Agbiz Morning Market Viewpoint on Agri-Commodities: 28 February 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 27 February 2017
February 27, 2017
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March 1, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 28 February 2017

Highlights in today’s morning note


This afternoon (15h30), the National Crop Estimate Committee will release its first production estimate for South Africa’s 2016/2017 maize crop. A Reuters and Bloomberg poll of analysts placed South Africa’s maize production estimates at 13.10 million tonnes and 13.18 million tonnes, respectively. These are well above our estimate of 11.90 million tonnes, which is 53% recovery from the previous season.

The International Grain Council (IGC) placed its estimate for South Africa’s 2016/17 maize production at 12.50 million tonnes. The Bureau for Food and Agricultural Policy (BFAP) has placed its view at 12.80 million tonnes. Lastly, the USDA’s one is at 13.00 million tonnes.

Overall, the crop is in fairly good condition across South Africa. After heavy rains last week, most areas of the country saw a dry and warm weekend. This is with the exception of the Mpumalanga province which received light scattered showers. The weather outlook for the week shows a possibility of light scattered rainfall across the maize belt.

In January 2017, South Africa’s total maize (monthly) demand reached 799 681 tonnes, with a 59% share being yellow maize and 41% being white maize. Overall, this was 4% higher than the volume consumed in December 2016 and 2% higher than January 2016.

In addition, SAGIS monthly data showed that South Africa’s total maize ending stocks were at 2.5 million tonnes in January 2017, with 48% share being yellow maize and 52% being white maize. This was 19% lower than the previous month and 23% lower than January 2016.


Worth noting are reports from South African Weather Service which suggest that an El Niño weather pattern, which is typically associated with hot and dry weather conditions, may potentially return around August 2017. We fear that this could negatively affect the 2017/18 winter wheat crop.

Moreover, dam levels are already at lower levels in the Western Cape province irrigation areas, with average provincial level estimated at 33% full on 20 February 2017. This is 8% lower than the corresponding period last year.

SAGIS reported South Africa’s monthly wheat demand at 246 273 tonnes in January 2017 – down by 3% from December 2016, but up by 1% from January 2016. Additionally, South Africa’s wheat ending stocks were reported at 1.65 million tonnes in January 2017, down by 2% from the previous month, but up by 0.1% from January 2016.

On the global front – this morning Chicago wheat price was down by 1.64% from the level seen at midday yesterday, following lower US weekly export inspections data of 538 000 tonnes (below the previous week’s volume).


South Africa is set to be a net importer of soybeans in the 2016/17 marketing season, with total imports estimated at 270 000 tonnes. So far, the country has imported 99% of this estimated volume. In January 2017, South Africa imported 204 tonnes of soybean from Nigeria.

The January 2017 import volume brought South Africa’s 2016/17 soybeans total imports to 268 995 tonnes. About 98% of this came from Paraguay and the rest from Ethiopia, Zambia and Nigeria. At the same time, South Africa’s 2016/17 soybean exports stand at 6 665 tonnes. About 62% went to Zimbabwe and 38% to Mozambique.

Moreover, South Africa’s soybean consumption (crushed oil and cake) reached 56 048 tonnes in January 2017, down by 8% from December 2016, and down by 32% from the corresponding period last year. Using an estimate of 2.2 million tonnes of South Africa’s crushing capacity, which then translates into 183 333 tonnes monthly crushing capacity, the country utilised only 31% of its soybean processing capacity in January 2017.

Also, worth noting is that South Africa’s soybean ending stocks were at 126 943 tonnes in January 2017, down by 32% from the previous month due to an increase in consumption and lower production. Moreover, this was 22% lower than January 2016.


The South African sunflower seed market gained ground during yesterday’s trade session, with support emanating from strong buying interest, as well as a relatively weaker rand against the US Dollar.

From a trade perspective – South Africa’s sunflower seed market started the year on a quiet note, with imports at just 22 tonnes from Argentina, well below the previous month volume of 21 978 tonnes. This brought South Africa’s 2016/17 total sunflower seed imports to 40 628 tonnes. About 95% of this came from Bulgaria and the rest from Botswana, Malawi, and Argentina.

At the same time, South Africa continues to exports sunflower seed to regional markets (Africa). The 2016/17 sunflower seed exports currently stand at 200 tonnes. About 54% went to Swaziland, 24% to Namibia, 17% to Botswana and 5% to Zimbabwe.

From a consumption perspective – South Africa saw a 33% increase in consumption (crushed oil and cake) when compared to the December 2016 and up by 41% from a corresponding period last year (January 2016), with overall volume reaching 61 868 tonnes.

Also worth noting is that South Africa’s sunflower seed ending stocks were recorded at 198 346 tonnes in January 2017, down by 23% from the previous month on the back of increasing consumption. However, this was double the volume seen in January 2016.


With the weather slightly warming up in some parts of South Africa, there was an uptick in deliveries which led to a 7% increase in daily stock level on Friday. This meant that the opening stocks for yesterday’s trade session would be at 640 951 bags (10 kg bags). Subsequently, the potatoes market came under pressure, losing 5.56% from the previous day’s level and closed at R40.93 per bag (10 kg bag).


The SAFEX beef market had a good start this week, with the traded price up by 1.14% from the previous day’s level, closing at R44.00 per kilogramme. This was largely on the back of increased activity at the stock exchange.

These recent gains are, to some extent, an indication of some level of rebalancing of meat supplies. Over the past few months, the South African beef industry saw higher slaughtering rate as farmers were unable to maintain their herds due to elevated feed costs (on the back of the drought), as well as seasonal demand during Christmas holiday. Data from the Red Meat Levy Admin shows that in December 2016, South African farmers slaughtered 299 767 head of cattle, which is 22% higher than the previous month.

The recent rainfall and slowing weekly slaughtering activity seem to suggest that farmers have started rebuilding their herds. Therefore, we could see support in meat prices over the medium to long term as slaughtering rate is likely to decline substantially during this process of recovery.

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