Sunflower seed region set to receive good showers within next two weeks

Highlights in today’s morning note

Maize:

The South African Weather Service recently revised its view from a weak La Niña phase to a neutral phase from this month through autumn season. Nonetheless, there is still a possibility of above-normal rainfall in most parts of the country over the observed period. This bodes well for maize crop which still needs moisture at its current stage of development.

In the near term, the weather charts currently show a possibility of widespread showers across the maize belt within the next two weeks. This should further improve soil moisture and benefit the crop. Again, this slightly reinforces the National Crop Estimates Committee’s view of a fairly good crop of 12.2 million tonnes in the 2017/18 production season.

Last week’s maize exports were quite disappointing. South Africa exported 14 672 tonnes, down by 43% from the volume exported in the week of 23 February 2018. About 65% of these exports were white maize, with 35% being yellow maize. This placed South Africa’s 2017/18 maize marketing year exports at 2.0 million tonnes, which equates to 83% of the season’s export forecast of 2.4 million tonnes.

Wheat:

As we set out in our note on Monday, at the moment the weather is of less importance in the winter wheat growing areas of South Africa as it is an off-season period. Also worth noting is that the Western Cape province is a winter rainfall area, therefore it is unsurprising that the next two weeks could remain dry and cool.

Nonetheless, the expected dryness implies that dam levels could remain critically low in the near term, thus negatively affect households and other agricultural activities such as livestock and horticulture.

The most recent data from the Department of Water and Sanitation shows that on 05 March 2018, the province’s dam levels averaged 20%, down by one percentage point from the previous week and 10 percentage points from the corresponding period last year.

Apart from the weather aspects, South Africa continues to receive large volumes of wheat imports. The country imported 90 094 tonnes in the week ending 02 March 2018, up by 53% from the previous week. About 43% from Latvia, 32% from Argentina and 25% from Romania. This placed 2017/18 marketing year’s wheat imports at 1.07 tonnes, which equates to 58% of the seasonal import forecast of 1.85 million tonnes.

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 20th batch of exports this season was recorded at 802 tonnes and went out last week. This was destined to Botswana, Lesotho and Namibia. Moreover, this is well below the previous week’s exports of 2 165 tonnes. Overall, South Africa’s 2017/18 wheat exports currently stand at 16 791 tonnes.

Sunflower seed:

The start of this week has been fairly dry and cool across the sunflower seed growing areas of South Africa. It is only Hoopstad, Wesselsbron, Derby and Ventersdorp areas of North West and western Free State provinces that received light showers on Monday evening.

With that said, the overall sunflower seed region is set to receive good showers within the next two weeks. The current weather forecasts show a possibility of between 16 and 50 millimetres of rainfall. The amount of rainfall might vary from the region by region, but the charts show an overcast across the summer crop growing areas.

Backing these forecasts is also the South African Weather Service’s report which noted a possibility of above normal rainfall within the next two months across summer rainfall areas, which should support the late-planted crop as its still needs moisture.

RSA Potatoes:

Yesterday the potatoes market managed to claw back some of its recent losses owing to strong commercial buying interest. The price was up by 8% from the previous day, closing at R37.13 per pocket (10kg).

In the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period in the weekend. This led to an 11% increase in daily stocks to 739 972 pockets (10kg bag).

SAFEX Beef:

In yesterday’s trade session the SAFEX beef carcass market presented more of the same. The price remained flat from the previous day, settled at R44.50 per kilogram due to thinly trade volumes.

From a supply point of view, the South African farmers slaughtered 188 737 head of cattle in January 2018, down by 21% from the previous month and 10% from the corresponding period last year. We did expect a bit of softening in slaughtering activity after festive season demand, but the scale of it came as a surprise.

It appears that still rebuilding their stock following a reduction during the 2015-16 drought. Lower maize prices and good recovery in pastures have also provided a good environment for the cattle stock rebuilding process.

Full report available below.

Agbiz Morning Market Viewpoint on Agri-Commodities 07 March 2018