(Bloomberg) – Corn futures in South Africa, the continent’s largest producer of the grain, surged by the 80 rand ($7) daily limit for a second day as hot, dry weather threatens the country’s crops.
Persistent dryness may have “tragic” consequences for the farming industry and mean high food prices in the next year at least, Grain South Africa, a farmers’ group, said Feb. 6. The lack of rain damaged corn in the Free State and the North West province, while crops in other parts of the country urgently need rain, it said.
“The forecast for rain is looking bleaker and bleaker with the weeks,” Brink van Wyk, a Pretoria-based trader with BVG (Pty) Ltd., said by phone on Wednesday. “The crops in the Free State and in North West are virtually in desperate need of rain.”
White corn for delivery in July rose 3.3 percent to 2,530 rand a metric ton, the highest since March 12, by the noon close on the South African Futures Exchange in Johannesburg. The grain is used mainly to produce a staple food known locally as pap. The yellow variety for delivery in the same month advanced 3.5 percent to 2,355 rand a ton. This kind is used mostly to feed animals.
The town of Bloemfontein in the Free State, the region responsible for about 43 percent of the nation’s corn, is forecast to see a maximum temperature of 33 degrees Celsius (91 degrees Fahrenheit) on Wednesday, while Lichtenburg in the North West province will reach a maximum of 36 degrees, according to data on the South African Weather Service’s website.
Bloemfontein has a 30 percent chance of rain Wednesday, according to the data, and the same likelihood Thursday.
Grain SA, the biggest group representing farmers, said the price of corn may jump by up almost 30 percent if the dry conditions continue.
The government has declared disaster areas in nine of 11 districts in the KwaZulu-Natal province, where more than 80 percent of the nation’s sugar is produced, said David Wayne, executive director at the South African Cane Growers’ Association. The nation has not experienced general drought since the early 1990s, Grain SA said.
