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South Africa preparing for “worst-case” maize import scenario

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa is laying the groundwork in case it needs to import as much as 4 million tonnes of maize after successive seasons of drought threaten the crop in Africa’s top producer of the grain, which is usually a net exporter.

Siyabonga Gama, chief executive of Transet, South Africa’s state-run ports and rail company, told Reuters in an interview on Tuesday the company’s talks with the industry indicated that 4 million tonnes was the “worst-case scenario”.

“The rail side is not the issue. We have the capacity there to absorb that much maize,” he said.

He said South Africa’s ports were designed mostly to export grain rather than import it, but this hurdle could be overcome.

“The issue is the import silo capacity so there are a few things that we will need to tweak. It could still be done.”

Other industry scenarios see a need to import perhaps 2.5 million tonnes or even as little as 700,000 tonnes, depending on rainfall patterns for the rest of the season.

The outlook is not good as an El Nino weather system is exacerbating a scorching start to the growing season, following drought conditions in the previous one which shrivelled the crop by a third to 9.94 million tonnes, the lowest since 2007.

This is helping to fuel inflation in Africa’s most advanced economy as the white variety of maize is a staple that provides much of South Africa’s caloric intake.

South Africa’s central bank has repeatedly voiced its concern this year about the impact of drought and food prices on the inflation outlook.

The March maize contract climbed over 2 percent to an all-time high of 3,662 rand ($247) a tonne on Tuesday after forecast rain over the weekend in the western part of the maize belt failed to meet expectations.

The December contract is fetching 3,705 rand a tonne, up 75 percent so far in 2015 and within striking distance of its record high of 4,000 rand reached last year, according to Thomson Reuters data.

“Initial indications are that it is going to be a very big import year. We will firm up the actual demand by January or February and we will have a plan at the correct time,” Gama said.

He said aside from the main grain facilities at the ports of Durban and East London, South Africa can also use Port Elizabeth and Cape Town and could even use Richards Bay, mostly used for coal exports, in a pinch.


(By Ed Stoddard. Editing by James Macharia and David Evans)

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South Africa’s Barclays Africa keeps credit taps open for drought-hit farmers

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Barclays Africa will keep lending taps open for South African farmers despite the worst drought in decades as growers can use high crop prices to offset lower output, the head of the lender’s agribusiness said on Wednesday.

The Johannesburg-listed bank, which funds farmers, is not concerned as yet despite the severity of the drought, Ernst Janovsky told reporters in Pretoria, adding that less than 0.2 percent of growers are defaulting on loans.

“There is still enough money around to survive the drought. We haven’t closed any taps. There is no real problem up to now,” he said.

While the weather slashed output. farmers can sell their crops at a higher price, Janovsky said, but warned that if substantial rains do not fall by March next year there could be a “serious problem”.

A combination of El Nino and drought conditions have hit production of soft commodities from sugar to maize in Africa’s most advanced economy, even forcing farmers to cull cattle due to lack of grazing grass.

Dry conditions last year cut South Africa’s staple maize crop by a third and the prospect of another drought pushed prices in July for white maize, the staple crop for the region,

to near record highs.

The South African Weather Service said last month that an El Nino weather system, which was already forecast to bring drought conditions for much of the southern hemisphere’s summer, now looks like it will extend into autumn next year.


(Reporting by Zandi Shabalala; Editing by Adrian Croft, Reuters)

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South African drought to cost Sappi up to $10 mil

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A drought in South Africa could cost paper maker Sappi between $5 million and $10 million in the first quarter of 2016 as it would result in slower production in its mills, chief executive Steve Binnie said on Thursday.

The drought – the worst in over a century in the eastern KwaZulu Natal province where Sappi has some mills – will negatively impact profits but Binnie told Reuters the first quarter of next year would still show improvement compared with the first three months of this year.


(Reporting by Zandi Shabalala; Editing by James Macharia, Reuters)


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