Highlights in today’s morning note
The National Crop Estimate Committee revised its 2017 wheat production estimate downwards by 4% from the previous month to 1.58 million tonnes. This is 17% lower than the previous season’s harvest. The notable decline was in the Western Cape province, which is not surprising given that the province experienced drought.
With that said, the province remains a key producer of South Africa’s wheat with a lion share of 43%. Trailing the Western Cape is the Free State and Northern Cape provinces with a combined share of 38%. These particular provinces are mainly irrigation dominated, whereas the Western Cape is mainly rain-fed.
The expected drier weather conditions this week suggest that there might be minimal improvements in dam levels, which are critically low. The update for the week ending 27 November 2017 shows that Western Cape dams averaged 35%, unchanged from the previous week, but 20% lower than the same period last year.
In terms of trade, South Africa imported 57 106 tonnes of wheat in the week ending 24 November 2017. About 81% of it was from Russia and 19% from Lithuania. This placed 2017/18 marketing season’s wheat imports at 519 988 tonnes, which equates to 29% of the seasonal import forecast of 1.8 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 8th batch of exports this season was recorded at 530 tonnes. This placed total exports for 2017/18 marketing year at 3 098 tonnes. There’s likely to be more exports to regional markets over the coming months.
The weather forecast for the 2017/18 maize production season remains favourable. The near-term outlook shows a possibility of widespread rainfall across the maize belt. The long-term forecasts from the South African Weather Service promise above normal rainfall between this months to February 2018. If this materialises, the country stands a good chance of obtaining a fairly big harvest.
From a trade perspective, South Africa’s maize exports recovered from the disappointing levels observed in the week ending 17 November 2017. Last week, the country exported 33 260 tonnes of maize. About 79% of these exports were yellow maize, with 21% being white maize.
The leading buyer was Japan with a share of 68%, all yellow maize. Trailing Japan was Botswana with a share of 11%. This placed South Africa’s 2017/18 total maize export volume at 1.6 million tonnes, which equates to 73% of the season’s export forecast of 2.2 million tonnes. About 67% of the exported 1.6 million tonnes is yellow maize, with 33% being white maize.
With the exception of Derby, Potchefstroom and Ventersdorp areas of North West province, most sunflower seed growing areas of the country had a relatively cool and drier start of the week. However, the forecasts for the next two weeks remain positive with a possibility of rainfall of between 20 and 80 millimetres.
At this point, the sunflower seed planting process is still at initial stages. However, this is not much of a concern, as the optimal planting window only closes in early January 2018. As indicated in our previous notes, the late start in planting essentially means that there could be relatively smaller ‘early producer deliveries’ in the upcoming marketing season.
Apart from the aforementioned aspects, this week’s data calendar fairly light, therefore the price movements will largely be driven by developments in the currency market and traded volumes within the next few days.
The South African potato market gained ground in yesterday’s trade session with the price up by 11% from the previous day, closing at R47.31 per pocket (10kg). These gains were mainly due to lower stocks of 629 453 pockets (10kg bag) at the beginning of the session.
However, during the session, the market saw a slight uptick in deliveries as the harvest activity picks up after a quiet weekend. This subsequently led to a 1% increase in daily stocks to 634 786 pockets (10kg bag).
The fruit market was once again mixed in yesterday’s trade session. The apples and bananas market managed to claw back the previous day’s losses and closed in positive territory. These gains followed an 11% and 2% respective decline in apples and bananas daily stocks to 206 000 tonnes and 261 000 tonnes.
Meanwhile, the price of oranges marginally declined by 2% from the previous day to R7.37 per kilogram. These losses were mainly on the back of a 20% increase in daily stocks to 59 000 tonnes.
Click below to read more recent reports by Wandile Sihlobo.