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

Maize:

A recent poll of analysts from Reuters suggested that South Africa’s 2017/2018 maize hectares could decline by 17% from the previous season to 2.18 million hectares. Bloomberg’s survey of analysts showed that South Africa’s maize area plantings could decline by 9% from the 2016/2017 production season to 2.39 million hectares. The notable decline in both surveys is expected to be on white maize hectares.

The expected decline in area planting is largely due to price competitiveness of other crops. The official estimate will be released by the National Crop Estimates Committee on Thursday, 26 October 2017.

The planting activity has already commenced in the eastern parts of South Africa but could be slowed during the next few days owing to expected rainfall. This could improve soil moisture, which will ultimately benefit the new season crop.

On the global front, t the beginning of this week (23 October 2017), about 38% of the United States (US) maize crop had already been harvested, which is 21 points behind the corresponding period last year. At the same time, about 66% of the US maize crop was rated good/excellent, compared to 74% in the corresponding period last year. Thus, it is not surprising that the United States Department f Agriculture (USDA) expects a 6% year-on-year decline in the country’s 2017/2018 maize production to 363 million tonnes.

The weather remains a primary focus in the US maize market as the harvest process progresses. The expected rainfall during the next eight days across the eastern parts of the Midwest could slow the process.

Wheat:

The weather forecast shows a possibility of dry and cool conditions across the Western Cape during the next two weeks. This means the areas that were planted late in the season and still need moisture could be strained for some time, particularly the southern Cape and Mossel Bay.

From a trade perspective, there are no new developments on the wheat import tariff front. The tariff has triggered twice without adjustments – it triggered to R909.99 per tonne on 12 September 2017, and to R716.33 per tonne on 10 October. Both of these rates have not yet been published in the Government Gazette.

At the time of writing, the wheat import tariff is R752.40 per tonne. This means that the tariff will first increase to R909.99 per tonne, and then be revised down to R716.33 per tonne. The timeframe for adjustments is unclear.

On the global front, the expected rainfall during the next eight days in the eastern regions of the US Midwest could benefit the new season crop, but delay the planting processes. On 22 October 2017, about 75% of the intended winter wheat hectares had already been planted, which is 3 points behind the corresponding period last year.

The US 2017/2018 all-wheat production is expected to decline by 25% from the previous season to 47 million tonnes, due to expected lower yields and a decline in area planted.

Soya beans:

The eastern parts of the country could receive rainfall during the next two weeks, which should improve soil moisture and benefit the new season crop. This might delay plantings but that is not much of an issue as the optimal planting window only closes at the beginning of December.

As we set out in yesterday’s (23 October 2017) note, the focus this week (ending 27 October 2017) is the National Crop Estimate Committee’s data which is due for release on Thursday (26 October 2017). The data will give an indication of the potential size of the hectares to be planted in the upcoming season. In the 2016/2017 production season, South Africa planted 573 950 hectares of soya beans.

The South African Grain Information Service (SAGIS) will also release its monthly data on Wednesday (25 October 2017). This will give an insight into the current stock levels, as well as monthly soya bean usage. In August 2017, South Africa’s 2017/2018 soya bean stocks were at 848 957 tonnes, up by 87% from the same period last year. Soya bean monthly consumption (crushed oil and cake) was reported at 80 932 tonnes, up by 14% from August 2016.

Potatoes:

The South African potato market started the week on a positive footing due to the relatively lower stock of 996 007 pockets (10kg). The price was up by 1% from the previous trading session, closing at R40.57 per pocket .During the session, the market saw a continued increase in commercial buying interest, coupled with a decline in deliveries on the back of slow harvest activity over the weekend. This subsequently led to a 30% decline in daily stocks to 694 611 pockets .

Fruit:

The fruit market ended the day mixed in yesterday’s (23 October 2017) trade session. The prices of apples and bananas were down by 5% and 11% from the previous trading day (22 October 2017), closing at R6.64 and R6.01 per kilogramme, respectively. These losses followed an 85% and 5% increase in stocks of apples and bananas to 269 629 tonnes and 249 960 tonnes, respectively.

The oranges market gained 4% from the previous day, closing at R6.26 per kilogramme due to the relatively lower stock of 60 338 tonnes, as well as commercial buying interest.

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