He also provides more information about the latest developments in the agricultural sector. 

Here is Sihlobo...

See PODCAST below

He says South Africa is roughly a month and a half away from the start of its 2020/21 summer crop planting season. In this regard, there are two important indicators to be observed in order to get a sense of farmers’ potential planting decisions for the season ahead. This includes commodities prices and the weather outlook. Sihlobo says the prospects of a La Niña weather event this summer signal higher rainfall, which is conducive for crops and it is supportive of a potential increase in plantings in the 2020/21 season. 

Together with that, it comes as a surprise that domestic grains and oilseeds prices have remained firm for so long, given the underlying supply and demand conditions. In the week of 13 August 2020, yellow and white maize spot prices were up by 5.3% on a year-to-year basis and 0.2% y/y trading at R2 895 per tonne and R2 880 per tonne, respectively. 

At the same time, sunflower seed and soybean prices were up by 22% y/y and 27% y/y, trading at R6 698 per tonne and R7 317 per tonne, respectively. Such price levels would be expected in years of scarcity when there have been droughts or lower plantings, says Sihlobo. The strong demand from the Southern Africa region and deep-sea markets has been one of the underlying drivers of prices.

He says it is expected that the new planting season may be more favorable, which will incentivise farmers to maintain plantings on areas planted or even increase planting areas. His advice to farmers is to perhaps increase the plantings of white maize rather than yellow maize, because of Zimbabwe's demand for white maize.

That was Wandile Sihlobo, Chief Economist at the Agricultural Business Chamber of South Africa, Agbiz. To listen to these inserts again, go to http://www.ofm.co.za, click on News, Agriculture, and the Agri Hour. Tune into OFM weekdays at 11:00 and 13:30 for your latest agricultural news bulletins. 

OFM News