The Crop Estimates Committee lifted its production estimates for wheat, barley and canola 1%, 5%, 8%, respectively from October 2020 to 2.15 million tonnes, 552 766 tonnes, and 148 456 tonnes. These will be the largest harvest on record for barley and canola, while for wheat it will be the largest harvest in 19 years. As we have discussed in the previous posts, this improvement in the harvest is primarily on the back of favourable rains and increased area plantings.

Nevertheless, the increase in production will have minimal impact on prices, specifically wheat, of which South Africa is a net importer. And thus, wheat prices largely depend on developments in the global market, along with domestic currency movements.

Having said that, while South Africa will remain a net importer, the volume will fall notably compared to the previous year. The most recent estimates from the South African Grain and Oilseeds Supply and Demand Estimates Committee suggest that wheat imports could fall by 18% y/y to 1.54 million tonnes, which bodes well for the agricultural trade balance. Meanwhile, the recovery in barley production will see South Africa becoming a net exporter (we’ve discussed the developments in the barley space in detail here). Canola will mainly be for domestic consumption.

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Exhibit 1: Winter crop production
Source: CEC, Agbiz Research

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