Highlights in today’s morning note
The weather is a main focus in the South African maize market as the new season planting commences in the eastern regions. The maize-belt could receive widespread showers of between 25 and 70 millimetres within the next two weeks. This might slow plantings activity, but will replenish soil moisture and benefit the new season crops in weeks ahead.
From a trade perspective, last week’s maize exports were disappointing. South Africa exported only 10 971 tonnes of maize, which is well below the previous week’s export of 61 777 tonnes. About 57% of these exports were white maize, with 43% being yellow maize.
This placed South Africa’s 2017/18 total maize export volume at 1.4 million tonnes, which equates to 64% of the season’s export forecast of 2.2 million tonnes. About 65% of the exported 1.4 million tonnes is yellow maize, with 35% being white maize.
The most recent weather updates show a possibility of light showers across the coastal areas of the Western Cape province, which implies that a large part of the crop could be strained for some time. This could worsen the crop conditions in the province.
In terms of dam levels – the recent update for the week ending 16 October 2017 shows that dams averaged 36% in the Western Cape province, fairly unchanged from the previous week, but 26-points lower than the corresponding period last year.
From a trade perspective – South Africa imported 83 442 tonnes of wheat in the week ending 13 October 2017, 57% from Russia and the balance from Romania and the US. This is double the volume imported the previous week and placed the total imports for the 2017/18 season at 118 208 tonnes. This equates to 7% of the seasonal import forecast of 1.8 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The second batch of exports this season went to Botswana and Namibia, totalling 766 tonnes. This placed the total exports for 2017/18 season at 833 tonnes. There’s likely to be more exports to regional markets over the coming months.
The weather is now a primary focus in the market as new season planting commences in the eastern regions of the country. The forecasts for the next two weeks show a possibility of widespread showers, which should improve soil moisture, albeit delaying planting activity.
In global markets – The weather remains a primary focus in the US soybean market as the harvest activity continues. The expected rainfall in the north-eastern parts of the Midwest within the next eight days could slow the maturation and harvest process.
As we set out in yesterday’s note, the harvest process is already behind last year’s pace, with only 49% of the area harvested thus far compared with 59% last year. With that said, the maturation process is almost in line with last year’s progress. At the start of the week, about 94% of the crop had started dropping leaves, which is only one point behind last year’s progress.
In Brazil, the new season soybean plantings have already started. The most recent data from AgRural shows that on 12 October 2017, about 12% of the intended acreage for 2017/18 production season had already been planted. However, this is 6-points behind the corresponding period last year.
The forecast rainfall across the sunflower seed growing areas of the country within the next two weeks should improve soil moisture ahead of the planting season which starts in November. Last season, South African farmers planted 635 750 hectares of sunflower seed, with Free State and North West being the leading producers.
There are talks in the market that this acreage could increase, particularly in the North West province, where white maize area is expected to shrink. A clear signal on this will in the intentions-to-plant data which will be released by the National Crop Estimate Committee on 26 October 2017.
In the global market – Yesterday the EU’s sunflower seed market saw extended losses with the price down by 0.26% from the previous day, closing at US$387 per tonne. This was largely on the back of lower crude oil prices, as well as expected large supplies in the EU region.
Elsewhere, the harvest process is underway in the Black Sea region. On 17 October 2017, Russia and Ukraine had harvested 50% and 90% of this season’s sunflower seed crop, respectively. Moreover, the forecast warm conditions within the next eight days across many parts of the region could add momentum to the process.
SUNSEEDAN forecasts Russia and Ukraine’s 2017/18 sunflower seed production at 14.0 and 11.5 million tonnes, which is a 3% y/y and 2% y/y decline, respectively.
Yesterday the fruit market managed to claw back its recent losses due to strong commercial buying interest. The prices of apples and bananas were up by 5% and 7% from the previous day, closing at R7.16 and R6.60 per kilogram, respectively. At the same time, the price of oranges increased by 24% from the previous day, closing at R5.37 per kilogram.
However, these gains could be short-lived due to large stocks of 295 869 tonnes of apples, up by 12% from the previous day. The bananas stocks are at 280 951 tonnes, up by 25% from the previous day. Lastly, the oranges daily stocks recovered to 95 185 tonnes.
Click below to read more recent reports by Wandile Sihlobo.