Reference Date: 08-November-2018
FOOD SECURITY SNAPSHOT
Plantings of 2019 maize crop foreseen to expand under generally favourable rainfall conditions
High probability of El Niño event later in season presents downside to production outlook
Supply levels in 2018/19 satisfactory, reflecting above average 2018 maize harvest and large carryover stocks
Maize prices higher on yearly basis, but favourable supply outlook contains larger price gains
Maize sowings forecast to rise for 2019 crop
Sowing of the 2019 cereal crops is underway. Early indications point to an area of 2.45 million hectares sown to maize, a 6 percent year-on-year expansion that would push plantings up to an average level (2014-2018). The expected increase is related to generally beneficial weather conditions at the start of the 2018/19 season and favourable forecasts for the first half of the season coupled with higher grain prices and the application of crop rotation practices. Reflecting the current rainfall forecasts and anticipated area planted, the 2019 maize production is expected at an average level of between 12 and 13 million tonnes.
However, the downside risk to this outlook is the high probability of an El Niño event occurring later in the cropping season, which is normally associated with an anomalous reduction in rainfall. If this weather phenomenon transpires, it would be expected to adversely affect yields and area harvested.
For sorghum, a secondary cereal crop also planted in the summer season, sowings are estimated to increase by up to 50 percent compared to 2018, but still remain at below-average levels. The area sown to soybeans is foreseen to expand by about 8 percent to a well above-average level, while a 4 percent decrease in sunflower plantings is envisaged compared to the previous year’s near-average cultivated area.
Maize production surpasses average levels in 2018
Although total cereal production in 2018 is estimated to have declined by 19 percent to 15.8 million tonnes from the record high of level in 2017, the output remains above the five-year average. The bulk of the yearly contraction is associated with maize, with production estimated at 13.5 million tonnes, 20 percent lower than the previous year, but still above average. A larger decline was expected earlier in the season following an extended period of reduced mid-season rains. However, precipitation improved during the second half of the cropping season, pushing yields to above average levels.
Production of wheat in 2018, with the crop currently being harvested, is forecast at an above average level of 1.8 million tonnes, 17 percent higher than the preceding year. Most of this increase rests on higher yields due to generally beneficial weather conditions and adequate water availability for irrigation.
Supply conditions remain healthy in 2018/19
Supply conditions for maize are estimated to be satisfactory in the 2018/19 marketing year (May/April). This reflects a 2018 output that exceeded the national maize consumption requirements and significantly above-average stocks of nearly 4 million tonnes.
The plentiful supplies augur well for trade prospects with exports forecast at 2.4 million tonnes in 2018/19, nearly unchanged compared to the previous year. Approximately 1.6 million tonnes of maize had already been shipped between May and October, the bulk of which was yellow maize delivered to Viet Nam.
For wheat, the expected higher 2018 output will boost domestic supplies and result in a reduced import volume in 2018/19, forecast at about 1.4 million tonnes, down from nearly 2 million tonnes in the preceding year.
Prices of maize increase, but at moderate rate
The overall favourable supply outlook has suppressed significant price gains for maize during most of 2018. However, a combination of a weak currency, spill-over effects from higher international prices and a decrease in the 2018 output (which still remained above average) exerted upward pressure on prices of white and yellow maize, which increased by 25 and 20 percent, respectively, if compared to their values a year earlier. These higher year-on-year price levels also reflect concerns over a potential El Niño, which could suppress 2019 production.
Prices for wheat were 5 percent higher on a yearly basis as of October, mostly on account of increased international quotations given South Africa’s position as a net importer. However, favourable prospects for the 2018 output capped further rises.
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