Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
Over the weekend (ending 11 March 2018), the Free State province received light and scattered showers which were, however, not sufficient to make a meaningful improvement in soil moisture. With that said, the maize crop is in fairly good condition across the country.
The areas that are somewhat moisture-stressed following dry conditions in the past few days could soon see some relief, as the weather forecasts for the next two weeks show a possibility of rainfall of between 20 and 60 millimetres.
As indicated in yesterday’s (12 March 2018) note, the United States Department of Agriculture (USDA) forecasts South Africa’s 2017/2018 maize production at 13.0 million tons (down by 26 percent from last year 2016/2017).
Worth noting, but of lesser significance to the global market, is a possible uptick in Mali’s maize harvest. The official estimate from the country’s Ministry of Agriculture points to a 15 percent year on year uptick in 2018/2019 maize production to 3.9 million tons. This improvement is largely on the back of an increase in area planted.
South Africa’s wheat market is currently off-season and therefore, most activity is in import trading. The past season’s drought resulted in a lower harvest in the Western Cape, which subsequently led to a 20% year-on-year decline in 2017 national production to 1.5 million tons.
The Western Cape is a winter rainfall area. Despite the urgent need for rain, there is a slim chance of sufficient showers in that province during the next couple of weeks. The winter wheat growing areas will, nonetheless, need moisture during the next two months or so ahead of the new planting season. At this point, it is unclear what the weather conditions will look like in the upcoming season.
Apart from the domestic development, the global market remains well supplied after the USDA supply and demand estimates reports showed a slight upward revision in the 2017/2018 global wheat production estimate to 759 million tons. This is 3% higher than the previous season. Russia and India were the leading contributors to this increase in production.
From a demand front, the 2017/2018 global wheat imports are estimated at 182 million tons, slightly higher than the previous month’s estimate of 180 million tons and 7%higher than the previous season. Southeast Asia, the Middle East, North Africa and Sub-Saharan Africa regions are set to be amongst the key importers.
The expected rainfall this past weekend (ending 11 March 2018) did not materialise in most sunflower seed growing areas. Only a few areas around Bloemfontein, De Brug, Viljoenskroon and Losdoorns received light showers of between 5 and 13 millimetres.
With that said, soil moisture is generally in fair condition following the recent rainfall. The crop that is slightly moisture-stressed following dry conditions in the past few days should soon recover as weather conditions promise rainfall during the next two weeks.
With the late planted sunflower seed crop still at early stages of development in regions around Delareyville, Sannieshof and Lichtenburg in the North West province, the expectation of a prolonged rainfall pattern this season should provide sufficient moisture for crop development.
The potato market started the week (ending 16 March 2018) on negative footing owing to a large stock of 934 899 tons at the start of the session. The price was down by 4% from the previous day, closing at R33.02 per pocket of 10kg bags.
However, towards the end of the session, the market experienced strong commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity during the weekend. This subsequently led to a 31% decline in daily stocks to 644 269 pockets.
The fruit market also started the week (ending 16 March 2018) on a negative footing with prices under pressure due to an uptick in daily stock. The prices of apples and bananas were down by 6% and a percentage point from the previous day (11 March 2018), closing at R7.27 and R7.19 per kilogramme, respectively. These losses were underpinned by a large stock of 220 000 tons of apples and 301 000 tons of bananas.
The price of oranges fell by 2% from the previous day (11 March 2018) and settled at R7.69 per kilogramme. This will, however, be short-lived because of fairly lower stock of 26 000 tons, compared to levels of over 70 000 tons in the past few days.