Highlights in today’s morning note
Although some regions of the country have already made notable progress regarding planting activity, the drier weather conditions continue to slow the progress in most other areas, particularly the western regions. The areas that have planted (eastern regions) also urgently need moisture for the germination process of seeds.
Fortunately, the forecasts for the next two weeks show a possibility of good rainfall across the maize-belt. The first week of December could bring rainfall varying between 30 and 90 millimetres across the maize-belt, which will beneficial to the new season crop.
From a trade perspective, last week’s maize exports were disappointing. South Africa exported only 12 485 tonnes of maize, which is well below the previous week’s exports of 58 574 tonnes. About 71% of these exports were white maize, with 29% being yellow maize.
The leading buyer was Botswana with a share of 40%, mainly white maize. Trailing Botswana was Mozambique with a share of 10%. This placed South Africa’s 2017/18 total maize export volume at 1.5 million tonnes, which equates to 68% of the season’s export forecast of 2.2 million tonnes. About 66% of the exported 1.5 million tonnes is yellow maize, with 34% being white maize.
The winter wheat harvest process should progress smoothly this week in the Western Cape province, as weather forecasts suggest that conditions will remain cool and dry in many areas. The southwestern parts of the province are the only regions that could receive light showers and possibly experience delays in harvesting.
Overall, the key wheat producing regions of the Western Cape province has already made notable progress in their harvest activity – more than half of the crop has already been a harvested. The yields received thus far are below average, but the quality of the crop is fair.
The expected drier weather conditions suggest that there might be minimal improvements in dam levels, which are critically low. The update for the week ending 20 November 2017 shows that Western Cape dams averaged 35%, unchanged from the previous week, but 21% lower than the same period last year.
In terms of trade, South Africa imported 32 544 tonnes of wheat in the week ending 17 November 2017 – all from Russia. This placed 2017/18 marketing season’s wheat imports at 461 947 tonnes, which equates to 26% of the seasonal import forecast of 1.8 million tonnes.
The weather remains a primary focus in the soybean market. The planting process has been slightly delayed in some areas due to dryness. Although there is still sufficient time for the process to move smoothly, the delays could lead to lower ‘early producer deliveries’ in the upcoming marketing season.
Overall, there are signs that this situation could soon improve with the weather forecasts showing a possibility of widespread rainfall across the soybean growing areas within the next two weeks. In Kwa-Zulu Natal province which has already planted a fair share of the intended area, the expected rainfall should support the new season crop. Meanwhile, in other areas, the improvements in soil moisture could accelerate the planting process.
As previously stated, data from the National Crop Estimates Committee indicates that South African farmers intend to plant 720 000 hectares of soybeans in the 2017/18 production season – the largest area on record.
In global markets – With the US soybean harvest process towards completion, estimated at 96% complete at the beginning of the week, the focus is shifting towards South America. There are lingering concerns that drier weather conditions in Argentina could delay the planting process.
Meanwhile, Brazil has received good showers in the past few weeks and the planting process is progressing well. The weather forecast for the first week of December paints a constructive picture of widespread rainfall across South America, which should benefit the new season planting activity and crops.
Yesterday the South African potato market managed to claw back its recent losses due to lower stocks of 835 724 pockets (10kg bag) at the start of the session. The price was up by 16% from the previous day, closing at R39.32 per pocket (10kg).
Moreover, during the day the market saw strong commercial buying interest, coupled with lower deliveries on the back of slow harvest activity. This led to a 17% further decline in daily stocks to 692 338 pockets (10kg bag).
The fruit market ended the day mixed in yesterday’s trade session. The apples and bananas market received support from commercial buying interest, with prices up by 6% and 11% from the previous day, closing at R7.59 and R6.12 per kilogram, respectively. However, these gains could be short-lived owing to a large stock of 220 000 tonnes of apples and 300 000 tonnes of bananas.
Meanwhile, the price of oranges declined by 4% from the previous day, closing at R7.08 per kilogram. The losses followed a 38% increase in daily stocks to 47 000 tonnes.
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