Aside from various data publications that I wrote about last week, we also had two important releases in the South African agricultural market that I didn’t get to explore. Therefore, I will start this week by focusing on these data, namely (1) the weekly grain producer deliveries and (2) trade activity for the week of 21 August 2020.

Producer deliveries

The producer deliveries data continue to reaffirm the view that South Africa’s grain harvest activity has been delayed because of the late start of the season, specifically for maize. While the harvest is now almost complete across the country and the focus is shifting towards the 2020/21 season which commences in October, I continue to watch the producer deliveries data as numbers suggest that more grain is yet to be delivered to commercial silos. Roughly 80% of the expected maize crop of 15.5 million tonnes had been delivered to commercial silos in the week of 21 August 2020, and fortunately, the quality of the crop is mainly good.

Oilseeds harvest is virtually over, and the focus here is now shifting towards the 2020/21 season. Also, the winter crops are still at growing stages, therefore, I will only start looking at the producer deliveries data for these crops around the harvest period, which is towards the end of the year.

Grain trade

South Africa exported 32 563 tonnes of maize in the week of 21 August 2020. About 48% of this went to Japan and the rest to Southern Africa markets. This was a second consecutive quite week since May 2020, as exports have been running at a volume of over 50 000 tonnes per week from the end of that month. South Africa’s total maize exports are currently at 1.18 million tonnes, which equates to 44% of the seasonal export forecast (2.7 million tonnes). The leading markets thus far are the Southern African countries, mainly for white maize, and Japan, Taiwan, Vietnam and South Korea for yellow maize.

About 74% of all maize exports thus far is yellow maize, with 26% being white maize. There will likely be an uptick in white maize exports towards the end of the year into 2021, which is when Zimbabwe’s maize stock will expectedly be low and the country will increase its import activity. Another country that will have low domestic supplies then is Kenya, but I doubt if South Africa will be amongst their countries of interest because of the prohibitions of the importation of genetically modified maize. Roughly 80% of South Africa’s maize is genetically modified, and we have been on this path since the early 2000s. And this has been amongst the key drivers of productivity (increased tonnage per hectare) in the maize industry.

In the case of wheat, South Africa is a net importer and brought in 3 550 tonnes from Russia in the week of 21 August 2020. This placed South Africa’s 2019/20 wheat imports at 1.6 million tonnes, which equates to 89% of the seasonal import forecast. The leading suppliers of wheat to South Africa in the 2019/20 marketing year include Poland, Germany, Lithuania, Russia, Ukraine and Latvia, amongst others. This marketing year ends in September 2019, which means South Africa will have to bring in an additional 200 000 tonnes of wheat within the next few weeks if we are to meet the import forecast of 1.8 million tonnes for the year.

Overall, the data didn’t introduce anything new that market participants aren’t necessarily aware of. Hence, I don’t expect that the data will influence price movements this week.

Best wishes for the week!

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