Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
On Tuesday, 23 January 2018, parts of the South African maize belt received fairly good showers but will need more in order to improve soil moisture and benefit the new season crop. As highlighted in yesterday’s (24 January 2018) note, weather forecasts for the next two weeks show a possibility of over 50 millimetres of rainfall across the maize growing areas of the country.
At the moment, the picture of South Africa’s maize crop conditions is somewhat mixed. The eastern regions of the country, which predominately produce yellow maize, are generally in good condition, with a fair amount of soil moisture. The western regions of the country, which largely produce white maize, were unable to meet their planting intentions due to dry and warm weather conditions.
Although the focus is on the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 9 419 tonnes in the week ending 19 January 2018, which is 12% lower than deliveries of the previous week, ending 12 January 2018. About 71% of this was white maize, with 29% being yellow maize. South Africa’s 2017/2018 marketing year’s total maize deliveries for week 1 to 38 currently stand at 15.22 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.
The wheat volumes recently delivered to commercial silos are well below deliveries of the previous week, ending 19 January 2018. This shows that the harvest process is almost complete. About 15 342 tonnes of wheat were delivered in the week ending 19 January 2018, down by 21% from the volume delivered the previous week (ending 12 January 2018). This placed South Africa’s wheat producer deliveries for week 1 to 16 of the 2017/2018 marketing year at 1.36 million tonnes.
The areas that are still harvesting are the VKB and OVK regions in the eastern Free State province but the process should be completed soon. The yields received thus far in both regions are well below average due to unfavourable weather conditions earlier in the season.
At the moment, rainfall is not of importance in the wheat growing areas but could improve dam levels and subsequently benefit households and other agricultural activities such as horticulture and livestock. An update for the week ending 22 January 2018 shows that dams averaged 25% in the Western Cape, down by two percentage points from last week ending 15 January 2018, and 15 percentage points lower than the corresponding period last year.
On Tuesday (23 January 2018), parts of Mpumalanga and the eastern Free State province received showers, which is a welcome relief following a heatwave in the past few days. Soil moisture in these particular provinces is not as low as in the North West and western Free State provinces, hence the crop is in a relatively better condition.
Nevertheless, the region will have to receive more showers in the coming weeks in order to see improvements in crop conditions. Fortunately, the forecast for the next two weeks promises favourable rainfall of over 50 millimetres across the soya bean growing areas of the country.
While there is optimism in the soya bean market, emanating from reports of better crop conditions in some areas in Mpumalanga and KwaZulu-Natal provinces, there is still uncertainty about the actual area planted due to dry conditions experienced in the central and western provinces. There will be more clarity when the National Crop Estimates Committee releases its preliminary planting data next week, ending 2 February 2018.
Yesterday (24 January 2018), the South African potato market pulled back from the previous day’s (23 January 2018) levels and closed in negative territory due to large stocks of 658 456 pockets of 10kg bags at the beginning of the session. The price was down by 3% from the previous day (23 January 2018), closing at R38.98 per pocket.
In the session, the market saw an uptick in deliveries on the back of ongoing harvest activity. This subsequently led to a 17% increase in daily stocks to 771 935 pockets.
Yesterday (24 January 2018), the fruit market started the day on a mixed footing. The prices of apples and oranges were up by 12% and 52% from the previous day (23 January 2018), closing at R9.29 per kilogramme and R7.75 per kilogramme, respectively. These gains were underpinned by lower stocks of 97 000 tonnes of apples and 50 000 tonnes of oranges.
The bananas market remained under pressure with the price down by 5% from the previous day (23 January 2018), settling at R5.88 per kilogramme due to commercial selling. However, these losses could soon be reversed, following a 33% decline in daily stocks to 171 000 tonnes.