Highlights in today’s morning note
The most recent weather updates show that the eastern, central and northern parts of South Africa could receive rainfall of between 20 and 80 millimetres within the next eight days (figure 1). This could benefit the summer crop growing areas. Meanwhile, the Western Cape province could remain dry and cool over the observed period which is not conducive for winter crops.
The weather is increasingly becoming a primary focus as the new season planting commences in the eastern parts of South Africa. The forecasts paint a positive picture of widespread showers across the maize belt within the next two weeks.
Although the forecast rainfall could possibly slow planting activity in the short term, it will replenish soil moisture which is conducive for the new season crop. The long-term weather forecasts also paint a positive picture, following the South African Weather Service’s report which indicated a possibility of above normal rainfall across the maize-belt between November 2017 and February 2018.
The persistent dryness in the Western Cape province could potentially worsen the crop conditions, which are already not in good shape in large parts of the province.
The aforementioned developments support the South African Supply and Demand Estimate Committee’s view that the country could see an uptick in wheat imports in order to fulfil the domestic needs.
Using the CEC’s view of 1.7 million tonnes of wheat production this season, the South African Supply and Demand Estimate Committee forecasts a 94% year-on-year increase in imports in the 2017/18 season to 1.8 million tonnes.
Within the continent, recent reports from the International Grains Council indicate that the Ethiopian government is looking for 400 000 tonnes of milling wheat from the optimal origin. Not of importance but interesting to note is that Mauritius recently bought 52 825 tonnes of wheat flour from the world market.
It is an off-season period with limited activity in the fields, therefore the market will remain relatively quiet in the near term. There are also no major data releases, which means the market performance will largely be guided by Chicago soybean price and domestic currency movements this week.
Farmers in the eastern parts of the country have already started preparing the soil for the 2017/18 summer grain and oilseed production season. For soybean, the planting window has already opened in Kwa-Zulu Natal province, but in most provinces, the planting window will only open in November and closes at the beginning of December.
Moreover, the weather prospects for the upcoming season remain positive with chances of above-normal rainfall in the eastern areas of the country, which should replenish soil moisture and benefit the crop.
The South African potatoes market started the week on a positive footing, with the price up by 4% from the previous day, closing at R51.73 per pocket (10kg). These gains were mainly on the back of relatively lower stocks of 722 238 pockets (10kg bag) at the start of the trading session.
During the session, the market saw a continued increase in commercial buying interest, coupled with a decline in deliveries on the back of slow harvest activity over the weekend. This subsequently led to a 38% drop in daily stocks to 449 556 pockets (10kg bag).
The fruit market was again mixed in yesterday’s trade session. The prices of apples and bananas were down by 7.1% and 6.9% from the previous day, closing at R6.78 per and R5.69 per kilogram, respectively. These losses followed an increase in daily stocks of apples and bananas to 231 765 and 253 893 tonnes, respectively.
Meanwhile, the oranges market gained 0.8% from the previous day, with the price closing at R5.36 per kilogram due to the lower stock of 53 463 tonnes.
Click below to read more recent reports by Wandile Sihlobo.