Spotlight on SA wheat market

• The weather remains a key focus in the South African wheat market as the crop is still in stages of development that require moisture. Unfortunately, the forecasts for the next two weeks paint a mixed picture for the Western Cape province. The coastal areas might receive light showers, while the inland areas of the province could remain dry and cool. This might strain the crop in areas that didn’t receive sufficient rainfall in the past couple of weeks, particularly the southern Cape regions.
• It is also worth noting that this is contrary to the optimistic picture that was painted by the South African Weather Service on its Seasonal Climate Watch on 24 July. The weather agency had predicted a likelihood of above-normal rainfall over the south-western regions of the country between August and October 2018.
• Perhaps, the expected rainfall will materialise over the coming weeks. In such a scenario, the Swartland and Overberg regions, which are currently in good shape, stand a chance to benefit. Meanwhile, the southern Cape region, already reporting crop damage in some areas, might not fully recover.
• As set out at the start of this week, we will get a clearer picture of South Africa’s 2018/19 wheat production when the Crop Estimate Committee releases its forecasts on 28 August 2018. What is clear at this point is that farmers increased the area plantings by 3 percent from the 2017/18 season to 505 000 hectares.
• The International Grains Council is quite optimistic, forecasts South Africa’s 2018/19 wheat production at 1.7 million tonnes, up by 13 percent from the previous season’s harvest due to improved weather conditions in some parts of the country. The agency will release an update of this estimate tomorrow afternoon.
• There were no new developments on the global front, the key focus is on the International Grains Council monthly update which will be released tomorrow. Last month, the Council placed 2018/19 global wheat production at 721 million tonnes, down by 5 percent from the previous season.

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