Highlights in today’s morning note
South Africa’s average dam Levels: week ended 30 October 2017 (last year’s figures in brackets – 30 October 2016)
Source: Department of Water and Sanitation and Agbiz Research
The expected rainfall within the next two weeks across Limpopo, North West, Gauteng, Mpumalanga, Free State, Kwa-Zulu Natal and Eastern Cape provinces should improve soil moisture, albeit slowing the planting process.
As we set out in our note on Friday, the optimal planting window for maize closes around mid-November in the eastern parts of the country and in mid-December in the western parts of the country. The eastern regions typically produce yellow maize, with the western parts dominated by white maize production.
Looking ahead, there is optimism regarding the 2017/18 production season. This comes after the South African Weather Service suggested that the summer crop growing areas could receive above-normal rainfall between November 2017 and February 2018. This will support maize crops from germination to pollination stages of development.
The recent showers in the Southern Cape and Overberg regions of the Western Cape province slowed the harvest processes last week but should gain momentum this week due to expected dry and cool weather conditions. The yields have been disappointing thus far, but the quality is fair.
South Africa’s wheat production is estimated at 1.66 million tonnes, which is 13% lower than the 2016/17 production season. This decline is mainly attributed to the Western Cape province. The National Crop Estimate Committee will release an update of the production estimates on the 28th November 2017.
The other provinces which are predominantly under irrigation are expected to receive fairly good yields, particularly the Free State, Northern Cape and Limpopo provinces. The water levels in the dams of these particular provinces are above 65%. Meanwhile, the Western Cape province’s dams averaged 37% in the week ending 30 October 2017, which is 23% lower than the corresponding period last year.
The expected rainfall in the eastern parts of the country within the next two weeks could slow the soybean planting activity, but that is not much of a concern as the optimal planting window only closes in December. Overall, rainfall should improve soil moisture and subsequently benefit the new season crop.
In global markets – After weeks of dryness in most parts of Brazil, the next two weeks could present widespread rainfall which will improve soil moisture and benefit the new season crop. With that said, the International Grains Council forecasts a 5% year-on-year decline in Brazil’s 2017/18 soybean production to 108 million tonnes.
In the US, the weather remains a primary focus in the soybean market as the harvest process continues. The expected rainfall in the eastern parts of the Midwest could slow the process this week. On the 29th of October 2017, about 83% of the US soybean crop had already been harvested which is 2% behind the corresponding period last year. The USDA will release an update in the evening as part of its crop progress report.
The South African potato market had a good run in Friday’s trade session, with the price up by 0.4% from the previous day, closing at R37.73 per pocket (10kg). This was due to commercial buying and a marginal decline in daily stock to 1.11 million pockets (10kg bag) at the beginning of the trading session.
However, in the session, the market saw an increase in deliveries due to ongoing harvest activity. This subsequently led to a 1% uptick in daily stocks to 1.12 million pockets (10kg bag).
The fruit prices were mixed in Friday’s trade session. The price of bananas was down by 2% from the previous day, closing at R7.47 per kilogram. These losses were mainly on the back of large stocks of 311 764 tonnes.
Meanwhile, the prices of apples and oranges were up by 7% and 6% from the previous day, closing at R7.62 and R6.69 per kilogram, respectively. This was due to strong commercial buying which led to a 14% and 10% decline in stocks of apples and oranges to 228 282 tonnes and 48 507 tonnes, respectively.
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