Corn Production Forecasts Revised Up On Good Weather
BMI View: We have revised up our forecast for Zimbabwe corn production in 2013/14 as favourable weather and a greater than anticipated planting area will boost output. We believe production will rise 3.6% on last year to 1mn tonnes, below national estimates of 1.2mn tonnes as we highlight low fertiliser use and the effect of late plantings as downside risks.
In 2012/13 Zimbabwe recorded its worst corn harvest in three years due to poor weather, low planting acreages and inadequate distribution of seeds and other inputs such as fertiliser. That year, output fell 31% year-on-year (y-o-y) to 960,000mn tonnes. Logistical challenges faced last year predicated our previous view that 2014 output would result in another y-o-y fall. However, preliminary planting estimates in February suggested that corn plantings rose 18% y-o-y to 1.66m hectares, from which we highlighted significant upside risks to 2014 corn output (see 'Upside Risks To Corn Output In 2013/14', March 28).
With local evidence suggesting that input usage has risen considerably this year, as well as greater plantings and favourable weather, we have revised up our corn production forecast for 2013/14. The main boost to this year's output will come from areas with historically low corn yields, as rains over the beginning of 2014 will result in traditionally dry regions of Zimbabwe contributing significantly to this year's crop. Major corn-growing areas lie in the centre-north and north-east of the country, which make up 45-50% of the crop area. This year, the southern half of the country has recorded higher than average rainfalls, which will lead to greater yields.
|Wide Deficit To Continue|
|Zimbabwe - Corn Consumption & Production ('000 tonnes)|
Despite this, we believe that the Zimbabwe Commercial Farmer's Union (ZCFU) forecast for output to reach 1.2mn tonnes this year is overly optimistic. While fertiliser usage has increased on last year, the FAO believes that under half of the targeted quantity of fertiliser under the government's USD180mn support scheme was distributed. This indicates that greater quantities of fertiliser were delivered to fewer parts of the country, supporting our view that concentrated areas will experience better yields this harvest. Local reports suggest that this poor fertiliser distribution resulted in late plantings across many parts of Zimbabwe, which led to a poor beginning to the season. Moreover, rainfall in the past 50 days has been less favourable than in the previous four months, which has limited yields in areas where plantings were late.
Despite our expectations for a greater than average harvest, we forecast Zimbabwe's corn deficit to grow by 5% y-o-y in 2014, on the back of domestic corn consumption growth of 4% y-o-y. Though we forecast average growth of 7% for Zimbabwe corn output from 2015 to 2018, we expect the country to remain a major net importer of corn. Over our forecast period, we forecast Zimbabwe to import roughly a third of its overall corn requirements, most of which will come from South Africa.