by Wandile Sihlobo | Jan 23, 2025 | Agricultural Production
Usually, if one does not deal with a particular commodity in their daily business, they rarely monitor whether it is produced sufficiently locally or imported. Consumers’ main concern is always whether they get their preferred products on the shelves when they go to the store at a fair price and in a safe condition. This has been the reality of wheat products in South Africa.
Hence, some South Africans realising that the country imports roughly half of its annual wheat consumption has sparked a discussion about why the country is not expanding domestic production in all the fallow land in some provinces.
Here is a thing;
South Africa began importing over a million tonnes of wheat from the 2003-04 marketing year. In the years before that, wheat imports averaged 458 518 tonnes, for example, between 2002-03 and 1989-90. The import surge resulted from increased consumption and a decline in area plantings.
From the 1997-98 season, South Africa’s wheat plantings fell below a million hectares, the norm in seasons before this period. This decline is better explained by the profitability challenges that farmers have faced since that period, specifically in the Free State and non-conducive climatic conditions.
The critical thing to recall is that before 1997-98, South Africa’s agricultural markets were regulated, and the various commodities boards played a massive role in setting prices, including wheat. Thus, after deregulation, South African farmers had to compete in the global market. Thus, the Free State production areas came under profitability strain, resulting in farmers switching from wheat to other profitable crops.
Other provinces of South Africa don’t have large areas with conducive climatic conditions for high-quality wheat milling for human consumption. Hence, we speak of a few major wheat-producing provinces, the Western Cape, and mainly those under irrigation in the Northern Cape, Free State, Limpopo, and North West.
A significant development over the years is improving productivity in South Africa’s wheat farming. In 1997-98 years before, South Africa’s wheat yields were below 2,0 tonnes per hectare. The yields are 3,8 tonnes per hectare as of the 2024-25 production season.
Because of improved profitability, South African wheat production has remained relatively large. The 2021/22 crop was the largest in 20 years, at about 2.3 million tonnes. In 2024-25, the crop is estimated at 1.94 million tonnes because of lower plantings in the Free State and Northern Cape, among other places.
But this will not be sufficient to meet annual consumption. South Africa will likely import about 1,82 million tonnes of wheat in the 2024-25 marketing year to supplement the domestic supplies. The current import volumes are roughly half South Africa’s annual wheat needs of 3,8 million tonnes.
In a separate post, I will discuss the current wheat production dynamics and import activity. Still, I felt it essential to explain why we are here: importing half of our annual wheat consumption.
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by Wandile Sihlobo | Dec 20, 2024 | Agricultural Production
(Oh well, one should be resting or surfing in Port St Johns, but here we are — there are more data releases on South Africa’s agriculture.)
What’s new? We continue to see a downward revision in South Africa’s winter crop production prospects. For example, in its fifth 2024-25 winter crop production estimates, South Africa’s Crop Estimates Committee slightly lowered the forecasts by 0,2% month-on-month (m/m) to 2,68 million tonnes.
From an annual basis, the harvest is down by 1,5% from the 2023-24 season. This estimate comprises wheat, barley, canola, oats and sweet lupines.
Wheat
Wheat production is estimated at 1,93 million tonnes, down 03% m/m and 6% year-on-year (y/y). The crop losses are not in the Western Cape, the major wheat producer.
The Western Cape expects a larger harvest than the 2023-24 season. The challenge is the poor harvest in other producing provinces, primarily the Northern Cape, Limpopo, and the Free State.
These provinces have reduced area plantings for wheat this year. The relatively lower wheat prices at the start of the season may be one of the factors behind the decision to slash plantings.
However, the challenge for the Free State and Limpopo is beyond the prices. These provinces experienced severe mid-summer drought, which led to significant summer grain losses.
When the winter wheat season started in May, farmers’ mood was downbeat, and they worried about soil moisture. Others may have wanted to conserve soil moisture for the new summer crop season.
Thus, we saw lower plantings and relatively lower expected yields in some areas. These challenges have contributed to the 6% expected national decline in the 2024-25 South African winter wheat harvest.
In a season like this with a reasonably expected lower harvest, one would assume that the imports would increase, especially as the consumption of wheat and wheat products in South Africa remains strong.
However, the South African Grain and Oilseeds Supply and Demand Estimates Committee estimates suggest that 2024-25 wheat imports may fall 7% to 1,80 million tonnes. This closely aligns with a five-year average of wheat imports to South Africa. The major boost is the higher opening stocks, supplemented by the ample imports in the past season.
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by Wandile Sihlobo | Dec 15, 2024 | Agricultural Production
The heatwave in most regions of South Africa is worrying – and if it persists, it may strain agricultural activity in some areas. So far, most agricultural regions in the country remain in fair condition. The heavy rains of November improved soil moisture immensely, and better soil moisture supported crop development in the past few days of intense heat.
Of course, I am speaking broadly here. There are areas around Delmas in Mpumalanga and parts of Limpopo province that were not as fortunate as the ones that had benefited from the November rains. The recent heatwave has been challenging and costly for livestock farmers who require feed for these regions.
Still, I continue to find comfort in the near-term weather prospects, which show a possibility of heavy rain over the next two weeks – see the coloured parts of the South African map.
The La Niña event remains activated for the medium term, providing additional comfort that there may be above-normal rainfall between these high temperatures to support agricultural activity. And yes, the La Niña rains are late in some regions, such as the parts of Limpopo I mentioned continue to struggle.
I remain optimistic about the 2024-25 agricultural season in South Africa. We have yet to contact many of our Southern African colleagues to get a sense of rainfall and farming conditions.
The Southern Africa region endured a heavy mid-summer drought in the 2023-24 season, which led to massive crop failure. For example, the 2023-24 grains and oilseeds harvest in South Africa fell by 23% y/y, Zimbabwe’s maize crop declined by 60%, and Zambia’s maize crop fell by half. There were also massive crop losses in Lesotho, Mozambique, and Malawi.
The 2023-24 crop failure also increased the region’s poverty levels.
Thus, I hope that the La Niña rains in 2024-25 will provide a recovery in the Southern Africa region’s agricultural conditions and food security.
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by Wandile Sihlobo | Dec 12, 2024 | Agricultural Production
We continue to see a surge in South Africa’s white maize spot price – trading at over R6 400 per tonne by December 11, up 49% year-on-year. A few friends in agriculture have asked me what I make of this, and I will try to clarify my thoughts in this post. Here we go; I think there are a couple of fundamental price drivers.
First, these higher maize prices reflect the impact of the 2023-24 drought on South Africa’s maize harvest. Our maize crop is down 23% y/y at 12,72 million tonnes. About 6,72 million tonnes is yellow maize (down 21% y/y), and 6,00 million tonnes is white maize (down 24% y/y).
Second, while South Africa’s harvest is poor, we continue to see maize exports to the broader Southern Africa region. Judging from the import need in Zimbabwe, Botswana, Namibia, Mozambique, and others, we will continue to see strong regional white maize demand through the first quarter of 2025.
Here, I must quickly clarify that South Africa’s maize harvest of 12,72 million tonnes is well above the annual needs of 11,8 million. Moreover, South Africa had large stocks of over two million tonnes from the last season, further boosting the domestic supplies this year.
This ultimately meant that while South Africa’s maize production was down, the country continued to export maize to the Southern African region.
South Africa’s overall maize exports are estimated by industry stakeholders at 1.9 million tonnes through the April 2025 marketing year (about 1.2 million tonnes is white maize, and 700k tonnes is yellow). About 1,36 tonnes have been exported, mainly to Southern Africa, and 65% of the exports are white maize.
Third, because of this poor harvest and the strong regional demand, the market participants seem worried about commodity scarcity, which is adding to the price increases. Remember, Mexico is the only maize white maize supplier outside South Africa in the world market.
I doubt Mexico has surplus white maize for exports to our region, similar to the US, which has, interestingly, signalled possible exports to our region. I doubt they have the supplies of white maize.
One must also appreciate that the US generally does not produce white maize in any significant volume for export. Therefore, such maize would have been planted on contract for particular buyers. It is possible that such maize could be a few consignments for the coastal regions while South Africa ramps up exports to the broader Southern Africa region.
Regardless of these challenges, South Africa will likely remain a net exporter of maize in the 2024-25 marketing year. The country will likely export just under two million tonnes of maize. Any possible imports will be far less, and maize will serve the broader Southern Africa region and the coastal areas of South Africa.
For example, coastal regions will continue to import small volumes of yellow maize for animal feed because of price advantages. We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports were at 342k tonnes at the end of November 2024.
So, this is my long-winded way of saying there are some supply constraints and fears in the market, possibly explaining the price increases we see. I also believe these are near-term challenges, and we should see some price moderation over the medium term.
And yes, the current price surge will reflect on grain products at the consumer inflation level in the coming months. But you see – there is a leg in these things, typically about three to four months before the prices appear at the consumer level.
For this reason, I have consistently pointed to grain-related products of the food basket in the inflation data as an upside risk to food prices. But again, the increases may not be as high. The world market has low wheat and rice prices because of the ample supplies, which will help smoothen the grains inflation part of the food basket.
Where do I draw my optimism? The new 2024-25 production season is favourable. In this view, I am leaning on the expected La Nina rains. The farmers have stated that they will plant a slightly bigger area for maize, which will help, assuming we get the much-needed rains to support the crop.
And yes, the rains have been delayed by roughly a month in some areas, and we have gone through a week of heatwave. Still, the forecasts point to a possible rainy summer season, which will help with maize production recovery and possible price moderation. This will be positive for the consumer in 2025.
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by Wandile Sihlobo | Dec 7, 2024 | Agricultural Production
I am one of the people who remain reasonably optimistic about the possible La Niña rains this 2024-25 summer season. We need the rains to improve agricultural production here in South Africa and across the Southern Africa region.
The forecasts for La Niña remain active, and we have received some scattered rains across South Africa, which have helped immensely with the planting so far. We have various regions that have planted much of the crop.
However, there are regions in South Africa that have not received much rain at all. The heatwave of this past week has worsened conditions in such areas. Parts of Limpopo, Free State, and even the North West are such regions. If one farms in these regions, it is understandable that they would be downbeat and annoyed at all the talk of La Niña.
But I gain comfort from the weather forecast for the next two weeks. It appears that we may finally receive trains in much of the northern regions of South Africa. The forecasts for the week of December 16th are even more favourable – see the coloured parts of the South African map here.
For some regions, the 2024-25 summer crop season may be roughly a month or so late. I also worry a lot about livestock and game farmers in the areas that haven’t received much rain.
Still, I believe there is a possible better 2024-25 agricultural season for South Africa and the Southern Africa region. The broader Southern Africa region may have more challenges with inputs such as fertilisers, but I will say more about that later.
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by Wandile Sihlobo | Dec 5, 2024 | Agricultural Production
For much of the past few weeks, we have focused on the summer grains and oilseed, the plantings of which have recently started across South Africa. But other equally essential crops are winter grains and oilseeds. After a reasonably good production period during the winter season, the farmers are now busy harvesting the 2024-25 winter crops.
Unlike other crops where we monitor the production conditions nationally, with winter crops, we pay close attention to the Western Cape because of the province’s significant contribution to these crops. For example, about 70% of the winter wheat plantings for the 2024-25 season are in the Western Cape. The area planted for barley, canola, and oats is also significant in the province as a winter rainfall region.
Other major winter crop-producing provinces are the Northern Cape, Free State, and Limpopo, and the production in these provinces is mainly under irrigation. This year’s primary challenge for these provinces was the mid-summer drought, which made farmers risk averse, and when the 2024-25 winter season started, they reduced the area plantings.
The latest production data mirror these area reductions. For example, in the last week of November 2024, the Crop Estimates Committee released its fourth 2024-25 winter crop production estimates for South Africa. The Committee slashed its winter crop production estimate by 1,6% month-on-month (m/m) to 2,68 million tonnes. From an annual basis, the harvest is down by roughly the same percentage, 1,5%, from the 2023-24 season. This estimate comprises wheat, barley, canola, oats and sweet lupines.
Wheat production is estimated at 1,94 million tonnes, down 1,3% m/m and 5% year-on-year (y/y). The crop losses are not in the Western Cape, the major wheat producer. The Western Cape expects a larger harvest than the 2023-24 season. The challenge is the poor harvest in other producing provinces, primarily the Northern Cape, Limpopo, and the Free State. These provinces have reduced area plantings for wheat this year. The relatively lower wheat prices at the start of the season may be one of the factors behind the decision to slash plantings.
However, the challenge for the Free State and Limpopo is beyond the prices. These provinces experienced severe mid-summer drought, which led to significant summer grain losses. When the winter wheat season started in May, farmers’ mood was downbeat, and they worried about soil moisture. Others may have wanted to conserve soil moisture for the new summer crop season. Thus, we saw lower plantings and relatively lower expected yields in some areas. These challenges have contributed to the 5% expected national decline in the 2024-25 South African winter wheat harvest.
In a season like this with a reasonably expected lower harvest, one would assume that the imports would increase, especially as the consumption of wheat and wheat products in South Africa remains strong. However, the South African Grain and Oilseeds Supply and Demand Estimates Committee estimates suggest that 2024-25 wheat imports may fall 7% to 1,80 million tonnes. This closely aligns with a five-year average of wheat imports to South Africa. The major boost is the higher opening stocks, supplemented by the ample imports in the past season.
Aside from wheat, the 2024-25 barley production is estimated at 371k tonnes, down 4% m/m and 1% y/y. On a more upbeat note, the 2024-25 canola production is forecast at 295k tonnes. This is the largest harvest on record, up 25% y/y. The improvement is underpinned by the expansion of the planted area and the better yields. Also worth highlighting is South Africa’s 2024-25 oats production, estimated at 56k tonnes, down 9% m/m but up 37% y/y. This significant annual production results from a notable increase in the planted area, combined with positive yield prospects.
These fourth production estimates paint a mixed picture of South Africa’s winter crop prospects for the 2024-25 season. However, this should not be an issue, especially from a consumer perspective. The large imports in the last season have boosted the opening stocks when considering the major winter crop, wheat. This puts South Africa in a relatively good place regarding wheat supplies this new marketing year. Moreover, ample wheat supplies in the world market will help fill the import gap. Global wheat prices have also generally been under pressure, which is beneficial for the importing countries (of course, the opposite is true for farmers who may desire slightly higher prices).
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by Wandile Sihlobo | Nov 30, 2024 | Agricultural Production
In November 2024, South Africa’s Crop Estimates Committee lowered its 2024-24 wheat production estimate mildly from the previous month (down -1% month-on-month). The Crop Estimates Committee now forecasts South Africa’s wheat crop for the 2024-25 season to be 1,94 million tonnes, down 5% from the previous season.
The crop declines are not in the Western Cape, the major wheat producer. The Western Cape expects a larger harvest than the 2023-24 season. The challenge is the poor harvest in other major producing provinces, primarily the Northern Cape, Limpopo, and the Free State. These provinces have reduced area plantings for wheat this year. The relatively lower wheat prices at the start of the season may be one of the factors behind the decision to slash plantings.
However, the challenge for the Free State and Limpopo is beyond the prices. These provinces experienced severe mid-summer drought, which led to significant summer grain losses. When the winter wheat season started in May, farmers’ mood was downbeat, and they worried about soil moisture.
Others may have wanted to conserve soil moisture for the new summer crop season. Thus, we saw lower plantings and relatively lower expected yields in some areas. These challenges have contributed to the 5% expected national decline in the 2024-25 South African winter wheat harvest.
In a season like this with a reasonably expected lower harvest, one would assume that the imports would increase, especially as the consumption of wheat and wheat products in South Africa remains strong.
However, the South African Grain and Oilseeds Supply and Demand Estimates Committee estimates suggest that 2024-25 wheat imports may fall 7% to 1,80 million tonnes. This will be closely aligned with a five-year average of wheat imports to South Africa. The major boost is the higher opening stocks, supplemented by the ample imports in the past season.
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by Wandile Sihlobo | Nov 3, 2024 | Agricultural Production
South African farmers typically till their land from mid-October in the eastern regions and mid-November in the western regions. The crops that South African farmers plant in each of these regions differ. The eastern areas are primarily yellow maize and soybeans, while the western regions are predominantly white maize and sunflower seeds.
But this year, the plantings have been slightly slower than usual as we haven’t received meaningful rains yet. If you talk to farmers in rural regions of Limpopo or outside eKomani in the Eastern Cape, they will tell you that the impact of the mid-summer drought 2024 is still lingering in their area. The weather conditions have been quite dry.
We have even heard some agricultural analysts speculate that the 2024-25 agricultural season may as well be a continuation of the misery of the 2023-24 season, where the heatwave from February 2024 and drier weather conditions led to major crop losses. South Africa’s 2023-24 summer grains and oilseeds harvest fell by 23% year-on-year to 15,39 million tonnes. This encompasses maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans. This was because of the El Niño–induced drought. The drought was more severe in Southern Africa, with Zimbabwe and Zambia, amongst others, losing over half of their maize harvest.
We have received various forecasts suggesting that in the 2024-25 summer season, we are moving towards the La Niña weather phenomenon. This weather phenomenon typically has the opposite impact of an El Niño in Southern Africa; it brings above-normal rainfall.
Since we have not yet received the higher rainfall, we suspect it is a matter of timing, but most forecasts point to prospects of favourable rainfall this 2024-25 season. This implies that the recovery period may be in sight, and the farmers are also optimistic. For example, on October 29, South Africa’s Crop Estimates Committee indicated that South African farmers intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024-25 season. This is up mildly by 1% from the previous season.
The planting intentions for white maize are at 1,58 million hectares (up 1% y/y), and yellow maize is at 1,06 million hectares (down 2% y/y). The overall maize planting intentions are at 2,64 million hectares (up 0,2% y/y), which aligns with the five-year average area. The planting intentions for soybeans are at 1,2 million hectares (up by 0,2%), the largest area on record. The sunflower seed planting intention is 540k hectares (up 2,1% y/y), slightly below the average planting of 554k hectares. The planting intentions for groundnuts are 40k hectares (down 2,9% y/y), sorghum at 54k hectares (up 28% y/y), and dry beans at 45k hectares (up 14% y/y).
I think there are three primary drivers of this optimism. First, the relatively higher grains and oilseed prices on the back of the poor harvest in the past season provide an incentive for increased planting in the 2024-25 season.
Second, the season starts with relatively better-priced input costs than the past season. For example, in rands terms, most fertilizer product prices were down by roughly 10% year-on-year in September 2024 compared with the previous year. Since fertilizer accounts for approximately a third of the grain farmers’ input costs in South Africa, such a price decline significantly improves farmers’ finances.
Also worth noting is that in rands terms, herbicide prices were down by around 20% in August 2024 compared with the same period last year. The prices of insecticides were down by roughly 15% year-on-year in August 2024. Since herbicides and insecticides comprise about 10% of grain farmers’ input costs, declining prices help with operational costs. The stronger domestic currency, combined with the decline of these prices in the international market, is a significant factor behind the decrease in domestic prices. The recent easing in fuel prices at a time of high usage during planting is another positive factor regarding the operating conditions in the farming sector.
Lastly, the prospects of a La Niña-induced rainfall in the 2024-25 summer season is another additional factor to be optimistic about the agricultural outlook in South Africa. Indeed, most regions of the country have not received any meaningful rains, but it is still early, and we suspect there could be a late start to the season. The comforting observation is that the major weather forecasters continue to see the likelihood of the La Niña event this season.
For example, on October 15, the Australian Bureau of Meteorology noted
“The ENSO Outlook is currently at La Niña Watch, meaning there remain some signs that a La Niña may form later in 2024”.
The Columbia Climate School at Columbia University sees the probability of La Niña occurrence at over 60% between October 2024 and January 2025. From February, the prospects slow to below 50%, with normal weather conditions dominating throughout the summer season.
An important point to underscore here is that “normal” weather conditions in a summer season imply regular rainfall, not drought or “El Niño”. Therefore, the normalizing weather prospects from February should not be a significant worry.
Admittedly, the South African Weather Service (SAWS) has been more cautious than its peers to make a bold call on where we are regarding the weather prospects. On October 5, in its monthly Seasonal Climate Watch, the SAWS stated
“The El Niño-Southern Oscillation (ENSO) is 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. It is advised to monitor the ENSO system during the start of the summer season, as it may change the rainfall outlook for the summer rainfall regions if and when the La Niña materializes.”
Overall, these are intentions to plant, not an actual area. The preliminary area planting will only be out at the end of January 2025. Over the coming weeks, my focus will be on rainfall conditions and the progress of plantings across the country. I remain optimistic that crop production in South Africa and Southern Africa may recover, but the season will be delayed than usual.
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