Highlights in today’s morning note
South Africa’s average dam levels: week ended 15 January 2018 (last year’s figures in brackets – 15 January 2017)
Source: Department of Water and Sanitation and Agbiz Research
A bit of comforting news is that the South African maize belt could receive over 50 millimetres of rainfall within the next eight days. This comes at a time when crops in areas that managed to plant successfully within the central and western regions are starting to wilt due to lower soil moisture, following dryness and heatwave experienced in the past few weeks.
The eastern parts of the maize belt, which have a fair amount of soil moisture, will also benefit greatly as heat stress was starting to affect crops in some areas. Overall, the optimal maize planting window has already passed, so, even if soil moisture refills, there will be minimal improvements in planting activity in the coming weeks.
Also interesting to note is that the International Grains Council (IGC) placed South Africa’s 2017/18 maize production estimate at 12.5 million tonnes, in line with the United States Department of Agriculture’s estimates. This is a 28% year-on-year decline, following a record harvest in 2016/17 production season.
While this estimate is in line with the long-term production trend, it will be difficult to achieve given that the North West and Free State provinces were unable to plant the overall intended area. The National Crop Estimate Committee (CEC) will release the preliminary estimates of the area planted next week, January 30. Overall, the domestic maize market is still well-supplied in the short-to-medium term owing to large stocks from the 2016/17 production season.
The warm weather conditions in the past few weeks have given the eastern Free State province enough room to quicken the harvest process. Regrettably, the yields received thus far are below average and the areas that are at final stages of the harvest process will most likely receive poor yields.
This poor performance joins the Western Cape province which experienced harsh weather conditions throughout the season. Thus, subsequently dragging down the country’s overall 2017 wheat production. As indicated in our previous reports, South Africa’s wheat production estimate currently stands at 1.48 million tonnes, down by 23% from 2016 harvest.
Other observers such as the IGC are slightly more optimistic than the CEC about South Africa’s wheat production. The IGC recently revised its estimate for South Africa’s 2017 wheat production down by 6% from November 2017 to 1.60 million tonnes. This is still 8% higher than the CEC’s estimate of 1.48 million tonnes.
Our view is more in line with the CEC, given the lower yields received in the Western Cape and parts of the Free State province. Overall, an update of the CEC estimate will be released on January 30.
The weather remains a primary focus in the sunflower seed market. The western parts of the Free State and North West provinces, which are key sunflower seed producers, last received good rainfall in December 2017.
The highest rainfall received in the first 18-days of this month in the western parts of the Free State province is 12 millimetres, and concentrated in areas around Bothaville, Losdoorns and Wesselsbron. In the North West province, the highest rainfall received this year is 27 millimetres, mainly in the areas around Schweizer-Reineke and Derby.
Therefore, it is unsurprising that these particular provinces experienced delays in planting. The soil moisture is quite low across the central and western parts of South Africa. This means that crops in areas that managed to plant on time will are currently experiencing heat stress.
Looking ahead, the weather forecasts paint a constructive picture of possible rainfall of between 20 and 100 millimetres of rainfall across the sunflower seed growing regions within the next eight days. This will be a welcome development, following weeks of persistent dryness.
While a majority of soybean crops are in affair condition in Mpumalanga, KwaZulu-Natal and the eastern parts of the Free State province, a boost in precipitation is urgently needed in order to improve soil moisture and reduce heat stress that continues to develop while rainfall is restricted and temperatures are extremely warm.
Fortunately, the prospects for this week promise over 50 millimetres of rainfall in the soybean growing areas of the country. Although this is a positive development, hail is always a key concern for the eastern side of South Africa, especially when there are expectations of heavy rainfall.
The South African potatoes market had a good run in Friday’s trade session and closed in positive territory, owing to strong commercial buying interest. The price was up by 1.28% from the previous day, closing at R38.00 per pocket (10kg).
Moreover, during the session, the commercial buying interest led to a 1% decline in daily stocks to 815 299 pockets (10kg bag).
The fruit market remains quite volatile. Friday’s trade session ended on a mixed footing due to relatively lower stocks. The price of apples was up by 1% from the previous day, closing at R8.92 per kilogram. These gains followed a 31% decline in daily stocks to 111 000 tonnes.
Meanwhile, the prices of bananas and oranges were down by 7% and 49% from the previous day, closing at R5.65 per kilogram and R3.56 per kilogram, respectively, due to commercial selling. With that said, these losses could soon be reversed following a respective 8% and 54% decline in daily stocks of bananas and oranges to 252 00 tonnes and 19 000 tonnes.
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