Agbiz Morning Market Viewpoint on Agri-Commodities: 21 June 2017.

Highlights in today’s morning note

Maize:

South Africa’s maize exports continue to momentum. The country exported 64 356 tonnes of maize in the week ending 16 June 2017. About 56% of this was white maize and 44% was yellow maize. South Africa’s 2017/18 maize exports currently stand at 213 963 tonnes.

Kenya was the leading buyer of South African maize in the week ending 16 June 2016, making up a share of 47% of total weekly exports (64 356 tonnes). Trailing behind Kenya was South Korea with a share of 39%. However, the Kenyan exports are unlikely to continue at higher volumes due to existing restriction on the importation of genetically modified maize (GM) in that particular market. Over 80% of South Africa’s maize is GM.

Media reports from Zimbabwe suggest that the country could soon be looking for export market due to large supplies this season. We are hesitant about this, given that the official total maize production is estimated at 2.1 million tonnes, which is below the annual consumption is 2.2 million tonnes. Private analysts forecast the country’s maize production at 1.8 million tonnes, which is 16% below the government forecast (2.1 million tonnes). All other things equal, Zimbabwe could import roughly 400 000 tonnes later in the year or early next year.

Wheat:

The most recent weather updates suggest that the fears of another the El Niño weather phenomenon have eased. The recent data from the Australian Bureau of Meteorology shows that the next summer season could be neutral and thus, not see another drought as previously feared.

Over the near term, the weather forecast for the week ending 06 July 2017 shows that the Western Cape province could receive widespread light showers, which could be beneficial for the new season crop. Planting in the province is virtually over, with incoming evidence suggesting that plantings could reach the intended area of 325 000 hectares within the province.

From a trade perspective, this was again a quiet week, with no imports reported. The last imports were in the week that ended on 02 June 2017, coming in at 32 772 tonnes, all from Germany. This brought South Africa’s 2016/17 total wheat imports to 558 935 tonnes, which is 37% of the seasonal import forecast (1.5 million tonnes).

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The total exports reached 1 137 tonnes in the week ending 16 June 2017, all went to regional markets. South Africa’s 2016/17 total wheat exports currently stand at 85 407 tonnes. About 26% of this went to Zimbabwe, 21% to Lesotho, 20% to Botswana, 18% to Zambia, 8% to Namibia, 4% to Mozambique and 3% to Swaziland.

Soybeans:

Harvesting is virtually over across the country’s soybean growing areas, with the exception of areas that planted late in the season. The activity (harvest) in these particular areas could gain momentum within the next two weeks due to forecast drier and warm weather conditions.

The areas that have harvested received excellent yields, which support the National Crop Estimate Committee’s view of a possible record crop.

In global markets – This morning Chicago soybean price was down by 0.64% from levels seen at midday yesterday, owing to increasing supplies in South America. 

With that said, the 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. The recent data from the USDA shows that at the beginning of this week, about 89% of the US new season soybean crop had already emerged.

Elsewhere, the weather forecasts for the Black Sea region remains favourable. There could be widespread showers this week which bode 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.

RSA Potatoes:

The South African potatoes market saw substantial gains during yesterday’s trade session, with the price up 17% from the previous day, closing at R28.96 per bag (10 kg bag). This was mainly on the back of relatively lower stocks of 960 131 bags (10kg bags) at the start of the session.

The market saw a further decline in deliveries throughout the session due to slow harvest activity and strong buying interest. This subsequently led to an 8% reduction in stocks by the end of the session to 881 917 bags (10 kg bags).

RSA fruit:

The fruit market was mixed once again during yesterday’s trade session. The bananas market gained 9% from the previous day, closing at R6.00 per kilogramme. This came after a 36% decline in daily stocks to 159 384 tonnes.

Meanwhile, the apple price saw extended losses of 5% from the previous day, closing at R6.16 per kilogramme due to large stocks of 236 421 tonnes. The oranges price was down by 3% from the previous day, closing at R2.11 per kilogramme. This was also on the back of large stocks of 395 885 tonnes, which is well above the previous day’s levels of 344 773 tonnes.

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