wheat production – Agri Limpopo

The African continent is far from being self-sufficient in wheat production

Arithmus — Tue, 09 Oct 2018 13:12:01 +0000

The African continent is far from being self-sufficient in wheat production. The 2018/19 wheat imports are estimated at 51 million tonnes, which is almost double the volume produced in the same season.
This, however, is concentrated in a few countries, namely; Egypt, Algeria and Nigeria which account for more than half of the expected import volume. This is partially explained by the fact that bread is a staple food, specifically in Egypt and Algeria. The other notable wheat importers in the African continent are Morocco, Tunisia, Libya, Kenya, Ethiopia, South Africa and Sudan.
This is likely to remain the key theme over the next couple of years as there are no convincing wheat breeding or production plans in the pipeline in many countries. In South Africa, the wheat industry is currently doing research on ways to boost yields, but the outcome of these efforts might take time to materialise.
The expected 18 percent annual improvement in South Africa’s wheat production in the 2018/19 production season to 1.8 million tonnes has largely been driven by an increase in area planted and expected higher yield following improvement in weather conditions.
The other countries that set to record an uptick in wheat production, albeit remaining net importers, are Algeria and Morocco with the 2018/19 harvest estimate at 2.9 million tonnes and 7.3 million tonnes, respectively.
The import dependency exposes the African continent exposed to shocks in the global wheat market. A case in point is the 2018/19 production season, where the expected 6 percent annual decline in global wheat production to 717 million tonnes could lead to tight supplies and in turn higher prices. These higher prices might translate to food price increases for the net importing African markets, which could reduce local demand.

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Sourced: Agbiz Morning Market Viewpoint on Agri-Commodities

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Will the Tight Global Grain and Oilseed Supplies have a Notable Impact on SA?

Arithmus — Tue, 30 Oct 2018 07:43:29 +0000

Although the 2018/19 maize and soybean production is expected to be up from the previous season, the stocks will be tight due to a decline in wheat production, as well as a general uptick in consumption. Broadly speaking, this means that global grain prices could move sideways to upwards in the near to medium term.
To dive into the details of the aforementioned summary, the global maize supplies will remain tight despite the expected 3 percent year-on-year improvement in 2018/19 global maize production to 1.07 billion tonnes. This is largely due to the increasing demand from both the animal feed processors and industrial use (ethanol). In the case of animal feed, this could be linked to the expected decline in global wheat production, which has led to an uptick in prices, hence some processors opt for maize as a substitute.
Overall, this will have minimal implication on the South African maize market as it is well supplied. But the same cannot be said about wheat, as South Africa is a net importer and thereafter exposed to global shocks.
In this mornings’ note, we explore the global picture of maize, wheat, soybeans and sunflower seed.

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Sourced: Agbiz, Agribusiness Research

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Factors currently underpinning SA grain and oilseed market

Arithmus — Thu, 15 Nov 2018 07:26:00 +0000

After experiencing a good run at the beginning of the week, yesterday almost all SAFEX grain and oilseed contract month prices pulled back and settled in negative territory. This was underpinned by a broad range of factors, but the most notable ones were the recovery in the domestic currency, as well as prospects of higher rainfall within the next two weeks. This morning the near term weather forecasts suggest that most parts of the country (with the exception of the Northern Cape and northern parts of Limpopo) could receive as much as 20 to 80 millimetres of rainfall. This is good for both areas that are yet to plant as it will improve soil moisture ahead of the process, and also bode well for recently planted areas as it will support the germination process of the crop.
The weather and ZAR/USD exchange are fundamental factors that will continue to underpin the domestic grain and oilseed market for months to come. In the case of the weather, however, the critical months are October to February, which is typically planting to pollination.
As set out in our previous notes, there is general optimism in the farming community regarding the 2018/19 summer grain and oilseed production. This is evident from the recent tractor sales data, and also farmers’ intentions to plant data. The data showed that summer grain and oilseed area plantings could increase by 5 percent year-on-year to 4.03 million tonnes in the 2018/19 production season. Most summer crops are expected to increase, with the exception of sunflower seed and groundnuts. While these farmer’s intentions are promising they are just that: farmers’ intentions. The actual summer crop planting estimates will be released on 29 January 2019.
The key risk on the path ahead, which we have emphasised in our previous notes, is the possibility of a weak El Niño. The South African Weather Service has indicated that this weather phenomenon could lead to drier weather condition in a period between the end of January and March 2019. This is a crucial period for most grain and oilseed because it coincides with pollination, which requires moisture. The global agricultural agencies such as the International Grains Council and the United States Department of Agriculture, amongst others, painted a somewhat positive picture of South Africa’s 2018/19 summer grain and oilseed production outlook, albeit the estimates lower than the previous production year. For example, maize production estimates currently range between 12.3 and 13.0 million tonnes, which is well above the long-term average of 12.0 million tonnes. Going forward, however, the weather will be a key determinant of whether any of the aforementioned data points materialise and this will be a central theme in the market for the next three months.

Winter Crops

Winter wheat harvest process is in full swing in the Western Cape. In the first six weeks of the 2018/19 marketing year, the producer deliveries amounted to 449 888 tonnes, which equates to 50 percent of the Western Cape’s expected harvest for the current season. While the upcoming deliveries figure for 16 November 2018 could show a further uptick form volumes delivered the previous weeks, the weeks of November 23 and 30 shows prospects of rainfall over the Western Cape, which could slow the process and might also negatively affect the quality of the crop in areas that have not yet harvested. Above all, South Africa’s wheat production is estimated at 1.86 million tonnes, up by 21 percent year-on-year. The improvement is on the back of higher yields and an expansion in overall area planted.
We are on the road again today, we will be back with the usual Agbiz Morning Market Viewpoint tomorrow, 16 November 2018.

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Sourced: Agbiz, Agribusiness Research

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Global and SA Agricultural Viewpoint

Arithmus — Mon, 26 Nov 2018 08:33:33 +0000

The 2018/19 global maize harvest could be the second largest on record, up by 3% y/y at 1.07 billion tonnes. This is underpinned by expected large harvests in the US, Brazil, Argentina, Ukraine and China. Nevertheless, the global maize stocks will remain tight due to an increase in consumption, particularly animal feed as traditional buyers of wheat are shifting to maize due to price competitiveness. Therefore, the stocks could fall by 13% y/y to 266 million tonnes.
The results of drier weather conditions that affected the wheat crop earlier in the season in Russia, Ukraine, Australia, China, India and the European Union region are reflected in the International Grains Council’s 2018/19 global wheat production estimate of 729 million tonnes, down by 5% y/y. This could then lead to a 3% y/y decline in stocks to 262 million tonnes.
The 2018/19 global soybean production is set to increase by 8% y/y to 367 million tonnes on the back of expected large harvests in the US, Brazil, Argentina, China, India, Paraguay, Ukraine, Russia and Uruguay, amongst others. As a result of this improvement in production, the 2018/19 global soybean stocks could be up by 28% y/y to 51 million tonnes, despite the expected uptick in consumption over the corresponding period. Similar to soybeans, the 2018/19 sunflower seed production is projected to increase by 5% y/y to 52 million tonnes boosted by an expected large harvest in the Black Sea region.
From a South African perspective, the aforementioned developments will have minimal direct implications in the case of maize as South Africa is a net exporter. But other commodities are interlinked to the SAFEX market as the country is a net importer of wheat, soybeans and sunflower seed by-products. The price dynamics are somewhat a result of the aforementioned fundamental factors, and the price movements in the near-term are likely to maintain a similar trend, except soybeans which continue to be largely affected by the US-China trade dispute.

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Sourced: Agbiz, Agribusiness Research

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