Highlights in today’s morning note
Forecast wet conditions across the eastern parts of South Africa within the next eight days could cause harvest delays. So far, the areas that have already harvested received above average yields, which supports the estimates of a bumper harvest this season.
From a trade perspective, there were no imports in the first week of the 2017/18 marketing year, which started on 01 May 2017. In fact, we do not foresee any imports this season due to expected large supplies. South Africa has managed to regain its status as a net exporter of maize, following large import volume of 2.3 million tonnes in the 2016/17 season.
South Africa’s first consignment of maize exports this season amounted to 16 786 tonnes, all went to African markets. About 88% share was white maize and 12% being yellow maize. This season’s maize exports are set to reach 2.7 million tonnes. About 52% of this is set to be white maize and 48% to be yellow maize.
As indicated in our note yesterday, yellow maize will most likely find buyers in the global market, while white maize will likely face a low uptake. This is because white maize is traditionally exported to African markets, which will be well supplied from domestic production this season.
Yesterday the South African wheat market received a boost from the weaker Rand against the US Dollar, as well as higher Chicago wheat prices.
Also helping yesterday’s wheat prices are forecasts of drier conditions across South Africa’s winter wheat growing areas. Some farmers have started planting in parts of the Western Cape province, despite the drier conditions but if there are no improvements over the coming weeks, as weather forecasts suggest, the planted crops stand a risk of failing to germinate. With that said, there is still time to make decent progress with regards to plantings if the province could receive rainfall later this month. The planting window is active from April until July.
From a trade perspective, South Africa imported 7 888 tonnes of wheat in the first week of this month, all from Germany. This brought the country’s 2016/17 total wheat imports to 469 389 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 first week of this month, total exports reached 1 113 tonnes, all went to regional markets. Overall, South Africa’s 2016/17 total wheat exports currently stand at 61 911 tonnes. About 35% of this went to Zimbabwe, 10% to Namibia, 10% to Botswana, 25% to Lesotho, 5% to Mozambique, 13% to Zambia and 2% to Swaziland.
Harvest process is currently underway across the country and benefitted from favourable weather conditions over the past few weeks. Yields are reportedly above average in most parts of the country, which supports the view of an expected record crop. That said, the expected rainfall across the eastern parts of the country within the next eight days could potentially cause harvest delays in areas that have not yet completed the process.
In global markets – this morning Chicago soybean price was up by 0.94% from the level seen at midday yesterday, also supported by forecasts of unfavourable weather conditions.
Weather forecast has changed significantly in the US Midwest, it now shows a possibility of wet conditions within the next eight days, which could cause planting delays. Earlier this week, the US farmers had planted 14% of the targeted acreage, which is 7% behind the corresponding period last year. The delays were already caused by adverse weather conditions experienced last week .
The market awaits the USDA’s World Agricultural Supply and Demand Estimates (WASDE) report which is due for release this evening. Last month, the agency estimated 2016/17 global soybean production at 345 million tonnes, up 11% from the previous season, with key contributors being the US, Brazil, Argentina, Paraguay and China.
Weather conditions remain favourable for harvesting across sunflower seed producing regions. The forecast for the next two weeks presents a possibility of drier conditions which should accelerate harvest activity. In areas that planted late, particularly the western parts of the North West province, drier weather conditions could support the maturation process of the crop.
Besides the aforementioned, frost remains a key concern that could potentially reduce sunflower seed yields in the country. With that said, if it does not materialise in the next two weeks, the crop could finish off well this season.
In global markets – yesterday the EU’s sunflower seed market saw marginal losses with the price down 0.49% from the previous day, closing at US$405 per tonne, due to favourable weather conditions for the new season crop.
The European Commission forecast EU’s 2017/18 sunflower seed production at 9.1 million tonnes, which is 7% higher than the previous season. This expected uptick is on the back of prospects of an increase in area plantings, as well as favourable weather conditions.
After seeing good gains the previous day, the Black Sea sunflower oil market took a breather during yesterday’s trade session, easing at US$739 per tonne.
With the new season sunflower seed planting currently underway in the Black Sea region, weather becomes an important factor in the market. The forecast for the week shows a possibility of wet conditions across Ukraine and Russia.
Ukraine had planted 70% of the intended area on the 09 May 2017, well above the corresponding period last year. At the same time, Russia had planted 32% of the intended area for this season, also above the corresponding period last year
The South African potatoes market traded mostly lower and closed in negative territory during yesterday, with large stock levels adding pressure to the market.
Although the session started off with lower stocks of 469 350 tonnes, the increase in deliveries during the session led to a notable recovery in stocks to 825 808 tonnes, thus adding bearish pressure to the market. This was linked to an increase in harvest activity as people returned to work after a weekend.
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