Agbiz Morning Market Viewpoint on Agri-Commodities: 11 April 2017

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April 11, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 11 April 2017

Maize: 

Harvest process is underway in some parts of South Africa, particularly the irrigation and the areas that planted early in the season. The process will be in full swing towards the end of May 2017. However, the areas that planted late still need rainfall in order to finish off well. Fortunately, the weather forecast presents a possibility of showers within the next eight days, which could be beneficial for the crop.

 

On the global front, this morning Chicago maize price were up by 2.23% from the level seen at midday yesterday, owing to US maize planting delays.

 

US farmers have started planting the 2017/18 maize crop. In the week ending 09 April 2017, the country had planted 3% of the intended area, which is 1% behind the corresponding week last year. With that said, this was in line with a 5-year average progress.  

 

The 2017/18 US maize plantings are estimated at 36.4 million hectares, which is  4% lower than the previous season and well below market expectations.

 

Weather forecasts for the week show a possibility of rainfall in most parts of the US Midwest. This could cause planting delay but will improve soil moisture.

 

Wheat: 

Weather remains a key focus for South Africa’s winter wheat farmers, as planting process is set to commence soon. Fortunately, the forecasts paint a promising picture with prospects of rainfall with the next eight days. Moreover, the South African Weather Services suggests that there is a likelihood of above-normal rainfall from June to August 2017, which will be positive for the new season crop .

 

On the global front, this morning Chicago wheat price was up by 1.24% from the level seen at midday yesterday, owing to spillover support from the maize market.

 

Yesterday, the USDA indicated that 56% of US winter wheat crop was rated good/excellent. This is a 5% improvement from the previous week, and 3% above the corresponding period last year. This improvement is mainly on the back of recent showers in some parts of the US Plains. Informa Economics forecasts US 2017 winter wheat production at 35 million tonnes, which is 23% annual decline.

 

Moreover, spring wheat plantings are underway, with progress estimated at 12% of the intended area, which is 7% ahead of the corresponding period last year.

 

Elsewhere, spring grain planting is underway in Russia. According to the country’s Ministry of Agriculture, on the sixth of April 2017, about 1.1 million hectares had already been planted. This is equivalent to 3% of intended area.

 

Soybean:

Soybean harvesting in underway around the eastern parts of South Africa, but not yet in full swing. The yields are reportedly average to above average, which supports the National Crop Estimate Committee’s view of a possible soybean record crop of 1.2 million tonnes. The expected rainfall within the next eight days could cause harvest delays in some areas, but still, benefit the areas that planted late.

 

In global markets, this morning Chicago soybean price was up by 0.11% from the level seen at midday Friday, owing to wet weather conditions in Argentina.

 

Weather forecast shows a possibility of rainfall this week across many parts of South America, which could possibly cause harvest delays in Brazil. On the 10th of April 2017, Brazilian farmers had harvested 85% of the soybean crop, ahead of the corresponding period last year.

 

In addition, AgRural lifted its estimate for Brazil’s 2016/17 soybean production by 4.6 million tonnes to 111.6 million tonnes, which is 17% higher than the previous season.  This upward revision was largely on the back of expected higher yields due to favourable weather conditions.

 

In Argentina, the crop is in good condition, but there are concerns that excessive wet weather wet weather conditions could cause crop damage. The International Grains Council forecasts Argentina’s 2016/17 soybean crop at 56 million tonnes, which is 5% lower than the previous season.

 

Sunflower seed: 

The forecast rainfall within the next two weeks could cause harvest delays in areas that have started with the process. Meanwhile, the late planting areas could still benefit, particularly the western parts of North West province. 

 

In global markets, yesterday the EU’s sunflower seed market extended the previous day’s losses, with a price down by 0.25%, closing at US$393 per tonne. These losses are on the back of large supplies, as well as positive prospects for the 2017/18 EU’s sunflower seed crop. 

 

The EU’s 2016/17 sunflower seed is estimated at 8.6 million tonnes, which is 4% higher than the previous season. Moreover, the next season promises larger increases, with the  2017/18 sunflower seed production estimated at 9.1 million tonnes, which is 7% higher than the 2016/17 season.

 

The Black Sea sunflower oil market also saw bearish pressure, with the price down by 1% from the previous day, closing at US$716 per tonne. This was also on the back of large supplies. Ukraine’s 2016/17 total sunflower seed production is estimated at 14.0 million tonnes, which is a 17% annual increase. Russia’s 2016/17 sunflower seed production is estimated at 11.0 million tonnes, a 10% annual increase.

 

Looking ahead, data from Ukraine’s Agricultural Ministry shows that on the seventh of April 2017, the country’s spring grains sowing was completed on 2.0 million hectares, which is equivalent to 83% of the intended area.  This included sunflower seed of 348 000 hectares, which is 6% of the intended area for the 2017 crop.

 

SA fruit:

Yesterday the Johannesburg Fresh Produce Market ended the day mixed. The apple price was up by 3% from the previous day, following a 33% decline in daily stock levels to 153 858 tonnes.

 

The oranges market saw substantial gains of 16% from the previous day’s level, closing at R3.46 per kilogramme.  This is after strong buying interest led to a 62% decline in stock levels to 71 640 tonnes.

 

Meanwhile, the bananas price lost 0.35% from the previous day, closing at R8.66 per kilogramme due to relatively large stock levels.

 

Potatoes:

The South African potatoes market extended the previous day’s losses, with the price down by 5% from the previous day’s level, closing at R23.31 per bag (10 kg bags). These losses were mainly on the back of large stock levels that were seen at the start of the session, at 1 130 727 bags (10 kg bags).

 

However, during the session, the market saw strong buying interest, which coincided with lower deliveries, following reduced harvest activity during the weekend. All of this led to a 20% decline in stock levels to 899 448 kg (10 kg bags).
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