Potato market had a good trade session yesterday

Highlights in today’s morning note

 

Maize:

As set out yesterday’s note, South Africa’s 2017/18 total maize production estimate was revised upwards by 2% from last month to 12.42 million tonnes. Of this, 6.36 million tonnes is white maize, with yellow maize at 6.06 million tonnes. While lower than last season’s record harvest of 16.82 million tonnes, this is well above market expectations of a fairly small harvest. Importantly, this is higher than South Africa’s annual maize consumption of roughly 10.50 million tonnes.

Also worth noting is that this expected harvest coupled with expected large carryover stock underpin the view that South Africa could remain a next exporter of maize in the 2018/19 marketing year which starts on 01 May 2018, with exports estimated at 2.2 million tonnes.

After heavy rainfall in the past few days, this week started on a dry and cool note, with clear skies over most sections of the maize belt. However, more rainfall could soon return but is expected to be in the form of fairly light and scattered showers. The weather updates show a possibility of between 16 and 50 millimetres of rainfall over the maize growing areas of the country within the next two weeks. This should, nonetheless, benefit the crop, especially the late planted areas in the western parts of the North West and Free State provinces.

 

Wheat:

In its preliminary forecasts, the International Grains Council placed 2018/19 global wheat production at 741 million tonnes, down by 2 percent from the previous season. The notable decline is expected to be driven by a fall in output in countries such as Russia, Argentina, Kazakhstan, India and the EU region. This is both on the back of expected poor yields in some regions, as well as expectations of a decline in area planting after the 2017/18 higher yields. Meanwhile, the US and Australia are expected to show a slight recovery from 2017/18 lower harvest.

The global wheat stocks for the 2018/19 season are estimated at 253 million tonnes, down by a percentage point from the 2017/18 season. The key message from this is that global wheat prices could trade sideways in the medium term and possibly receive marginal gains in the medium to long-term. With that said, the weather will be a key factor to monitor across leading wheat producing countries in the coming months.

Back on home soil, the 2018/19 winter wheat season promises to be much better than the previous one, at least from the weather front. As highlighted in our previous note, the South African Weather Service indicated that between April and June 2018, parts of the south-western cape regions could receive above-normal rainfall .

In addition, the near-term prospects remain constructive, showing a possibility of between 16 and 30 millimetres of rainfall between this week and the week of 13 April 2018. These are welcome developments ahead of the planting period which commences in the next two months or so, depending on soil moisture. The farmer’s intentions to plant data for winter wheat will be released on 25 April 2018.

 

Soybeans:

South Africa’s soybean production seems to be growing year by year owing to an increase in area planted and higher yields. Yesterday the National Crop Estimates Committee lifted its 2017/18 soybean production estimate by 2 percent from last month to a new record level of 1.39 million tonnes. Moreover, this is 6 percent higher than the previous season.

This is unsurprising as soybean growing areas received good rainfall since the start of the season. The key contributing provinces are Free State, Mpumalanga and KwaZulu Natal making up a combined share of 87 percent. The other notable producing province is Gauteng and Limpopo with a combined share of 8 percent.

As highlighted in yesterday’s note, the recent heavy rainfall over the eastern parts of South Africa did not cause crop damage. Instead, there was an improvement in soil moisture which is conducive for the late-planted crop.

Above all, the expected large productions mean that South Africa’s soybean market will be well supplied in the 2018/19 marketing year. The seasonal imports could decline to levels around 20 000 tonnes, which will be a remarkable improvement following imports of 271 098 tonnes in the 2016/17 marketing year.

Moreover, the expected improvement in production could also lead to a decline in South Africa’s soybean oilcake imports. We estimate that 2018 soybean oilcake imports could decline by 17 percent from last year to 458 992 tonnes. This is a notable improvement from imports of close to a million tonnes in 2010, thanks to a continuous increase in domestic production.

 

Sunflower seed:

Yesterday the National Crop Estimates Committee revised its 2017/18 sunflower seed production estimate upwards by 2 percent from last month to 749 205 tonnes. This was mainly on the back an increase in area planted in the North West and Free State provinces, as well as expected high yields on the back of favourable weather conditions.

In the main, this shows that the recent rainfall over the sunflower seed growing areas has brought some level of optimism in the market and improved crop growing conditions. As indicated in yesterday’s note, the weather will remain a primary focus in the market as the crop is still in its growing stages that require moisture.

Fortunately, the near-term weather outlook which covers the next two weeks presents a possibility of rainfall over the sunflower seed growing areas. This should further improve soil moisture and crop conditions.

Looking ahead, the South African Weather Service indicated a possibility of above-normal rainfall over the summer crop growing areas within the next two months. This should support the crop in general, and the late-planted crop in particular, in areas such as the western parts of the North West and Free State provinces.

Overall, the expected harvest suggests that South Africa’s sunflower seed market could be well supplied in the 2018/19 marketing year, with possible small volumes of possible imports. The Supply and Demand Estimates Committee forecasts South Africa’s 2018/19 sunflower seed imports at 500 tonnes, down by 10 percent from the previous season.

 

RSA Potatoes:

The potatoes market had a good run in yesterday’s trade session, with the price up by 6 percent from the previous day, closing at R46.30 per pocket (10kg). This was due to lower stocks of 615 492 pockets (10kg bag) at the start of the session.

However, towards the end of the trading session, the market saw an uptick in deliveries as harvest activity picked up after a quiet period in the weekend. This led to a 12 percent increase in daily stocks to 686 792 pockets (10kg bag).

 

RSA fruit:

The fruit market has been quite volatile this week due to lower stocks and strong commercial buying interest. Yesterday the prices for apples and bananas were up by 22 percent and 10 percent from the previous day, closing at R7.88 and R7.52 per kilogram, respectively.

Meanwhile, the price of oranges declined further by 20 percent from the previous day and settled at the lowest level of R2.81 per kilogram. These losses were mainly on the back of large stocks of 183 000 tonnes, which is triple the levels seen in the past few days, underpinned by higher producer deliveries.

 

 

Find the full report by Wandile Sihlobo below.

Agbiz Morning Market Viewpoint on Agri-Commodities 29 March 2018