The effects of the mid-summer drought are being felt but the country’s needs should be met with some over for export
South Africa is on its eighth summer grain and oilseeds production forecast for the 2023-24 season. Given that we are at the tail end of the season, and will soon be in the mid-October optimal planting window for the 2024-25 production season, we thought there would be no more major revisions of the production figures at this late stage.
But this has not been a typical season, and the lower producer deliveries we have been observing over the past few weeks are not only a function of on-farm storage but a poor harvest. Indeed, we struggled with a mid-summer drought in February and March, undermining crop yield potential in various regions.
On September 26, South Africa’s Crop Estimates Committee lowered the 2023-24 maize harvest to 12,8 million tonnes, down 2% from last month and 22% from the previous season. This sharp decline in harvest prospects shows the harsh impact of the drought.
Of the current estimate, white maize is about 6,08 million tonnes (down 2% m/m), with yellow maize at 6,72 million tonnes (down 2% m/m). The current maize crop of 12,8 million tonnes is the lowest in six years, again showing the impact of the drought.
We believe the expected harvest and carryover stocks from last season will meet South Africa’s annual maize consumption of roughly 12 million tonnes. This will leave the country with a sizable volume for export markets.
The data from the South African Grains and Oilseed Supply and Demand Estimates Committee suggests that the country’s maize exports could reach 1,85 million tonnes in the 2024-25 marketing year (this corresponds with the 2023-24 production season).
In the week of September 13, about 843 000 tonnes had already been exported. The 2024-25 marketing year started on May 1.
In this export forecast, about 1,2 million tonnes will probably be white maize, with 650 000 tonnes yellow maize. Still, the estimated exports of 1,85 million tonnes are down notably from 3,4 million tonnes in the previous 2023-24 marketing year (this corresponds with the last 2022-23 production season).
With the further downward revision of the harvest, we suspect that the export figure might have to be revised somewhat, particularly the white maize component.
Also worth noting is that while South Africa will probably remain a net exporter of maize in the 2024-25 marketing year (which corresponds with the 2023-24 production season), the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina through Cape Town.
South Africa’s 2024-25 maize imports stand at 173 000 tonnes. The imports for the 2024-25 marketing year could rise to 350 000 tonnes. Brazil is another potential supplier of yellow maize to the country.
Importantly, these figures are still tentative. There could be adjustments in the coming months, particularly on white maize export forecasts. We are in a tricky season, with many unknowns, and the recent downward revision of white maize has further complicated the situation.
The implication for the consumer is that white maize prices might remain elevated over the near term. On September 26, the white maize spot price traded at around R5 505 per tonne, roughly 38% up year-on-year.
Meanwhile, yellow maize was at R4 240 per tonne, up 10% year-on-year.
The price difference is because of the abundant yellow maize supplies in the world market relative to scarcer white maize.
The regional demand for white maize will also continue to present upward price pressures, especially towards the end of the year and going into the first few months of 2025.
Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University’s Department of Agricultural Economics. His latest book is A Country of Two Agricultures.