Highlights in today’s morning note
The weather forecast has drastically changed and currently shows a possibility light showers around the western parts of the Western Cape province within the next eight days. This bodes well with winter wheat growing areas of the province which urgently need rainfall to improve soil moisture.
The Western Cape province dams are critically low, estimated at 18% full in the week ending 29 May 2017. This shows the seriousness of the dry spell in the province.
With that said, the irrigation areas of Northern Cape and Free State provinces which plant nearly half of South Africa’s wheat crop could thrive well this season as dam levels in these respective provinces benefited from summer rainfall .
Some farmers continue to deliver the old-season wheat crop to commercial silos. In the week ending 26 May 2017, wheat deliveries were recorded at 778 tonnes, which is 5% lower than the previous week. Overall, South Africa’s 2016/17 total wheat deliveries for “week 1 to 34” currently stand at 1.85 million tonnes.
Harvest is almost complete in the irrigation maize producing areas of the country, whereas in dryland areas the process is still at initial stages. The forecast drier and warm weather within the next eight days should accelerate the process.
The South African farmers delivered 604 651 tonnes of maize to commercial silos in the week ending 26 May 2017, which is 91% higher the previous week’s deliveries. About 57% of this was white maize and 43% was yellow maize. This brought the country’s 2016/17 total maize deliveries for “week 1 to 4” to 1.43 million tonnes.
Recent data from the South African Supply and Demand Estimates Committee shows that the county’s 2017/18 total maize supplies could reach 16.05 million tonnes. This figure includes opening stock (at 1 May 2017) of 1.01 million tonnes, as well as expected commercial deliveries of 15.01 million tonnes. This is 31% higher than the previous season’s supplies.
The Committee does not expect any imports this season. The exports are set to reach 2.2 million tonnes, which is well below our expectations of 3.00 million tonnes. One of the key reasons for a relatively lower export estimate is an anticipated weak demand for white maize in the global market. Of the 2.2 million tonnes, white maize exports are set to only reach 870 000 tonnes.
The traditional white maize importers, African markets, are well supplied this season due to improvements in domestic production. Moreover, Zambia and Malawi will also have notable surpluses of white maize to add to regional supplies, which could present competition to South Africa. Essentially, this could lead to a huge carry-over stock of roughly 3.37 million tonnes, compared to just 1.09 million tonnes the previous season. These large carry-over stocks will most likely keep maize prices under pressure for some time.
Harvest process is almost complete across the country. Many areas harvested exceptional yields, which supports the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes. The weather forecast has cleared up and currently shows a possibility of dry and warm conditions within the next eight days which should accelerate harvest activity in the remaining areas.
Data from the South African Supply and Demand Estimates Committee shows that the country’s soybean supplies for the 2017/18 season could reach 1.29 million tonnes. This includes an opening stock (at 1 March 2017) of 84 792 tonnes, as well as commercial deliveries of 1.20 million tonnes. Overall, this is 20% higher than the previous season.
Moreover, the demand is projected at 1.18 million tonnes, also up 20% from the previous season. This includes 1.00 million tonnes of soybean for crush for oil and meal (oilcake), with the remainder set to be utilised in other uses. The exports for the 2017/18 season are estimated at 30 000 tonnes, well above the previous season’s exports of 6 745 tonnes.
Sunflower seed harvest is almost complete in areas that planted on time, particularly the western parts of the Free State province. Meanwhile, crops are still drying off in late planted areas, particularly the western parts of the North West province.
Although other crops have been realising exceptional yields this season, sunflower seed yields are expected to be just above average due to diseases such as alternaria and sclerotinia that affected the crop earlier in the season.
Recent data from the South African Supply and Demand Estimates Committee shows that the country’s sunflower seed supplies could reach 1.02 million tonnes this season (2017/18). This figure includes opening stock (at 1 March 2017) of 163 086 tonnes and commercial deliveries of 853 470 tonnes. This essentially means that this season’s supplies are 16% higher than the previous one.
There are no imports expected, while exports could reach 300 tonnes which will most likely be exported to neighbouring countries.
The South African potatoes market pulled back from the previous day’s levels with an increase in stocks underpinning the market. The price was down 4% from the previous day, closing at R30.23 per bag (10 kg bag).
From a stocks perspective, the day started off with 871 861 bags (10 kg bags) which is 16% higher than a previous day. During the trading session, the increase in deliveries on the back of ongoing harvest lifted the figure to 897 186 bags (10 kg bags), a 3% daily uptick.
SAFEX beef carcass:
The SAFEX beef market was a quiet session during yesterday’s trade session with limited participation at the stock exchange underpinning the market. With that said, the market sentiment in the beef market is slightly bullish due to easing slaughter activity, as farmers continue to restock their herds after a drought spell.
The data from the Red Meat Levy Admin shows that South African farmers slaughtered 238 097 head of cattle in March 2017, which is 6% lower than the corresponding period last year.
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