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

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He says it is expected that the global grains market will still be well supplied in the 2020/21 season, but the recent weather disruptions and changes in demand have led to price increases, which is not conducive for importing countries. He says although South Africa is a net exporter of some major grains, such as maize and barley, the country is not insulated from the global grain market developments. International price movements in these commodities do influence, to a certain extent, trading conditions in the domestic market. For rice, wheat, soybean oil cake and sunflower oil, of which South Africa is a net importer, global market conditions matter even more. The livestock and poultry industries, which heavily rely on maize and soybean meal for feed, are often at the forefront of global shocks, specifically from a soybean meal perspective.

It is because of this reason that a keen interest in developments in the global grains market is usually taken note of.

According to Sihlobo, there have been numerous reports of dry weather conditions threatening crops in Europe over the past few weeks. At the same time, parts of the United States (US) have experienced severe storms which destroyed maize and soybean fields, while some parts of Asia have also been affected by floods. All these events have raised concerns that earlier expectations of a record global grains harvest in 2020/21 could turn out to have been too bullish.

Nevertheless, the International Grains Council (IGC) report, released on 27 August this year, maintained an optimistic picture with 2020/21 global grains harvest, estimated at a record 2.23 billion tonnes, which is a 2% annual increase. The IGC expects this to be boosted by expected large maize, wheat, sorghum, rice, soybean and rye harvests. This suggests that the aforementioned unfavourable weather conditions in various geographies have thus far caused less damage than previously feared.

He says for maize, which accounts for more than half of global grains in volume terms, the 2020/21 harvest projection of 1.17 billion tonnes is roughly unchanged from the previous month’s estimate. This is 4% higher than the 2019/20 production season, with potential increases expected to originate from the US, parts of sub-Saharan Africa, Brazil, Canada and Ukraine, amongst others. This will offset the projected harvest decline in Argentina, India, parts of the European Union (EU) and Vietnam, whose crop has been negatively affected by the aforementioned unfavourable weather conditions, dryness in Europe and flooding in Asia.

In the case of wheat, the 2020/21 harvest is projected to increase just marginally by 0.1% year-on-year to a fresh high of 763 million tonnes. This is boosted by expected large harvests in Russia, Australia and Canada, amongst other countries. The increase in the harvests of these countries will compensate for the expected slight crop declines in the US, EU, UK and Ukraine. Dryness has been a major challenge in countries that are expecting an annual decline in the harvest. The important point, however, is that global wheat supplies in 2020/21 season are likely to remain solid. 

For rice, the IGC forecasts the 2020/21 global harvest at 505 million tonnes, which is roughly unchanged from the previous month's estimate and 2% higher than the previous season. This is underpinned by an expected large harvest in Asia, following expansion in areas planted and expectations of higher yields in some countries in this region. 

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