South Africa’s 2019/20 winter crops marketing year ended this past week. The key data point most analysts observe are wheat imports, as the country imports about 51% of its annual wheat consumption.
We initially estimated the 2019/20 wheat imports to 1.80 million tonnes, which was up by 32% y/y on the back of a poor domestic harvest that year. But the data released by the South African Grain Information Services on 25 September 2020 showed that imports were mildly higher than our estimate, at 1.86 million tonnes. Russia, Poland, Lithuania and Germany were the leading suppliers of wheat to South Africa in 2019/20 marketing year.
In the 2020/21 marketing year, wheat imports will likely show a decline of 14% y/y to 1.64 million tonnes. This is a view that is also shared by both the South African Grain and Oilseeds Supply and Demand Estimates Committee and the United States Department of Agriculture (Pretoria Office). This is premised on the back of a potential increase in domestic wheat production following the favourable weather conditions in the Western Cape, which accounts for two-thirds of South Africa’s wheat plantings, and other wheat-producing regions of the country.
Just this past week, the Crop Estimates Committee (CEC) reaffirmed its view that South Africa’s 2020/21 wheat crop could be the largest in a decade, while the canola and barley harvest could be the largest on record. The CEC lifted all the production forecasts of all the aforementioned crops by 3% each from the previous month’s levels, as favourable rainfall suggests that there could be good yields in several regions. The current estimates suggest that South Africa’s 2020/21 wheat, barley and canola production could increase by 32% y/y, 51% y/y and 33%, respectively, to 2.02 million tonnes, 520 106 tonnes and 126 520 tonnes.
Since I have mentioned other winter crops, I should as well note that for barley, South Africa will remain a net exporter, and the country is actively looking for export markets as the expected volume might not all be utilized in the domestic market this season (see here). Meanwhile, for canola, the harvest will probably be utilized in the domestic market.
In a nutshell, 2020/21 marketing year promises to bring notable improvement from an output perspective, which in turn, will lead to a decline in imports of wheat. For other winter crops, South Africa will remain a net exporter. This is primarily thanks to favourable weather conditions, and of course, farmers’ efforts.
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