Required Report - public distribution

Date: 2/9/2006

GAIN Report Number: SF6008

SF6008

South Africa, Republic of

Grain and Feed

Annual

2006

Approved by:

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

#### **U.S. Embassy, South Africa**

Prepared by:

Herman Germishuis

Report Highlights:

The corn crop planted in 2004 yielded 11.7 million tons causing an
oversupply and a price collapse. As a result farmers voluntarily cut
back the 2005 area planted by 45%. Favorable, but late rains, is helping
to sustain high yields and we expect a 6.5 million ton crop. This will
not be sufficient for domestic and regional demand and imports are
expected to jump in 2006. Wheat and rice imports continue unabated.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Pretoria \[SF1\]

\[SF\]

#### **SUMMARY** {#summary-1}

South Africa\'s grain industry is going through dramatic adjustments to
become more competitive in the world market in the face of the strong
and volatile South African Rand. The total area planted to summer crops
dropped by 34% in 2005 while the area planted to corn dropped by 45%
mainly due to a voluntary area cutback brought about by low prices. As a
result a corn crop of 6.5 million tons is expected compared to the 11.7
million tons produced by the crop planted in 2004. This will change
South Africa from a 2 million ton exporter in 2005/06 to a net importer
in 2006/07.

Wheat and Rice imports continue unabated.

US\$1 = Rand 6.20 (02/08/06)

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

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

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

**[www.fews.net]{.underline}**

**[www.wfp.org]{.underline}**

#### CORN

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

  Country             South                                              
                      Africa                                             

  Commodity           Corn                                               

  1000 HA             2004      Revised   2005      Estimate   2006      Forecast

  1000 MT             USDA      Post      USDA      Post       USDA      Post
                      \[Old\]   \[New\]   \[Old\]   \[New\]    \[Old\]   \[New\]

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

  Area Harvested      3223      3223      2600      1950       0         2800

  Beginning Stocks    2956      2935      3572      2870       1372      720

  Production          11716     11715     7500      6500       0         9275

  TOTAL Mkt. Yr.      150       270       200       700        0         255
  Imports                                                                

  Oct-Sep Imports     131       140       200       270        0         0

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

  TOTAL SUPPLY        14822     14920     11272     10070      1372      10250

  TOTAL Mkt. Yr.      2300      2100      1000      400        0         550
  Exports                                                                

  Oct-Sep Exports     1517      1187      1500      1200       0         0

  Feed Dom.           4300      4800      4200      4400       0         4500
  Consumption                                                            

  TOTAL Dom.          8950      9950      8900      8950       0         9000
  Consumption                                                            

  Ending Stocks       3572      2870      1372      720        0         700

  TOTAL DISTRIBUTION  14822     14920     11272     10070      0         10250
  ------------------- --------- --------- --------- ---------- --------- ----------

## **Production**

In late 2005 the National Crop Estimates Committee revised the 2004
commercial corn crop data. The following table compares the revised 2004
figures to the preliminary 2005 estimate and the forecast of the crop to
be planted in 2006:

+---------+---------+---------+---------+---------+---------+---------+
| Com.    | FAS     |         | FAS     |         | FAS     |         |
|         | 2004    |         | 2005    |         | 2006    |         |
| Prod.   |         |         |         |         |         |         |
|         | Final   |         | E       |         | F       |         |
|         |         |         | stimate |         | orecast |         |
+---------+---------+---------+---------+---------+---------+---------+
|         | Area    | Prod.   | Area    | Prod.   | Area    | Prod.   |
|         | planted |         | planted | E       | planted | F       |
|         |         |         |         | stimate |         | orecast |
+---------+---------+---------+---------+---------+---------+---------+
|         | 1,000   | 1,000   | 1,000   | 1,000   | 1,000   | 1,000   |
|         | ha.     | MT      | ha.     | MT      | ha.     | MT      |
+---------+---------+---------+---------+---------+---------+---------+
| White   | 1 700   | 6 541   | 954     | 3 700   | 1 500   | 5 300   |
+---------+---------+---------+---------+---------+---------+---------+
| Yellow  | 1 110   | 4 909   | 594     | 2 550   | 900     | 3 700   |
+---------+---------+---------+---------+---------+---------+---------+
| Total   | 2 810   | 11 450  | 1 548   | 6 250   | 2 400   | 9 000   |
+---------+---------+---------+---------+---------+---------+---------+

The 2005 crop is causing concern. An area estimate done in mid January
indicated that the total area planted on commercial farms only amounted
to 1.55 million hectares, a decrease of 45% on the previous year and the
lowest total in eighty years. The voluntary cutback in production was
advocated by Grain SA to alleviate the oversupply and support the price.
In addition to price pressure, the early part of the planting season was
hot and dry delaying planting. Rainfall has improved since then and the
rainfall to date has been favorable. The area planted to corn declined
by 1.26 million ha. to 1.55 million compared to 2.8 million ha. in 2003
and 2004 and 3.2 million in 2002. This means that the current area
planted to corn is less than half the area planted in 2002. Some
additional plantings may have been done after the survey was completed.
The Free State, North West and Mpumalanga are the main production areas.
The cutback in the Free State amounted to 500,000 ha. The cutback in the
North West Province was 420,000 ha. and 224,000 ha. was not planted in
Mpumalanga. The voluntary set aside was less successful in Mpumalanga
where the rainfall arrived in time but some of the cutback in the Free
State and North West may be due to late rains. The late planting is
another reason why the 2004 yields are not likely to be achieved again
this season while the possibility of early frosts hang over the eastern
production areas. On the other hand yields have been improving lately,
mainly due to favorable weather and technological improvements, but the
cutback implies that only the high potential soils are being planted
leading to the high yields.

In this annual report we also forecast the 2006 season, this is the crop
to be planted from November 2006. As the 2005 situation is still very
unsettled and an official estimate has not yet been made, 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 yields until the situation becomes
clearer.

A production forecast based on normal rainfall from now on follows:

<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>’000 ha.</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>’000 ha.</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>‘000 ha.</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>Com.</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>1,700</td>
<td>3.8</td>
<td>6,540</td>
<td>954</td>
<td>3.9</td>
<td>3,700</td>
<td>1,500</td>
<td>3.5</td>
<td>5,300</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,110</td>
<td>4.4</td>
<td>4,910</td>
<td>594</td>
<td>4.3</td>
<td>2,550</td>
<td>900</td>
<td>4.1</td>
<td>3,700</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>2,810</td>
<td>4.1</td>
<td>11450</td>
<td>1,548</td>
<td>4.0</td>
<td>6,250</td>
<td>2,400</td>
<td>3.8</td>
<td>9,000</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>326</td>
<td>0.6</td>
<td>200</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>76</td>
<td>0.7</td>
<td>50</td>
<td>75</td>
<td>0.7</td>
<td>75</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>414</td>
<td>0.6</td>
<td>266</td>
<td>402</td>
<td>0.6</td>
<td>250</td>
<td>400</td>
<td>0.6</td>
<td>275</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>1,280</td>
<td>3.0</td>
<td>3,900</td>
<td>1,825</td>
<td>3.0</td>
<td>5,500</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,199</td>
<td>4.1</td>
<td>4,973</td>
<td>670</td>
<td>3.9</td>
<td>2,600</td>
<td>975</td>
<td>3.9</td>
<td>3,775</td>
</tr>
<tr class="odd">
<td>TOTAL</td>
<td>3,224</td>
<td>3.6</td>
<td>11716</td>
<td>1,950</td>
<td>3.3</td>
<td>6,500</td>
<td>2,800</td>
<td>3.3</td>
<td>9,275</td>
</tr>
</tbody>
</table>

**Consumption**

We include commercial silo deliveries for March and April in our
delivery figure as, depending on the season, the new crop becomes
available from March each year. We would normally expect to receive only
a few thousand tons in January and February.

Commercial deliveries up to the end of December 2005 are shown in the
following table:

  ----------------- ----------------- ----------------- -----------------
  Deliveries '000   White corn        Yellow corn       Total corn
  MT                                                    

  March 2005        18                53                71

  April             37                104               141

  May -- Dec.       5,998             3,832             9,830

  TOTAL             6,050             3,990             10,040

  Crop estimate     6,540             4,910             11,450

  Farm retentions   490               920               1,410
  ----------------- ----------------- ----------------- -----------------

There is still more than 1.4 million tons of the revised 2004 crop
unaccounted for. We can consider this as farm retentions although it is
much higher than the usual 450,000 tons (100,000 tons white and 350,000
tons yellow) estimated to be retained on farms. It can be assumed that a
portion of the additional retentions is being stored for later sale. If
half of the additional retentions reach the market later this year it
could amount to about 200,000 tons of white and 300,000 tons of yellow
corn for a total of 500,000 tons.

A commercial PS&D based only on deliveries from March to December 2005
can be supplied to highlight the current situation.

+-------------------+----------------+----------------+----------------+
| # FAS 2004        | # MY           | #              | '000 MT        |
|                   | May05/April 06 | Commercial S&D |                |
+-------------------+----------------+----------------+----------------+
| '000 Metric tons  | White          | Yellow         | Total          |
+-------------------+----------------+----------------+----------------+
| B/Stocks, May 1,  | 2345           | 590            | 2935           |
| 05                |                |                |                |
+-------------------+----------------+----------------+----------------+
| Revised           | 6540           | 4910           | 11450          |
| Production        |                |                |                |
+-------------------+----------------+----------------+----------------+
| Deliveries, March | 6050           | 3990           | 10040          |
| --Dec             |                |                |                |
+-------------------+----------------+----------------+----------------+
| Farm retentions   | 490            | 920            | 1410           |
+-------------------+----------------+----------------+----------------+
| Imports           | 0              | 270            | 270            |
+-------------------+----------------+----------------+----------------+
| Total supply      | 8395           | 4850           | 13245          |
+-------------------+----------------+----------------+----------------+
| Expected exports  | 1750           | 350            | 2100           |
+-------------------+----------------+----------------+----------------+
| Expected          | 4675           | 3600           | 8275           |
| consumption       |                |                |                |
+-------------------+----------------+----------------+----------------+
| Ending stocks\*   | 1970           | 900            | 2870           |
+-------------------+----------------+----------------+----------------+

\* Plus the additional stock available on farms, which could amount to
500,000 tons, 200,000 tons of white and 300,000 tons of yellow as shown
above.

The analysis above includes imports, which resumed in January 2006 with
59,000 tons of yellow corn from Argentina. Further imports are foreseen
before the end of the current season, as about 270,000 tons can be
imported at a TRQ rebate of duty. Importers are also looking at the
Biotech certificate requirements for white corn.

The smaller 2004 crop and the cutback in the 2005 crop will tighten up
the supply situation and increase the demand for imports. With a
commercial carry over of nearly 2.9 million tons at the end of April
2006 and a delivery forecast of about 5.8 million tons from the 2005
crop, total supply may reach 8.7 million tons compared to domestic
demand of 8.2 million tons, a surplus of 500,000 tons. South Africa
traditionally supplies its Customs Union neighbors with about 400,000
tons annually cutting the surplus to 100,000 tons. Minimum carry over
stocks amount to about 700,000 tons creating the shortfall. We can give
a 2006/07 PS&D forecast to illustrate the point.

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

  1,000 MT          White corn        Yellow corn       Total corn

  B/Stocks          1970              900               2870

  Crop forecast     3700              2550              6250

  Farm retentions   100               350               450

  Expected          3600              2200              5800
  Deliveries                                            

  Imports           0                 700               700

  Supply            5570              3800              9370

  Exports\*         350               50                400

  Consumption       4700              3550              8250

  E/Stock           520               200               720
  ----------------- ----------------- ----------------- -----------------

> \*Exports to Customs Union members Botswana, Lesotho, Namibia and
> Swaziland only.

This analysis does not take other regional demand, (Zimbabwe, Zambia,
Malawi and Mozambique) into account. These countries can, however,
source imports from other origins but the situation is complicated by
their demand for firstly white corn, and in the case of Zimbabwe and
Zambia, non-Biotech corn. This will put further pressure on South
African white corn supplies. Some yellow corn may also be used in lieu
of white for human consumption. The extra stocks from the 2004 crop,
presumably still being held on farms, may also come in the picture.

## **Trade**

In the meantime exports continue unabated with about 117,600 tons
exported in the first four weeks of January. Zimbabwe continues to be
the main market taking 59% of white corn exports through January 27 and
is averaging more than 85,000 tons per month. Both Malawi and Zambia
must pick up their rate of imports substantially over the next few
months to avert famine. Current high price levels and clogged supply
lines are slowing down the process. The high prices also killed off the
possibility of major overseas sales as well as dampening the World Food
Program's appetite for South African corn.

The following table compares South Africa's 2005/06 exports to date to
the full season's 2004/05 sales.

+--------------------+------------------------+------------------------+
| ### Exports, MT    | 2004/05/01-            | 2005/05/01-            |
|                    |                        |                        |
|                    | 2005/04/29             | 2006/01/27             |
+--------------------+------------------------+------------------------+
| ##### White corn   |                        |                        |
+--------------------+------------------------+------------------------+
| Angola             | 33,644                 | 13,344                 |
+--------------------+------------------------+------------------------+
| Benin              | 0                      | 2,278                  |
+--------------------+------------------------+------------------------+
| Botswana           | 110,873                | 140,700                |
+--------------------+------------------------+------------------------+
| Cameroon           | 0                      | 1,774                  |
+--------------------+------------------------+------------------------+
| Congo              | 216                    | 0                      |
+--------------------+------------------------+------------------------+
| Ghana              | 0                      | 7,638                  |
+--------------------+------------------------+------------------------+
| Kenya              | 129,451                | 33,614                 |
+--------------------+------------------------+------------------------+
| Lesotho            | 112,070                | 54,507                 |
+--------------------+------------------------+------------------------+
| Madagascar         | 2,382                  | 967                    |
+--------------------+------------------------+------------------------+
| Malawi             | 0                      | 41,849                 |
+--------------------+------------------------+------------------------+
| Mali               | 0                      | 2,258                  |
+--------------------+------------------------+------------------------+
| Mozambique         | 48,044                 | 107,824                |
+--------------------+------------------------+------------------------+
| Namibia            | 43,452                 | 29,460                 |
+--------------------+------------------------+------------------------+
| Sudan              | 0                      | 28,272                 |
+--------------------+------------------------+------------------------+
| Swaziland          | 17,968                 | 18,805                 |
+--------------------+------------------------+------------------------+
| Tanzania           | 0                      | 10,000                 |
+--------------------+------------------------+------------------------+
| Zambia             | 0                      | 41,018                 |
+--------------------+------------------------+------------------------+
| Zimbabwe           | 205,424                | 768,554                |
+--------------------+------------------------+------------------------+
| ### Total          | 703,524                | 1,302,862              |
+--------------------+------------------------+------------------------+
| ###  Yellow corn   |                        |                        |
+--------------------+------------------------+------------------------+
| Angola             | 430                    | 204                    |
+--------------------+------------------------+------------------------+
| Botswana           | 8,205                  | 16,336                 |
+--------------------+------------------------+------------------------+
| Indonesia          | 0                      | 49,500                 |
+--------------------+------------------------+------------------------+
| Iran               | 0                      | 93,284                 |
+--------------------+------------------------+------------------------+
| Japan              | 0                      | 113,098                |
+--------------------+------------------------+------------------------+
| Lesotho            | 6,712                  | 1,647                  |
+--------------------+------------------------+------------------------+
| Mozambique         | 5,488                  | 7,082                  |
+--------------------+------------------------+------------------------+
| Namibia            | 12,500                 | 14,017                 |
+--------------------+------------------------+------------------------+
| Swaziland          | 28,434                 | 24,703                 |
+--------------------+------------------------+------------------------+
| Zambia             | 0                      | 189                    |
+--------------------+------------------------+------------------------+
| Zimbabwe           | 653                    | 2,136                  |
+--------------------+------------------------+------------------------+
| ### Total          | 62,422                 | 322,196                |
+--------------------+------------------------+------------------------+
| ### Corn total     | 765,946                | 1,625,058              |
+--------------------+------------------------+------------------------+

The increased 2005/06 sales are mainly due to increased Zimbabwean
demand as well as sales to Indonesia, Iran and Japan done earlier when
South African prices were still competitive.

  ----------------------- ---------------- ----------------- ------------
  Export Trade Matrix                                        

  Country                 South Africa                       

  Commodity               Corn                               

  Time Period             May/April        Units:            MT

  Exports for:            2003/04                            2004/05

  U.S.                    0                U.S.              0

  Others                                   Others            

  Zimbabwe                413657           Zimbabwe          206077

  Botswana                141515           Botswana          119078

  Lesotho                 130002           Lesotho           118782

  Namibia                 121769           Namibia           55952

  Mozambique              90189            Mozambique        53532

  Swaziland               55294            Swaziland         46402

  Kenya                   48150            Kenya             129451

  Tanzania                34781            Angola            34074

  Cape Verde              28840            Madagascar        2382

  Madagascar              12381            Congo             216

  Total for Others        1076578                            765946

  Others not Listed       36210                              0

  Grand Total             1112788                            765946
  ----------------------- ---------------- ----------------- ------------

####### Imports

South Africa only imported about 100,000 tons of yellow corn in MY
2004/05 while MY 2005/06 imports to date amount to 59,000 tons of yellow
corn from Argentina, all arriving in January 2006. More imports are
likely before the end of the marketing year at the end of April. The MY
2006/07 trade situation is still up in the air - in the analysis in the
Consumption section we only showed 700,000 tons of yellow corn imports
to supply in the domestic and customs union needs. More imports will be
needed to supply in the regional demand for Non Biotech white corn but
this will depend on the availability of white corn complying with South
Africa's GMO requirements.

  ----------------- ----------------- ----------------- -----------------
  Import Trade                                          
  Matrix                                                

  Country           South Africa                        

  Commodity         Corn                                

  Time Period       May/April         Units:            MT

  Imports for:      2003/04                             2004/05

  U.S.              62474             U.S.              3484

  Others                              Others            

  Argentina         470343            Argentina         96453

  Total for Others  470343                              96453

  Others not Listed 30372                               1007

  Grand Total       563189                              100944
  ----------------- ----------------- ----------------- -----------------

The following table gives an indication of South Africa's import regime:

Indicative import parity prices:

+-----------------+-----------------+-----------------+-----------------+
|                 | HRW \# 2 wheat  | Argentina       | #3 US corn      |
|                 |                 | yellow corn/MT  | Gulf/MT         |
|                 | Gulf/MT         |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| FOB Value 03/06 | 160.35          | 110.00          | 107.95          |
+-----------------+-----------------+-----------------+-----------------+
| Freight         | 31.00           | 29.00           | 31.00           |
+-----------------+-----------------+-----------------+-----------------+
| Insurance       | 0.48            | 0.33            | 0.32            |
+-----------------+-----------------+-----------------+-----------------+
| CIF             | 191.83          | 139.33          | 139.27          |
+-----------------+-----------------+-----------------+-----------------+
| Rand/MT         | 1168.11         | 848.42          | 848.06          |
+-----------------+-----------------+-----------------+-----------------+
| Financing cost  | 10.08           | 7.32            | 7.32            |
+-----------------+-----------------+-----------------+-----------------+
| Discharging     | 110.82          | 110.82          | 110.82          |
| cost            |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Import tariff   | 18.53           | 22.91           | 22.91           |
+-----------------+-----------------+-----------------+-----------------+
| FOR Port        | R1308.54        | R989.47         | R989.11         |
+-----------------+-----------------+-----------------+-----------------+

It is clear from the figures that yellow corn can be imported to the
coast at a competitive price. The Biotech requirement of only allowing
corn containing the events registered for use in South Africa,
effectively excludes US corn. The white corn requirement is similar but
international supplies are limited and although the US does not produce
GM white corn, the Non-GM certificate is difficult to obtain.

#### 

#### **Prices**

The main reason for the production cutback this year was the low SAFEX
prices after harvest in 2005. In June both white and yellow corn prices
for August, October and December were well below \$100/ton, or R600/ton
at the current exchange rate. This was due to the usual post harvest
price slump and the commercial crop estimate of 12 million tons at that
stage implying a big surplus. As the official crop estimate is mainly
based on farmer's returns the Crop Estimates Committee cannot be blamed,
especially as the market also seemed to support the estimate. Deliveries
to the silos, however, disappointed while farmers increased farm
retentions due to the low prices. Farmers claimed that the \$100/ton was
below their cost of production and decided to cut back the area planted
in 2005. Grain SA was actually advising farmers not to plant at all.
Basically international corn prices vary about 10% to either side of
\$100/ton. SAFEX is a much more 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 | #           | August 05   | October 05  |
| corn      |             | ## March 06 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 06/27/05  | R634=\$94.5 | R670=\$99.9 | R574=\$85.5 | R593=\$88.4 |
+-----------+-------------+-------------+-------------+-------------+
| 07/27/05  | R           | R           | R           | R           |
|           | 671=\$100.9 | 709=\$106.6 | 619=\$122.6 | 632=\$107.8 |
+-----------+-------------+-------------+-------------+-------------+
| 08/31/05  | R           | R           | ##          | R           |
|           | 735=\$114.0 | 766=\$118.8 | #### May 06 | 695=\$107.8 |
+-----------+-------------+-------------+-------------+-------------+
| 09/30/05  | R           | R           | R           | R           |
|           | 847=\$133.4 | 868=\$136.7 | 867=\$136.5 | 823=\$129.6 |
+-----------+-------------+-------------+-------------+-------------+
| 11/03/05  | R           | R           | R           | ## July 06  |
|           | 834=\$125.4 | 851=\$128.0 | 856=\$128.7 |             |
+-----------+-------------+-------------+-------------+-------------+
| 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 |
+-----------+-------------+-------------+-------------+-------------+
|           |             |             |             |             |
+-----------+-------------+-------------+-------------+-------------+
| Yellow    | December 05 | #           | August 05   | October 05  |
| corn      |             | ## March 06 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 06/27/05  | R669=\$99.7 | R           | R607=\$90.5 | R629=\$93.7 |
|           |             | 705=\$105.1 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 07/27/05  | R           | R           | R625=\$94.0 | R635=&95.5  |
|           | 667=\$100.3 | 697=\$104.8 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 08/31/05  | R           | R           | ##          | R645=\$100  |
|           | 683=\$105.9 | 708=\$109.8 | #### May 06 |             |
+-----------+-------------+-------------+-------------+-------------+
| 09/30/05  | R           | R           | R           | R           |
|           | 772=\$121.6 | 780=\$122.8 | 786=\$123.8 | 755=\$118.9 |
+-----------+-------------+-------------+-------------+-------------+
| 11/03/05  | R           | R           | R           | ## July 06  |
|           | 777=\$116.8 | 789=\$118.6 | 801=\$120.9 |             |
+-----------+-------------+-------------+-------------+-------------+
| 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 |
+-----------+-------------+-------------+-------------+-------------+

+-----------+-------------+-------------+-------------+-------------+
| Wheat     | December 05 | #           | August 05   | October 05  |
|           |             | ## March 06 |             |             |
+-----------+-------------+-------------+-------------+-------------+
| 06/27/05  | R1          | R1          | R1          | R1          |
|           | 481=\$220.7 | 521=\$226.7 | 603=\$238.9 | 580=\$235.5 |
+-----------+-------------+-------------+-------------+-------------+
| 07/27/05  | R1          | R1          | R1          | R1          |
|           | 475=\$221.8 | 520=\$228.6 | 537=\$231.1 | 542=\$231.9 |
+-----------+-------------+-------------+-------------+-------------+
| 08/31/05  | R1          | R1          | ##          | R1          |
|           | 379=\$213.8 | 429=\$221.6 | #### May 06 | 490=\$231.0 |
+-----------+-------------+-------------+-------------+-------------+
| 09/30/05  | R1          | R1          | R1          | R1          |
|           | 421=\$223.8 | 460=\$229.9 | 473=\$232.0 | 440=\$226.8 |
+-----------+-------------+-------------+-------------+-------------+
| 11/03/05  | R1          | R1          | R1          | ## July 06  |
|           | 463=\$220.0 | 484=\$223.2 | 520=\$228.6 |             |
+-----------+-------------+-------------+-------------+-------------+
| 11/30/05  | R1          | R1          | R1          | ## R1       |
|           | 369=\$210.6 | 401=\$215.5 | 421=\$218.6 | 432=\$220.3 |
+-----------+-------------+-------------+-------------+-------------+
| 12/27/05  | September   | R1          | R1          | ## R1       |
|           | 06          | 450=\$228.3 | 464=\$230.6 | 470=\$231.5 |
+-----------+-------------+-------------+-------------+-------------+
| 01/26/06  | R1          | R1          | R1380=\$230 | ## R1       |
|           | 430=\$238.3 | 360=\$226.7 |             | 409=\$234.8 |
+-----------+-------------+-------------+-------------+-------------+

#### **WHEAT**

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

  Country             South                                              
                      Africa                                             

  Commodity           Wheat                                              

  1000 ha.            2004      Revised   2005      Estimate   2006      Forecast

  1000 MT.            USDA      Post      USDA      Post New\] USDA      Post
                      \[Old\]   \[New\]   \[Old\]              \[Old\]   \[New\]

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

  Area Harvested      830       830       800       801        0         870

  Beginning Stocks    598       598       560       565        560       490

  Production          1680      1680      1800      1840       0         2000

  TOTAL Mkt. Yr.      1396      1395      1300      1200       0         1000
  Imports                                                                

  Jul-Jun Imports     1407      1350      1300      850        0         1100

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

  TOTAL SUPPLY        3674      3673      3660      3605       560       3490

  TOTAL Mkt. Yr.      324       322       350       325        0         325
  Exports                                                                

  Jul-Jun Exports     338       350       350       325        0         320

  Feed Dom.           10        27        10        25         0         15
  Consumption                                                            

  TOTAL Dom.          2790      2786      2750      2790       0         2805
  Consumption                                                            

  Ending Stocks       560       565       560       490        0         360

  TOTAL DISTRIBUTION  3674      3673      3660      3605       0         3490
  ------------------- --------- --------- --------- ---------- --------- ----------

###### Production

The sixth official estimate of the 2005 wheat crop is 1.84 million tons.
The expected yield is 2.3 MT/ha. The production estimate for the Western
Cape is 645,000 tons at 2.15 MT/ha. and the Free State 551,000 MT at
1.45 MT/ha. The total area planted is unchanged at 800,500 ha. The 2006
wheat crop to be planted from June may be affected by the recent cutback
in area planted to corn. In the Free State alone 500,000 hectares were
not planted to corn and is now laying fallow after very good rains. In
2004, 353,000 hectares were planted to wheat in the Free State and
380,000 in 2005. This could increase to 450,000 this year pushing the
total area to be planted to about 870,000 ha. and a potential 2 million
ton crop.

####### Consumption

Commercial human consumption increased by 3.1% from 2.652 million tons
in MY 2003/04 to 2.734 million tons in MY 2004/05. The following table
contains the commercial consumption figures on the October/September
marketing year basis:

  ----------- ---------- ---------- ---------- ---------- ---------- ----------
  '000 MT     2003/04                          2004/05               

              Human      Feed       Total      Human      Feed       Total

  Human       2652       0          2652       2734       0          2734

  Feed        1          0          1          0          2          2

  Withdrawn   13         2          15         8          1          9

  Seed        18         3          21         16         0          16

  Total       2684       5          2689       2758       3          2761
  ----------- ---------- ---------- ---------- ---------- ---------- ----------

####### Imports

Imports increased from 1.278 million tons in 2003/04 to 1.394 million
tons in 2004/05 and are expected to reach 1.2 million tons in 2005/06.

  ----------- ---------- ------------ ---------- ---------- ---------- ----------
  MT          MY 03/04   Oct./Sept.              MY 04/05   Oct/Sept   

              For Africa For RSA      Total      For Africa For RSA    Total

  Argentina   73 816     268 218      342 034    111 654    574 600    686 254

  USA         146 660    413 429      560 089    43 078     281 165    324 243

  Australia              298 504      298 504               154 112    154 112

  Germany     3 873      12 199       16 072     12 603     115 332    127 935

  Canada      13 767                  13 767                43 766     43 766

  Ukraine                                                   29 935     29 935

  UK                     22 420       22 420                27 586     27 586

  France      2          25 016       25 016                           

  TOTAL       238 116    1 039786     1 277 902  167 335    1 226 496  1 393 831
  ----------- ---------- ------------ ---------- ---------- ---------- ----------

South Africa imported about 116,000 tons more in 2004/05 than in
2003/04. Although the US share sunk from 43% to 23%, U.S. exports to
Southern Africa still reached 324,000 tons.

  ----------------------- ---------------- ----------------- ------------
  Import Trade Matrix                                        

  Country                 South Africa                       

  Commodity               Wheat                              

  Time Period             Oct/Sept         Units:            MT

  Imports for:            2003/04                            2004/05

  U.S.                    560089           U.S.              324243

  Others                                   Others            

  Argentina               342034           Argentina         686254

  Australia               298504           Australia         154112

  Germany                 16072            Germany           127935

  Canada                  13767            Canada            43766

  UK                      22420            Ukraine           29935

  France                  25016            UK                27586

  Total for Others        717813                             1069588

  Others not Listed                                           

  Grand Total             1277902                            1393831
  ----------------------- ---------------- ----------------- ------------

Imports during the 2005/06 season continue unabated, from October 1 to
January 27, 404,977 tons were imported. The following table contains the
details.

  ----------------- ----------------- ----------------- -----------------
  From              For Africa        For RSA           Total

  USA               19,674            78,201            97,875

  Australia                           59,927            59,927

  Argentina         9,097             73,123            82,220

  Germany           31,164            80,560            111,724

  Ukraine                             53,231            53,231

  Total             59,935            345,042           404,977
  ----------------- ----------------- ----------------- -----------------

Exports

  ----------------------- ----------------------- -----------------------
  Metric tons             2003/04                 2004/05

  Botswana                88 559                  77 033

  Lesotho                 74 656                  75 956

  Swaziland               40 634                  34 543

  Zimbabwe                102 598                 40 738

  Zambia                  37 430                  55 826

  Namibia                 12 622                  16 904

  Total                   356 499                 301 000

  Products                23 001                  21 000

  Grand total             379 500                 322 000
  ----------------------- ----------------------- -----------------------

Whole grain exports only reached 301,000 tons in 2004/05 after 356,000
tons were exported in 2003/04. Product export data are added for a total
of 322,000 tons in 2004/05 including 135,000 tons of SA origin wheat,
the same as in 2003/04.

  ----------------------- ---------------- ----------------- ------------
  Export Trade Matrix                                        

  Country                 South Africa                       

  Commodity               Wheat                              

  Time Period             Oct/Sept         Units:            MT

  Exports for:            2003/04                            2004/05

  U.S.                    0                U.S.              0

  Others                                   Others            

  Botswana                88559            Botswana          77033

  Lesotho                 74656            Lesotho           75956

  Swaziland               40634            Swaziland         34543

  Zimbabwe                102598           Zimbabwe          40738

  Zambia                  37430            Zambia            55826

  Namibia                 12622            Namibia           16904

  Total for Others        356499                             301000

  Others not Listed       0                                  0

  Grand Total             356499                             301000
  ----------------------- ---------------- ----------------- ------------

####### Rice

  ------------------- --------- --------- --------- ---------- --------- ----------
  Country             South                                              
                      Africa,                                            

  Commodity           Rice,                                              
                      Milled                                             

  1000 HA             2004      Revised   2005      Estimate   2006      Forecast

  1000 MT             USDA      Post      USDA      Post       USDA      Post
                      \[Old\]   \[New\]   \[Old\]   \[New\]    \[Old\]   \[New\]

  Market Year Begin             01/2004             01/2005              01/2006

  Area Harvested      0         0         0         0          0         0

  Beginning Stocks    195       0         249       0          239       0

  Milled Production   0         0         0         0          0         0

  Rough Production    0         0         0         0          0         0

  MILLING RATE        0         0         0         0          0         0
  (.9999)                                                                

  TOTAL Imports       818       750       800       805        0         810

  Jan-Dec Imports     800       750       750       805        0         810

  Jan-Dec Import U.S. 0         1         0         1          0         2

  TOTAL SUPPLY        1013      750       1049      805        239       810

  TOTAL Exports       14        14        10        27         0         25

  Jan-Dec Exports     10        14        10        27         0         25

  TOTAL Dom.          750       736       800       778        0         785
  Consumption                                                            

  Ending Stocks       249       0         239       0          0         0

  TOTAL DISTRIBUTION  1013      750       1049      805        0         810
  ------------------- --------- --------- --------- ---------- --------- ----------

We will elaborate on the rice situation as soon as the full annual trade
data becomes available.

  ----------------------- ---------------- ----------------- ------------
  Import Trade Matrix                                        

  Country                 South Africa                       

  Commodity               Rice, Milled                       

  Time Period             Jan-Dec          Units:            MT

  Imports for:            2003                               2004

  U.S.                    69744            U.S.              462

  Others                                   Others            

  Thailand                390076           Thailand          616284

  India                   316152           India             121549

  Australia               1948             Australia         2625

  Pakistan                2233             Pakistan          2192

  Uruguay                 2839             Uruguay           1137

  China                   1683             China             917

  Total for Others        714931                             744704

  Others not Listed       6127                               4843

  Grand Total             790802                             750009
  ----------------------- ---------------- ----------------- ------------

  ----------------------- ---------------- ----------------- ------------
  Export Trade Matrix                                        

  Country                 South Africa                       

  Commodity               Rice, Milled                       

  Time Period             Jan-Dec          Units:            MT.

  Exports for:            2003                               2004

  U.S.                    0                U.S.              0

  Others                                   Others            

  Zambia                  5632             Zambia            6077

  Congo                   1329             Congo             3914

  Zimbabwe                4020             Zimbabwe          2438

  Mozambique              701              Mozambique        479

  Total for Others        11682                              12908

  Others not Listed       1039                               834

  Grand Total             12721                              13742
  ----------------------- ---------------- ----------------- ------------