The debate about South Africa’s 2016/17 summer crops production has returned to the top of the agenda as we enter the new production season. Normally, different organisations make different projections, which are attached to various assumptions about the future. Since output bottomed out in 2015/16 due to drought, much of the outlooks in the next production season are more positive, particularly with regards to maize.  Earlier this month, the Bureau for Food and Agricultural Policy estimated South Africa’s 2016/17 maize production at 12.3 million tons; with the International Grains Council placing their estimate at 12.9 million tons; while the United States Department of Agriculture (USDA) have placed their view on South Africa’s 2016/17 maize crop at 13 million tons.

All these estimates suggest that South Africa’s upcoming maize production could fully recover from this season’s lower harvest of 7.3 million tons. This means that the country could be again a net exporter of maize, with annual consumption of 10.5 million tons, South Africa could possibly export about a million tons.

That said, all of these estimates are largely underpinned by the assumption that weather conditions could improve. In the past few months, a number of weather forecasters, such as the Earth Institute at Columbia University and the Australian Bureau of Meteorology, among others have championed a view that South Africa could experience a La Niña event late spring to the summer season.

However, this week the view has changed significantly, with the chances of La Niña occurrence having been revised down from 65% to 50% by the Australian Bureau of Meteorology. Two things can be drawn from this downward revision. Firstly, South Africa might actually experience a moderate La Niña event, which could lead to normal rainfall. Secondly, there is still a possibility that South Africa might actually receive below normal rainfall. Both these scenarios remain uncertainty. Even the South African Weather Services hinted this week that we are not out of the woods just yet, with their weather models presenting mixed views regarding the coming summer season.

In the 2015/16 season, conditions turned out slightly better than expected at the start of the season, where organised agriculture suspected that production could drop to as low as 5 million tons. To supplement domestic supplies, maize imports are forecast at 3.8 million tons for the period between May 2016 and April 2017, which at the prevailing import parity price of roughly R3 200 per ton could potentially cost South Africa at least R12 billion.

Within the forecast 3.8 million tons maize imports, about 2.7 million tons have to be yellow maize and 1.1 million tons white maize. With regards to yellow maize, there are large supplies in the market and South Africa will be able to import. However, it is unclear whether South Africa will be able to source the required white maize imports due to the scarcity of the commodity. By 31 August 2016, South Africa had imported just 21% of the forecast 1.1 million tons. In addition, approximately 90% of global traded maize is yellow maize.

Moreover, with Zambian maize exports banned, South Africa could potentially see additional demand from the region, particularly Zimbabwe, Mozambique and the BNLS countries (Botswana, Namibia, Lesotho and Swaziland). Together these countries could see a shortfall of at least 2 million tons of maize this season.

When looking at the supply side, outside of Africa, the key white maize exporters is United States and Mexico. With regards to the United States, about 70% of their white maize production is GM (Genetically Modified), and their GM variety is not yet cleared for importation in South Africa. Therefore, the regional demand could be flocked on Mexico and at the moment it is unclear whether Mexico will be able to supply the required regional volumes.

This does not call for panic, since deliveries from the current harvest have eased supplies in the short to medium term. However, it is important to keep in mind that the country and the region is not yet out of the woods regarding maize supplies for the current season, as well as the coming season. Against the projection of a rebound in maize production in the 2016/17 season, South African might see a relief in food prices in mid-2017. That said, one will have to continuously monitor the weather developments as the season progresses and hopefully things work out for the best.

Wandile Sihlobo is Head of Agribusiness Research at the Agricultural Business Chamber (Agbiz). Follow him on Twitter @WandileSihlobo
E-mail: wandile@agbiz.co.za