Agbiz Morning Market Viewpoint on Agri-Commodities: 22 June 2017.

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Agbiz Morning Market Viewpoint on Agri-Commodities: 22 June 2017.

Highlights in today’s morning note

Maize:

The South African farmers delivered 1.09 million tonnes of maize to commercial silos in the week ending 16 June 2017, which is 6% higher than the previous week’s deliveries. About 56% of this was white maize and 44% was yellow maize. This brought the country’s 2017/18 total maize deliveries for “week 1 to 7” to 5.3 million tonnes.

On the global front – This morning the Chicago maize market was down by 0.81% from levels seen at midday yesterday due to prospects of better weather conditions in parts of the US Midwest.

The US weather remains a key focus in the maize market. The forecast for the next few days shows a possibility of showers across the central and eastern parts of the US Midwest which is conducive for the new season crop. At the beginning of this week, about 67% was rated good/excellent, which is 8% behind the same period last year.

Wheat:

The weather forecast for the next two weeks has changed drastically from what we reported yesterday. It now shows a relatively drier outlook across the central and eastern parts of the Western Cape province, which is not conducive for the new season crop.

More concerning is the recent dam levels data which shows the average Western Cape dams at 21% full in the week ending 19 June 2017, which is 14% lower than the corresponding period last year. 

With that being said, the recent weather updates suggest that the fears of another the El Niño weather phenomenon have eased. The recent data from the Australian Bureau of Meteorology shows that the next summer season could be neutral and thus, not see another drought as previously expected.

Some farmers continue to deliver the old-season wheat crop to commercial silos. In the week ending 16 June 2017, wheat deliveries were recorded at 827 tonnes, which is 32% higher than the previous week. Overall, South Africa’s 2016/17 total wheat deliveries for “week 1 to 37” currently stand at 1.85 million tonnes.

On the global front –  The weather forecast for the central and eastern parts of the US Midwest presents a promising picture of possible showers within the next few days, which could benefit the new season crop.

Persistent dryness in the US had already started to damage the crop. At the beginning of this week, it was only 41% of the US spring wheat crop that was rated good/excellent, compared to a rate of 76% in the corresponding period last year.

Sunflower seed:

There was not much happening in the market. Harvesting is almost complete with yields reportedly above average, which supports the views of a possible 13% annual uptick in production to 853 470 tonnes .

What’s more, the weather forecast for the next two weeks shows a possibility of drier conditions across sunflower seed growing areas. This is favourable for harvesting in areas that are still completing the process, particularly the western parts of North West province.

From a global perspective – Yesterday the EU’s sunflower seed market remained in negative territory with the price down by 0.51% from the previous day, closing at S$390 per tonne. These losses were largely on the back of lower crude oil and other vegetable oil prices.

The weather forecast for some EU countries remains positive in the near term, which bode well with the new season crop that needs rainfall.  The region is set to have a good season with 2017/18 sunflower seed production estimated at 9.1 million tonnes, up 6% from the previous season. This comes on the back of an expected increase in acreage across many EU countries, as well as higher yields.

Meanwhile, the Black Sea’s sunflower oil market gained 0.14% from the previous day, closing at US$738 per tonne due to a slight uptick in regional demand.

Incoming data from Ukraine shows that in the first two weeks of this month, the country exported sunflower oil and sunflower meal volumes of 267 000 tonnes and 194 100 tonnes, respectively.  From a production perspective, the Black Sea could receive scattered showers this week, which is supportive of the new season crop.

RSA Potatoes:

The South African potatoes market retracted some of its recent gains, with the price down 4% from the previous day, closing at R27.90 per bag (10 kg bag). This was mainly on the back of a recovery in stock levels.

The market saw an increase in deliveries throughout yesterday’s trade session, driven by ongoing harvest activity. This subsequently led to a 15% up in stocks by the end of the session to 1.01 million bags (10 kg bags).

SAFEX Beef carcass:

The SAFEX beef carcass market saw another quiet session, with lower traded volumes at the stock exchange. The price remained flat at R45.00 per kilogramme.

Having said that, the general sentiment in the beef carcass market remains bullish due to easing slaughter activity, as farmers continue to restock their herds after the 2015-16 drought spell. Data from the Red Meat Levy Admin shows that South African farmers slaughtered 193 373 head of cattle in April 2017, down 19% from the previous month and the corresponding period last year

RSA fruit:

The fruit market saw widespread gains during yesterday’s trade session due to strong buying interest. The apples market gained 5% from the previous day, closing at R6.46 per kilogramme, supported by strong buying interest, as well as relatively lower stocks of 237 574 tonnes.

The bananas and oranges prices were respectively up 2% and 13% from the previous day, closing at R6.09 per kilogramme and R2.39 per kilogramme. However, these gains could be short lives due to large stocks of both bananas and oranges.

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