Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.

Maize:

The weather remains a key focus in the domestic maize market as the crop is still at its growing stages. The soil moisture has generally improved across the maize belt following rainfall in the past few weeks. However, follow up rainfall is needed given that the crop has been moisture-stressed in the western parts of the country following dry conditions in the past few days.

Fortunately, the near-term weather forecasts show signs of good rainfall across the maize belt during the next two weeks. If this materialises, the maize crop will remain in good shape, which increases the chance of good yields this season.

While the focus is on the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 13 287 tons in the week ending 9 March 2018, which is well above the previous week’s (ending 2 March 2018) deliveries of 13 287 tons. About 60% of this was yellow maize, with 40% being white maize. Overall, South Africa’s 2017/2018 marketing year’s total maize deliveries for weeks 1 to 45 currently stand at 15.39 million tons. Of this total, 59% is white maize with 41% being yellow maize.

Wheat:

Although the winter wheat growing season will only start in the next two months or so, the recent developments on the Western Cape weather front are worth highlighting. The weather charts currently show a possibility of light rainfall during the next two weeks across the coastal areas of the province.

This is a welcome development following weeks of dry conditions but will not make a meaningful improvement on dam levels which are critically low, estimated at 20% in the week of 12 March 2018, unchanged from the previous week, but down by 9 percentage points from the corresponding period last year (2017).

The volumes of wheat recently delivered to commercial silos declined significantly from levels seen in previous weeks. This mirrors the reduction in activity in the farms after the completion of the harvest process.

About 3 519 tons of wheat were delivered to commercial silos in the week ending 9 March 2018. This is up by 24% from the volume delivered the previous week, but well below the volumes delivered in the previous months when the harvest process was at its peak. This placed South Africa’s winter wheat producer deliveries for weeks 1 to 23 of the 2017/2018 marketing year at 1.46 million tons.

Soya beans:

This week (ending 16 March 2018) the soya bean growing areas have been dry and cool so far, with light showers on Tuesday night only,  concentrated in areas around Lydenburg, Middelburg, Morgenzon, Witbank and Wonderfontein. With that said, this is not a great concern as there is still a fair amount of soil moisture.

The next two weeks promise the possibility of good rainfall which should further improve soil moisture. As noted in yesterday’s (14 March 2018) note, these weather developments support the Crop Estimates Committee’s view of a new record level of 1.4 million tons this season, up by 5% from the 2016/2017 production season.

In global markets, there is speculation in the market that China’s soya bean demand could partially shift from the United States (US) to South America owing to the recent political developments regarding US trade policy. China is the world’s leading importer of soya beans with a share of 64% in the 2017/2018 global soya bean imports of 151 million tons.

In the past five years, the US has been one of the key suppliers of soya beans to China, accounting for nearly 40% share of that market, according to data from Trade Map. Brazil and Argentina were amongst the key suppliers, hence the talks in the market point to a possible increase in South America’s share at the expense of the US in the Chinese soya bean market over the coming years.

Sunflower seed:

The expected rainfall has not yet materialised in most areas of the country. Although not an immediate concern, it is worth noting that some crops in the western parts of the North West and Free State provinces are slightly moisture-stressed and urgently need rainfall.

There is hope however that the expected rainfall during the next eight days could offer slight relief. Fortunately, the medium-term forecasts promise a possibility of above normal rainfall in summer crop growing areas of South Africa between this month (March) and May 2018 which should provide sufficient moisture for crop development throughout the season.

In the global market, the warm weather conditions in Argentina which have been disrupting the soya bean crops have had a slightly positive impact on sunflowers, not by increasing yields but boosting the harvest process. Data from SUNSEEDMAN shows that on 14 March 2018, about 50% of this season’s Argentinian sunflower seed crop had already been harvested. The United States Department of Agriculture (USDA) forecasts the country’s 2017/2018 sunflower seed crop at 3.6 million tons, up by 6% year-on-year.

Potatoes:

After experiencing a good run at the start of the week (ending 16 March 2018), the potato market pulled back in yesterday’s (14 March 2018) trade session and settled in negative territory due to a large stock of 780 197 pockets of 10kg bags at the start of the session. The price was up by 9%from the previous day, closing at R32.40 per pocket.

In yesterday’s (14 March 2018) trading session, the market saw an uptick in deliveries on the back of ongoing harvest activity. This led to a 24% increase in daily stocks to 970 516 pockets.

Fruit:

The fruit market has been quite wobbly this week (ending 16 March 2018). The gains that were seen at the start of the week were again shaved off in yesterday’s (14 March 2018) session due to an uptick in daily stock levels. The prices of apples and bananas were down by down by 15% and 6% from the previous day (13 March 2018), closing at R6.91 and R7.58 per kilogramme, respectively.

Surprisingly, the price of oranges experienced extended losses of 17% from the previous day (13 March 2018) and settled at R4.54 per kilogramme. We maintain that this will be short-lived because of fairly lower stock of 64 000 tons, compared to levels of over 70 000 tons in the past few days.

Find the full report here.

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