Agbiz Morning Market Viewpoint on Agri-Commodities: 14 March

Agbiz Morning Market Viewpoint on Agri-Commodities: 13 March
March 13, 2017
Agbiz Morning Market Viewpoint on Agri-Commodities: 15 March
March 15, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 14 March

Highlights in today’s morning note

Weather:

The weather forecast for the week shows a possibility of scattered light showers across the eastern parts of South Africa’s summer crop growing regions. These expected showers vary between 5 and 20 millimetres. Meanwhile, the rest of the country could remain dry and warm over the observed period (figure 1). For summer crop growing regions, this weather forecast does not raise concerns as a large part of the crop is already maturing.

Maize:

On the global front – this morning Chicago maize price was down by 0.84% from the level seen at midday yesterday, owing to expected large maize supplies. The US 2016/17 maize production is set to reach 384.78 million tonnes, which is 11% higher than the previous season. Moreover, recent estimates from Informa Economics suggest that the US could see a further increase in production this coming season, which with planting estimates data at 90.8 million acres, well above the USDA’s forecast of 90.0 million acres.

On the bullish front, the USDA reported the US maize export inspection at 1.54 million tonnes, which is towards the high end of market expectations.

Elsewhere, prospects for Brazil’s safrinha maize (second season maize crop) remain positive. Data from AgRural showed that on the 09 March 2017, about 88% of the crop had already been planted, which is 3% higher than the corresponding period last year.

Wheat:

There are still lingering concerns about ongoing dryness across the Western Cape province. The province has not received much rainfall lately and water levels are critically low – threatening the new season if this dry spell continues for some time. The weather forecast for the next two weeks shows a possibility of dry and warm conditions .

On the global front – this morning Chicago wheat price was down by 2.60% from the level seen at midday yesterday due to large global supplies, as well as expected improvements in US wheat growing conditions. The weather forecast for the week shows a possibility of rainfall across the southern US Plains. If this materialises, it could be beneficial for the crop, as it is currently breaking dormancy – a stage that needs moisture. The USDA forecasts US 2016/17 wheat production at 62.9 million tonnes, which is 12% higher than the previous season.

Looking ahead, Informa Economics forecasts US all-wheat plantings for the 2017/18 at 45.6 million acres, which is slightly below the USDA’s estimate of 46.0 million tonnes.

Soybean:

In global markets – this morning Chicago soybean price was down by 0.30% from the level seen at midday yesterday, owing to large global supplies. In addition, firm Informa Economics raised its 2017 US soybean plantings forecast to 88.7 million acres, from 88.647 million in January 2017.

In the absence of major news events, South America remained a primary focus in the global market. Weather forecasts for the region show a possibility of dry and warm conditions this week, which bode well with the harvest process in Brazil. On the 11th March 2017, the country had harvested 59% of its soybean crop, ahead of the corresponding period last year.

The USDA placed Brazil’s 2016/17 soybean production at 108 million tonnes, which is 12% higher than the previous season. This is in line with private analysts’ estimates, such as Lanworth which placed its estimate at 107 million tonnes. These increases are on the back of an uptick in area plantings, as well as higher yields due to favourable weather conditions.

In addition, the dry and warm weather conditions could also be beneficial for the Argentinian soybean crop, following wet weather conditions over the past few weeks. The USDA forecasts Argentina’s 2016/17 soybean crop at 55.5 million tonnes, down by 2% from the previous season. This is due to a decline in area plantings on the back of a competition from sunflower seed, as well as expected lower yields in some areas.

RSA Potatoes:

Yesterday the South African potatoes price was down by 9.40% from the previous day due to large stock levels, on the back of ongoing harvest activity. At the start of yesterday’s trade session, the stocks were at 1 139 194 bags (10 kg bags), which was the largest volume in the past seven trading days.

However, during the session, the market saw a decline in deliveries following reduced activity over the weekend, as well as strong buying interest. All of which led to a 28% reduction in daily stocks to 814 764 bags (10 kg bags).

SA fruit:

The Johannesburg Fresh Produce Market ended the day mixed during yesterday’s trade session. The apple market was down by 4.82% from the previous day’s level, closing at R7.31 per kilogramme. These losses were on the back of higher stock levels of 239 076 tonnes (which is 27% higher than the previous day).

The oranges market lost 4.46% from the previous day, closing at R4.71 per kilogramme. This too came on the back of 54% uptick in daily stock levels to 79 724 tonnes.

Meanwhile, the bananas market gained 8.44% from the previous day’s level, closing at R8.87 per kilogramme, due to strong buying interest.

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