Agbiz Morning Market Viewpoint on Agri-Commodities: 23 February 2017

Highlights in today’s morning note

Maize:

The past few days saw higher rainfalls which have led to mixed views in the market. On the one hand, some areas viewed it as positive for crop development, while others raised concerns about possible crop damage, particularly the eastern parts of the country. Fortunately, the precipitation forecast has changed significantly, and now shows a possibility of light scattered showers across the maize producing regions within the next eight days.

Another positive development to highlight is that dam levels across the country have shown notable improvements over the past few weeks. Data from the Department of Water and Sanitation shows that in the week ending 20 February 2017, North West average provincial dam level was at 82% full, which is 35% higher than the corresponding period last year. In Limpopo, the average dam level was at 70% full, which is 10% higher when compared to the same period last year.

In addition, average dam level in Mpumalanga province was at 69% full, which is 9% higher than the corresponding period last year. Gauteng province was 88% full, which is 4% above the corresponding period last year. The Free State province was 64% full, which is 11% higher than the same period last year. The Northern Cape province was reportedly at full capacity, compared to a level of 58% the same period last year.

South African farmers continue to deliver maize crop to commercial silos. In the week ending 17 February 2017, total maize producer deliveries were recorded at 46 977 tonnes (77% was white maize and 23% was yellow maize). This was 70% higher than the previous week’s deliveries. Overall, South Africa’s total maize producer deliveries for “week 1 to 42” currently stand at 6.59 million tonnes.

Wheat:

South African farmers continue to deliver wheat to commercial silos. In the week ending 17 February 2017, wheat deliveries were recorded at 7 569 tonnes, which is 36% lower than the volume recorded the previous week. This brought South Africa’s 2016/17 total wheat deliveries for “week 1 to 20” to 1.78 million tonnes.

Most parts of South Africa received high rainfall in the past few weeks, while the Western Cape province remained dry and warm. This is not an immediate concern as winter wheat farmers are still off season. However, the region will have to get sufficient rains around April to May 2017 in order for the new season plantings to progress well.

The irrigation areas in the province are also not in good shape, with average provincial dam level estimated at 33% full on 20 February 2017. This is 8% lower than the corresponding period last year.

On the global front – this morning Chicago wheat price was up by 1.14% from the level seen at midday yesterday due to strong demand from Egypt, which has recently bought 360 000 tonnes of Russia and Ukraine. Moreover, the USDA reported a sale of 138 650 tonnes of US wheat to unknown destinations.

Soybean:

In global markets – this morning Chicago soybean price was down by 0.29% from the level seen at midday yesterday due to large global supplies and an expected forecast for increased plantings in the US.

Elsewhere, data from South America shows that Brazil continues to benefit from the strong global soybean demand. According to Agrimoney, about 3.8 million tonnes of Brazilian soybean has been exported so far in February 2017, with another 3.0 million tonnes already booked for export in this month.

Sunflowerseed:

Despite the recent high rainfall, South Africa’s sunflower seed crop is in fairly good condition, which supports our view that this season’s crop should at least reach 798 960 tonnes, which is 6% higher than the previous season. That said, as Agbiz has reported there have been mentions of Sclerotinia in some sunflower seed fields in the North West province, but with pesticides in the market, the farmers should be in a better place to manage the disease.

In global markets – the EU’s sunflower seed market remained under pressure, with prices down by 0.96% from the previous day’s level, closing at US$414 per tonne.

While there were no major events in the EU market, we suspect the price declines were on the back of bearish pressure which stems from higher domestic supplies. The region’s 2016/17 crop estimated at 8.6 million tonnes, which is 6% higher than the previous season’s crop.

Potatoes:

Yesterday the South Africa potatoes market remained in positive territory, with support emanating from lower stock levels. This comes after the current wet weather conditions slowed potatoes harvest activity, which subsequently led to lower producer deliveries. At the start of yesterday’s trade session, the stocks were at 641 954 bags (10 kg bags) and that was the lowest level in the past six trading days.

SAFEX Beef:

After a couple of quiet days with limited activity, the SAFEX beef market gained ground during yesterday’s trade session due to an increase in volumes traded. The SAFEX beef price was up by 2.33% from the previous day’s level, closing at R44.00 per kilogramme.

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