Agri Trends 20 October 2017 Grains, Oilseeds, Livestock , Fibre & Vegetables

Potato Industry View

This year we saw potato prices on the fresh produce markets at lower levels than the previous year. Due to drought and very hot conditions in 2016, crops were damaged and stocks were limited on the fresh produce markets. The limited supply, supported price increases, and in quarter 2 of 2016, prices soared to levels of R6.07/kg, the highest it has been since 2015 (fig 1). Prices have since then declined in 2017 (Quarter 4, 2017 average price R3.55/kg) due to favourable weather, supporting greater yields and therefore larger supplies on the fresh produce market floors. In 2017, the Eastern Free State and Limpopo had good growing conditions. Limpopo had a warm winter; supporting greater yields. Even though the economy is static and consumer pockets under immense strain, it was noted that during Q1 of 2017, the fresh produce markets, made record potato sales. In general more potato bags are being sold from the fresh produce markets, compared to the earlier years, thanks to growing consumer preference and demand. Sales declined during Q2 and Q3 (2017) but we see an uptick trend in Q4 (2017), which may increase until the festive season, thereafter sales are likely to take a downward trend.

Highlights

 Grains

• Normal wheat harvests are expected in the eastern parts of the Free State and in the Northern Cape. The area received some frost during the week but no significant damage was recorded. Swartland area harvest expected to average to poor in the northern parts as well as parts of the West Coast.
• Indications of lower maize seed sales seem to indicate to potential lower maize plantings. Local production conditions look favourable, with rainfall gracing the major maize producing regions, to allow for planting (eg. soil moisture is much better  in the central Free State, the region received around 25mm-40mm rain in the first two weeks of October, allowing producers to plant ,during the optimal planting season).

Livestock & Fibre

• Domestically, it is in line with seasonal trends livestock prices to follow an increasing trend through August until after the festive season, and as we have entered into warmer conditions and moved away from winter. Grazing conditions already improved in some areas and as the summer progresses, it will have a strong re-growth that will enable farmers to rebuild their livestock herds. Weather forecasts indicate that Neutral to weak La Niña conditions are still favoured for the season up until at least March/April 2018.
• As a result of the bird flu, consumers can expect some increases in prices of eggs in the coming months due to supply shortages caused by the continued culling of chickens. The cost impact could flow further to producers of goods that use eggs as ingredients and ultimately to the consumer.
• The derived SA cotton prices increased this week.  The increases in prices were in line with the increases in international prices, in spite of the strength in the South African rand. Some maize producers may switch their maize planting area to cotton to leverage off better profit margins. Maize prices are currently low, due to the surplus. The large carry-over stocks are expected for the new season due to low export activities. As a result, producers are under pressure to plant less maize this coming season. The cotton production experienced increases for the past two seasons, and the cotton industry expects the same is expected for the 2017/18 planting season. Prices that producers can realize are now known beforehand at planting time as they are able to hedge prices in advance, which give producers some certainty.

For a detailed update please see attachment