Good news awaits Mzans farmers and consumers as the global grains and oilseeds production outlook for the 2022-2023 season looks broadly positive. Wandile Sihlobo, chief economist at Agbiz, says that while South Africa is a small player in the global market, domestic prices of commodities such as maize, wheat, and soybeans have followed the global price trend.
This has been uncomfortable for some as South Africa had ample harvest of these commodities. However, according to the United States department of agriculture’s monthly flagship report, the World Agricultural Supply and Demand Estimates, there have been some changes in production conditions in various countries, but the overall estimates continue to paint a positive picture.
Sihlobo highlights that global maize production is forecast at 1.15 billion tonnes, down by 0.4% from the January estimate and 5% less than the 2021-2022 season crop due to an expected smaller crop in the US, Ukraine, and the European Union.
The 2022-2023 global rice production is estimated at 503 million tonnes, roughly unchanged from January estimates, but down by 2% from the 2021/22 season due to anticipated poor yields in parts of rice-producing regions of Asia. However, the USDA forecasts global wheat production at 783 million tonnes, marginally up from January estimates and 1% higher than the previous season.
This is supported by expected large yields in Russia, the US, Canada, Kazakhstan, China, Australia, and the United Kingdom, amongst others. The soybean harvest is now estimated at 383 million tonnes, up 7% from the previous season.
Implications for SA farmers
Sihlobo notes that while these forecasts paint a mixed picture, they depict a broadly positive view of the 2022-2023 global grains and oilseeds season. The expected global production will probably be sufficient to provide relief from the price levels grains and oilseeds reached in the weeks after the start of the Russia-Ukraine war. However, the tighter maize and rice stocks will likely keep prices at reasonably higher levels than the long-term averages.
“For a South African farmer or consumer, the key takeaway is that rice and maize prices will not soften notably this year, although they will likely be lower than the price levels we saw following Russia’s invasion of Ukraine, while wheat and soybean prices will likely soften notably,” says Sihlobo.
South Africa remains a net importer of roughly half of annual wheat consumption, and therefore, the decline in global prices is positive for domestic consumers.
The renowned economist further stresses that global dynamics matter to local farmers, regardless of where they farm, as the price they pay or get for grain commodities is influenced by events in the Americas or Asia and much of the Black Sea. Therefore, it is essential to keep an eye on the global grains and oilseeds markets.
He describes the positive global grains and oilseeds production outlook for the 2022-2023 season as good news for South African farmers and consumers, but the tighter maize and rice stocks will likely keep prices at reasonably higher levels than long-term averages. While wheat and soybean prices are expected to soften notably, it is still important for local farmers to keep an eye on the global market.
