Amid the news flow of the coronavirus, which we have also contributed to (see here), there have been some positive developments on South Africa’s maize production front. The United States Department of Agriculture (USDA) has revised its estimate for South Africa’s 2019/20 maize production up by 10% from last month’s estimate to 16.0 million tonnes. This is up by 35% from the previous season.
One thing we should remember, however, is that the USDA data includes both commercial and non-commercial production, and therefore not directly comparable to South Africa’s Crop Estimates Committee’s number of 14.6 million tonnes released last month, which accounts for only commercial production. Nonetheless, this doesn’t change the view we expressed last month, which is; this could be the second-largest maize harvest on record after the 2016/17 season (which was 16.8 million tonnes for total maize).
Aside from a favourable food price inflation outlook, which we estimate at 4% y/y in 2020 (see here), this data essentially means that South Africa would remain a net exporter in the 2020/21 marketing year which starts in May 2020 (this corresponds with 2019/20 production season). This is at a time where Southern African maize import needs could outpace the previous year, with Zimbabwe in need of maize supplies to an extent that the country lifted a ban on the importation of genetically modified maize, which eases access for South African maize exporters.
Moreover, a maize harvest of 16.0 million tonnes would enable South Africa to export maize beyond the continent to other typical markets such as Japan, Taiwan, Vietnam and South Korea who are not prominent in the current marketing year. With that said, the coronavirus remains a key threat to global trade and may disrupt South Africa’s agricultural exports in various markets as we explained here.
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