Voluntary Report - public distribution

**Date:** 6/30/2006

**GAIN Report Number:** SF6024

SF6024

**South Africa, Republic of**

Grain and Feed

**Monthly Update**

2006

**Approved by:**

![](media/image1.wmf)Scott Reynolds

#### U.S. Embassy

**Prepared by:**

Herman Germishuis

**Report Highlights:**

South Africa\'s corn crop planted in 2005 and currently being harvested
is estimated at 6.3 million tons, 46% lower than the 11.7 million ton
2004 crop. This is the result of a voluntary, 38% cutback in area
planted in an effort to bring supply more in line with demand. The
industry was able to export 2.1 million tons in MY 2005/06, with more
than a million tons going to Zimbabwe, which also helped to balance the
equation. The 6 million ton crop should come close to supplying domestic
and regional demand for white corn while yellow corn is being imported.
The exercise at least helped to double domestic prices over the past
year.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[SF\]

###### Summary {#summary-1}

In an effort to balance corn supply and demand South African commercial
farmers cut the area planted by 44% from 2.8 million hectares (ha.) in
2004 to 1.6 million ha. in 2005. As a result the commercial crop is
expected to decline by 48% from 11.45 million tons to 6 million tons.
After a slow start to the 2005/06-rainfall season, precipitation
improved from mid December followed by heavy sustained rains. As a
result of water logging and the overcast weather the average yield is
expected to decline to 3.8 MT/ha.

Due to a carry over of about 3.2 million tons at the end of April 2006
the commercial crop should be sufficient to supply the local need of
about 8 million tons. The problem is that the market is divided between
white corn mainly for human consumption and yellow corn mainly for
animal feed. White corn stocks should be sufficient for domestic and
traditional export needs while yellow corn is being imported to make up
the shortfall. The net result of the exercise is that prices for July
2006 have increased to about \$184/MT for white and \$169/MT for yellow
corn.

Bio Fuels, including Ethanol from corn is a big issue at the moment but
it is unlikely that additional areas will be planted for this purpose in
2006. It could, however, become a major additional outlet in the future.

The wheat situation is unchanged, with a small decrease in the area now
being planted and continued high import levels.

Please note the more than 10% depreciation of the SA Rand against the US
Dollar over the past month.

US\$1 = Rand 6.55 (05/30/06)

US\$1 = Rand 7.25 (06/28/06)

# 

[**www.sagis.org.za**](http://www.sagis.org.za/)

[**www.grainsa.co.za**](http://www.grainsa.co.za/)

[**www.safex.co.za**](http://www.safex.co.za/)

[**www.fews.net**](http://www.fews.net/)

[**www.wfp.org**](http://www.wfp.org/)

####### CORN

  ------------------- ---------- --------- ---------- ---------- ---------- ----------
  PSD Table                                                                 

  Country             South                                                 
                      Africa                                                

  Commodity           Corn                                                  

  1000 HA             2004       Revised   2005       Estimate   2006       Forecast

  1000 MT             USDA       Post Est. USDA       Post Est.  USDA       Post Est.
                      Official             Official              Official   

  Market Year Begin              05/2005              05/2006               05/2007

  Area Harvested      3223       3224      2200       1998       2750       2845

  Beginning Stocks    2956       2935      3022       3170       1422       750

  Production          11716      11715     7500       6315       9000       9000

  TOTAL Mkt. Yr.      350        360       750        750        700        400
  Imports                                                                   

  Oct-Sep Imports     131        140       650        470        700        700

  Oct-Sep Import U.S. 0          4         0          0          0          0

  TOTAL SUPPLY        15022      15010     11272      10235      11122      10150

  TOTAL Mkt. Yr.      2200       2140      750        750        500        600
  Exports                                                                   

  Oct-Sep Exports     1517       2600      1400       1200       500        500

  Feed Dom.           5100       5000      4400       4075       4300       4100
  Consumption                                                               

  TOTAL Dom.          9800       9700      9100       8735       9000       8800
  Consumption                                                               

  Ending Stocks       3022       3170      1422       750        1622       750

  TOTAL DISTRIBUTION  15022      15010     11272      10235      11122      10150
  ------------------- ---------- --------- ---------- ---------- ---------- ----------

# Production

The fifth official production estimate for the commercial corn crop
planted in 2005 was released on June 20, 2006. The crop estimate is
still about 6 million tons, 47.6% less than the 2004 crop. The only
change to the previous estimate was a 4,975 MT reduction in the expected
yellow corn crop. The commercial area planted is estimated at 1.57
million hectares, 44% smaller than the previous season, and with the
crop at 6 million tons the average yield is 3.8 tons/hectare. The
decline is mainly due to a voluntary cutback in production in an effort
to balance supply and demand. The following table contains the details.

<table style="width:100%;">
<colgroup>
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td>CORN</td>
<td><p>2004 area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>’000 MT</p></td>
<td><p>2005 area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>’000 MT</p></td>
<td><p>2006</p>
<p>Area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>‘000</p>
<p>MT</p></td>
</tr>
<tr class="even">
<td>Comm</td>
<td></td>
<td>Final</td>
<td></td>
<td></td>
<td>Est.</td>
<td></td>
<td></td>
<td>Fore.</td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>1,700</td>
<td>3.8</td>
<td>6,540</td>
<td>985</td>
<td>3.7</td>
<td>3,616</td>
<td>1,565</td>
<td>3.4</td>
<td>5,325</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,110</td>
<td>4.4</td>
<td>4,910</td>
<td>581</td>
<td>4.1</td>
<td>2,382</td>
<td>880</td>
<td>3.9</td>
<td>3,425</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>2,810</td>
<td>4.1</td>
<td>11450</td>
<td>1,566</td>
<td>3.8</td>
<td>5,998</td>
<td>2,445</td>
<td>3.6</td>
<td>8,750</td>
</tr>
<tr class="even">
<td>Dev.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>325</td>
<td>0.6</td>
<td>203</td>
<td>346</td>
<td>0.7</td>
<td>238</td>
<td>325</td>
<td>0.6</td>
<td>200</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>89</td>
<td>0.7</td>
<td>63</td>
<td>86</td>
<td>0.9</td>
<td>79</td>
<td>75</td>
<td>0.7</td>
<td>50</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>414</td>
<td>0.6</td>
<td>266</td>
<td>432</td>
<td>0.7</td>
<td>317</td>
<td>400</td>
<td>0.6</td>
<td>250</td>
</tr>
<tr class="even">
<td>Total corn</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>2,025</td>
<td>3.3</td>
<td>6,743</td>
<td>1,331</td>
<td>3.0</td>
<td>3,854</td>
<td>1,890</td>
<td>2.9</td>
<td>5,525</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,199</td>
<td>4.1</td>
<td>4,973</td>
<td>667</td>
<td>3.7</td>
<td>2,461</td>
<td>955</td>
<td>3.6</td>
<td>3,475</td>
</tr>
<tr class="odd">
<td>TOTAL</td>
<td>3,224</td>
<td>3.6</td>
<td>11716</td>
<td>1,998</td>
<td>3.2</td>
<td>6,315</td>
<td>2,845</td>
<td>3.2</td>
<td>9,000</td>
</tr>
</tbody>
</table>

The total 2005 crop is now estimated at 6.3 million metric tons compared
to the 11.7 million ton 2004 crop. There are still some doubts about the
actual size of the 2004 crop, deliveries indicate that the commercial
crop was closer to 10.6 million tons and the total about 10.9 million
tons. After a late start to the 2005/06-rainfall season precipitation
picked up in December and the late summer rainfall was good. Sunlight
was limited by the overcast weather and the average yield did not reach
2004 levels.

The unchanged 2004 and 2005 area and production estimate for the main
production areas, the Free State, North West and Mpumalanga, follows:

<table>
<colgroup>
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td>Area</td>
<td>‘000</td>
<td>Ha</td>
<td>Yield</td>
<td>MT/ha</td>
<td></td>
<td>Prod.</td>
<td>’000</td>
<td>MT</td>
</tr>
<tr class="even">
<td></td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>Free State</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>2004</td>
<td>660</td>
<td>385</td>
<td>1045</td>
<td>4.0</td>
<td>3.8</td>
<td>3.9</td>
<td>2658</td>
<td>1455</td>
<td>4113</td>
</tr>
<tr class="odd">
<td>2005</td>
<td>345</td>
<td>195</td>
<td>540</td>
<td>3.75</td>
<td>3.55</td>
<td>3.68</td>
<td>1294</td>
<td>692</td>
<td>1986</td>
</tr>
<tr class="even">
<td>North West</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>2004</td>
<td>680</td>
<td>215</td>
<td>895</td>
<td>3.2</td>
<td>3.2</td>
<td>3.2</td>
<td>2185</td>
<td>678</td>
<td>2863</td>
</tr>
<tr class="even">
<td>2005</td>
<td>380</td>
<td>112</td>
<td>492</td>
<td>2.8</td>
<td>2.75</td>
<td>2.79</td>
<td>1064</td>
<td>308</td>
<td>1372</td>
</tr>
<tr class="odd">
<td>Mpumalanga</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>2004</td>
<td>224</td>
<td>336</td>
<td>560</td>
<td>5.1</td>
<td>5.0</td>
<td>5.0</td>
<td>1134</td>
<td>1673</td>
<td>2807</td>
</tr>
<tr class="odd">
<td>2005</td>
<td>156</td>
<td>185</td>
<td>341</td>
<td>4.5</td>
<td>4.35</td>
<td>4.42</td>
<td>702</td>
<td>805</td>
<td>1507</td>
</tr>
<tr class="even">
<td><p>Top 3</p>
<p>areas</p></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>2004</td>
<td>1564</td>
<td>936</td>
<td>2500</td>
<td>3.8</td>
<td>4.1</td>
<td>3.9</td>
<td>5977</td>
<td>3806</td>
<td>9783</td>
</tr>
<tr class="even">
<td>2005</td>
<td>881</td>
<td>492</td>
<td>1373</td>
<td>3.47</td>
<td>3.67</td>
<td>3.54</td>
<td>3060</td>
<td>1805</td>
<td>4865</td>
</tr>
</tbody>
</table>

## FAS 2006

##  

We also forecast the 2006 season - this is the crop to be planted from
November 2006. We have to consider the possible after effects of the
2005 cutback in area planted. The current high prices are likely to
restore some of the area to corn while we can only use recent average
trend yields, excluding the doubtful 2004 crop, at this stage. The
commercial area to be planted is forecast at 2.4 million ha. producing
about 8.75 million tons, the total area is likely to reach 2.8 million
ha. producing a total of nine million tons. This is under the assumption
of a "normal" season and does not include additional plantings for bio
fuel production, which is not expected to be on stream by 2007.

# Consumption

We used to include commercial silo deliveries for March and April 2005
in our delivery figure as, depending on the season, the new crop becomes
available from March each year. With more on farm storage becoming
available the distinction between crop years disappeared and we reverted
to the official May/April marketing season. The final 2005/06 supply and
distribution data is available and a rounded commercial PS&D, based on
SAGIS information, is supplied to highlight the situation.

  ------------ --------- ----------- --------- --------- ----------- ---------
               FAS 2003  MY2004/05   Final     FAS 2004  MY2005/06   Final

  1,000 MT     White     Yellow      Total     White     Yellow      Total

  B/stocks     2125      500         2625      2400      750         3150

  Deliveries   5645      3445        9090      6110      3945        10055

  Imports      0         220         220       0         360         360

  Supply       7770      4165        11935     8510      5055        13565

  Exports\*    670       60          730       1785      355         2140

  Cons.                                                              

  Human        3480      260         3740      3560      265         3825

  Feed         735       2695        3430      545       2985        3530

  Other        485       400         885       320       580         900

  Total        4700      3355        8055      4425      3830        8255

  E/stocks     2400      750         3150      2300      870         3170
  ------------ --------- ----------- --------- --------- ----------- ---------

> \*Whole grain only

We can also supply a MY 2006/07 scenario based on the latest official
crop estimate, in this table it shows that white corn supplies should be
sufficient to carry through the 2006/07 marketing year and allow for
some feed use and exports. The higher price levels are likely to
suppress domestic and regional demand. Yellow corn supplies are tight
but the shortfall is being met by imports from Argentina. From May 2005
to April 2006, 360,000 tons were imported and unloaded in the ports of
Cape Town, Port Elizabeth, East London and Durban. From May 2006 to June
23 about 200,000 tons have already been imported.

The following table contains the details:

  ----------------- ----------------- ----------------- -----------------
  FAS 2005 forecast MY May 06/April   Commercial S&D    '000 MT
                    07                                  

  1,000 MT          White             Yellow            Total

  B/Stocks          2300              870               3170

  Crop estimate     3620              2380              6000

  Farm retentions   120               300               420

  Expected          3500              2080              5580
  Deliveries                                            

  Imports           0                 750               750

  Supply            5800              3700              9500

  Exports           700               50                750

  Consumption       4500              3500              8000

  E/Stock           600               150               750
  ----------------- ----------------- ----------------- -----------------

# Trade

Final data for the May 05/April 06 marketing season is available. Whole
grain exports jumped from 732,000 MT. in 2004/05 to 2.14 million tons in
2005/06 mainly due to early overseas sales of yellow corn to Indonesia,
Iran and Japan. The main increase for white corn was the more than a
million tons sold to Zimbabwe after only 206,000 tons were sold in
2004/05.

  ------------- -------- ---------- -------- ---------- ---------- ----------
  EXPORTS       May 04   to April            May 05     to April   MT
                         05                             06         

                White    Yellow     Total    White      Yellow     Total

  Angola        33 644   430        34 074   14 162     204        14 366

  Benin                                      2 278                 2 278

  Botswana      110 873  8 205      119 078  175 247    20 063     195 310

  Cameroon                                   3 001                 3 001

  Chad                                       151                   151

  Congo         216                 216                            

  Ghana                                      7 638                 7 638

  Indonesia                                             49 500     49 500

  Iran                                                  93 284     93 284

  Japan                                                 113 098    113 098

  Kenya         129 451             129 451  40 038                40 038

  Lesotho       112 070  6 712      118 782  82 351     1 647      83 998

  Madagascar    2 382               2 382    967                   967

  Malawi                                     67 322     359        67 681

  Mali                                       2 258                 2 258

  Mozambique    48 044   5 488      53 532   137 724    10 324     148 048

  Namibia       43 452   12 500     55 952   53 607     16 922     70 529

  Somalia                                    3 158                 3 158

  Sudan                                      28 272                28 272

  Swaziland     17 968   28 434     46 402   25 860     34 761     60 621

  Tanzania                                   10 000                10 000

  Zambia                                     89 370     189        89 559

  Zimbabwe      205 424  653        206 077  1 029 897  10 727     1 040 624

                                                                   

  Total         703 524  62 422     765 946  1 773 301  351 078    2 124 379

                                                                   

  SAGIS season  668 000  64 000     732 000  1 786 000  357 000    2 143 000
  ------------- -------- ---------- -------- ---------- ---------- ----------

These figures, compiled on a weekly basis, differ slightly from the full
season figures as supplied by SAGIS, but do give us destinations.

Customs Union sales (basically domestic sales) are a prime, natural
market for the South African industry averaging about 400,000 tons,
340,000 tons white and 60,000 tons yellow per season. This market will
have to be serviced in 2006/07. Mozambique (100,000 MT.) and Zimbabwe
(600,000 MT.) are the other potential markets. Early estimates show a
demand for more than a million tons of mainly white corn in the
immediate vicinity, which will be difficult to supply from South Africa
this year.

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td><p>EXPORTS</p>
<p>’000 MT</p></td>
<td><p>MY</p>
<p>03/04</p></td>
<td></td>
<td></td>
<td><p>MY</p>
<p>04/05</p></td>
<td></td>
<td></td>
<td><p>MY</p>
<p>05/06</p></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Customs Union</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>Botswana</td>
<td>140</td>
<td>2</td>
<td>142</td>
<td>111</td>
<td>8</td>
<td>119</td>
<td>1765</td>
<td>21</td>
<td>196</td>
</tr>
<tr class="even">
<td>Lesotho</td>
<td>124</td>
<td>6</td>
<td>130</td>
<td>112</td>
<td>7</td>
<td>119</td>
<td>83</td>
<td>23</td>
<td>86</td>
</tr>
<tr class="odd">
<td>Namibia</td>
<td>103</td>
<td>19</td>
<td>122</td>
<td>43</td>
<td>13</td>
<td>56</td>
<td>54</td>
<td>17</td>
<td>71</td>
</tr>
<tr class="even">
<td>Swaziland</td>
<td>29</td>
<td>26</td>
<td>55</td>
<td>18</td>
<td>28</td>
<td>46</td>
<td>26</td>
<td>35</td>
<td>61</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>396</td>
<td>53</td>
<td>449</td>
<td>284</td>
<td>56</td>
<td>340</td>
<td>338</td>
<td>76</td>
<td>415</td>
</tr>
</tbody>
</table>

#### Prices

The main reason for the production cutback this year was the low SAFEX
prices after harvest in 2005. In June 2005 both white and yellow corn
prices for August, October and December were well below \$100/ton, or
R600/ton at the then current exchange rate. This was due to the usual
post harvest price slump and the crop estimate at that stage implying a
big surplus. Farmers claimed that the \$100/ton was below their cost of
production and decided to cut back the area planted in 2005. This had a
major effect on SAFEX prices. SAFEX is a volatile market with the March
06 white corn price nearly doubling from June to December 2005 and the
yellow corn price increasing by 50%.

The following table shows current SAFEX futures prices.

+-----------+-------------+-------------+-------------+-------------+
| Rand/MT   | US\$/MT     |             |             |             |
+-----------+-------------+-------------+-------------+-------------+
| White     | December 05 | #           | May 06      | July 06     |
| corn      |             | ## March 06 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 11/30/05  | R           | R           | R           | R           |
|           | 959=\$147.5 | 978=\$150.5 | 975=\$150.0 | 980=\$150.8 |
+-----------+-------------+-------------+-------------+-------------+
| 12/27/05  | September   | R1          | R1          | R1          |
|           | 06          | 227=\$193.2 | 204=\$189.6 | 195=\$188.2 |
+-----------+-------------+-------------+-------------+-------------+
| 01/26/06  | R1          | R1          | R1          | R1          |
|           | 110=\$185.0 | 076=\$179.3 | 075=\$179.2 | 091=\$181.8 |
+-----------+-------------+-------------+-------------+-------------+
| 03/06/06  | R1          | December 06 | R1          | R1          |
|           | 150=\$187.0 |             | 120=\$182.1 | 132=\$184.1 |
+-----------+-------------+-------------+-------------+-------------+
| 03/29/06  | R1          | R1          | R1          | R1          |
|           | 183=\$189.3 | 212=\$193.9 | 152=\$184.3 | 164=\$186.2 |
+-----------+-------------+-------------+-------------+-------------+
| 05/03/06  | R1          | R1          | R1          | R1          |
|           | 104=\$182.5 | 132=\$187.1 | 071=\$177.0 | 088=\$179.8 |
+-----------+-------------+-------------+-------------+-------------+
| 05/30/06  | R1          | R1          | March 07    | R1          |
|           | 225=\$187.0 | 262=\$192.7 |             | 207=\$184.3 |
+-----------+-------------+-------------+-------------+-------------+
| 06/28/06  | R1          | R1          | R           | R1          |
|           | 361=\$187.7 | 396=\$192.6 | 1406=%193.9 | 337=\$184.4 |
+-----------+-------------+-------------+-------------+-------------+
|           |             |             |             |             |
+-----------+-------------+-------------+-------------+-------------+
| Yellow    | December 05 | #           | May 06      | July 06     |
| corn      |             | ## March 06 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 11/30/05  | R           | R           | R           | R           |
|           | 797=\$122.6 | 804=\$123.7 | 837=\$128.8 | 814=\$125.2 |
+-----------+-------------+-------------+-------------+-------------+
| 12/27/05  | September   | R           | R1          | R1          |
|           | 06          | 995=\$156.7 | 005=\$158.3 | 005=\$158.3 |
+-----------+-------------+-------------+-------------+-------------+
| 01/26/06  | R           | R           | R           | R           |
|           | 975=\$162.5 | 970=\$161.7 | 964=\$160.7 | 960=\$160.0 |
+-----------+-------------+-------------+-------------+-------------+
| 03/03/06  | R1          | December 06 | R           | R           |
|           | 000=\$162.6 |             | 993=\$161.5 | 995=\$161.8 |
+-----------+-------------+-------------+-------------+-------------+
| 03/29/06  | R1          | R1          | R1          | R1          |
|           | 045=\$167.2 | 072=\$171.5 | 030=\$164.8 | 029=\$164.6 |
+-----------+-------------+-------------+-------------+-------------+
| 05/03/06  | R1          | R1          | R           | R1015=167.8 |
|           | 036=\$171.2 | 054=\$174.2 | 998=\$165.0 |             |
+-----------+-------------+-------------+-------------+-------------+
| 05/30/06  | R1          | R1          | March 07    | R1          |
|           | 151=\$175.7 | 177=\$179.7 |             | 129=\$172.4 |
+-----------+-------------+-------------+-------------+-------------+
| 06/28/06  | R1          | R1          | R1          | R1          |
|           | 240=\$171.0 | 248=\$172.1 | 265=\$174.5 | 225=\$169.0 |
+-----------+-------------+-------------+-------------+-------------+

Although Rand prices have strengthened since the end of May the US\$
price movements are mainly due to the depreciating Rand from \$1=R6.55
at the end of May to \$1=R7.25 at the end of June.

####### WHEAT

  ------------------- ---------- --------- ---------- ---------- ---------- ----------
  PSD Table                                                                 

  Country             South                                                 
                      Africa                                                

  Commodity           Wheat                                                 

  1000 HA             2004       Revised   2005       Estimate   2006       Forecast

  1000 MT             USDA       Post Est. USDA       Post Est.  USDA       Post Est.
                      Official             Official              Official   

  Market Year Begin              10/2004              10/2005               10/2006

  Area Harvested      830        830       800        805        820        794

  Beginning Stocks    598        598       560        594        646        500

  Production          1680       1680      1886       1905       1910       1750

  TOTAL Mkt. Yr.      1396       1395      1300       1100       1200       1100
  Imports                                                                   

  Jul-Jun Imports     1407       1350      1300       850        1200       1100

  Jul-Jun Import U.S. 270        265       0          250        0          0

  TOTAL SUPPLY        3674       3673      3746       3599       3756       3350

  TOTAL Mkt. Yr.      324        325       300        325        350        325
  Exports                                                                   

  Jul-Jun Exports     338        350       300        325        350        320

  Feed Dom.           10         9         10         39         10         15
  Consumption                                                               

  TOTAL Dom.          2790       2754      2800       2774       2850       2760
  Consumption                                                               

  Ending Stocks       560        594       646        500        556        265

  TOTAL DISTRIBUTION  3674       3673      3746       3599       3756       3350
  ------------------- ---------- --------- ---------- ---------- ---------- ----------

**Production**

Based on replies to a survey conducted by the Department of Agriculture
the area expected to be planted to wheat in 2006 is 793,500 ha. compared
to the 805,000 ha. planted in 2005. This means that the producers intend
to plant 11,500 ha. (1.4%) less to wheat than in 2005. The main
producing areas are the Free State with 375,000 ha. (47.3%) and 1.3%
down on the previous season, followed by the Western Cape with 294,500
ha. (37.1%) or 2.5% down on the previous season. The decrease is mainly
blamed on low wheat prices, as agronomic conditions are favorable. If
favorable conditions continue the crop is likely to reach 1.75 million
tons, again well short of domestic demand.

The 2005/06 crop estimate was adjusted to 1.905 million tons of which
deliveries are expected to reach 1.87 million tons and 37,700 tons is
expected to be retained on farms. The area planted was left at 805,000
ha.

**Consumption**

Milling for flour increased by 3.1% from 2.653 million tons in 2003/04
to 2.736 million tons in 2004/05. From October 2005 to May 2006 milling
amounted to 1.8 million tons, 1.3% more than in the corresponding months
in 2004/05. Growth is slow and barely keeps pace with the increase in
population.

**Trade**

In MY 2004/05 South Africa exported 158,000 tons of South African wheat
(135,000 tons) and flour (23,000 tons wheat equivalent) and 168,000 tons
of imported wheat for a total of 326,000 tons. In 2004/05 imports for
own use amounted to 1.227 million tons and 168,000 tons for re-export to
total 1.395 million tons. Imports and exports for the current season
from October 2005 to June 23, 2006 follow:

  ------------ ------------ ------------ ------------ ------------ ---------
  Exports      MT           Imports      For Africa   For South    Total
                                                      Africa       

  Botswana     54,464       USA          24,584       90,049       114,633

  Lesotho      57,345       Australia    0            59,927       59,927

  Namibia      13,622       Argentina    32,797       241,605      274,402

  Swaziland    24,385       Germany      52,492       247,339      299,831

  Zambia       47,353       Ukraine      0            60,754       60,754

  Zimbabwe     1,575        Brazil       6,301        0            6,301

                            Canada       12,759       31,784       44,543

  Total        198,744      Total        128,933      731,458      860,391
  ------------ ------------ ------------ ------------ ------------ ---------

**Prices**

Current SAFEX futures market prices are:

  -------------- --------------- --------------- --------------- ---------------
  Rand/MT \$/MT  March 07        July 06         September 06    December 06

  05/30/2006     R1500=\$229.0   R1531=\$233.7   R1547=\$236.2   R1463=\$223.4

  06/28/2006     R1520=\$209.7   R1628=\$265.9   R1630=\$224.8   R1551=\$213.9
  -------------- --------------- --------------- --------------- ---------------