Johannesburg - South African corn surged to a record as dry weather threatens yields in the coming harvest and inventories in the continent’s largest producer of the grain fall below acceptable levels.
The country had 23 days of available white-corn stock at the end of November, the Grain and Oilseeds Supply and Demand Estimates Committee said in its most recent report.
That’s down from 37 days at the end of June, when the first assessment was published.
For the yellow variety, the projected availability was 30 days from 42 days four months earlier.
Actual stockpiles of both types declined 20 percent in November to 3.99 million metric tons from a year earlier, the Grain Information Service said on December 20.
“If you’ve got stock, you’ve got gold,” Kallie van Heerden, a trader at Farmwise Grains (Pty) Ltd. in Johannesburg, said by phone.
Healthy inventories would be from 37 days to 40 days, he said.
“I would go long at this moment at this level.”
The March-delivery contract for white corn, one of the nation’s staple foods, climbed 0.7 percent to 2,913 rand ($275) a ton by the close on the South African Futures Exchange in Johannesburg, the highest level since trading started in 1996.
The yellow variety, used mainly as animal feed, for delivery in the same month erased an intraday gain of as much as 2.9 percent to a record 2,852 rand a ton to close 1.3 percent lower at 2,735 rand.
South Africa’s harvest of the white variety was the smallest since 2007 last year, dropping 20 percent from 2012, after the main growing regions didn’t receive sufficient rain in the planting period, the Crop Estimates Committee said in November.
Output of the yellow variety exceeded that for the white for the first time since 1995.
Grain SA, the nation’s biggest representative of commercial farmers, said November 29 white corn may surge as much as 27 percent if the drought-stricken North West province doesn’t get more rain to enable farmers to plant.
World production of corn, also known as maize, may reach a record 964.3 million metric tons in the 2013-2014 season, after US farmers harvested the biggest crop yet, the US Department of Agriculture estimates.
Prices of the grain dropped 40 percent on the Chicago Board of Trade in 2013, the most among 24 commodities in the Standard & Poor’s GSCI Spot Index.
‘We’re not short of maize or wheat this year globally by any means,’’ said Amy Reynolds, an economist at the International Grains Council in London.
“There’s no shortage of stuff on the seas ready to be sold” if South Africa needs to import, she said.
The depreciation of South Africa’s rand will boost the cost of grain shipments to the nation.
The currency, which lost 19 percent against the dollar last year, declined to the weakest level in almost five years against the greenback yesterday.
The rand gained 0.9 percent to 10.5895 per dollar by 2:16 p.m. in Johannesburg.
The nation’s corn farmers plant the crop in the summer months of October to December and reap their harvest from April.
“The weather has more of an impact on July, or new-season, prices and although we started off dry it seems OK for now,” Brink van Wyk, a trader at Pretoria-based BVG, said in an e-mailed response to questions.
“To buy at these very high prices may not be a good idea; the market can make a quick correction to the downside.”
Food accounts for 17.5 percent of the consumer inflation basket.
Price growth slowed to 5.3 percent in November from 5.5 percent a month earlier, according to Statistics South Africa. - Bloomberg News