Many, including myself, may have been a bit pessimistic about the 2023-24 summer crop growing conditions when we signalled a potential further downward revision of the harvest estimate this month.
The data released last week by the Crop Estimates Committee showed mild upward adjustments in the crop size from last month’s figures. South Africa’s 2023-24 summer grains and oilseed harvest is estimated at 16 million tonnes, up 1% from last month.
This is not a cause for celebration. The figure does not change the reality that we have been through a difficult season of El Niño-induced drought and heatwave in February and March that weighed on the summer grains and oilseed harvest in various regions of the country. The estimated harvest of 16 million tonnes is down 20% from the 2022-23 production season.
Maize
A closer look at the data shows that white and yellow maize harvest could be 6.4 million tonnes (up 2% month-on-month) and 6.9 million tonnes (roughly unchanged from last month). These revisions place the total maize production estimate at 13.3 million tonnes (up 1% month-on-month).
When viewed annually, white maize harvest is down 25%, with yellow maize down 13% from the 2022-23 season. The expected harvest of 13.3 million tonnes is down 19% from the 2022-23 season.
If it materialises, the expected harvest will be sufficient to meet South Africa’s annual maize consumption of roughly 12 million tonnes, leaving the country with a small export volume. Still, we will likely see prices remaining elevated for some time because of the potentially tight supplies.
The Southern African regional demand, particularly for white maize, also remains a significant upside driver of prices. On April 25, white maize spot price closed at R5 477 a tonne, up 56% year-on-year. At the same time, the yellow maize spot price closed at R4 420 a tonne, up 22% year-on-year.
Yellow maize prices have not increased much as the supply risk could be manageable through imports. There are ample maize supplies in the world market. The International Grains Council (IGC) forecasts the 2023-24 global maize harvest to be 1.2 billion tonnes, up 6% year-on-year.
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.
In the world market, outside the Southern Africa region, the other significant producer of white maize is Mexico. Given that the Northern Hemisphere is at the start of its 2024-25 production season, it may be helpful in the Southern African countries with poor harvests, such as Zimbabwe and Zambia, to discuss with Mexico or even the United States to plant white maize on contract for export to the region.
In my calculation, I think South Africa will not be able to fulfil the regional demand even if the forecast harvest of 6.4 million tonnes of white maize materialises.
Oilseeds
The 2023-24 soybean harvest remained unchanged from last month, estimated at 1.8 million tonnes (down 35% year-on-year). This annual decline results from lower yields. South Africa may not play a robust position in soybean exports as it did the previous season. If anything, soybean oilcake imports this new season are now a possibility.
The sunflower seed harvest estimate was lifted from last month by 4% to 615 000 tonnes (down 15% year-on-year). 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 South Africa’s sunflower seed is planted in the western regions that experienced dryness and heatwave in February and March.
The recent rains in much of South Africa’s summer crop-growing regions are too late. The damage to the crop occurred in February and March during the heatwave and the El Niño-induced dryness. The crop forecasts reflect this, as the major crops are down notably compared to the 2022-23 production season.
Still, from a consumer perspective, South Africa is not in a crisis. The recent drought presents upside risks to food price inflation but not the overall basket. The problem is primarily the white maize, 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 South Africa could be slightly cushioned in these commodities.
The IGC forecasts the 2023-24 global wheat harvest at 789 million tonnes, well above the long-term average. There is a lot of rice globally, with the 2023-24 global harvest forecast at 511 million tonnes, well above the long-term average. The 2023-24 global sunflower seed harvest is forecast at 57.9 million tonnes, well above average.
Still, the exchange rate will be important when assessing the possible imports of wheat and rice (and possibly yellow maize) into South Africa.
Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of South Africa and a senior fellow in Stellenbosch University’s Department of Agricultural Economics. His latest book is A Country of Two Agricultures.
The El Niño-induced drought and heatwave in February and March hit crops hard in Southern Africa
