Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The warm weather conditions in the Western Cape have allowed for good progress in the winter wheat harvest activity. In the Swartland region, roughly 90% of the crop has already been harvested. In the Southern Cape, the harvest process is virtually over, with the exception of Mossel Bay, where almost half of the crop has not yet been harvested.
In the Overberg region, roughly 70% of the crop has already been harvested. Overall, the yields are below average, which is not surprising given the unfavourable weather conditions experienced during the production season. However, the quality is reportedly in a fair condition.
The expected warm and dry weather conditions this week (ending 1 December 2017) should support the harvest process in areas not yet completed. Dry conditions imply that dam levels could remain in bad shape for some time. The update for the week ending 20 November 2017 shows that Western Cape dams averaged 35%, unchanged from the previous week, but 21% lower than the same period last year.
The winter wheat harvest process is virtually over in the irrigation areas of Limpopo and the yields vary between average to below-average. In the Northern Cape, also irrigation, the harvest process should begin in a few weeks. The crop is reportedly in good shape and good yields are expected. The National Crop Estimate Committee forecasts South Africa’s 2017 total wheat production at 1.66 million tonnes. An update will be released tomorrow, 28 November 2017.
Maize farmers have made notable progress regarding the planting process of the new season crop. In Mpumalanga and KwaZulu-Natal, the process is almost complete. With the optimal maize planting window already closed in the eastern parts of the maize belt, the late plantings stand a risk of experiencing frost later in the season, thus increasing the possibility of harvesting relatively lower yields.
On Thursday (23 November 2017), Bethal, Davel, Ermelo, Greyling Stad, Kriel, Middelburg, Morgenzon, Nigel, Standerton, Wonderfontein and Witbank in Mpumalanga province received light showers, varying between 15 and 43 millimetres. This is supportive of the new season crop.
The expected rainfall during the next two weeks should replenish soil moisture, which will support the new season crop in areas that have already planted, as well as the planting process in the western parts of the country which have been slow due to dry conditions. The western regions of the maize belt have sufficient time to plant as the optimal window only closes in December.
In terms of supplies, South Africa’s maize stocks were estimated at 9.2 million tonnes in October 2017, which is twice the volume seen in the same period last year due to large supplies on the back of a record crop in 2016/2017.
With the exception of KwaZulu-Natal, the soya bean planting process is still at initial stages across the country. The delays in planting in other provinces are due to drier weather conditions experienced in the past few weeks.
However, this could soon change as the weather forecasts show a possibility of good showers during the next two weeks. The long-term forecasts from the South African Weather Service also indicate that the summer crop growing areas of the country could receive above normal rainfall between November 2017 and February 2018.
South Africa’s soybean consumption (crushed oil and cake) was reported at 63 402 tonnes in October 2017, down by 22% from the previous month (September), but up by 59% from October 2016. Also worth noting is that the ending stocks were at 694 681 tonnes in October 2017, down by 9% from the previous month, but double the volume seen in the same period last year due to a large harvest 2016/2017 production season.
The South African potato market gained ground in Friday’s (24 November 2017) trade session with the price up by 4% from the previous day (23 November 2017), closing at R42.23 per pocket (10kg). These gains were mainly due to lower stocks of 848 606 pockets (10kg) at the beginning of the session.
During the session, the market saw strong commercial buying interest, coupled with a marginal decline in deliveries on the back of slow harvest activity. This led to a 4% decrease in daily stocks to 813 033 pockets (10kg).
The fruit market saw widespread losses in Friday’s (24 November 2017) trade session. The apple and banana prices were down by 2% from the previous day (23 November 2017), closing at R7.67 and R6.41 per kilogramme, respectively. These losses were partially due to relatively large stocks of 172 000 tonnes of apples and 197 000 tonnes of bananas.
The price of oranges declined by 6% from the previous day, closing at R5.96 per kilogramme owing to increased commercial selling. However, this could be short-lived owing to lower stocks of 18 000 tonnes at the end of Friday’s trade session.
SAFEX beef carcass:
Friday’s (24 November 2017) trade session remained the same in the SAFEX beef carcass market. The price remained flat at R46.00 per kilogramme due to thinly traded volumes. This suggests that the SAFEX beef carcass prices might differ from the physical market, which continues to show solid activity and higher traded volumes.
The data from the Red Meat Levy Admin shows that farmers slaughtered 209 322 head of cattle in September 2017, down by 12% from the previous month (August 2017), and the corresponding period last year. This implies that the uptick in the August 2017 slaughtering activity was somewhat a temporary blip. More clarity on the October 2017 slaughtering figures are due for release later this week.