Agbiz Morning Market Viewpoint on Agri-Commodities: 26 July 2017.

Agbiz Morning Market Viewpoint on Agri-Commodities: 25 July 2017.
July 25, 2017
Fruit market claws back some recent losses.
July 27, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 26 July 2017.

Highlights in today’s morning note

Maize:

The National Crop Estimate Committee will release its sixth production estimate in the afternoon (15h30). As indicated in yesterday’s note, Reuters and Bloomberg analyst’s surveys show that South Africa’s maize production could be revised up by 1% from the previous estimate to 15.77 and 15.80 million tonnes, respectively. This doubles the last season’s output of 7.78 million tonnes.

In terms of trade, South African maize exports continue to gain momentum. The country exported 152 985 tonnes of maize in the week ending 21 July 2017. This is 85% higher than the previous week’s exports.  About 47% was yellow maize, with 53% being white maize.

Moreover, 46% of total maize exports went to Kenya. This is probably a non-genetically modified batch. Kenya still has a restriction on the importation of genetically modified maize. South Korea and Japan accounted for a 26% and 18% shares of weekly exports, respectively. Overall, South Africa’s 2017/18 total maize exports currently stand at 703 827 tonnes, which equals to 32% of the season export forecast (2.2 million tonnes).

Also worth noting is that in June 2017, South Africa’s maize stocks were estimated at 7.3 million tonnes, which is treble the volume seen in the previous month. This notable increase is due to higher deliveries on the back of ongoing harvest process. Moreover, this is 82% higher than the corresponding period last year.

Wheat:

South Africa’s wheat imports were reported at 1 932 tonnes in the week ending 21 July 2017, all from Russia. This brought South Africa’s 2016/17 total wheat imports to 637 398 tonnes, which equals to 42% 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 were recorded at 378 tonnes in the week ending 21 July 2017, all went to Botswana and Namibia. Overall, South Africa’s 2016/17 total wheat exports currently stand at 88 008 tonnes.

South Africa’s monthly wheat consumption reached 265 661 tonnes in June 2017, down 5% from the previous month and 6% from June 2016.  At the same time, South Africa’s wheat ending stocks were reported at 824 316 tonnes, down 21% from the previous month and 27% from June 2016.

Soybeans:

The current soybean production estimate is 1.34 million tonnes, up 81% from the previous season. The harvest process finished on positive footing with exceptional yields reported in many areas. Therefore, we do not expect any meaningful adjustments in the current estimate, if there are any adjustments, it will most probably be an upward revision.

This expected uptick in production means that South Africa might see minimal imports of soybeans this season, which will be a remarkable improvement following 2016/17 imports of 271 098 tonnes. The country imported 1 407 tonnes of soybean in June 2017, all from Zambia and Malawi. This placed South Africa’s 2017/18 soybean imports at 8 933 tonnes.

There were no exports in June 2017. The last exports were in May 2017, totalling 185 tonnes, all went to Mozambique. The 2016/17 soybean total exports currently stand at 312 tonnes, all went to Mozambique and Botswana. If the forecast 1.34 million tonnes of production materialises, South Africa’s exports could reach 30 000 tonnes by end of the 2017/18 season.

South Africa’s soybean consumption (crushed oil and cake) was reported at 72 095 tonnes in June 2017, down 22% from the previous month and 30% from a corresponding period last year.

Using an estimate of 2.2 million tonnes of South Africa’s soybean crushing capacity, which then translates into 183 333 tonnes per month, the country utilised 39% of its monthly soybean processing capacity in June 2017.

Sunflower seed:

South Africa exported 5 tonnes of sunflower seed to Swaziland in June 2017. This brought the country’s 2017/18 sunflower seed exports to 93 tonnes. About 68% went to Swaziland, 23% to Botswana and 9% to Namibia.

In the same month, South Africa imported 132 tonnes of sunflower seed from Argentina and Malawi. This is the second batch of imports this season. The total imports currently stand at 232 tonnes. Looking ahead, we do not foresee any large import volumes this season due to expected large domestic supplies.

From a consumption perspective – the country’s sunflower seed consumption (crushed oil and cake) increased by 48% m/m and 14% y/y in June 2017 to 68 482 tonnes. Also worth noting is that South Africa’s sunflower seed ending stocks were recorded at 711 486 tonnes in Junes 2017, up 30% m/m and 68% y/y.

RSA Potatoes:

Yesterday the South African potatoes market maintained the previous day’s gains and closed in positive territory. The price was up by 11% from the previous day, closing at R30.30 per kilogramme. These gains were on the back of lower stocks of 796 380 bags (10kg bags) at the start of the session.

RSA fruit:

Yesterday the fruit market saw widespread losses with bearish pressure coming from large stocks. The price of apples was down by 4% from the previous day, closing at R6.36 per kilogramme. This followed a 62% uptick in daily stocks to 281 444 tonnes.

The bananas and oranges prices were, respectively, down by 1% and 9% from the previous day, closing at R7.00 per kilogramme and R2.79 per kilogramme. This also came on the back of large stocks of 147 654 tonnes in the bananas market and 300 927 tonnes in oranges market.

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