Due to a demand pull, post forecasts that a record area of 1.5 million hectares will be planted with oilseeds later in 2015, for the 2015/16 MY, up 10 percent from the area planted in the 2014/15 MY. Post forecasts a 16 percent growth in the area planted with soybeans to 800,000 hectares, due to added soybean crushing capacity and the increased affinity by farmers to use soybeans as a rotational crop with corn. Post forecasts that sunflower seed and groundnut planted areas will only increase marginally to 590,000 hectares and 60,000 hectares, respectively.

Based on average yields, South Africa should produce a historical high of 2.0 million tons of oilseeds in the 2015/16 MY. Soybean production will increase to 1.3 million tons, while sunflower and groundnut production will increase to 710,000 tons and 72,000 tons, respectively. As a result, post forecasts that South Africa will crush a historical high of 1.8 million tons of oilseeds in the 2015/16 MY and should import only about 30 percent of oilseed meal consumption, down from the more than 70 percent ten years ago, while oilseed oil imports should drop to about 900,000 tons.

Production of oilseeds will be down in the 2014/15 MY, due to a mid-summer drought that hit the summer rainfall production areas of South Africa. Oilseed production is expected to be almost 15 percent less than in the 2013/14 MY, despite a 14 percent increase in area planted, at 1.6 million tons.

US$1 = Rand 12.25 (03/20/2015)

Total Oilseeds

Production

South Africa planted a record of 1.3 million hectares of oilseeds in the 2014/15 MY, up 14 percent from the 1.2 million hectares planted in the 2013/14 MY. This positive trend in oilseeds area planted was mainly driven by an increase in soybean plantings after South Africa invested an estimated R1 billion (US$100 million) the past few years on expanding its soybean processing capacity to replace soybean meal imports. As a result, about 1.2 million tons of additional oilseed processing capacity has been created, bringing South Africa's current total oilseed capacity to an estimated 2.2 million tons per annum.

Due to this demand pull, post forecasts that a record area of 1.5 million hectares will be planted with oilseeds later in 2015, for the 2015/16 MY (marketing year starts March, 1, 2016), up 10 percent from the area planted in the 2014/15 MY. Post forecasts a 16 percent growth in the area planted with soybeans to 800,000 hectares, due to the added soybean crushing capacity and the increased affinity by farmers to use soybeans as a rotational crop with corn. Post forecasts that sunflower seed and groundnut planted areas will only increase marginally to 590,000 hectares and 60,000 hectares, respectively.

Based on average yields, post forecasts that South Africa will produce a historical high of 2.0 million tons of oilseeds in the 2015/16 MY. Soybean production will increase to 1.3 million tons, while sunflower and groundnut production will increase to 710,000 tons and 72,000 tons, respectively.

Production of oilseeds will be down in the 2014/15 MY, due to a mid-summer drought that hit the summer rainfall production areas of South Africa. The season started normal and most areas received normal to above-normal rainfall during December 2014. However, during the first two months of 2015, most parts of South Africa's main oilseed producing areas experienced extreme drought condition that impacted negatively on yields. As a result, oilseed production is expected to be almost 15 percent less than in the 2013/14 MY, despite a 14 percent increase in area planted.

The South African Crop Estimates Committee (CEC) released its first oilseeds production estimate for the 2014/15 MY (marketing year starts March, 1, 2015) on February 26, 2015. The CEC estimated the commercial oilseed crop at 1.6 million tons on 1.3 million hectares. Although the soybean area planted increased by almost 37 percent from the previous marketing year, soybean production is expected to decrease marginally to 938,350 tons. A 45 percent decrease in sunflower production to 574,300 tons is also expected. Most of the sunflower production in South Africa is taking place in the Northwest Province and the western side of the Free State Province where the drought was extremely severe. The CEC estimates that the peanuts crop will decrease by almost 10 percent to 67,845 tons.

The following table indicates the area planted and production figures for sunflower, soybeans and peanuts for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (forecast).

Area planted and production of oilseeds in South Africa

Oilseeds

2013/14 MY

2014/15

MY

2015/16

MY

Area

(1,000ha)

Yield

MT/ha

Prod.

(1,000 MT

Area

(1,000ha

Yield

MT/ha

Prod

(1,000 MT

Area

(1,000ha)

Yield

MT/ha

Prod.

(1,000 MT)

Sunflower

600

1.4

832

568

1.0

574

590

1.2

710

Soybeans

503

1.9

948

687

1.4

938

800

1.6

1,255

Peanuts*

52

1.6

82

58

1.2

68

60

1.3

75

TOTAL

1,154

1.6

1,855

1,313

1.2

1,580

1,450

1.4

2,040

Source: SAGIS

*Data supplied on a shelled basis, converted to in-shell (X1.33).

Consumption

Post forecasts that South Africa will consume about 2.0 million tons of oilseeds in the 2015/16 MY, an increase of 11 percent from the estimated utilization of 1.8 million tons in the 2014/15 MY, due to higher oilseed production. As a result of the current drought conditions, post anticipates a drop of six percent in oilseed utilization for the 2014/15 MY. In the 2013/14 MY, South Africa utilized a record of 1.9 million tons of oilseeds locally. As already mentioned, South Africa's crushing capacity increased to an estimated 2.2 million tons per annum after new soybeans crushing facilities were added the past couple of years. Post forecasts that a record 1.8 million tons of oilseed will be crushed in the 2015/16 MY, up 13 percent from the estimated 1.6 million tons that will be crushed in the 2014/15 MY. Table illustrates the domestic utilization of sunflower seed and soybeans in South Africa for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (forecast).

The utilization of sunflower seed and soybeans in South Africa

Marketing year

2013/14

2014/15

2015/16

Oilseeds

('1,000 MT)

Sun-flower

Soy-beans

Total

Sun-flower

Soy-beans

Total

Sun-flower

Soy-beans

Total

Crush

865

840

1,705

650

950

1,600

700

1,100

1,800

Food

1

25

26

1

25

26

1

25

26

Animal feed

3

125

128

3

125

128

3

125

128

Seed

4

5

9

3

5

8

3

5

8

Other

5

5

10

5

5

10

5

5

10

Exports

2

2

4

0

0

0

0

0

0

TOTAL

880

1,002

1,882

662

1,110

1,772

712

1,260

1,972

Imports

70

105

175

100

100

200

0

0

0

Source: SAGIS & Grain SA

South Africa processes almost its entire sunflower seed crop for the conversion to sunflower oil. The crushing capacity for sunflower seeds in South Africa is estimated at around one million tons per annum, while the capacity of oilseed refineries is estimated at 950,000 tons per annum. In years of lower sunflower production, the activities at crushing plants are reduced and the refineries import more crude oil, as it is more cost effective than importing sunflower seeds. There are strong correlation between the local production and crushing of sunflower seeds annually.

Sunflower meal, a by-product of the oil extraction process, is sold to local animal feed manufacturers. Sunflower meal is generally regarded as a low-value product that does not compare well to soybean meal in terms of nutritional value and fiber content. As a result, broiler rations cannot include more than seven percent sunflower meal. Hence, sunflower meal is mainly used as feed in the dairy and beef industries.

The increasing trend in the local utilization of soybeans in South Africa, mainly driven by an increase in crushing capacity. With the increase in crushing capacity, South Africa crushed a record 840,000 tons of soybeans in the 2013/14 MY. Post estimates South Africa will crush 950,000 tons and 1.1 million tons of soybeans in the 2014/15 MY and 2015/16 MY, respectively. The local demand for soybean meal, as the preferred source of protein for animal feed, has increased in correlation with the increase in poultry production in South Africa and more than doubled over the past decade. As local production of soybean meal was limited in the past, almost all of the local consumption had to be imported. With the expansion of the local soybean crushing industry and soybean production, imports are expected to decrease to less than 30 percent of local consumption compared to more than 60 percent five years ago.

The domestic consumption for peanuts is indicated in Table for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (forecast). The domestic market is relatively stagnating at around 60,000 tons, with about 25,000 tons of peanuts being consumed in the direct edible market and about 30,000 tons for the peanut butter market.

The utilization of peanuts in South Africa

Peanuts* ('1,000 MT)

Marketing year

2013/14

2014/15

2015/16

Direct edible market

22

23

25

Peanut butter market

28

30

30

Oil and oilcake

2

3

3

Seed

3

3

3

Exports

12

10

10

Other

2

1

1

TOTAL**

69

70

72

Source: SAGIS & Grain SA

*Data supplied on a shelled basis, converted to in-shell (X1.33)

** Including carryover stocks from previous seasons and imports

Trade

For the 2015/16 MY, post does not foresee any oilseed imports by South Africa. South Africa's trade in oilseeds is mainly directed to the imports of oil and protein meal, however, in the 2013/14 MY, South Africa imported about 70,000 tons of sunflower seeds and 105,000 tons of soybeans to augment the local oilseed crop and to utilize crushing capacity optimal. In the 2014/15 MY, post anticipates that South Africa will imports about 100,000 tons of sunflower seed and 100,000 tons of soybeans to supplement the drop in local oilseed production, due to the drought conditions.

South Africa exported a small amount of 2,000 tons of soybeans and 2,000 tons of sunflower seeds in the 2013/14 MY, destined mainly for South Africa's neighboring countries. Exports of soybeans and sunflower seeds are expected to drop to zero in the 2014/15 MY and 2015/16 MY, as total local production will be used locally.

Exports of peanuts (according to Global Trade Atlas) reached about 12,000 tons in the 2013/14 MY. South Africa also imported about 9,000 tons of peanuts in the 2013/14 MY. Post expects peanut exports to stay constant at 10,000 tons in the 2014/15 MY and 2015/16 MY.

Current import tariffs of oilseeds and oilseed products

Product

General rate of duty

EU

EFTA

SADC

Sunflower seed

9.4%

Free

9.4%

Free

Soybeans

8%

Free

8%

Free

Peanuts

10%

Free

10%

Free

Soybean meal

6.6%

Free

6.6%

Free

Sunflower meal

6.6%

Free

6.6%

Free

Soybean oil

10%

Free

10%

Free

Sunflower oil

10%

Free

10%

Free

Source: Cargo-info

Prices

The South African Future Exchange (SAFEX) prices for sunflower seed and soybeans as of 03/17/2015 are indicated in Table. Year-on-year local sunflower prices and soybean prices are trading, respectively, 16 percent and 23 percent lower, mainly driven by lower global oil, meal and oilseed prices. Local soybean and sunflower seed prices are inter alia influenced by international soybean meal and oilseed oil prices.

SAFEX prices for sunflower and soybeans

SAFEX Futures prices

(03/17/2015)

Commodity

2015/03

2015/05

2015/07

2015/09

2015/12

Sunflower

R5,030/t

($410/t)

R4,930/t

($402/t)

R5,015/t

($409/t)

R5,080/t

($415/t)

R5,160/t

($421/t)

Soybeans

R5,072/t

($414/t)

R4,977/t

($406/t)

R5,042/t

($412/t)

R5,131/t

($419/t)

R5,147/t

($420/t)

Oilseed, Sunflower seed

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2013

Mar 2014

Mar 2015

South Africa

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

600

600

610

568

0

590

Area Harvested

600

600

610

568

0

590

Beginning Stocks

41

41

79

63

0

75

Production

853

832

800

574

0

710

MY Imports

0

70

0

100

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

894

943

879

737

0

785

MY Exports

2

2

2

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

800

865

800

650

0

700

Food Use Dom. Cons.

1

1

1

1

0

1

Feed Waste Dom. Cons.

12

12

12

11

0

11

Total Dom. Cons.

813

878

813

662

0

712

Ending Stocks

79

63

64

75

0

73

Total Distribution

894

943

879

737

0

785

1000 HA, 1000 MT

Oilseed, Soybean

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2013

Mar 2014

Mar 2015

South Africa

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

503

503

560

687

0

800

Area Harvested

503

503

560

687

0

800

Beginning Stocks

165

165

255

216

0

144

Production

944

948

920

938

0

1,255

MY Imports

110

105

130

100

0

0

MY Imp. from U.S.

3

3

3

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1,219

1,218

1,305

1,254

0

1,399

MY Exports

4

2

5

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

750

840

800

950

0

1,100

Food Use Dom. Cons.

26

25

28

25

0

25

Feed Waste Dom. Cons.

184

135

192

135

0

135

Total Dom. Cons.

960

1,000

1,020

1,110

0

1,260

Ending Stocks

255

216

280

144

0

139

Total Distribution

1,219

1,218

1,305

1,254

0

1,399

1000 HA, 1000 MT

Oilseed, Peanut

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2013

Mar 2014

Mar 2015

South Africa

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

52

52

60

58

60

Area Harvested

52

52

60

58

60

Beginning Stocks

3

3

5

11

3

Production

110

110

120

90

100

MY Imports

25

12

25

15

15

MY Imp. from U.S.

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

Total Supply

138

125

150

116

118

MY Exports

24

15

33

13

13

MY Exp. to EU

0

0

0

0

0

Crush

25

25

25

25

25

Food Use Dom. Cons.

77

67

80

70

73

Feed Waste Dom. Cons.

7

7

8

5

5

Total Dom. Cons.

109

99

113

100

103

Ending Stocks

5

11

4

3

2

Total Distribution

138

125

150

116

118

1000 HA, 1000 MT