Highlights in today’s morning note
Although it is still too early to be certain about the potential size of the crop, the International Grains Council forecasts South Africa’s 2017/18 maize production at 12.50 million tonnes. This is 29% lower than the previous season. With that said, one should bear in mind that the 2016/17 production season was an exception – thanks to good summer rainfall.
Also worth noting is that the expected 12.50 million tonnes of maize are in line with a long-term average harvest (discounting the drought years). More importantly, this is well above South Africa’s annual maize consumption of 10.50 million tonnes.
Mpumalanga and parts of North West province received good showers over the weekend, which bodes well for the 2017/18 production season. While maize planting is still at initial stages in most provinces, Mpumalanga and Kwa-Zulu Natal are at advanced stages — almost complete the targeted area. The western regions of the maize-belt have sufficient time to plant as the optimal window only closes in December (in this region).
On the global front – The International Grains Council forecasts the 2017/18 global maize production at 1.039 billion tonnes, which is 4% lower than the previous season’s harvest. The decline is mainly linked to expected lower harvest in the US, Argentina, Ukraine, South Africa, China, India, Russia, and Ukraine.
The winter wheat harvest process is virtually over in the Western Cape province. As we set out in yesterday’s note, the Swartland, Southern Cape (with the exception of Mossel Bay) and Overberg regions have harvested over 70% of the crop. With the weather forecast for the next eight days showing prospects of drier and cool conditions, the process should get additional momentum.
The focus today is on the National Crop Estimates Committee’s fourth production estimates which are due for release in the afternoon. The current estimate for South Africa’s wheat production is 1.66 million tonnes, with the Western Cape province making up a lion share of 45%. We believe that there will be a downward revision in today’s number due to poor yields in the Western Cape province, following a drought season.
The weather remains a key focus in the domestic soybean market as the planting activity progresses. Last night, some soybean growing areas of the country received light showers, which is a welcome development after weeks of drier conditions. In addition, the expected rainfall within the next two weeks should improve soil moisture and benefit the new season crop.
From a trade perspective, the large soybean harvest of 1.32 million tonnes received in 2016/17 production season implies that South Africa could receive minimal imports in the 2017/18 marketing year. This is a remarkable improvement following imports of 271 098 tonnes in the previous marketing year.
The country imported 733 tonnes of soybean in October 2017, which is well below the previous month import volume of 3 189 tonnes. About 89% of this came from Zambia and the balance from Malawi. This placed South Africa’s total soybean imports to 25 068 tonnes, which equals to 90% of the seasonal import forecast of 28 000 tonnes. This 2017/18 soybean marketing year ends in February 2018.
There were no exports last month. The last exported volume was 99 tonnes in August 2017. South Africa’s 2017/18 soybean total exports currently stand at 411 tonnes. With that said, the country’s seasonal soybean exports are estimated at 30 000 tonnes.
The next two weeks could bring good rains across South Africa’s sunflower seed growing areas, which bodes well for the 2017/18 production season. As we set out in yesterday’s note, the sunflower seed planting process is still at initial stages in most parts of the country. The process has somewhat been delayed by drier weather conditions experienced in the past few weeks.
In terms of trade, South Africa exported one tonne of sunflower seed to Swaziland in October 2017, which is which is well below the previous month’s exports of seven tonnes. This brought the country’s 2017/18 sunflower seed exports to 126 tonnes. About 66% went to Swaziland, 17% to Namibia and 17% to Botswana.
In the same month, South Africa imported 26 tonnes of sunflower seed from Malawi. This is the sixth monthly batch this season. The total imports for the 2017/18 marketing year stand at 512 tonnes. Looking ahead, we do not foresee any big import volumes due to relatively large domestic supplies.
Last month, South Africa’s sunflower seed consumption (crushed oil and cake) increased by 12% month-on-month to 94 500 tonnes. Moreover, this is 13% higher than the volume utilised in October 2016. Also worth noting is that South Africa’s sunflower seed ending stocks were recorded at 465 032 tonnes in October 2017, down by 16% from the previous month, but up by 38% from the corresponding period last year.
The South African potato market had a good run in yesterday’s trade session with the price up by 1% from the previous day, closing at R42.67 per pocket (10kg). These gains were mainly due to lower stocks of 813 033 pockets (10kg bag) at the beginning of the session.
During the session, the market saw a further 23% decline in daily stocks to 629 453 tonnes owing to commercial buying interest and a decline in deliveries on the back of slow harvest activity.
The fruit market started the week on a mixed footing. The apples and bananas prices were down by 6% and 11% from the previous day, closing at R7.18 and R5.69 per kilogram, respectively. This followed a 34% uptick in apples daily stocks to 232 000 tonnes and a 35% increase in bananas daily stocks to 266 000 tonnes.
Meanwhile, the price of oranges significantly increased by 27% from the previous day to R7.59 per kilogram due to strong commercial buying and relatively lower stocks of 49 000 tonnes.
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