weather – Agri Limpopo

Medium term forecasts present some hope.

Arithmus — Mon, 07 Aug 2017 09:48:17 +0000

The recent update for the week ending 31 July 2017 shows that dams averaged 27%, compared to 55% in the same period last year. The medium term forecasts present some hope, as the South African Weather Service’s indicated that there is a possibility of wetter conditions in the south western parts of the country between August and October 2017.

Highlights in today’s morning note

Wheat:

Last week, the Southern Cape region of the Western Cape province received light showers of between 3 and 6 millimetres, which is not sufficient to make an improvement on crop conditions. Meanwhile, other regions of the province remained dry and cool. Overall, the crop is not in good shape and urgently needs moisture in order to develop well this season.

Maize:

The lower maize prices that were seen in the past few days sparked buying interest amongst market participants, thus leading to bargain-buying in Friday’s trade session. Moreover, the weaker Rand against the US Dollar, as well as higher Chicago maize prices also added support to the maize market.

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Soybeans:

There was not much happening in the domestic soybean market as harvest process is already complete. Looking ahead, the domestic soybean market will largely be guided by the Chicago (soybean) price and domestic currency movements.

Sunflower seed:

The harvest process is virtually over with few patches left in the western areas of the North West province. The forecast dry and warm weather conditions within the next two weeks could allow farmers to complete the process smoothly.

RSA Potatoes:

The South African potatoes market lost ground in Friday’s trade session and closed in negative territory due to relatively large stocks of 1.21 million bags (10kg pockets/bag). The price was down by 2% from the previous day, closing at R28.46 per 10kg pocket.

SAFEX beef:

In Friday’s trade session, there was not much happening in the SAFEX beef carcass market. The price remained unchanged from the previous day, closing at R46.00 per kilogramme. However, it is worth noting that the SAFEX beef carcass prices could differ from the physical market due to thinly traded volumes at the stock exchange.

RSA fruit:

The fruit market ended the day mixed in Friday’s trade session. The prices of apples and bananas were down by 5% and 4% from the previous day, closing at R7.14 per kilogramme and R5.66 per kilogramme, respectively. Meanwhile, the price of oranges gained 0.34% from the previous day, closing at R2.95 per kilogramme.

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Spotlight on the US maize market

Arithmus — Mon, 21 May 2018 07:52:06 +0000

Today the focus will be on the US maize market ahead of the weekly crop progress data which is due for release in the evening. In the week of 13 May 2018, about 62 percent of the maize area for this season had already been planted. This, however, is slightly behind last year’s pace of 68 percent in the corresponding period.
Moreover, about 28 percent of the planted crop had already emerged. Given that the weather conditions have been quite favourable in the past couple of days, today’s data is likely to show improvement on crop emergence. The overall delays in plantings were due to unfavourable weather conditions experienced earlier in the season. The conditions have now improved, with the forecasts for the next two weeks showing a possibility of rainfall over most parts of the Midwest. This should improve soil moisture and subsequently benefit the crop.
The USDA forecasts the US 2018/19 maize production at 357 million tonnes, down by 4 percent from the previous season owing to expected lower yields in some States, as well as a slight decline in area plantings. This is almost in line with the International Grains Council estimate, which is currently at 355 million tonnes, also weighed down by similar factors as the USDA.
The global picture is in good shape. The International Grains Council forecasts 2018/19 global maize production at 1.05 billion tonnes, up by a percentage point from the previous year. This is due to expectations of a large harvest in China, Argentina, Brazil, and Russia.
Overall, the global maize developments could have minimal impact on the SAFEX maize prices in the near term due to solid local supplies, which are estimated at 16.4 million tonnes, well above annual consumption of 10.7 million tonnes. Therefore, the SAFEX maize prices could possibly remain at relatively lower levels for some time.

Read the full report by Wandile Sihlobo in the attachment below:

Agbiz Morning Market Viewpoint on Agri-Commodities 21 May 2018

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The weather and trade policy remains topical issues in the SA wheat market

Arithmus — Tue, 28 Aug 2018 07:41:15 +0000

This past weekend the Western Cape province received widespread showers which should slightly improve soil moisture and benefit the crop as it starts to pollinate in some areas.
Although this is a welcome development, it might not lead to widespread improvement in crop conditions across the province. The Swartland and Overberg regions will benefit as the crop was already in good condition. Meanwhile, the southern Cape region might see minimal improvement as part of the crop had already been damaged by drier weather conditions experienced over the past couple of weeks.
In terms of trade policy, the wheat import tariff rate of R640.54 per tonne that triggered on 10 July 2018 was finally published in a government gazette on 24 August 2018, making it an official rate. Nonetheless, this could be short-lived, the wheat import tariff triggered again on 16 August 2018 to R298.45 per tonne due to an uptick in international wheat prices (No2 HRW) on the back of an expected decline in production. This newly calculated rate will also be effective only after publication in a government gazette, of which the timeframe is unclear.
These developments are of importance, not only because South Africa is a net importer, but imports are set to reach 1.9 million tonnes, the second highest level on record, in the 2017/18 marketing year, which ends in September 2018. There could be a decline to levels around 1.6 million tonnes in the 2018/19 marketing year due to expectations of an uptick in local production. With that said, this will remain an important subject as imports will roughly constitute half of local wheat consumption.
Today the Crop Estimate Committee will release its first production estimate for 2018/19 winter wheat. The International Grains Council is quite optimistic, placed its estimate for South Africa’s 2018/19 wheat production at 1.8 million tonnes, up by 20 percent higher than the previous season due to improved weather conditions.

Sourced: Agribusiness Research

Click HERE for the full report.

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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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SA food and non-alcohol beverages accelerated to 3.9%

Arithmus — Thu, 25 Oct 2018 06:24:51 +0000

South Africa’s food and non-alcoholic beverages price inflation accelerated to 3.9% y/y in September 2018, up by 3.5% y/y in the previous month – the highest rate in five months. The uptick was not widespread across the food basket, the key drivers were mainly milk, eggs and cheese; vegetables, non-alcoholic beverages; oils and fats as well as fish. Meanwhile, meat price inflation decelerated from levels seen the previous month, with bread and cereals; fruit; and sugar, sweets and desserts still in deflation, albeit slowly pulling back due to recent increases in raw commodity prices.

The notable uptick in milk, eggs and cheese was due to a combination of factors which include the tail-end effects of avian influenza in the case of eggs which affected the South Africa egg layers flock last year. From a milk perspective, this was more of a seasonality issue, hence we expect milk prices to soften as the summer season approaches, and as milk production increases. The vegetable prices were also underpinned by the seasonality factor, therefore prices should somewhat decelerate in the months to follow when production resumes in most parts of the country, given that early summer rainfall has already started.
While the bread and cereals price was still in deflation in September, the rate of a decline has narrowed, measured to -0.6% y/y, from -2.2% in August 2018. This follows the recovery in commodity prices, with white and yellow maize currently up by more than 20% from levels seen last year. Furthermore, the wheat prices are also up by more than 5% y/y.
But, this does not mean that South Africa’s grain supplies are tight, it has more to do with uncertainty about the weather outlook and effects on crops in the 2018/19 season, given the prospects of a weak El Niño later in summer. This is a key upside risk to food inflation, but will not be as drastic as what we observed in 2015-16. There are sufficient supplies in the market to cushion South Africa, for at least until 2019. The prospects thereafter will depend on the current planting season.
Meat price inflation continued to decelerate due to lower pork prices and a recovery in cattle slaughtering activity, amongst other factors.

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Sourced: Agbiz, Agribusiness Research

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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.

Click HERE for the full report.

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.

Click HERE for the full report.

Sourced, Agbiz, Agribusiness Research

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Global and SA Agricultural Viewpoint

Arithmus — Mon, 26 Nov 2018 08:33:33 +0000

The 2018/19 global maize harvest could be the second largest on record, up by 3% y/y at 1.07 billion tonnes. This is underpinned by expected large harvests in the US, Brazil, Argentina, Ukraine and China. Nevertheless, the global maize stocks will remain tight due to an increase in consumption, particularly animal feed as traditional buyers of wheat are shifting to maize due to price competitiveness. Therefore, the stocks could fall by 13% y/y to 266 million tonnes.
The results of drier weather conditions that affected the wheat crop earlier in the season in Russia, Ukraine, Australia, China, India and the European Union region are reflected in the International Grains Council’s 2018/19 global wheat production estimate of 729 million tonnes, down by 5% y/y. This could then lead to a 3% y/y decline in stocks to 262 million tonnes.
The 2018/19 global soybean production is set to increase by 8% y/y to 367 million tonnes on the back of expected large harvests in the US, Brazil, Argentina, China, India, Paraguay, Ukraine, Russia and Uruguay, amongst others. As a result of this improvement in production, the 2018/19 global soybean stocks could be up by 28% y/y to 51 million tonnes, despite the expected uptick in consumption over the corresponding period. Similar to soybeans, the 2018/19 sunflower seed production is projected to increase by 5% y/y to 52 million tonnes boosted by an expected large harvest in the Black Sea region.
From a South African perspective, the aforementioned developments will have minimal direct implications in the case of maize as South Africa is a net exporter. But other commodities are interlinked to the SAFEX market as the country is a net importer of wheat, soybeans and sunflower seed by-products. The price dynamics are somewhat a result of the aforementioned fundamental factors, and the price movements in the near-term are likely to maintain a similar trend, except soybeans which continue to be largely affected by the US-China trade dispute.

Click HERE for the full report.

Sourced: Agbiz, Agribusiness Research

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The recent outbreak of foot-and-mouth disease could disrupt SA beef exports

Arithmus — Mon, 14 Jan 2019 14:37:39 +0000

The South African beef sector will be under pressure in 2019 due to rising feed costs, as well as potentially slowing exports on the back of a foot-and-mouth disease outbreak.
From a consumer perspective, the beef industry challenges will, however, have positive short-to-medium term benefits as slowing exports would translate into an increase in domestic supply and, in turn, slow meat price inflation.
Our initial maize production estimate of 12.2 million tonnes will not materialise, the crop will most likely be lower due to a potential decline in area planting, as well as prospects of lower yields in late-planted areas.
Soybean harvest will most likely be lower than the 2017/18 production season due to similar factors as maize, which is a decline in area plantings and expectations of poor yields in some areas.
Sunflower seed typically surprises by doing well in seasons that are characterised by prolonged dry spells, as farmers tend to shift from maize to sunflower seed plantings in late-rain seasons. Therefore, sunflower production projections remain uncertain, at least until planting data is received.
The weather will continue to play a key role in the South African agricultural markets in the next three months. Thereafter, the focus will shift to winter crop producing areas. The near-term precipitation prospects are constructive (see page 6).
South Africa’s rice imports will increase in 2019 driven by an uptick in consumption.
The tough production conditions in the grains and oilseeds subsectors will most likely add upward pressure on consumer prices, but we do not expect a notable uptick in headline food price inflation, as lower meat prices will somewhat overshadow the potential upswings.

Click HERE for the full report.

Sourced: Agbiz, Agriculture Research

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