Weather a key focus in SA wheat market

• The weather is a primary focus in the South African wheat market as the winter wheat planting period approaches. The Western Cape province, which is a leading winter wheat producing province experienced persistent dryness in the past few months, therefore soil moisture is extremely low across the fields.
• The province needs to receive intense and persistent rainfall for soil moisture to improve, which will, therefore, add momentum to the planting process. However, the near-term weather forecasts present more of the same, which is cool and dry weather conditions across the province with the exception of the western areas which could receive light showers of between 16 and 25 millimetres in the week of 25 April 2018.
• The weather forecasts for the first week of May 2018 show clear skies, which is disappointing as rainfall typically starts towards the end of April, which then allows for the planting process to commence. If the aforementioned weather forecasts materialise, the 2018/19 planting period could be slightly delayed.
• Looking ahead, there is some optimism as the local weather agency maintained that the parts of the southwest regions of the cape could receive above-normal rainfall in May and June 2018. A key data point to focus on this week is the farmers’ intentions-to-plant data which is due for release on Wednesday. The expectations of good rainfall have improved optimism that the area plantings could be higher than the previous season.
• South African farmers planted 491 600 hectares of wheat in the 2017/18 production season, which is 3 percent lower than the previous season and slightly below the average area plantings for the past five years (see Chart below). The decline in plantings was mainly in the Eastern Cape and Free State provinces, whereas other provinces recorded a slight uptick in plantings. At the end of the season, however, the Eastern Cape and Western Cape were the only provinces that registered an annual decline in output due to poor yields. The lower plantings in other provinces were somewhat compensated by higher yields.

Chart: South Africa’s wheat production

Source: SAGIS, CEC, Agbiz Research

Read full report by Wandile Sihlobo in attachment below:

Agbiz Morning Market Viewpoint on Agri-Commodities 23 April 2018