Senwes Scenario April / May 2018 | Page 61

MARKETS Figure 2: Production in South America. Argentina and Brazil are the strongest competition for our domestic maize in the export market. Local prices will therefore be compared with South American prices in order to ensure profitable exports. The USA is entering a period during which producers will have to make a choice between planting maize or soybeans. With maize plantings being less profitable than soybean plantings at present, expec- tations are that USA maize prices will USA Table 1: Local supply and demand figures V&A Production Crop estimate Estimate for 2018/19 WM YM Total 6 108 000 6 114 950 12 222 950 Grain held back 200 000 350 000 550 000 Less early deliveries 200 000 350 000 550 000 Plus early deliveries 200 000 350 000 550 000 5 908 000 5 764 950 11 672 950 Opening stock 2 805 286 1 418 159 4 223 445 Producer deliveries Available for domestic market Supply 5 908 000 5 764 950 11 672 950 Imports - - - Net early deliveries - - - 12 000 18 000 30 000 8 725 286 7 201 109 15 926 395 6 494 000 3 888 000 10 382 000 67 000 260 000 327 000 6 561 000 4 148 000 10 709 000 560 000 1 620 000 2 180 000 Total demand 7 121 000 5 768 000 12 889 000 Closing stock 1 604 286 1 433 109 3 037 395 Stock-to-usage 24.45% 34.55% 28.36% 2.96 4.42 3.51 90 135 107 Surplus Total supply Demand Processed for domestic market Sundry demand Domestic demand Exports Months with available stock Days with available stock remain higher relative to soybean prices. In addition the USA is not kicking off the planting season on a good note - large areas in the production area are classified as drought areas and rain will have to be received for planting to commence. Local conditions The most important characteristic of the local market is the surplus stock carried over from the 2017/18 season. This will probably result in prices trading close to export parity levels. Any price support will probably come from a weaker exchange rate or increasing international prices since both these factors have a material influence on parity prices. SUMMARY Local prices will probably continue to reflect a sideways trend, with prices trading around export parity levels. Even with exports of almost 2,2 million tons, carry-over stock levels of around 3 million tons can be expected by the end of April 2019. However, interim price increases could occur as a result of higher inter- national prices or a weaker exchange rate. These opportunities can and must be utlised in order to do the most optimal marketing possible. Scan the QR code for the newest market information. http://senwes.co/HSApr18 SENWES SCENARIO | AUTUMN 2018 59