By Paul Makube, Senior Agricultural Economist, FNB Commercial
Monitoring the 2023/24 harvest forecasts has been interesting following an El Nino-induced heat that decimated crops earlier in the year. After the initial optimism of a 14.36 million tons in the first estimate despite the drought conditions, the National Crop Estimates Committee (CEC) downgraded their forecast in the subsequent updates.
Now, the maize harvest estimates for the first time fell below 13 million tons for the first time in five years at 12.80 million tons which is down 22% y/y and 5% below the 10-year average of 13.47 million tons, according to the CEC’s 8th production forecast. We did expect this scenario to happen given the lower producer deliveries of just over 9.95 million tons as of the week ended 20 September 2024, which is 78% of the expected crop and 28% below the 3-year average of 13.88 million tons.
Nonetheless, we had a good carryover stock which provides a slight buffer to ensure we meet our export commitments estimated at 1.85 million tons for the 2024/25 marketing year, according to the South African Grains and Oilseed Supply and Demand Estimates Committee. The price response to the harvest contraction has been strong with average white maize prices so far for September 2024 up by 40.7% y/y and almost 9% above the early year level (Feb) at R5,503/ ton, while its yellow counterpart was 9.6% above last year at R4,196/ ton. Are we going to see increased imports? SA remains a net exporter of maize particularly the white category, however, yellow maize imports have increased with a cumulative seasonal volume of 172,928 tons that was sourced from Argentina as of 13 September 2024.
On other crops, the CEC downgraded the sunflower harvest estimate by 2% from the previous month to 635,750 tons which is 11.7% lower y/y. The soybean was however revised upwards by 1.8% m/m to 1.81 million tons but still down by 34.6% y/y, thus indicating a potential increase in imports of oil cake after building domestic self-sufficiency over the past few years. Groundnut harvest is still lower at 51,745 tons, down 1.7% from last month’s estimate and 2.4% lower y/y. Sorghum and dry beans estimates remained unchanged from the previous month but showed increases of 1.6% and 0.5% y/y respectively at 95,830 tons and 50,495 tons.
The harvest and delivery season for 2023/24 is now tailing off and the next focus for farmers is production conditions with La Nina back in the forecast for the 2024/25 agriculture season. Input cost indicators so far show a modest decline relative to last year with fuel prices having been cut for three consecutive months and we expect another one for October. The analysis of the movement of average fuel over or under recovery by the Central Energy Fund on the 25th of September 2024 showed a potential cut of R1.12 and R1.09 per litre for the diesel 0.05% and 0.005% grades respectively for October 2024. This bodes well for the summer crop farmers as we head into increased activity of planting for the 2024/25 agriculture season.
