We rarely explore developments in Mozambique’s agricultural sector as the country is not a key contributor to Southern Africa’s staple foods production such as maize, sorghum and wheat. But the devastation caused by Tropical Cyclone Idai meant that Mozambique should not be overlooked this year due to possible food needs over the coming months.
• To recap, Mozambique is generally a net importer of grains, such as maize, wheat and rice, although a smaller volume in maize. In a normal season, the country imports roughly 100 000 tonnes of maize, 700 000 tonnes of rice, and 680 000 tonnes of wheat to fulfil its domestic needs. In the case of rice, the key suppliers are typically Thailand, Pakistan, Vietnam, and China, amongst others. Aside from Pakistan, these countries are expecting an uptick in 2018/19 rice production which means there will be fairly large supplies in the global market. In terms of wheat, Russia, Germany, Canada, and Poland are generally the leading suppliers to Mozambique. While some of these countries could experience a decline in their wheat harvest in the 2018/19 production season, there will still be sufficient supplies in the global market. Given that Mozambique’s production of rice and wheat is relatively negligible, the current weatherinduced devastation will not lead to meaningful changes in import requirements of these commodities.
• Worth noting, however, is that a large proportion of the wheat and rice imports are shipped in through the Port of Beira, which is the area that has been affected by the cyclone. Therefore, the damage to the port’s infrastructure and storage facilities could obstruct or delay the imports, with implications on supply to the country.
• The case of maize is somewhat different from the aforementioned grains. In a normal season, Mozambique produces over 70% of its annual maize requirements, but this season this situation is likely to change. Although it has beendifficult to ascertain the impact of the floods on maize production thus far, the anecdotal evidence points to notable damage in the southern and coastal parts of the country. Hence, we suspect that the imports could increase from an average volume of about 100 000 tonnes per the calendar year in normal seasons. Over the recent past, the key suppliers of maize to Mozambique are usually South Africa, Mexico, and Zambia, amongst others. The 2018/19 production season has not been favourable for South Africa and Zambia, as both countries are set to record doubledigit declines in production compared to the 2017/18 season. This, however, does not mean that there will not be room for maize exports, but prices will be higher which will ultimately lead to increased food insecurity in Mozambique.
• SAGIS monthly data which is due for release on 26 March 2019 will present South Africa’s maize usage for February 2019, trade figures, and stock levels, amongst other aspects. To recap, in January 2019, South Africa’s monthly maize usage was 918 242 tonnes, up by 10% from the previous month, and 8% higher than the corresponding period in 2018. Drawing from the historical trades, February’s data is likely to show a slight decline from the previous month. In terms of stocks, South Africa’s maize stocks were at 5.1 million tonnes in January 2019, down by 16% from the previous month, and 20% from the corresponding period in 2018. This decline was underpinned by generally higher maize consumption levels, as well as the fact that South Africa had a lower harvest of 12.5 million tonnes in the 2017/18 production season compared to 16.8 million tonnes in the 2016/17 production season.
• In terms of oilseeds, South Africa utilised 129 249 tonnes of soybeans in January 2019, up by 7% from the previous month, and 20% higher than January 2018. The annual increase was driven by large domestic supplies, as well as the growing demand from the crushing plants. About 82% of the monthly soybean utilisation went to the crushing plants for oils and oilcake (meal) processing. If we apply an estimate of 2.2 million tonnes of South Africa’s soybean crushing capacity, which equates to 183 333 tonnes per month, then the country utilised 58% of its monthly soybean processing capacity in January 2019 . This is slightly above the annual average pace. The crushing activity probably remained at similar levels in February 2019, but could potentially slow in March 2019 when the crushing plants go on maintenance stage.
• Also, worth noting is that there were no soybean exports in January 2019, but there was probably a small volume in February 2019. Overall, we estimate that South Africa exported 33 000 tonnes of soybeans in the 2018/19 marketing year which ended in February 2019. But this could fall to 3 000 tonnes in the 2019/20 marketing year, which started this month due to the anticipation of a poor harvest. Moreover, South Africa’s soybean stocks were at 599 311 tonnes in January 2019, down by 17% from the previous month, but 43% higher than the same period the previous year.
• South Africa’s sunflower seed consumption was up by 14% month-on-month in January 2019, but down by 22% year-on-year to 63 893 tonnes. Similar to soybeans, the data for February 2019 will most likely show that there was a good activity in the market, nonetheless, there is a possibility of a decline in consumption in March 2019 when the processing plants go onto maintenance stage. At the same time, the stocks were at 180 468 tonnes, down by 25% from December 2018, and 23% from January 2018. This was partly due to lower harvest, and solid consumption.
Summer grain and oilseed production estimates
• While the weather forecasts have consistently painted a positive picture of possible rainfall in most parts of the country in the past few weeks, the central and western regions of South Africa have been quite dry. This negatively affected maize and sunflower seed crops, specifically in the North West, and western Free State. As a result, we believe that the Crop Estimates Committee (CEC) could make downward revisions in its estimates on 26 March 2019 from levels presented last month, particularly on maize and sunflower seed harvest. The data will include maize
(white and yellow), sunflower seed, soybeans, groundnuts, sorghum and dry beans, but our focus in this note is only on major grains.
Maize: We expect a 5% downward revision in South Africa’s 2018/19 maize production estimate from the first estimate to 10.0 million tonnes, with the decline on both white and yellow maize. We base this view on possible poor yields in the central, and western parts of the country which are currently experiencing dryness, with crop damage in some areas. Be that as it may, South Africa will most likely remain a net exporter of maize in 2019/20 marketing year (corresponds with 2018/19 production season), albeit the small volumes of imports that have landed in the country over the past few weeks. We estimate that South Africa will have a carryover stock of at least 3.0 million tonnes in the 2018/19 marketing year which ends in April 2019. This will boost the supplies in the 2019/20 marketing year which starts on 01 May 2019. If South Africa receives a total harvest of roughly 10.0 million tonnes in the 2018/19 production year (links with 2019/20 marketing year), then the country could remain a net exporter of maize in the 2019/20 marketing year, as total maize supplies could be about 13.0 million tonnes, against the annual consumption of 10.8 million tonnes.
Soybeans: Last month, the CEC revised its estimate for the 2018/19 soybean plantings down from the preliminary estimate by 2% to 730 500 hectares. This is 8% lower than the 2017/18 production season. From a yield perspective, the production estimate was placed at 1.3 million tonnes, which was slightly below our expectations of 1.4 million tonnes, and 17% lower than the 2017/18 season. This month, we don’t expect any notable adjustments, as weather conditions have generally been favourable in most soybean-growing areas.
Sunflower seed: Some areas in the western regions of the North West and Free State haven’t received rainfall in almost a month. As a result, crop conditions which were promising last month, have deteriorated significantly in some areas around Delareyville and Biesiesvlei, to name a few, and we expect a decline in yields. Therefore, the CEC could revise its estimate for 2018/19 sunflower seed production down from
563 590 tonnes to the region of 520 000 tonnes.