The weather and trade policy remains topical issues in the SA wheat market

• This past weekend the Western Cape province received widespread showers which should slightly improve soil moisture and benefit the crop as it starts to pollinate in some areas.
• Although this is a welcome development, it might not lead to widespread improvement in crop conditions across the province. The Swartland and Overberg regions will benefit as the crop was already in good condition. Meanwhile, the southern Cape region might see minimal improvement as part of the crop had already been damaged by drier weather conditions experienced over the past couple of weeks.

• In terms of trade policy, the wheat import tariff rate of R640.54 per tonne that triggered on 10 July 2018 was finally published in a government gazette on 24 August 2018, making it an official rate. Nonetheless, this could be short-lived, the wheat import tariff triggered again on 16 August 2018 to R298.45 per tonne due to an uptick in international wheat prices (No2 HRW) on the back of an expected decline in production. This newly calculated rate will also be effective only after publication in a government gazette, of which the timeframe is unclear.

• These developments are of importance, not only because South Africa is a net importer, but imports are set to reach 1.9 million tonnes, the second highest level on record, in the 2017/18 marketing year, which ends in September 2018. There could be a decline to levels around 1.6 million tonnes in the 2018/19 marketing year due to expectations of an uptick in local production. With that said, this will remain an important subject as imports will roughly constitute half of local wheat consumption.

• Today the Crop Estimate Committee will release its first production estimate for 2018/19 winter wheat. The International Grains Council is quite optimistic, placed its estimate for South Africa’s 2018/19 wheat production at 1.8 million tonnes, up by 20 percent higher than the previous season due to improved weather conditions.

Sourced: Agribusiness Research

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