There is a generally held view that South Africa will likely transition into an El Niño state in the upcoming 2023/24 summer season. However, the intensity of it, its duration, and its impact on crop production remain uncertain.
Still, South Africa can be expected to have a smaller harvest compared with the past four years of consecutive ample harvests of field crops and horticulture. A critical factor to note is that the expected El Niño comes after four straight seasons of solid rainfall and good soil moisture.
Therefore, in the event of a weak El Niño state, the current soil moisture conditions could support crop conditions and ensure another reasonably decent harvest as in 2018/19, which was also an El Niño period. Notably, the season before 2018/19 was not even as favourably wet as the past four seasons.
We will have a much better view of the expected El Niño intensity in two to three months, which will also be closer to the summer crop planting. On June 2, 2023, the South African Weather Service (SAWS) noted that ” ENSO predictions during this time are less skilful than other times of the year” and that the “forecasts be monitored until we reach August/September, when ENSO forecasts have significantly higher skill levels.”
Positively, with all the fears about the prospects of the upcoming drought, the winter crop-growing regions across the country have received reasonably good moisture, which will support the crop. In fact, in some regions of the Western Cape, the rains were even more than necessary this past week, leading to the destruction of roads and infrastructure.
As the winter season continues, there is likely to be additional rainfall in the Western Cape and coastal regions, possibly not destructive as recent ones, all of which will be supportive of winter crops, wine grapes, and various horticulture. This is a view held by the SAWS. In its recent release, the weather bureau stated that “the multi-model rainfall forecast indicates above-normal rainfall for most of the country during winter (Jun-Jul-Aug) through to early-spring (Aug-Sep-Oct). This is still only relevant for the south-western parts of the country during winter but also for the eastern coastal areas during spring.”
This weather outlook reinforces our optimism about the South African 2023/24 winter crop season. At the end of April, the Crop Estimates Committee indicated that farmers intend to plant 542 600 hectares of wheat in the 2023/24 season, 3% up from the five-year average area planted (although down 4% y/y). We view such an area planted, combined with favourable weather conditions, as a catalyst for a solid harvest of around 2 million tonnes. We assumed an average yield of 3,75 tonnes per hectare, which is a possibility if the weather conditions remain favourable throughout the season, as the forecasts suggest.
Moreover, farmers intend to plant 109 100 hectares of barley, up 8% y/y (but below the five-year average planting). If we apply the same logic here of a five-year average yield of 3,38 tonnes per hectare in an area planting of 109 100 hectares, South Africa could have a barley crop of 368 758 tonnes in the 2023/24 season (up 19% y/y). The canola planting intentions are at 127 500 hectares, up by 3%, and a record area planting. Combined with an average yield of 1,71 tonnes per hectare, such an area suggests 218 025 tonnes of harvest this season, 4% higher than the previous year.
Still, the completion of planting activity in the intended area and weather conditions of the next two to three months are crucial in determining whether the intended area is successfully planted or even exceeded. We will have an update on the area plantings when the Crop Estimates Committee releases the preliminary area planted data on 26 July. The first actual production forecast will be released on 29 August. We generally hold a positive view of these expected data releases. Importantly, the broader horticulture subsector will also benefit from favourable weather conditions.
Overall, while there generally is some fear about the impact of the expected El Niño phenomenon on South Africa’s agriculture, the winter crops could be spared the dryness. Notably, the effect of the Niño on the 2023/24 season remains highly uncertain at this stage. A lot of it will depend on the intensity, which in our view, is not clear so far. It will be two to three months before we better understand the weather outlook and impact on the next season’s crop.
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