Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
Last week (ending 1 September 2017), South Africa exported 82 231 tonnes of maize, which is double the volume exported in the week ending 25 August 2017. About 67% of these exports were yellow maize, with 33% being white maize.
The leading buyer was Japan with a share of 64%, all yellow maize. Trailing Japan was Kenya with a share of 24%, all white maize. This is probably a non-genetically modified batch. Kenya still has a restriction on the importation of genetically modified maize.
This week’s exports placed South Africa’s 2017/2018 total maize export volume at 1.1 million tonnes, which equates to 50% of the season export forecast of 2.2 million tonnes. About 67% of the exported 1.1 million tonnes is yellow maize, with 33% being white maize.
Although the next eight days could remain dry and cool across the winter wheat growing areas, the week ending 21 September 2017 offers some hope. There are prospects of light showers of between 10 and 20 millimetres across the Western Cape. This will not be sufficient to replenish soil moisture but will offer some relief following weeks of persistent dry conditions.
In terms of dam levels, the recent update for the week ending 4 September 2017 shows that dams averaged 34% in the Western Cape, which is a 1% improvement from last week, but 28% lower than the corresponding period last year. More emphasis is placed on the Western Cape because it is the main dryland winter wheat producing region of South Africa.
From a trade perspective, South Africa imported 25 552 tonnes of wheat in the week ending 1 September 2017, all from Russia. This is 75% higher than the previous week’s (ending 25 August 2017) imports. Overall, South Africa’s 2016/2017 total wheat imports stand at 799 420 tonnes, which equates to 80% of the seasonal import forecast.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The total exports were recorded at 106 tonnes last week, all to Namibia and Zimbabwe. This brought the country’s 2016/2017 total wheat exports to 90 600 tonnes.
As previously noted, the domestic soya bean data calendar is light this week (ending 8 September 2017). As a result, the market performance will be guided largely by the Chicago (soya bean) price and domestic currency movements throughout the week.
In global markets this morning (6 September 2017), the Chicago soya bean price was up by 1.05% from levels seen at midday yesterday (5 September 2017) due to poor crop conditions.
The recent showers in some parts of the Midwest were not enough to improve crop conditions. At the beginning of the week (4 September 2017), only 61% of the crop rated good/excellent, unchanged from the previous week (ending 1 September 2017), but 12% lower than the same period last year.
While the United States (US) soya bean crop has largely passed the pollination stage of development, the weather remains a primary focus in the market as wet conditions could help in the kernel fill process. The forecast for the next two weeks shows a possibility of light showers in the north-eastern parts of the Midwest, which could benefit the crop. Meanwhile, other areas could remain dry with light scattered rainfall.
There is, however, optimism in the market concerning the US soya bean crop, despite the aforementioned concerns. Informa Economics forecasts the US 2017/2018 soya bean production at 119.3 million tonnes. This is slightly higher than the United States Department of Agriculture’s (USDA’s) estimate of 119.2 million tonnes and is 2% higher than the previous season’s harvest.
The drier conditions in Brazil could slow the new season planting activity. The forecasts for the next two weeks show a possibility of dry and warm conditions across the central and eastern parts of the country. Overall, IGC forecasts Brazil’s 2017/2018 soya bean production at 108 million tonnes, down 5% year-on-year.
The South African potato market gained ground in yesterday’s (5 September 2017) trade session with the price up by 2% from the previous day (4 September 2017), closing at R41.88 per pocket (10kg). These gains came on the back of relatively lower stocks of 572 294 pockets (10kg) at the start of the session.
However, during the trading session, the market saw an uptick in deliveries on the back of ongoing harvest activity. By the end of the session, the daily stocks were up by 18%, closing at 678 358 pockets (10kg).
The fruit market managed to claw back its recent losses, recording widespread gains in yesterday’s (5 September 2017) trade session. The prices of apples and bananas were up by 2% and 18% from the previous day (4 September 2017), closing at R7.32 per kilogramme and R5.96 per kilogramme, respectively. This was on the back of relatively lower stocks of 230 188 tonnes of apples and 284 025 tonnes of bananas.
The price of oranges was significantly up by 24% from the previous day, closing at R3.44 per kilogramme. This followed a 6% decline in daily stocks to 198 863 tonnes.