Highlights in today’s morning note
The USDA, in its monthly World Agricultural Supply and Demined Estimate (WASDE) report, placed South Africa’s 2016/17 maize production estimate at 15.3 million tonnes, up 2% from the previous month’s estimate and up 87% from the previous season. This comes on the back of an increase in area plantings, as well as expected higher yields due to favourable weather conditions.
Worth noting is that the USDA’s crop estimate is not directly comparable to the South African Crop Estimate Committee’s figures due to two basic reasons: (1) the marketing years are different, (2) the USDA estimates the overall national maize production, while the Crop Estimate Committee focuses only on commercial maize production. Differences aside, both agencies are painting an optimistic picture for South Africa’s maize supplies this year.
In the first week of this marketing year, the South African farmers delivered 172 908 tonnes of maize to commercial silos. About 52% of this was white maize and 48% was yellow maize.
On the global front – the USDA estimated 2016/17 global maize production at 1.065 billion tonnes, up 10% from the previous season. The key contributors to this season’s global maize production are the US, Argentina, Brazil, South Africa and the EU region. Moreover, the 2016/17 global ending stocks are estimated at 224 million tonnes, up 6% from the previous season.
Looking ahead, the agency placed its 2017/18 global maize production projection at 1.033 billion tonnes, down 3% from the previous season. The ending stocks are estimated at 195 million tonnes, down 13% from the previous season.
Weather forecast for the next eight days shows a possibility of light showers of 16 millimetres along the coastal areas of the Western Cape province, which will have a minimal impact on soil moisture in wheat fields. The province will need high continuous rainfall to recover from the current drier conditions. Unfortunately, the long-term weather shows a possibility of drier conditions throughout the country, which could slow planting progress (as soil moisture is slow).
South African farmers continue to deliver wheat to commercial silos. In the week ending 05 May 2017, wheat deliveries were recorded at 1 588 tonnes, which is 17% lower than the previous week. This brought South Africa’s 2016/17 total wheat deliveries for “week 1 to 31” to 1.85 million tonnes.
On the global front – the USDA forecasts 2016/17 global wheat production at 753 million tonnes, up 2% from the previous season. Moreover, the 2016/17 global ending stocks are estimated at 255 million tonnes, up 5% from the previous season. The key contributors to this season’s global wheat crop are the US, Canada, Argentina, Australia and Russia.
From the demand perspective, Middle-East, North Africa and South East Asia are set to be the key buyers of wheat this season, with import forecast at 18 million tonnes, 29 million tonnes and 25 million tonnes, respectively.
Looking ahead, the agency placed its 2017/18 global wheat production forecast at 738 million tonnes, down 2% from the previous season. The ending stocks are estimated at 258 million tonnes, up 1% from the previous season.
Soybean harvest could be slow in the next few days due to expected wet conditions across the northern parts of the country. In areas that have already harvested, yields are reportedly above average, which supports the view of an expected record crop.
In global markets – the USDA forecasts 2016/17 global soybean production at 348 million tonnes, up 11% from the previous season. At the same time, global ending stocks are estimated at 90 million tonnes, a 17% annual uptick.
The key contributors to this season’s global soybean crop are the US, Brazil, Argentina and China, with production estimated at 117 million tons (+10% y/y), 112 million tons (+15% y/y), 57 million tons (+0.4% y/y) and 12.9 million tons (+9% y/y).
Looking ahead, the agency placed its 2017/18 global soybean production forecast at 345 million tonnes, which is 1% below the previous season. The ending stocks are forecast at 89 million tonnes, which is also 1% decline from the previous season.
The South African sunflower market took a breather during yesterday’s trade session, with selling pressure, as well as a relatively strong Rand against the US Dollar being the key drivers of the market.
On the fields, the harvest is under way around sunflower seed producing provinces. However, the forecast wet weather conditions within the next eight days around the central areas of the country could cause harvest delays.
Going forward the key risk is frost. That said, the weather has been fairly favourable over the past few days and if it remains this way within the next two weeks, the crop could finish off well this season.
In global markets – yesterday the EU’s sunflower seed market lost ground with the price down 0.25% from the previous day, closing at US$404 per tonne, in line with vegetable oil markets. Moreover, favourable weather conditions across many EU countries also added downward pressure on prices.
The EU is set to harvest a big crop in the new season. Estimates from the European Commission shows that 2017/18 sunflower seed production could reach 9.1 million tonnes, which is 7% higher than the previous season. This is on the back of an expected increase in area plantings, as well as favourable weather conditions.
Yesterday the fruit market trade was mixed, but mostly higher, due to light volume day. The bananas market gained 14% from the previous day, closing at R9.22 per kilogramme due to an 11% decline in daily stock level to 159 246 tonnes.
The oranges market was up 1% from the previous day, closing at R3.18 per kilogramme. The support came on the back of lower stock levels of 240 864 tonnes, which is 12% lower than the previous day.
Meanwhile, the apple price was down 2% from the previous day, closing at R6.47 per kilogramme, owing to relatively large stock levels of 256 329 tonnes.
The South African potatoes market extended the previous day’s losses with large stocks adding a bearish pressure to the market.
The day started with stocks at 825 808 tonnes, and during the session the market saw an increase in deliveries which led to a 14% uptick in stocks to 940 600 tonnes, therefore adding bearish pressure to the market.
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