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

Maize:

After the National Crop Estimate Committee revised its maize production forecast to 15.96 million tonnes in July, it has further lifted its forecast to 16.41 million tonnes – making this season’s crop the largest on record. White and yellow maize production estimates were revised up by 2% and 5% respectively from the previous estimate to 9.65 million and 6.76 million tonnes. In total, this is a record level of 16.41 million tonnes.

This is well above South Africa’s annual maize consumption of 10.50 million tonnes. Therefore, this implies that the country will have over 4.00 million tonnes of maize in total as an exportable surplus for the 2017/2018 marketing season.

However, weak global demand for white maize could lead to relatively lower exports of 2.2 million tonnes. This will leave a large carry-over stock to the new season, which will essentially keep maize prices under pressure for some time.

Also out yesterday (29 August 2017) was the weekly grain trade data which showed that South Africa exported 34 199 tonnes of maize in the week ending 25 August 2017, down by 52% from the previous week (ending 18 August 2017). About 74% of these exports were yellow maize, and 26% was white maize.

The leading buyer was Japan with a share of 65%, all yellow maize. The second largest buyer was Botswana with a share of 17%. Overall, South Africa’s 2017/2018 total maize exports currently stand at 1.10 million tonnes, which is 50% of the season export forecast (2.2 million tonnes).

Wheat:

The National Crop Estimate Committee’s first production estimate for wheat confirmed market expectations of a possible lower harvest due to continuous drier weather conditions in key wheat producing provinces, as well as a decline in acreage.

The data showed that the 2017 winter wheat crop could fall by 16% from the previous season to 1.60 million tonnes. A notable decline is recorded for the Western Cape and Free State provinces. It is still early to be certain of the actual size of the crop, as this season is delayed by almost six weeks. Developments over the coming months will be monitored in order to ascertain the potential impact on the supplies for the next season, as well as prices.

From a trade perspective, South Africa imported 14 569 tonnes of wheat in the week ending 25 August 2017, all from Russia. This is 68% lower than the previous week’s (ending 18 August 2017) imports. Overall, South Africa’s 2016/2017 total wheat imports stand at 773 868 tonnes, which is 64% of the seasonal import forecast.

Although a net importer of wheat, South Africa continues to export wheat to regional markets. The total exports were recorded at 981 tonnes last week, all to Zimbabwe. This brought the country’s 2016/2017 total wheat exports to 90 494 tonnes.

Soya beans:

It almost seems as if the market has run out of the bullish news. The spot and March 18 contract month prices opened lower in yesterday’s (29 August 2017) trade session and remained under pressure throughout. The relatively stronger domestic currency, selling pressure and lower Chicago soya bean prices were the key factors driving the market.

The National Crop Estimate Committee revised down its soya bean production estimate by 2% from the previous one to 1.32 million tonnes. This is still the largest crop on record and it is 77% higher than the 2015/2016 production season.

This reinforces the view that South Africa could be a net exporter of soya bean in the 2017/2018 marketing year, with a total export volume estimated at 30 000 tonnes. However, in the past two months, the market has been fairly quiet with the last exported volume of 185 tonnes in May 2017. This placed the 2016/2017 soya bean total exports at 312 tonnes, all to Mozambique and Botswana.

Sunflower seed:

The National Crop Estimate Committee surprised the market with an upward revision of 6% in sunflower seed production from the previous estimate to 870 095 tonnes. This is 15% higher than the previous season due to an increase in area plantings, as well as higher yields.

The upward revision was Free State, Limpopo and North West provinces, with the crops currently estimated at 478 500 tonnes, 81 000 tonnes and 304 500 tonnes, respectively. These provinces collectively produce 99% of South Africa’s sunflower seed.

Initially, there were fears that lower yields of between 0.6 and 0.7 tonnes per hectare in areas that planted late in the season could weigh on the overall crop, but that proved to be untrue.

This essentially means that South Africa will be a net exporter of sunflower seed this season, with exports estimated at 300 tonnes. In July, South Africa exported 8 tonnes of sunflower seed to Swaziland and Namibia. This brought the country’s 2017/2018 sunflower seed exports to 117 tonnes. About 69% went to Swaziland, 19% to Botswana and 12% to Namibia.

SAFEX Beef:

At the risk of sounding like a broken record, it was again a quiet day in the SAFEX beef carcass market. The price remained flat at R46.00 per kilogramme due to thinly traded volumes. This means that SAFEX beef carcass prices could differ from physical market prices.

Apart from the aforementioned developments, the beef industry is still in a rebuilding process after the 2015/2016 El Niño-induced drought. The most recent data from the Red Meat Levy Admin shows that South African farmers slaughtered 203 647 head of cattle in July 2017, down 6% from June 2017.

This is 13% lower than the corresponding period last year. Developments will be closely monitored over the coming months in order to determine the impact on prices.

Fruit:

The fruit market closed on a mixed footing in yesterday’s (29 August 2017) trade session. The prices of bananas and oranges were up by 13% and 5% from the previous day (28 August 2017), closing at R4.54 per kilogramme and R3.40 per kilogramme, respectively. This was on the back of lower stocks of 343 771 tonnes of bananas and 151 370 tonnes of oranges.

The price of apples was down by 3% from the previous day, closing at R7.28 per kilogramme. This could be short lived due to relatively lower stocks of 248 357 tonnes, down 15% from the previous day (27 August 2017).

Find the full report here.

Find previous reports here.

 

 

   

 

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