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South Africa corn exports to hit 20-year high

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South Africa is poised for its strongest corn exports in 20 years, boosted by a bumper harvest and the competitiveness afforded by a sliding currency in a market already notable for its ample supplies.

South Africa will in the year starting in May ship 3.50m tonnes of corn, the US Department of Agriculture bureau in Pretoria said, a jump of 70% year on year.

The figure, 1.2m tonnes above the USDA's official estimate, will lift the country to sixth among world exporters, and reflects in part the best harvest in 33 years.

The bureau estimated output at 14.6m tonnes, a rise of 16.9% year on year, comprising 13.9m tonnes of production from commercial farmers, and a harvest from subsistence growers of 700,000 tonnes.

Crops were supported by unusually strong rains, beginning in February.

On Wednesday, South Africa's official Crop Estimates Committee pegged the commercial harvest, which is in its final stages, at 13.94m tonnes, an upgrade of 50,000 tonnes on its previous estimate.

'Increased price competitiveness'

However, the bureau also highlighted the boost to South Africa's export hopes from a drop in the rand, down 20% against the dollar from the start of 2013, undermined by labour unrest in its important mining sector.

South Africa is enjoying "increased corn price competitiveness in the world market, due to a weakening rand-dollar exchange rate".

Furthermore, the country, has seen a particular decrease in domestic prices, down 50% in the past six months, compare with a drop of some 16% in Chicago futures.

The decline reflects the return of South Africa to ample local supplies after a period early in 2014 when the extent of exports of last year's crop depleted domestic inventories, sending prices to levels which incentivised imports.

South Africa imports some 80,000 tonnes of Ukrainian corn to underpin its supplies until the latest harvest.

Prices for the rest of 2015 look like staying "close to export parity", the bureau said, implying further weakness with prices for shipping, facing strong world competition, at a little over half those for import, which include an allowance for transport costs.

Outlook for 2015

The bureau forecast a retreat in South Africa's corn production next year, to 13.0m tonnes, reflecting a return to average yields, albeit with sowings expected to remain at 3.2m hectares.

The estimate comprises 12.3m tonnes of commercial production, and 700,000 tonnes grown by subsistence farmers.

That harvest will support corn exports of 2.5m tonnes in the year beginning in May 2015, the bureau said.

South Africa's domestic needs are being swollen by increased population and economic growth, with demand for corn for feed rising by 2% a year, and for feed by 3%.

Its major export markets last season were Japan, at 596,000 tonnes, Zimbabwe at 287,000 tonnes and Botswana at 210,000 tonnes.

By Agrimoney.com

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