What to expect in 2018
Global grain and oilseeds stocks remain high, with world ending stocks of soya beans at 96,1 million tons compared to 94,9 million tons in the previous year. The South American climate is currently key and will play a critical role in crop condition moving into 2018. Locally, the prospects for an exceptional crop of soya beans are looking good. October's intentions to plant 720 000 hectares of soya beans, which is an increase of 25% from the current season, bodes well for soya bean production in 2018. It will be the largest area in South Africa planted with soya beans yet.
Even with a yield reducing to a ten-year long-term average of 1,62 tons per hectare, we might still achieve a soya bean crop of 1,17 million tons. With sunflower at a ten-year long-term average of 1,23 tons per hectare, we could at least achieve a crop of 818 565 tons.
Weather will play a critical role in the success of crops, and prospects for summer rainfall are positive. The current drought in the Western Cape will persist into 2018, with dire consequences on agriculture in general. As a direct result of the drought, the socio-economic effect due to lack of employment will be felt long into next year, with the desperate requirement for winter rainfall to return to above normal.
The demand for animal feed and, consequently, proteins will be influenced by the current bird-flu epidemic. This epidemic has primarily affected the layer industry, with the Western Cape being the most adversely affected. Current estimates show a loss of at least three million layer hens. A change in weather patterns will hopefully curb the spread of the disease in 2018.
Large crop sizes are likely to keep a lid on oilseed prices, while the influence of the exchange rate's volatility will remain the norm. Between political instability, fiscal downgrades, dollar strength and emerging market movements, it will be a challenge to predict currency fluctuations in 2018.
We trust that the December elections for the leadership of the ANC will go smoothly and not be undone by violence or legal battles. This election will not only have a major influence on the 2019 general elections, but the future of our democracy and economy could be at stake.
Best wishes for a prosperous 2018.