Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
Many farmers have already made notable progress regarding the harvest process and received exceptional yields. This supports the National Crop Estimate Committee’s view of a possible record crop of 15.97 million tonnes this season. The forecast drier weather conditions during the next eight days could boost the harvest process in areas that have not yet been completed.
In terms of trade, South African maize exports fell by 47% in the week ending 4 August 2017 from the week ending 28 July 2017 and eased at 46 526 tonnes. This was mainly due to a decline in activity in the Kenyan and Taiwanese markets. About 86% of these exports were yellow maize, and 14% was white maize.
The leading buyer was Japan with a share of 81%, all yellow maize. The second largest buyer was Botswana with a share of 6%, largely white maize. South Africa’s 2017/2018 total maize exports currently stand at 839 524 tonnes, which is 38% of the season export forecast of 2.2 million tonnes.
On the global front this morning (10 August 2017), the Chicago maize market was down by 0.80% from levels seen at midday on Tuesday (8 August 2017) ahead of the United States Department of Agriculture’s (USDA’s) World Agricultural Supply and Demean Estimates report (WASDE), due for release this afternoon. In July, the agency placed the United States (US) 2017/2018 maize crop at 362 million tonnes, down 6% year-on-year (y/y).
The new season crop is not in good shape due to persistent dry conditions in the Western Cape. Weather models show that this week (ending 11 August 2017) could remain dry and cool which will continue to strain the crop. Although dry conditions were experienced from earlier in the season, farmers were not discouraged. They planted 498 850 hectares, which is 2% lower than the previous season. This decline was due to competition and substitution from other crops such as canola and barley.
In terms of dam levels, the recent update for the week ending 7 August 2017 shows that dams averaged 28%, which is a 1% improvement from last week, but 29% below the same period last year.
From a trade perspective, South Africa imported 31 773 tonnes of wheat in the week ending 4 August 2017. About 62% came from Germany and 38% from the Czech Republic. This brought South Africa’s 2016/2017 total wheat imports to 717 046 tonnes, which is 60% of the seasonal import forecast of1.2 million tonnes.
On the global front this morning, the Chicago wheat price was down by 1.93% from levels seen at midday on Tuesday (8 August 2017) ahead of the USDA’s WASDE report. This report will give guidance on the US’s 2017/2018 crop size, as well as the global crop size. Last month, the agency pegged the US 2017/2018 wheat crop at 48 million tonnes, down 23% from the previous 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 throughout the week.
There is still an underlying bearish sentiment in the domestic soya bean market which stems from expected large production of 1.34 million tonnes, up 81% from the previous day (8 August 2017).
In global markets this morning (10 August 2017), the Chicago soya bean price was up by 0.42% from levels seen at midday on Tuesday (8 August 2017), supported by lingering concerns of dry conditions in some parts of the Midwest.
The weather remains a key focus in the US soya bean market. The forecast for the next two weeks shows a possibility of wetter conditions towards the central and eastern parts of the US, while other areas could experience dry and cool weather. This could negatively affect the crop in western parts of the US.
At the beginning of this week (7 August 2017), the new season US soya bean crop was not in good shape, with only 60% rated good/excellent which is 12% lower than the same period last year.
The USDA’s WASDE report will be the key focus today. This report will give an indication of the potential US soya bean crop size. These estimates could reflect the impact of recent dry conditions in the Midwest. Last month (July), the agency placed the US 2017/2018 soya bean production forecast at 116 million tonnes, which is 1% lower than the previous season.
On the global front, there is rising optimism in some European Union (EU) countries regarding the 2017/2018 season sunflower seed crop. France Farm Ministry forecasts a 6% y/y uptick in production of sunflower seed this season to 1.3 million tonnes.
This is in line with the European Commission’s sentiment, which forecasts a 5% annual increase in the region’s 2017/2018 sunflower seed production to 9.0 million tonnes. This is largely on the back of an increase in area planting, as well as expected higher yields.
SUNSEEDMAN forecasts the 2017/2018 global sunflower seed production at 48.5 million tonnes, down 3% from the previous season.
The South African potato market gained ground on Tuesday’s (8 August 2017) trade session with the price up by 5% from the previous day (7 August 2017), closing at R30.08 per 10kg pocket. These gains were driven by lower stocks of 859 053 pockets (10kg) at the start of the session.
However, during the session, the market saw an increase in deliveries on the back of ongoing harvesting. This subsequently led to a 9% uptick in daily stocks to 933 080 tonnes.
The fruit market ended the day mixed on Tuesday’s (8 August 2017) trade session. Apple and banana prices were down by 3% and 1% from the previous day (7 August 2017), closing at R7.38 per kilogramme and R5.74 per kilogramme, respectively. These losses came on the back of large stocks, with apples at 240 542 tonnes, and bananas at 292 726 tonnes.
The price of oranges gained 18% from the previous day, closing at R3.32 per kilogramme due to strong buying interest. However, these gains could soon be reversed due to large stocks of 276 216 tonnes, up 75% from the previous day.