Voluntary Report - public distribution

**Date:** 11/2/2004

**GAIN Report Number:** SF4044

SF4044

**South Africa, Republic of**

**Grain and Feed**

**Monthly Update**

**2004**

**Approved by:**

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

U.S. Embassy, South Africa

**Prepared by:**

Herman Germishuis

**Report Highlights:**

FAS/Pretoria estimates the current South African corn crop at 9.6
million tons, 700,000 tons more than the South African Government\'s
estimate. The revision is based on deliveries exceeding the estimate.
The 2004 crop is due to be planted soon but a lack of rain is delaying
planting. Good rains are currently needed to allow planting at the
optimum planting dates. The 2004 wheat crop is estimated at 2 million
tons, well short of domestic and regional needs. The shortfall will be
imported, with a high percentage sourced from the USA.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[SF\]

**SUMMARY**

South Africa's 2003 corn crop (2003 indicating the year of planting) is
currently estimated by the South African Department of Agriculture at
8.9 million tons, 1.9 million tons more than the initial estimate made
in February.

We, however, estimate the 2003 crop at 9.6 million tons, about 700,000
tons more than the official South African estimate. The estimate is
under pressure from deliveries exceeding the estimate. From March 2004
to the end of September about 8.92 million tons was received. Between
October and the end of February 2005, another 80,000 tons can be
delivered pushing the total to 9 million tons. Farm retentions are
considered to be about 400,000, which must be added for a total
commercial crop of 9.4 million tons. If the 200,000 tons in the
developing sector is added the total crop estimated increases to 9.6
million tons and the average yield to 3.2 tons per hectare, the second
highest on record. This is leading to a considerable oversupply, as
exports have been slow.

Planting intentions for the new growing season, which is due to start
soon, are to increase the area planted on commercial farms to 2.85
million ha. This could lead to another 9-million-ton-plus crop
aggravating the oversupply at current prices and exchange rate. Weather
is, however, becoming a concern. Rainfall to date has been low and
temperatures high. Planting has been delayed and rain is urgently needed
to get the season started.

The 2004 wheat plantings increased to 851,000 hectares after only
748,000 hectares were planted in 2003. The crop estimate is 1.98 million
tons compared to the 1.54 million tons produced last year. A small
import tariff of R18.67 or \$2.84/ton was announced in August, but this
is not expected to affect imports, which reached about 1.28 million tons
in 2003/04 and could reach 900,000 tons again in 2004/05.

US\$1=Rand 6.10 on 11/02/2004.

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

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

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

[www.fews.net]{.underline}

[www.wfp.org]{.underline}

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

[www.weathersa.co.za](http://www.weathersa.co.za/)

**CORN**

+-------------------+--------+-------+-------+-------+-------+-------+
| **Country**       | **S    | ###   |       |       |       |       |
|                   | outh** | ### A |       |       |       |       |
|                   |        | frica |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| **Commodity**     | **     |       |       |       |       |       |
|                   | Corn** |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| Area, 1000 ha.    | 2002   | Re    | 2003  | Est   | 2004  | For   |
|                   |        | vised |       | imate |       | ecast |
+-------------------+--------+-------+-------+-------+-------+-------+
| Production, 1000  | USDA   | Post  | USDA  | Post  | USDA  | Post  |
| mt.               | \      | \[    | \[    | \[    | \[    | \[    |
|                   | [Old\] | New\] | Old\] | New\] | Old\] | New\] |
+-------------------+--------+-------+-------+-------+-------+-------+
| **Market Year     |        | 05    |       | 05    |       | 05    |
| Begin**           |        | /2003 |       | /2004 |       | /2005 |
+-------------------+--------+-------+-------+-------+-------+-------+
| Area Harvested    | 3650   | 3651  | 3200  | 3007  | 3300  | 3250  |
+-------------------+--------+-------+-------+-------+-------+-------+
| Beginning Stocks  | 1943   | 1945  | 2443  | 2420  | 2077  | 3070  |
+-------------------+--------+-------+-------+-------+-------+-------+
| Production        | 9675   | 9675  | 8934  | 9600  | 9300  | 9500  |
+-------------------+--------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.    | 441    | 465   | 400   | 300   | 400   | 250   |
| Imports           |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| Oct-Sep Imports   | 617    | 730   | 500   | 420   | 300   | 200   |
+-------------------+--------+-------+-------+-------+-------+-------+
| Oct-Sep Import    | 21     | 82    | 0     | 10    | 0     | 10    |
| U.S.              |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY      | 12059  | 12085 | 11777 | 12320 | 11777 | 12820 |
+-------------------+--------+-------+-------+-------+-------+-------+
| TOTAL Mkt. Yr.    | 1096   | 1125  | 1000  | 750   | 1000  | 1000  |
| Exports           |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| Oct-Sep Exports   | 1141   | 818   | 900   | 550   | 1000  | 500   |
+-------------------+--------+-------+-------+-------+-------+-------+
| Feed Dom.         | 4000   | 4000  | 4100  | 4000  | 4100  | 4050  |
| Consumption       |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| TOTAL Dom.        | 8520   | 8540  | 8700  | 8500  | 8700  | 8500  |
| Consumption       |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+
| Ending Stocks     | 2443   | 2420  | 2077  | 3070  | 2077  | 3320  |
+-------------------+--------+-------+-------+-------+-------+-------+
| TOTAL             | 12059  | 12085 | 11777 | 12320 | 11777 | 12820 |
| DISTRIBUTION      |        |       |       |       |       |       |
+-------------------+--------+-------+-------+-------+-------+-------+

**Production**

South Africa's current, 2003 (referring to the year of planting), corn
crop continues to surprise. The National Crop Estimates Committee
released the eighth official estimate on September 20, 2004. The total
crop was estimated at about 8.9 million tons, 27% more than the initial
estimate. The following table contains the details:

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

  Corn         Area       Yield      Production   Area       Yield      Production

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

  White        2232       2.85       6366         1728       3.09       5346

  Yellow       953        3.17       3026         918        3.66       3360

  Total        3185       2.95       9391         2646       3.29       8706

  Developing                                                            

  White        368        0.60       221          282        0.61       171

  Yellow       98         0.66       65           79         0.72       57

  Total        466        0.61       286          361        0.63       228

  Total corn                                                            

  White        2600       2.53       6587         2010       2.77       5517

  Yellow       1418       2.18       3091         997        3.43       3417

  Total        3651       2.65       9678         3007       2.97       8934
  ------------ ---------- ---------- ------------ ---------- ---------- ------------

We estimate the 2003 commercial crop at 9.4 million tons, about 700,000
tons more than the official estimate. We base the bigger crop on actual
deliveries to the silos, from March 2004 to the end of September about
8.92 million tons was received. Between October and the end of February
2005 another 80,000 tons can be delivered pushing the total to 9 million
tons. Farm retentions are considered to be about 400,000, which must be
added for a total commercial crop of 9.4 million tons.

If the 200,000 tons from the developing sector is added the total crop
estimated increases to 9.6 million tons and the average yield to 3.2
tons per hectare, the second highest on record. It can be argued that
the cutback in area planted mainly consisted of low potential soils
resulting in a proportional increase in the area of high potential soil
planted. New varieties also played a role. Farmers were also able to
optimize input use as a result of the smaller area. The role of
irrigation cannot be ignored. In the Northern Cape, where only irrigated
production is possible, 45,500 hectares were planted this year and this
is expected to produce 455,000 tons at 10 tons per hectare. Although the
area planted under irrigation declined in 2003 due to the dry start to
the season, it is estimated that about 150,000 hectares were planted
under full or supplemental irrigation, probably producing 1.5 million
tons of the total. Because of the decline in total area planted, the
irrigated crop plays a proportionally bigger role in the total
production.

Since the introduction of the free market system the area planted to
corn has dropped about 25% from the recent high of 4 million hectares in
1996 and 40% of the all time high of about 5 million hectares in 1975.

The first planting intentions report was also released on September 20.
Based on replies received from producers the expected area to be planted
to corn on commercial farms later this year is 2.85 million hectares of
which 1.81 million ha. (63%) is earmarked for white corn and 1.04
million ha. is to be planted to yellow corn. The survey shows that
producers intend to increase the area planted to white corn by 83,100
ha. (4.8%) compared to the previous season. The area to be planted to
yellow corn is expected to increase by 125,300 ha. (13.6%). The
following table contains the potential commercial crop scenario,
including our revision to the 2003 commercial crop:

+--------+--------+---------+----------+---------+---------+----------+
| CORN   | Area   | Yield   | Revised  | Int     | Yield   | Forecast |
|        |        |         | pr       | entions |         | pr       |
|        | 1000   | Mt./ha. | oduction | 1000 ha | Mt./ha. | oduction |
|        | ha.    |         |          |         |         |          |
|        |        |         | 1000 mt. |         |         | 1000mt.  |
+--------+--------+---------+----------+---------+---------+----------+
|        | FAS 03 |         | My 04/05 | FAS 04  | Py      | My 05/06 |
|        |        |         |          |         | 04/05   |          |
+--------+--------+---------+----------+---------+---------+----------+
| White  | 1728   | 3.36    | 5800     | 1811    | 3.1\*   | 5600     |
+--------+--------+---------+----------+---------+---------+----------+
| Yellow | 918    | 3.92    | 3600     | 1043    | 3.55\*  | 3700     |
+--------+--------+---------+----------+---------+---------+----------+
| Total  | 2646   | 3.55    | 9400     | 2854    | 3.25\*  | 9300     |
+--------+--------+---------+----------+---------+---------+----------+

\* Average of the past two seasons

Under normal conditions the 2004 crop soon to be planted could yield a
crop similar to the current crop. In the summer grain growing areas,
however, the new seasons' rainfall to date has been low and the
prediction is for below normal rainfall and above normal temperatures
into December. Farmers have not yet been able to plant while we are
already in the optimum planting window. Any further hot and dry weather
could already impact on the potential yield.

# Consumption

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

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

The latest commercial PS&D's are summarized below:

+-----------------+-----------------+-----------------+-----------------+
| FAS 2002 final  | # My 2003/04    | #               |                 |
|                 |                 |  Commercial S&D |                 |
+-----------------+-----------------+-----------------+-----------------+
| '000 Metric     | White           | Yellow          | Total corn      |
| tons            |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Beginning       | 1265            | 680             | 1945            |
| stocks          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Estimate        | 6365            | 3025            | 9390            |
+-----------------+-----------------+-----------------+-----------------+
| Retentions      | 165             | 255             | 420             |
+-----------------+-----------------+-----------------+-----------------+
| Delivery,       | 6200            | 2770            | 8970            |
| March/Feb       |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Imports         | 60              | 405             | 465             |
+-----------------+-----------------+-----------------+-----------------+
| Total Supply    | 7525            | 3855            | 11380           |
+-----------------+-----------------+-----------------+-----------------+
| Export          | 1015            | 110             | 1125            |
+-----------------+-----------------+-----------------+-----------------+
| Dom.            | 4480\*          | 3355            | 7835            |
| Disappearance   |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Ending stocks   | 2030            | 390             | 2420            |
+-----------------+-----------------+-----------------+-----------------+

\*Including an additional 500,000 tons of white corn used for feed.

+-----------------+-----------------+-----------------+----------------+
| FAS 2003        | # My 2004/05    | #               |                |
| estimate        |                 |  Commercial S&D |                |
+-----------------+-----------------+-----------------+----------------+
| '000 Metric     | White           | Yellow          | Total          |
| tons            |                 |                 |                |
+-----------------+-----------------+-----------------+----------------+
| B/Stocks        | 2030            | 390             | 2420           |
+-----------------+-----------------+-----------------+----------------+
| Adjusted crop   | 5750            | 3650            | 9400           |
| est.            |                 |                 |                |
+-----------------+-----------------+-----------------+----------------+
| Farm retentions | 150             | 250             | 400            |
+-----------------+-----------------+-----------------+----------------+
| Delivery        | 5600            | 3400            | 9000           |
| forecast        |                 |                 |                |
+-----------------+-----------------+-----------------+----------------+
| Imports         | 0               | 300             | 300            |
+-----------------+-----------------+-----------------+----------------+
| Total supply    | 7630            | 4090            | 11720          |
+-----------------+-----------------+-----------------+----------------+
| Exports         | 700             | 50              | 750            |
+-----------------+-----------------+-----------------+----------------+
| Dom.            | 4500\*          | 3400            | 7900           |
| Disappearance   |                 |                 |                |
+-----------------+-----------------+-----------------+----------------+
| Ending stocks   | 2430            | 640             | 3070           |
+-----------------+-----------------+-----------------+----------------+

\*Including an additional 500,000 tons of white corn used for feed.

The expected carry over of more than 3 million tons at the end of April
2005 will alleviate price pressure if weather conditions deteriorate.
Prices are already increasing as shown in the following table, assisted
by an R31.67/ton (\$5.20) import tariff levied on October 8. The tariff
is formula driven as explained on the SAGIS website.

  -------------- --------------- ---------------- --------------- ---------------
  Futures prices March 2005      May 2005         July 2005       December 2004

  White corn/mt.                                                  

  08/03/04       R1007=\$160.9   R1017=\$162.5                    R969=\$154.8

  08/27/04       R1076=\$163.5   R1089=\$165.5                    R1034=\$157.1

  10/04/04       R975=\$151.2    R1000=\$155.0                    R935=\$145.00

  11/01/04       R1071=\$175.6   R1089=\$178.5    R1100=\$180.3   R1041=\$170.7

  Yellow                                                          
  corn/mt.                                                        

  08/03/04       R1008=\$161.0   R990=\$158.2                     R983=\$157.0

  08/27/04       R1070=\$162.6   R1044=\$158.7                    R1041=\$158.2

  10/04/04       R977=\$151.47   R1000=\$155.04                   R965=\$149.61

  11/01/04       R1041=\$170.7   R1005=\$164.8    R1010=\$165.6   R1018=\$166.9
  -------------- --------------- ---------------- --------------- ---------------

# Trade

During the 2003/04 May to April marketing season South Africa imported
468,000 tons and exported 1,126,000 tons of corn. This included imports
and re-exports.

More than a million tons, 980,000 tons of white and 80,000 tons of
yellow, were exported overland to African states, of which a high
proportion needed to be GMO free.

Exports during the current MY 2004/05, marketing season are not faring
so well. Between May 1 and the end of October 2004 South Africa exported
298,000 tons of corn, or about 50,000 tons per month. If this rate
continues the export total for the season could be as low as 600,000
tons, although we still show 750,000 tons in the S&D.

The following table contains South African corn exports between the May
1 and October 29, 2004.

  ----------------- ----------------- ----------------- -----------------
  Metric tons       White corn        Yellow Corn       Total corn

  Angola            3,456                               3,456

  Botswana          48,418            4,787             53,205

  Kenya\*           95,611                              95,611

  Lesotho           54,159            3,300             57,459

  Mozambique        15,336            993               16,329

  Namibia           256               7,994             8,250

  Swaziland         5,636             9,364             15,000

  Zimbabwe          46,475            96                46,571

  Madagascar        1,942                               1,942

  Total             271,289           25,534            297,823
  ----------------- ----------------- ----------------- -----------------

**WHEAT**

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

  **Commodity**       **Wheat**                                            

  1000 ha.            2002        Revised   2003      Estimate   2004      Forecast

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

  **Market Year                   10/2002             10/2003              10/2004
  Begin**                                                                  

  Area Harvested      941         941       748       748        850       851

  Beginning Stocks    587         588       898       897        688       612

  Production          2320        2387      1540      1540       2125      1976

  TOTAL Mkt. Yr.      871         870       1200      1278       900       900
  Imports                                                                  

  Jul-Jun Imports     1024        831       911       837        900       850

  Jul-Jun Import U.S. 63          59        488       414        0         500

  TOTAL SUPPLY        3778        3845      3638      3715       3713      3488

  TOTAL Mkt. Yr.      310         310       300       379        300       325
  Exports                                                                  

  Jul-Jun Exports     331         328       356       320        300       300

  Feed Dom.           10          12        10        30         10        30
  Consumption                                                              

  TOTAL Dom.          2570        2638      2650      2724       2660      2725
  Consumption                                                              

  Ending Stocks       898         897       688       612        753       438

  TOTAL DISTRIBUTION  3778        3845      3638      3715       3713      3488
  ------------------- ----------- --------- --------- ---------- --------- ----------

**Production**

The third National Crop Estimates Committee estimate of South Africa's
2004 wheat crop was released on October 20, 2004. According to the
estimate the expected crop decreased by 73,825 tons from 2.05 million
tons to 1.98 million tons over the past month. The current estimate is
still 436,475 tons, or 28.3% higher than the crop for the previous
season, mainly due to an increase in area planted. The main producing
areas are the Free State, with 712,500 tons or 36% of the total and the
Western Cape with 640,800 tons or 32.4%. The main reason for the
decrease in the crop estimate over the past month is drought in the Free
State and the Western Cape, which affected yields. The following table
contains the detailed crop estimate:

+----------+---------+---------+---------+---------+---------+---------+
| Province | Area    | Yield   | Pro     | Area    | Yield   | Pro     |
|          | 2003,   |         | duction |         |         | duction |
|          | ha.     | Mt/ha.  |         | 2004,   | Mt/ha.  |         |
|          |         |         | Metric  | ha.     |         | Metric  |
|          |         |         | tons    |         |         | tons    |
+----------+---------+---------+---------+---------+---------+---------+
| Western  | 325,000 | 1.63    | 530,000 | 356,000 | 1.8     | 640,800 |
| Cape     |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Northern | 48,500  | 5.77    | 280,000 | 51,000  | 5.8     | 295,800 |
| Cape     |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Free     | 320,000 | 1.5     | 480,000 | 375,000 | 1.9     | 712,500 |
| State    |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Eastern  | 2,500   | 3.4     | 8,500   | 4,200   | 3.5     | 14,700  |
| Cape     |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| KwaZulu  | 7,000   | 4.56    | 31,900  | 6,500   | 4.55    | 29,575  |
+----------+---------+---------+---------+---------+---------+---------+
| Mp       | 9,000   | 4.0     | 36,000  | 13,000  | 5.2     | 67,600  |
| umalanga |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Limpopo  | 8,000   | 4.4     | 35,000  | 15,000  | 4.3     | 64,500  |
+----------+---------+---------+---------+---------+---------+---------+
| Gauteng  | 2,000   | 4.3     | 8,600   | 2,500   | 4.4     | 11,000  |
+----------+---------+---------+---------+---------+---------+---------+
| North    | 26,000  | 5.0     | 130,000 | 28,000  | 5.0     | 140,000 |
| West     |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| TOTAL    | 748,000 | 2.06    | 1,      | 851,200 | 2.32    | 1,      |
|          |         |         | 540,000 |         |         | 976,475 |
+----------+---------+---------+---------+---------+---------+---------+

Only in the Free State and the Western Cape is wheat mainly grown under
dry land conditions, in the other provinces wheat is grown under
irrigation, explaining the much higher yields.

The crop will still be insufficient to satisfy domestic demand,
currently around 2.7 million tons, and the needs of the region. As a
result imports of about 900,000 tons are expected for the 2004/05 season
after 1.278 million tons were imported during 2003/04. Preliminary
import figures for the 2003/04 season are:

  ----------------- ----------------- ----------------- -----------------
  Origin, Metric    For Africa        For South Africa  TOTAL, MY2003/04
  tons                                                  

  USA               146,660           413,429           560,089

  Canada            13,767            0                 13,767

  Germany           3,873             12,199            16,072

  United Kingdom    0                 22,420            22,420

  Australia         0                 298,504           298,504

  Argentina         73,816            268,218           342,034

  France            0                 25,016            25,016

  TOTAL             238,116           1,039,786         1,277,902
  ----------------- ----------------- ----------------- -----------------

During My 2003/04 the US supplied 560,089 tons, or 43.8% of the wheat
imported followed by Argentina with 26.8% and Australia with 23.4%.

In October 2004, the first month of the new 2004/05 marketing year,
imports amounted to 88,545 tons of which 49,978 tons were supplied by
Argentina and 38,567 tons by the US.

The export figures for the 2003/04 season have not been finalized but
the preliminary figures are shown in the following table; South Africa,
wheat exports, MY 2003/04, October 2003 to end September 2004.

  ------------------------------------- ---------------------------------
  Botswana                              88,559

  Lesotho                               74,656

  Swaziland                             40,634

  Zimbabwe                              102,598

  Zambia                                37,430

  Namibia                               12,622

  TOTAL                                 356,499
  ------------------------------------- ---------------------------------

During October 2004 about 20,000 tons were exported.

  -------------- --------------- --------------- --------------- ---------------
  Futures prices March 2005      May 2005        November 2004   December 2004

  Wheat/mt.                                                      

  08/03/04       R1467=\$234.4                   R1480=\$236.4   R1445=\$230.8

  08/27/04       R1505=\$228.7                   R1425=\$216.6   R1476=\$224.3

  10/04/04       R1472=\$228.2   R1484=\$230.1   R1440=\$223.3   R1430=\$221.7

  11/01/04       R1388=\$227.5   R1425=\$233.6   R1349=\$221.1   R1352=\$221.6
  -------------- --------------- --------------- --------------- ---------------

An R18.67/ton import tariff was instituted on August 13, 2004 but the
futures prices mainly reflect import parity and the volatile Rand
exchange rate.