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JOHANNESBURG — This story on corn exports grabbed my interest for several reasons. The first being that South Africa’s agricultural sector has just notched up its highest exports of corn to the European Union in seven years amid a bumper crop. This is an incredible development, especially when considering South Africa’s distance from the Eurozone. What’s more interesting is that these record exports are said to be continuing as we speak (during the month of May) at a time when the rand has been relatively strong to the euro, at least over a six month period. As of November 15, 2017, the rand was trading at just shy of R17/€. As of this week, it’s been hovering around R14.87/€. There may have been a lot of forward-buying that took place at the beginning of the year as well, but this is still an indicator of how important South Africa’s agricultural sector has become. When approaching the land debate, Parliament will need to consider the growth prospects of this sector very seriously and tread carefully (and rationally). – Gareth van Zyl
(Bloomberg) — Europe’s hunger for corn is giving South Africa a surprising destination to sell more of its record crop.
Africa’s top corn grower typically doesn’t export much to the European Union due to the long shipping distance and uncompetitive cost. But last year’s big harvest has cut prices, and should help South Africa ship more to the EU than in the previous six years combined, according to Strategie Grains.
The increased trade comes as EU imports surged 41 percent this season amid strong demand for animal feed and cheap grain from more traditional suppliers such as Ukraine, Brazil and the U.S. Spain has accounted for all of the EU’s recent purchases from South Africa, whose last harvest more than doubled from a year earlier when the worst drought on record hurt crops.
“We have already seen a corn shipment from South Africa to Spain and several more are expected in May and June, which is very unusual,” Strategie Grains analyst Laurine Simon said. The “EU is not a usual market for South African corn because most of the time it’s too expensive to buy corn from South Africa. Even when South Africa exports, it usually does so to neighboring countries.”
Spain and Italy are forecast to import a combined 260,000 tons from South Africa in the 12 months ending September, the most in seven years, Strategie Grains estimates. South African prices have slumped at least 37 percent in the past two years, underperforming Ukrainian, U.S. and French grain.
South African corn exports to Spain, the EU’s biggest grain importer and which is also recovering from a drought, have in the first two weeks of May already surpassed the entire previous 12-month period, South African Grain Information Service data show. Italy and Portugal have also imported in the past decade.
“Spain really surprised us by buying huge quantities of South African white corn because in the past it has not been a big market for us,” said Wandile Sihlobo, head agricultural economist at the Pretoria-based Agricultural Business Chamber. “We will be watching with interest to see how this evolves as we expect to see continued good demand for South African corn.”
The imports of South African corn are still a fraction of the amount the EU buys from Ukraine or Brazil. The African country recently started collecting its new harvest, which is expected to be close to the average over the past decade.
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