Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The forecast drier weather conditions during the next eight days could boost harvest activity in areas that have not yet completed the process.
Many farmers have already made notable progress and received exceptional yields which support the National Crop Estimate Committee’s view of a possible record crop of 15.97 million tonnes this season. This is well above the 2016/2017 crop of 7.78 million tonnes and a long term average production of 12.50 million tonnes.
On the global front this morning (8 August 2017), the Chicago maize market was up by 1.08% from levels seen at midday yesterday (7 August 2017) due to a relatively weaker US Dollar against major currencies and poor crop rating.
At the beginning of this week (7 August 2017), about 60% of United States (US) maize was rated good/excellent, which is 14% behind the corresponding period last year. These results mirror the impact of persistent dry weather conditions of the past few weeks.
The weather remains a primary focus in the US maize market as the crop enters the pollination stages of growth which requires higher moisture. The most recent updates show a possibility of widespread showers this week across the Midwest that could improve crop conditions and development.
The Chinese National Grain and Oilseed information Centre left its 2017/2018 maize production forecasts unchanged at 212 million tonnes, which is 4% lower than the previous forecasts.
Although this week (ending 11 August 2017) will most likely remain dry and warm across many areas of the Western Cape, the week ending 23 August 2017 could bring rainfall of between 7 and 20 millimetres throughout the province which will possibly improve crop conditions. These favourable weather prospects are in line with the South African Weather Service’s views of possible wetter conditions in the south western parts of the country between August and October 2017. If this materialises, it will be a welcome relief after weeks of dry conditions in the Western Cape during the first half of its traditional rainy season.
On the global front this morning (8 August 2017), the Chicago wheat price was up by 1.97% from levels seen at midday yesterday (7 August 2017), with support partly on the back of poor crop ratings.
At the start of this week (7 August 2017), only 32% of US spring wheat was rated good/excellent, compared to 68% in the corresponding period last year. The forecast rainfall in the Midwest could potentially improve crop conditions after weeks of hot and drier weather. The International Grains Council (IGC) forecasts US 2017/2018 wheat production at 47 million tonnes, down 26% from the 2016/2017 season.
In the absence of major data releases, the domestic soya bean market performance will be guided largely by the Chicago (soya bean) price and domestic currency movements during the week.
In global markets this morning (8 August 2017), the Chicago soya bean price was up by 1.16% from levels seen at midday yesterday (7 August 2017), also supported by poor crop ratings. It appears that last week’s (ending 4 August 2017) rainfall in the Midwest was not as effective as expected in improving crop conditions.
Recent data from the United States Department of Agriculture (USDA) shows that 60% of the US soya bean crop was rated good/excellent at the beginning of this week (7 August 2017), which is 12% lower than the same period last year. On Thursday (10 August 2017), the agency will release its official forecasts for US soya bean production and will possibly reflect the impact of recent dry conditions in the Midwest. The current production estimate is 116 million tonnes, which is 1% lower than the 2016/2017 season.
The US soya bean could get relief this week and possibly experience improvement in crop conditions. Recent weather models show a possibility of wet conditions across the US soya bean growing areas during the next two weeks, particularly in the south central areas .
The Chinese National Grain and Oilseed Information Centre has lifted its 2017/2018 production estimate by 100 000 tonnes from the previous estimate to 14.4 million tonnes. This is 11% higher than the previous season.
Yesterday (7 August 2017) the South African potato market managed to claw back some of its recent losses with support coming from lower stock levels. The price was up by 1% from the previous day (6 August 2017), closing at R28.75 per 10kg pocket.
The market saw strong buying interest, coupled with lower deliveries after a weekend with reduced harvest activity. This subsequently led to a 30% decline in daily stocks to 859 053 pockets (10kg).
The fruit market was once again mixed in yesterday’s (7 August 2017) trade session with the banana and orange price up by 1% and 2% from the previous day (6 August 2017), closing at R5.74 per kilogramme and R3.01 per kilogramme, respectively. These gains came on the back of a decline in daily stocks – banana stocks were at 227 018 tonnes, down 20% from the previous day and oranges at 235 558 tonnes, down 18% from the previous day.
The price of apples fell by 0.28% from the previous day, closing at R7.12 per kilogramme. However, this could soon be reversed due to lower stocks of 181 538 tonnes, down 27% from the previous day.