I appreciate that the minds of many South Africans are on election outcome matters, but food matters remain vital in the midst of it all.
Thus, reflecting on the Crop Estimates Committee’s (CEC) forecasts released at the end of May for the 2023/2024 summer crop production season is valuable.
This is a fourth production estimate for the season, and the harvest across the country is under way so we may put more weight on the accuracy of this figure than our tentative view in the previous estimates.
The CEC places SA’s 2023/2024 total summer grains and oilseed production forecast at 15.9-million tonnes, down 0.5% from the previous month’s forecast (April 2024) and 21% lower than the last season’s harvest.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6.4-million tonnes (down 0.9% m/m) and 6.9-million tonnes (down 0.3% m/m).
These revisions place the total maize production estimate at 13.3-million tonnes (down 0.6% m/m).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022/2023 season.
The expected harvest of 13.3-million tonnes is down 19% from the 2022/2023 season.
This harvest would meet SA’s annual maize consumption of roughly 12-million tonnes, leaving the country with over a million tonnes for exports.
With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season.
Admittedly, in recent weeks, white and yellow maize prices have moderated from the levels we saw last month because of the harvest pressure, among other factors.
Still, at the end of May, white maize prices were roughly 30% higher than levels we saw a year ago, with yellow maize prices up about 7% from a year ago.
The white maize spot price hovers around R5,000 a tonne today, while the yellow maize spot prices are about R4,000 a tonne.
Yellow maize prices have not increased much as imports could make the supply risk manageable.
There are ample maize supplies (yellow) in the world market.
The International Grains Council (IGC) forecasts the 2023/2024 global maize harvest to be 1.2-billion tonnes, up 6% year on year.
A majority of this expected global maize is yellow. The stocks are also robust, thus keeping the international yellow maize prices moderate.
This also partly explains the relatively mild increase in yellow maize prices compared with the surge in white maize prices, which is scarce in the world market and primarily produced in Southern Africa and Mexico.
Oilseeds
The 2023/2024 soybean harvest was lowered by 2% from last month to 1.7-million tonnes (down 36% y/y).
This annual decline results from lower yields in various regions of SA.
We now believe SA may not play a robust position in soybean exports like the previous season.
If anything, soybean oilcake imports this new season are now a possibility.
Meanwhile, the sunflower seed harvest estimate was again lifted from last month by 6% to 649,250 tonnes (down 10% y/y).
The area plantings are moderately down from the previous year, which means the primary driver of the annual decline in the harvest is the expected poor yields, especially as most of SA’s sunflower seed is planted in the western regions that experienced dryness and heatwave in February and March.
Other grains
The 2023/2024 groundnut harvest estimate is 54,440 tonnes (up 3% y/y), sorghum is at 95,830 tonnes (up 2%), and dry beans are at 52,190 tonnes (up 4%).
Concluding remarks
The current production data illustrates the scale of damage caused by the midsummer drought to the South African agricultural sector.
The complete scale of the financial impact of this drought on the farming businesses is yet to be clear.
Still, from a consumer perspective, SA is not in a crisis, in our view.
The recent drought presents upside risks to food price inflation but not the overall basket.
The challenge is primarily the white maize, especially considering the potentially more robust regional demand later in the year.
The favourable supplies of other grains in the world market, mainly yellow maize (also rice and wheat), and the moderating prices mean SA could be slightly cushioned in these commodities.
Still, the exchange rate will be necessary to monitor when assessing the possible imports of wheat, palm oil and rice into SA.
• Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University's Department of Agricultural Economics.
Counting the cost to agriculture of midsummer drought
Columnist
I appreciate that the minds of many South Africans are on election outcome matters, but food matters remain vital in the midst of it all.
Thus, reflecting on the Crop Estimates Committee’s (CEC) forecasts released at the end of May for the 2023/2024 summer crop production season is valuable.
This is a fourth production estimate for the season, and the harvest across the country is under way so we may put more weight on the accuracy of this figure than our tentative view in the previous estimates.
The CEC places SA’s 2023/2024 total summer grains and oilseed production forecast at 15.9-million tonnes, down 0.5% from the previous month’s forecast (April 2024) and 21% lower than the last season’s harvest.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6.4-million tonnes (down 0.9% m/m) and 6.9-million tonnes (down 0.3% m/m).
These revisions place the total maize production estimate at 13.3-million tonnes (down 0.6% m/m).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022/2023 season.
The expected harvest of 13.3-million tonnes is down 19% from the 2022/2023 season.
This harvest would meet SA’s annual maize consumption of roughly 12-million tonnes, leaving the country with over a million tonnes for exports.
With that said, maize prices will likely remain elevated for some time because of potentially tighter supplies later in the season.
Admittedly, in recent weeks, white and yellow maize prices have moderated from the levels we saw last month because of the harvest pressure, among other factors.
Still, at the end of May, white maize prices were roughly 30% higher than levels we saw a year ago, with yellow maize prices up about 7% from a year ago.
The white maize spot price hovers around R5,000 a tonne today, while the yellow maize spot prices are about R4,000 a tonne.
Yellow maize prices have not increased much as imports could make the supply risk manageable.
There are ample maize supplies (yellow) in the world market.
The International Grains Council (IGC) forecasts the 2023/2024 global maize harvest to be 1.2-billion tonnes, up 6% year on year.
A majority of this expected global maize is yellow. The stocks are also robust, thus keeping the international yellow maize prices moderate.
This also partly explains the relatively mild increase in yellow maize prices compared with the surge in white maize prices, which is scarce in the world market and primarily produced in Southern Africa and Mexico.
Oilseeds
The 2023/2024 soybean harvest was lowered by 2% from last month to 1.7-million tonnes (down 36% y/y).
This annual decline results from lower yields in various regions of SA.
We now believe SA may not play a robust position in soybean exports like the previous season.
If anything, soybean oilcake imports this new season are now a possibility.
Meanwhile, the sunflower seed harvest estimate was again lifted from last month by 6% to 649,250 tonnes (down 10% y/y).
The area plantings are moderately down from the previous year, which means the primary driver of the annual decline in the harvest is the expected poor yields, especially as most of SA’s sunflower seed is planted in the western regions that experienced dryness and heatwave in February and March.
Other grains
The 2023/2024 groundnut harvest estimate is 54,440 tonnes (up 3% y/y), sorghum is at 95,830 tonnes (up 2%), and dry beans are at 52,190 tonnes (up 4%).
Concluding remarks
The current production data illustrates the scale of damage caused by the midsummer drought to the South African agricultural sector.
The complete scale of the financial impact of this drought on the farming businesses is yet to be clear.
Still, from a consumer perspective, SA is not in a crisis, in our view.
The recent drought presents upside risks to food price inflation but not the overall basket.
The challenge is primarily the white maize, especially considering the potentially more robust regional demand later in the year.
The favourable supplies of other grains in the world market, mainly yellow maize (also rice and wheat), and the moderating prices mean SA could be slightly cushioned in these commodities.
Still, the exchange rate will be necessary to monitor when assessing the possible imports of wheat, palm oil and rice into SA.
• Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University's Department of Agricultural Economics.
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