The SAFEX soya bean market posted gains in yesterday’s (2 May 2018) trade session, supported by bullish sentiment emanating from higher Chicago soya bean prices, commercial buying interest, as well as the weaker domestic currency against the US Dollar.
In the fields, the weather has cleared up over South Africa’s soya bean growing areas; therefore the harvest process could gain momentum during the next eight days, particularly in Mpumalanga province. As highlighted in yesterday’s note, the areas that have harvested received average yields, which supports the National Crop Estimates Committee’s production forecasts of a record 1.4 million tons in the 2017/2018 production season.
This optimism in soya bean production is not limited to South Africa. A number of countries such as the United States (US), Brazil, China and Canada are in good shape, with the 2017/2018 harvest estimated at 119.5 million, 116.0 million, 14.3 million and 7.7 million tons, respectively, according to data from the International Grains Council (IGC).
From a global perspective, the uptick in soya bean production in these particular countries was, however, overshadowed by the decline in Argentina, Uruguay, Paraguay and India. This is evident from the IGC’s data which shows that the 2017/2018 global soya bean production at 338.8 million tons, down by 3% from the previous season. Moreover, the ending stocks are estimated at 41 million tons, down by 15% from the 2016/2017 production season. This provided the near-term support to the market.
Looking ahead, the path could soon change, as the IGC forecasts a 5% year-on-year uptick in the 2018/2019 global soya bean production to 355 million tons. This is underscored by prospects of a recovery in Argentina, Uruguay and India production, which in turn is supported by expectations of favourable weather conditions and an expansion in area plantings. Moreover, Brazil’s harvest is set to increase further by 3% from the 2017/2018 production season to 119 million tons.
It is still early in the season, however, and more will unfold over the coming months. Some of the countries in the northern hemisphere are at initial stages of planting the 2018/2019 crop. – 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.