Bullish grain supplies estimates will help tame food inflation

Comment by Paul Makube, Senior Agricultural economist at FNB Agri-Business

South Africa’s Crop Estimates Committee (CEC) made a further upward adjustment to its 2019/20 crop estimates by raising the expected output by 1.8%  to 17.07 million tons of grain and oilseed crops. The country’s biggest staple, maize, was raised by 1.7% from the first estimate in February 2020 to 14.81 million tons mainly due to a significant increase of 2.9% in the white maize from 8.29 million to 8.54 million tons.

In the oilseed complex, the expected sunflower output jumped 4.6% month-on-month (m/m) to 731,210 tons while the estimate for soybean advanced 2.1% m/m to 1.27 million which is 8.4% higher than the previous season and the third on record. Groundnuts also saw output increasing by 3.1% m/m to 56,060 tons, up by a whopping 189% year-on-year (y/y).

The season so far has progressed well, and all indications are that we are going to finish the year on a positive note. This is not only good development from a GDP perspective, this bullish supply outlook will help tame food inflation despite upward pressure from the weaker rand.

Finally, a sustained Rand weakness will continue to boost export revenues for exportable products such as maize and fruits.

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