Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The maize crop conditions across South Africa paint a mixed picture. The eastern regions which predominately produce yellow maize, are in fairly good shape, although currently experiencing heat stress due to the heatwave. This area mainly covers Mpumalanga, KwaZulu-Natal, northern parts of the Eastern Cape, as well as the eastern Free State. In Limpopo province, farmers managed to plant the intended area and the crop also appears to be in good condition. The western regions, which largely produce white maize, are in bad shape. In fact, farmers have not managed to plant all intended hectares in the North West, as well as the western parts of the Free State province.
The most recent survey from Grain SA suggests that farmers in the North West province have only planted 70% of the intended area. The crop that has been planted also appears to be in poor condition due to persistent dry conditions and the heatwave. In the central and north-western parts of the Free State province, the crop conditions are the same as the North West province, but the area planted is at 75% of the intended planting area.
As indicated in our note yesterday (8 January 2018), South African farmers planned to plant 2.47 million hectares of maize this season, which is 6% lower than the 2016/2017 production season. About 56% of the area is set to be for white maize, and 44% for yellow maize. However, this might change due to the aforementioned delays in planting in the western regions of the country. An update will be released on 30 January 2018.
In the near term, the weather forecast promises improvement, with chances of showers of between 16 and 60 millimetres across the South African maize belt during the next eight days. If this materialises, crop conditions could improve, but there is a limited chance for additional plantings as the optimal window has already passed.
It is an off-season period in the South African wheat growing areas, therefore the current dry weather conditions are not much of an issue. However, they have already negatively affected the 2017 harvest, which is estimated at 1.48 million tonnes, down by 23% from the previous season. An update of this estimate will also be released on 30 January 2018.
While imports are set to increase significantly this season in order to fulfil domestic needs, the market is well supplied for now. South Africa’s wheat stocks were at 1.05 million tonnes in November 2017, double the previous month’s (October) volume due to large deliveries on the back of the harvest activity. However, this is 30% lower than the corresponding period in 2016.
South Africa’s soya bean crop looks promising in Mpumalanga and KwaZulu-Natal provinces. With that said, some areas experienced hail damage in the past few weeks, but the extent of it is still clear. There are rising concerns that the current heatwave could negatively affect the crop. Fortunately, the weather forecast for the next two weeks shows a possibility of rainfall which should ease concerns and improve crop conditions.
As indicated in yesterday’s (8 January 2018) note, South African farmers intended to plant an area of 720 000 hectares in the 2017/2018 production season. Most provinces managed to achieve the targeted area with the exception of provinces such as North West, a relatively small soya bean producer, which planted roughly 85% of the intended area thus far, and is negatively affected by dry conditions.
The key sunflower seed growing areas of the country, particularly the North West province and the north-western parts of the Free State province last received good rainfall in the second week of December 2017. As a result, the planting process has been delayed due to lower soil moisture.
A recent survey by Grain SA shows that farmers have planted roughly 40% of the intended sunflower seed area in the North West province. In the north-western parts of the Free State province, the progress is much slower, with only 20% of the intended area planted thus far.
More concerning is that crops in areas that managed to plant have been negatively affected by the current heatwave. For areas that have not yet planted, the optimal planting window has narrowed. The optimal planting window for sunflower seed closes next week (ending 19 January 2018) in the north-western parts of the Free State and North West provinces.
Planting outside the optimal planting window implies that crops could be negatively affected by frost later in the season, which will, in turn, lower the yields.
Weather forecasts currently paint a constructive picture of rainfall of between 16 and 60 millimetres across the sunflower seed growing areas during the next two weeks. While this will not be sufficient to replenish soil moisture, it is a welcome development following weeks of dry conditions.
As indicated in yesterday’s (8 January 2018) note, South African farmers planned to plant 665 500 hectares of sunflower seed in the 2017/2018 production season, up by 5% from the previous season. At the moment, there is still uncertainty as to whether this will be achieved or whether farmers will actually plant more. The weather developments this week (ending 12 January 2018) will be a key deciding factor. The National Crop Estimates Committee will release the preliminary area planted estimates on 30 January 2018
The South African potato market started the week ending 12 January 2018 on a negative footing with the price down by 0.28% from the previous day, closing at R42.53 per pocket (10kg). These losses were on the back of large stocks of 824 387 pockets (10kg) at the beginning of the trading 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 a 30% decline in daily stocks to 577 342 pockets (10kg).
The market was again mixed in yesterday’s (8 January 2018) trade session. The prices of apples and bananas declined by 9% and 3% from the previous day (7 January 2018), closing at R7.92 per kilogramme and R7.42 per kilogramme, respectively. This followed a 15% increase in apples daily stocks to 158 000 tonnes and a 3% uptick in banana stocks to 208 000 tonnes.
The daily price of oranges marginally increased by 1% to R4.98 per kilogramme due to lower stocks of 24 000 tonnes (down by 4% from the previous day).