With everything going on the agricultural and land policy front, I really don’t want to spend much time on grains and oilseeds production data updates. But I am a bit concerned that the picture painted by the figures released by South Africa’s Crop Estimates Committee on March 26 could change somewhat in the coming days, particularly on maize and sunflower seeds production estimates.
Over the past few days, I cautioned that drier weather conditions in the western parts of South Africa have led to the deterioration of crop conditions, and that could be reflected in the production estimates data. I guess this concern was shared by other market participants, but at varying degrees, as the Reuters analysts’ consensus forecast showed a possible slight downward revision of South Africa’s 2018/19 maize harvest from 10.51 million tonnes in February 2019 to 10.5 million tonnes this month.
However, the official estimates presented a 0.5% uptick to 10.6 million tonnes in maize production estimate. For context, this is still a lot lower than the 12.5 million tonnes in 2017/18 production season due to a decline in area planted, and expectations of poor yields in some areas.
Now, the small upward revision in the latest production forecasts is a welcome development, but I worry that the impact of the persistent dryness on white maize and sunflower seed in the western areas of the North West, and Free State could have a negative impact on yields, and thus result into a downward revision of yields in the coming months.
Be that as it may, if South Africa harvests, at least, 10.0 million tonnes of maize this season, which will be added to an opening stock of 3.0 million tonnes when the 2019/20 marketing year starts on 01 May 2019 (this corresponds with the 2018/19 production season), then there could be sufficient supplies in the market, and that will cover the country’s annual consumption of about 10.8 million tonnes.
In the case of sunflower seed, the current estimate is 563 590 tonnes, unchanged from last month, but below the 2017/18 production season’s harvest of 601 500 tonnes.
Let me close off with one important point – some white maize and sunflower seed crops in the western parts of South Africa were planted nearly a month after the optimal period due to delayed rainfall. Therefore, the one factor that most farmers worry about at this point, is a possible frost in the coming months, as that could lead to poor yields.
But to keep track of things, the Crop Estimates Committee will release its third production update on 25 April 2019, which will paint a clearer picture of the summer crop harvest expectations in light of the aforementioned possible risks to the current estimates. The outlook for 2019 summer crops remains a key factor for food price inflation over the coming quarters.
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