Summary of 2025/2026 Income & Cost Budgets
Key messages and cautionary remarks for the upcoming 2025/26 summer crop season
Going into October 2025, the Rand traded around R17.30/USD – an appreciation of nearly 8% since January. This stronger Rand helps reduce input cost inflation for imports like fertiliser and machinery but puts pressure on export-driven agricultural sectors. Commodity prices such as grains and oilseeds, which are closely tied to global markets, are also affected. A stronger Rand narrows price parity bands, lowering domestic crop prices.
Global grain production is projected to reach a record 2,412 million tons, up 87 million tons year-on-year. Total supply will exceed 3,000 million tons for the first time, with consumption also hitting a new high (IGC, 2025). Grain stocks are expected to grow by 17 million tons, although still slightly below the five-year average. Since the price surge in 2021/22, global supply has increased sharply: canola by 19%, soybean oil by 18%, soybeans by 16%, and maize by 11%.
On 30 September, South Africa’s Crop Estimates Committee released its 8th forecast, revising maize production up from 15.80 million to 16.18 million tons – a 2.4% increase. Soybean and sunflower outputs remain largely unchanged. Following the 2024 drought and low ending stocks, the strong 2025 crop has improved commodity balance sheets. However, improved supply in Zambia, Malawi, and Zimbabwe is limiting regional export opportunities for South African white maize.
Global commodity prices have continued to decline since peaking in 2022, with sunflower being the exception, rising between August 2024 and April 2025. Since June, global yellow maize (US) dropped below $200/ton, now trading at $183/ton – 48% lower than its 2022 Q2 peak. Wheat, soybeans, and sunflower followed similar downward trends. Domestically, a stronger Rand and a solid summer crop led to sharp price drops in September. Compared to January 2025, yellow maize fell 36%, soybeans 24%, while sunflower and wheat rose slightly (~4%). Despite recent declines, prices remain well above 2019 levels.
Agricultural input costs remain high and volatile. Brent crude is down 12% year-to-date, while natural gas is up 16%, both influencing fertiliser and fuel costs. Global urea is 26% higher than in 2024; local fertiliser prices rose 4%, while diesel dropped 6%. Compared to 2019, fertiliser is nearly 70% more expensive, diesel 34% higher, and administered costs like wages and electricity have outpaced inflation.
With falling crop prices and persistently high input costs, a cost-price squeeze is likely. Favourable soil moisture and a potential La Niña season could result in another bumper crop in 2026, adding further downward pressure on prices. Producers should reassess break-even points and conduct stress tests, especially irrigation farmers. Data-driven marketing strategies will be essential to manage margin pressures effectively.
The El Niño-Southern Oscillation (ENSO) is currently shifting from neutral to La Niña, expected to persist until February 2026. The chance of El Niño emerging by next winter remains low (under 25%) but is gradually increasing. The SA Weather Service forecasts above-average rainfall and temperatures across most summer crop regions. After a wet March-April 2025 that delayed harvesting due to waterlogging, careful planning and timing will be key for the upcoming planting season.
Farm-level profitability outlook
Figures 4.1-4.3 provide a summary of the gross margin performance of dryland and irrigated crops over the period from 2018 (adjusted to account for actual yields and crop prices) to 2027 (2026 and 2027 are projected). It is important to note that the gross margins only consider direct costs and exclude overhead costs, and that the presented gross margins will differ based on the timing when producers have purchased agricultural inputs (fertilisers, fuel and chemicals) and when marketing takes place. Furthermore, uncertainty remains regarding the forecasted weather and its effect on yields. For the gross margins presented in this report, target yields were assumed.
The previous 2024/25 season realised mixed harvests across the country, depending on the timing and amount of rainfall. Within an area, some fields realised record yields, while others barely broke even. Nevertheless, overall the harvest performed better than expected, with the most recent crop estimate estimating a 16.2 million ton maize harvest (CEC, September 2025). This had a positive impact on dryland and irrigated gross margins across six crops in seven agro-ecological regions, as illustrated in Figure 4.1. During the upcoming 2025/26 season, gross margins are expected to decline as crop prices decrease and costs remain elevated.
In the seven agro-ecological dryland regions, maize gross margins are projected to decline by 76%, sunflower margins by 17%, and soybean margins by 26%, when comparing the 2025/26 season to the 2024/25. As a result, on average, both maize and soybean gross margins are expected to fall below sunflower margins in the 2025/26 and the 2026/27 production season.
In the 2024/25 season, maize under irrigation performed exceptionally well, achieving above-average targeted yields. Looking ahead to 2025/26, if yields return to trend levels, sunflowers are projected to deliver the highest gross margin per hectare, followed by soybeans. This pattern is expected to continue into the 2026/27 season.
However, irrigation farmers may face pressure on margins due to anticipated crop price declines. If prices fall further toward export parity – especially in the case of a large harvest – gross margins could be significantly impacted. This poses a financial risk for irrigation producers, making careful planning and cost management essential.
