SOUTH AFRICA – The United States Grains Council (USGC) has embarked on a research to explore and identify opportunities for exports of U.S. corn and sorghum into South Africa amid the projected decline in local production.
The persistent drought conditions could reduce the South African corn output by 20% this year, presenting short-term demand shortfalls in the region, reports World Grain.
The U.S. Grains Council (USGC) recently sent a team to South Africa to explore the situation first hand and identify opportunities for exports of U.S. corn and sorghum.
“The impacts of drought are extending across east and southern Africa.
”The drought and crop shortfall have caused grain prices to soar in East Africa, and the Council is also exploring opportunities to export U.S. feed grains into these markets as a result,” said Kurt Shultz, senior director of global strategies at the USGC.
USGC has previously successfully secured market access for U.S. corn to fill domestic demand gaps through outreach efforts that included back-and-forth trade missions with government leaders, millers, commercial grain traders and end-users.
During the drought experienced in the country in 2016, USGC worked closely with the South African Government in adopting intervention to improve the situation.
Notably, the intervention lead to the government adopting to eliminate biotech restrictions on corn imports from the United States, resulting in the South African government issuing permits authorizing imports of white and yellow corn.
As a result, South Africa purchased more than 350,000 tons of corn valued at US$71 million and more than 170,000 tons of sorghum valued at US$28 million during the 2015-16 and 2016-17 marketing years.
South Africa’s corn production in the country is expected to decline 23% this year to 11.9 million tons down from 15.6 million tons harvested last year subsequently creating an import window.
“South Africa is expected to import more than 500,000 tons of corn and we have seen 45,000 tons of U.S. sorghum exported to South Africa already for human consumption and brewing industry needs.
“The Council will continue to monitor the situation to identify additional market opportunities,” said Reece Cannady, USGC manager of global trade, who participated in the mission.
The USGC team met with the South African grain industry to explore both this market potential and also identify constraints, including logistical challenges for the flow of grain in May.
In addition to Shultz and Cannady the team also includes and Ramy Taieb, USGC director for the Middle East and Africa
“Without regular shipments of grain between the United States and South Africa, introducing new feed ingredients like dried distiller’s grains with solubles (DDGS) or expanding existing sorghum sales is difficult.
“We will look more closely at the bulk and container markets to see if we can help create new avenues to trade,” Taieb said.