Pressure abroad, strength at home
Global agricultural trade is heavily affected by the disruption of key shipping routes through the Strait of Hormuz. The result is an increase in transport and shipping costs, as well as higher fertiliser prices, while energy prices continue to surge. The Middle East is a key producer of fertiliser, especially urea, and shortages and price increases are unavoidable.
Rapidly escalating fuel prices as well as fertiliser availability could threaten global production. Interruptions in the supply chain for perishable goods are also likely to increase costs, especially in net-importing countries. The entire food supply chain is being affected by rising energy and transport costs. South Africa’s citrus exports to the Middle East, which account for approximately 20% of the local market, may need to find alternative routes or markets.
Positive summer crop expectations
The third crop estimate for South Africa’s 2026 maize season, at 16,84 million tonnes, is another excellent result and is expected to be the highest production level on record. Exports of more than two million tonnes are anticipated. Current soya bean crop estimates of 2,81 million tonnes also represent a remarkable achievement, with an average yield of 2,32t/ha, making it the largest soya bean crop ever produced in South Africa.
Sunflower production of 822 000 tonnes, together with the record winter canola harvest of 309 000 tonnes, places the balance between supply and demand in a very positive position and emphasises the importance of maintaining a robust export market.
Low grain and oilseed prices, driven by international market movements and exacerbated by higher fuel and fertiliser costs, will place pressure on profitability in the coming season. Greater emphasis across the value chain will therefore need to be placed on continued improvements in efficiency.
Strait of Hormuz shipping woes are pushing up fuel and fertiliser costs as SA heads for record crops, but farm profitability will face pressure in the coming season.
