Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The wheat crop in many parts of the Western Cape is in fair condition following last week’s (ending 18 August 2017) rainfall. However, there is a need for more rain as this was not sufficient to replenish the soil moisture.
The weather forecast for this week (ending 25 August 2017) presents a possibility of light showers around the south-western parts of the Western Cape. Most other areas will be dry which is not conducive for crops.
In terms of dam levels, the recent update for the week ending 14 August 2017 shows that Western Cape dams averaged 30%, which is a 2% improvement from last week, but 28% below the same period last year. The Northern Cape and Free State provinces, which are mostly irrigated, are in good shape with dam levels over 80% full.
Of the 498 850 hectares of wheat planted this season, 65% is in the Western Cape. On 29 August 2017, the National Crop Estimate Committee will give an indication of the impact of current dry conditions on wheat crops in its first production forecasts for winter crops.
Most parts of South Africa have already completed the harvest process. Those not yet finished could get momentum from the expected drier and cooler weather conditions during the next two weeks.
Data releases this week, such as maize weekly trade and producer deliveries, as well as SAGIS monthly figures will give an indication of the current stocks of white and yellow maize, as well as maize usage.
On the global front this morning (21 August 2017), the Chicago maize market was down by 0.29% from levels seen at midday Friday (18 August 2017), following relatively lower export sales of 734 200 tonnes last week.
Although the weather forecast for the United States (US) Midwest indicates rainfall during the next two weeks, this is skewed towards the central and eastern regions. The other areas could receive light and scattered showers which are not sufficient for the crop.
The US maize crop is still strained following recent drier weather conditions. At the beginning of last week (14 August 2017), only 62% of US maize was rated good/excellent, down by 12% from the corresponding period last year. An update will be released this evening by the United States Department of Agriculture (USDA).
The Buenos Aires Grain Exchange forecasts Argentina’s 2017/2018 maize acreage at 5.4 million hectares, which is 6% higher than the previous season.
The domestic soya bean data calendar is fairly light this week with SAGIS monthly data due for release at midday on Friday (25 August 2017). This will indicate current stocks levels, monthly soya bean consumption, as well as imports and exports data. Apart from this, the market performance will be guided largely by the Chicago (soya bean) price and domestic currency movements throughout the week.
In global markets this morning (21 August 2017), the Chicago soya bean price was up by 32% from levels seen at midday yesterday (20 August 2017) owing to solid demand in the world market.
During the week ending 18 August 2017, US weekly export sales reached 1.4 million tonnes, which is well above market expectation. China was among the leading buyers and expected to remain a key buyer throughout the season due to a growing demand from the Chinese animal feed industries. The USDA forecasts China’s 2017/2018 soya bean imports at 94.0 million tonnes, which is a 3% increase from the previous season
The weather remains a key focus in the US soya bean market. The forecast for the next two weeks shows a possibility of rainfall towards the central and eastern parts of the Midwest. While this will benefit the crops in these particular areas, the western parts could be strained due to dry conditions.
This week’s calendar in the South African sunflower seed market is light with one key data release on Friday (25 August 2017). SAGIS will release monthly stocks, consumption, and trade data. The market will most likely be driven by the currency movements and traded volumes.
From a global perspective, the European Union’s (EU’s) sunflower seed market ended last week (ending 18 August 2017) in positive territory with support coming from higher vegetable oil prices and strong global demand. The price was up 0.25% from the previous day’s (17 August 2017) level, closing at US$394 per tonne
The Black Sea’s sunflower oil price fell by 0.13% from the previous day and eased US$763 per tonne. This was partially on the back of an expected large crop. APK Inform recently revised its estimate for Ukraine’s 2017/2018 sunflower seed production up by 800 000 tonnes to 14.0 million tonnes. However, this is still below the USDA’s estimate of 14.5 million tonnes production. The overall revision is due to expected higher yields and an uptick in area plantings.
The Black Sea region’s sunflower seed crop benefited from the recent showers. A report from SUNSEEMAN shows that the region’s crop is currently in fair condition. The forecast rainfall across Romania and Ukraine this week could improve crop conditions further.
The South African potato market saw marginal gains in Friday’s (18 August 2017) trade session with the price up by 0.56% from the previous day (17 August 2017), closing at R28.93 per pocket (10kg). These gains came on the back of relatively lower stocks in the market.
At the start of the trade session the market had daily stocks of 1.002 million pockets (10kg), but this fell by 14% by the end of the session and eased at 866 734 pockets (10kg) due to strong buying interest.
The SAFEX beef market has not shown any notable movements this month due to thinly traded volumes. The price remains flat at R46.00 per kilogramme. This means that the SAFEX beef carcass prices could differ from the physical market prices.
The beef market is slowly showing signs of normalisation after the 2015/2016 El Niño-induced drought. Data from the Red Meat Levy Admin shows that South African farmers slaughtered 203 983 head of cattle in June 2017, up by 1% from the previous month.
This is 16% lower than the corresponding period last year. The figures for July 2017 will be updated by the end of this month. Developments will be closely monitored during the coming months in order to determine the impact on prices.
The fruit market ended the past week (18 August 2017) on a mixed footing. The price of apples was down by 3% from the previous day (17 August 2017), closing at R7.65 per kilogramme. However, this could be short lived due to relatively lower daily stocks of 172 621 tonnes.
The prices of bananas and oranges were up by 2% and 21% from the previous day, closing at R5.78 per kilogramme and R3.92 per kilogramme, respectively. These gains were mainly on the back of lower stocks and strong buying interest.