Johannesburg - Grain SA, the biggest representative of commercial farmers in South Africa, said prices for the nation’s white corn could surge as much as 27 percent if the drought-stricken North West doesn’t get more rain to enable farmers to plant.
The government of the region, which produced about 30 percent of the country’s white corn last season, declared a drought in September. The province’s harvest of the crop, also known as maize, probably fell 45 percent in the 2013 season to 1.16 million metric tons, or 21 percent of the national total, the Crop Estimates Committee said in its most recent prediction.
Prices have risen 16 percent this year, with the contract for delivery in March little changed at R2 449 a ton by the close in Johannesburg on Thursday. White corn’s import-parity price, or the cost local customers would pay for buying the commodity outside the country and transporting it to the nation, is about R3 100 a ton, according to the South African Grain Information Service’s website.
“If we have a crop failure in North West this season, we could see white-maize prices moving to import parity,” Chief Executive Officer Jannie de Villiers said in an emailed response to questions. That is 26 percent higher than current prices. “With maize being the staple food and feeding into poultry, dairy and meat industries, food inflation will surely become a problem.”
Food-price inflation this year peaked at 7.4 percent in August and slowed to 4.2 percent in October, according to the South African Reserve Bank’s Monetary Policy Review released on November 26. Growth in the consumer-price index fell to 5.5 percent in October, the slowest pace since June. The central bank targets inflation of 3 percent to 6 percent.
The nation is the continent’s largest producer of the grain. The white variety is a staple food and the yellow type is mainly fed to animals. Provinces that produce white corn have had less rainfall than those that grow yellow, and the country may produce more of the yellow variety for the first time in 19 years.
Lichtenburg in the North West province has a 30 percent chance of rain today and tomorrow, rising to at least 60 percent until Dec. 3, according to the South African Weather Service’s website.
So far the rains haven’t been sufficient for farmers to commence planting, De Villiers said. “The optimum planting period for maize in the North West is November 15 to December 15.,” he said. “Time is thus running out.”
The Crop Estimates Committee will release final corn-harvest figures for the season that ended in April at 3.30pm. Growers probably produced 11.7 million tons of the grain, or 3.3 percent less than the 2012 season, according to the median estimate of six analysts’ estimates in a Bloomberg survey.
In 2010, South Africa produced 12.8 million tons of corn, the biggest crop since 1982. - Bloomberg