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

Maize:

The National Crop Estimates Committee will release its 2017/2018 first production estimate for maize today (27 February 2018). We believe that the estimate could be revised down by roughly a third from the 2016/2017 production season to 11.2 million tons. This is mainly because drier weather conditions that were experienced earlier in the season led to a decline in area planted in the western sections of the Free State and North West provinces.

As highlighted in yesterday’s (26 February 2018) note, the International Grains Council placed its estimate for South Africa’s maize production at 11.8 million tons, also underpinned by the same reasons as the Agbiz’ s estimate.

Apart from the production dynamics, South Africa’s maize market is well supplied. The ending stock was recorded at 6.4 million tons in January 2018, down by 13% from the previous month (December 2017). However, this is treble the volume recorded in the corresponding period last year (2017).

South Africa utilised 850 601 tons of maize in January 2018, up by 5% from the previous month (December 2017), driven by an uptick in both yellow and white maize consumption. This is 10% higher than the corresponding period last year.

Wheat:

In the afternoon, the National Crop Estimates Committee will release its final production estimates for the 2017 wheat crop. In January 2018, the estimate was left unchanged from the previous month (December 2017) at 1.48 million tons, which is a 23% decline from the previous season.

As highlighted in our previous notes, the decline in the 2017 wheat production is mainly on the back of poor yields in the Western Cape and Free State provinces following drier weather conditions. In today’s (27 February 2018) data, we don’t foresee major changes; if any, it will probably be a further downward revision.

Apart from this, the domestic wheat market is well supplied in the near term, as imports also continue to boost local supplies. Last month (January) the domestic wheat stock was down by 2% from December 2017 and 15% from January 2017, settled at 1.39 million tons.

In terms of usage, local wheat demand was recorded at 256 608 tons in January 2018, down by 13% from the previous month (December 2017), but up by 5% from the corresponding period the previous year (2017).

Soya beans:

As indicated in yesterday’s (26 February 2018) note, we believe that the 2017/2018 soya bean production could be down by 8% from the 2016/2017 season, despite the increase in area planted. This is mainly due to the expectation of lower yields of 1.7 tons per hectare, compared to an average yield of 2.3 tons per hectare in the 2016/2017 production season. The official estimates will be released by the National Crop Estimates Committee this afternoon (27 February 2018).

The soya bean crop is generally in good condition across the country. During the weekend (ending 25 February 2018), parts of Mpumalanga and the eastern Free State province received light showers which are conducive to the new season crop. The forecast rainfall during the next two weeks across soya bean growing areas will further improve crop conditions, which then increases a chance of yet another big crop.

In January 2018, South Africa’s soya bean stocks were at 418 618 tons, which is treble the volume seen in January 2017. Soya bean consumption (crushed oil and cake) was at 82 353 tons in January 2018, up by 25% from the previous month (December 2017) due to increased demand from the processors. This was 46% higher than the volume utilised in January 2017.

Sunflower seed:

The primary focus today is on the National Crop Estimates Committee’s first production estimates for the 2017/2018 sunflower seed crop, as well as the revised area plantings estimate. Last month (January), the Committee placed the sunflower seed planting estimate at 560 100 hectares, down by 12% from the 2016/2017 production season due to drier weather conditions at the time.

However, the improvement in weather conditions in the latter part of January 2018 and the start of February led to increased sunflower seed plantings in the western sections of the Free State and North West provinces. This means that the Committee could revise its area planting estimate upwards today.

Apart from the production dynamics, South Africa’s sunflower seed consumption (crushed oil and cake) increased by 25% month-on-month to 79 218 tons in January 2018.  This is 28% higher than the volume utilised in January 2017.

The ending stock was recorded at 233 329 tons in January 2018, down by 25% from the previous month (December 2017) due to increased consumption. However, this is 17% higher than the volume recorded in the corresponding period last year (2017).

Potatoes:

The potato market saw extended losses in yesterday’s (26 February 2018) trade session owing to a large stock of 1.14 million pockets of 10kg bags at the start of the session. The price was down by 8% from the previous day (25 February 2018), closing at R29.38 per pocket.

However, during the day, the market experienced commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity during the weekend (ending 25 February 2018). This subsequently led to a 32% decline in daily stocks to 772 906 pockets.

Fruit:

The fruit market ended yesterday’s (26 February 2018) session on a mixed footing. The prices of apples and bananas were down by 11% and 4% from the previous day (25 February 2018), closing at R7.78 and R5.35 per kilogramme. These losses were mainly on the back of large stocks of 250 000 tons of apples and 359 000 tons of bananas.

The orange market had a good run owing to lower stocks of 19 000 tons compared to levels of over 50 000 tonnes in December 2017. The price was up by 19% from the previous day (25 February 2018) and settled at R10.58 per kilogramme.

Find the full report here.

Find previous reports here. 

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