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SA crop prices remain high as Ukraine war rages

South Africa's soybeans harvest for the 2021/22 season increased by 8 percent increase to a record 2.09 million tonnes. Photo, AP

South Africa's soybeans harvest for the 2021/22 season increased by 8 percent increase to a record 2.09 million tonnes. Photo, AP

Published Jun 30, 2022

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Worries and concerns about 2022/23 global production stemming from the Russia-Ukraine war continue to present upside support to crop prices as reflected in the South African grains market, according to the Agricultural Business Chamber (Agbiz).

“Still, the fact that supplies improved provides comfort regarding the availability of essential grains and oilseeds. The upside price movements or elevated prices bode well for farmers in areas that didn't experience much crop damage. They stand to benefit from slightly higher grains and oilseeds prices. Meanwhile, the consumers, livestock, dairy, sheep, goats and poultry producers will likely experience increased costs over the foreseeable future,” Agbiz chief economist Wandile Sihlobo said.

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With South Africa's 2021/22 summer crop harvest in full swing across the country, the feedback from farmers about the yields they are getting has been encouraging.

Agbiz said the data from the Crop Estimates Committee (CEC) released this week was unlikely to change much over the coming months. The CEC released its fifth production estimate and introduced minor adjustments from the previous month.

South Africa's 2021/22 maize production was estimated at 14.68 million tonnes, down by 0.3 percent from last month. This is on the back of a slight downward revision of white maize estimates, now estimated at 7.47 million tonnes, while yellow maize was adjusted upwards to 7.21 million tonnes. Essentially, this is down by 10 percent from the 2020/21 season crop but well above the 10-year average maize harvest of 12.8 million tonnes and annual domestic consumption of 11.8 million tonnes.

Sihlobo said this meant that South Africa would remain a net exporter of maize, which Agbiz anticipated to be just more than 30 million tonnes in the 2022/23 marketing season (which corresponds with the 2021/22 production season).

South Africa's soybeans harvest for the 2021/22 season increased by 8 percent to a record 2.09 million tonnes.

Sihlobo said this would help lessen South Africa's reliance on soybean oilcake imports. Sunflower seed, unsurprisingly, was lowered marginally by 0.2 percent from last month to 961 350 tonnes.

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“We suspected this would happen, given the relatively slow pace of producer deliveries. Still, the delivery issue could be explained by the fact that the crop was planted late, and the harvest is in full swing.”

By 17 June, about 594 236 tonnes had already been delivered to commercial silos.

Besides these major summer crops, the sorghum harvest was estimated at 140 820 ( up 3 percent month on month), dry beans harvest was at 53 565 tonnes (-4 percent m/m) and groundnuts were at 54 900 tonnes (-22 percent m/m).

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According to the National Agricultural Marketing Council’s Markets & Economic Research Centre Input Costs Monitoring June 2022 report released recently, international fertiliser prices have increased due to several factors such as low stock levels caused by the Covid-19 pandemic, high natural gas prices and the Russia/Ukraine crisis.

South African fertiliser prices followed a similar trend in rand terms, and although the increases had less of an impact locally because of the stronger currency, an increase in crude oil prices could push fertiliser costs higher.

Furthermore, South Africa’s fuel prices were influenced by global and local factors. The country imports both crude oil and finished products at a price set at the international level, including importation costs, like shipping.

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Agbiz said the continued rise in input costs might affect the ability of grain and oilseed farmers in South Africa to continue producing sustainably and profitably.

“Grains and oilseeds are components that are required in the poultry industry and other industries where feed plays a crucial role, and higher demand going forward will require substantial investment in coarse grains and oilseeds,” it said.

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