Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The maize planting process is complete in Mpumalanga. In KwaZulu-Natal province and eastern region of the Free State province, roughly 90% and 60%, respectively, of the intended area has already been planted. The other provinces have experienced delays owing to drier weather conditions in the past few weeks.
However, the conditions are slowly improving. On 1 December 2017, Balfour, Davel, Greylingstad, Kriel, Nigel, Standerton, Bethlehem, Frankfort, Kroonstad, Marquard, Vrede, Ventersburg and Warden in Mpumalanga and the eastern Free State received rainfall varying 14 and 80 millimetres.
The expected rainfall during the next two weeks should replenish soil moisture, which will support the new season crop in areas that have already been planted, and the planting process in the western parts of the country which have been on the downtime due to dry conditions.
South Africa’s large maize supplies of 17.02 million tonnes in the 2017/2018 marketing year, coupled with weak global demand for white maize, could lead to a large carryover stock of 4.4 million tonnes. This is well above the 2016/2017 marketing year carryover stock of 1.1 million tonnes. These large stocks will keep maize prices under pressure for some time.
The winter wheat harvest process should commence in a week or two in the Northern Cape due to expected warm and drier weather conditions. The province had a good season, as decent water levels in the dams supported irrigation activity. Yields are expected to be above average.
The National Crop Estimates Committee forecasts the Northern Cape province’s wheat crop at 304 000 tonnes, up by 14% from last year. This estimate constitutes a 19% share of the overall expected crop of 1.58 million tonnes. This is at par with the Free State province’s expected crop, which has also been boosted by projected higher yields in the irrigation areas.
As indicated in yesterday’s (4 December 2017) note, the winter wheat harvest process is virtually over in the Western Cape, estimated at 95% complete. Yields are reportedly below average, which is not surprising given the harsh weather conditions earlier in the season.
The South African Supply and Demand Estimate Committee kept its wheat import estimate for the 2017/2018 marketing year unchanged from last month (November 2017), at 1.8 million tonnes. This is a 94% year-on-year increase due to expected lower production of 1.58 million tonnes. This marketing year only ends in September 2018.
Mpumalanga and KwaZulu-Natal have made notable progress regarding the 2017/2018 soya bean planting activity, with over 80% of the intended area already planted. These provinces make up a combined share of 43% of the intended area of 720 000 hectares.
Other provinces have not made much progress due to dry and cool weather conditions experienced in the past few weeks. However, conditions are now improving. The Free State received light showers last week which were not sufficient to improve soil moisture, but the expected rainfall during the next two weeks could make a meaningful improvement.
The monthly data from the South African Supply and Demand Estimates Committee placed the 2017/2018 soya bean marketing year supplies at 1.4 million tonnes in the 2017/2018 season. This includes an opening stock of 84 792 tonnes, commercial deliveries of 1.28 million tonnes and a small volume of imports. Overall, this is 27% higher than the previous season’s supplies boosted by large deliveries.
At the same time, the total soya bean demand is projected at 1.1 million tonnes, up by 11% from the previous season. This includes 880 000 tonnes of soya bean for crush for oil and meal (oil cake), 30 000 tonnes for exports, and the remainder set to be utilised in other (soya bean) products.
The South African Supply and Demand Estimates Committee placed sunflower seed supplies for the 2017/2018 marketing year at 1.05 million tonnes. This includes an opening stock of 163 086 tonnes, commercial deliveries of 874 595 million tonnes and a small volume of imports. Overall, this is 18% higher than the previous season.
The total demand is projected at 818 700 tonnes, up by 14% from the previous season. This includes 800 000 tonnes of sunflower seed for crush for oil and meal (oil cake), with the remainder set to be utilised in other (sunflower seed) products.
The exports forecast was kept unchanged from last month (November 2017) at 300 tonnes, which is well above the 2016/2017 marketing year’s exports of 205 tonnes. So far, the country has only exported 126 tonnes of sunflower seed.
The South African potato market remained in negative territory in yesterday’s (4 December 2017) trade session with the price down by 4% from the previous day (3 December 2017), closing at R46.17 per pocket (10kg). These losses were due to large stocks of 803 418 pockets (10kg) at the beginning of the session.
However, during the day the market saw strong commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity over the weekend. This subsequently led to an 11% decline in daily stocks to 718 814 pockets (10kg).
The fruit market saw extended losses in yesterday’s (4 December 2017) trade session due to large stocks. The price of apples declined by 2% from the previous day (3 December 2017), closing at R7.50 per kilogramme. This followed a 50% increase in daily stocks to 215 000 tonnes, owing to large producer deliveries.
The prices of bananas and oranges were down by 4% and 6% from the previous day, closing at R6.30 per kilogramme and R5.51 per kilogramme, respectively. This was on the back of large stocks of 323 000 tonnes of bananas and 61 000 tonnes of oranges.
*2017/2018 marketing year = 2016/2017 production year.