El Nino drought puts South Africa in market for corn

El Nino drought puts South Africa in market for corn

U.S. Grains Council delegation meets with decision-makers to promote U.S. grains.

A U.S. Grains Council mission uncovered a near-term opportunity for U.S. feed grain exports to South Africa late last year after El Niño created a severe drought in that country. Last week, a team including USGC staff and a member delegate followed up on these findings by meeting with South African grain importers, end-users and government officials regarding the country’s white and yellow corn deficit.

From left, Wimpie Annandale, feedlot manager/director, Morgan Beef; Philip McCoun, Kentucky farmer, chairman of the Kentucky Corn Promotion Council and member of USGC’s Middle East and Africa Advisory Team; and Heiko Koster, USGC consultant in South Africa. (Photo courtesy USGC)

“Under normal climatic conditions, South Africa is a net exporter of approximately 1 million metric tons of corn (39.4 million bushels) each year,” said USGC Manager of Global Trade Manuel Sanchez, who participated in the mission. “However, with this year’s drought reducing their corn production by more than 40%, it is estimated that South Africa will have to import about 3.5 million tons (137.8 million bushels) of corn.”

In order to import the grains South Africa needs, the country will have to overcome logistical barriers.

“We estimate that South Africa will need white corn imports in the last half of 2016 or early 2017 to fulfill demand,” said USGC Manager of Biotechnology Andrew Conner, who also participated in the mission. “However, the port facilities in South Africa will be taxed if the country imports their entire demand of 11.5 million tons of corn, rice, wheat and other grains or oilseeds in a short window of time.”

In addition, lagging biotech trait approvals in South Africa are hindering the country’s ability to source corn from the United States.

“There are stacked events that are commercially available in U.S. yellow corn production that have not been submitted for import approval in South Africa,” Conner said. “Unless these traits are approved soon, U.S. corn will not be an option to fill this country’s deficit.”

Currently, South Africa is sourcing its yellow corn from Argentina because the two countries’ biotech approvals are compatible. However, Argentina does not produce white corn, so the country is sourcing that commodity from Mexico. The United States has the ability to provide both if these barriers could be overcome.

“We met with key decision makers in the country to promote the imports of U.S. feed grains and explore biotech constraints, which are limiting our exports to this market,” said Philip McCoun, Kentucky farmer and chairman of the Kentucky Corn Promotion Council, who also participated in the mission as a member of USGC’s Middle East and Africa Advisory Team.

“We were well-received by the groups we met with and determined areas of follow-up, including training programs and educational activities to promote U.S. distiller’s dried grains with solubles (DDGS).”

Source: USGC

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