Regular readers of this blog may remember that on Mondays, I provide an update of South Africa’s weekly grain data, also at times with a highlight of various events in the agricultural data calendar for the week ahead. With a data calendar for the week ahead fairly quiet, I thought it might be good to use this blog post to also provide an update on the local wheat import tariff adjustments, which occurred at the start of this month.
SA weekly grain data
There are two major grains weekly data releases that we monitor in the domestic market – (1) producer deliveries and (2) grain trade.
First, the producer deliveries data for the week of 11 September 2020 showed that roughly 86% of the expected maize crop of 15.5 million tonnes had been delivered to commercial silos, and the quality of the crop is mainly good. A greater share of the 2019/20 soybean and sunflower seed crop had already been delivered to commercial silos. This is clear from the producer deliveries data, which have slowed in recent weeks, while the sum nearly equals the expected harvest in both crops.
Second, South Africa exported 110 550 tonnes of maize in the week of 11 September 2020. About 80% to South Korea, and the rest to Southern Africa markets (primarily Eswatini, Mozambique, Zimbabwe, Botswana and Lesotho). This placed South Africa’s 2020/21 total maize exports at 1.4 million tonnes, which equates to 52% of the seasonal export forecast (2.7 million tonnes). The leading markets thus far are the Southern African countries (Zimbabwe, Botswana, Mozambique, Lesotho, Eswatini and Namibia), mainly for white maize, and Japan, Taiwan, Vietnam and South Korea for yellow maize. About 76% of all maize exports thus far is yellow maize, with 24% being white maize.
Moreover, South Africa is a net importer of wheat and brought in 67 270 tonnes in the week of 11 September 2020. About 54% from Russia and 46% from Ukraine. This placed South Africa’s 2019/20 wheat imports at 1.72 million tonnes, which equates to 96% of the seasonal import forecast (1.80 million tonnes). The 2019/20 marketing year ends this month. The leading suppliers of wheat to South Africa thus far include Poland, Germany, Lithuania, Russia, Ukraine and Latvia, amongst others.
SA wheat import tariff lifted
South Africa’s wheat import tariff was lifted to R832.10 per tonne on 04 September 2020 from R516.60. This is after a prolonged delay in the adjustment of the tariff as it triggered on 24 March 2020, following a decline in global wheat prices on the back of expected large supplies.
The conditions have somewhat changed now, at least from a global wheat price perspective, but for certainty in the market, it was key that the tariff was adjusted as the formula dictates. Ideally, the government should ensure the tariff is implemented immediately whenever the trigger occurs. The delay is not always good for policy certainty. For background, the adjustment on this rate occurs when the international wheat prices deviate by US$10 per tonne for three consecutive weeks from the base price (which is part of the standard formula).
Follow me on Twitter (@WandileSihlobo). E-mail: firstname.lastname@example.org