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GRAIN MARKET PROSPECTS
February 2017 : Market movements
THYS GROBBELAAR SENIOR GRAIN ANALYST , SENWES GRAINLINK
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THE OBJECTIVE OF THIS ARTICLE IS TO PROVIDE A BROAD MARKET OVERVIEW OF THE MOST IMPORTANT GRAINS AND OILSEEDS , SINCE THERE IS A SIGNIFICANT TIME LAPSE BETWEEN THE WRITING AND PUBLICATION OF THE ARTICLE .
Price drivers in the grain and oilseeds markets
A schematic representation of the most important variables which currently have an impact on commodity prices in the local market can be seen below . We will attempt to briefly focus on the most important variables . We have two situations at present , namely old season grain and oilseeds and new season grain and oilseeds .
OLD SEASON SITUATION ( 2016 / 17 MARKETING YEAR )
• Local available stock
• Expected exchange rate movements
• International prices
• Possible imports
• Consumption
• Expected early deliveries ( March 2017 and April 2017 )
NEW SEASON SITUATION ( 2017 / 18 MARKETING YEAR )
• Carry-over stock ( old season )
• Expected exchange rate movements
• International prices
• Expected production – Hectares planted – Expected yield
» Climatological factors such as frost , tropical cyclones and temperatures » Expected rainfall » Heat units – Consumption – Possible imports or exports
FEB / MAR 2017 • SENWES Scenario
International fundamental factors
International economic situation
Die vooruitsigte vir groei in die wêreldekonomie in terme van ’ n styging in die Bruto Binnelandse Produk is 3,53 %, wat gunstiger is as die voorafgaande paar jaar . Die ontwikkelde ekonomie se groeiverwagting bly egter maar aan die trae kant . Die matige groei in die wêreldekonomie gaan waarskynlik kommoditeitspryse tot ’ n mate ondersteun .
Energy prices More than a third of the American maize crop is used for ethanol production . During March 2012 the crude oil price was in the region of $ 122 per barrel , which resulted in the international maize price hovering in the region of $ 7 per bushel . Due to a number of factors the crude oil price decreased to $ 28 per bushel in June 2016 . New oil fields were discovered , large-scale fracking was undertaken and the use of alternative forms of energy such as wind and sun energy , increased dramatically . The crude oil price is currently at levels of between $ 54 and $ 56 per bushel . Although the crude oil price increased , prices of commodities such as maize and oilseeds are not supported to the same extent as in the past ..
WHITE AND YELLOW MAIZE PRICE TRENDS ON THE SOUTH AFRICAN EXCHANGE South Africa experienced one of the worst droughts over the past few years . The western areas of the summer grain production areas yielded particularly poor crops . It was evident by the end of January 2016 that white and yellow maize would have to be imported . The question at the time was where South Africa would source white maize for import purposes . The Department of Agriculture has a limitation on genetically modified crops and products in terms of legislation . At the time GM-free white maize from Mexico was available and the FOB-price was in the region of $ 260 per ton , which made imported maize very expensive . The Safex white maize price moved to the calculated import parity of Mexican white