A month after it imposed tariffs on shipments from the United States, China saw a significant reduction in grain imports, according to figures published by China’s General Administration of Customs.

This summer’s drought has led to a significant drop of total E.U. cereal production, estimated at 8% below the last five-year average. This is just one of the findings of the latest short-term outlook report, published on Oct. 3  by the European Commission.

The decision to pursue improved profitability via higher-value grain sales or via increased yields and higher volumes is a constant concern facing the Australian grain industry as it looks to achieve efficiencies and preserve the competitiveness of Australian grain in global markets, according to a new report from Rabobank. 

It is year-end and therefore an appropriate time to reflect on the African continent’s agricultural performance, particularly grains and oilseeds which are staple foods, and key inputs in the animal feed sector. The 2018/19 production season has been confronted by unfavourable weather conditions in the sub-Saharan region which has negatively affected the planting activity and growing conditions of crops and, by extension, the continent expected harvest. The International Grains Council (IGC) forecasts Africa’s 2018/19 grains production at 154 million tonnes, down by a percentage point from the previous season (Figure 1). In this context, grains include maize, barley, wheat, sorghum and oats, while oilseeds refer to soybeans. The continent’s 2018/19 soybean production is estimated at 2.7 million tonnes, unchanged from the previous season. Although the import status differs across countries, the African continent will remain a net-importer of major grains and oilseeds such as wheat, maize, soybeans and rice in 2018/19.

 Africa’s 2018/19 wheat imports are estimated at 49 million tonnes, down by 6% from the previous season owing to anticipation for a slight uptick in production in countries such as Algeria, Morocco and South Africa, albeit the continent’s overall grain production expected to decline. Although volumes differ from the previous season, Algeria, Egypt, Morocco, Tunisia, Kenya, Nigeria, South Africa and Sudan will remain Africa’s leading wheat importers in the 2018/19 season, collectively accounting for 74% of the continent’s wheat imports, according to data from the IGC. Africa is an important player in the global wheat market as it accounts for nearly a third of imports in 2018/19.

The African continent’s 2018/19 maize imports are estimated at 22 million tonnes, which is slightly above the previous season’s harvest. The North African countries, namely, Algeria, Egypt, Morocco and Tunisia are the key importers, accounting for 82% of the expected imports. Within the sub-Saharan region, the leading maize importers in 2018/19 are Kenya and Zimbabwe. In terms of soybeans, Africa’s soybean imports could amount to 4.6 million tonnes in the 2018/19 season, up by 12% year-on-year. About 78% could be imported by Egypt and the rest spread across the continent. In addition, Africa’s 2018/19 rice imports could amount to 19 million tonnes, up by 12% from the previous season. Benin, Côte d'Ivoire, Nigeria, Senegal, South Africa, Ghana and Mozambique will remain the key importers.

Domestic focus – maize trade; rice market; crop conditions and weather prospects
What role can South Africa play in the continent’s maize market.
While some countries on the continent will have tight maize supplies, South Africa is one of the few countries which could remain a net exporter in the 2018/19 marketing year which ends in April 2019. South Africa has thus far exported 1.6 million tonnes of maize, which equates to 73% of the seasonal export forecast of 2.2 million tonnes . But there have not been any exports to Africa’s leading maize importers (Algeria, Egypt, Morocco, Tunisia, Kenya and Zimbabwe) in the 2018/19 marketing year. A large share of maize was exported to Japan, Taiwan, South Korea, Vietnam, Italy and BNLS (Botswana, Namibia, Lesotho and Swaziland) countries. If there are any exports in the coming months, it will probably be to Zimbabwe. In markets such as Kenya, South Africa’s presence could be limited partly due to restrictions on the importation of genetically modified maize and competition from Mexico, Uganda and Ukraine. More than 80% of South Africa’s maize production is now genetically modified. Also, we do not foresee maize exports to Algeria, Egypt, Morocco and Tunisia as these countries typically import maize from Ukraine, Argentina, Brazil, Romania and the United States, which all currently have sufficient supplies for exports.

SA rice market
South Africa accounts for 6% of the expected 19 million tonnes of rice imports into Africa in the 2018/19 season. This is about 1.1 million tonnes, up by 10% from the previous season driven by an uptick in consumption . In the first three quarters of this year, about 704 718 tonnes had already reached the South African shores. About 92% of this originated from Thailand and India, and the rest from Italy, Pakistan, Vietnam and Brazil, amongst other suppliers.

Worth noting is that South Africa does not have a conducive climate for rice production and therefore the country imports all of its rice consumption. The imported rice typically includes; paddy, brown, semi-milled, and broken rice. Similar to what is transpiring this year, in 2017, about 77% of rice was imported from Thailand, with 17% from India and the rest form the United States, China, Vietnam, Pakistan and Uruguay, amongst others. On average, about 101 854 tonnes or 10% of the imported rice every year is re-exported to the neighbouring countries, namely Swaziland, Botswana, Zimbabwe, Lesotho, Namibia and Zambia

From a supply perspective, the global rice market is in good shape. The 2018/19 global rice production could reach a record 491 million tonnes, marginally up from the previous season, according to data from IGC. The key contributing countries to the expected increase are India, Vietnam, Thailand, United States, China, Bangladesh and the Philippines. These are same countries that supply to South Africa. The benefit of an uptick in global rice production is clear on prices which have softened in the recent months compared to the beginning of the year across all the aforementioned countries. This is all beneficial to rice importing countries such as South Africa.

Current crop conditions
 Although this month started with an optimistic message from the South African Weather Service indicating a possibility of above-normal rainfall in the summer crop growing areas of the country between December 2018 and February 2019, most parts of the country are still dry. The expected rainfall last week did not materialise in most regions, thus planting activity has not progressed in the central and western parts of the country. It is only a few areas of the eastern Free State and Mpumalanga that received very light showers, with the highest being 11 millimetres in the Frankfort area.
Therefore, planting has thus far largely advanced only in the eastern parts of South Africa which received higher rainfall at the beginning of the season. But these areas are not in good condition as the recent heat wave and drier weather conditions started negatively affecting newly planted crops. In terms of crop distribution, these are areas that predominantly produce yellow maize and soybeans. Meanwhile, the western regions of the country which largely produce white maize and sunflower seed have not seen progress in planting due to persistent drier weather conditions. The only crop that has been planted in these areas so far is cotton as it copes somewhat better with drier conditions compared maize, sunflower seeds and other crops.

Nonetheless, the precipitation outlook for this month shows rainfall between 20 and 70 millimetres in the summer crop growing areas of South Africa.If this materialises, then the aforementioned production conditions

Exports/Imports could change, although some areas are already outside the optimal planting window of most crops.

We will closely monitor the developments on the weather front but must mention that the past few weeks’ predictions proved fruitless.
Be that as it may, we have not changed our production expectations from what we reported a few weeks back . While the harvest is expected to be lower than the previous season in the case of maize and sunflower seed, South Africa’s supplies will still be at comfortable levels due to large stocks from the 2017/18 production season, and also the fact that the expected crop is higher than annual consumption in the case of maize.

Between October and February, which is planting to pollination, the weather becomes an important factor in the South African grains and oilseeds market and, to some extent, amongst the major drivers of prices. This has been the case in the past few weeks, but the exchange rate fluctuation and developments in the global agricultural market also influenced the SAFEX market . Overall, while the activity will possibly slow in the market as the festive season approaches, the above-mentioned factors could remain the key drivers of SAFEX prices in the coming weeks. AGBIZ 

Despite grain storage in sub-Saharan Africa being one of the key leaking points in the harvested cereal’s supply chain, several interventions are being rolled out to reduce post-harvest losses to at least 50% as governments in the region strive to achieve the 2014 Malabo Declaration target set by African Union member-countries. 

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.

Malaysia doesn’t produce any wheat and produces a small corn crop, leading it to import both for food and feed uses. Rice remains its staple food and a lack of self-sufficiency makes it a big importer. It is, however, a major producer and exporter of palm oil.

The inherent uncertainty around weather conditions remains a major risk to global wheat production in the foreseeable future. Whether one looks at Europe, North America or Southern Africa, there are increasing reports of drier weather conditions. If dryness persists for a prolonged period, it could threaten wheat yields and, in turn, lead to a downward revision of the optimistic outlook of 2020/21 global wheat production of a record 768 million tonnes that the United States Department of Agriculture (USDA) currently forecasts. Over the past week, Romania, Russia and Ukraine are amongst countries which saw their 2020/21 wheat production forecasts revised down because of expected poor yields in some spring wheat-growing regions. What's more, the UK, France, Belgium, Netherlands and parts of Germany are also amongst the European regions currently experiencing inadequate moisture.

 The same is true for the US where analysts now have some doubts that the USDA wheat yields forecasts will materialise if there aren’t sufficient rains in the coming days or weeks. We now look to the USDA’s crop conditions report which will release the results of crop conditions for the week of 24th of May 2020 on Tuesday. In the week of 17th May 2020, about 52% of the US winter wheat was rated good or excellent, which is slightly behind the 66% rating in the corresponding day in the previous year.  To a certain extent, this shows the impact of dryness in some regions of the US wheat industry.

For a broader update of the 2020/21 global wheat production estimates, we look to the USDA’s World Agricultural Supply and Demand Estimates report which will be released on the 11th of June 2020. In the meantime, various crop forecasts from governments and analysts suggest that the USDA might have to revise down the optimistic estimate of a record 768 million tonnes in the next release. The magnitude of such revisions, however, will largely depend on the weather conditions in the coming weeks.

In Southern Africa, there aren’t many major wheat producers, with South Africa being the only major producer in the region. The winter wheat planting activity in the country commenced at the start of April and will continue until the end of this month or first week of June, which is when the optimal planting window closes. By the week of the 24th of May 2020, nearly two-thirds of the estimated 495 000 hectares for the 2020/21 season had been planted. Various regions of the major wheat-producing province, Western Cape, have experienced persistent dryness which somewhat slowed the planting activity. Moreover, the aforementioned intended planting area for the 2020/21 wheat season is down by 8% from the previous season.

South Africa’s Crop Estimates Committee will release its first winter wheat production forecast on the 27th of August 2020. It is only on that day that we will have a sense of how big the 2020/21 wheat crop could be. The preliminary estimates from the International Grains Council (IGC) paint an optimistic picture of 22% y/y increase in South Africa’s 2020/21 wheat production to 1.8 million tonnes. While it is still early to make a concrete judgement, we doubt if this will materialise under the expected area plantings and dryness. Perhaps, the IGC took a leaf from the South African Weather Service in drafting the underlying assumptions for this estimate.

 On the 30th of April 2020, the local weather bureau estimated an increased chance of above-normal rainfall in the south-western regions of South Africa, which included the Western Cape between May and August 2020. So far, the forecast rainfall hasn’t materialised. Notwithstanding that the rainfall forecast for this week promises widespread showers over most regions of the Western Cape, which could be a welcome relief and conducive for the planting activity currently underway.

In a nutshell, the weather remains a major risk that requires constant monitoring in the global wheat market. This means, while the fears about lower global wheat supplies have eased following the release of the 768 million tonnes production estimate for 2020/21 season, a lot will depend on weather conditions for the coming weeks. With that said, we still think there is no need for panic at this point or for major wheat-producing countries to re-consider the restrictive trade policy they had intended to implement at the start of the pandemic when they feared for wheat shortages. The current weather forecast only suggests that global production might not be as large as initially expected, but there aren’t signs of potential shortages.

WEEKLY HIGHLIGHTS

 SA maize harvest process slightly delayed

The late start of the 2019/20 maize production season because of dryness when farmers commenced planting, means that the harvest process will be slightly later than usual. This is clear from the maize producer deliveries data for the first three weeks of the 2020/21 marketing year (corresponds with the 2019/20 production season), which are down by 19% compared to the corresponding period last year, with about 277 178 tonnes delivered in the week of 15th of May 2020. This is the case, although the 2019/20 maize harvest is expected to be up by 35% y/y, estimated at 15.2 million tonnes, which is the second largest harvest on record . Essentially, the harvest process has started across all provinces, but still at very preliminary stages.

Nevertheless, with the weather outlook for maize-producing regions of the South Africa showing clears skies for the next two weeks, the harvest activity could gain momentum around mid-June 2020. This means that in the coming months, the increase in harvest activity could add downward pressure on maize prices, which at the end of the past week traded at roughly the same levels as in the previous year (21 May 2019). White and yellow maize prices were at R2 674 per tonne and R2 682 per tonne, respectively, on 21 May 2020. The downward pressure on prices is likely, particularly as the country is expecting a bumper maize harvest. The one factor that could somewhat minimise the potential decline on maize prices and other agricultural commodity prices is the weaker domestic currency, which currently shows a strong correlation (see, The recent sharp price increases in South Africa’s white maize shouldn’t be a worry: a temporary market blip, published on 25 April 2020 for maize price and USD/ZAR correlation).

 DATA RELEASES THIS WEEK

 From a global perspective, on Tuesday the United States Department of Agriculture (USDA) will release the weekly crop progress data. This is important data to monitor grains and oilseeds planting activity across the US for the 2020/21 production season, which promises to be a good one, despite the glitches caused by the COVID-19 pandemic and drier weather conditions.

There has already been enormous progress in planting activity across the US. On the 17th of May 2020, about 80% of the intended area for maize in 2020/21 season had already been planted. This compares to 44% in the corresponding week the previous year and a five-year average of 71%. In the same day, about 53% of the intended area for soybeans had already been planted, compared to 16% on the 17th of May 2019 and a five-year average of 38%. Also, worth noting is that the planting activity in the US in 2019 was far behind schedule because of excessive rains at the start of the season.

 On Friday, the USDA will release the weekly export sales data. This is important data to monitor as it will give an indication of the US agriculture exports to China, and help us monitor the progress on commitments made in phase one trade deal and impact of the COVID-19 pandemic on trade.

 On the domestic front, on Wednesday, the South African Grain Information Service (SAGIS) will release the weekly grain producer deliveries data for the week of 22nd of May 2020. This covers both summer and winter crops. But the focus is on summer crops since the winter crops are still at planting stages. As indicated above, in the third week of the 2020/21 maize marketing year, which was on the 15th of May 2020, about 277 178 tonnes of maize had already been delivered to commercial silos. About 58% was yellow maize, with 42% being white maize. This, however, is a small fraction of the expected harvest of 15.2 million tonnes in the 2019/20 production season (which corresponds with 2020/21 marketing year).

Unlike maize, where the harvest season is still at its very early stages, there has been progress in the soybean harvest. In the week of 15th of May 2020, about 842 428 tonnes had been delivered to commercial silos. This equates to 65% of the expected harvest of 1.3 million tonnes in the 2019/20 season. Also, on the 15th of May 2020, about 211 279 tonnes of sunflower seed, which accounts for 29% of the expected harvest in 2020/21 marketing year had already been delivered to commercial silos.

  On Thursday, SAGIS will release the weekly grain trade data. In the third week of the 2020/21 marketing year, about 59 702 tonnes of maize had already been exported, all to the neighbouring countries. This too is a small fraction of the 2.7 million tonnes of South Africa’s 2020/21 maize exports we currently forecast, which is up by 90% y/y. This notable increase is supported by the expected large harvest, which is set to be the second largest in the history of South Africa, at 15.2 million tonnes. In terms of wheat, South Africa is a net importer. In the week of the 15th of May 2020, South Africa’s 2019/20 wheat imports amounted to 1.2 million tonnes, which equates to 66% of the seasonal import forecast.

One of South Africa's agricultural strategic objectives is the expansion of export markets. And it is with this ambition that organized agriculture, through the BRICS Business Council, went into the 2023 BRICS Summit.

The Agribusiness Working Group had four broad focus areas for discussion with BRICS countries, namely (1) a need to improve fertilizer availability and use amongst BRICS countries and the broader African continent, (2) the sharing of best practices on agricultural sustainable development among BRICS countries, (3) outlining the BRICS countries' view on the arbitrary pesticide MRLs followed by some regions such the European Union and the general use of sanitary and phytosanitary (SPS) measures as barriers to trade, and (4) deepening trade and investment amongst the BRICS countries, and broader Africa.
The BRICS Business Forum’s annual general meeting (AGM) adopted all these points, carried on the Annual Report, and presented them to the political principals for consideration. These points also found broad support at the political level, illustrating the alignment of ambition between BRICS countries' political leadership and business interests on these matters. While the conference is over and the work has been presented to the political principals, the technical work only starts from this point. This will be through the Business Councils of each BRICS member country, working directly with their governments to deliver on these broad points presented at the conference.

From a South African perspective, this would take the form of BRICS Business Council's Agribusiness Working Group engaging with both the Department of Trade, Industry and Competition and the Department of Agriculture, Land Reform and Rural Development to deliver on these broad ambitions, especially the one of trade and investments, as well as the SPS measures barriers in countries that South Africa wants to deepen its trade. The broad trade point mainly refers to lowering import tariffs in BRICS countries where South Africa wants to increase exports, which ties perfectly with the SPS matters. Ideally, this would not be a demanding task as South Africa's Minister of Agriculture, Land Reform and Rural Development chaired a meeting of BRICS Agricultural Ministers ahead of the 15th BRICS Summit and discussed similar matters as the ones presented by the Agribusiness Working Group of the BRICS Council.

Notably, South Africa remains a chair of the global Agribusiness Woking Group until the end of the year, with commanding authority to bring all countries to the table for reflections and implementation of the objectives the Group had adopted. This will be the technical work that should happen between now and the end of the year and hopefully continue under the new chair in 2024. From a South African perspective, these points will remain a priority going into the new year as they will not be resolved overnight and require time.

The trade and SPS aspect is important because the BRICS countries collectively imported about US$320 billion of agricultural products from the world market in 2022 (according to data from Trade Map). About 74% of the Group's agricultural imports come from China, 12% from 12% from India, 8% from Russia, 4% from Brazil and 3% from South Africa.
The key agricultural products the BRICS grouping imports are soybeans, palm oil, beef, maize, berries, wheat, cotton, poultry, pork, apricots and peaches, sorghum, rice, and sugar. These are products that are produced at scale by some BRICS countries. Yet the imports to other BRICS members typically originate from suppliers outside the grouping. This is understandable given that importers will search for competitively priced products and not necessarily from countries where they enjoy close cooperation. The lack of competitiveness has mainly been caused by higher import tariffs that BRICS countries face amongst each other compared with their competitors in this market, along with SPS matters. This is undoubtedly the case for South Africa regarding India and China.

Another noteworthy point emerging from the 15th BRICS Summit was the invitation of the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic of Iran, the Kingdom of Saudi Arabia and the United Arab Emirates to become full members of BRICS. The membership will take effect from 1 January 2024.

If we consider the BRICS+ grouping from an agricultural perspective, the opportunities for increasing trade and investment from a South African perspective primarily lie in China, India, and the Kingdom of Saudi Arabia. We already have some form of agricultural trade with these countries. Still, the ambition for South Africa is to increase wine, fruits and beef exports, amongst other products, to these particular countries. Admittedly, deepening agricultural trade would bring challenges as trade is not a one-way approach. Still, we believe that South African agricultural products are of high quality, and with the lowering of tariffs and non-tariff barriers, could remain competitive prices.

The task now lies on the BRICS Agribusiness Working Group to resume its work and engage with relevant government departs domestically and other agribusiness Working Group chairs from the founding BRICS member countries to take the points mentioned above forward. From early next year, when other BRICS+ members officially join, the BRICS Business Council's Agribusiness Working will extend an invitation to them and update them on the work of the 15th Summit. Overall, we view this Summit as broadly positive for agriculture, which also was robustly spotlighted in this conference at the plenary session of the Business Forum, with all the points we highlight here presented.

Disclaimer: This year, Wandile Sihlobo chairs the Agribusiness Working Group of the BRICS Business Council (South Africa) and the global agribusiness grouping.

WEEKLY HIGHLIGHT

South Africa's consumer food inflation decelerated in July 2023

South Africa's consumer food inflation continued to slow in July 2023, recorded at 10,0% from 11,1% in the previous month. The product prices underpinning this deceleration are primarily bread and cereals; meat; fish; and oils and fats. While there are renewed risks in global agriculture, such as India's decision to ban specific categories of rice exports and the Black Sea Grain Deal Initiative that facilitated grains and oilseeds exports from Ukraine terminated, we are still optimistic that South Africa's consumer food inflation will continue to slow during this second half of the year.

The products that could underpin the slowing food inflation trend will likely remain similar to those in the past few months. Notably, red meat prices, which have softened at the farm level, should continue on this trend at the retail level in the coming months. Fruit prices should also remain affordable because of improved domestic supplies.

However, there are some risks in some food product categories. For example, the recent decline in "oils and fats" products in the inflation basket mirrored the softening price trend we saw in the global environment a few months ago. But this trend may change slightly in the coming months as we see the changes already in the global environment. In July 2023, the FAO's vegetable oil price index was at 130 points, up 12% from June. Significantly, this marked the first increase after seven months of consecutive declines. This increase was due to Black Sea concerns, mainly on sunflower oils, and the subdued production conditions on palm oil, a product South Africa imports in large volume. We will keep an eye on the global vegetable oil prices as their price trends, over time, may reflect in South Africa, but not in equal proportion as the global price changes.

Regarding the "bread and cereals" product prices, the Black Sea Grain Deal challenges and India's rice exports ban remain an upside price risk. With South Africa importing a million tonnes of rice and similarly exposed to wheat imports, the disruption in trade of these commodities and the length of it could have implications on global price and, ultimately, South Africa's "bread and cereals" component of the food inflation basket.

Still, we have not seen a material change in prices for now, and we should not be alarmed; what is essential to monitor is the extent of price changes and their duration. Importantly, there is roughly a lag between three to five months between the price changes at farm and retail levels. Hence, we expect the prices of grain-related products in the inflation basket to maintain a softening path regardless of the recent disruption in grain prices.

Beyond the global dynamics, South Africa has a favourable agricultural season. For example, the 2022/23 maize harvest is estimated at 16,4 million, 6% higher than the 2021/22 season's harvest and the second-largest harvest on record. Soybeans harvest could reach a record 2,8 million tonnes. Be that as it may, the prices of these products are influenced by global developments as we are an open economy interlinked to the world markets. Other field crops and fruits also show prospects for decent harvest this season. These increased supplies support the slowing food inflation view we expressed. However, there are now renewed upside global risks and energy costs issues in the domestic market that needs constant monitoring.
 

WEEK AHEAD

What we are watching this week

As always, we start the week with a global focus, and today, the USDA will release its weekly update of the US Crop Progress Report. After weeks of excessive heat, the US crop growing conditions have improved following good rains in some regions. On 20 August, about 58% of the planted maize crop was rated good/excellent, slightly above 55% in the same week in 2022. In addition, about 59% of the soybean crop was rated good/excellent, also slightly above the 57% rating in the same week in August 2022. The USDA will release its weekly US Grains and Oilseeds Exports data on Thursday.

On the domestic front, on Tuesday the Crop Estimates Committee will release South Africa’s seventh production forecast for summer field crops for 2023. We don’t expect any adjustments from the past month’s data as the harvest has progressed and the yields have been quite excellent in most regions. What will be important to monitor is South Africa’s revised area planted estimate and first production forecast for winter cereals for 2023. The weather conditions have been favourable in the winter crop growing regions, and thus, we expect decent production estimates.

On Wednesday, SAGIS will release its weekly South Africa’s Grains and Oilseeds Producer Deliveries data for 25 August. In the previous release on 18 August, South Africa's 2023/24 maize producer deliveries were about 254 502 tonnes. This placed the 2023/24 deliveries at 13,6 million tonnes out of the expected harvest of 16,4 million.

The soybean harvest activity has progressed more than maize because it was planted earlier in the season. The harvest is now close to completion, and on 18 August, about 2,6 million tonnes of soybeans had already been delivered to commercial silos out of the expected crop of 2,8 million tonnes. On the same day, sunflower seed producer deliveries amounted to 710 784 tonnes out of the expected harvest of 758 610 tonnes.

On Thursday, SAGIS will publish its weekly South Africa's Grains and Oilseeds Trade data for 25 August. In the previous release on 18 August, the 16th week of the 2023/24 marketing year, South Africa exported 84 305 tonnes of maize. Of this volume, about 63% was exported to South Korea, and the balance was to African countries. This placed South Africa's 2023/24 maize exports at 1,51 million tonnes out of the seasonal export forecast of 3,22 million tonnes.

South Africa is a net wheat importer, and 18 August was the 46th week of the 2022/23 marketing year, with a weekly import volume of 79 739 tonnes from Lithuania and Poland. This placed South Africa's 2022/23 wheat imports at 1,37 million tonnes. The seasonal import forecast is 1,60 million tonnes, roughly unchanged from the previous season.

Also on Thursday, Statistics South Africa will release the Producer Price Index (PPI) data for July 2023. Our focus on this data will be on the food category.

In its Agri Commodities Monthly Report for October, Rabobank noted short-term support for wheat futures worldwide on the basis of tightening global fundamentals. 

Ukrainian farmers have harvested over 66 million tonnes of grain in 2018, which exceeds the record figure of 2016, according to the press service of the Ukraine Agrarian Policy Ministry.

World total grains production is forecast to hit a three-year low, falling short of demand and keeping global trade strong, the International Grains Council said following its 48th Council Session on Dec. 4 in Paris, France.

SA’s recent agricultural GDP figures, which show that the sector escaped the recession in the third quarter, expanding 6.5% on a quarter-on-quarter (seasonally-adjusted annualised) basis, are no call for celebration.

Ukraine’s grain harvest in 2018 hit a record 70 million tonnes, Prime Minister Volodymyr Groysman said at a business forum on Dec. 11. 

Durban harbour is key to South Africa’s grain trade. In the 2017/18 marketing year, South Africa exported 2.3 million tonnes of maize (white and yellow). About 74% of this went to markets through Durban harbour (nothing through other harbours), with the rest exported by road and rail to the continent.

Delayed rainfall in most parts of Zambia, coupled with low maize stocks in the National Food Reserve Agency silos, poses severe food insecurity for the 16 million people in the Southern African state, over 90% of whom depend on maize as a staple food.

The world’s grain markets face a year of challenges and uncertainty, with weather and politics likely to drive trade flows and prices, said the keynote speaker at the Global Grain Conference in Geneva, Switzerland.

As a result of maize prices increasing to import parity price levels and carcass prices declining due to the suspension of beef exports as a result of SA’s loss of its free Foot-and-mouth disease status, feedlots are near break-even cost levels.

The International Grains Council on Jan. 24 issued its Grain Market Report for January in which it lowered its forecast for 2018-19 world soybean production and raised its outlook for the 2018-19 corn crop. The IGC also provided other updated supply-and-demand forecasts for those crops for the current marketing year.  

The key focus in the South African summer grains and oilseed market last week was the national Crop Estimates Committee’s preliminary planting estimates data, particularly maize.