Highlights in today’s morning note
Harvest is currently underway in areas that planted early in the season. So far, yields are reportedly above average, which supports the National Crop Estimate Committee’s view of a possible second-biggest crop on record. Moreover, forecast drier weather conditions for the next two weeks presents conducive condition for the harvest process.
From a trade perspective, there were no imports in the last week of the 2016/17 marketing year, which ended on 28 April 2017. The last imports were in the week ending 31 March 2017, coming in at 42 575 tonnes. Overall, South Africa’s 2016/17 total maize imports stand at 2.26 million tonnes, which is 98% of the seasonal import forecast.
In the same week, 28 April 2017, South Africa exported 12 602 tonnes of maize to regional markets (Africa), with 75% share being white maize and 25% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 814 219 tonnes (64% is white maize and 36% is yellow maize).
On the global front, this morning Chicago maize price was up by 0.82% from the level seen at midday yesterday, owing to prospects of planting delays in the US Midwest.
Weather remains a key focus in US maize market. The forecast for the next two weeks shows a possibility cold temperatures and rainfall, which could cause planting delays. Earlier this week, US farmers had planted 34% of the intended 36.4 million hectares, which is 9% behind the corresponding period last year. Moreover, US ethanol production data for the week ending 28 April 2017 came in at 986 000 barrels a day, down 0.1% from the previous week, but still 7% higher than the corresponding period last year.
The weather remains a key concern for South Africa, particularly the Western Cape province. The forecast for the next two weeks show no signs of meaningful rain, which could stall planting activity since the soil moisture is low across the province. That said, there is still time as planting window only closes in July.
From a trade perspective, in the week ending 28 April 2017, South Africa imported 8 919 tonnes of wheat. About 80% came from the US and 20% from Germany. This brought the country’s 2016/17 total wheat imports to 461 480 tonnes, which is 31% 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 28 April 2017, total exports reached 898 tonnes, all went to regional markets. Overall, South Africa’s 2016/17 total wheat exports currently stand at 60 730 tonnes. About 35% of this went to Zimbabwe, 10% to Namibia, 9% to Botswana, 25% to Lesotho, 5% to Mozambique, 14% to Zambia and 2% to Swaziland.
On the global front – this morning, the Chicago wheat market gained ground this morning, with the price up 0.45% from the level seen at midday yesterday, owing to unfavourable weather conditions in the US.
Weather remains a key theme in the US wheat market, with annual Wheat Quality Tour of Kansas currently underway. This comes after a weekend heavy snow and winds that caused crop damage in most areas of the US. The extent of the damage is still unknown and an accurate view will transpire over the coming weeks after the completion of the crop assessment.
In global markets – this morning Chicago soybean price was up 0.63% from the level seen at midday yesterday, due to expected planting delays.
Weather remains a key focus in the US soybean market. So far, farmers remain ahead of the planting schedule. Earlier this week, the USDA data showed that US farmers had planted 10% of the targeted area, which is 3% ahead of the corresponding period last year . However, the weather forecast for the week shows a possibility of rainfall within the next eight days, which could delay plantings.
For South America, the weather is also a key factor as harvest process is still underway. Current forecasts suggest that the next eight days could remain wet, which could possibly cause soybean harvest delays and also jeopardise logistics in Argentina. On the 03 May 2017, Argentina’s soybean harvest was 44% complete, ahead of the same period last year. Informa Economics slashed its estimate for Argentina’s soybean production estimate by 700 000 tonnes to 56.8 million tonnes.
In Brazil, soybean harvest is virtually over, was estimated at 98% done on the 03 May 2017. Informa Economics lifted its estimate for the country’s 2016/17 soybean production by 2 million tonnes from the previous one to a record 113 million tonnes. From a trade perspective, in April 2017, Brazil exported 10.4 million tonnes of soybean, which is the biggest volume ever dispatched in a single calendar month..
In global markets – yesterday, the EU’s sunflower seed market lost ground, with the price down by 0.25% from the previous day, closing at US$404 per tonne owing to large global supplies.
The 2016/17 global sunflower seed production is estimated at 48 million tonnes, up by 14% from the previous season. This is on the back of an 8% year-on-year increase in area plantings to 27.5 million hectares. The key contributors to this global production uptick are the EU, Moldova, Ukraine, China and Russia. This has subsequently led to higher exports, with the International Grains Council placing its 2016/17 global sunflower seed exports forecast at 2.1 million tonnes, up 3% from the previous season.
Moreover, the 2017/18 season is set to bring a big crop for most regions. Preliminary estimates for the EU suggest that sunflower seed production could reach 9.1 million tonnes, which is 7% higher than the previous season .
Elsewhere, the Black Sea sunflower oil market saw another quiet session, with the price unchanged from the previous day’s level, closing at US$726 per tonne.
Sunflower seed planting is currently underway in most parts of the Black Sea. This week, however, planting could be delayed in the western parts of Ukraine and Romania due to expected rainfall. Data from Ukraine’s Agricultural Ministry showed that on the 28th April 2017, sunflower seed plantings were completed on 2.3 million hectares, which is equivalent to 43% of the intended area. Russia had planted 1.7 hectares of sunflower seed by 02 May 2017. This is equivalent to 23% of the intended area for this season.
The South African potatoes market saw extended gains during yesterday’s trade session, with the price up 7% from the previous day, closing at R33.85 per bag (10 kilogrammes). This is the highest price level in a month. These gains were on the back of lower stock levels due to lower deliveries over the long weekend.
With that said, during the session the market saw an uptick in deliveries as harvest gains momentum and that led to a 14% uptick in stock levels to 956 348 bags (10 kg bags).
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