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G R A IN MA RKE T PR O SPE CT S ••
Graph 4. Cash white and yellow maize price movement on Safex
Energy prices
Approximately 34% of American
corn is used for the production of
ethanol. Expensive maize and low
crude oil prices put the margins
of ethanol plants under pressure
and it could even result in negative margins, which in turn could
result in the closure of ethanol
plants. The result is a decrease in
the consumption of maize, higher carry-over stock and, in turn,
pressure on the maize price. The
Brent crude oil price is currently
in the region of $47.1 per barrel
compared to $25.8 during January
2016. The current low maize price
could still result in ethanol plants
realising positive margins. Some
of the large ethanol plants in the
American corn belt realise positive
.
margins of $16 to $22 per ton of
maize at present. This has a positive impact on the American corn
price.
International grain and
oil seed situation
As we know global carry-over
stock levels of maize, wheat and
soybeans are very high, which
does not have a positive impact on
international prices. The American
Department of Agriculture
adjusted their latest supply and
demand report relating to their
corn and soybean yields and crops.
Based on this report, it seems as
if America will exceed the highest
corn yield in history. The estimate
in the supply and demand report
dated 12 August 2016 amounted
to 175.1 bushel per acre.
In metric tons the above
amounts to 10.97 tons per hectare. This yield includes their dry
land an irrigation corn. It is evident from graph 1 that there is a
strong positive trend in respect of
the yield per acre over time. The
question is where it will end. Until
now global maize production has
been able to keep up with the
growing demand for maize, despite
the shrinking areas of land available for maize production.
The large corn crop contributes to the ever-increasing
American carry-over stock as well
as to the world's increasing carry-over stock levels.
The high yield together with
the larger area in the USA under
maize production could contribute
to the largest maize crop in history.
The expected crop this season is
15,153 million bushels, or 384,9
million tons in metric terms. A
number of climate risks could
still impact on the yield, but the
chances are slim that it will have a
material impact.
Due to the expected huge crop,
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Graph 5. Derivative import and export parities for white maize (USA corn) Safex-Randfontein based - 09 September
2016.
SENWES Scenario • OCT/NOV 2016
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