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

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Sihlobo says there was an optimistic outlook at the beginning of 2021 that South Africa's maize prices, including to an extent soybean and sunflower seed prices, could begin to soften from around the end of February.

“This is the time when more information about the expected sizeable domestic harvest would become available. A decline in commodity prices would be beneficial to the livestock and poultry industries which have had to battle with higher feed prices over the past couple of months. The prospect of large crop production was a South African story as it was a broader Southern Africa region one. Hence, we believed that the demand for South African maize exports to the Southern Africa region would also soften in the 2021/22 marketing year, thereby easing some pressure on domestic prices.

“The government of Zimbabwe estimated the country's 2020/21 maize plantings at 1,40 million hectares, which is roughly in line with the ten-year average area for the country. Still, the excellent weather conditions at the start of the 2020/21 season added optimism for a possible good harvest in the country.

“A potential increase in domestic production would be a positive gain for Zimbabwe which produced only 908 000 million tonnes in the 2019/20 season, making the country a net importer of roughly a million tonnes of maize to meet its domestic needs. 

“Thus far, South Africa has been one of the significant maize suppliers to Zimbabwe, and that added demand contributed to the higher South African maize prices. On 21 January 2021, South Africa's white and yellow maize spot prices traded at 3 436 per tonne and 3 472 per tonne, up by 14% and 20% year on year, respectively,” says Sihlobo.

He further explains that their optimism about the 2020/21 production season was as a result of the view that prices could soften from these levels.

“Leaning on the historical data and weather outlook, we estimated South Africa's 2020/21 maize harvest at 16,50 million tonnes (compared with 15,4 million tonnes in 2019/20 production season). We based this estimate on the 6,00 tonnes per hectare yield assumption, on an area of 2,75 million hectares as estimated by the Crop Estimates Committee.

“The expected production is measured against an annual maize consumption of roughly 11,40 million tonnes, which means that South Africa will likely remain a net exporter of maize in 2021/22 marketing year (this corresponds with the 2020/21 production season),” he further adds.

Sihlobo says countries such as Zimbabwe, Mozambique, eSwatini and Namibia, amongst other Southern African maize importers, all kicked the 2020/21 production season off on a positive note with forecasts of a harvest that would be slightly larger. However, he further explains that cyclone Eloise present risks to this outlook.

“*Cyclone Eloise has already caused devastation in Mozambique's Sofala province and other regions, threatening to cause heavy floods in southern Zimbabwe, northern parts of South Africa and Eswatini, Malawi and far eastern Botswana.  The scale of the impact of such expected rain is yet to unfold.

“Mozambique is one of the few Southern African countries that always fall victim to natural disasters, either droughts or floods, at least once every three years. The current tropical cyclone Eloise is hitting Mozambique not long after Cyclone Idai in March 2019, which devastated more than 700 000 hectares of agricultural land and the infrastructure at the Port of Beira.

“In 2019/20, Mozambique's farming community began rebuilding with maize production rising to 2,13 million tonnes, the third-largest harvest on record, according to data from the United States Department of Agriculture (USDA). The current season of 2020/21, was set to be one of the best agricultural seasons across Southern Africa because of good rains which enabled plantings at its start, during planting in October 2020,” explains Sihlobo.

He says while Agbiz is still trying to understand the full scale of Cyclone Eloise's devastation, an early assessment done by Mozambique's National Institute for Disaster Management and Risk Reduction suggests that "since the start of the heavy rain in mid-January, more than 21 500 people have been affected, and more than 3 900 hectares of farmland have been impacted". 

“This insight suggests that Mozambique could find itself once again in another food crisis, even if not at the same scale as that of 2019 following the devastation caused by Cyclone Idai. During the food crisis, the necessities are staple foods or grains, which Mozambique is generally a net importer of, including major ones such as maize, wheat and rice.

“In a regular season, Mozambique imports, on average, roughly 139 000 tonnes of maize, 632 000 tonnes of rice, and 729 000 tonnes of wheat a year to fulfil its domestic needs, according to data from the USDA. Maize imports are primarily transported on land as these are mainly from South Africa and Zambia. Meanwhile, wheat and rice imports originate from Europe, and Asia through Beira Port, which is in the area that has been affected by Cyclone Eloise.

“In Zimbabwe, Eswatini, Botswana and Malawi, we are unsure of the scale of damage the expected heavy rains will potentially cause to crops. Nevertheless, we are beginning to see increased risk on the optimistic view of agricultural production in Southern Africa in the 2020/21 production season that we expressed earlier because of Cyclone Eloise,” he further adds.

Sihlobo says they continue to be optimistic about South Africa’s agricultural sector, as primarily staple grains will be mostly unaffected.

Furthermore, he adds that the South African Weather Service (SAWS) indicates possible destructive winds, which will mainly be experienced in the eastern regions of KwaZulu-Natal, Mpumalanga and Limpopo.  However, the horticultural fields in these areas could be affected.

“Under a scenario of minimal damage in South Africa's grain-producing regions, the Southern Africa region will have sufficient supplies from the country and Zambia. The 16.5 million tonnes of maize that we estimate for South Africa, far outstrip the annual consumption of 11.4 million tonnes, meaning that there could be over 2 million tonnes of maize for the export market.

“Such volumes will fulfil the needs of affected areas of Mozambique, Zimbabwe and Malawi if such a need arises. To close with a word of caution, some of the points we have expressed here are based on incomplete information about the scale of *Cyclone Eloise's impact, which we are currently observing. We might revisit some of the estimates as more information becomes available,” concludes Sihlobo. 

*UPDATE: Cyclone Eloise has in the meantime been downgraded to a tropical storm.

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