Agri Trends 18 August 2017 Grains, Oilseeds, Livestock and Fibre

Western Cape drought effect on wheat and fruit trees.

Currently the Swartland area has an irrigation issue, they’ve been getting between 5-10mm irrigation weekly, which helps with the wheat at the moment but the dams still remain relatively empty as seen on the latest dam level statistics for the Western Cape at 29.6% (compared to 57.5% in 2016). If however sufficient rains are not received, the viticulture and horticultural industry may incur material damage later.

The wheat crops planted on heavier soils is starting to suffer because, underground moisture levels are virtually non-existent, weekly  irrigation of 5-10mm irrigation is really not good enough while temperatures keep on rising.  The southern parts of the Swartland is looking relatively good, the rains received on wheat were “okay”, the northern parts of the Swartland Area (Rooi Karoo), incurred a bit of damage, it’s not that material, should the area still receive some good rains, a normal-good crop can be expected.

The industry is definitely not anticipating a top harvest since the market underwent a lot of strain due to below average rainfall and late plantings, we expect a lower wheat harvest. The Western Cape is expected to yield around 2.3-2.4 t/ha on average.

Highlights

Livestock & Fibre

• The South African wool market started this new season with a strong basis, with wool prices showing strong gains at the recent auction. Domestic wool market prices were 19.82% lower to close at R183.50 (clean) at the close of the season. The last sale of the season was on the 07th of June 2017 where prices reached R153.14 (clean).
• Due to the past season’s drought conditions, the number of cattle slaughtered increased and the national herd numbers declined considerably as a result. The supply of weaner calves declined which fell together with the lower maize prices. This has led to increases in weaner calf prices to R37/kg. At these prices levels the A2/A3 grade beef price need to increase above R51/kg for feedlots to break even.  Pressures for feedlots are the need to continue producing carcasses due to overhead costs.
• The pork industry is exploring export markets in countries such as Singapore, Thailand, the Philippines and India, some South African farmers are already exporting successfully to countries in Africa. Between January and May this year, 3 000 ton of pork was exported to African countries. Negotiations and administrative procedures regarding exports to the East are still in progress.
• Locally, lamb and mutton prices continued with their strong gains over the past week, as the herd rebuilding process continues to be underway. The latest prices show that the average national lamb prices continued to reach record levels this week, with lamb prices reaching an average price of R78.61.

Grains & Oilseeds

• Grains were under some pressure, weather is positive in the central and eastern Midwest. There’s a 6-15 day cooler temperature forecast (next week) for the Midwest, local prices will be influenced by US  maize prices movement.
• The international oilseed prices traded lower this week, on the back of  ampleness in the international soybean market, as can be noted on the USDA’s bearish WASDE August report. Domestic prices followed international trends. The Rand volatility may provide underlying support.
• Large soybean deliveries have been coming in strong for the 2017/18 season. So far the monthly soybean deliveries are 1.240 million tons (SAGIS); this figure is above the highest year deliveries (1,042 million ton) during the 2015/16 marketing season.

For a detailed update please see attachment/a>