The total poultry imports from Brazil are estimated at R3,2 billion for 2017. During the first 10 months of 2018 Brazilian imports already exceeded R2,9 billion.

The expected imports for 2018 can be estimated at R3,6 billion. From the world, South Africa imported until October an estimated R5,14 billion broiler meat products. The total imports from the world for 2018 are estimated at R6,2 billion. Keep in mind that the average exchange rate for the Rand to the $ were R13.32 in 2017 and R13.16 in 2018. The import value of poultry products increased by 20% year on year. The profitability of local poultry production is challenged by the increased competitive imports from the world. South African exports of poultry declined year on year by 16,3%. The impact of imports on the poultry industry and the consequent substitution of local production impacts also on other industries such as the grain and oilseeds industry. Growth in the domestic market for locally produced feedstock such as maize and soybean are impacted negatively as well.

Highlights

South African poultry imports increased by 20% year on year. The value of poultry imports is estimated at R6,2 billion for 2018. The Poultry Association applied for an adjustment in the import tariff to protect the local industry from cheaper imports.

Livestock

The combination of the unusual increase in supply by primary producers of cattle to meet cash flow needs and the seasonal increase of supply by feedlots at abattoirs to meet demand during the festive season weigh on local beef prices.

The tightening supply in Australia and a strong export demand will support mutton prices in 2019

At current prices US pork producers will be producing pork at break-even levels during Q1 in 2019. Producers will incur losses with further declines in pork prices.

ABSA AGRI TRENDS- Wessel Lemmer. 

A number of factors played together to create the perfect storm leading to the sharp decline in livestock prices during the past week. Consumers are under pressure due to our weak economic growth and relatively high energy prices and cannot pay more for protein.

Maize: The international corn market traded negatively week-on-week with US yellow corn trading 2.4% lower. The premium for Kansas white
corn is 19.3% down week-on-week. Domestic maize prices traded negatively this week with yellow maize down 2.3% and white maize down
1.3%. In their third production forecast the Crop Estimates Committee estimates that the total maize crop will be 10,655 million tons; this is
0.9% more than estimated in their second forecast.
Wheat: The US wheat prices are at contract lows this week with soft red down 2.8% and hard red down 3.1% week-on-week. The US Spring
plantings are currently 5% completed; the norm for this time of year is approximately 21%. Local wheat prices traded marginally positive with a
0.4% week-on-week increase. Accourding to the Crop Estimates Committee, farmers intend to plant 513 450ha of wheat for the 2019 season
which is 2% more than the 2018 crop.
Soybeans: The US soya market traded negatively week-on-week with prices of soybeans down 1.9%, soya oil down 2.6% and soya meal
down 1.2%. Domestic soybean prices traded 0.3% down week-on-week. The crushing margin after tax is 17.8% higher week-on-week
however, is 60.8% lower than the crushing margin of R1186.15/ton received last year.
Fibre: Wool seasonal trends indicate a slight increase in prices June before declining again in July; while Australian prices are expected to
follow this trend, an increase in South African wool prices would be unlikely considering the pressure currently on the market. Current cotton
prices are 10% higher than prices experienced a year ago.

The international corn market traded negatively week-on-week with US yellow corn trading 2.4% lower. The premium for Kansas white corn is 19.3% down week-on-week however has increased by 179% from last year's premium of US$1.77/ton. Hope regarding the US/China trade deal is turning into disappointment as there is no conclusion in sight. The Brazil crop is large and the Safrinha corn has been rated as 89% good quality with 11% average. Due to the wet ground conditions delaying plantings there is concern that US farmers may switch from corn to soya.

Domestic maize prices traded negatively this week with yellow maize down 2.3% and white maize down 1.3%. However, prices for both yellow and white maize are higher than prices a year ago with yellow maize 25.4% higher and white maize 16.9% higher. In their third production forecast the Crop Estimates Committee estimates that the total maize crop will be 10,655 million tons; this is 0.9% more than estimated in their second forecast. Of the total crop, it is estimated that 49.61% will be white maize while 50.39% will be yellow maize. The expected average yield of maize if 4.63t/ha.

Domestic prices of both yellow and white maize are expected to continue their decline in the next month (May) and then begin to increase from June. However, white maize prices are expected to continue declining at a faster rate than the yellow maize prices. The local market can't expect support from international prices in the coming month as US prices are expected to remain under pressure.

The US wheat prices are at contract lows this week with soft red down 2.8% and hard red down 3.1% week-on-week. The US Spring plantings are currently 5% completed; the norm for this time of year is approximately 21%, the wet weather conditions have delayed plantings. The market was hoping that the low prices would bring in new buyers however this has not been the case. There is a large Russian wheat crop coming in which is expected to further impact US wheat prices negatively.

Local wheat prices traded marginally positive with a 0.4% week-on-week increase. Accourding to the Crop Estimates Committee, farmers intend to plant 513 450ha of wheat for the 2019 season which is 2% more than the 2018 crop. Week-on-week old season wheat (May19) traded up 1.1% while new season wheat (Dec19) traded 0.4% up. The new wheat tariff is still yet to be published, the new tariff of R675.07/ton triggered over a month ago on the 12th of March.

The outlook for US wheat is relatively bleak with prices expected to reach near term lows, global wheat stocks are large with China's wheat stocks at a record high. Domestic wheat prices are expected to continue their slow but steady increase in the next three months. The new wheat tariff of R675.07/ton is expected to be published in May.

The US soya market traded negatively week-on-week with prices of soybeans down 1.9%, soya oil down 2.6% and soya meal down 1.2%. US prices are at a new low since September 2018 this is due to a lack of exports, no conclusion to the US/China trade deal in sight and a large South American crop. The Brazil harvest is 92% complete while the Argentine harvest is 34% complete. The world production of soybeans has been revised with an increase of 4.4 million tons. Chinese imports and crushing of soybeans will be lower than expected due to declining demand for feed in the swine industry following the African Swine Fever outbreak reducing their pig herd.

Domestic soybean prices traded 0.3% down week-on-week while the sunflower seed prices traded up by 0.4%. Prices of both soybeans and
sunflowers are higher compared to this time a year ago. The crushing margin after tax is 17.8% higher week-on-week however, is 60.8% lower than the crushing margin of R1186.15/ton received last year. The third production forecast released by the Crop Estimate Committee showed that the expected production of soybeans will be 1.3 million tons (1.55% more than the estimate from the second production forecast), the expected yield is 1.77t/ha.

The international soya market is currently at a new low since September 2018, it is expected that prices will continue their decline as the large South American crop puts pressure on the US market as they await news on the US/China trade negotiations. Domestic soybean prices are expected to continue their slow decline until June when they will start to increase again. Domestic sunflower seed prices are expected to follow a similar outlook.

Australia: There was no Australian wool auction for the week ended 26 April 2019. The next auction will be held in the week beginning 29th April 2019. South African wool prices are expected to continue their downward spiral with shorter cuts experiencing the largest impact on prices. Although there are talks to reopen the South African wool export market this is unlikely to happen in the short term. Seasonal trends indicate a slight increase in prices June before declining again in July; while Australian prices are expected to follow this trend, an increase in South African wool prices would be unlikely considering the pressure currently on the market. A slight bump in prices of long good quality wool may occur but shorter wools will continue to experience declining prices.
Local: There was no South African auction this week. The next auction is scheduled for the 9th of May 2019.
USA: The US cotton market traded negatively this week; the Cotton A Index was 2% lower week-on-week and is 4.6% lower than last year. Wet
weather and low temperatures across parts of the US slowed fieldwork and planting activity. Spot trading was inactive with moderate demand and an offering of 8,277 bales which is almost 70% less than the 27,298 bales offered last week.
Local: Domestic cotton prices experienced a marginal increase of 0.6% week-on-week. Current prices are 10% higher than prices experienced a year ago. Farmers in the Indore region of India are intending to increase their cotton planting by 15% following increased demand; this may support local prices in the coming months. Domestic prices are expected to remain fairly stable in the coming months.

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.

The suspension of beef exports and the poor outlook of summer crops which will subsequently affect the feed industry were the main drivers of the decline in prices in the beef industry.

The late rainfall during the planting window of maize threatens to limit the output of the crop in the 2019/20 marketing year.

Underneath is an interpreted summary of the aspects covered in the SONA on agriculture. (Full SONA attached in MSWord). It will be interesting to see how the national budget on the 20th February will allocate funds in support of the vision set out in the SONA. The importance of agriculture was highlighted a couple of times.

The recent recovery in weaner calf prices fuelled by tax purposes was short lived and did not carry though the past week. The dry conditions and lack of sufficient follow up rainfall in the grain production regions lead to price increases for yellow maize and soybeans.

The profitability of pork production will be under pressure from April to June due to increased animal feed prices.

Increased demand and optimism surrounding the beef industry is driving beef futures prices higher. China is one of the largest beef importers in the world, however the US only has approximately 1% of that market.

Weekly Updated Agri Trends of ABSA -Local prices this week were down on average for all commodities.

African Swine Fever spreads through China.

Local prices for grains, oilseeds and fiber continued their decline this week. Yellow maize prices decline by 2.7%, while white maize prices declined by 4.9% week-on-week. Week-on-week wheat prices were down 0.4%, soybean prices are down 0.5% and sunflower prices are down 3.6%. A large late winter storm hit the US creating wet conditions along the corn belt which is likely to affect international production estimates. A conclusion to the US/China trade negotiations has been delayed until June. There was no South African wool auction this week, however local wool producers may be facing serious cash flow issues as wool exports continues to be suspended.

US corn prices declined this week by 2.9%, this is 14.4% lower than prices were a year ago. A big late winter storm has created very wet conditions along the corn belt which may resulting in flooding and disrupt planting. The US market is currently watching the weather closely as reduced acreage will disrupt the supply/demand outlook. US traders are currently net short for approximately 246 thousand corn contracts which could support South African prices.

The domestic maize market traded lower this week with white maize spot prices dropping by 4.9% week-on-week and yellow maize spot prices dropping by 2.7% week-on-week. The international Grains Council has estimated that there will be a 14% decline in South African maize production in the 2018/19 season due to lower plantings and lower yields. Due to late plantings local producers are concerned regarding the risk of frost occuring up to the first weekend of May. Another concern for the market is the movement of the Rand as the May elections approaches.

Prices of both white and yellow maize are expected to continue their decline until the end of June; then prices are expected to start increasing. The USDA Production Estimate will be released on the 10th of May which will indicate the extent to which the storm affected the US corn crop. The US/China trade negotiations are ongoing and a conclusion is expected to be delayed until June.

The international wheat market traded lower overall this week with Soft Red Gulf down by 2.1% and Hard Red Gulf down by 1.7% week-on-week.
Wheat export shipments are low. The market is expected to remain relatively stable over the next weeks as news on whether delayed plantings due to the storm this week will have an effect on production estimates.

The JSE spot price was 0.4% lower this week. The new import tariff has not be implemented yet so the tariff currently remains at R490.70. The new wheat tariff of R675.07 is expected to be published this week. New season (Dec 2019) and old season (May 2019) contract prices declined this week. The US import parity is down by 2% week-on-week.

International wheat prices are expected to move sideways as the market waits for news on delayed spring plantings as well as a conclusion to the trade deal. The USDA is set to release their revised production estimate on the 10th of May. Domestic wheat prices are also expected to remain fairly stable in the next months with a slight increase in prices in May in accordance with seasonal trends.

US soybean prices increased marginally week-on-week but are down 16.9% since last year. Week-on-week soya oil was up 0.2% while soya meal was down 0.5%. Although the early harvests of the Argentina soybean crop have indicated higher than expected yields, there is some concern over the protein content of the beans. Egypt's growing feed demand has resulted in imports increasing by 5% from last year mainly sourced from the US. The world supply of oilseeds are expected to exceed earlier estimates due to the revised yields of the South American crop.

The local oilseed market continued to trade downwards this week although prices of soybeans and sunflowers were up from last year. Sunflower
prices are down 3.6% from last week while soybean prices are down 0.5% from last week. The crushing margin after tax is 57.6% lower than it was a year ago.

Soybean and sunflower seed prices are expected to follow the seasonal trends and drop in April before increasing from May. Derived soybean prices are expected to start increasing in the months coming up to June.

Australia: Australian wool prices continued their decline this week, decreasing by 1.5% from last week. The decline in prices is due to the wool offering consisting of an increase of less stylish wools with low yields. There was high competition amongst buyers for the small offering of wools with better styles and higher yields. The next auction has 42,487 bales scheduled for sale.

Australian wool prices are expected to drop in Rand terms in April and May before increasing in June. Domestic wool is still prohibited from being
exported and as such prices are under continued pressure. Local wool prices are expected to remain relatively stable from April to June. Domestic cotton prices are expected to decrease slightly in the next three months.
Local: There was no South African wool auction for the week ending 12th April 2019. The next auction is scheduled for the 17th of April. Wool prices are under pressure and are expected to continue to decline. Disease outbreaks in China as well as the US/China trade negotiations are currently taking priority for Chinese authorities. The FMD outbreaks in South Africa are of growing concern for Chinese government. Local wool producers may be facing cash flow problems due to the delay before the suspension of wool exports is lifted.
USA: The cotton A Index increased by 0.6% week-on-week; this is 3.4% higher than a month ago however is 2.0% lower than the same time a year ago. Producer offerings and demand was moderate this week. Planting of new season cotton is expected to increase this week after widespread rainfall was welcomed to areas where moderate drought conditions had been experienced.
Local: South African cotton prices are up by 13.9% from the same time last year however week-on-week prices are down by 0.5%.

The short week is resulting in reduced activity on the international market this week. In the US topside, rump and striploin prices all increased week-onweek while chuck and brisket prices declined week-on-week.

Maize: Local maize prices moved slightly this week with white maize prices increasing by 0.4% and yellow maize prices decreasing by 0.2%.

Beef: Week-on-week US prices for rump, striploin and brisket increased by 2.1%, 6.3% and 0.3% respectively. US Chuck prices experienced  the largest price decline this week decreasing by 6.1% compared to last week.

Variable climatic conditions, macro- economic fluctuations, trade wars and land reform policy uncertainty will remain some of the biggest factors impacting on the South African agriculture sector for the foreseeable future, according to the Bureau for Food and Agricultural Policy’s (BFAP’s) agricultural outlook for 2018 to 2027.

Week-on-week US beef prices of topside, rump and chuck declined by 5.2%, 4.2% and 6.5% respectively while prices of striploin and brisket increased by 0.5% and 1,3% respectively.

Prices are low at the moment. Tomatoes prices have decreased 32% w/w, cabbage prices decreased 19% w/w, carrots prices decreased
13% w/w and potatoes prices decreased 13% w/w.

It was expected that prices would increase for month end, this proved true for tomatoes (6.3% price increase w/w), onions (0.9% increase
w/w) and cabbage (1.5% increase w/w) whilst w/w price declines were experienced by potatoes (3.2%) and carrots (3.3%).