by Wandile Sihlobo | Mar 1, 2025 | Agricultural Production
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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by Wandile Sihlobo | Feb 20, 2025 | Agricultural Production
I know a lot is happening in politics and international trade that has implications for South Africa’s agriculture. But I want to take a moment away from that and comment on the recent rains, which have been superb for agriculture and have improved farming conditions.
You see, while I have consistently maintained an optimistic view that this will be a recovery year for South Africa’s agriculture following a year of El Nino-induced drought, the summer grains and oilseeds in the country’s western regions were starting to be strained a bit because of the scant rains. This week’s rains will help improve crop-growing conditions in such areas.
I am also gathering views from our friends at Grain South Africa, among other folks we talk to, who support this optimistic viewpoint.
We are recovering in agriculture, and farmers planted a decent amount of summer grains and oilseeds for the 2024-25 season. For example, the preliminary planting data released by the Crop Estimates Committee last month showed that South African farmers likely planted 4.45 million hectares of summer grains and oilseeds in the 2024-25 season, up slightly by 0.3% from the previous season.
In more detail, the data show that South Africa’s 2024-25 maize preliminary plantings were 2.64 million hectares, up by 0.4% year over year (y/y).
Moreover, sunflower seed preliminary plantings are 552 000 hectares (up 4% y/y), with groundnuts at 46 175 hectares (up 12% y/y) and dry beans at 45 500 hectares (up 15% y/y).
Meanwhile, the soybean preliminary plantings are at 1,12 million hectares (down 2% y/y), and sorghum at 39 500 hectares (down 6% y/y).
Some of these plantings likely happen outside the typical optimal window because of some regions’ unfavourable weather conditions at the start of the season. In such areas, there will be a need for better rains through to March, when the crops will likely pollinate. Notably, the recent rains helped with the early stages of crop growth.
Encouragingly, the La Niña prospects suggest we may receive favourable rains during this period.
Of course, not all things are as glowing; there may be regions where the rains could have done some minor damage to crops, although I haven’t heard of any. Still, it remains true that rain does more good than bad in agriculture.
While I highlight the growing conditions in the summer grains and oilseeds regions, these rains also benefit the livestock industry’s grazing veld. In the current times, where feed prices remain elevated, better grazing conditions provide some relief to commercial farmers and greatly benefit smallholder non-commercial farmers.
The dam level improvement also supports the production of fruit and vegetable crops primarily under irrigation.
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by Wandile Sihlobo | Feb 14, 2025 | Agricultural Production
Since I have been writing about the higher maize prices and possible upside risks to consumer food price inflation, I thought it is important to highlight that we have been observing a price retreat since last week.
When the market closed today, February 14, 2025, South Africa’s white maize spot price was R5 559 per tonne, well below the R6 700 per tonne mark we saw at the start of January 2025. However, it is still up 30% from a year ago.
The yellow maize price is R4 940 per tonne, down from R5 110 per tonne at the start of January 2025. Still, this was up by roughly 30% from the same period in 2024.
The tight maize supplies underpinned the generally high prices over the past few months. South Africa was hard hit by the mid-summer drought in the 2023-24 season, leading to a 21% decline in maize production to 12,9 million tonnes.
The Southern Africa region was also hit hard, with Zimbabwe losing 60% of its maize crop, Zambia’s maize harvest down 50%, and significant crop losses across the region. This led to a strong demand for maize, and South Africa remained one of the significant maize suppliers to Southern Africa.
South Africa’s poor maize harvest of 12.9 million tonnes was supplemented by better stocks of about 2.4 million tonnes, enabling the country to remain a net exporter.
Between May 2024 and the end of January 2025, South Africa exported 1.80 million tonnes out of the expected 1.90 million tonnes (down from 3.44 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
In essence, the primary price drivers in recent months were the poor domestic maize harvest of the 2023-24 season, strong regional demand for maize, and uncertainty about the new 24-25 season outlook.
So, what changed in these past few weeks?
The focus is shifting to the new 2024-25 season, and the crop is generally in good condition across South Africa.
Broadly, the farmers have managed to plant well in most regions, although the timing of the planting seems to differ vastly in some areas, partly because of the erratic rains at the start of the season. The crop conditions are favourable.
South Africa’s 2024-25 maize preliminary plantings were 2.64 million hectares, up 0.4% year over year (y/y). White maize was 1.59 million hectares (up 3% y/y), and yellow maize was 1,05 million hectares (down 3% y/y).
Admittedly, while the crop fields are visibly green and in good condition, the heat of November to early December 2024 strained some regions.
While the crop has recovered from the recent rains in such areas, it is not in its usual health state for this season, especially in the various small towns in the eastern Free State. We suspect that the Nort West, the western regions of Mpumalanga and the northern parts of Limpopo may have similar experiences. These areas saw erratic and late rains.
Still, the overall view of the maize crop and the general agricultural conditions is far better than that of the past season.
Therefore, optimism about the season ahead and favourable rainfall forecasts through March are the key drivers of the market’s price decline. We also see some selling pressure, which further moderates this price decline.
Of course, this isn’t ideal for maize farmers, especially since they are planted with relatively higher input costs. But the fact that prices remain well above last year’s levels provides a cushion.
The current price trend bodes well for the consumer regarding food inflation dynamics. And yes, there is a lag between farmgate prices and what we ultimately see at the retail level.
So, the moderation in maize prices shouldn’t lead to people looking for a quick price decline. Other costs in the value chain are associated with processing, packaging, and distribution.
Ultimately, suppose the weather conditions remain favourable through March, and there is no frost. In that case, South Africa may likely see a recovery in grain production and a generally better agricultural season.
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by Wandile Sihlobo | Feb 13, 2025 | Agricultural Production
As much as I like boasting about South Africa’s agricultural production and exports, there are particular commodities I pay close attention to which we import in large volume. One such commodity is wheat.
In one of my previous posts, I stated that South Africa imports roughly half of its annual wheat consumption; thus, it is always essential to pay close attention to global wheat production dynamics.
It is comforting that the International Grains Council maintained the 2024-25 global wheat production forecast at 796 million tonnes, slightly up from the previous year.
Australia, Canada, Kazakhstan, the US, China, and India are the key countries that boosted the harvest this year, while other large producers in the EU and Black Sea expect a slight decline in production.
With global wheat consumption set to remain moderate, we can expect the global wheat stocks also to be stable in 2024-25. This means the prices may move sideways to moderate in the near to medium term.
This promising global wheat production outlook is in an environment where South Africa’s wheat production has not been ideal. Farmers have just completed the 2024-25 harvest, and most provinces had poor yields.
South Africa’s 2024-25 wheat production is forecast at 1,92 million tonnes, down by 6% from the 2023-24 production season.
The farmers have delivered much of the crop to the commercial silos. For example, the wheat producer deliveries for the first 19 weeks of the 2024-25 marketing year stand at 1,76 million tonnes as of February 7. This is closer to the expected overall harvest of 1,92 million tonnes.
Wheat production has declined across the other provinces except for the Northern Cape, North West, and Gauteng.
For example, the Western Cape, a major wheat producer, saw a 1% drop in its wheat harvest to 1.07 million tonnes. This is mainly due to poor yields in regions that suffered from excessive rains, not the decline in area plantings.
The area planted was reduced in other major producing provinces, such as the Free State and Limpopo. The relatively lower wheat prices at the start of the season may have been one factor in the decision to slash plantings.
However, the Free State and Limpopo face challenges beyond the prices. In 2024, these provinces experienced a severe mid-summer drought, which led to significant summer grain losses. When the winter wheat season started in May, farmers were downbeat and 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 imports would increase, especially as South Africa’s consumption of wheat and wheat products remains strong.
However, the latest South African Grain and Oilseeds Supply and Demand Estimates Committee estimates suggest that 2024-25 wheat imports may fall 6% to 1,82 million tonnes. This is closely aligned with the five-year average of wheat imports to South Africa.
The major reason for an expected decline in imports is that we have ample supplies, thanks to the higher opening stocks, supplemented by the ample imports in the past season.
One could argue that South African importers took advantage of the relatively better prices of global wheat imports in the past few months to build supplies for this new season.
Overall, the 2024-25 season imports will likely account for 47% of South Africa’s annual wheat consumption. Sourcing imports should not be a challenge, as there are sizeable global wheat supplies.
In such an environment, the major risk is the domestic currency. If it remains strong and stable, as it has in recent times, then the wheat price path ahead remains positive for consumers.
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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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