Senwes Scenario December 2017 - March 2018 | Page 28

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G RAI N M AR K E T P R O S P E C T S
November 2017:
Market movements
THYS GROBBELAAR
SENIOR GRAIN ANALYST, SENWES GRAINLINK
Article written: 27 October 2017
THE OBJECTIVE OF THE ARTICLE
IS TO PROVIDE A BROAD MAR-
KET OVERVIEW OF THE MOST
IMPORTANT GRAINS AND OIL-
SEEDS, SINCE THERE IS A SIG-
NIFICANT TIME LAPSE BETWEEN
THE WRITING AND PUBLICA-
TION OF THE ARTICLE.
Price drivers in the grain
and oilseeds markets
INTERNATIONAL
INFLUENCING FACTORS
International commodity prices
The most important maize pro-
ducing countries in the Northern
Hemisphere have made significant
progress with the harvesting pro-
cess. Carry-over stock levels are
high and the American corn price
is in the region of $3,5 per bush-
el. The American Department
of Agriculture is expecting the
corn price to hover between $3.3
and $4.1 for the rest of the sea-
son. The price is therefore not
expected to increase or decrease
significantly. Our local price is not
receiving much support from the
international maize price.
Energy prices
The international LCO crude-oil
price increased from $44.8 per
barrel on 20 July 2017 to $59.2
on 27 October 2017. It supports
the international grain and oil-
26
Graph 1. Rand/dollar exhange rate movements.
seeds prices to some extent, but
since input costs also increase in
the process, soft commodity prices
are under pressure.
Price drivers in the local
grain and oilseeds markets
Exchange rate movements
The South African rand weakened
significantly since 13 October
2017 due to financial and politi­
cal uncertainties. The rand is at
its lowest level for the past year.
The weakening rand supports
local grain and oilseed commodity
prices fairly well. The question
is, however, how the rand will
perform against the dollar in the
foreseeable future.
White and yellow maize price
trends on the South African
exchange
The South African white and
yellow maize prices are very close
to calculated import parity due
to the large crop which realised
DEC 2017-MAR 2018 • SENWES Scenario
during the past season, which in
turn resulted in high carry-over
stock levels. The table below
reflects the effect of the rand/
dollar exchange rate and the
American corn price on the cal-
culated import parity. Should the
rand weaken by approximately R2
against the dollar, it would have
a R500 effect on the calculated
import parity. The rand/dollar
exchange rate must therefore be
monitored carefully and market-
ing opportunities must be used.
Position in respect of exports:
The following two graphs give an
indication of what the cumulative
white and yellow maize exports
(red line) should be in order to
export the calculated exportable
surplus before the end of the
2017/18 marketing year. The cal-
culations of the NAMC were used
in the graphs. Exportable surplus
means the tonnage to be transport
to get to the required pipe line
stock, which is equal to approxi­