Editor's note

El Niño: What lies ahead for South African agriculture

The strong El Niño developing this year brings hotter-than-average temperatures, an increased risk of heatwaves, and reduced rainfall to South Africa’s summer crop regions. This weather pattern threatens optimal yields for soya bean and sunflower. Expected to persist from August through December, these above-normal temperatures may increase the chances of severe heatwaves and accelerate soil drying.

Rainfall in our summer rainfall areas is projected to drop considerably compared to recent wet years. Dry spells will stretch further apart, driving up evaporation rates and increasing the risk of veld fires. These dry, hot conditions are predicted to stress newly planted crops heading into 2027, particularly in the northern and northeastern regions of the country. Lower surplus production could curb traditional exports, potentially resulting in commodity prices moving away from export parity. Consequently, consumer food prices and consumer inflation could be affected.

On a positive note, current soil moisture levels are excellent, which should help mitigate some of the negative impacts. Furthermore, while the risk of agricultural drought remains high, major water systems such as the Vaal Dam are starting at relatively healthy levels, cushioning household water security.

The soya bean differential

The soya bean differential is a price adjustment used by the Johannesburg Stock Exchange (JSE) to account for transport costs as well as local supply and demand. After two years the JSE cancelled the multiple reference point (MRP) model.

While the market across the supply chain largely welcomed the change, Grain SA expressed strong disappointment with the decision. A single proposed reference point is in close proximity to Isando, well-situated near the main consumption area and very close to the centre of the production area.

DR ERHARD BRIEDENHANN