South Africa's wheat imports to nearly double due to drought

07.11.2017

Due to drought in a major wheat-producing area of South Africa, the nation is expected to nearly double its wheat imports in the 2017-18 market year.

Imports are estimated at 1.9 million tonnes, up from 1 million tonnes of wheat and wheat products in 2016-17, according to a Oct. 30 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA).

Planted hectares are only down 3% according to the Crop Estimate Committee (CEC), but the drought is expected to cause a 13% drop in wheat production. Two-thirds, or 326,000 hectares, of wheat area was planted in the drought-stricken Western Cape Province.

“Wheat production in the Western Cape Province is expected to drop by 32%, from 1.1 million tonnes the previous season to 749,800 tonnes in the 2017-18 market year,” the USDA said.

In the Western Cape Province, average dam levels are currently only 36% of capacity, compared to 62% in the previous year. Conditions are not expected to improve in the short term since the Western Cape Province falls in a winter rainfall area with only limited rain occurring during the summer season (September to March).

Annual wheat consumption in South Africa has increased on average by only about 1% per year in the last five years, mostly because of slow economic growth and cheaper alternatives such as corn and rice.

Wheat demand in 2017-18 is expected to reach 3.22 million tonnes while consumption in 2016-17 is estimated at 3.19 million tonnes, the USDA noted in the report.

South Africa imports wheat from Germany, Russia, the Czech Republic and Romania. A new agreement between South Africa and the E.U. allows for duty free imports of 300,000 tonnes of wheat from E.U. countries.

The nation is expected to export about 2 million tonnes of corn in 2017-18, drawing from its large carry-over stock from 2016-17. Production in 2016-17 reached a record 17.5 million tonnes.

Lower local prices put downward pressure on the area to be planted with corn for the 2017-18 market year, the USDA said. Commercial hectares of corn are estimated at 2.4 million, a 9% drop from 2016-17.

“Under normal climatic conditions and taking into account the subsistence farming sector, South Africa’s corn crop for the 2017-18 market year could reach 12 million tonnes,” the USDA said in the report. “An oversupplied regional market after a favorable agricultural season and a weak global market for white corn limits South Africa’s export opportunities, which will leave a relatively large carry-over stock, especially in white corn, for the 2017-18 market year.”


world-grain

Readers choice: TOP-5 articles of the month by UkrAgroConsult