Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The weekend’s (ending 18 March 2018) rain didn’t bring much improvement in soil moisture. The rainfall was quite scattered in a few areas, but mostly in regions of Mpumalanga and the eastern Free State provinces. The maize crop that is currently moisture-stressed following last week’s dry conditions could soon receive relief as weather forecasts show a possibility of over 60 millimetres of rain during the next eight days.
Worth noting, but of lesser significance to the global market, is the problem of pests and diseases which continue to affect crops in the region. The recent report from the Mozambican government suggests that more than 3 000 hectares of maize plantings have been affected by disease and pest infestations.
In the 2016/2017 production season, Mozambique produced 2.0 million tons of maize up by 12% from the previous season. However, this was slightly below the annual maize consumption of 2.2 million tons, and this means that the country will resort to imports to boost supplies. At this point, it is unclear what the 2017/2018 maize harvest will be but reports of crop damage increase the chance of a decline in the maize harvest. This could potentially increase Mozambique’s reliance on maize supplies in countries such as South Africa and Zambia.
Yesterday (19 March 2018) there was no new news in the local wheat market. The weather is not a main focus at the moment as it is an off-season period. However, in the next two months or so, the weather will again take the spotlight ahead of the winter wheat planting season.
In provinces such as the Western Cape, soil moisture has not improved as there hasn’t been any meaningful rainfall in months. The weather forecasts for the next two weeks show a possibility of light showers along the coastal areas of the province in the week ending 6 April 2018. This will, however, not lead to any improvement in soil moisture. Above all, it is unclear what the weather conditions will look like in the upcoming season.
Apart from the domestic development, Russia plans to increase its presence in the global wheat market. The country’s Ministry of Agriculture forecasts the 2017/2018 grain exports at 52 million tons, which is a 44% uptick from the previous season. About 71% of the expected exports is wheat, which is unsurprising following a notable increase in production this season.
Some soya bean growing areas of the country experienced light and scattered showers during the weekend (ending 18 March 2018). However, areas around Bethlehem, Frankfort, Kroonstad, Lindley, Ventersburg, Vrede, Warden, Balfour, Davel, Greylingstad, Irene, Leandra, Lydenburg, Standerton and Vereeniging received rainfall of over 20 millimetres during the weekend. This bodes well for the soya bean crop as it is still at growing stages and requires moisture.
This week promises heavy rainfall across the soya bean growing areas of the country. Although unusual at this time of the season, hail remains a concern for the eastern parts of the country when there are expectations of heavy rainfall. The past few weeks brought a bit of hail in some regions of Mpumalanga and KwaZulu-Natal, but crop damage was limited.
The soya bean crop is generally in good condition and if there are no crop damages in the coming weeks, the country will stand a good chance of achieving the National Crop Estimates Committee’s estimate of a new record harvest of 1.4 million tons this season, up by 5% from the 2016/2017 production season.
It is also worth noting that South Africa remains a net importer of soya bean oil-cake (meal), but the volumes imported have declined from levels of close to a million tons in 2010. Last year, South Africa imported 553 003 tons of soya bean oilcake, down by 15% from volumes imported in 2016. This decline was partly linked to improvement in soya bean production in the 2016/2017 production season, where the soya bean harvest reached a record level of 1.3 million tons.
Argentina was a leading supplier with a share of 88% of total imports. Zambia, Malawi and the Netherlands were also amongst the key suppliers of oilcake to South Africa, according to data from Trade Map.
After experiencing a good run in the past few days, the potato market pulled back in yesterday’s (19 March 2018) trade session owing to a large stock of 1.2 million pockets of 10kg bags at the start of the session. The price was down by 7% from the previous day, closing at R28.16 per pocket.
However, towards the end of the session, the market experienced strong commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity during the weekend (ending 18 March 2018). This subsequently led to a 33% decline in daily stocks to 808 418 pockets.
The fruit market was under pressure in yesterday’s (19 March 2018) trade session owing to commercial selling, as well as large stocks. The prices of apples and bananas were down by 11% and 15% from the previous day (18 March 2018), closing at R7.24 and R6.09 per kilogramme, respectively. This was mainly on the back of large stocks of 179 000 tons of apples and 326 000 tons of bananas.
The price of oranges declined by 28% from the previous day (18 March 2018) and settled at R3.97 per kilogramme due to commercial selling. With that said, we believe that these losses could be short lived because of fairly lower stock of 53 000 tons, compared to levels of over 70 000 tons in the past few days.
Find the full report here.