American farmers are likely to be somewhat uplifted by the recent US-China meeting. They are feeling the negative impact of the current trade friction, as China has increased its reliance on South and Latin American countries to buy soybeans and other agricultural products.
China is the world’s largest importer of soybeans, accounting for roughly half of global soybean imports. China also imports a range of agricultural products, making it the world’s second-largest agricultural importer. Therefore, a promise from the recent US-China meeting to resume imports of US agricultural products will help alleviate some of the pressures on American farmers.
For us in South Africa, of course, the easing of the trade friction reduces the volatility in the grain markets. However, it doesn’t fundamentally change much of our reality. There are ample grain and oilseed supplies in the world market, which have kept prices generally under pressure. This adds to the fact that South Africa has a large crop.
Therefore, for a South African farmer, there are some financial pressures, particularly if one considers that we will start the 2025-26 planting season with reasonably higher input costs.
For consumers, however, the ample global and domestic grain prices bode well for a continuously moderating food inflation path through 2026.
With all these issues considered, South African farmers remain eager to plant a decent crop area in the 2025-26 season, with an intended area of 4.5 million hectares, up 1% from the 2024-25 season that has just been completed. The weather outlook for the season is broadly positive, suggesting we may have another excellent crop.
Overall, we will closely monitor the issue of US-China grain trade and whether there will be a resumption in US export volumes. Still, even if there is a resumption, China will likely stay on its path to diversify its agricultural product suppliers. The South and Latin American region are the biggest beneficiary of this effort, but China is increasingly looking at other regions, which includes us in South Africa.
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