CO L UMN
Energy prices
The international maize and soya
bean prices are further supported
by the higher crude oil prices.
Ethanol production in America
accounts for approximately 44%
of the local consumption of maize,
which means that the international
crude oil price plays a huge role
in the price formation process.
The crude oil price has declined
by almost 63% since mid-January
2016. A number of ethanol plants
are starting to make money again,
which is increasing the demand for
maize, which in turn supports the
price of this commodity.
International grain and oil seed
situation
Graph 3 reflects the price movements of yellow maize on the
CBOT. It is evident that the maize
prices are relatively low and that
producers making use of production credit are not making a lot of
money at a price below $4/bu. The
large carry-over stock levels in the
USA and the world are the main
reasons for the low international
maize price.
Graph 4. Exhange rate movements.
•••
Current climate in the USA
Brazil is experiencing a drought
over parts of its maize producing
areas and it will be difficult for
Brazil to meet all its export obligations. This means that Brazil
will have to import maize. The
predicted La Nina-episode is
expected for the coming season,
which could result in a drought
situation in the southern states.
Americans are busy planting and
progress was estimated at 45%
during the past week, compared
to the 5-year average of 38%.
Planting progress in respect of
soya beans is also higher than the
5-year average.
The reason for the high plant-
ing progress percentages is the
fact that most of the fields have
dried sufficiently and excessively
wet conditions do not exist. The
map below indicates the current
climate in the USA. Certain
areas are drying to a larger extent, particularly in the southern
states.
Damage due to excessively
wet conditions in Argentine is
another price supporting factor.
The La Nina-episode predicted
for the coming season normally
results in a drought over the
southern states, which supports
the American corn price to some
extent.
LOCALLY
Exchange rate movements
The rand has strengthened since
January 2016, although fluctuations are still at the order of the
day. This results in lower priced
imported maize, soya beans and
sunflower which, in turn, puts
pressure on our Safex prices. The
rand may decline again over the
short term, which will support
prices. (Graph 4.
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SENWES Scenario • JUN/JUL 2016
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