Agbiz Morning Market Viewpoint on Agri-Commodities: 13 June 2017.

Agbiz Morning Market Viewpoint on Agri-Commodities: 12 June 2017.
June 12, 2017
Agbiz Morning Market Viewpoint on Agri-Commodities: 14 June 2017.
June 14, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 13 June 2017.

Highlights in today’s morning note

Maize:

Harvesting is in full swing across the country. Most areas are reporting exceptional yields, which supports the National Crop Estimate Committee’s view of a record crop of 15.63 million tonnes. The forecast drier and warm weather conditions within the next two weeks could accelerate the process. 

Regionally, recent data from Zimbabwe’s Finance Ministry indicates that the country’s 2016/17 maize production could reach 2.1 million tonnes – up four-fold from the previous season. This uptick is on the back of an increase in area plantings and expected higher yields. If this materialises, the country could only need to import roughly 100 000 tonnes of maize to fulfil its annual domestic needs. The potential supplies in this regard will most probably be sourced from South Africa and Zambia.

On the global front – this morning, the Chicago maize market was down by 1.30% from levels seen at midday yesterday due to improving weather outlook in some parts of the US maize belt. With that said, there are forecasts of drier and warm conditions within the next few days in parts of the Midwest which could negatively affect the recently emerged crops.

On 11 June 2017, about 94% of the intended 36.4 million hectares of maize had already emerged, which is 1% behind the corresponding period last year. Of that, 67% was rated good/excellent, which is 8% below the same period last year.. 

Wheat:

The recent rainfall across the Western Cape province has slightly improved soil moisture. Farmers could soon complete planting the estimated area of 325 000 hectares. However, the weather forecast for the next two weeks paints a troubling picture of dryness across the province. The forecast warm and drier weather conditions could strain the newly emerged crop, as soil moisture is still relatively low.

More concerning are the estimates that another El Niño weather pattern, typically associated with hot and dry weather conditions, may return later this year.  Data from the Australian Bureau of Meteorology shows that there is a 50% chance of El Niño developing in 2017, which is approximately twice the normal likelihood.

If the forecast El Niño materialises, it could disadvantage crops, particularly around pollination period where there is a need for moisture. We will monitor the developments over the coming weeks.

On the global front – Chicago wheat price was down by 0.91% from levels seen at midday yesterday, also pressured by prospects of rainfall this week in some parts of the US.

Last week’s drier weather conditions enhanced spring wheat planting activity but negatively affected the recently emerged crop. Yesterday’s crop progress report showed that US spring wheat planting is complete and 95% of the recently planted crop has already emerged. However, only 45% of that was good/excellent, compared to a rate of 79% in the corresponding period last year.

Soybeans:

The weather forecast shows a possibility of drier conditions across the country within the next two weeks, which could accelerate the harvest activity in areas that are completing the process. The areas that have harvested received excellent yields, which support the National Crop Estimate Committee’s view of a possible record crop of 1.23 million tonnes. 

In global markets – this morning Chicago soybean price was down 0.64% from levels seen at midday yesterday, also pressured by prospects of rainfall in parts of the US soybean growing areas.  

Recent crop progress report shows that US farmers have already planted 92% of the intended 36.35 million hectares this season, which 1% ahead of the corresponding period last year. This is mainly on the back of drier weather conditions over the past few days. Moreover, 77% of the crop has already emerged, in line with the corresponding period last year.

While farmers in the northern hemisphere have shifted their attention to the new season, as noted above, southern hemisphere farmers are still finalising the 2016/17 soybean harvest. Argentinian farmers had harvested 94% of the expected 57.8 million tonnes on 12 June 2017. The process could be completed soon due to favourably drier weather conditions.

Sunflower seed:

From a global perspective – In yesterday’s trade session the EU’s sunflower seed market saw substantial losses, with the price down 2.97% from the previous day, closing at US$392 per tonne. These losses were largely on the back of lower crude oil prices.

Meanwhile, the Black Sea sunflower oil market remained flat, closing at US$730 per tonne. With that said, there is still bearish sentiment in the market which emanates from large regional supplies and positive prospects for the new season crop.

Looking ahead, Sunseedman forecasts 2017/18 global sunflower seed production at 48.5 million tonnes, down by 1% from the previous season. Weather conditions across the EU and Black Sea region remain favourable and planting has progressed well so far.

The EU’s 2017/18 sunflower seed production is estimated at 9.1 million tonnes, up 6% from the previous season. In the Black Sea region, Russia’s sunflower seed planting is complete at 7.1 million hectares, down 7% from the 2016/17 season. Ukraine planted 5.5 million hectares, down 6% from the previous season.

The US farmers have made good progress with plantings. On 11 June 2017, farmers had planted 80% of the intended area, which is 4% ahead of the corresponding period last year. This was largely driven by drier and warm weather conditions in the past few days.

Potatoes:

The South African potatoes market saw extended losses during yesterday’s trade session with the price down 5% from the previous day, closing at R26.23 per bag (10 kg bag). These losses came on the back of higher stocks of 1.3 million bags (10kg bags) at the start of the session.

During the session, the market saw strong buying interest, coupled with a decline in deliveries due to lower harvest activity after a weekend. Subsequently, the daily stocks fell by 20% at end of the session to 1.05 million bags (10 kg bags).

SAFEX Beef carcass:

It was again another quiet day in the SAFEX beef carcass market, with a price unchanged from the previous day due to lower traded volumes at the stock exchange. Overall, this suggests that the SAFEX carcass prices could differ from the physical market, where there is strong participation.

In actual fact, the sentiment in the physical market remains bullish due to easing slaughter activity, as farmers continue to restock their herds after a 2015-16 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.

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