El Nino to cut corn output by 25%. Need Imports of 5m tonnes to cover shortfall.

Consumers must brace themselves for what could be a massive strain on already empty pockets. The milk industry is cutting supply, which in turn will drive prices. We are also expecting the South African Reserve Bank to increase rates today by an estimated 50 basis points. The local currency is in freefall, and despite expectations that a rate hike will stop the rot, the weak trend is expected to persist. And now the El Nino weather pattern has ravaged the corn season. The season’s harvest is the smallest since 2007, 25 percent less than last season. And given a weak rand, imports that are needed will cost more. And as the basic ingredient for staple food like pap, the damage is far-reaching. A classic supply/demand case in play. If 2015 was tough, 2016 just got a whole lot tougher. – Stuart Lowman

By Tshepiso Mokhema

(Bloomberg) — South Africa, the largest corn producer on the continent, will probably reap the smallest harvest since 2007 this year after the country suffered the lowest rainfall since records began because of the global El Nino weather pattern.

Growers will probably produce 7.44 million metric tons of corn in the season that ends in April, Marda Scheepers, a spokeswoman for the nation’s Crop Estimates Committee, said by phone Wednesday. That’s 25 percent less than the 9.9 million tons in the previous season and exceeds a 6.1 million-ton median prediction by seven analysts surveyed by Bloomberg.


The area sowed was 1.995 million hectares (4.9 million acres), 25 percent less than in 2015 and the smallest since 2006. The estimate by six analysts was for 1.6 million hectares, or 37 percent less than the 2.55 million tons farmers had planned.

Prices for white corn, used to make a staple food known as pap, rose to a record Jan. 21 as dry weather hurt supply. South Africa will probably need to import about 970,000 tons of corn in the year to April and 5 million tons of corn in the following 12 months as rainfall declined to the least since at least 1904, according to Grain SA, the biggest farm lobby.

Read also: Hunger strikes Southern Africa. El Nino decimates crops, livestock.

“Assuming that this crop will materialize, this would mean that South Africa might not need 5 million tons of maize imports as previously expected, but would rather import 3 million tons to supplement the domestic supplies,” Wandile Sihlobo, an economist at Grain SA, said in an e-mailed note Thursday, using the local term for corn. “However, it is important to highlight that this is still a preliminary forecast; hence, one would need to observe the next two or three estimates to get a clear picture of the current crop conditions.”

The wheat-production estimate was unchanged at 1.5 million tons for the season that ended in September. This compares with a median prediction for a 0.3 percent reduction to 1.495 million tons this season by four of the analysts surveyed by Bloomberg.

Read also: Surging food prices loom: How SA kindled own spark that ignited Arab Spring

Sunflower production this year will probably fall 6 percent to 622,000 tons, while groundnut output may decline 48 percent to 29,600 tons, Scheepers said. The soybean harvest may decrease27 percent to 768,560 tons while the drybean crop may fall 52 percent to 35,150 tons. Sorghum production will probably increase 2 percent to 119,400 tons.

White corn for July delivery dropped 2.3 percent to 4,770 rand ($291) a ton on the South African Futures Exchange in Johannesburg Wednesday, while the yellow variety for the same month declined 1.3 percent to 3,540 rand.

The white-corn crop may be 31 percent smaller than last year’s, falling to 3.27 million tons, while the harvest of the yellow type may decline 20 percent to 4.17 million tons, the committee said.

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