Johannesburg - South African yellow corn, mainly used to feed animals, closed at the highest level in 19 years on forecasts for dry weather in the biggest growing regions.
Yellow corn for delivery in December climbed 1.7 percent to R2 974 ($212) a metric ton on the South African Futures Exchange, the highest level in data going back to 1996. White corn for delivery in the same month gained 1.4 percent to R3 239 a ton, the highest since July 31.
“People are worried about the weather this year as South Africa can ill afford another drought,” Brink van Wyk, a trader at BVG, said by email. “There is not much rain in the forecasts.”
South Africa has been hit by the worst drought since 1992 and a decline in corn production from the Free State and North West provinces, which accounted for almost two-thirds of output last year. The nation has started importing grain.
The nation’s Crop Estimates Committee predicts this season’s harvest will be 9.84 million metric tons, the smallest since 2007. Last year’s crop was the biggest in 33 years at 14.3 million tons.
There is no rain forecast in the town of Kroonstad in the Free State for Monday and Tuesday, according to the South African Weather Service website. In the town of Lichtenburg in North West, there is no rain predicted this week.
The rand’s decline against the dollar is making imports of corn more expensive and raising demand for locally produced grain. The currency is near a record low at R14.0385 per dollar.
“Maize prices across the board rallied higher on the back of a weaker domestic currency,” Warren Langridge, a trader with Sigma Option Writers in Hermanus, South Africa, said by email.
The price of white corn is up 51 percent this year, while yellow corn gained 37 percent.
BLOOMBERG