/ 10 July 2024

Agricultural outlook: What to expect for South Africa’s maize and oilseed market

The first month of the year is critical because the seedlings must survive both heat and low rainfall.
When viewed annually, the white maize harvest is down 26%, with yellow maize down 10% from the 2022-23 season. File photo

South Africa’s agricultural sector has various institutions, organisations and committees that play specific roles in supporting the sector’s growth and sustainability. One of these,  housed in the department of agriculture, land reform and rural development, is the Crop Estimates Committee. 

This committee benefits on skills from government, academia, and the private sector. Its main task is to provide production forecasts for winter and summer grains and oilseed. These data are crucial to understanding the country’s food security conditions and often influence the market prices of grains and oilseeds in season. For each season, the committee typically releases about 10 reports. From the fourth monthly report, there is generally some certainty about the expected crop.

We are now at the end of the 2023-24 summer grains and oilseed season. This comprises white maize, yellow maize, sunflower seed, soybeans, groundnuts, sorghum and dry beans. 

On 27 June, the Crop Estimates Committee released its fifth production estimate for the summer grains and oilseed season. The current data is more reliable and unlikely to change much in the coming weeks. In the fifth release, the committee lifted the 2023-24 summer grains and oilseed harvest by 0.6% from the May 2024 report to 16 million tonnes. Still, this is down 20% year-on-year, reflecting the severe impact of the mid-summer drought. 

The monthly slight upward adjustment of the summer grains and oilseed harvest size is mainly because of the notable uptick in the yellow maize production estimate, while other crops remained roughly unchanged from last month. 

If we zoom into the main crops, the white and yellow maize harvest could be 6.3 million tonnes (up 0.1% month-on-month) and 7.1 million tonnes (up 1.3% month-on-month). These revisions place the total maize production estimate at 13.4 million tonnes (up 0.7% month on month). 

When viewed annually, the white maize harvest is down 26%, with yellow maize down 10% from the 2022-23 season. The disparity in the crop decline is a result of the regions where each crop variety is planted, with white maize predominantly in the western areas of South Africa while yellow maize is in the east. 

Moreover, yellow maize is typically planted a month earlier than white maize. Rainfall affects these regions and timeframes differently, ultimately affecting the expected harvest sizes. The expected harvest of 13.4 million tonnes is down 18% from the 2022-23 season. 

I am optimistic that this harvest may materialise and meet South Africa’s annual maize consumption of roughly 12 00 million tonnes, leaving the country with roughly 1.4 million tonnes for exports (there is also support from the carry-over stocks from the previous season). About 840 000 tonnes will probably be white maize, with 600 000 tonnes likely to be yellow maize. Still, the estimated exports of 1.4 million tonnes are down notably from 3.4 million tonnes in the previous season. 

With that said, maize prices will probably remain elevated for some time because of potentially tighter supplies later in the season and into the first quarter of 2025. Admittedly, in recent weeks, white and yellow maize prices have moderated from the levels we saw last month because of the relatively stronger domestic currency and the harvest pressure, among other factors. Still, white maize prices are more than 30% higher than the levels we saw a year ago. The white maize spot price closed at R5 185 a tonne on 27 June, 2024. Meanwhile, the yellow maize prices currently are down roughly 4% from a year ago. The yellow maize spot price was at R3 825 a tonne.

Yellow maize prices have not increased much, as the supply risk could be manageable through imports. There are ample yellow maize supplies in the world. This also explains the decline in the yellow maize prices compared with the surge in white maize prices, which is scarce in the world market and primarily produced in Southern Africa and Mexico.

Regarding oilseeds, the 2023-24 soybean harvest was unchanged from last month to 1.7 million tonnes (down 36% year-on-year). Moreover, the sunflower seed harvest estimate was unchanged from last month at 649 250 tonnes (down 10% year-on-year). This annual decline results from poor yields.

Overall, the data illustrates the scale of damage caused by the midsummer drought to the South African summer grains and oilseed harvest. 

Still, from a consumer perspective, South Africa is not in a crisis regarding supplies of grains and oilseed. With that said, there are upside risks to white maize prices, especially considering the potentially ample demand from the Southern Africa region later in the year and into the first quarter of 2025 when their domestic supplies are depleted. 

Wandile Sihlobo is the chief economist at the Agricultural Business Chamber of South Africa and a senior fellow in Stellenbosch University’s Department of Agricultural Economics. His latest book is A Country of Two Agricultures.