Agbiz Morning Market Viewpoint on Agri-Commodities: 10 January 2018

Highlights in today’s morning note

Weather:

There are prospects of rainfall across the summer crop growing areas of South Africa within the next eight days (see figure 1 – attached report). This could ease the concerns of heat-stress on crops. However, the western parts of the Eastern Cape, Northern Cape and Western Cape provinces will most likely remain warm and dry over the observed period.

Maize:

Last night, some areas in the central and eastern parts of the country received light showers which are a welcome development, but not sufficient to significantly improve crop conditions. Unfortunately, most regions in the western parts of the country remain warm and dry, which is not conducive for crops.

From a trade perspective, last week’s maize exports were disappointing. South Africa exported only 5 327 tonnes of maize, which is well below the previous week’s exports of 64 206 tonnes. About 61% of these exports were white maize, with 39% being yellow maize.

The leading buyer was Swaziland with a share of 38%, mainly yellow maize. Trailing Swaziland was Botswana with a share of 27%. 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.

Wheat:

There is very little rain expected in the next months across South Africa’s winter crop producing areas. While this will add a strain on communities which are already experiencing water shortages (such as Western Cape province), it is not a major issue for wheat because it is an off-season period.

In terms of dam levels – the most recent update for the week ending 08 January 2018 shows that dams averaged 28% in the Western Cape province, down by one percentage point from last week, but 16 percentage points lower than the corresponding period last year.

As noted in our previous report, the Western Cape province drought negatively affected the 2017 winter wheat harvest, which is currently estimated at 1.48 million tonnes, down by 23% from the previous season. An update of this assessment will be released on the month end.

From a trade perspective, this was again a quiet week, with no imports reported. The last imports were in the weeks of 09 and 29 December 2017, coming in at 48 432 tonnes. This placed South Africa’s 2017/18 wheat marketing year’s imports at 625 073 tonnes, which equates to 35% of the seasonal import forecast of 1.80 million tonnes (This estimate is under the assumption that domestic production will reach 1.48 million tonnes).  

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The country exported 425 tonnes of wheat in the weeks of in the week ending 05 January 2018, all went to Namibia. This placed South Africa’s total wheat exports for 2017/18 marketing year at 4 730 tonnes.

Soybean:

The fears that heatwave could damage soybean crop in the country have somewhat eased due to expectations of rainfall within the next two weeks. Last night, the eastern and central parts of the country received scattered light showers, which is a welcome slight relief following weeks of extremely high temperatures.

In terms of the actual planted area for this season, a clear indication will unravel later this month when the National Crop Estimate Committee releases its preliminary planting estimates data.

The feedback from farmers in the field suggests that a major part of the intentions of 720 000 hectares have been successfully planted and the crop is in a fair condition (This is with the exception of the areas that were affected by hail in the past few weeks, as well as the North West province which planted roughly 85% of the intentions of 35 000 hectares).

RSA Potatoes:

The domestic potatoes market had a good run in yesterday’s trade session, with the price by 3% from the previous day, closing at R43.75 per pocket (10kg). These gains were mainly on the back of lower stocks of 577 342 pockets (10kg bag) at the beginning of the trading session.

However, during the day, the market saw an uptick in deliveries as harvest activity picks up after a quiet weekend. This subsequently led to 24% increase in daily stocks to 718 365 pockets (10kg bag).

RSA fruit:

In yesterday’s trade session, the fruit market ended the day on a mixed footing. The price of apples fell by 7% from the previous day, closing at R7.33 per kilogram. This was due to large stocks of 250 000 tonnes, up by 58% from the previous day, owing to increased deliveries. 

Meanwhile, the prices of bananas and oranges gained 2% and 33% from the previous day, closing at R7.54 per kilogram and R6.64 per kilogram, respectively. This was on the back of commercial buying, as well as relatively lower stocks of 248 000 tonnes of bananas and 24 000 tonnes of oranges.

Click below to read more reports by Wandile Sihlobo

Agbiz Morning Market Viewpoint on Agri-Commodities 10 January 2018