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Perspektief | Perspective Week 39 - 2017

29 Sep 2017

Luan van der Walt, Economist, Grain SA

Crop Estimates

According to the National Crop Estimates Committee’s second production forecast of winter grains for the season, the wheat production for the season is estimated at 1.7 million ton. This estimate is approximately 7% higher than the previous estimate of approximately 1.6 million ton which was forecasted in August. There are however still a lot of uncertainty in terms of production conditions in the Western Cape where dry conditions experienced in the largest part of the province, can still have an enormous impact on the size of the crop. The production conditions for the remainder of the season up until the start of harvesting, will be watched closely by market participants. Furthermore, due to the Western Cape's late crop development, rain will be needed at least until mid- to end-October in order for yields to be fairly good.

Supply and Demand

Currently, the supply and demand figures of wheat for the 2016/17 marketing season which ended on Friday, 30 September 2017 are rather low. The carry-over stocks at the end of the marketing season is likely to be just below or equal to the 6-week pipeline stocks, which the market will be comfortable with. The imports will play a key role in stock levels and therefore import tempos will be closely watched in the next few weeks. Year-to-date imports as reported by SAGIS amount to 906 654 tons for the season. To reach at least 6-weeks of pipeline stocks, imports of approximately 1 million tons are needed. The expectation is however, that this scenario is unlikely, and since the balance of imports took place during this last week of the marketing season, ending stocks will most probably be below the 6-week level. With the market anticipating this scenario, expectations remain that imports are likely to occur at a good rate in the next two months, bridging the supply gap between the old- and new crop which will be harvested later this season. Imports taking place in the next two months will be added to the 2017/18 figures, but are likely to still be in time to prevent a supply squeeze in the local market. Low domestic stock levels, coupled with a expected domestic crop to be harvested somewhat later can keep the market volatile, and producers should make use of opportunities in the market to hedge if the market should show some small prices spikes. It is however uncertain if price spikes will occur, and if so, in what range and for how long the market will react. In terms of the supply and demand for the 2017/18 marketing season, expectations are that with the current crop estimate, at least 1.6 million tons of wheat will have to be imported for the season in order to fulfil local demand.

The tariff

The wheat import tariff and the uncertainty regarding the tariff dominated the news in the wheat markets during the past two to three months. After the announcement of the adjusted variable formula calculation, the tariff was set on R947/ton and triggered shortly thereafter to R379/ton. This was mainly due to the increase in international wheat prices at the time. The tariff was triggered two more times thereafter to levels of R752/ton and R909/ton respectively. The market, knowing that the tariff would be announced to the lower level of R379/ton, therefore tried to wait as long as possible to import in order to maximise on the lower tariff. As a result, import tempo lagged slightly, which was one of the reasons domestic stock levels are lower. The tariff was however announced to R379/ton early September, motivating buyers to import wheat at the lower duty. The expectation is therefore that a lot of wheat is currently booked to enter the market withing the next two months which will fill the shortages in the supply. There is however no clear and transparent indication of the exact amount of wheat that will be imported for the rest of the season. The tariff of R752/ton was published in the Government Gazette on Thursday 29 September, which is the current tariff in place.

In Conclusion

There are currently a few uncertainties in the wheat market which includes the production conditions in the Western Cape as well as the stock levels and the pace of the imports for the next few months. The market is likely to be very volatile towards the abovementioned factors and therefore producers have to make use of opportunities in the market when it occur in order to hedge their prices and limit their price risk. Grain SA Focus introduces a series that focuses on Profitability at Export Parity. A look at Grain SA’s activities to ensure its members can produce grain sustainably. View the next clips in the series, as published on social media below.


Corné Louw, Snr Economist: Inputs, Grain SA

The SA Groundnut Forum urged producers to be particularly careful in the application of post-emergence herbicides and fungicides on groundnuts. If not applied according to labelling instructions, it could increase residual levels in groundnuts to above permitted levels. Only substances registered under Act 36 of 1947 for use on groundnuts, may be used.

As South Africa wants to export more groundnuts, it is important that local groundnuts meet international standards. One of the most important requirements for exports is the set "maximum chemical residue levels".

The SA Groundnut Forum once again compiled a document this year, indicating the maximum residue levels for South Africa, Europe and Japan. The document also indicate the time lap between the last chemical application and the harvest of groundnuts.

To download the complete document, click here


The accumulation of empty agricultural chemicals containers remains a problem in addition to creating risks. AVCASA (the representative body of agrochemical companies) has set up best practices relating to empty chemical containers and compiled a list of companies that can recycle these containers. This important information is downloaded from their website CropLife or obtained from the links below.

Plastic processors which can process triple-flushed empty pesticides containers

Instructions for disposing of empty plastic pesticides containers



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We are excited about the upcoming Day of Celebration, taking place in Bloemfontein on 5 October 2017. During this functions and aptly known as the "Harvest of Farmers", Grain SA celebrates farmer development. We, together with our partners, recognise excellence in the field and acknowledge transformation in grain production. The announcement of the 2017 Grain SA Subsistence Farmer of the Year, sponsored by ABSA and John Deere Financial, the 2017 Grain SA Smallholder Farmer of the Year, sponsored by Syngenta, and the 2017 Potential Commercial Farmer of the Year, sponsored by Monsanto will showcase Grain SA farmers succeeding against all odds. In addition, the 2017 New Era Commercial Farmer of the Year finalists, sponsored by ABSA and John Deere Financial will also be announced together with more than 50 graduations from the 250ton Club.

If you cannot join us for this celebratory occasion, be sure to keep an eye on the Grain SA social media channels for updates as the action unfold.