Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
South Africa’s maize crop is in good condition across all provinces. The forecast rainfall for this week will not be of much influence as the crop is already maturing. If anything, it could cause harvest delays in areas that have already started with the harvest process.
On the global, front this morning (4 April 2017) the Chicago maize price was up by 0.27% from the level seen at midday yesterday (3 April 2017). The support is still linked to the United States Department of Agriculture (USDA’s) prospective plantings data which indicated that US farmers could plant 36.4 million hectares of maize in 2017. This is 4% lower than the previous season and well below market expectations.
Elsewhere, the European Commission forecasts the European Unions’ (EU) 2017/2018 maize production at 66.6 million tonnes, which is 10% higher than the previous season.
Weather forecasts show a possibility of rainfall across the wheat producing areas of the country within the next eight days. This will be beneficial for winter wheat growing areas, with planting activity set to start within the next few weeks. Moreover, this adds to an already positive sentiment that was signalled by the South African Weather Services, indicating a likelihood of above-normal rainfall for late autumn to mid-winter (June-July-August).
On the global front, this morning (4 April 2017) the Chicago wheat price was down by 0.47% from the level seen at midday yesterday (3 April 2017) owing to higher stock levels in the US market. The USDA has recently indicated that on the first of March 2017, the US all wheat stocks level were at 41.5 million tonnes, which is 21% higher than the same period last year, and the highest levels since 1998.
There are large wheat supplies in the global market. The International Grains Council forecasts 2016/2017 global wheat production at 754 million tonnes, which is 2% higher than the previous season. The key drivers of this production are the uptick in Russia, the US, Australia, Canada, Argentina and Kazakhstan. The ending stocks are estimated at 239 million tonnes, which is a 7% annual increase.
In global markets, this morning (4 April 2017) the Chicago soya bean price was down by 0.95% from the level seen at midday yesterday (3 April 2017). This was due to the USDA’s report which placed US soya bean planting intentions at 36.2 million hectares, which is 7% higher than the previous season. This increase is set to come at the expense of maize acreage, due to profitability levels.
On the first of March 2017, the US soya bean stocks were estimated at 47.2 million tonnes, which is 13% higher than the previous season. Worth noting is that this is the highest reading since the first of March 2007.
In South America, Informa Economics revised its estimate for Argentina’s 2016/2017 soya bean production upwards by 2.5 million hectares to 57.5 million tonnes. This is 2% higher than the previous season. At the same time, Brazil’s 2016/2017 soya bean production estimate was revised up by 3.0 million tonnes to a record 111.0 million tonnes. This is 16% higher than the previous season.
The forecast rainfall this week could be beneficial for the sunflower seed crop that was planted late, particularly the western parts of the North West province. Overall, while production estimates were revised down, South Africa’s sunflower seed market are still well supplied. The ending stocks were recorded at 162 439 tonnes in February 2017, which is treble the volume seen the in the corresponding period last year.
In global markets, the European Commission forecasts the EU’s 2017/2018 sunflower seed production at 9.1 million tonnes, which is 7% higher than the previous season due to expected increase in area plantings, as well as positive prospects of weather conditions.
In the US, the USDA forecasts 2017/2018 sunflower seed plantings at 600 000 hectares, which is 9% lower than the previous season.
The South African potato market started the week (3 April 2017) on a negative footing, with losses linked to higher stock levels. At the start of the session, the stocks were estimated at 1 316 278 bags (10 kg), up by 3% from the previous day (2 April 2017), due to ongoing harvest activity.
However, during the session, the market saw a decline in deliveries due to slow harvest activity over the weekend and led to a 25% decline in deliveries to 981 261 bags (10 kg bags).
Find the full report here.