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SA set to have the largest wheat harvest in a decade, and largest canola and barley harvest on record
Published: 30/09/2020
This week the Crop Estimates Committee (CEC) reaffirmed its view that South Africa’s 2020/21 wheat crop could be the largest in a decade, while the canola and barley harvest could be the largest on record. The CEC lifted all the production forecasts of all the aforementioned crops by 3% each from last month’s levels as favourable rainfall suggests that there could be good yields in several regions. The current estimates suggest that South Africa’s 2020/21 wheat, barley and canola production could increase by 32% y/y, 51% y/y and 33%, respectively, to 2.02 million tonnes, 520 106 tonnes and 126 520 tonnes (Exhibit 1).
This week the Crop Estimates Committee (CEC) reaffirmed its view that South Africa’s 2020/21 wheat crop could be the largest in a decade, while the canola and barley harvest could be the largest on record. The CEC lifted all the production forecasts of all the aforementioned crops by 3% each from last month’s levels as favourable rainfall suggests that there could be good yields in several regions. The current estimates suggest that South Africa’s 2020/21 wheat, barley and canola production could increase by 32% y/y, 51% y/y and 33%, respectively, to 2.02 million tonnes, 520 106 tonnes and 126 520 tonnes (Exhibit 1).
The winter crop planting was delayed which means that the crop will require moisture for a longer period than the usual months. We think for the current expected large harvest to materialize, the Western Cape and other winter-crop producing provinces will need sufficient moisture until the end of October, which is plausible according to the weather forecasts.
On July 24, in its Seasonal Climate Watch report, the South African Weather Service highlighted prospects for “increased chances of above-normal rainfall over the south-western and southern parts of the country between August and October 2020”. We have already received good moisture in August and September, which gives us optimism that rains could continue in the coming month and support the crop. Of course, the Western Cape is not the only province that has contributed to these expected fortunes, specifically in the case of wheat, the Northern Cape, Free State, Limpopo, North West and Eastern Cape are amongst the contributors.
What does this all mean? To start with wheat, which South Africa over the past 10 years imported on average about 51% per annum of its consumption, there will be a decline in imports. We think that a harvest of 2.02 million tonnes would see South Africa’s wheat imports falling by, at least 11% y/y, in 2020/21 to levels around 1.6 million tonnes. In terms of barley, South Africa will remain a net exporter, and the country is actively looking for export markets as the expected volume might not all be utilized in the domestic market this season. Meanwhile, for canola, the harvest will probably be utilized in the domestic market.
