Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
The winter wheat crop is in fair condition in some parts of the Western Cape following the past few weeks’ showers. This was, however, insufficient to replenish soil moisture. In the Free State province, the crop is in fair to poor condition due to persistent dry conditions.
The crop could start to pollinate within the next two weeks, which means there is an urgent need for higher rainfall to aid this process. Unfortunately, the weather forecast for the next two weeks shows a possibility of dry and cool conditions throughout the dryland winter crop growing areas of South Africa. This is not conducive for crops and increases the possibility of lower yields. Developments will be monitored.
In terms of dam levels, the recent update for the week ending 4 September 2017 shows that dams averaged 34% in the Western Cape, which is a 1% improvement from last week, but 28% lower than the corresponding period last year.
This week is data packed with weekly grain trade and producer deliveries, as well as the United States Department of Agriculture’s (USDA’s) World Agricultural Supply and Demand Estimates (WASDE) report due for release. Any notable changes in these particular data points could lead to movements in the grain and oilseed markets.
There are, however, positive prospects regarding the new season maize crop which should commence in October. A recent report from the South African Weather Service shows that the north-eastern parts of the country could receive above normal rainfall between October and December 2017. This coincides with the planting period and could aid seed germination.
The local weather bureau affirmed its view of a normal season in 2017/2018. “The El Niño Southern Oscillation phenomenon is now likely to have no specific influence during the coming summer months over South Africa,” said the South African Weather Service.
The data calendar for the rest of the week (ending 15 September 2017) is fairly light, and is an off season period with not much activity in the fields. Therefore, market performance will again be guided largely by the Chicago soya bean price and domestic currency movements during the next few days.
In global markets this morning (11 September 2017), the Chicago soya bean price was down by 1.14% from levels seen at midday Friday (8 September 2017) owing to large global supplies.
The weather remains a primary focus in the United States (US) soya bean market as wet conditions could support the kernel fill process of crop development. Weather models currently show a possibility of showers in the central and western parts of the Midwest, with other areas set to remain cool with scattered showers.
The recent rainfall in some parts of the Midwest did not lead to notable improvement in crop conditions. Evidently, at the beginning of last week (4 September 2017), only 61% of the crop rated good/excellent, unchanged from the previous week (ending 1 September 2017), but 12% lower than the same period last year. The USDA will release an update this evening as part its weekly crop progress report.
Recent data from Russia’s Ministry of Agriculture shows that the country harvested 99 100 hectares of soya beans last week, with 189 200 tonnes collected thus far. Yields are estimated at 1.9 tonnes per hectare, which is 5% higher than the previous season’s yield.
It is an off season period for South Africa’s sunflower seed and this week’s calendar is light with no major data releases. Therefore, 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 saw a fairly quiet trade session on Friday (8 September 2017), characterised by thinly traded volume. As a result, prices remained flat at US$404 per tonne.
In terms of production, the European Commission revised down its sunflower seed production estimate by 3% from the previous one to 8.7 million tonnes. This is partly due to expected lower yields in some areas of the EU, such as Romania and Hungary. With that said, this season’s crop is 1% higher than the 2016/2017 one of 8.6 million tonnes.
Similar to the EU market, the Black Sea sunflower oil market remained flat in Friday’s trade session, closing at US$779 per tonne due to thinly traded volumes.
The harvest process is underway across the Black Sea region. Data from Russia’s Ministry of Agriculture shows the country harvested 197 300 hectares last week (ending 8 September 2017), with 423 400 tonnes collected thus far. The process could gain momentum this week due (ending 15 September 2017) to expected dry and cool weather conditions.
The South African potato market lost ground during Friday’s (8 September 2017) trade session with the price down by 3% from the previous day (7 September 2017), closing at R39.43 per pocket (10kg). These losses were partly on the back of relatively large stocks of 849 679 pockets (10kg) at the start of the session.
During the trading session, the market saw an uptick in deliveries on the back of ongoing harvest activity. This subsequently led to an 11% increase in daily stocks to 946 022 pockets (10kg).
The fruit market ended the day mixed on Friday’s (8 September 2017) trade session. The price of oranges was up by 1% from the previous day (7 September 2017), closing at R2.81 per kilogramme due to strong buying interest.
The prices of apples and bananas were down by 6% and 2% from the previous day, closing at R7.50 per kilogramme and R5.81 per kilogramme, respectively. This was partly on the back of large stocks of 256 956 tonnes of apples, up by 25% from the previous day and 266 186 tonnes of bananas, up by 30% from the previous day.