Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The National Crop Estimates Committee revised its 2017 wheat production estimate downwards by 4% from the previous month to 1.58 million tonnes. This is 17% lower than the previous season’s harvest. The notable decline was in the Western Cape, which is not surprising given the recent drought.
With that said, the province remains a key producer of South Africa’s wheat with a lion’s share of 43%. Trailing the Western Cape is the Free State and Northern Cape with a combined share of 38%. These particular provinces are mainly irrigation dominated, whereas the Western Cape is mainly rain-fed.
The expected drier weather conditions this week (ending 1 December 2017) suggest that there might be minimal improvements in dam levels, which are critically low. The update for the week ending 27 November 2017 shows that Western Cape dams averaged 35%, unchanged from the previous week, but 20% lower than the same period last year.
In terms of trade, South Africa imported 57 106 tonnes of wheat in the week ending 24 November 2017. About 81% of this was from Russia and 19% from Lithuania. This placed the 2017/2018 marketing season’s wheat imports at 519 988 tonnes, which equates to 29% 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 8th batch of exports this season was recorded at 530 tonnes. This placed total exports for the 2017/2018 marketing year at 3 098 tonnes. There’s likely to be more exports to regional markets over the coming months.
The weather forecast for the 2017/2018 maize production season remains favourable. The short-term outlook shows a possibility of widespread rainfall across the maize belt. Long-term forecasts from the South African Weather Service promise above normal rainfall between this month November 2017 and February 2018. If this materialises, the country stands a good chance of a fairly big harvest.
From a trade perspective, South Africa’s maize exports recovered from the disappointing levels observed in the week ending 17 November 2017. Last week (ending 24 November 2017), the country exported 33 260 tonnes of maize. About 79% was yellow maize, with 21% being white maize.
The leading buyer was Japan with a share of 68%, all yellow maize. Trailing Japan was Botswana with a share of 11%. This placed South Africa’s 2017/2018 total maize export volume at 1.6 million tonnes, which equates to 73% of the season’s export forecast of 2.2 million tonnes. About 67% of the exported 1.6 million tonnes is yellow maize, with 33% being white maize.
With the exception of Derby, Potchefstroom and Ventersdorp in the North West province, most sunflower seed growing areas of the country had a relatively cool and drier start to the week (ending 1 December 2017). However, forecasts for the next two weeks remain positive with a possibility of rainfall of between 20 and 80 millimetres.
At this point, the sunflower seed planting process is still at initial stages. However, this is not much of a concern, as the optimal planting window only closes in early January 2018. As indicated in our previous notes, the late start in planting essentially means that there could be relatively smaller early producer deliveries in the upcoming marketing season.
Apart from the aforementioned aspects, this week’s data calendar is fairly light, therefore price movements will be driven largely by developments in the currency market and traded volumes during the next few days.
The South African potato market gained ground in yesterday’s (28 November 2017) trade session with the price up by 11% from the previous day (27 November 2017), closing at R47.31 per pocket (10kg). These gains were mainly due to lower stocks of 629 453 pockets (10kg) at the beginning of the session.
However, during the session, the market saw a slight uptick in deliveries as the harvest activity picks up after a quiet weekend. This subsequently led to a 1% increase in daily stocks to 634 786 pockets (10kg).
The fruit market remained mixed in yesterday’s (28 November 2017) trade session. The apple and banana market managed to claw back the previous day’s (27 November 2017) losses and closed in positive territory. These gains followed an 11% and 2% respective decline in apple and banana daily stocks to 206 000 tonnes and 261 000 tonnes.
The price of oranges marginally declined by 2% from the previous day to R7.37 per kilogramme. These losses were mainly on the back of a 20% increase in daily stocks to 59 000 tonnes.