Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The United States Department of Agriculture (USDA) lifted its estimate of South Africa’s maize production by 3% from last month (August) to a record level of 17.15 million tonnes. This comes at the back of an increase in area plantings, as well as expected higher yields due to favourable weather conditions.
However, it is worth noting that USDA’s crop estimate is not directly comparable to the South African Crop Estimate Committee’s figures due to two basic reasons: (1) the marketing years are different, (2) the USDA estimates the overall national maize production, while the Crop Estimate Committee focuses only on commercial maize production. Differences aside, both agencies are painting an optimistic picture for South Africa’s maize supplies this year.
From a trade perspective, last week’s (ending 8 September 2017) maize exports were disappointing. South Africa exported only 8 785 tonnes of maize, which is well below the previous week’s (ending 1 September 2017) export of 82 760 tonnes. About 73% of these exports were yellow maize, with 27% being white maize.
This week’s exports placed South Africa’s 2017/2018 total maize export volume at 1.19 million tonnes, which equates to 54% of the season’s export forecast of 2.2 million tonnes. About 66% of the exported 1.19 million tonnes is yellow maize, with 34% being white maize.
Although the short term weather forecasts present a possibility of continued dry conditions, the long term forecasts show some improvements with the possibility of showers of between 16 and 35 millimetres in the week ending 28 September 2017. This will not be sufficient to replenish soil moisture but will be a welcome relief.
From a trade perspective, South Africa imported 16 904 tonnes of wheat in the week ending 8 September 2017, all from Australia. This is 34% lower than the previous week’s (ending 1 September 2017) imports. Overall, South Africa’s 2016/2017 total wheat imports stand at 816 324 tonnes, which equates to 82% of the seasonal import forecast.
While a net importer of wheat, South Africa continues to export wheat to regional markets. The total exports were recorded at 176 tonnes last week, all to Namibia. This brought the country’s 2016/2017 total wheat exports to 90 776 tonnes.
On the global front this morning (13 September 2017), the Chicago wheat price was up by 1.70% from levels seen at midday yesterday (12 September 2017) due to persistent dry conditions in Australia. The Australian government lowered its estimate of the country’s 2017/2018 wheat crop to 21.64 million tonnes.
The relatively weaker Rand against the US Dollar did less to support the domestic soya bean market in yesterday’s (12 September 2017) trade session. The market remained under pressure throughout the day with bearish sentiment emanating from the lower Chicago soya bean prices and an increased domestic selling.
In global markets this morning (13 September 2017), the Chicago soya bean price was down by 1.15% from levels seen at midday yesterday owing to large global supplies.
Although the United States (US) soya bean crop is not in good shape, the USDA lifted its estimate for the 2017/2018 production by 1% from the previous month (July) to 120.59 million tonnes. This is 3% higher than the 2016/2017 season’s harvest. However, the carryover stocks fell from 12.94 million tonnes in August to 12.93 million tonnes in September 2017. This is still 38% higher than the 2016/2017 season.
From a global production perspective, the USDA boosted its 2017/2018 global soya bean production estimate by 0.3% from the previous month to 348.44 million tonnes. However, this is 1% lower than the previous season’s crop. In the same season, the global carryover stocks were revised down to 97.53 million tonnes from 97.78 million tonnes in August 2017. This is 3% higher than the 2017/2018 season.
There is not much happening in the fields as it is an off season period and this week’s domestic sunflower seed calendar is light with no major data releases. As a result, the market will most likely be driven by the domestic currency movements and traded volumes in the local market.
In the global market the European Union’s (EU’s) sunflower seed market lost ground in yesterday’s (12 September 2017) trade session with the price down by 0.50% from the previous day (11 September 2017), closing at US$402 per tonne. These losses came on the back of lower vegetable oil prices.
There is generally some bearish sentiment in the EU’s sunflower seed market which emanates from expected large sunflower seed production. The crop is in fair condition across many countries in the region. The European Commission forecasts the 2017/2018 sunflower seed production at 8.7 million tonnes, which is 1% higher than the previous season and a five-year average crop.
The largest contributors to the EU’s 2017/2018 sunflower seed production are Bulgaria, Romania, Hungary and France with production estimated at 1.94 million tonnes, 1.92 million tonnes, 1.82 million tonnes and 1.25 million tonnes, respectively.
The South African potato market lost ground in yesterday’s (12 September 2017) trade session with the price down by 2% from the previous day (11 September 2017), closing at R38.08 per pocket (10kg). These losses were partly on the back of relatively large stocks of 708 221 pockets (10kg) at the start of the session.
During the trading session, the market saw an uptick in deliveries owing to ongoing harvest activity. This subsequently led to a 30% increase in daily stocks to 923 458 pockets (10kg).
The fruit market ended the day mixed in yesterday’s (12 September 2017) trade session. The prices of apples and oranges were up by 3% and 5% from the previous day (11 September 2017), closing at R7.46 per kilogramme and R3.52 per kilogramme, respectively. These gains were partly on the back of strong buying interest and lower producer deliveries which subsequently led to a decline in daily stocks.
The price of bananas fell by 9% from the previous day, closing at R5.34 per kilogramme. This followed a 58% uptick in daily stocks to 317 288 tonnes due to higher producer deliveries.