Voluntary Report - public distribution

**Date:** 5/31/2006

**GAIN Report Number:** SF6020

SF6020

**South Africa, Republic of**

Grain and Feed

**Monthly Update**

2006

**Approved by:**

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

#### U.S. Embassy

**Prepared by:**

Herman Germishuis

**Report Highlights:**

In an effort to balance corn supply and demand South African commercial
corn farmers voluntarily cut back the area planted to corn from 2.8
million hectares in 2004 to 1.6 million hectares in 2005. As a result
production dropped from 11.45 million tons to 6 million tons. Exports
during MY 2005/06 reached 2.1million tons, which helped relieve the
oversupply but the carry over still amounted to about 3.2 million tons
at the end of April 2006. White corn supplies should be sufficient for
domestic and regional needs in My 2006/07 but yellow corn are being
imported.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Pretoria

\[SF\]

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

In an effort to balance corn supply and demand South African commercial
farmers cut the area planted by 44% from 2.8 million ha. in 2004 to 1.6
million ha. in 2005. As a result the crop is expected to decline by 48%
from 11.45 million tons to 6 million tons. After a slow start to the
2005/06-rainfall season, precipitation improved from mid December
followed by heavy rains since then. As a result of water logging and the
overcast weather the average yield is expected to decline from 4.1
MT/ha. for the crop planted in 2004 to 3.8 MT/ha.

Due to a carry over of about 3.2 million tons at the end of April 2006
the commercial crop should be sufficient to supply the local need of
about 8 million tons. The problem is that the market is divided between
white corn mainly for human consumption and yellow corn mainly for
animal feed. White corn stocks should be sufficient for domestic and
traditional export needs while yellow corn is being imported to make up
the shortfall. The net result of the exercise is that prices for July
2006 have increased to about \$184/MT. for white and \$172/MT. for
yellow corn.

Bio Fuels, including Ethanol from corn is a big issue at the moment but
will be the subject of a separate GAIN report.

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

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

# 

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

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

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

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

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

##### CORN

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

  Country             South                                              
                      Africa                                             

  Commodity           Corn                                               

  1000 HA             2004      Revised   2005      Estimate   2006      Forecast

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

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

  Area Harvested      3223      3224      2200      1998       2750      2845

  Beginning Stocks    2956      2935      3022      3195       1422      675

  Production          11716     11715     7500      6320       9000      9000

  TOTAL Mkt. Yr.      350       360       750       750        700       500
  Imports                                                                

  Oct-Sep Imports     131       140       650       470        700       700

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

  TOTAL SUPPLY        15022     15010     11272     10265      11122     10175

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

  Oct-Sep Exports     1517      2600      1400      1200       500       500

  Feed Dom.           5100      5000      4400      4200       4300      4250
  Consumption                                                            

  TOTAL Dom.          9800      9675      9100      8840       9000      9000
  Consumption                                                            

  Ending Stocks       3022      3195      1422      675        1622      575

  TOTAL DISTRIBUTION  15022     15010     11272     10265      11122     10175
  ------------------- --------- --------- --------- ---------- --------- ----------

# Production

The fourth official production estimate for the commercial corn crop
planted in 2005 was released on May 23, 2006. The crop estimate is 6
million tons, 1.4% more than the third estimate. The commercial area
planted is estimated at 1.57 million hectares and with the crop at 6
million tons the average yield is 3.8 tons/hectare. The area planted is
44% smaller than the previous season and the crop is down 48%. The
decline is mainly due to a voluntary cutback in production in an effort
to balance supply and demand. The following table contains the details.

<table style="width:100%;">
<colgroup>
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td>CORN</td>
<td><p>2004 area</p>
<p>000ha.</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>’000 MT</p></td>
<td><p>2005 area</p>
<p>000ha.</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>’000 MT</p></td>
<td><p>2006</p>
<p>Area</p>
<p>000ha.</p></td>
<td><p>Yield</p>
<p>MT/ha</p></td>
<td><p>Prod.</p>
<p>‘000</p>
<p>MT</p></td>
</tr>
<tr class="even">
<td>Comm</td>
<td></td>
<td></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>985</td>
<td>3.7</td>
<td>3,616</td>
<td>1,565</td>
<td>3.4</td>
<td>5,325</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,110</td>
<td>4.4</td>
<td>4,910</td>
<td>581</td>
<td>4.1</td>
<td>2,387</td>
<td>880</td>
<td>3.9</td>
<td>3,425</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>2,810</td>
<td>4.1</td>
<td>11450</td>
<td>1,566</td>
<td>3.8</td>
<td>6,003</td>
<td>2,445</td>
<td>3.6</td>
<td>8,750</td>
</tr>
<tr class="even">
<td>Dev.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>325</td>
<td>0.6</td>
<td>203</td>
<td>346</td>
<td>0.7</td>
<td>238</td>
<td>325</td>
<td>0.6</td>
<td>200</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>89</td>
<td>0.7</td>
<td>63</td>
<td>86</td>
<td>0.9</td>
<td>79</td>
<td>75</td>
<td>0.7</td>
<td>50</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>414</td>
<td>0.6</td>
<td>266</td>
<td>432</td>
<td>0.7</td>
<td>317</td>
<td>400</td>
<td>0.6</td>
<td>250</td>
</tr>
<tr class="even">
<td>Total corn</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>2,025</td>
<td>3.3</td>
<td>6,743</td>
<td>1,331</td>
<td>3.0</td>
<td>3,854</td>
<td>1,890</td>
<td>2.9</td>
<td>5,525</td>
</tr>
<tr class="even">
<td>Yellow</td>
<td>1,199</td>
<td>4.1</td>
<td>4,973</td>
<td>667</td>
<td>3.7</td>
<td>2,466</td>
<td>955</td>
<td>3.6</td>
<td>3,475</td>
</tr>
<tr class="odd">
<td>TOTAL</td>
<td>3,224</td>
<td>3.6</td>
<td>11716</td>
<td>1,998</td>
<td>3.2</td>
<td>6,320</td>
<td>2,845</td>
<td>3.2</td>
<td>9,000</td>
</tr>
</tbody>
</table>

The total 2005 crop is now estimated at 6.32 million metric tons
compared to the 11.72 million ton 2004 crop. After a late start to the
rainfall season precipitation picked up in December and the late summer
rainfall was very good. Sunlight was limited by the overcast weather and
the average yield did not reach 2004 levels.

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

  ------------ ------- -------- ------- ------- -------- ------- ------- -------- -------
               Area    '000     Ha      Yield   MT/ha            Prod.   '000     MT

               White   Yellow   Total   White   Yellow   Total   White   Yellow   Total

  Free State                                                                      

  2004         660     385      1045    4.0     3.8      3.9     2658    1455     4113

  2005         345     195      540     3.75    3.55     3.68    1294    692      1986

  North West                                                                      

  2004         680     215      895     3.2     3.2      3.2     2185    678      2863

  2005         380     112      492     2.8     2.75     2.79    1064    308      1372

  Mpumalanga                                                                      

  2004         224     336      560     5.1     5.0      5.0     1134    1673     2807

  2005         156     185      341     4.5     4.35     4.42    702     805      1507

  Total 3      Main    Areas                                                      

  2004         1564    936      2500    3.8     4.1      3.9     5977    3806     9783

  2005         881     492      1373    3.47    3.67     3.54    3060    1805     4865
  ------------ ------- -------- ------- ------- -------- ------- ------- -------- -------

# Irrigation

The 2005 irrigated area planted estimate has also been released, 55,000
ha. for white and 70,000 for yellow for a total of 125,000 ha. or 8% of
the total area planted. The 2004 plantings amounted to 70,000 ha. white
corn and 120,000 ha. yellow for a total of 190,000 ha. or only about 7%
of the area planted in 2004. At 10 tons plus per hectare, the irrigated
production of about 1.25 million tons thus plays a bigger role in total
production and increases the average yield for the whole crop.

# Developing sector 

The crop in the developing sector has also been announced at 317,000
tons from 432,000 hectares, an improvement on the previous crop. As a
result of the cutback in the area planted in the commercial sector, the
area and production in the developing sector plays a more important role
in the total crop and the average yield.

# Biotech corn

Planting of genetically modified (GM) corn increased its market share
from 14.6 per cent of total South African corn planted in 2004 to 29.4
per cent in 2005, according to a survey submitted to the Maize Trust.
The major unique trait remains insect resistance with 72 per cent of the
total GM corn, while herbicide tolerant corn now stands at 28 per cent.
Actual hectares planted increased by 11 per cent to 455,287 despite
total area having slumped by 44 per cent. The following table contains
the details:

+-----------------+-----------------+-----------------+-----------------+
| Area planted    | White corn      | Yellow corn     | Total corn      |
|                 |                 |                 |                 |
| '000 ha.        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| 2004 Total      | 1,700           | 1,110           | 2,810           |
+-----------------+-----------------+-----------------+-----------------+
| Biotech         | 145             | 265             | 410             |
+-----------------+-----------------+-----------------+-----------------+
| \%              | 8.5%            | 24%             | 14.5%           |
+-----------------+-----------------+-----------------+-----------------+
| 2005 Total      | 985             | 580             | 1,565           |
+-----------------+-----------------+-----------------+-----------------+
| Biotech         | 280             | 175             | 455             |
+-----------------+-----------------+-----------------+-----------------+
| \%              | 28%             | 30%             | 29%             |
+-----------------+-----------------+-----------------+-----------------+

White GM corn showed the most dramatic increase from 8.6 per cent of
total white corn area in 2004 to 28 percent in 2006. Yellow GM area
planted grew from 24 per cent to 30.5 per cent of total yellow area.

## FAS 2006

##  

We also forecast the 2006 season - this is the crop to be planted from
November 2006. As the 2005 situation is still very unsettled 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 yield trends, excluding the
doubtful 2004 crop, at this stage.

# Consumption

We used to include commercial silo deliveries for March and April 2005
in our 2005/06-delivery figure as, depending on the season, the new crop
becomes available from March each year. Commercial deliveries for the
2004 crop up to the end of February 2006 are included in the following
table:

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

  March 2005        18                53                71

  April             37                104               141

  May -- Feb. 2006  6,065             3,893             9,958

  TOTAL 2004 crop   6,120             4,050             10,170

  May -- April 2006 6,102             3,941             10,043
  ----------------- ----------------- ----------------- -----------------

As shown in the table above the difference between March-February and
May-April deliveries is small. With additional storage facilities
reported to be available on farms the distinction between crops
disappears and we may as well revert to the official May/April marketing
season. The preliminary 2005/06 supply and distribution data is
available and a commercial PS&D, based on SAGIS information, can be
supplied to highlight the current situation.

  ------------ ---------- ---------- ---------- ---------- ---------- ----------
                          2004/05                          2005/06    

  1,000 MT     White      Yellow     Total      White      Yellow     Total

  B/stocks     2123       501        2624       2402       746        3148

  Deliveries   5647       3446       9093       6102       3941       10043

  Imports      0          219        219        0          360        360

  Supply       7770       4166       11936      8504       5047       13551

  Exports\*    668        64         732        1784       357        2141

  Cons.                                                               

  Human        3478       262        3740       3546       264        3810

  Feed         733        2694       3427       539        2979       3518

  Other        489        400        889        322        565        887

  Total        4700       3497       8056       4407       3667       8215

  E/stocks     2402       746        3148       2313       882        3195
  ------------ ---------- ---------- ---------- ---------- ---------- ----------

> \*Whole grain only

We can also supply a 2006/07 scenario based on the latest official crop
estimate, in this table it shows that white corn supplies should be
sufficient to carry through the 2006/07 marketing year and allow for
some feed use and exports. The higher price levels are likely to
suppress domestic and regional demand. The South African industry is,
however, finding it more and more difficult to effectively separate
Biotech and non-Biotech corn and with cross contamination both in the
fields and in the handling equipment it will soon become difficult to
supply non-Biotech certification. Yellow corn supplies will be tight but
the shortfall can be made up by suitable Biotech imports from Argentina.
From May 2005 to April 2006, 360,000 tons were imported and unloaded in
the ports of Cape Town, Port Elizabeth, East London and Durban.

The following table contains the details:

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

  1,000 MT          White             Yellow            Total

  B/Stocks          2315              880               3195

  Crop estimate     3616              2387              6003

  Farm retentions   166               357               523

  Expected          3450              2030              5480
  Deliveries                                            

  Imports           0                 750               750

  Supply            5765              3660              9425

  Exports           700               50                750

  Consumption       4500\*            3500              8000

  E/Stock           565               110               675
  ----------------- ----------------- ----------------- -----------------

# Trade

Preliminary data for the May 05/April 06 marketing season is available.
Whole grain exports jumped from 732,000 MT. in 2004/05 to 2.141 million
tons in 2005/06 mainly due to early overseas sales of cheap yellow corn
to Indonesia, Iran and Japan. The main increase for white corn was the
million tons sold to Zimbabwe after only 205,000 tons were sold in
2004/05.

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

               White    Yellow     Total    White      Yellow     Total

  Angola       33 644   430        34 074   14 162     204        14 366

  Benin                                     2 278                 2 278

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

  Cameroon                                  3 001                 3 001

  Chad                                      151                   151

  Congo        216                 216                            

  Ghana                                     7 638                 7 638

  Indonesia                                            49 500     49 500

  Iran                                                 93 284     93 284

  Japan                                                113 098    113 098

  Kenya        129 451             129 451  40 038                40 038

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

  Madagascar   2 382               2 382    967                   967

  Malawi                                    67 322     359        67 681

  Mali                                      2 258                 2 258

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

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

  Somalia                                   3 158                 3 158

  Sudan                                     28 272                28 272

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

  Tanzania                                  10 000                10 000

  Zambia                                    89 370     189        89 559

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

                                                                  

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

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

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

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td>’000 MT</td>
<td><p>MY</p>
<p>03/04</p></td>
<td></td>
<td></td>
<td><p>MY</p>
<p>04/05</p></td>
<td></td>
<td></td>
<td><p>MY</p>
<p>05/06</p></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Customs Union</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
<td>White</td>
<td>Yellow</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>Botswana</td>
<td>140</td>
<td>2</td>
<td>142</td>
<td>111</td>
<td>8</td>
<td>119</td>
<td>175</td>
<td>20</td>
<td>195</td>
</tr>
<tr class="even">
<td>Lesotho</td>
<td>124</td>
<td>6</td>
<td>130</td>
<td>112</td>
<td>7</td>
<td>119</td>
<td>82</td>
<td>23</td>
<td>84</td>
</tr>
<tr class="odd">
<td>Namibia</td>
<td>103</td>
<td>19</td>
<td>122</td>
<td>43</td>
<td>13</td>
<td>56</td>
<td>54</td>
<td>17</td>
<td>71</td>
</tr>
<tr class="even">
<td>Swaziland</td>
<td>29</td>
<td>26</td>
<td>55</td>
<td>18</td>
<td>28</td>
<td>46</td>
<td>26</td>
<td>36</td>
<td>61</td>
</tr>
<tr class="odd">
<td>Total</td>
<td>396</td>
<td>53</td>
<td>449</td>
<td>284</td>
<td>56</td>
<td>340</td>
<td>337</td>
<td>96</td>
<td>411</td>
</tr>
</tbody>
</table>

#### Prices

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

The following table shows current SAFEX futures prices.

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

**WHEAT**

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

  Country             South                                              
                      Africa                                             

  Commodity           Wheat                                              

  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             10/2004             10/2005              10/2006

  Area Harvested      830       830       800       805        820       794

  Beginning Stocks    598       598       560       594        596       500

  Production          1680      1680      1886      1886       1910      1750

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

  Jul-Jun Imports     1407      1350      1300      850        1200      1100

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

  TOTAL SUPPLY        3674      3673      3746      3580       3706      3350

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

  Jul-Jun Exports     338       350       350       325        350       320

  Feed Dom.           10        9         10        10         10        15
  Consumption                                                            

  TOTAL Dom.          2790      2754      2800      2755       2850      2760
  Consumption                                                            

  Ending Stocks       560       594       596       500        506       265

  TOTAL DISTRIBUTION  3674      3673      3746      3580       3706      3350
  ------------------- --------- --------- --------- ---------- --------- ----------

**Production**

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

**Consumption**

Milling for the human market increased by 3.1% from 2.653 million tons
in 2003/04 to 2.736 million tons in 2004/05. From October 2005 to April
2006 milling amounted to 1.558 million tons, 1.3% more than in the
corresponding months in 2004/05. Growth is slow and barely keeps pace
with population growth.

**Trade**

In MY 2003/04 South Africa exported 158,000 tons of South African wheat
and flower and 220,000 tons of imported wheat for a total of 378,000
tons. In MY 2004/05 exports of local stocks also amounted to 158,000
tons while exports from imported stocks amounted to 168,000 tons for a
total of 326,000 tons. In 2003/04 imports for own use amounted to 1.042
million tons and for re-export 236,000 tons to total 1.278 million tons.
In 2004/05 imports for own use amounted to 1.227 million tons and
168,000 tons for re-export to total 1.395 million tons. Imports and
exports for the current season from October 2005 to May 26, 2006 follow:

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

  Botswana     48,978       USA          22,661       81,814       104,475

  Lesotho      55,409       Australia    0            59,927       59,927

  Namibia      12,786       Argentina    32,797       241,605      274,402

  Swaziland    26,171       Germany      51,832       200,877      252,709

  Zambia       38,329       Ukraine      0            60,754       60,754

                            Brazil       6,301        0            6,301

                            Canada       3,300        23,879       27,179

  Total        181,673      Total        116,891      671,856      788,747
  ------------ ------------ ------------ ------------ ------------ ---------

**Prices**

Current SAFEX futures market prices are:

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

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

                                                                 
  -------------- --------------- --------------- --------------- ---------------