This, while other regions could receive good rainfall. Either way, this will have an effect on grain production around the world. 

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According to Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz), dryness as a result of the La Niña was witnessed in 2020/21 and the downward revisions on Brazilian and Argentinian grain production forecasts due to poor yields.  

He adds that a repeat of this scenario would mean that the preliminary forecasts of a large crop in these regions, that the United States Department of Agriculture (USDA) and the International Grains Council (IGC) have recently released, would most likely be cut in the coming months.

“Under such a scenario, the global grains prices would not fall notably in the coming months as we had previously expected (although they will probably remain at lower levels than at the start of 2021). Such price dynamics would spill over into South Africa's grain market, as had been the case for much of 2020 and this year.

“The price levels above the long-term average would incentivise farmers to maintain an area planning of just over four million hectares for summer crops as in the previous years (although there might be a switch between various crops depending on profitability).

“Notably, farmers were already optimistic about the production conditions, as evident from the tractor sales. In the first seven months of this year, South Africa's tractor sales were 26% ahead of the corresponding period in 2020, with 3 934 units,” says Sihlobo.

However, he says that it is worth noting that sales in much of last year were negatively affected by lockdown restrictions, so the base is slightly distorted.

“Still, 2020 was also a good year in South Africa's tractor sales, so surpassing it means we are witnessing some good momentum this year. In 2020, the tractor sales amounted to 5 738 units, up by 9% from 2019, supported by the large summer grains and oilseeds harvest in 2019/20.

“The only challenge that farmers are contending with this season is rising input costs. In July, agrochemicals such as glyphosate, atrazine, acetochlor were respectively up by 151%, 30% and 24% from July 2020. Meanwhile, fertiliser products such as ammonia, urea, DAP, and KLC were up by 184%, 104%, 115% and 98%, respectively, from July 2020.

“This means that the profitability margins of this year will be squeezed, and farmers should work on receiving higher yields in order to thrive. The rainy weather outlook presents a conducive environment for potentially higher crop yields in the 2021/22 season.

“All else being equal, we are looking at an unusual period of three consecutive favourable seasons for South Africa's agriculture, especially for field crops and horticulture. While this is positive for the sector, higher international commodity prices will keep input costs elevated for the livestock and poultry sector,” concludes Sihlobo.

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