Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The weather remains a key focus in the South African maize market as the crop is still in its early stages of development. The eastern sections of the country, which mainly produce yellow maize, received showers of between 16 and 44 millimetres on Monday (19 February 2018). This was mainly concentrated in the regions of Frankfort, Amersfoort, Bethal, Carolina, Davel, Delmas, Ermelo, Graskop, Hendrina, Leandra, Lydenburg, Morgenzon, Witbank and Wonderfontein.
Other sections of the country had a cool and drier start to the week (ending 23 February 2018). Nonetheless, South Africa’s maize crop is in good condition, thanks to good rainfall received in the past few weeks. Last night (20 February 2018), the central areas of the maize belt also received light showers, which bodes well for the crop. Looking ahead, the expected heavy rainfall during the next eight days will further improve soil moisture and benefit the crop.
From a trade perspective, South Africa exported 39 742 tons of maize in the week ending 16 February 2018, up by 35% from the volume exported the previous week (ending 9 February 2018). About 80% of these exports were yellow maize, with 20% being white maize. This placed South Africa’s 2017/2018 maize marketing year exports at 1.96 million tons, which equates to 84% of the season’s export forecast of 2.34 million tons.
As we set out in yesterday’s (20 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, Western Cape, are worth mentioning. The weather charts for the next eight days show a possibility of showers of between 16 and 40 millimetres across the province.
Recent data from the Department of Water and Sanitation indicates that on 19 February 2018, the province’s dam levels averaged 23%, unchanged from the previous week (ending 12 February 2018), but 10 percentage points lower than the corresponding period in 2017.
Apart from the weather aspects, South Africa continues to receive large volumes of wheat imports. The country imported 97 392 tons in the week ending 16 February 2018, up by 49% from the previous week (ending 9 February 2018); about 61% from Germany, 30% from Lithuania and 9% from the United States. This placed the 2017/2018 marketing year’s wheat imports at 923 576 tons, which equates to 49% of the seasonal import forecast of 1.90 million tons .
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 17th batch of exports this season was recorded at 1 822 tons and went out last week (ending 16 February 2018). This is treble the volume exported the previous week (ending 9 February 2018). About 46% of wheat went to Lesotho, 41% to Swaziland, 11% to Botswana and 2% to Namibia. Overall, South Africa’s 2017/2018 wheat exports stand at 11 906 tonnes.
Although the local market has recovered from levels seen in the past few weeks, the spot price is still 27% lower than the levels observed on 21 February 2017. These losses are mainly on the back of the large stock and favourable outlook for the new season crop.
As set out in our note on Monday (19 February 2018), the 2017/2018 soya bean marketing year will end with a large carryover stock of 340 862 tons, which is treble the volume seen in the 2016/2017 marketing year. This will boost South Africa’s soya bean supplies in the 2018/2019 marketing year, which starts on 1 March 2018.
In terms of the new season crop, South Africa could be in for another good harvest, although it might be relatively lower than the 2016/2017 production season’s crop. We believe that the harvest could reach at least 1.2 million tons, down by 8% from the previous season.
The weather conditions have generally been favourable across many soya bean growing areas from the start of the season. The forecasts for the next eight days indicate a possibility of heavy rainfall of over 70 millimetres in the soya bean growing areas in the country. While this is a welcome development, hail is always a key concern for the eastern sections of South Africa, especially when there are expectations of heavy rainfall.
After recording losses at the start of the week (ending 23 February 2018), the potato market gained ground in yesterday’s (20 February 2018) trade session and settled in positive territory. This was on the back of relatively lower stock of 756 013 pockets of 10kg bags at the start of the session. The price was up by 15% from the previous day (19 February 2018), closing at R35.30 per pocket.
However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period during the weekend (ending 18 February 2018). This led to a 9% increase in daily stocks to 823 322 pockets.
The fruit market posted gains in yesterday’s (20 February 2018) trade session, largely supported by commercial buying interest. The prices of apples and bananas were up by 12% and 11% from the previous day (19 February 2018), closing at R9.18 and R5.57 per kilogramme, respectively. However, these gains could be short-lived due to large stocks of 161 000 tons of apples and 345 000 tons of bananas.
The price of oranges significantly increased by 31% from the previous day (19 February 2018) and settled at R9.86 per kilogramme owing to lower stocks and commercial buying interest. At the end of the session, the stocks had slightly improved to 34 000 tons, following an uptick in deliveries. This is, however, still below levels of over 50 000 tons that were seen in December 2017.