The USDA, in its World Agricultural Supply and Demined Estimate (WASDE) report, placed South Africa’s 2016/17 maize production estimate at 15 million tonnes, up by 3% from the previous month’s estimate and up by 83% from the previous season. This comes on the back of an increase in area plantings, as well as expected higher yields due to favourable weather conditions.
Worth noting is that the USDA’s crop estimate is not directly comparable to the South African Crop Estimate Committee’s figures due to two basic reasons: (1) the marketing years are different (in other words, the months selected are not the same), (2) the USDA estimates the overall national maize production, while the Crop Estimate Committee focuses only on commercial maize production. Differences aside, both agencies are painting an optimistic picture for South Africa’s maize supplies this year.
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. This week, however, there were no imports. The last imports were on the week ending 31 March 2017, coming in at 42 216 tonnes. 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 16 922 tonnes of maize to regional markets (Africa), with 84% share being white maize and 16% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 771 806 tonnes (64% is white maize and 36% 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.
Weather forecast has changed significantly across the northern parts of the Western Cape province. It currently shows a possibility of warm and dry conditions, which does not bode well with the planting processes that are set to commence soon.
From a trade perspective, in the week ending 07 April 2017, South Africa imported 5 834 tonnes of wheat from the US. This brought the country’s 2016/17 total wheat imports to 395 947 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 07 April 2017, total exports reached 738 tonnes, all went to regional markets. Overall, South Africa’s 2016/17 total wheat exports currently stand at 51 044 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 up by 1.17% from the level seen at midday yesterday, with support coming from the weaker US Dollar against major currencies. However, these gains could be short lived due to large global supplies. The USDA’s WASDE report shows that 2016/17 global wheat production could reach 751 million tonnes, slightly above March 2017 estimate and 2% higher than the previous season.
The key contributors to this season’s global crop are US, Argentina, Canada, Australia and Russia, with production estimated at 63 million tons (+12% y/y), 16 million tons (+42% y/y), 32 million tons (+15% y/y), 35 million tons (+44% y/y) and 73 million tons (+19% y/y). Moreover, the 2016/17 global ending stocks are estimated at 252 million tonnes, which is 1% higher than the previous estimate and 5% higher than the previous season.
In global markets – this morning Chicago soybean price was up by 0.32% from the level seen at midday yesterday, owing to reports that 700 000 hectares of prime soybean and maize area have been lost in Argentina to bad weather in the 2016/17 crop year.
With that said, there is some bearish sentiment in the market which comes from large global supplies. The USDA forecasts 2016/17 global soybean production at 345 million tonnes, up by 2% from the previous estimate and 11% from the previous season.
The key contributors to this season’s global soybean crop are the US, Brazil, Argentina, Paraguay and China, with production estimated at 117 million tons (+10% y/y), 108 million tons (+12% y/y), 56 million tons (-2% y/y), 9 million tons (+2% y/y) and 13 million tons (+9% y/y).
Moreover, the 2016/17 global ending stocks are estimated at 87 million tonnes, up by 6% from the previous estimate and (up) by 13% from the 2015/16 ending stock levels.
From the demand perspective, China is set to remain a key buyer of soybeans in the global market, accounting for a share of over 60% in 2016/17 global soybean demand. The country’s 2016/17 soybean import are estimated at 88 million tonnes, up by 1% from the previous season and up by 6% from the previous season.
The weather forecast still shows a possibility of light showers across sunflower seed growing areas, which could be beneficial for late planted crops, as they are still at fertilisation stages. Meanwhile, the early planted areas, in which crops have matured, could experience harvest delays.
In global markets – yesterday the EU’s sunflower seed market extended the previous day’s losses, with a price down by 0.25%, closing at US$392 per tonne. These losses are on the back of large supplies, as well as positive prospects for the 2017/18 EU’s sunflower seed crop.
The EU’s 2016/17 sunflower seed is estimated at 8.6 million tonnes, which is 4% higher than the previous season. Moreover, the next season promises larger increases, with the 2017/18 sunflower seed production estimated at 9.1 million tonnes, which is 7% higher than the 2016/17 season.
After remaining quiet for days, the SAFEX beef market saw substantial gains during yesterday’s trade session due to relatively higher traded volumes. The price was up by 4.55% from the previous day’s level, closing at R46.00 per kilogramme.
Moreover, the market sentiment is generally bullish due to easing slaughter activity as farmers continue to restock their herds (after a drought spell). The most recent data from the Red Meat Levy Admin shows that in February 2017, South African farmers slaughtered 192 186 head of cattle, which is 7% lower than the previous month and 17% lower than the same period last year.
The South African potatoes market saw substantial gains during yesterday’s trade session owing to lower stock levels of 899 448 kg (10 kg bags). The price was up by 10% from the previous day, closing at R25.56 per bag (10kg).
However, during the session, the market saw an uptick in deliveries due to an increase in harvest activity as many workers returned from the weekend. All of this led to an 11% increase in stock levels to 998 075 kg (10 kg bags).
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