Agbiz Morning Market Viewpoint on Agri-Commodities: 15 February 2018

Highlights in today’s morning note

Weather:

After receiving light showers on Tuesday evening, the weather has cleared up across the Western Cape and western sections of the Northern Cape provinces. The forecast for the next eight days in these particular provinces shows a possibility of continuous dryness (figure 1). Meanwhile, other provinces could receive a fair amount of rainfall, which bodes well for summer crops.  

Maize:

On Tuesday night, Bethlehem, Fouriesburg, Kroonstad, Lindley, Marquard, Senekal, Theunessen, Ventersburg, Warden, Allanridge, Bothaville, Losdoorns, Viljoenskroon, Wesselsbron regions of the Free State province received light showers varying between 10 and 28 millimetres.  While this did not yield much improvement in soil moisture, it is a welcome development and the crop is generally in good condition in many areas.

Looking ahead, the next two weeks could bring higher rainfall of between 25 and 90 millimetres across the maize belt, which will improve soil moisture and thereafter crop conditions .  

While the focus is on the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 12 161 tonnes in the week ending 09 February 2018, double the previous week’s deliveries. About 59% of this was yellow maize, with 41% being white maize.

Overall, South Africa’s 2017/18 marketing year’s total maize deliveries for “week 1 to 41” currently stand at 15.3 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.

Wheat:

The volumes of wheat recently delivered to commercial silos showed a decline from levels seen the previous months, which mirrors the reduction in activity in the farms after the completion of the harvest process .

About 9 885 tonnes of wheat were delivered in the week ending 09 February 2018. This is well above the previous week’s deliveries of 4 037 tonnes, but well below the volumes delivered in the previous months when the harvest process was at its peak. Overall, this placed South Africa’s winter wheat producer deliveries for “week 1 to 19” of the 2017/18 marketing year at 1.42 million tonnes.

On the global front – The weather remains a primary focus in the US wheat market as the crop is still at its growing stages. The weather forecasts for the next eight days shows a possibility of drier conditions in the southern Plains, which could negatively affect the crop.

In its February 2018 update, the USDA placed the US 2017/18 wheat production estimate at 47 million tonnes, down by 25% y/y. The decline is mainly due to a relatively smaller area planted, as well as expected lower yields in some parts of the country. In the same season, the ending stock is estimated at 27 million tonnes, down by 16% from the 2016/17 season. Despite the lower expected crop in the US, the global wheat market is well supplied. The 2017/18 global production is estimated at 758 million tonnes, up by 1% y/y.

Soybeans:

Yesterday we noted that South Africa remains a net importer of soybean oilcake, despite the significant increase in production in the past few years (Data from the International Grains Council shows that South Africa’s 2017/18 soybean oilcake imports could reach 600 000 tonnes, despite the record soybean production in the 2016/17 season. This is 20% higher than the 2015/16 season).

However, the country is not alone on this import path, Egypt and Algeria are the leading importers of soybean oilcake in Africa.

The International Grains Council forecasts Egypt and Algeria’s 2017/18 soybean oilcake imports at 1.6 million tonnes and 1.4 million tonnes, respectively up by 45% and 16% from the previous season. This notable increase is due to strong demand from the animal feed industries. 

RSA Potatoes:

The South African potatoes market lost ground in yesterday’s trade session following an uptick in stocks to 945 931 stock pockets (10kg bag) at the start of the trade session. The price was down by 6% from the previous day, closing at R34.88 per pocket (10kg).

In the session, the market saw an increase producer deliveries due to ongoing harvest activity in most parts of the country. This subsequently led to a 16% gain in daily stocks to 1.1 million pockets (10kg bag).

RSA fruit:

The fruit market posted gains in yesterday’s trade session owing to a decline in daily stock levels. The prices of apples and bananas were up by 2% and 3% from the previous day, closing at R9.95 and R5.88 per kilogram, respectively. The apples and bananas stock respectively declined by 19% and 32% from the previous day and settled at 149 000 tonnes and 268 000 tonnes.

The prices of oranges have been quite wobbly owing to lower stocks. Yesterday the price was up by 48% from the previous day, closing at R8.86 per kilogram. The stocks are still well below the levels seen the previous week, recorded at 29 000 tonnes at the close of yesterday’s session.

Click below to read more reports by Wandile Sihlobo

Agbiz Morning Market Viewpoint on Agri-Commodities 15 February 2018