South African Yellow Corn Rallies to Record as Rains Too Lateby
Corn prices have advanced on crop damage caused by El Nino
Traders say recent, forecast rainfall won't be enough
South African yellow corn rallied to a record on concern that rain the country’s main growing areas will do little to prevent drought damage caused by the El Nino weather pattern.
Futures for yellow corn, a base for animal feed, climbed for a fourth day to the highest since at least 1996 in Johannesburg. Prices of the white type, which is used to make a staple food locally, jumped by an extended daily limit to near the highest on record. The market is disregarding recent and forecast downpours, according to Warren Langridge, a trader with Sigma Option Writers (Pty) Ltd. in Hermanus, South Africa.
The El Nino phenomenon caused the least rainfall in more than a century last year, boosting corn prices by at least 66 percent. The government’s Crop Estimates Committee in October said growers in the continent’s biggest corn producer will probably sow the smallest area with the grain since 2011. Since then, many parts of South Africa have experienced record temperatures and little rain, making the country a net importer of corn for the first time since the 2008 season.
"The rain changed perceptions for a day or two, but it was really too late and people are realizing that South Africa is still facing a severe shortage of maize," Brink van Wyk, a trader at BVG (Pty) Ltd., said by e-mail. Maize is another term for corn.
Yellow corn for delivery in July rose 2.2 percent to 3,695 rand ($222) a metric ton on the South African Futures Exchange. A fourth straight advance is the longest run in three weeks. The white variety for delivery in the same month gained 2.6 percent to 4,821 rand a ton, climbing by the extended 120 rand daily limit. Prices reached a record 4,865 rand on Jan. 6.
In the first 10 days of this month, the Free State towns of Cornelia and Heilbron received 26 millimeters (1 inch) of rain, while Frankfort got 24 millimeters, according to the South African Weather Service. In North West, 80 millimeters fell in Hartebeespoort Dam and Lichtenburg Plaasverlies received 27 millimeters.
The town of Kroonstad in the Free State province, where most of the nation’s corn is produced, may get 0.7 millimeters rain on Thursday, according to data on the yr.no weather website. In the North West town of Rustenburg, 8.9 millimeters rain may fall. The two provinces accounted for almost two-thirds of corn output in 2014.
The northwestern and central parts of the Free State have only planted corn on about 23 percent of the intended area, while in the North West province, only 30 percent of the planned grain is in the ground, Grain SA farmers’ association said last week.