Wandile Sihlobo, Agbiz

The winter wheat planting activity could slow down in the coming weeks as weather forecasts indicate a possibility of continued dry conditions in the Western Cape during the next two weeks. The Swartland is the only wheat-growing region that could receive light showers of between 16 and 25 millimetres this week (ending 11 May 2018). The prospects for the week ending 22 May 2018 present similar dynamics, with light showers in areas around the Overberg region.

On 23 March 2018, the South African Weather Service highlighted a possibility of above-normal rainfall in the south-western Cape regions of the country between April and June 2018.  This has not yet materialised and it is unclear whether the forecasts will change drastically in this month’s update or show a delay, but maintain the same theme of higher rainfall.

Apart from production dynamics, trade is also one of the topical issues in the domestic wheat market. There have been no imports in the past six weeks. The last imports were in the week ending 09 March 2018, amounting to 22 715 tons. This placed South Africa’s wheat imports at 1.2 million tons, which equates to 63% of the 2017/2018 wheat import forecast.

This slow import activity coincides with the delays in adjustments in wheat import tariff levels. The wheat import tariff triggered on 10 April 2018 to R437.24 per ton. The previous trigger was on 20 March 2018, which then was calculated at R293.74 per ton, following an uptick in international wheat prices (No2 HRW) due to unfavourable weather conditions in the United States.

However, these rates are not yet applicable. The current import tariff is R394.85 per ton. The newly calculated rates will be applicable after publication in a Government Gazette, of which the timeframe is unclear. The import tariff is expected to decline to R293.74 per ton first and then increase to R437.25 per ton. – Wandile Sihlobo, Agbiz

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.

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