Paul Makube
Following a relatively good start to the 2023/24 crop season with good rains which saw farmers increasing their planted area for summer crops by 1.2% y/y to 4.4 million hectares, the weather turned negative with limited follow-up rains coupled with excessive heat early in 2024. The excessive heat caused a lot of stress and wilting of crops during the critical growth stage thus impacting negatively on potential yields.
Consequently, the National Crop Estimates Committee (CEC) pegged its first estimate of the country summer crops at 17.41 million tons which is a decline of a whopping 13.5% y/y. In the case of the country’s biggest staple, maize, the estimate was slashed by 12.6% y/y to 14.36 million tons mainly due to a significant reduction in the expected white maize harvest (-17.2% y/y). This was expected given the persistent dryness in the producing areas of the North West and some parts of the Free State. The current harvest estimate however still ensures adequate supply for the country and is still higher than the long-term average (10-year) of 13.1 million tons for the commercial maize crop.
Meanwhile, maize futures have already responded in the past few weeks with the latest May-24 and Jul-24 white maize contracts rising by 16.3% (+R629/t) and 16.1% (+R619/t) m/m respectively at R4,479/t and R4,471/t. Yellow maize futures for May-24 and Jul-24 delivery has so far increased by 5.9% (+R220/t) and 5.5% (+R205/t) m/m respectively at R3,918/t and R3,905/t.
The next big crop, soyabeans, saw harvest expectations cut by 22.8% y/y to 2.14 million tons due to the combination of yield contraction and a 2.2% y/y reduction in planted area. However, this projected level is still way ahead of the 10-year and 5-year averages of 1.26 million tons and 1.55 million tons respectively. The price response has only been muted so far on a month-on-month basis. In the case of sunflower, the expected harvest is 6.8% lower y/y at 671,100 tons but has not had upside pressure on prices. The latest trends show that sunflower futures for May-24 and Jul-24 are still down by 1.2% (-R96/t) and 0.7% (-R56/t) m/m at R8,184/t and R8,394/t.
We are now into the critical stage of crop growth and decent rains are required to reverse potential losses. Nonetheless, the El Nino weather pattern was relatively mild for South Africa as we received unusually widespread rains. Further, the good news is that the current El Nino will be a once off event as forecasts so far indicate that it is dissipating towards winter with neutral conditions taking hold into the 2024/25 crop season.
The short-term rainfall outlook still calls for showers of about 20mm to 50mm across most growing areas that could help salvage the situation. However, more is needed to make a meaningful recovery.
Paul Makube, is Senior Agricultural Economist, FNB Commercial. He writes in his personal capacity.
