The Western Cape is the leading producer of South Africa’s winter crops, which are wheat, barley and canola. It is also in this province where plantings typically begin at the end of April, while in other provinces it's around midyear.
The 2019/20 production season is no different from the previous years; farmers have made good progress in planting all winter crops in the Western Cape. About 60% of the intended canola hectares in the province have thus far been planted. Meanwhile, roughly 40% of the intended hectares for wheat and barley plantings are completed.
• While this is an encouraging development, and somewhat in line with development in normal seasons, the progress has not been widespread. Nearly all winter crop producing regions of the Western Cape planted with minimal interruptions over the past few weeks with the exception of the Southern Cape. This particular region is currently experiencing low soil moisture, following erratic rainfall over the past few months. As a result, planting activity has slowed in the Southern Cape, and some farms are said to have paused plantings until moisture levels improve.
• Fortunately, it might not take long before soil moisture improves, not only in the Southern Cape but across the Western Cape. On 03 May 2019, the South African Weather Service noted that the south-western parts of the country could receive above-normal rainfall, in high frequency, between May and August 2019. This means that there could be an increase in soil moisture in the province not only during the planting period but throughout the season.
• The other winter crop producing regions of the country, which will start with plantings around midyear, is largely under irrigation. Therefore, the crops should experience a generally good season as dams across the country are at healthy levels, measured at over 60% full in the week of 29 April 2019. This is with the exception of the Western Cape, where dams were 35% full, an anomaly that is explained by the fact that the province is a winter rainfall area. In addition, the weather forecast for other provinces of South Africa is expected to be generally normal during the winter season. This essentially means lower rainfall occurs during the season, but not at an exceptional level.
• Overall, these weather developments reinforce our view of a good production season in 2019/20 and also increases a possibility 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.
• As set out in our previous note, although it is still early to be certain of the potential harvest, the possible plantings of the aforementioned intended area for different crops would lead potentially lead to a harvest of 1.8 million tonnes in the case of wheat . This is under the assumption of a five-year average yield of 3.4 tonnes per hectare, which is less than the 2018/19 yields of 3.7 tonnes per hectare in the 2018/19 season. Under this scenario, South Africa could remain a net importer of wheat, with the volume roughly unchanged from the current season where imports could amount to 1.4 million tonnes.
• In terms of barley, production could reach levels around 426 600 tonnes if farmers plant the intended area, and weather conditions remain favourable. This would be slightly higher than the 2018/19 season’s harvest due to the anticipation of better yields. Under similar conditions, canola production could lift marginally to 104 000 tonnes boosted by an increase in area planted and expectations of good yields .
• Going forward, we will closely monitor the weather developments across the country, in order to ascertain the impact on winter crop production expectations. What we have presented in this particular note are our in-house production forecasts; the national Crop Estimates Committee will release the official production estimates for South Africa’s winter crops on 27 August 2019. By that time, information about the planting progress, and weather conditions will be available to support the committee’s estimates.
• We keep an eye on global agricultural conditions as the Southern Africa region will need grains supplies in the 2019/20 marketing year (corresponds with 2018/19 production season) following the damages in the agriculture fields caused by the recent cyclone in Mozambique, Zimbabwe, and Malawi. But we don’t expect any major adjustments in 2018/19 global grains production estimates that the USDA released in April 2019 as the weather conditions have generally been favourable in most countries over the past couple of weeks.
• To recap, last month, the USDA placed its estimate for 2018/19 global maize production at 1.1 billion tonnes, which is 2% higher than the previous season. The increases are mainly in South America and the Black Sea region. Moreover, the agency placed its 2018/19 global rice production at 501 million tonnes, up by a percentage point from the levels observed in 2017/18 production season.
• The 2018/19 global soybean production estimate was at 360 million tonnes, which is 6% higher than the 2018/19 production season. The uptick is mainly on the back of an expected large harvest in the United States, China, and Argentina. The data for 2018/19 global wheat production was at 733 million tonnes, which is a 4% decline from the 2017/18 production season.
Agricultural machinery sales data
• We expect South Africa’s tractor sales to have declined by 3% y/y in April 2019 to 444 units. This probably occurred despite the expected increase in winter crop plantings in the 2019/20 production season. The anticipated decline is partly due to the fact that some farmers have already purchased tractors in the past couple of months. In fact, March 2019 tractors sales were the highest this year, with about 600 units. This comes after robust tractor sales in 2018.
• In terms of combine harvesters, we think South Africa’s combine harvester sales declined by 3% y/y to 28 units in April 2019. This view is partly supported by expected lower 2018/19 summer grains and oilseed harvest owing to unfavourable weather conditions at the start of the season.
Weekly grain trade data
• South Africa’s weekly grain trade data is due for release on Friday, 10 May 2019. This will mainly be maize and wheat. In terms of maize, we expect South Africa to be a net exporter in the 2018/19 marketing year, with about 2.3 million tonnes (white and yellow maize). About 2.1 million tonnes had been exported on 26 April 2019, which equates to 91% of seasonal exports. The key buyers have been Vietnam, Japan, Italy, South Korea, Taiwan, and continental markets. Therefore, this week’s data will show activity for the last week of the 2018/19 marketing year and could show a further increase in exports.
• Looking ahead, South Africa is likely to remain a net exporter of maize in the 2019/20 marketing year which commenced on 01 May 2019. The exports, however, could decline by half from the 2018/19 marketing year to about 1.0 million tonnes. This is under the assumption that maize production could amount to 10.6 million tonnes. At the same time, we expect imports of about 450 000 tonnes (all yellow maize), up from an estimated 171 500 tonnes in the 2018/19 marketing year.
• 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 36% of the seasonal forecast. The leading suppliers have been Russia, Germany, Latvia, Argentina, and Canada, amongst others. The data for the week of 03 May 2019, which is due for release on Friday will most likely lead to an increase in imports.
