UN Sees Favorable Southern Africa Corn Outlook Amid Armyworms

Corn crops in southern Africa are in good condition in the largest producing areas as rains improved, while some regions had too much moisture and fields were infested with armyworms, the United Nations’ Food & Agriculture Organization said.

In South Africa, the region’s largest producer, the area planted with corn is higher than a year earlier, the Rome-based agency wrote in a report on its website yesterday. Dry weather early in the season in southern areas of Zimbabwe, Madagascar and Mozambique may cut yields, while rain in December and early January alleviated some stress. Heavy rainfall early this month caused some flooding and crop losses in parts of Botswana, Malawi, Mozambique, Namibia, South Africa and Zimbabwe.

“With water levels remaining at elevated levels, the potential for further floods remains,” the FAO said. “The situation needs to be monitored closely in the coming weeks.”

Areas of Botswana, Malawi, Namibia, Zambia and Zimbabwe also saw outbreaks of armyworms in late 2012 that may reduce yields, the FAO said. Farmers in Zambia were able to replant some affected fields with early maturing crop varieties, and control measures were put in place to help keep the pest from spreading in the sub region, according to the report.

“Although the full extent of the damage is not yet known, any significant crop losses would deteriorate local food security conditions,” the FAO said.

South African corn prices peaked near a record in August 2012, and remain at “relatively high levels” even after declining in September and December, the FAO said. Corn futures on the Chicago Board of Trade, the global benchmark, surged to a record $8.49 a bushel in August as drought hurt crops in the U.S., the world’s biggest grower and exporter.

Malawi Corn

In Malawi, corn prices in November were double year-earlier levels. About 2 million people in the country needed food assistance in the country in October, 21 percent more than in June, the FAO said, citing the Malawi Vulnerability Assessment Committee. Food aid distribution and the release of government subsidized corn has tempered prices in recent weeks, it said.

In Zambia, corn meal prices climbed 19 percent from November to December as the cost of grain rose 9 percent, the FAO said. A government directive to millers to cut prices has spurred some abatement in wholesale costs, while retail prices have been slow to decline, according to the report.

In Mozambique, heavy rain and flooding has disrupted transportation, reducing food supplies in wholesale markets in some areas, the FAO said. This may push corn prices higher in the region, according to the report.

To contact the reporters on this story: Whitney McFerron in London at wmcferron1@bloomberg.net;

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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