Voluntary Report - public distribution

**Date:** 6/2/2004

**GAIN Report Number:** SF4023

SF4023

**South Africa, Republic of**

**Grain and Feed**

**Monthly Update**

**2004**

**Approved by:**

![](media/image1.wmf)Rachel Bickford

U.S. Embassy, South Africa

**Prepared by:**

Herman Germishuis

**Report Highlights:**

South Africa\'s MY2004/05 corn crop is now estimated at 7.9 million tons
compared to the 9.7 million tons produced in the previous season. The
decrease is mainly due to a cutback in planted area. The local industry
operates in a free market with unhindered trade flows. In the marketing
year that ended April 30, 2004, about 464,000 tons were imported while
over 1.1 million tons were exported. Wheat imports also continue
unabated.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[SF\]

**Summary**

South Africa's 2003 corn crop (2003 indicating the year of planting) is
currently officially estimated at 7.9 million tons, 875,000 tons more
than the initial estimate made in February. The 12.5% increase is
indicative of the generally more favorable conditions over the second
half of the season. Harvesting is in progress and indications are that
the estimate may even increase further. South African supplies will be
adequate for local needs but with the free market imports of especially
yellow corn and exports of mainly white will continue.

At this stage it is expected that wheat plantings will increase to
886,000 hectares this year after only 748,000 hectares were planted in
2003. This could lead to a crop in excess of 2 million tons compared to
the 1.5 million tons produced last year. At this stage there are some
concern about the lack of rain in the Western Cape. High levels of
imports are expected to continue.

[www.sagis.org.za]{.underline}

[www.grainsa.co.za]{.underline}

[www.safex.co.za]{.underline}

[www.fews.net]{.underline}

[www.wfp.org]{.underline}

[www.grains.org](http://www.grains.org/)

[www.pecad.fas.usda.gov]{.underline}

# CORN

+-----------------+------------+-------+-------+------+-------+------+
| ##              |            |       |       |      |       |      |
| ##### PSD Table |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| **Country**     | **South    |       |       |      |       |      |
|                 | Africa**   |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| **Commodity**   | **Corn**   |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| 1000 Hectare    | 2002       | Re    | 2003  | Esti | 2004  | Fore |
|                 |            | vised |       | mate |       | cast |
+-----------------+------------+-------+-------+------+-------+------+
| 1000 Metric     | USDA       | Post  | USDA  | Post | USDA  | Post |
| tons            | \[Old\]    | \[    | \[    | \[N  | \[    | \[N  |
|                 |            | New\] | Old\] | ew\] | Old\] | ew\] |
+-----------------+------------+-------+-------+------+-------+------+
| **Market Year   |            | 05    |       | 05/  |       | 05/  |
| Begin**         |            | /2003 |       | 2004 |       | 2005 |
+-----------------+------------+-------+-------+------+-------+------+
| Area Harvested  | 3650       | 3650  | 3000  | 3005 | 3500  | 3300 |
+-----------------+------------+-------+-------+------+-------+------+
| Beginning       | 1943       | 1945  | 2318  | 2460 | 1118  | 1200 |
| Stocks          |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| Production      | 9675       | 9675  | 7800  | 7900 | 9300  | 9000 |
+-----------------+------------+-------+-------+------+-------+------+
| TOTAL Mkt. Yr.  | 450        | 465   | 700   | 490  | 500   | 300  |
| Imports         |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| Oct-Sep Imports | 617        | 617   | 700   | 450  | 500   | 275  |
+-----------------+------------+-------+-------+------+-------+------+
| Oct-Sep Import  | 21         | 21    | 0     | 0    | 0     | 0    |
| U.S.            |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| TOTAL SUPPLY    | 12068      | 12085 | 10818 | 1    | 10918 | 1    |
|                 |            |       |       | 0850 |       | 0500 |
+-----------------+------------+-------+-------+------+-------+------+
| TOTAL Mkt. Yr.  | 1100       | 1125  | 1000  | 1100 | 1000  | 1000 |
| Exports         |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| Oct-Sep Exports | 1141       | 1141  | 1000  | 850  | 1000  | 950  |
+-----------------+------------+-------+-------+------+-------+------+
| Feed Dom.       | 4100       | 4000  | 4100  | 4025 | 4100  | 4050 |
| Consumption     |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| TOTAL Dom.      | 8650       | 8500  | 8700  | 8550 | 8700  | 8600 |
| Consumption     |            |       |       |      |       |      |
+-----------------+------------+-------+-------+------+-------+------+
| Ending Stocks   | 2318       | 2460  | 1118  | 1200 | 1218  | 900  |
+-----------------+------------+-------+-------+------+-------+------+
| TOTAL           | 12068      | 12085 | 10818 | 1    | 10918 | 1    |
| DISTRIBUTION    |            |       |       | 0850 |       | 0500 |
+-----------------+------------+-------+-------+------+-------+------+

# Production

The fourth official estimate of South Africa's 2003 corn crop was
released on May 20, 2004 (2003 referring to the year of planting). The
total crop is estimated at about 7.9 million tons, 18.4% less than the
9.7 million 2002 crop, mainly due to a decline in area planted. In spite
of a late start to the rainy season, and a December/January dry spell,
the average yield is expected to decline by less than 1%. Since the
first estimate was made on February 19, rainfall has improved
considerably and the fourth estimate shows an increase of 875,000 tons,
or 12.5% on the initial estimate. The fourth estimate follows:

  ------------ ---------- ---------- ------------ ---------- ---------- ------------
  Crop         FAS 2002   MY 03/04                FAS 2003   MY 04/05   

  Corn         Area       Yield      Production   Area       Yield      Production

  Commercial   '000 ha.   Mt./ha.    '000 mt.     '000 ha.   Mt./ha     '000 mt.

  White        2232       2.85       6366         1728       2.70       4666

  Yellow       953        3.17       3026         918        3.27       3004

  Total        3185       2.95       9391         2646       2.90       7671

  Developing                                                            

  White        368        0.60       221          282        0.61       171

  Yellow       98         0.66       65           79         0.72       57

  Total        466        0.61       286          361        0.63       228

  Total corn                                                            

  White        2600       2.53       6587         2010       2.41       4837

  Yellow       1418       2.18       3091         997        3.07       3061

  Total        3651       2.65       9678         3007       2.63       7899
  ------------ ---------- ---------- ------------ ---------- ---------- ------------

The most significant feature of the latest estimate is that the average
yield of the commercial crop decreased by 1.7% compared to the previous
season, in spite of the difficult growing conditions. The yield of the
yellow corn crop is actually expected to surpass the yield attained in
2002. The main, market related reason for the smaller crop was the
540,000-hectare, 17.7%, decrease in the area planted in response to
market and weather factors. As harvesting continue the crop size is
expected to increase further.

**Consumption**

Commercial deliveries, that is corn delivered to the silos according to
the South African Grain Information Service (SAGIS), forms the basis of
the commercial supply and distribution.

To correlate the commercial S&D with a specific crop we use the March to
February deliveries and not the formal May to April marketing year. The
March and April deliveries are then deducted from the May 1 carry over
and added to the new season's deliveries. Imports for re-exports, and
the relevant stocks, are incorporated in the figures.

The current and forecasted commercial PS&D's are summarized below:

  ----------------- ----------------- ----------------- -----------------
  FAS 2002 est.     My 2003/04                          

  '000 Metric tons  White             Yellow            Total corn

  Beginning stocks  1265              680               1945

  Estimate          6365              3025              9390

  Delivery,         6200              2770              8970
  March/Feb                                             

  Retentions        165               255               420

  Imports           60                405               465

  Total Supply      7525              3855              11380

  Export            1015              110               1125

  Dom.              4455\*            3340              7795
  Disappearance                                         

  Ending stocks     2055              405               2460
  ----------------- ----------------- ----------------- -----------------

  ----------------- ----------------- ----------------- -----------------
  FAS 2003 forecast My 2004/05                          

  '000 Metric tons  White             Yellow            Total

  B/Stocks          2055              405               2460

  4th Crop est.     4666              3004              7670

  Farm retentions   166               254               420

  Deliveries        4500              2750              7250

  Imports           45                445               490

  Total supply      6600              3600              10200

  Exports           1000              100               1100

  Dom.              4500\*            3400              7900
  Disappearance                                         

  Ending stocks     1100              100               1200
  ----------------- ----------------- ----------------- -----------------

\* Including 400 to 500,000 tons of white corn used for feed.

# 

# Trade

Trade in whole corn during the May 03/April 04 marketing year is shown
in the following table. It contains imports for re-export, including
27,000 tons of white corn from the US, and exports from corn imported
earlier.

  ----------------- ----------------- ----------------- -----------------
  1000 Metric tons  White Corn        Yellow corn       Total whole grain

  IMPORTS           MY May 03/April                     
                    04                                  

  From: USA         60                8                 68

  Argentina         0                 388               388

  China             0                 8                 8

  Total             60                404               464

  EXPORTS                                               

  Botswana          140               2                 142

  Lesotho           124               6                 130

  Namibia           103               19                122

  Swaziland         29                26                55

  Total Customs     396               53                449
  Union                                                 

  Zimbabwe          397               16                413

  Zambia            7                 0                 7

  Mozambique        84                6                 90

  Angola            15                0                 15

  Kenya             48                0                 48

  Tanzania          35                0                 35

  Senegal           0                 3                 3

  Madagascar        10                2                 12

  Cape Verde        14                15                29

  Mauritius         0                 1                 1

  Japan             0                 10                10

  TOTAL             1 006             106               1 112
  ----------------- ----------------- ----------------- -----------------

The data above, compiled on a weekly basis, correlate very well with the
SAGIS seasonal figures:

  ----------------- ----------------- ----------------- -----------------
  SAGIS imports     33                408               441

  \+ for export     27                0                 27

  Total             60                408               468

  Exports           1,004             92                1,096

  \+ imports for    11                19                30
  export                                                

  TOTAL             1,015             111               1,126
  ----------------- ----------------- ----------------- -----------------

The main point is that South Africa again exported more than 1.1 million
tons in MY2003/04, very similar to the 2002/03 exports.

The second point is that only about 50,000 tons were exported overseas,
with only 10,000 tons going to Japan and the rest going to nearby
islands.

More than a million tons, 980,000 tons of white and 80,000 tons of
yellow, were exported overland to African states, of which a high
proportion needed to be GMO free. For the first time we are also able to
trace actual sales to the Customs Union partners (the BLNS countries).

  ----------------- ----------------- ----------------- -----------------
  EXPORTS                                               

  Botswana          140               2                 142

  Lesotho           124               6                 130

  Namibia           103               19                122

  Swaziland         29                26                55

  Total Customs     396               53                449
  Union                                                 
  ----------------- ----------------- ----------------- -----------------

Historically these sales were considered part of the domestic market. We
have previously estimated these sales between 400,000 and 600,000 tons
depending on the season.

Mozambique, not part of the Customs Union, takes about 90,000 tons
annually so South Africa can at least bank on exports of more than
500,000 tons annually.

The most remarkable figure in the table is the 413,000 tons that went to
Zimbabwe including 397,000 tons of white and 16,000 tons of yellow corn.
Zimbabwe had to purchase the bulk of the shipments, which is hard to
believe given the state of the economy. The figure does include food aid
shipments bought with donor funds as Zimbabwe insists on GMO free whole
corn. GMO corn donations had to be milled before delivery and are not
included in the whole corn trade figures.

# Prices

Although the crop and consumption estimates have settled, implying a
major white corn surplus and a yellow corn shortage, prices on SAFEX are
still fluctuating. The main determinant in the market seems to be the
exchange rate as the supply and distribution situation is clear and the
regional export market potential the only other unknown. The market does
not seem to be perturbed by the 2.5 million tons of unutilized old crop
stocks lying in the silos at the end of April 2004 with the new crop
deliveries picking up. It is interesting that the Government is
considering the idea of a strategic reserve while the market has held
carry over stocks of around 2 million tons over the past few seasons.

The following table contains the details:

  -------------- -------------- -------------- -------------- --------------
  Futures prices May 2004       July 2004      September 2004 December 2004

  White corn/mt.                                              

  12/30/03       R1174 =        R1190 =        R1219 =        
                 \$177.9        \$180.3        \$184.7        

  01/29/04       R1467 =        R1500 =        R1518 =        
                 \$213.5        \$218.3        \$221.0        

  02/27/04       R1194 =        R1225 =        R1245 =        R1285 =
                 \$179.3        \$183.9        \$186.9        \$192.9

  03/26/04       R1077 =        R1103 =        R1134 =        R1168 =
                 \$165.4        \$169.4        \$174.2        \$179.4

  04/30/04       R1121 =        R1150 =        R1166 =        R1202 =
                 \$163.6        \$167.9        \$170.2        \$175.5

  05/26/04                      R1069 =        R1091 =        R1130 =
                                \$160.7        \$164.1        \$169.9

  Yellow                                                      
  corn/mt.                                                    

  12/30/03       R1162 =        R1135 =        R1135 =        
                 \$176.0        \$172.0        \$172.0        

  01/29/04       R1370 =        R1346 =        R1371 =        
                 \$199.4        \$195.9        \$199.6        

  02/27/04       R1255 =        R1217 =        R1243 =        R1285 =
                 \$188.4        \$182.7        \$186.6        \$192.9

  03/26/04       R1160 =        R1134 =        R1150 =        R1175 =
                 \$178.2        \$174.2        \$176.7        \$180.5

  04/30/04       R1165 =        R1160 =        R1178 =        R1196 =
                 \$170.1        \$169.3        \$172.0        \$174.6

  05/26/04                      R1080 =        R1103 =        R1123 =
                                \$162.4        \$165.9        \$168.9

  Wheat/mt.                                                   

  12/30/03       R1633 =        R1649 =        N/a            
                 \$247.4        \$249.8                       

  01/29/04       R1760 =        R1782 =        N/a            
                 \$256.2        \$259.4                       

  02/27/04       R1765 =        R1773 =        N/a            R1740 =
                 \$265.0        \$266.2                       \$261.3

  03/26/04       R1730 =        R1739 =        N/a            R1652 =
                 \$265.7        \$267.1                       \$253.8

  04/30/04       R1766 =        R1770 =        R1765 =        R1630 =
                 \$257.8        \$258.4        \$257.7        \$238.0

  05/26/04                                     R1680 =        R1602 =
                                               \$252.6        \$240.9
  -------------- -------------- -------------- -------------- --------------

# Wheat

+-----------------+------------+------+-------+-------+-------+------+
| ##              |            |      |       |       |       |      |
| ##### PSD Table |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| **Country**     | **South    |      |       |       |       |      |
|                 | Africa**   |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| **Commodity**   | **Wheat**  |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| 1000 Hectare    | 2002       | Rev  | 2003  | Est   | 2004  | Fore |
|                 |            | ised |       | imate |       | cast |
+-----------------+------------+------+-------+-------+-------+------+
| 1000 Metric ton | USDA       | Post | USDA  | Post  | USDA  | Post |
|                 | Official   | \[N  | \[    | \[    | \[    | \[N  |
|                 | \[Old\]    | ew\] | Old\] | New\] | Old\] | ew\] |
+-----------------+------------+------+-------+-------+-------+------+
| **Market Year   |            | 10/  |       | 10    |       | 10/  |
| Begin**         |            | 2002 |       | /2003 |       | 2004 |
+-----------------+------------+------+-------+-------+-------+------+
| Area Harvested  | 941        | 941  | 748   | 748   | 850   | 886  |
+-----------------+------------+------+-------+-------+-------+------+
| Beginning       | 587        | 588  | 898   | 897   | 576   | 535  |
| Stocks          |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| Production      | 2320       | 2387 | 1428  | 1540  | 2125  | 2100 |
+-----------------+------------+------+-------+-------+-------+------+
| TOTAL Mkt. Yr.  | 871        | 870  | 1200  | 1200  | 900   | 900  |
| Imports         |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| Jul-Jun Imports | 1024       | 1018 | 1200  | 1200  | 900   | 850  |
+-----------------+------------+------+-------+-------+-------+------+
| Jul-Jun Import  | 63         | 63   | 0     | 600   | 0     | 500  |
| U.S.            |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| TOTAL SUPPLY    | 3778       | 3845 | 3526  | 3637  | 3601  | 3535 |
+-----------------+------------+------+-------+-------+-------+------+
| TOTAL Mkt. Yr.  | 310        | 310  | 300   | 350   | 300   | 325  |
| Exports         |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| Jul-Jun Exports | 331        | 328  | 300   | 320   | 300   | 300  |
+-----------------+------------+------+-------+-------+-------+------+
| Feed Dom.       | 10         | 12   | 10    | 30    | 10    | 30   |
| Consumption     |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| TOTAL Dom.      | 2570       | 2638 | 2650  | 2752  | 2660  | 2765 |
| Consumption     |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+
| Ending Stocks   | 898        | 897  | 576   | 535   | 641   | 445  |
+-----------------+------------+------+-------+-------+-------+------+
| TOTAL           | 3778       | 3845 | 3526  | 3637  | 3601  | 3535 |
| DISTRIBUTION    |            |      |       |       |       |      |
+-----------------+------------+------+-------+-------+-------+------+

# Production

Farmers have started planting the 2004 winter wheat crop and early
indications are that the area to be planted could reach 886,000 hectare,
more than 18% larger than in 2003 but about 6% less than in 2002. As
soil moisture in the Free State is favorable and the winter rainfall
season in the Cape has started, climatic conditions favor bigger
plantings. The problem is that price expectations are poor which may be
the limiting factor. The first meaningful estimates will only be
available next month.

Deliveries from the 2003 crop amount to about 1.5 million to date,
surpassing the earlier estimates again. Consumption is also showing
growth to about 2.75 million tons which means that imports continue. The
following tables summarize the trade situation to date:

  ----------------- ----------------- ----------------- -----------------
  Wheat imports     October 4, 2003   May 28, 2004      
                    to                                  

  Metric tons       For South Africa  Transshipments    Total

  From the US       332,231           112,033           444,264

  Canada            0                 13,586            13,586

  Germany           12,199            3,873             16,072

  United Kingdom    22,420            0                 22,420

  Australia         183,524           0                 183,524

  Argentina         70,765            21,525            92,290

  TOTAL             621,139           151,017           772,156
  ----------------- ----------------- ----------------- -----------------

To date the US enjoys 57.5% market share followed by Australia with
about 24%.

  ----------------------------------- -----------------------------------
  Wheat exports, October 4, 2003 to   May 28,2004, Metric tons

  Botswana                            72,773

  Lesotho                             61,950

  Namibia                             8,768

  Swaziland                           22,882

  Total Customs union                 166,373

  Zimbabwe                            35,097

  Zambia                              17,954

  TOTAL                               219,424
  ----------------------------------- -----------------------------------

While the grain imports continue indicative import parity prices gives
us a reason.

Indicative Import Parity Prices:

  -------------------- ----------------- ----------------- -----------------
  July 2004            US HRW #2 wheat   Argentina Corn    US #3Y Corn

  FOB Gulf value       150.46            121.00            131.59
  \$/ton                                                   

  Freight(20-30,000)   51.00             45.00             51.00
  \$                                                       

  Insurance \$/ton     0.45              0.36              0.39

  CIF \$/ton           201.91            166.36            182.98

  Rand/ton @ 6.5       1312.44           1081.36           1189.39

  Financing cost R/ton 12.41             10.22             11.24

  Discharging cost R/t 92.02             92.02             92.02

  Import tariff        Free              Free              Free

  FOR Durban R/ton     1416.87           1183.60           1292.65

  SAFEX Randfontein    1670.00           1071.00           1071.00
  -------------------- ----------------- ----------------- -----------------

The SAFEX corn futures prices ex Randfontein are lower than the coastal
landed prices, but higher for wheat and, while the Randfontein - Durban
freight rate is at least R145/ton, there is obviously scope to import
grain especially into the coastal areas.