Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
From a trade perspective, South Africa’s maize exports are gaining momentum. The country exported 73 178 tonnes of maize in the week ending 9 June 2017. About 92% of this was yellow maize and 8% was white maize. South Africa’s 2017/2018 maize exports currently stand at 149 121 tonnes.
About 88% of total maize exports during the week ending 9 June 2017 went to Taiwan and South Korea. In the 2014/2015 marketing season, Taiwan was a leading buyer of South African yellow maize, accounting for almost half of yellow maize exports. Trailing behind Taiwan was South Korea and Japan. Given the current lower prices, this season could be a repeat of this scenario.
South African white maize will continue to experience low demand in the global market and stiff competition from Zambia and Malawi in regional markets. In fact, Zimbabwe has recently banned imports of maize into the country until further notice due to sufficient domestic supplies. This means that South Africa will see an even lower demand from regional markets. The key implication of this is the sustained lower white maize prices over the near to medium term.
On the global front, this morning (14 June 2017) the Chicago maize market was up by 0.53% from levels seen at midday yesterday (13 June 2017) owing to concern of a return of dry weather in some parts of the US Midwest.
Winter wheat planting is virtually over in the Western Cape However, the recently emerged crop could be strained by current drier conditions, as soil moisture levels are relatively low across the province. These unfavourable drier conditions could remain for the next two weeks, which is not conducive for the new crop.
From a trade perspective, the week ending 9 June 2017 was a quite one, with no imports reported. The last imports were in the week ending 2 June 2017, coming in at 32 772 tonnes, all from Germany. This brought South Africa’s 2016/2017 total wheat imports to 559 209 tonnes, which is 37% of the seasonal import forecast of 1.5 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The total exports reached 675 tonnes in the week ending 9 June 2017, all to regional markets. South Africa’s 2016/2017 total wheat exports currently stand at 84 270 tonnes. About 26% of this went to Zimbabwe, 21% to Lesotho, 20% to Botswana, 18% to Zambia, 8% to Namibia, 4% to Mozambique and 3% to Swaziland.
On the global front, this morning (14 June 2017) the Chicago wheat price was up by 1.83% from levels seen at midday yesterday (13 June 2017), also supported by expectations of dry conditions in some parts of the US Midwest.
The forecast dry conditions could negatively affect the newly emerged crop. As it is, the crop is not in good shape. At the beginning of the week (12 June 2017), only 45% was good/excellent, compared to 79% in the corresponding period last year.
In global markets this morning (14 June 2017), the Chicago soya bean price was up by 0.11% from levels seen at midday yesterday (13 June 2017), following a sale of 130 000 tonnes of US soya beans to an unknown destination.
Weather remains a key focus in the US soya bean market. Drier conditions over the past few days allowed farmers to make notable progress in planting, with 92% of the intended 36.35 million hectares this season already planted by the beginning of this week (12 June 2017). This is 1% ahead of the corresponding period last year.
However, going forward rainfall will be needed to ensure the success of the crop. At the beginning of the week , about 77% of the crop had already emerged, in line with the corresponding period last year.
Nothing much is happening in the domestic sunflower seed market. Harvest is almost complete across the country. The yields obtained so far are well above average levels of 1.2 tonnes per hectare, which suggests that the total crop could reach the National Crop Estimate Committee’s forecast of 853 470 tonnes, up 13% from the previous season.
From a global perspective, the EU’s sunflower seed market gained ground during yesterday’s (13 June 2017) trade session, with the price up 0.26% from the previous day (12 June 2017), closing at US$393 per tonne owing to strong buying interest.
The Black Sea sunflower oil market saw a quiet day with the price unchanged from the previous day’s level, closing at US$730 per tonne.
In the Black Sea region, sunflower seed planting for the 2017/2018 season is complete. Russia planted 7.1 million hectares, down 7% from the 2016/2017 season. Ukraine planted 5.5 million hectares, down 6% from the previous season. The weather forecast for the week (ending 16 June 2017) looks favourable, which is conducive for newly emerged crops.
In the EU, weather conditions remain favourable for the new season. The region’s 2017/2018 sunflower seed production is estimated at 9.1 million tonnes, up 6% from the previous season.
In the US, planting is underway. At the beginning of the week (12 June 2017), US farmers had planted 80% of the intended area, which is 4% ahead of the corresponding period last year.
Yesterday (13 June 2017), the South African potato market ended the day in positive territory with the price up 4% from the previous day (12 June 2017), closing at R27.22 per bag (10 kg). These gains were on the back of relatively lower stocks of 1.05 million bags (10kg) at the start of the session.
However, during the session, the market saw an uptick in deliveries due to ongoing harvest activity. Subsequently, the daily stocks increased by 12% towards the end of the session to 1.18 million bags (10 kg).
The fruit market ended the day mixed during yesterday’s (13 June 2017) trade session. The apple price was down 2% from the previous day (12 June 2017), closing at R6.38 per kilogramme. The bearish sentiment emanated from higher stocks of 246 367 tonnes (compared to levels of 200 000 tonnes in the previous few days).
The banana market gained 5% from the previous day closing at R5.94 per kilogramme, largely supported by strong buying interest. The orange market was up 3% from the previous day closing at R2.35 per kilogramme. These gains were on the back of a 7% decline in daily stocks to 381 581 tonnes.