Highlights in today’s morning note
Over the weekend, the Free State province received light and scattered showers, which were however not sufficient to make a meaningful improvement in soil moisture. With that said, the maize crop is in fairly good condition across the country.
The areas that are somewhat moisture-stressed following dryness in the past few days could soon see some relief, as the weather forecasts for the next two weeks show a possibility of rainfall of between 20 and 60 millimetres.
As indicated in yesterday’s note, the United States Department of Agriculture (USDA) forecasts South Africa’s 2017/18 maize production at 13.0 million tonnes (down by 26 percent from last year) .
Worth noting, but of lesser significance to the global market, is a possible uptick in Mali’s maize harvest. The official estimate from the country’s Ministry of Agriculture points to a 15 percent year on year uptick in 2018/19 maize production to 3.9 million tonnes. This improvement is largely on the back of an increase in area planted.
South Africa’s wheat market is currently off-season, and therefore, most activity is in import trading. The past season’s drought resulted in a lower harvest in the Western Cape province, which subsequently led to a 20 percent year-on-year decline in 2017 national production to 1.5 million tonnes.
The Western Cape is a winter rainfall area. Despite the urgent need for rain, there a slim chance of sufficient showers in that province within the next couple of weeks. The winter wheat growing areas will, nonetheless, need moisture within the next two months or so ahead of the new planting season. At this point, it is unclear what the weather conditions will look like in the upcoming season.
Apart from the domestic development, the global market remains well supplied after the USDA supply and demand estimates reports showed a slight upward revision in 2017/18 global wheat production estimate to 759 million tonnes. This is three percent higher than the previous season. Russia and India were the leading contributors to this increase in production.
From a demand front, the 2017/18 global wheat imports are estimated at 182 million tonnes, slightly higher than the previous month’s estimate of 180 million tonnes and seven percent higher than the previous season. Southeast Asia, Middle East and North Africa and Sub-Saharan Africa regions are set to be amongst the key importers.
The expected rainfall this past weekend did not materialise in most sunflower seed growing areas. It is only a few areas around Bloemfontein, De Brug, Viljoenskroon and Losdoorns that received light showers of between 5 and 13 millimetres.
With that said, soil moisture is generally in fair condition following the recent rainfall. The crop that is slightly moisture-stressed following dryness in the past few days should soon recover as weather conditions promise rainfall within the next two weeks.
With the late planted sunflower seed crop still at early stages of development in regions around Delareyville, Sannieshof and Lichtenburg in the North West province, the expectation of a prolonged rainfall pattern this season should provide sufficient moisture for crop development.
The potatoes market started the week on negative footing owing to a large stock of 934 899 tonnes at the start of the session. The price was down by four percent from the previous day, closing at R33.02 per pocket (10kg).
However, towards the end of the session, the market experienced strong commercial buying interest, coupled with relatively lower deliveries on the back of slow harvest activity during the weekend. This subsequently led to a 31 percent decline in daily stocks to 644 269 pockets (10kg bag).
The fruit market also started the week on a negative footing with prices under pressure due to an uptick in daily stock. The price of apples and bananas were down by six percent and a percentage point from the previous day, closing at R7.27 and R7.19 per kilogram, respectively. These losses were underpinned by a large stock of 220 000 tonnes of apples and 301 000 tonnes of bananas.
Moreover, the price of oranges fell by two percent from the previous day and settled at R7.69 per kilogram. This will, however, be short-lived because of fairly lower stock of 26 000 tonnes, compared to levels of over 70 000 tonnes in the past few days.
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