Johannesburg - South African yellow-corn futures dropped from a record as rain is forecast for the second-biggest producing province, while prices for the white variety rose as dry weather in crucial planting areas persists.
Yellow corn for delivery in December dropped 1.4 percent to R2 997 ($216) a metric ton by midday on the South African Futures Exchange in Johannesburg. It closed at the highest since at least August 1996 on Monday, with the grain’s 14-day relative-strength index rising to 67. A reading of 70 or more is a signal to those who study charts that an increase may have gone too far and there’s the possibility of a decline. White corn gained 2.2 percent to R3 075 rand a ton, the highest level since October 30.
"Some weather maps show some rain over Mpumalanga next week, where mostly yellow is planted,” Brink van Wyk, a trader at BVG, said by e-mail.
The town of Barberton in the Mpumalanga province, which vies with the Free State as the biggest growing region for yellow corn and will produce about 30 percent of the 2015 harvest, has a 30 percent chance of rain on November 8, according to data on the South African Weather Service website. No rain fell in the province overnight.
Farmers in Africa’s biggest corn producer will reduce 2016 season plantings of the grain to the smallest since 2011 because of poor rains in the main growing regions, according to the Crop Estimates Committee. A drought in the previous season cut producers’ harvest to the smallest since 2007. A strengthening El Nino pattern bringing dry conditions to sub-Saharan Africa has prompted the national weather service to predict below- normal rainfall for the next four months.
"The optimal planting time, especially for the western parts of the main producing areas areas like North West and the west of Free State, is November 15 and December 15," Wandile Sihlobo, an economist at the Grain SA farmers’ lobby, said by phone Tuesday. "These were the parts that were mostly affected by the drought, so now the farmers there are looking at the rain forecasts because these are the areas that mostly produce white maize,” he said, using the local term for corn.
South Africa has had to resume imports of corn because of the drought. The nation bought 24 437 tons of white corn from Mexico in the week ended October 30, the Pretoria-based South African Grain Information Service said in a statement on its website. That is biggest amount of that variety the country has brought in from Mexico since 2012.
BLOOMBERG