Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in is update on agricultural commodity markets.
South African maize exports were disappointing in the first week of this month. The country exported 31 788 tonnes of maize in the week ending 7 July 2017, compared to 113 111 tonnes the previous week (ending 30 June 2017).
About 71% of this was yellow maize and 29% was white maize. Moreover, 62% of total maize exports went to Japan (all yellow maize). Trailing behind Japan was Botswana, accounting for a 17% share of weekly exports. South Africa’s 2017/2018 total maize exports currently stand at 461 104 tonnes, which is 21% of the season’s forecast exports of 2.2 million tonnes.
This comes as no surprise as the past few weeks’ exports were boosted by large volumes of non-GM maize to Kenya. Given that Kenya still has restrictions on the importation of GM maize, South Africa’s participation in that market will most likely be limited.
Other traditional markets for South Africa’s white maize, such as Zimbabwe and Malawi had a good season which led to large domestic supplies. This means there will be a weak demand for white maize in the African region this year. This will essentially keep South African white maize prices under pressure for some time.
Recent weather updates show a possibility of light showers in some parts of the Western Cape within the next eight days. However, this will not be sufficient to cause a notable improvement on crops as soil moisture is very lower across the province.
Although the Western Cape is largely dry land production, it is important to look at dam levels data as it gives an indication of soil moisture. The recent update for the week ending 10 July 2017 shows that dams were at 24% full, compared to 45% in the same period last year.
With regards to trade, South Africa imported 16 501 tonnes of wheat in the week ending 7 July 2017, all from Russia. This brought South Africa’s 2016/2017 total wheat imports to 609 034 tonnes, which is 41% of the seasonal import forecast of 1.5 million tonnes.
While a net importer of wheat, South Africa continues to export wheat to regional markets. Exports were recorded at 932 tonnes in the week ending 30 June 2017, all to Botswana and Namibia. Overall, South Africa’s 2016/2017 total wheat exports currently stand at 86 817 tonnes.
The harvesting process is complete with excellent yields across the country. This supports the National Crop Estimate Committee’s view of a record crop of 1.34 million tonnes, which is 81% higher than the previous season. The Committee will release an update on 26 July 2017.
In global markets this morning, the Chicago soya bean price was up by 0.89% from levels seen at midday yesterday (11 July 2017) due to unfavourable weather conditions in parts of the United States (US) Midwest.
The weather remains a key focus in the US soya bean market. The warm and dry conditions of the past few days negatively affected the crop. Yesterday’s (11 July 2017) data from the United States Department of Agriculture (USDA) showed that only 62% of the soya bean crop was rated good/excellent. This is 7% lower than the same period last year.
The latest weather models show improvement in some parts of the Midwest, with prospects of light scattered showers. However, the region needs effective rainfall to improve soil moisture as the crop approaches the pollination stage of growth.
Overall, the International Grain Council forecasts the US 2017/2018 soya bean production at 115.5 million tonnes, which is 2% lower than the previous season.
Later today the USDA will release its World Agricultural Supply and Demand Estimates report for July 2017. This report will give an indication of the government’s view of the 2017/2018 soya bean crop production.
The forecast warm and drier weather conditions within the next two weeks could add momentum to harvest activity in areas that have not yet finalised the process, particularly the western parts of the North West province. South Africa’s sunflower seed production is estimated at 821 970 tonnes, which is 9% higher than the previous season.
From a global perspective, there was nothing much happening in the European Union (EU) sunflower seed market in yesterday’s (11 July 2017) session. Prices remained unchanged from the previous day (10 July 2017), closing at S$399 per tonne.
The Black Sea’s sunflower oil market posted marginal gains of 0.13% from the previous day (10 July 2017) to US$744 per tonne, with support coming from higher crude oil prices.
Recent data from UkrAgroConsult shows that Ukraine planted 6.3 million hectares of sunflower seed this season, which is 2% lower than the 2016/2017 season. Therefore, production is set to decline by 3% from the 2016/2017 season to 14.0 million tonnes. The crop is in fair condition, with weather models showing signs of possible showers this week. This bodes well for the crop as it needs moisture ahead of the pollination stage of development.
The South African potato market managed to claw back some of the previous day’s (10 July 2017) losses with the price up by 1%, closing at R28.81 per bag (10 kg). These gains followed a 15% decline in stocks at the end of the previous day’s (10 July 2017) session.
However, during yesterday’s (11 July 2017) session, the market saw an increase in deliveries on the back of ongoing harvest activity. This subsequently led to a 17% uptick in stocks to 1.09 million bags (10kg). This implies that the gains in prices will probably be short lived.
The fruit market ended the day on a mixed footing in yesterday’s (11 July 2017) trade session, with the apple price up by 1% from the previous day (10 July 2017), closing at R6.73 per kilogramme. These gains were largely on the back of strong buying interest.
The banana price was down by 5% from the previous day, closing at R5.67 per kilogramme. This was on the back of relatively large stocks of 172 679 tonnes.
The orange price was down by 12% from the previous day closing at R2.43 per kilogramme. The losses in the orange market could soon be reversed due to lower stocks of 205 046 tonnes, which is a 50% decline from the previous day’s (10 July 2017) stocks.