South African Yellow Corn Surges Most in Month as Rand Weakensby
Weaker local currency makes local grain more attractive
Yellow corn has declined 29% this year, boosting demand
Yellow corn in South Africa, the continent’s biggest producer, rallied the most in a month after the nation’s currency slumped the most in five years against the dollar, making locally produced grain more attractive relative to imports.
Yellow corn for December delivery climbed 3.2 percent, to 3,214 rand ($225) a metric ton on the South African Futures Exchange in Johannesburg. That was the biggest increase since Oct. 11. The white variety for the same month advanced for a third day, adding 2.8 percent to 3,735 rand a ton.
The currency of Africa’s biggest economy depreciated as much as 5.2 percent against the dollar Thursday and extended the drop today, leading a decline among emerging-market currencies together with the Mexican peso on expectations that U.S. president-elect Donald Trump’s spending plans will boost inflation in the country, leading to soaring U.S. Treasury yields and undermining the case for riskier government debt.
“The weaker rand is the key driver of the market at the moment,” Wandile Sihlobo, the head of economic and agribusiness intelligence at the Pretoria-based Agricultural Business Chamber, said in an e-mailed response to questions.
White corn, which South Africans use to make a staple food called pap, has dropped 29 percent since reaching a record on Jan. 20. Prices have declined as analysts forecast a recovery in the crop, which has been hampered by two straight years of insufficient rains.
Farmers will increase the area planted with corn by 27 percent in the 2017 season that ends in April as forecast showers relieve the worst drought on record, the Crop Estimates Committee said Oct. 26.
“With the expected shortfall in white-maize supplies later this season, buyers are finding the current levels attractive,” Sihlobo said, using another term for corn.