The global wheat market has been in focus since Russia invaded Ukraine in February last year. Many countries feared they would not meet domestic needs due to supply constraints resulting from war in one of the world’s major producing regions. The price surge after the invasion was also a big challenge for importing countries such as SA.
The Black Sea grain deal brokered between the UN, Turkey, Russia and Ukraine to allow the movement of grains out of the region has brought much-needed relief from possible wheat shortages. Wheat prices have since moderated markedly. At end-April, SA’s wheat spot price was about R6,650 per tonne, down 10% year on year.
The decline in wheat prices has raised concerns about a potential reduction in domestic plantings. But we learnt this week that farmers are optimistic about the 2023/24 season.
The crop estimates committee indicated in its most recent data release that farmers intend planting 542,600ha of wheat in the 2023/24 season, 3% more than the five-year average (though 4% down year on year). Such an area planted, combined with favourable weather conditions, would yield a solid harvest of about 2.03-million tonnes, assuming an average yield of 3.75 tonnes/ha, which is quite possible if the climatic conditions remain favourable throughout the season as suggested by forecasters.
Farmers intend to plant 109,100ha of barley, up 8% on last year but also below the five-year average planting. Applying the same logic of a five-year average yield of 3.38 tonnes per hectare to an area planting of 109,100ha, SA could have a barley crop of 368,758 tonnes in the 2023/24 season, up 19% year on year.
Canola-planting intentions are at 127,500ha, an increase of 3%, which will be a record area planting. Combined with an average yield of 1.71 tonnes/ha, this suggests a harvest of 218,025 tonnes this season, 4% higher than last year.
SA has been progressively growing its oats crop. In the 2023/24 season farmers intend to plant 29,600ha, up 10% year on year and well above the long-term average. In this crop the average yield is 1.41 tonnes/ha. Applying this to the area mentioned implies a harvest of 42,032 tonnes, a 41% increase year on year.
We are still early in the season though. The planting activity and weather conditions in the next two months will be crucial in determining whether the intended area is successfully planted or even exceeded. There will be an update on the area plantings when the crop estimates committee releases the preliminary area planted data on July 26. The first actual production forecast will be released on August 29.
Farming input prices such as those for fertilisers and agrochemicals have come off last year’s highs, helping to compensate for the decline in wheat and other winter crop prices.
The outlook for weather conditions for the winter crops also remain positive. In its Seasonal Climate Watch update published on April 3 the SA Weather Service noted that while regional weather conditions are transitioning to an El Niño state, which typically brings below-normal rains in much of the country, the winter crop-growing regions of SA will still receive rains. This is positive for the agricultural season.
The areas that produce under irrigation in Limpopo, Free State, Northern Cape and other provinces should also thrive, benefiting from the good 2022/23 soil moisture and improved dam levels.
Overall, the planting intentions data and favourable weather outlook suggest that SA should have a decent winter harvest.
Written for and first appeared in Business Day.
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