by Wandile Sihlobo | Oct 3, 2024 | Agricultural Production
South Africa is on its eighth summer grain and oilseeds production forecast for the 2023-24 season. There are two more monthly reports to follow. Given that we are at the tail end of the season and will soon be in the optimal planting window for the 2024-25 production season from mid-October, we thought there would be no major revisions of the production figures at this late stage.
But this has not been a typical season, and the lower producer deliveries we have been observing over the past few weeks are not only a function of on-farm storage but a poor harvest. Indeed, we struggled with a mid-summer drought in February and March, undermining crop yield potential in various regions.
On September 26, South Africa’s Crop Estimates Committee lowered the 2023-24 maize harvest to 12,80 million tonnes, down 2% from last month and 22% from the previous season. This sharp decline in harvest prospects signifies the harsh impact of the drought.
Of the current estimate, white maize is about 6,08 million tonnes (down 2% m/m), with yellow maize at 6,72 million tonnes (down 2% m/m). The current maize crop of 12,80 million tonnes is the lowest in six years, again showing the sharp impact of the drought.
We believe the expected harvest and carryover stocks from last season will meet South Africa’s annual maize consumption of roughly 12,00 million tonnes. This will still leave the country with a sizable volume for export markets.
The latest data from the South African Grains and Oilseed Supply and Demand Estimates Committee suggests that South Africa’s maize exports could reach 1,90 million tonnes in the 2024-25 marketing year (this corresponds with the 2023-24 production season).
In the week of September 13, about 843k tonnes had already been exported (the 2024-25 marketing year started on May 1).
In this export forecast, about 1,20 million tonnes will likely be white maize, with 700k tonnes could be yellow maize. Still, the estimated exports of 1,90 million tonnes are down notably from 3,40 million tonnes in the previous 2023-24 marketing year (this corresponds with the last 2022-23 production season). With the further downward revision of the harvest, we suspect that the export figure may have to be revised somewhat, particularly the white maize component.
Also worth noting is that while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year (which corresponds with the 2023-24 production season), the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina through Cape Town.
South Africa’s 2024-25 maize imports currently stand at 173k tonnes. The imports for the year (2024-25 marketing year) could rise to 350k tonnes. Brazil is another potential supplier of yellow maize to South Africa. Notably, after accounting for these potential imports, South Africa will likely remain a net maize exporter.
Importantly, these figures are still tentative. There may still be adjustments in the coming months, particularly on white maize export forecasts. We are in a tricky season with many unknowns, and the recent downward revision of white maize has further complicated an already challenging season.
The implication for the consumer is that white maize prices may remain elevated over the near term. On September 26, the white maize spot price traded around R5 505 per tonne, roughly 38% up year-on-year.
Meanwhile, yellow maize was at R4 240 per tonne, up 10% year-on-year. The price difference is because of the abundant yellow maize supplies in the world market relative to scarce white maize.
The regional demand for white maize will also continue to present upward price pressures, especially towards the end of the year and going into the first few months of 2025.
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by Wandile Sihlobo | Sep 29, 2024 | Agricultural Production
Canola is one of South Africa’s agricultural success stories. Since South African farmers planted the crop commercially on 17k hectares in 1998-99, the area has increased to an estimated 165k hectares in 2024-25.
There has been a switch from some traditional winter wheat and barley growing areas to canola because of price competitiveness. Canola is a winter crop. Hence, production is primarily in the Western Cape, a winter rainfall region in South Africa.
The catalyst behind the increase in canola plantings, among other things, is a rise in domestic demand or usage for oils and oilcake. South Africa is now a net canola exporter, having exported to countries such as Germany and Belgium in the recent past.
Considering the recent expansion in area plantings, and expected better yields, South Africa’s 2024-25 canola production is forecast at 294k tonnes. This is the largest harvest on record, up 25% year-on-year.
Indeed, in our recent visit to the Western Cape, the canola plantings were visibly in good condition in most regions of the province. These figures confirm our anticipation that the province will have a decent canola crop.
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by Wandile Sihlobo | Sep 29, 2024 | Agricultural Production
Disruptions in the major grain supplies always spark fears of food security. Certainly, in July 2023, India sparked fresh concerns about global food security as the world was readjusting from the disruptions caused by the Russian war on Ukraine on global grain supplies and prices.
India placed a ban on non-basmati white and broken rice. This category typically accounted for 45% of the 22 million tons of rice that India exports to the global market annually.
The rationale cited in media articles at the time was that India’s government was worried about inflation before the upcoming elections.
In the months following that official announcement on 20 July 2023, global rice prices rallied as many were concerned about possible supply shortages. The worries were not misplaced. India accounts for roughly 26% of global rice production.
Fortunately, there was a quick adjustment of supply chains, and the world did not face a major rice shortage. The fact that other notable rice exporters such as Pakistan, Thailand, the US, Vietnam, China, Cambodia and Myanmar had a good crop in the 2023-24 season also helped to ease fears over time and to avail the supplies.
We are far from that reality today – at least from the rice price levels. Global rice prices have softened notably in recent weeks because of the expected ample global supplies. Moreover, the news that India is likely to ease rice export restrictions as supply increases and elections have passed has perhaps also helped.
Rice prices from various origins have moderated significantly from the higher levels we saw last year – currently trading at levels of about $550 (about R9,440) per ton (as of August 2024), compared with levels of about $650 per ton at the end of 2023.
Dependence on rice imports
We paid attention to the rice issue in South Africa throughout this period because of our dependence on rice imports. We rely 100% on imports. We consume about a million tons of rice annually and we can’t produce rice because of our relatively dry environment — we are generally a semi-arid country.
Thailand is the leading rice supplier to South Africa, accounting on average for 74% of South Africa’s rice import volume a year in the past five years. India is the second largest rice supplier to South Africa, boasting an average annual share of 21% over the past five years. Other rice suppliers include Pakistan, Vietnam, China, Australia, the US, and Brazil.
Therefore, this reliance on imports means we should constantly monitor global price developments. Indeed, this time around the rice price prospects look to continue softening because of the abundant supplies and minimal trade disruptions.
The International Grains Council forecasts 2024-25 global rice production at 528 million tons, up 1% year-on-year.
There are expectations for a good harvest in India, Vietnam, Thailand, the US, Pakistan, China, India, Bangladesh and Pakistan, among others.
The expansion in area planted and favourable weather conditions are some of the factors behind the optimism about the global rice harvest in the 2024-25 season. Subsequently, the global rice stocks could also lift by 1% from the 2023-24 season to 176 million tons.
Continuous moderation
All else being equal, one can say that the coming months will probably see much better continuous moderation in global rice prices. Perhaps, if India can boldly lift the restrictions on exports sooner, we may even see more softening in prices.
This benefits importers like South Africa. Moreover, the relatively less depreciated domestic currency will also help ease the costs of imported rice.
In the case of broader southern Africa, where the white maize supplies are tight because of the recent mid-summer drought, the easing rice prices and ample supplies provide a better addition to the basket of staples. Still, at the retail level, the actual rice prices may remain relatively higher than some white maize products.
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by Wandile Sihlobo | Sep 24, 2024 | Agricultural Production
On Thursday, September 26, South Africa’s Crop Estimates Committee — the body of researchers in government and independent organizations tasked with forecasting the country’s grains and oilseed production — will release its eighth production forecast for the 2023-24 summer grain production. They will also release their 2nd production estimates for 2024-25 winter grains and oilseeds.
We know the 2023-24 summer grains and oilseed harvest took a major hit from the mid-summer drought. The current production estimate is 15,69 million tonnes, down 22% from the 2022-23 season. There are significant crop declines in maize, soybeans, and sunflower seeds, amongst other grains. And to be clear, the 15,69 million tonnes estimate is for all summer grains and oilseeds – maize, soybeans, sunflower seed, sorghum, groundnuts, and dry beans.
Still, South Africa is fortunate to have been able to meet its local needs and have a surplus for the neighbouring countries in dire need of maize supplies.
Given that we are late in the season, we doubt the data released on Thursday will change much of the picture of sufficient grain supplies that the Crop Estimate Committee painted last month. Still, I must highlight that we continue to see relatively lower deliveries to commercial silos, which at this point, we don’t know if it’s because of relatively high on-farm storage or if there are challenges with the crop that are yet to unfold. This lack of clarity makes watching the data for this week vital.
Beyond this week’s data, we will focus on the 2024-25 summer grain and oilseed production season starting next month. The planting should begin in the eastern regions of South Africa from mid-October. The weather forecasts remain optimistic, with prospects of La Nina rains, which could help bring much-needed rains and support agricultural production for the 2024-25 season. The harvest from this particular season will be critical for the food security conditions in 2025 and 2026.
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by Wandile Sihlobo | Sep 19, 2024 | Agricultural Production
In all of our agricultural abundance in South Africa, rice is one of the crops we are not endowed with. We rely 100% on imports. We consume about a million tonnes of rice annually. We can’t produce rice because of our relatively dry environment; we are generally a semi-arid country.
Thailand is the leading rice supplier to South Africa, accounting, on average, for 74% of South Africa’s rice import volume a year in the past five years. India is the second largest rice supplier to South Africa, boasting an average annual share of 21% over the past five years. Other rice suppliers to South Africa include Pakistan, Vietnam, China, Australia, the US, and Brazil.
Therefore, this reliance on imports means we should constantly monitor global price developments. Indeed, this time around, the rice price prospects look great globally.
The rice prices from various origins have moderated significantly from the higher levels we saw last year. This benefits the importers like South Africa. Moreover, the relatively less depreciated domestic currency will also help ease the costs of imported rice.
The global rice prices have softened, amongst others, because of the positive global production prospects for the 2024-25 season. The International Grains Council forecasts 2024-25 global rice production at 528 million tonnes, up 1% year-on-year.
There are expectations for a good harvest in India, Vietnam, Thailand, the US, Pakistan, China, India, Bangladesh and Pakistan, amongst others.
The expansion in area planted and favourable weather conditions are some of the factors behind the optimism about the global rice harvest in the 2024-25 season.
Subsequently, the global rice stocks could also lift by 1% from the 2023-24 season to 176 million tonnes.
All else being equal, one can say that the coming months will likely see much better costs for rice consumers. In the case of Southern Africa, where the white maize supplies are tight because of the recent mid-summer drought, the easing rice prices and ample supplies provide a better addition to the basket of staples. However, at the retail level, rice prices may remain relatively higher than some white maize products.
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by Wandile Sihlobo | Sep 16, 2024 | Agricultural Production
By this time next month, the fields across the eastern regions of South Africa will likely be busy. Farmers will be tilling the land for the 2024-25 summer grains and oilseed production season in mid-October. It will be another month before the country’s western regions start till the land, from mid-November. The variation in the optimal planting windows is mainly due to the differences in rainfall patterns.
From now on through the season, the weather outlook will remain a primary focus for the agricultural stakeholders. We are, after all, emerging from a challenging 2023-24 summer grains and oilseed season that resulted in major crop losses. The latest figures from the Crop Estimates Committee show that the 2023-24 summer crop may have fallen as much as 22% from the previous season to 15,69 million tonnes.
The 2024-25 season seems likely to be a recovery period. So far, global weather forecasters such as the International Research Institute for Climate and Society at Columbia Climate School (IRI) continue to indicate an optimistic outlook about rainfall prospects. For example, the IRI sees a possibility of La Niña occurrence from this month to April 2025. For South Africa and the entire Southern Africa region, this weather event typically brings above-normal rainfall.
The critical period for rainfall for South Africa’s summer grains and oilseed is between October and the end of February the following year. This is a period between planting and pollination of the crop. The months after are essential, but the crop could still have decent yields even if there is less rain after the pollination.
In the 2023-24 season, the drought was at its harshest as the crop started the pollination period from February to the end of March. Had this been delayed by roughly a month, the outcomes would have differed greatly for the better. The summer grains and oilseeds encompass yellow maize, white maize, sunflower seeds, soybeans, groundnuts, sorghum, and dry beans, and these are the crops whose planting season will start soon.
Also worth noting is that other forecasters, such as the Australian Bureau of Meteorology, also see a possibility of the La Niña occurrence, although still without a firm view. For example, on September 3, the Australian Bureau of Meteorology indicated that “The El Niño-Southern Oscillation Outlook is currently at La Niña Watch, meaning there are some signs that a La Niña may form in the Pacific Ocean later in 2024. A La Niña Watch does not guarantee that a La Niña will develop.”
This cautious view by the Australian weather authorities is similar to what we see in South Africa. On August 31, the South African Weather Service (SAWS), in its monthly Seasonal Climate Watch, indicated that “The El Niño-Southern Oscillation is currently still in a Neutral state and is predicted to weaken further. Current predictions indicate the development of a La Niña state during the start of the summer season; however, there is still significant uncertainty in the predictions.” SAWS further added “It is advised to monitor the ENSO system, as significant changes in the system may occur after the winter period due to increased prediction skill. Current predictions focus on the spring and early summer seasons and indicate wetter conditions along the south-eastern coastal areas during spring as well as the central parts in early summer.”
This suggests the likelihood of La Niña in the 2024-25 season and potentially favourable rainfall. How South African farmers will factor these weather prospects into their planting decisions is unclear. We will have an idea of their view on October 29, when the Crop Estimates Committee releases the 2024-25 season’s farmers’ planting intentions data.
The improvement of weather conditions is not only for crops but also for the horticulture and livestock industry. The dam levels that horticulture relies on will benefit from improved rainfall. Equally, the grazing veld for the livestock industry will also benefit from better rainfall.
So far, the available insights support a view of a potential recovery in South Africa’s agriculture in the 2024-25 season.
Written for and first appeared on the Business Day.
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by Wandile Sihlobo | Sep 2, 2024 | Agricultural Production
This point is worth revisiting now that we have new 2024-25 season production data. Canola is one of South Africa’s agricultural success stories. From when we planted the crop commercially on 17k hectares in 1998-99, the area has increased to an estimated 154k hectares in 2024-25.
There has been a switch from some winter wheat and barley traditional growing areas to canola because of price competitiveness. Canola is a winter crop. Therefore, the production is primarily in the Western Cape, a winter rainfall region in South Africa.
The catalyst behind the increase in canola plantings, among other things, is a rise in domestic demand or usage for oils and oilcake. South Africa is now a net canola exporter, having exported to countries such as Germany and Belgium in the recent past.
Moreover, in the 154k hectares for the 2024-25 season, the canola production is forecast at a record 265k tonnes, up 12% y/y. In essence, we are in another possible excellent season for canola. However, we must pay close attention to weather conditions in the months ahead.
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by Wandile Sihlobo | Aug 28, 2024 | Agricultural Production
This afternoon, South Africa’s Crop Estimates Committee lowered its estimate for the country’s 2023-24 maize harvest by 2% from last month to an estimated 13,06 million tonnes. This is 21% down from last season. This sharp decline in harvest prospects signifies the harsh impact of the mid-summer drought.
Of the current estimate, white maize is about 6,19 million tonnes (down 3% m/m), with yellow maize at 6,87 million tonnes (down 2% m/m).
This expected harvest will meet South Africa’s annual maize consumption of roughly 12,00 million tonnes, leaving the country with a sizable volume for export markets. Data from the South African Grains and Oilseed Supply and Demand Estimates Committee suggests that exports could reach 1,85 million tonnes in the 2024-25 marketing year (this corresponds with the 2023-24 production season).
This may sound significant following a challenging season with a somewhat poor harvest, but there is a boost in supplies from the carryover stocks from the previous season. In this export forecast, about 1,20 million tonnes will likely be white maize, with 650k tonnes could be yellow maize. Still, the estimated exports of 1,85 million tonnes are down notably from 3,40 million tonnes in the previous 2023-24 marketing year (this corresponds with the last 2022-23 production season).
These exports will primarily be for the Southern Africa region. In fact, between May and mid-August 2024, South Africa had already exported 655k tonnes out of the expected 1,85 million tonnes. The principal beneficiary is Zimbabwe and a range of neighbouring African countries.
Also worth noting is that while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year (which corresponds with the 2023-24 production season), the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina through Cape Town.
South Africa’s 2024-25 maize imports currently stand at 134k tonnes. The imports for the year (2024-25 marketing year) could rise to 350k tonnes. Brazil is another potential supplier of yellow maize to South Africa. Notably, after accounting for these potential imports, South Africa will remain a net maize exporter.
Importantly, these figures are still tentative. There may still be adjustments in the coming months, particularly on white maize export forecasts. We are in a tricky season with a lot of unknowns.
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