South Africa’s Crop Estimates Committee (CEC) recently released its fourth production estimate for the 2023/24 summer crop production season. The harvest across the country is underway so we may put more weight on the accuracy of this figure than our tentative view in the previous estimates.
The CEC places South Africa’s 2023/24 total summer grains and oilseed production forecast at 15,9 million tonnes, down 0,5% from the previous month’s forecast and 21% lower than the last season’s harvest.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6,4 million tonnes (down 0,9% m/m) and 6,9 million tonnes (down 0,3% m/m). These revisions place the total maize production estimate at 13,3 million tonnes (down 0,6% m/m).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022/23 season. The expected harvest of 13,3 million tonnes is down 19% from the 2022/23 season.
We are optimistic that this harvest may materialize, although we are unsure of the quality. Suppose we are correct; this harvest would meet South Africa’s annual maize consumption of roughly 12,00 million tonnes, leaving the country with over a million tonnes for exports.
With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season. Admittedly, in recent weeks, white and yellow maize prices have moderated from the levels we saw last month because of the harvest pressure and the relatively stronger domestic currency, amongst other factors.
Still, white maize prices are over 30% higher than levels we saw a year ago, with yellow maize prices up roughly 7% from a year ago. On May 28, South Africa’s white maize spot price closed at R5 005 per tonne, while the yellow maize spot price was R4 035 per tonne.
Yellow maize prices have not increased much, as imports could make the supply risk manageable. There are ample maize supplies (yellow) in the world market.
The International Grains Council (IGC) forecasts the 2023/24 global maize harvest to be 1,2 billion tonnes, up 6% year-on-year. A majority of this expected global maize is yellow. The stocks are also robust, thus keeping the international yellow maize prices moderate.
This also partly explains the relatively mild increase in yellow maize prices compared with the surge in white maize prices, which is scarce in the world market and primarily produced in Southern Africa and Mexico.
Concluding remarks
The current production data illustrates the scale of damage caused by the mid-summer drought to the South African agricultural sector. The complete scale of the financial impact of this drought on the farming businesses is yet to be clear.
Still, from a consumer perspective, South Africa is not in a crisis, in our view. The recent drought presents upside risks to food price inflation but not the overall basket.
The challenge is primarily the white maize, especially considering the potentially more robust regional demand later in the year.
The favourable supplies of other grains in the world market, mainly yellow maize (also rice and wheat), and the moderating prices mean South Africa could be slightly cushioned in these commodities.
Follow me on X (@WandileSihlobo).
