Article

Some optimism about South Africa's 2024-25 winter crop production

Published: 01/10/2024

• South Africa's agricultural sector is currently in what some would consider a relatively quiet period before we start the busy period again in a few weeks. Farmers will soon be tilling the land for summer crops from mid-October. Towards the end of November, the table grape industry will also start with its harvesting period, and there will be more activities from that period onwards. The winter crop is the main crop currently in season, with farmers starting the season in May.
• Indications are that the winter crop is in reasonably good condition in some regions of South Africa, although the start of the season was challenging. On September 26, the Crop Estimates Committee (CEC) lifted South Africa's 2024-25 winter crop by 2% from August to 2,72 million tonnes. This placed the projected harvest only negligibly (i.e., 0.04%) less than the previous season. This winter crop encompasses wheat, barley, canola, oats and sweet lupines. The upward revisions in the CEC’s latest projections were mainly on wheat, canola and sweet lupines.
• Much of this positive activity is in the Western Cape, a major province in the production of winter crops. For example, about 73% of the winter wheat plantings for the 2024-25 season are in the Western Cape. The area planted for barley, canola, and oats is much more prominent in the province as a winter rainfall region. Other major winter crop-producing provinces are the Free State, Northern Cape, Limpopo, and North West, but the production in these provinces is mainly under irrigation.
• If we zoom into wheat, the production is estimated at 1,94 million tonnes, up 2% from last month. The upward revision was mainly in the Western Cape, benefitting from favourable weather conditions. Importantly, it appears that the excessive rains at the start of the season may not have caused much damage in the province's wheat production, at least in most regions. The provincial crop is projected to be up 2% from the 2023-24 season, at 1,1 million tonnes of the national expected wheat harvest of 1,94 million tonnes. Still, yearly, the current national wheat crop of 1,94 million tonnes is down 5% from the previous season, indicating lower production outside of the Western Cape.
• The production in other provinces is down notably from the previous season. We suspect that the mid-summer drought has weighed on the production in the Free State, Limpopo and Northern Cape provinces. Farmers were financially constrained after they lost their summer crop. Moreover, some may have opted to conserve the soil moisture for the start of the 2024-25 summer crop production.
• Thus, South Africa will remain a net wheat importer in the 2024-25 marketing year. Fortunately, there are ample global wheat supplies and prices have remained broadly contained. The International Grains Council forecasts 2024-25 global wheat production at 798 million tonnes, up 0,4% year-on-year. The improved global wheat production prospects have kept global wheat prices at a moderate level, thus benefiting consumers and importing countries like South Africa, especially with the much stronger exchange rate. Still, the wheat import tariff typically reduces the potential gains for the wheat consumers while equally providing some level of support to the domestic producers.
• Aside from wheat, barley production prospects remain positive annually, although down on a monthly revision. The CEC lowered the barley harvest prospect by 4% from August to 398k tonnes. Still, this is 6% higher than the 2023-24 season. With the barley plantings down 7% year-on-year, at an estimated 100k hectares, the improved annual harvest prospects are supported by better yield prospects in some regions of the Western Cape.
• The 2024-25 canola production is forecast at 294k tonnes. This is the largest harvest on record, up 25% year-on-year. An expansion in the area underpins the improvement planted and prospects for better yields. Indeed, in our recent visit to the Western Cape, the canola plantings were visibly in good condition in most regions of the province. These figures confirm our anticipation that the province will have a decent canola crop.
• Also worth highlighting is that South Africa's 2024-25 oats production could increase 67% year-on-year to 68k tonnes according to CEC. This significant production results from a notable increase in the planted area and positive yield prospects. We see similar improvements in sweet lupines, where production is estimated at 19k tonnes, up by 20% year-on-year.
• The winter crop season is shaping slightly better than the challenging summer crop season. Admittedly, we are early in the season, and a lot could change depending on the weather conditions in the coming months. But the figures we have at this point provide some comfort about the size of the supplies. Where production prospects are down notably, the large global wheat production will provide much-needed cushion to the domestic wheat processors and food companies.
• In the coming months, there will also be more activity in other crops and value chains in agriculture. Perhaps at the end of the year, the focus on logistics will be a priority again as the horticulture industry will gear up again for an export season.