As we have noted previously, South Africa's agricultural sector is export-orientated.
Nearly half of the annual produce, in value terms, is exported in regular and good seasons. The 2020/21 season has been one such season, producing the second consecutive strong output performance, with an even larger harvest for major field crops, horticulture and the wine industry than in 2019/20. This robust production could boost exports to surpass the 2020 level of US$10,2 billion.
For example, in the first quarter of 2021, agricultural exports amounted to US$2,9 billion, which is a 28% year-on-year (y/y) increase. We now have the full data for the second quarter which showed an even stronger performance with exports valued at US$3,2 billion, up 36% y/y. This means that in the first half of 2021, South Africa's agricultural exports amounted to US$6,1 billion, which is a 30% y/y increase. Compared with last year, the growth is partly because of base effects, as the first half of 2020 was heavily affected by the Covid-19 related disruptions to global supply chains. Still, the growth reflects rising export performance for various products.
In the second quarter of this year, the top exportable products were citrus, apples and pears, maize, wine, grapes, pineapples and avocados, wool, and nuts, amongst other products. We expect some of these products to continue dominating the export list in the second half of the year; thanks to large production volumes. There were temporary delays in exports in the port of Durban at the start of July because of unrest. Moreover, later in July, there were additional brief delays in export activity across South Africa following IT glitches on Transnet systems. This will likely be reflected in the third quarter export trade activity. However, this does not change our view that exports could be larger in 2021 than the previous year because of the robust harvest.
To illustrate this point, consider the data from the South African Wine Industry Information and Systems, which estimated the 2021 wine grape crop at 1,5 million tonnes, 9% larger than the 2020 harvest. While there was a temporary ban on alcohol sales domestically, the exports continued for those entities with access to export markets, thus contributing to an increase in exports this year. The Citrus Growers' Association forecasts South African citrus exports at a record 159 million cartons for this year, up by 9% from 2020. The citrus industry was affected by the temporary closures in the Port of Durban during the unrest at the start of July and later faced delays in export activity when Transnet experienced IT glitches. Still, the response to these challenges was swift, and export activity quickly resumed.
Moreover, South Africa could export 2,6 million tonnes of maize in the 2021/22 marketing year (this marketing year corresponds with the 2020/21 production season). This, however, would be 10% below the previous season because of an anticipated decline in Southern African demand. The rest of Southern Africa region is typically a key importer of maize from South Africa, but there is a major improvement in maize production across the region this year, and thus less need for South Africa's maize. These available maize export volumes are on the back of a large harvest which the Crop Estimates Committee forecasts at 16,4 million tonnes, the second largest on record.
From a destination point of view, the African continent and Asia were the largest markets for South Africa's agricultural exports in the second quarter of this year, accounting for 34% and 26% in value terms, respectively. The European Union was the third-largest market, taking up 21% of South Africa's agricultural exports in the second quarter of 2021. The balance of 19% of export value constitutes other regions of the world.
Notably, South Africa's agricultural imports also increased in the second quarter of 2021 by 33% y/y to US$1,7 billion. The top imported products were the usual ones where domestic consumption usually outstrips domestic production. These are primarily palm oil, wheat, rice, poultry products and soybean oilcake, amongst other products. We believe rice, wheat, and palm oil will continue leading the agricultural import product list throughout the second half of the year. The International Grains Council forecasts South Africa's 2021 rice imports at 1.1 million tonnes, a 5% increase from the previous year.
Meanwhile, South Africa's 2020/21 wheat imports are forecast at 1,58 million tonnes, down by 16% y/y following an uptick in domestic production. We expect a notable decline in soybean meal imports as South Africa has a record soybean harvest of 1,92 million tonnes in the 2020/21 production season. The increase in domestic soybeans production should substitute a large share of the usual imports.
Overall, South Africa recorded an agricultural trade surplus of US$1,5 billion in the second quarter of 2021, which is a 40% y/y increase, in part because of lower base effects, as previously stated. With major economies in Europe, Asia, and the Americas recovering from the 2020 economic shock of the pandemic, we expect the demand for food products to remain firm and support exports in South Africa. The relatively weaker exchange rate will also most likely keep South African agricultural products competitive for foreign buyers. As such, with the large volumes of production of various crops and fruits and sound output in the wool industry, we believe that South Africa's 2021 agricultural exports are on track to exceed the 2020 level of US$10,2 billion.
From a policy perspective, South Africa has an export-orientated agricultural sector, which means that there need to be continuous improvements on logistics and an expansion of export markets to the new destination. These efforts should be well sequenced and complement the ongoing attempts of boosting domestic production through various interventions such as Master Plans. In our view, South African policymakers should prioritise these additional export markets: China, India, Saudi Arabia, and Japan. These are large and growing markets, yet South Africa still has minimal agricultural presence. In terms of logistics, the ongoing engagements between industry and Transnet to address bottlenecks and efficiency challenges at the ports and rail are a step in the right direction of supporting further export-orientated growth in South Africa's agricultural sector.
Weekly highlights
Strong tractors sales signal optimism about 2021/22 summer crop season
South Africa's agricultural machinery sales remain strong as the 2021/22 production season approaches. In addition to the favourable weather outlook for the upcoming season and attractive grain prices, we view the strong sales as a positive indicator that farmers could plough a sizable area for summer grains and oilseeds of roughly four million hectares as the previous seasons. The recent data from the South African Agricultural Machinery Association show that tractor sales were up by 17% y/y in July, with 549 units sold.
Again, considering the total tractor sales for the first seven months of this year, we are already 26% ahead of the corresponding period in 2020, with 3 934 units. However, it is worth noting that sales in much of last year were negatively affected by lockdown restrictions, so the base is slightly distorted. Still, 2020 was also a good year in South Africa's tractor sales, so surpassing it means that we are witnessing some good momentum this year. In 2020, the tractor sales amounted to 5 738 units, up by 9% from 2019, supported by the large summer grains and oilseeds harvest in 2019/20. Yet, 2020/21 was another excellent agricultural season and coincided with higher commodities prices boosting farmers' finances and, subsequently, the tractor sales.
The planting period for the 2021/22 season for summer grains and oilseeds begins in October; as such, the sales for the next two months will be worth watching. As highlighted in our previous notes, we are somewhat pessimistic about the sales in the last quarter of the year. We fear that the rising input costs, such as fertilizers, herbicides and fuel, could add pressure on farmers' finances and thus lead to a change in machinery-buying decisions. Also, the planting will be in full swing, and there would be little incentive to bring more new machinery. Still, the pace of sales in the first seven months of the year convinces us that, in aggregate, the annual sales for 2021 could still be larger than the previous year.
Global food prices slowed for the second consecutive month
Last week, the FAO released a monthly update of the Global Food Price Index, which fell for a second consecutive month in July 2021, although still at higher levels compared with the same period last year. The Index is at 123 points, down 1% from June 2021, but still 32% higher than July 2020.
This mirrors the drop in prices of grains, dairy products and vegetable oils. The decline in grains and vegetable oil prices is reflective of the expected improvement in production. For example, at the end of July, the International Grains Council forecasts the 2021/22 global maize production at a new peak of 1,2 billion tonnes, up by 7% y/y. This is on the back of an expected large crop in the US, Brazil, Argentina, Ukraine, China, EU, and Russia. Similarly, the IGC forecasts the 2021/22 global wheat production at a record 788 million tonnes, up 2% y/y. Expected large crops boost this in the EU, Ukraine, Argentina, China, India, and the UK. Also worth noting is that the global rice supplies and stocks are also at comfortable positions, well above the 2020/21 production season. The IGC forecasts the 2021/22 global rice production at a record 511 million tonnes, up 1% y/y. This is on the back of possible expansions in area plantings in Asia, combined with expected better yields resulting from favourable weather conditions. The observations are similar in the global soybean production prospects, with the 2021/22 harvest estimated at 382 million tonnes, up by 5% y/y. The beneficial weather conditions will likely boost the crop in Brazil, Argentina, India, Paraguay, Russia, Ukraine, and Uruguay. In terms of dairy products, the prices soften following a decline in demand and an improvement in supplies across the Northern Hemisphere.
Overall, the global grains and oilseeds production forecasts suggest that prices could continue softening over the coming months, albeit marginal. Hence, we believe that the South African grain prices could follow a similar path of a decline in prices from higher levels of the recent months, which bodes well for consumer food price inflation.
Data releases this week
We start the week with a global focus, as the United States Department of Agriculture (USDA) will release the World Agricultural Supply and Demand Estimates report Thursday. Our interest in this report will be to assess the global grains and oilseeds production estimates. We know from the aforementioned IGC estimates (discussed above) that the global grains and oilseeds production prospects are generally positive. We look to see if the USDA will confirm such a view. On the same day, the USDA will release the US Weekly Export Sales data.
On the domestic front, on Thursday, SAGIS will release the Weekly Grain Producer Deliveries data for 06 August 2021. This data cover summer and winter crops, although we only focus on summer crops for now where harvesting is at completion and farmers will soon be preparing for the next season. To recap, on 30 July, about 1 378 tonnes of soybeans were delivered to commercial silos. This placed the soybean producer deliveries for 22 weeks of the 2021/22 marketing year at 1,81 million tonnes, which equals 94% of the expected harvest of 1,92 million tonnes. Moreover, 634 542 tonnes of sunflower seed for the 2021/22 season had already been delivered to commercial silos in the same week, out of the expected crop of 677 240 tonnes. In maize, the marketing year is different from oilseeds; we are still in the thirteenth week of the 2021/22 marketing year, which began at the start of May. The producer deliveries currently amount to 12,5 million tonnes, equating to 76% of the expected crop of 16,4 million tonnes.
On Friday, SAGIS will release the Weekly Grain Trade data for the week of 06 August 2021. In the week of 30 July, which was the thirteenth week of South Africa's 2021/22 maize marketing year, total maize exports amounted to 980 442 tonnes. The seasonal export forecast is 2,6 million tonnes, roughly 10% below the previous season because of an anticipated decline in Southern African demand, as previously stated. In terms of wheat, South Africa is a net importer. On 23 July, imports amounted to 1,4 million tonnes, equating to 88% of the seasonal import forecast of 1,6 million tonnes.
