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

Maize:

The incoming data paints a positive picture regarding the weather conditions in the maize crop growing areas of South Africa. Yesterday (5 December 2017), the Australian Bureau of Meteorology confirmed a development of La Niña during the 2017/2018 summer season.

This essentially means that there could be above-normal rainfall between December 2017 and February 2018 in summer rainfall areas of South Africa. This implies that crops could potentially have sufficient moisture from germination to pollination stages of development, which increases a chance of yet another good crop.

The planting process is currently underway in most provinces. Mpumalanga, KwaZulu-Natal and the eastern Free State are the only provinces that have made notable progress thus far. Other provinces should make good progress as soon as there’s sufficient soil moisture. There are expectations of rainfall during the next two weeks.

From a trade perspective, South Africa exported 63 589 tonnes of maize in the week ending 1 December 2017, up by 91% from the volume exported the previous week (ending 24 November 2017). About 92% of these exports were yellow maize, with 8% being white maize.

The leading buyer was Japan with a share of 87%, all yellow maize. Trailing Japan was Botswana with a share of 4%. This placed South Africa’s 2017/2018 total maize export volume at 1.7 million tonnes, which equates to 77% of the season’s export forecast of 2.2 million tonnes. About 68% of the exported 1.7 million tonnes is yellow maize, with 32% being white maize.

Wheat:

With the weather expected to remain fairly dry and warm across the Western Cape during the next two weeks, the harvest process should be completed smoothly. At the beginning of this week, roughly 95% of the crop had already been harvested. The yields received so far are mainly below average and, fortunately, the quality of the crop is in a fair condition.

The expected drier weather conditions this week suggest that there might be minimal improvement in dam levels, which are critically low. The update for the week ending 4 December 2017 shows that Western Cape dams averaged 34%, down by 1% from the previous week and 19% from the corresponding period last year.

In terms of trade, South Africa imported 56 189 tonnes of wheat in the week ending 1 December 2017, down by 2% from the previous week (ending 24 November 2017). About 63% of it was from Lithuania and 37% from Russia. This placed the 2017/2018 marketing year’s wheat imports at 575 856 tonnes, which equates to 32% of the seasonal import forecast of 1.8 million tonnes.

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 9th batch of exports this season was recorded at a mere 99 tonnes, to Botswana and Namibia. This placed total exports for the 2017/2018 marketing year at 3 197 tonnes.

Soya bean:

As we set out in yesterday’s (5 December 2017) note, Mpumalanga and KwaZulu-Natal have already made notable progress in soya bean planting. The expected rainfall during the next two weeks should assist in seed germination and support crops.

Rainfall in other provinces could improve soil moisture and thereafter support the planting process. Both short- and medium-term weather forecasts paint a promising picture of good rainfall this season. This should benefit crops from germination to pollination stages of development.

In global markets, the soya bean planting process is currently underway in South America, with roughly 92% of the crop already planted in Brazil and 50% planted in Argentina. However, with La Niña at the door, there are growing fears of possible dry conditions in the coming months. The opposite is true for South Africa, where good rainfall is expected.

Last month, the International Grains Council slashed its Brazil and Argentina 2017/2018 soya bean production estimates by 5% and 2% from the previous season to 108 million tonnes and 54 million tonnes, respectively. Going forward, the weather will be a key factor to monitor as it influences crop growing conditions, and ultimately the output.

Potato:

After experiencing losses in the past few days, the South African potato market gained ground in yesterday’s (5 December 2017) trade session with the price down by 5% from the previous day (4 December 2017), closing at R48.34 per pocket (10kg). These gains came on the back of relatively lower stocks of 718 814 pockets (10kg) at the beginning of the session.

However, during the day the market saw a slight uptick in deliveries as harvest activity picks up after a quiet weekend. This subsequently led to a 9% increase in daily stocks to 782 977 pockets (10kg).

Fruit:

Yesterday (5 December 2017) the fruit market managed to claw back its recent losses with support coming from strong commercial buying. The price of apples increased by 9% from the previous day (4 December 2017), closing at R8.14 per kilogramme.

The prices of banana and oranges were down by 3% and 21% from the previous day, closing at R6.46 per kilogramme and R6.66 per kilogramme, respectively. However, these gains could be short-lived due to relatively large stocks of 214 000 tonnes of apples, 352 000 tonnes of bananas and 61 000 tonnes of oranges.

Find the full report here.

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