South Africa’s corn exports will hold up better than thought, US officials said, despite issuing a relatively weak harvest forecast, and signs of recovery in the country’s prices of the grain.
The US Department of Agriculture’s Pretoria bureau estimated at 2.0m tonnes South African corn exports in the year starting in May 2018.
That would be down 500,000 tonnes on shipments for the current 2017-18 season, but above the 1.7m-tonne figure that the USDA has officially factored in.
It would also come in above the five-year average of 1.61m tonnes.
Upbeat weather outlook
The bureau’s forecast came despite a corn harvest forecast which, at 12.0m tonnes, was 500,000 tonnes below that of the USDA, with the International Grains Council pitched at 12.5m tonnes too.
Indeed, in South Africa, Wandile Sihlobo, at industry group Agbiz, said that on his estimates, even assuming “normal” rainfall, and the current official sowings forecast of 2.47m hectares implied a harvest of about 12.5m tones.
In fact, South Africa’s official meteorology bureau, in a forecast overnight “said it expected above normal rainfall to February 2018”, Mr Sihlobo said, adding that this implied the potential for larger production still.
“The period will cover corn from germination through to pollination,” key developmental phases, favoured by decent soil moisture levels.
‘Strong demand from South Korea’
However, Mr Siholobo, and the International Grains Council, concurred with the potential for exports of about 12.0m tonnes, after shipments Agbiz pegged this season at 12.2m tonnes.
While production will decline year on year, exportable supplies will be supported by large stocks carried over into the new season, “we which expect at at least 4m tonnes”, he told Agrimoney.
And although import needs in other southern African countries, typically a big market for South Africa, are being depressed by strong harvests - with Malawi earlier this week lifting an export ban on the grain - weak prices have allowed South Africa to find buyers further afield.
Grains sector group GrainSA flagged “some improvement” in latest South African corn export data, “helped by a strong demand from South Korea”, lifting volumes so far this season to 1.46m tonnes, more than 10 times the level as of a year before, when supplies were depressed by successive drought-affected harvests.
‘Bearish market, long term’
Mr Sihlobo said that the export improvement had been, besides weakness in the rand, a spur for headway by Johannesburg maize futures, which have confounded expectations of many observers by gaining since the Crop Estimates Committee last week revealed a smaller drop in sowings prospects than investors had forecast.
December futures in yellow maize, used largely as feed, have risen by 2.7% since the data, to close on Friday at 2,131 rand a tonne, their best finish in nearly four months.
December futures in white maize, a regional food staple, have gained 2.7% too, settling on Friday at 2,039 rand a tonne, also their best close since early July.
However, the rally, which has take both contracts above their 200-day moving averages for the first time, looks unsustainable, Mr Sihlobo said.
“Looking long term, South Africa appears a bearish market,” undermined by the prospect of yield-supporting rains and large carryover stocks.