Lithuania Leads South African Wheat Import Market
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South Africa’s Wheat area stagnated at around 500,000 ha per annum during the past ten years. This is almost a million hectares less than 25 years ago, before the deregulation of the Wheat market in the late 1990s. Producers plant more profitable crops such as canola, oats, corn, and soybeans in a free-market environment. Farmers feel that Wheat is no longer viable in many regions due to the climatic change of later rains. However, in some areas of South Africa, especially in the Western Cape province, Wheat remains a competitive crop. As a result, more than 60 percent of South Africa’s Wheat is planted in the Western Cape province.
Last year, local producers expanded their Wheat area by eight percent due to the Russia-Ukraine conflict that created uncertainty in the global commodity markets and pushed local Wheat prices to record-high levels. However, an upsurge in MY 2023/24 Wheat plantings is unlikely. Local Wheat prices fell by more than 20 percent from their historically high levels and, coupled with a 12 percent drop in yields realized in the previous season, optimism for an upsurge in Wheat plantings is fading.
In addition, with South Africa’s continuous power outages, an expansion of Wheat plantings under irrigation is unlikely. As a result, Post forecasts a six percent drop in Wheat area to 530,000 ha in MY 2023/24, which equates to the 5-year average. Under normal climatic conditions and an assumed 5-year average yield of 3.8 MT/ha, an area of 530,000 ha could realize a Wheat crop of about 2.0 MMT in MY 2023/24.
On February 28, 2023, the Crop Estimates Committee (CEC) released the final estimate for MY 2022/23’s Wheat crop. The CEC estimated the Wheat crop at 2.1 MMT, a nine percent drop from the previous marketing year’s crop of 2.3 MMT. Although the Wheat area surged by more than eight percent to 566,800 ha (the highest during the past ten years), drier weather conditions in the Western Cape province, a winter rainfall area, negatively impacted yields. Wheat yields dropped by 26 percent in the Western Cape province to 2.6 MT/ha. Nevertheless, the Wheat crop of MY 2022/23 is the third largest during the past 20 years in South Africa.
Wheat is the second most crucial grain commodity consumed in South Africa after corn. The annual per capita consumption of corn, in the form of a meal, is the highest at 90kg/person, followed by Wheat (60kg/person) and rice (16kg/person). South Africa consumes around 2.4 billion loaves of bread annually, or 40 loaves per person yearly. During the past ten years, population growth has driven the human consumption of Wheat by approximately one percent per annum.
Post expects this trend to continue in MY 2023/24, with local Wheat consumption marginally growing to 3.7 MMT. Investment in processing facilities is expected to be limited due to numerous economic challenges, including continuous power outages, higher interest rates, and amplified electricity costs. The struggling domestic economy will hinder any significant upsurges in demand for Wheat. The post also estimates Wheat demand in MY 2022/23 at 3.6 MMT, marginally higher than in MY 2021/22.
Wheat Import in South Africa
According to AgFlow data, Lithuania led South Africa’s Wheat import market with 0.1 million tons in April, followed by Poland (54,799 tons) and Russia (50,000 tons). Wheat imports totaled 0.45 million tons in Q1 2023. Post forecasts that South Africa’s Wheat and Wheat products imports for MY 2023/24 will rise to 1.9 MMT as local Wheat production is expected to drop by four percent. For MY 2022/23, Post estimates that Wheat imports could grow by five percent to 1.85 MMT on a nine percent drop in local production.
Other sources: USDA
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