Wandile Sihlobo, Agbiz

While light showers in some parts of the Western Cape might have somewhat slowed the harvest process over the weekend, the pace could pick up during the next two weeks due to expected cool and drier weather conditions in the province.

The harvest progress made last week (ending 2 November 2018) will be reflected on the producer deliveries data which are due for release at midday tomorrow (7 November 2018). In the week ending 26 October 2018, the producer deliveries amounted to 78 731 tons, well above the initial deliveries of 7 716 tons.

The feedback from farmers in areas that have already harvested has been fairly positive, suggesting that yields are mostly average-to-above average. This supports the Crop Estimates Committee’s view of higher yields this season and an overall harvest of 1,86 million tons, up by 21% from the 2017/2018 production season.

The Western Cape is central to this optimism. After all, the decline in the 2017/2018 season’s wheat production was largely due to the poor harvest in the Western Cape, hence its recovery will have a notable impact on the national harvest. To reiterate a point made yesterday (5 November 2018), the Western Cape accounts for 49% of the estimated 1,86 million tons of winter wheat in the 2018/2019 production season.

The aforementioned production improvement bodes well for South Africa’s agricultural trade balance as it will lead to a decline in wheat imports. Assuming that the aforementioned harvest projection materialises, South Africa’s wheat imports could fall by a third from last year’s (2017) volume to 1,4 million tons.

On the global front, the United States Department of Agriculture (USDA) indicated that farmers could lift wheat plantings in the 2019/2020 season by 9% year-on-year (y/y) to 17,4 million hectares due to attractive prices on the back of tight global supplies. To recap, the 2018/2019 global wheat production estimated at 729 million tons is down by 5% from the previous season, according to data from the International Grains Council (IGC). The losses are mainly in the European Union (EU), the Black Sea and Australia, amongst other countries, all underpinned by unfavourable weather conditions earlier in the season. –Wandile Sihlobo

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.

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