Required Report - public distribution

**Date:** 5/4/2007

**GAIN Report Number:** SF7017

SF7017

**South Africa, Republic of**

Grain and Feed

**Quarterly Update**

2007

**Approved by:**

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

#### South Africa

**Prepared by:**

Herman Germishuis

**Report Highlights:**

The total area planted to corn in 2006 reached about 2.9 million
hectares implying a 10 million ton crop under normal conditions. Since
January 2007 an El Nino induced drought and heat wave devastated the
crop to the extent that we currently expect a 6.5 million ton crop.
Fortunately about 2 million tons were carried over at the end of April
2007 that should cushion the effect of the drought and white corn
supplies should be sufficient to supply in domestic and regional demand.
About 1.2 million tons of yellow corn will have to be imported during
MY07/08.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Quarterly Report

Pretoria \[SF1\]

\[SF\]

## Summary {#summary-1}

**Corn:** after a voluntary cutback in total area planted to 2 million
hectares for the crop planted in 2005, production declined to about 6.9
million tons, balancing supply and demand and bolstering prices. As a
result the area planted in 2006 rebounded to 2.9 million hectares
setting the potential for a 10 million ton crop. An El Nino induced
drought and heat wave developed from January 2007 severely damaging the
crop and reducing crop prospects to 6.5 million tons.

Carry over stocks at the end of April 2007 were about 2 million tons,
which will cushion the effect of the drought. White corn supplies may be
sufficient to supply domestic and traditional regional needs but yellow
corn stock imports will have to increase from the 915,000 tons of the
current season to at least 1.2 million ton in MY 07/08. This situation
has led to high domestic prices, which may limit local and regional
sales while high international prices will increase import costs.

US\$1 = Rand 7.0 (05/04/07)

Sources:

[**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       2005       Revised                2006       Estimate               2007       Forecast   

  1000 MT       USDA\      Post\      Post\       USDA\      Post\      Post\       USDA\      Post\      Post\
                Official   Estimate   Estimate\   Official   Estimate   Estimate\   Official   Estimate   Estimate\
                                      New                               New                               New

  Market Year              05/2006    05/2006                05/2007    05/2007                05/2008    05/2008
  Begin                                                                                                   

  Area          2032       2032       2032        2800       3000       2897        0          3300       3300
  Harvested                                                                                               

  Beginning     3190       3190       3190        1725       1700       2000        625        750        375
  Stocks                                                                                                  

  Production    6935       6935       6935        6000       7000       6500        0          11000      11000

  MY Imports    1100       1135       915         2000       1500       1200        0          250        250

  TY Imports    896        896        896         1050       700        1050        0          0          0

  TY Imp. from  36         36         36          0          0          0           0          0          0
  U.S.                                                                                                    

  Total Supply  11225      11260      11040       9725       10200      9700        625        12000      11625

  MY Exports    500        530        540         600        600        525         0          1000       750

  TY Exports    1406       1406       1406        500        500        500         0          600        0

  Feed          4500       4530       4150        4000       4425       4300        0          4500       4350
  Consumption                                                                                             

  FSI           4500       4500       4350        4500       4425       4500        0          4500       4550
  Consumption                                                                                             

  Total         9000       9030       8500        8500       8850       8800        0          9000       8900
  Consumption                                                                                             

  Ending Stocks 1725       1700       2000        625        750        375         0          2000       1975
  ------------- ---------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- -----------

**Production:**

The Crop Estimates Committee released its third official estimate of the
2006 corn crop on April 25, 2007. The estimate was actually increased by
about 50,000 tons compared to the previous figure mainly due to an
increase in the area planted under irrigation. The committee increased
the area planted to yellow corn in the Northern Cape by 5,000 hectares
to 45,000 hectares, leading to the additional 50,000 tons in production.
The following table contains the official figures.

<table style="width:100%;">
<colgroup>
<col style="width: 9%" />
<col style="width: 9%" />
<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%" />
</colgroup>
<tbody>
<tr class="odd">
<td>CORN</td>
<td><p>Area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>000 t</p></td>
<td><p>Area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>000 t</p></td>
<td><p>Area</p>
<p>000ha</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>000 t</p></td>
</tr>
<tr class="even">
<td>Commercial</td>
<td><strong>2004</strong></td>
<td></td>
<td></td>
<td><strong>2005</strong></td>
<td></td>
<td></td>
<td><strong>2006</strong></td>
<td><p>3rd.</p>
<p>official</p></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>1,700</td>
<td>3.8</td>
<td>6,540</td>
<td>1,033</td>
<td>4.1</td>
<td>4,187</td>
<td>1625</td>
<td>2.5</td>
<td>4,065</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,110</td>
<td>4.4</td>
<td>4,910</td>
<td>567</td>
<td>4.3</td>
<td>2,431</td>
<td>927</td>
<td>3.1</td>
<td>2,895</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>2,810</td>
<td>4.1</td>
<td>11450</td>
<td>1,600</td>
<td>4.1</td>
<td>6,618</td>
<td>2,552</td>
<td>2.7</td>
<td>6,960</td>
</tr>
<tr class="even">
<td>Small scale</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>264</td>
<td>0.6</td>
<td>149</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>81</td>
<td>0.8</td>
<td>65</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>345</td>
<td>0.6</td>
<td>214</td>
</tr>
<tr class="even">
<td>Total</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>1,379</td>
<td>3.2</td>
<td>4,425</td>
<td>1,889</td>
<td>3.0</td>
<td>4,214</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,199</td>
<td>4.1</td>
<td>4,973</td>
<td>653</td>
<td>3.8</td>
<td>2,510</td>
<td>1,008</td>
<td>3.6</td>
<td>2,960</td>
</tr>
<tr class="odd">
<td>TOTAL</td>
<td>3,224</td>
<td>3.6</td>
<td>11716</td>
<td>2,032</td>
<td>3.4</td>
<td>6,935</td>
<td>2,897</td>
<td>3.2</td>
<td>7,174</td>
</tr>
</tbody>
</table>

The increase in the area under irrigation to 210,000 ha. is a surprise
as the five-year average for commercial corn under irrigation is about
180,000 ha.

  ---------- ---------- ----------- ---------- ----------- ---------- -----------
  '000 ha.   2004 total Irrigated   2005 total Irrigated   2006 total Irrigated

  WM         1700       70 4%       1033       55 5%       1625       85 5%

  YM         1110       120 11%     567        70 12%      927        125 13%

  TM         2810       190 7%      1600       125 8%      2552       210 8%
  ---------- ---------- ----------- ---------- ----------- ---------- -----------

Based on the El Nino induced drought and heat wave from January, but
taking the increase in the irrigated area planted into account, we
estimate the total corn crop planted in 2006 and currently being
harvested at 6.5 million tons of which 6.3 million tons is from the
commercial sector. This is nearly 700,000 tons less than the official
estimate. As there are some differences in the estimates the
calculations are laid out below. The area planted data is from the
official CEC figures. The irrigated crop plays a much bigger role in
production in a drought year, which is taken into account in the
analysis. The portion of the crop not harvested for grain is unknown but
will be substantial this year and will influence yield figures based on
area planted.

The following table contains the rounded data:

+-----------------+-----------------+-----------------+-----------------+
| FAS 2006 CORN   | Area planted    | Yield           | Production      |
|                 |                 |                 |                 |
| Commercial crop | 1,000 Ha        | Mt/ha           | 1,000 Mt        |
+-----------------+-----------------+-----------------+-----------------+
| Irrigated       |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| White corn      | 85              | 9.75            | 830             |
+-----------------+-----------------+-----------------+-----------------+
| Yellow corn     | 125             | 10.25           | 1,280           |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 210             | 10.05           | 2,110           |
+-----------------+-----------------+-----------------+-----------------+
| Dry Land        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| White           | 1,540           | 1.73            | 2,670           |
+-----------------+-----------------+-----------------+-----------------+
| Yellow          | 802             | 1.88            | 1,505           |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 2,342           | 1.78            | 4,175           |
+-----------------+-----------------+-----------------+-----------------+
| Total           |                 |                 |                 |
| commercial      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| White           | 1,625           | 2.15            | 3,500           |
+-----------------+-----------------+-----------------+-----------------+
| Yellow          | 927             | 3.0             | 2,785           |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 2,552           | 2.46            | 6,285           |
+-----------------+-----------------+-----------------+-----------------+
| Subsistence     |                 |                 |                 |
| agric.          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| White           | 264             | 0.56            | 150             |
+-----------------+-----------------+-----------------+-----------------+
| Yellow          | 81              | 0.80            | 65              |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 345             | 0.62            | 215             |
+-----------------+-----------------+-----------------+-----------------+
| Total corn      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| White           | 1,889           | 1.93            | 3,650           |
+-----------------+-----------------+-----------------+-----------------+
| Yellow          | 1,008           | 2.83            | 2,850           |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 2,897           | 2.24            | 6,500           |
+-----------------+-----------------+-----------------+-----------------+

In the 2007 season for which planting starts in October we expect the
area planted to recover to 3.3 million hectare giving the potential for
an 11 million ton crop.

# Consumption

Actual commercial consumption (through the silos) over the past two
seasons follows:

  ---------- ---------- ---------- ----------- ---------- ---------- ----------
  '000MT     White      Yellow     Total       White      Yellow     Total

             My         04/05      May/April   My         05/06      

  Human      3478       262        3740        3559       266        3825

  Animal     733        2694       3427        543        2985       3528

  Other      489        394        883         318        579        897

  Total      4700       3350       8050        4420       3830       8250
  ---------- ---------- ---------- ----------- ---------- ---------- ----------

As shown in the table white corn is mainly used for milling for human
consumption (about 3.5 million tons annually) and yellow corn for feed.

For the current 2006/07 marketing season just ended preliminary figures
indicate that the 2005 crop may have been underestimated as the white
corn deliveries actually exceeded the crop estimate. As the marketing
year runs from May to April, there could be some carry over between
seasons but this does not materially affect the situation. Imports
amounted to 915,000 tons of yellow corn from Argentina while exports
totaled 540,000 tons. Commercial consumption amounted to about 8.155
million tons. The following table contains the preliminary PS&D.

  ----------------- ----------------- ----------------- -----------------
  FAS 2005,                           MY 2006/07        Estimate

  1,000 MT          White             Yellow            Total

  B/stocks          2300              870               3170

  Production        4187              2431              6618

  Retentions        +163              -176              -13

  Deliveries        4350              2255              6605

  Imports           0                 915               915

  Supply            6650              4040              10,690

  Exports           455               85                540

  Cons. Human       3525              300               3825

  Feed              700               3035              3735

  Other             270               320               595

  Cons. Total       4495              3655              8150

  E/stocks          1700              300               2000
  ----------------- ----------------- ----------------- -----------------

A forecast of the FAS 2006, My 2007/08 PS&D can be made:

  ----------------- ----------------- ----------------- -----------------
  FAS 2006,                           My 2007/08        Forecast

  1,000 MT          White             Yellow            Total

  B/Stocks          1700              300               2000

  Production        3500              2785              6285

  Retentions        100               285               385

  Deliveries        3400              2500              5900

  Imports                             1200              1200

  Total supply      5100              3800              8900

  Exports           450               75                525

  Consumption       4500              3700              8200

  E/stocks          150               225               375
  ----------------- ----------------- ----------------- -----------------

# Trade

Preliminary export figures for the May/April 06/07 season compare as
follows to the recent seasons:

  ---------------- ----------- -------------- --------------- ------------
  EXPORTS: MT      MY 03/04    MY 04/05       MY 05/06        MY 06/07

  White corn       May/April   May/April      May/April       May/April

  Angola           15,534      33,644         14,162          3,742

  Botswana         136,630     112,683        175,708         116,295

  Kenya            48,150      129,451        40,038          2,792

  Lesotho          124,417     112,070        82,851          70,260

  Madagascar       10,357      2,382          967             1,033

  Malawi                                      68,204          159

  Mexico                                                      27,410

  Mozambique       84,656      48,396         138,702         42,757

  Namibia          103,235     43,452         53,956          50,190

  Sudan                                       28,272          

  Swaziland        29,596      17,968         26,184          17,023

  Tanzania         34,781                     10,000          9,289

  Zambia           6,829                      89,370          35

  Zimbabwe         399,460     209,682        1,034,743       111,399

  Other            14,378      216            18,484          280

  TOTAL            1,008,023   709,944        1,781,641       452,664

  YELLOW CORN                                                 

  Botswana         2,085       8,205          20,744          12,561

  Indonesia                                   49,500          

  Iran                                        93,284          

  Japan            10,374                     113,098         

  Lesotho          5,585       6,712          3,843           5,769

  Mozambique       6,455       5,488          11,459          880

  Namibia          19,486      13,121         17,261          16,489

  Swaziland        26,690      28,434         35,111          50,168

  Zimbabwe         16,281      653            10,727          264

  Other            20,659      537            752             

  TOTAL            107,615     63,150         355,779         86,131

  TOTAL CORN       1,115,638   773,094        2,137,420       538,795

  IMPORTS Yellow                                              

  Argentina        387,924     205,856        360,542         915,242
  ---------------- ----------- -------------- --------------- ------------

During MY 06/07 exports dropped from the 2.1 million tons sold in 05/06
to 540,000 tons. Zimbabwe was again the main customer for white corn at
111,000 tons but his was much less than the 1.035 million tons bought in
05/06. A lack of foreign exchange and the high prices are given as the
reason for the cutback as the Zimbabwean food supply situation has not
improved. Sales to the SACU (Southern African Customs Union) countries
were next with 338,000 tons.

  ----------------- ----------------- ----------------- -----------------
  SA Corn exports   May 06/April 07   '000 MT           
  to the Customs                                        
  Union                                                 

  (BLNS countries)  White             Yellow            Total

  Botswana          116               13                129

  Lesotho           70                6                 76

  Namibia           50                16                66

  Swaziland         17                50                67

  Total             253               85                338

  4 Year average    320               70                390
  ----------------- ----------------- ----------------- -----------------

A similar situation is foreseen for MY 2007/08.

Imports, on the other hand reached a recent record of 915,000 tons in My
60/07 while at least 1.2 million tons will be needed in 07/08.

# Prices

Recent SAFEX prices are: 05/03/2007

  ----------- ----------- ----------- ----------- ----------- -----------
              2007/05     2007/07     2007/09     2007/12     2008/03

  White corn  R1676/mt    R1720/mt    R1755/mt    R1802/mt    R1798/mt

              \$239/mt    \$245/mt    \$251/mt    \$257/mt    \$257/mt

  Yellow      R1695       R1715       R1731       R1747       R1740

              \$242       \$245       \$247       \$250       \$249
  ----------- ----------- ----------- ----------- ----------- -----------

These prices have come down from recent high of close to R2, 000/ton in
February.