Highlights in today’s morning note
The harvest process is in full swing, with excellent yields reported across South Africa. The forecast drier weather conditions within the next two weeks in the maize belt should accelerate the activity (harvesting).
Recent reports from Zambia suggest that the government could place a 10% duty on maize exports if final production falls below 2.0 million tonnes. Fortunately, the current estimates suggest that the country could harvest a record crop of 3.6 million tonnes, which means there won’t be any export tax this season. From a South African perspective, this implies increased competition for regional markets, particularly white maize.
On the global front – This morning the Chicago maize market was up by 0.28% from levels seen at midday yesterday after the USDA pegged the crop condition below market expectations.
At the start of this week, about 67% of US maize was rated good/excellent, which is 8% behind the corresponding period last year. In part, these ratings reflect the impact of persistent dry weather conditions that were seen in the past few weeks.
The US weather remains a key focus in the US maize market. The forecast for the next few days shows a possibility of showers across the northern and eastern parts of the Midwest which is conducive for the new season crop.
The wheat crop in Swartland is in a fair condition relative to other regions within the Western Cape province. This is due to variation in rainfall. The Swartland region received a fair amount of rainfall in June 2017, estimated to be between 40 and 60 millimetres, whereas other regions such as Southern Cape and Overberg received showers of between 20 and 30 millimetres.
Looking ahead, the weather forecast for the week ending 12 July 2016 presents a possibility of light showers across the province, which could be beneficial for the winter wheat crop.
On the global front – This morning the Chicago wheat price was down by 0.22% from levels seen at midday yesterday owing to prospects of rainfall this week.
The prolonged dryness that was seen in past few weeks across the US wheat growing areas had a negative impact on crops. Recent data from the USDA shows that only 40% of the US spring wheat crop that is rated good/excellent, compared to a rate of 72% in the corresponding period last year.
However, the weather forecast for the next few days presents a promising outlook of rainfall across the northern and eastern parts of the US Midwest. This could be beneficial for the spring wheat crop and potentially lead to improvement in crop conditions over the comings weeks.
Elsewhere, Canada had a good start this season with favourable rainfall across wheat growing areas. The recent data from Alberta province shows that the overall crop was rated at 82% good/excellent in the week ending 20 June 2017. More specifically, the spring wheat crop was rated at 84% good/excellent, which is 1% higher than the same period last year.
The weather forecast for the next two weeks shows a possibility of drier conditions across many parts of the country. This could accelerate the harvest activity in areas that are still completing the process, particularly the western parts of North West province.
From a global perspective – The EU sunflower seed market gained ground during yesterday’s trade session with the price up by 0.51% from the previous day, closing at S$393 per tonne. These gains were partly on the back of higher crude oil and other vegetable oil prices.
The Black Sea’s sunflower oil market managed to claw back the previous day’s losses. Yesterday the price recovered by 0.13%, closing at US$734 per tonne due to relatively higher crude oil prices.
Regarding production, data from Oil World shows that 2017/18 global sunflower seed production could reach 47.9 million tonnes, which will be the second largest crop on record. This is mainly on the back of an expected increase in acreage, as well as (expected) higher yields in most parts of the world.
The South African potatoes market saw extended losses during yesterday’s trade session with the price down by 3% from the previous day, closing at R26.66 per bag (10 kg bag). This was mainly on the back of large stocks of 1.2 million bags (10 kg bags) at the start of the session.
However, the stocks fell by 22% towards the end of the session and eased at 931 684 bags (30 kg bags) due to slow harvest activity after a weekend, coupled with strong buying interest.
The fruit market ended the day mixed during yesterday’s trade session. The apples price was under pressure, closing at R6.49 per kilogramme due to the relatively large stock of 188 045 tonnes.
The oranges market lost 12% from the previous day, closing at R2.04 per kilogramme. These losses were on the back of large stocks of 203 777 tonnes, a 29% uptick from the previous day.
Meanwhile, the bananas market remained in positive territory, closing at R6.30 per kilogramme following a 34% decline in daily stocks to 114 806 tonnes.
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