Agbiz Morning Market Viewpoint on Agri-Commodities: 02 May 2017.

Highlights in today’s morning note

Wheat:

Weather forecast for the next two weeks show no signs of rainfall across the Western Cape province, which could stall planting activity since the soil moisture is low across the province. Planting typically starts around April and continues until July. So far, there’s been little activity in the fields. Moreover, dam levels in the province are also low, estimated at 21% full in the week ending 24th April 2017, compared to 30% in the corresponding period last year.

Fortunately, nearly half of South Africa’s wheat crop is under irrigation in the Northern Cape and Free State province, which should thrive well as dam levels in these respective provinces benefited from summer rainfall.

On the 24th April 2017, the dams in the Northern Cape were almost at capacity, at 98% full compared to 68% in the corresponding period last year. In the Free State province, dam levels were around 86% full, which is a third higher than the same period last year.

On the global front – this morning, Chicago wheat price was up by 7.95% from the level seen at midday Friday, after adverse weather raised more concerns for the crop that is already under stress.

Most parts of the US saw wet and snowy weather conditions over the weekend, which caused damage to winter wheat crops and also slowed planting processes. On the 30 April, the US had planted 31% of the targeted area for this season, which is 21% behind the corresponding period last year.

Maize:

Harvest is currently underway in areas that planted early in the season. So far, yields are reportedly above average, which supports the National Crop Estimate Committee’s view of a possible second-biggest crop on record. Weather forecasts for the next two weeks show a possibility of drier conditions across the South African maize belt, which is conducive to the harvest process.

Also worth noting is that the International Grains Council has recently revised its estimate for South Africa’s 2016/17 maize production upwards by one million tonnes from the previous estimate to 14.5 million tonnes. This is on the back of expected higher yields across many areas of the country.

The 2016/17 “marketing year” ended on the 30 April 2017, with South Africa a net importer of maize, estimated at 2.26 million tonnes. In the new marketing year, 2017/18, South Africa regains its status as a net exporter of maize. The total maize exports are estimated at 2.7 million tonnes. About 52% of this is set to be white maize and 48% to be yellow maize.

On the global front – this morning Chicago maize price were up by 2.78% from the level seen at midday Friday, due to unfavourable weather conditions in the US Midwest. Over the weekend, some parts of the US Midwest received high rainfall, which hindered planting activity. On the 30 April 2017, US farmers had planted 34% of the intended 36.4 million hectares, which is 9% behind the corresponding period last year.

Soybean:

Soybean harvesting is in full swing across South Africa and towards completion in some areas. So far, yields are reportedly above the national average of 1.6 tonnes per hectare, which supports the National Crop Estimate Committee’s view of a possible record crop. The weather forecast for the week shows a possibility of drier conditions, which should accelerate harvest activity.

In global markets – this morning Chicago soybean price was up by 2.11%from the level seen at midday Friday, also supported by fears that wet conditions could slow the planting processes.

Most parts of the US Midwest saw high rainfall over the past few days and the weather forecast shows a possibility of rainfall this week, which could slow planting activity. That said, on the 30 April 2017, US farmers had planted 10% of the targeted area, which is 3% ahead of the corresponding period last year .

Elsewhere, South America is likely to receive widespread showers this week, which could cause harvest delays in Brazil and Argentina. On the 28th April 2017, Brazilian farmers had harvested 96% of their soybean crop, ahead of the corresponding period last year. At the same time, Argentina’s soybean harvest was 35% complete, ahead of the same period last year.

Sunflower seed:

Sunflower seed harvest in underway, with yields so far reportedly below expectations in areas around Wesselsbron and Lichtenburg in the North West province. In areas where farmers had expected two tonnes per hectare, yields are only reaching one tonne per hectare. In part, this is due to the sclerotinia disease that was seen in the past few months.

In areas that planted late, the crop is at the advanced stages of maturation. Over the coming weeks, frost will remain a key concern for farmers. That said, if there is no frost until mid-May, the sunflower seed crop could finish off well this season. Overall, although the National Crop Estimate Committee revised down this season’s production estimate to 853 470 tonnes, we believe that there could be further downward revisions over the coming months..

RSA Potatoes:

On Friday, the South African potatoes market gained ground and closed in positive territory. The market was largely supported by strong buying interest, with the price up 1% from the previous day, closing at R28.16 per bag (10 kilogrammes).

However, these gains could be short lived due to higher stock levels. During the session, the market saw an uptick in deliveries on the back of ongoing harvest activity. This led to an 8% increase in daily stock levels to 1 1 106 251 bags (10 kg bags).

RSA Fruit:

On Friday, the Johannesburg Fresh Produce Market saw widespread losses due to relatively large stock levels. The apple price was down 6% from the previous day, closing at R6.83 per kilogramme, owing to higher stocks of 256 688 tonnes.

The bananas market lost 9% from the previous day, closing at R7.17 per kilogramme. These losses came on the back of a 79% daily uptick in stock levels to 271 458 tonnes (owing to increased deliveries).

The oranges market closed in negative territory, with the price closing at R2.91 per kilogramme. This was also on the back of relatively large stock levels of 381 664 tonnes (compared to levels around 200 000 tonnes in the past week).

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