Highlights

Under normal climatic conditions and taking into account the subsistence farming sector, South Africa's total corn crop for the 2016/17 MY could reach 12.8 million tons. Hence, South Africa should return to be a net exporter of corn of about 1.0 million tons. The final estimate for the 2015/16 MY corn crop was set at 8.0 million tons, almost 40 percent tons lower than South Africa's normal corn production due to the drought. As a result, South Africa will have to import about 3.0 million tons of corn in the 2015/16 MY. Due to the slow pace of approval by the South African government, the United States is still not allowed to export Genetically Engineered corn to be used for feed and food to South Africa.

Executive Summary

The area to be planted with corn in 2016, for the 2016/17 MY, will be influence in a positive manner by relatively high local corn price levels. In addition widespread rain has fallen in the corn producing areas of the country the past week, enabling farmers on the eastern side to start planting corn within the optimum planting window. Hence, post forecasts that around 2.7 million commercial hectares of corn will be planted in 2016, which is about ten percent higher than the ten year average in area planted and almost 40 percent higher than the drought reduced area that was planted in the 2015/16 MY. Under normal climatic conditions and taking into account the subsistence farming sector, South Africa's total corn crop for the 2016/17 MY could reach 12.8 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.

The Crop Estimates Committee (CEC) increased the 2015/16 MY commercial corn crop by three percent in their final estimate to 7.5 million tons. The CEC kept the estimate for subsistence farmers unchanged at 435,740 tons. This sets South Africa's total corn crop for the 2015/16 MY at almost 8.0 million tons on 2.2 million hectares, which is 25 percent lower than the 2014/15 MY's crop of 10.6 million tons due to the impact of the drought. As a result, post estimates that South Africa will have to import about 3.0 million tons of corn in the 2015/16 MY. So far in the 2015/16 MY, South Africa has already imported almost 800,000 tons of yellow corn, mainly from Argentina, and 335,000 tons of white corn, mainly from Mexico. Due to the slow pace of approval by the South African government, the United States is still not allowed to export Genetically Engineered (GE) corn to be used for food and feed to South Africa.

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.

CORN

Production

The area to be planted with corn in 2016, for the 2016/17 MY, will be influence in a positive manner by relatively high local corn price levels. Local corn prices is expected to still trade at import parity price levels in the near future, giving farmers enough initiative to plant more fields to corn. In addition widespread rain has fallen in the corn producing areas of the country the past week, enabling farmers on the eastern side to start planting corn within the optimum planting window. Hence, post forecasts that around 2.7 million commercial hectares of corn will be planted in 2016, which is about ten percent higher than the ten year average in area planted and almost 40 percent higher than the drought reduced area that was planted in the 2015/16 MY. Under normal climatic conditions and taking into account the subsistence farming sector, South Africa's total corn crop for the 2016/17 MY could reach 12.8 million tons.

The CEC released the “intention to plant survey" on October 26, 2016. Commercial farmers indicated that they will plant 2.5 million hectares of corn in the 2016/17 MY. The intention by commercial farmers is to plant 1.5 million hectares of white corn and 1.0 million hectares of yellow corn.

The CEC released its final estimate for the 2015/16 MY corn crop on September 27. The CEC increased the commercial corn crop by three percent from the previous estimate, to 7.5 million tons. The CEC kept the estimate for subsistence farmers unchanged at 435,740 tons. This sets South Africa's total corn crop for the 2015/16 MY at almost 8.0 million tons on 2.2 million hectares, which is 25 percent lower than the 2014/15 MY's crop of 10.6 million tons. Commercial white corn production is estimated at 3.3 million tons, 32 percent lower than the previous season, while commercial yellow corn production is estimated at 4.3 million tons, 18 percent lower than the previous season.

Given the above, post increased its previous total corn crop (including commercial and subsistence farming) estimate by 400,000 tons to 8.0 million tons on 2.2 million hectares.

More than 6.2 million tons of corn or almost 85 percent of the estimated corn crop has already been delivered to the commercial market.

Consumption

Post increased its estimate for the commercial demand for corn in the 2015/16 MY by two percent to 10.2 million tons after taking into consideration the current consumption information from Sagis. Post kept the corn consumption estimate for animal feed unchanged at 5.1 million tons, but increased the estimated demand for corn for human consumption by 200,000 tons to 4.8 million tons. This means that the total demand for corn is expected to drop by three percent in the 2015/16 MY, from the 10.5 million tons of corn consumed in the 2014/15 MY. The major reasons for the expected drop are the drought related higher corn prices and the sluggish economic growth that is impacting negatively on the demand for corn.

Post forecasts a three percent increase in the commercial demand for corn in the 2016/17 MY to 10.5 million tons, due to increased production. Post expects that South Africa will use 4.9 million tons of corn for human consumption and 5.3 million tons of corn for animal feed, excluding 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 3.0 million tons of corn, as the drought reduced normal corn production by almost 40 percent. So far in the 2015/16 MY, South Africa has already imported almost 800,000 tons of yellow corn, mainly from Argentina, and 335,000 tons of white corn, mainly from Mexico. Due to the slow pace of approval by the South African government, the United States is still not allowed to export Genetically Engineered (GE) corn to be used for food and feed to South Africa. Although all of the GE events currently commercially produced in South Africa was 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 certain GE event approvals for corn. 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. Post was hoping that the South African government would have approved all six outstanding events for commodity clearance, which would allow for the importation as food or feed, at their Executive Council meeting held in mid-September. However, only four of the events where approved at the meeting for commodity clearance. The Executive Council's next meeting is in November and indications are that the outstanding two events will then get commodity clearance approval.

South Africa will continue exporting corn to its neighboring countries in the 2015/16 MY, which should amount to about 700,000 tons. So far this marketing year, South Africa has exported 352,169 tons of corn to its neighboring countries.

Prices

Local white corn and yellow corn prices have decrease by 25 percent since mid-June following the decrease in global corn prices and strengthening of the rand. However, white corn and yellow corn prices are trading, respectively, 18 percent and 13 percent higher than a year ago. Yellow corn prices are trading at import parity levels, due to the drought, and are mainly influence by global corn prices levels and the appreciation or depreciation of the rand. White corn prices are trading at a premium above import parity price levels, illustrating the limits of white corn on the world market. Local corn prices are expected to still trade at import parity price levels in the near future.

PS&D Table for Corn

Corn. 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

2200

2213

3200

3100

Beginning Stocks

2198

2198

2448

2418

1448

1491

Production

10629

10630

7900

7973

13000

12800

MY Imports

1964

1968

3000

3000

500

25

TY Imports

469

469

2700

2700

2500

2000

TY Imp. from U.S.

2

2

0

0

0

0

Total Supply

14791

14796

13348

13391

14948

14316

MY Exports

693

693

700

700

1500

1000

TY Exports

746

746

750

700

1300

800

Feed and Residual

6150

6150

5700

5700

5600

5900

FSI Consumption

5500

5535

5500

5500

5700

5600

Total Consumption

11650

11685

11200

11200

11300

11500

Ending Stocks

2448

2418

1448

1491

2148

1816

Total Distribution

14791

14796

13348

13391

14948

14316