Agri Trends – 06 April 2018 – grains, livestock & fibre

Winter wheat production almost here…what’s your next move?

Western Cape livestock producers were struggling with feed for their cattle due to higher maize price costs down in the Western Cape. Transportation costs are higher for the Western Cape producers, because trucks transporting maize from inland return empty from the coast. Livestock producers are paying roughly R400-500/ton more on maize. This is becoming too expensive. Therefore there’s a potential shift in plantings to feed crops, canola and barley to maximize profitability at the cost of wheat. The potential reduction in plantings is also supported by the significant lower wheat seed sales reported by the industry so far.

Highlights

 Grains & Oilseeds

• More favourable growing conditions in South Africa’s summer crop growing regions, supported greater crop prospects of maize. Official crop estimate for 2017/18 was raised slightly to 12.4 million tons. Still a decline from the previous year’s record of 16.8 million tons. But carry-over stocks and sluggish exports in the SA, will suppress prices in the medium term.
• The Western Cape is expected to receive some above average rainfall over the next months, favourable for winter crop production prospects.
• Sunflower and soybean seed prices weighed down by international lower soybean and sunflower seed prices due to trade war fears escalation between the US and China.

Vegetables

• The Gauteng area had heavy rains the previous 2 weeks, which caused some crop damage and lowered crop size (volumes available at the FPMs). Prices have been trading higher coupled with the Easter weekend heightened demand. Good quality tomato crop is scares and volumes also low. Prices currently trading average (R6-8/kg for poorer quality and RR9-10/kg for very good quality).
• Potato prices were very high at the end of this week. Heavy rainfall in the Eastern Free State hampered potato harvesting. Producers in those areas are not able to market their crops now. Volumes are really low, underpinning higher prices.  Prices are currently trading at R4-R4.50/kg. The current good prices are not expected to prevail for a long time. As soon as the suns out and harvesting conditions improve, volumes will increase, changing the sentiment.

Livestock

• Weaner calf prices remain under pressure due to an increase in the number of weaners in the market currently.
• Normally, the increased supply for weaner calves during the weaner season from March until May could weigh further on weaner calf prices. This will improve the price margin for feedlots.
• Increased consumer spending during the Easter period support demand.
• The Stats SA monthly prices for February 2018 show that consumer egg prices are showing some slight recovery after having followed increasing trends in the past months. Egg prices for ½ dozen declined by 0.6%, to R16.40 whilst prices for 2.5 dozen declined by 1.2% to R62.97 during February 2018 when compared to January 2018.

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