Soybean crop generally in good condition, despite inconsistent rainfall

Highlights in today’s morning note

Maize:

The rainfall has been erratic in the past few days over the maize belt. As a result, the crop in the western sections of North West and Free State provinces is still moisture-stressed. The weekend didn’t bring much improvement, the showers were light and scattered and did not lead to a notable improvement in soil moisture.

The weather charts, however, show a possibility of over 35 millimetres of rainfall over the South African maize belt this week. If this materialises, the maize crop will possibly improve and be in a fair condition again, which increases a chance of good yields this season.

On the global front – There is solid demand for maize in the world market. Last week, the US weekly export sales were reported at 2.5 million tons, well above market expectations. The leading buyers were Japan, Taiwan and South Korea. Also worth noting is that the USDA placed its 2017/18 global maize imports estimate at 148 million tonnes, up by 9% from the previous season. The EU, Egypt, Japan, Mexico and South Korea are expected to be amongst the world’s leading importers of maize.

Wheat:

This has not been a good season for US wheat producers due to drier weather conditions at the beginning of the season. Earlier this month, the USDA placed US 2017/18 all-wheat production at 47 million tonnes, which is a 25 percent decline from the previous season due to lower yields, as well as a reduction in area planted.

These dynamics, however, have been overshadowed by a significant increase in wheat production in India and Russia. At the start of this month, the USDA estimated 2017/18 global wheat production at 759 million tonnes, up by a percentage point from the previous season.

In the same season, the global ending stock is up by a percentage point from 2016/17 season, estimated at 269 million tonnes. This implies that the global wheat prices could trade sideways in the short to medium term as the market is well supplied.

For net importing countries such as South Africa, these are good developments, particularly from a wheat user or processor’s perspective. South Africa’s 2017/18 wheat imports are estimated at 1.85 million tonnes. About two-thirds of this have already been imported. The leading supplies thus far are Russia, Lithuania, Argentina, Germany and Ukraine.

Soybeans:

In the field, the soybean crop is generally in good condition, despite the inconsistent rainfall pattern last week. There is still a fair amount of soil moisture in soybean growing areas following good rainfall over the past few months, particularly in Mpumalanga, KwaZulu Natal and eastern sections of the Free State province.

The past weekend was cloudy with light and scattered showers in parts of the eastern Free State and Mpumalanga provinces. This didn’t lead to a notable improvement in soil moisture, but this week promises some improvement. The current weather charts show a possibility of over 35 millimetres of rainfall in soybean growing areas of the country.

In global markets – The soybean utilisation remains solid in the US, thanks to demand from the animal feed industry. The most recent data from the National Oilseed Processors Association shows that 4.2 million tonnes were processed in February 2018, up by 8 percent from the corresponding period last year.

Sunflower seed:

Although South Africa’s sunflower seed production improved marginally in the last season, the country remained a net importer of sunflower crude oil in 2017. In fact, the imports increased by 30 percent from 2016 to 144 783 tonnes, according to data from Trade Map.

The leading suppliers were Bulgaria, Argentina, Romania and Spain with a share of 29 percent, 29 percent, 24 percent and 7 percent, respectively. The remaining 11 percent share originated from other countries which include Portugal and Netherlands.

RSA Potatoes:

The potatoes market was under pressure at the end of last week with the price down by 0.93 percent from the previous day, closing at R32.10 per pocket (10kg). This was mainly on the back of a large stock of 970 516 pockets (10kg bag) at the start of the session.

On Thursday’s trading session, the market saw a further uptick in deliveries on the back of ongoing harvest activity. This led to a 21 percent increase in daily stocks to 1.18 million pockets (10kg bag).

RSA fruit:

The fruit market was quite wobbly last week. On Friday, the price of apples was up by 6.9 percent from the previous day, settling at R7.39 per kilogram due to strong commercial buying interest. This could, however, be short-lived due to a large stock of 217 000 tonnes, up by 15.4 percent from levels seen the previous day.

Meanwhile, the prices of bananas and oranges were down by down by 0.4 percent and 2.9 percent from the previous day, closing at R7.55 and R4.41 per kilogram, respectively. These losses followed a slight improvement in stock levels to 218 000 tonnes of bananas and 70 000 tonnes of oranges.

Full report by Wandile Sihlobo attached below.

Agbiz Morning Market Viewpoint on Agri-Commodities 19 March 2018