Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
A bit of comforting news is that the South African maize belt could receive over 50 millimetres of rainfall during the next eight days. This comes at a time when crops in areas that managed to plant successfully within the central and western regions are starting to wilt due to lower soil moisture, following dry conditions and a heatwave in the past few weeks.
The eastern parts of the maize belt, which have a fair amount of soil moisture, will also benefit greatly as heat stress is starting to affect crops in some areas. The optimal maize planting window has already passed and, even if soil moisture refills, there will be minimal improvements in planting activity in the coming weeks.
Interesting to note is that the International Grains Council (IGC) placed South Africa’s 2017/2018 maize production estimate at 12.5 million tonnes, in line with the United States Department of Agriculture’s (USDA) estimates. This is a 28% year-on-year decline, following a record harvest in the 2016/2017 production season.
While this estimate is in line with the long-term production trend, it will be difficult to achieve, given that the North West and Free State provinces were unable to plant the overall intended area. The National Crop Estimates Committee (CEC) will release the preliminary estimates of the area planted next week, 30 January. The domestic maize market is still well-supplied in the short-to-medium term owing to large stocks from the 2016/2017 production season.
The warm weather conditions in the past few weeks have given the eastern Free State province enough room to speed up the harvest process. Regrettably, the yields received thus far are below average and the areas that are at the final stages of the harvest process will probably receive poor yields.
This poor performance joins the Western Cape which experienced harsh weather conditions throughout the season, subsequently dragging down the country’s overall 2017 wheat production. As indicated in our previous reports, South Africa’s wheat production estimate currently stands at 1.48 million tonnes, down by 23% from the 2016 harvest.
Other observers, such as the IGC are slightly more optimistic than the CEC about South Africa’s wheat production. The IGC recently revised its estimate for South Africa’s 2017 wheat production down by 6% from November 2017 to 1.60 million tonnes. This is still 8% higher than the CEC’s estimate of 1.48 million tonnes.
Our view is more in line with the CEC, given the lower yields received in the Western Cape and parts of the Free State province. An update of the CEC estimate will be released on 30 January.
The weather remains a primary focus in the sunflower seed market. The western parts of the Free State and North West provinces, which are key sunflower seed producers, last received good rainfall in December 2017.
The highest rainfall, in the first 18 days of this month (January) in the western parts of the Free State province, is 12 millimetres, and concentrated around Bothaville, Losdoorns and Wesselsbron. In the North West province, the highest rainfall received this year is 27 millimetres, mainly in the areas around Schweizer-Reneke and Derby.
It is therefore unsurprising that these particular provinces experienced delays in planting. The soil moisture is quite low across the central and western parts of South Africa. This means that crops in areas that managed to plant on time are currently experiencing heat stress.
Looking ahead, the weather forecasts paint a constructive picture of possible rainfall of between 20 and 100 millimetres across the sunflower seed growing regions during the next eight days. This will be a welcome development, following weeks of persistent dry conditions.
While a majority of soya bean crops are in affair condition in Mpumalanga, KwaZulu-Natal and the eastern parts of the Free State province, a boost in precipitation is urgently needed in order to improve soil moisture and reduce heat stress that continues to develop while rainfall is restricted and temperatures are extremely warm.
Fortunately, the prospects for this week ending 28 January 2018, promise over 50 millimetres of rainfall in the soya bean growing areas of the country. Although this is a positive development, hail is always a key concern for the eastern side of South Africa, especially when there are expectations of heavy rainfall.
The South African potato market had a good run in Friday’s (19 January 2018) trade session and closed in positive territory, owing to strong commercial buying interest. The price was up by 1.28% from the previous day (18 January 2018), closing at R38.00 per pocket of 10kg bags.
Moreover, during the session, the commercial buying interest led to a 1% decline in daily stocks to 815 299 pockets per 10kg bag.
The fruit market remains quite volatile. Friday’s (19 January 2018), trade session ended on a mixed footing due to relatively lower stocks. The price of apples was up by 1% from the previous day (18 January 2018), closing at R8.92 per kilogramme. These gains followed a 31% decline in daily stocks to 111 000 tonnes.
The prices of bananas and oranges were down by 7% and 49% from the previous day, closing at R5.65 per kilogramme and R3.56 per kilogramme, respectively, due to commercial selling. These losses could soon be reversed following a respective 8% and 54% decline in daily stocks of bananas and oranges to 252 00 tonnes and 19 000 tonnes.
Find the full report here.