I spent my day immersed on land reform policy matters, but couldn’t go to bed without saying a few words about South Africa’s summer grains and oilseeds for 2018/19 production prospects.
Today we received important data from the national Crop Estimate Committee outlining the preliminary planting estimates for 2018/19 production season for all summer grains and oilseeds – white maize, yellow maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans.
But the key focus in the market was mainly on maize – South Africa’s staple crop. The preliminary planting data showed that South Africa’s area planted to maize is 2.3 million hectares. About 1.3 million hectares is white maize, with 1.0 million hectares being yellow maize. This came as a surprise as we, at the Agricultural Business Chamber of South Africa (Agbiz), had a projection of 1.98 million hectares. I suspect that the late plantings might have been more than anticipated following early January rainfall.
Although this is a welcome development, it is important to stress that these are initial estimates; there could be a revision next month and our view still leans towards a possible downward adjustment.
The important question at the moment is, what size of maize crop will South Africa have in the 2018/19 production season? The estimates in the market currently vary between 10.4 and 12.0 million tonnes, which is plausible if one assumes the aforementioned area and average yields, although that is dependent on good rainfall which is still proving to be a challenge at the present moment in the western areas of the South African maize belt.
Given that South Africa’s maize consumption is about 10.8 million tonnes a year, a harvest of at least 10.4 million tonnes or even as low as 8.0 million tonnes would still ensure sufficient supplies for the country, as there could be fairly large stocks of about 3.4 million tonnes at the beginning of the 2019/20 marketing year in May 2019. This is under the assumption that there could be minimal exports, which is yet to be seen as our neighbouring countries could experience a shortage.
Essentially, today’s data does not change our food inflation outlook of a possible moderate uptick this year to an average of 5% despite the recent increase in maize prices. Here is a note for more information on South Africa’s food inflation outlook.
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