South African wheat advanced to a record as a weaker rand made imports of the cereal more costly. Corn declined as weather forecasts show a possibility of rain that would ease the worst drought in 23 years.
Wheat for delivery in December gained 0.8 percent to 4,427 rand ($311) a metric ton by midday on the South African Futures Exchange in Johannesburg, the highest closing level since trading started in November 1997. It reached 4,430 during trading. The rand fell to a record-low 14.3827 per dollar Wednesday, extending the drop this year to 19 percent.
“Since the rand moved substantially over 14 rand, there has been a bit of a lag,” Andrew Fletcher, an independent trader in Kroonstad, South Africa, said by phone on Wednesday. “The market now sees how expensive it is to import wheat.”
The nation’s Crop Estimates Committee has reduced its forecast for grain plantings and harvests because of the worst drought since 1992. Wheat production may decline to the least since 2011, while the corn area for 2016 will be the smallest in five years, it said Oct. 27.
While the nation is the sub-Saharan region’s biggest producer of wheat after Ethiopia, it’s still a net importer, according to U.S. Department of Agriculture data. It’s the continent’s largest corn grower.
White corn for delivery in December fell 2.4 percent to 3,195 rand a ton, paring the increase this year to 49 percent, while the yellow type declined 0.8 percent to 3,000 rand a ton, taking the advance in 2015 to 39 percent.
“Good rainfall in the summer rainfall region of South Africa over the next months is possible and can still break the drought cycle and ensure relief,” Agri SA, the country’s biggest farmers’ organization, said in an e-mailed statement. “However, scenarios are increasingly pointing to a situation where significant imports of maize, as staple food crop, will become necessary.”
Cornmeal made from the white variety is used to make the South African staple known as pap, while yellow corn is used to feed animals bred for meat such as beef and chicken. White corn comprises only about 13 percent of global output, according to the United Nations’ Food and Agriculture Organization. This makes it difficult to import.
The country has imported 67,340 tons of white corn since the season started in May, according to data on the South African Grain Information Service website. It last brought in this variety in October 2012. Yellow corn imports are so far at 411,351 tons.
The town of Bloemfontein in the Free State province, the biggest growing region at 40 percent of the 2014-15 season’s harvest, may get 5.1 milliliters (0.2 inch) of rain on Nov. 20 according to yr.no, a joint service by Norwegian Meteorological Institute and the Norwegian Broadcasting Corp. and which provides information on South Africa.
(Source – http://www.bloomberg.com/news/articles/2015-11-11/south-african-wheat-rises-to-record-as-rand-slumps-corn-falls)