Report Highlights:

For the 2013/14 MY, post forecasts a seven percent increase in the area planted with oilseeds, to a record 1.14 million hectares, which could produce a historical high of 1.67 million tons of oilseeds. This positive trend in oilseed production in South Africa is mainly driven by a 4-fold increase in soybean crushing capacity and an increase in soybean plantings. As a result, South Africa will crush a record of 1.4 million tons of oilseeds in the 2013/14 MY. Locally produced oilseed meal will increase by almost 50 percent, to 892,000 tons, from the 602,000 tons produced in the 2011/12 MY, and will represent almost 60 percent of the local demand, with imports of oilseed meals decreasing to around 680,000 tons. 

Executive Summary 

For the 2013/14 MY, post forecasts a seven percent increase in the area planted with oilseeds later in 2013, to a record 1.14 million hectares, which could produce a historical high of 1.67 million tons of oilseeds. The increase in total oilseed plantings is mainly driven by a nine percent increase in soybean plantings to 580,000 hectares. A new soybean crushing plant, with a capacity of 185,000 tons per annum, started to operate in 2012 and another three plants, with a combined crushing capacity of approximately 650,000 tons are expected to be added through 2013. Post believes farmers will react positively to this increased local demand for soybeans and consequently will plant more hectares to soybeans. Post forecasts that sunflower seed and groundnut planted areas will increase only marginally to 510,000 hectares and 50,000 hectares, respectively. 

The South African Crop Estimates Committee (CEC) released its first oilseeds production estimate for the 2012/13 MY on February 26, 2013. The CEC estimated the commercial oilseed crop at 1.6 million tons. However, the CEC did their yield surveys before a mid-season drought hit the Northwest and Free State Provinces and harshly affected the summer crops. The grain industry is in agreement that the CEC was overly-optimistic in the first estimate and that the committee will have to adjust the production estimates for summer crops significantly downwards at their subsequent meetings. After taking the drought conditions in consideration, post estimates the commercial oilseed crop at 1.44 million tons for the 2012/13 MY, 16 percent more than the 1.24 million tons produced in the 2011/12 MY. 

In the 2011/12 MY, South Africa crushed a record 1.06 million tons of oilseeds, 15 percent more than in the previous year. Post estimates that this record will increase to 1.27 million tons in the 2012/13 MY, and to 1.4 million tons in the 2013/14 MY, due to the increase in soybean crushing capacity. As a result, local produced oilseed meal will increase by almost 50 percent, to 892,000 tons, in the 2013/14 MY, from the 602,000 tons produced in the 2011/12 MY, and will represent almost 60 percent of local consumption. Post estimates that in the 2012/13 MY, South Africa will crush, for the first time, more soybeans than sunflower seeds, due mainly to the increase in soybean crushing capacity and a decrease in sunflower production, and this will be the status qua for the future. 

Total Oilseeds 

Production 

For the 2013/14 MY, post forecasts a seven percent increase in the area planted with oilseeds later in 2013, to a record 1.14 million hectares. The increase in total oilseed plantings is mainly driven by a nine percent increase in soybean plantings to 580,000 hectares. A new soybean crushing plant, with a capacity of 185,000 tons per annum, started to operate in 2012 and another three plants, with a combined crushing capacity of approximately 650,000 tons is expected to be added through 2013. Post believes farmers will react positively to this increased local demand for soybeans and consequently will plant more hectares to soybeans in the 2013/14 MY. Post forecasts that sunflower seed and groundnut planted areas will only increase marginally to 510,000 hectares and 50,000 hectares, respectively. 

Based on average yields, post forecasts that South Africa will produce a record of 1.67 million tons of oilseeds on 1.14 million hectares for the 2013/14 MY. Soybean production will increase by 18 percent to 990,000 tons, while sunflower and groundnut production will increase to 610,000 tons and 70,000 tons, respectively.

The South African Crop Estimates Committee (CEC) released its first oilseeds production estimate for the 2012/13 MY on February 26, 2013. The CEC estimated the commercial oilseed crop at 1.6 million tons. However, the CEC did their yield surveys before a mid-season drought hit the Northwest and Free State Provinces and harshly affected the summer crops. The grain industry is in agreement that the CEC was overly-optimistic in the first estimate and that the committee will have to adjust the production estimates for summer crops significantly downwards at their subsequent meetings. However, on the eastern side of South Africa, producers received enough rain and are expecting excellent summer crops with record yields predicted in some areas. Most of the sunflower production in South Africa is taking place in the Northwest Province and the western side of the Free State Province, while soybeans are produced mainly in the eastern side of the Free State Province and in Mpumalanga Province. After taking the drought conditions in consideration, post estimates the commercial oilseeds crop at 1.44 million tons for the 2012/13 MY, 16 percent more than the 1.24 million tons produced in the 2011/12 MY. 

With the increase in crushing capacity, farmers planted a record of 515,000 hectares of soybeans in the 2012/13 MY, nine percent more than in the previous season. A record soybean crop of 870,000 is expected, 23 percent more than the previous season. Sunflower seed plantings increased by 11 percent to 505,000 hectares, mainly due to dry weather conditions that persisted during the normal planting period for corn, and as a result many farmers had to switch to sunflower production. With the drought conditions in the western side of South Africa’s summer rainfall area, post estimates the 2012/13 MY sunflower seed crop at 510,000 tons, marginally less than the 530,000 tons produced in the 2011/12 MY. Post expects the groundnut crop to be on the same level as the previous season, i.e., 55,000 tons. 

Consumption 

There is a strong correlation between the local production of sunflower seed and crushing capacity utilized per annum, as almost the entire sunflower crop is destined for the processing industry for 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. 

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. Post estimates that only 520,000 tons of sunflower seed will be crushed in the 2012/13 MY, due to the current drought conditions and an expected lower sunflower seed crop. This is 20 percent lower than the 648,000 tons crushed in the 2011/12 MY. However, post forecasts an increase in crushed sunflower seeds in the 2013/14 MY, to 600,000 tons, due to an increase of locally produced sunflower seed.

In 2012, an 185,000 tons per annum soybean crushing facility was added to the existing 240,000 tons, and, another estimated 650,000 tons of crushing capacity is expected to be added through 2013. This will increase the estimated soybean crushing capacity for South Africa to more than a million tons per annum by 2014.

With the increase in crushing capacity, South Africa crushed a record 413,000 tons of soybeans in the 2011/12 MY, and will almost double that in the 2013/14 MY to 800,000 tons. In the 2012/13 MY, South Africa is expected to crush, for the first time ever, more soybeans than sunflower seed. 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 currently.

The domestic market is relatively stagnating at around 60,000 tons, with about 30,000 tons of peanuts being consumed in the direct edible market and about 25,000 tons for the peanut butter market.

Trade 

South Africa’s trade in oilseeds is mainly directed to the imports of oil and protein meal, however, in the 2011/12 MY, South Africa exported 158,000 tons of soybeans, destined for the premium tofu markets of Malaysia and Indonesia. Exports of soybeans are expected to decrease to about 50,000 tons in the 2012/13 MY, and to zero in the 2013/14 MY, as local processing of soybeans will increase due to the construction of new crushing facilities. 

South Africa imported a small amount (25,000 tons) of sunflower seeds in the 2011/12 MY. Due to the drought conditions and an expected decrease in the sunflower seed crop, imports of sunflower seed are expected to increase to about 50,000 tons in the 2012/13 MY, but should normalize again at 25,000 tons in the 2013/14 MY. 

Exports of peanuts (according to SAGIS) reached about 16,000 tons for the 2011/12 MY. Exports are expected to decrease to 14,000 tons in the 2012/13 MY, but will recover in the 2013/14 MY to 20,000 tons, due to a increase in local production.

Prices 

Local sunflower prices are trading 14 percent higher than a year ago, while soybean prices are trading 27 percent higher. Factors that are contributing to the year-on-year increases in oilseed prices, includes, higher international oilseed prices, the depreciation of the Rand against the United States Dollar and the current drought conditions in South Africa.

Total Meals 

Production 

In the 2011/12 MY, South Africa crushed a record 1.06 million tons of oilseeds, 15 percent more than in the previous year. Post estimates that this record will increase to 1.27 million tons in the 2012/13 MY, and to 1.4 million tons in the 2013/14 MY, on increased soybean crushing capacity. As a result, local produced oilseed meal will increase by almost 50 percent to 892,000 tons in the 2013/14 MY, from the 602,000 tons produced in the 2011/12 MY, and will represent almost 60 percent of local demand. Post estimates that in the 2012/13 MY, South Africa will crush, for the first time, more soybeans than sunflower seeds, due to the increase in soybean crushing capacity and a decrease in sunflower production, and this will be the status qua in the future. Crushing yields used includes 42 percent meal for sunflower seeds and 80 percent meal for soybeans.

Consumption 

South Africa’s consumption of oilseed meal stayed constant at approximately 1.5 million tons in the 2011/12 MY, as slow economic growth and high feed prices resulted in growth of less than two percent in broiler production. As already mentioned, the broiler industry is a major consumer of soybean meal. The business environment for broiler production is not expected to improve in 2013, as poultry feed prices are expected to remain at relatively high levels. As a result, it is estimated that South Africa’s broiler industry will only grow marginally in 2013 and 2014. Hence, post estimates that the consumption of oilseed meal will grow by only about two percent in the 2012/13 MY to 1.53 million tons and by another two percent in 2013/14 MY to 1.56 million tons.

Trade 

There are trend in the replacement of oilseed meal imports with locally produced oilseed meal in South Africa. Expectations are that South Africa will import less than 30 percent of oilseed meal consumption in the next few years.

Imports of oilseed meal decrease by almost 12 percent in the 2011/12 MY to 900,565 tons, on increased local production. Almost all imports of oilseed meal were from Argentina. For the 2012/13 MY, imports of oilseed meal is expected to decrease by about 20 percent to 720,000 tons, due to the increase in the local production of soybean meal. Post forecasts, that in the 2013/14 MY, oilseed meal imports will decrease even further to around 680,000 tons, or 43 percent of local consumption.

Total Oils 

Production 

Post estimates that South Africa will produce about 344,000 tons of oilseed oil in the 2012/13 MY. This is almost eight percent more than the 320,000 tons produced in the 2011/12 MY. For the 2013/14 MY, post forecasts that locally produced oilseed oil will increase again by eight percent to 372,000 tons on increased crushing capacity. Crushing yields used include 38 percent oil for sunflower seed and 18 percent oil for soybeans.

Consumption 

South Africa consumes about1.1 million tons of oilseed oil per annum. Approximately 30 percent of the vegetable oils are locally produced. Post estimates that the consumption of oilseed oil will grow only by about two percent in the 2012/13 MY, to 1.11 million tons, and by another two percent in 2013/14 MY to 1.13 million tons. Economic growth is the main overall driver for the increase in the demand for oilseed oil and South Africa’s economy is expected to grow by less than three percent in 2013 and 2014. Labor unrest and prospects of slower global economic recovery will impact negatively on economic growth.

Trade 

South Africa imported 902,918 tons of oilseed oil in the 2011/12 MY, eight percent more than the previous season. Sunflower oil imports increased by more than 100,000 tons to 195,985 tons in the2011/12 MY, due to a decrease in local production. On the other hand, soybean oil imports decreased by 28 percent to 197,938 tons, due to the increased capacity in local soybean crushing. Sunflower oil was imported from Argentina (61 percent of total sunflower oil imports), Ukraine (17 percent), and Switzerland (7 percent), while soybean oil was imported mainly from Spain (36 percent), the Netherlands (35 percent) and Germany (16 percent). The imports of palm oil increased by ten percent in the 2011/12 MY, to 400,742 tons. Palm oil is mainly imported from Indonesia (51 percent) and Malaysia (47 percent). 

For the 2012/13 MY and 2013/14 MY, oilseed oil imports are expected to be on the same level as the 2011/12 MY, i.e., around 900,000 tons, as the demand for oilseed oil is expected to increase only marginally. 

South Africa also exports oilseed oils to neighboring countries such as Zimbabwe and Mozambique. In the 2011/12 MY, South Africa exported almost 140,000 tons of oilseed oil. These exports are expected to continue at the same level in the 2012/13 MY and 2013/14 MY