The South African Crop Estimates Committee has revised down further its estimate for the country’s 2019/20 wheat harvest to 1.5 million tonnes. This is 20% lower than the previous season.
The downward revision is mainly on the back of poor harvest in parts of the Free State, Limpopo, Northern Cape and Western Cape. All is because of lower yields on the back of unfavourably dry weather conditions over the past few months, not the decline in area plantings. The area planted to wheat in 2019/20 production season is 7% higher than the previous season, at 540 000 hectares.
This will result in an increase in wheat imports within the 2019/20 marketing year in order to supplement the domestic consumption needs. We think South Africa’s 2019/20 wheat imports could increase by 33% y/y to 1.8 million tonnes.
Fortunately, there are large supplies in the global market. The International Grains Council forecasts the 2019/20 global wheat harvest at 761 million tonnes, up by 3% y/y. This has also kept global prices at softer levels, which should be beneficial to importing nations such as South Africa. In the week of the 31st of January 2020, global wheat price (U.S. Hard Red Winter Wheat) was down 4% y/y, trading around US$232 per tonne.
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