RSA fruit: Yesterday the fruit market managed to claw back some of its recent losses with support coming from strong buying interest. The price of apples was up by 9% from the previous day, closing at R6.91 per kilogramme. The bananas and oranges prices were, respectively, up by 0.14% and 11% from the previous day, closing at R7.01 per kilogramme and R3.09 per kilogramme. 

Maize: The National Crop Estimate Committee (CEC) revised its maize production estimates up by 2% from the previous month to 15.97 million tonnes. This is above the market expectations of 15.80 million tonnes and doubles the previous season’s production of 7.78 million tonnes.

Wheat: The CEC’s preliminary wheat planting data shows that farmers reduced the area planted in 2017 by 2% from the previous season to 498 850 hectares. This decline in the area was due to some farmers switching to barley and canola owing to profitability reasons.  

Click here to read the Morning Market Viewpoint on Agri-Commodities for today.

Soybeans: In its sixth production estimate, the CEC maintained its soybean production estimate unchanged from last month at 1.34 million tonnes. This is 81% higher than the previous season and the biggest crop on record. 

Sunflower seed: The CEC left its production estimate unchanged from the previous month at 821 970 tonnes. This is 9% higher than the previous season due to expected higher yields. The harvest process is virtually over with above average yields reported in many areas of the country. This supports the CEC’s view of a relatively large crop this season. 

RSA Potatoes: The South African potatoes market lost ground in yesterday’s trade session and closed in negative territory due to relatively large stocks of 846 765 bags (10kg bags). The price was down by 5% from the previous day, closing at R28.67 per kilogramme.

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The National Crop Estimate Committee revised its maize production estimates up by 2% from the previous month to 15.97 million tonnes. This means South Africa would, ideally, export roughly 4.0 million tonnes of total maize this year. However, weak global demand for white maize could lead to relatively lower exports of 2.2 million tonnes – leaving a large carry-over stock.

Figures released this afternoon by the National Crop Estimate Committee shows that 2017 total summer grains production could reach 18.44 million tonnes, which is a 96% annual increase. White and yellow maize production estimates were revised up, respectively, by 0.43% and 4.83% from the previous estimate to 9.51 million and 6.46 million tonnes. In total, reaching a record level of 15.97 million tonnes.

Apart from the dry beans production estimate which was revised up by 1.87% from last month, all other estimates were left unchanged. The harvest process is virtually over across the country and many areas reported exceptional yields, particularly on soybeans and maize, which support the CEC’s view of record crops.

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In terms of winter crops – the preliminary area estimate for wheat shows that farmers planted 498 850 hectares, which is 1.87% less than the previous season. Today’s data shows that South Africa will be well supplied this season and maize prices could remain at relatively lower levels for some time.  

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Meanwhile, wheat and oilseeds markets ended the week in negative territory, largely pressured by lower international prices and relatively large domestic supplies – particularly for oilseeds.

For fruits and vegetables, the week has again been fairly wobbly with daily stock levels underpinning the market. Lastly, there was nothing much happening in the SAFEX beef market, prices remained flat from the levels seen last week.

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The recent update for the week ending 31 July 2017 shows that dams averaged 27%, compared to 55% in the same period last year. The medium term forecasts present some hope, as the South African Weather Service’s indicated that there is a possibility of wetter conditions in the south western parts of the country between August and October 2017. 

Highlights in today’s morning note

Wheat:

Last week, the Southern Cape region of the Western Cape province received light showers of between 3 and 6 millimetres, which is not sufficient to make an improvement on crop conditions. Meanwhile, other regions of the province remained dry and cool. Overall, the crop is not in good shape and urgently needs moisture in order to develop well this season. 

Maize:

The lower maize prices that were seen in the past few days sparked buying interest amongst market participants, thus leading to bargain-buying in Friday’s trade session. Moreover, the weaker Rand against the US Dollar, as well as higher Chicago maize prices also added support to the maize market. 

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Soybeans:

There was not much happening in the domestic soybean market as harvest process is already complete. Looking ahead, the domestic soybean market will largely be guided by the Chicago (soybean) price and domestic currency movements.

Sunflower seed:

The harvest process is virtually over with few patches left in the western areas of the North West province. The forecast dry and warm weather conditions within the next two weeks could allow farmers to complete the process smoothly.

RSA Potatoes:

The South African potatoes market lost ground in Friday’s trade session and closed in negative territory due to relatively large stocks of 1.21 million bags (10kg pockets/bag). The price was down by 2% from the previous day, closing at R28.46 per 10kg pocket.

SAFEX beef:

In Friday’s trade session, there was not much happening in the SAFEX beef carcass market. The price remained unchanged from the previous day, closing at R46.00 per kilogramme. However, it is worth noting that the SAFEX beef carcass prices could differ from the physical market due to thinly traded volumes at the stock exchange.

RSA fruit:

The fruit market ended the day mixed in Friday’s trade session. The prices of apples and bananas were down by 5% and 4% from the previous day, closing at R7.14 per kilogramme and R5.66 per kilogramme, respectively. Meanwhile, the price of oranges gained 0.34% from the previous day, closing at R2.95 per kilogramme. 

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The good performance in the domestic currency in June and early part of July, coupled with expected large domestic grain and oilseed harvest boosted the tractor sales in July 2017. The sales were recorded at 502 units – up by 5% from June 2017 and 11% higher than the corresponding period last year. Although grain prices are under pressure, the higher yields per hectare have, to some extent, boosted farmers’ incomes.

 As noted in our previous reports, South Africa has had a good run this year in terms of production. The 2017 summer grain and oilseed harvest is estimated at 18.44 million tonnes, which is a 96% annual increase. The favourable summer rainfall, higher yields and an increase in area plantings are the key drivers of this rebound.

Contrary to tractors, the combine harvester sales declined by 7% m/m and 35% y/y, with only 13 units sold in July 2017. This is the lowest sales figure since December 2016. Furthermore, this decline came after five consecutive months of solid performance in harvester sales, owing to a good harvest.  With that said, the decline in July 2017 figures is not surprising as the summer harvest process is virtually over across the country.

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Looking ahead – We expect the tractor sales to remain stable in the near term, ahead of the new planting season which starts in October 2017.  The combine harvesters’ sales could remain weak in the near term and possibly gain momentum towards the end of the year when the winter crop harvest period commences. In the short-to-medium term, the key risk to the aforementioned is the weaker exchange rate. An important factor to monitor in the long term is the cost of servicing the farm debt, as it would have implications on the agricultural machinery sales performance.

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After cutting 44 000 jobs in the first quarter of 2017, South Africa’s agricultural sector saw a further 40 000 jobs lost in the second quarter – putting the total labour force at 835 000 jobs.

However, it is worth noting that this is in line with the season’s trend due to reduced horticultural activity in the second quarter.

Taking a closer look at the provincial decomposition, it is clear that most job losses occurred in the Northern Cape, Western Cape, KwaZulu Natal and Gauteng provinces where the bulk of labour intensive crops are grown. Meanwhile, other provinces saw slight job gains.

In terms of sub-sector performance – The reduction in employment were in field crops and horticulture, forestry and aquaculture. Meanwhile, the other sub-sectors, such as the livestock, game farming, as well as mixed farming showed job gains.

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RSA Potatoes:

The South African potatoes market gained ground on Tuesday’s trade session with the price up by 5% from the previous day, closing at R30.08 per 10kg pocket. These gains were driven by lower stocks of 859 053 pockets (10kg) at the start of the session. However, during the session, the market saw an increase in deliveries on the back of ongoing harvest. This subsequently led to a 9% uptick in daily stocks to 933 080 tonnes.

Maize:

In terms of trade – South African maize exports fell by 47% in the week ending 04 August 2017 from the previous one and eased at 46 526 tonnes. This was mainly due to a decline in activity in the Kenyan and Taiwanese markets. About 86% of these exports were yellow maize, with 14% being white maize.

Wheat:

The new season crop is not in good shape due to persistent dryness in the Western Cape province. The weather models show that this week could remain dry and cool which will continue to strain the crop.

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Soybeans:

There is still an underlying bearish sentiment in the domestic soybean market which stems from expected large production of 1.34 million tonnes, up 81% from the previous day.

Sunflower seed:

From a global front there is rising optimism in some EU countries regarding the 2017/18 season sunflower seed crop. France Farm Ministry forecasts a 6% year-on-year uptick in production of sunflower seed this season to 1.3 million tonnes.

RSA fruit:

The fruit market ended the day mixed on Tuesday’s trade session. The apples and bananas prices were down by 3% and 1% from the previous day, closing at R7.38 per kilogramme and R5.74 per kilogramme, respectively. Meanwhile, the price of oranges market gained 18% from the previous day, closing at R3.32 per kilogramme due to strong buying interest. 

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The weather remains a key focus in the South African wheat market as the crop is still at relatively early stages of development that require high moisture. However, this is mainly a concern in dryland areas such as the Western Cape province. The province has not received effective rainfall since the start of the season, thus soil moisture is extremely low.

South African Agricultural Commodities Weekly Wrap

Apart from the USDA’s World Agricultural Supply and Demand report, domestic weekly grain and oilseed trade data, and the producer deliveries, this was a fairly quiet week in the South Africa agricultural commodities markets.

With that said, the weaker domestic currency and strong buying interest led to widespread gains in markets. This was with the exception of wheat which ended the week in negative territory, largely pressured by lower international prices.

For fruits and vegetables, the week has again been fairly volatile with daily stock levels underpinning the market. The SAFEX beef carcass market ended the week on a quiet note with prices unchanged from last week.

Click here to read more.

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SAFEX beef:

The beef market is slowly showing signs of normalisation after the 2015-16 El Nino-induced drought. Data from the Red Meat Levy Admin shows that South African farmers slaughtered 203 983 head of cattle in June 2017, up by 1% from the previous month. With that said, this is still 16% lower than the corresponding period last year (drought year with higher slaughtering rate). We will monitor the developments closely to determine the impact on prices.

Wheat:

The wheat crop is generally not in good shape due to persistent dryness in the Western Cape Province. The first part of last week was dry and warm across the province, but toward the end of the week, the Swartland region received showers of between 10 and 20 millimetres.

Maize:

Most areas of the country have already completed the harvest process. The ones that have not yet finished could get momentum from the expected drier and cool weather conditions within the next two weeks.

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Soybeans:

The domestic soybean data calendar is light this week, therefore the market performance will largely be guided by the Chicago (soybean) price and domestic currency movements throughout the week. 

Sunflower seed:

From a global perspective – The USDA forecasts 2017/18 global sunflower seed production at 47.3 million tonnes, up 2% from the previous season. The uptick is due to expected large harvest in Russia, Turkey, Ukraine and the EU countries.

RSA Potatoes:

The South African potatoes market saw marginal gains in Friday’s trade session with the price up by 0.24% from the previous day, closing at R28.91 per pocket (10kg). These gains came on the back of relatively lower stocks in the market.

RSA fruit:

The fruit market ended the day mixed on Friday’s trade session. The price of bananas was up by 3% from the previous day, closing at R5.95 per tonne due to strong buying interest. Meanwhile, the prices of apples and oranges fell by 1% and 15% from the previous day, closing at R7.31 per kilogramme and R2.90 per kilogramme, respectively. 

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RSA fruit:

The fruit market was once again mixed in yesterday’s trade session. The price of apples was down by 2% from the previous day, closing at R7.16 per tonne due to large stocks of 240 969 tonnes. Meanwhile, the other products managed to claw back the recent losses due to strong buying interest and a subsequent decline in daily stocks. The prices of bananas and oranges were up by 1% and 10% from the previous day, closing at R6.04 per kilogramme and R3.20 per kilogramme, respectively.

Maize:

In areas that have already harvested, farmers received exceptional yields which support the National Crop Estimate Committee’s view of a possible record crop of 15.97 million tonnes this season. This is well above the 2016/17 crop of 7.78 million tonnes and a long term average production of 12.50 million tonnes.

Click here to read more.

Wheat:

The weather forecast has changed drastically. It currently shows a possibility of rainfall of between 16 and 30 millimetres across the Western Cape province within the next two weeks. This will not be sufficient to improve soil moisture but could bring relief after weeks of dryness. In order to realise notable improvements, the province needs roughly 60 millimetres.

Soybeans:

In the absence of major data releases, the domestic soybean market performance will largely be guided by the Chicago (soybean) price and domestic currency movements throughout the week. 

RSA Potatoes:

Large daily potatoes stocks of 1.049 million pockets (10kg) at the start of yesterday’s trade session added bearish pressure to the market. The price ended the day in negative territory, down 2% from the previous day and closing at R28.32 per 10kg pocket.

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