Although South Africa is a nett exporter of some major grains such as maize and barley, the country is not insulated from the developments in the global grains market. International price movements in these commodities influence trading conditions in the domestic market to a certain extent.

Global market conditions for rice, wheat, soya bean oilcake and sunflower oil, of which South Africa is a nett importer, matter even more. The livestock and poultry industries, which rely heavily on maize and soya bean meal for feed, are often at the forefront of global shocks, specifically from a soya bean meal perspective.

Developments in the global grains market

It is for these reasons that Agbiz always take a keen interest in developments in the global grains market. Over the past couple of weeks, there have been numerous reports of dry weather conditions threatening crops in Europe.

At the same time, parts of the United States (US) have experienced severe windstorms that destroyed maize and soya bean fields, while some parts of Asia have also been affected by floods. All these events have raised concerns that earlier expectations of a record global grains harvest in 2020/21 could turn out to have been too bullish.

Nevertheless, the International Grains Council (IGC) report that was published on 27 August 2020 maintained an optimistic picture, with the 2020/21 global grains harvest estimated at a record 2,23 billion tons, which represents a 2% annual increase.

The IGC expects this to be boosted by expected large maize, wheat, sorghum, rice, soya bean and rye harvests. This suggests that the aforementioned unfavourable weather conditions in various areas have thus far caused less damage than previously feared.


Starting with maize, which accounts for more than half of global grains in volume terms, the 2020/21 harvest projection of 1,17 billion tons is roughly unchanged from July’s estimate. This is 4% higher than the 2019/20 production season, with potential increases expected to originate from the US, parts of sub-Saharan Africa, Brazil, Canada and the Ukraine, among others.

This will offset the projected harvest decline in Argentina, India, parts of the European Union (EU) and Vietnam, whose crops have been negatively affected by the aforementioned unfavourable weather conditions, dryness in Europe and flooding in Asia.

Available data from the US suggests that the crop damages by a windstorm in Iowa could be compensated for by higher yields in other states. The national harvest is therefore still set to be 11% higher than the 2019/20 production season.

This large global maize harvest has, however, not translated to price declines in recent weeks. In fact, on 27 August 2020, the global maize (Chicago maize) price was up by 7% year-on-year (y/y) and traded around US$173 per ton.

The underpinning price drivers of global maize prices have been said weather concerns, and the growing demand for maize, primarily supported by China. The IGC estimates that 2020/21 global maize consumption will lift by 3% y/y.


In the case of wheat, the 2020/21 harvest is projected to increase just marginally by 0,1% y/y to a fresh high of 763 million tons. This is boosted by expected large harvests in Russia, Australia and Canada, among other countries.

The increase in the harvests of these countries will compensate for the expected slight crop declines in the US, EU, United Kingdom (UK) and the Ukraine. Drought has been a major challenge in countries that are expecting an annual decline in harvest. The important point, however, is that global wheat supplies in the 2020/21 season are likely to remain solid.

Similar to the maize market, the strong global demand for wheat has sustained global prices (US HRW) at fairly higher levels. On 27 August 2020, the global wheat prices were up by 15% y/y, trading around US$232 per ton. This does not bode well for wheat-importing countries such as South Africa.

Over the past ten years, South Africa has imported on average about 51% of its annual wheat consumption of approximately 3,1 million tons. The figure could, however, decline somewhat in the 2020/21 season as the domestic wheat harvest is set to be the largest in a decade, estimated at 1,96 million tons.


For rice, the IGC forecasts the 2020/21 global harvest at 505 million tons, which is roughly unchanged from July’s estimate and 2% higher than the previous season. This is underpinned by a large expected harvest in Asia, following expansion in the area planted and expectations of higher yields in some countries in this region.

Positively, the floods that have caused damage in parts of Asia in recent weeks seem to have caused minimal disruptions in the rice plantations. Hence, the global harvest estimate is still maintained at these higher levels. Similar to other commodities, rice prices have remained elevated.

On 27 August 2020, Thailand’s (5% broken) rice prices were up by roughly 25% y/y, trading around US$500 per ton. Price drivers include the growing demand and fears that the floods would cause crop damage, which the new information shows has not been the case. Moreover, prices are at fairly higher levels for Vietnam, India and Pakistan.

This is a challenge for importing countries such as South Africa that also experience a depreciation in the domestic currency. As highlighted in our previous notes, IGC estimates South Africa’s 2020 rice imports at 1,1 million tons, up by 10% y/y.

Soya beans

There is also optimism about soya beans, with the 2020/21 global harvest estimated at 373 million tons, slightly above July’s estimate and 10% higher than the previous season. The US, Brazil, Argentina, China, India and Paraguay are among the key drivers of the large expected harvest.

Importantly, the data shows that the crop damage in Iowa, following the windstorm, has not been as disastrous as initially feared, as the US soya bean harvest is still firm, up 23% y/y. In the case of South America, the estimates are still tentative as plantings will gain momentum in October 2020. The strong soya bean demand from China, however, provides an incentive for South American producers to increase their plantings.

On 27 August 2020, soya bean prices in the US, Argentina and Brazil were up by 11, 7 and 9% from 2019, trading at US$389 per ton, US$376 per ton and US$405 per ton, respectively.

In a nutshell, the global grains market will still be well supplied in the 2020/21 season. Still the recent weather disruptions and changes in demand have led to price increases, which is not conducive for importing countries such as South Africa. – Wandile Sihlobo, Agbiz

Wandile Sihlobo, chief economist at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on the agricultural markets for the major commodities.

Find previous reports here.