Agbiz Morning Market Viewpoint on Agri-Commodities: 01 March 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 28 February 2017
February 28, 2017
28 February 2017 South Africa: lots of grains and oilseeds on the horizon
March 2, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 01 March 2017

Highlights in today’s morning note

Maize:

The CEC released their first estimates of the season and projected South Africa’s 2016/17 total maize production at 13.92 million tonnes, which is 78% annual increase. This is 17% higher than the Agbiz estimate of 11.90 million tonnes. Worth noting, however, is that the CEC estimates are only preliminary, and therefore, we will get a much clearer view of the crop over the coming months.

From a trade perspective – in the week ending 27 February 2017, South Africa’s maize imports came in at 17 623 tonnes all yellow maize from Ukraine. This placed South Africa’s 2016/17 yellow maize imports at 1.31 million tonnes – 76% of the seasonal import forecast. Moreover, South Africa’s 2016/17 white maize imports stand at 668 504 tonnes – 89% of the seasonal import forecast. Overall, South Africa’s 2016/17 total maize imports stand at 1.98 million tonnes, which is 80% of the seasonal import forecast.

In the same week, South Africa exported 13 883 tonnes of maize to regional markets (Africa), with 71% share being white maize and 29% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 658 861 tonnes (62% is white maize and 38% is yellow maize).

FYI: South African maize exports should access new markets

Wheat:

South Africa’s final wheat production estimate was revised up by 1% from the previous estimate to 1.90 million tonnes due to higher yields on the back of favourable weather conditions. More importantly, this is 32% higher than the previous season’s crop of 1.44 million tonnes. Subsequently, wheat imports for this season could decline by 25% from 2015/16 marketing year to 1.5 million tonnes.

The recent trade figures show South Africa’s wheat imports for the week ending 24 February 2017 reached 48 135 tonnes. About 59% was from Poland, 29% from Germany and 12% from the US. This is 10% higher than the previous week’s imports. Overall, South Africa’s 2016/17 total wheat imports stand at 296 224 tonnes, which is 20% of the seasonal import forecast (1.5 million tonnes).

Although a net importer of wheat, South Africa continues to export wheat to regional markets. In the week ending 24 February 2017, total exports reached 3 142 tonnes, all went to regional markets (Africa). Overall, South Africa’s 2016/17 total wheat exports currently stand at 39 745 tonnes. About 53% of this went to Zimbabwe, 10% to Namibia, 10% to Botswana, 16% to Lesotho, 8% to Mozambique, and 3% to Swaziland.

From the climate perspective, the Australian Bureau of Meteorology noted that there is an increasing likelihood that an El Niño weather event could appear over the Pacific Ocean in the second half of 2017, potentially giving rise to a period of widespread hot and dry conditions. This could potentially affect the 2017/18 winter wheat production. That said, more information will unfold as the season progresses.

Soybean:

South Africa’s soybean crop is in fairly good condition throughout the country. The expected dry spell in some parts of the country this week should offer some relief for the crops after high rainfall over the past two weeks.

The first production estimates for South Africa’s soybean crop reached 1.07 million tonnes, which is 44% higher than the previous estimate due to expected higher yields. If this materialises, it will be a record crop for the country, with the second largest being 2014/15 crop.

The provinces that are set to show the notable contribution to the expected overall soybean production volume is Mpumalanga, Free State, Kwa-Zulu Natal and Gauteng, with a share of 41%, 36%, 8% and 5%, respectively.

Sunflowerseed:

South Africa’s sunflower seed crop is in fairly good condition and expected dry weather, with scattered showers over the next two weeks should allow the sunshine on crops, following weeks of heavy rainfall. Recent indications from the CEC suggest that South Africa’s 2016/17 sunflower seed production could reach 928 620 tonnes. If this materialises, it would be the largest crop in 16 years.

In global markets – yesterday the EU’s sunflower seed market gained ground, with the price up by 0.24% from the previous day’s level, closing at US$417 per tonne. These gains were still on the back of solid global demand for sunflower seed products (oil and meal).

Meanwhile, the Black Sea region’s sunflower seed oil market saw marginal losses of 0.13% from the previous day’s levels, closing at US$741 per tonne.

Potatoes:

Following a 19% decline in stock levels in the previous day, the South African potatoes market found support in yesterday’s session and closed in positive territory. The price was up by 7.70% from the previous day’s level, closing at R44.08 per bag (10 kg bag).

SA fruit:

The Johannesburg Fresh Produce Market has been very volatile over the past few weeks, with underpinning driver being the stock levels and buying interest. Yesterday the apple price gained 7.55% from the previous day’s level, closing at R7.55 per kilogramme. This comes after an increase in buying interest led to an 18% decline in stock levels to 211 027 tonnes.

The bananas market clawed back the previous day’s losses, with the price up by 18.48% from the previous day’s level, closing at R6.41 per kilogramme. Meanwhile, the oranges market saw significant losses and closed at R11.26 per kilogramme.

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