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G RAI N M AR K E T P R O S P E C T S
September 2017:
Market movements
THYS GROBBELAAR
SENIOR GRAIN ANALYST, SENWES GRAINLINK
Article written: 9 September 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:
Exchange rate movements:
The rand/dollar exchange rate
has a real effect on all the South
African commodity prices, since
the variable is used in the calcu
lation of the import and export
parity of the different crops. The
local commodity prices usually
form between the calculated
import and export parity, depend
ing on the calculated carry-over
stock at the end of the market
ing season. With every one cent
strengthening of the dollar against
the rand, the calculated import
parity of white maize decreases by
R2,24 per ton, while the calcu
lated export parity of white maize
decreases by R1,68 per ton. The
rand has strengthened by one
rand against the dollar between
10 April 2017 and 4 September
2017. This means that the calcu
42
Graph 1. R/$ exchange rate movements.
lated import parity decreased by
R168 per ton. A strengthening
rand therefore has a negative
impact on the South African com
modity prices.
International commodity prices:
Large carry-over stock levels as
a result of relative favourable
growing conditions and genetic
progress in respect of plant cul
tivation in the largest part of the
world put a lot of pressure on
the international prices of maize,
wheat and soybeans. The next
graph reflects the seasonal move
ments of yellow maize on the
Chicago Futures Exchange. The
graph reflects a sharp decrease
since the beginning of July 2017.
Some of the northern states of
the USA experienced drought
during the season. It was speculat
ed that maize production would
Graph 2. The long-term spot price (c/bushel) of yellow maize over a season on
Chicago Board of Trade against the 2017/18 price.
OCT/NOV 2017 • SENWES Scenario