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

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He says in two weeks' time the Crop Estimates Committee (CEC) is expected to release data on South African farmers’ intentions to plant summer crops for the 2020/21 season. The available data, such as tractor sales, weather outlook, and commodity prices, which could be read as leading indicators, suggests this could be yet another good season for South Africa’s agricultural sector. The focus will mainly be on maize, sunflower seed, soybeans, groundnuts, sorghum, and dry beans - which are all major summer grains and oilseeds - as well as on 28 October 2020, which is the day when the data will be released,

According to Sihlobo, tractor sales, which are an important early indicator of farmers’ expectations for the upcoming season, have been robust since June 2020. The recent sales for September 2020 showed a 23% year-on-year (Y/Y) increase, with about 529 units sold. Importantly, the available data for the first nine months of the year already shows South Africa’s tractor sales amounted to 3 924 units, which is slightly up by  0.1% y/y. This was boosted, to a certain extent, by farmers’ improved financial position following a large summer grains harvest in the 2019/20 production season, combined with higher commodity prices. 

He says another factor that is likely to buoy farmers is crop prices. On 8 October, South Africa’s white and yellow maize spot prices were each up by 21% y/y, trading at R3 394 per tonne and R3 498 per tonne, respectively. At the same time, domestic soybean and sunflower seed spot prices were up by 36% y/y and 34% y/y respectively trading at R8 206 per tonne and R7 633 per tonne. The key drivers of prices are mainly the weaker domestic currency, rising demand for South African grain products in key markets such as the Far East, and generally higher global grain prices on the back of growing demand from China. Although these price increases present various challenges for grain users, primarily, as well as the livestock industry, millers, and ultimately consumers, they have improved farmers’ finances. This has offered some of the support for the solid agricultural machinery sales.  

In addition to boosting the agricultural machinery sales, the higher commodity prices could provide an incentive for farmers to maintain or even increase area plantings where possible. This is likely to be the case as we expect South Africa’s grain prices to remain at fairly higher levels for the rest of this year. This is on the back of an anticipated uptick in Southern Africa’s maize demand in the coming months. This is specifically the case for Zimbabwe, whose maize stocks will likely be depleted towards the end of the year into 2021. 

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