Production

In the 2014/15 MY (October 2014 to September 2015), South Africa's area planted with wheat was at a record low of only 476,570 hectares, as producers switched to more profitable crops like canola, oats, corn and soybeans. Post forecasts that famers will plant about 450,000 hectares of wheat in the 2015/16 MY, as the declining trend in hectares planted with wheat will continue. Unless drastic technology changes occur that could improve wheat yields, the decreasing trend in hectares planted with wheat in South Africa will continue in future. An area of 450,000 hectares will, on average yields, realize a wheat crop of about 1.7 million tons.

South Africa's 2014/15 MY wheat crop is estimated at 1.8 million tons, five percent lower than the 1.9 million tons produced in the 2013/14 MY, due to a six percent drop in hectares planted. Although the 2014/15 MY's area planted was at a record low, a reasonable good season in the Western Cape, where about fifty percent of South Africa's wheat is produced, contributed positively to a 1.8 million tons wheat crop.

The following table indicates the area planted and production figures of wheat in South Africa for the 2013/14 MY (actual), 2014/15 MY (estimate) and 2015/16 MY (forecast).

Area planted and production of wheat in South Africa

MY

Area

(hectares)

Yield

(tons/ha)

Production

(1,000 tons)

2013/14 (actual)

505,500

3.7

1,870

2014/15 (estimate)

476,570

3.7

1,775

2015/16 (forecast)

450,000

3.7

1,665

Consumption

South Africa's wheat consumption increased marginally by four percent in the 2013/14 MY to 3.2 million tons; on relative constant local wheat prices. Wheat consumption is expected to increase by eight percent to 3.5 million tons in the 2014/15 MY, as the prices of corn products are expected to rise on a significant decrease in corn production, due to the drought conditions in the main corn producing areas of South Africa. Consumers can substitute wheat and corn products on price and taste preferences. Corn prices should stabilize again in 2016, on increased area planted, hence post forecast only a three percent increase to 3.6 million tons in wheat consumption for the 2015/16 MY. The economic growth outlook for South Africa also remains sluggish at less than two percent per annum in 2015 and 2016, due to inter alia electricity constraints, labor unrest and relatively lower commodity prices, diminishing a more aggressive demand growth for wheat products.

Consumption of wheat in South Africa

Wheat (1000 tons)

Marketing year

Human

Animal

Seed

Other

TOTAL

2013/14 (actual)

3,122

54

18

6

3,200

2014/15 (estimate)

3,370

60

15

5

3,450

2015/16 (forecast)

3,480

70

15

5

3,570

Source: South African Grain Information Services (SAGIS) and Grain SA

Trade

Wheat imports for the 2015/16 MY are expected to increase by six percent to 1.9 million tons, as a three percent increase in wheat consumption is expected coupled by a six percent decrease in production.

In the 2014/15 MY, South Africa is expected to import about 1.8 million tons of wheat. In the first five months of the 2014/15 MY (October – February), South Africa already imported 835,902 tons of wheat. Russia (264,731 tons), Ukraine (167,393 tons) and Germany (106,571 tons) were the major suppliers. Imports from the United States total 12,785 tons for the first five months of the 2014/15 MY.

In the 2013/14 MY, South Africa imported almost 1.7 million tons of wheat. Most of the wheat was imported from Russia (800,964 tons), Ukraine (372,500 tons), and Germany (179,436 tons). South Africa imported 66,468 tons of wheat from the United States in the 2013/14 MY.

South Africa also exports wheat to the Southern Africa region and acts as a conduit for imported grain. For the 2014/15 MY (October – February), 100,976 tons of wheat has already been exported to neighboring countries. In the 2013/14 MY, South Africa exported 255,136 tons of wheat from its own stocks to neighboring countries and 72,446 tons of imported wheat. South Africa's wheat exports are expected to reach 240,000 tons in the 2014/15 MY and 2015/16 MY.

Export and import countries for wheat

2013/14 MY

(Oct 1, 2013 – Sept 30, 2014)

2014/15 MY

(Oct 1, 2014 – Feb 28, 2015)

Import Suppliers

United States

66,468

12,785

Australia

49,780

62,375

Germany

179,436

106,571

Canada

111,289

25,768

Finland

25,430

0

Latvia

22,013

61,005

Ukraine

372,500

167,393

Poland

0

91,483

Lithuania

40,532

43,791

Russia

800,964

264,731

TOTAL IMPORTS

1,668,412

835,902

Export destinations

Botswana

84,859

31,774

Lesotho

63,595

17,733

Namibia

37,054

6,886

Swaziland

11,539

8,093

Zimbabwe

58,089

36,434

TOTAL EXPORTS

255,136

100,976

Prices

The South Africa Future Exchange (SAFEX) prices for wheat as of 03/10/2015 are shown in the following Table. Local wheat prices increased only marginally on a year-on-year basis despite a weakening exchange rate as international wheat price declined on a recovery of global wheat stock levels. Local wheat prices will continue to trade at import parity levels in the foreseen future and as a result will be impacted by movements in world wheat prices, the strength of the South African rand exchange rate and the fluctuations in transport costs.

SAFEX future prices for wheat

SAFEX Futures prices (03/10/2015)

Commodity

2015/03

2015/05

2015/07

2015/09

Wheat

R3,937/t

($318/t)

R3,973/t

($320/t)

R4,004/t

($323/t)

R3,900/t

($315/t)

PS&D Table for Wheat

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

South Africa

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

505

505

477

477

0

450

Beginning Stocks

747

747

785

830

0

715

Production

1,805

1,870

1,775

1,775

0

1,665

MY Imports

1,736

1,668

1,750

1,800

0

1,900

TY Imports

1,775

1,800

1,750

1,700

0

1,850

TY Imp. from U.S.

97

66

0

50

0

50

Total Supply

4,288

4,285

4,310

4,405

0

4,280

MY Exports

338

255

320

240

0

240

TY Exports

322

322

320

200

0

200

Feed and Residual

40

55

40

60

0

70

FSI Consumption

3,125

3,145

3,225

3,390

0

3,500

Total Consumption

3,165

3,200

3,265

3,450

0

3,570

Ending Stocks

785

830

725

715

0

470

Total Distribution

4,288

4,285

4,310

4,405

0

4,280

1000 HA, 1000 MT, MT/HA