Highlights

The corn crop across South Africa is in fairly good condition. Favorable forecasts for follow-up rains over the next three weeks could further improve the crop. Hence, post kept its estimate for South Africa’s total corn crop for the 2016/17 MY, including production from the subsistence farming sector, unchanged at 12.8 million tons. This means the 2016/17 MY corn crop could be almost 60 percent higher than the drought-reduced estimated corn crop of 8.0 million tons of the 2015/16 MY. Hence, South Africa should return to being a net exporter of corn in the 2016/17MY. All Genetically Engineered corn events that caused asynchrony with the United States were approved at the end of 2016. Imported grain from the United States can now make a difference in the food security status in southern Africa.

Executive Summary

The corn crop across South Africa is in fairly good condition. Favorable forecasts for follow-up rains over the next three week could further improve the crop. Hence, post kept its estimate for South Africa’s total corn crop for the 2016/17 MY, including production from the subsistence farming sector, unchanged at 12.8 million tons. This means the 2016/17 MY corn crop could be almost 60 percent higher than the drought-reduced estimated crop of 8.0 million tons of the 2015/16 MY. As a result, South Africa should return to being a net exporter of corn in the 2016/17 MY. 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 due to the impact of the drought. So far in the 2015/16 MY, South Africa has already imported almost 1.2 million tons of yellow corn and 641,000 tons of white corn. On December 5, 2016, the Registrar of the GMO Act informed stakeholders that all corn Genetically Engineered (GE) events that caused asynchrony with the United States were approved by the Executive Council and the registrar invited applications for permits from importers. Due to asynchronous approvals, the United States was not allowed to export GE corn to be used for food and feed to South Africa. Imported grain from the United States can now make a difference in the food security status in southern Africa, which experienced the worst drought in history last year. Since the announcement about 46,000 tons of white corn from the United States where imported by South Africa. Import permits for another 900,000 tons of GE corn from the United States have been issued in December 2016 by the South African Department of Agriculture (DAFF).

CORN

Production

There was good rainfall between October and December of last year in many of the areas in Southern Africa that were affected by the severe drought the previous season. As a result, the corn crop across South Africa is in fairly good condition. Favorable forecasts for follow-up rains over the next three weeks could further improve the crop. Hence, post kept its estimate for South Africa’s total corn crop for the 2016/17 MY, including production from the subsistence farming sector, unchanged at 12.8 million tons. This means the 2016/17 MY corn crop could be almost 60 percent higher than the drought-reduced estimated crop of 8.0 million tons of the 2015/16 MY. Post forecasts that around 2.7 million commercial hectares of corn were planted in the 2016/17 MY, which is almost 40 percent higher than the area planted for the 2015/16 MY; the area planted in 2015 was reduced due to the drought.

The Crop Estimate Committee (CEC) will finalize the size of the 2015/16 MY commercial corn crop in early February. According to the South African Grain Information Services (SAGIS), 6.4 million tons of corn or 86 percent of the estimated commercial corn crop of 7.5 million tons has already been delivered to the market. Hence, post kept its estimate for South Africa’s total corn crop (including commercial and subsistence farming) for the 2015/16 MY unchanged 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, and 18 percent lower than the previous season.

Consumption

Post increased its estimate for the commercial demand for corn in the 2015/16 MY by two percent to 10.4 million tons after taking into consideration the current consumption information from SAGIS. Post increased the corn demand estimate for animal feed and human consumption, each by 100,000 tons to 5.2 million tons and 4.9 million tons, respectively. This means that the total demand for corn is expected to drop only marginally in the 2015/16 MY, from the 10.5 million tons of corn consumed in the 2014/15 MY, despite the higher drought-induced corn prices. With higher rainfall leading to increased production and thus relatively lower corn prices, post forecasts a two percent increase in the commercial demand for corn in the 2016/17 MY to 10.6 million tons. Post expects that South Africa will use 5.0 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

South Africa should return to being 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, due to the impact of the drought. So far in the 2015/16 MY, South Africa has already imported almost 1.2 million tons of yellow corn, mainly from Argentina, and 641,000 tons of white corn, mainly from Mexico. On December 5, 2016, the Registrar of the GMO Act informed stakeholders that all corn GE events that caused asynchrony with the United States were approved by the Executive Council and the registrar invited applications for permits from importers. Due to asynchronous approvals, the United States was previously not allowed to export GE corn to be used for food and feed to South Africa. Imported grain from the United States can know make a difference in the food security status in southern Africa, which experienced the worst drought in history last year. Since the announcement, about 46,000 tons of white corn from the United States was imported by South Africa. Import permits for another 900,000 tons of GE corn from the United States have been issued in December 2016 by DAFF. The United States also exported 17,000 tons of non-GE white corn to South Africa in the beginning of the 2015/16 MY. South Africa will continue exporting corn to its neighboring countries in the 2015/16 MY, which should amount to about 700,000 tons of exports. So far this marketing year, South Africa has exported 598,788 tons of corn to its neighboring countries.

Prices

Local corn prices are trading at import parity levels indicating South Africa’s corn shortage due to last season’s drought. In the past three months, local yellow corn prices only changed marginally and are hovering around R3,200/ton ($240/ton). On the other hand, local white corn prices decreased by almost eight percent the last three months with most of the decline initiated after the announcement of the Registrar of the GMO Act on December 5, 2016, that all corn GE events that have been causing asynchrony with the United States have been approved. Since then local white corn prices dropped by more than R700/ton ($53/ton) Year-on-year local yellow corn and white corn prices are, respectively, 17% and 33% lower, indicating the better climatic conditions compared to the last season.

Corn

Corn

Market Begin Year

South Africa

2014/2015

2015/2016

2016/2017

May 2015

May 2016

May 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3048

3048

2200

2213

3100

3100

Beginning Stocks

2198

2198

2448

2418

1348

1291

Production

10629

10630

7900

7973

13000

12800

MY Imports

1964

1968

3000

3000

500

25

TY Imports

469

469

2579

2579

2500

2000

TY Imp. from U.S.

2

2

110

110

0

0

Total Supply

14791

14796

13348

13391

14848

14116

MY Exports

693

693

800

700

1500

1000

TY Exports

746

746

759

759

1300

800

Feed and Residual

6150

6150

5700

5800

5600

5900

FSI Consumption

5500

5535

5500

5600

5700

5700

Total Consumption

11650

11685

11200

11400

11300

11600

Ending Stocks

2448

2418

1348

1291

2048

1516

Total Distribution

14791

14796

13348

13391

14848

14116