Highlights in today’s morning note
The South African farmers delivered 872 433 tonnes of maize to commercial silos in the week ending 02 June 2017, which is 11% higher than the previous week’s deliveries. About 52% of this was white maize and 48% was yellow maize. This brought the country’s 2016/17 total maize deliveries for “week 1 to 5” to 2.5 million tonnes.
South Africa has large maize supplies this season – estimated at 16.05 million tonnes, up 31% from the 2016/17 season. This figure includes opening stock of 1.01 million tonnes – as at 01 May 2017 – as well as expected commercial deliveries of 15.01 million tonnes.
This is well above the country’s annual maize needs of 10.5 million tonnes. Given the expected lower exports of 2.2 million tonnes, this means that the country will have large carry-over stocks of over 3.3 million tonnes which will keep maize prices under pressure over the short-to-medium term.
On the global front – this morning, the Chicago maize market was up 1.58% from levels seen at midday yesterday due to ongoing concerns that dry weather conditions in the Midwest could negatively affect the recently planted crops.
There is still uncertainty regarding the new season’s winter wheat crop due to dryness in the Western Cape province. Thus far, farmers have managed to plant approximately 90% of the crop but they could reach the estimated area of intentions to plant of 325 000 hectares within the next few weeks.
In the near-term, however, the current storm and expected rainfall could ease concerns and improve soil moisture levels in the province.
In the longer-term, there are still lingering concerns that the El Niño weather pattern, typically associated with hot and dry weather conditions, may return later this year to the detriment of the crops. Data from the Australian Bureau of Meteorology shows that there is a 50% chance of El Niño developing in 2017, which is approximately twice the normal likelihood.
Some farmers continue to deliver the old-season wheat crop to commercial silos. In the week ending 02 June 2017, wheat deliveries were recorded at 1 036 tonnes, which is 7% lower than the previous week. Overall, South Africa’s 2016/17 total wheat deliveries for “week 1 to 34” currently stand at 1.85 million tonnes.
On the global front – this morning, the Chicago wheat market was up by 1.36% from levels seen at midday yesterday owing to drier weather conditions across the US Midwest.
South Africa’s 2017/18 soybean supplies could increase by 20% from the previous season to 1.29 million tonnes. This includes an opening stock of 84 792 tonnes – as at 1 March 2017 – as well as commercial deliveries of 1.20 million tonnes.
The weather forecast shows a possibility of favourable dry conditions across the soybean growing areas of the country within the next two weeks, which supports harvest activity in areas that are completing the process. Most parts of the country have received exceptional yields, which supports the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes.
In global markets – this morning Chicago soybean price was up 0.75% from levels seen at midday yesterday, due to spillover support from the maize market.
There are speculations that US soybean acreage could potentially decline from the expected 36.35 million hectares, as warm weather conditions will offer maize farmers an opportunity to plant more land. Initially, there were talks that potential delays in maize planting would mean an increase in soybean – as its planting window stretches beyond the maize one.
The South African potatoes market saw extended losses during yesterday’s trade session with the price down 5.54% from the previous day, closing at R27.79 per bag (10 kg bag). These losses came on the back of higher stocks of 1.01 million bags (10kg bags), a 10% daily uptick.
During the session, the market saw an increase in deliveries due to ongoing harvest activity. This subsequently led to 7% upticks in daily stocks to 1.08 million bags (10 kg bags).
SAFEX Beef carcass:
In yesterday’s trade session, the SAFEX beef carcass price remained flat due to lower traded volumes at the stock exchange. Worth noting is that these prices could differ from the physical market.
The sentiment in the physical market remains bullish due to easing slaughter activity, as farmers continue to restock their herds after a 2015-16 drought spell. The recent data from the Red Meat Levy Admin shows that South African farmers slaughtered 193 373 head of cattle in April 2017, which is 19% lower than the previous month and the corresponding period last year.
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