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. 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. In the 2014/15 MY, South Africa imported almost 2.0 million tons of corn to augment local production.

Executive Summary

The area to be planted with corn later in 2016, for the 2016/17 MY, will be influence in a positive manner by relatively high local corn price levels, due to the past dry season. 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 increased its previous corn crop (including commercial and subsistence farming) estimate for the 2015/16 MY by 600,000 tons to 7.6 million tons on 2.2 million hectares after the Crop Estimates Committee released its sixth estimate for the South African corn crop. South Africa will have to import approximately 3.5 million tons of corn in the 2015/16 MY to meet local demand. So far, South Africa has imported 370,000 tons of corn mainly from Argentina (yellow corn) and Mexico (white corn).

Corn

Production

The area to be planted with corn later in 2016, for the 2016/17 MY, will be influenced in a positive manner by relatively high local corn price levels, due to the past dry season. Local corn prices are expected to trade at import parity price levels for at least until next years' harvest season, giving farmers enough initiative to plant more fields of 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 sixth estimate for the 2015/16 MY corn crop on June 28. According to the CEC, South Africa's commercial corn crop is estimated at 7.2 million tons on 1.9 million hectares. The CEC also estimated the subsistence farmer's production at 435,740 tons on 266,130 hectares. This sets South Africa's total corn crop for the 2015/16 MY at 7.6 million tons on 2.2 million hectares, which is 29 percent lower than the 2014/15 MY's crop of 10.6 million tons and almost half that of the 2013/14 MY's crop of 15.0 million tons, illustrating the impact of the drought. White corn production is 35 percent lower than the previous season, while yellow corn production is 22 percent lower.

Given the above, post increased its previous total corn crop (including commercial and subsistence farming) estimate by 600,000 tons to 7.6 million tons on 2.2 million hectares . More than 5.0 million tons or almost 75 percent of the estimated corn crop has already been delivered to the commercial market.

Consumption

Post kept its previous forecasts of a three percent increase in the commercial demand for corn in the 2016/17 MY to 10.3 million tons, due to increased production, unchanged. 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 also kept its estimate for the commercial demand for corn in the 2015/16 MY unchanged at 10.0 million tons, as drought related high corn prices, corn availability and sluggish economic growth will impact negatively on an increased demand for corn.

The commercial consumption of corn in the 2014/15 MY was finalized by SAGIS. According to SAGIS the commercial consumption of corn increased by 2.5 percent from the 2013/14 MY's 10.3 million tons to 10.5 million tons. This is also five percent more than post's pervious consumption estimate of 10.0 million tons. However, there was, as expected, a three percent decrease in the human consumption of corn from 4.8 million tons to 4.7 million tons, due to relatively high white corn prices. Overall the consumption of white corn decrease by 27 percent from 5.9 million tons in the 2013/14 MY to 4.3 million tons in the 2014/15 MY, due to an almost 40 percent drop in production. On the other hand, commercial yellow corn consumption increased by 43 percent from the 2013/14 MY's 4.3 million tons to 6.2 million tons, as yellow corn is more readily available on the world markets for imports. The usage of corn for animal feed increased by 10 percent to 5.5 million tons and was mainly driven by an estimated four percent growth in the South African broiler industry (a major user of yellow corn as feed) and the lack of natural pastures, due to the drought, pressuring producers to buy extra feed for their animals.

Trade

Under normal weather, 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 is South Africa's most favorable trading partners in terms of yellow corn, while Mexico and the United States are preferred suppliers of white corn. South Africa will continue exporting corn to its neighboring countries, which should amount to about 700,000 tons in the 2015/16 MY.

For the 2014/15 MY, South Africa imported almost 2.0 million tons of corn to augment local production. Most of the imports were yellow corn (1.9 million) and from Argentina (1.1 million tons) and Brazil (502,147 tons). South Africa also imported 102,179 tons of white corn, mainly from Mexico and the United States. South Africa continued to export corn to its neighboring countries, which amounted to about 693,428 tons in the 2014/15 MY.

Prices

Currently, yellow corn prices are trading at import parity levels, due to the drought, and are mainly influenced by the corn price levels in the United States and the appreciation or depreciation of the rand. White corn prices are trading at a premium above import parity price levels, illustrating the scarcity of white corn on the world market. At that stage, white corn and yellow corn prices were trading, respectively, 36 percent and 17 percent higher than a year ago. Both white corn and yellow corn prices traded at historically high levels of R5,280/ton ($368) and R4,130/ton ($288), respectively, in mid-January 2016 when the rand depreciated to more than R16.50/US$ and the severity of the drought started to be realized by the role players in the South African grain industry. Local corn prices are expected to trade at import parity price levels, most probably until next years' harvest season.

PS&D Table for Corn

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

2213

3200

3200

Beginning Stocks

2198

2198

2410

2418

710

1818

Production

10629

10630

6500

7600

13000

12600

MY Imports

1972

1968

3500

3500

500

25

TY Imports

469

469

2700

2700

2500

2000

TY Imp. from U.S.

2

2

0

0

0

0

Total Supply

14799

14796

12410

13518

14210

14443

MY Exports

689

693

700

700

1500

1000

TY Exports

746

746

700

700

1300

800

Feed and Residual

6100

6150

5500

5700

5600

5700

FSI Consumption

5600

5535

5500

5300

5700

5600

Total Consumption

11700

11685

11000

11000

11300

11300

Ending Stocks

2410

2418

710

1818

1410

2143

Total Distribution

14799

14796

12410

13518

14210

14443

(1000 HA) ,(1000 MT)