Maize supplies are in good shape compared to annual consumption

Highlights in today’s morning note

Wheat:

The weather is currently of less importance in the winter wheat growing areas of South Africa as the harvest process is totally over. However, the recent developments in the major wheat production province, Western Cape, are worth mentioning. The weather charts have cleared and currently shows a possibility of continuous dryness within the next two weeks.

This implies that dam levels could remain critically low in the near term. The most recent data from the Department of Water and Sanitation shows that on 26 February 2018, the province’s dam levels averaged 21%, down by two percentage points from the previous week and 11 percentage points from the corresponding period last year.

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

About 7 532 tonnes of wheat were delivered to commercial silos in the week ending 23 February 2018, well below the volumes delivered when the harvest process was at its peak. Overall, this placed South Africa’s winter wheat producer deliveries for “week 1 to 21” of the 2017/18 marketing year at 1.44 million tonnes.

Maize:

Admittedly, the expected harvest of 12.2 million tonnes of maize this season is well below last season’s harvest of the 16.8 million tonnes. But, South Africa’s maize supplies are in good shape as this is above annual maize consumption of 10.5 million tonnes. Moreover, the expected ending stock of 4.2 million tonnes by end of the current marketing year will further boost maize supplies in the 2018/19 marketing year which starts in May 2018.

The aforementioned production estimates are largely based on expectations of higher yields, which can only be possible if weather conditions are favourable for the rest of the season. Fortunately, the near and medium term outlook show a possibility of good rainfall over the maize growing areas of the country.

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 13 363 tonnes in the week ending 23 February 2018, up by 42% from the previous week. About 64% of this was yellow maize, with 36% being white maize.

Overall, South Africa’s 2017/18 marketing year’s total maize deliveries for “week 1 to 43” currently stand at 15.3 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.

Soybeans:

South Africa’s soybean market is well supplied. The 2018/19 marketing year commences on better footing than the previous year, thanks to a large harvest in the 2016/17 production season. The opening stock is estimated at 340 862 tonnes, which is treble the volume seen at the beginning of 2017/18 marking year.

In addition, the expected large harvest will further boost the supplies. As highlighted in our previous notes, the National Crop Estimates Committee placed its first production estimates at 1.4 million tonnes, up by 5% from the previous season. This is driven by both an increase in area planted, as well as expected higher yields. The area planted is estimated at 775 300 hectares, up by 31% from the previous season and also a record level in a dataset dating back to 1970/71 production season. The leading producing provinces are Mpumalanga and Free State, with a combined share of 78%.

Above all, the aforementioned increase in area planted is underpinned by favourable weather conditions in the eastern parts of South Africa and competitive prices. In fact, the soybean growing areas experienced good weather conditions since the start of the season, while the western sections of the country experienced dryness.

Looking ahead, the next two weeks could bring good showers over soybean growing areas. Actually, the medium-term outlook also promises rainfall until the end of April 2018. This should further boost soil moisture and therefore improve crop conditions.

RSA Potatoes:

The domestic potatoes market had a good run in yesterday’s trade session owing to a lower stock of 759 950 pockets (10kg bag) at the start of the session. The price was up by 0.83% from the previous day, closing at R35.41 per pocket (10kg).

However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period in the weekend. This led to a 9% increase in daily stocks to 824 901 pockets (10kg bag).

RSA fruit:

The fruit market ended yesterday’s trade session on a mixed footing. The price of apples was up by 5% from the previous day, closing at R8.87 per kilogram. This followed an increase in commercial buying which subsequently led to a 5% decline in daily stock to 181 000 tonnes.

Meanwhile, bananas and oranges prices were down by 7% and 2% from the previous day, closing at R6.14 and R10.45 per kilogram, respectively. This could however soon be reversed due to large stocks of 299 000 tonnes of bananas and 22 000 tonnes of oranges.

Click below to read more reports by Wandile Sihlobo

Agbiz Morning Market Viewpoint on Agri-Commodities 01 March 2018