Agbiz Morning Market Viewpoint on Agri-Commodities: 05 April 2017  

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Agbiz Morning Market Viewpoint on Agri-Commodities: 05 April 2017  

Weather:

The weather forecast shows a possibility of light showers across South Africa within the next two weeks. The forecast rainfall varies between 16 and 50 millimetres. On the one hand, the wet conditions do not bode well with summer crops that are maturing, as they mainly need dry and warm conditions at these stages of development, while late-planted crops could still benefit from these expected showers, on the other.  Moreover, winter crop growing areas could also benefit from wet conditions, with plantings set to commence over the next few weeks.

 

Maize:

Yesterday the South African maize market maintained the previous day’s gains with support coming from the weaker Rand against the US Dollar, as well as strong buying interest.

From a trade perspective, although South Africa is set to regain its status as a net exporter of maize in 2017/18 marketing year, the country remains a net importer of maize in the 2016/17 marketing year, which ends on the 30 April 2017. In the week ending 31 March 2017, South Africa imported 42 216 tonnes of maize all from the US. About 67% was yellow maize and 33% was white maize. Overall, South Africa’s 2016/17 total maize imports stand at 2.28 million tonnes, which is 99% of the seasonal import forecast.

In the same week, South Africa exported 25 968 tonnes of maize to regional markets (Africa), with 87% share being white maize and 13% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 753 882 tonnes (63% is white maize and 39% is yellow maize). Looking ahead, South Africa’s 2017/18 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. This comes on the back of an expected rebound in domestic production.

 

On the global front – this morning Chicago maize price was down by 1.09% from the level seen at midday yesterday due to improved weather for US maize planting.

 

Wheat:

The South African wheat market gained ground during yesterday’s trade session, with support coming from the weaker Rand against the US Dollar, as well as strong buying interest.

From a trade perspective, this was a quiet week, with no imports reported. The last imports were in the week ending 10 March 2017, coming in at 33 699 tonnes, all from Germany. This is 49% lower than the previous week’s imports. Overall, South Africa’s 2016/17 total wheat imports stand at 390 550 tonnes, which is 26% of the seasonal import forecast (1.5 million tonnes).

Although a net importer of wheat, South Africa continues to export wheat to regional markets. In the week ending 31 March 2017, total exports reached 494 tonnes, all went to regional markets. Overall, South Africa’s 2016/17 total wheat exports currently stand at 50 306 tonnes. About 42% of this went to Zimbabwe, 9% to Namibia, 9% to Botswana, 25% to Lesotho, 6% to Mozambique, 6% to Zambia and 3% to Swaziland.

On the global front – this morning Chicago wheat price was down by 0.23% from the level seen at midday yesterday owing to large global supplies.

 

Soybean:

Although the daily price changes seem marginal, the soybean spot price has gained 3% from the same period last week due to the weaker Rand against the US Dollar. Besides these market movements, there were no other major events in the domestic market. The expected rainfall within the next two weeks could cause harvest delays in areas that have already started with the process. Meanwhile, the late plantings ones could still benefit from rainfall.

In global markets – this morning Chicago soybean price was up by 0.43% from the level seen at midday yesterday due to strong buying interest.

In South America, soybean production prospects remain positive. Informa Economics revised up its estimate for Argentina’s 2016/17 soybean production by 2.5 million hectares to 57.5 million tonnes. This is 2% higher than the previous season. At the same time, Brazil’s 2016/17 soybean production estimate was revised up by 3.0 million tonnes to a record 111.0 million tonnes. This is 16% higher than the previous season.

Harvest activity is underway in Brazil. However, the expected rainfall this week could cause harvest delays. On the fourth of April 2017, Brazilian farmers had harvested 80% of their soybean crop, ahead of the corresponding period last year.

 

Sunflower seed:

The South African sunflower seed market closed in positive territory during yesterday’s session, with the weaker Rand against the US Dollar still giving gains to the market. Moreover, a downward revision of the national crop production estimate also added bullish pressure to the market .

Although the day to day price adjustments seem marginal, sunflower seed spot price has gained roughly 9% from the same period last week. The key driver of this increase has largely been the weaker domestic currency against the US Dollar.

Last month, we noted concerns of sclerotinia disease in some sunflower seed fields around Lichtenburg town of the North West province. However, the persistent dryness seems to have improved conditions across many farms in the area and crops are maturing well. Worth noting, however, is that the areas that planted late still need rainfall. Therefore, the expected showers this week could be beneficial for the region.

 

SA fruit:

Yesterday the Johannesburg Fresh Produce Market ended the day mixed. The apple price remained in negative territory due to large supplies of 284 244 tonnes, which is 60% higher than the previous day.

Meanwhile, the bananas market saw marginal gains of 0.98% from the previous day’s level, closing at R8.25 per kilogramme, with support coming from strong buying interest.

Lastly, the oranges market gained 32.32% from the previous day, closing at R3.48 per kilogramme from the previous day. This followed a 63% decline in daily stock levels to 101 133 tonnes (owing to strong buying interest).

 

Potatoes:

The South African potatoes market saw substantial gains during yesterday’s trade session. This was mainly on the back of lower stock levels of 981 261 bags (10 kg bags), which is 25% lower than the previous day.

During the session, the market saw a further decline in deliveries due to slow harvest activity and led to a 10% decline in deliveries to 883 415 bags (10 kg bags).

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