SOUTH AFRICA- The Foreign Agricultural Service of the US Department of Agriculture (USDA) is confident that South Africa will maintain its status as a corn exporting country despite declines in production.
According to USDA, the estimate for South Africa’s total corn crop (subsistence and commercial production) remains unchanged at 15.6 million metric tons for the marketing year 2022/23.
The forecast is lower than the 16,951 million metric tonnes that the USDA estimates were produced in the 2021/2022 marketing year.
According to the USDA, the lowered outlook is due to the excessive rains on the eastern side of South Africa’s corn production area that delayed planting operations and caused damage to already-planted crops that could negatively impact yields.
With the decline in production, South Africa is now expected to export some 2.5 million metric tonnes of corn, down from 3.0 million metric tonnes estimated for the marketing year 2021/22.
USDA has further slashed the hectarage from 3000 hectares (Ha) to 2900 Ha but raised the forecast for national average production from 5.3MT/Ha to 5.4MT/Ha following the unpredicted rain patterns in the country during the summer season.
However, The South African Crop Estimates Committee (CEC) is tracking the impact of the heavy rains and will release its first summer crop production estimate by the end of February 2023.
For MY 2021/2022, the CEC estimated the South African corn crop at 16.1 MMT (15.4 MMT from commercial producers and 667,000 MT from subsistence producers) on 3.0 million hectares (MHa) at a national average yield of 5.3 MT/ha.
On consumption, Post maintains its previous estimate and forecast for the commercial demand for corn in MY 2021/22 and MY 2022/23 at 11.8 MMT and 12.0 MMT, respectively.
This represents a marginal growth rate from MY 2020/21 and correlates with the latest utilization figures published by South African Grain Information Services (Sagis).
Moreover, South Africa’s economic growth outlook over the medium term remains lackluster due to prevailing policy uncertainty, and structural constraints, including continuous power outages and growing pressure on consumer spending due to rising inflation and interest rates.
However, consumption and trade may be affected by the struggling domestic economy which might hinder any major upsurges in the demand for corn, especially with the current relatively high commodity price environment.
According to USDA, local corn prices are trading in correlation with export parity levels, an indication of the availability of surplus corn and a positive outlook for the current season.
This has led to an 11% drop in local corn prices in the past three months attributed to the strengthening of the local currency and the decline in global corn prices. Nevertheless, local white corn and yellow prices are trading at 20% and 14% higher than a year ago respectively.