Weather could remain favourable through maize production season

Highlights in today’s morning note

Maize:

The weather conditions could remain favourable throughout the production season. The medium-term forecasts promise above average rainfall within the next two months across the maize belt, which should further improve soil moisture and benefit the crop.

From the data front, today the United States Department of Agriculture (USDA) will release its monthly update of the World Agricultural Supply and Demand Estimates report. Last month, the agency placed South Africa’s 2017/18 maize production estimate at 12.5 million tonnes (commercial and non-commercial maize production.), down from last season’s record harvest of 17.5 million tonnes.

While the focus is on the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 4 241 tonnes in the week ending 02 March 2018, well below the previous week’s deliveries of 24 593 tonnes. About 61% of this was white maize, with 39% being yellow maize. Overall, South Africa’s 2017/18 marketing year’s total maize deliveries for “week 1 to 44” currently stand at 15.3 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.

Wheat:

The volumes of wheat recently delivered to commercial silos declined significantly from levels seen the previous weeks. This mirrors the reduction in activity in the farms after the completion of the harvest process .

About 2 848 tonnes of wheat were delivered to commercial silos in the week ending 02 March 2018. This is four-fold lower than the volume delivered the previous week, and well below the volumes delivered in the previous months when the harvest process was at its peak. Overall, this placed South Africa’s winter wheat producer deliveries for “week 1 to 22” of the 2017/18 marketing year at 1.44 million tonnes.

On the global front – Making headlines yesterday was the intergovernmental contract between Iran and Russia, which could potentially lead to about 1.5 million tonnes of wheat exports to Iran in the coming years. This will be an important market for Russia as the country continues to see a solid increase in domestic wheat production.

In its February report, the USDA placed Russia’s 2017/18 wheat production at 85 million tonnes, up by 17% from the previous season owing to an increase in area planted, as well as expected higher yields. This is a notable contribution to global supplies, making up a share of 11%.

Soybeans:

The expected rainfall has not yet materialised in most soybean growing areas of the country. The only areas that received light showers on Tuesday evening were Bethlehem, Fouriesburg, Heilbron, Harrismith, Lindley, Ventersburg, Senekal, Morgenzon and Vereeniging.

Nevertheless, this is not much of a concern as soybean growing areas of South Africa still have a fair amount of soil moisture from rainfall received in the past few weeks. Moreover, the forecast rainfall within the next two weeks is in line with the South African Weather Service’s expectations of above normal rainfall within the next two months across the summer crop growing areas of the country.

In global markets – The global soybean demand remains solid, underpinned by strong demand from China. The USDA recently reported a sale of 120 000 tonnes of US soybean to China. As highlighted in our previous note, China National Grain and Oils Information Centre forecasts the country 2017/18 soybean imports at 96 million tonnes, slightly below the USDA’s estimate of 97 million tonnes.

RSA Potatoes:

The potatoes market lost ground in yesterday’s trade session owing to a large stock of 739 972 tonnes at the start of the session. The price was down by 6% from the previous day, closing at R34.95 per pocket (10kg).

In the session, the market saw an uptick in deliveries owing to ongoing harvest activity in most parts of the country. This led to a 12% increase in daily stocks to 831 606 pockets (10kg bag).

RSA fruit:

The fruit market recorded widespread losses in yesterday’s trade session. The prices of apples and bananas were down by 1% and 3% from the previous day, closing at R8.21 and R7.03 per kilogram. These losses were mainly due to large stocks of 176 000 tonnes of apples and 210 000 tonnes of bananas.

The price of oranges declined by 4% from the previous day and settled at R4.63 per kilogram. This was also pressured by a recovery in stocks to 61 000 tonnes, from levels of below 30 000 tonnes in the past few days.

Full report attached below

Agbiz Morning Market Viewpoint on Agri-Commodities 08 March 2018