South Africa’s soybean oil and oilcake imports on a decline

One of South Africa’s key objectives behind the expansion of the soybean crushing plants was import substitution of soybean oil and oilcake. The country has made notable progress on both products as imports have been on a decline in the past few years due to increasing domestic production.

Most notably, between 2010 and 2017, South Africa’s soybean oilcake imports declined by 42 percent to 553 003 tonnes. We estimate that 2018 soybean oilcake imports could decline further by 17 percent from last year to 458 992 tonnes due to expected large soybean production .

Moreover, South Africa’s soybean oil imports declined by 30 percent between 2010 and 2017 to 191 255 tonnes. We believe that 2018 soybean oil imports could decline by a percentage point from last year to 189 342 tonnes, also supported by an uptick in local soybean production (estimated at a record level of 1.39 million tonnes).

With all the aforementioned improvements, the sector hasn’t fully utilised its soybean crushing capacity (see Chart below). Using an estimate of 2.2 million tonnes of South Africa’s soybean crushing capacity, which equates to 183 333 tonnes per month, the country utilised 43 percent of its monthly soybean processing capacity in February 2018, which is, nonetheless, double the capacity utilisation in February 2017.

Over the past two years, the sector has utilised, on average, about 40 percent of its monthly crushing capacity due to a combination of factors, which include relatively lower domestic soybean supplies, amongst others.

Chart: Monthly utilisation of South Africa’s soybean crushing plants

Source: SAGIS, Agbiz Research

Full report by Wandile Sihlobo available below:

Agbiz Morning Market Viewpoint on Agri-Commodities 09 April 2018