Highlights in today’s morning note
There was not much happening in the domestic maize market. Harvesting of maize crop is in full swing and excellent yields are reported across the country. The forecast drier and warm weather conditions in the country’s maize belt within the next two weeks should accelerate the harvest process.
On the global front – The Chicago maize market took a breather this morning. The price was down by 0.79% from levels seen at midday yesterday. This was also due to large global supplies. The 2016/17 global maize production is estimated at 1.067 billion tonnes, up 10% from the previous season.
Looking ahead – although the US weather forecast painted a promising picture for the week in the early morning yesterday, the outlook has changed drastically. It currently shows a possibility of dryness this week across the western parts of the Midwest, which is negative for the new season crop.
At the beginning of this week, about 98% of the 36.4 million hectares of maize had already emerged, which is just 1% behind the corresponding period last year. Of that, 67% was rated good/excellent, which is unchanged from the previous week, but 8% behind the same period last year.
With the crop at early growing stages, the weather will remain a key focus in the domestic market for some time. The forecast for the next two weeks shows a possibility of light showers along the south and western parts of the Western Cape and Northern Cape provinces.
While this could support the crop in the aforementioned areas, the other wheat growing areas of the Western Cape province could remain dry, with lower levels of soil moisture, which will negatively affect the crop. As noted yesterday, the recent rainfall in the province was not sufficient to replenish soil moisture and dams. Therefore, even the irrigation areas could suffer if dryness persists.
In the week ending 12 June 2017, the Western Cape province average dam levels were estimated at 20% full, which is 10% below the corresponding period last year. Dam levels in the Northern Cape and Free State provinces, which produce nearly half of South Africa’s wheat crop, are at healthy levels of above 80% full. This will benefit the crop.
On the global front – This morning the Chicago wheat price was up by 1.51% from levels seen at midday yesterday due to ongoing dryness in parts of the US wheat growing areas.
The current drier conditions in the north and western parts of the Midwest continue to threaten the crop. The forecast for the next few days paints a disappointing picture of continuous dryness. At the beginning of this week, it was only 41% of the US spring wheat crop that was rated good/excellent, compared to a rate of 76% in the corresponding period last year.
The forecast drier and warm weather conditions across the country within the next two weeks could accelerate the harvest process in areas that have not finalised the process yet. The areas that have harvested received exceptional yields, which support the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes. Overall, the process is virtually over in many areas.
In global markets – This morning Chicago soybean price was down by 0.74% from levels seen at midday yesterday, owing to good progress in US soybean planting (albeit the persistent drier conditions).
Weather remains a key focus in the US soybean market. The forecast drier weather conditions across the north and western parts of the US Midwest could strain the recently emerged crop.
At the beginning of this week, US farmers had planted with 96% of the intended 36.35 million hectares for this season, which is 1% ahead of the corresponding period last year. About 89% of the crop had already emerged, which is 1% ahead of the same period last year.
Elsewhere, the Black Sea region could see widespread showers within the next few days, which bodes well with the new season crop. Russia’s 2017/18 soybean acreage is complete on 2.3 million hectares, up by 27% from the previous season. In addition, Ukraine’s 2017/18 soybean acreage is estimated at 1.88 million hectares, up by 1% from the previous season.
In South America, soybean harvesting is virtually over, but forecast light showers this week could possibly delay the progress. Argentinian farmers had harvested 97% of the expected 57.8 million tonnes on 19 June 2017.
Harvesting is virtually over across the country, with the exception of the areas that planted late in the season – particularly around the western parts of North West province. However, the forecast drier weather conditions across the country within the next two weeks will probably accelerate the process.
The areas that have already harvested obtained yields that are well above average levels of 1.2 tonnes per hectare, which suggests that the total crop could reach the National Crop Estimate Committee’s forecast of 853 470 tonnes, up 13% from the previous season.
From a global perspective – Yesterday the EU’s sunflower seed market managed to claw back some of the previous day’s losses. The price was up 0.51%, closing at US$393 per tonne due to spillover support from other vegetable oil markets.
There was not much happening in the Black Sea’s sunflower oil market. The price remained unchanged from the previous day, at US$734 per tonne. From a production perspective – Russia planted 7.4 million hectares, up 6% from the 2016/17 season, according to data from the country’s Ministry of Agriculture. Data from Ukraine’s Agricultural Ministry shows that the country finished planting at 5.6 million hectares, up 2% from the previous season.
The US farmers have made good progress with plantings due to drier weather conditions. At the beginning of the week, farmers had planted 93% of the intended area, which is 7% ahead of the corresponding period last year.
In yesterday’s trade session the South African potatoes market ended the day in negative territory. The price was down by 5% from the previous day, closing at R24.78 per bag (10 kg bag). This was mainly on the back of large stocks of 1.40 million bags at the start of the session.
During the session, the market saw strong buying interest, coupled with a decline in deliveries due to lower harvest activity after a weekend. Subsequently, the daily stocks fell by 31% at end of the session to 960 131 bags (10 kg bags).
The fruit market ended the day mixed during yesterday’s trade session. The apple price was down 7% from the previous day, closing at R6.49 per kilogramme. These losses were on the back of a 35% uptick in daily stocks to 290 707 tonnes.
Meanwhile, the bananas market gained 8% from the previous day, closing at R5.49 per kilogramme due to strong buying interest. The oranges price was up by 5% from the previous day, closing at R2.18 per kilogramme, also supported by strong buying interest. Having said that, these gains could be short lived due to due to large stocks of both bananas and oranges.
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