Agbiz Morning Market Viewpoint on Agri-Commodities: 31 January 2018

Agbiz Morning Market Viewpoint on Agri-Commodities: 30 January 2018
January 30, 2018
Early estimates show a 7% y/y decline in SA’s 2017/18 summer crop plantings
January 31, 2018

Agbiz Morning Market Viewpoint on Agri-Commodities: 31 January 2018

Highlights in today’s morning note:

Maize:

After experiencing drier weather conditions at the start of the season (mainly the western regions), the incoming data from the South African Weather Service suggests that the maize belt could receive above-normal rainfall between February and March 2018. This bodes well for new the season crop as it urgently needs moisture.

The preliminary area estimate for total maize is 2.30 million hectares, which is 12% lower than the 2016/17 production season. However, this decline is mainly skewed towards white maize, which is set to drop by 22% from the 2016/17 season to 1.28 million hectares. Meanwhile, yellow maize area could increase by 4% from the previous season to 1.02 million hectares.

The key factor underpinning this trend is the variation in weather conditions at the start of the season. The western areas experienced dry and warm weather conditions in the last few weeks of 2017 and they have also had a drier start to 2018. Meanwhile, the eastern regions experienced fairly favourable weather conditions.

From a trade perspective, South Africa exported 12 886 tonnes of maize in the week ending 26 January 2018, well below the previous week’s volume of 20 987 tonnes. About 70% of these exports were white maize, with 30% being yellow maize. This placed South Africa’s 2017/18 maize marketing year exports at 1.8 million tonnes, which equates to 82% of the season’s export forecast of 2.2 million tonnes.

 

Wheat:

The National Crop Estimates Committee left its 2017 winter wheat production estimate unchanged from the previous one, at 1.48 million tonnes, which is 23% lower than the previous season’s harvest. This might not lead to many reactions in the market today as it’s almost in line with expectations.

As indicated in our previous notes, the lower wheat harvest essentially means South Africa’s wheat imports could increase to 1.90 million tonnes in the 2017/18 marketing year, which is double the volume imported the previous marketing year. Also worth noting is that there were relatively lower opening stocks at the beginning of the current marketing year, estimated at 341 424 tonnes. This is well below the 2016/17 marketing year’s opening stock of 827 232 tonnes.

South Africa imported 22 419 tonnes of wheat in the week ending 26 January 2018, which is 50% lower than the previous week’s imports. About 64% from Argentina and 36% from Lithuania. Overall, this placed 2017/18 marketing year’s wheat imports at 702 491 tonnes, which equates to 37% of the seasonal import forecast of 1.9 million tonnes .   

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 14th batch of exports this season was recorded at 1 923 tonnes, well above the previous week’s volume of 101 tonnes. About 58% went to Swaziland, 37% to Namibia and 5% to Zimbabwe. This placed total wheat exports for 2017/18 marketing year at 7 408 tonnes.

 

Soybeans:

The National Crop Estimates Committee placed its preliminary area estimate for soybeans at 701 000 hectares, which is 22% higher than the area planted in the 2016/17 production season. With the exception of the Western Cape, all provinces recorded an uptick in area plantings for soybeans.

Mpumalanga and Free State provinces, which account for 83% of South Africa’s soybean hectares registered a significant uptick from the area planted in the 2016/17 production season. Competitive soybean prices, as well as fairly favourable weather conditions in the eastern parts of South Africa, are some of the key factors behind the increase in soybean plantings in the aforementioned provinces.

Also worth noting is that last week, some areas in the eastern parts of the country received good showers of between 20 and 97 millimetres, which bodes well for the crop. Moreover, the South African Weather Service, in its Seasonal Climate Watch, presented an encouraging forecast of good rainfall across the summer crop growing areas between February and April this year.

 

Sunflower seed:

Yesterday the National Crop Estimates Committee placed its preliminary area estimate for sunflower seed at 560 100 hectares, which is 12% less than the area planted in the 2016/17 production season. This decline is recorded in almost all sunflower seed producing provinces as some producers have not yet finished plantings due to dry and warm weather condition.

The Free State, Limpopo and North West provinces, which account for 99% of South Africa’s sunflower seed area plantings registered the most notable declines.  However, this is unsurprising given that these particular provinces received very little rainfall in the last few weeks of 2017 and they have also had a drier start to 2018.

With that said, the area planted could thrive well as the weather forecasts paint a promising picture for the near-to-medium term. The South African Weather Service highlights a possibility of above-normal rainfall between February and April 2018.

Rainfall has already started to break the dry spell in the western Free State and North West provinces. As indicated in yesterday’s note, a number of regions  of within these particular provinces received good rainfall over the past five days, varying between 20 and 110 millimetres.

 

RSA Potatoes:

The South African potatoes market posted gains in yesterday’s trade session owing to the lower stock of 657 179 pockets (10kg bag) at the start of the trading session. The price was up 10% from the previous day, closing at R40.60 per pocket (10kg).

In the session, there was sustained commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity. This led to a further 7% decline in daily stocks to 612 051 pockets (10kg bag).

 

RSA fruit:

Yesterday the fruit market ended on a mixed footing. The prices of apples and oranges were down by 2% and 17% from the previous day, settled at R9.61 per kilogram and R7.87 per kilogram, respectively, due to commercial selling. With that said, these losses could soon be reversed owing to lower stocks of 150 000 tonnes of apples and 22 000 tonnes of oranges.

Meanwhile, the price of bananas increased by 12% from the previous day, closing at R6.19 per kilogram due to strong commercial buying interest. Other than that, the bananas daily stock remains solid, at 294 000 tonnes at the end of yesterday’s session, up by 1% from the previous day.

 

Click here for more reports by Wandile Sihlobo

Agbiz Morning Market Viewpoint on Agri-Commodities 31 January 2018

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