Agbiz Morning Market Viewpoint on Agri-Commodities: 07 March 2017

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Agbiz Morning Market Viewpoint on Agri-Commodities: 07 March 2017

Highlights in today’s morning note

Maize:

With maize production set to recover this season to 13.92 million tons, South Africa could regain its status as a net exporter of maize in the 2017/18 marketing season. The total maize exports are forecast at 2.5 million tonnes, more than double the previous season’s export volume. About 56% of this is white maize and the remainder is yellow maize (there will not be any imports in the 2017/18 season, all other things equal).

On the global front – this morning Chicago maize price was down by 0.53% from the level seen at midday yesterday, owing to large global supplies. The International Grains Council forecasts 2016/17 global maize production at 1.049 billion tonnes, up by 8% from the previous season. Moreover, the closing stocks are estimated at 224 million tonnes, which is a 7% annual increase.

Soybean:

With South Africa’s soybean production set to recover to levels of 1.07 million tonnes, the country might not need any imports of soybeans in 2017/18 marketing year. The 2016/17 season’s soybean imports are estimated at 270 000 tonnes. This marketing year ended on the 28th February 2017, but the final figures for the season’s actual activity will be released by SAGIS later this month.

In global markets – this morning Chicago soybean price was down by 0.58% from the level seen at midday yesterday owing to large global supplies.

From a country perspective, the US is likely to see an uptick in soybean plantings in 2017/18 season due to profitability levels. The USDA placed its planting forecast for US soybean at record-high of 88 million acres.

Elsewhere, developments in South America remain a key focus in the soybean market as the region produces almost half of global soybean crop. The region is set to receive high rainfall this week. Although this might be beneficial for Argentinian soybean farming regions, it places serious challenges for the Brazilians.

Brazil’s Agricultural Ministry recently indicated that heavy rains have caused disruptions in soybean transport to the shipping ports. About 11 soybean ships were facing loading delays in the country’s northern ports. About 600 000 tonnes of soybeans had already been diverted to southern ports.

Sunflowerseed:

With South Africa’s 2016/17 sunflower seed production set to reach levels of 928 620 tonnes, which is 23% higher than the previous season. As a consequence, the country might not see any imports of sunflower seed in the 2017/18 marketing year.

The 2016/17 sunflower seed imports are estimated at 66 000 tonnes. The marketing year ended in February 2017, but the final figures for the season’s activity will be released by SAGIS figures later this month.

In global markets – yesterday the EU’s sunflower seed market managed to claw back the previous day’s gains, with the price up by 0.48% from the previous day’s level, closing at US$414 per tonne. These gains were largely on the back of strong global demand for sunflower seed products (oil and meal).

Recent data from Stratégie Grains suggest that EU’s 2017/18 sunflower seed production might reach 8.6 million tonnes, which is a 4% annual increase.

SAFEX Beef:

The SAFEX beef market started the week on a quiet note, with the price unchanged from the previous day’s level, at R44.50 per kilogramme. This was largely on the back of reduced activity at the stock exchange.

January and February 2017 slaughtering data is not yet out, but the weekly slaughtering activity points to a slowing trend which suggests that farmers have started restocking their herds. This comes after recent rainfall led to a notable improvement in grazing fields, as well as relatively lower feed costs.

SA fruit:

Yesterday the Johannesburg Fresh Produce Market ended the day mixed. The apple market saw extended losses, with the price down by 8.70% from the previous day’s level, closing at R6.82 per kilogramme. This was largely due to large stock levels of 240 589 tonnes – a 41% increase from the previous day.

The bananas market lost 3.81% from the previous day and closed at R8.33 per kilogramme, also pressure by large stock levels of 231 873 tonne (a 44% increase from the previous day).

Meanwhile, the oranges market gained 21.13% from the previous day’s level, closing at R4.30 per kilogramme. This was largely on the back of an 18% decline in stock levels to 47 073 tonnes.

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