The Weather and Trade Aspects Continue to Dominate SA Wheat Market

The weather and trade policy will remain topical issues in the South African wheat market for some time.

From a weather perspective, the new season crop is still in its early stages of development which needs moisture. With the exception of the Southern Cape, the Swartland and Overberg regions of the Western Cape received good showers in the past couple of weeks; hence the winter wheat crop is in fair condition in these particular regions.

Fortunately, the South African Weather Service forecasts a possibility of above-normal rainfall in the south-western parts of the country within the next three months. This is precisely what the Western Cape needs in order to replenish subsoil moisture and subsequently benefit the winter wheat crop following months of dry conditions.

In terms of trade policy, the import tariff matters will continue to dominate the market as imports are set to reach the second highest level on record in the 2017/2018 marketing year, which ends in September 2018.

On 12 June 2018, the wheat import tariff triggered to a new rate of R281.74 per ton, which is 36% lower than the current rate. This adjustment followed an uptick in global wheat prices in the past couple of weeks, due to unfavourable weather conditions in parts of the Black Sea and the European Union regions.

The newly triggered rate of R281.74 per ton has not yet been published in the Government Gazette, and will only be applicable after its publication. The timeframe for this process is unclear, but previous adjustments took more than three weeks.

*The Western Cape province is of importance because it accounts for 64 percent of South Africa’s intended 500 500 hectares for winter wheat in the 2018/19 production season.

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Author: Wandile Sihlobo

Wandile Sihlobo is an agricultural economist and head of agribusiness research at the Agricultural Business Chamber (Agbiz) in South Africa. He is a columnist for Business Day and Farmers Weekly magazine. Sihlobo is a member of the South African Agricultural Economics Association. He has previously served as an economist at Grain South Africa. He holds a Master of Science degree in Agricultural Economics from Stellenbosch University.

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