JOHANNESBURG– South Africa will need to target Asian markets to boost maize exports this year after bumper crops at home and in neighbouring countries depressed prices and dampened demand in Africa.
South African farmers, who are expected to produce a maize surplus of around 3.5 million tonnes this season, will need to attract new maize importers or crops may be wasted in another setback for a struggling economy.
South Africa posted a maize deficit last year due to a scorching drought but will return to surplus this season.
Africa’s biggest commercial crop producer exported almost all its maize surplus in 2014/15 to other African countries.
This season South Africa hopes to export most of its maize surplus for the first time to Asia and the Middle East, where buyers use it for animal feed rather than human consumption.
Industry producer group Grain SA said it will target markets including Japan, South Korea, Taiwan and the Middle East. South Africa has a geographical advantage over rivals like Argentina to supply these markets.
“Most of those countries in the East don’t have a lot of land, their animal feed industry mostly imports all the raw materials,” Grain SA chief executive Jannie de Villiers told Reuters. “I don’t expect a lot of maize going into Africa.”
South Africa’s will struggle to sell maize in Africa after increased rainfall boosted crops in Malawi and Zambia which have lifted export bans on their non-genetically modified (GM) crops that are preferred on the continent.
“It looks like Africa is well supplied and if Africa needs maize, with the likes of Kenya and Burundi, they still have tough restrictions on GM,” said Wandile Sihlobo, an economist at the agricultural business chamber.
South Africa is expected to harvest a record 15.6 million tonnes of maize this year, double last year’s output. Favourable weather conditions have lifted yields following an El Nino induced drought that scorched crops in 2016.
South Africa’s domestic consumption is usually around 10.5 million tonnes.
Persistent low maize prices may result in farmers, many of whom have high debts following the drought, reducing next year’s plantings and switching to more profitable crops such as soy beans, said de Villiers.
South Africa planted an estimated 2,628,600 hectares of maize this season, up 35 percent from the previous year when plantings and yields were hard hit by the drought.
White maize used mainly for human consumption in South Africa will likely be used in animal feed along with the yellow variety if prices continue to drop amid an over-supplied market.
“A lot of the surplus of white maize will be utilised locally in animal feed rather than exported,” said de Villiers.
The white maize contract due in September was down 1.49 percent to 1,780 rand a tonne by 0857 GMT, around 67 percent lower than record peaks of over 5,000 rand a tonne scaled in January last year during the drought.