Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.
South African farmers continue to deliver maize crop to commercial silos. In the week ending 3 March 2017, total maize producer deliveries were recorded at 12 553 tonnes (61% was white maize and 39% was yellow maize). This is 78% lower than the previous week’s deliveries. Overall, South Africa’s total maize producer deliveries for “week 1 to 44” currently stand at 6.66 million tonnes.
Dam levels across the country continue to show notable improvements and that might support the irrigation areas over the coming months. Data from the Department of Water and Sanitation shows that in the week ending 6 March 2017, North West average provincial dam level was at 91% full, which is 45% higher than the corresponding period last year. Limpopo’s average dam level was at 78% full, which is 19% higher than the same period last year.
In addition, average dam level in Mpumalanga province was at 78% full, which is 19% higher than the corresponding period last year. Gauteng province was 92% full, which is 10% above the corresponding period last year. The Free State province was 86% full, which is 32% higher than the same period last year. The Northern Cape was reportedly at full capacity, compared to a level of 63% the same period last year.
South African farmers continue to deliver wheat to commercial silos. In the week ending 3 March 2017, wheat deliveries were recorded at 4 114 tonnes, which is 61% lower than the volume recorded the previous week. This brought South Africa’s 2016/2017 total wheat deliveries for “week 1 to 22” to 1.80 million tonnes.
The Western Cape province continues to experience dryness and conditions are expected to remain unchanged over the next two weeks. The average provincial dam level was estimated at 30% full on the 6 March 2017. This is 7% lower than the corresponding period last year.
There are rising concerns in wheat producing areas of the province, as the outlook for the medium term remains unfavourably dry. Data from the Australian Bureau of Meteorology and South African Weather Services suggest that there is an increasing likelihood that an El Niño weather event could appear over the Pacific Ocean in the second half of 2017, potentially giving rise to a period of widespread hot and dry conditions. This could negatively affect the 2017/2018 winter wheat production season. That said, more information will unfold over the coming months.
In global markets, this morning (9 March 2017) the Chicago soya bean price was down by 0.59% from the level seen at midday yesterday (10 March 2017) owing to improving weather conditions in South America.
South America has been a centre of attention in the global soya bean markets, not so much because of its large production volumes, but wet weather conditions which have complicated the road transport system and led to export delays, particularly in Brazil.
However, conditions are improving, as the weather continues to show a dry and warm outlook for some parts of Brazil this week. Moreover, recent media reports have indicated that truck movements are now returning to normal and that should accelerate export activity over the coming weeks.
Private analysts are optimistic about Brazil’s 2016/2017 soya bean production. FC Stone have revised up their estimate for Brazil’s soya bean production to 109.07m tonnes, almost 5 million tonnes higher than the February 2017 estimate and 14% higher than the previous season. This is attributed to favourable weather across many soya bean producing regions of the country.
Forecast dry and warm weather conditions for some parts of Brazil could also accelerate soya bean harvest activity. On 8 March 2017, the country had harvested 52% of its soya bean crop, ahead of the corresponding period last year.
Yesterday (8 March 2017) the South Africa potatoes price was down by 8.18% from the previous day due to large stock levels. The increase in stock level is mainly on the back of ongoing harvest activity. At the start of yesterday’s (8 March 2017) trade session, the stocks were at 730 000 bags (10 kg), which is the fourth largest volume in the past seven trading days. Towards the end of the session, the market saw an increase in deliveries and that led to a 23% uptick in daily stocks to 900 000 bags (10 kg bags) – a third largest volume in the past seven trading days.
During yesterday’s (9 March 2017) trade session, the Johannesburg Fresh Produce Market ended the day mixed. The apple market gained 1.81% from the previous day’s (8 March 2017) level, closing at R7.30 per kilogramme. These gains were on the back of strong buying interest, as well as relatively lower stock levels of 206 974 tonnes (22% lower than the previous day).
Meanwhile, the banana market saw marginal losses of 1.42% from the previous day, closing at R8.33 per kilogramme. This was partly on the back of large supplies – 164 973 tonnes. The orange market lost 28.71% from the previous day’s level, closing at R4.42 per kilogramme, also pressured by relatively large stock levels – 64 977 tonnes.