Paucity of Rain Threatens South Africa Corn Crop

The map here highlights the current areas of drought in South Africa using a drought index derived from evapotranspiration anomalies. The data underlying the drought index come from USGS-FEWSnet. 

South Africa’s corn crop is stalled before it even gets going. A lack of rain in the Northeast corn producing provinces has left fields parched, which has prevented farmers from sowing seed. The critical planting window for South African corn closes roughly around the end of December, but the ideal crop planting window in some states has already passed. Adding to concern for the 2019 crop is an expected El Niño, which typically brings less rainfall to South Africa in the summer months from January through April and threatens crop progress and plant condition in later stages of development. El Niño in 2016 sharply curtailed production.

The market has responded accordingly, white and yellow corn prices have spiked by over 100 rand in the past few weeks on the Johannesburg Stock Exchange and a weakening rand has compounded the issue. The yellow corn contract closed at R2,776 per tonne on Monday, the highest price since the first quarter of 2017. Problems with South Africa’s corn crop come as the country’s agricultural sector struggles. The Agribusiness Confidence Index dropped to a nine-year low in the final quarter of 2018, with participants citing infrastructure concerns and recent contentious land and property-rights legislation.

Although South Africa isn’t expected to suffer immediate effects from a weak corn harvest—bumper crops over the past two years have bolstered carryover corn stocks—rising corn prices put neighboring countries like Zimbabwe and Botswana at risk for food supply shortages. Food production in southern Africa is also under pressure from rising seed costs, which increases costs of production and makes yield-improving inputs less affordable for smallholders.

South Africa’s corn production (blue line in left chart) and area harvested (green line) are forecast to fall this year following dry conditions at the start of planting season. Both metrics also fell sharply in 2016, the last time the region was hit by the El Niño weather effect. Another El Niño is expected this year.