Spotlight on SA soybean market

As set out in our previous note, the Crop Estimate Committee left its final forecast for South Africa’s 2017/18 soybean production unchanged from last month at 1.55 million tonnes. This is 18 percent higher than the previous season due to an expansion in area planted, as well as fairly higher yields.

The Committee’s decision is usurping as the harvest process ended with reports of average and above average yields in a number of areas. In the week of 14 September 2018, about 1.47 tonnes of soybean had already been delivered to commercial silos. This equates to 95 percent of the estimated harvest. We believe that additional volumes will be delivered over the coming weeks as farmers continue to take their harvest to the market.

This production data reinforced the view that South Africa’s soybean supplies will be in good shape in the 2018/19 marketing year. The national Supply and Demand Estimates Committee forecasts the country’s soybean supplies at 1.86 million tonnes, up by 32 percent from the 2017/18 marketing year. This includes the expected production and imports, as well as opening stock.

Furthermore, this implies that the soybean processors will largely rely on local supplies, hence we expect a decline on imports. South Africa’s soybean and oilcake imports could drop by 27 percent and 17 percent year-on-year in the 2018/19 marketing year to 20 000 tonnes and 458 992 tonnes, respectively.

Soybean consumption (processed for oil and cake) amounted to 78 349 tonnes in August 2018, which is somewhat in line with the long-term monthly average consumption trend. If we apply an estimate of 2.2 million tonnes of South Africa’s soybean crushing capacity, which equates to 183 333 tonnes per month, then, the country utilised 43 percent of its monthly soybean processing capacity in August 2018. This is marginally down by a percentage point from last month and the corresponding period last year.

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