Agbiz Morning Market Viewpoint on Agri-Commodities: 15 March

Highlights in today’s morning note

Maize:

Weather conditions remain favourable for the maize crop throughout South Africa. The forecast light showers in eastern areas of the country are unlikely to make a meaningful improvement in the crop conditions, as it is already maturing. At the same time, dry and warm weather conditions in the western and central parts of the country bode well with the crop at maturing stages.

Although South Africa is set to regain its status as a net exporter of maize in 2017/18 marketing year, the country remains a net importer of maize in the 2016/17 marketing year, which ends on the 30 April 2017.

In the week ending 10 March 2017, South Africa saw a record weekly yellow maize imports of 113 040 tonnes, 68% from Ukraine and 32% from the US. This placed South Africa’s 2016/17 yellow maize imports at 1.49 million tonnes – 90% of the seasonal import forecast. Moreover, South Africa’s 2016/17 white maize imports stand at 658 809 tonnes – 90% of the seasonal import forecast. Overall, South Africa’s 2016/17 total maize imports stand at 2.14 million tonnes, which is 90% of the seasonal import forecast.

In the same week, South Africa exported 15 501 tonnes of maize to regional markets (Africa), with 73% share being white maize and 27% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 691 244 tonnes (62% is white maize and 38% is yellow maize).

Looking ahead, South Africa’s 2017/18 total maize exports are forecast at 2.5 million tonnes. About 56% of this is set to be white maize and 44% to be yellow maize. This comes on the back of an expected rebound in domestic production.

Wheat:

Weather forecast for the domestic winter wheat growing areas, such as the Western Cape province, remain dry and warm. Ideally, these areas would start to get rainfall around April and May, so that plantings can progress smoothly. However, the forecasts suggest that this season could be dry due to expected El Niño weather pattern later this year . That said, more information about this will unfold as the season progresses.

From a trade perspective, the recent trade figures show that South Africa’s wheat imports for the week ending 10 March 2017 were at 33 699 tonnes, all from Germany. This is 49% lower than the previous week’s imports. Overall, South Africa’s 2016/17 total wheat imports stand at 396 326 tonnes, which is 26% 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 week ending 10 March 2017, total exports reached 1 540 tonnes, all went to regional markets (Africa). Overall, South Africa’s 2016/17 total wheat exports currently stand at 42 687 tonnes. About 51% of this went to Zimbabwe, 10% to Namibia, 9% to Botswana, 20% to Lesotho, 7% to Mozambique, and 3% to Swaziland.

Sunflower seed:

There are reports of sclerotinia disease in some sunflower seed fields in the North West province. However, the extent of it is unknown at this stage. This poses a risk in the overall crop as it could lead to lower yields if it is not controlled effectively. The National Crop Estimate Committee forecasts the North West province’s 2016/17 sunflower seed production at 304 500 tonnes, which is 33% of the national production forecast.

In global markets – the EU’s sunflower seed market saw a fairly quiet day, with prices unchanged from the previous day’s level, closing at US$412 per tonne. Overall, there is still lingering bearish sentiment in the EU market emanating from large supplies .

The Black Sea region’s sunflower seed oil market saw extended losses during yesterday’s trade session. The market lost 0.40% from the previous day’s level, closing at US$730 per tonne. These losses were also on the back of large regional supplies. Ukraine’s 2016/17 total sunflower seed production is estimated at 14 million tonnes, up by 17% from the previous season. Russia’s 2016/17 sunflower seed production is set to reach 11 million tonnes, which is a 10% annual increase.

Elsewhere, the expected dry and warm weather conditions in Argentina bode well with the ongoing harvest activity. On the 13th March 2017, Argentina’s sunflower seed harvest was 47% complete. The country’s 2016/17 sunflower seed crop is estimated at 3.75 million tonnes, a 29% annual increase.

RSA Potatoes:

After seeing losses for a couple of days, the South African potatoes market found support during yesterday’s trade session. The price was up by 9.13% from the previous day’s level, closing at R29.00 per bag (10 kilogrammes). These gains were on the back of relatively lower stock levels. At the start of yesterday’s trade session, the stocks were at 814 764 bags (10 kg bags), which is 28% lower than the previous day.

However, during the session, the market saw an increase in deliveries due to ongoing harvest activity. All of which led to a 14% increase in daily stocks to 929 259 bags (10 kg bags).

SA fruit:

The Johannesburg Fresh Produce Market saw widespread gains during yesterday’s trade session. The apple market up by 9.03% from the previous day’s level, closing at R7.97 per kilogramme. This comes on the back of strong buying interest, as well as relatively lower stock levels of 197 728 tonnes (17% lower than the previous day).

The oranges market gained 2.12% from the previous day, closing at R4.81 per kilogramme due to strong buying interest. Lastly, the bananas market gained 11.95% from the previous day’s level, closing at R9.93 per kilogramme, due to strong buying interest.

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