Bullish grain supplies to tame South Africa’s inflation



JOHANNESBURG, (CAJ News) AN increase in the estimated output of some major crops is projected to boost South Africa’s gross domestic product (GDP) and efforts to tame the country’s food inflation.

The Crop Estimates Committee (CEC) made a further upward adjustment to its 2019/20 crop estimates by raising the expected output by 1,8 percent to 17,07 million tonnes of grain and oil seed crops.

The country’s biggest staple, maize, was raised by 1,7 percent from the first estimate in February 2020 to 14,81 million tonnes mainly due to a significant increase of 2,9 percent in the white maize from 8,29 million to 8,54 million tonnes.

The estimated maize crop is 31 percent bigger than the 2019 crop.

The three main maize producing areas, namely the Free State, Mpumalanga and North West provinces are expected to produce 83 percent of the 2020 crop for South Africa.

In the oil seed complex, the expected sunflower output jumped 4,6 percent month-on-month (m/m) to 731 210 tonnes while the estimate for soybean advanced 2,1 percent m/m to 1,27 million which is 8,4 percent higher than the previous season and the third on record.

CEC stated the estimated area planted to soybeans is 705 000 hectares.

Groundnuts also saw output increasing by 3,1 percent m/m to 56 060 tonnes. This is a 189 percent year-on-year (y/y) increase.

For groundnuts, the area estimate is 37 500 ha, CEC stated.

Paul Makube, Senior Agricultural economist at First National Bank (FNB) Agri-Business, said the season so far had progressed well.

“All indications are that we are going to finish the year on a positive note,” he said.

“This is not only good development from a GDP perspective. This bullish supply outlook will help tame food inflation despite upward pressure from the weaker Rand,” Makube added.

Finally, the analyst concluded, the sustained Rand weakness would continue to boost export revenues for exportable products such as maize and fruits.

Meanwhile, CEC forecast production for sorghum is 132 810 tonnes, which is 1,69 percent higher than the previous year.

In the case of dry beans, the production forecast remained unchanged at 72 910 tonnes.

The third production forecast for summer field crops for 2020 will be released on April 29.

Agriculture remains a significant provider of employment, especially in the rural areas, and a major earner of foreign exchange for South Africa.

However, according to Trading Economics, GDP from agriculture decreased to R67,4 billion (US$3,76 billion) in the fourth quarter of 2019 from R69 billion in the third quarter of 2019.

– CAJ News

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