Highlights in today’s morning note
The weather outlook has changed overnight and currently shows a possibility of light showers across the maize producing regions of Kwa-Zulu Natal, Eastern Cape, Mpumalanga, Gauteng and Limpopo within the next eight days. While this might delay the planting activity, it will improve soil moisture which will essentially benefit the new season crops.
Although the focus is in the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 23 869 tonnes in the week ending 27 October 2017, which is an 18% decline from the previous week’s deliveries. About 56% of this was white maize, with 44% being yellow maize.
Overall, South Africa’s 2017/18 total maize deliveries for “week 1 to 26” currently stand at 14.89 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.
Regionally, the USDA forecasts a 14% year-on-year (y/y) increase in Nigeria’s 2017/18 maize imports to 400 000 tonnes. This is partly due to anticipated 4% y/y decline in maize production to 6.9 million tonnes in the 2017/18 marketing season.
The weather forecast remains relatively favourable for the Western Cape within the next eight days. The province could receive light showers of between 10 and 20 millimetres. Although this is not sufficient to make a meaningful improvement in soil moisture and dams, it could support winter wheat crops in areas that planted later in the season.
As we set out in yesterday’s note, on the 30th of October 2017, the Western Cape provinces dam levels averaged 37% in, fairly unchanged from the previous week, but 23% percentage points lower than the corresponding period last year.
The harvest process is underway in areas that planted early in the season. Farmers delivered 27 895 tonnes of wheat to commercial silos in the week ending 27 October 2017. This placed the country’s producer delivers for “week 1 to 4” of the 2017/18 marketing season at 42 274 tonnes.
On the global front – This morning the Chicago wheat price was up by 0.72% from the levels seen at midday yesterday due to a relatively weaker US Dollar, as well as increased global wheat sales.
Wheat demand remains relatively solid in the global market. Iraq recently bought 100 000 tonnes of US hard red winter wheat. At the same time, Taiwan bought 86 000 tonnes of US milling wheat. Japan bought 14 300 tonnes of feed wheat.
The weather conditions have changed significantly from what we reported yesterday. The forecasts currently show a possibility of light showers in the eastern parts of the country, which could continue to improve soil moisture and that will subsequently benefit the new season crops.
The 2017/18 soybean intentions to plant data shows that Free State and Mpumalanga provinces could constitute 83% of the soybean plantings. As previously indicated, the overall area is expected to reach 720 000 hectares – largest on record. An update will be released at end of this month and will indicate whether farmers have changed their view or will follow through with the intentions.
Apart from that, this is a fairly quiet week with no major data releases in the soybean market. The price movements will be driven by developments in the currency market, as well as Chicago soybean market performance.
The South African potato market pulled back from the previous day’s levels with the daily price down by 3%, closing at R38.05 per pocket (10kg). This was due to large stocks of 839 907 pockets (10kg bag) at the beginning of the trading session.
In the session, the market saw an uptick in deliveries owing to ongoing harvest activity. This subsequently led to a 13% increase in daily stocks to 950 476 pockets (10kg bag).
The fruit market ended the day mixed in yesterday’s trade session. The price of apples was down by 2% from the previous day, closing at R7.15 per kilogram. These losses followed an 8% increase in daily stocks to 265 244 tonnes.
Meanwhile, the prices of bananas and oranges were up by 2% and 6% from the previous day, closing at R7.60 and R6.29 per kilogram, respectively. This was due to strong commercial buying which led to a 33% and 29% decline in stocks of bananas and oranges to 2160 108 tonnes and 53 889 tonnes, respectively.
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