The outbreak of desert locusts in East African countries, and severe drought in Zimbabwe, have raised serious concerns about grain production in these countries in 2020, pushing them to consider importing corn — the region’s staple grain — from South Africa, market participants said. While Zimbabwe and major East African countries are likely to produce less corn in 2019-2020, South Africa is seen producing more corn, the US Department of Agriculture’s World Agriculture Production report showed. The lower production in these countries due to crop damage can result in a surge in grain imports, and higher production in South Africa may possibly ease the supply pressure, Petunia Setumo, an agricultural economist at FNB Agribusiness, a South Africa based financial institution, said. “The other country that supply to these markets, Zambia, is recovering from last year’s drought, making South Africa better positioned to supply to these markets,” she added. Corn production in major East African countries — Kenya and Tanzania — in 2019-2020 (July-June) is estimated at 3.4 million mt and 6.2 million mt, down 15% and 6% from a year ago, respectively, according to the USDA report. Zimbabwe, however, is expected to experience a 54% year on year drop in its corn production in 2019-2020 to 78,000 mt. South Africa, on the other hand, is likely to produce 16 million mt of corn in 2019-2020 (May-April), which is nearly 35.3% higher than a year ago. USDA has projected South Africa to export 2.5 million mt of corn in 2019-2020, nearly 50% higher than the 1.7 million mt exported a year ago. South Africa is traditionally a major corn market for Kenya, Tanzania, Ethiopia, and Zimbabwe. Although Tanzania has not been severely impacted by the locust outbreak, it is also a major producer-supplier of the coarse grain in East Africa and in the case of lower production, it too will look to South Africa for imports. There was exceptionally heavy precipitation during the October-December 2019 rainy season in East Africa, the highest in the last 40 years and the unusually wet conditions created a conducive environment for the severe outbreak of desert locusts, the United Nation’s Food and Agriculture Organization said in their March Crop Prospects and Food Situation report. The FAO report added that the locust outbreak can lead to “substantial crop losses” in 2020. Already dealing with the worst locust plague in 25 years, East Africa was recently warned of another locust invasion during the main cropping season of March to May. Though there were no concrete estimates of how much damage can be expected in East Africa, Setumo said that 2017 imports can provide direction for what to expect going forward. In 2017, East Africa suffered from severe drought conditions and the region sourced some of its staples from South Africa. Kenya imported about 1.3 million mt of corn from the southern regions, with South Africa the main supplier that year at 254,968 mt and Zambia supplying 95,046 mt, Setumo said. “For this year, the numbers could change depending on the extent of the damage and if it does hit Tanzania’s crop fields,” she added. In the 2019-2020 marketing year, Zimbabwe has already imported 122,405 mt of white corn from South Africa, which is slightly above average imports during difficult seasons, Setumo said. Zimbabwe had recently lifted its ban on genetically modified corn due to drought conditions and soaring inflation rates in the past year, Paul Makube, another agriculture economist with FNB Agribusiness, said. Zimbabwe’s 2019-2020 corn production is estimated at 78,000 mt, whereas demand is 1.8 million-2 million mt annually. This can benefit South Africa given the bullish outlook for the new season crop, Setumo said. What will also impact the import decisions of these countries will be the government’s purchasing power, Setumo said. In anticipation of lower corn production in Zimbabwe and East African countries, corn prices have been trending higher. “Generally, prices have been on an upward trajectory in East Africa and should remain in that direction for most of this year due to crop damages,” Setumo said. For the southern part of Africa, futures contracts traded on the Johannesburg Stock Exchange have lost ground owing to the bullish outlook for the new season crop. For Zambia and Zimbabwe, a general shortage of the crop has rallied prices higher, she said. As of last week, the most actively traded white corn contract on the JSE tumbled 5.9% from December 2019 levels, according to data from the exchange. Source - https://www.hellenicshippingnews.com