Agbiz Morning Market Viewpoint on Agri-Commodities: 19 April 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 18 April 2017
April 18, 2017
SA agricultural sector likely to pay 3% more for diesel next month
April 19, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 19 April 2017

Highlights in today’s morning note

Maize:

Over the weekend, most areas in the eastern parts of the country remained dry with scattered light showers. Therefore, harvest activity is set to continue with minimal interruption this week. Meanwhile, the western parts of the country saw light rainfall varying between 9 and 41 millimetres, benefiting the late planting areas that needed moisture.

Regionally, recent reports from Ethiopia suggest that the Fall Armyworms continue to destroy crops in the southern part of the country, with damage so far estimated at 10 700 hectares of land. Ethiopia is not a major maize producer or importer, however, any decline in production could open room for small volumes of imports from the world.

On the global front, this morning Chicago maize price were down by 1.63% from the level seen at midday yesterday, still pressured by large global supplies.

Commodity Weather Group forecasts rainfall across the US maize belt this week, which could stall planting activity. Earlier this week, the USDA reported US maize plantings for the week ending 16 April at 6% complete, which is 6% behind the corresponding period last year. The US maize acreage for 2017/18 season is estimated at 36.4 million hectares, which is 4% lower than the previous season.

Elsewhere, data from Russia’s Agricultural Ministry shows that on the 17th April 2017, the 2017/18 maize planting activity was at 403 000 hectares, which is 13% of the estimated area. Overall, the International Grains Council forecasts Russia’s 2017/18 maize production at 15.4 million tonnes, which is 1% higher than the previous season.

Wheat:

With the local market’s attention slowly shifting towards the 2017 winter wheat planting period, weather becomes an important factor. The forecast for the next eight days shows a possibility of dry and warm conditions, which is not ideal for plantings. However, the last week of this month promises widespread light showers across the winter wheat growing areas.

At the moment, the dam levels are critically low, which puts the irrigation areas at a disadvantage position. Data from the Department of Water and Sanitation shows that in the week ending 10 April 2016, the Western Cape average dam levels were at 23% full, which is 7% lower than the same period last year.

On the global front, this morning Chicago wheat price remained unchanged from the levels seen at midday yesterday.  With that said, over the past few days, wet weather conditions have been favourable for US winter wheat crops, but causing delays in spring wheat plantings.

Earlier this week, the USDA’s data showed that 54% of the winter wheat was rated good/excellent, which is a 1% improvement from the previous week. However, spring wheat plantings were at 13% complete, which is 12% behind the corresponding period last year.

Soybean:

Over the weekend, Mpumalanga province was mostly dry with light showers. Overall, conditions were ideal for harvest activity. The process is set to be in full swing by end of the month, particularly in areas that planted on time. So far, the yields are reportedly average to above average, which supports the National Crop Estimate Committee’s view of a possible record crop – 1.2 million tonnes.

That said, weather forecasts show a possibility of light showers throughout the country next week, which could potentially slow the process. More will unfold over the next few days.

In global markets, this morning Chicago soybean price was down by 0.11% from the level seen at midday yesterday, mainly pressured by favourable weather conditions in Argentina, as well as expected large global supplies.

The US National Oilseed Processors Association estimates that in March 2017, soybean crush/processing reached 4.2 million tonnes, which is 8% higher than the previous month, but 2% below the corresponding period last year.

A recent report from the US Climate Prediction Centre suggests that neutral weather conditions are likely to prevail throughout the spring season in the Norther Hemisphere, which is ideal for the soybean crop. The US 2017/18 soybean acreage is estimated at 36.2 million hectares, a 7% annual increase.

However, the report also warned of a possible El Niño by late summer. In Northern Hemisphere, this weather phenomenon is typically associated with heavy rains (vice-versa in South Hemisphere). More information will be available as the season progresses.

Sunflower seed:

During Easter weekend, some parts of the North West and western Free State received rainfall, benefiting the late sunflower seed (late plantings). Schweizer-reneke, Ventersdorp, Sannieshof, Regina, Bloemof, Klerksdorp, Bultfontein, Allanridge, Losdoorns and Wesselsbron received showers varying between 9 and 41 millimetres.

Looking ahead, the key concern for most sunflower seed farmers is whether this season will finish off without frost damage. For now, weather forecasts for the next two weeks show a positive outlook and if conditions remain this way for the rest of the month and the greater part of May, then the season should finish off well.

In global markets, yesterday the EU’s sunflower seed market gained ground, with the price up by 0.51% from the previous day, closing at US$395 per tonne. This was mainly on the back of strong buying interest for sunflower seed products (oil and meal). 

Recent data from Association Ukroliyaprom shows that in March 2017, Ukraine’s sunflower oil exports reached an all-time high of 683 470 tonnes, which is a 155% increase from the previous month and 159% increase from the corresponding period last year. 

Moreover, Russia’s Agricultural Ministry has indicated that on the 17th April 2017, sunflower seed sowing for 2017/18 season was at 685 000 hectares, which equals to 10% of the intended area

SA fruit:

The Johannesburg Fresh Produce Market ended the day mixed during yesterday’s trade session. The apple market lost ground and closed in negative territory due to higher stock levels of 238 394 tonnes (which is 24% higher than the previous day).

The oranges market lost 7% from the previous day, closing at R3.09 per kilogramme, due to relatively higher stock levels of 369 335 tonnes (compared to normal levels of just below 200 000 tonnes).

Meanwhile, the bananas market gained 6% from the previous day, closing at R8.50 per kilogramme, owing to strong buying interest.

Potatoes:

Yesterday the South African potatoes market maintained the previous day’s gains and closed in positive territory, with support coming from strong buying interest and lower stock levels. At the start of the session, the stocks were at 785 926 kg (10 kg bags), which is 21% lower than the previous trading day.

During the session, the market saw continuous buying interest, coupled with lower deliveries after a long weekend, which led to a 25% decline in stock levels to 588 255 kg (10 kg bags).

Click here to read more.