Senwes Scenario June / July 2017 - Page 45

••• • • G R A IN MA RKE T PR O SPE CT S • • Energy prices As already known, the Americans use approximate­ ly 35% of their total maize crop to produce ethanol. Consumption is 44% of domestic consumption, excluding exports. The international crude oil price has declined, which has a negative impact on ethanol prices. At the current price levels of American corn, seven of the largest ethanol plants in the USA are realising a gross margin of between $0.24 and $0.43 per bushel. This is a very low margin and will probably limit the maize price movement to a reasonable extent. of white maize and 1,2 million tons of yellow maize. For this rea­ son, white and yellow maize are trading in the region of calculated import parity at present. The difference between the calculated import and export parity can be up to R2 300 per ton, depend­ ing on the country from which imports and exports are done. The calculated export parity of white maize was, at the time of writing of this article, approxi­ mately R100 per ton lower than the JSE cash price. Exports will probably struggle to get on track, until such time as the JSE price moves closer to calculated export parity. Graph 4 reflects the price movements of the white maize July 2017 contract on the JSE. The white maize price declined Graph 3. Light sweet crude oil price/barrel (Reuters). Price drivers in the domestic grain and oilseeds markets White and yellow maize price trends on the South African Exchange The third crop estimate of the National Crop Estimate Committee (NCEC) for the season predicts the second largest crop in South African history. Chances are that the estimate will even be increased. This means that, according to the calcula­ tions of the National Agricultural Marketing Council (NAMC), there will be an exportable surplus of approximately 1,3 million tons > CONTINUED ON PAGE 44 Table 1: The calculated import parity of South African white maize to Southeast Asia. Maize origin: Randfontein Load cost advantage USA-$11 Delivery point: Southeast Asia Basis CBT to FOB($/t) $22 Date: 10 May 2017 Quality premium: $5 USA CBT yellow maize price ($/bu) Exchange rate R/$ 3,40 3,50 3,60 3,70 3,80 4,00 4,20 4,40 12,50 R1 536 R1 585 R1 635 R1 684 R1 733 R1 831 R1 930 R2 028 12,75 R1 579 R1 629 R1 679 R1 729 R1 779 R1 880 R1 980 R2 081 13,00 R1 621 R1 672 R1 724 R1 775 R1 826 R1 928 R2 031 R2 133 13,25 R1 664 R1 716 R1 768 R1 820 R1 873 R1 977 R2 081 R2 186 13,50 R1 706 R1 760 R1 813 R1 866 R1 919 R2 025 R2 132 R2 238 14,00 R1 792 R1 847 R1 902 R1 957 R2 012 R2 122 R2 233 R2 343 14,50 R1 877 R1 934 R1 991 R2 048 R2 105 R2 219 R2 333 R2 448 SENWES Scenario • JUN/JUL 2017 43