Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The optimal planting window is narrowing in the eastern parts of the South African maize belt. However, the planting process is not yet complete in some areas due to interruptions caused by drier conditions at the beginning of this month. The only province that has made notable progress is Mpumalanga, with roughly 90% of the intended hectares already planted.
The expected rainfall during the next two weeks should improve soil moisture, but could delay planting activity. There is still enough time for planting in the western parts of the maize belt, where the optimal planting window only closes in mid-December.
From a trade perspective, South Africa’s maize exports recovered from the disappointing activity in the week ending 3 November 2017. Last week, the country exported 58 538 tonnes of maize. About 87% of these exports were yellow maize, with 13% being white maize.
The leading buyer was Japan with a share of 80%, all yellow maize. Trailing Japan was Botswana with a share of 6%, largely white maize. This placed South Africa’s 2017/2018 total maize export volume at 1.5 million tonnes, which equates to 68% of the season’s export forecast of 2.2 million tonnes. About 67% of the exported 1.5 million tonnes is yellow maize, with 33% being white maize.
Yesterday (14 November 2017), parts of the Western Cape received rainfall of between 15 and 20 millimetres. More showers are expected during the next eight days. This should improve dam levels which are critically low – estimated at 35% on 13 November 2017, which is 23% lower than the corresponding period last year.
Although this is a welcome development, it might delay the harvest process which is currently in full swing across the province. At the moment, it is unclear whether the rainfall will have an impact on crop quality. The quality of the crop that has already been harvested is reportedly in fair condition.
In terms of trade, South Africa imported 34 720 tonnes of wheat in the week ending 10 November 2017. About 83% came from Ukraine, 14% from Lithuania, and 3% from Russia. This placed the 2017/2018 marketing season’s wheat imports at 428 667 tonnes, which equates to 24% of the seasonal import forecast of 1.8 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The sixth batch of exports this season went to Namibia, totalling 34 tonnes. This placed total exports for the 2017/2018 marketing season at 1 648 tonnes. There are likely to be more exports to regional markets over the coming months.
The weather remains a primary focus in the local market. Current forecasts show that the next two weeks could bring widespread showers across the soya bean producing areas of the country. This will improve soil moisture, and later benefit the new season crop.
Planting activity is still at initial stages in many provinces. The process has been somewhat slow due to dry conditions in some parts of the country. The province that has advanced is KwaZulu-Natal where roughly 40% of the intended area had already been planted at the beginning of the week.
In global markets, the soya bean demand remains fairly vibrant. The United States Department of Agriculture (USDA) recently reported a sale of 135 000 tonnes of United States (US) soya bean meal to the Philippines. Egypt is looking for 30 000 tonnes of soya bean oil from the world market.
In addition, China is set to remain a key buyer of soya beans. The country’s 2017/2018 soya bean imports are estimated at 97 million tonnes, up by 4% from the 2016/2017 season. The European Union (EU) is also expected to remain a key buyer with imports estimated at 14 million tonnes, up by 6% from the 2016/2017 season.
Although last week’s expected rainfall did not materialise, the forecast for the next two weeks is promising with a chance of between 16 and 30 millimetres across sunflower seed producing regions. This should improve soil moisture and benefit the crops, but could delay harvest activit .
As indicated in our previous notes, South African farmers intend to increase sunflower seed plantings by 5% from the 2016/2017 production season to 665 500 hectares. The expansion will most likely be in the North West and Free State provinces and could be at the expense of white maize hectares due to price competitiveness.
In the global market, the harvest process is virtually over in the US. On 12 November 2017, about 81% of the crop had already been harvested. This is 7 points behind the corresponding period last year. The delays are largely due to wet weather conditions in some parts of the Midwest in the past few weeks.
Yesterday (14 November 2017) the South African potato market managed to claw back its recent losses. The price was up by 7% from the previous day (13 November 2017), closing at R35.91 per pocket (10kg). These gains were mainly on the back of lower stocks of 871 104 pockets (10kg) at the start of the trading session.
However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet weekend. This subsequently led to a 13% increase in daily stocks to 982 635 pockets (10kg).
The fruit market was once again mixed in yesterday’s (14 November 2017) trade session. The orange market withdrew some of its recent gains following a substantial increase in daily stocks to 111 000 tonnes, double the previous day’s (13 November 2017) level. The price was down by 41% from the previous day, closing at R5.55 per kilogramme.The prices of apples and bananas were up by 7% and 4% from the previous day, closing at R7.78 and R6.51 per kilogramme, respectively. These gains were mainly on the back of relatively lower stocks of 239 000 tonnes of apples and 281 000 tonnes of bananas.