Agbiz Morning Market Viewpoint on Agri-Commodities: 26 April 2017.

Agbiz Morning Market Viewpoint on Agri-Commodities: 25 April 2017.
April 25, 2017
South Africa’s Crop Estimate Committee reaffirmed its view of large maize and soybean supplies this season.
April 26, 2017

Agbiz Morning Market Viewpoint on Agri-Commodities: 26 April 2017.

Highlights in today’s morning note

Maize:

The National Crop Estimate Committee (CEC) reaffirmed its expectation of the second biggest maize crop on record in 2017. The CEC revised up its forecast by 1% from its previous estimate to 14.54 million tonnes. This is against market expectations of a 1% decline to 14.20 million tonnes.

White and yellow maize production estimates were revised up by 1% and 2% from the previous estimates to 8.6 million tonnes and 5.9 million tonnes, respectively. This is largely on the back of an increase in area planted, as well as expected higher yields on the back of favourable weather conditions.  Weather forecasts for the next two weeks show a possibility of drier conditions within the South African maize belt, which is supportive of the harvest process. Most areas will probably start with the harvest process towards the end of May 2017.

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 42 575 tonnes. Overall, South Africa’s 2016/17 total maize imports stand at 2.26 million tonnes, which is 98% of the seasonal import forecast.

In the week ending 21 April 2017, South Africa exported 11 154 tonnes of maize to regional markets (Africa), with 76% share being white maize and 24% being yellow maize. South Africa’s 2016/17 total maize exports currently stand at 801 617 tonnes (64% is white maize and 36% is yellow maize).

Overall, the uptick in maize production means that South Africa will regain its status as a net exporter of maize this season.  The 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

Wheat:

Yesterday the planting intentions data came in at 496 350 hectares, down by 2% from the previous season. However, this was above market expectations of 477 075 hectares. Weather forecast for the Western Cape remains dry which could delay planting activity. The longer-term forecasts show a possibility of light showers of between 10 and 25 millimetres within the next two weeks.

From a trade perspective, in the week ending 21 April 2017, South Africa imported 29 625 tonnes of wheat. About 56% came from Germany and 44% from the Czech Republic.  This brought the country’s 2016/17 total wheat imports to 451 561 tonnes, which is 30% 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 21 April 2017, total exports reached 1 056 tonnes, all went to regional markets. Overall, South Africa’s 2016/17 total wheat exports currently stand at 56 863 tonnes. About 36% of this went to Zimbabwe, 9% to Namibia, 9% to Botswana, 25% to Lesotho, 5% to Mozambique, 14% to Zambia and 2% to Swaziland.

On the global front, this morning, Chicago wheat price was up by 1.99% from the level seen at midday yesterday, owing to prospects of planting delays. 

Weather forecast for the US wheat growing areas shows a possibility of rainfall this week, which might possibly slow US spring wheat planting. Earlier this week, the US had planted 22% of the targeted area for this season, which is 18% behind the corresponding period last year.

Soybean:

The CEC revised up its soybean production forecast by 6% from the previous one to 1.23 million tonnes, the biggest crop on record. This is on the back of an increase in area planted, as well as expected higher yields. The largest contributors to the expected production uptick are Mpumalanga and the Free State province, with production shares of 41% and 39%, respectively.

As a result, we do not foresee any soybean imports this season. We do, however, believe that there could be at least 6 000 tonnes of exports to the neighbouring countries.

Weather forecast for soybean growing areas shows a possibility of warm and dry conditions this week, which should accelerate harvest activity. In areas that have already harvested, yields are reportedly above average, which supports the CEC’s view of a possible record crop.

In global markets, this morning Chicago soybean price was down 0.52% from the level seen at midday yesterday, owing to expectations of large global supplies.

Weather forecast for the US Midwest shows a possibility of rainfall this week, which could slow planting activity. Earlier this week, US farmers had planted 6% of the targeted area, well above market expectations. However, the forecast rainfall across the US Midwest this week could slow soybean planting processes .

Elsewhere, the weather forecast for the next eight days presents a possibility of light rainfall across South America. This could possibly cause harvest delays in Brazil and Argentina. On the 25th of April 2017, Brazil’s soybean harvest was 95% complete, ahead of the corresponding period last year. At the same time, Argentina’s soybean harvest was 25% complete, ahead of the same period last year.

Sunflowerseed:

The recent CEC report presented a 5% decline in sunflower seed production forecast from the previous one to 853 470 tonnes. This is due to persistent drier conditions over the past few weeks around the Free State province. We believe that there could be further downward revisions over the coming months following prolonged dryness in the past few weeks around the later planting areas of the North West province.

That said, this year’s sunflower seed crop is still 13% higher than the previous season. Therefore, we do not foresee any imports this season. We do, however, believe that there could be at least 20 000 tonnes of exports to the neighbouring countries

In global markets, yesterday the EU’s sunflower seed market pulled back from the previous day’s level, with the price up 1.52%, closing at US$402 per tonne. This was partly on the back strong buying interest for sunflower seed products (oil and meal).

Looking ahead, reports from the EU’s Monitoring Agricultural Resources Unit highlighted that continued mild weather conditions have been very favourable for spring sowing activities in most countries within the EU.  The region’s 2017/18 sunflower seed production is estimated at 9.1 million tonnes, which is 7% higher than the 2016/17 season.

Potatoes:

After seeing losses for a number of days, the South African potatoes market gained ground during yesterday’s trade session. The market was largely supported by lower stock levels at the start of this week. This comes after daily stocks declined by 31% to 743 936 bags (10 kg bags) due to reduced harvest activity in the weekend.

However, during the session, there was an uptick in deliveries due to an increase harvest activity. This led to a 57% recovery in daily stock levels 1 171 223 bags (10 kg bags).

SA Fruit:

Yesterday, the Johannesburg Fresh Produce Market saw widespread losses due to a recovery in stock levels. The apple price was down 1% from the previous day, closing at R7.26 per kilogramme. This was on the back of a 14% uptick in daily stocks to 304 577 tonnes.

The bananas market lost 5% from the previous day, closing at R7.77 per kilogramme. This was on the back of large stock levels to 175 914 tonnes, which is a 61% increase from the previous day.

Lastly, the oranges market closed in negative territory, with the price closing at R2.91 per kilogramme. This was also on the back of relatively large stock levels of 226 525 tonnes.

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