Spotlight on wheat market
The Western Cape and Free State are key wheat producing provinces in South Africa, accounting for 83 percent of the estimated area of 500 500 hectares for the 2018/19 production season.
The planting activity is still at its initial stages in the Free State province but should gain momentum within the next couple of weeks. The winter wheat crop in the Free State province is produced in both dryland and irrigation areas. Fortunately, the summer rainfall has improved soil moisture levels across the province which bodes well for the new season. Moreover, the irrigation areas could also have a good season as dams are almost at full capacity across the province (see Map below for details on dam levels).
As indicated in yesterday’s note, the planting activity is complete in Western Cape province. The newly emerged crop in areas that planted early in the season, Swartland and Overberg regions, is in good condition, following good showers in the past couple of days. This week could also bring rainfall in the province, but will most likely be concentrated in areas around Helderberg, Swartland, Winelands and western parts of Overberg. This means that there could also be minimal improvements in provincial dam levels, which averaged 24 percent on 04 June 2016, up by 6 percentage points from the corresponding period last year.
While the forecast rainfall is a welcome development which will slightly improve topsoil moisture, the Western Cape province still needs intense and persistent rainfall in order to sufficiently improve subsoil moisture and support the wheat crop in the coming months. Fortunately, there is a possibility of such rainfall within between this month and August 2018 .
Aside from the domestic production developments, the focus today will be on the USDA’s World Agricultural Supply and Demand Estimates report. Last month, the agency placed 2018/19 global wheat production estimate at 748 million tonnes, down by a percentage point from the previous season. The reduction in production was linked to expectations of a relatively lower harvest in the EU, Ukraine, India and Russia.