Highlights in today’s morning note
The primary focus today is on the intentions-to-plant data for the new production season. As we set out on yesterday, the market expectations are the area plantings could decline due to lower maize prices. Reuters and Bloomberg surveys put the expected decline at a range of 9% and 17% from the 2016/17 production season. The National Crop Estimates Committee will release the official data at 3:30 pm today.
Although the focus is in the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 29 053 tonnes in the week ending 20 October 2017, which is an 8% decline from the previous week’s deliveries. About 65% of this was white maize, with 35% being yellow maize.
Overall, South Africa’s 2017/18 total maize deliveries for “week 1 to 25” currently stand at 14.87 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.
In terms of supplies, South Africa’s maize stocks were estimated at 10.1 million tonnes in September 2017, which is twice the volume seen in the same period last year due to large supplies on the back of a record crop.
From a trade perspective, recent reports from the International Grains Council show that Taiwan is in the market looking for 65 000 tonnes of maize. The most likely origins will be South Africa, USA, Argentina or Brazil.
Taiwan is one of South Africa’s trading partners. In the current marketing year, the country has imported 213 926 tonnes of yellow maize from South Africa. This equates to 14% of the exported volume of 1.4 million tonnes thus far
The National Crop Estimates Committee’s third production estimates, which are due for release in the afternoon, will give an indication of the effects of the Western Cape drought on winter wheat crops. The market consensus is that production will remain unchanged from the previous estimate at 1.7 million tonnes. This is 11% lower than the 2016/17 crop.
With that said, we think this is a bit more optimism, given that a large part of the crop is not in good shape in the Western Cape province due to persistent dryness. Overall, the harvest process will soon begin in areas that planted early in the season, particularly Swartland and Overberg regions.
In terms of dam levels – the recent update for the week ending 23 October 2017 shows that dams averaged 37% in the Western Cape province, up by 1-point from the previous week, but 24-points lower than the same period last year. There are limited chances for further improvement in the next two weeks as the weather forecast shows a possibility of continued dryness across the province.
The expected rainfall in the eastern and central parts of the country should improve soil moisture which eventually benefits the new season crop. However, in the near term, rainfall could delay planting, but that is not much of a concern as the optimal planting window only closes in December.
The National Crop Estimates Committee will take a spotlight today, with intention-to-plant data due for release at 3:30 pm. The data will give an indication of the potential size of the hectares to be planted in the upcoming season. In 2016/17 production season, South African farmers planted 573 950 hectares of soybeans and that led to a record harvest of 1.32 million tonnes due to good summer rainfall.
The large harvest meant that South Africa could receive minimal imports this marketing season, which will be a remarkable improvement following imports of 271 098 tonnes last season. The country imported 3 189 tonnes of soybean in September 2017, which is 61% lower than the previous month’s volume. This placed South Africa’s total soybean imports to 24 335 tonnes.
The South African potato market lost ground in yesterday’s trade with the price down by 8.46% from the previous day, closing at R38.97 per pocket (10kg). The losses were mainly on the back of relatively large stock of 820 538 pockets (10kg bag) at the start of yesterday’s session.
Moreover, during the session, the market saw an uptick in deliveries on the back of ongoing harvest activity. This subsequently led to a 27% increase in daily stocks to 1.04 million pockets (10kg bag).
The fruit market saw widespread gains in yesterday’s trade session due to strong commercial buying, coupled with relatively lower stock levels. The prices of apples and bananas were up by 1% and 6% from the previous trading day, closing at R7.21 and R6.58 per kilogram, respectively. These gains followed a 5% and 17% decline in stocks of apples and bananas to 223 826 tonnes and 271 547 tonnes, respectively.
The oranges market gained 18% from the previous day, closing at R6.32 per kilogram due to lower stocks of 90 102 tonnes.
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