• The SAFEX wheat prices had a good run on Friday’s trade session and settled in positive territory, with spot price at R3 855 per tonne. The gains were in line with higher Chicago wheat prices, as well as commercial buying interest.
• The Chicago wheat market was supported by lingering concerns about unfavourable weather conditions in the central and eastern parts of Europe, US Plains, Australia, Canada and Russia. This could potentially lead to a decline in wheat yields in the 2018/19 production season.
• In Russia, the US and the EU region there are already expectations of lower yields. Last week, International Grains Council (IGC) placed Russia, US and EU’s 2018/19 wheat production at 75 million, 46 million and 149 million tonnes, respectively down by 12 percent, 2 percent and a percentage point from last season.
• The other countries that are expected to register a decline in production in the 2018/19 wheat production season are China, India, Ukraine and Kazakhstan. This is partly underpinned by an expected reduction in area planted and prospects of unfavourable weather conditions in some regions.
• Meanwhile, Australia and Canada are expected to receive fairly good harvests despite the unfavourable weather conditions experienced last week. The IGC forecasts Australia and Canada’s 2018/19 wheat production at 24 million and 31 million tonnes, up by 15 percent and 4 percent from the previous season, respectively.
• Overall, from a global perspective, the aforementioned potential decline in production will somewhat be offset by increases in Canada, Australia and Argentina. The IGC forecasts 2018/19 global wheat production at 748 million tonnes, down by 2 percent from the previous season.
• Back on home soil, the weather remains a key focus in winter wheat growing regions. The winter wheat planting has already been completed in regions around Swartland and Overberg. The crop has emerged, thanks to light showers received in the past few weeks, although these were not sufficient to improve subsoil moisture levels. The Western Cape province needs to receive intense and persistent rainfall for subsoil moisture to improve, which will, therefore, benefit the new season crop.
• The areas that have not made notable progress regarding planting is the Southern Cape due to persistent dryness.

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• In terms of weather outlook, the South African Weather Service seems to be singing from the same hymn book as the International Research Institute for Climate Change Society. Yesterday the local weather agency indicated a possibility of above-normal rainfall in winter crop growing areas between June and September 2018.
• The expected higher rainfall is precisely what is needed in the Western Cape province in order to sufficiently improve soil moisture and benefit the new season crop. The dam levels could also improve. In the week of 21 May 2018, the dams averaged 17 percent, down by 2 percentage points from the same period last year.
• Be that as it may, the near term forecasts paint a mixed picture. The areas around the West Coast, Swartland, Helderberg, Overberg and the Garden Route regions of the Western Cape province could receive light showers within the next eight days which should benefit the newly planted crop. Meanwhile, the forecast for the week of 05 June 2018 shows clear skies over most regions of the province.
• The Western Cape province is of importance because of its share contribution to South Africa’s wheat production. The province accounts for 64 percent of South Africa’s intended 500 500 hectares for winter wheat in the 2018/19 production season. We will get clarity about this season’s harvest when the National Crop Estimates Committee releases its first production estimate for winter crops at the end of August 2018.
• Aside from the production dynamics, the wheat import tariff rate of R437.24 per tonne that triggered on 10 April 2018 was finally published in a government gazette on 25 May 2018, making it an official rate. This is a 45 percent increase from the previous rate. The delays and uncertainty of wheat tariff adjustments partly resulted in a decline in imports in the past couple of weeks, but this could soon change as all triggered tariffs have now been gazetted.

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The harvest activity is gaining momentum in the irrigation areas around the country. This is reflected in the volumes of maize delivered to commercial silos in the week ending 25 May 2018, which amounted to 255 903 tonnes, up by 77 percent from the previous week.

About 67 percent of this was yellow maize, with 33 percent being white maize. The fact that a large part of maize delivered to commercial silos is yellow maize signals that the harvest activity is gaining ground also in the early planted areas in the eastern parts of the country (areas that predominantly plant yellow maize). The total maize deliveries for the four weeks of the 2018/19 marketing year are estimated at 561 275 tonnes.

More maize will be delivered in the coming weeks because the harvest activity will soon gain momentum across the dryland regions of the country, particularly the early planted areas in the eastern and central parts of South Africa. The weather forecast is quite favourable for the next two weeks, which bodes well with the harvest activity and could also support the areas where maize is at drying and maturing stages.

Our conversation with farmers, as well as reported yields in areas that have already harvested ranges between average and above average (yields), which supports that National Crop Estimates Committee’s view of 12.9 million tonnes of maize production this season.

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This was a data-packed week for grain and oilseed markets, with the most notable release being the Crop Estimates Committee’s fourth production estimates for 2017/18 summer crops.

The commercial maize production estimate was lifted by a percentage point from last month to 12.8 million tonnes. The soybean and sunflower seed production estimates were left unchanged from last month at 1.4 million tonnes and 792 255 tonnes, respectively.

The yields received thus far in the summer crop areas that have already harvested vary between average and above average, which is supportive of the aforementioned estimates. In terms of winter crops, the first production estimate will only be released at the end of August.

The planting activity is almost complete in the Western Cape province. The newly emerged crops are in good shape but need rainfall to improve soil moisture and crop conditions.

The SAFEX beef carcass market experienced a quiet week with prices unchanged from levels seen last week.

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There are reports of deteriorating wheat crop conditions in the Black Sea region due to persistent dryness, particularly in the southern parts of Russia. In the third week of May 2018, the International Grains Council estimated Russia’s 2018/19 wheat production at 75 million tonnes, down by 12 percent from the previous season. This estimate did not factor in the recent weather dynamics. Therefore, there might be a further downward revision in the next monthly update.

The other countries within the Black Sea region that are set to register a decline in 2018/19 production season are Ukraine and Kazakhstan, where harvests are estimated at 27 million and 14 million tonnes, respectively down by a percentage point and 7 percent from the previous season.

From a global perspective, the aforementioned potential decline in production will slightly be offset by increases in other countries such as Canada, Australia and Argentina, amongst others. The USDA forecasts 2018/19 global wheat production at 742 million tonnes, down by 2 percent from the previous season.

Back on our home soil, the weather remains a primary focus as the winter wheat crop is at early stages of development in the Western Cape province. Last week, the Swartland region received good showers of between 20 and 40 millimetres, which bodes well with the crop at the current stages of its development.

In the Overberg region, the crop is also in good conditions, thanks to the recent showers. In the Southern Cape region, the planting activity is almost complete, also boosted by slight improvement in soil moisture. This is also evident in the province’s dam levels which averaged 19 percent in the week of 28 May 2018, up by 2 percentage points from the previous week and a percentage point from the corresponding period last year (see Map below).

With that said, it is not all rosy, while the recent showers have slightly improved topsoil moisture, the province needs intense and persistent rainfall in order to replenish subsoil moisture, which will then benefit the crop.

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