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  • South African farmers believe Russia has great potential in the field of agriculture and are interested in sharing experience with the country, Omri van Zyl, the executive director of federation of South African agricultural organisations AgriSa, told Sputnik. 

  • Although unfavorable weather conditions contributed to a drop in Russia’s grain harvest from a record setting 2017-18, it is still higher than the 10-year average.

  • Farmers from South Africa will visit the Russian peninsula of Crimea to exchange experience in winemaking, as they face the possibility of losing their farms as part of their country's land reform.

  • Russia’s egg industry’s net profit dropped by $ 254 million in 2017, as the wholesale prices on the domestic market fell during the year, ending up at $ 0.56 per ten eggs. Market research by the Russian Union of Poultry Farmers (Rosptitsesoyuz) notes a 14% drop compared to 2016.

  • Russia’s agriculture ministry said on Nov. 8 that it projects grain exports in 2018-19 at 38 to 39 million tonnes, up from its projection of 35 million tonnes in September.

  • Russian feed production has been increasing for more than two decades, and all forecasts expect this trend to continue for the foreseeable future with record-breaking state aid promised to the feed industry by the federal government and many avenues to increase domestic grain production.

  • March 2019 World Agricultural Supply and Demand Estimates report by the United States Department of Agriculture (USDA) provided further evidence that the world will have fairly large maize, soybean, and rice supplies in the 2018/19 season. Meanwhile, wheat production could decline from levels seen in the 2017/18 season.

  • South Africa remains an efficient chicken producer in the global context and has consistently produced chicken cheaper than the European Union (EU) countries. This is according to the latest research from the Bureau for Food and Agricultural Policy (BFAP).

  • Russia’s difficulty exporting its sugar could slow the expansion of the industry that’s seen a big transformation in the past two decades.

  • The members of the Grain Handling Organisation of Southern Africa (GOSA) effectively handled 17,5 million tons of grain – produced locally and imported – during the past season.

  •  Ukrainian farmers have harvested 6.1 million tonnes of grain from an area of 1.9 million hectares, the press service of the Agrarian Policy and Food Ministry of Ukraine reported on July 3.

  • The Ministry of Agriculture of the Russian Federation has put forth a long-term strategy that could ramp up investment in the country’s grain sector by investing billions of dollars in infrastructure and logistics.

  • The revenue of the chicken egg market in Eastern Europe amounted to $9.7B in 2018, surging by 6.6% against the previous year.

  • The first Russia-Africa Summit that was held last week concluded with an announcement that urged all participants to increase cooperation in security, science, environmental protection, trade and economic matters. On this last point, the declaration highlights that participants should “make efforts to substantially expand the trade between the Russian Federation and the African States and diversify it, including by increasing the share of agricultural products in import and export operations.”

     Russia is an important player in global agricultural markets, ranked as the 13th largest importer, valued at US$28.8 billion annually, on average, over the past five years. The countries that have benefited from Russia’s agricultural import needs are Belarus, China, Germany, Brazil, Ecuador, Italy, Turkey, Paraguay, Indonesia and France, amongst others. The African countries are down on the list of key agricultural exporters to Russia. In fact, while Russia’s agricultural trade balance is negative, the country has a trade surplus with the African continent. In 2018, Russia had an agricultural trade surplus of US$2.8 billion with the African continent, according to data from Trade Map.

     Over the past five years, wheat has been the dominant product in Russia’s agricultural exports to Africa. It accounted for an average of 79% of all exports into the continent over the past five years (Figure 1 of the attached file). The other products that Africa imports from Russia are sunflower oil, soybean oil, barley, maize, and linseed. Also, this is not widespread across the continent. Nearly half of Russia’s agricultural exports into Africa go to Egypt, and it is mainly wheat. Sudan, Nigeria, Algeria and Kenya are other key markets for Russia, which when collectively added to Egypt account for about 73% value of Russia’s agricultural exports to Africa.

     Here at home, South Africa, the picture is different. South Africa enjoys an agricultural trade surplus with Russia. The products that South Africa exports to Russia include citrus, apples, pears, wine, grapes, apricots, cherries, peaches and fruit juices. These are amongst the products that Russia generally imports from the world (Russia’s top ten agricultural imports are citrus, bananas, wine, soybean, cheese, beef, palm oil, apples, pears and tobacco).

    In 2018, Russia was South Africa’s 16th largest agricultural market. The call for increased agricultural trade between Africa and Russia sets a good basis for South Africa to explore the means of increasing its share within the Russian agricultural market. In terms of reciprocity, Russia is already a notable supplier of wheat to South Africa and could increase its share if it were to compete comparatively with wheat suppliers such as Ukraine and Lithuania, amongst others.

    Overall, the announcement of increased agricultural trade by the Russia-Africa Summit is positive for South Africa’s agricultural sector. The growth that South Africa envisages in this particular sector will be export-led, therefore, any talks that encourage trade should be viewed positively. In 2018, South Africa’s agricultural sector exported nearly half of its production in value terms which means the sector is export-orientated. South Africa’s agricultural sector already participates within Russia’s market, although ranked as the 29th country supplying agricultural products to Russia in 2018.

    The current engagements with Russia should seek to improve South Africa’s position by promoting more exports in that market. If Russia was to insist on reciprocity within the agricultural sector, wheat would be their targeted space. In there, South Africa imports roughly half of its annual consumption. An increase in Russia’s wheat would displace other suppliers rather than add pressure to the local market in the near term.

    SA farmland is dry

    In a normal season, by this period, farmers would be hard at work planting, especially in the central and eastern regions of South Africa. But this has not been the case because of dryness that has prevented farmers from planting. Soil moisture in South Africa’s farmland is rated very short (dry) in nearly all regions of the country with the exception of a few areas near the border of Eastern and Western Cape where soil moisture was rated marginally adequate on 25 October 2019, as illustrated in Figure 2 in the attached file.

    Over the weekend, some regions in the central parts of South Africa received light rainfall, which is a welcome development. But this was not sufficient to make meaningful improvement on soil moisture. The country needs a consistent and slow rainfall which will help to replenish soil moisture and thereafter support planting and growing of the crop.

    We are generally positive that such rainfall is likely. The weather forecast for the next two weeks – Figure 4 in the attached file – shows prospects of rainfall across the summer rainfall (or crop-growing) areas of South Africa. More importantly, the South African Weather Service forecasts above-normal rainfall in the central and eastern regions of South Africa between November 2019 and January 2020. As encouraging as this is, it comes with some level of uncertainty and hence it will be important to monitor the weather conditions over the coming weeks as that will influence farmers decisions to plant.

    From a data front

    We start off on Monday, with the US Department of Agriculture’s US crop conditions data for the week of 27 October 2019. This data should give us a sense of the US crop-growing conditions, and thereafter the potential size of the harvest.

    On Tuesday, the Quarterly Labour Force Survey data for the third quarter of 2019 will be released. To recap, Quarterly Labour Force Survey data for the second quarter of this year showed that South Africa’s primary agricultural employment fell by 0.2% from the corresponding period last year to 842 000. The subsectors that faced a notable reduction were mainly field crops, the game industry and forestry. In the case of field crops, the reduction in employment was unsurprising following a reduction in activity in the fields on the back of a poor harvest in the 2018/19 season, all of which is underpinned by unfavourable weather conditions earlier in the season. From a regional perspective, a notable decline in employment was recorded in the Northern Cape, Free State and Limpopo, whilst other provinces saw a marginal uptick.

     On Wednesday, the South African Grain Information Service (SAGIS) will release the grain producer deliveries data for the week of 25 October 2019. This covers both summer and winter crops. What we will particularly be interested in, however, are data for winter crops. This provides an indication of the progress in harvest activity which recently started in parts of the Western Cape wheat-producing regions. In the week of 18 October 2019, about 93 563 tonnes of the expected 1.8 million tonnes of wheat in the 2019/20 season had been delivered to commercial silos.

    On Thursday, we will get the weekly grain trade data (wheat and maize) for the week of 25 October 2019. In brief, maize exports for the 2019/20 marketing year have thus far amounted to 532 045 tonnes. Looking ahead, we expect South Africa to remain a net exporter of maize this marketing year, although the volume will most likely fall by half from 2018/19 to about 1.1 million tonnes. At the same time, we expect maize 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 320 617 tonnes of yellow maize. About 88% from Argentina, with 12% from Brazil.

     In terms of wheat, South Africa’s 2019/20 wheat imports could increase by 14% y/y to 1.6 million tonnes because of expected lower domestic harvest on the back of unfavourable weather conditions in the Western Cape. The third import consignment of the 2019/20 marketing year was 67 476 tonnes. This placed total imports for the 2019/20 season at 135 270 tonnes, which equates to 12% of the seasonal import forecast. This week we will receive data for activity in the week of 25 October 2019.

     Also, on Thursday, Stats SA will release the Producer Price Index (PPI) data for September 2019. In August, South Africa’s food producer price inflation slowed to 5.4% y/y, from 6.1% y/y in the previous month.

  • The first Russia-Africa summit held last week concluded with an announcement that urged all participants to increase co-operation in security, science, environmental protection, trade and economic matters.

  • While few traders wish to go on record, many agree: it’s been a memorably bad season for South African citrus in Russia –  even “horrific”, in the opinion of an experienced trader.

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