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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by Wandile Sihlobo | Oct 29, 2024 | Agricultural Production
I’ve been one of the people who have been vocal about the positive prospects for the 2024-25 agricultural season in South Africa, leaning on expected La Nina rains. I continue to remain optimistic about the upcoming season. But the reality is that we may have a late season. The good rains of the past few weeks have been scattered, and planting hasn’t gained momentum in any meaningful way across the country.
This has raised fears in the grains markets about another tough season, partly contributing to the surge in maize prices we continue to see on SAFEX. Of course, the fundamental driver of maize prices is that we have tight supplies because of the bad crop in the 2023-24 season.
Still, I think it’s too early to make a call as to whether the upcoming season will be tough. The prospect of La Nina is still active. In all likelihood, it may be a late season.
Until we see a material change in the weather prospects, we will maintain our view of a possible better season.
Another essential point to underscore is that even if we move from “La Nina” to “normal” weather conditions. Normal weather in the summer season does not translate to drought; it’s normal rains.
We have gotten so used to the cycle of moving between “La Nina” and “El Nino” that we no longer talk of a regular season.
Still, I want to underscore that we are probably in for a late season. There are still convincing signs of La Nina. The planting has also not occurred in any meaningful way across South Africa.
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by Wandile Sihlobo | Oct 27, 2024 | Agricultural Production
I have been closely watching South America’s maize and soybean planting progress, and the 2024-25 season seems to have started nicely. We are experiencing a La Niña weather phenomenon, which typically leads to drier weather conditions in South America (the opposite of the Southern Africa experience).
But so far, the season seems to have started on sound footing with encouraging maize and soybean planting progress. The La Niña has has not had a significant impact, and various regions of the countries have received favourable rainfall that supports the planting process.
Brazil and Argentina are essential contributors to global grains and oilseed production. These two countries collectively account for 14% and 50% of global maize and soybean production.
The optimistic 2024-25 global maize and soybean production estimates from the International Grains Council and the U.S. Department of Agriculture have assumed a decent harvest from Brazil and Argentina. So, if La Niña changes and has a harsher impact on the crop in the coming months, depending on the scale, there would be a notable impact on the global harvest.
A La Niña weather event in South Africa typically brings above-normal rainfall and supports agricultural production. Therefore, we view the 2024-25 season as a period of possible recovery following a harsh season where South Africa’s 2023-24 summer grains and oilseed harvest fell by 23% year-on-year.
Because of the scale of production in the region, South American crop conditions typically impact commodities’ prices. Thus, relatively small producers such as South Africa, which are interlinked to the global market, must pay attention to the crop conditions in South America. Still, so far, there seem to be normal conditions. We will continue watching the conditions closely.
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by Wandile Sihlobo | Oct 19, 2024 | Agricultural Production
South Africa’s agricultural sector is currently in what some would consider a relatively quiet period before we start the busy period again in a few weeks. Farmers will soon be tilling the land for summer crops from mid-October. Towards the end of November, the table grape industry will also start with its harvesting period, and there will be more activities from that period onwards. The winter crop is the main crop currently in season, with farmers starting the season in May.
Indications are that the winter crop is in reasonably good condition in some regions of South Africa, although the start of the season was challenging. On September 26, the Crop Estimates Committee (CEC) lifted South Africa’s 2024-25 winter crop by 2% from August to 2,72 million tonnes. This placed the projected harvest only negligibly (i.e., 0.04%) less than the previous season. This winter crop encompasses wheat, barley, canola, oats and sweet lupines. The upward revisions in the CEC’s latest projections were mainly on wheat, canola and sweet lupines.
Much of this positive activity is in the Western Cape, a major province in the production of winter crops. For example, about 73% of the winter wheat plantings for the 2024-25 season are in the Western Cape. The area planted for barley, canola, and oats is much more prominent in the province as a winter rainfall region. Other major winter crop-producing provinces are the Free State, Northern Cape, Limpopo, and North West, but the production in these provinces is mainly under irrigation.
If we zoom into wheat, the production is estimated at 1,94 million tonnes, up 2% from last month. The upward revision was mainly in the Western Cape, benefitting from favourable weather conditions. Importantly, it appears that the excessive rains at the start of the season may not have caused much damage in the province’s wheat production, at least in most regions. The provincial crop is projected to be up 2% from the 2023-24 season, at 1,1 million tonnes of the national expected wheat harvest of 1,94 million tonnes. Still, yearly, the current national wheat crop of 1,94 million tonnes is down 5% from the previous season, indicating lower production outside of the Western Cape.
The production in other provinces is down notably from the previous season. We suspect that the mid-summer drought has weighed on the production in the Free State, Limpopo and Northern Cape provinces. Farmers were financially constrained after they lost their summer crop. Moreover, some may have opted to conserve the soil moisture for the start of the 2024-25 summer crop production.
Thus, South Africa will remain a net wheat importer in the 2024-25 marketing year. Fortunately, there are ample global wheat supplies and prices have remained broadly contained. The International Grains Council forecasts 2024-25 global wheat production at 798 million tonnes, up 0,4% year-on-year. The improved global wheat production prospects have kept global wheat prices at a moderate level, thus benefiting consumers and importing countries like South Africa, especially with the much stronger exchange rate. Still, the wheat import tariff typically reduces the potential gains for the wheat consumers while equally providing some level of support to the domestic producers.
Aside from wheat, barley production prospects remain positive annually, although down on a monthly revision. The CEC lowered the barley harvest prospect by 4% from August to 398k tonnes. Still, this is 6% higher than the 2023-24 season. With the barley plantings down 7% year-on-year, at an estimated 100k hectares, the improved annual harvest prospects are supported by better yield prospects in some regions of the Western Cape.
The 2024-25 canola production is forecast at 294k tonnes. This is the largest harvest on record, up 25% year-on-year. An expansion in the area underpins the improvement planted and prospects for better yields. 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.
Also worth highlighting is that South Africa’s 2024-25 oats production could increase 67% year-on-year to 68k tonnes according to CEC. This significant production results from a notable increase in the planted area and positive yield prospects. We see similar improvements in sweet lupines, where production is estimated at 19k tonnes, up by 20% year-on-year.
The winter crop season is shaping slightly better than the challenging summer crop season. Admittedly, we are early in the season, and a lot could change depending on the weather conditions in the coming months. But the figures we have at this point provide some comfort about the size of the supplies. Where production prospects are down notably, the large global wheat production will provide much-needed cushion to the domestic wheat processors and food companies.
In the coming months, there will also be more activity in other crops and value chains in agriculture. Perhaps at the end of the year, the focus on logistics will be a priority again as the horticulture industry will gear up again for an export season.
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by Wandile Sihlobo | Oct 12, 2024 | Agricultural Production
The Southern Africa region is at the tail end of the most challenging season – the 2023-24 production year. Grains and oilseed production declined significantly across Southern Africa in the 2023-24 production season. Some countries saw a much sharper decline in their staple maize production, leading to concerns about the potential increase in food insecurity.
For example, on June 7, USAID said that:
“an estimated 26 to 30 million people are experiencing acute food insecurity throughout the region ahead of the upcoming lean season”.
The USAID further stated that:
“Widespread crop failure has resulted in heightened food insecurity regionally, eroding affected populations’ ability to access food and safe drinking water and maintain livelihoods, prompting four national governments—Malawi, Namibia, Zambia, and Zimbabwe—to issue drought-related disaster declarations”.
This assessment is correct, and the impact is severe on livestock.
Regarding staple maize, Zimbabwe’s maize harvest declined by roughly 60% year-on-year in the 2023-24 production season. Moreover, Zambia’s maize harvest was down by 50% in the same season. There were also major crop failures in Malawi, Lesotho, and Namibia.
Others, like South Africa, saw a more moderate decline in maize harvest, down 22% year-on-year. South Africa remains comfortable with sufficient maize supplies for its use and exports to the neighbouring countries.
The difference was caused, amongst other things, by the variation in the seed cultivars and fertilizer usage. Still, the ultimate challenge was that we were in an El Niño cycle, which typically brings below-normal rainfall in Southern Africa. This weighed heavily on the region’s agricultural production conditions this past season.
A more optimistic outlook
Fortunately, we are now transitioning to a La Niña phenomenon, which usually brings above-normal rainfall in Southern Africa. This could be a much-needed break from a tough season.
Thus, I think it is a reasonable choice to remain optimistic about the upcoming 2024-25 summer season in South Africa’s agriculture and the entire Southern Africa region.
Global weather forecasters paint encouraging prospects for weather conditions. For example, the Australian Bureau of Meteorology and the International Research Institute for Climate and Society (IRI) at Columbia University continue to forecast La Niña occurrence.
The Australian Bureau of Meteorology states:
“The ENSO Outlook is at La Niña Watch, meaning there are some signs that a La Niña may form in the Pacific Ocean later in 2024”.
Meanwhile, the IRI sees a strong likelihood of La Niña now through January 2025, and after that, it weakens as the weather normalizes.
On October 3, the South African Weather Service (SAWS) also stated a cautiously optimistic note in its Seasonal Climate Watch monthly report. The SAWS wrote that the:
“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.”
The SAWS added that:
“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. Current predictions focus on the early- and mid-summer seasons and indicate wetter conditions over the interior of the country. The northeastern parts, however, at this stage, indicate drier conditions extending through to the mid-summer period.”
What we can draw from these statements is that (1) South Africa and, indeed, the Southern Africa region is out of an El Niño cycle, which typically brings drought and has had a devastating impact on agriculture in the 2023-24 summer season; (2) there is reason to be optimistic about the La Niña possibilities and favourable rains in the 2024-25 season (but must be mindful of the regions of South Africa the SAWS suggests may be slightly dry for some time), and that (3) even if we are out of a La Niña cycle soon and in the “neutral” state, the agricultural conditions could still be favourable as the “neutral” state implies normal conditions.
In essence, I am inclined to believe that the 2024-25 agricultural season may be a period of recovery in South Africa and the broader Southern Africa region following a challenging drought period in the 2023-24 season, which negatively impacted not only summer grains and oilseeds, but also the livestock industry, and other agricultural activity. Most importantly, the drought caused a significant regional food insecurity challenge.
Depending on the area farmers will till for crops and the pace of recovery in other agricultural activity in the broader Southern Africa region, it is reasonable to assume that food price inflation in 2025 could moderate. The food insecurity challenge could perhaps also be eased.
Still, I must caution that we are working with weather prospects and basing my views on that. Therefore, as I have assumed here, continuous monitoring of the weather and its outlook is vital in determining whether my optimistic view holds. For now, I think we have reason to be hopeful.
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