Agbiz Morning Market Viewpoint on Agri-Commodities: 05 June 2017.

South African Agricultural Commodities Weekly Wrap.
June 2, 2017
Agbiz Morning Market Viewpoint on Agri-Commodities: 06 June 2017.
June 6, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 05 June 2017.

Highlights in today’s morning note

Maize:

Harvest is almost complete in the irrigation maize producing areas of the country, whereas in dryland areas the process is still at initial stages. A recent survey by Grain SA shows that in Mpumalanga province, about 20% of the maize crop had already been harvested in the week ending 2 June 2017, with yields well above average.

At the same time, 35% of Kwa-Zulu Natal maize crop had already been harvested. In the Eastern Cape, the harvest is in full swing with yields reportedly above average. In the Free State province, the harvest process is still at initial stages, with 10% – 20% of the crop harvested in the eastern parts of the province by the end of last week, 2 June 2017. Overall, the forecast warm and dry weather within the next two weeks across the South African maize-belt will most likely add momentum to the harvest process.

On the global front – this morning, the Chicago maize market was up 1.08% from levels seen at midday Friday owing to spillover support from the soybean market.

Elsewhere, the European Commission forecasts EU’s 2017/18 maize production at 64.2 million tonnes, which is 6% higher than the previous season. This is on the back of an expected uptick in acreage, as well as favourable weather conditions.

Wheat:

The weather forecast for the week shows a possibility of rainfall across the central and western parts of the Western Cape and Northern Cape provinces, which could be beneficial for winter wheat crops. Although it’s dry the winter wheat farmers in the Western Cape managed to plant roughly 80% to 90% of the crop which will benefit greatly if the forecast rainfall materialises.

With that said, the long-term weather forecast is still concerning, it shows a possibility of drier and warm conditions across the country, which is not conducive for winter wheat growing areas that need moisture, particularly the Western Cape province.

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 .

On the global front – this morning, the Chicago wheat market was up by 0.93% from levels seen at midday Friday. This comes after last week’s US wheat sales reached 810 304 tonnes, well above expectations.

The US farmers have made notable progress regarding spring wheat plantings. Last week they had planted 96% of the intended area for spring crops. However, the weather remains a key risk in the market as it could affect the growing conditions of the crop, as well as winter wheat quality. As a result, the forecast rainfall around the Midwest this week remains a concern.

Elsewhere, recent data from the European Commission shows that EU’s 2017/18 wheat production could reach 141.3 million tonnes which is 5% higher than the previous season. This is on the back of an increase in area plantings, as well as expected favourable weather conditions.

Soybeans:

Soybean harvest is nearly complete across the South Africa, with exceptional yields recorded in many places, which supports the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes. The forecast dry and warm weather this week should allow the areas that have not completed harvesting to do so smoothly.  

In global markets – this morning Chicago soybean price was up 0.98% from levels seen at midday Friday, largely supported by strong global demand. 

Last week, the US weekly soybean export sales reached 610 200 tonnes, well ahead of market expectations of 400 000 tonnes, despite the talks that China cancelled some import orders.

The weather remains a key risk in the US soybean market, with the forecast for the next eight days showing a possibility of wet conditions which could possibly slow planting activity. At the beginning of last week, the US had planted 67% of the intended 36.35 hectares for this season, which is 4% behind last year’s pace. About 37% of the crop has already emerged, compared to 19% last week. This evening the USDA will release an update in its crop progress report.

Sunflower seed:

Sunflower seed harvest is almost complete across many parts of the country. A recent survey by Grain SA shows that in the North West province, about 90% of sunflower seed had already been harvested in the week ending 2 June 2017. The yields were marginally above average due to diseases such as alternaria and sclerotinia that affected the crop earlier in the season.

The north-western parts of the Free State province have made similar progress, with 90% of the crop already harvested and average yields were achieved. In the VKB area of the Free State province, sunflower seed harvesting is complete. Meanwhile, in the OVK area, also in the eastern Free State, harvesting was at 60% complete on the 2 June 2017.  Overall, the yields obtained so far suggest that the total crop could meet the National Crop Estimate Committee’s estimate of 853 470 tonnes, which is up 13% from the previous season.

From a global perspectiveon Friday, the EU’s sunflower seed market saw a quiet session with prices unchanged from the previous day, closing at US$406 per tonne. The European Commission, in its monthly report, left the EU’s 2017/18 sunflower seed production estimate unchanged at 9.1 million tonnes, which is 6% higher than the previous season. 

The Black Sea sunflower oil market also saw a quiet session with prices unchanged from the previous day, closing at US$735 per tonne. Planting of the new season crop is underway. Russia had planted 6.7 million hectares of sunflower seed on the 29 May 2017, which is equivalent to 93% of the intended area. With that said, the forecast rainfall this week could cause planting delays. 

Potatoes:

The South African potatoes market saw marginal losses during Friday’s trade session with the price down 0.50% from the previous day, closing at R30.08 per bag (10 kg bag).

These losses were largely on the back of an increase in stocks. The day started off with stocks at 897 186 bags (10 kg bags) which is 3% higher than a previous day. During the trading session, the increase in deliveries on the back of ongoing harvest lifted the figure to 1.2 million bags (10 kg bags), a 35% daily uptick.

SAFEX beef carcass:

On Friday, the SAFEX beef market ended the week on a quiet note with prices unchanged from the previous day, closing at R46.00 per kilogramme due to limited participation at the stock exchange. 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 recent data from the Red Meat Levy Admin shows that South African farmers slaughtered 193 373 head of cattle in April 2017, which is 19% lower than the previous month and the corresponding period last year.

SA Fruit:

The fruit market saw widespread gains during Friday’s trade session with lower stocks and strong buying interest underpinning the market. The apple price was up 2% from the previous day, closing at R6.53 per kilogramme. This follows a 24% decline in daily stocks to 214 660 tonnes.

The bananas market gained 8% from the previous day, closing at R6.33 per kilogramme due to relatively lower stocks of 204 438 tonnes. Lastly, the oranges market gained 1% from the previous day, closing at R2.25 per kilogramme, largely supported by strong buying interest, which led to relatively lower stocks of 583 831 tonnes.

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