ADVERTORIAL

HOLLARD

VERSEKERING

Will rice be a substitute for white maize in Kenya, Zimbabwe and Mozambique?

The available data suggests that Zimbabwe, Kenya and Mozambique will collectively need to import about 2.5 million tonnes of maize in the 2019/20 marketing year in order to satisfy the domestic demand in the respective countries.

The dilemma, however, as argued in our previous notes is where will these countries source the maize supplies, specifically if its white maize, as we suspect the needs will mostly be for this variety. At such uncertain times, one wonders if there could possibly be an uptick in rice imports this year as, to an extent, a substitute for maize meal in some households.
• The sub-Sahara African region generally imports a large volume of rice. The region’s 2018 rice imports amounted to 16.7 million tonnes. This equates to 36% of global rice imports that year. The most recent numbers from the International Grains Council (IGC) suggest that sub-Sahara Africa’s 2019 rice imports could increase by 6% year-on-year (y/y) to about 17.7 million tonnes. But the countries driving this uptick are not the ones expected to have huge maize shortfalls, notably Zimbabwe and Kenya. The key drivers of it are Cameroon, Mozambique, Nigeria, Benin and South Africa where imports are set to increase by 17% y/y, 17% y/y, 10% y/y, 8% y/y and 5% y/y, respectively, to 700 000 tonnes, 700 000 tonnes, 2.3 million tonnes, 2.7 million tonnes, and 1.1 million tonnes. The expected increase in South Africa is not purely for domestic use, the country typically re-exports on average about 124 000 tonnes a year to neighbouring countries, mainly Eswatini, Lesotho, Botswana, Zimbabwe, Namibia and Zambia. In the case of Mozambique, lower domestic grains production could be a key driver of imports.
• As best as we can tell, Zimbabwe, which is expected to have a maize shortfall of about a million tonnes (although the official estimate is about 800 000 tonnes), might not show an uptick in rice imports. Zimbabwe imports on average about 180 000 tonnes of rice, and the imports for this year could hover around these levels. Kenya’s situation is somewhat different. The country’s rice imports have been increasing on average by 10% over the past 10 years, reaching a record level of 625 128 tonnes in 2018. Given this historical record, we are compelled to believe that rice imports could amount to at least 687 640 tonnes this year. This would be in line with the general increase which is boosted by population growth and improvement in people’s incomes. The new factor, this time around, which could increase imports beyond the usual pace would be the scarcity of white maize in the global market.
• Fortunately, these developments are occurring at a time when there are fairly large global rice supplies. According to the IGC dataset, the 2018/19 global rice production amounted to 500 million tonnes, up by 1% from the previous season. The 2019/20 season is set to record a relatively large harvest of about 505 million tonnes. This is underpinned by an increase in production in the Far East Asia on the back of favourable weather conditions, particularly in Cambodia, Indonesia, the Philippines, Thailand and Vietnam. These are amongst the key exporting countries to Africa and other regions of the world. Moreover, global rice stocks are solid, estimated at 60 million tonnes in 2018/19, up by 4% y/y. The prospects for the 2019/20 season are even better, with stocks set to increase further by 3% y/y to 62 million tonnes. These developments have weighed on global rice prices over the past few months, which is beneficial for the importing countries of the sub-Sahara African region.
The weather remains a primary focus in winter wheat areas
• The weather remains a primary focus in the domestic wheat market as the crop is still at its early growing stages in most regions of the Western Cape – the leading winter wheat producing province in the country, accounting for 63% of the intended 513 450 hectares this year. The precipitation forecast for this week paints a positive picture for the Western Cape, with a possibility of between 13 and 30 millimetres of rainfall, as illustrated in Figure 4. This will be a welcome development as regions of the province which received showers over the past couple of days need follow-up rainfall to improve soil moisture.
• The weather forecast for other provinces of the country shows clear skies. But this is not a concern as other provinces are mainly summer rainfall areas, which are expected to remain dry at this time of the year. With that said, Free State, Limpopo and the North West are amongst the key winter wheat producing provinces. The planting activity in these provinces, which are mainly under irrigation, could gain momentum over the coming weeks. Broadly speaking, we think the crops could experience a generally good season as dams across the country are still at healthy levels, measured at over 60% full in the week of 17 June 2019, as shown in Figure 1. Overall, these developments reinforce our view that farmers might be able to achieve the intended area of 513 450 hectares of wheat, 118 500 hectares of barley, and 80 000 hectares of canola across South Africa.
• Looking ahead, we are concerned that the next couple of months could present relatively dry weather conditions in the Western Cape which will not be conducive for crop development

South Africa’s agricultural data calendar is packed this week. On Wednesday the Crop Estimates Committee will release its fifth summer crops production forecasts, followed by SAGIS’s grain producer deliveries data on the same day, and weekly grain trade data on Thursday. Stats SA will release the food producer price inflation data for May 2019 on Thursday.
Summer grain and oilseed production estimates
• The fifth summer crop production estimates will help shape our view of South Africa’s grain and oilseed supplies for the 2019/20 marketing year. The data will include maize (white and yellow), sunflower seed, soybeans, groundnuts, sorghum and dry beans, but our focus in this particular preview note is only on major grains.
o Maize: The maize harvesting process is underway in most parts of the country, specifically the eastern regions. The progress made is reflected in the producer deliveries data. Since the start of the 2019/20 season on 01 May 2019, about 2.8 million tonnes of maize has already been delivered to commercial silos. About 72% of this is yellow maize with 28% being white maize. This confirms that the progress in harvesting has largely been in the eastern parts of South Africa which predominantly produce yellow maize. The yields in most areas range between below-average to average, although the eastern regions received better rainfall than the western areas of the country.
o South Africa’s maize supplies for the 2018/19 production year are shaping up better than we previously feared at the beginning of the year when dryness in the western parts of the country led to delayed plantings. In this month’s update, we do not expect notable changes in the upcoming release from the 10.9 million tonnes estimate released last month. If anything, it will probably be a slight downward revision on the white maize production figures due to anticipated poor yields.


With the maize harvest currently expected at 10.9 million tonnes in the 2018/19 production season (which corresponds with 2019/20 marketing year) added to an available opening stock of 2.8 million tonnes when the 2019/20 marketing year started on 01 May 2019, the country should have sufficient maize supplies to cover its annual consumption of about 10.8 million tonnes. Moreover, South Africa is likely to remain a net exporter of maize in the 2019/20 marketing year. The exports, however, could decline by half from the 2018/19 marketing year to about 1.1 million tonnes. These exports will likely be destined to countries in the Southern Africa region.


 Soybeans: The soybean harvest process has advanced in most provinces on the back of favourable weather conditions over the past few weeks. The producer deliveries data show that about 1.1 million tonnes had already been delivered to commercial silos in the week of 14 June 2019. In terms of production data, we do not expect any adjustments from the current estimate of 1.3 million tonnes.

 In last month’s 10.9 million tonnes maize production estimate, about 5.5 million tonnes is white maize, with 5.4 million tonnes being yellow maize things being equal, we think South Africa’s 2019/20 soybean imports could amount to 7 000 tonnes, which is slightly higher than the 2018/19 marketing year.
o Sunflower seed: We think that the Crop Estimates Committee could leave its sunflower seed production estimate unchanged from last month, at 611 140 tonnes as production conditions have not changed much in sunflower seed growing areas since the last assessment. The currently expected harvest is down by 29% from the previous season. If we work with these numbers, South Africa could be a net importer of sunflower seed in the 2019/20 marketing year. The imports could amount to 80 000 tonnes, up from 1 324 tonnes in the 2018/19 marketing year.
South Africa’s summer crop production estimates for 2018/19 season (data as at 28 May 2019)

Weekly grain trade data
• South Africa’s weekly grain trade data is due for release on Thursday, 27 June 2019. This will mainly be maize and wheat. In terms of maize, this week’s data will show activity for the eighth week in the 2019/20 marketing year which started on 01 May 2019. The seventh weeks’ exports amounted to 129 042 tonnes. We expect South Africa to remain a net exporter of maize in the 2019/20 marketing year, although the volume will most likely fall by half from the previous year to about 1.1 million tonnes. This is under the assumption that domestic maize production could amount to 10.9 million tonnes,.

At the same time, we expect imports of about 450 000 tonnes, all yellow maize, mainly for the coastal provinces of the country. This is up from an estimated 171 500 tonnes in the 2018/19 marketing year. The country has thus far imported 66 308 tonnes of yellow maize, all from Argentina.
• In terms of wheat, South Africa remains a net importer, although the recovery in the country’s 2018/19 domestic wheat production will lead to a decline in imports this season. South Africa’s 2018/19 wheat imports could fall by 36% from the previous season to about 1.4 million tonnes. So far, the country has imported about 57% of the seasonal forecast. The leading suppliers have been Germany, Russia, Lithuania, Canada, Czech Republic, the United States and Latvia, amongst others.


ADVERTORIAL

SASOL

FERTILIZER 

Farming Diary

Sep
17

2:00 pm 09.17.2019 - 3:00 pm 09.18.2019

Oct
3

10.03.2019 - 10.04.2019

Oct
29

10.29.2019

ENCA - Latest

Feed not found.