• BERLIN, GERMANY — Significantly affected by a severe drought, Germany is expected to sharply increase imports of soybeans and soybean meal and to become a net grain importer in the coming months, according to a Sept. 24 Global Agricultural Information Network (GAIN) report from the U.S. Department of Agriculture.

  • The area planted estimate and final production forecast of summer crops for the 2018 production season was recently released by the National Crop Estimates Committee.

  • The ‘intentions to plant’ data provided tentative evidence that South Africa could have another good production season, which might keep the country’s grain supplies in good shape at least until 2020.

  • The first Russia-Africa Summit that was held last week concluded with an announcement that urged all participants to increase cooperation in security, science, environmental protection, trade and economic matters. On this last point, the declaration highlights that participants should “make efforts to substantially expand the trade between the Russian Federation and the African States and diversify it, including by increasing the share of agricultural products in import and export operations.”

     Russia is an important player in global agricultural markets, ranked as the 13th largest importer, valued at US$28.8 billion annually, on average, over the past five years. The countries that have benefited from Russia’s agricultural import needs are Belarus, China, Germany, Brazil, Ecuador, Italy, Turkey, Paraguay, Indonesia and France, amongst others. The African countries are down on the list of key agricultural exporters to Russia. In fact, while Russia’s agricultural trade balance is negative, the country has a trade surplus with the African continent. In 2018, Russia had an agricultural trade surplus of US$2.8 billion with the African continent, according to data from Trade Map.

     Over the past five years, wheat has been the dominant product in Russia’s agricultural exports to Africa. It accounted for an average of 79% of all exports into the continent over the past five years (Figure 1 of the attached file). The other products that Africa imports from Russia are sunflower oil, soybean oil, barley, maize, and linseed. Also, this is not widespread across the continent. Nearly half of Russia’s agricultural exports into Africa go to Egypt, and it is mainly wheat. Sudan, Nigeria, Algeria and Kenya are other key markets for Russia, which when collectively added to Egypt account for about 73% value of Russia’s agricultural exports to Africa.

     Here at home, South Africa, the picture is different. South Africa enjoys an agricultural trade surplus with Russia. The products that South Africa exports to Russia include citrus, apples, pears, wine, grapes, apricots, cherries, peaches and fruit juices. These are amongst the products that Russia generally imports from the world (Russia’s top ten agricultural imports are citrus, bananas, wine, soybean, cheese, beef, palm oil, apples, pears and tobacco).

    In 2018, Russia was South Africa’s 16th largest agricultural market. The call for increased agricultural trade between Africa and Russia sets a good basis for South Africa to explore the means of increasing its share within the Russian agricultural market. In terms of reciprocity, Russia is already a notable supplier of wheat to South Africa and could increase its share if it were to compete comparatively with wheat suppliers such as Ukraine and Lithuania, amongst others.

    Overall, the announcement of increased agricultural trade by the Russia-Africa Summit is positive for South Africa’s agricultural sector. The growth that South Africa envisages in this particular sector will be export-led, therefore, any talks that encourage trade should be viewed positively. In 2018, South Africa’s agricultural sector exported nearly half of its production in value terms which means the sector is export-orientated. South Africa’s agricultural sector already participates within Russia’s market, although ranked as the 29th country supplying agricultural products to Russia in 2018.

    The current engagements with Russia should seek to improve South Africa’s position by promoting more exports in that market. If Russia was to insist on reciprocity within the agricultural sector, wheat would be their targeted space. In there, South Africa imports roughly half of its annual consumption. An increase in Russia’s wheat would displace other suppliers rather than add pressure to the local market in the near term.

    SA farmland is dry

    In a normal season, by this period, farmers would be hard at work planting, especially in the central and eastern regions of South Africa. But this has not been the case because of dryness that has prevented farmers from planting. Soil moisture in South Africa’s farmland is rated very short (dry) in nearly all regions of the country with the exception of a few areas near the border of Eastern and Western Cape where soil moisture was rated marginally adequate on 25 October 2019, as illustrated in Figure 2 in the attached file.

    Over the weekend, some regions in the central parts of South Africa received light rainfall, which is a welcome development. But this was not sufficient to make meaningful improvement on soil moisture. The country needs a consistent and slow rainfall which will help to replenish soil moisture and thereafter support planting and growing of the crop.

    We are generally positive that such rainfall is likely. The weather forecast for the next two weeks – Figure 4 in the attached file – shows prospects of rainfall across the summer rainfall (or crop-growing) areas of South Africa. More importantly, the South African Weather Service forecasts above-normal rainfall in the central and eastern regions of South Africa between November 2019 and January 2020. As encouraging as this is, it comes with some level of uncertainty and hence it will be important to monitor the weather conditions over the coming weeks as that will influence farmers decisions to plant.

    From a data front

    We start off on Monday, with the US Department of Agriculture’s US crop conditions data for the week of 27 October 2019. This data should give us a sense of the US crop-growing conditions, and thereafter the potential size of the harvest.

    On Tuesday, the Quarterly Labour Force Survey data for the third quarter of 2019 will be released. To recap, Quarterly Labour Force Survey data for the second quarter of this year showed that South Africa’s primary agricultural employment fell by 0.2% from the corresponding period last year to 842 000. The subsectors that faced a notable reduction were mainly field crops, the game industry and forestry. In the case of field crops, the reduction in employment was unsurprising following a reduction in activity in the fields on the back of a poor harvest in the 2018/19 season, all of which is underpinned by unfavourable weather conditions earlier in the season. From a regional perspective, a notable decline in employment was recorded in the Northern Cape, Free State and Limpopo, whilst other provinces saw a marginal uptick.

     On Wednesday, the South African Grain Information Service (SAGIS) will release the grain producer deliveries data for the week of 25 October 2019. This covers both summer and winter crops. What we will particularly be interested in, however, are data for winter crops. This provides an indication of the progress in harvest activity which recently started in parts of the Western Cape wheat-producing regions. In the week of 18 October 2019, about 93 563 tonnes of the expected 1.8 million tonnes of wheat in the 2019/20 season had been delivered to commercial silos.

    On Thursday, we will get the weekly grain trade data (wheat and maize) for the week of 25 October 2019. In brief, maize exports for the 2019/20 marketing year have thus far amounted to 532 045 tonnes. Looking ahead, we expect South Africa to remain a net exporter of maize this marketing year, although the volume will most likely fall by half from 2018/19 to about 1.1 million tonnes. At the same time, we expect maize imports of about 450 000 tonnes, all yellow maize, mainly for the coastal provinces of the country. This is up from an estimated 171 500 tonnes in the 2018/19 marketing year. The country has thus far imported 320 617 tonnes of yellow maize. About 88% from Argentina, with 12% from Brazil.

     In terms of wheat, South Africa’s 2019/20 wheat imports could increase by 14% y/y to 1.6 million tonnes because of expected lower domestic harvest on the back of unfavourable weather conditions in the Western Cape. The third import consignment of the 2019/20 marketing year was 67 476 tonnes. This placed total imports for the 2019/20 season at 135 270 tonnes, which equates to 12% of the seasonal import forecast. This week we will receive data for activity in the week of 25 October 2019.

     Also, on Thursday, Stats SA will release the Producer Price Index (PPI) data for September 2019. In August, South Africa’s food producer price inflation slowed to 5.4% y/y, from 6.1% y/y in the previous month.

  • South Africa’s summer crops could have a good start of the season as the weather forecasts for the next two weeks show prospects of rainfall over most parts of the country.

  • From planting to pollination, which is typically the period between October and February, the weather becomes an important factor in the South African summer grains and oilseeds market. 

  • The expected rainfall in the western parts of South Africa did not materialise in many areas this week, and thus the maize and sunflower seed planting activity has not progressed much in this particular region. This, however, is not a major concern for now as optimal planting window will be open until mid-December.

  • China, the world’s No. 2 corn producer, sharply revised higher its corn output data for the past 10 years, a move that should have wide repercussions for global supply and demand scenarios.

  • Since 2011, farmer Sean Stratman has grown kale, cauliflower, broccoli and squash in Carnation, Washington. Then, a few years ago, he added a new crop to his bounty: knowledge, using drones and the intelligent edge to get near-real-time information about issues like soil moisture and pests.

  • The average lamb class A price during October 2018 was under great pressure, and declined month on month to 73.37/kg. Prices have followed a declining trend since July 2018.

  • In its Agri Commodities Monthly Report for October, Rabobank noted short-term support for wheat futures worldwide on the basis of tightening global fundamentals. 

  • Wet and wintry conditions in parts of the U.S. keep stalling the 2018 soybean harvest.

  • Yesterday the Crop Estimate Committee’s summer grains preliminary plantings data showed that the area planted to maize is 2.3 million hectares.

  • In order to sustain a world population expected to reach 10 billion by 2050, we will need to double global agri production over the next three decades. Thanks to a number of global trends that are influencing food security, poverty, and the overall sustainability of food and agricultural systems through digital technology, usually referred to as ‘AgTech’.

  • The numbers released on February 27 by SA’s crop estimates committee underscores the message of optimism about agricultural conditions carried in my column on February 20.

  • South Africa’s Crop Estimates Committee (CEC) lifted its estimates for the country’s 2018/19 grains and oilseeds production by 0.4% from last month to 12.7 million tonnes.

  • s, it’s raining in the Midwest. But the real news is that it’s forcing some farmers into a terrible, painful choice: to plant or not to plant this season? America’s wettest year on record has culminated in months of heavy showers that are soaking the country’s most fertile, productive cropland.

  • In economics, natural experiments are hard to come by, but once in a while, you hit a jackpot without even paying a lottery ticket.

  • It already has and will continue to just like it has changed just about every other sector from healthcare to manufacturing to retail.

  • If the U.S. maize crop was at an advanced stage of growth, the latest U.S. Department of Agriculture (USDA) report would have convinced us that the supplies will be in better shape than initially feared.