Reference Date: 30-June-2017
FOOD SECURITY SNAPSHOT
Production in 2017 forecast to rebound strongly to record high
Country expected to return to being net exporter of maize in 2017/18 marketing year, following importing well above-average volume in previous year
Maize prices continued to decline steeply, driven by favourable supply outlook
Maize production forecast at record high in 2017
Harvesting of the 2017 maize crop is well underway and is expected to conclude in western areas in the next weeks under generally favourable weather conditions. Recently released official figures, including the non-commercial sector, confirm a record high production of 16.4 million tonnes. The forecasted year-on-year production gain reflects a 35 percent increase in plantings, spurred by higher prices and anticipated bumper yields, mostly owing to wetter conditions this season. Disaggregated, white maize accounts for the bulk of the expected increase, forecast to nearly double from the reduced output of 2016, while yellow maize is anticipated to increase by 41 percent. This year’s output would be in stark contrast to 2016’s drought-reduced production, when the dry weather cut yields to well below-average levels.
Sorghum production is also forecast to rise and a bumper soybean crop is projected in 2017. For the winter wheat crop, which will be harvested during the last quarter of 2017, dry weather conditions in the main-producing southwestern regions at the start of the cropping period in April/May delayed plantings and preliminary forecasts point to a year-on-year contraction in the area sown. However, with a large proportion of the crop grown under irrigation, the impact of the supressed rains will be partly abated in some provinces given the replenished dam levels from the abundant summer rains. Although in the largest producing Western Cape Province, dam levels are very, 15 percent down compared to the previous year as of the end of June 2017. The wheat crop is still tentatively forecast to fall moderately to a near-average level, driven by both lower plantings and yields.
Overall, cereal production in 2017 is forecast at a well above-average level of 18.7 million tonnes, with an increase of 76 percent compared with the drought-affected 2016 output.
South Africa expected to return to being net exporter of maize
In the current 2017/18 marketing year (April/May), reflecting the bumper output, the country is expected to return to being a net exporter, with minimal import levels forecast. Exports are anticipated to rise significantly to about 2.8 million tonnes. Given that most countries in the subregion are also expecting large domestic outputs, the subregional import demand is forecast to be significantly reduced and, therefore, most of South Africa’s maize is expected to be delivered outside of the subregion during the first two months of 2017/18, about 50 percent of the exports were delivered to East Asia.
Maize imports in the 2016/17 marketing year (April/May) reached 2.35 million tonnes, approximately 0.4 million tonnes higher on an annual basis and well above average, to compensate for the below average 2016 harvest.
In consideration of the vastly improved maize supply situation, in addition to increasing export volumes, the country is also forecast to bolster stocks. At the close of the 2017/18 marketing year, maize stocks are forecast at about 2.7 million tonnes, more than double the opening stock level.
Prices of maize well down on yearly basis
Maize prices declined steeply in the first half of 2017, continuing a trend that began in mid-2016 when they reached record highs. Most of the recent declines are a result of the expected improved supply situation in 2017/18, which has pushed prices of white maize below their export parity level, while an appreciation of the currency has also added downward pressure. On an annual basis, wholesale prices of white and yellow maize in June 2017 were down 62 and 44 percent, respectively. The decreasing wholesale prices have also instigated recent small declines for maize meal products; however, prices still remain close to their year-earlier levels.