Agri-Weekly

30 September 2016

Yellow maize market (Graph 1)

International:

 US maize prices ended in negative territory under

pressure due to the favourable harvest weather and

good crop ratings of 74% in the good to excellent

category. Harvest progress was however still behind

last year at 15% complete.  In its latest report of 29 September 2016, the

International Grain Council still projected a record

global grain crop for 2016/17 at 2.03 million tons

which is unchanged m/m. Over half of this is maize,

whose estimate was lowered slightly from August but

still at a record high of 1.03 million tons. Dry weather

conditions in parts of the European Union (EU) and China were cited as reasons for the downward

revision of the estimate.  Meanwhile, China has reportedly given approval to two companies to export up to 2 million tons of maize

in an effort to reduce some of its surplus. This combined with an already record global supply outlook will

continue to weigh heavily on international prices. The livestock sector, especially the intensive production

systems such as poultry, pork and feedlots will be the major beneficiaries in terms of reduced cost of

feeding.  In the weekly ethanol update, the US Energy Information Agency (EIA) showed that ethanol production

was up 8,000 barrels per day for the week ended 23 September 2016. Ethanol stocks were up 600,000

barrels at 20.6 million barrels. Ethanol stocks and price trends are important as maize is a major feedstock

in ethanol production in the US.

Source: USDA, PSD

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Graph 1a: World maize production trends (‘000 tons)

0%

5%

10%

15%

20%

25%

30%

35%

0

50,000

100,000

150,000

200,000

250,000

Graph 1b: World maize- Ending Stocks vs Stocks/Usage ratio

Ending Stocks Stocks/Usage ratio

Graph 1: Yellow maize prices

750

1,070

1,390

1,710

2,030

2,350

2,670

2,990

3,310

3,630

3,950

4,270

02-Oct -15 05-Feb-16 10-Jun-16 14-Oct -16

(R/ton)

Import parity Export parity Domestic

* last two data points are preliminary

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Domestic:

 It was another week of sharp losses on the maize market due to the combined influence of a resurgent

rand, seasonal harvest pressure and the upward revision of the current season crop.

 The average weekly YMAZ prices dropped by 3.4% w/w but still 3% higher y/y at R3,002/t. Prices have so

far fallen by R1,020/t from the 2016 peak of R4,021/t earlier in January.

 Early in the week, the Crop Estimate Committee report showed an upward revision of its yellow maize

crop by 2% to 4.3m tons, although remaining below last year’s 5.2m tons. The total maize crop estimate

was raised 3.3% from the previous estimate to 7.54m tons.

 Weekly producer deliveries came in at relatively lower with overall volumes at 40,344 tons with yellow

maize at 12,310 tons. Cumulative season to date deliveries were reported at 6.2m tons.

 The latest trade data was bullish with yellow maize imports reported at 60,113 tons, which is slightly higher

w/w. Exports however slowed to 4,171 tons, down 25% w/w.

Source: JSE, Own Calculations

SAFEX (Rand/ ton) CME (US$/t)

30 September 2016 WMAZ % w/w YMAZ % w/w CBOT Corn % w/w US CORN % w/w

Weekly Avg R 3,615 -5.6% R 3,002 -3.4% R 1,803 -2.8% 146.3 -2.3%

Dec-2016 R 3,593 -7.3% R 3,066 -1.6% R 1,818 0.3% 132.62 0.1%

Mar-2017 R 3,542 -3.7% R 3,041 -1.6% R 1,909 0.7% 136.48 0.1%

May-2017 R 3,009 1.9% R 2,655 0.2% R 1,964 -0.4% 139.24 0.2%

Jul-2017 R 2,819 0.2% R 2,626 0.6% - - 141.92 0.2%

Sep-2017 - - - - - - 144.60 0.2% Source: JSE, CME

OUTLOOK

We are entering a period in which weather will become a major price driver for the local market. With

planting period fast approaching, rains are needed to ensure good soil moisture for crop emergence.

Globally, the abundant supplies will continue to exert downward pressure on prices.

-400 -340 -280 -220 -160 -100

-40 20 80

140 200 260 320

Graph 1c: Weekly YMAZ price change (R/ton) Last 5 months

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

3300 Graph 1d: JSE YMAZ Futures, Jul-17 (R/t)

0

10,000

20,000

30,000

40,000

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

Graph 1e: Monthly Yellow Maize Export Trends Marketing Seasons, (tons)

2015/16 2016/17

0

20,000

40,000

60,000

80,000

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

Graph 1f: Total SA Maize Export Trends Marketing Seasons, (tons)

2015/16 2016/17

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Source: SAGIS;

30 September 2016 Calculated Yellow Maize Options prices (R/ton) RMB commodity desk (Tel: 011 269 9005)

Dec-16 Mar-17 May-17

Ask Put Call Ask Put Call Ask Put Call

3,100 346 312 3,080 322 283 2,700 309 264

3,060 324 330 3,040 300 301 2,660 286 281

3,020 302 348 3,000 278 319 2,620 264 299

White maize market trends (Graph 2)

International:  As with their yellow counterparts, US white maize

prices lost ground on advancing harvest and better crop ratings.

 US white maize reversed last week’s gains and shed 1.8% over the week at US$136/ton, which is 9% lower compared to last year.

Domestic:

 Weekly white maize prices posted the biggest

losses on large import volumes, the slightly firmer

rand and the improved supply outlook from the

CEC report.

 The CEC raised its estimate of the national white

maize crop by 5% from last month to 3.3m tons,

which weighed heavily on the market.

 White maize prices averaged R3,615 per ton, down 5.6% w/w but 14% higher y/y. Prices have so far shed

a whopping R1,547/t from the 2016 peak of R5,162/t.

 After a brief hiatus, maize imports resumed with 15,686 tons from Mexico arrived at the domestic ports,

with the year to date reaching 330,634 tons. Exports recovered slightly from last week at 13,225 tons, and

the cumulative year to date at 202,995 tons.

OUTLOOK

We are entering a period in which weather will become a major price driver for the local market. With

planting period fast approaching, rains are needed to ensure good soil moisture for crop emergence.

Globally, the abundant supplies will continue to exert downward pressure on prices.

30 September 2016 Calculated White Maize Options prices (R/ton) RMB commodity desk (Tel: 011 269 9005)

Dec-16 Mar-17 May-17

3,640 555 508 3,580 586 548 3,040 495 464

3,600 531 524 3,540 563 565 3,000 471 480

3,560 509 542 3,500 540 582 2,960 448 497

0

100,000

200,000

300,000

400,000

500,000

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

Graph 1g: Monthly Yellow Maize Import Trends (tons) Marketing Season

2015/16 2016/17

0

100,000

200,000

300,000

400,000

500,000

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

Graph 1h: Total Monthly SA Maize Imports (tons) Marketing Season

YM 2016/17 WM 2016/17 YM 2015/16 WM 2015/16

Graph 2: White maize prices

680

1,160

1,640

2,120

2,600

3,080

3,560

4,040

4,520

5,000

5,480

02-Oct-15 05-Feb-16 10-Jun-16 14-Oct-16

Impo rt parit y Expo rt parit y D omest ic

(R/ton)

* last two data points are

preliminary

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Source: JSE, Own Calculations

Source: SAGIS;

Wheat market trends (Graph 3) International:

 US prices moved sideways to weaker on upward

revisions of the global crop while the stronger US

dollar and quality concerns in Australia helped limit

losses.

 The IGC raised its global wheat crop estimate by

4m tons to