Agri- Sep 2016.pdf · PDF file FNB Agri-Weekly Page 2 Domestic: It was another week of...

Click here to load reader

  • date post

    15-Jul-2020
  • Category

    Documents

  • view

    0
  • download

    0

Embed Size (px)

Transcript of Agri- Sep 2016.pdf · PDF file FNB Agri-Weekly Page 2 Domestic: It was another week of...

  • 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

  • ____________________________________________________________________________________________________________________________________________

    FNB Agri-Weekly Page 2

    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

  • ____________________________________________________________________________________________________________________________________________

    FNB Agri-Weekly Page 3

    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

  • ____________________________________________________________________________________________________________________________________________

    FNB Agri-Weekly Page 4

    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