Johannesburg - South Africa, the continent’s largest producer of corn, may have to pay as much as $1.2 billion for imports of the grain this season as an El Nino-induced drought damages crops in the nation’s main producing areas.
It would cost R17 billion ($1 billion) to R20 billion to import 5 million tons of corn, Wandile Sihlobo, an economist at the Grain SA farmers’ lobby group, said in an emailed response to questions on Monday. That’s almost half of what’s required for domestic demand, which is forecast at 10.5 million tons by the Grain and Oilseed Supply & Demand Estimates Committee.
“These expected imports will put additional pressure on the infrastructure and are also quite negative for South Africa’s agricultural trade balance,” he said. “South Africa is traditionally a net maize exporter.”
The worst drought since 1992 means that growers in the continent’s biggest corn producer will probably sow the smallest area with the grain since 2011, the government’s Crop Estimates Committee said on October 27. Since then, many parts of South Africa have experienced record temperatures and little rain. The country was last a net importer of corn in the 2008 season.
The price of white corn, which is used to make a staple food locally, has more than doubled since the start of 2015, while the yellow variety that’s a base for animal feed has advanced 63 percent. As a result, food inflation may go up by about 12 percent toward the middle of the year, more than double the 4.8 percent recorded in November. Ernst Janovsky, the head of agribusiness at Barclays Africa Group Ltd, said by phone from Johannesburg.
Yellow corn climbed 2.3 percent to R3 529 a metric ton by the close on the South African Futures Exchange while the white variety declined 1.6 percent to R4 565 a ton.
BLOOMBERG