R2,796/t

($225/t)

R2,851/t

($230/t)

Yellow corn

R2,443/t

($197/t)

R2,466/t

($199/t)

R2,468/t

($199/t)

R2,494/t

($201/t)

R2,542/t

($205/t)

Stock levels

Post adjusted the corn consumption numbers for the 2005/06 MY to 2009/10 MY to include usages by the subsistence farming sector. As a result, corn ending stock numbers have changed in the succeeding marketing years, but are now more in line with the ending stock levels as reported by SAGIS.

PS&D Table for Corn

Corn

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

3,096

3,096

3,100

3,065

0

3,200

Beginning Stocks

664

664

2,171

2,171

0

1,471

Production

14,982

14,982

11,500

10,400

0

13,000

MY Imports

25

25

25

500

0

0

TY Imports

79

79

25

0

0

0

TY Imp. from U.S.

4

4

0

0

0

0

Total Supply

15,671

15,671

13,696

13,071

0

14,471

MY Exports

2,000

2,000

1,000

600

0

1,500

TY Exports

2,104

2,104

1,000

1,000

0

0

Feed and Residual

5,400

5,400

5,200

5,300

0

5,500

FSI Consumption

6,100

6,100

6,100

5,700

0

5,900

Total Consumption

11,500

11,500

11,300

11,000

0

11,400

Ending Stocks

2,171

2,171

1,396

1,471

0

1,571

Total Distribution

15,671

15,671

13,696

13,071

0

14,471

1000 HA, 1000 MT, MT/HA