el nino – Agri Limpopo

There is a chance of an El Niño occurrence in the next production season

Deidre Carter — Tue, 17 Jul 2018 15:24:23 +0000

The picture of South Africa’s maize supplies for the 2018/19 marketing year is somewhat clear and points to comfortable levels of domestic supplies. The means South Africa’s 2018/19 maize supplies could reach 16.7 million tonnes, well above the local demand of 10.8 million tonnes, according to data from the national Supply and Demand Estimates Committee. The supplies figure includes an opening stock and expected production.
However, the preliminary weather forecasts for the upcoming production season which will start in October 2018 presents an unfavourable outlook. The most recent data from the International Research Institute for Climate Society shows that the likelihood of an El Niño occurrence next season is over 60 percent. This means that there is a higher chance that South Africa could experience a drier season next year.
Overall, these are still initial estimates, we will keep a close eye on the developments over the coming months in order to ascertain the impact of this on next season’s crop production. In the near term, this will possibly have minimal impact on maize prices until there is some level of confidence or clarity on the estimates, which should be in the space of a month or two.
Aside from these weather developments, the global maize market is also in good shape, following a slight upward revision of the production estimate for the 2018/19 season to 1.05 billion tonnes, according to the USDA. Most importantly, this is 2 percent higher than the 2017/18 global maize production. The key contributing countries are Brazil, Argentina, Russia, Ukraine and China, amongst others. Going forward, the weather will remain an important factor to monitor across the globe as it could still influence the aforementioned estimates.

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SA Weather Service flags a likelihood of El Niño occurrence in 2018/19

Deidre Carter — Wed, 25 Jul 2018 07:52:41 +0000

Yesterday the South African Weather Service expressed a similar message to the International Research Institute for Climate Society about the probability of El Niño occurrence in the 2018/19 production season, which commences in October 2018. But, the agency also cautioned that “it is still too early to determine the potential impact of the predicted El Niño event; however, the typical effects are drier and warmer conditions for the summer rainfall areas during summer”.
We will keep a close eye on the developments over the coming months in order to ascertain the impact of this on next season’s crop production. In the near term, this will possibly have minimal impact on maize prices until there is some level of confidence or clarity on the estimates, which should be in the space of a month or two.\
South Africa’s maize supplies for the 2018/19 marketing year are in good shape, estimated 16.7 million tonnes, which is well above the local demand of 10.8 million tonnes, according to data from the national Supply and Demand Estimates Committee. The supplies figure includes an opening stock and expected production. This could keep SAFEX maize prices under pressure in the near term.
In terms of trade, South Africa exported 75 115 tonnes of maize in the week of 20 July 2018, down by 20 percent from levels seen in the previous week. About 93 percent was yellow maize, with 7 percent being white maize.
The leading buyer was again Taiwan, with a share of 74 percent of the weekly exports. Trailing Taiwan was Vietnam with a share of 15 percent of weekly exports. The rest went to regional markets. Overall, this placed South Africa’s 2018/19 maize exports at 838 925 tonnes, which equates to 34 percent of the seasonal export forecast of 2.5 million tonnes.

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South African Agricultural Commodities Weekly Wrap

Arithmus — Fri, 14 Sep 2018 10:41:00 +0000

The producer deliveries data for 2017/18 summer grains and oilseeds, particularly maize, soybeans and sunflower seed, show that South Africa will have sufficient supplies until the first quarter of 2019.
Hence, the focus in the market is somewhat shifting towards the 2018/19 production season which commences next month. On that end, the weather forecasters are predicting a possibility of another El Niño event, which could negatively affect the new season crop if it materialises.
It is still unclear whether South African farmers will reduce the intentions to plant because of the forecast El Niño. However, we will have a better indication when the Crop Estimate Committee releases its estimates on October 25.
From a winter crop perspective, this has been one of the good seasons following a drought year in the Western Cape that led to a double-digit decline in 2017/18 wheat production.
The SAFEX beef carcass market experienced a quiet week with prices unchanged from levels seen last week. In terms of the supply, the South African farmers slaughtered 212 060 head of cattle in July 2018, down by a percentage point from July 2017 due to the herd rebuilding process after a reduction during the 2015-16 drought.

Looking ahead, the data calendar for next week is fairly light with no major releases.

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Spotlight on maize market

Arithmus — Wed, 17 Oct 2018 08:29:35 +0000

The weather remains an important factor in the US maize market, as it could still influence the harvest process, as well as the crop quality/conditions. The forecast for the next two weeks shows the prospects of rainfall over the eastern parts of the Midwest, while other areas set to experience cool and drier weather conditions. Therefore, the potential delays in the harvest process will not be widespread but concentrated on a few patches.
As a result, next week’s harvest pace assessment could show a bit of an uptick from levels observed in the week of 14 October 2018, where 39 percent of the US maize crop had already been harvested. This is good progress, about 12 percent ahead of the corresponding period last year.
The crop conditions assessment could show similar results as the week of 14 October 2018, where 68 percent of the US maize crop was rated good or excellent. This was about 3 percentage points better than the corresponding period last year.
We place more emphasis on the US because of its importance in global maize supplies. The US 2018/19 maize production is estimated at 375 million tonnes, up by a percentage point from the previous week. This accounts for 35 percent of expected 2018/19 global maize production.
The weather is a key focus also in the domestic maize market as the 2018/19 planting season has recently started. The past couple of days brought widespread rainfall in the eastern and central parts of South Africa, which bodes well for the new season crop. The outlook for the next eight days promises additional showers over the eastern parts of the country which will lead to further improvement. The elephant in the room, however, is the forecast El Niño, which might negatively affect crop conditions later in the season.

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Sourced: Agbiz Morning Market Viewpoint on Agri-Commodities

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Good Improvement in SA Soil Moisture

Arithmus — Wed, 24 Oct 2018 07:41:16 +0000

Although there is uncertainty about the weather outlook later in the 2018/19 summer season with talks of a possible El Niño, the planting period started on good footing. South Africa has had well-timed rain events so far which have improved soil moisture for early planting in the eastern and central regions (see Figure 1).
The planting process has begun in several areas and is set to gain momentum over the next couple of weeks. This is all due to improved soil moisture in the eastern regions, as previously mentioned, and also prospects of widespread higher rainfall in the first week of November, which will further uplift soil moisture and thereafter encourage farmers in the western areas of South Africa to also commence with planting activity.
This is all unsurprising as the optimal planting window for yellow maize and soybeans growing areas, the eastern and central regions of South Africa, opened earlier this month and expected to continue until late November. White maize and sunflower seed optimal planting window will only open at the beginning of next month in the western regions of South Africa and continue until late December.
As we have been highlighting throughout the week, tomorrow we will get a sense of South Africa’s 2018/19 maize area planting when the Crop Estimate Committee releases its monthly data.
For context, the South African farmers planted 2.3 million hectares of white and yellow commercial maize in the 2017/18 production season, down by 12 percent year-on-year. In the same season, the communal farmers or non-commercial maize planting was about 314 835 hectares, down by 14 percent from the 2016/17 production season.

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Sourced: Agbiz Morning Market Viewpoint on Agri-Commodities

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South African farmers intend to increase summer crop hectares in 2018/19

Arithmus — Fri, 26 Oct 2018 06:28:42 +0000

The ‘intentions to plant’ data provided tentative evidence that South Africa could have another good production season, which might keep the country’s grain supplies in good shape at least until 2020. This is under the assumption that the expected El Niño, which we cautioned about in our previous notes, could be fairly weak and potentially occur later in the summer season as some forecasters already suggest. Figures released this afternoon by the national Crop Estimate Committee shows that South African farmers intend to increase the area planting for summer grain and oilseed by 5 percent from 2017/18 season to 4.03 million hectares. Most summer crops showed an uptick, with the exception of sunflower seed and groundnuts. This is partly driven by the favourable agricultural commodity prices.

To dive into the details of the aforementioned summary, South African farmers intend to plant 2.4 million hectares of maize, up by 6% from the 2017/18 production estimate. This was in line with our and Bloomberg’s consensus forecast of 6% y/y uptick in area plantings. About 1.3 million hectares is white maize with 1.1 million hectares being yellow maize, both up from levels planted in the 2017/18 production season.
Soybeans continue to surprise us, pleasantly, as farmers intend to lift the area planting to a new record of 851 800 hectares, up by 8% y/y. This is supported by growing demand in the domestic animal feed market. On the downward side, the area intended for sunflower seed plantings could fall by 4% y/y to 575 000 hectares.
The planting activity has begun in the eastern and central parts of South Africa following recent rainfall which somewhat improved soil moisture. The South African Weather Service forecasts higher rainfall over summer crop growing areas between November 2018 and January 2019, which bodes well with the new season crop. However, the period thereafter could experience dryness associated with expected El Niño, albeit some weather forecasters arguing that it could be fairly weaker.
We worry about the potential impact of this on crops as it could coincides with pollination stages of development of some crops. We will keep a close eye on this in the coming months.

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Sourced: Agbiz, Agribusiness Research

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The Weather will remain a Key Driver of SA Grains and Oilseed Market until February 2019

Arithmus — Wed, 31 Oct 2018 09:25:50 +0000

Between October and February, which is typically planting to pollination, the weather becomes an important factor in the South African grains and oilseeds market and, to some extent, a major driver of prices. While there are concerns about a possible El Niño later in summer, the season started on sound footing with widespread rainfall in the eastern and central parts of the country. Moreover, farmers have also shown some optimism as the summer grains and oilseed area plantings are set to increase by 5 percent year-on-year to 4.03 million tonnes in the 2018/19 production season.
So far, the planting activity has been fairly good in the eastern parts of the country. These good conditions could gain momentum over the coming weeks, not only because the optimal planting window will narrow around mid-month, but also due to a largely favourable weather outlook.
The weather charts this morning currently show prospects of between 20 and 90 millimetres of rainfall over the summer crop growing provinces within the next two weeks. Admittedly, higher rainfall could potentially slow the planting activity in some areas, but potential improvement in soil moisture will have far enriching benefits to the crops later in the season. Possible planting delays will not be much of an issue as some areas could still plant outside of the optimal period, although yield levels could be slightly affected.
The impact of the favourable near-term weather prospects on prices has been muted. For example, yellow maize is up by over 15% y/y at R2 401 per tonne on 30 October 2018. At the same time, white maize price up by roughly 21% y/y at R2 411 per tonne. This looks as if the market is somewhat pricing in the potential decline in production on the grounds of a possible El Niño.
Be that as it may, other institutions such as the International Grains Council are fairly optimistic about South Africa’s 2018/19 maize production at 12.3 million tonnes, down 9% year-on-year (commercial and non-commercial maize) from anticipated lower yields on the back of the forecast El Niño weather phenomenon later in the summer.
To be clear, with a harvest of 12.3 million tonnes, South Africa would remain a net exporter of maize until April 2020. By and large, as a country, we consume about 10.8 million tonnes of maize a year and we will probably have about 3.3 million tonnes of stocks when the 2019/20 marketing year starts in May 2019.
If we add the expected production of 12.3 million tonnes to the potential 3.3 million tonnes of stocks, South Africa’s maize supplies will be in good shape over the next two years, all else being equal.
Aside from maize, the planting activity is underway in other summer crops such as soybean and the farmers are expected to plant a record level of 851 800 hectares. Similar to other crops, the weather will be a key determinant of the overall production. Worth noting, however, the soybean pollination stage could fall in within the rainy period (before El Nino), especially the areas that planted early, which increases a chance of higher yields.

Winter Crops

The weather outlook over the winter crop growing areas of the Western Cape province shows clear skies for the next two weeks, which is a good window for the harvest process that is currently underway. As set out in our previous notes, South Africa’s winter wheat production is estimated at 1.86 million tonnes, well above the previous season’s area of 1.54 million tonnes. The improvement is on the back of higher yields and an expansion in overall area planted.
But some areas of Swartland were hard hit by heavy winds and rainfall in the past few days, which negatively affected the quality and the volume of the crop. Hence, we believe that the Crop Estimate Committee will release its production estimate down next month form the current estimate of 1.86 million tonnes. In terms of prices, the South African wheat prices are up marginally from last year, with the spot price closing at R4 422 per tonnes on 30 October 2018.
We are on the road today, we will be back with the usual Agbiz Morning Market Viewpoint tomorrow, 01 November 2018.

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Sourced, Agbiz, Agribusiness Research

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South African Agricultural Commodities Weekly Wrap

Arithmus — Fri, 02 Nov 2018 09:44:42 +0000

From planting to pollination, which is typically the period between October and February, the weather becomes an important factor in the South African summer grains and oilseeds market.
Fortunately, this year, although there are concerns about a possible El Niño later in summer, the season started on a sound footing with widespread rainfall in the eastern and central parts of the country.
The planting activity is gaining ground in most areas, but it is yet to be seen if it will reach the intended area of 4.03 million tonnes in the 2018/19 production season, an increase of 5 percent year-on-year.
In the winter crop growing areas, harvesting is gaining momentum and the progress is reflected in the volume of wheat delivered to commercial silos in the Western Cape. There will most likely be good progress within the next two weeks as the weather forecast currently shows clear skies over most parts of the province.
The SAFEX beef carcass market experienced a quiet week with prices unchanged from levels seen last week. In terms of the supply, the South African farmers slaughtered 189 108 head of cattle in September 2018, down by 11 percent year-on-year due to the herd rebuilding process after a reduction during the 2015-16 drought.

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Sourced: Agbiz, Agribusiness Research

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SA could receive above normal rainfall within the next three months

Arithmus — Mon, 05 Nov 2018 08:16:30 +0000

Last week, the South African Weather Service noted that ‘the El Niño-Southern Oscillation (ENSO) is still in a neutral phase and although most models indicate a strong strengthening towards an El Niño phase in the early summer season, it is not expected to have an influence on South Africa during the first half of summer.’
The weather agency further indicated that above-normal rainfall conditions are expected over most parts of parts of the country during early summer, which is November 2018 and January 2019. This is evident on the near term weather forecasts which currently show prospects of higher rainfall over the summer crop growing areas of South Africa within the next two weeks. This could help improve soil moisture, which will subsequently benefit the germination process in areas that have planted and boost planting activity in areas that have not yet planted.
With that said, the period between late January and March 2019 could experience dryness associated with expected El Niño, albeit some weather forecasters arguing that it could be fairly weaker. We worry about the potential impact this may have on summer crops as it could coincide with pollination of major grains and oilseeds. We will keep a close eye on this in the coming months.
Aside from the aforementioned weather developments, the dam levels have improved significantly in the Western Cape province, thanks to the recent rainfall (see Figure 1 below).

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Sourced: Agbiz, Agribusiness Research

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The next two weeks could bring positive change in sunflower seed growing areas

Arithmus — Wed, 21 Nov 2018 08:22:34 +0000

There is still limited activity in the sunflower fields due to lower soil moisture on the back of drier weather conditions in the past couple of weeks. But the next two weeks could bring positive change as weather charts currently show prospects of roughly 20 to 90 millimetres of rainfall over the sunflower seed growing areas within the next two weeks. Some areas have already started receiving showers, and this could intensify in the next couple of days.
While the forecast rainfall is a positive development for the 2018/19 production season, it also means that sunflower seed planting could experience a further two weeks’ delay due to wet conditions, but planting should begin as soon as the weather clears.
This is not a main concern in the market as there is still sufficient time for sunflower seed planting. South Africa’s sunflowers seed optimal planting window will only close at the beginning of January 2019 in the main sunflower seed producing provinces such as the Free State and North West. To reiterate a point made yesterday, our recommendations for early plantings in areas that had good soil moisture was due to expectations of drier weather conditions between the ends of January to March 2019. This period could coincide with pollination, which requires moisture. Therefore, in an event of drier weather conditions, yields could be negatively affected.
Also worth noting is that during the drier production seasons of 2014/15 and 2015/16, South Africa’s sunflower seed yields averaged 1.10 tonnes per hectare. If we assume a yield of this size on intended area plantings of 575 000 hectares, South Africa’s 2018/19 sunflower seed production could amount to 632 500 tonnes.
But, this is possibly a worst case scenario, as we don’t believe that the weather conditions could be as dry as 2015-16 period. There are expectations of a weak El Niño. Therefore, if we assume that the 2018/19 sunflower seed yields could amount to 1.28 tonnes per hectare, a five-year average yield, on an area plantings of 575 000 hectares, then production could amount to 736 000 tonnes, down by 14 percent from the previous season.

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Sourced: Agbiz, Agribusiness Research

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