In the 2019/20 marketing year, Zimbabwe’s maize imports, specifically from South Africa didn’t gain much momentum until the start of 2020.
This is when Zimbabwe’s maize stocks were already depleted following a season where the country produced roughly 777 000 tonnes, which is way less than its annual consumption of about 1.9 million tonnes.
The poor harvest was a result of unfavourable weather conditions during the season; dryness at the start of the season, and Cyclone Idai later in the season. The same pattern of maize import activity could prevail this year as Zimbabwe has yet another poor maize harvest. According to data from the United States Department of Agriculture (USDA), Zimbabwe’s 2019/20 maize harvest lifted by 9% y/y to 850 000 tonnes. With annual maize consumption in the 2020/21 marketing year (which corresponds with the 2019/20 production season) estimated at 1.9 million tonnes, Zimbabwe will need to import at least a million tonnes of maize to meet its annual needs. Between May and the last week of October 2020, Zimbabwe imported 216 856 tonnes of South African maize (both white and yellow). South Africa’s maize exports could remain thin in the coming weeks as Zimbabwe still relies on its domestic harvest. But there will likely be some momentum at the end of the year and into 2021. This is when Zimbabwe’s maize stocks will likely be depleted or at low levels.
This is also the time when there will likely be reports about cases of rising hunger, which the World Food Programme has been consistently been warning about since July 2020 when there was much clarity about the size of the 2019/20 maize harvest. This expected increase in Zimbabwe’s maize needs will have implications for the South African maize market, especially prices, which will likely increase or remain at elevated levels evident at the time of writing. This is primarily because South Africa, as a neighbouring country with surplus maize, will potentially be a source of imports in the coming months. As we have noted in our recent notes, South Africa’s maize prices have remained at elevated levels over the past couple of months, in part because of growing demand from the Far East countries, the weaker domestic currency and generally higher global grains prices on the back of growing Chinese grains and oilseed demand. China is currently rebuilding its pig herd which was devasted by African swine fever in 2019. This process has led to a notable increase in demand for soybeans and maize, and hence, lifted global agricultural commodities market and by extension South Africa.
For example, on 04 November 2020, South Africa’s white and yellow maize spot prices were up by 27% y/y and 26% y/y, trading at R3 433 per tonne and R3 385 per tonne, respectively. These higher commodity prices might be ironic as the 2019/20 season had large supplies which would have ordinarily added pressure on prices. South Africa had the second-largest maize harvest on record, about 15.4 million tonnes (yellow maize at 6.7 million tonnes and white maize: 8.7 million tonnes) and the third-largest soybean harvest on record (1.26 million tonnes). Yet, the aforementioned price drivers have had a more pronounced impact on prices. The only reprieve on prices might emanate when there is clarity about the size of the 2020/21 crop which is at the start of the season. Anticipated Zimbabwe’s maize demand will mean that South Africa remains with higher maize prices for some time. Wandile Sihlobo is Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and the author of Finding Common Ground: Land, Equity, and Agriculture.
