Highlights in today’s morning note
South Africa’s average dam Levels: week ended 02 October 2017 (last year’s figures in brackets – 02 October 2016)
This week’s domestic maize calendar is fairly light with only weekly trade and deliveries data due for release. Apart from that, the focus will be on the new production season, as some farmers have already started planting in the eastern parts of the country. The planting activity in other parts of the country should gain momentum over the coming weeks.
The weather prospects remain positive with a possibility of widespread rainfall of between 20 and 80 millimetres across the South African maize-belt within the next eight days. This could delay planting activity, but will replenish soil moisture, which is conducive for the new season crop.
Within the region, the Zambian government expects above normal rainfall across the country between October 2017 and March 2018. This will benefit the summer crops. With that said, there are still concerns that the armyworm could again be a challenge in grain-producing regions this upcoming season.
The winter wheat crop is generally not in good shape in many parts of the Western Cape province due to persistent dryness. The prospects of an average harvest have diminished in Swartland area to such an extent that some farmers are resorting to cutting off the wheat crop so they can at least feed the livestock.
There are no new developments on the weather front. The current forecasts show a possibility of dry and cool condition across the Western Cape province within the next eight days. This means the winter wheat crop will be strained for some time.
In terms of dam levels – the recent update for the week ending 02 October 2017 shows that dams averaged 36% in the Western Cape province, unchanged from the previous week, but 26-points lower than the corresponding period last year.
It appears that most of the bearish news regarding the large soybean supplies of 1.32 million tonnes have partly been priced in. Therefore, market performance will largely be guided by the Chicago soybean price and domestic currency movements within the next few days.
In global markets – This morning the Chicago soybean price was up by 0.52% from levels seen at midday Friday owing to concerns that drier weather conditions in Brazil could delay the new season planting activity.
In addition, Abiove forecasts Brazil’s 2017/18 soybean production at 108.5 million tonnes, down by 5% from the previous season. This is in line with the International Grains Council estimate of 108.0 million tonnes for Brazil’s 2017/18 harvest.
Back in the US, the weather forecast shows a possibility of rainfall across the central and north-eastern parts of the Midwest within the next eight days. This could potentially slow the maturation and harvest process.
Informa Economics revised its 2017/18 US soybean production estimates up to 121.8 million tonnes, which is marginally higher than the USDA’s estimate of 120.6 million tonnes. Moreover, this is 4% higher than the previous season
It is still an off-season period in the domestic sunflower seed market and this week’s calendar is light with no major data releases. Therefore, the market will again be driven by the domestic currency movements and traded volumes in the local market.
In the global market – The EU’s sunflower seed market gained ground on Friday’s trade session with the price up by 1% from the previous day, closing at US$384 per tonne. These gains followed a slight uptick in global demand, as well as higher crude oil prices.
There is optimism regarding this season’s EU’s sunflower seed harvest. The European Commission has recently revised up its EU’s 2017/18 sunflower seed production by 500 000 tonnes from August 2017 estimate to 9.2 million tonnes. Overall, this is 8% higher than the 2016/17 season due to expected higher yields and an increase in acreage this season.
The South African potatoes market had a good run in Friday’s trade session with the price up by 6% from the previous day’s level, closing at R49.95 per pocket (10kg). These gains were on the back of relatively lower stocks of 750 625 pockets (10kg bag) at the start of the trading session.
During the trading session, the market saw an increase in buying interest, coupled with a slight decline in deliveries which subsequently added support to the market. Overall, the stocks fell by 4% from the previous day to 722 238 pockets (10kg bag).
The fruit market ended the day mixed during Friday’s trade session. The prices of apples and bananas were down by 3% and 1% from the previous day, closing at R7.30 per and R6.11 per kilogram, respectively. These losses were due to relatively large stocks of 204 546 tonnes of apples and 243 797 tonnes of bananas.
Meanwhile, the oranges market gained 38% from the previous day, with the price closing at R5.32 per kilogram due to the lower stock of 91 861 tonnes.
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