Improved weather leads to increased sunflower seed plantings

Highlights in today’s morning note

 

Maize:

Today the National Crop Estimates Committee will release its 2017/18 first production estimate for maize. We believe that the estimate could be revised down by roughly a third from the 2016/17 production season to 11.2 million tonnes. This is mainly because drier weather conditions that were experienced earlier in the season led to a decline in area planted in the western sections of the Free State and North West provinces.

As highlighted in yesterday’s note, the International Grains Council placed its estimate for South Africa’s maize production at 11.8 million tonnes, also underpinned by same reasons as the Agbiz’ s estimate.

Apart from the production dynamics, South Africa’s maize market is well supplied. The ending stock was recorded at 6.4 million tonnes in January 2018, down by 13% from the previous month. However, this is treble the volume recorded in the corresponding period last year.

Also worth noting is that South Africa utilised 850 601 tonnes of maize in January 2018, up by 5% from the previous month, driven by an uptick in both yellow and white maize consumption. Moreover, this is 10% higher than the corresponding period last year.

 

Wheat:

In the afternoon, the National Crop Estimate Committee will release its final production estimates for 2017 wheat crop. In January 2018, the estimate was left unchanged from the previous month at 1.48 million tonnes, which is a 23% decline from the previous season.

As highlighted in our previous notes, the decline in 2017 wheat production is mainly on the back of poor yields in the Western Cape and Free State provinces following drier weather conditions. In today’s data, we don’t foresee major changes, if any, it will probably be a downward further downward revision .

Apart from this, the domestic wheat market is well supplied in the near term, as imports also continue to boost local supplies. With that said, last month the domestic wheat stock was down by 2% from December 2017 and 15% from January 2017, settled at 1.39 million tonnes.

In terms of usage, local wheat demand was recorded at 256 608 tonnes in January 2018, down by 13% from the previous month, but up by 5% from the corresponding period the previous year.

 

Soybeans:

As indicated in yesterday’s note, we believe that the 2017/18 soybean production could be down by 8% from the 2016/17 season, despite the increase in area planted. This is mainly due to the expectation of lower yields of 1.7 tonnes per hectare, compared to an average yield of 2.3 tonnes per hectare in the 2016/17 production season. The official estimates will be released by the National Crop Estimates Committee in the afternoon.

The soybean crop is generally in good condition across the country. Over the weekend, parts of Mpumalanga and eastern Free State province received light showers which are conducive to the new season crop. The forecast rainfall within the next two weeks across soybean growing areas will further improve crop conditions, which then increases a chance of yet another big crop.

Last month, South Africa’s soybean stocks were at 418 618 tonnes, which is treble the volume seen in January 2017. Also worth noting is that soybean consumption (crushed oil and cake) was at 82 353 tonnes in January 2018, up by 25% from the previous month due to increased demand from the processors. Moreover, this was 46% higher than the volume utilised in January 2017.

 

Sunflower seed:

The primary focus today is on the National Crop Estimates Committee’s first production estimates for 2017/18 sunflower seed crop, as well as the revised area plantings estimate. Last month, the Committee placed sunflower seed planting estimate at 560 100 hectares, down by 12% from the 2016/17 production season due to drier weather conditions at the time.

However, the improvement in weather conditions at the latter part of January 2018 and the start of this month led to increased sunflower seed plantings in the western sections of the Free State and North West provinces. This means that the Committee could revise its area planting estimate upwards today.

Apart from the production dynamics, South Africa’s sunflower seed consumption (crushed oil and cake) increased by 25% month-on-month to 79 218 tonnes in January 2018. Moreover, this is 28% higher than the volume utilised in January 2017.

Also worth noting is that the ending stock was recorded at 233 329 tonnes in January 2018, down by 25% from the previous month due to increase consumption. However, this is 17% higher than the volume recorded in the corresponding period last year.

 

RSA Potatoes:

The potatoes market saw extended losses in yesterday’s trade session owing to a large stock of 1.14 million pockets (10kg bag) at the start of the session. The price was down by 8% from the previous day, closing at R29.38 per pocket (10kg).

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 32% decline in daily stocks to 772 906 pockets (10kg bag).

 

RSA Fruit:

The fruit market ended yesterday’s session on a mixed footing. The prices of apples and bananas were down by 11% and 4% from the previous day, closing at R7.78 and R5.35 per kilogram. These losses were mainly on the back of large stocks of 250 000 tonnes of apples and 359 000 tonnes of bananas.

Meanwhile, the oranges market had a good run owing to lower stocks of 19 000 tonnes compared to levels of over 50 000 tonnes in December 2017. The price was up by 19% from the previous day and settled at R10.58 per kilogram.

 

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Agbiz Morning Market Viewpoint on Agri-Commodities 27 February 2018