Highlights in today’s morning note
Last night some areas of the maize belt received light showers, which were not sufficient to replenish soil moisture. Fortunately, the outlook for the next two weeks shows a possibility of good rainfall across the maize-belt, which bodes well for the 2017/18 maize production season.
Moreover, the incoming data suggest that South Africa could receive above normal rainfall during the 2017-18 summer season. The Australian Bureau of Meteorology recently raised the probability of a La Niña forming in late 2017 to around 70% – treble the normal likelihood.
Although the focus is on the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 17 340 tonnes in the week ending 17 November 2017, which is 0.4% lower than the previous week’s deliveries. About 76% of this was white maize, with 24% being yellow maize.
Overall, South Africa’s 2017/18 market year total maize deliveries for “week 1 to 29” currently stand at 15.03 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.
This week, parts of the Western Cape province received rainfall of between 15 and 30 millimetres. But, that has now cleared up, while the temperature remains fairly cold which could slow the harvest process within the next few days. Overall, this is not much of a concern as the harvest process has already advanced in many areas.
Evidently, about 168 302 tonnes of wheat were delivered to commercial silos in the week ending 17 November 2017. This is down by 23% from the previous week owing to harvest delays caused by last week’s rainfall in some regions of the Western Cape province. Above all, this placed the country’s producer deliveries for “week 1 to 7” of the 2017/18 marketing season at 515 774 tonnes.
The rainfall could again return in the first week of December but might have minimal impact on harvest activity, as it is expected vary between 10 and 16 millimetres. The dam levels might also not show any meaningful improvements. The update for the week ending 20 November 2017 shows that Western Cape dams averaged 35%, unchanged from the previous week, but 21% lower than the same period last year.
The weather forecasts paint a constructive picture for South Africa’s soybean growing areas, with forecasts of higher rainfall within the next two weeks. This should improve soil moisture and subsequently benefit the new season crops. The long-term forecasts show that conditions could remain favourable between November 2017 and February 2018, which means crops might receive sufficient moisture from germination to pollination.
In global markets – The global soybean demand remains solid. Yesterday, the USDA reported a sale of 130 000 tonnes of US soybean to China. Moreover, China, as well as the EU region are set to remain key buyers of soybeans in the 2017/18 marketing season.
The USDA estimates that China’s 2017/18 soybean imports could increase by 4% year-on-year to 97 million tonnes, driven by growing demand in the animal feed industry. At the same time, the EU’s soybean imports are estimated at 14 million tonnes, up by 6% from the 2016/17 season.
The South African potato market saw marginal losses in yesterday’s trade session owing to strong commercial selling. This, in turn, was driven by attractive prices that were recorded in the previous day. Overall, the prices were down by 1% in yesterday’s trade session, closing at R38.84 per pocket (10kg).
During the day, the market saw an uptick in deliveries as harvest activity picks up after a quiet weekend. This subsequently led to a 2% increase in daily stocks to 709 055 pockets (10kg bag).
The fruit market was once again mixed in yesterday’s trade session. The apples and bananas prices were up by 7% and 4% from the previous day, closing at R8.14 and R6.36 per kilogram, respectively. These gains followed an 18% decline in apples daily stock to 181 000 tonnes and a 34% decline in bananas daily stock to 197 000 tonnes. Overall, this was underpinned by commercial buying interest.
Meanwhile, the price of oranges declined by 8% from the previous day, closing at R6.49 per kilogram. The losses followed a 38% increase in daily stocks to 65 000 tonnes.
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