Positive news is rare these days, so it is essential to highlight encouraging developments when we notice them.
One piece of good news is that South Africa’s agricultural production conditions are improving, bolstering our long-held belief in a better season ahead.
We have been stating for some time that this will likely be a recovery year for South Africa’s agriculture. This follows a severe mid-summer drought in the 2023-24 season, which negatively impacted the harvest of grains and oilseeds.
The first production estimates for 2024-25 summer grains and oilseeds, released at the end of February 2025, suggest a better harvest. The Crop Estimates Committee forecasts the harvest at 17.2 million tonnes, up 11% from the previous season. This comprises maize, sunflower seeds, soybeans, groundnuts, sorghum, and dry beans.
The expected yield improvements support better harvest prospects. The overall area planted is 4.4 million hectares, roughly unchanged from last season.
As this is a preliminary production estimate and may not completely reflect the benefits of the widespread rains in the final two weeks of February, we could expect further upward revisions in the months ahead. After all, there are nine more estimates to be published monthly.
A closer look at the data shows the first maize production estimate at 13.9 million tonnes, up 8% year over year (y/y). About 7.4 million tonnes is white maize (up 22% y/y), and 6.5 million tonnes is yellow maize (down 4% y/y). The difference is caused by the area switch, with white maize taking a more significant area and the yield expectations.
The prospects of a better maize season have already added downward pressure on prices. For example, on 27 February 2025, the white maize spot price closed at R5 500 per tonne, down roughly 18% from mid-January (although still up about 30% year over year). The yellow maize spot price was around R4 780 per tonne, down 16% from mid-January (albeit up by roughly 26% year over year).
If the production forecasts are lifted further in the coming months, as we suspect, the maize prices may continue on this moderating path. This could be good for consumer food price inflation.
Importantly, this would mean a better inflation path for grain-related food products in the inflation basket, which would moderate in the second half of the year. The first half may see mild increases, reflecting the recent higher grain prices in the country, which have yet to be reflected at the retail level.
Importantly, for the long term, expected maize production for the 2024-25 season is well above South Africa’s annual maize needs of about 11.8 million tonnes.
The outlook is also optimistic regarding oilseeds, which are vital for food inflation and animal feed. For example, the soybean harvest is estimated at 2.3 million tonnes, up 26% year over year. This is due to anticipated better yields, as the area is roughly the same as last season.
Moreover, the sunflower seed harvest is forecast at 720 050 tonnes, up 14% year over year, benefiting from expected higher yields.
The groundnut harvest is estimated at 65 359 tonnes (up 26% year over year), sorghum production is estimated at 129 620 tonnes (up 32% year over year), and dry beans harvest is estimated at 75 966 tonnes (up 50% year over year). The base effects also boost the significant annual increases, given the poor harvest we recorded in 2023-24 during the drought.
Overall, this is shaping up to be a better agricultural season. Still, the weather conditions in the coming months will more significantly determine the development of crop conditions.
The season is late by roughly a month because of the late start of rains in some regions. This means the grain deliveries may be late, thus somewhat curbing the possible fast deceleration in maize prices.
South Africa must get favourable rains through March as some crops may pollinate. Fortunately, the weather prospects suggest that there could still be favourable rains next month.
Also worth noting is that as encouraging as this picture is, some regions may not share it, whose crops have been affected by massive rains in recent weeks and some by erratic rains in the past month. We mainly saw such challenges in Limpopo. For such areas, farmers may face financial challenges.
Without minimizing those unique challenges, the national picture remains favourable for agriculture this year. We remain convinced that this is a recovery period. The horticultural industry also benefits from these recent rains, like the livestock industry, through improved grazing veld.
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