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South Africa corn at record highs on drought fears

JOHANNESBURG - South African corn futures hit new peaks on Monday asdrought concerns intensified in Africa's largest producer of the grain crop, raising the prospect of food price inflation pressures at a time when the central bank is in a tighte...

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JOHANNESBURG - South African corn futures hit new peaks on Monday asdrought concerns intensified in Africa's largest producer of the grain crop, raising the prospect of food price inflation pressures at a time when the central bank is in a tightening cycle.

The March contract climbed over 2 percent to an all-time high of 3,582 rand ($247) a tonne after forecast rains over the weekend in the western part of the corn belt failed to meet expectations, traders said.

"Parts of the corn belt did not get the rain that was forecast in North West and the Free State. And the weather forecast is not good at present," said Piet Faure, a trader at CJS Securities.

"Time is running out quickly for planting in some places."

The December contract surged almost 7 percent higher to 3,720 rand a tonne, within striking distance of its record high of 4,000 rand reached last year, according to Thomson Reuters data.

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The price of white corn is a major concern as it is primarily used for human consumption and is the staple crop that provides much of the caloric intake for South Africa's poor and mostly black majority.

South Africa's headline consumer inflation ticked up to 4.7 percent in October compared with 4.6 percent in September.

The central bank raised the benchmark lending rates on Nov. 19 to 6.25 percent, warning that failure to act on inflation risks could worsen the already weak growth.

Yellow corn, primarily grown for animal feed, has also hit or approached record highs. The March yellow corn contract rose 2.4 percent Monday to a record high just over 3,400 rand a tonne.

The scorching drought, seen worsening due to an El Nino weather pattern, comes after dry conditions last season - the driest since 1991-92- reduced South Africa's corn output by a third.

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