South Africa appears poised for larger-than-expected maize supplies, but an increasing wheat import requirement, after official data on both crop came in wide of investor forecasts.
The country’s official Crop Estimates Committee, in its first forecasts for South African maize plantings for harvesting in 2018, pegged them at 2.47m hectares, a drop of 6.0% year on year.
Producers surveyed ahead of the forecast “indicated that less maize, especially white maize, will be planted for the 2018 harvest”, the committee said, pegging white corn area down 14.5% at 1.40m hectares.
This drop is “mainly because of farmers switching to other crops”, including oilseeds, but also yellow maize, for which sowings were pegged at 1.07m hectares a rise of 8.2% year on year.
Nonetheless, the loss of maize area was less severe than expected by investors, who had forecast a figure of 2.18m hectares, according to a Reuters survey, a drop of some 17% year on year.
Indeed, the data were a “surprise, given the low level of prices, and large stocks”, wich have doubled to 10.1m tonnes in the year to September, with large supplies limiting the odds of a recovery in values, said Wandile Sihlobo, at South African industry group Agbiz.
November futures in yellow maize, used mainly in feed, closed at 2,085 rand a tonne in Johannesburg earlier on Thursday, down 35% year on year, with November futures in white maize, a food staple, down 47% at $1,980 rand a tonne.
‘Another large maize crop?’
Given the particular price fall, and weakness in demand evident in a soft export performance, investors had expected the white maize sowings figure to fall even further, by 29% to 1.16m hectares.
White maize, which has historically accounted for the majority of South Africa’s maize exports, has accounted for only some 35% of South Africa’s shipments of 1.4m tonnes so far in 2017-18.
Given the strong plantings prospects, and a forecast of decent rains stretching into February, covering the period of sowing and establishment, “we could have another large maize crop, assuming good weather,” Mr Sihlobo told Agrimoney.
However, he flagged that the maize area could yet fall further than officials currently expect, with Thursday’s data “showing intentions for planting, not the area actually planted”.
On wheat, by contrast, the committee cut its forecast for the forthcoming harvest by more than 61,000 tonnes, to 1.66m tonnes, taking it more than 250,000 tonnes below last season’s crop.
The downgrade was “mainly because the main wheat producing province, namely the Western Cape, experiences dryness”, said the committee, whose downgrade defied expectations of an unchanged figure, according to a Bloomberg poll.
The weakened wheat production expectation leaves the country on course for an even bigger rise in imports than expected this season, from the 940,000 tonnes seen in 2016-17, Mr Sihlobo said.
With stocks also run down “this year, we could see 1.8m tonnes”, he told Agrimoney.