The softening of the key South African Futures Exchange (Safex) prices will pare back farm incomes, despite a higher Crop Estimates Committee (CEC) first production forecast, Anthony Clark, an independent analyst at Smalltalkdaily Research said in a note yesterday.
The release of CEC’s first production forecast for commercial field crops this week showed that the initial maize figure was better than market expectations at 15.6 million tons, 0.94% higher than the previous harvest.
Clark said yellow maize was more than R1 000 a ton lower than the peak for late last year.
And this would also place pressure on farmers given materially higher year-on-year production input costs such as diesel, chemicals and fertiliser, he said.
This came from a decline in overall hectares planted year-on-year of 1.5%.
“Better weather in the planting and initial pollination window has aided the outlook despite some delays in some areas’ initial planting,” Clark said.
Much would depend on climatic conditions in the months ahead and with some crops being delayed in planting, the chance of early frost in May could put a damper on expectations.
The initial maize harvest was, however, bullish and given South Africa’s consumption needs of 11.8 million tons per annum would lead to export potential.
He said, “Of greater significance is that a shift away from maize towards soya, which has a materially lower nutrient demand than maize, has seen soya hectares increase 24.1% on the prior season to 1.14 million hectares, a South African record.
The crop was estimated at 2.65 million tons (+18.91%) on the previous harvest at a yield of 2.31 tons per hectare (2.38 tons in 2022).
“Maize and soya are the two largest input costs into protein production and both these CEC stats will cheer the embattled sector,” Clark said.
Clark said internationally, despite the weaker rand, an improved outlook and an expectation of a bumper crop in the US and a better weather outlook in Brazil had led to maize prices softening.
“That has aided the Safex market despite the weakness of the rand.”
Meanwhile, Wandile Sihlobo, the chief economist at the Agricultural Business Chamber, said the start of South Africa’s 2022/23 summer crop production season had been challenging for farmers and agricultural role players because of excessive rains.
He said the crop planting in various regions of the country was delayed by roughly a month, threatening yield prospects, but the warm weather at the end of January and much of February helped improve conditions on the farms.
“It thus eased concerns about the possibility of smaller yields due to excessive soil moisture. Moreover, the persistent load shedding raised concerns that areas under irrigation could receive poor yields. Still, the return of rainfall, at a moderate pace, from mid-February provided a much-needed breather and improved crop conditions. Within summer crops, roughly 20% of maize and 15% of soybeans are produced under irrigation,” Sihlobo said.
He said it was still early for one to be entirely sure about the size of South Africa's summer crops, with nine more monthly crop forecast updates to follow.
“The crop is now at pollination stages in some regions of the country, and if the weather conditions remain favourable, the yields stand to improve even further. Still, one will have to keep a close eye on the irrigation areas and the pace of interventions to be made by the Department of Agriculture, Land Reform and Rural Development on energy challenges in the sector.”
Agbiz said South Africa’s 2022/23 overall summer crop production was forecast at 19.3 million tons, up 3% from the previous season.
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