While South Africa is traditionally a net exporter of agricultural products, wheat is the second most valuable imported food product after rice. In 2020, South Africa’s wheat imports were valued at US$493 million, which equates to 8% of the overall agricultural import value of US$5,9 billion that year. In the first half of this year, wheat hasn’t moved from its second place as a valuable imported agricultural into South Africa. Over the past decade, imports accounted for an average of 53% of South Africa’s annual wheat consumption of 3,2 million tonnes.
As a result of this dependency on the global market, we pay close attention to primary producers, who serve as South African suppliers. These include the Black Sea countries, Canada, Australia, the US, and the EU.
The start of the 2021/22 global wheat production season can be categorized as mixed. As such we will need to pay particular attention to how supplies could evolve as production estimates continue to be adjusted in various geographies.
For example, in the Black Sea, Russia’s first stages of the winter wheat harvest were initially delayed by rains, and as a result, the yields are poor in some regions of the country. Moreover, the spring wheat areas also didn’t have a good start; continuous dryness negatively affected the yields. As a result, the International Grains Council (IGC) has lowered its estimate for Russia’s 2021/22 wheat production by 5% year-on-year (y/y) to 81 million tonnes. This means Russia’s wheat exports could potentially fall by the same magnitude to around 35 million tonnes.
Canada and the US are other major wheat-producing and exporting countries that have had a bad start to the 2021/22 season. Of these two, Canada is in a poorer position due to sustained heat and dryness that worsened wheat conditions across the country’s western regions.
The 2021/22 harvest estimates for Canada and the US are down by 19% y/y and 4% y/y to 29 million tonnes and 48 million tonnes, respectively. Consequently, the exports could also fall by roughly similar magnitudes to 18 million tonnes in Canada, and 25 million tonnes in the US, according to data from the United States Department of Agriculture (USDA).
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