Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
In the past nine seasons, South Africa’s soya bean production doubled, from half a million tonnes in 2008/2009 to 1.32 million tonnes in the 2016/2017 production season. This was due to an increase in area planted, as well as higher yields which were boosted by improved technology and better production practices.
The main driver behind the increase in plantings was the growing domestic demand from the animal feed industry. However, this significant increase in production has been unable to satisfy the local market as soya bean oilcake imports remain fairly high.
The most recent data from the International Grains Council shows that South Africa’s 2017/2018 soya bean oilcake imports could reach 600 000 tonnes, despite the record soya bean production in the 2016/2017 season. This is 20% higher than the 2015/2016 season.
Therefore, 2018/2019 soybean oilcake imports could increase further as we expect South Africa’s 2017/2018 soya bean production to decline by 8% year-on-year (y/y) to 1.2 million tonnes. Over the past few years, South American countries have been the key suppliers of soya bean oilcake to South Africa.
As we set out in yesterday’s (13 February 2018) note, the weather is currently of less importance in the winter wheat growing areas of South Africa as the harvest process is totally over. However, the recent developments in the major wheat production province, the Western Cape, are worth mentioning. The province received light showers last night, which is a welcome development, although not sufficient to notably improve dam levels.
Recent data from the Department of Water and Sanitation shows that on 12 February 2018, the province’s dam levels averaged 23%, down by one percentage point from the previous week (ending 5 February 2018) and 12 percentage points from the corresponding period last year 2017.
Apart from the weather aspects, South Africa continues to receive large volumes of wheat imports. The country imported 65 268 tonnes in the week ending 9 February 2018, up by 11% from the previous week. About 79% came from Latvia, 20% from Germany and 1% from Argentina. Overall, this placed the 2017/2018 marketing year’s wheat imports at 826 184 tonnes, which equates to 43% of the seasonal import forecast of 1.9 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 16th batch of exports this season was recorded at 542 tonnes last week (ending 9 February 2018), well below the previous week’s exports of 1 324 tonnes. About 68% went to Namibia, 19% to Botswana and 13% to Zimbabwe. This placed total wheat exports for the 2017/2018 marketing year at 9 274 tonnes.
The past few days have been dry and cool across the South African maize belt, but weather charts show a possibility of showers varying between 25 and 60 millimetres across during the next two weeks.
As highlighted in our previous notes, the weather forecasts promise a possibility of above-normal rainfall in summer crop growing areas between this month (February) and April 2018. This should improve soil moisture and maize crop conditions, which will subsequently boost yields.
From a trade perspective, South Africa exported 29 392 tonnes of maize in the week ending 9 February 2018, down by 43% from the volume exported the previous week (ending 2 February 2018). About 76% of these exports were yellow maize, with 24% being white maize. This placed South Africa’s 2017/2018 maize marketing year exports at 1.9 million tonnes, which equates to 86% of the season’s export forecast of 2.2 million tonnes.
Yesterday (13 February 2018), the South African potato market managed to recover from its recent losses owing to a lower stock of 867 816 pockets of 10kg bags at the start of the trade session. The price was up by 3% from the previous day (12 February 2018), closing at R37.29 per pocket.
However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period in the weekend. This led to a 9% increase in daily stocks to 945 931 pockets.
The fruit market remained mixed in yesterday’s (13 February 2018) trade session. The prices of apples and bananas were up by 13% and 7% from the previous day (12 February 2018), closing at R9.79 and R5.72 per kilogramme, respectively. However, these gains could soon be reversed due to large stocks of 184 000 tonnes of apples and 394 000 tonnes of bananas.
The price of oranges declined by 5% from the previous day (12 February 2018), closing at R6.00 per kilogramme due to commercial selling. Looking ahead, the oranges market should soon gain ground as stocks are at lower levels of 4 000 tonnes, compared to levels of over 30 000 tonnes at the beginning of the month.