Possibility of good showers across sunflower growing areas

Highlights in today’s morning note

South Africa’s average dam levels: week ended 02 April 2018, with the same week last year in brackets

 

 

Source: Department of Water and Sanitation and Agbiz Research

 

Wheat:

The weather is increasingly becoming an important factor in the domestic wheat market as winter wheat planting is set to commence next months. At the start of the week we highlighted a possibility of light showers across the major winter wheat producing province, Western Cape, however, the conditions changed overnight. The weather has now cleared across most areas of the province with the exception of the coastal regions which should receive light showers of about 16 millimetres.

The forecasts for the week of 20 April 2018 also show clear skies, which suggests that the next two weeks could remain cool and dry over most winter wheat producing areas of the Western Cape province. Moreover, dam levels could remain critically low. On 02 April 2018, Western Cape dams averaged 18 percent, roughly unchanged from the previous week, but 6 percentage points below corresponding period last year.

This, however, is not a cause for panic. The rainy season, which starts at the end of this month, promises to be much better than the previous one. The South African Weather Service indicated that between April and June 2018, parts of the south-western cape regions could receive above-normal rainfall.

From a trade front, there were no imports last week, and the last imports were in the week of 16 March 2018, recorded at 25 135 tonnes. This placed 2017/18 marketing year’s wheat imports at 1.16 million tonnes, which equates to 63 percent of the seasonal import forecast of 1.85 million tonnes. It is unclear whether the sluggish imports are either partially influenced by the delays in wheat tariff adjustments or mainly weak demand, or both. The newly calculated trigger rate is R394.84 per tonne, down by 45 percent from the current active level.

While a net importer of wheat, South Africa continues to export wheat to regional markets. The 24th batch of exports this season was recorded at 2 281 tonnes in the week ending 30 March 2018, up by 79 percent from the volume seen the previous week. The exports were destined to Namibia, Swaziland and Zambia. Overall, this placed South Africa’s 2017/18 wheat exports at 21 245 tonnes.

 

Maize:

This week started on a dry and cool note, with light showers only concentrated in areas around Warden, Delareyville, Klerksdorp, Ventersdorp, Amersfoort, Middelburg and Morgenzon. This, however, is not a concern as other areas received a breather following heavy rainfall in the past couple of days.

This dry and cool condition could soon be over in the maize-belt. The weather forecast for the next eight days shows a possibility of rainfall of between 20 and 50 millimetres. The week of 20 April also promises rainfall, but could mostly be centred in the central and eastern maize-belt.

From a trade perspective, South Africa exported 11 820 tonnes of maize in the week of 30 March 2018, down by 60 percent from the previous week. About a third of the exported volume was yellow maize, with the remainder being white maize. 

The leading buyer was, again, Botswana with a share of 34 percent. The rest went to other regional markets, such as Namibia, Swaziland, Lesotho and Mozambique, amongst others. Overall, this placed South Africa’s 2017/18 maize marketing year exports at 2.1 million tonnes, which equates to 88 percent of the season’s export forecast of 2.4 million tonnes. Moreover, South Africa could remain a net exporter of maize in the 2018/19 marketing year which starts on 01 May 2018. The 2018/19 total maize exports could reach 2.2 million tonnes. About 73% of this will most likely be yellow maize, with 23% being white maize.

 

Soybeans:

One of South Africa’s key objectives behind the expansion of the soybean crushing plants was import substitution of soybean oil and oilcake.  The country has made notable progress on both products as imports have been on a decline in the past few years due to increasing domestic production.

Between 2010 and 2017, South Africa’s soybean oilcake imports declined by 42% to 553 003 tonnes. The consistent supplier over this period was Argentina, with an average market share of 98 percent of the total import market. We estimate that 2018 soybean oilcake imports could decline further by 17 percent from last year to 458 992 tonnes due to expected large soybean production . Meanwhile, the USDA places South Africa’s 2018 soybean meal imports at 400 000 tonnes.

Similar to oilcake imports, South Africa’s soybean oil import declined by 30% between 2010 and 2017 to 191 255 tonnes . The consistent suppliers over this period were Argentina, Netherlands and Spain.  We believe that 2018 soybean oil imports could decline by a percentage point from last year to 189 342 tonnes, also supported by an uptick in local soybean production.

Apart from trade, the theme remains unchanged in the fields. The crop is in good condition, thanks to recent rainfall. The expected light showers within the next two weeks across the soybean growing areas of the country will further improve soil moisture and therefore support the crop.

 

Sunflower seed:

In yesterday’s note, we highlighted the possibility of good showers within the next two weeks across the sunflower growing areas. The near-term outlook remains unchanged with a possibility of rainfall of between 20 and 50 millimetres, which should improve soil moisture and benefit the crop. However, the long-term forecasts changed overnight and currently show chances of clear skies over most sunflower seed growing regions in the week of 20 April.

If the forecast rainfall within the next eight days materialises, then the expected warm conditions in two weeks’ time will be a much-needed breather, particularly for areas that planted on time or earlier in the season. The crop is currently in good condition and could show further improvement in the coming weeks.

 

RSA Potatoes:

The local potatoes market had a good run in yesterday’s trade session with the price up by 6 percent from the previous day, closing at R51.79 per pocket (10kg). The key factor behind this surge in prices was the lower stock of 496 391 pockets (10kg bag) at the start of the session.

Nonetheless, in the session, the market saw a slight increase in deliveries as a couple of business resume the harvest activity after the Easter weekend. This led to a 21 percent increase in daily stocks to 598 498 pockets (10kg bag).

 

RSA Fruit:

The South African fruit market settled on a mixed footing in yesterday’s trade session. The prices of oranges and apples were down by 0.14 percent and 13 percent from the previous day, closing at R6.91 and R2.80 per kilogram, respectively. These losses were underpinned by relatively large stocks of 703 000 tonnes of apples and 392 00 tonnes of oranges, compared to levels seen the previous days.

Meanwhile, the price of banana increase by 2 percentage points from the previous day and settled at R7.30 per kilogram. This was mainly supported by 44 percent decline in daily stock to 971 000 tonnes, following strong commercial buying interest.

 

Find the full report attached below:

Agbiz Morning Market Viewpoint on Agri-Commodities 05 April 2018