Agbiz Morning Market Viewpoint on Agri-Commodities: 17 January 2018

Highlights in today’s morning note

Wheat:

While warm and drier weather conditions are not conducive for summer crops in the Free State province, the winter wheat harvest process which is towards completion should gain momentum. All other provinces have completed the process and the yields were below average, with the exception of Northern Cape and parts of Limpopo province which received above-average yields.

As indicated in our previous notes, South Africa’s wheat production is estimated at 1.48 million tonnes, down by 23% from 2016 harvest due to poor yields in the Western Cape and parts of the Free State provinces. However, this is not a final estimate, an update will be released on January 30.

From a trade perspective, South Africa imported 10 007 tonnes of wheat in the week ending 12 January 2018, all from Argentina. This is the first consignment this year, following a large volume of 48 728 tonnes in the weeks of 09 to 29 December 2017. Overall, this placed 2017/18 marketing year’s wheat imports at 635 376 tonnes, which equates to 33% of the seasonal import forecast of 1.9 million tonnes.

At the moment, rainfall is not of importance in the wheat growing areas but could improve dam levels and subsequently benefit households and other agricultural activities such as horticulture and livestock. An update for the week ending January 15 shows that dams averaged 27% in the Western Cape province, down by one percentage point from last week, but 15 percentage points lower than the corresponding period last year.

Maize:

The expected rainfall has not yet materialised in most areas of the South African maize belt. The showers received earlier this week were light and scattered mainly in parts of Mpumalanga province. Overall, the crop is still in a fair condition in the eastern areas of the country with good soil moisture, thanks to rainfall received in the past few weeks. Meanwhile, the central and western areas were unable to achieve the planting intentions. Moreover, the areas that managed to plant are experiencing heat stress.

From a trade perspective, South Africa’s maize exports recovered from the disappointing levels observed in the week ending 05 January 2018. Last week, the country exported 49 053 tonnes of maize. About 90% of these exports were yellow maize, with 10% being white maize.

The leading buyer was Japan with a share of 82%, mainly yellow maize. Trailing Japan was Botswana with a share of 5%. This placed South Africa’s 2017/18 maize marketing year exports at 1.8 million tonnes, which equates to 82% of the season’s export forecast of 2.2 million tonnes. About 69% of the exported 1.8 million tonnes is yellow maize, with 31% being white maize.

Sunflower seed:

The prospects of rainfall yesterday afternoon and last night did not materialise in most parts of the country. The sunflower seed growing areas receive very light and scattered showers of between 01 and 06 millimetres in Bothaville, Viljoenskroon, Delareyville, Derby, Ottosdal and Schweizer Reneke. Overall, this is as good as nothing, it will not lead to any meaningful improvement in soil moisture.

Most parts of the North West province last received meaningful rainfall in the beginning of December 2017, hence the planting activity has been delayed in most areas. More concerning is that the optimal planting window is closing in this weekend. Which means that if South Africa does not receive good rainfall within the next few days, the intended area of 665 500 hectares might not be fully utilized.

Also worth noting is that crops in areas that managed to plan on time are not in good condition and some are wilting due to persistent dryness and heat stress, particularly in the western parts of the Free State and North West provinces.

RSA Potatoes:

Yesterday the South African potatoes market managed to claw back its recent losses owing to lower stocks of 652 482 pockets (10kg bag) at the beginning of the trading session. The price was up by 5% from the previous day, closing at R40.35 per pocket (10kg).

However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period over the weekend. This led to a 5% increase in daily stocks to 685 231 pockets (10kg bag).

RSA fruit:

Yesterday the fruit market ended on a mixed footing owing to relatively lower stocks, as well as strong commercial buying. The price of apples was down by 13% from the previous day, closing at R7.46 per kilogram. This followed a 17% increase in daily stocks to 183 000 tonnes.

Meanwhile, the prices of bananas and oranges were up by 3% and 69% from the previous day, closing at R6.54 per kilogram and R7.64 per kilogram, respectively. These gains were partially due to commercial buying interest, as well as relatively lower stocks of 288 000 tonnes of bananas and 31 000 tonnes of oranges.

Click below to read more reports by Wandile Sihlobo 

Agbiz Morning Market Viewpoint on Agri-Commodities 17 January 2018