Suppressed corn prices in SA to result in lower 2020/2021 production with exports to remain resilient

SOUTH AFRICA – South Africa produced its second highest corn crop on record in the 2019/2020 Market Year (MY) with the bumper harvest suppressing local corn prices, the U.S. Department of Agriculture (USDA) in a Global Agricultural Information Network report indicated.

The suppressed price is expected to continue past the 2020/21 MY’s planting season, putting downward pressure on the area to be planted with corn later in 2020.

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As a result, it is forecasted that around 2.3 million commercial hectares of corn will be planted later in 2020, for the 2020/21 MY, which is 11 percent less than the area planted in the 2019/20 MY.

According to the Crop Estimates Committee (CEC), the South African commercial corn crop for the 2019/20 MY is at 15.5 million tons on 2.6 million hectares at a national average yield of 5.9 tons per hectare.

The 2019/20 MY commercial corn crop production is 38 percent higher than the 2018/19 MY’s commercial crop of 11.3 million tons.

Under normal climatic conditions and taking into account the subsistence farming sector, South Africa’s corn crop for the 2020/21 MY could reach 12.6 million tons, which is 21 percent less than the expected corn crop of 16.1 million tons in the 2019/20 MY.

However, the reports have indicated that South Africa should be able to export around 600,000 tons of corn in the 2020/21 MY, despite an expected decrease in commercial production, as stock levels will still be relatively high.

In 2019/2020 South Africa should be able to export about 2.5 million tons of corn, with the first two months of the year having already exported 479,000 tons of the crop.

These exports are expected to be mainly to South Africa’s established markets in neighbouring countries, especially Zimbabwe.

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Zimbabwe needs at least 1.0 million tons of corn to meet local demand after drought conditions impacted negatively on crop yields.

In addition, the country lifted restrictions on the importation of Genetically Engineered (GE) corn, supporting increased corn imports from South Africa.

Moreover, a corn crop of more than 16.0 million tons enables South Africa to also export corn, especially yellow corn, beyond its neighboring countries to other markets such as South Korea, Taiwan and Japan.

In the 2018/19 MY, South Africa exported 1.4 million tons of corn consisting of 1.0 million tons of white corn and 410,000 tons of yellow corn.

The major markets for South African corn were mainly its neighboring countries with Zimbabwe, Botswana, Namibia, Mozambique, Eswatini (Swaziland) and Lesotho representing almost 90 percent of corn exports.

South Africa also imported yellow corn in the 2018/19 MY from Argentina and Brazil to augment local production. These corn imports amounted to 510,000 tons.

The consumption of corn (white and yellow corn) in South Africa has increased on average of 2% per annum over the past ten years, mainly driven by population and economic growth.

Post predicts a 3% increase in the human consumption of corn in the 2019/20 MY to 5.6 million tons while that the demand for corn for animal feed in the 2019/20 MY will stay at the 2018/19 MY’s level of 5.7 million tons, as the shrinking local economy will limit an increase in the demand for animal protein.

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