Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The South African Weather Service recently revised its view from a weak La Niña phase to a neutral phase from this month through the autumn season. Nonetheless, there is still a possibility of above-normal rainfall in most parts of the country over the observed period. This bodes well for the maize crop which still needs moisture at its current stage of development.
In the near term, the weather charts currently show a possibility of widespread showers across the maize belt during the next two weeks. This should further improve soil moisture and benefit the crop. Again, this slightly reinforces the National Crop Estimates Committee’s view of a fairly good crop of 12.2 million tons in the 2017/2018 production season.
Last week’s (ending 2 March 2018) maize exports were quite disappointing. South Africa exported 14 672 tons, down by 43% from the volume exported in the week ending 23 February 2018. About 65% of these exports were white maize, with 35% being yellow maize. This placed South Africa’s 2017/2018 maize marketing year exports at 2.0 million tons, which equates to 83% of the season’s export forecast of 2.4 million tons.
As we set out in our note on Monday (5 March 2018), at the moment the weather is of less importance in the winter wheat growing areas of South Africa as it is an off-season period. The Western Cape is a winter rainfall area, therefore it is unsurprising that the next two weeks could remain dry and cool.
Nonetheless, the expected dry conditions imply that dam levels could remain critically low in the near term, thus negatively affect households and other agricultural activities such as livestock and horticulture.
The most recent data from the Department of Water and Sanitation shows that on 5 March 2018, the province’s dam levels averaged 20%, down by one percentage point from the previous week (ending 26 February 2018) and 10 percentage points from the corresponding period last year.
Apart from the weather aspects, South Africa continues to receive large volumes of wheat imports. The country imported 90 094 tons in the week ending 2 March 2018, up by 53% from the previous week (ending 23 February 2018). About 43% from Latvia, 32% from Argentina and 25% from Romania. This placed the 2017/2018 marketing year’s wheat imports at 1.07 tons, which equates to 58% of the seasonal import forecast of 1.85 million tons.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The 20th batch of exports this season was recorded at 802 tons and went out last week (ending 2 March 2018) to Botswana, Lesotho and Namibia. Moreover, this is well below the previous week’s (ending 2 March 2018) exports of 2 165 tons. South Africa’s 2017/2018 wheat exports currently stand at 16 791 tons.
The start of this week (ending 9 March 2018) has been fairly dry and cool across the sunflower seed growing areas of South Africa. It is only Hoopstad, Wesselsbron, Derby and Ventersdorp in the North West and western Free State provinces that received light showers on Monday evening.
The overall sunflower seed region is set to receive good showers during the next two weeks. The current weather forecasts show a possibility of between 16 and 50 millimetres of rainfall, varying from region to region. Backing these forecasts is also the South African Weather Service’s report which noted a possibility of above-normal rainfall during the next two months across summer rainfall areas, which should support the late-planted crop as its still needs moisture.
Yesterday (6 March 2018), the potatoes market managed to claw back some of its recent losses owing to strong commercial buying interest. The price was up by 8% from the previous day (5 March 2018), closing at R37.13 per pocket (10kg bags).
In the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet period in the weekend (ending 4 March 2018). This led to an 11% increase in daily stocks to 739 972 pockets.
In yesterday’s (6 March 2018) trade session the SAFEX beef carcass market presented more of the same. The price remained flat from the previous day (5 March 2018), and settled at R44.50 per kilogramme due to thinly trade volumes.
From a supply point of view, South African farmers slaughtered 188 737 head of cattle in January 2018, down by 21% from the previous month (December 2017) and 10% from the corresponding period last year (January 2017). We did expect a bit of softening in slaughtering activity after the festive season demand, but the scale of it came as a surprise.
It appears that farmers are still rebuilding their stock following a reduction during the 2015/2016 drought. Lower maize prices and good recovery in pastures have also provided a good environment for the cattle stock rebuilding process.