He also provides more information about the latest developments in the agricultural sector. 

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Wheat is one of South Africa’s most valuable imported food products, even though the country is traditionally a net exporter of agricultural products.

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“In 2021, South Africa's wheat imports were valued at US$463 million, which equates to 7% of the overall agricultural import value of US$6,9 billion that year. In the first half of this year, wheat was the top valuable imported agricultural product into South Africa, surpassing rice and palm oil.

“Over the past decade, imports accounted for an average of 53% of South Africa's annual wheat consumption of 3,2 million tonnes. As a result of this dependency on the global market, we pay close attention to primary producers, who serve as South African suppliers. These include Argentina, Poland, Canada, Australia, Brazil, the US, and the EU.

“The start of the 2022/23 global wheat production season has been uncertain because of the drought in some countries in the Northern Hemisphere, and the ongoing war in the Black Sea region, a major wheat-producing region. Hence, we will need to pay close attention to how supplies could evolve as production estimates continue to be adjusted in various geographies.

“Still, the current estimates remain positive. The United States Department of Agriculture forecasts the 2022/23 global wheat production at 783 million tonnes, up by 1% from the previous season. This is on the back of an expected large harvest in the US, China and Russia, amongst other regions. With the war still lingering, Russia’s wheat supplies are unlikely to reach as many destinations to ease global food security concerns as in the pre-war years,” shares Sihlobo.

Moreover, he adds that the forecast of another La Niña in the 2022/23 season is an important factor to monitor.

“This weather phenomenon typically causes dryness in some regions of the Northern Hemisphere and South America. These are also risks to wheat production that need close monitoring, especially as there had already been droughts in much of the EU.

“Also, it is important to highlight that global wheat consumption remains strong. Thus, the 2022/23 global wheat stocks are forecast to fall by 2% year-on-year, despite the improvement in production. This means that the global wheat prices could remain relatively elevated over the medium term, although possibly at lower levels compared to the months after Russia invaded Ukraine.

“In sum, South Africa is an agriculturally abundant country, but there is still a global market dependency on wheat products. Hence, we consistently monitor the global dynamics and their implication for the domestic market and consumers.

“So far, while we fear that tighter stocks mean global wheat prices might not fall notably in response to increased 2022/23 production, we do not expect a significant uptick in prices. We rather expect a more sideways movement, which from a local consumer perspective doesn't present a major food inflation risk.

“Also worth noting is that the domestic wheat harvest is expected to remain at decent levels, estimated at 2,1 million tonnes in the 2022/23 season which is currently underway. The past few weeks saw good rains in the major wheat-producing regions of the Western Cape; thus, we think these production estimates could even be lifted in the coming months. This will ultimately mean that South Africa’s wheat imports could fall below 1,5 million tonnes in the 2022/23 marketing year, which starts in October 2022,” concludes Sihlobo.

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