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September 2018
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Important grain crossing
T
he Food and Agricultural Organi-
zation of the United Nations (FAO)
recently updated its global forecast
for cereal production, demand and
stocks for 2018/2019. There was an inter-
esting ‘crossing’ for grain producers to take
note of.
For the first time since 2012, the demand
outstrips the production. For producers,
this means prices are supposed to increase,
but the message from Prof Marcos Fava
Neves (Brazil) was very simple (but hard on
the ear): ‘For the next ten years, you will
have to build margins in a growing market
at current prices’.
He was the keynote speaker at the 2018 Ag-
biz Congress.
The crossing of supply and demand was
also supposed to lower the global stock
levels, but no, China made some 33 million
ton stock adjustment which caused global
stocks to increase. The professor is a world
leader in agricultural outlook and explained
in detail how the demand for grains will con-
tinue to grow in future.
The growth will mainly stem from the
growth in the demand for meat (chicken, red
meat and especially pork consumption in
China). The Chinese government decided to
combat pollution with a 10% biofuel blend
by 2020. This is good news for any grain
producer.
Team Grain SA and the officials of the De-
partment of Agriculture, Forestry and Fish-
eries (DAFF) are post-haste busy sorting out
the outstanding protocols between South
Africa and China to open this potential mar-
ket for maize and soybeans.
The Indian population is growing by 2 mil-
lion people per month. That basically means
a new South Africa (±56 million) inside India
every two and a half years. All those people
need some food to live on.
What is important for grain producers, is that
South Africa not only has access to these
growing markets; we have preferential ac-
cess – it means lower or no import duties
for South African grains and meat. South
Africa has in many instances a location ad-
vantage over the African and Middle Eastern
countries and even some Asian countries. (It
almost sounds like a dream that a location
differential can work in a producer’s favour
for a change.)
relevant
Jannie de Villiers,
CEO, Grain SA
Graph 1: FAO outlook for cereals.
Graph 2: Expected growth in imports of chicken meat.
* Selected importers, not world total
Graph 3: Expected growth in imports of pork.
* Selected importers, not world total
** Japan, Korea and Taiwan