#AgriMarkets: Spotlight on wheat market

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agricultural commodity markets
Wandile Sihlobo, Agbiz

The Western Cape and Free State are key wheat producing provinces in South Africa, accounting for 83% of the estimated area of 500 500 hectares for the 2018/2019 production season.

Planting activity is still at its initial stages in the Free State province but should gain momentum during the next couple of weeks. The winter wheat crop in the Free State province is produced in both dryland and irrigation areas. Fortunately, the summer rainfall has improved soil moisture levels across the province which bodes well for the new season. The irrigation areas could also have a good season as dams are almost at full capacity across the province.

As indicated in yesterday’s (11 June 2018) note, planting activity is complete in the Western Cape. The newly emerged crop in areas that planted early in the season, Swartland and Overberg regions, is in good condition, following good showers in the past couple of days. This week could also bring rainfall in the province but it will most likely be concentrated in areas around Helderberg, Swartland, Winelands and western parts of Overberg. This means that there could also be minimal improvements in provincial dam levels, which averaged 24% on 04 June 2016, up by 6 percentage points from the corresponding period last year (2017).

While the forecast rainfall is a welcome development which will slightly improve topsoil moisture, the Western Cape still needs intense and persistent rainfall in order to sufficiently improve subsoil moisture and support the wheat crop in the coming months. Fortunately, there is a possibility of such rainfall between this month (June) and August 2018.

Apart from the domestic production developments, the focus today will be on the United states Department of Agriculture (USDA)’s World Agricultural Supply and Demand Estimates report. Last month (May), the agency placed the 2018/2019 global wheat production estimate at 748 million tons, down by a percentage point from the previous season. The reduction in production was linked to expectations of a relatively lower harvest in the European Union, Ukraine, India and Russia. – 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.

Find previous reports here.

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