Highlights in today’s morning note: 20 February 2018

Highlights in today’s morning note

South Africa’s average dam levels: week ended 12 February 2018, with the same week last year in brackets

Source: Department of Water and Sanitation and Agbiz Research

Wheat:

With the winter wheat harvest process totally over in South Africa, the weather is not of importance in the market. As indicated in our previous notes, the impact of drier conditions experienced in the Western Cape province over the past few months is mirrored in national wheat production. The 2017 harvest is estimated at 1.48 million tonnes, down by 23% y/y. This is not new news, therefore already priced into the market.

With that said, the weather forecast for the Western Cape is worth highlighting as the province currently battles with water issues, which are negatively affecting households and other agricultural activities such as livestock and horticulture. The weather charts for the next eight days show a possibility of light showers of between 16 and 20 millimetres in coastal areas of the province.

This is a welcome development, although will not meaningfully improve dam levels. On 12 February 2018, the provinces dam levels averaged 23%, down by one percentage point from the previous week and 12 percentage points from the corresponding period last year.

Maize:

This past weekend brought light showers in the South African maize belt but mainly concentrated towards western sections. The showers varied between 10 and 26 millimetres, which mainly benefited white maize crops. Meanwhile, the eastern sections of the maize belt, which predominately produce yellow maize, remained cool and dry throughout the weekend.

Overall, South Africa’s maize crop is in good condition, thanks to good showers received in the past few weeks which improved soil moisture and subsequently benefited the crops . Also heartening to see is that the weather forecast for the next eight days presents a possibility of good rainfall across the maize belt, which should further improve soil moisture and crop conditions.

Sunflower seed:

Over the weekend, Bothaville, Hertzogville, Hoopstad, Orkney, Wesselsbron, Bloemhof, Klerksdorp, Leeudoringstad and Sannieshof regions of the western Free State and North West province received rainfall of between 10 and 26 millimetres. This added to already improved soil moisture levels, which bodes well for the new season sunflower seed crop.

The expected rainfall within the next eight days could bring further improvements in soil moisture and benefit the crop. Moreover, the long-term weather outlook promises good rainfall until April 2018. This will potentially support the newly planted crop from germination to pollination stages of development.

Apart from production developments, the 2017/18 sunflower seed marketing year will end on 28 February 2018, but in relatively better shape than the previous year. The ending stock is estimated at 183 081 tonnes, which is 12% higher than the 2016/17 marketing year. This will essentially boost the country’s supplies in the 2018/19 marketing year, which starts on 01 March 2018.

RSA Potatoes:

The South African potatoes market started the week on a negative footing with the price down by 6% from the previous day, closing at R30.73 per pocket (10kg). These losses were partially on the back of a large stock of 1.1 million pockets (10kg bag) at the start of the trade session.

However, during the day, the market experienced commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity during the weekend. This subsequently led to a 33% decline in daily stocks to 756 013 pockets (10kg bag).

RSA Fruit:

The fruit market ended yesterday’s trade session on a mixed footing. The prices of apples and bananas were down by 10% and 14% from the previous day, closing at R8.20 and R5.03 per kilogram, respectively. These losses were on the back of large stocks of 154 000 tonnes of apples and 374 000 tonnes of bananas.

Meanwhile, the price of oranges significantly increased by 45% from the previous day and settled at R7.55 per kilogram owing to lower stocks. At the end of the session, the stocks fell to 1 000 tonnes, from levels of over 30 000 tonnes in the past few weeks.

Click below for more reports by Wandile Sihlobo 

Agbiz Morning Market Viewpoint on Agri-Commodities 20 February 2018