Highlights in today’s morning note
Maize harvest is currently underway in most parts of the country, with yields reportedly above average. With that said, it is still wet in some areas around the Free State province, but harvest should start by end of May. The expected drier weather conditions within the next two weeks should support the harvest process.
On the global front – this morning Chicago maize price was down by 0.28% from the level seen at midday Friday, owing to large global supplies. The 2016/17 global maize production is estimated at 1.059 billion tonnes, up 9% from the previous season.
With that said, weather remains a key focus in US maize market. The forecast for the next eight days shows a possibility of wet conditions, which could cause planting delays. Last week, US farmers had planted 34% of the intended 36.4 million hectares, which is 9% behind the corresponding period last year. This evening the USDA will release its weekly crop conditions update.
Elsewhere, the European Commission forecasts the EU’s 2017/18 maize production at 66.5 million tonnes, which is 10% higher than the previous season. This is on the back of expected increase in area plantings, as well as prospects of favourable weather conditions.
In the Black Sea, data from Ukraine’s Agricultural Ministry showed that 2.4 million hectares of maize had been planted by 03 May 2017, equivalent to 53% of this season’s targeted area. In addition, Russia had planted 4.2 million hectares of maize by 26 April 2017, which 5% ahead of a corresponding period last year.
Although the winter wheat growing areas of the Western Cape are still dry, with lower soil moisture, some farmers have started planting. The weather forecast for the next two weeks show no signs of meaningful rain across the province, which puts the recently planted areas at risk.
Overall, there is still time to make decent progress with regards to plantings if the province could receive rainfall later this month. The planting window runs from April until July.
Last week, the South African Weather Services echoed the message of other international weather forecasters, suggesting that an El Niño weather phenomenon, which is associated with dry and hot weather, is expected to return during the forthcoming spring to summer seasons. Moreover, the World Meteorological Organisation recently observed a 60% probability of an El Nino weather phenomenon later this year. If this materialises, the wheat crop could be negatively affected over the coming months.
On the global front – this morning, the Chicago wheat market lost 0.47% from the level seen at midday Friday, owing to large global supplies of 753 million tonnes in the 2016/17 season, which is 2% higher than the previous season.
US farmers are not out of the woods yet, the weather forecasts for the week show a possibility of wet conditions which could slow planting processes. Last week, the US had planted 31% of the targeted area for this season, which is 21% behind the corresponding period last year. This evening’s USDA data should present an indication of the impact of last weekend’s snow and winds on crops and planting.
In global markets – this morning Chicago soybean price was up 0.21% from the level seen at midday yesterday, due to a recent sale of 132 000 tonnes of US soybean to an unknown destination.
Weather remains a key focus in the US soybean market. The forecast for the next eight days shows a possibility of rainfall in some parts of the US Midwest, which could cause planting delays. With that said, the US farmers had planted 10% of the targeted area last week, which is 3% ahead of the corresponding period last year . This evening, the USDA will release its weekly crop progress update.
The US International Trade Commission is currently investigating a case of possible biodiesel dumping by Argentina and Indonesia. The US will mostly likely impose tariffs if it assessed that these respective countries are supporting their exports with unfair subsidies.
The weather forecast suggests that sunflower seed growing areas of South Africa could see drier conditions over the next two weeks, which should accelerate harvest process. In areas that planted late, particularly the western parts of the North West province, warm conditions could support the maturation process of the crop.
Overall, frost remains a key concern that could potentially reduce sunflower seed yields further. With that said, if it does not materialise until mid-May, the crop could finish off well this season.
In global markets – on Friday the EU’s sunflower seed market gained ground, with the price up 0.50% from the previous day, closing at US$406 per tonne due to strong demand for sunflower oil and meal.
Following a large crop in the 2016/17 season, the EU’s sunflower seed production could increase further by 7% year-on-year in the 2017/18 season to 9.1 million tonnes. This is on the back of an increase in area plantings, as well as expected favourable weather conditions across the region.
Elsewhere, sunflower seed planting is currently underway in the Black Sea region. However, the expected rainfall could cause planting delays this week around the western parts of Ukraine and Russia.
Ukraine had planted 3.1 million hectares of sunflower seed on the 03 May 2017, which is equivalent to 57% of the intended area. This is 9% behind the corresponding period last year owing to adverse weather conditions. At the same time, Russia had planted 1.7 hectares of sunflower seed, which is equivalent to 23% of the intended area for this season.
The SAFEX beef market ended the week on a quiet note with the price unchanged from the previous day’s levels, closing at R46.00 per kilogramme. This was on the back of reduced activity at the stock exchange.
Despite the aforementioned, the market sentiment remains slightly bullish due to easing slaughter activity, as farmers continue to restock their herds after a drought spell. The most recent data from the Red Meat Levy Admin shows that in March 2017, South African farmers slaughtered 238 097 head of cattle which is 6% lower than the corresponding period last year.
The South African potatoes market ended the week in positive territory with lower stock levels adding some support. At the start of the session, the stocks were at 956 348 tonnes, which is well below the levels seen the previous days.
Moreover, during the session, the market saw a decline in deliveries and that led to a 24% decrease in stock levels to 725 644 bags (10 kg bags).
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