Agbiz Morning Market Viewpoint on Agri-Commodities: 28 June 2017.

Highlights in today’s morning note

Maize:

The National Crop Estimate Committee will release its fifth production estimate in the afternoon (15h30). The consensus prediction amongst analysts polled by Bloomberg is 15.73 million tonnes, which is 1% higher than last month’s estimate of 15.63 million tonnes. The upward revision will most probably be on white maize, whereas yellow maize could remain unchanged.

South African maize exports continue to gain momentum. The country exported 86 920 tonnes of maize in the week ending 23 June 2017. About 52% of this was white maize and 48% was yellow maize. South Africa’s 2017/18 maize exports currently stand at 310 791 tonnes.

Almost half of maize exports in the week ending 23 June 2017 went to Taiwan. Trailing behind Taiwan was Kenya accounting for 44% of weekly exports (86 920 tonnes).

Regionally, media reports from Zambia suggest that the country will soon be in talks with Kenya regarding possible maize exports.

According to the Zambia’s Ministry of Finance, there are 1.4 million tonnes of maize available for exports this season. This comes on the back of an expected bumper harvest of 3.6 million tonnes, from 2.9 million tonnes in 2016/17 marketing season.

Wheat:

South Africa imported 25 905 tonnes in the week ending 23 June 2017. About 65% came from Germany and 35% from the Czech Republic. This brought South Africa’s 2016/17 total wheat imports to 581 147 tonnes, which equals to 39% 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 recorded at 68 tonnes in the week ending 23 June 2017, all went to Zimbabwe. South Africa’s 2016/17 total wheat exports currently stand at 85 477 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.

South Africa’s monthly wheat consumption reached 282 944 tonnes in May 2017, up 14% from the previous month and 7% from May 2016.  At the same time, South Africa’s wheat ending stocks were reported at 1.05 million tonnes, down 17% from the previous month and 15% from May 2016.

Soybean:

Today the National Crop Estimate Committee will release its fifth production estimates. Weather conditions and harvest processes have remained fairly favourable since the release of last month’s estimate. As a result, we believe that the Committee will keep its production estimate unchanged at 1.23 million tonnes. 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 this season, which will be a remarkable improvement following 2016/17 imports of 271 098 tonnes. The country imported 174 tonnes of soybean in May 2017, all from Zambia and Ethiopia. This placed South Africa’s 2017/18 soybean imports at 7 526 tonnes.

In terms of exports – South Africa exported 185 tonnes of soybean in May 2017, all went to Mozambique. If the forecast 1.23 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 92 900 tonnes in May 2017, up 53% from the previous month due to positive crushing margins. 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 51% of its monthly soybean processing capacity in May 2017.

Also worth noting is that South Africa’s soybean ending stocks reached 1.07 million tonnes in May 2017, up 59% from the previous month due to an increase in deliveries on the back of ongoing harvest. This is 62% higher than the corresponding period last year.

Sunflower seed:

South Africa exported 38 tonnes of sunflower seed to Botswana and Swaziland in May 2017. This brought the country’s 2017/18 sunflower seed exports to 88 tonnes. About 66% went to Swaziland, 25% to Botswana and 9% to Namibia.

In the same month, South Africa imported 100 tonnes of sunflower seed from China and Malawi. This was the first batch of imports this season. 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 24% m/m in May 2017 to 46 307 tonnes. However, this was still 13% lower than the corresponding period last year.

Also worth noting is that South Africa’s sunflower seed ending stocks were recorded at 545 331 tonnes in May 2017, up six folds from the corresponding period last year due to large supplies this season.

RSA Potatoes:

The South African potatoes market saw substantial gains in yesterday’s trade session with the price up by 9% from the previous day, closing at R29.06 per bag (10 kg bag). These gains came on the back of relatively lower stocks of 931 684 bags (30 kg bags) at the start of the session.

However, the market saw an increase in deliveries throughout the session due to an ongoing harvest activity. This led to a 10% uptick in stocks to 1.02 million bags (10kg bags).

RSA fruit:

The fruit market was once again mixed during yesterday’s trade session. The apples price was under pressure, closing at R6.26 per kilogramme due to the relatively large stock of 245 660 tonnes (compared to 188 045 tonnes in the previous day).

Meanwhile, the bananas market gained 7% from the previous day, closing at R6.71 per kilogramme due to strong buying interest. The oranges price was up by 5% from the previous day, closing at R2.14 per kilogramme due to relatively lower stocks of 449 720 tonnes.

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