Update on agricultural commodity markets

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agricultural commodity markets

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.

 

Wheat:

With regards to wheat there has not been any meaningful improvement in weather outlooks. The forecasts suggest that the Western Cape province could remain dry this month (May 2017). This adds risks of possible seed germination failure in areas that already planted in anticipation of wet weather conditions. There is, however, still time as the planting window is open from April to July. Dam levels in the Western Cape province are critically low, estimated at 20% full in the week ending 8 May 2017, compared to 31% in the corresponding period last year.

Fortunately, nearly half of South Africa’s wheat crop is under irrigation in the Northern Cape and Free State, which should thrive well as dam levels in these respective provinces benefited from summer rainfall.

On the global front this morning, the Chicago wheat market gained 0.70% from the level seen at midday Friday (12 May 2017), owing to prospects of wet weather conditions and a weaker US Dollar against major currencies. Weather forecast for this week shows a possibility of wet conditions, which could lead to spring wheat planting delays and winter crop quality damage. Last week, US farmers had planted 54% of the targeted area for this season, which is 20% behind the corresponding period last year. This evening, the United States Department of Agriculture (USDA) will release an update in its weekly crop progress report.

Maize:

Harvest is currently underway in most parts of the country, with yields reportedly above average.  The maize is still wet in some areas around the Free State and North West province, but harvests should start by end of May. Expected wet weather conditions around Mpumalanga, KwaZulu-Natal and the eastern Free State, within the next eight days, could cause harvest delays.

On the global front this morning, the Chicago maize price was up 2.78% from the level seen at midday Friday (12 May 2017) owing to uncertainty over planting weather in the US Midwest.

The US maize farming regions are not out of the woods yet. Weather remains a critical factor and it currently shows a possibility of wet conditions this week, which could slow planting activity.

At the start of last week, US farmers had planted 47% of the intended 90 million acres, which is 14% behind the corresponding period last year. The delays were due to wet weather conditions. This evening the USDA will release its weekly crop conditions report. There is speculation that if wet conditions persist across the US Midwest, a considerable acreage could be shifted to soya beans as it has a much longer planting window than maize.

Informa Economics has already lowered its forecast for US 2017/2018 maize acreage by 1.1 million acres from the previous one to 89.7 million acres, which is slightly below the USDA’s estimate of 90 million acres.

Soya bean:

Soya bean harvest is underway across the country, with yields reportedly above average.  That said, forecast rainfall this week could cause delays in areas that have not yet finished harvesting, particularly around Mpumalanga and the eastern Free State.

In global markets this morning, the Chicago soya bean price was up 0.84% from the level seen on Friday (12 May 2017), benefitting from the weaker US Dollar against major currencies.

From a production perspective, Informa Economics lifted its US 2017/2018 soya bean area plantings by nearly one million acres to 89.7 million acres.

Weather forecast for the US Midwest shows a possibility of wet conditions within the next eight days, which could slow planting activity. Last week, US farmers had planted 14% of the targeted acreage, which is 7% behind the same period last year. The delays were already caused by adverse weather experienced last week.  This evening the USDA will release an update in their weekly crop progress report.

Sunflower seed:

Harvest is underway in some sunflower seed producing provinces. Moreover, the forecast drier conditions within the next two weeks could add momentum to the harvest process and also benefit the areas that planted late, with the crop still drying up.

The key risk on the horizon is a possibility of frost. The weather has been fairly favourable over the past few days and if it remains this way until the end of this month, the crop could finish off well.

In global markets, on Friday (12 May 2017), the EU’s sunflower seed market saw a quiet session with the price unchanged from the previous day (11 May 2017), closing at US$403 per tonne.

The EU is set to harvest a big crop in the 2017/2018 season. Data from the European Commission shows that 2017/2018 sunflower seed production could reach 9.1 million tonnes, which is 7% higher than the previous season. This is on the back of an expected increase in area plantings, as well as favourable weather conditions.

Meanwhile, the Black Sea sunflower oil market gained 0.27% from the previous day, with price easing at US$739 per tonne. This was due to an increase in global demand for sunflower seed products, as well as spill-over support from the palm oil market. Reports that Turkey has removed the restriction on Russia’s sunflower oil imports were also supportive to the market.

RSA Potatoes:

On Friday (12 May 2017), the South African potato price extended its losses with large stocks underpinning the market. At the start of the session, the stocks were at 1 206 956 bags (10 kg), up 28% from the previous day (11 May 2017).

Moreover, during the session, the market saw an increase in deliveries owing to the ongoing harvest. This subsequently led to a 3% uptick in stocks to 1 239 318 bags (10 kg).

Find the full report here.

Find previous reports here.

 

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