The recent rains across South Africa have been favourable for the 2023/24 season’s winter wheat. The wheat crop is mostly in good condition in the Western Cape, a province that accounts for more than two-thirds of plantings.
The heavy rains in June in the province, which damaged infrastructure, had a minimal adverse effect on the overall winter wheatlands. Admittedly, certain areas received excessive moisture that may have stunted crops in some fields.
Still, the broad feedback from producers in the province suggests that we could receive above-average yields in winter wheat. Other notable winter wheat-producing provinces such as Northern Cape, Free State and Limpopo also have good soil moisture from the summer rainfall, which is now beneficial for winter crop conditions. This winter season has also been much colder, supporting crop conditions.
It is worth noting that South Africa’s winter wheat production conditions this 2023/24 season were better than the previous one regarding input costs. For example, when farmers started to prepare for the season in March 2023, essential agrochemicals such as glyphosate and acetochlor were down 36% year on year and 18% year on year, respectively, in rand terms. In the same month, essential fertilisers such as ammonia, urea, di-ammonium phosphate and potassium chloride were down 45%, 54%, 18% and 28% in rand terms, respectively.
These price changes in agrochemicals and fertilisers are vital as they affect vast components of grain input costs. Fertiliser accounts for a third of grain farmers’ input costs, while other agrochemicals account for roughly 13%. This means that a decline in the prices of these inputs considerably lessened the cost burden on farmers.
On July 26, the crop estimates committee (CEC) released Soth Africa’s wheat area plantings data for the 2023/24 season. Wheat plantings are down by 6% y/y, estimated at 532 300 hectares. The notable decline is in the Northern Cape, Free State and Limpopo. Meanwhile, the Western Cape is marginally up from the previous season.
Such an area planted, combined with favourable weather conditions as we have observed over the past few months, could result in a decent harvest of 2,0 million tonnes (down 4% y/y). We assumed an average yield of 3,8 tonnes per hectare, which is a possibility if the weather conditions remain favourable throughout the season.
With a wheat harvest of this size, South Africa will likely need to import about 1,5 million tonnes of wheat to meet domestic consumption in the 2023/24 season. This will not be an issue; there is plenty of grain globally.
While various regions of the world, such as Europe, have struggled with excessive heat in their summer, the winter wheat regions of SA have had favourable production conditions thus far. The crop size will show the benefit of all the conducive weather.
Though we received the planting data on July 26, it will be a month before we have the first production forecast by the CEC, which will be released on August 29.
With renewed worries about wheat supplies and a potential uptick in prices because of the nonrenewal of the Black Sea grain deal, a decent domestic wheat harvest would provide a much-needed buffer in terms of supplies towards the end of the year into 2024.
But this does not change that South Africa remains a net importer of roughly half of its domestic wheat consumption. These are imports of about 1.5-million tonnes.
That said, having a sizeable domestic wheat harvest helps for the near-term wheat usage in the fragile grain trade times we witness worldwide.
Therefore, the favourable rains and farmers’ efforts may have provided a much-needed buffer through the 2023/24 season winter wheat supplies, which promise to be sizeable.
Written for and first appeared on Business Day.
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