Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The weather remains a primary focus in the market as planting activity continues across the country. The next two weeks should bring showers in the maize belt, which bodes well for the new season crop as it will improve soil moisture. However, there could be planting delays, particularly in the eastern parts of the country where the optimal maize planting window has narrowed.
From a trade perspective, last week’s (ending 3 November 2017) maize exports were disappointing. South Africa exported only 16 062 tonnes of maize, which is well below the previous week’s (ending 27 October 2017) exports of 63 326 tonnes. About 65% of these exports were yellow maize, with 35% being white maize.
The leading buyer was Japan with a share of 35%, all yellow maize. Trailing Japan was Botswana with a share of 10%, largely white maize. This placed South Africa’s 2017/2018 total maize export volume at 1.5 million tonnes, which equates to 68% of the season’s export forecast of 2.2 million tonnes. About 66% of the exported 1.5 million tonnes was yellow maize, with 34% being white maize.
The winter wheat harvest process should continue with minimal interruptions in the Western Cape during the next eight days. As we set out in our note on Monday (6 November 2017), the yields in the Southern Cape and Overberg regions have been disappointing thus far, but the quality is in fair condition.
The week ending 23 November 2017 could bring showers across the Western Cape, which could slow the harvest process. Given that the expected rainfall varies between 16 and 25 millimetres, the wheat quality might not be affected.
Overall, rainfall will be a welcome development given that the province’s dam levels are critically low. The update for the week ending 30 October 2017 shows that Western Cape dams averaged 37%, which is 23% lower than the same period last year.
From a trade perspective, South Africa imported 82 712 tonnes of wheat in the week ending 3 November 2017, about 41% from Lithuania, 35% from the United States (US) and the balance from Romania and Ukraine. The 2017/2018 marketing season’s wheat imports stand at 393 947 tonnes. This equates to 22% of the seasonal import forecast of 1.8 million tonnes.
Although a net importer of wheat, South Africa continues to export wheat to regional markets. The fifth batch of exports this season went to Botswana, totalling 33 tonnes. This placed the total exports for the 2017/2018 season at 1 614 tonnes. There are likely to be more exports to regional markets during the coming months.
The weather forecast continues to paint an optimistic picture across South Africa’s soya bean producing provinces. The next two weeks could bring widespread rainfall, which bodes well for the 2017/2018 production season, as it will improve soil moisture which will subsequently benefit the crops.
With very little on the data calendar this week, the price movements during the next few days will be driven largely by developments in the currency market, as well as the Chicago soya bean market performance.
In global markets this morning (8 November 2017), the Chicago soya bean price was up by 0.20% from levels seen at midday yesterday (7 November 2017), partly supported by talks of small yields in some parts of the US Midwest.
There are hints in the market that the United States Department of Agriculture (USDA) might revise down its 2017/2018 soya bean production estimates for the US due to disappointing yields in some areas. More details on this will be out on Thursday (9 November 2017) evening. Last month (October), the agency estimated the US 2017/2018 soya bean harvest at 121 million tonnes, up by 3% year-on-year.
Yesterday (7 November 2017) the South African potato market managed to claw back some of its recent losses with the price up by 2% from the previous day (6 November 2017), closing at R37.92 per pocket (10kg). The commercial buying interest and relatively lower stock of 846 048 tonnes (10kg) at the beginning of the session were the key drivers of the market.
However, during the session, the market saw an uptick in deliveries as harvest activity picks up after a quiet weekend. This subsequently led to a 3% increase in daily stocks to 874 777 pockets (10kg).
Yesterday (7 November 2017) the fruit market ended the day on a mixed footing. The price of oranges was down by 1% from the previous day (6 November 2017), closing at R6.43 per kilogramme. This followed a 79% increase in daily stocks to 91 857 tonnes.
The prices of apples and bananas were up by 12% and 1% from the previous day, closing at R7.80 and R7.63 per kilogramme, respectively. The strong commercial buying interest and relatively lower stocks of 277 201 tonnes of apples and 276 487 tonnes of bananas were the key drivers of the market.