Agbiz Morning Market Viewpoint on Agri-Commodities: 07 June 2017.

Highlights in today’s morning note

Maize:

The forecast wet conditions across many parts of the country next week could slow the harvest process. These forecast showers will probably have minimal impact on the quality of the crop as it is set to scattered and vary between 16 and 25 millimetres.

From a trade perspective – South Africa’s maize exports are gaining momentum. Exports reached 28 759 tonnes in the week ending 02 June 2017. About 78% of this was yellow maize and 22% was white maize. South Africa’s 2017/18 maize exports currently stand at 75 369 tonnes.

Worth noting in this week’s grain trade data were sales of 18 283 tonnes of yellow maize to Taiwan. The country last imported South African maize in 2014/15 season. Then, it was a leading market for South African yellow maize, accounting for almost half of yellow maize exports. Trailing behind Taiwan was South Korea and Japan. Given the current prices, this season will most likely be no different for yellow maize. Meanwhile, white maize will continue to experience low demand in the global market and stiff competition from Zambia and Malawi in regional markets.

Wheat:

After months of prolonged dryness, the weather forecast for the next two weeks shows a possibility of rainfall across the Western Cape province which will most likely improve soil moisture and benefit the crops. So far, the winter wheat farmers in the province have managed to plant roughly 90% of the crop.

Having said that, there is still risks associated with the expected El Nino weather event towards the end of the year . This expected dryness casts a shadow over the winter wheat crop in the province, as predictions from international forecasters put the chance of an El Nino developing later this year at 50 percent. More information on this will unfold as the season progresses.

From a trade perspective, South Africa imported 32 772 tonnes of wheat in the week ending 02 June 2017, all from Germany. This brought South Africa’s 2016/17 total wheat imports to 559 209 tonnes, which is 37% 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 reached 1 451 tonnes in the week ending 02 June 2017, all went to regional markets. South Africa’s 2016/17 total wheat exports currently stand at 83 595 tonnes. About 27% of this went to Zimbabwe, 21% to Lesotho, 19% to Botswana, 18% to Zambia, 8% to Namibia, 4% to Mozambique and 3% to Swaziland.

Soybeans:

Weather remains favourable dry across soybean growing areas of the country, which supports harvest activity in areas that are completing the process. The areas that have completed the harvest process received exceptional yields, which supports the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes.

The uptick in production means that there will be minimal imports this season, while exports could reach 30 000 tonnes, well above the 2016/17 season’s volume of 6 745 tonnes. Moreover, this season’s large supplies boosted the utilisation of the country’s soybean crushing plants activity by 15% month-on-month in April 2017 to 33% . The coming months will most likely show increased activity, as domestic soybean consumption is set to reach 1.18 million tonnes, also up 20% from the 2016/17 season.

Sunflower seed:

Sunflower seed harvest is almost complete across many parts of the country. The areas that have harvested obtained yields that are marginally above average levels of 1.2 tonnes per hectare . The yields could have been higher, but the crop was affected by alternaria and sclerotinia earlier in the season.

Earlier this month there were fears of possible frost which could have negatively affected the late planting areas. However, the past few weeks have turned out differently, with warmly favourable weather conditions which supported the crop.

Potatoes:

The South African potatoes market managed to claw back some of the previous day’s losses, gaining 3.37% and closed at R29.42 per bag (10 kg bag). This was largely on the back of relatively lower stocks of 915 890 bags (10 kg bags), as well as strong buying interest.

Having said that, during the session the market saw an increase in deliveries due to ongoing harvest activity. This subsequently led to 10% gains in daily stocks to 1 012 017 bags (10 kg bags).

SAFEX Beef carcass:

It was another quiet day in the SAFEX beef market with prices unchanged from the previous day due to limited participation at the stock exchange.

With that said, the market sentiment in the beef market is bullish due to easing slaughter activity, as farmers continue to restock their herds after a 2015-16 drought spell. The recent data from the Red Meat Levy Admin shows that South African farmers slaughtered 193 373 head of cattle in April 2017, which is 19% lower than the previous month and the corresponding period last year.

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