South Africa produced its second highest corn crop on record of 16.1 million tonnes in the 2019/20 MY, which is 38% higher than the 2018/19 MY’s crop of 11.3 million tonnes.
This bumper corn crop is suppressing local corn prices and is expected to continue to do so past the 2020/21 MY’s planting season, putting downward pressure on the area to be planted with corn later in 2020.
This is especially true for the white corn areas, as South Africa produced an ample white corn crop of more than 9 million tonnes in the 2019/20 MY. A 20% drop in the 2020/21 MY for the commercial area planted with white corn is forecast at 1.3 million hectares.
The expected commercial yellow corn area in the 2020/21 MY should be at average levels of about 1 million hectares. As a result, around 2.3 million commercial hectares of corn are forecast to be planted later in 2020, which is 11% less than the area planted in the 2019/20 MY.
Under normal climatic conditions and taking into account the subsistence farming sector, South Africa’s corn crop for the 2020/21 MY could reach 12.6 million tonnes, which is 21% less than the expected corn crop in the 2019/20 MY (16.1 million tonnes).
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The consumption of corn (white and yellow corn) in South Africa increased, on average, by about 2% per annum over the past 10 years, mainly driven by population and economic growth. However, the South African economy recorded its third consecutive quarter of economic decline, and economists estimate that the economy could shrink as much as 10% because of Covid-19.
While white corn, in the form of a meal, is the staple food for many South African households, yellow corn is used as the primary ingredient for animal feed, especially in the broiler industry. Post foresees that the demand for corn for animal feed in the 2019/20 MY will stay at the 2018/19 MY’s level of 5.7 million tonnes, as the shrinking local economy will limit an increase in the demand for animal protein. As a result, it is estimated that only a marginal increase in the total commercial demand for corn in the 2019/20 MY to 11.4 million tonnes. It is predicted that this marginal increase in the commercial demand for corn will continue in the 2020/21 MY to 11.6 million tonnes as South Africa’s economic growth will still be under pressure in 2021 due to the Covid-19 pandemic.
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Post increased the commercial demand estimate for corn in the 2018/19 MY marginally to 11.3 million tonnes to correlate with the final consumption figures released by the South African Grain Information Services (Sagis) in June 2020. This represents an increase of 3% from the previous year’s corn consumption of 10.9 million tonnes. According to Sagis, 5.4 million tonnes of corn was used for human consumption and 5.7 million tonnes was milled for animal feed. Of the total commercial corn consumption, white corn represented 49%, mainly for human consumption, while yellow corn represented 51%, mainly for animal feed.
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South Africa will remain a net exporter of corn in the 2020/21 MY. Post estimates South Africa should be able to export around 600,000 tonnes of corn in the 2020/21 MY, as stock levels will still be relatively high despite an expected decrease in commercial production. These exports will mainly be to South Africa’s established markets in neighbouring countries. For the 2019/20 MY, it is estimated that South Africa will export about 2.5 million tonnes of corn. Corn exports continue amidst a Covid-19 lockdown that began on 27 March 2020, as the South African government labelled the food supply system as an essential sector that needs to remain uncompromising and functional. In the 2018/19 MY, South Africa exported 1.4 million tonnes of corn consisting of 1 million tonnes of white corn and 410,000 tonnes of yellow corn. The major markets for South African corn were mainly its neighbouring countries with Zimbabwe, Botswana, Namibia, Mozambique, Eswatini (Swaziland) and Lesotho, representing almost 90% of corn exports. South Africa also imported 510,000 tonnes of yellow corn in the 2018/19 MY from Argentina and Brazil to augment local production.
This article is based on a USDA Gains report prepared by Dirk Esterhuizen.