The global wheat market has been in focus since Russia invaded Ukraine in February last year. Many countries feared that they would not meet domestic needs because of supply constraints brought by the war in one of the major producing regions.
The price surge after the invasion was also a significant challenge for importing countries such as South Africa. The Black Sea Grain Deal brokered between the United Nations representatives, the Turkish government, and the Russian and Ukrainian governments to allow the movement of grains out of the Black Sea region has brought much- Moreover, the soybeans harvest was lifted by 2% from the March estimate to a record 2,8 million tonnes. The crop improvement is due to an expansion in the area planted and the expected higher yields. The expected large harvest means South Africa could meet its domestic demand and remain with just over 300 000 tonnes of soybeans for export markets. This soybean export expansion is a new territory for South Africa, which until recently, had been a net importer of soybeans and soybean products, and positive for the agricultural trade balance.
The sunflower seed production estimate remained unchanged from last month at 797 610 tonnes (down 6% y/y). The annual decline in the sunflower seed production forecast mirrors the reduced planted area and yields in some areas. Other small crops, such as sorghum and groundnuts, have a reasonably large expected harvest of 107 180 tonnes (up 4% y/y) and 49 080 tonnes (up by 1% y/y), respectively.
Overall, South Africa's 2022/23 summer grains and oilseeds are maturing, and some areas are nearing harvest. Notably, these data bode well with the already softening maize prices, now hovering around R3 600 per tonne, roughly down by 20% from a year ago. Sunflower seed and soybean prices have also softened at the same rate, and spot prices are currently trading around R8 442 per tonne and R7 424 per tonne, respectively.
Data releases this week
The agricultural calendar this week is relatively light. On the global front, the United States Department of Agriculture (USDA) will release its US Weekly Grains and Oilseeds Exports data on Thursday. Notably, on Friday, the Food and Agriculture Organisation of the Union Nations (FAO) will release its Global Food Price Index for April 2023. This is one of the most watched data releases as it provides early signals of the direction of global food price inflation.
In the March 2023 update, the Global Food Price Index averaged 126.9 points, down 2% from February, marking the twelfth consecutive monthly decline since reaching its peak one year ago. The decline in the index in March was led by drops in the cereal, vegetable oil and dairy price indices, while those of sugar and meat increased. During the past twelve months since March 2022, the index has fallen by as much as 21%.
On the domestic front, on Thursday, SAGIS will release South Africa's Weekly Grain Producer Deliveries data for 28 April. In the previous release of 21 April, the deliveries were about 7 379 tonnes. This placed South Africa's 2022/23 wheat producer deliveries at 2,0 million tonnes, out of the expected harvest of 2,1 million tonnes. We will report on the 2023/24 summer grains and oilseeds when the harvest gains momentum later this month, which is also the start of the new marketing year.
On Friday, SAGIS will publish South Africa's Weekly Grain Trade data for 28 April. In the previous release on 21 April, the 51st week of South Africa's 2022/23 maize marketing year, the weekly exports amounted to 127 434 tonnes. About 79% to Taiwan, and the balance to the neighbouring countries. This brought the total 2022/23 exports to 3,6 million tonnes, which exceeds the seasonal export forecast of 3,5 million tonnes.
South Africa is a net wheat importer, and 21 April was the 29th week of the 2022/23 marketing year, with 30 740 tonnes, all from Australia. South Africa's 2022/23 wheat imports currently stand at 814 291 tonnes. The seasonal import forecast is 1,6 million tonnes, roughly unchanged from the previous season.
The major wheat suppliers in the 2021/22 season were Argentina, Lithuania, Brazil, Australia, Poland, Latvia and the US. If one looks into South Africa's wheat import data for the past five years, Russia was one of the significant wheat suppliers, accounting for an average share of 26% yearly. Argentina and Brazil replaced this in the 2021/22 season. However, Russia is back on the suppliers' list in the 2022/23 season and is again one of the significant wheat suppliers to South Africa thus far.
