Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
Monday’s (22 January 2018) showers in the South African maize area were very light and scattered, varying between 9 and 25mm. The main towns that received these drops were Vrede, Frankfort, Bloemfontein, Bultfontein, De Brug, Viljoenskroon, Potchefstroom, Ventersdorp, Amersfoort, Delmas, Ermelo, Hendrina, Kriel, Middelburg, Morgenzon and Wonderfontein.
With that said, the forecast for the next two weeks promises rainfall of over 50mm, which should improve soil moisture and subsequently benefit the new season’s crop.
From a trade perspective, South Africa exported 20 987 tons of maize in the week ending 19 January 2018, well below the previous week’s (ending 12 January 2018) volume of 49 053 tons. About 64% of these exports were yellow maize, with 36% being white maize.
The leading buyer was Japan with a share of 48%, mainly yellow maize. Trailing Japan was Namibia with a share of 12%. This placed South Africa’s 2017/18 maize marketing year exports at 1,8 million tons, which equates to 82% of the season’s export forecast of 2,2 million tons. About 69% of the exported 1,8 million tons is yellow maize, with 31% being white maize.
South Africa continues to import large volumes of wheat to meet domestic demand. The country imported 44 450 tons of wheat in the week ending 19 January 2018, all from Argentina. This is well above the previous week’s (ending 12 January 2018) imports of 10 007 tons. This placed the 2017/18 marketing year’s wheat imports at 679 136 tons, which equates to 36% of the seasonal import forecast of 1,9 million tons.
Not of importance but interesting to note is that Argentina has thus far been the sole supplier of wheat to South Africa in 2018, with a total volume of 54 457 tons. With that said, when viewing the 2017/18 total wheat imports, Russia is in the lead with 43% share. Trailing Russia is Ukraine with 18% share, then Lithuania with 13%, Argentina with 11%, the United States with 8% and Romania with 7% share.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 13th batch of exports this season was recorded at 101 tons, all destined for Lesotho. This placed total wheat exports for the 2017/18 marketing year at 4 831 tons.
From a regional perspective, sub-Saharan Africa’s 2017/18 wheat imports are set to reach 22,6 million tons, up by 10% from the previous season. The uptick is driven by both expected decline in domestic production, as well as an uptick in consumption.
Nigeria, Sudan, Kenya, South Africa and Ethiopia are expected to be key importers, with a combined share of 56% in the expected imports of 22,6 million tons. With that said, Nigeria takes a lion’s share of 23% of sub-Saharan wheat imports. In fact, the country’s wheat imports have grown from levels of 4,3 million tons in the 2014/15 season to an expected 5,1 million tons in the 2017/18 season.
On Monday 22 January 2018, Frankfort, Harrismith, Kroonstad, Marquard, Theunessen, Vrede, Amersfoort, Delmas, Ermelo, Hendrina, Kriel, Middelburg, Morgenzon and Wonderfontein (towns in the eastern Free State and Mpumalanga provinces) received light showers of between 9 and 25mm.
Moreover, South Africa will experience a boost in precipitation over the next two weeks, which will improve soil and soya bean crop conditions after weeks of prolonged dryness. The preliminary plantings data that is due for release at the end of this month will give an indication of the potential size of the harvest.
At the beginning of the season, farmers planned to plant 720 000ha of soya beans. The eastern regions planted successfully, but experienced crop damage in some areas due to unfavourable weather conditions. Nevertheless, the crop is generally in good shape.
Above all, South Africa is well supplied in the short to medium term, thanks to a record harvest from the 2016/17 production season. Moreover, the 2018/19 marketing year will commence in March 2018 with a solid opening stock of 309 862 tons, which is treble the volume seen in the previous season.
Yesterday (23 January 2018), the South African potatoes market managed to claw back its recent losses, as lower stocks of 523 903 pockets of 10kg bags at the beginning of the session provided support. The price was up by 10% from the previous day (22 January 2018), closing at R40,21 per pocket of 10kg bags.
However, during the session, the market saw an uptick in deliveries as harvest activity picked up after a quiet period over the weekend ending 21 January 2018. This led to a 26% increase in daily stocks to 658 456 pockets of 10kg bags.
The fruit market had a good run in yesterday’s (23 January 2018) trade session, with relatively lower stocks underpinning the market. The price of apples was up by 10% from the previous day (22 January 2018), closing at R8,25 per kilogram. This followed a 4% decline in daily stock to 138 000 tons.
Additionally, the prices of bananas and oranges were up by 21% and 2% from the previous day (22 January 2018), closing at R6,19 per kilogram and R5,11 per kilogram, respectively. These gains were on the back of relatively lower stocks of 257 000 tons of bananas and 16 000 tons of oranges.