Highlights in today’s morning note
The weather forecast has cleared up across the South African maize-belt. This is an opportunity for farmers in the eastern regions of the country to continue with planting activity or soil preparation.
With that said, widespread rainfall could return in the week ending 27 October 2017. This might slow the planting activity, which will not be an issue as the optimal planting window in the eastern parts of the country is open until mid-November.
The key data to watch today is the USDA’s World Agricultural Supply and Demand Estimates report. This will entail the agency’s forecast for South Africa’s 2017/18 maize production. As early as last month, the USDA had already projected South Africa’s new season crop at 12.5 million tonnes. This is roughly in line with the long-term production trend (discounting the drought years, 2015-16).
Although the focus is in the new production season, some farmers continue to deliver old season maize to commercial silos. The total maize deliveries were reported at 32 228 tonnes in the week ending 06 October 2017, which is a 50% decline from the previous week’s deliveries. About 64% of this was white maize, with 36% being yellow maize.
Overall, South Africa’s 2017/18 total maize deliveries for “week 1 to 23” currently stand at 14.76 million tonnes. Of this total, 60% is white maize with 40% being yellow maize.
There are no new major developments on the weather front for the Western Cape province. The most recent updates show a possibility of light showers across the coastal areas the province, which implies that a large part of the crop could be strained for some time.
As indicated in our previous note, the persistent dryness increases a chance of downward revision of the current national crop estimate of 1.7 million tonnes. On 26 October 2017, the National Crop Estimate Committee will release its official production estimates update.
On the global front – This morning the Chicago wheat price was up by 0.46% from levels seen at midday yesterday due to bargain-buying after prices reached lower levels in the past few days.
Apart from that, the focus is on today’s USDA World Agricultural Supply and Demand Estimates report. In last month’s update, the agency estimated the US 2017/18 wheat production at 47 million tonnes, down by 24% from the previous season.
At the moment, the forecast rainfall in the north-eastern parts of the Midwest could improve soil moisture and benefit the winter wheat crops. At the beginning of this week, about 48% of the intended winter wheat acreage had already been planted, which is 9-points behind the corresponding period last year. Moreover, about 25% of this crop had already emerged, which is 7-points behind the same period last year.
The weather forecast has cleared up across the country, with the exception of the coastal areas. This will present some breathing space for farmers in the eastern areas of the country to continue with early planting activity .
In global markets – This morning the Chicago soybean price was up by 0.31% from levels seen at midday yesterday due to concerns that dryness in Brazil could reduce the 2017/18 soybean crop.
Conab revised up its estimate for Brazil’s 2017/18 soybean acreage by 555 000 hectares to 35 million hectares. This is partially on the back of an expected decline in maize plantings due to price competitiveness and weather challenges.
With that said, the unfavourable weather conditions could lead to relatively lower yields. As a result, Conab placed the country’s 2017/18 production is set to decline by 5% year-on-year to 108 million tonnes. This is in line with the International Grains Council view and slightly higher than the USDA’s view of 107 million tonnes.
The South African sunflower seed market continued on its roller-coaster ride in yesterday’s trade session as the relatively stronger domestic currency and prospects of an increased acreage in the new season underpinned the market.
There are ideas in the market that sunflower seed price competitiveness and good weather could tempt farmers to switch some acreage from maize to this particular crop. More information on this will be available on 26 October 2017 when the National Crop Estimate Committee releases its “summer crop intentions to plant” data.
In the global market – Favourably dry and warm weather conditions in the Black Sea have allowed for good progress in harvest activity. On 10 October 2017, Russia and Ukraine had harvested 40% and 85% of this season’s sunflower seed crop, respectively.
Elsewhere, the harvest process is also underway in the US. At the beginning of this week, 6% of the area had already been harvested. However, this is 5-points behind the corresponding period last year and 6-points behind a 5–year average progress.
After having a good run in the past few months, the South African potato market pulled back during yesterday’s trade session with the price down by 8% from the previous day, closing at R51.59 per pocket (10kg). These losses followed an uptick in stocks to 524 473 pockets (10kg bag) at the start of the trading session.
Moreover, during the session, the market saw an uptick in deliveries on the back of ongoing harvest process. This subsequently led to a 41% increase in daily stocks to 736 965 pockets (10kg bag).
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