Highlights in today’s morning note
The forecast dry and warm weather conditions within the next two weeks should accelerate harvest activity across the country. Harvest is almost complete in the irrigation maize producing areas, whereas in dryland areas the process is still at initial stages. In most provinces, the harvest process is still at roughly 20% complete.
On the global front – this morning, the Chicago maize market was down 0.27% from levels seen at midday yesterday owing to good planting progress.
The US had planted 96% of the intended 36.4 million hectares of maize on 04 June 2017, which is 1% behind the corresponding period last year. About 86% of the crop had already emerged, compared to 88% for the same period last year. However, wet conditions have negatively affected the crop. Evidently, only 68% of the crop was rated good/excellent, which is 7% below the same period last year.
The weather remains a key risk in the market as the crop enters early growing stages. The forecast for the week shows a possibility of drier conditions in some parts of Midwest which should allow planting to finish off smoothly.
After months of prolonged dryness, the weather forecast for the week shows a possibility of rainfall across the central and western parts of the Western Cape province. This bodes well with winter wheat growing areas which currently need moisture in order for crops to germinate and grow well. The winter wheat farmers in the province have managed to plant roughly 80% to 90% of the crop, despite the drier conditions.
With that said, the long-term weather forecast is still concerning, it shows a possibility of drier and warm conditions across the country, which is not conducive for winter wheat growing areas that need moisture, particularly the Western Cape province. At the same time, the winter wheat irrigation areas of Northern Cape and Free State provinces which plant nearly half of South Africa’s wheat crop could thrive well this season as dam levels improved on the back of summer rainfall .
On the global front – this morning, the Chicago wheat market was up by 070% from levels seen at midday yesterday owing to unfavourably dry weather conditions across the US Midwest.
The US farmers have completed spring wheat plantings. On 04 June 2017, about 90% of the crop had already emerged, which is 5% behind the corresponding period last year. However, only 55% of the crop was reportedly good/excellent, compared to a rate of 79% in the corresponding period last year.
All of this is a result of drier weather conditions seen over the past few days. However, the forecast for the coming weekend offers some hope, showing a possibility of wet conditions across the Midwest which is supportive of spring wheat growing conditions.
Soybean harvest process is virtually over across South Africa, with exceptional yields recorded in many places. This supports the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes.
The uptick in production has started to lead to positive gains on the consumption side of the value chain. It boosted the utilisation of the country’s soybean crushing plants activity by 15% month-on-month in April 2017 to 33% .
In global markets – this morning Chicago soybean price remained flat from levels seen at midday yesterday.
Overall, the weather remains a key risk in the US soybean market. The forecast for the next few days shows a possibility of drier conditions in the Midwest which could potentially accelerate planting activity.
With that being said, the US farmers have already made notable progress regarding plantings in the past few weeks. On the 04 June 2017, about 83% of the intended 36.35 million hectares for soybeans this season had been planted, which 1% ahead of the corresponding period last year. About 58% of the crop has already emerged, which is a 21% improvement from the previous week, but 4% below the corresponding period last year.
As indicated in our note yesterday, sunflower seed harvest is almost complete across many parts of the country. The North West province has harvested roughly 90% of the crop, with yields marginally above average levels of 1.2 tonnes per hectare . This province produces approximately 36% of South Africa’s sunflower seed crop.
In the Free State province, which produces more than half of South Africa sunflower seed crop, the harvest is in full swing with yields reportedly above average. Overall, the yields obtained thus far in many parts of the country suggest that the total sunflower seed crop could reach the National Crop Estimate Committee’s estimate of 853 470 tonnes, which is up 13% from the previous season.
From a global perspective – In yesterday’s trade session the EU’s sunflower seed market gained 0.74% from the previous day, closing at US$409 per tonne. This was mainly due to spillover support from the crude oil market.
Meanwhile, the Black Sea sunflower oil market lost 0.27% from the previous day, closing at US$733 per tonne due to large vegetable oil supplies in the region.
Looking ahead, there is rising optimism regarding the EU’s 2017/18 sunflower seed production. The European Commission forecasts production at 9.1 million tonnes, which is 6% higher than the 2016/17 season. In the Black Sea region, Ukraine had planted 5.5 million hectares of sunflower seed on the 1st of June 2017, which is equivalent to 102% of the initially intended area. At the same time, Russia’s sunflower seed planting was estimated at 97% complete.
The South African potatoes market lost ground during yesterday’s trade session with the price down 1.39% from the previous day, closing at R28.46 per bag (10 kg bag). These losses came on the back of higher stocks of 1.3 million bags (10 kg bags).
However, during the session, the market saw strong buying interest, coupled with lower deliveries after a weekend. This subsequently led to a 30% decline in daily stocks to 915 890 (10 kg bags).
The fruit market ended the day mixed during yesterday’s trade session. The apple price was up 2% from the previous day, closing at R6.47 per kilogramme due to strong buying interest. The oranges market gained 4% from the previous day, closing at R2.34 per kilogramme due to relatively lower stocks of 430 102 tonnes.
Meanwhile, the bananas market lost 9% from the previous day, closing at R6.09 per kilogramme. These losses came on the back of a 19% increase in daily stocks to 164 424 tonnes.
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