Highlights in today’s morning note
The new season maize crop is generally in good condition following recent rainfall in most parts of the country. Looking ahead, the weather forecast for the next two weeks promises a possibility of over 50 millimetres of rainfall across the maize belt which should further improve soil moisture and therefore benefit the crop.
The United States Department of Agriculture (USDA) revised its estimate for South Africa’s 2017/18 maize production up by 4% from last month to 13.0 million tonnes. This is, however, lower than the previous season’s harvest of 17.5 million tonnes due to a decline in area planted and expected lower yields in some areas.
Also worth highlighting is that the USDA estimate covers both commercial and non-commercial maize production, while the National Crop Estimates Committee’s (CEC) estimates only covers commercial production.
The CEC forecasts South Africa’s 2017/18 maize production at 12.2 million tonnes. While not directly comparable to the USDA estimate because of the aforementioned reasons, it is 6% lower than the USDA’s estimates.
With South Africa being a net importer of wheat, the major developments in the global market tend to influence the domestic environment. Friday’s session was no different, the spot price was under pressure due to a decline in Chicago wheat prices.
The global wheat prices were underpinned by a slight upward revision in 2017/18 global wheat production. The USDA forecasts the global crop at 759 million tonnes, which is now 3% higher than the 2016/17 harvest due to an uptick in wheat production in Russia and India.
The USDA forecasts Russia’s 2017/18 wheat production at 85 million tonnes, up by 39% from the previous season owing to an increase in area planted, as well as higher yields. In the same season, India’s wheat production is estimated at 98 million tonnes, up by 14% from the previous season. This somewhat compensated the decline in output in other key wheat producing countries such as the United States, Australia and Canada. Moreover, the 2017/18 global wheat ending stock was revised up by a percentage point from February 2019 to 269 million tonnes. This is 11% higher than the previous season.
From a demand perspective, 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 7% higher than the previous season. Southeast Asia, Middle East and North Africa regions are set to be amongst the key importers.
Sub-Saharan Africa is also amongst the key wheat importing regions with 2017/18 wheat imports estimated at 23 million tonnes, up by 7% from the previous season. The leading buyers within this region are Nigeria, Sudan, South Africa and Kenya.
The areas around Bethlehem, Fouriesburg, Heilbron, Harrismith, Lindley, Ventersburg, Senekal, Morgenzon, Vereeniging, Balfour, Bethal, Davel, Delmas, Greyling Stad, Kriel, Leandra, Nigel and Standerton received light showers towards the end of last week which is conducive for the soybean crop. The crop is generally in good condition across the country and should benefit from expected rainfall with the next two weeks.
In global markets – The USDA revised its 2017/18 global soybean production estimates down by 2% from February 2018 to 341 million tonnes this month. This is 3% lower than the previous season due to expected lower yields in Argentina and Paraguay.
Argentina’s 2017/18 soybean production was revised down by 13% from the February 2018 to 47 million tonnes. This is 19% decline from the previous season. The drier weather conditions that were experienced in the past few weeks across the country led to lower yields, thus leading to a reduction in production.
Contrary to Argentinian developments, Brazil’s 2017/18 soybean production estimate was revised up further by 1% from the previous month to 113 million tonnes. This is now just 1% lower than the 2016/17 harvest. The upward revision is mainly on the back of higher yields in most areas. The production estimates for other key soybean producing countries such as the US and China was left unchanged from the previous month at 120 million and 14 million tonnes, respectively.
The weather remains a key focus across sunflower seed growing areas as the crop is still at its early stages of development that requires moisture. The sunflower seed crops experienced dry and cool weather conditions for the most part of last week. This is with the exception of areas around Hertzogville, Hoopstad, Orkney, Viljoenskroon, Derby, Bothaville, Losdoorns, Viljoenskroon, Wesselsbron, Delareyville and Ventersdorp which received light showers. These were however not sufficient to notably improve soil moisture.
With that said, the expected rainfall of over 50 millimetres across the sunflower seed growing areas within the next two weeks could meaningfully improve soil moisture and therefore benefit the crop. The medium-term forecast promises above normal rainfall in summer crop growing areas between this month and May 2018 .
In the global market – The USDA forecasts 2017/18 global sunflower seed production at 46 million tonnes, down by 3% from the previous season. This is due to lower yields in parts of Russia and Ukraine. Meanwhile, Argentina, Turkey and the European Union registered an uptick in production.
The potatoes market lost ground in yesterday’s trade session owing to a large stock of 902 788 tonnes at the start of the session. The price was down by 3% from the previous day, closing at R34.44 per pocket (10kg).
In the session, the market saw an uptick in deliveries owing to ongoing harvest activity in most parts of the country. This led to a 4% increase in daily stocks to 934 899 pockets (10kg bag).
The fruit market ended the day mixed in Friday’s trade session. The prices of bananas and oranges were up by 7% and 31% from the previous day, closing at R7.49 and R6.05 per kilogram. These gains were underpinned by lower stocks of 175 000 tonnes of bananas and 38 000 tonnes of oranges.
Meanwhile, the price of apples declined by 4% from the previous day and settled at R7.91 per kilogram. This was pressured by a 24% uptick in daily stock to 219 000 tonnes.
Full report attached below.