SA first summer crop estimate for 2016 much better than expected
The Department of Agriculture’s National Crop Estimates Committee (NCEC) released their preliminary production forecast for the 2016 summer crops on Wednesday, 27 January 2016. According to the committee, the preliminary planting estimate for the 2016 maize crop is 1.995 million hectares, which is 24.8% or 657 700 hectares less than the 2.653 million hectares planted during the previous summer season and also 21.8% or 555 650 hectares less than the intention to plant estimates that was compiled in October 2015.
In terms of production, the preliminary size of the commercial maize crop is forecast at 7.438 million tons, which is a massive 25.2% or 2.503 million tons less than the 9.942 million tons produced during the previous season. Ahead of the crop estimate being released last week, some analysts (including Grain SA) had expected the maize crop to be estimate at between 5.5 million and 6.5 million tons. Although the maize crop is perhaps not as bad as initially estimates, the latest crop estimate still implies that South Africa would have to import around 3 million tons of maize 2016. This is, however, well below the earlier import estimates of around 5 million tons.
A breakdown of the maize crop estimate shows that the white maize crop is forecast at a mere 3.267 million tons, which is 30.5% or 1.436 million tons less than the 2015 season. In addition, the yellow maize production forecast for 2016 is 4.171 million tons, which is 20.4% or 1.068 million tons less than the 2015 season.
The improved rainfall during the past couple of weeks (as well as record prices) appear to have prompted some farmers to increase planting, including the planting of white and yellow maize, in the hope that there will sufficient follow-up rains over the coming weeks/months to ensure a successful crop. Typically, in South Africa maize is planted between October and December. Planting as late as mid-January significantly increases the risk that an early frost in May could substantial damage the crop. Under these circumstances the crop would then mostly be used for animal feed or destroyed.
In terms of the other summer crops, expectations range from a production decline of 52.1% in the case of dry beans, to a drop of 47.8% in groundnuts, and a 27.5% fall in soybean production. In contrast, the sorghum crop is currently forecast to be 2.5% larger than the 2015 season (see chart attached). In total, the summer crop production is forecast to be 24.3% smaller during 2016 compared with the 2015 summer season. This will reduce SA GDP growth in 2016 by an estimated 0.30 percentage points. The summer crop estimate is expected to be updated on 25 February 2016, and then again each month until the final production estimate is released on 27 September 2016.
Download the presentation slides
Please follow our regular economic updates on twitter @lingskevin