South African corn sowings fall - but not as sharply as investors expected

31.01.2018

South African corn sowings fell to amongst their lowest in years thanks to “less favourable rainfall”, which depressed plantings of other crops too, officials said – although the decline is less severe than investors expected.

Farmers in South Africa planted 2.31m hectares with maize [corn] for the 2018 harvest, more than 160,000 hectares fewer than they had intended, the official crop estimates committee said.

The shortfall left corn sowings down 317,000 hectares year on year, and their lowest in at least a decade, bar the 1.95m-hectare figure in 2016, amid a particularly difficult drought.

However, the seedings estimate was higher nonetheless than the figure of about 2.15m-2.16m hectares suggested by investor polls, with the area of white maize in particular exceeding market expectations.

Plantings of white maize – a food staple, as opposed to the yellow maize used in the main as feed – came in at 1.28m hectares, a drop of some 360,000 hectares year on year, but ahead of the 1.15m hectares that investors had forecast.

Price implications

The data were termed “surprising” by Wandile Sihlobo, head of agribusiness research at industry group AgBiz, adding that it was “different from what we had been hearing on the ground” from growers in dry areas of the country.

Nonetheless, he cautioned against expecting an overly bearish reaction in futures markets.

“It would seem negative for prices on fundamentals for this season, but that would be to discount the effect of large stocks” built up by the record 2017 harvest.

With the inventory build, and an outlook for rainfall ahead, having prevented prices from reacting to the weak sowings prospects, there was limited risk premium now left to remove, with any potential drop in futures prices on Wednesday likely to prove “short-lived”.

Sunseed imports to jump?

Still, the data may pose implications for the sunflower market, with sowings of the oilseed pegged at a five-year low of 560,100 hectares - down more than 75,000 hectares year on year.

Growers had originally intended to raise sunflower sowings this year to 665,500 hectares on crop estimates committee estimates.

With South Africa lacking in sunflowers the hefty stocks the country has in corn, the lower sowings estimate, in implying weaker production, mean the country “may have to ramp up on imports”, Mr Sihlobo said.

The committee flagged that for sunflowers there was still potential for extra plantings, saying that “rainfall within the next two weeks can still influence farmers’ decisions to plant” the crop.

Weather outlook

On corn, the committee said that “less favourable rainfall and warm temperatures in the western producing areas over the past few weeks prevented producers from planting their intended area with summer crops”.

This was “especially” true in the Free State and North West provinces, particularly big areas for growing white maize, but where dryness has been particularly acute.

However, South Africa, including dry areas, is poised for further rainfall, after the showers last week which “began to ease dryness across the corn belt, improving conditions for development of the corn crop”, said Kyle Tapley at weather service Radiant Solutions.

“Despite the recent increase in rainfall, some areas of dryness do remain, particularly in North West Province, northern and western Free State, Gauteng, Mpumalanga, and Limpopo,” Mr Tapley said.

“Additional showers are expected this week, however, which should lead to further improvements in soil moisture.

“Drier weather should return… next week, but by that time soil moisture levels should be adequate for development of the corn crop across most of the belt.”


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