As a result of maize prices increasing to import parity price levels and carcass prices declining due to the suspension of beef exports as a result of SA’s loss of its free Foot-and-mouth disease status, feedlots are near break-even cost levels.
Producers who depend on the diversification between grain and extensive livestock production (weaners) to lower their risk may not reap the benefits in 2019. The preliminary estimate of hectares planted will be published by the end of January. Stakeholders in the industry expect that the hectares planted in the Free State and North West provinces may only reach 70% of intentions while the yield of maize production in these provinces may even be 20% less than the four year average yield.
To summarize, it can be expected that the total hectares planted may only reach a total of about 1,95 million hectares with a total production of 9,3 million tons. At these production levels and considering the total demand of maize at 10,8 million tons South Africa need to import 1,1 million tons of yellow maize to meet the demand for animal feeds. The rainfall between July and December adds up to 139 mm for the Free State compared to 82 mm during 2015 and the long term average (since 1960) of 244 mm. Rainfall in the North West Province adds up to 115 mm (97 mm in 2015) compared to a long term average rainfall of 208 mm. Mpumalanga received 285 mm (211 mm in 2015) compared to the long term average of 378 mm. The total production in the 2015/16 production season reached nearly 7,8 million tons.
Highlights
Grains & Oilseeds
· Stakeholders in the industry expect that the hectares planted in the Free State and North West provinces may only reach 70% of intentions while the yield of maize production in these provinces may even be 20% less than the four year average yield. To summarize, it can be expected that the total hectares planted may only reach a total of about 1,95 million hectares with a total production of 9,3 million tons
· The Free State and Western Free State is likely to have 20% decline in yield respectively due to the poor growing conditions.
· Late planting of maize crops brings its own challenges and sets of risks. Frost may be risk for maize that was planted late. There is a 40% probability of light frost in the Northwest Free State before mid-April. Weather forecasters also estimate a 20-30% probability of moderate to severe frost from the 20-30 April in the area (Bothaville). The probability and risk of severe frost occurring before end of April is very low in the Lichtenburg area.
· Stronger local currency limited gains in the local wheat market. Prices are expected to trade sideways in the medium term. Current weather worries affecting the summer grain producing regions is irrelevant to the wheat growing areas. The 300 000 ton tariff free importing window may weigh on local prices in the coming month.
Fibre
· Domestic wool market is expected to trade well in the short to medium term. Supply concerns remain a bullish factor due to persisting drought in the wool growing areas. The price support came from excellent competition on merino wools of well grown and longer length wools. The next sale is scheduled for the 23 January 2019 and approximately 8931 bales will be on offer.
Conce Moraba & Wessel Lemmer
Agricultural Economists, Absa group
All the information regarding prices on AGRI NEWS NET
