Reference Date: 12-December-2016
FOOD SECURITY SNAPSHOT
Maize plantings for 2016/17 cropping season expected to rebound to near-average levels
Drought-reduced 2016 harvest results in tighter maize supplies and increased import requirements in 2016/17
Maize prices declined, mostly on back of stronger rand and favourable production prospects for 2017 crop
Plantings of 2017 maize crop expected to rebound
Planting activities in the eastern maize belt are virtually complete under generally beneficial weather conditions, while they are ongoing in western parts with reports of some early seasonal dryness. Current indications point to a rebound in the area sown to maize by nearly 30 percent compared to the reduced level in 2016, which would imply a similar area to the previous five-year average. Higher domestic prices and favourable weather conditions, including seasonal forecasts that point to an enhanced chance of above-normal rainfall until March 2017, are mainly behind this year’s plantings upturn. Although at a preliminary stage of the season, the 2017 production outlook is positive, particularly in comparison to the drought-affected 2016 output; FAO forecasts the aggregate maize crop at about 12 million tonnes.
Drought conditions sharply reduced 2016 maize production
Aggregate maize production (commercial and non‑commercial crop) in 2016 is estimated at about 7.7 million tonnes, down 27 percent from the previous year’s already reduced output. The steep decline is mainly attributed to the El Niño‑related drought conditions that curbed white maize yields by 25 percent compared to the five‑year average, while an overall reduction in the area planted also contributed to the smaller harvest. Sorghum production in 2016, the other summer season cereal crop but produced on a much smaller scale, is estimated to have decreased by 30 percent on a yearly basis to about 107 000 tonnes.
By contrast, the 2016 winter wheat crops, with the harvest virtually complete, is estimated at 1.74 million tonnes, 20 percent higher than the previous year, reflecting an expansion in plantings and weather-improved yields. Despite the recent upward revisions, the barley output is estimated to be 10 percent down from the previous year, mainly resting on a reduction in plantings.
Overall, cereal production in 2016 is estimated at 10.2 million tonnes, 19 percent (almost 4.5 million tonnes) down on the average.
Tight domestic supplies result in larger import needs in 2016/17
Maize imports in the 2016/17 marketing year (April/May) are forecast at 3 million tonnes, about 1 million tonnes more than the previous year, mainly reflective of the reduced 2016 maize harvest resulting in a shortage of domestic supplies. As of November, about 1.6 million tonnes of maize had been imported since May, mostly yellow maize from Argentina, while white maize imports, estimated at about 580 000 tonnes, largely originated from Mexico.
South Africa is expected to be a net importer this year, with exports forecast at approximately 0.85 million tonnes. Nearly all of this volume is expected to remain in the subregion, where most neighbouring countries recorded sharp decreases in domestic harvests resulting in augmented import requirements. As of November, 0.5 million tonnes had been exported since the start of the current marketing year, mostly to Botswana and Zimbabwe.
Maize prices down from record highs, but remain up on a yearly basis
Given the increased proportion of maize imports in national supplies this year, currency fluctuations are exerting more influence on market dynamics, with monthly maize price movements mirroring changes in the South African rand/US dollar exchange rate. Since reaching a record high in February 2016, prices of white maize have since dropped by 24 percent up to November, reflecting the rand’s appreciation from a low at the start of the year. The early favourable production outlook for the 2017 maize crop has also added further downward pressure in recent months. However, the overall tight supply situation has sustained higher year-on-year price levels for both white and yellow maize.