Highlights in today’s morning note
South Africa is not alone on the abundance of maize supplies this year. Zambia, Zimbabwe and Malawi are also expected to harvest a large crop. This means that Southern Africa will mostly likely be well supplied with maize this year, thus raising a concern about South Africa’s maize exports activity.
South Africa’s 2017/18 total maize exports are set to reach 2.7 million tonnes. About 52% of this is set to be white maize and 48% to be yellow maize. Yellow maize will most likely find buyers in the global market, while white maize will likely face a low uptake. This is because white maize is traditionally exported to African markets, which will be well supplied from domestic production this year. Going forward, our view on attractive markets for South Africa’s maize exports is briefly discussed in this article.
On the global front – this morning Chicago maize price was down by 0.28% from the level seen at midday yesterday, owing to forecast favourable weather conditions in the US Midwest.
With maize plantings currently underway in the US, weather remains a key focus in that market. The forecast for the week presents a possibility of drier conditions in parts of the US Midwest, which should present a window for planting
The past week saw wet and cold conditions, which caused delays in plantings. Recent data from the USDA shows that on the 07 May 2017, US farmers had planted 47% of the intended 36.4 million hectares, which is 14% behind the corresponding period last year.
On the weather front, there have not been any improvements. The forecasts continue to present the possibility of drier conditions across the country within the next two weeks, which is not conducive for wheat production as soil moisture is currently low in most areas.
Some farmers have started planting in parts of the Western Cape province, despite the drier conditions. However, if conditions remain dry as forecasts suggest, the planted crops stand a risk of failing to germinate.
Overall, there is still time to make decent progress with regards to plantings if the province could receive rainfall later this month. The planting window runs from April until July. Looking ahead, the prospects of another El Niño weather event later this year also presents some risks to production .
On the global front – this morning, the Chicago wheat market lost 1.88% from the level seen at midday yesterday, due to plantings delays in spring wheat growing areas of the US.
With wheat planting and production underway, the weather is an important factor in the US wheat market. The past few days were characterised by wet and cold in most wheat growing conditions, which is not conducive to growing crops and planting activity.
Subsequently, the USDA data shows that the US had planted 54% of the targeted area for this season by 07 May 2017, which is 20% behind the corresponding period last year. At the same time, 53% of the crop was rated good/excellent, which is 1% below the previous week. To some extent, this suggests that last week’s storm did not cause much damage on crops.
In global markets – this morning Chicago soybean price was down 0.42% from the level seen at midday yesterday, after US soybean weekly exports inspection data came in at 349 385 tonnes, well below market expectations.
With plantings currently underway, the weather has become an important factor in the US soybean market. The forecast for the next eight days shows a possibility of dryness in some parts of the US Midwest, which could boost plantings. The US farmers had planted 14% of the targeted area by 07 May 2017, which is 7% behind the corresponding period last year due to adverse weather conditions experienced last week .
Elsewhere, recent data from China’s National Grain and Oils Information Centre showed that the country’s soybean production could increase by 9.2% year-on-year to 14.3 million tonnes in the 2017/18 season. This is on the back of an expected 10.5% annual increase in the soybean acreage to 7.9 million hectares.
As indicated in our note yesterday, the weather forecast presents a likelihood of drier conditions over the next two weeks across the sunflower seed growing areas of South Africa. This could accelerate harvest processes. In areas that planted late, particularly the western parts of the North West province, drier weather conditions could support the maturation process of the crop.
Looking ahead, frost remains a key concern that could potentially reduce sunflower seed yields in the country. With that said, if it does not materialise until mid-May, the crop could finish off well this season.
In global markets – yesterday the EU’s sunflower seed market gained ground, with the price up 0.25% from the previous day, closing at US$407 per tonne, benefitting from higher palm oil prices.
However, there is still bearish sentiment in the market which emanates from large supplies. In fact, the 2017/18 season is set to bring a 7% annual uptick in the EU’s sunflower seed production to 9.1 million tonnes . This is on the back of an increase in area plantings, as well as expected favourable weather conditions across the region.
Yesterday the Johannesburg Fresh Produce Market saw widespread losses with bearish pressure coming from large supplies. The apple price was down 1% from the previous day, closing at R6.61 per kilogramme. This followed a 31% uptick in daily supplies to 329 300 tonnes.
The bananas market lost 11% from the previous day, closing at R8.11 per kilogramme due to a 31% recovery in stocks to 178 866 tonnes.
Lastly, the oranges market lost 5% from the previous day, closing at R3.05 per kilogramme due to relatively higher stocks of 274 006 tonnes.
The South African potatoes market started the week on a negative footing, with the price down 3.23% from the previous day, closing at R33.57 per bag (10-kilogramme bag). This was on the back of higher stock levels at the start of the session.
With that said, yesterday the market saw a quiet session with lower deliveries and strong buying interest after a weekend. This led to lower stock levels of 469 350 bags (10 kg bags), well below the levels of 700 000 tonnes seen in the previous sessions.
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