05.06.2017

SA to set sights on Asia after bumper maize crops in Africa

It looks like Africa is well supplied and if Africa needs maize, with the likes of Kenya and Burundi - Wandile Sihlobo, Agbiz economist

BusinessDay

SA will need to target Asian markets to boost maize exports in 2017 after bumper crops at home and in neighbouring countries depressed prices and dampened demand in Africa.

South African farmers, who are expected to produce a maize surplus of about 3.5-million tonnes this season, will need to attract new maize importers or crops may be wasted in another setback for the struggling economy.

SA posted a maize deficit in 2016 due to a scorching drought but will return to surplus this season.

Africa’s biggest commercial crop producer exported almost all its maize surplus in 2014-15 to other African countries.

This season SA hopes to export most of its maize surplus for the first time to Asia and the Middle East, where buyers use it for animal feed rather than human consumption.

Industry producer group Grain SA said it would target markets including Japan, South Korea, Taiwan and the Middle East. SA has a geographical advantage over rivals like Argentina to supply these markets.

"Most of those countries in the East don’t have a lot of land, their animal feed industry mostly imports all the raw materials," Grain SA CE Jannie de Villiers said. "I don’t expect a lot of maize going into Africa."

SA will struggle to sell maize in Africa after increased rainfall boosted crops in Malawi and Zambia, which have lifted export bans on their non-genetically modified crops that are preferred on the continent.

"It looks like Africa is well supplied and if Africa needs maize, with the likes of Kenya and Burundi, they still have tough restrictions on [genetically modified crops]," said Wandile Sihlobo, an economist at the agricultural business chamber.

SA is expected to harvest a record 15.6-million tonnes of maize in 2017, double 2016’s output. Favourable weather conditions have lifted yields following an El Nino induced drought that scorched crops in 2016.

SA’s domestic consumption is usually around 10.5-million tonnes.

Persistent low maize prices could result in farmers, many of whom had high debts following the drought, reducing plantings in 2018 and switching to more profitable crops such as soy beans, said De Villiers.

SA planted about 2,628,600ha of maize this season, up 35% from the previous year when plantings and yields were hard hit by the drought.

White maize used mainly for human consumption in SA is likely to be used in animal feed along with the yellow variety if prices continue to drop amid an oversupplied market.

"A lot of the surplus of white maize will be utilised locally in animal feed rather than exported," said De Villiers.

The white maize contract due in September was down 1.49% to R1,780 a tonne by 10.57am, about 67% lower than record peaks of more than R5,000 a tonne scaled in January 2016 during the drought.

Reuters

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