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South Africa

GIEWS Country Brief: South Africa 30-April-2020

Attachments

FOOD SECURITY SNAPSHOT

  • Production of maize in 2020 forecast at above-average level

  • Increase in maize exports forecast in 2020/21

  • Sharp uptick in prices of maize in March 2020, underpinned by COVID-19-induced depreciation of national currency

Maize production expected to recover strongly in 2020

Harvesting of the 2020 maize crop started in April and is expected to conclude in June.
Maize plantings in the commercial sector, which accounts for almost the entire national output, are estimated at 2.6 million hectares, an above-average level and about 12 percent larger than the previous year. The area expansion was mostly driven by higher year-on-year prices, particularly for white maize and consequently improved profit expectations.
Yield prospects are also favourable, resting on conducive seasonal rains. Remote sensing vegetation indexes indicated above-average conditions in most cropped areas as of early April, reinforcing the buoyant yield prospects. Early estimates indicate that national maize yields will range from 5.5 tonnes to 6 tonnes per hectare, an above-average level.
Overall, production of maize in 2020 is forecast at 15.8 million tonnes, including the output from the non-commercial sector, which would place this year’s outturn as the second largest on record. Barley production is also forecast at an above-average level in 2020. The 2020 wheat crop, which is currently being planted, is expected to recover from the reduced outturn obtained in 2019.

Upturn in domestic production foreseen to boost maize export prospects in 2020/21

On account of a reduced harvest in 2019, domestic maize supplies contracted in the 2019/20 marketing year (May/April), particularly compared to the above-average levels in the previous two years. As a result, exports of maize declined from an above-average level of 2 million tonnes to about 1.4 million tonnes in 2019/20 and closing stocks are estimated to have shrunk to about 1.8 million tonnes compared to the five-year average of 2.4 million tonnes.
GIEWS global information and early warning system on food and agriculture In the 2020/21 marketing year, the forecasted upturn in production would boost supplies and support an increase in maize exports, which are estimate to exceed 2 million tonnes.
Whilst large quantities of maize are foreseen to be exported to Botswana, Eswatini, Lesotho and Namibia, the main destination of maize grains for South Africa is likely to be Zimbabwe as the country is expecting a below-average harvest for a second consecutive year and has lifted import restrictions on genetically modified grain in late 2019.
Further supporting the outlook for export growth in 2020/21 is the sharp depreciation of the Rand, the national currency, in the first quarter of 2020, driven by the effects of the COVID-19 pandemic.
The low value of the Rand has increased the competitiveness of South African maize grain in the international market. The depreciation is also expected to spur a rise in exports of yellow maize, which declined to a below-average level of 400 000 tonnes in 2019/20. However, the COVID-19 pandemic poses a risk to trade prospects in general, particularly through the interruptions to logistics services and supply chains, more broadly.
Stocks are likely to be replenished in 2020/21 and national inventories could reach around 2 million tonnes. The extent of the yearly increase will, however, largely depend on export quantities.

Prices of white maize spiked in March

Prices of white maize spiked in March following the sharp depreciation of the country’s currency coupled with strong export demand, largely from Zimbabwe. At the March level, the price of white maize was about 7 percent higher year on year, while the price of yellow maize was at a comparable level.
Although the favourable supply outlook for maize has partly contained the upward pressure from the effects of COVID-19, prices of imported food staples are likely to increase owing to the currency’s loss of value. This scenario would apply to rice, which is almost entirely imported, and to wheat, as domestic production only accounts for approximately half of the national consumption needs.