Bloomberg News

South Africa to Plant Smallest Area of Wheat on Record

April 24, 2012

South African farmers are expected to plant the smallest area of wheat on record after prices dropped, the nation’s Crop Estimates Committee said.

The country will sow 547,200 hectares (1.4 million acres) of the cereal, 9.5 percent less than the area covered in the previous season, Marda Scheepers, a spokeswoman for the committee, said by phone from Pretoria today. That would be the smallest area since at least 1931, when the committee’s records began, she said. The figure compares with a median estimate of 600,000 hectares by eight analysts surveyed by Bloomberg News.

“This is because of low prices and grading regulations,” she said. “It’s more difficult to get good-quality wheat at silos.”

Wheat prices have declined 14 percent over the past year on the Johannesburg-based South African Futures Exchange. Wheat for May delivery increased 0.5 percent to 2,697 rand ($346) a metric ton by the noon close. The nation produced 1.43 million tons of wheat in the 12 months through September, the smallest crop since 1992, according to Grain South Africa.

South Africa, which is a net importer of wheat, is sub- Saharan Africa’s largest producer of the grain and the region’s third-biggest importer after Nigeria and Sudan, according to U.S. Department of Agriculture data on Bloomberg.

‘High Standards’

“The quality needs for the milling and baking industry are of high standards,” Jannie de Villiers, Grain SA’s chief executive officer, said by phone in Pretoria today. “There is a negative correlation between high standards of wheat and the yield and this makes it difficult for local farmers to produce more wheat.”

Imports in the week through April 20 climbed to 60,255 tons, the most since Feb. 24, the Pretoria-based South African Grain Information Service said on its website today.

The Crop Estimates Committee reduced its forecast for corn output by 1.6 percent because of persistent drought in growing areas, Scheepers said.

South Africa, the continent’s biggest corn producer, may reap 11.1 million tons of corn this season, Scheepers said. The country produced 10.4 million tons of corn last year.

The forecast includes 6.4 million tons of white corn and 4.7 million tons of yellow, she said. The total forecast compares with the committee’s estimate of 11.3 million tons last month and is above the 11 million-ton median estimate by eight traders surveyed by Bloomberg.

White corn for July delivery, the most active contract, rose 1.2 percent to 2,119 rand a ton. Yelllow corn for delivery in July jumped 1.7 percent to 2,071 rand a ton.

To contact the reporter on this story: Tshepiso Mokhema in Johannesburg at tmokhema@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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